1965-04-26

[Stage Direction]
A message from His Excellency the Governor General transmitting estimates for the financial year ending March 31, 1966 was presented by Hon. Walter L. Gordon (Minister of Finance) and read by Mr. Speaker to the House.
Hon. Walter L. Gordon (Minister of Finance):: Mr. Speaker, I should make a short statement. There is no need for detailed comment concerning these main estimates because they are identical with those which I tabled in this House during the previous session of Parliament. Because they were distributed to all members of Parliament at that time, I have not arranged for another general distribution now.
On that occasion, which was March 22, I made a short statement which can be found on pages 12,607 and 12,608 of Hansard for the second session of this Parliament. Tables related to the estimates were included in Hansard on pages 12,609, 12,610 and 12,611. Opposition spokesmen made their usual statements at that time also.
During the previous session Parliament provided interim supply for April and May by the enactment of Appropriation Act No. 1, 1965, based on estimates identical to those which I have tabled today. These estimates will provide the basis for further votes of supply during this session to provide for 1965-66 requirements.
I should draw the attention of the House to a discrepancy on page 5 of these estimates. The total amount shown in the summary for "Loans, Investments and Advances" should read $201,994,800, as printed on page 524, rather than $202,144,800 as shown in the summary. The correct figure which appears on page 524 will be the one considered by the Committee of Supply.



REFERENCE TO COMMITTEE OF SUPPLY

["Mr. Speaker, I shall be very happy to pass along these words of congratulation and thanks, and may I express my hope that conditions will rapidly improve in the hon. Member's constituency."]
Walter Lockhart Gordon: That the message of His Excellency, together with the estimates presented this day, be referred to the Committee of Supply.


[Stage Direction]
Motion agreed to.

Hon. Miichell Sharp (Minister of Trade and Commerce):: Mr. Speaker, I wish to advise the House that last Thursday, April 22, our Ambassador to the United States signed on behalf of the Government of Canada a protocol extending the current International Wheat Agreement without amendment for one year, to July 31, 1966. The International Wheat Council agreed at its session last February to recommend to member governments this extension of the agreement, pending the possible development of broader international arrangements on grains under the Kennedy round of trade negotiations, which could have implications for the International Wheat Agreement.


INDUSTRY
Hon. J. R. Nicholson (Acting Minister of Industry):: Mr. Speaker, with leave I, as the acting minister, wish to table copies of correspondence between the Minister of Industry and General Motors of Canada Ltd., Ford Motor Company of Canada Ltd. and Chrysler Canada Ltd., concerning the Canada-United States automotive agreement signed by the Prime Minister of Canada and the President of the United States on January 16, 1965.


Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, I wonder would the Minister also include any correspondence that was received from the Secretary of State for External Affairs in connection with that matter.


Some hon. Members:: Oh, oh.

April 26, 1965
Questions QUESTIONS
(Questions answered orally are indicated by an asterisk.)


LUCIEN RIVARD-CONSULTATIONS RESPECTING FILMING OF POLICE RAIDS
Mr. Coates: Were there prior consultations between the C.B.C., the freelance camera men and the police authorities carrying out the surprise raid on possible hideouts of one, Lucien Rivard in the Montreal area as shown on C.B.C. television news, as to the timing of the surprise raid and, if so, (a) what are the names of the freelance camera men (b) how many individuals were involved in the filming of the surprise raid (c) were there any markings on the transportation used by the freelance camera men which carried the equipment necessary to film the surprise raid (d) how long prior to the actual surprise raid were the freelance camera men in question on the scene
(e)	was the surprise raid filmed, timed to suit the programming convenience of either the C.B.C. producers or the freelance camera men, or both
(f)	was an extra premium paid to the freelance camera men in question for the extra risks involved associated with the filming of the surprise raid and were any precautions taken by the police authorities to insure that the freelance camera men did not divulge information through friends of Lucien Rivard as to site of the surprise raid?


Hon. Maurice Lamoniagne (Secretary of State):: I am informed by the Canadian Broadcasting Corporation that the C.B.C. had no prior consultations with the freelance cameramen or the police authorities.


TENDERS FOR POST OFFICE ALTERATIONS, MONTREAL
Mr. Loney: 1.	Were tenders called for "post office addition and alterations, Montreal, (Cote St. Luc)" on November 10. 1964?
2.	What were the names and addresses of the tenderers?
3.	What was the price quoted by each tenderer?
4.	Was the lowest tender accepted and, if not, for what reason?


Hon. Lucien Cardin (Minister of Public Works):: 1. Yes.
2	and 3. Leonard J. Weber Construction Co., Montreal, $131,949; Efficiency Maintenance Construction Ltd., Rosemere, $138,397; Noma Construction Co. Ltd., Mount St. Hilaire, $138,816; J. R. Robillard Ltee., Montreal, $143,447; Hiland Limited, Montreal, $145,000; Prieur Entreprises Inc., Chomedy, $145,800; Cambrian Construction Ltd., Montreal, $152,000; Arthur Murphy Construction Ltd., Valois, $158,580.
4.	Yes.


DREDGING AND CONSTRUCTION PROJECTS, N.S.
Mr. Crouse: 1.	How much money was spent on major construction projects in Yarmouth Harbour, Nova Scotia, during the past 25 years?
2.	How much money was spent on dredging in Yarmouth Harbour, Nova Scotia, during the past five years?
3.	How much money was spent on dredging projects in the LaHave river. Lunenburg county, Nova Scotia, during the past five years?


Louis-Joseph-Lucien Cardin: 1. The amount spent on construction projects during the fiscal years 1939-40 to 1963-64, inclusive, was $1,035,836.06.
2.	The amount spent on dredging during the fiscal years 1959-60 to 1963-64, inclusive, was $389,867.45.
3.	The amount spent on dredging in the La-Have River during the fiscal years 1959-60 to 1963-64, inclusive, was $41,414.03.


PUBLIC SERVICE PERSONNEL
Mr. Muir (Cape Breton: North and Victoria):
1.	What is the total number of individuals in the employ of the Civil Service Commission?
2.	What is the breakdown of those who state English as their first language and what is the total of those who state French as their first language?
3.	What is the number of individuals who state that they are bilingual?


Maurice Lamontagne: I have been given the following answer by the Civil Service Commission: 1. 849.
2.	Employees whose first language is English, 599; Employees whose first language is French, 250.
3.	260.


RADIO STATION CBI, SYDNEY, N.S.-PROGRAM &quot;PLAIN TALK&quot;
Mr. Muir (Cape Breton North and Victoria): 1.	Does the Canadian Broadcasting Corporation, through their radio station CBI at Sydney, Nova Scotia, broadcast a daily series entitled "Plain Talk"?
2.	Who is allowed to participate in this series?
3.	Were the scripts for "Plain Talk" for the week commencing March 1, 1965, recorded and on what date did the recording take place and by whom?
4.	Were all of these recordings broadcast and, if not, for what reason?
5.	Did the manager of the radio station CBI object to any of the recordings?
6.	For what reason did the manager of radio station CBI cancel the broadcasting of any of the recordings in the "Plain Talk" series?
7.	Is it the policy of the C.B.C. to prohibit the broadcasting of any particular theological position?
8.	How much plain talk is allowed by the C.B.C. in their series "Plain Talk"?
April 26, 1965



9.	In the past 15 months, apart from news columnist and broadcaster Gordon Sinclair, how many individuals have been allowed by the C.B.C. to expound the philosophy of atheism on their facilities?


Maurice Lamontagne: I am informed by the Canadian Broadcasting Corporation as follows: 1. Yes.
2.	Ministers normally resident in the community and/or serving permanent congregations in the community.
3.	Yes, by the Reverend E. H. Bean on February 25th.
4.	No. One was not broadcast because it was considered not to conform to the C.B.C.'s policy governing this series.
5.	Yes.
6.	Because he judged that they did not conform to the Corporation's policy.
7.	No.
8.	These talks are intended to appeal to the widest possible audience and to avoid theological disputes which might tend to divide members of different religious faiths. No restrictions are placed on the advocacy of any particular faith or doctrine; but speakers have generally understood that criticism of faiths or doctrines differing from their own is not acceptable.
9.	The C.B.C. does not judge, and does not keep records of, the religious beliefs of those who appear on its general programming.


CHRISTOPHER YOUNG-APPEARANCES ON C.B.C. PROGRAM &quot;PREVIEW COMMENTARY&quot;
Mr. Korchinski: How many times since April 1, 1963 has Christopher Young appeared on the C.B.C. program, "Preview Commentary"?


Mr. J. B. Slewart (Parliamentary Secretary to Secretary of State):: I am informed by the Canadian Broadcasting Corporation that the program on April 6, 1965 was the tenth appearance in the two years since April 1, 1963.


BARCELONA TRACTION COMPANY
Mr. Noble: Is the Canadian government represented before the international court at The Hague in connection with the Barcelona Traction Company and, if so (a) is the said company an affiliate of any Canadian company (b) what is the parent company (c) who are the Canadian directors of this company (d) what is the position of the Canadian government on the issues that have been raised in connection with such hearing?


Hon. Paul  Marlin@Secretary of Stale for External Affairs: No. (a) N.A.; (b) N.A.; (c) N.A.; (d) N.A.
Questions


C.B.C. PARLIAMENTARY CORRESPONDENTS- SALARY INCREASE
Mr. Pigeon: 1.	Does the Canadian Broadcasting Corporation intend to increase the salaries of its parliamentary correspondents in Ottawa and, if so, on what date?
2.	What will be the amount of such increase?
3.	If no such increase is contemplated, for what reasons are such increases withheld?


John B. Stewart: I am informed by the Canadian Broadcasting Corporation that under the terms of an agreement concluded with the Canadian Wire Service Guild provision is made for periodic increases in wages of Parliamentary Reporters. The last increase was effective February 1, 1965. The next adjustment takes effect on October 1, 1965.
The answer to part two of the question is 3 per cent. Part 3 is not applicable.


CIVIL SERVICE COMMISSION STAFF, MONTREAL
Mr. Pigeon: 1.	How many persons are employed in the office of the Civil Service Commission at 1165 Bleury Street in Montreal?
2.	Is the staff adequate to handle callers and correspondence efficiently?
3.	Has attention been drawn to extended delays in the answering of correspondence by this office?
4.	Does the government intend to increase the staff and, if so (a) when (b) by how many persons?


Maurice Lamontagne: I have been given the following answer by the Civil Service Commission:
1.	Thirty two.
2.	Yes, during periods of normal workloads. Because of the turnover of staff and the necessity of continually training new staff, it has been difficult to keep up to date in answering general inquiries during peak periods. However, special care is taken to ensure that inquiries about current competitions are handled within the deadlines.
3.	The Commission has issued instructions to its staff that inquiries are to be answered within a few days but it is aware that delays of more than a week have occurred when the number of callers and the volume of correspondence have been particularly heavy.
4.	The Commission is keeping the situation at the Montreal office under review and, if more staff is required, will seek authority to increase the establishment at that office.


BROCHURE ON CORRECT FLAG USAGE
Mr. Malheson: Have the Chaplains-General of the Canadian Armed Services given consideration to the prepara-

April 26, 1965
Questions
tion of a brochure which would be available upon request to churches and other institutions for the purpose of providing guidance as to correct flag usage in places of worship and elsewhere?


Hon. Paul Hellyer (Minister of National Defence):: No. The Department of National Defence provides guidance in so far as possible in reply to specific enquiries as does the Department of the Secretary of State.


POSTAGE STAMPS COMMEMORATING PRIME MINISTERS
Mr. Macquarrie: 1.	What Canadian Prime Ministers have been portrayed on postage stamps?
2.	What were the dates of issue and the number of stamps issued?
3.	Is it intended to issue a stamp in 1965 to commemorate the sesquicentennial of the birth of Sir John A. Macdonald?
4.	Is it intended to issue a stamp to commemorate Sir Winston Churchill?


Hon. Rene Tremblay (Postmaster General):: 1 and 2.
Prime	Denomi	-	Minister	nation	Date of Issue	QuantityMacdonald	10	June	29,	1927	148,034,000Laurier	50	June	29,	1927	26,627,000Macdonald	and	Laurier	120	June	29,	1927	5,273,000Borden	30	June	25,	1951	50,800,000King	40	June	25,	1951	49,953,000Abbott	30	Nov.	3,	1952	50,365,300MacKenzie	40	Nov.	3,	1952	50,868,100Thompson	40	Nov.	1,	1954	50,500,000Bowell	50	Nov.	1,	1954	50,800,000Bennett	40	Aug.	1,	1955	49,855,000Tupper	50	Aug.	1,	1955	50,480,000Meighen	50	Apr.	19,	1961	35,560,0003.	No. Sir John A. Macdonald has appeared on two Canadian stamps, one more than any Prime Minister other than Sir Wilfrid Laurier. The Post Office will honour in 1965, 1966 and 1967 the many events through which this country was led to Confederation, and in which the Fathers of Confederation played a prominent part.4.	Yes. The stamp will go on sale August 12, 1965, the anniversary of the enunciation of the Atlantic Charter, which was a result of meetings between Prime Minister Winston Churchill and President Franklin D. Roosevelt on warships in Placentia Bay, Newfoundland in 1941.


C.B.C. TELEVISION OUTLETS, NEW BRUNSWICK
Mr. Douglas: 1.	What television stations are now operated by the C.B.C. in the province of New Brunswick?

2.	What representations have been made either to the C.B.C. or to the government for the establishment of additional C.B.C. outlets in New Brunswick?
3.	Is consideration being given at the present time by the C.B.C. to establish additional television outlets in New Brunswick?
4.	If so, what cities are being considered for the establishment of such television outlets?
Hon. Maurice Lamonlagne (Secretary of
State): I am informed by the Canadian Broadcasting Corporation as follows: 1. The only C.B.C. owned television station is CBAFT at Moncton which provides the French network service. At present there is no C.B.C. owned English network station. A portion of the C.B.C. English television service is carried on privately owned stations which are affiliated with the C.B.C. network.
2.	Representations have been received from organizations and individuals asking for C.B.C. owned stations for both English and French language to provide the full C.B.C. network service.
3	& 4. Early in 1963 the Corporation made application to the Department of Transport for the reservation of a television channel for C.B.C. use in the Saint John-Fredericton area to provide the English language service. This was granted. In September 1963 a freeze was placed on applications for licences involving the extension of alternative television services. This was to be in effect until July 1, 1964.
However, with the appointment of the Advisory Committee on Broadcasting, the freeze has been extended until the Committee makes its report, as the terms of reference of the Committee includes an inquiry into the various means of providing alternate television services. Consequently, in the interim the Corporation has deferred action on its plans for New Brunswick.


FISHERIES DEPARTMENT OFFICE, BATHURST, N.B.
Mr. Douglas: 1.	Does the Department of Fisheries maintain an office in Bathurst, New Brunswick?
2.	If so, where is it located?
3.	What staff is employed in this office?
4.	What are the duties of the person or persons employed in this office?
5.	What is the salary paid to this person or persons employed in this office?


Hon. H. J. Robichaud (Minisier of Fisheries):: 1.	Yes.
2.	In the Federal building.
3.	A Fishery Officer Grade 3 and a Fishery Officer Grade 1.
4.	The Fishery Officer 3 has supervisory responsibility for fisheries conservation ad-
April 26, 1965

ministration in Gloucester and Restigouche Counties, N.B.
5.	Fishery Officer 3, $5,460; Fishery Officer 1, $4,260.


CBMT TELEVISION PROGRAM &quot;ACROSS CANADA&quot;
Mr. Howe (Hamilton South): 1.	Did CBMT television program "Across Canada" on December 3, 1964, deal with a faith healer, Mr. J. A. Desfosses and. If so, what was the general tenor of the remarks?
2.	Has the C.B.C. sanctioned the use of this program as advertising for Mr. Desfosses' clinics and, if not, will action be taken to prevent such use?


Maurice Lamontagne: 1. Yes, the general tenor of the item and of the following commentary was critical of his organization and of those public attitudes that make it possible for him to operate.
2. The Corporation has learned that without its prior knowledge or sanction the program has been the subject of publicity material and appropriate action is now being considered.


TRADE WITH JAPAN
Mr. Deachman: In each year since 1950, what has been the value of (a) exports to Japan (b) imports from Japan?


Mitchell William Sharp: Value of exports to Japan, and imports from Japan, for the years 1950 to 1964 inclusive, are shown in the attached statement.
Value of Exports to Japan, and Imports
from Japan, Years 1950 to 1964 inclusive.
Year	Domestic Exports Re-Exports	Total Exports	Total Imports1950	$ '000 20,443	$ '000 59	$ '000 20,502	$ '000 12,0761951	72,839	3,303	76,142	12,5471952	102,463	235	102,698	13,1131953	118,441	178	118,619	13,4751954	96,401	216	96,617	19,0041955	90,817	95	90,912	36,5861956	127,804	178	127,982	60,7291957	139,082	361	139,443	61,3961958	104,853	506	105,359	70,0921959	139,724	240	139,964	102,6691960	178,859	690	179,549	110,3821961	231,574	846	232,420	116,6071962	214,535	1,033	215,568	125,3591963	296,010	1,886	297,896	130,4711964	330,234	1,959	332,193	174,381
Questions


DEFENCE DEPARTMENT SCHOOLS, ALBERTA
[Stage Direction]
Question No. 78*-Mr. Lambert:
1.	What is the location of D.N.D. schools in the province of Alberta?
2.	How many teachers are on full time employment or part time employment in D.N.D. schools in the province of Alberta at (a) elementary school level (b) junior high school level (c) high school level?
Paul Theodore Hellyer: 1. Griesbach Barracks, Edmonton, Alta.; Camp Wainwright, Alta.; RCAF Station, Cold Lake, Alta.; RCAF Station, Namao, Alta.; RCAF Station, Penhold, Alta.
2. (a) 132, (b) 30, (c) 10.


JURISDICTION OVER DEFENCE DEPARTMENT SCHOOLS, ALBERTA
Mr. Lambert: 1.	Have any discussions taken place either at a departmental level or between representatives of the Department of National Defence and any local school authority in the province of Alberta with respect to the closing out of D.N.D. schools or the transfer of jurisdiction of such schools?
2.	If so, with respect to what schools and with what school authority?


Paul Theodore Hellyer: 1. and 2. Communications have been made between the Associate Minister of National Defence and the Minister of Education of the Province of Alberta with regard to the possibility of the province accepting responsibility for the education of dependant children of military personnel living on Crown lands.


DEFENCE DEPARTMENT PROVISION FOR STUDENTS, ALBERTA
Mr. Lambert: 1.	How many students are registered for full time schooling in the Department of National Defence schools in the province of Alberta?
2.	For how many students up to and including senior high school does the Department of National Defence provide payments to public school districts in the province of Alberta?
3.	For how many students up to and including senior high school does the Department of National Defence provide payments to separate school districts in the province of Alberta?
4.	Is provision being made by the Department of National Defence for the education of D.N.D. dependants in the province of Alberta other than included in the above categories and, if so, how many?


Paul Theodore Hellyer: 1. 4,497.
2.	434.
3.	99.
4.	No.

April 26, 1965
Questions


TELEVISING OF HOCKEY GAMES
Mr. Dube: 1.	Did the C.B.C. study the possibility of televising in their entirety all of the National Hockey League regular games on Saturday nights and, if so, what decision was arrived at and what reasons motivated this decision?
2.	Have a number of television viewers made representations favouring the televising of all of such regular games and, if so, how many such representations were received?
3.	During the 1964-65 season what programs took the place of the first period of the hockey game on the French and English networks?
4.	What popularity do these programs enjoy and how is their rating arrived at?
5.	Outside the hockey games, what other C.B.C. programs are not televised in their entirety?


Maurice Lamontagne: I am informed by the Canadian Broadcasting Corporation as follows: 1. The rights to televise National Hockey League games are owned by an advertising agency, not the C.B.C. The NHL clubs themselves refuse to allow coverage of full games during regular season.
2.	From time to time letters are received requesting full coverage of games and occasionally petitions are received from groups making the same request. The numbers of such letters and petitions have dropped greatly in the past two years since the starting time of the telecasts was advanced from 9:00 p.m. to 8:30 p.m. and video tape highlights of the first period included in the first intermission show.
3.	English Network, The Saint; French Network, Thierry la Fronde.
4.	By Neilsen Television Index for January 1965: The Saint, ranks 25th; Thierry la Fronde, ranks 20th.
5.	Live coverage of sports events, other than regular season NHL games, usually is for the complete game. It should be pointed out, however, that in the case of football, the other major sport which is telecast, the city in which the game is being played is blacked-out. This is not the case with hockey.


DREDGING PROGRAM, CLYBURN RIVER, N.S.
Mr. Muir (Cape Breton North and Victoria): As a result of the survey taken in the area, does the government intend to carry out a dredging program at the Clyburn River, Victoria County, N.S., for the benefit of the fishermen?


Louis-Joseph-Lucien Cardin: No.


BRAS D'OR ILLUSTRATION STATION
Mr. Muir (Cape Breton: North and Victoria):
Has the contract for the Bras d'Or Hlustration Station expired and, if so, will it be renewed and for what period?


Hon. Harry W. Hays (Minister of Agriculture):: The contract for the Bras d'Or Illustration Station expired in December 1964 and is not being renewed.


PAYMENTS TO CLERGYMEN, POINT EDWARD NAVAL BASE
Mr. Muir (Cape Breton: North and Victoria):
1.	With reference to QRCN. ART. 210.62, are officiating clergymen to receive the same pay as lieutenants and, if so, were the officiating clergymen at the Point Edward naval base granted a raise in pay retroactive to October, 1964?
2.	Were similar increases provided in 1962 and 1963 and were these increases made retroactive to officiating clergymen at the Point Edward naval base and, if not, for what reason?


Paul Theodore Hellyer: 1. Yes. If such officiating clergymen were employed at Point Edward Naval Base on dates between 1 Oct. 1964 and 28 Feb. 1965, they are entitled, upon application, to receive adjustment in respect to the recent pay increase.
2. No, since the Retroactive Remuneration Regulations were not applicable at the time of the 1962 general pay increase.


C.B.C. EMPLOYMENT OF CERTAIN PERSONS
Mr. Leboe: 1.	Has one or more of the following persons or groups ever appeared on CBC radio or television: Claude Leveillee, Jean-Guy Moreau, Herve Brousseau, Pierre Letourneau, Monique Leyrac, Les Cailloux, Les Cyniques, Jacques Blanchet, Renee Claude, Pauline Julien, Pierre Calve, Claude Gauthier, Joel Denis, Donald Lautrec, Jacques Desrosiers, Pierre Chouinard, Les quatre-20, Suzanne Valery, Louise Marleau, Andre Gagnon, Yvonne Laflamme?
2.	Were any of these persons or groups under contract with the CBC or any of its sponsors?
3.	Has the attention of the CBC been drawn to the advertised appearance of the above listed persons and groups at a gala concert sponsored by the Quebec separatist group RIN held at the Montreal Forum on March 3, 1965 and, if so, what is the CBC's policy with regard to the employment of such persons?
Hon. Maurice Lamonlagne (Secretary of
Sia-.e): I am informed by the Canadian Broadcasting Corporation as follows: 1. Yes.
2.	Yes.
3.	Yes. The persons referred to are free lance performers engaged on a per program basis. Performers are employed on the basis

April 26, 1965


René Tremblay: 1.	Four Postmasters are due to retire in 1965. While the Public Service Superannuation Regulations provide that a contributor ceases to be employed in the Public Service upon attaining sixty-five years of age, he may apply for an extension of employment. The four Postmasters will be given the usual notice of retirement and should any request for extension be received, it will be dealt with on its merits.
2.	Mrs. Maude A. McKinna, Alida, Saskatchewan; Mrs. Mary Rebecca Vaughan, Bromhead, Saskatchewan; Mrs. Mable Clare Cameron, Fairlight, Saskatchewan; Miss Eva C. Law, Gainsborough, Saskatchewan.
3.	The Post Office Department has not requested the Department of Public Works to construct any new postal premises in the riding of Moose Mountain during the fiscal year 1965-66.


HOSPITAL FACILITIES, CAMP GAGETOWN
Mr. Coales: 1.	Has Camp Gagetown any hospital facilities for the care of military personnel in the camp area?
2.	What are these hospital facilities, number of beds, military doctors and others?
3.	Is Camp Gagetown satisfied with the care provided in Lancaster military hospital, Lancaster, New Brunswick, for the ill soldiers who are sent there?
4.	Why does the Department of National Defence wish to build a military hospital in the Oromocto area?
Hon. Paul Hellyer (Minister of National
Defence): 1. Temporary hospital facilities are provided at Camp Gagetown in a 180-man Barrack Block that was converted for use as a military infirmary in 1957.
2. A 45-bed hospital with a military staff of 6 doctors, 9 other officers and nurses and 57 other staff.


HOSPITAL CONSTRUCTION, OROMOCTO, N.B.
Mr. Coates: Is the Department of National Defence taking part in the building in Oromocto of a hospital and, if so (a) are they associating themselves with a civilian hospital (b) has such action ever been taken by the Department before?


Paul Theodore Hellyer: The possibility of the Department participating in the construction of the proposed Oromocto Public Hospital, so as to provide 40 active treatment beds for military personnel serving at Camp Gagetown, is under study and discussion at this time with the Oromocto Public Hospital Planning Board, (a) The proposed Oromocto Public Hospital will be a civilian hospital, (b) No.


APPLICATION FOR HOSPITAL CONSTRUCTION, OROMOCTO, N.B.
Mr. Coates: Did the federal government make the first application for a hospital in the town of Oromocto?


Paul Theodore Hellyer: No.


CHANNEL DREDGING, MACDONALD'S POND, N.S.
Mr. Muir (Cape Breton: North and Victoria):
Is it the intention of the Department of Public Works during the coming season, to carry out experimental dredging at MacDonald's Pond, Indian Brook, Victoria County, Nova Scotia, to determine the advisability of maintaining the channel at this locale?


Louis-Joseph-Lucien Cardin: Yes.


MICHELE-MARIE SAUNIER
Mr. Thompson: 1.	Does Michele-Marie Saunier, a native of Metz, France, presently live in Canada at 5566 Decelles Avenue, apartment 7, Cote-des-Neiges, Montreal?
2.	Since when has this person been in Canada?
3.	Through what port of entry and on what date did she come into the country?
4.	Is she a naturalized Canadian and, if not, what is her present citizenship status and what type of visa does she hold?
5.	Was she recently involved with the law in the matter of a plot to destroy various United States monuments?
6.	What are the Canadian government's intentions in this matter?

April 26, 1965
Questions


Maurice Lamontagne: I am informed by the Department of Citizenship and Immigration and the Royal Canadian Mounted Police as follows: 1. The Immigration Landing Records of the Department of Citizenship and Immigration contain an entry which shows that a Michelle Sau-nier, born in Metz, France, was admitted to Canada as a Landed Immigrant at the port of Quebec on June 6, 1957. The Citizenship Registration Records of the Department of Citizenship and Immigration indicate that this Michelle Saunier was granted Canadian citizenship on November 28, 1963, at which time her address was given as 5566 Descelles Street, Apartment 7, Montreal 26, Quebec.
2. 3. 4. See answer to part 1.
5.	Yes. She has been indicted for conspiracy by the U.S. authorities.
6.	In addition to the charge referred to in No. 5, three charges under the Criminal Code have been laid by the Montreal City Police. The Canadian Government does not intend to interfere in any way with the due process of law.


FARM REVENUE, VILLENEUVE COUNTY, QUE.
Mr. Caoueiie: Mine
Akasaba Gold Mines Ltd.
Barnat Mines Ltd.
Bevcon Mines Ltd.
Canadian Malartic Gold Mines Ltd. East Malartic Mines Ltd.
Eldrich Mines Ltd.
Lamaque Mining Co. Ltd.
Malartic Gold Fields Ltd.
Marban Gold Mines Ltd.
Norlartic Mines Ltd.
Peel-Elder Ltd.*
Sigma Mines (Quebec) Ltd. Sullivan Consolidated Mines Ltd.
Total
*In 1962 and 1963 known as Elder-Peel Ltd.
3. The amount of assistance payable to a gold mine in a designated or calendar year is based on the number of ounces of gold produced and the average cost of production per ounce. Under the current formula, the amount is computed by adding 25 per cent to the product of the number of assistance ounces and the rate of assistance.

During the past five years, what has been the average revenue of farmers in Villeneuve county?


Mitchell William Sharp: This information is not available.


MINE SUBSIDIES, VILLENEUVE COUNTY, QUE.
Mr. Caouette: 1.	What amount was spent in subsidies of all kinds in connection with the operation of mines in the county of Villeneuve during the years 1962, 1963 and 1964?
2.	What amount did each of these mines receive for each of the same years?
3.	On what basis were such subsidies paid?


Hon. W. M. Benidickson (Minister of Mines and Technical Surveys):: 1. Financial assistance was provided to the lode gold mines in the County of Villeneuve for the designated or calendar years 1962, 1963 and 1964 under the provisions of the Emergency Gold Mining Assistance Act. A total of $9,542,470 was paid to 13 mines for the three years up to March 31, 1965.
2. The amounts pair to each of the respective mines in each of the three years up to March 31, 1965, is listed below.
1962	1963	1964$	$	$123,077	20,990	closed158,444	322,436	340,009254,977	292,419	278,744309,724	180,811	75,046796,568	767,157	649,641131,578	closed	closed247,142	295,525	347,936125,484	83,978	38,724127,266	155,068	182,030206,643	223,547	184,222117,073	23,865	118,748464,578	421,468	377,605391,798	410,977	297,1721,454,352	3,198,241	2,889,877
The number of assistance ounces is two thirds of the total number of ounces produced and sold to the Royal Canadian Mint in the calendar year.
The rate-of-assistance factor is two thirds of the amount by which the mine's average cost of production per ounce of gold for the calendar year exceeds $26.50. The amount of assistance payable per ounce increases as the average cost of production per ounce in-
April 26. 1965



creases from $26.50 to $45 but the maximum rate of assistance is $12.33.


DEFENCE DEPARTMENT EXPENDITURES, VILLENEUVE COUNTY, QUE.
Mr. Caouelle: 1.	What amount was spent by the Department of National Defence in the county of Villeneuve during the years 1962, 1963 and 1964?
2.	What sums were allocated to (a) capital expenditures (b) military purposes (c) other purposes?


Paul Theodore Hellyer: 1. and 2. This information is not readily available as accounts are not kept by constituency.


FRENCH LANGUAGE SCHOOLS AT MILITARY STATION
Mr. Caouette: 1.	What military camps or stations are located in English-speaking areas in Canada?
2.	Do these military camps or stations provide French language schools for children of French speaking Canadians on such camps or stations and, if so, in which camps are they provided?
3.	Are such schools under private, public or military direction?


Paul Theodore Hellyer: 1. It is not departmental policy to make public lists of all establishments in Canada giving the precise locations.
2.	No. However, where French-speaking schools exist within reasonable commuting distance from all military establishments, the Department of National Defence affords all French-speaking and also English-speaking occupants of its married quarters housing projects the right to attend French-speaking schools at federal government expense, i.e., costs for tuition fees and school transportation costs.
3.	The French-speaking schools referred to in part 2 are operated under civilian school boards as either private schools or tax supported schools, dependant on their location.


FARM INCOME, BRUCE COUNTY, ONT.
Mr. Loney: In the county of Bruce for the year 1963, what was the number of farms with a reported annual income of: $800-$1,000; $1,000-$1,500; $1,500-$2,000; $2,000-$2,500;	$2,500-$3,000;	$3,000-$4,000:	$4,000-
$5,000; 6,000-$7,000; $8,000-$9,000; $9,000-$10,000; and $10,000 plus?


Mitchell William Sharp: As far as the Dominion Bureau of
Questions
Statistics is concerned, this information is not available.


LOANS TO FARM IMMIGRANTS
Mr. Rondeau: 1.	Are there special rules in the federal Department of Agriculture allowing special assistance for conditional loans to farm immigrants from European countries and, if so, (a) does the department co-operate in providing such loans with the provincial Department of Agriculture (b) when was such a program initiated?
2.	Did any farm immigrants established in the province of Quebec from European countries benefit from financial assistance since 1960 and, if so, how many in each year?
3.	If such regulations exist (a) what is the amount loaned by the federal Department of Agriculture (b) what is the amount loaned by the Department of Agriculture of the Province of Quebec (c) are such loans jointly approved (d) through what agency are such loans administered (e) what is the interest on such loans (f) for how many years are such loans granted?
4.	How many European farm immigrants took advantage of such loans?
5.	Can Canadian farmers benefit from these loans?


Harry William Hays: 1. No.
2, 3, 4 & 5. Not applicable.


POPULATION OF DORCHESTER COUNTY, QUE.
Mr. Boutin: What was the population of the county of Dorchester for the years 1960-61-62-63-64, and (a) what was the male population (b) what was the female population?


Mitchell William Sharp: The population of the County of Dorchester at the 1961 Census of Canada was 34,711, consisting of 18,192 males and 16,519 females. There are no figures available for years other than the Census year 1961.


VALUE OF FARM PRODUCTION
Mr. Boutin: 1.	What was the total dollar value of farm production during the years 1960-61-62-63-64?
2.	For the same years, what was the animal and dairy production in the county of Dorchester?


Mitchell William Sharp: 1 and 2. Data not available on a county basis.


VALUE OF FOREST PRODUCTION, DORCHESTER COUNTY, QUE.
Mr. Boutin: During the years 1960-61-62-63-64, what was the value of forest products in the county of Dorchester?
Questions

April 26, 1965


Mitchell William Sharp: The value of shipments of the forest products manufactured in the County of Dorchester was: 1960; Wood Industries, $1,333,000; Paper and Allied Industries, nil. 1961; Wood Industries, $834,000; Paper and Allied Industries, nil. 1962; Not yet available at County level. 1963; Not yet available at county level, 1964; Not yet available at county level.


FARM INCOME, DORCHESTER COUNTY, QUE.
Mr. Boutin: What was the average income of farmers in the county of Dorchester, during the years 1960-61-6263-64?


Mitchell William Sharp: Data not available on a county basis.


RAW MATERIAL EXPORTS TO JAPAN
Mr. Howard: For each fiscal year since, and including 1960, what was (i) dollar value, and (ii) quantity by the appropriate measurement of (a) iron ore (b) logs by specie (c) coal (d) fish, and (e) other raw materials were exported to Japan?


Mitchell William Sharp: Full details of exports to Japan are published quarterly in "Exports by Countries", Catalogue Number 65-003, and are available for research in all public libraries and in the Parliamentary Library. The latest period for which these data have been published is January to December 1964.


ARDA EXPENDITURES IN QUEBEC CONSTITUENCIES
Mr. Laprise: What sums have been spent annually, under the ARDA plan, in the constituencies of (a) Beauce (b) Bellechasse (c) Bonaventure (d) Dorchester (e) Gaspe (f) Kamouraska (g) Levis (h) Matape-dia-Matane i) Montmagny-L'Islet (j) Rimouski, and (k) Riviere du Loup-Temiscouata?


Hon. Maurice Sauve (Minister of Forestry):: 1. Projects submitted by the provinces and expenditures made against each project are not recorded by electoral districts and, therefore, this detailed information is not available.


TENDERS FOR FEDERAL BUILDING, WALLACEBURG, ONT.
Mr. Loney: 1.	What are the names and addresses of the tenderers, "Tender for federal building," Wallace-burg, Ontario, December 16, 1964?
2.	What was the price quoted by each tenderer?
3.	Was the lowest tender accepted and, if not, for what reason?


Louis-Joseph-Lucien Cardin: 1 and 2. The John Hayman and Sons Company Ltd., London, $364,000; Ben Bruinsma and Sons Ltd., Chatham, $383,249; Bert Westley Ltd., Port Lambton, $387,837; Mac Construction Co. (Wallaceburg) Ltd., Wallaceburg, $390,000.
3. Yes.


TENDERS FOR RESEARCH LABORATORY, VINELAND, ONT.
Mr. Loney: 1.	What are the names and addresses of the tenderers, "Tender for Agricultural Research Laboratory ', Vineland, Ontario, December 23, 1964?
2.	What was the price quoted by each tenderer?
3.	Was the lowest tender accepted and, if not, for what reason?


Louis-Joseph-Lucien Cardin: 1 and 2. Noren Construction Limited, Toronto, $1,494,000; Neuman Bros. Limited, St. Catharines, $1,498,316; Eaglewood Construction Co. Ltd., Hamilton, $1,498,800; James Kemp Construction Ltd., Hamilton, $1,499,000; Inspiration Limited, Toronto, $1,514,750; Stewart Hinan Corporation Ltd., St. Catharines, $1,542,000.
3.	Yes.


QUESTIONNAIRE TO POST OFFICE PATRONS, AVONDALE, N.S.
Mr. MacEwan: 1.	Has a questionnaire been sent to the patrons of Avondale Post Office, Avondale, Pictou County, N.S.?
2.	What questions did the questionnaire ask?
3.	What was the reason for this questionnaire?


René Tremblay: 1. Yes.
2.	The question being asked is: "Do you prefer the retention of the present Avondale Station Post Office or rural mail delivery service from the Barney River Station Post Office".
3.	To determine whether the patrons of Avondale Station wished to retain the Post Office or accept rural mail delivery service through Barney River Station Post Office.
April 26, 1965	COMMONS


ARDA PROJECTS, QUEBEC
Mr. Laprise: Under the ARDA program, how many projects have been submitted by the Province of Quebec to date and how many have been accepted by the federal government?


Maurice Sauvé: 1. The Province of Quebec has submitted 410 projects to March 31, 1965. The federal government has accepted 389 of these projects and rejected 21.
[DOT] (2:40 p.m.)


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
John George Diefenbaker: I would direct a question to the Prime Minister in connection with remarks made by Hon. Gerin-Lajoie regarding agreements which could be made, as he contended, between any province and a foreign state. I ask the Prime Minister whether he is prepared to make a statement in this connection and to make very clear that any agreement made between a province and a foreign state cannot be sloughed off as a mere agreement, but that in point of fact such agreements constitute treaties.


Right Hon. L. B. Pearson (Prime Minister):: The position of the Federal Government regarding the negotiation and signing of treaties was set out in a statement issued on Friday last by the Secretary of State for External Affairs. If the right hon. gentleman so desires, that statement could be tabled and included in Hansard as an appendix. It sets out the position taken by the Government, and I have nothing to add to it at the moment.
However, in clarifying the position of his government, that is the government of Quebec, on this matter, Mr. Lesage is reported as having said in Toronto on Saturday night last-and I quote from the report-that his Government did not claim the right to make treaties but only to conclude agreements on matters within provincial jurisdiction. That is the end of the press quotation.
On both the federal and the provincial sides in statements made on this matter reference has been made to the recent cultural and educational entente between Quebec and France as a precedent which could well be followed. In this precedent, involving an intergovernmental exchange between France
DEBATES	395
Inquiries of the Ministry and Canada, the federal and provincial authorities co-operated to achieve the desired result for the province in a way which recognized that only the Federal Government can enter into treaty arrangements with a foreign power.
Having regard to this precedent, and having regard to the statement made on Saturday by Mr. Lesage, I am sure that any misunderstanding which might exist on this matter between the two levels of government can be cleared away, and steps are being taken to this end.


John George Diefenbaker: May I ask a supplementary question arising out of the answer given by the Prime Minister. He has quoted the Premier of Quebec. Does he agree with the Premier of Quebec that everything which took place resulted from a misunderstanding by the Secretary of State for External Affairs, and that in fact a treaty between countries involves only the question of sovereignty and the right to declare war? Does the Government accept that definition?
[DOT] (2:50 p.m.)
Furthermore, I would ask the Prime Minister this. He has stated that the cultural entente-that is a new description of a treaty -had been arrived at with the agreement of the federal authorities. Was Mr. Gerin-Lajoie right when he said that the Federal Government was informed of the agreement after it had been signed, and solely as a matter of information, by the French Embassy at Ottawa? He further says there was no request, in advance of the signing, for consideration by the Federal Government. Are those statements correct? I direct my question to the Prime Minister, because it is most unusual for the Secretary of State for External Affairs to be speaking on this matter and making a statement on behalf of the Government, as he did the other night.


Lester Bowles Pearson: Mr. Speaker, so far as the right hon. gentleman's last observation is concerned, I think it is quite proper for the Secretary of State for External Affairs, after consultation with me, to issue a statement on a matter which concerns treaty arrangements with foreign powers. With regard to the first part of the right hon. gentleman's question, I am in touch with Mr. Lesage and I am not at this moment going to comment on any statement reported to have been made by him until I get the exact text of that statement.

April 26, 1965
Inquiries of the Ministry
So far as the other part of the right hon. gentleman's question is concerned, I can assure him and anyone else who is interested that the Federal Government was indeed in touch with the Government of France with regard to this cultural and educational entente; that the negotiations between the provincial authorities and those concerned in departments of government in Paris were conducted with the knowledge and approval and co-operation of the Federal authorities, and indeed that there was an agreement by an exchange of notes between France and Canada as a kind of umbrella under which the other kind of entente was worked out.


Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, I wish to ask the Prime Minister a supplementary question.
If the federal government, as he stated, reserves the right to negotiate all its international treaties, will it be authorized also to change anything to the text of those same agreements which might be entered into by the government of the province of Quebec and foreign governments in the field of education?
In other words, does the federal government reserve the right to impose its conditions in regard to education, with respect to the terms and texts of the agreements to be signed between Quebec and foreign governments?


Lester Bowles Pearson: Mr. Speaker, only the
Federal Government acting for Canada can make international treaties with other countries. If treaties of that kind are made with other countries and they deal with matters under provincial jurisdiction, then under our Constitution those treaties cannot be implemented in respect of those matters without the approval of the Provincial Governments. That has been the custom for many years, with a great deal of experience in this field, by which the Federal Government negotiates treaties and then works out with the Provinces their implementation in so far as there are matters in those treaties which come under provincial jurisdiction.


Gilles Grégoire: Mr. Speaker, I wish to ask another supplementary question.
If the federal government does not feel authorized to change or add anything to the text of the negotiations concluded by the provinces, what then is the role of the federal
fMr. Pearson.!
government in the conclusion of those international treaties between the province of Quebec and other countries with regard to education?


Lester Bowles Pearson: Mr. Speaker, the role of the Federal Government is to carry out its constitutional responsibility as representing Canada, and to do that, in cases to which my hon. friend has referred, in co-operation with the provincial governments.


Some hon. Members:: Hear, hear.


Gilles Grégoire: Mr. Speaker, I should like to put a question to the Secretary of State for External Affairs-


Mr. Speaker:: Order, please. The hon. member for Calgary North.


Hon. D. S. Harkness (Calgary Norih):: Mr. Speaker, in view of the general confusion of mind which exists with regard to this whole matter, I wonder if the Prime Minister could outline the sequence of events in connection with it; by which I mean, who initiated and carried on the negotiations in regard to this matter, what documents did the Province sign, and when were they signed; and what documents, if any, did the Federal Government sign, and when were they signed?


Lester Bowles Pearson: Mr. Speaker, to get a complete reply it would be, I think, desirable to put this question on the order paper so that all the details can be made public, as indeed they should be made public. If my hon. friend would like to have a tentative reply, because we have not all the details here, my hon. friend the Secretary of State for External Affairs is, I think, in a position to give it.


Hon. Paul  Marlin@Secrelary of Slate for Exlernal Affairs: Mr. Speaker, perhaps by way of a supplement to the reply given by the Prime Minister I might point out that the Federal Government was, of course, aware of the desire of the government of Quebec with regard to an agreement covering cultural exchanges with France. The procedure to make effective this entente, this consensus was discussed by me with the Minister of Foreign Affairs for France, and in February the agreement between the Quebec government and France was signed. On the same day there was an exchange of notes, as the Prime Minister mentioned a moment ago, between the governments of Canada and
April 26. 1965

France which served as the basis for the arrangements entered into between Quebec and France.


Douglas Scott Harkness: A further supplementary. Was this exchange of notes, which the Secretary of State for External Affairs mentioned took place in February, before or after the Province of Quebec had signed an agreement, or something of that nature, with the Government of France?


Mr. Martin (Essex East):: The agreement on education in February was the first such arrangement concluded between that jurisdiction and the foreign power in question. This matter has already been covered by arrangements made on other occasions. For instance, the Province of British Columbia recently was anxious to engage in an arrangement with the United States for the sale of downstream benefits of the Columbia river; and as my hon. friend knows, he was a member of a government which conducted, on behalf of the owner of the resource in question, negotiations with the United States. The resource came within the control of the province and could only be dealt with with the approval of the province, but as that province did not have any locus standi with the government of the United States the only way in which a treaty in that matter could be reached was through the Government of Canada. A procedure similar to that was followed in this instance.


Douglas Scott Harkness: Mr. Speaker, notwithstanding the use of a few Latin phrases I think the Secretary of State has further confused the issue rather than shed light on it. Therefore I would ask him whether he could prepare a clearer statement in answer to the question I asked and give it to the House tomorrow if he is not in a position to give it to us today.


Paul Joseph James Martin: Mr. Speaker, I failed to recollect that my hon. friend was not a lawyer, and on that account I suppose I should not have used a foreign language. But "locus standi" has a well known meaning among lawyers, and I think it covers this situation aptly.


John George Diefenbaker: Mr. Speaker, in connection with the locus standi would the Minister say whether, as Mr. Gerin-Lajoie says, the fact is that the agreement was signed in Paris? "We did not even inform them"-that is the Government of Canada-"of the negotiations which were in progress", Mr. Gerin-Lajoie said. Is that correct or is it not? When
Inquiries of the Ministry the signatures of the province of Quebec and the Republic of France had been duly affixed it was then, for the first time, that the Government of Canada, through the Department of External Affairs, took an interest in the matter at all.


Paul Joseph James Martin: Mr. Speaker, I think we have already dealt with this aspect of the question.


John George Diefenbaker: No.


Paul Joseph James Martin: My right hon. friend is reading from a newspaper report, and I have learned from long practice in this House that before replying to a newspaper article it is well for one to have carefully read the article. I have not read the article to which my right hon. friend directs my attention; I will do so, and if I think it warrants a further reply perhaps I can give it later.


John George Diefenbaker: Does the Minister agree with the Premier of Quebec that in the remarks which were made by the Minister the other day there is a clear indication that the Minister did not know what he was talking about?
[DOT] (3:00 p.m.)


Paul Joseph James Martin: Mr. Speaker,
there may well be people who would feel that a minister often says things when he does not know what he is saying, but I can assure my hon. friend that in this instance that would not be a correct assessment to make of my position.


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I have a further supplementary question for the minister. Would the minister not agree that any so-called international agreements made by a province must in virtually all cases be subject to federal acquiescence because of the paramount constitutional right to the national government to prohibit, regulate and control entry to and exit from Canada of persons and goods?


Mr.   Marlin@Essex Easl: Mr. Speaker, my hon. friend has obviously studied the statement I made on Saturday carefully and his assessment is the correct one.


Hon. Marcel Lamberl (Edmonton Wesi):: supplementary question, Mr. Speaker. Does the Secretary of State for External Affairs now suggest by his use of language that the words "agreement", "treaty", "entente" and "consensus" are co-equal in meaning?

April 26, 1965
Inquiries of the Ministry


Mr.   Marlin@Essex Easl: No, Mr. Speaker, making powers be printed as an appendix to It is clear under international law, as my hon. Hansard. Does he have the consent of the friend, a good lawyer, knows, that they are House?
not always co-equal in meaning.	Mr. Diefenbalcer: I think it should be in


Mr. Lambert:: Then why is the minister Votes and Proceedings rather than in Han-using them as being co-equal this afternoon? sard.


Mr.  R. Gordon L. Fairweather@Royal: Mr. Speaker, I have a supplementary question on the point raised by the hon. member for Edmonton West. When this matter is being discussed or when further information is being tabled, will the minister tell us the difference between a treaty, an arrangement, an entente, a note and an agreement?


Gilles Grégoire: Mr. Speaker, I should like to put a supplementary question to the Secretary of State for External Affairs.
Could he tell us whether he has met or intends to meet the Quebec minister of education in order to discuss with him the jurisdiction of the Quebec government with regard to the signing of international agreements in the field of education?


Lester Bowles Pearson: Mr. Speaker, perhaps I can answer that question. I hope to have the pleasure of meeting the minister in question very shortly on this and related matters.


John George Diefenbaker: Are there other agreements too?


Mr. G. H. Aiken (Parry Sound-Muskoka):: Mr. Speaker, I have a supplementary question for the Secretary of State for External Affairs. Is the use of the word "entente" meant to indicate that some new kind of automobile is being imported into Windsor?


Paul Joseph James Martin: Mr. Speaker, the phrase "entente" was, of course, a phrase that was mutually agreed on by the Government of Canada and the Government of Quebec to describe a situation within the context of the over-all authority of the Federal Government under the British North America Act.
With regard to the question of automobiles, I might say that conditions in the city of Windsor at the present time with respect to automobile production reveal that employment is at its highest level, notwithstanding recent adjustments within that industry.


Mr. Speaker:: It was my understanding that the Prime Minister suggested that the press release dealing with the provinces and treaty
fMr. Lambert.]


Mr. Speaker:: In Votes and Proceedings, then?


Some hon. Members:: Why?


Some hon. Members:: No.


Gilles Grégoire: Mr. Speaker, would it not be fitting for the Prime Minister to read again that statement here in the House, on motions, so that opposition members may have the opportunity to make their comments in this regard?
On the whole, that statement is important enough to allow us to enlighten the government by acquainting them of our ideas on this matter. That would be valuable to everybody.


Lester Bowles Pearson: I could save time by sending all hon. Members a copy of the statement this afternoon, if that is desired.


Gilles Grégoire: Mr. Speaker, we would like the Prime Minister to afford us the opportunity to make some comments on this statement. That is why I am wondering whether he would not agree to revert to motions in order to read the said statement. In this way we would have the opportunity today or tomorrow to make our comments.


Some hon. Members:: No.


Lester Bowles Pearson: I would remind the hon. gentleman that the budget will be introduced at eight o'clock this evening.


[Stage Direction]
On the orders of the day:
Mr. R. N. Thompson (Red Deer):: settlement in relation to the critical situation in Viet Nam?


Hon. Paul  Marlin@Secretary of Stale for External Affairs: Mr. Speaker, the Canadian Government has been in consultation for a number of weeks now with a number of the governments represented at the Geneva conferences in 1954 and 1962. I hope some day soon to have the opportunity of discussing certain matters with Mr. Couve de Murville when I see him at the NATO meeting, and before that next week in Paris.


[Stage Direction]
On the orders of the day:
Mr. J. Chester MacRae (York-Sunbury):: should like to address a question to the Prime Minister. I trust he received the notice I sent him this morning. It is based on statements that were made over the Canadian Broadcasting Corporation on Thursday evening last by Senator Wayne Morse, the Democratic Senator from Oregon. He said in effect that the Prime Ministers of Canada, Great Britain and Italy had been patting the United States on the back with words of encouragement as to her war-making policies in Viet Nam, but they should send troops if they mean it; that there are no British boys dying in South Viet Nam; there are no Canadian boys dying in South Viet Nam, and there are no Italian boys dying in South Viet Nam.
My question is in two parts, and perhaps I should ask both to give the Prime Minister an opportunity to reply. First, will the Prime Minister advise the House if he did, in effect, commend the President of the United States upon his policy as far as Viet Nam is concerned? Second, would the Prime Minister consider replying to the second part of Senator Wayne Morse's statement in which he said that there are no Canadian boys dying in Viet Nam by pointing out that Canadians in the Gaza strip, in the Congo and Cyprus have been playing their full part in the never ending struggle for world peace? Finally, would the Prime Minister point out to Senator Wayne Morse that for three years in World War I and two years in World War II, Canada and Britain fought by themselves for the democratic freedom we enjoy?


Lester Bowles Pearson: Mr. Speaker, so far as the first part of the question is concerned, I think the Government has made its position quite clear. It supports the purposes and objectives of United States policy in Viet Nam. So far as the
Inquiries of the Ministry second part of the question is concerned, my hon. friend has answered it more eloquently than I could ever hope to do.


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Would the Prime Minister say whether the Canadian Government has been informed by the United States that the use of nuclear weapons is a possibility under circumstances which as yet have not been defined? Will he also say whether, in view of the very perilous situation in Viet Nam and the need for an expression of the views of Members of this House generally, one day this week may be set aside so that a discussion can take place on this matter and the House can express itself regarding events that have taken place as well as the build-up of United States activity since the Prime Minister gave his admonitory words and the suggestion about the pause that would refresh?


Lester Bowles Pearson: I have seen the reports to which my hon. friend refers, and I share his concern over those reports. However, I would point out that these are newspaper reports, and there is no evidence of which I know from official sources to confirm these reports. I think, Mr. Speaker, we have no reason to assume that the United States Government is contemplating that course.


Mr. Colin Cameron (Nanaimo-Cowichan-The Islands):: As a supplementary question, Mr. Speaker, would the Prime Minister inform us whether he or the Secretary of State for External Affairs made any inquiries in Washington as to the correctness of the definite statement in the press that this view had been expressed with respect to reserving the United States' right to use nuclear weapons?


Lester Bowles Pearson: This report appeared only this morning. Naturally we will follow it very closely and do our best to see if there is any basis for it, but I would like to emphasize that this is a newspaper report and there is no evidence that this is the policy or intended policy of the United States government.


Colin Cameron: Mr. Speaker, I am at a loss to understand why the Prime Minister did not see the report earlier, because I saw it in Dublin two days ago; the same report.

April 26, 1965
Inquiries of the Ministry


Lester Bowles Pearson: The Irish newspapers, Mr. Speaker, are very imaginative.


Mr. Sianley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a supplementary question to the Prime Minister relating to the questions and answers of a few minutes ago. Pending information from Washington as to the position of the United States with respect to its operations in Viet Nam is it not possible for the Canadian Government to declare here in this House of Commons its opposition to the use of nuclear arms in that situation?


Lester Bowles Pearson: I think our views with regard to the use of nuclear arms are well known.


Some hon. Members:: What are they? [Later:]


Colin Cameron: Mr. Speaker, my question is for the Prime Minister. In view of his statement a few moments ago to my colleague from Winnipeg North Centre, that the views of his Government with regard to the use of nuclear weapons in South Viet Nam and North Viet Nam were well known-I presume in Washington-would it be possible for him to take this House into his confidence and tell us what they are; for I for one do not know what the policy of this Government is in this respect, and I doubt if any other Member of the House knows.


Lester Bowles Pearson: Mr. Speaker, I might say that we hope and expect that no Government in any part of the world will ever feel that the use of nuclear weapons is required. Our own position in this matter is very much like that of the Prime Minister of the United Kingdom and his Government, whom my hon. friend's leader is visiting at the present time.


[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I would like to direct a question to the Secretary of State for External Affairs. Is he in a position to give the House an up to date report on the difficulties that are taking place between two members of the Commonwealth, Pakistan and India? The second part of my question is, is Canada using her good offices to try to resolve the present dispute between our two partners in the Commonwealth?


Hon. Paul  Marlin@Secretary of Stale for External Affairs: Mr. Speaker, as the hon.

Member knows, there have been a series of incidents on the northwestern boundary between the Indian state of Kutch and the Pakistan province of Sind. Canada is supporting the United Nations military observer group in India and Pakistan. There are 16 Canadians serving at the present time with that group, supported by one Caribou aircraft. The Government is following the situation closely because we are naturally concerned at any incidents which affect relations between two of our fellow members of the Commonwealth.


Wallace Bickford (Wally) Nesbitt: Is this Canadian observer corps in the State of Kashmir or in the more southerly part on the boundary between the two countries where hostilities are taking place?


Paul Joseph James Martin: I cannot say whether they are immediately, at this moment, in that particular vicinity. It is a mobile operations observer group, but I intend to seek that information.


[Stage Direction]
On the orders of the day:
Gordon Harvey Aiken: Mr. Speaker, I have a question for the Minister of Northern Affairs and National Resources. Does the Minister intend to make an official tour in the Soviet Union shortly; and if so, what is the purpose of the visit?


Hon. Arthur Laing (Minister of Northern Affairs and National Resources):: Mr. Speaker, it was not my intention to make an announcement at this time, but I am informed that today His Excellency the Soviet Ambassador made certain reference to it.
I very much appreciate an invitation I have received to spend two weeks in the Soviet Union as the guest of the Soviet Government and it is my intention to take, as a second representative of Canada, my Parliamentary Secretary, the hon. Member for St. Lawrence-St. George. In addition we will be taking four officers of the Department who are informed in northern matters in our own country. It has been indicated to us that we will have an opportunity of seeing the more northern reaches of the Soviet Union, and I hope this will be of benefit to us.


Gordon Harvey Aiken: May I ask a supplementary question, Mr. Speaker. Is there also an arrangement being made for a return visit by Soviet Officials to Canada?
April 26, 1965	COMMONS


Mr. Maclnnis:: What about the Member for Red Deer?


Arthur Laing: A return visit has been discussed, Mr. Speaker.


Mr. Speaker:: The hon. Member for Bran-don-Souris.


Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, mine was a supplementary question along the same lines.


[Stage Direction]
On the orders of the day:
Mr. W. H. Jorgenson (Provencher):: Mr. Speaker, I should like to direct my question, which is more in the nature of a request, to the Minister of Trade and Commerce and the Minister of Transport. I would ask them to convey to the Canadian Wheat Board and Canada's national railway the sincere appreciation of the people of Provencher who live along the Red river for their splendid cooperation when the people of that area were faced with a threatened flood which fortunately did not materialize to the extent expected.


Mitchell William Sharp: Mr. Speaker, I shall be very happy to pass along these words of congratulation and thanks, and may I express my hope that conditions will rapidly improve in the hon. Member's constituency.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Mr. Real Caouette (Villeneuve):: Mr. Speaker, my question was meant for the Minister of Transport, but since he is not in the house I shall put it to the Prime Minister.
Over the week end we all heard over the radio and on television and read in the newspapers the statement made by Mr. Dominique Joncas, president of the association of French-Canadian federal civil servants.
Now, Mr. Joncas is accusing the Department of Transport of purely and simply practising discrimination against French Canadians.
DEBATES	401
Inquiries of the Ministry Does the government intend to conduct an inquiry to find out if any employee of the Department of Transport is really being discriminated against at the present time?


Lester Bowles Pearson: Mr. Speaker, I read that statement in the press and I am taking it up with the Civil Service Commission and the Minister of Transport.



POLITICAL ACTIVITIES OF NATIONAL REVENUE CLERK IN HAMILTON, ONT.

[Stage Direction]
On the orders of the day:
Mr. William Dean Howe (Hamilton South):: I should like to address a question to the Minister of National Revenue based on an article which appeared in the Hamilton Spectator on April 22 concerning one John Beattie, a customs clerk who has set himself up as head of the Canadian Nazi party. Would the Minister care to comment on Mr. Beattie's employment position relative to this political activity?


Hon. E. J. Benson (Minister of National Revenue):: Could I take this question as notice?



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I should like to direct a question to the Prime Minister. Could he make a statement to the House now which might allay the worries of thousands of Canadian workers with regard to the large scale lay-offs as announced by Ford in Windsor last week, which are taking place as a result of the implementation of the Canada-United States automotive agreement, which statement would indicate that the matter will be dealt with quickly by the government?


Lester Bowles Pearson: Mr. Speaker, I am going to ask the Minister of Labour to deal with that matter.


Hon. A. J. MacEachen (Minister of Labour):: Mr. Speaker, on Thursday last, as hon. Members may recall, the progressive lay-off of some 1,600 workers between mid-May and August was made public by the United Automobile Workers and later confirmed by the Ford Motor Company. The lay-offs are for the purpose of modernizing and retooling the

April 28, 1965
Inquiries of the Ministry engine and transmission plants of the company at Windsor, and there is a strong possibility that when the procedure is completed total employment will be increased as a result of this operation. It is expected that the men will be rehired progressively commencing in the autumn of this year.
With your indulgence, Mr. Speaker, I should like to make a rather longer than usual reply to this question if I may do so.


John George Diefenbaker: Mr. Speaker, possibly we could revert to motions, because some members want to make observations regarding this matter.


Allan Joseph MacEachen: In that case I will reply directly to the hon. Member by saying that the announced lay-off covers 1,600 men and is to begin in mid-May and conclude in August. The employment situation in Windsor itself is very strong indeed, and the prospects for the re-employment of the first two groups in the Windsor area are very good indeed.
We have asked the president of the Ford Motor Company to come to Ottawa tomorrow morning to discuss this matter with the Government, and a meeting has been arranged for later in the week with the President of the United Automobile Workers for the purpose of discussing this matter.


David Orlikow: A supplementary question, Mr. Speaker. I should like to ask the Minister what consideration the Government has given to the proposal made to the Minister of Labour, the Minister of Industry and the minister for Windsor that a tripartite meeting of Government, management and labour be set up to meet continuously in order to deal with the problems that have arisen as a result of the agreement in the first instance. If such a meeting has not been called, as the deputy minister indicated it would be, is it because the management of the big companies have refused to participate in such a meeting?


Allan Joseph MacEachen: 
David Orlikow: I should like to ask the Minister how, then, the statement he makes now about things which will happen some day in the future jibes with the speeches the Minister and his officials have been making about labour-management co-operation, manpower policy, and how we are ready to move whenever it is required.


Hon. Michael Starr (Ontario):: May I ask a
supplementary question. The Minister in his statement concerning the laying off of 1,600 men mentioned two groups that would have a reasonable opportunity for new employment. I wonder if the Minister could tell us how many of the 1,600 are included in these two groups.


Allan Joseph MacEachen: Before replying to my hon. friend may I congratulate him on becoming the Opposition House Leader, and tell him I am relying in the future on his good work.
In reply to his question, it is my understanding that approximately 500 workers will be included in the first two lay-offs, for whom there is a good prospect that employment will be available in the Windsor area, particularly in the Chrysler operation.


Michael Starr: What arrangements are then being made for the 1,100 who will be laid off later? What opportunities for employment are available in the Windsor area for them?


Allan Joseph MacEachen: I have asked the officials of the National Employment Service at regional headquarters in Toronto to go to Windsor to help develop a program of adjustment in consultation with the Ford Motor Company. We are having a meeting tomorrow with the President, and later in the week with Mr. Burt. We are striving to develop a program that will meet this situation that will not fully develop until August. We do have considerable time to reach what I would hope would be a satisfactory solution.


Michael Starr: Is the Minister prepared then, under the circumstances, to declare Windsor a labour surplus area so the expenses of moving these workers to other areas where jobs may be available would be paid?
April 2E, 1S65


Allan Joseph MacEachen: As my hon. friend knows, Mr. Speaker, Windsor is a designated area. We hope, because of the expanding employment opportunities, it may be dedesignated very shortly. It is my suggestion that we ought not to consider moving workers from the Windsor area, an area of expanding employment opportunities.


Michael Starr: Can the Minister explain then why Windsor is a designated area now, when the minister for external affairs tells us that the situation was never as good as it is now?


Allan Joseph MacEachen: Windsor was designated an area of chronic unemployment two years ago, and because of improved employment it is likely that it will lose that undesirable status.


Michael Starr: You mean after the 1,600 are laid off?



WATER RESOURCES


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: As
one of the Members of this House who could be accused of having water on the brain, I wish to address a question to the Minister of Northern Affairs and National Resources and I do so with buoyant, expectant anticipation. In view of the Minister's recent attendance at the Pacific Northwest Trade Association conference, the topic of which was "Water, the Ultimate Resource", held at Portland, Oregon, and in view of the speech made by the Minister, which I understand is of continental interest, will the Minister at the first opportunity make a statement with respect to Canadian Government policy in connection with the proposals of the North American Water and Power Alliance?


Arthur Laing: Mr. Speaker, I thank the hon. Member for having spoken to me and informing me he was going to ask this question. It is in such general terms that I think I should not attempt to give an answer today. I made the speech in Oregon on April 12, and I will be happy to send him a copy. Thereafter, if there is any particular matter about which he would like to inquire, he can do so. Probably we would work more effectively that way.
Inquiries of the Ministry ADMINISTRATION OF JUSTICE



REPORT BY LAW SOCIETY RESPECTING ONTARIO SUPREME COURT JUDGE

[Stage Direction]
On the orders of the day:
Mr. Andrew Brewin (Greenwood):: I wanted to ask the Minister of Justice a question but I have not given him notice of it. Perhaps he would like to take this as notice. Has he received a copy of a report from the Benchers of the Law Society of Upper Canada concerning the position of Mr. Justice Landreville on the Bench of the Supreme Court of Ontario, and if so can he tell us what action, if any, he proposes to take on it?


Hon. Guy Favreau (Minister of Justice):: am willing to accept the hon. Member's suggestion and take this question as notice.



LUCIEN RIVARD-INQUIRY AS TO WHEREABOUTS

[Stage Direction]
On the orders of the day:
Gilles Grégoire: Mr. Speaker, I would like to ask a question of the Minister of Justice.
Has he any news concerning Lucien Rivard? Was he found in Spain or elsewhere?
Can the minister inform the house about his whereabouts, or can he tell us if the R.C.M.P. is making any headway in locating this individual who was sprinkling skating rinks in summertime?


Guy Favreau: Mr. Speaker, in answer to this question, I must state, as I already did, that it would not be in the interests of this house or of the administration of justice, if I made progress reports as it were, concerning the investigations in this matter, e (3:20 p.m.)



NATIONAL PARKS


[Stage Direction]
On the orders of the day:
Mr. R. R. Southam (Moose Mountain):: Mr. Speaker, I have a question I would like to direct to the Minister of Northern Affairs and National Resources. Last week the Government of Saskatchewan announced that the Federal Government was considering the possibility of a second national park in the Province of Saskatchewan. In view of the very high potential of the Moose Mountain

April 26, 1965
Inquiries of the Ministry parkland area, would the minister consider this area as a site for Saskatchewan's second national park?


Arthur Laing: Mr. Speaker, we are now engaged with the Province of Saskatchewan in looking over that area of the Cypress Hills which is part of Saskatchewan. It may well be that in the discussions which take place between our people and theirs, other areas of Saskatchewan will be looked at as well, and I shall certainly draw the hon. Member's words to the attention of our parks department.


Mr. Eric A. Winkler (Grey-Bruce):: As a
supplementary question, would the Minister say whether there is such a co-operative examination going on in the province of Ontario?


Arthur Laing: Mr. Speaker, for some time now I have owed the hon. Member a letter, and I dropped it in the mail box the other night. I think he will have it today and, with respect to the inquiry he is making regarding the Province of Ontario, I hope it is a satisfactory reply.


Eric Alfred Winkler: May I thank the Minister for this information. I have been looking for this letter for days and days, and it had not reached me as of 2.30 this afternoon.


Walter Gilbert Dinsdale: As
a further supplementary question, could the Minister inform the House whether the consideration of the Cypress Hills area in Saskatchewan extends across the boundary into Alberta, taking in that whole geographic area?


Arthur Laing: Yes, Mr. Speaker. On two or three occasions I have endeavoured to discuss this matter with the Minister of Resources for the province of Alberta, and on one occasion I have spoken with the Premier of Alberta. It would be our desire to incorporate the Cypress Hills on both sides of the provincial border. Some of our people are rather of the opinion that the more desirable portion is on the Alberta side, although I would not want to take sides as between two provinces; and, in the light of a review of the position of Wood Buffalo National Park we have not yet given up hope with respect to this particularly beautiful area of southern Alberta in our discussions with the Province of Alberta.


Robert Norman Thompson: Mr. Speaker, may I ask the Minister whether the

suggestion that the Cypress Hills area be incorporated into a national park has been discussed with Alberta apart from any barter arrangement regarding the Wood Buffalo National Park? In other words, has it been discussed as a potential program on its own merits?


Arthur Laing: No, Mr. Speaker, but I am quite certain that if Alberta had been desirous it could have been separated in the discussions.


Mr. P. V. Noble (Grey North):: Mr. Speaker, I too listened to the news release by the Minister in respect of national parks, and I would like to ask him would he specifically direct his attention to the excellent sites we have available in the Georgian Bay area?



INDIAN AFFAIRS


[Stage Direction]
On the orders of the day:
John Robert (Jack) Nicholson: Mr. Speaker, on April 12, the day before the recess, the hon. member for Yukon inquired about the composition of the interdepartmental committee which I had announced earlier was being established to conduct a comparative study of the promises contained in the various Indian treaties and surrenders as related to the laws respecting game and fish.
The committee has now been formed and its members are: Mr. E. R. Olson of the Department of Justice, who will act as chairman; Mr. J. S. Nutt of External Affairs; Dr. A. L. Pritchard of Fisheries; Dr. D. A. Munro of Canadian Wildlife Service; Mr. C. M. Bolger, Northern Affairs and National Resources and Chief Superintendent C. B. Macdonell of the R.C.M. Police. The Department of Citizenship and Immigration will be represented on the committee by Dr. G. C. Monture and Mr. L. L. Brown.
With this representation the Committee will comprise persons trained in the law, those concerned with the conservation of fish and game, and those having broad experience in matters relating to Indian affairs and to northern administration. The committee has already begun its study.


Mr. Frank Howard (Skeena):: As a supplementary question, Mr. Speaker, could the Minister give some indication how long these studies might take? Has he any estimate to make about that? Also, can he indicate
April 26, 1965

whether he intends to broaden the scope of the Committee's inquiry so as to include hunting and fishing rights of native Indians not covered by treaties?


John Robert (Jack) Nicholson: Mr. Speaker, I shall be glad to look into the second part of the question.
I really think the directions that have been given to the committee are quite wide enough to include such a study, but I will make sure that they are. With regard to the length of time the Committee will take, it is too early to make an announcement at this early date.


Mr. O. J. Godin (Nickel Belt):: I should like to direct a supplementary question to the Minister of Citizenship and Immigration in connection with the discussion of the Indian Claims Commission which took place a few minutes ago. Can the Minister advise the House whether the Indian population of the country will be represented on this commission?


John Robert (Jack) Nicholson: The answer to that question is yes. Dr. G. C. Monture, O.B.E. is a member of the Six Nations at Brantford. He taught school on the Six Nations Reserve early in his career and he has maintained a lively interest in Indian affairs. He has worked closely with the Indian-Eskimo Association of Canada ever since its formation.
During a distinguished career in the federal civil service Dr. Monture has represented Canada on a number of international conferences. For his valuable wartime services as Canadian executive officer of the Combined Production and Resources Board in Washington, he was honoured by being made an officer of the Order of the British Empire.
Dr. Monture is singularly well qualified by background, training and experience to make a significant contribution to the work of the interdepartmental committee.



DOMINION-PROVINCIAL RELATIONS REPORTED STATEMENT RESPECTING PROVINCIAL TAX REVENUES

[Stage Direction]
On the orders of the day:
Michael Starr: Mr. Speaker, I wish to direct a question to the Prime Minister. In view of the public statement made recently by the Canadian High Commissioner in London, England, to the effect that the provinces of Canada must have more tax revenue, I am sure the Prime Minister will agree that this is an infringement by the High Commissioner on matters which are
Inquiries of the Ministry the subject of Government policy and beyond the scope of the high office he holds, and I would ask the Prime Minister whether he has brought this to the attention of Mr. Chevrier.


Lester Bowles Pearson: Mr. Speaker, I think if my hon. friend read the text of the statement, especially that observation to which he refers, in the context of the speech itself, he would come to the conclusion that what the High Commissioner said was quite appropriate in the circumstances, that provinces need greater tax revenue and also that the federal Government needs greater tax revenue.


John George Diefenbaker: Is that a preview of tonight?


Michael Starr: In view of what the Prime Minister has just said, that this was an appropriate statement, can he tell us how the Minister of Finance is going to bring about tax cuts tonight?



TERMS OF REFERENCE RESPECTING OFFSHORE MINERAL RIGHTS

[Stage Direction]
On the orders of the day:
Mr. H. Russell MacEwan (Pictou):: Mr. Speaker, I have a question for the Prime Minister. In view of the fact that additional oil companies have applied for further licences for the exploration of mineral rights off the coast of Nova Scotia, could the Prime Minister advise whether the provinces have agreed on the terms of reference to the Supreme Court of Canada and, if so, when will this reference probably be made?


Lester Bowles Pearson: Mr. Speaker, it is my understanding that the terms of reference have now been submitted to the court, but I would like to look into that and I shall make a statement tomorrow.
[DOT] (3:3C p.m.)



INQUIRIES OF THE MINISTRY

[Stage Direction]
On the orders of the day:
David Réal Caouette: Mr. Speaker, I should like to put a question to the Minister of Justice.
At noon today I heard that yesterday the minister visited the riding of Villeneuve, one of the fine ridings of Quebec. Indeed, he seems to have been of some help to me.
On that occasion did his Liberal friends from the Malartic area convince him that I am sure to be returned at the next election?

April 26. 1965
Inquiries of the Ministry


Guy Favreau: age done by ice along the eastern shore of
Mr. Speaker, I must say that the hon. mem- Nova Scotia particularly in the Port Dufferin, ber for Villeneuve has been very lucky to Ecum Secum and the Liscomb areas? I underrepresent such a fine riding until now. How- stand that the extent of this damage is such ever, had he attended the meeting for the that it has now reached disaster proportions, nomination of a candidate for the next elec- I wonder what steps have been taken by the tion he would have been slightly disappointed officials to ascertain quickly and fully the by such enthusiasm on the part of Liberals, extent of the losses.


David Réal Caouette: A supplementary question, Mr. Speaker.
Did the minister not notice that half the audience were Creditistes?


Mr.  R. Gordon L. Fairweaiher@Royal: have a question for the Minister of Forestry; I have been curious about this since reading Le Devoir of April' 22. What are the results of the Minister's reflection on his political future, and did he find the necessary calm for reflection he sought on his recent trip?


Maurice Sauvé: Mr. Speaker, I thank the hon. member for being concerned with my fate; but in due time he will see what happens.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. Lloyd R. Crouse (Queens-Lunenburg):: I have a question for the Prime Minister. Has the right hon. gentleman received a telegram which reads as follows:
Fishermen of East Halifax county and Guys-borough county are suffering from heavy ice along Eastern coast of Nova Scotia. Respectfully request Federal vessels break up ice and fisheries department extend lobster season.
If so, will the Prime Minister take this matter up with the proper officials in order to provide this very necessary assistance to our Nova Scotia inshore fishing?


Lester Bowles Pearson: I am not sure whether I have received that telegram. In any event I will certainly take it up at once in view of what the hon. Member has said.


Mr. J. E. Lloyd (Halifax):: I have a question for the Minister of Fisheries; in a way it is supplementary to the question directed to the Prime Minister by the hon. Member for Queens-Lunenburg.
What steps are being taken by the Department to ascertain the full extent of the dam-


Hédard-J. Robichaud: Although I did not receive such a telegram as was mentioned a while ago by the hon. Member for Queens-Lunenburg


Lloyd Roseville Crouse: Mr. Speaker-


Hédard-J. Robichaud: I think the hon. Member wishes to intervene to say that the telegram he referred to was to have been sent to the Prime Minister. I agree. But representations were made to me earlier today by the hon. Member for Halifax and the hon. Member for Antigonish-Guysborough, and I have asked officials of my Department to investigate immediately to determine the extent of the damage and ascertain whether it has reached disaster proportions. I wish to make it clear that in such a case representations would have to be made by the Government of the Province.



INDUSTRY


[Stage Direction]
On the orders of the day:
Mr. A. D. Hales (Wellington South):: I should like to address a question to the Prime Minister. Before the Easter recess the right hon. gentleman said he would check the facts in order to determine whether the United States Government was collecting duty on Canadian cars being shipped into the United States, and also that he would give us a more comprehensive report as to the circumstances in which Canadian made Ford cars are being sold at lower prices in Buffalo that those charged to Canadian consumers.


Lester Bowles Pearson: We have taken steps to secure that information but I believe it has not arrived as yet. We hope it will be here within the next day or so.



SHIPPING


[Stage Direction]
On the orders of the day:
Frank Howard: I wonder whether in the absence of the Minister of
April 26, 19S5

Transport I could direct a question to the Acting Minister and ask whether he or the Department has any knowledge of an accident which befell the S.S. Northcliffe Hall over the week end, a ship which two officers quit before it left Montreal and which has been declared unseaworthy; and whether the Department will conduct an investigation into the allegations and complaints of the seamen aboard this vessel.
Hon. E. J. Benson (Minister of National
Revenue): I will take up this matter with the Minister of Transport, who will undoubtedly deal with the question on his return.



INCOME TAX


[Stage Direction]
On the orders of the day:
Mr. M. W. Martin (Timmins):: I have a question for the Minister of National Revenue. I regret not having had time to give him notice, but in view of his grasp of the affairs of his Department I am sure he will be able to answer without notice. Can the Minister inform me whether it is Government policy to have officials of the Income Tax Branch question the word of clergymen and other individuals with regard to charitable donations for income tax purposes, which in effect accuses them of making false declarations without proving the charge?


Edgar John Benson: It is not the policy of the Government or of the Department of National Revenue to accuse anyone falsely.


Murdo William Martin: I should like to take this matter up at ten o'clock, Mr. Speaker.
[DOT] (3:40 p.m.)



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Gilles Grégoire: Mr. Speaker, I should like to put a question to the Minister of Labour.
Since contracts let by the Canadian Government to Canadair, are now being carried out, does his department intend to intervene one way or another so as to put an end to the conflict between management and labour which has resulted in a strike of Canadair employees in Montreal?
Inquiries of the Ministry


Allan Joseph MacEachen: Mr. Speaker, it would be certainly an unwarranted intrusion into provincial matters for the Minister of Labour to enter a situation which is within the exclusive authority of the Province of Quebec.


Gilles Grégoire: Mr. Speaker, I should like to direct a supplementary question to the Minister of Labour.
Has he received representations from the United States government asking him to intervene in the settlement of the dispute at Canadair plants? Has the Minister of Labour or the Secretary of State for External Affairs received such representations from the United States government?


Paul Joseph James Martin: Mr. Speaker, I personally did not receive any such representations or request.



COMMONWEALTH RELATIONS


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, just a short question to the Prime Minister. Is there any foundation for the suggestion that negotiations have been going on or consideration has been given by the various countries of the Commonwealth to a postponement of the date of the Prime Ministers' Conference, which I believe was set earlier for the first or second week of June?


Lester Bowles Pearson: No, Mr. Speaker, I am not aware of any negotiations or discussions of any kind toward a postponement.



DEFENCE PRODUCTION


[Stage Direction]
On the orders of the day:
Alfred Dryden Hales: Mr. Speaker, I would like to address my question to the Minister of Defence Production, but in view of his absence perhaps the President of the Privy Council could answer it. Is it the intention of the Government to set up a central purchasing agency for all non-military cars for Federal use?

April 26, 1965
Inquiries of the Ministry


Hon. G. J. Mcllraiih (Presidenl of the Privy Council):: Mr. Speaker, I would prefer to take that question as notice.



ROYAL CANADIAN MINT


[Stage Direction]
On the orders of the day:
Michael Starr: Mr. Speaker, I wish to ask the Minister of Finance a noncontroversial question, and it is this. When is he going to make an announcement to the effect that the Mint will be prepared to take new orders for the coin sets?


Walter Lockhart Gordon: Mr. Speaker, I acknowledge that that was a non-controversial question, and I hope it is an indication of the kind of questions that we may have from the hon. gentleman from now on in his new position.


Michael Starr: There is no guarantee of that.


Walter Lockhart Gordon: I undertook, Mr. Speaker, that some time before the end of this month I would make a complete statement on the situation at the Mint, and I hope to do that before the end of this week.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Walter Lockhart Gordon: Mr. Speaker, I should like to reply to a question that was put to me on April 12 by the hon. Member for Medicine Hat concerning the effect of possible extensions in the hospital insurance plans of Quebec and Alberta to provide certain outpatient services.
While this is a subject which comes more within the responsibility of the Minister of National Health and Welfare, I can say that any such extension in services would require an amendment to the existing hospital insurance agreements before any costs could be shared. It is my understanding that no formal request for an amendment of the existing agreement has been received yet from the Province of Quebec, but such a letter was received today in the Department of National Health and Welfare from the Province of Alberta. There has not yet been time to consider the Alberta request, so I am not in a position to give a precise answer to my hon. friend's question.
[Mr. Hales.)



PENSIONS


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of Finance. Would the Minister say whether he will soon be introducing the legislation which he forecast on December 18 of last year concerning the supervision of private pension plans for employees who come under Federal jurisdiction?


Walter Lockhart Gordon: Mr. Speaker, I hope to be introducing not only that particular piece of legislation but others that I referred to even earlier. I am thinking particularly of the legislation respecting revision of the Bank Act.


Stanley Howard Knowles: A supplementary question, Mr. Speaker. Will the pension legislation be introduced at this session?


Walter Lockhart Gordon: Mr. Speaker, I hope all this legislation will be introduced at this session.



HATE LITERATURE


[Stage Direction]
On the orders of the day:
Francis Andrew Brewin: Mr. Speaker, I would like to redirect to the Secretary of State for External Affairs the question that I previously asked the Prime Minister, and inquire whether steps will be taken to refer to the External Affairs Committee of this House the subject matter of hate literature, upon which considerable work was done by the Committee at the last session.


Paul Joseph James Martin: Mr. Speaker, I am sure this is a desirable thing to do. I will see that the necessary arrangements are made through the Chairman of the Committee and that whatever other things must be done to make this possible are done.



THE SENATE


George James McIlraith: that the House go into Committee to consider the following resolution:
That it is expedient to introduce a measure to provide for the retirement, upon attaining the age of seventy-five years, of any person appointed to the Senate after the coming into force of the said measure; to extend the provisions of the Members of Parliament Retiring Allowances Act to
April 26, 19S5	COMMONS
such persons; to provide for the granting of an annuity to any person appointed to the Senate before the coming into force of the said measure who resigns his place in the Senate after having atained the age of seventy-five years or having become afflicted with a permanent infirmity disabling him from the performance of his duties; and to provide further for the granting of an annuity to the widow of a person who was granted such an annuity upon resigning his place in the Senate.
Motion agreed to and the House went into Committee, Mr. Lamoureux in the Chair.
[DOT] (3:50 p.m.)


George James McIlraith: Mr. Chairman, this proposed legislation envisages a situation whereby Senators will hold their places in the Senate until the age of 75 years is attained, rather than for life as at present. It is proposed that this situation be brought about by the following method: First, that any person summoned to the Senate after the coming into force of this legislation would be subject to compulsory retirement at the age of 75 years. Senators who are now holding their places in the Senate would not be interfered with. However, they would be given the option of retiring with an adequate retiring allowance, if they so wished, on attaining the age of 75 years, or if by reason of health they were unable to carry on.
In other words there are three distinct parts to the legislation. The first part would deal with the amendment of section 29 of the British North America Act to provide for the retirement at age 75 of persons summoned to the Senate in the future. Part two will consist of a series of amendments extending the provisions of the present Members of Parliament Retiring Allowances Act, which now is applicable only to members of the House of Commons, to those members of the Senate who are summoned to the Senate in the future. These persons will be subject to the same retiring allowance legislation as are members of the House of Commons at the present time.
The third part of the proposals envisaged in the legislation is a series of provisions which will apply to Senators already holding their places in the Senate or who are appointed to the Senate before the coming into force of the proposed legislation. These latter provisions will make it possible for Senators who attain the age of 75 years or who have become permanently disabled to resign their places in the Senate and be granted an annuity eaual to two thirds of their indemnity. Provision would also be made for an annuity to be granted to the widow of a Senator who during his lifetime had been granted an an-
DEBATES	409
Retirement Age for Senators nuity under the Bill. This would make it possible for such a Senator to resign his place in the Senate with the assurance that if he died, his widow would be provided for. Thus in effect the legislation would provide that future Senators would contribute to a pension scheme in the same manner as members of the House of Commons, and that persons now in the Senate would have an option of retiring with non-contributory annuities similar to those provided for judges.
Now, Mr. Chairman, having outlined the purpose of the legislation and the method being sought to be used, I do not think there is much I can usefully add at this resolution stage. If there are any questions, I will be glad to try to answer them, but I think the three general points are fairly clear, simple and direct, and that the more detailed provisions can be better examined when we see the legislation after the Bill itself is put before the house.


John George Diefenbaker: Mr. Chairman, may I say at once of this resolution that one might almost term it a fiddling with Senate reform. Indeed, it is simply a generality, that those appointed to the Senate hereafter shall retire at the age of 75, but that no action will be taken among the Senators today occupying that high and august position.
I recall immediately that when we were in office we decided that there should be an age limit of 75, effective for new appointments and for incumbents. It is of interest to recall that on April 9, 1962 I, as the then Prime Minister, moved for leave to introduce a Bill to amend the British North America Act in respect of the Senate. I stated, as reported at page 2607 of Hansard for that date:
The amendment which will be brought before the House will be restricted to retirement at the age of 75 years of all members in the other place, as well as those who may thereafter be appointed. Provision will be made for a retirement pension for all who are now in the Senate. A resolution to that effect will be placed on the order paper today. I think I should also make it clear now that in the event that this amendment is passed, no appointment of successors to vacancies resulting from the compulsory retirement of Senators under this legislation will be made until after the next general election.
That was the purport and summary of the measures we had in mind. We made it very clear that there would be no appointments made of successors to those who would be automatically retired until after the next election.
First reading of the bill was opposed by the hon. Member for Kootenay West, and the
410	COMMONS
Retirement Age jor Senators House divided on the question. The only members who voted against introduction and first reading of the bill were seven members belonging to the C.C.F. party of that day, the New Democratic Party of today.
The Bill, first reading of which was agreed to, stated simply as follows:
Section 29 of the British North America Act, 1867 is repealed and the following substituted therefor:
"A Senator shall, subject to this Act, hold his place in the Senate until he attains the age of seventy-five years or until the coming into force of this section if at that time he has already attained that age."
The the Bill was described. At the same time, Mr. Chairman, there was a bill to provide for the payment of annuities to persons who had served as members of the Senate, immediately after each and every Senator to which the act applied ceased to hold office.
[DOT] (4:00 p.m.)
Now, Sir, the legislation that is envisaged by the resolution is simply a milk and water substitute for the promises that have been made for so many years. One has only to look back a matter of 46 years ago when Senate reform was promised during the 1919 convention of the Liberal Party. I recall very well the election of 1925 when the then Prime Minister, Right Hon. W. L. Mackenzie King, stated that reform of the Senate was a first and a foremost course of action needed to assure democracy in this country. He said the same thing in 1926. I recall so well the promises of that day. He said he was going to substitute live Grits for dead Tories in the Senate. Some of those appointed were only half qualified on the basis of Mr. King's description.
Again in 1935 he was going to reform the Senate. You will recall that he stated that each and every Senator appointed would sign a declaration to the effect that he would voluntarily remove himself at any time that the Prime Minister decided. We do not know how many actually entered into that form of undertaking. On several occasions we endeavoured to secure copies of these resignations in anticipation but nobody was ever able to see them. We tried in 1944, as I recall, and again without success.
What of this measure now before us? Sir, this is simply a watered down type of reform.
It is interesting to read about the Senate.
It was to provide a sober, second thought. On many occasions throughout the years it has justified its existence. It has stood against an all-powerful House of Commons when

DEBATES	April 26, 1965
members of the Senate believed that bills introduced in the House of Commons, other than money bills, were not representative of the thinking of Canadians as a whole.
It is of interest that numerous articles have been written by pundits and others regarding this subject. I have before me an article written by Bruce Hutchison, who I understand has ambitions. I also understand that another pundit by the name of Blair Fraser has ambitions, and I would recommend to the President of the Privy Council and the Prime Minister a reading of the views of these two hopefuls. On the 27th of February, 1964, Mr. Hutchison wrote an article headed "Don't Shoot the Senate". He said:
Every old reporter must be saddened by the news that Mr. Pearson will reform the Senate, as if a beloved face were about to be changed beyond recognition by plastic surgery. The late Mr. Mackenzie King also undertook to reform the Senate in 1921.
Then he goes on to deal with the real question. I am citing Mr. Hutchison's view to the Prime Minister because Mr. Hutchison has become a monitor to the Government. He went on to say:
The real question, therefore, is not whether Mr. Pearson plans to change the constitution but whether he plans to appoint better Senators.
I am not going into the list of appointments that have been made unless, of course, I am provoked into doing so, but certainly in the appointments that have been made by the present Government there is no indication that the admonitions and advice given by that extracurricular adviser have been carried out. He went on to say:
The Senate could be a generator of basic ideas, an unprejudiced critic, a continual national assize instead of an elderly orphan.
I do not agree with that description of that body. It has been an institution that on occasions in the past has lived up fully to the great traditions and opportunities that those who established the Senate had in mind.
I mentioned too that Mr. Blair Fraser had expressed himself. At the moment I will go no further than to say that he also has expressed himself strongly in this connection. Possibly the only reference I may need to make to Mr. Fraser is that he has stated that in the past the Liberal Party has only made a halfhearted gesture toward carrying out the party's platform pledge of Senate reform, that it brought the matter before the Dominion-Provincial Conference in 1927, and that the conference got nowhere.
As I read the press of Canada it is evident that almost without exception this legislation
April 26, 1365

has been looked upon as simply a sham, simply a means of pretending there is going to be reform, without actually reforming. Indeed, the Toronto Star, never a very great critic of the Government, has stated:
The Pearson Government has shown a characteristic weakness for half measures in its proposals for Senate reform.
Sir, we were told that we were in a new era of new politics, that all those things that have gone before would be no more. The appointments that have been made indicate that in the field of Senate reform Canadians have not seen a new heaven and a new earth as envisaged by the Liberal party in 1962 and 1963. Indeed, the Canadian Press has dealt with this matter at some length in an article headed "New Politics Pays Off" in which it said:
The canniest politicians try to protect their rear by making their actions conform as closely as possible to their past pronouncements.
Then it deals with the appointments that have been made and it states that these appointments have been far removed from anything along the lines predicted or indicated in the past.
[DOT] (4:10 p.m.)
There has been no fundamental reform, but merely a glossing over of the situation on Senate reform. Today, the composition of the Senate is virtually two to one in favour of Liberal appointees, with three who claim some element of independence.
The matter of Senate reform has been a continuing subject of discussion throughout the years, something like the weather. I think the Prime Minister could continue the course we introduced of having a minister responsible for a portfolio, or several such ministers, in the Senate. I think there would be no particular objection taken by Canadians as a whole if two or three outstanding appointments were made from that body. When I was Prime Minister I tried, so far as possible, to have a larger measure of legislation introduced in the Senate than had been the case in the past. I feel that it would be most helpful if the Prime Minister would designate an ever increasing number of measures to be introduced in that body, so that the fullest possible examination could take place.
After all, this is a wonderful position today. It pays $15,000 a year, and the Senate sits from time to time. It should sit almost as long as does the House of Commons, if given an opportunity to discharge its responsibilities. I would suggest a measure of reform that could be made would be the designating, to a
Retirement Age for Senators greater extent than ever before, of the number of Bills to be introduced in that body.


Lester Bowles Pearson: I wonder if my hon. friend would permit me to ask him a question? While I certainly do not disagree with what he has been saying, would he approve a change by which money bills would be introduced in the Senate?


John George Diefenbaker: No, Mr. Chairman, I would not and I made that clear earlier. It would be quite impossible to designate the Senate as a place in which money bills could be introduced. If we were to follow that course we would deprive the House of Commons of its inherent and exclusive right to control money matters. Many other types of legislation could be introduced there and the fullest examination could take place. I, of course, make it very clear, and I am sure the Prime Minister agrees, that there would be no justification whatever for the introduction in that Chamber of measures in the nature of money Bills.
So far as what is introduced here is concerned, I do not think it is of great importance. It is a step, a faltering step. Those who are going to be appointed hereafter will automatically retire at 75. Those who are over 75 can stay if they choose. It is interesting that an appointment to that body seems to be a tremendous encouragement to longevity. Few, if any, of the Senators who are over 75 will retire. Why should they, when they are going to get the indemnity that today is available? Why was it that action was not taken to make effective the retirement at 75? Well, I can only conclude there was a fear on the part of the Government that such a measure might receive opposition in the other place. This is scarcely a sound qualification for the determination of Government policy.
This is simply legislation that makes a step forward, but it is innocuous in so far as being effective today is concerned. However, half a loaf is better than none. What is before the House is merely a shadow of what was contemplated 46 years ago at the Liberal convention. However, 46 years is not a long time to wait for the implementation of Liberal policy.


Stanley Howard Knowles: Mr. Chairman, I agree with the Leader of the Opposition that the proposal placed before the House is a case of fiddling with Senate reform. However, I was a bit surprised to hear that charge made by the Leader of the Opposition for I find it difficult to discover any substantial difference between the proposal now made by this Government
April 26. 1965

Retirement Age for Senators and the proposal that was made by his Government.


John George Diefenbaker: You had better read it over again.


Michael Starr: Read both of them, not just one.


Stanley Howard Knowles: I have read both, and as I recall both of them proposed retirement at 75. The only difference is that the Liberals propose that retirement at 75 shall be effective only after the Bill becomes law. On the other hand the Leader of the Opposition, when he brought in his proposal, suggested it be effective to all those appointed after the date on which he announced the proposed change.


John George Diefenbaker: You had better read it again.


Stanley Howard Knowles: At any rate, apart from any difference in the effective retirement date, that is the only reform either of them proposed, namely that some Senators retire at age 75. The Leader of the Opposition suggests that half a loaf is better than no bread at all. I am not so sure that this measure is to be regarded in that light. It strikes me that it is the kind of measure that might fool the Canadian people into thinking that something had been done to reform the Senate, and therefore it would be another 46 years before something might be done again.
It seems to me, Mr. Chairman, if we are going to consider the Senate at all, we ought to come up to date; we ought to recognize that we are in the 1960's. We ought to ask ourselves whether there is any place in our parliamentary institution for a group of people who are not responsible to the electors of this country. I can understand the thinking of the Fathers of Confederation 100 years ago. In that day they believed in democracy, but not completely. There was a lingering notion that in addition to those who are elected by the people there should be some elder statesmen, like the Members of the House of Lords of the United Kingdom, who would have the final say, a veto, a chance to check on the work of the elected Members. But, Mr. Chairman, we have moved a bit in the last 100 years. We no longer think that the elected people have to be vetoed, or checked, or supervised by people who are not elected. In our view the House of Commons, consisting of Members elected by the people of Canada, should be the final court so far as the making of laws is concerned.
[DOT] (4:20 p.m.)
I am putting this forward in a very low key. I do not need to shout our position from the housetops because it has been well known

throughout the years of the C.C.F. and since the founding of the New Democratic Party, namely, that we believe the Senate ought to be abolished. We think that any measure of reform, particularly so ineffective a measure as this, is hardly worth the time it takes us to deal with it.
I know the arguments in favour of having the Senate. With 23 other Members of the House of Commons I had the experience during the Christmas recess of sitting on a joint committee which had 12 members from the other place, and I know their contributions to the work of that committee were very useful. I also know that from time to time the Senate sets up interesting and useful committees. They had one on employment a while ago, one on the use of land, and one on aging. These are all good committees and their Honours do interesting and useful work. But this is the kind of work to be done by people appointed for that purpose, and ought not to be done by people who enjoy the same status that the elected representatives do, but with the additional right to veto legislation passed by the people's elected representatives.
Perhaps because in the United Kingdom the House of Lords cannot finally veto legislation, but can only delay its passage, or perhaps from the fact that in the United States the veto of the President can be overridden by a two thirds vote of the two houses of Congress, -whatever the origin-there is a notion held generally in Canada that the Senate can only go so far, that it can only turn down legislation once, twice or three times, or something like that.
However, the constitutional position is that the Senate could block a measure passed by the House, year after year, to the end of time. I know this has never happened. I know that the number of times the Senate has vetoed something passed in the House of Commons has been very limited. The outstanding example is the first old age pensions Act back in 1926, and two or three matters in the years from 1957 to 1963. I know the Senate does not do this very often, but it has, as a constitutional entitlement, the right to say no to what the people's elected representatives have decided. In terms of political theory, in terms of democratic practice, I think this is wrong, and that we should be taking a serious look at the position of a non-elected body in our parliamentary institution.
Another point sometimes made is that the Senators are there to protect minority rights, and in particular to protect provincial rights.
April 26, 1965

I suggest however that that is no more their function than it is the function of the House of Commons and also that of the courts. 1 further suggest that we have had the Senate for 98 years, that our Federal-Provincial situation is not all that it might be, and that having the Senate has not taken care of that problem.
It seems to me that all the various arguments for the retention of a second House, particularly a non-elected one, fall to the ground, and that what the House of Commons, should have placed before it on this occasion is not some measure of ineffective reform but rather a measure for the abolition of the Senate.
Hon. Members are aware I have such a bill on the Order Paper as a private Members' public bill, but it does not have quite the same chance of being reached, let alone the chance of being voted on, as a Government measure has.
As I have said, these arguments have been stated time and time again. They are frequently the subject of debate in high schools and universities. The subject has frequently come up here, and before we proceed with a measure of this kind I submit this is the kind of consideration we ought to be giving the subject.
I see, Mr. Chairman, that you are fidgeting a bit. Maybe it is just in my mind, but I wonder if perhaps you were thinking I was getting away from the subject of the resolution by talking about the abolition of the Senate, when all we have before us is a limited measure of Senate reform. But I want to make it clear that I do not agree with the position of the Leader of the Opposition, namely that by reforming the Senate we should be giving it more responsibility, more voice and more legislation. Members of the other place, fine ladies and gentlemen that they are, are not elected by the people of Canada and I do not think they should have the role in our parliamentary institution that is accorded them by our constitution-and I believe that is the change we ought to be making, namely the abolition of the Senate itself.
I should now like to say a word or two about the specific terms of the resolution, and particularly about the outline of those terms as given to us by the President of the Privy Council. I not that the Bill is to have three main parts and that the first part is to carry out the main proposal, to provide for an amendment to the British North America Act whereby all persons appointed to the
Retirement Age for Senators Senate after the passage of this legislation shall be compulsorily retired at age 75. As I have already said, that is an ineffective piece of legislation that does not really amount to anything, in the face of what ought to be done.
The second part of the proposed Bill is to make provision for those who, having been appointed after the coming into effect of this legislation will be compelled to retire at 75, to give them the rights and privileges that Members of the House of Commons enjoy under the Members of Parliament Retiring Allowances Act. I suppose if Members are going to be summoned to the Senate for a limited period of time, and if we are in an age when we feel that all classes of employment should have certain pension rights, then Members of the Senate appointed under these conditions should also have pension rights. But I want to object-and I ask the Prime Minister to listen to me on this-I want to object most strongly to what has been indicated as part III of the bill.
If I heard the President of the Privy Council correctly he said that provision would be made for those who are now in the Senate, and those who are appointed between now and the time the Bill becomes law, on reaching 75 to retire voluntarily on a pension that I understand will be non-contributory, a free pension equal to two-thirds of their present indemnity. The present indemnity of a Senator is $12,000 a year. Two thirds of that is $8,000 a year. We are therefore saying to any Senator who is now for example 50 years of age that for the next 25 years he gets an indemnity of $12,000, plus his $3,000 expense allowance; and then, at age 75, without having contributed one nickel to a pension fund he can retire, if he wishes to do so, on an $8,000 pension, plus provision for a widow's pension if he should die after he goes on that pension. [DOT] (4:30 p.m.)
Let me divorce all of this, however, from what I am saying about the Senate as an institution. I think it should go. Apparently I cannot carry that idea today, so I have to deal with the situation as it is. I feel that in present situation, when we in this house have a pension plan to which we contribute, when we have just set up a Canada Pension Plan on a contributory basis and when it is accepted by most people that pensions are theirs as a right, because they have earned them by working for them and paying for them, to pick out this particular group of men and women and say "You do not have to pay one cent for this; if you do us the favour of
414	COMMONS
Retirement Age jor Senators retiring so that we can appoint someone else we shall give you absolutely free a pension of $8,000 a year" is entirely wrong. If I have misunderstood the President of the Privy Council I hope he will correct me, but I understood him to say this was to be an annuity on a non-contributory basis equal to two-thirds of the present indemnity. Remember, this is to be paid to persons who may have been drawing this indemnity for 20 years. I think the Government should reconsider this aspect of its proposals by providing that if such pensions are to be made available, the people concerned should be asked to pay for them.


George James McIlraith: Could I ask a question by way of clarification? How would the hon. Member get such persons to retire at the age of 75?


An hon. Member:: Make it compulsory.


George James McIlraith: How would you get the Bill
passed?


Stanley Howard Knowles: The hon. Gentleman asks how the Government would get the Bill passed. In other words, this is a bribe. The Government is bribing the Senators to retire at 75 by offering them a free pension of $8,000. That is the import of the question which the President of the Privy Council has just asked.


George James McIlraith: I wonder whether I could ask the hon. Member to address himself to the question itself. These incumbents hold office for life. If they are to retire at 75, how do you bring about such legislation to retire them at 75?


Stanley Howard Knowles: Rather than be guilty of offering them a bribe I would let them live it out, because it seems to me this principle is wrong. When the pension plan affecting Members of the House of Commons was brought into being there were quite a few here, including the President of the Privy Council and myself, who had a number of years of service. We were given the right to elect to cover those past years of service but we had to make payments in respect of them.


George James McIlraith: Would the hon. Member not agree that we were in the position that we were not here for life? We had to face the electorate every four years or so. We are not holding our positions as Members of the House of Commons for life as a right.


Stanley Howard Knowles: It seems to me that the President of the Privy Council has strengthened the case I am making. We were in a

DEBATES	April 26, 1965
less favourable position, yet we still had to pay in respect of past service. The hon. Gentleman is saying that this is the only way he can expect the Senators to support this biU.


George James McIlraith: He was not saying that. He was asking a question.


Stanley Howard Knowles: True, the President of the Privy Council was only asking a question, but the implications were clear. I would think that if the Senators cannot be persuaded to retire because it is right in principle, no such offer should be made to them.
Even though I have said many critical things about the Senate as an institution, I know a good many of them over there; there are many decent, upright and honourable people in the other place and I think most of them would agree in principle that they should pay for their pensions, just as we have to pay for ours. If they do not agree with this proposition I suggest they should not be given this pension as a bribe.
Speaking of the general situation there is, of course, provision for widows' pensions. This is a matter which, I know, concerns some of the Senators. When a Senator dies there is nothing for his widow. But if the pension, even if it had to be paid for, included a widow's pension, Senators might take a different view toward it than is now the case. When I looked at the resolution I wondered whether it was in effect an attempt to bribe Senators to vote in favour of the measure, but even I was not suspicious enough to think that this was the case. However, the question asked by the President of the Privy Council makes it clear that this is a bribe as the Government sees it. The Government wants to get this measure through. It wants some of the Senators to retire at the age of 75 and it has decided that the only way to accomplish this is to offer them a free pension of $8,000 at age 75. In a day when we have not yet got the old age security pension up to $100 a month or $1,200 a year; in a day when we have not found it possible to increase the pensions of retired civil servants or retired employees of the Canadian National Railways; in a day when, despite various improvements, we are still struggling with the problem of providing adequate pensions for our people, I do not think this Parliament should approve offering to those who have enjoyed indemnities for a lengthy period of time the kind of annuity which is now suggested. I do not think this phase of the legislation should receive the support of the House
April 26. 1965

and I hope that before the Bill is brought down the Government will take a further look at this aspect of it.
We think this is a case of fiddling with Senate reform in an ineffective way. What should be done is to provide for its abolition so that our Parliament can be a truly democratic institution composed only of men and women elected by the citizens of Canada.


Robert Norman Thompson: I must say I am very disappointed by the resolution before us. I fail to understand why the Government should have taken such a "milquetoast" approach to this question. This is nothing but a minute and timid attempt to initiate a measure of Senate reform. Possibly the Government did not wish to come forward with proposals for a major overhaul; but why did it not bring forward at least one or two firm proposals indicative of a desire to correct some of the faults and shortcomings of the institution which we refer to as the other place? I urge the Government to amend its intentions, at least as they concern this phase of the resolution respecting the retirement of future Senators at the age of 75.
I have many good friends in the Senate and I highly respect many of the men and women who compose that body. I believe they have a worth-while contribution to make. From my conversations with them I would say that most of them have no objection to constructive proposals. They realize that the institution is antiquated. I cannot understand what pressures on the Government would result in the bringing forward of a bill which has so little backbone. If the establishment of a retirement age is a legitimate part of Senate reform, why not make it effective now? In recognition of the fact that no provision has been made for Senators who retire, it would be logical to make some provision. I do not go along with the hon. Member for Winnipeg North Centre when he says they have not made any contribution-they have not had a chance to contribute. His suggestion may be something for the future. But even if they were retired at $8,000 a year now, that would save the Government of Canada $7,000 a year per Senator.
[DOT] (4:40 p.m.)


Stanley Howard Knowles: That would cost $15,000 plus $8,000, or a total of $23,000.


Robert Norman Thompson: We are talking now about setting the retirement at age 75. I really do hope that the Government are not going to bring in a Bill that is as insipid as this resolu-
415
Retirement Age for Senators tion indicates it is going to be. I do not think this is the time for entering into any lengthy debate on Senatorial reform, although I find it very amusing to listen to the Leader of the Official Opposition as he talks about what he had once planned to do. Certainly if he had wanted to bring in Senatorial reform long ago, he would have done it while he was in office. I do not think there has been any Prime Minister of Canada who has made such political use out of the Senate as did the former Prime Minister, now the Leader of the Official Opposition. I do not think there is much argument as far as concerns what should have been done in the past, but we must have our eyes to the future.
I for one certainly am not in favour of the abolition of the Senate. I think the Senate has a very important role to play, and I think we must be very cautious in taking an irrevocable stand on saying that even an appointed Senate does not have a responsible role. There are some advantages in an appointed Senate that an elected Senate cannot have. But on the other hand, to suggest that the Senate in its present state of affairs is anything but an antiquated piece of machinery that no longer fills a very useful role, or that it should be perpetuated even until future Senators reach 75 years of age is not, I think, putting on coloured glasses; it is just putting on glasses that cannot be seen through at all-because certainly there are some changes that should be brought into the Senatorial picture.
I think that one of the tragedies and certainly one of the weaknesses of the present Senate is that it does not properly represent political opinion, thinking and action in the various Provinces. Certainly it has not brought into the Senate the best qualified individuals in Canada who might have been, if the Senate had operated on any other basis than being a political arm of the particular party which was responsible for government. I would have hoped that at this stage the Government would have taken some step which would have made Provincial representation in the Senate possible. It is the prerogative of the Federal Government to appoint Senators; but what a tremendous opportunity there would have been toward establishing a greater sense of political unity if the Government were to have set up a Senatorial Commission, perhaps of three people, one representing the Government, one from the Senate itself and one appointed by the Government of the Province which was concerned in any specific Senatorial appointment
April 26, 1965

Retirement Age for Senators How much stronger and how much more representative of Canadian thinking and public opinion the Senate would have been if there had been representation of Provincial Governments in the Senate.
I think another point that really is basic, and does not get into many of the more detailed problems that a complete Senatorial overhaul would require is action which would have eliminated the conflict of interest which now besets many of our Senators as they serve in the Senate. Why should they not be subject to the same restrictions, so far as a dual interest or a conflict of interest is concerned, as we are in this House? There was no better example of this than the recent Senatorial Committee on Banking which dealt with three different bills that would have set up or given authority to the establishment of three new banks in Canada. It so happened that the majority, if not all, of the members of that Senatorial Banking Committee were themselves members of the boards of directors of other banks already in existence. It seems to me that included in this legislation could very well have been the requirement that Senators have the same restrictions placed upon them which was intended to eliminate conflict of interest in so far as their public responsibilities are concerned.
I think that likewise if the Government had been concerned about the welfare of the Senators who hold appointments at the present time they might have set up some machinery by which a pension could have been provided for those who retire before they reach 75 years of age. In other words, there is nothing wrong at all with a contributory pension scheme for those who might be appointed under any new system of appointment.
I think another point that would have been very important here would have been to bring some attendance requirement into the Senate. All that is necessary now is that a Senator appear once in any session. Why should not Senators be required to fill a minimum requirement as far as attendance and participation are concerned, as we do in this House? These are small things, Mr. Chairman, that would not have required amendments to the British North America Act, which would have been a positive step toward an over-all Senatorial reform pattern *and which could have been included in this legislation. I believe such action would have indicated to the Canadian people that the Government really was sincere in its inten-
IMr. Thompson.]
tion of bringing in Senatorial reforms. As it is now, this insipid suggestion that is supposed to give benefit a little later on really has not any worth whatsoever to it. It is a sham or a cover-over in order to make the people of Canada think there has been some step taken toward reforming the Senate.
I am concerned, as one who believes that the Senate has a place, that the whole purpose and usefulness of the Senate in the eyes of public opinion has been weakened, and if continued in this way it might well lead us to a point where public opinion will demand the abolition of the Senate. I think this certainly would not be in the best interests of the country. I would like to see Senate appointments set up through a Senatorial Commission, not only so this Commission could consider the recommendations of the Provinces but also that Senators appointed would represent the Provinces as well as the Federal Government, and also making possible non-partisan political appointments. Men and women selected because of their own service to Canada and their own abilities on the Canadian scene in the non-political fields would make the Senate of much more worth. I am thinking of men in education, men in business, retired civil servants-yes, even retired military personnel-and men in the arts. All these people, if they had an opportunity to come into the Senate free of any partisan political influence, would make the Senate certainly a much more effective, much more efficient and much more useful institution.
[DOT] (4:50 p.m.)
Mr. Chairman, I would just close my remarks by saying that I hope the Government will seriously consider some of these suggestions before the Bill is actually brought before the House. The intended legislation could be strengthened, first of all by making retirement at 75 effective now, with adequate provisions to take care of those who may have no pension scheme under the present set-up; then by adding some of the other proposals which have been made. If this were done, then truly I think the Government would get the support of the House. As it is now I am concerned that they will not get support, even to take or bring into reality this very minute step which they are now suggesting. Certainly the Government has a great responsibility to those in their own ranks who have talked about Senatorial reform, as well as to others in this House who have made suggestions, but most of all it has a responsibility to the Canadian people.
April 26. 1965


David Réal Caouette: Mr. Chairman, this resolution is some sort of a draft for the bill which will be introduced here eventually.
I thought it would contain other provisions than the one setting the retirement age of senators at 75, giving present incumbents the choice of retaining their seat even if they are past the age of retirement or to retire with full benefits as far as pension and other benefits are concerned if they have reached the age of 75.
How many senators are 75 or more at present? I should like to have a reply from the President of the Privy Council on that point.
On the other hand, I would suggest that if the bill to be introduced provides for retirement of senators at the age of 75, that provision apply to everyone whether one wants to retire or not. I even find that 75 is a rather advanced age; it should be 70. Considering the difficult task which they have to fulfil in the other house, I believe that when they reach 70 years of age, they have worked long enough to be entitled to retirement.
This would enable us to have a younger Senate who would understand better present day problems, not only with regard to one part of the country but concerning Canada as a whole. A little while ago the Leader of the Opposition (Mr. Diefenbaker) was telling us that he and his government had introduced a bill for that purpose a few years ago when there were 208 Conservative members in the House of Commons and that the Liberals had then voted against this measure as well as the New Democratic Party members, the CCF at that time.
The Liberal government is now introducing such a bill and the opposition does not know whether to vote for it or against it.
This is a clear evidence of the lack of seriousness of the two political parties who succeeded each other at the head of the government of Canada since Confederation. It is nevertheless the Canadian people who pay for the nonsense indulged in on either side with regard to the Senate, the senators and the setting of a retirement age.
A little later, the hon. member for Winnipeg North Centre (Mr. Knowles) said that himself and his party were in favour of the abolition of the Senate purely and simply.
Considering the present constitution and structure of the Senate, I believe that its abolition would be in no way prejudicial to the Canadian people but, on the contrary,
Retirement Age jor Senators would be greatly profitable because we waste a lot of time while waiting for the decisions to be made in the other place.
For instance, we would support Senate reforms which would make for a more representative Senate. For instance, agriculture should be represented by one or more senators coming from the farming community. We would need representatives of the unions to speak for the working classes in Canada; representatives of professional groups such as teachers, lawyers, physicians, engineers, economists and industrialists. There should also be in the Senate someone to speak for our young people, someone who could defend the interests of that large and important segment of our society. There should also be representatives of women's associations, not necessarily representatives of Liberal, Conservative or Creditiste women's associations, but simply representatives of women's associations in Canada. Also, in the religious community, the various religions existing in Canada should have respective spokesmen in the Senate. Then, Mr. Chairman, to my mind the Senate would no longer be a haven for worn-out politicians, but rather a dignified and efficient assembly representing the whole people of Canada.
That is the provisions for Senate reform that I would have liked to see in this resolution instead of the mere fixing of an age limit of 75. I am convinced that at 75 years of age, one is too old to be a senator. Surely, there are good senators; I have nothing against any of them. But what we disapprove is the principle according to which, at the present time, the Senate is made up and organized and according to which senators are appointed to the upper chamber.
Those are the remarks I wanted to make concerning this resolution which provides for the retirement upon attaining the age of
75 years, of members of the Senate.
We suggest that the age provision be changed to 70 years when this bill is being drafted. But if it is imperative to fix the age limit at 75 years, if a senator is 77 years old when this bill is passed, he should then retire on pension, if he wants to. That has been agreed to since last year.
Mr. Chairman, we are for a reform of the Senate. We do not approve of the Senate as it is now constituted.


Norman Platt Lambert: Mr. Chairman, in opening my brief remarks this afternoon I have found
April 26. 1965

Retirement Age /or Senators that there have been some rather wide-sweeping condemnations of the other place, and I am just wondering whether those remarks would have been quite as sincere if some representatives of the Parties in question had themselves been members of the other place. I think that some of the criticisms made of the other place are quite equivocal, and it is because there are particular hobby-horses or axes to grind that we hear such sweeping condemnations.
In a democracy I think it is absolutely essential that we protect the interests of the public from the tyranny of the temporary majority. Majorities are not always right, and I think it is essential that we do have an opportunity for review. In a democracy efficacy is not necessarily the byword. If it does sometimes take a little longer to get something through, certainly that so-called sober second thought is worth while. The Senate is an essential portion of Parliament and I find it absolutely ludicrous and, frankly, presumptuous of Members of this House, who after all form only one third of the constituents of Parliament, to offer such criticisms. According to our constitution, Parliament is composed of the Crown, of the Senate and of the Commons, and we owe one another respect, in accordance with our constitution, as constituting the Parliament of this country. I think it is presumptuous on the part of individuals in this chamber roundly to condemn the other constituent of Parliament, merely because it is fashionable to do so. Certainly suggestions for the improvement and modification of Parliament can be made, but if it is acceptable that we have every right roundly to condemn the other place they in turn have the right to condemn us, without mitigation. In that event I think hon. Members of this House might find themselves somewhat aggrieved if the other place, either as individuals or collectively, were to censure this House continually. I believe that we as a constituent of Parliament owe a certain respect to the institution of Parliament within this democracy.
[DOT] (5:00 p.m.)
Having said that, I think that certainly some modifications in the constitution of the other place may be suggested. The hon. Member for Villeneuve (Mr. Caouette) said that his group would consider the age of 70 as a limitation on membership in the other place, because after that a man may be too old. Will he apply the age of 70 to this House?


David Réal Caouette: Would the hon. Member permit a question?


Norman Platt Lambert: No, I will deal with it later.


David Réal Caouette: Why not? Just one question.


An hon. Member:: Are you afraid?


Norman Platt Lambert: No, I am not afraid. I do not care what age limit the hon. Member wishes to impose upon the other place, but if he says they have no right to be members of the other place because they are too old-


David Réal Caouette: I never said they have no right.


Norman Platt Lambert: Well, the implication is that they are too old. I am dealing with the criticism and the hon. Gentleman indicated it is the intention of his Party to advance an amendment calling for retirement at the age of 70. I am subject to correction but I thought that was the burden of his remarks. He said that the purpose of setting the limitation of the age of 70 was that by that age a man had gone far past his prime and it was time he retired. If that sort of criticism can be levelled at the other place, it is equally opposite in this House; but I would certainly think it would be most unfair to suggest that because a man had reached the age of 70 he could no longer qualify for membership in this House. Many a world leader and many a worthy leader of this House in years gone by would have found himself cut off when he was really in his prime in the face of such a limitation.
It is true that we have applied an arbitrary yardstick in other fields which compels retirement at the age of 65, but with the advance in science today I am not too sure that is a really valid concept. I think that compulsory retirement at age 65 is a depression complex yardstick, imposed because of a desire to make way for younger persons on the ground that they need the jobs. I cannot fully accept that proposition. Certainly many younger men may be impatient about replacing their elders but I would suggest to hon. Members that we must be very careful about the imposition of an arbitrary retirement age.
There is of course a norm of sorts that is applied in our courts, such as the Supreme Court of Canada and our Superior Courts, which results in the retirement of judges at age 75, the age that is set forth in the resolution. I suppose one might accept the age of 75 as a yardstick, provided this fact is known before appointment to the office. Certainly I think it is more arguable that it is a more
April 26, 1965

legitimate age for retirement than age 70 or age 65, in that I think it should apply in this House as well as in the other place.


David Réal Caouette: Will the hon. Member permit a question? There is all the difference in the world between the two Houses.


Norman Platt Lambert: If the hon. Member is trying to make the point that superior intellects and superior beings are the prerogative of this House as opposed to the other place, I certainly do not find that argument acceptable.


David Réal Caouette: Will the hon. member permit a question?


Norman Platt Lambert: The hon. Member can make his speech again during the next round. Having regard to the limitations of the resolution, I think the resolution puts forward a just proposal to members of the other place, in that those who are now members of the Senate and may wish to retire at the age of 75 can do so on the basis of a pension of some kind. After all, they were appointed to the other place on the understanding and in accordance with the tradition that their appointments were for life, and I think that many of them have made changes in their lives, to their prejudice. I know some members of the other place who have made changes in their lives, to their prejudice, and it would be unfair to say to them now that they must go, and go without a pension. In all fairness I do not think we can take that attitude. I am expressing a personal point of view when I say that.
If hon. Gentlemen of the other place are placed under a contributory pension scheme, it seems to me that this is also fair. A pension scheme or retirement pension is part and parcel of mandatory retirement in any line of endeavour today, unless one is self-employed, in which case one is encouraged to provide for his own retirement on an annuity basis. I would say that such provision must be made for hon. Members of the other place if we are going to get men from all walks of life. In that regard may I say that I do not think the other place should be preserved for retirement from this House. I think the composition of the Senate has perhaps been somewhat limited. The ins always say it is quite all right to appoint those of one's own political party but when they are in the outs it is a different story. I could use the old adage that there is no greater traditionalist or reactionary than the rebel who has assumed power. In my view there should perhaps be wider representation in the other
Retirement Age for Senators place, but should a man be disqualified simply because he belongs to a certain political party? In the other place there have been and are at this time eminent representatives of various types of organizations and interests, and their appointments have been made on that basis rather than the fact that they have been members of a particular party.
[DOT] (5:10 p.m.)
Somehow or other I fail to see why, because an hon. Member has reached a certain stage of service in this House and it is felt perhaps he should take a less demanding role, and is then appointed to the other place, the position of the other place suffers thereby. I do not understand this glib assumption that because one is a politician or has been a Member of this House he is therefore some sort of second class or second rate citizen. I do not understand why he should be immediately suspect when he goes to the Senate because he has taken part in the deliberations of this House. There is the suggestion that the Senate is composed of retired ward-heelers or suspect politicians. I reject that theory entirely. We have seen very able men who have retired from the hurly-burly, the more demanding pace of this House, and who have gone on to render great service to Parliament.
Personally, I should like to see more Government business initiated in the other place. Personally, again, I should like to see Members from the other place represented on the treasury benches, as is done in Westminster. They have Members of the House of Lords, up to one third of the Cabinet, participating in the Cabinet. There are other Ministers or Parliamentary Secretaries who cover for them in the House of Commons. I feel this is quite legitimate. I should like to see more Members from the Senate participating in the Cabinet. I am expressing a personal point of view. I should like to see as well more of the non-financial business of the House start in the other place.
Now, Mr. Chairman, I think that in the main this measure meets with general approval of the House. There may be matters of detail-I said "general approval of the House", but there are some hon. Members who feel that the other place should be abolished. Well, perhaps somebody in the other place might stand up one of these days and say the House of Commons should be abolished. I do not know that anything is gained by debate at this level. I therefore limit my discussion at this time. When we
April 26, 1365

Retirement Age for Senators are able to see the Bill there may be some provisions which will require further discussion.


Frank Howard: It will be recalled, Mr. Chairman, that I had some comments to make about the Senate in the immediately preceding session during the course of the consideration of the estimates. I do not want to go over that ground again at this time. However, we have before us a specific measure upon which I should like to make a few comments. The gist of it is that Senators should be retired at age 75. Whether or not this measure is to apply in the future or retroactively to those who are there now is really immaterial to the main point.
This leaves me in a bit of a quandary as to how to approach this resolution, because it has always seemed to me that as soon as a person was appointed to the Senate he became retired whether he was 35 or 45. We only have to look at many of the recent appointments, both by the Government now in office and its predecessor, to see that that is exactly the case. People appointed to the Senate suddenly slip into oblivion, and are content to live the easy life of retirement and get a decent income for the rest of their lives. It seems a bit ridiculous to be talking now of putting into effect the retirement plan at age 75 when these gentlemen over there are retired almost as soon as they enter the hallowed halls of the other place. People refer to the other place but, unfortunately, I cannot bring myself to referring to it in this way. This has always seemed to me to be similar to lawyers calling each other learned gentlemen, with a sneer on their face. I would sooner refer to it as the Senate, which is what it is, and not try to upgrade it or degrade it by referring to it as the other place.
The implication of the measure before us is that a person who is appointed to political office ceases to be of any value in that office once he becomes 75. Age, as was mentioned by the hon. Member for Edmonton West, seems to be indicated as a factor which impinges upon the faculties. Perhaps the thought is that one becomes relatively valueless after 75 and therefore a retirement age should be set. If this is the thought behind the measure, then I submit we should have before us a companion measure to retire Members of Parliament at age 75. After all, we place a limit on the other end. We say that people below the age of 20 are not competent enough, do not have enough acumen, to sit in this place. I feel therefore we

should place a limit at the other end and have before us a companion piece of legislation. The application of it is identical. It does not really matter that people get to one place by the political selection of the Government in office and to the other place in the normal process of election. The implication is that a person at age 75 is not competent enough to sit in the legislative bodies of this nation. We should I submit make that applicable to this House as well as to the Senate.
One of the parts of the measure now before us in the resolution constitutes a bribe, because what we are in effect attempting to do is to offer the Senators who are there now a bribe of $8,000 a year if they will retire at age 75. They do not have to make any contribution toward this pension. A Senator who is now 50 years of age can attend one session of the Senate once every two years and at age 75, without contributing a single cent, can leave the Senate and draw $8,000 a year. If there is going to be an annuity or something of this nature, to induce Senators to retire at age 75, then I submit it should be a contributory plan. They should avail themselves of the Members of Parliament retirement allowance and contribute just the same as the Members here contribute to a pension, and just as Senators who are appointed in the future will be required to contribute. To ask Parliament to grant $8,000 per year as a gift to any Senator who wants to retire at age 75 is going a little bit too far, being a little bit too lenient, with the taxpayers' money.
Heaven knows, a Senator receives a good pension as it is now, without tossing this extra amount of money down the drain. I think it is not simply a question of retiring Senators in the future at 75, as much as it is offering to the Senators at the moment a bribe to retire at age 75 if they desire to do so, or offering a potential bribe in the future if they will only give speedy passage to this particular measure which is being presented to us.
[DOT] (5:20 p.m.)
There has been a great deal of discussion about reform of the Senate and about the necessity for having respect for it, but I submit that respect is a thing which must be earned, and if the Senate does not have much respect for itself I do not see why it should require other people, including Members of this House, to have respect for it.
April 26, 1965	COMMONS
To me the Senate, by its past actions, is beyond reform. It is not possible to reform it, no matter how much we juggle the rules. Recently I read perhaps as decent and succinct an analysis as one could find of the Senate called, "The Senate of Canada-a Political Conundrum," by John Napier Turner. Incidentally that is the same name as the Parliamentary Secretary, the hon. Member for St. Lawrence-St. George. Whether it is the same person or not I could not say, but I am sure if it is not he will stand up in his place one of these days and deny he ever wrote such an article as this, which rips the Senate fore and aft and ridicules it as a rather useless entity and appendage to our political system.
I shall not read any excerpts from his article, which was published in 1961, not too long ago; but for a person with the ability and knowledge of the hon. Member for St. Lawrence-St. George it would indeed be strange if he has changed his mind in the short period of four years, since he wrote such a devastating, ridiculing article about the Senate.


Herbert Wilfred Herridge: Was he a member of the Liberal Party then?


Frank Howard: It is difficult to say whether he was or not at that time, but it is a fact that once one becomes a Member of the Liberal party one always looks for higher things, and when one becomes a Parliamentary Secretary there are no bounds to one's ambitions and hopes. Perhaps those who do not find their way into the Cabinet may discover they are valueless to the Cabinet and so they get to the Senate, and maybe this is the ambition of some Members on the other side.


Some hon. Members:: Oh, oh.


Frank Howard: Mr. Chairman, these mutter-ings on the other side should be expressed in a formal way so that the whole chamber can be appraised of the pearls of wisdom these hon. Gentlemen have respecting the measure before us.
If we want to reform the Senate, if there is a serious desire on the part of the Government to reform the Senate, then I submit the approach it should take is not to piddle around with this halfhearted, weak-kneed measure here, but to place the Senate on an elected basis, the same as is the situation in the United States.
I am not drawing an exact parallel between the political system down there, and saying it should apply here, but if we are to have
DEBATES	421
Retirement Age for Senators a Senate that is worth while, a Senate that will fulfil the role conceived for it by the Fathers of Confederation, a Senate that is representative of political thought in this nation, a Senate that is to be somewhat representative of political opinion in the provinces, a Senate that is to be a useful functioning part that would gain respect within our political system, we should abolish it as an appointed political body and elect ten members to it from each Province, so that all Provinces would have equal representation in it.
By establishing whatever political boundaries are necessary within the Provinces for electoral districts we would have Members elected from within the Provinces. I am not concerned with details such as that, but if we were to place the Senate on an elected basis we would have another functioning body in our parliamentary system for which we could have respect, and which would be on equal terms, as it were, with Members in this place, because periodically Members of such a Senate would have to go back home and justify their existence to the people-and it is only the people who count in a political system, it is only the people's welfare and wishes that count in a political democracy.
As it is now, the people in the Senate have to give justification to no one. They can be as incompetent as they like, as lazy as they like, and as disrespectful of their positions as they like. They may not even bother to attend sessions. They can loll in their offices all day, and even not show up on the premises for months on end. There is no accounting to any one, and this is not sensible or reasonable in a political democracy.
Senators should have the responsibility to go back periodically to the electorate to justify their existence, and if the electorate feels they have been doing a reasonable job and they are re-elected, then well and good. If the electorate decides to change the Senators, then well and good too; because that is the essence of the political democracy built up in the western world over many centuries, namely, the opportunity of the people to make the final choice. But so far as the Senate is concerned the people do not have the opportunity to make the final choice. The people have no opportunity to make any choice whatever because the Senate is a haven for broken down political hacks, party givers and people who become relatively useless in political life elsewhere.
I am not in favour of the resolution before us. The position of our party is clear, namely
April 26, 1965

Retirement Age for Senators that we should abolish the Senate. We feel this is fraught with some difficulty because we will have to get the consent of the Senate itself in order to abolish it; but where there's a will there's a way, and I submit that if the Government had a sincere desire to do something worth while for the Senate it would withdraw the resolution presently before us and put something on the order paper that had some meat in it, that would reflect its sincere and honest desire for reform. But perhaps it is asking too much for this Government to be sincere or to be honest.


Mr. Nugent:: Mr. Chairman, I would give much on this occasion, as on many others, to be able to speak with that firm determination, that absolute certainty of mind that the previous speaker exhibited. I hope I am not being too unfair to him when I suggest to Members of the Committee that one of the reasons I cannot speak in that way is that I feel that on both questions there is some doubt, and even on those questions where I think the balance of the argument is pretty preponderant on one side, there is usually enough doubt that I could not speak with that amount of certainty.
But did I belong to the hon. Member's Party perhaps I could understand him. They, after all, not only have no Members in the Senate, but I am sure most hon. Members will agree that under our present political system they are never likely to be in the position to get a Member of theirs in the Senate. It is therefore with some scepticism that we heard this last remark of the hon. Member about honesty and sincerity. We know that in the views of the Members of that Party only those in the N.D.P. are honest; and therefore, since there are no Members of that Party in the Senate, undoubtedly you would search in vain to find an honest Senator.
We have heard the hon. Member for Winnipeg North Centre, as well as the hon. Member for Skeena, reflect the view that it is only the members of the N.D.P. who are intelligent, and therefore how could we expect any intelligent contribution to the Parliament of Canada from that part of our Parliament which has no representation from that Party? I am sure that, considering the certainty with which those hon. Members speak on any and every subject which comes up, we all realize it is only the members of the N.D.P. who take the trouble to get themselves informed on any subject. It is only they who, indeed, are qualified because of their vast

knowledge and experience in every line of endeavour from banking to ditchdigging to give advice on each and every point, and we cannot expect anything like the same standards from the other House because there are no members of the New Democratic Party in it. While members of that party are much too modest to tell us how hard working and diligent they are, I infer, sometimes, from the way in which they tell us that Members of this House or in the other House have not really applied themselves to their tasks, that they feel they have a monopoly when it comes to diligence and hard work, and that this being the case it would be useless to expect diligence and hard work from any Member of the other place. Feeling so convinced, on such very strong grounds, that the Senate is useless, they would naturally feel they were being less than honest if they were to suggest that any Member of the other place was worthy of his hire. Since the virtues I have mentioned are the sole prerogatives of the New Democratic Party it follows that they are completely absent from the other place. Therefore, I for one have no doubt as to the absolute sincerity of the hon. Member for Skeena and the hon. Member for Winnipeg North Centre in feeling it is their bounden duty to hound the other place out of existence. I think they honestly believe that any legislative body in this country upon which their Party is not represented must lack virtues which most of us feel are most important, if not essential, in any legislature.
[DOT] (5:30 p.m.)
However, I cannot myself speak with such a degree of certainty as the hon. Member for Skeena and his friends. In the same way I have reservations, for instance as to whether the age of 21 is really a better choice than the age of 18 when it comes to eligibility for voting. The question of the abolition of the Senate is one on which arguments could be made from both sides. But knowing something of what has gone on in the other House, having from time to time taken the trouble to listen to some very fine and informative speeches in that chamber, having read something of the work of its committees and knowing something of the dedication to democracy, the tremendous background of experience and information which those hon. gentlemen have brought to bear on the task before them, I am left in some doubt as to my willingness to agree with the hon. Member for Skeena, the hon. Member for Winnipeg North Centre and, indeed, with their
April 26, 1965	COMMONS
whole Party, that these men and women are somehow an inferior class. In fact, some of us who are capable of a touch of modesty-and I know the hon. Member for Skeena will find this hard to understand-sometimes feel we could learn a lot by listening to the voice of experience.
I found many of the statements made by the hon. Member for Skeena most insulting to the other House. I will admit there are Members of the Senate who apparently, from what I have been able to observe, do not work as hard as do some others. I have seen evidence from time to time that some are more capable than others. But I do resent, almost as a friend might, the insinuation that we should take for granted that there is no one in the other House who makes a worthwhile contribution, and that this is equally true of the work of the Senate as a whole.
I will say this: The method and the manner in which the hon. Member for Winnipeg North Centre uses his knowledge of the rules of the House, the interpretation he sometimes places on those rules in order to give a political twist to some of the questions facing us while seeming to insist that politics is the subject furthest from his mind, is entirely consistent with the arguments he and his friends now present in connection with the Senate. It is of course democracy they are interested in. The country should be run on the direct say of the electors.
Well, I believe this approach just as much as I believe so many of the hon. Member's arguments on the rules. It is the application which counts, and since there is no application of political appointments of supporters of the N.D.P. to the Senate either now or in the foreseeable future, this cannot be other than a very bad state of affairs and it should be changed. I am absolutely convinced, too, that the honesty of the hon. Member will remain intact should he and his friends suddenly be in a position to make appointments to the Senate. His honesty would remain intact because he would be overwhelmed by the new arguments which his agile mind would suddenly find applicable to the new circumstances.
However, I do not wish to deal at any length with arguments for or against the abolition of the Senate, because the resolution really asks whether or not Senators should retire and proposes the manner in which this might be arranged. Most of us who were in the House when a bill to retire judges was brought down heard some valuable contributions on the question of how valid is the 22620-281
DEBATES	423
Retirement Age for Senators argument that retirement should be compulsory on the basis of age alone. I am sure there are many here who have met people considerably over the age of 75 who are as mentally alert as men half that age. Sometimes they are as physically fit, too. Indeed, most of us are acquainted with men unfortunate enough to have encountered the aging process early in life; we have seen signs of positive senility in people of 50 years of age.
There are considerations we must take into account before we arbitrarily pick a retirement age of 70, 75 or 80 years. The question is whether the age of 75 is the right age to pick? This question only arises when we decide there is need to apply an age limit at all. I think the same reasoning which persuaded this House to apply an age limit to judges should persuade us now that it is a good idea to apply an arbitrary age limit in the case before us. It is true we are likely to lose the services of some who are still rendering most valuable assistance and who, with respect to many of the subjects we discuss here, make more intelligent contributions than 75 per cent of the Members of this House.
[DOT] (5:40 p.m.)
By passing this Bill we are going to say that, no matter how valuable their contribution in the past, no matter what may be the treasure-house of knowledge, experience and wisdom that we might expect in the future from such great people as these, we must do without it because the danger of allowing people to stay on there is greater than any benefit we can experience.
I suggest that before the House can pass this measure we must recognize and accept that argument; and I do not advance that argument on the basis that these people are lazy, that the Members of the Senate go there to retire, that there is not in our parliamentary system a positive need for a second House. The question is simply that on the average and over the long run by the age of 75, even with the advance of modern medicine, we find that in the vast majority of cases men and women are so much past their prime that the odds are very long indeed that they will give that invaluable contribution that we ask from those senior Members in the second House. In other words, while we are getting to be a younger nation and perhaps the demands of youth are taking more prominence, the situation simply is that we want to retain all the experience and the benefit of
424	COMMONS
Retirement Age for Senators the older, wiser and perhaps more stable people in our community, those who have gained pre-eminence and have earned an appointed which depends, not on popular vote, but is earned because of their dedication to public service and the confidence the Government of the day has in their devotion to our democratic systems and the belief in the use they will be to our Parliament. These are the qualities that give them their jobs; these are the qualities that we have asked them to have; these are the reasons, we say, that we rely on them implicitly.
Despite these qualifications and these reasons for their appointment, however, we are saying that we do not want an old fogey point of view, shall I say. We want a limit on the extent to which, shall we say, old age can influence their deliberations. Perhaps we want a limit on the length of time that a person may take to make up his mind. For any and all of these reasons, we feel that we cannot allow the Senate to take the risk of going beyond a certain age limit; that if we left the age limit off, the odds are that we will get an inferior type of person, rather than once in a while a really superior person of whom we, by this Act, would deprive ourselves.
I am a little puzzled, I must confess, as to why the resolution is directed at those who are going to be appointed after the coming into force of this act. I think the suggestion to the President of the Privy Council is a little unkind when we call it a bribe to get the present Members to retire, but I must confess that it does seem a most accurate description. As soon as I say that, I want to say that I do not mean it in any unfriendly way because the main argument is, I am afraid, that we do wish some who are now sitting, who are beyond that age limit, to retire. But there are many, or at least I believe there are some, who are beyond that age limit who have perhaps been improvident-although many there are very well off-and who took the employment in the belief that it was theirs for life, and that therefore they did not have to make other financial provision for a different type of livelihood when they had finished with it, who could not now support themselves, their wives or their families in anywhere near the manner to which they have grown accustomed. In fact there may be some who would find it extremely difficult to support their families in any fitting manner whatsoever. I think, then, to suggest, when it is said that we must do something for these

DEBATES	April 26, 1965
people, that we are being unkind to call it a bribe, is perhaps not facing the realities of the situation. However, I am a little suspicious that this is a very small minority of those who would be affected.
From my personal knowledge of the Senate-and I am afraid I have not had the opportunity or the pleasure of getting to know as many as I would like, and of those I do know, there are some whose financial affairs I do not know very well-but from what I have gathered from meeting Senators and from talks with my colleagues, a great many Members of the Senate are not at all in need of financial assistance. That is an argument, of course, against the necessity for offering them a bribe. If a man is not in need of financial assistance, then a pension would hardly seem to be an effective bribe to offer him. It is only the person who needs a pension that would need, perhaps not a bribe to make up his mind, but a way in which it becomes economically possible for him to follow the expressed wish of Parliament. I think that is a very important distinction. I like to liken it to the difference between convicting the man who is innocent and letting guilty people go free.
It is a most important maxim of our law, in the conduct of our criminal courts, that it is better that ten guilty persons should go free than one innocent person should be punished. I think, in fairness to the President of the Privy Council, before we use the word "bribe" we should perhaps use this type of reasoning; that even if there were only one or two Senators whose retirement might be in the best interests of the country, because they are over age-and I suggest that those who are over age and should retire are perhaps not aware that it is they themselves who are the weak ones in the House- it makes it only just, and not terrible, that we should make it financially possible for them to retire; because when they took on the job it was a contract between them and the Government of a job for life. I suggest that if we substitute the compensation that the Government is going to pay them for their releasing the Government from their part of the contract, we are perhaps getting to-


The Chairman:: Order. I regret to interrupt the hon. Member but his time has expired.


Terence James (Terry) Nugent: May I finish my sentence, Mr. Chairman?


Lucien Lamoureux: Does the hon. Member have the consent of the Committee to continue?
April 26, 1965


Some hon. Members:: Agreed.


Terence James (Terry) Nugent: I say, Mr. Chairman, that rather than a bribe it is compensation for their releasing the Government from the Government's obligations under the contract, and we will achieve what I would call a fairer description of the suggestion of pension for these people than the word "bribe" used by the N.D.P.


Lucien Lamoureux: Shall the resolution carry?


Some hon. Members:: Carried.
[DOT] (5:50 p.m.)


David Orlikow: Mr. Chairman, it is not surprising that Members on the other side would like to get this resolution passed as quickly as possible, and with probably as little discussion as possible. I do not suppose in the years to come that there will be anything that this Party sitting on the other side, this great Canadian Party which has given such leadership to this country for so many years, will be so ashamed of as this proposal. I do not know for how many years-one would have to search the records-they have talked of Senate reform. Their great leaders, like Mr. Mackenzie King, could talk out of both sides of their mouths so ably that you could quote them on any subject; but they have told us what they would do and how they would do it. And what do we have here, Mr. Chairman? A proposal to bring in a bill which from now on means, after the bill is passed, that Senators will have to retire at age 75. But those great people now in the Senate can stay on or retire on an annuity of $8,000 a year.
I do not suppose in the history of Canada that there has been a worse group of Senators appointed to the upper chamber than those appointed by this Government in the short period of time it has been in office.


Francis Andrew Brewin: That is because you are so familiar with them.


David Orlikow: The hon. Member for Greenwood says it is because I am familiar with them. I hope that is the only reason; because it is inconceivable, to me at least, that worse ones were appointed in other years.
I am surprised by this, because there are some people in Canada who are Liberal Party supporters who do have ability. One has only to look at the universities of Canada to find a professor of history, or a professor of economics, or a doctor who is a Liberal. One would think, after all the fine speeches which have been made on the other side of
Retirement Age for Senators the House, that some of these good people could have been appointed to the Senate since this Government took office so that they could have raised the standard of ability and quality in the other House.
I am not going to go into details today, but before this legislation passes we are going to put on the record the kind of people who have been appointed. One of the new Members is a very young man-I will not mention his name-who is still in his early forties. What is his great distinction, and the quality for which he has been appointed to the Senate-to a post where, as there seems to be something about the Senate which is conducive to old age, being in his early forties he can sit for another 40 years? What is his great quality or ability, this great service he can render to the Canadian people? He was the fund raiser in charge of the pork barrel of the Liberal Party in Ontario, which really makes him a good person to put in the Senate of Canada. That it the kind of person who has been appointed, Mr. Chairman.
What we have to realize with our present set-up, which will be such as long as this country is unfortunate enough to have the party opposite in power, is that we have a Senate, a second chamber, which has the kind of power which no other second chamber, to my knowledge, has in any other parliamentary system in the world. After all, in Great Britain, about whose customs and history we are so proud and which we emulate so often, in words if not in spirit, it is now almost 100 years, certainly more than 50, since the power of the House of Lords was clipped. The power of the House of Lords is very limited. I am speaking from memory, and I will go into this in detail at the appropriate time, but in the passage of legislation the matter becomes law on the second presentation to the House of Lords, whether that chamber agrees with it or not. But in Canada the Senate has practically as much power as the House of Commons.
These Senators are people who are appointed for life, many of them with very little qualifications. They have the right, the opportunity and the ability to stop cold legislation which the elected House of Commons may want to pass. Let this Government have the courage-which it has not-to propose a real medicare plan and you will see pressure brought upon the Senate from insurance companies and medical associations to cut the guts out of such a plan. And what will this

April 26, 1965

Proceedings on Adjournment Motion Government do it it ever has the courage to bring that kind of legislation before the Senate? Nothing.
I would have thought that before this Government brought in this proposal it could have learned something from the Province of Quebec. There they have a second chamber, an appointed chamber. The government of Quebec wants to establish the principle-a very sound principle which I wish the Prime Minister would think about some time-that the second chamber should not have the power which the elected chamber has. Because the Executive Council of the Province of Quebec has refused to pass certain legislation, the Government of Quebec is going to the Queen with a proposal that the Queen enact legislation to reduce the power of the appointed Executive Council in the Province of Quebec. Why does not the Government of Canada, this so-called great Liberal Government, propose that the power of the Senate of Canada be reduced, as it has been in every other country which has a democratic system of government? They have not done so, Mr. Chairman, because they have not got the courage. They do not mind a second chamber which has the power and authority to keep in check any proposals which in future years may come from an elected House of Commons.
I should like to say on behalf of the Members of this group that not only will we oppose this resolution but that I hope, indeed I expect, that we will fight the Bill when it comes in, clause by clause. Because I think it is a farce, a disgrace and a fraud on the people of Canada.


Lucien Lamoureux: Shall the resolution carry?


David Orlikow: Six o'clock.


Lucien Lamoureux: It being six o'clock and in view of-


George James McIlraith: Mr. Chairman, may we rise and report progress?


Lucien Lamoureux: Shall I rise and report progress and request leave to sit again at the next sitting of the House?


Some hon. Members:: Agreed.
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: It being six o'clock it is my duty, pursuant to Provisional StandrMr. Orlikow ]
ing Order 39A, to inform the House that the questions to be raised at ten o'clock this evening are the following: the hon. Member for Danforth (Mr. Scott), industry, benefits of Canada-U.S. automobile agreement to Canadian consumers; the hon. Member for Cape Breton South (Mr. Maclnnis), labour conditions-


Donald MacInnis: Mr. Speaker, a question of privilege.


Mr. Deputy Speaker:: Order, please. The hon. Member for Timmins (Mr. Martin), income tax, acceptance of statements respecting charitable donations.


Donald MacInnis: Mr. Speaker, on a question of privilege, on the thirteenth of this month when I gave notice to debate a matter pertaining to unemployment at Louisburg Mr. Speaker ruled, as reported in the last sentence on page 302 of Hansard:
I am afraid there is nothing before the House to debate at ten o'clock.
This, Sir, constitutes a ruling on the request I made at that time. I was further informed that this matter was out of order. For some unknown reason this snap decision was taken. I made a legitimate request, one which I do not repeat at this time since the urgency of the matter has been removed. I see no reason why I should be put in such a position as this, having been denied the privilege of debating the matter according to the rules on the thirteenth, when it was ruled out of order by Mr. Speaker, and is now being brought forward, after some considerable thought on the part of the Speaker, who has now decided it is in order.


Mr. Deputy Speaker:: I assume the hon. Member has unanimous consent of the House not to proceed with this question at this time. Is it agreed?


Some hon. Members:: Agreed.
[DOT] (6:00 p.m.)


Stanley Howard Knowles: I wonder whether, if the House is in an agreeable mood, we might not also agree to postpone the other items until tomorrow night, in view of certain uncertainties tonight at the end of the presentation of the Budget?


Mr. Deputy Speaker:: Is it agreed?


Some hon. Members:: Agreed.
At six o'clock the House took recess.
April 26, 1965	COMMONS


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


Walter Lockhart Gordon: That Mr. Speaker do now leave the Chair for the House to go into Committee of Ways and Means.
He said: Mr. Speaker: It gives me a great deal of satisfaction to be able to report to the House, and to the country, on the state of our economy and of our national finances. There has been a great and encouraging improvement in economic conditions, and in the state of the budget during the past two years. This robust expansion must be continued. With the budget under control, we must use our fiscal policies to achieve the nation's goals. The primary objective now is a healthy rate of sustained economic growth.

I am glad to note that all regions in Canada have shared in this expansion. The Atlantic provinces and the province of Quebec, for example, have experienced substantially increased economic activity. I believe that it is in this context of a prosperous and expanding economy, benefiting all Canadians, that we shall best succeed not only in maintaining but in strengthening the unity of our great country.

Economic Objectives
When this government first came into office we stated a number of economic objectives. Our first goal was a high level of employment for Canadians and the reduction of unemployment. The second was a high and sustainable level of economic growth. Third, we wanted a better regional balance in both employment and growth. We also wished to bring into closer balance our trade and other current international transactions. To realize these objectives, we recognized that our industry, especially our manufacturing industry, would have to become more vigorous and competitive. We expected that as unemployment was reduced and these other objectives achieved, we would also be able to move toward a balanced budget. Moreover, we sought over the long term to improve the degree of participation by Canadians in
DEBATES	427
The Budget-Mr. Gordon the ownership and direction of businesses operating within our borders and using our resources.
We may all take pride in the extent to which these goals have been achieved.
Almost half a million new jobs have been created since the spring of 1963.
Unemployment had fallen by last month to 3.9 per cent, on a seasonally adjusted basis, which is just about half the 7.7 per cent reached in the first quarter of 1961.
This improvement in employment was not confined to one or two favoured parts of Canada. During the past two years some of the most rapid increases in employment took place in those sections of the country where unemployment had been particularly high. The decline in the unemployment rate in the Atlantic provinces and British Columbia was of the order of one third between the last quarter of 1962 and the last quarter of 1964; in Quebec there was a reduction of one-quarter. In Ontario and in the prairie provinces unemployment by the last quarter of 1964 was down to about 3 per cent.
We have also had a rapid increase in the Gross National Product. In the two years 1963 and 1964, the value of the nation's output increased by 6.5 per cent and 8.9 per cent, or by a total for the two-year period of about 16 per cent. Incomes have improved materially. The value of construction of all kinds increased by more than 20 per cent from 1962 to 1964, and housing starts went up from 130,000 to 166,000-that is, by more than one-quarter.
[DOT] (8:10 p.m.)
In our dealings with other countries we have achieved a considerable improvement in our balance of trade and payments. Our deficit on current account in 1964 was less than one-third what it was at its peak in 1959.


John George Diefenbaker: All kinds of selective statistics.


Mr. Byrne:: Sour grapes.


Walter Lockhart Gordon: This improvement was achieved not by restricting imports and travel by Canadians, but by a vigorous expansion of our exports. Our secondary manufacturing industry has accounted for an important part of this change.
The improvement in our international balance of payments, and indeed in our rate of economic growth in general, could not have come about if we had not been able to keep our prices and costs competitive. Canadian
April 28, 1965

The Budget-Mr. Gordon prices have risen less in the last two years than have those of any other industrial country in the world except the United States.
Along with these improvements in the performance of the economy we have been able to bring about a dramatic improvement in the federal budget. The 1962-63 fiscal year produced a budgetary deficit of $692 million. This has been reduced to $83 million for the fiscal year just ended.
If the accounts are translated into a form more suitable for measuring their impact on the economy, that is, into terms of the national economic accounts, the change in two years is from a deficit of $399 million in 1962-63 to a surplus of $332 million in the last fiscal year-an improvement of over $700 million.
These achievements have taken place against the background of the longest period of peacetime economic expansion we have enjoyed in the present century. However, the pace of our expansion has not proceeded without faltering. There was a noticeable pause in the advance at the end of 1962.
New Policies
In no small measure the strength of the expansion, certainly since 1962, is due to the introduction of new policies. The results achieved enable us to describe them as effective policies. They include:
(a)	Strong incentives in the form of capital cost allowances to Canadian-owned manufacturing and processing companies installing new machinery and equipment.
(b)	Similar inducements, together with a three-year tax exemption, for new manufacturing and processing companies to establish in designated areas of slow growth and high unemployment.
(c)	Special arrangements to improve the efficiency of our automobile industry and to secure a fairer share of the total automotive production of North America.


Michael Starr: Sixteen hundred laid off in Windsor.


Walter Lockhart Gordon: There seems to be a little noise, Mr. Speaker, but this will prove to be one of the most important policies ever introduced in Canada.
(d)	Establishment of the Municipal Development and Loan Fund, to assist municipalities, with provincial approval, to accelerate their capital spending programs.
(e)	Establishment of the Atlantic Development Fund of $100 million to stimulate economic activity in the Atlantic provinces.

(f)	The highly effective $500 bonus for winter-built houses, and other increased help for housing and urban development.
(g)	The provision of massive assistance to the provinces in the fields of technical and vocational training.
(h)	The provision of guaranteed loans to students to assist them with their university education costs, and the provision of youth allowances to young people 16 and 17 years of age who remain in full-time education.
(i)	A vigorous expansion in the loan programs of the Farm Credit Corporation.
(j)	Increased amounts and improved terms for credits and insurance to finance a rapid increase in exports.
(k)	Improved fiscal arrangements with the provinces to enable them to do their important part in a growing modern economy.
(l)	And last, but certainly not least, there has been a monetary policy which enabled the demands of economic growth to be met without a tightening of credit conditions.
Partly as a result of such policies, the Canadian economy in the past two years has expanded faster, and unemployment has been reduced further than in the United States.
It might interest hon. Members to know that in the United States last year, 1964, the total output of the economy of that country increased by 6.6 per cent. In Canada the increase was one third as much again.
In 1964 unemployment in the United States was reduced by 7 per cent. The rate of reduction in Canada was almost twice that figure.
Current Situation and Outlook
The economy is currently in a very healthy state. Unemployment is at its lowest level since 1957. Our output of goods and services is at record heights and is still rising. Prices are reasonably stable. Our international competitive position remains strong. The capacity of our industry is being used more fully. Business confidence is reflected in the highest level of capital investment we have ever had. All areas of the country, almost all types of industry and agriculture, and most groups in the community are sharing in this advance.


Eric Alfred Winkler: Is that why the farmers are coming to Ottawa on Wednesday?


Lester Bowles Pearson: To get even more.


Walter Lockhart Gordon: I thought all the farmers were over there, Mr. Speaker, but they won't be like that after the next election.
We may view our prospects for the coming year with confidence. Canadians in the ag-
April 26, 1965

gregate, both individuals and businesses, and their governments will invest and consume substantially increased quantities of goods and services in 1965.
[DOT] (8:20 p.m.)
The economies of the nations with whom we trade, subject to one or two exceptions, are continuing to expand, and the markets for our exports should continue to grow. We have sufficient productive capacity in Canada to meet our own needs and those of our trading partners. New investments now being made will increase our capacity to produce. And last-but of great importance-we have the most rapidly growing labour force in the industrialized world and it is better trained than ever before.


John George Diefenbaker: Thanks to Mr. Starr.


Some hon. Members:: Oh, oh.


An hon. Member:: Even he couldn't keep a straight face.


Walter Lockhart Gordon: It is this growth in our labour force which provides the foundation for rapid economic growth in Canada. It also makes it necessary. This necessity for growth in order to put our young and rapidly growing labour force to work was the central feature of the First Annual Review of the Economic Council, published several months ago.
Economic Council Review
Honourable members will recall the main projections which the Council brought to the nation's attention: that between 1963 and 1970 Canada's labour force can be expected to grow by 2.7 per cent per year on the average; that the potential productivity of our workers- that is, output per person employed-can be expected to increase by 1.9 per cent per year; that, if the level of unemployment can be reduced to an annual national average of 3 per cent-which the Council regards as a realistic objective-and if we can catch up the lag in our productivity gains between 1957 and 1963-we can reach an average rate of growth in our production over this period of 5i per cent. The Council points out how the achievement of this rate of growth would require and make possible rapidly expanding levels of consumer expenditures, government expenditures, business investment and exports.
The realization of the true potentials of the Canadian economy is a goal which all of us can accept. The problem has been, and will always be, to develop and put into effect the kind of policies needed so that each major
The Budget-Mr. Gordon part of the economy can make its full contribution. The Council has given us helpful advice in this regard.
There are, as the Council has pointed out, some especially difficult problems before us. Canada must train and place in the right jobs an enormous number of young people if we are to achieve the potentials the Council anticipates. Industry must grow at a pace which will provide these jobs and must increase its productivity. The capital must be found which industry, and governments, will require to finance this expansion. And above all, Canadians must find, and be efficient in competing for, the domestic and foreign markets for the goods which an expanded economy will be capable of producing.
To achieve all of this will be difficult enough, but our very success in doing so will itself pose problems. A higher rate of productivity is essential to the achievement of the nations's economic potential, and its ability to compete, but it means we have to find more markets to employ our manpower. Rapidly rising production generates more employment, but it could also lead to the large deficits in international payments which the Economic Council has projected in its model. These must be avoided.
Balances of Payments
We hear a great deal these days about the balance of payments problems of our friends the British and the Americans. The British problem springs in considerable part from the strain which has been placed on their productive capacity and which their recent budget is designed to relieve. The essence of the Americans' problem is that the very large surplus they earn in trade and other current transactions is substantially less than what is needed for the large scale private investment by Americans all over the world, in addition to the requirements of defence overseas and foreign aid.
Our problem is unlike either of these. Although we still have some room in our economy for increased production without undue strain, we continue to have a deficit in our current transactions with the rest of the world. To be sure, last year we achieved a trade surplus of $700 million. But we used up this surplus and more in servicing past debts, in paying dividends to foreigners, and in making other kinds of current payments. Our current operating deficit was, I am glad to say, lower than it had been for ten years. But it is
430	COMMONS DEBATES	April 26, 1965
The Budget-Mr. Gordon
still sizeable. Furthermore, last year we exported large quantities of wheat to Russia, and we cannot count on having such large markets for our wheat on a continuing basis.
Our persistent international payments problem is apparent not only in the total size of our current account deficit, but also in its structure. Last year our current account deficit with the United States reached nearly $1.7 billion. This was largely offset by a surplus of $1.2 billion on merchandise and non-merchandise trade with the rest of the world, including the large wheat sales to communist countries. These transactions still left us with a current account deficit of $453 million which we had to finance.
In order to provide jobs to match the quite exceptional growth of our labour force we will need high levels of capital investment in the next few years, higher than the present physical capacity of the economy can be expected to meet. I do not anticipate difficulties in financing outside Canada the moderate amounts really required for this purpose, but this dependence on foreign savings should not be permitted to persist indefinitely. The world is hungry for capital for investment both in developing and in industrialized countries. The major source of capital, the United States, is having to restrict its investments abroad. We would be foolhardy if we assumed that over the long term the capital needed to cover our continuing current account deficits, whatever their size, would always be ours for the asking.
Financial Markets
The performance of our financial markets during 1964 was remarkably good. Through the first half of the year, they weathered successfully the continuing uncertainties arising out of the United States' Interest Equalization Tax. Later they adjusted readily to the disturbances arising out of the United Kingdom balance of payments problems. In spite of these difficulties the Canadian capital markets handled a greater volume of new issues than in the previous year.
The substantial improvement in the federal government's financial position enabled us to reduce our demands on the market, thereby making room for other borrowers. The improvement in the government's position also made it easier for monetary policy to continue to give support to economic expansion. Interest rates were slightly lower at the end of the year than they had been at the beginning.
The House will recall that, at the time the United States' Interest Equalization Tax and

the Canadian exemption were announced in July, 1963, the Canadian government stated its intention not to seek to increase Canadian exchange reserves through borrowing in the United States. During 1964 Canadian monetary and debt-management operations were undertaken with a view to their effect on Canadian borrowers who might seek funds in the United States, as well as with a view to domestic conditions. The interest rate differentials between Canada and the United States fell, during the course of 1964, to the lowest level for some time.
The financial disturbances at the time of the sterling crisis and the raising of the bank rate in Canada were not allowed to interfere with this development. In fact, the careful handling of that situation by the Bank of Canada considerably assisted in meeting this objective and keeping our capital market working effectively.
The past year was marked by a further evolution of the international financial machinery. Just as Canada benefited from the rapid assembly of massive financial assistance at the time of her exchange crisis in 1962, so Britain was the recipient of even more massive aid in the autumn of 1964. Canada was an active and major participant in this operation.
[DOT] (8:30 p.m.)
International Liquidity
During the year representatives of the government took part in a series of international discussions on world liquidity. The question at issue has been whether the total of international reserves, such as our own reserves of gold and foreign exchange, when combined with official international credit arrangements such as those provided by the International Monetary Fund or by arrangements between central banks, is sufficient to support the growing level of international trade and payments both now and in the years ahead.
As Minister of Finance I attended meetings of the so-called "Group of Ten" in Paris last June and of the Board of Governors of the International Monetary Fund in Tokyo last September. The most immediate result of these discussions is that the Fund itself is to be enlarged by a 25 per cent increase in the quotas of all members, plus special additional increases for member countries such as Canada whose growth has been well above the average. I have made it quite clear that Canada would have welcomed a greater increase than this in world liquidity in order
April 26, 1965	COMMONS
to ensure expansion of world trade and payments without any drag or interruption.
Trade Policies
In the Budget Speech last year I described our preparations for the "Kennedy Round" of tariff negotiations in Geneva, and outlined the principles that would govern Canada's participation. The formal opening of the negotiations occurred last November when the offers of reductions in duties on industrial goods and materials were exchanged. Our delegation is now engaged in a detailed examination, with other delegations, of the scope for tariff reductions of mutual benefit.
The negotiations on agricultural products are only now getting under way. This means that for Canada, with its important export interests in agriculture, the Kennedy Round is not yet in full swing.
Consequently it would be premature to offer any firm or final judgment as to the probable outcome of this tariff conference. Nevertheless I believe there are real possibilities for important tariff reductions covering a broad range of our exports. We have a strong delegation in Geneva, headed by Mr. Norman Robertson, one of the most respected senior public servants of Canada. I can assure the House that our representatives will bargain vigorously and realistically to advance the interests of Canada at this conference. It is in our interests that barriers to trade throughout the world be progressively reduced.
There has been a good deal of interest recently in our trading relations with the United Kingdom. The United Kingdom has always been a very important market for Canadian raw materials and foodstuffs which Britain requires in great volume. For a wide range of such products Canada is Britain's nearest, and most reliable and cheapest source. As a result, our sales to Britain over the years have normally exceeded her sales to Canada.
In the last three years this excess has been increased because United Kingdom export markets in Canada were adversely affected, first by the devaluation of the Canadian dollar in 1962, and then by the Canadian import surcharges that were in effect for some nine months.
Understandably the British are concerned about the large deficit in their trade with Canada. We can appreciate this because we face the same sort of problem, but in a more exaggerated form, in our current account transactions with the United States. It would
DEBATES	431
The Budget-Mr. Gordon be better in both cases if increased exports enabled these large bilateral deficits to be reduced.
I am glad to note that for a good many products the United Kingdom has now significantly improved its position in this market. For 1964 as a whole its merchandise exports to Canada were $60 million more than in 1963. This improvement is reflected in a variety of British exports to Canada, of which automobiles are one of the most notable examples. Our imports of cars from Britain in 1964 increased by 100 per cent over 1963. Here is a real example of energetic British exporters adapting their products and their dealer and service organizations to meet the needs of Canadian consumers. We expect now to see further substantial improvement in the sale of British products in the Canadian market.
Federal-Provincial Relations
The achievement of Canada's economic goals-of our potential growth-will require the use of the whole range of policies available to us and to provincial governments and local authorities. These include not only general policies, fiscal and monetary, trade and industrial, but also particular policies. These particular policies are reflected in measures relating to the development and use of our natural resources, the education and training of our young people, the planning and proper use of our land, the develpment and the redevelopment of our cities and towns, and the proper planning and building of the roads and other utilities on which both our production and our living are dependent. That is necessary if business, labour, agriculture and other private interests are to play their full part in carrying forward the progress of our economy, and improving our productivity.
All this implies that the federal government must work with the provincial governments and that the latter, in turn, must work not only with us, but with the municipalities. The federal government's responsibility in the field of fiscal policy, monetary policy and trade policy is primary and indisputable. And that is as it should be. To work to best advantage, however, such policies should be co-ordinated with plans and policies in areas which come under provincial jurisdiction.
Moreover, we must recognize that the sum total of the effects of the fiscal policies of the provinces is also of national importance. The provinces and the municipalities
April 26, 1965

The Budget-Mr. Gordon together are now spending more than is the federal government. It follows that changes in provincial revenues and expenditures, and in their budgetary balance, have a major effect upon growth and stability in the Canadian economy. It follows too that the timing of their expenditure measures can be such as to contribute to a steady growth of production and jobs, or the reverse.
[DOT] (8:40 p.m.)
An essential part of the job of good economic management in Canada is to achieve a reasonable harmony in the policies of the different governments. That is why we spend much of our time, both Ministers and officials, in consultation with the provinces. For example, the Provincial Treasurers and Ministers of Finance met with me in what might be called a pre-budget meeting in December, in order that we might jointly review the state of the economy and compare our views as to its prospects.
During the next 18 months, the federal government and the provinces must also review and revise the federal-provincial fiscal arrangements between them in order that we can propose legislation for the five-year period commencing in 1967. It was for that purpose that the federal-provincial conference last year appointed the Tax Structure Committee of Ministers from Ottawa and from the provincial governments. The representatives of the eleven governments will examine the fiscal outlook of federal and provincial governments in an effort to determine the probable requirements of each of them in the six years ahead. We shall endeavour to find a division of the tax fields and a formula for equalizing fiscal capacity which will assure to Parliament and to each provincial legislature effective means of carrying out its own responsibilities under the Constitution.
Royal Commission on Taxation
During the same time that we are discussing and revising our fiscal arrangements with the provinces, we shall be making a thorough review of our own federal tax system-both in its general plan and in detail-with the aid of the report of the Royal Commission on Taxation appointed in September, 1962. Last year I said I expected the report would be published in time to find some reflection in this year's budget. Unfortunately the Commission was not able to conclude its work when it planned to do so, and now I do not expect the report to

be available before fall. Consequently we are having to defer the thorough review of our tax laws until later.
University Finance
This government, as well as its two predecessors, has taken a vital interest in doing what it properly could to help young Canadians to be trained to work effectively in the modern world. Our program of assistance to the provinces for technical and vocational training now involves annual expenditures of over one hundred million dollars. Parliament last year provided for youth allowances to young people of 16 and 17, and also instituted with the co-operation of the provinces a large and already successful program of guaranteed student loans. The Central Mortgage and Housing Corporation has been making loans to universities for student residences that are helping to transform the character as well as increase the size of our universities. We are paying unconditional grants equivalent to $2 per capita to the universities in nine provinces and providing the equivalent in Quebec by a tax abatement formula. We are making large grants to universities for scientific research. It is evident, however, that more needs to be done in financing higher education in Canada, though just what should be done and in what way are unresolved questions.
The universities have established their own committee of enquiry into university finance which should be reporting later this year. Its report should be of much help in re-appraising not only what is needed but how it should be supplied. We shall be anxious to discuss the subject of university finance with the provincial governments when there has been an opportunity to study the forthcoming report of Dean Bladen and his colleagues.
Accounts for 1964-65
1 come now to review briefly the outcome of our budgeting for the past year and assess the prospects for the year ahead, before putting the government's proposals before you. The figures are all given in part 2 of the White Paper which I tabled two weeks ago and I will refer only to the highlights. Revenues exceeded all expectations because of the excellent improvement in the economic situation, a greater improvement than I could properly forecast a year ago. At $7,136 million they were $436 million more than the figure in last year's budget. Expenditures are
April 28, 1965	COMMONS
estimated at $7,219 million, $64 million, or less than one per cent, higher than originally forecast. This leaves a budgetary deficit of $83 million, less than one-fifth the amount originally forecast.
Last year, for the first time, I included with the budget a forecast of our revenues and expenditures in terms of the national economic accounts. Part 1 of the White Paper explains the nature of these accounts and gives some of the figures for past years, and for the calendar year 1964. For the past fiscal year our revenues are estimated in these terms at $8,313 million and our expenditures at $7,981 million. This means that in place of the small deficit originally anticipated, in these terms, the national economic accounts reflect a federal government surplus of $332 million.
These results-a deficit of $83 million by our parliamentary public accounts, and a surplus of $332 million by the national economic accounts-are the best in seven years. In practical terms it seems fair to say that after a long period of troublesome deficits the nation's finances are now under firm control.
In this new fiscal year we can anticipate further increases in our revenues based upon the growth to be expected in the economy itself. We can be confident that the recent rates of economic growth will continue well into the summer, although the outlook for the latter part of the year is less certain. We can reasonably forecast an increase of about 7 per cent in the Gross National Product in 1965 compared with 1964, of which increase nearly 5 per cent would be in volume. This will mean that for the first time the Gross National Product of Canada this year will exceed $50 billion.
Outlook for Revenue and Expenditure
Without any changes in our tax laws I would expect our revenues to be about $7,525 million. With the consent of the House I would propose to include a table in Hansard at this point giving the details of this forecast, and comparing them with the estimated figures for last year.


Mr. Speaker:: Does the House give unanimous consent?


Some hon. Members:: Agreed.
[Editor's note: The table above referred to is as follows:]
DEBATES	433
The Budget-Mr. Gordon Budgetary and Old Age Security Fund Revenues
Forecast
Before
	1964-65	Tax
Preliminary		Changes
	($ million)	($ million)
Personal income tax Corporation income	2,108	2,175tax Non-resident with-	1,510	1,570holding tax	144	148Estate tax	90	97Customs duties	617	670Sales tax	1,193	1,300Other duties and taxes	676	725Total taxes	6,338	6,685Non-tax revenues	798	840Budgetary revenues Old age security fund	7,136	7,525revenues	952	1,145Total revenues	8,088	8,670


Walter Lockhart Gordon: I should point out that the details of these forecasts are inevitably complicated and involve many special factors affecting particular items, especially in the case of corporation income tax. The forecast for personal income tax takes into account the higher abatements in favour of the provinces, and also some movement toward prompter remittance of tax deducted at the source.
I am forecasting budgetary expenditures for this year at $7,650 million. This figure, like that for revenues, is based on the expectation that Quebec will take full advantage of the opportunity to contract out of established shared-cost programs recently authorized by Parliament, but that other provinces will not avail themselves of this opportunity this year. My forecast includes allowances for supplementary estimates and for the anticipated shortfall of total expenditures below appropriations requested. It includes all items I know of that are already authorized or that we plan to place before the House. On the basis of these forecasts of revenue and expenditure before budget changes, we would have a deficit in our budgetary accounts of $125 million.
I expect the Old Age Security Fund this year to have revenues of $1,145 million from which pensions of $905 million will be paid.
434	COMMONS
The Budget-Mr. Gordon The remainder will be used to repay the outstanding loans to the Fund of $36 million and to be applied in future years to meet the cost of paying pensions at ages below 70.
Taking into account our non-budgetary loans, investments, receipts and credits-particularly the accumulations in our employee superannuation accounts-we estimate our net total non-budgetary cash requirements at $225 million. Adding this to the anticipated budgetary deficit we get a total cash requirement of $350 million for the year, apart from government security transactions or variations in our exchange reserves, and before allowance for the proposals I will now be making.
As I did last year, I would like to table and have included as an appendix to the budget, tables showing how these forecasts of revenue and expenditure appear when expressed in terms of our national economic accounts. They show an expected surplus in these terms of $343 million, compared with the surplus for the year just completed of $332 million.


Mr. Speaker:: If I may just interrupt, is it agreed that these tables be printed in Hansard?


Some hon. Members:: Agreed.
[Editor's note: For tables above referred to see Appendix "A"'].
[DOT] (8:50 p.m.)



PROPOSALS

Walter Lockhart Gordon: I turn now, Mr. Speaker, to the proposals which I wish to lay before the House.
Canada Development Corporation
The first is a financial measure which does not involve tax changes. One of our important objectives is to encourage the development of industrial opportunities in Canada by Canadians. There has been over the years increasing evidence of the need for additional Canadian sources of financing for businesses in Canada, particularly where substantial sums of equity funds are required. The recent actions taken by the United States and by the United Kingdom to protect their balance of payments have emphasized the need for industrially developed countries to be able to stand on their own feet more than in the past. In the future, new business developments in Canada should be looking to domestic sources for more of their financial requirements.
Canadian provinces will find their financing problems much easier with the inauguration

DEBATES	April 26, 1965
of the Canada Pension Plan and the Quebec Plan next year. Municipalities have already benefited greatly by the establishment of the Municipal Development and Loan Fund, and I expect they will derive at least indirect benefits from the accrual of funds under the the Canada Pension Plan. Canada now needs some new institutional channel through which Canadians can invest their savings in a form that carries with it a share in the ownership and direction of businesses operating in this country.
To assist in meeting this requirement, Parliament will be asked to approve a measure establishing a Canada Development Corporation. It would be the function of this Corporation to share in financing the initial development, or expansion of large scale industrial projects in Canada, and to provide financing, including refinancing, for large Canadian enterprises which might otherwise be led to seek funds outside Canada, with a consequent loss of ownership and control to non-residents. The Corporation would be expected to invest in projects and enterprises which are likely to contribute to the sound economic development of Canada and to be profitable in the long run.
The Canada Development Corporation would be authorized to purchase from the government the equity interest in Crown corporations that have become viable commercial operations. In particular the government would propose to sell to it Polymer Corporation, which has been a highly successful and profitable government enterprise of which Canadians can well be proud.
The sale of one or more Crown corporations in this way to the Canada Development Corporation would conform with the views expressed by the Glassco Commission.
The Canada Development Corporation would have an authorized share capital of about one billion dollars. The shares would be of the mutual fund type, the shareholder having the right of redemption at values to be established by the Corporation based on the value of its investments. There would be restrictions on the ownership and voting rights of the share of the Corporation to ensure that it is essentially Canadian owned.
The Corporation would be mainly financed by the sale of its shares to the public. Individual investors would be given priority in purchasing shares but support would also be sought from a wide variety of Canadian institutions, including insurance companies,
April 26, 1965

banks, trust companies, pension funds, estates and trusts, credit unions, charitable foundations and, I may add, provincial governments and their agencies.


Herbert Wilfred Herridge: We proposed the establishment of a Canadian development fund 15 years ago.


Walter Lockhart Gordon: I hear an interruption from my friend across the way. It is too bad he was not in a position to do anything about it.
No investor other than the federal government would be permitted to own more than 3 per cent of the outstanding shares.
The government would subscribe on its own account for 10 per cent of the issued share capital. In addition, the government might acquire additional shares from time to time, either as partial compensation for the sale of Polymer Corporation or in connection with underwriting the sale of shares to the public. In order to ensure the independence of the Corporation, any shares taken up by the government in excess of 10 per cent of the issued capital could be redeemed by the Corporation whenever the Board of Directors wished to replace them with shares sold to the public.
The government would also have authority to purchase debentures of the Corporation or to make loans to it up to a maximum of $100 million.
The Corporation would be directed by a Board of Directors to be appointed initially by the Government, with provision for election of the directors by its shareholders when the Corporation's shares have been sold to the public. In this way the Corporation would stand on its own feet, free of government control. In view of its proposed investment in the Corporation, the government would retain the right to appoint a small proportion of the Directors.
We are convinced that thousands of Canadians will welcome an opportunity to share in the future growth and development of our country; that they will take pride in owning even a small interest in expanding Canadian industries. Participation in the Canada Development Corporation will provide this opportunity.
I am placing a Resolution on the notice paper immediately to pave the way for the introduction of a bill to establish this Corporation.
Publications
I turn now to a measure of a very different character. The government has given considerable thought to the best method of deal-
The Budget-Mr. Gordon ing with the magazine problem, and to the equally important matter of preserving Canadian ownership and control of Canadian newspapers. At the present time there is no law or other impediment standing in the way of the purchase by non-residents of any of our newspapers. Given the vital role newspapers play in influencing public opinion, we do not believe we should run the risk of them falling under foreign control.
[DOT] (9.00 p.m.)
In the Resolutions which I am presenting this evening we propose that the Income Tax Act be amended to disallow, as a business expense of a Canadian advertiser, the cost of advertising primarily directed to a Canadian market in a non-Canadian periodical or nonCanadian newspaper. This measure would become effective next January. Advertising in the so-called "Canadian editions" of nonCanadian periodicals now being published and printed in Canada will not be affected by this provision, nor will advertising in the two small foreign-owned weekly newspapers already being published in this country. The question of the subsidized postal rates now enjoyed by the Canadian editions of nonCanadian periodicals will be studied as part of a general review being made of postal rates.
The purpose of this measure as it affects newspapers is purely preventive. No existing commercial interests will be affected, nor will any changes in existing advertising patterns be required. Foreign newspapers can enter Canada freely and will continue to do so, but we intend that our Canadian newspapers shall remain under the control of Canadian owners. They will be as free as ever to determine their own editorial content; they will be free to use whatever foreign commentaries and other features they wish; they will be free to rely upon whatever foreign or international news services they favour.
I shall also be proposing tonight a Resolution to amend the Customs Tariff to prohibit the entry into Canada of non-Canadian periodicals, such as split runs, containing advertising primarily directed to the Canadian market, as well as periodicals in which more than 5 per cent of the advertising contains specific references to sources of availability in Canada or conditions of sale in Canada. This is essentially the same as the Resolution which stood on the order paper last session.
April 26, 1965

The Budget-Mr. Gordon Accelerated Capital Cost Allowance
I wish to turn now to measures designed to encourage industrial development and increased productivity.
The first is one which does not require action by Parliament but which, I hope, will meet with general approval. It will be recalled that in 1963 the government introduced a highly accelerated rate of capital cost allowance on new manufacturing machinery and equipment, acquired by companies with a degree of Canadian ownership and by individuals carrying on business. This incentive measure is scheduled to terminate on June 13th of this year. It has permitted the cost of machinery and equipment to be deducted from income for tax purposes over as little as two years, and has greatly helped in bringing about the expansion and modernization of Canadian manufacturing and processing industries. It has been responsible in large measure for the great increase in private capital expenditure and thus for stimulating total employment and production. We have decided that this measure should be extended to cover machinery and equipment acquired up until the end of December, 1966. Before that date it will be thoroughly reviewed in the light of the analysis and conclusions of the Royal Commission on Taxation.
The effect upon our revenues in this fiscal year of this extension of the accelerated rate of capital cost allowance is estimated to be $15 million. The effect next year will be much greater.
I am also proposing some changes in capital cost allowances to help farmers who are facing difficulty in marketing corn and other grain crops in areas where there is a shortage of grain storage facilities. I am thinking of many areas, including the area comprised by the constituency of Essex East, a great corn belt. Under this plan, which will be incorporated in a regulation, the cost of all new grain storage facilities constructed in the period May 1, 1965, to December 31, 1966, may be written off for tax purposes over a four-year period. This will apply to farmers and taxable co-operatives as well as to others. The new arrangement will be helpful both in the east, where corn production is expanding rapidly because of changes in harvesting techniques, and in the west where rationalization of transportation and grain handling facilities should go hand in hand.
An important tax concession will also be provided to encourage industry to take new

steps to prevent the waste products from their operations polluting our streams and lakes. This will take the form of an amendment to the Income Tax Regulations to permit capital expenditures made until the end of 1966 by businesses primarily for the purpose of preventing water pollution to be deducted at the rate of 50 per cent. This provision will also be reviewed following the report of the Royal Commission on Taxation and after we have the results of studies being made of the problems of pollution and the means of dealing with them.
Scientific Research and Development
The Income Tax Act includes a provision introduced in 1962 which permits those making expenditures on scientific research to deduct not only the amount of these expenditures from income in the year in which they are incurred, but also an additional 50 per cent of the increase in research expenditures over those in the 1961 base year. This results in a reduction in taxes, which is equivalent to making a grant in support of such research.
I have received many representations and suggestions in regard to this extra 50 per cent deduction, as well as enquiries as to its future beyond the 1966 taxation year when the present provision expires. The government believes it is highly important to continue to offer a general inducement to industry to expand its effort in scientific research and development. We consider, however, that this inducement could be made fairer and more effective if it were in a form that was of more value to new and small companies, subject to the lower rate of tax, and of those faced with losses. The assistance now proposed would take the form of grants of defined amounts to be taken in cash or applied as credits against the tax liability of the businesses concerned. Such benefits would then be accounted for to Parliament in the same way as other expenditures.
For this purpose we propose to bring forward a bill that will provide in 1967 and later years a grant or a credit against tax liabilities equal to 25 per cent of the defined amount of expenditures on scientific research or development carried out by a business, either directly by its own staff or by contract with others in Canada. For 1966 a business will be permitted to elect whether to get the benefits available under the Income Tax Act or the benefits under this new legislation.
It is proposed that the whole amount of capital expenditures for scientific research or
April 26. 1965

development would be eligible to qualify for the bonus, subject to certain safeguards. In regard to current expenditure, it is proposed that the bonus be calculated on the increase in research and development expenditures in any particular year over the average of such expenditures in the three preceding years.
[DOT] (9:10 p.m.)
This assistance for research and development will be administered by the Department of Industry. It will be available automatically to all businesses whose expenditures on research and development are less than $50,000 a year. Those who wish to receive assistance based on larger expenditures than this will be able to do so by getting prior agreement from the Minister of Industry that the research and development proposed, if successful, would be likely to benefit Canada.
I have set forth the government's intention here so those making long term plans will be able to take these intentions into account. The legislation proposed will not be required until 1966, and we will welcome comments and suggestions based on the outline I have given.
Improvements to Income Tax Act
I have reviewed the Income Tax Act again this year, and considered carefully the many requests and suggestions received from taxpayers across Canada. It will not be possible to accede to all of them. If we were to do so the government would be left with no revenues at all.
I wish to propose a number of amendments to increase the equity of the Act in its application to individuals. One of these will be to allow a taxpayer to claim a deduction for supporting his niece or nephew where the parents of the niece or nephew are not able to provide support. A taxpayer will also be allowed a deduction for amounts spent to support his aunt or uncle if she or he is dependent by reason of mental or physical infirmity.
There will also be an amendment to ensure that contributions to the Canada Pension Plan and the Quebec Plan will be fully deductible in calculating taxable income.
Amendments will be introduced to permit individuals to transfer lump sum retiring allowances into a pension plan, deferred profitsharing plan or registered retirement savings plan without attracting tax at the time of transfer. The percentage of earned income that an individual may deduct as a premium
The Budget-Mr. Gordon under a registered retirement savings plan will also be increased.
It is proposed that amounts paid as annual trade union dues or professional dues, which now may be deducted from income under Section 11 of the Act, will no longer be included in amounts covered by the $100 optional standard deduction. This will permit both the amount of dues and the $100 standard deduction to be claimed in future.
I propose that corporations and individuals in business be granted the right to deduct certain expenditures made in connection with their businesses that have hitherto been ruled as non-deductible, on the grounds that they were capital in nature or not related directly to earning income. This amendment will permit a taxpayer to deduct expenditures such as the costs of making representations to a government or municipality for the purpose of obtaining a licence, franchise or trade mark in connection with his business, or amounts spent investigating the suitability of a site for a new factory or power development. It will also permit a taxpayer to deduct the cost of landscaping his place of business or an apartment building, and it will permit a farmer to deduct amounts spent for clearing land or laying drainage tile.


Herbert Wilfred Herridge: You can aspire now to receiving grateful credit for this.


Mr. Fisher:: You can retire now.


Walter Lockhart Gordon: Well, Mr. Speaker, I would just like to thank the hon. Member for Kootenay West for bringing this to my attention, and say I hope he does not retire. That, however, does not go for all his colleagues.
In 1963 a number of provisions were placed in the Income Tax Act to prevent tax avoidance by means that were prevalent at that time. These deterrents have been effective. Other loopholes in the law continue to be found, however, and exploited in a way which is unfair to others as well as costly to the Crown. When the Act is extensively revised in the light of the report of the Royal Commission on Taxation we hope that we can make some general changes that will safeguard against abuses. In the meantime we will continue the 1963 measures, and I propose to add several more of a specific character, some of which are in the Resolution, while others will first appear in the Bill itself.
Section 36 of the Act, which is intended to provide tax relief for lump sum payments, is being abused in some cases. Some persons arrange to have inordinately large amounts
April 26, 1965

The Budget-Mr. Gordon placed to their credit in pension or profitsharing plans and then, having received this amount upon termination of their employment or the winding up of the plan, they elect to have it taxed at a low rate under section 36. I propose that the major abuses in this area be blocked by restricting the amounts that qualify for taxation under Section 36.
I also propose an amendment to prevent persons from arranging to have business income taxed at no more than the non-resident withholding tax rate of 15 per cent through the use of trusts with non-resident beneficiaries. Because of the varied use of trusts it is difficult to foresee the effect that the proposed amendments in this area may have in all cases. Consequently modifications of this proposal will be considered if representations should show that the amendments outlined in the Resolution will have an unintended impact upon trust arrangements where tax avoidance is not a factor.
Some companies and their principal shareholders have found it possible to avoid taxation on the distribution of accumulated surpluses, or to avoid the withholding tax on payment of dividends to non-residents, by changing the residence of these companies to another country of companies incorporated in Canada. To prevent this form of tax avoidance I propose that henceforth companies incorporated in Canada shall be deemed to remain residents of Canada.
Several amendments will be introduced to prevent certain of the concessionary provisions applicable to the oil, gas and mining industries being used in ways that were not intended.
We propose to require annual returns from trustees administering pension plans, retirement savings plans, and deferred profit-sharing plans. These plans involve very large sums of money representing accumulations of income on which tax has been deferred. We believe that the tax authorities should receive an annual account of their operations.
Customs Tariff Changes
I turn now to matters relating to the Customs Tariff. As honourable members are aware, the Kennedy Round of trade negotiations which is being conducted under the auspices of the GATT is now in progress in Geneva. A number of the requests which have been received in the past year for reductions in rates of duty are being taken up in these negotiations. Accordingly the Resolutions relating to the Customs Tariff which I shall table at the end of my remarks contain

fewer changes than usual, and I do not feel it is necessary to describe them here.
I shall be seeking authority to renumber the items in the Customs Tariff by Order-in-Council. The present numbering of the Tariff has evolved over the years and is a mixture of numbers and letters, making it difficult to relate import statistics to individual tariff items. A purely arithmetic numbering of the tariff will permit the use of modern tabulating equipment for correlating import statistics and tariff items. As the Resolution makes clear, the proposed renumbering will not affect the substance of any item in any way.
During 1964 the Tariff Board submitted two reports, one covering mining equipment and the other covering oil-seeds, vegetable oils and related products. On March 29 of this year I tabled a report by the Board on radio, television and related products, and on April 9 I tabled a report on live turkeys. These four reports are now under consideration in preparation for international negotiations in connection with items which have been bound under the General Agreement on Tariffs and Trade.
I am proposing to send two new references to the Tariff Board. One will cover machines used in the grading, packing and storing of fresh fruits or fresh vegetables. The other will relate to precision instruments used in such activities as engineering, surveying, drafting and machining.
The Customs Act
I am proposing several changes in the Customs Act this year. One is being introduced to deal with the case put forward by the British government that there are some features of our Customs law which bear inequitably or unreasonably on British goods by comparison with goods from other countries.
What is involved in the operation of the value for duty provisions of the Customs Act as they relate to the quantities of goods sold and to the trade level at which they are sold in the country of origin. We have accepted the British contention that there are certain circumstances in which these provisions work a particular hardship on their exporters as compared with exporters in certain other countries. Accordingly I shall be moving an amendment to the Customs Act to provide power to deal with such cases by means of a new Section 37A of that Act. If Parliament approves it, we shall make effective use of this section to remove any dis-
April 26, 1965	COMMONS
crimination of this nature against British goods.
It is the government's hope that this proposal will be taken by British exporters as a decisive response to their pleas that Canada give a clear signal that we welcome their goods; we hope, too, they will respond by seeking out and serving the very substantial demand which certainly exists here in Canada for imported goods.
There are a number of other less important amendments which will be advanced in the Resolution on the Customs Act.
Estate Tax Act
I do not propose this year to introduce any amendments to the Estate Tax Act. We amended the Estate Tax Act last year, as you will recall, in a number of particulars, and I said that any material changes would now affect provincial revenues more than they would affect our own budget position. I went on to say we felt action should be deferred on such changes of substance until we had seen the results of both the federal and provincial commissions of enquiry, and had consultations with the provinces. That is still the situation.
Excise Tax Act
In regard to the Excise Tax Act, I have had many representations on the present exemptions from the sales tax, and proposals for new exemptions. I have considerable sympathy with a number of these proposals; their implications, however, raise still further problems of equity, and consequential changes. It is my belief that we must make a thorough review and revision of the sales tax as soon as possible after we have received the views of the Royal Commission on Taxation. I intend that it should be given priority and my department has already put in hand preparatory work to enable them to get ahead with the review quickly once we know what the commissioners' conclusions are. In the meantime, I do not propose to put forward any proposals for amendments in this Budget.
Drugs
There has been much concern expressed about the high prices of drugs in Canada and proposals made that they should be exempt from the sales tax, which has always applied to them. The government has considered these representations but does not wish to act on them until the matter has been considered by the special Committee of the House on Food and Drugs.
DEBATES	439
The Budget-Mr. Gordon
Some hon.'Members: Shame.


Walter Lockhart Gordon: Hon. Members across the way are making remarks but I would remind them that this is a Committee of the House on which I am sure some of them are important members. If the Committee comes to the conclusion that, as part of a comprehensive and effective program to reduce the prices of drugs, they should be exempt from the sales tax, I would expect to see this done in a special statute covering all the measures required to give effect to the program, and I am quite sure the hon. Member for Halton (Mr. Harley), who is Chairman of this Committee, will see it proceeds with this very important matter just as expeditiously as it can.
Tax Cut
I come finally, Mr. Speaker, to the question of what should be the general weight of our taxation in this coming year and, if it should be altered, what should be the amount and form of the change. I have already given the House the highlights of the econoinic situation, which are set forth in detail in the White Paper. From this it is evident that we have enjoyed an excellent rate of economic expansion in the last few years, and our situation now is good, though not completely satisfactory.
Looking ahead we foresee a further advance this year over 1964. However, we must plan to accommodate a rapid increase in our labour force this summer and in the next several years. We need to assure the market demand to put it to work productively. At the beginning of 1966, within this fiscal year, the commencement of the payment of contributions into the Canada and Quebec Pension Plans will exercise some restraining influence on the growth of consumer expenditure, which may not be fully offset by increased capital spending by the provinces or their agencies out of moneys from the Pension funds.
Our budgetary position for the last fiscal year came close to a balance in our normal accounting terms, and showed a sizeable surplus in terms of the economic accounts. For this new fiscal year our budgetary accounts will not be quite so close to a balance, because of changes already authorized by Parliament or proposals already placed before you. In terms of our national economic accounts, however, the federal budget will be a restraining influence this year unless we make some further changes.

April 26, 1965
The Budget-Mr. Gordon
[DOT] (9:20 p.m.)
Accordingly, after weighing up these considerations and the advice I have received from many quarters-including business men, trade unions, academic circles and the Review of the Economic Council-I believe this budget should be an expansionary one. To achieve this affect we should reduce moderately the weight of our taxation.
In choosing the nature and form of the reduction, I have been influenced by the fact that we are expecting to make a thorough revision of our tax structure after receiving the report of the Royal Commission and discussing the whole situation with the provinces. While we can count on none of our taxes being unaffected by such a revision, I have concluded that we should leave both the sales tax and the Corporation income tax largely as they are pending this review. Consequently we propose to concentrate the reduction in the personal income tax.


Some hon. Members:: Hear, hear.


Mr. Nowlan:: Wait till you hear it before you cheer.


Walter Lockhart Gordon: Those who pay this tax provide a very important part, indeed the largest single part, of federal government revenues. I am happy to recognize here their essential contribution in the last few years toward bringing the budget under control.
I also recognize the very natural feeling among people generally that taxes should be kept as low as possible. As Minister of Finance, I am happy that the present budget provides an opportunity to carry out that most desirable objective.
We have chosen a form of reduction that will not reduce provincial revenues, nor be too complicated for the typical taxpayer to apply in making out his return. In determining the amount of the reduction I have had to consider the condition of the budget and the economic consequences of the change. There is no precise mathematical formula that can be applied in our present situation. It must be a matter of judgment.
Taking all these factors into account, I propose, Mr. Speaker, that effective from the first of July we make a reduction of our federal tax equal to 10 per cent of the basic tax payable under our personal income tax law, subject to a maximum reduction of $600 per year.


John George Diefenbaker: Just under one cent a day.


Walter Lockhart Gordon: In most provinces this basic tax equals the total income tax payable to the federal and provincial governments combined. After allowing for the abatements from the basic tax in favour of the provinces, the reduction in the federal tax will be about 12J per cent, except for the higher incomes.

The amount of this tax reduction will be the same for all persons having the same taxable income. This means that people residing in the province of Quebec, for example, will benefit from tax cut just as much as people in all other parts of Canada. This is as it should be.

The direct effect of this tax reduction would be to reduce our revenues by about $170 million this fiscal year and by about $265 million in a full year. The amount retained by individuals as personal disposable income -that is "take-home pay"-will be correspondingly increased. As a result, we can expect the rate of private expenditure to increase by nearly this amount, and there should be secondary effects which ultimately should increase the rate of Gross National Product by something more than the amount of the tax reduction.
Apart from these effects upon private expenditures, I believe that this substantial cut in personal taxes will encourage and stimulate our working force-including those in management and the professions-upon whose efforts our prosperity and progress depend. This is one of the main reasons for concentrating the whole amount of the reduction on the personal income tax.
Since this tax reduction is being deliberately made to achieve these economic effects, I would not expect provincial governments to move in to raise their income taxes to take advantage of our action. If we in Parliament are to manage the nation's economic affairs properly we must be able and prepared to take action of this kind from time to time, both in putting taxes down and in putting them up when the occasion demands it. The larger the share of the provinces and municipalities in the total public revenues of the country, the larger must be the proportionate change in our own taxes necessary to achieve the objectives of fiscal management.
The particular form of this tax cut should be regarded as provisional until we have com-
April 26, 1965	COMMONS
pleted the basic review of our structure that is under way. I would expect that by 1967 we will enact a new schedule of tax rates and make a number of modifications in the base of the tax.
I would like to insert in Hansard here tables showing the effects of the tax cut on
DEBATES	441
The Budget-Mr. Gordon the annual tax payable by taxpayers at various income levels.


Mr. Speaker:: Does the house agree?


Some hon. Members:: Agreed.
[Editor's Note: The tables above referred to are as follows:]
TO ILLUSTRATE PROPOSED PERSONAL INCOME TAX REDUCTION (Single Taxpayer with no Dependants)
Income	Tax for 1965 before reduction	Tax reduction in a full year	Combined federal and provincial tax	Federal tax only	Amount of reduction	% of combined federal and provincial tax	% of federal tax only$	$	$	$	%	%2,0C0	99	78	10	10.0	12.73,000	236	186	24	u	it4,000	403	318	40	11	U5,000	591	467	59	it	a7,500	1,154	912	115	a	a10,000	1,795	1,418	180	"	15,000	3,520	2,781	352	a	20,000	5,645	4,460	565	a	a30,000	10,195	8,054	600	5.9	7.450,000	20,333	16,063	600	3.0	3.7100,000	49,295	38,943	600	1.2	1.5
The "Combined federal and provincial tax" shown for 1965 before tax reduction includes provincial tax computed at the rate of 21% of basic tax. The "Federal tax only" is after deducting the abatement of 21% in accordance with current federal-provincial arrangements.
The old age security tax is not included in the taxes shown.
In calculating these taxes it has been assumed that taxpayers with incomes under $10,000 deduct only the optional standard deduction of $100 but that taxpayers with incomes of $10,000 or greater deduct charitable donations and eligible medical expenses which aggregate 2\% of their income.
April 26, 1965


Walter Lockhart Gordon: It will be seen that in a full year the federal tax for a single person with an income of $3,000 will be reduced from $186 to $162, that is, by $24; for a married man with two children and an income of $5,000, the reduction will be $30 a year; for a married man without children having an income of $10,000, the reduction will be $151 a year.
I would also like to include two tables showing how the prospective Canadian income tax for 1966, including the Old Age Security Tax the Canada Pension Plan contributions and the provincial income tax in Ontario, as an example, would compare with the United
DEBATES	443
The Budget-Mr. Gordon States income taxes including social security contributions and the State income tax in New York. It must be recognized that the comparison in any individual case will be affected substantially by the deductions which can be claimed under the tax laws of the two countries. In the United States deductions are permitted for state taxes paid, mortgage interest, etc., which will vary from person to person. The deductions used for the comparisons in these tables are set forth in the footnotes.
[Editor's Note: The tables referred to above are as follows:]



COMPARISON OF PERSONAL INCOME TAXES IN CANADA AND THE UNITED STATES

[Stage Direction]
(Single taxpayer with no dependants)
Income	Canada-	-taxes at rates proposed for 1966	U.S.A.-	*taxes at rates for 1966 in	present lawFederal income tax	Provincial income tax	O.A.S. tax and C.P.P. contribution	Total taxes	Federal income tax	State income (New York)	Social Security tax	Total taxes$	$	$	$	$	$	$	$	$1,000	7	. 7	14	41	552,000	65	24	61	150	161	16	83	2603,000	156	57	119	332	329	43	124	4964,000	266	97	177	540	500	70	165	7355,000	390	142	199	731	671	106	198	9757,500	762	277	199	1,238	1,168	203	198	1,56910,000	1,185	431	199	1,815	1,742	334	198	2,27415,000	2,323	845	199	3,367	3,170	706	198	4,07420,000	3,726	1,355	199	5,280	4,838	1,190	198	6,22630,000	7,148	2,447	199	9,794	8,885	2,190	198	11,27350,000	14,853	4,880	199	19,932	18,242	4,190	198	22,632100,000	36,864	11,831	199	48,894	45,333	9,190	198	54,721
The taxes shown for each country are the federal income tax, the provincial or state income tax and the federal social security charge. The federal income tax shown for Canada is the tax in all provinces except Quebec. The provincial income tax is the provincial income tax in any province except Quebec, Manitoba or Saskatchewan. The state income tax is the New York State income tax. In the United States thirty-five states impose income taxes.
In calculating the Canadian taxes it has been assumed that taxpayers with incomes under $10,000 deduct only the optional standard deduction of $100 but that taxpayers with incomes of $10,000 or greater deduct charitable donations and eligible medical expenses which aggregate 2\% of their income. The Canadian federal income tax is after the proposed reduction of 10% of basic tax with a maximum of $600.
In calculating the United States taxes it has been assumed that taxpayers with incomes of $10,000 or less deduct only the optional standard deduction. This is 10% of income with a minimum of $300 for single taxpayers and a maximum of $1,000. It was also assumed that taxpayers with incomes in excess cf $10,000 use the optional standard deduction for purposes of their state income tax and for federal tax purposes deduct charitable donations, eligible medical expenses, mortgage interest, property taxes, etc., which aggregate 5% of their income and in addition deduct their state income tax.
The old age security tax in Canada is 4% of taxable income with a maximum of $120 and the Canada Pension Plan contribution is 1.8% of income in excess of $600 with a maximum of $79.20. The social security tax in the United States for 1966 as provided in the present law is 4.125% of adjusted gross incomes with a maximum of $198 and this has been used in the above table. However, the Budget Message of the President on January 25, 1965, recommended that this be increased to 4.25% with a maximum of $238 for 1966.
April 26, 1965
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The Budget-Mr. Gordon

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(Married taxpayer with no dependants)
Income	Canada-	-taxes at rates proposed for 1966	U.S.A.-	-taxes at rates for 1966 in	present lawFederal income tax	Provincial income tax	O.A.S. tax and C.P.P. contribution	Total taxes	Federal income tax	State income tax (New York)	Social Security tax	Total taxes$	$	$	$	$	$	$	$	$1,000	-	-	7	7	41	412,000	-	-	25	25	56	83	1393,000	65	24	79	168	2C0	10	124	3344,000	156	57	137	350	354	37	165	5565,000	266	97	195	558	501	67	198	7667,500	606	220	199	1,025	915	163	198	1,27610,000	993	361	199	1,554	1,342	283	198	1,82315,000	2,059	749	199	3,007	2,363	639	198	3,20020,000	3,429	1,247	199	4,875	3,452	1,115	198	4,76530,000	6,768	2,327	199	9,294	6,087	2,115	198	8,40050,000	14,435	4,748	199	19,382	13,189	4,115	198	17,502100,000	36,370	11,675	199	48,244	36,057	9,115	198	45,370
The taxes shown for each country are the federal income tax, the provincial or state income tax and the federal social security charge. The federal income tax shown for Canada is the tax in all provinces except Quebec. The provincial income tax is the provincial income tax in any province except Quebec, Manitoba or Saskatchewan. The state income tax is the New York State income tax. In the United States thirty-five states impose income taxes.
In calculating the Canadian taxes it has been assumed that taxpayers with incomes under 810,000 deduct only the optional standard deduction of 8100 but that taxpayers with incomes of 810,000 or greater deduct charitable donations and eligible medical expenses which aggregate 2£% of their income. The Canadian federal income tax is after the proposed reduction of 10% of basic tax with a maximum of $600.
In calculating the United States taxes it has been assumed that taxpayers with incomes of $10,000 or less deduct only the optional standard deduction. This is 10% of income with a minimum of 8400 for joint returns of married taxpayers and a maximum of $1,000. It was also assumed that taxpayers with incomes in excess of $10,000 use the optional standard deduction for purposes of their state income tax and for federal tax purposes deduct charitable donations, eligible medical expenses, mortgage interest, property taxes, etc., which aggregate 5% of their income and in addition deduct their state income tax. It was further assumed that taxpayers take advantage of the income splitting provision in the federal tax law.
The old age security tax in Canada is 4% of taxable income with a maximum of $120 and the Canada Pension Plan contribution is 1.8% of income in excess of $600 with a maximum of $79.20. The social security tax in the United States for 1966 as provided in the present law is 4.125% of adjusted gross income with a maximum of $198 and this has been used in the above table. However, the Budget Message of the President on January 25, 1965 recommended that this be increased to 4.25% with a maximum of $238 for 1966.
It will be noted that the combined Canadian levy is below that in the United States throughout for single persons. For married persons the Canadian combined levies are less up to a level of about $17,000 a year; above that level the effect of "income splitting" for husband and wife in the United States puts their tax slightly lower than ours.
It must of course be borne in mind that these are comparisons of levies on personal incomes only, and there are many other taxes in both countries which have to be taken into account in comparing the total weight of taxation. On the whole, however, after this tax cut, income taxes and social security contributions based on income will be less in Canada than in the United States. This

means there will be no inducement from an income tax point of view for young Canadians to move to the United States or to continue to live there rather than in Canada.
This major tax cut of $265 million a year, together with the other changes outlined, will alter our revenues for this new fiscal year directly and also indirectly by reason of their effect on the economy. I would expect the Gross National Product for 1965 as a whole to increase over 1964 by slightly more than the approximate figure of 7 per cent I mentioned earlier. Taking this and direct effects of tax changes into account, we estimate that our revenues for this fiscal year should be about $7,350 million. Our expenditures I have forecast at $7,650 million. This
April 26. 1965
will leave a deficit in terms of our public accounts of approximately $300 million.
Taking all our expected non-budgetary receipts and disbursements into account, we would anticipate a total cash requirement, for other than transactions in government securities, or changes in our foreign exchange reserves, of $525 million.
In terms of our national economic accounts the federal government's revenue and expenditure transactions would show a modest surplus of $152 million. Given the economic and fiscal prospects for the year ahead, I think this outcome of the budget is about right.
In conclusion, Mr. Speaker, may I emphasize that our national finances have been brought under control; our national economy is moving ahead in a satisfactory way; and we are now able to lead from strength.
The times call for an expansionary approach in our financial and economic affairs. Consequently this is a growth budget. It expresses the determination of the government to give a lead in achieving our national potential. It is intended as a challenge to Canadians in all provinces to share in the great future that can be ours.


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Resolved: That it is expedient to introduce a measure to establish an investment corporation, to be known as the Canada Development Corporation, to provide through savings by Canadians a supplementary large-scale source of financing where substantial sums of equity capital are required for the initiation or expansion of larger enterprises in Canada and for facilitating, in the case of offers to purchase or sell shares of such enterprises, the acquisition of such shares by Canadian residents rather than non-residents; to authorize the issue by the Corporation to Canadian residents, at an initial issue price of five dollars per share, of shares of the Corporation the total number of which outstanding at any time shall not exceed two hundred million; to authorize the Government of Canada to underwrite the issue of shares of the Corporation, and at its discretion to invest in shares of the Corporation on its own account not exceeding in number ten per cent of the total number of issued and outstanding shares of the Corporation, the amount of which underwriting commitment, together with the total amount in-
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The Budget-Resolutions vested by the Government of Canada in shares of the Corporation, shall not exceed two hundred and fifty million dollars; to authorize the Government of Canada to make loans to or purchase debentures of the Corporation to an aggregate amount not exceeding one hundred million dollars and to sell to the Corporation the holdings of Canada of shares of certain Crown corporations; and to provide further for other necessary and incidental matters relating to the establishment of the Corporation, its objects and powers, and its management, operation and control.

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Resolved, that it is expedient to amend the Customs Act by:
1.	Striking out subsection (1) of section 22 and substituting the following:
22. (1) Unless the goods are to be warehoused in the manner by this Act provided, the importer shall, at the time of entry,
(a)	pay or cause to be so paid, all duties upon all goods entered inwards; or
(b)	in the case of goods entered in accordance with the terms and conditions prescribed by regulations made under subsection (3), present in respect of the duties upon such goods a bond, note or other document as prescribed by such regulations;
and the collector or other proper officer shall, immediately thereupon, grant his warrant for the unlading of such goods, and grant a permit for the conveyance of such goods further into Canada, if so required by the importer.
2.	Adding to section 22 the following subsection:
22. (3) The Governor in Council may make regulations prescribing_____________________
(a)	the terms and conditions upon which goods may be entered into Canada free of any requirement that the importer shall, at the time of entry, pay or cause to be so paid all duties on the goods so entered inwards; and
(b)	the terms and conditions of any bond, note or other document presented upon the entry of such goods in respect of the duties thereon.
3.	Striking out subsection (1) of section 35 and substituting the following:
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35. (1) The value for duty of goods imported shall be determined in accordance with the provisions of sections 36 to 41A.
4.	Striking out all that portion of subsection (2) of section 35 preceding paragraph (a) and substituting the following:
35. (2) In this section and sections 36 to 41A, with reference to any goods,
5.	Adding immediately after section 37 the following section:
37A. Where the Governor in Council is satisfied, on a report from the Minister, that the application of subparagraph (i) of paragraph (e) of subsection (2) of section 36 or subsection (3) of section 36 is inequitable in that it results in discrimination against the importation of goods of a class from any country, as compared with the importation of goods of that class from any other country, the Governor in Council may prescribe the manner in which the value for duty of goods of that class, as determined under section 36 or 37, shall be reduced; but the value for duty of any imported goods upon being reduced as provided in this section shall not be less than an amount equal to the cost of production of the goods plus such amount for gross profit as is deemed reasonable by the Governor in Council.
6.	Adding immediately after section 41 the following section:
41A. In the case of any imported goods that
(a)	were shipped indirectly to Canada from
the country of origin through one or more other countries; and_________________________
(b)	would, but for this section, be valued for duty under sections 36 to 40B at less than
the value for duty of such goods would be if the country of export were the country of origin:
the goods shall, notwithstanding subsection (1) of section 36, upon such terms and conditions as to shipment, documentation, warehousing, transshipment or the like as the Governor in Council may prescribe, be valued for duty as if they were imported direct from the country of origin at the time they were first shipped from that country._____________
7.	Striking out section 79 and substituting the following:
79. Subject to subsection (1) of section 22, no person shall make, nor shall any officer accept, any bond, note or other document for the purpose of avoiding or deferring the actual payment of duties legally accruing on goods imported into Canada, or arrange for deferring payment of such duties in any way, unless such goods are entered for warehouse, and duly deposited therein according to the laws and regulations governing the warehousing of such goods.
8.	Adding to section 104 the following subsection:
104. (la) Where goods, the property of the government of a country other than Canada, that were imported into Canada free of duty or at a rate lower than that to which they would otherwise be liable, are sold or otherwise disposed of on behalf of the government of such country in accordance with an agreement between the governments of such country and Canada, such goods shall be charged with duties payable at such rate as may be determined by the Minister.

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CUSTOMS TARIFF	2.
1. Resolved, that the Customs Tariff be amended by adding thereto, immediately after section 16 thereof, the following section:
17. (1) The Governor in Council, by order, may from time to time amend
(а)	Schedules A to C, and
(б)	any lists of articles or goods the duties on which are removed or reduced pursuant to any Act or any order in council under the Customs Act or this Act. by renumbering the items set out in Schedules A to C or in any such list but not so as to affect the status of any of those items with respect to the payment of duty,
(2)	On and after the coming into force of an order under subsection (1) a reference by its former number in any Act or in any statutory or other instrument or document to any item renumbered by that order shall, unless the context otherwise requires, be construed to be a reference to that item as renumbered by the order.
(3)	The Minister of National Revenue may, from time to time by publication in Part I of the Canada Gazette, give notice of any change required to be made, by virtue of an order under subsection (1), in any reference in any Act or in any statutory or other instrument or document to an item renumbered by the order where the reference thereto is by the former number.
2. Resolved, that Schedule A to the Customs Tariff ha amended by striking out tariff items 209e, 210i, 263e, 384, 440m(1), 440n(l), 445z, 541o(2) and 695c, and the enumerations of goods and the rates of duty set opposite each of those items, and by inserting therein the following items, enumerations of goods and rates of duty:
Tariff
Item
Most-
British	Favoured-
Preferential	Nation
Tariff	Tariff
General
Tariff
Rates in Effect Prior to Rates Proposed in this Budget
British	Most-
Preferential	Favoured-Nation	GeneralTariff	Tariff	Tariff209e	Potassium chloride	
(Applicable to December 31, 1966)	Free	Free	25 p.c.	Free	Free 25 p.c. (Applicable to December 31, 1965)	210i_	Sodium hypochlorite in solution	
(Applicable to December 31, 1966)	15 p.c.	20 p.c.	30 p.c.	15 p.c.	20 p.c. (Applicable to December 31,	30 p.c. 1965)263e	Compounds of tetramethyl lead, in which tetramethyl lead is the preponderant constituent by weight	
(Applicable to December 31, 1966)	12£ p.c.	12J p.c.	25 p.c.	12$ p.c.	12$ p.c. (Applicable to December 31,	25 p.c. 1965)384	Skelp, plate, sheet or strip of iron or steel, hot- or cold-rolled, for use in the manufacture of pipes or tubes. ..	Free	71 p.c.	15 p.c.	Free 5 p.c. 5 p.c.	7i p.c. 10 p.c. 15 p.c.	15 p.c. 20 p.c. 25 p.c.388	Foundry moulding snap flasks and jackets for use there-with	Free	Free	35 p.c.	10 p.c. Various	22$ p.c. Various	35 p.c. Various
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			Most-Fa voured-Nation Tariff			Rates in Effect Prior to Rates Proposed in this Budget	
Tariff Item	British 	
Preferential Tariff	General Tariff	British Preferential Tariff	Most- F avoured-N ation Tariff	General Tariff440m Aircraft, not including engines, under such regulations as the Minister may prescribe: (1) When of types or sizes not made in Canada.... on and after July 1, 1966	Free Free	Free 15 p.c.	27$ p.c. 27$ p.c.	Free Free	Free 15 p.c. (on and after July 1, 1965)	27$ p.c. 27$ p.c.440n	Aircraft engines, when imported for use in the equipment of aircraft: (1) When of types or sizes not made in Canada.... on and after July 1, 1966	Free Free	Free 15 p.c.	27$ p.c. 27$ p.c.	Free Free	Free 15 p.c. (on and after July 1, 1965)	27$ p.c. 27$ p.c.445z	Parts for use in the manufacture or repair of electric dry shaving machines for use in removing human hair or of rectifier converters used in conjunction therewith....	Free	Free	10 p.c.	Free 15 p.c.	Free 22* p.c.	10 p.c. Various541a	Yarns and rovings, including threads, cords and twines, wholly or in part of vegetable fibres, n.o.p., not containing silk, wool or hair, man-made fibres or filaments nor glass fibres or filaments: (2) Linen yarns for weaving, knitting or braiding into fabrics	Free	Free	25 p.c.	Free 12$ p.c. 15 p.c.	Free 17$ p.c. 20 p.c.	25 p.c. 25 p.c. 25 p.c.695c	Original sculptures and statuary, including the first	twelve replicas made from a sculptor's original work or model; all the foregoing the professional productions of sculptors only and valued at not less than seventy-five dollars each	Free	Free	Free	Free	Free	Free695e	Hand-woven tapestries, suitable only for use as wall	hangings, valued at not less than twenty dollars per square foot	Free	Free	Free	25 p.c.	27$ p.c.	55 p.c.
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3. Resolved, that Schedule B to the Customs Tariff he amended by inserting therein the following item, enumeration of goods and rate of drawback of duty:
Item No.	Goods	When Subject to Drawback	Portion of Duty (not including Special Duty or Dumping Duty) Payable as Drawback
1010 Knitted netting.		When used in the manufacture of shapes for women's or	
		children's headgear		99 p.c.
4. Resolved, that Schedule C to the Customs Tariff be amended by striking out item 1220 and the enumeration of goods set opposite that item, and by inserting therein the following item and enumeration of goods:
1220 Offensive weapons, as defined in the Criminal Code:
This item does not affect in any manner:
(а)	arms, implements or munitions of war, army, naval and air stores, and any articles deemed capable of being converted thereinto or made useful in the production thereof, imported under permit issued by the Minister of National Revenue pursuant to regulations made by the Governor in Council under section 279 of the Customs Act;
(б)	firearms imported by a person who holds a permit in Form 43 or Form 44, issued with respect thereto, under section 94 of the Criminal Code;
(c)	shotguns and rifles of the standard or auto-loading type imported for sporting use only;
(d)	antique articles eligible for entry under tariff item 693 (i) or tariff item 693 (iii), and bona fide collectors' items, as determined by the Minister;
(e)	arms, military stores and munitions of war eligible for entry under tariff item 708 or tariff item 7086; or
(/) arms, military stores, munitions of war or offensive weapons exempted from the provisions of this item by a regulation of the Governor in Counci' in any particular case or class of cases.
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5.	Resolved, that Schedule C to the Customs Tariff be amended by inserting therein the following item and enumeration of goods:
1221	(1)	Issues of a periodical, one of the four immediately preceding issues of which, if such preceding issue is dated after September 30, 1965,	has, under regulations prescribed by the Governor in Council, been found to be an issue of a special edition, including a split run or a regional edition,	that contained an
advertisement that was primarily directed to a market in Canada and that did not appear in identical form in all editions of that issue	of that periodical
that were distributed in the country of origin,
(2) Issues of a periodical, one of the four immediately preceding issues of which, if such preceding issue is dated after September 30, 1965, has, under regulations prescribed by the Governor in Council, been found to be an issue, more than 5 per cent of the advertising space in which consisted of space used for advertisements that indicated specific sources of availability in Canada, or specific terms or conditions relating to the sale or provision in Canada, of any goods or services, except where the indication of such sources of availability or such terms or conditions was primarily diiected to persons outside Canada.
For the purposes of this item,
(a) "issue" includes a special annual issue, and
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The Budget-Resolutions

(tO "periodical" means a periodical, the issues of which, other than special annual issues, are published at regular intervals of more than 6 days and less than 15 weeks and are distributed as issues of a distinct publication or as a supplement to more than one newspaper, but does not include
(i)	a catalogue,
(ii)	a newspaper, or
(iii)	a periodical, the principal function of which is the encouragement, promotion or development of the fine arts, letters, scholarship or
religion.
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6.	Resolved, that any enactment founded upon resolutions 2, 3 and 4 of the foregoing resolutions shall be deemed to have come into force on the 27th day of April, 1965, and to have applied to all goods mentioned in the said resolutions imported or taken out of warehouse for consumption on or after that day, and to have applied to goods previously imported for which no entry for consumption was made before that day.
7.	Resolved, that any enactment founded upon resolution 5 of the foregoing resolutions shall come into force on the 1st day of January, 1966, and shall apply to all goods mentioned in the said resolution imported or taken out of warehouse for consumption on or after that day, and shall apply to goods previously imported for which no entry for consumption was made before that day.
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April 26, 1965	COMMONS

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Income Tax Act and related provisions of the Federal-Provincial Fiscal Arrangements Act and to provide among other things:
1.	That for the 1966 and subsequent taxation years the income tax payable by an individual be reduced by an amount equal to the lesser of 10 per cent of basic tax or $600 and for the 1965 taxation year by an amount equal to the lesser of 5 per cent of basic tax or $300.
2.	That for the 1965 and subsequent taxation years a taxpayer may deduct in computing his taxable income an amount for the support of a person who was his niece or nephew and who during the year resided in Canada, was wholly dependant upon him for support, and was
(a)	under 21 years of age,
(b)	21 years of age or over and dependant by reason of mental or physical infirmity, or
(c)	21 years of age or over and in full time attendance at a school or university,
if
(d)	the mother of the niece or nephew was divorced or separated and not in receipt of alimony or similar payments, or
(e)	the father of the niece or nephew was deceased or mentally or physically infirm, not exceeding $300 if the person was a child qualified for family allowance and $550 if he was not so qualified.
3.	That for the 1965 and subsequent taxation years a taxpayer may deduct in computing his taxable income an amount not exceeding $550 expended by him during the year for the support of a person who was his aunt or uncle and who during the year resided in Canada and was dependant upon him for support by reason of mental or physical infirmity.
4.	That for the 1970 and subsequent taxation years the additional exemption of $500 now allowed to a taxpayer who has attained the age of 65 years be allowed only if the taxpayer has attained the age of 70 years and that for the taxation years 1966 to 1969 inclusive a taxpayer who has attained the age of 65 years but has not attained the age of 70 years be allowed the additional exemption of $500 only if he did not receive a pension under the Old Age Security Act in respect of any month in that year.
5.	That for the 1965 and subsequent taxation years a taxpayer who deducts in com-
DEBATES	451
The Budget-Resolutions puting his income from an office or employment
(a)	annual dues to maintain membership in a trade union or to maintain membership in an association of public servants,
(b)	annual dues retained from his remuneration pursuant to the provisions of a collective agreement aid paid to a trade union or association, or
(c)	annual professional membership dues the payment of which was necessary to maintain a professional status recognized by statute,
shall not by reason of such deduction be ineligible to deduct the standard deduction of $100 described in paragraph (ca) of subsection (1) of section 27 of the Act.
6.	That for the 1966 and subsequent taxation years a person, the spouse of such person residing with him and previously resident in Canada, or any dependant child of such person, shall be deemed to have been resident in Canada throughout a taxation year if such person was at any time in the year performing services in a country other than Canada under a prescribed international development assistance program of the Government of Canada, and was resident in Canada during a part of the year preceding the commencement of such services.
7.	That for the 1966 and subsequent taxation years a contribution made by a person under the Canada Pension Plan or under a provincial pension plan as defined in section 3 of the Canada Pension Plan may be deducted in computing the income of such person.
8.	That for the 1965 and subsequent taxation years the limitation on the amount related to earned income that a taxpayer may deduct as a premium under a registered retirement savings plan be increased from 10 per cent of earned income to 20 per cent of earned income.
9.	That for the 1965 and subsequent taxation years such part of any amount that would otherwise be included in computing income of a taxpayer as a retiring allowance be deductible if it is paid in the year, or Within 60 days after the end of the year, as a contribution to a registered pension fund or plan, as a premium under a retirement savings plan, or to a trustee under a deferred profit sharing plan.
10.	That there may be deducted in computing the income of a taxpayer an amount in respect of an outlay or expense made by the taxpayer in the 1965 and subsequent taxation years
[Stage Direction]
April 26, 1965
The Budget-Resolutions
(a)	to a person with whom the taxpayer is dealing at arms length and who is the lessee of property owned by the taxpayer, to obtain the cancellation of a lease on such property,
(b)	for landscaping property used by the taxpayer for the purpose of gaining or producing income,
(c)	for clearing land or laying tile drainage for the purpose of carrying on a farming business,
(d)	as or on account of the cost of making representations to a government, municipality or other public authority in connection with a business carried on by the taxpayer, including representations for the purpose of obtaining a license, permit, franchise, or trademark,
(e)	as or on account of the cost incurred in investigating the suitability of a site for a building or other structure planned by the taxpayer for use in connection with a business carried on by him.
11.	That for the 1965 and subsequent taxation years a corporation shall be deemed to be resident in Canada throughout a taxation year if
(a)	it was incorporated in Canada before April 27, 1965 and was resident in Canada in its taxation year that included April 26, 1965 or in any subsequent taxation year, or
(b)	it was incorporated in Canada after April 26, 1965.
12.	That with respect to payments received by a taxpayer after April 26, 1965, other than a payment made upon the death of an employee, the amount that a taxpayer may elect to have taxed under section 36 of the Act shall not exceed
(a)	in the case of a single payment
(i)	out of or pursuant to a superannuation or pension fund or plan, or
(ii)	pursuant to deferred profit sharing plan, or
(iii)	pursuant to an employee's profit sharing plan,
$1,500 times the number of years during which the employee, in respect of whom the payment was made, was a member of the plan, or
(b)	in the case of
(i)	a single payment upon retirement of an employee in recognition of long service, or
(ii)	a payment or payments made by an employer to an employee or former employee upon or after retirement in respect of loss of office or employment
$1,000 times the number of years during which the employee, in respect of whom the pay-

ment was made, was an employee of the employer who made the payment.
13.	That for taxation years commencing after April 26, 1965, a trust or estate (other than a trust or estate arising on death) that has income from a business carried on by it in Canada may not deduct in computing its income an amount paid or payable to a beneficiary who is
(a)	a non-resident of Canada,
(b)	a non-resident-owned investment corporation, or
(c)	another trust or estate resident in Canada, unless that other trust or estate
(i)	arose on a death, or
(ii)	has been since April 26, 1965 a beneficiary of the trust or estate paying the amount and the trust or estate paying the amount has been carrying on the business since April 26, 1965, and any amount paid or payable out of the income for the year of the first-mentioned trust or estate will continue to be included in the income of its beneficiary notwithstanding the fact that the first-mentioned trust or estate was not entitled to deduct the amount in computing its income.
14.	That for the 1965 and subsequent taxation years the amount of income derived from a new mine that a corporation may exclude in computing its income shall be confined to income from the operation of the mine by the corporation.
15.	That where a joint exploration corporation acquires after April 26, 1965 a right, licence or privilege to explore for, drill for or take petroleum, natural gas or other related hydrocarbons, the cost of the right, license or privilege may not be renounced to a shareholder corporation.
16.	That for the 1965 and subsequent taxation years an amount that a taxpayer may exclude from his income because it is consideration for a mining property acquired as the result of his efforts as a prospector, or as the result of efforts of a prospector who was employed or financially assisted by him, shall not include a share of profits, a royalty or a payment based on production.
17.	That the Minister of National Revenue with the approval of the Governor in Council may on behalf of the Government of Canada enter into an agreement with the government of a province, under which one government undertakes to transfer to the other, in respect of income tax paid by an individual from whom deductions were made at source as though he were resident in a place other
April 26, 1965	COMMONS
than the province in which he was resident on the last day of the year, a part of the amount deducted or withheld under section 47 of the Act or a similar provision of a provincial income tax act.
18.	That in order to give effect to the provisions of paragraph 1 without reducing the amount of equalization payments to any province a consequential amendment be made to the Federal-Provincial Fiscal Arrangements Act to adjust the fractions set out therein in the definition of "standard individual income tax" used in the computation of equalization payments.
19.	That a new section be added to the Act concerning expenditures of a taxpayer for advertising space in a non-Canadian newspaper or periodical having effect substantially as follows:
"12A. (1) In computing income, no deduction shall be made in respect of an otherwise deductible outlay or expense of a taxpayer for advertising space in an issue of a nonCanadian newspaper or periodical dated after December 31, 1965 for an advertisement directed primarily to a market in Canada.
(2)	An issue or edition of an issue of any newspaper or periodical that is edited in whole or in part in Canada and printed and published in Canada and that was not on April 26, 1965 a Canadian newspaper or periodical shall be deemed, for the purposes of subsection (1), not to be an issue of a nonCanadian newspaper or periodical if
(a)	throughout the period of twelve months ending April 26, 1965 issues or editions of issues of that publication were being edited in whole or in part in Canada and printed and published in Canada at the usual intervals for issues of that publication and have since that date continued to be so edited, printed and published without interruption except for a reason other than the cessation of the business of publishing that publication; and
(b)	in the case of a periodical, the periodical is similar, in content and in respect of the class of readers to whom it is directed, to the issues or editions of that periodical that were throughout the period of twelve months ending April 26, 1965 being edited in whole or in part in Canada and printed and published in Canada.
(3)	Subsection (1) does not apply with respect to an advertisement in a special issue or edition of a newspaper that is edited in whole or in part and printed and published outside Canada if such special issue or edition is devoted to features or news related pri-
DEBATES	453
The Budget-Resolutions marily to Canada and the publishers thereof publish such an issue or edition not more frequently than twice a year.
(4)	Subsection (1) does not apply with respect to an advertisement in
(a)	a catalogue, or
(b)	any publication the principal function of which is the encouragement, promotion or development of the fine arts, letters, scholarship or religion.
(5)	In this section,
(a) 'Canadian issue' means,
(i)	in relation to a newspaper, an issue, including a special issue,
(A)	the type of which, other than the type for advertisements or features, is set in Canada,
(B)	the whole of which, exclusive of any comics supplement, is printed in Canada,
(C)	that is edited in Canada by individuals resident in Canada, and
(D)	that is published in Canada, and
(ii)	in relation to a periodical, an issue, including a special issue,
(A)	the type of which, other than the type for advertisements, is set in Canada,
(B)	that is printed in Canada,
(C)	that is edited in Canada by individuals resident in Canada, and
(D)	that is published in Canada,
but does not include an issue of a periodical
(E)	that is produced or published under a license granted by a person who produces or publishes issues of a periodical that are printed, edited or published outside Canada, or
(F)	the contents of which, excluding advertisements, are substantially the same as the contents of an issue of a periodical, or the contents of one or more issues of one or more periodicals, that was or were printed, edited or published outside Canada;
(b) 'Canadian newspaper or periodical' means a newspaper or periodical the right to produce and publish issues of which belongs to or is vested in
(i)	a Canadian citizen,
(ii)	a partnership of which at least | of the members are Canadian citizens and in which interests representing in value at least f of the total values of the partnership property are owned by Canadian citizens,
(iii)	an association or society of which at least | of the members are Canadian citizens,
(iv)	Her Majesty in right of Canada or a province, or a municipality in Canada, or
(v)	a corporation
454	COMMONS DEBATES	April 26. 1965
The Budget-Mr. Nowlan
(A)	that is incorporated under the laws of Canada or a province,
(B)	of which the chairman or other presiding officer and at least f of the directors or other similar officers are Canadian citizens, and
(C)	of which, if it is a corporation having share capital, at least J of the shares having full voting rights under all circumstances, and shares representing in the aggregate at least | of the paid-up capital, are owned by Canadian citizens or by corporations other than corporations controlled directly or indirectly by citizens or subjects of a country other than Canada; and
(c)	'issue of a non-Canadian newspaper or periodical' means an issue that is not a Canadian issue of a Canadian newspaper or periodical."
[DOT] (9:30 p.m.)
George Clyde Nowlan: Mr. Speaker, I think it can be truly said of this budget tonight that never have
so many words been used to say so little as have been used by the Minister of Finance (Mr. Gordon) during the last hour and a half. There will be more disappointed people in Canada when they hear over the radio the news of the alleged tax cuts than have been disappointed since they were at the horse races when they were kids 15, 20 or 25 years ago. We were told and believed that we could expect some tax cuts. What did we get? My amateur mathematicians over here have been working out tables for me.


Lester Bowles Pearson: They are amateur, all right.


George Clyde Nowlan: They are so extreme that one would hardly dare to use them. A single person, for instance, with this massive $265 million a year income tax reduction, earning $3,000 a year will, according to one figure which I have checked casually, have a tax reduction of 7J cents a day. A person with $2,000 a year income will have a tax reduction of 2f cents a day; and you could go on and on. With regard to a married person with two dependants and $3,000 a year, his taxes will be reduced by $3 per annum, or 25 cents a month.


Alfred Dryden Hales: Peanuts.


George Clyde Nowlan: That, I would think, would be a two-bit reduction by the two-bit boys on the other side of the House. This is not what we were led to believe. This is not what the country expects nor what the country wants today. I do not intend, of course,
[Mr. Gordon.J
Mr. Speaker, to analyse the various proposals which have been brought before us tonight. Undoubtedly there are some very minor things included in the chaff with which we have been fed, and I would want some time before dealing with them. We will be doing that, I hope, in the relatively near future. In the few minutes left tonight I just want to sketch one or two of the outlines which I think are important. One of the most important defects in this alleged budget is the failure of the Minister to deal with the sales tax on not only building materials but at least on production machinery. This, Mr. Speaker, can hardly be anything but a deliberate omission on the part of the Minister of Finance, who had to retreat so far and so long and so fast on his first budget that he is determined to hold on to some vestige of that budget so he can show posterity that all of it was not scrapped. All of it should be scrapped and he would be a better Minister of Finance if it were scrapped.
Talk about tax reduction. Talk about income tax reduction. The President of Chemcell at the annual meeting last week said that if that tax was not repealed or changed, his company, with over 50 per cent of its products being exported, would have to pay a surcharge, as he called it, of over $1 million a year. That is one company in the export business that will be paying this amount of money because of the tax on production machinery and equipment. Sir, that is one thing that should have been dealt with. I will go into it at greater length on another occasion; but I want to emphasize that I think the country naturally expected something of that kind to be done, perhaps not with regard to the sales tax on all building materials, although that would have been desirable, but certainly with regard to the sales tax on the equipment and supplies going into production. This is something that I think would do more to develop and take the check off the economy than anything else that could have been done, and here the Minister absolutely refuses, apparently-although I am quite sure there was a great deal of pressure and argument brought to bear upon him-to do something that should have been done. For some reason he did not do this.
Another glaring omission in the budget, of course, is the failure to deal in any way with the problem of education. This is one of the fundamental problems with which this country is concerned; one which obviously, as we know, comes under provincial jurisdiction but
April 26. 1965	COMMONS
one in which the Federal Government, as I have said and we have said on this side of the House time and time again, must take a greater responsibility and greater activity. Yet there is no mention of that in the budget.
Mr. Speaker, one could go on listing the omissions. I have just jotted down rough notes as we went along and I will develop some of those later on.
[DOT] (9:40 p.m.)


Eric Alfred Winkler: What about public utilities?


George Clyde Nowlan: Somebody said something about public utilities. That is not mentioned in the Budget; but it is a comparatively minor detail compared with the failure to deal with production machinery and equipment.
We also heard a great deal about the Canada Development Corporation. It seems to me that we heard a great deal about that two years ago. Was that not to be taken care of in the 60 days of decision? Were we not to have then a Canada Development Corporation?


An hon. Member:: It was talked out.


George Clyde Nowlan: 
Some hon. Members:: Hear, hear.


George Clyde Nowlan: Well, I have plenty of time but I want to deal with them in an organized way.
I might say that when I get to them I do not think hon. Members on the other side of the house will be cheering. I could go ahead, but, after all, in order to sift the chaff-and it was largely chaff that the Minister of Finance spread into the atmosphere here for an hour and 35 minutes-I should like to take a little
DEBATES	April 26. 1965
time, so that I may be a little more succinct and able to analyse the items properly and fairly, rather than make a casual judgment. There must be some matters, Mr. Speaker, which are worthy of comment, possibly even worthy of a word of commendation to the Minister and the Government, so may I move the adjournment of the debate.
On motion of Mr. Nowlan the debate was adjourned.



BUSINESS OF THE HOUSE

George James McIlraith: Mr. Speaker, tomorrow the House will be asked to continue consideration of the resolution preceding a measure to provide for the retirement of Senators upon attaining the age of 75 years. Then when that is concluded we will consider item No. 10 on today's Order Paper, the motion standing in the name of the Minister of Justice to provide for the setting up of a Joint Committee of the Senate and the House of Commons to consider the state of penitentiaries; and item No. 5 on today's Order Paper, the resolution having to do with national housing.
On motion of Mr. Mcllraith the House adjourned at 9.50 p.m.
April 26, 1965



APPENDIX &quot;A'


[Stage Direction]
1965-66 1964-65 forecast
1963-64 estimate before tax changes
(millions of dollars)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Budgetary revenue	
Supplementary period adjustment*1)	
Extra-budgetary revenues
Old Age Security tax collections	
Prairie Farm Assistance Act levy	
Unemployment insurance employer-employee contributions	
Government pension funds, employer-employee contributions....
Interest receipts of social insurance and government pension funds.
Corporate income tax1'2': excess (+) of accruals over collections.
Profits before taxes (net of losses) of government business enterprises..
Interest on loans, advances and investments	
Less: Budgetary return on investments	
Less: Postal revenue	
Budgetary revenue items offset against budgetary expenditures®...
All other adjustments to budgetary revenue®	
Total revenue, national accounts basis	
6,253	7,136	7,525-21	-10	29747	956	1,1439	10	10297	307	331245	251	261143	157	17838	-137	-85207	244	244175	169	216-392	-380	-466-201	-230	-246-109	-112	-112-44	-48	-1457,347	8,313	8,883
<* In the national accounts, revenues in the supplementary period are shifted to the following fiscal year.
<!) Taxes on government business enterprises are excluded from this item and included in item 5.
<3>
See also line 10, expenditure reconciliation.
® These adjustments are largely revenue items not relevant for the national accounts such as proceeds from sales of existing assets.
[Stage Direction]
April 26, 1965

[Stage Direction]
1964-65 forecast 1963-64 estimate before tax changes
(millions of dollars)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Budgetary expenditure	
Supplementary period adjustment*')	
Expenditures of extrabudgetary funds
Old Age Security Fund payments	
Unemployment insurance benefits	
Government pension fund payments	
Prairie farm assistance payments	
Transfers to extra-budgetary funds	
Adjustment to place other government funds and crown agencies on a
disbursement basis*®	
Budgetary expenditures offset against income of government business enterprises
Post Office expenditures	
Deficits of government business enterprises	
Capital assistance to non-defence industry*®	
Reserves and write-offs	
Budgetary revenue items offset against budgetary expenditure*®	
All other adjustments to budgetary expenditure	
Total expenditure, national accounts basis	
Surplus (+) or deficit (-), national accounts basis Surplus (+) or deficit (-), budgetary basis	
Total, national accounts basis
6,872
-	33
366
11
-	66 19
-206 - 86 - 60 -161 -109 109
7,553
(-619)
7,347
7,219 - 6
332
10
-	63
-	30
-211 - 80
-	77
-	42 -112
7,981 +332 (- 83)
8,313
7,650
906
109
- 62 - 7
-	96
-	70
-	54 -112
8,540
+343
(-125)
8,883
*') In the national accounts, expenditures on goods and services in the supplementary period are split evenly between adjacent fiscal years. Other expenditure items are shifted entirely to the next fiscal year.
<2>
This adjustment replaces budgetary appropriations to various funds and agencies by the outlays actually made by these funds and agencies.
<3>
Government capital assistance to industry appears as part of business gross capital formation and is removed from the government sector to avoid double counting in the national accounts.
<'>
The largest component of this item consists of revenue from sales of goods and services by the government sector. These sales appear as final expenditure of the private sector and are deducted to avoid double counting.
April 26, 1965	COMMONS DEBATES	459

[Stage Direction]
1965-66 1964-65 forecast 1963-64 estimate before tax changes
(millions of dollars)
A.	Revenue
1.	Direct taxes, persons	
2.	Direct taxes, corporations*"	
3.	Withholding taxes	
4.	Indirect taxes	
5.	Investment income	
6.	Employer-employee contributions to social insurance and government
pension funds	
7.	Total.
B.	Expenditure
1.	Goods and services: defence	
2.	Goods and services: non-defence	
3.	Transfers to persons	
4.	Interest on the public debt	
5.	Subsidies	
6.	Transfers to other levels of government.
7.	Total	
C.	Surplus (+) or deficit (-).
2,254	2,635	2,6961,385	1,500	1,615126	143	1482,516	2,907	3,194525	570	638541	558	592.. 7,347	8,313	8,883.. 1,624	1,543	1,609.. 1,384	1,538	1,745.. 2,143	2,262	2,362. . 955	1,010	1,074. . 284	266	296.. 1,163	1,362	1,454.. 7,553	7,981	8,540.. -206	+332	+343included with government investment	
income.
April 26. 1965
[Stage Direction]
The Budget-Appendix

[Stage Direction]
presented by
the Honourable Walter L. Gordon, M.P., Minister of Finance for the information of Parliament in connection with the Budget of 1965-1966
April 26, 1965
[Stage Direction]
The Budget-Appendix

[Stage Direction]
The purpose of these Papers is twofold:
1.	to present a general economic review of 1964, bringing together in one
place and in convenient form some of the more comprehensive indicators of economic conditions prepared by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies, together with brief comments;
2.	to present a preliminary review of the Government Accounts for the
fiscal year ending March 31, 1965.
[Stage Direction]
April 26. 1965
The Budget-Appendix

[Stage Direction]
Table of Contents
Page
1.	General	 465
2.	National Accounts-
National Income and Product	 473
National Expenditure	 480
Personal Income and Its Disposition	 486
Investment and Capital Expenditure	 489
Revenue and Expenditure of all Governments	 494
3.	Employment and Earnings	
5064.	Price and Cost Trends	
5095.	Balance of International Payments	
5146.	Disposition and Source of Saving	
5307.	Capital Markets	
533
The tables and charts in this Budget Paper are based upon estimates provided by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies. Some of the figures appear for the first time; others have been published elsewhere. All 1964 estimates are preliminary and subject to revision.
April 26, 1965
[Stage Direction]
The Budget-Appendix

[Stage Direction]
In terms of economic achievement, the year 1964 was a remarkable one. As we were often reminded, in 1964 Canada was in the fourth year of a cyclical upswing whose length in itself was unusual. This fourth year, however, was specially notable in the extent of the gains achieved in all major sectors. The total value of the production of goods and services advanced by about 9 per cent which was the largest year-to-year gain since 1956. Nor was this gain unduly inflated by price advances, as has been the case on occasions in the past at high levels of activity.
Moreover, the expansion was well-balanced, with consumers, investment and exports all contributing to the growth in demand, so that the economy at year-end was showing no signs of excesses or distortions. Most important of all, the level of unemployment was significantly reduced, particularly in the areas where it has been most serious for a number of years. This most welcome improvement occurred despite the fact that, mainly for demographic reasons, the Canadian labour force was expanding more rapidly in 1964 than in any year, save two, for which official statistics are available.
The advance in GNP excluding the farm sector was even larger than for total GNP, rising by about 10 per cent. The agricultural sector in 1964 enjoyed a year in which the weather was again kind, on the whole, and the harvest was good as measured by the long-term average. But a second successive grain crop of the magnitude of the mammoth 1963 harvest could not be expected, and accrued farm income as recorded in the national product accounts showed a decline in 1964. Farm cash income, however, was substantially higher in 1964 than in 1963, and the farm sector as a whole shared in the rising incomes and prosperity of the rest of the nation.
Higher employment levels and higher average earnings were reflected in the consumer expenditure pattern. Retail sales of all kinds have been brisk, but the most dramatic gains occurred in sales of consumer durable goods. About half the value of consumer durables bought in any year are new and used cars, and automobile sales in 1964 created new records in the course of the year.
During 1964, the number of marriages increased quite sharply. Net immigration was higher. More people were starting family life in Canada in 1964 than was the case in 1963, and more people were buying and moving into new houses. There was also an increase in the number of young people not yet married, who were setting up their own bachelor establishments in apartments for the first time. As might be expected, sales of furniture and other kinds of household durables rose considerably. Some people ran down their savings a little to finance these purchases, (even though total personal savings continued to increase substantially), while some others increased their instalment debt.
[Stage Direction]
April 26, 1965
The Budget-Appendix
This was evidence of continued confidence in the outlook for jobs and income, confidence which appears to have been fully justified by events.
The economic highlight of the year 1964 was the dramatic revision made by the business sector in its capital investment expenditure plans. The first survey of investment intentions, published in February 1964, showed that the private sector expected to increase its capital outlays (excluding housing) at approximately the same rate of gain as that achieved over the preceding two or three years. By the time of the mid-year review, published in July, the business sector had revised its expectations very sharply upward, indicating that private investment totals for the year were expected to reach a level substantially higher than the original forecast.
The actual amount of capital outlays by the business sector in 1964 was close to the level forecast in the mid-year survey. The contribution made by investment expenditures to the economy was therefore strong, and was sustained through the year. These circumstances, and other evidence now becoming available on the outlook for business investment expenditure, indicate that private capital outlays have again become a dynamic element in the overall growth picture.
Following the developments in 1964, we may regard the continued announcements of further additions to capacity as having another significance. Expenditures on machinery and equipment bring quick returns to the economy, as this equipment is put into productive service very rapidly. These increases in productive capacity are then soon available to meet the rise in demand, stimulated by the investment process itself.
Federal government purchases of goods and services advanced only slightly in 1964, and have played a less important part in the current business expansion than has been the case in the past. This, to some extent, has been a reflection of the changes that have been taking place in defence expenditures. Provincial governments and municipalities have continued to increase their purchases of goods and services. Continued population growth requires additional construction of schools, hospitals, sewers, roads, and other forms of social capital, and also more people employed in education, health, and community services of all kinds.
Exports, of course, played a very important part in the general advance of 1964. Apart from the special wheat sales, there was steady growth in most of the major traditional exports, the products of our mines and forests. This was a reflection of continued strength in the foreign markets for our products. At the same time, there was a striking advance in some of the newer exports, especially manufactured goods. Exporters have been helped in this field not only by the lower value of the Canadian dollar in international markets since 1962, followed by relative cost and price stability, but also by increased use of export financing facilities. Much is due to the considerable enterprise and effort put into the expansion of foreign sales by Canadian producers in 1964.
Wheat exports, expanded by the special sales to Russia which took place through the winter and spring of 1963-1964, contributed substantially both to Canada's international reserves and to the general prosperity of the country. The cash income received by wheat producers as grain moved through commercial channels released funds for investment outlays in the farm sector, and also for some additions to consumption expenditure. Production and income in other sectors were thus affected by the export of wheat under the special contracts.
April 26, 1965
[Stage Direction]
The Budget-Appendix
Imports also were higher in 1964. In any free and open economy, a rise in economic activity calls forth a demand for higher imports. This is particularly true of the Canadian economy, with its high degree of international specialization. The investment programme of 1964 naturally was accompanied by a rise in imports. The speedy installation of imported manufacturing equipment was an important factor in the expansion of production facilities to meet rapidly-growing demand. In this case as with many other products, the availability of imports at competitive prices acted to maintain price stability.
The international current account deficit was reduced further in 1964 to $453 million, despite the sharp rise in imports, as both wheat and non-wheat exports expanded substantially. Even if the entire amount of the exceptional wheat shipments to the Soviet Union were to be deducted from exports in 1963 and 1964, the current account deficits so computed would be of the order of $750 million in both years, a considerable improvement over earlier years, particularly when measured against rising incomes and heavy outlays on machinery and consumer durable goods, which typically have a large import content.
All of the recent improvement has been with overseas countries; the current account deficit with the United States widened considerably in 1964. In a subsequent section in this Review the broad pattern of financing our current account deficit is described. Briefly, the large current account deficit with the United States has, as usual, been covered only in part by a capital inflow from that country. The remainder has been covered by receipts from other countries, arising mainly from a surplus on current transactions, and from newly produced gold in Canada. On balance, over the postwar period, Canada has been a net provider of U.S. dollars to the United States economy.
Some modest upward movement in the various measures of price change continued in 1964. These movements are discussed and analysed in later pages of this Review. The section on prices points out that there are technical problems associated with the construction of some price indexes, which may perhaps have the effect of causing an apparent upward drift in the general level of measured prices, when it is by no means certain that true price increases have occurred.
Price movements are an essential element in a free and dynamic economy, inducing as they do the necessary movement of men and capital among industries, among occupations and among regions. In Canada, the distances between labour markets, together with the shortages of some kinds of skills, must always be recognized as a potential source of price strain as the margin of unemployed resources diminishes. However, to the extent it is possible to derive statistical proof, Canada appears fortunate in having a relatively high degree of mobility, with both labour and capital responding fairly readily to price and cost movements.
In this regard, and in other respects, it is therefore a fact of significance and for gratification that the greatest declines in unemployment which took place in 1964 were in the Atlantic provinces, Quebec and British Columbia. The margin of unemployment in Ontario and the Prairie provinces was of relatively small proportions at the beginning of 1964, and showed some improvement as the year wore on. Thus, the regions of high unemployment showed the most improvement over the year. Moreover, this improvement reflected not just a decline or stabilization of the labour force, but an important increase in the number of people with
[Stage Direction]
April 26, 1965
The Budget-Appendix
jobs. This gives strong indication of overall and substantial improvement in the economies of these regions. These trends are encouraging, given our objective to attain maximum employment while maintaining the greatest possible degree of price stabilization.
Outlook for 1965
This record of a year of strength leads naturally to consideration of what may lie ahead. The evidence we have at present already suggests that the economy has moved into 1965 at continued high levels of activity, and there are indications that the present year will be one in which additional important economic gains are achieved in Canada.
The outlook contains several significant elements of strength. Among these are the plans for continuing advance in capital expenditures in both the public and private sectors, and further increases in consumer expenditure in response to continued improvements in personal disposable income. The normal growth of government expenditures can be expected to continue. We cannot expect these elements of strength will be reinforced, as they were in 1964, by extraordinary gains in exports; nevertheless, exports should be well maintained by the favourable demand conditions prevailing in the United States and most of our overseas markets so that any decline which may occur in exports of wheat from the abnormal 1964 level should be offset by gains in exports of other kinds.
The Investment Outlook
The recent report on the investment outlook shows that total public and private investment in 1965 is expected to exceed that of 1964 by fourteen per cent. Therefore, it is now expected that 1965 will be the second successive year in which new capital formation has shown a strong tendency to expand from the relatively low levels which existed in earlier years. In those years public and private capital formation amounted to 22 per cent or less of gross national product, by contrast with the high figure of 27 per cent in 1957. If the forecast for 1965 is fulfilled, a level of capital formation equivalent to more than 24 per cent of gross national product will have been reached.
In addition to business capital requirements, which are discussed below, a large part of the current investment programme consists of housing and social capital. This is in part a consequence of the "population bulge". The number of young adults in the 20 to 24 and the 25 to 29 age groups will increase very rapidly during the next five years: by 31 per cent and 22 per cent respectively, compared with 18 per cent and a decline of 2 per cent over the past five years. These groups, in particular the 25-29 group, provide a large market for new housing, which in turn implies more schools and municipal services. Moreover, both age groups are important buyers of durable goods and can be expected to undertake substantial forward obligations at this time of life, in contrast to the relatively higher savings patterns that occur in middle age groups.
Businessmen in estimating future markets and providing the capital facilities necessary to produce the goods and services required by such markets are undoubtedly taking these and other factors into account. In addition, there are important new capital requirements for export markets. The domestic "infrastructure" of transport, power utilities and other services which are basic to the continued development of industry will also require substantial amounts of
April 26, 1965
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Millions Ratio Scale
Data for tha yaari 19SS to I960 wara obtoinad from 0 B S. inierranjol ottimotai.
capital formation. Some idea of the investment required by these basic industries can be obtained from the recent report on the investment outlook for the year 1965. Manufacturing industries have reported investment intentions over one-fifth higher than in the preceding year. Finance, real estate and commercial construction is expected to increase by as much as one-third over 1964. Transportation, electric power and other utilities, retail and wholesale trades and new residential construction are all expected to increase their fixed capital investments by one-tenth. It can be expected that businessmen will continue to add to their stocks of inventories more or less in line with the growth of commodity production. In recent years, inventories have been worked down to lower levels in relation to production and sales.
Consumer expenditure
Changes in the number of people in particular age groupings, as illustrated in the preceding chart, have important consequences for consumer durable goods purchases, for example in the sales of automobiles, appliances and other household goods. These purchases expanded rapidly in the past year, but without excesses occurring in productive capacity or deterioration in the quality of credit issued in connection with these purchases. A continuation of this expansion is expected in 1965, although at a somewhat less rapid rate. At least some of the demands that had accumulated earlier may have been met in the buoyant situation prevailing in 1964.
[Stage Direction]
April 26. 1965
The Budget-Appendix Government expenditures
Provincial governments and municipalities are expected, on the basis of the budgets so far announced, to increase expenditures in 1965. Related in part to population growth, demands for municipal services and for provincial highway, power and other developments will increase. School and hospital programmes will be expanded. In addition to capital requirements, provincial and municipal governments have been increasing their current operating expenses. Total expenditures by these governments may therefore be expected to increase at a rate commensurate with that of the past few years, which is considerably in excess of the rate of increase in gross national product.
Total federal government expenditures will increase at a slightly smaller rate than the gross national product. Transfers to provincial governments and municipalities and to persons through old age security payments and other health and welfare programmes will rise at a moderate rate. Outlays on non-defence goods and services are expected to increase as in the past year, while defence expenditure will remain relatively stable.
The aggregate of all governments' expenditures on goods and services is expected to rise at a rate slightly more than gross national product in 1965, with little change in the share of that product devoted to public as distinct from private uses.
Exports and Imports
The outlook for exports is determined to an important extent by conditions in United States' markets. The Economic Report of the President issued in January 1965, suggests a range of gross national product in that country for 1965 of between $650 billion and $670 billion, the middle point of which would be approximately six per cent above the level of $623 billion achieved in 1964. Additional inventory accumulation over and above the very moderate levels of recent years, is also suggested in that Report. Translating these factors in demand for Canadian exports on the basis of past relationships, a substantial improvement in exports to that country can be expected in the coming months.
There are, of course, several offsets to be expected in overseas markets. Wheat sales cannot be expected to be as high as they were last year when the special shipments to Russia took place, although sales to Eastern Europe and China are continuing. Exports to the United Kingdom will be affected by the measures recently imposed to deal with her balance of payments difficulties. The outlook in most European markets and Japan is, on the whole, favourable.
Taking all of the above factors into account, the expansive factors are expected to more than offset the anticipated declines in certain markets. On balance, however, we would expect a smaller increase in exports in 1965 than last year.
Imports will continue to increase. The closer the economy approaches limits of capacity in particular industries, the more it would be inclined to satisfy its needs from abroad, especially since another substantial increase is expected in investment in machinery and equipment, much of which is not produced in Canada. Offsetting these tendencies, of course, have been the continuing successes of Canadian producers in making inroads in new markets, both at home and abroad, through the development of new lines at competitive prices.
On balance, it would be prudent to expect some widening of the current account deficit in 1965, from the levels achieved in 1963 and 1964 when the massive sales of wheat had a substantial impact on the trade balance.
April 26, 1965
[Stage Direction]
The Budget-Appendix
Demand and Supply
The sum of these demand factors is expected to give rise to a further substantial growth in gross national product, probably at a rate somewhat less than the exceptional rate of increase now known to have been achieved in 1964.
Productive capacities in general appear to be adequate to meet the probable demands. There may be some supply difficulties in specific localities and industries, which a high degree of mobility of both labour and capital would help to relieve. The labour force is expected to increase somewhat more rapidly than in the past year, as a result of the large number of new entrants in the younger age groups, many of whom will be coming on to the labour market next June. It is also expected that industrial productivity will continue to improve. In these circumstances of productivity improvement and high labour force growth, the increases in output required to meet the demands outlined above are clearly within the growing capacity of the economy. Indeed, the economy must continue to expand rapidly if all those who wish to obtain employment are to find jobs.
Conclusion
These pages have contained an assessment of the outlook for the various sectors of the economy in the year ahead. In each case, some further expansion of expenditures appears likely. Some sectors may grow more rapidly than others, and the overall picture is one of rising but not excessive outlays. Productive capacity, in terms of both labour and capital equipment, will be larger in 1965 than it was in 1964, so that the increase in demand will be accompanied by higher levels of domestic output. While the record gains of 1964 may not be matched, good progress can be expected in the months ahead. Within a framework of continued relative stability of cost and price levels generally, and with the expectation of continued strength in our foreign markets, the Canadian economy as a whole should move forward to new and higher levels of activity in 1965.
April 26. 1965
[Stage Direction]
The Budget-Appendix
THE NATIONAL ACCOUNTS National Income and Product
The Gross National Product is the most convenient measure of the country's production of goods and services as a whole. Gross National Product in 1964 rose more rapidly than in any previous year of the present upswing. Comparing 1964 with 1963, labour income, corporation profits and investment income advanced strongly. Details are set forth in Table 1 and are shown graphically in the charts on page 4.
The level of non-farm activity at the beginning of 1964 was already high, and a further substantial advance occurred during the first quarter. Gains during subsequent quarters were less marked but the advance continued throughout the year.

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to 4Q 1963	to IQ 1964	to 2Q 1964	to 3Q 1964	to 4Q 1964	1963Labour Income	8.4	10.2	6.5	10.5	7.2	8.7Corporation Profits before taxes and before dividends paid abroad	24.8	39.4	-11.1	-8.2	46.1	14.6Investment Income	10.8	3.0	4.0	-0.5	17.2	5.9Net Income, non-farm unincorporated business	1.3	7.0	5.7	6.2	-4.9	4.7Gross National Product	11.3	11.7	6.7	6.1	5.3	8.9
(1)Seasonally adjusted, and percentage changes expressed at annual rates.
As a result of these developments, the Gross National Product was 8.9 per cent higher than it was in 1963.
The gain in wrages, salaries and supplementary labour income, which amounted to 8.7 per cent, was accounted for by higher employment and lower unemployment on the one hand, and by the continuing secular uptrend in wage-rates, on the other. Increases in total earnings were over 9 per cent in manufacturing and construction, and in the primary industries as a group they amounted to 6.6 per cent. In the service sector, earnings in finance and personal services rose by 12.5 per cent. Transportation, communication and other utilities, together with public administration, recorded gains of about 6 per cent.
The sustained strength in labour income has been accompanied by a generally higher level of profits. Corporation profits, before taxes and before payment of dividends to non-residents, were 14.6 per cent higher than they were in 1963.

[Stage Direction]
NATIONAL INCOME AND GROSS NATIONAL PRODUCT (Seasonally adjusted at annual rates)
1.	Wanes, salaries, and supplementary labour income	
2.	Military pay and allowances	
3.	Corporation profits before taxes	
4.	Deduct: Dividends paid to non-residents*11	
5.	Rent, interest, and miscellaneous investment income	
6.	Accrued net income of farm operators from farm production*2)	
7.	Net income of non-farm unincorporated business*31	
8.	Inventory valuation adjustment	
9.	National Income	
10.	Indirect taxes less subsidies	
11.	Capital consumption allowances and miscellaneous valuation adjustments	
12.	Residual error of estimate	
13.	Gross National Product at Market Prices	
14.	(Gross National Product at Market Prices excluding Accrued Net Income of Farm Operators)	
1963				1964			
IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q(	Millions	}f dollars	)	20,996	21,308	21,712	22,168	22,732	23,100	23,704	24,128560	608	596	628	572	576	584	6003,900	3,960	3,940	4,184	4,596	4,468	4,376	4,880-608	-560	-596	-688	-684	-588	-680	-7882,992	3,072	3,112	3,196	3,220	3,252	3,248	3,3881,720	1,708	1,664	1,808	1,372	1,680	1,432	1,4042,448	2,440	2,496	2,504	2,548	2,584	2,624	2,592-136	-312	-144	-188	-140	-292	88	-14031,872	32,224	32,780	33,612	34,216	34,780	35,376	36,0645,572	5,308	5,640	5,752	6,140	6,340	6,500	6,3444,996	5,140	5,160	5,392	5,512	5,580	5,596	5,740-280	-112	-192	-144	52	-16	-80	-13242,1G0	42,560	43,388	44,612	45,920	46,684	47,392	48,016(40,440)	(40,852)	(41,724)	(42,804)	(44,548)	(45,004)	(45,960)	(46,612)
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^Includes the withholding tax applicable to this item.
<!1Ineludes an arbitrary smoothing of crop production and standard seasonal adjustments for withdrawals of grain from farm stocks and the change in livestock items. Because of the arbitrary elements, too precise an interpretation should not be given the seasonally adjusted figures of accrued net income of farm operators. *31Includes net income of independent professional practitioners.
The Budget-Appendix
April 28. 1965
[Stage Direction]
The Budget-Appendix
The substantial gains recorded in non-farm income were offset slightly by a drop in net income of farm operators. The decline in farm income, which amounted to 14.7 per cent, was a reflection of the return to more normal crop levels in 1964- from the record prairie wheat harvest of 1963. The 1964 level of farm income, in itself, was rather higher than the average of the past decade.
It may be noted that the fall in net farm income recorded in Gross National Product did not reflect a fall of similar proportions in farm cash income. Net farm income in the National Accounts is calculated on an accrual basis, with the new crop being recorded as income when it is harvested. Also included in this item are the accrued net earnings arising out of the operations of the Canadian Wheat Board. Farm cash income, which represents the actual cash receipts of farmers (excluding some supplementary payments), rose from a total of $3,185 million in 1963 to $3,456 million in 1964, a rise of 8.5 per cent. This rise was partly due to the payments made by the Canadian Wheat Board to the farmers through the winter and spring months of 1963-64, as grain moved rapidly into commercial channels.
Total non-agricultural output in the economy, in volume terms, was 6.7 per cent higher in 1964 than in 1963. Sharp gains occurred in the transportation industries, which advanced by 10 per cent, reflecting the high level of activity in the handling and shipment of goods for export, particularly wheat. Output of the electric power and gas utilities, a useful guide to the level of industrial activity generally, was nearly 10 per cent higher.
Among the goods-producing industries, forestry output recorded a gain of over 8 per cent. This was associated with a comparable rise in exports of forest products. Mining output rose by about 9 per cent, and manufacturing output by nearly 8 per cent. Because of the major part played by manufacturing in the economy, this gain accounted for about one-third of the aggregate increase in output. Much of the increase reflected a substantial gain in output of motor vehicles and parts, and expansion of iron and steel production. Output in the construction industry, which was heavily influenced by the winter housing incentive programme, was high in the first and fourth quarters of 1964 (on a seasonally adjusted basis) but at somewhat lower levels in the second and third quarters. For the year, the advance in construction was over 9 per cent.
The high levels of manufacturing output, and specifically the gains in output of automobiles and iron and steel products, give some indication of the growth which has occurred in the economy since 1961. Total manufacturing output of durable and non-durable goods rose by 30 per cent between the first quarter of 1961 and the fourth quarter of 1964. Production of durable goods rose by nearly 40 per cent during this period, with production of primary iron and steel being 72 per cent higher. The advance in output of motor vehicles which was curtailed due to strike conditions in the fourth quarter, had risen by 126 per cent by the end of the preceding quarter.
National income and product in the fourth quarter recorded further gains, giving final 1964 totals substantially higher than the 1963 levels. Such price movements as have occurred (discussed in greater detail below) have accounted for only a small part in the overall advance. The degree of soundness and strength revealed in the course of 1964, coming as it did in the fourth year of a cyclical expansion, was notable not only for this reason but also because the economy at year-end was exhibiting no significant signs of distortion. The generally balanced
[Stage Direction]
April 26, 1965
The Budget-Appendix

[Stage Direction]
CYCIE-ON-CYCIE SERIES Previous Business Cycle Peak=100 Seasonally Adjusted
April 26. 1965
[Stage Direction]
The Budget-Appendix

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CYCIE-ON-CYCIE SERIES Previous Business Cycle Peak=100 Seasonally Adjusted
478
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April 26, 1965
The Budget-Appendix

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CYCIE-ON-CYCIE SERIES Previous Business Cycle Peak=100 Seasonally Adjusted I * RESOURCE INDUSTRIES
April 26. 1965	COMMONS DEBATES
The Budget-Appendix

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CYCIE-ON-CYCLE SERIES Previous Business Cycle Peak=IOO Seasonally Adjusted

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Quarters from reference trough
22620-31 j
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April 26, 1965
The Budget-Appendix
growth characteristic of the earlier part of the expansion continued through the year. Supply and capacity were, on the whole, able to meet the demands placed upon them. The 1964 developments on the expenditure side of the accounts are reviewed in the following section.
National Expenditure
All major components of demand continued to expand during 1964. The following table summarizes the course of events through the year and compares the quarterly level of expenditures in the various sectors with the level recorded in the preceding quarter.
PER CENT CHANGES IN MAJOR EXPENDITURE COMPONENTS**)
3Q1963 to 4Q1963	4Q1963 to IQ 1964	IQ 1964 to 2Q1964	2Q1964 to 3Q1964	3Q1964 to 4Q1964	1964 1963Personal expenditure	. 1.9	2.5	0.7	2.2	1.6	7.3Non-durables	. 0.5	2.0	1.7	1.7	2.5	6.3Durables	. 7.5	4.2	-3.5	7.2	- 6.6	10.4Services	. 1.9	2.7	0.7	1.4	2.9	7.8Government expenditure	. 0.1	5.5	- 0.5	0.2	2.9	7.3Federal	- 2.7	8.1	- 5.2	0.7	- 0.7	3.5Provincial-Municipal	. 1.7	4.0	2.3	-	4.9	9.4Investment expenditure	4.3	11.3	- 1.3	- 1.2	7.6	18.1Residential	5.8	18.8	-12.3	- 1.9	13.7	18.4Non-residential	2.6	7.0	2.5	4.1	6.3	17.9Machinery and equipment	5.0	9.6	2.0	- 5.5	5.5	18.2Exports	8.2	2.7	6.1	1.4	- 3.3	15.0Total final demand	3.0	4.3	1.1	1.2	1.8	10.2Total final demand ex imports 	2.9	3.7	1.6	1.5	1.6	9.6Inventories	+ $44 m	-$120m	-S 4m	-J 60m	-J156m	- SlllmBusiness only	+$252m	+$ 72m	+* 44m	+$188m	-$756m	+*310m
^Quarterly magnitudes seasonally adjusted.
In the personal sector, total expenditures in 1964 were 7.3 per cent above the level recorded in the third quarter of 1963. During the year, the otherwise steady quarter-to-quarter gains were marked by a pause in the second quarter, when the total changed little from the high first-quarter level. The second-quarter total of expenditures was affected by a marked fall-off in consumer purchases of durables after the sharp gains of the earlier months. This pattern was associated with the unusually high level of activity in residential construction in the first quarter, as a result of which employment and consumer demand in the winter months were greatly increased in comparison with the traditional seasonal pattern. Further increases of the same magnitude in employment and expenditures in the second quarter could not be expected. Third-quarter purchases of consumer durables, however, rose again as consumer demand remained very strong. The supply of new cars during the annual changeover was, in 1964, adequate to meet high levels of demand, while purchases of other kinds of durables were stimulated by the high rate of residential construction. However, unavailability of some models of automobiles, due to strikes in the industry, resulted in a renewed decline in the fourth quarter but the year-over-year gain in durables expenditure was more than 10 per cent. A strong gain in the purchase of services was also evident, although a temporary levelling-off occurred here also in the second quarter.
April 26. 1965
[Stage Direction]
The Budget-Appendix

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-	2Q 1954 to 4Q 1956 (10 quarters after trough)	IQ 1958 to IQ 1960 (8 quarters after trough) (revised)	IQ 1961 to 4Q 1964 (15 quarters after trough)Personal expenditure on consumer goods and services	43.6	48.9	54.3Non-durable goods	18.8	17.6	85.8Durable goods	7.0	4-8	7.8Services	17.8	86.5	81.3Government expenditures on goods and services	15.6	15.5	15.6Federal	4.7	-1.6	1.8Provincial and Municipal	10.9	17.0	14.3New residential construction	3.7	-0.7	6.2New non-residential construction	16.1	-4.9	9.1New machinery and equipment	11.8	5.7	9.8Non-farm business inventories	15.1	33.8	-2.3Farm inventories and grain in commercial channels	7.4	3.6	4.4Exports of goods and services	17.6	19.9	26.6Imports of goods and services (-)	-31.0	-21.8	-23.7GNE (ex. error)	100.0	100.0	100.0
Government sector expenditures on goods and services rose by 7.3 per cent between 1963 and 1964. Federal expenditures were up by 3.5 per cent and the first-quarter figures were affected by the purchase of some major items of defence equipment and by a number of other outlays of an unusual or nonrecurring nature. Reductions in defence expenditures over the year were slightly exceeded by increases in non-defence expenditures, while at the provincial-municipal level there has been continuing growth of expenditures on education, roads and highways, and health services.
Total investment outlays in 1964 were, of course, heavily affected by the pattern of residential construction activity. The payment of a $500 bonus to purchasers of winter-built housing, among other factors, stimulated housebuilding in the first and fourth quarters, so that this form of expenditure (seasonally adjusted) experienced a decline from the first to the second quarter and remained relatively low in the third, rising again in the fourth. The reintroduction of the special measures in the winter of 1964-1965 resulted in a strong upturn in housing expenditures in the fourth quarter of 1964.
The timing of outlays on plant and equipment was also influenced by special factors in 1964, including the application of an additional 4 per cent sales tax on building materials and production machinery at the beginning of the second quarter. Total investment activity in 1964 was high in the first quarter, with some decline occurring subsequently .The third quarter level, however, was 13.2 per cent above the level of the third quarter 1963, and there was a very strong rise again in the last quarter, which carried investment for the year as a whole to a level 18.1 per cent higher than in 1963. The fourth quarter total was influenced by the special factors ruling at the end of the year, notably the renewed housing incentives and possibly some anticipation of the final increase in sales taxes on January 1, 1965.

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GROSS NATIONAL EXPENDITURE (Seasonally adjusted at annual rates)
		1963				1964			
		IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q
					(Millions of dollars)				
1.	Personal expenditure on consumer goods and services	26,744	27,140	27,632	28,148	28,852	29,040	29,684	30,1482.	Government expenditure on goods and services	7,980	7,884	8,112	8,120	8,564	8,524	8,544	8,7963.	Business gross fixed capital formation^*	7,112	7,512	7,704	8,036	8,944	8,828	8,720	9,380New residential construction	1,596	1,668	1,732	1,832	2,176	1,908	1,872	2,128New non-residential construction	2,640	3,864	2,880	2,956	3,164	3,244	3,376	3,588New machinery and equipment	£,876	3,980	3,092	3,248	3,604	8,676	3,472	3,6644.	Value of physical change in inventories-total®	568	296	528	572	452	448	388	232Non-farm business inventories	184	-132	248	BOO	572	616	804	48Farm inventories and grain in commercial channels	384	428	280	72	-120	-168	-416	1845.	Exports of goods and services(3)	8,612	8,960	9,000	9,736	9,996	10,604	10,756	10,4046.	Imports of goods and services®	-9,136	-9,348	-9,780	-10,140	-10,840	-10,772	-10,784	-11,0767.	Residual error of estimate	280	116	192	140	-48	12	84	1328.	Gross National Expenditure at Market Prices	42,160	42,560	43,388	44,612	45,920	46,684	47,392	48,016
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("Includes private businesses and institutions, and publicly owned business enterprises.
("The book value of inventories is deflated to remove the effect of price changes and the derived "physical" change is then valued at average prices of the current period to obtain the value of physical change. The difference between this value of physical change and the change in book value is called the inventory valuation adjustment (see line 8, Table 1)
("Minor adjustments have been made to the figures of current receipts and payments shown in Table 26 to achieve consistency with the other component series.
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GROSS NATIONAL EXPENDITURE IN CONSTANT (1957) DOLLARS (Seasonally adjusted at annual rates)
	1963				1964			
	IQ	1 2Q	1 3Q	4Q	IQ	2Q	1 3Q	4Q
				(Millions of dollars)				
1. Personal expenditure on consumer goods and services	24,712	24,984	25,312	25,732	26,252	26,316	26,812	27,1562. Government expenditure on goods and services	6,848	6,704	6,852	6,784	7,140	7,076	6,996	7,1843. Business gross fixed capital formation	6,308	6,624	6,728	6,968	7,684	7,476	7,360	7,848New residential construction	1,392	1,440	1,480	1,532	1,796	1,552	1,504	1,692New non-residential construction	£,860	2,552	2,544	2,592	2,764	2,808	2,904	3,048New machinery and equipment	2,556	2,632	2,704	£,844	8,124	8,116	2,952	3,1084. Value of physical change in inventories-total	536	268	508	532	444	424	336	208Non-farm business inventories	168	-116	£48	460	668	696	744	S£Farm inventories and grain in commercial channels	368	384	260	72	- 124	- 172	- 408	1765. Exports of goods and services	8,028	8,344	8,360	8,940	9,128	9,648	9,672	9,4046. Imports of goods and services	-8,220	-8,376	-8,632	-8,924	-9,472	-9,364	-9,436	-9,7407. Residual error of estimate	256	104	172	128	- 44	12	76	1168. Gross National Expenditure at Market Prices	38,468	38,652	39,306	40,160	41,132	41,588	41,816	42,176
The Budget-Appendix
[Stage Direction]
April 26. 1965
The Budget-Appendix
The export sector (discussed in greater detail below) was a major source of strength in 1964. Wheat exports were, of course, heavily affected by the 1963 crop failure in Russia, as a result of which both Russia and other countries normally dependent on Russia for some part of their wheat supplies entered world markets as major buyers. Exports excluding wheat, however, also increased substantially in 1964, reflecting high levels of economic activity in the United States and other principal markets. The movement of wheat into export channels, by its effect on farm cash income, contributed to the rise in consumer purchases and also to expenditures on new machinery and equipment. Other industries in the export sector also undertook expanded investment programmes in the course of the year.
Business investment in inventories through the year showed a fairly regular quarter-to-quarter gain, until the fourth quarter when the accumulation was small. This advance represented about a 3 per cent rise in the total level of nonfarm business inventories, compared with an increase in non-farm GNP of about 10 per cent.
The change in total non-farm inventories through the year was the sum of many changes in the various sectors. Some of these changes were offsetting. In the third quarter, for example, retail inventories declined while manufacturers' inventories rose. This shift reflected the circumstances prevailing in the automobile market in the summer of 1964. The sustained record levels of automobile sales caused a heavy depletion of retail inventories during the changeover period, while manufacturers built up supplies of new models in anticipation of a continuation of record sales into the fourth quarter. This buildup, however, was also in part due to expectation that supplies of components might later be interrupted by strikes. To some extent, this factor also contributed to a buildup of supplies of some kinds of steel at the manufacturers' level.
Inventories are by nature a highly volatile element. On the whole, developments since the fourth quarter of 1963 seem to reflect attempts by industry to raise the level of their inventories; these attempts, however, have been offset by the sustained overall level of demand in the economy, and inventories at the end of 1964 were still relatively low compared to sales levels across a large part of the economy.
Tables 2 and 5 analyse the movements of expenditure components over three postwar expansions. At the end of 1964, the level of economic activity had been rising through fifteen successive quarterly periods. The preceding two cyclical upswings, that of 1954 to 1956 and that of 1958 to 1960, had lasted ten and eight quarters respectively. Table 2 reveals the relatively greater importance of the export sector in the current growth trend, compared to the two previous cycles. It also indicates that additions to non-farm business inventories have so far not contributed to the expansion of demand. Consumer expenditure, notably on goods, has played a rather stronger role in the current expansion than previously, while the government sector has been unchanged in relative importance. Private investment outlays have contributed more strongly to the present upswing than they did in 1958-1960, when investment activity failed to expand with the rest of the economy. Private investment spending, however, remains substantially less significant than it was during the capital expenditures boom of 19541956.
April 26, 1965	COMMONS DEBATES	485
The Budget-Appendix

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RATIO SCALE	R*T10 SCALE
^SEASONALLY ADJUSTED ANO AT ANNUAL RATES
[Stage Direction]
April 26, 1965
The Budget-Appendix
Table 5 shows the growth of components of Gross National Expenditure from a rather different viewpoint. This table compares the average annual rates of growth in both total expenditure and its various components during the three post-war cycles. Total expenditure in the current upswing has grown at an annual rate of 8.8 per cent, compared to about 6.9 per cent in 1958-1960, and 11.7 per cent in 1954-1956. Real non-agricultural gross domestic product, which provides a measure of output in constant dollars and excludes the irregular impact of crop conditions, has grown at a rate of about 6.0 per cent since 1961. Government expenditure on goods and services, at 6.9 per cent, has grown less rapidly in the current expansion than in 1954-1956, but moderately faster than in 1958-1960. Private investment outlays have grown much more rapidly since 1961 than in 1958-1960, but more slowly than in 1954-1956. Exports again show up as a source of strength in the present expansion. On the whole, the expenditure components viewed on this basis indicate clearly the more balanced nature of the current period of growth.

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1954-1956	1958-1960	1961-1964
	Average annual per cent change over period of expansion		
10 Quarters after 2Q 1954 trough	8 Quarters after IQ 1958 trough	15 Quarters after IQ 1961 troughPersonal expenditure	8.2	5.6	7.1Non-durables	6.6	S.9	6.6Durables	10.9	4.7	9.5Services	9.6	8.4	7.0Government expenditure on goods and services	10.5	6.2	6.9Federal	5.8	-1.3	1.3Provincial and Municipal	16.1	13.0	10.8New residential construction	9.6	-1.0	13.8New non-residential construction	29.2	-4.1	11.1New machinery and equipment	17.8	5.5	12.1Non-farm business inventories	(+$454 m)	(+$806 m)	(-$ 70 m)Farm and grain inventories	(+$222 m)	(+$ 86 mj	(+$138 m)Exports of goods and services	10.4	7.5	11.3Imports of goods and services	16.6	7.1	8.9Gross National Expenditure at Market Prices	11.7	6.9	8.8Final Demand (ex inventories)	10.7	5.0	8.5G.N.E. in Constant (1957) Dollars	8.6	4.4	6.6Real Non-agricultural Gross Domestic Product	8.6	4.7	6.0Per Capita G.N.E. in Constant (1957) Dollars	5.4	2.0	4.5
Personal Income and Its Disposition
Personal income in 1964 reached a level some 6.8 per cent above that recorded in 1963. Wages, salaries and supplementary labour income, after adjustment for seasonality, rose in each quarter of the year, with the gains in the first and third quarters being greater than the gains in the second and fourth. Net income of non-farm unincorporated business rose by 4.7 per cent during the year, while interest, dividend and net rental income rose by about 5.8 per cent. Transfer payments to persons were 8.3 per cent higher in 1964. These developments are set out in detail in Table 6.
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-	1961	1962	1963	1964	1964U) IQ | 2Q | 3Q | 4Q	1.	Wages, salaries and supplementary labour income	
Deduct: Employer and employee contributions to social insurance and government pension funds	
2.	Military pay and allowances	; * * *.[DOT]	
3.	Net income received by farm operators from farm production	
4.	Net income of non-farm unincorporated business	
5.	Interest, dividends and net rental income of persons	
6.	Transfer payments to persons- (a)	from government (excluding interest)	
(b)	charitable contributions made by Corporations	18,996 - 787 550 978 2,274 3,030 3,441 40	20,233 - 812 586 1,492 2,376 3,308 3,729 44	21,546 - 847 598 1,587 2,472 3,555 3,838 44	(Millions 23,416 - 892 583 1,362 2,587 3,760 4,159 44	of dollars) 22,732 - 876 572 1,828 2,548 3,688 4,148 44	23,100 - 900 576 1,276 2,584 3,708 4,096 44	23,704 - 892 584 1,108 2,624 3,788 4,200 44	24,128 - 900 600 1,236 2,592 3,856 4,192 4428,522	30,956	32,793	35,019	34,684	34,484	35,160	35,748
(^Seasonally adjusted at annual rates.
The Budget-Appendix

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-	1961	1962	1963	1964	
** TO r 1964<*>
^ IQ 1 2Q 1 3Q | 4Q «	1.	Personal direct taxes- income taxes	
succession duties and estate taxes	
miscellaneous taxes	
Total direct taxes	
2.	Personal expenditure on consumer goods and services- non-durable goods	
durable goods	
Services0'	2,125 146 240	2,316 165 249	2,487 171 253	(Millions 2,930 185 292	of dollars) 2,784 164 284	2,868 228 268	2,996 156 300	3 & ii O 3,072 2 192 S 316 32,511	2,730	2,911	3,407	3,232	3,364	3,452	3,580 Hi12,178 2,716 9,572	12,961 2,952 10,000	13,508 3,223 10,685	14,355 3,558 11,518	13,968 3,588 11,296	14,204 3,464 11,372	14,440 3,712 11,532	O 14,808 M 3,468 W 11,872 >
h]Total consumer expenditure	
3.	Personal net saving	
4.	Personal Income	
5.	Personal Disposable Income(2)	24,466	25,913	27,416	29,431	28,852	29,040	29,684	30,1481,545	2,313	2,466	2,181	2,600	2,080	2,024	2,02028,522	30,956	32,793	35,019	34,684	34,484	35,160	35,748(26,011)	(28,226)	(29,882)	(31,612)	(31,452)	(31,120)	(31,708)	(32,168)
(1)Includes net expenditure abroad. ([DOT]'Personal Income less total direct taxes. ([DOT]'Seasonally adjusted at annual rates.
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Farm net income, which is subject to sometimes extensive fluctuations due to changes in the market conditions and in crops, reached $1,828 million (annual rate) in the first quarter, but declined to $1,276 million in the second, and to $1,108 million in the third and increased to $1,236 million in the fourth. The explanation for this pattern lies in the timing of payments by the Canadian Wheat Board to farmers. These payments, associated with the rapid movement of wheat into export channels in 1963, had been sustained from mid-1963 into the first quarter of 1964. The decline in these payments in the second quarter was reflected in net income of farm operators. As a result of this development, total personal income recorded a decline in the second quarter. The upward movement was resumed in the third quarter.
Personal disposable income, which is taken as personal income less personal direct taxes, rose sharply in the first quarter, fell in the second and moved up again in the third and fourth quarters. The second-quarter decline reflected the drop in personal income which occurred at that time, associated with the timing of payments by the Wheat Board discussed above, and also a rise in personal taxes paid. In all, personal disposable income in 1964 was 5.8 per cent higher than in 1963.
Consumer expenditures in 1964, and particularly expenditures on durables, increased more rapidly than they did in 1963. Purchases of non-durable goods were 6.3 per cent higher than in 1963. Purchases of durables were 10.4 per cent higher. All major classes of consumer durables contributed to the increase, with expenditures on new and used cars rising by 11.5 per cent. The 1964 advance in expenditures on appliances and radios was 8 per cent, and on furniture 6 per cent. Consumer outlays on services rose by 7.8 per cent, and total consumer expenditures were 7.3 per cent higher.
The seasonally-adjusted quarterly pattern of consumer expenditures indicates that total outlays advanced during all four quarters. The second-quarter decline in personal disposable income was however, reflected in a moderation in the quarter-to-quarter rate of advance in total consumer spending. Outlays on non-durable goods rose in each quarter, as did purchases of services, but expenditures on durables fell in the second quarter from the first-quarter level, and again in the fourth quarter after a very strong third quarter.
Personal net saving in 1964, at $2.2 billion, was 11.6 per cent lower than a year previously. Personal saving, which is the difference between personal disposable income and personal expenditure on goods and services, takes the form of accumulation of a wide variety of financial and real assets: bank deposits, securities, insurance, equity in real estate, and so on. Personal saving by definition also covers any changes in inventory holdings of non-corporate business, including agriculture. Accordingly, large shifts in farm inventories, which may reflect changes in the level of crop production from one year to the next, affect the level of personal saving. Excluding farm inventory change, personal saving in 1964 was nearly $2.3 billion, compared with rather less than $2.2 billion in 1963. Personal saving, excluding farm inventories, amounted to 7.2 per cent of personal disposable income in 1964.
Investment and Capital Expenditure
A rapid upsurge in public and private capital formation occurred in 1964. Both housing construction and business capital spending on construction, machinery and equipment increased by 18 per cent. Capital investment by government departments increased by 15 per cent. The above increases brought the total of public and private investment over the $10 billion mark for the
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first time. After allowing for price changes, the volume index of total investment exceeded the previous peak reached in 1957. It appears that these increases marked the emergence from several years of under-utilization of structures and equipment. The value of public and private capital formation amounted to 23 per cent of GNP, in comparison with less than 22 per cent of GNP in the previous three years. This ratio was well below the peak of 27 per cent which was reached in 1957.
An industrial breakdown of the 1964 investment programme is given in Tables 8 and 9; it will be seen that manufacturing was a principal contributor to the increase.

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-	I960	1961	1962	1963	1964
		(Millions of dollars)			
Agriculture and fishing	550	576	663	762	820Forestry	54	50	54	60	73Mining, quarrying and oil wells	400	449	480	521	633Manufacturing	1,178	1,085	1,269	1,358	1,815Electric power, gas and water works	688	710	723	764	881Transportation, storage and communications	1,084	988	878	1,007	1,196Construction industry	130	136	109	135	151Trade, finance and commercial services	875	847	860	918	996Institutions	573	617	834	873	766Housing	1,456	1,467	1,587	1,713	2,028Government departments	1,274	1,247	1,258	1,282	1,468Total Capital Expenditure'1)	8,262	8,172	8,715	9,393	10,827Total Capital Expenditure as a percentage of Gross National Expenditure	
Index of total Capital Expenditure in constant (1957) dollars	22.8	21.8	21.5	21.8	23.090.2	89.5	93.1	97.3	108.5
WFor reconciliation with Business Gross Fixed Capital Formation in housing, plant and equipment as per national accounts, see below.
-	1960	1961	1962	1963	1964
		(Millions of dollars)			
Private and Public Capital Expenditure, Table 8...	8,262	8,172	8,715	9,393	10,827
Deduct:					
New residential construction by governments.. New non-residential construction by govern-	13	9	10	6	71,420	1,368	1,562	1,609	1,640New machinery and equipment outlays by	137	160	183	187	212
Business Gross Fixed Capital Formation in Hou-					
sing, Plant and Equipment-National Ac-	6,692	6,635	6,960	7,591	8,968
					
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-	Percentage Increase 1963-64	Capital Expenditure as a Percentage of Total Capital Expenditure, 1964Agriculture and fishing	7.6	7.621.7	0.7Mining, quarrying and oil wells	21.5	5.833.7	16.8Electric power, gas and waterworks	15.3	8.1Transportation, storage and communications	18.8	11.0Construction industry	11.9	1.4Trade, finance and commercial services	8.5	9.2-12.3	7.118.4	18.7Government departments	14.5	13.615.3	100.0
Business Capital
In 1964, all categories of business capital investment increased. The manufacturing sector experienced the greatest relative upsurge in capital outlays. These increased by 34 per cent over the previous year, compared with a gain of 7 per cent in 1963. Within the manufacturing sector, capital expenditures increased by 84 per cent in the textile industry, 61 per cent in the paper and allied industries, 72 per cent in the transportation equipment industry, 41 per

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-	Total Private and Public Investment	Housing and Social Capital(1)	Business Investment Private and Public(2>1948	20.4	7.8	12.61949	21.7	8.7	13.01950	21.9	8.9	13.01951	22.4	8.6	13.81952	22.9	9.0	13.91953	23.9	9.4	14.51954	23.0	9.6	13.41955	23.0	9.8	13.21956	26.3	9.9	16.41957	27.3	9.6	17.71958	25.4	10.6	14.81959	24.1	10.4	13.7I960	22.8	9.3	13.41961	21.8	9.1	12.71962	21.5	9.2	12.31963	21.8	9.1	12.71964	23.0	9.2	13.8
^Includes housing, outlays by government departments, institutions and municipal waterworks. ^Includes government business enterprises.
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cent in primary metals, 45 per cent in non-metallic mineral products and 40 per cent in the machinery manufacturing industry. Of course these large percentage increases are in comparison with levels which had been relatively low. Certain indicators of the rates of capacity utilization in some of the above industries suggest significantly higher rates in 1964 than in recent years.

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BUSINESS INVESTMENT AS PER CENT OF GDP«>
ORIGINATING BY INDUSTRY,

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-	1949	1955	1957	1963	1964Agriculture	26	23	27	30	36Forestry	10	14	12	15	16Mining, quarrying and oil wells.	18	31	50	33	36Manufacturing	13	14	19	14	17Construction	7	13	8	7	7Transportation and storage	20	22	49	23	28Communication	53	46	54	47	41Electric power, gas and water utilities	105	78	108	61	629	10	9	7	6Finance, insurance and real estate(,)	72	64	58	49	55Total	23	24	30	23	26
Sources: Tables 21 and 25 of Annual National Accounts, excluding public administration and defence, and community service industries. 1964 calculations by Department of Finance.
<*>Gross domestic product at factor cost differs from gross national product at market prices by the exclusion of indirect taxes less subsidies and by the inclusion of net foreign factor payments such as net interest and dividend payments abroad. It is therefore a measure of the value of production of industries located in Canada whether or not they include returns to foreign investors. The above ratios were obtained by dividing new capital formation by value product in each industry. Further refinements in these data are possible and the above table should be used only to gain an indication of trends.
f2)CapitaI formation in finance, insurance and real estate includes new residential construction, and the product originating in the industry includes gross paid and imputed rents.
Table 9 shows the changes in new investment between 1963 and 1964. As indicated, manufacturing, which accounts for about one-sixth of total new investment, showed the largest percentage gain. As can be seen from the table, however, most other major industrial sectors also showed substantial increases in new investment in 1964. Although evidence is incomplete, it seems likely that the gains in investment in 1964 were associated with the extended gains in market demand, both domestic and foreign, which had been accumulating for several years. The increases in investment were also made against a background of credit expansion, and large flows of business savings in the form of undistributed earnings and capital cost allowances, referred to in other sections of this Review.
The ratios of investment so far achieved do not appear to be high by historical standards, as Table 10 shows. The present ratios compare quite closely with those of 1949 to 1955 as a percentage of GNE, but are well below the peak of 1957. Table 11 provides additional industrial detail, with regard to historical levels and current levels of capital formation as a per cent of value of production.
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1,000
1,000
1953	1954	1955	1956	1957	1958	1959	I960	1961	1962	1963

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1964 p

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2,000'
2,000
1,500
7,000
6,000
5,000
4,000
- 5,000 -T 3,000
2,500
RATIO SCALE BILLIONS OF OOLLARS 11,000 r-
10,000
9,000
3,000
10,000
9,000
- 8,000
7,000
6,000

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Housing and Social Capital
Expenditures on new housing in 1964 increased nearly 19 per cent over the previous year. This increase was as large as that realized during the three-year period 1960 to 1963. Both demographic and economic factors account for these increases. The chart of population by age groups shows that there are rapidly increasing numbers in the 20-24 and 25-29 age groups who normally establish their own households. In addition, higher incomes in general have permitted "un-doubling" of composite families, with older members and relatives apparently able to afford accommodation of their own. These factors may account for the rising proportion of apartments and multiple units which now amount to over 50 per cent by volume of all new housing construction. Thus, both new "family formation" by way of additional marriages and "non-family formation" by way of splitting-up of older units, or single persons establishing their own households, play their part in contributing to the demand for new housing. On the supply side, there has been a great deal of winter construction, aided by special measures. The ready availability of mortgage credit has also facilitated additional building to meet the above demands. This rate of building appears to
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have come about without undue distortion of the housing market. Vacancy rates are moderate in the majority of cities, with no apparent geographic extremes.
The population and income changes already noted have given rise to new developments in the provision of urban and social capital. Capital outlays by government departments increased by 15 per cent from 1963 to 1964. Capital expenditures on institutional services were lower by 12 per cent in 1964, due to offsetting movements, related in part to the changing age composition of the population. School construction was lower, but university and hospital construction continued to expand at substantial rates of increase.
Revenue and Expenditure of all Governments
The familiar public accounts, which for the federal government are discussed in Part II of this Survey, are designed to permit legislative and administrative control over the manifold items of government expenditure. In the following section, the basic data for government revenue and expenditure have been regrouped and adjusted in such a way as to bring out the transactions between the government and other sectors of the economy as they appear in the broader framework provided by the National Accounts. This regrouping also corresponds to the manner in which the accounts of the other sectors of the economy are kept and presented.
The "National Accounts" budgetary presentation differs from the parliamentary budgetary presentation in several ways. Only income and expenditure transactions which have a direct and immediate impact on the flow of incomes in the economy are included in the National Accounts budgetary presentation; financial transactions (i.e., loans), which result in changes in the liabilities of one sector of the economy to another, are excluded from the National Accounts presentation. A number of bookkeeping items in the parliamentary accounts of purely internal significance and having no impact on the private sector are also excluded from the National Accounts presentation.
A number of items which are excluded from the parliamentary budgetary accounts are of immediate significance to the private incomes stream. The National Accounts embrace these items, the most important of which are payments into and out of the Old Age Security Fund, the Unemployment Insurance Fund, and the government pension funds, by those contributing or drawing benefits.
National Accounts items are entered as they accrue, that is, at the time when the economic impact is felt on the economy, since this is the basic method used in business. Corporation income taxes in particular require a major adjustment from the public accounts to a National Accounts basis. These taxes will have been paid on an instalment basis beginning eight months before the end of the companies' fiscal year and ending four months after (taking into account the current advancement in payments of corporation income tax). Corporations can elect to estimate current income on the basis of last year's income or on the basis of their current records, but must complete the current year's payment within four months of the end of that year. As a result, corporations may accrue tax liabilities a number of months before tax payments are actually made and recorded in the public accounts. Tax accruals are directly related to corporate profits at the time they occur, and profits move with the business cycle. Accordingly, the recording of tax accruals and the analysis of the government sector, on a National Accounts basis, may permit a more meaningful appreciation of the timing of changes in revenues of the government sector in relation to fluctuations in economic activity. Similarly, timing adjustments are made on the expenditures side of the National Accounts to put government purchase of goods and services on an accrual basis, rather than at the time actual payments are made.

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1961	1962	1963	1964	1964('>	IQ	2Q	3Q	4QGovernment Revenue-	(Millions of dollars)	Direct Taxes-Persons	2,511	2,730	2,911	3,407	3,232	3,364	3,452	3,580Federal	2,132	2,088	2,193	2,558	2,448	2,552	2,580	2,652Provincial and Municipal	379	642	718	849	784	812	872	928Direct taxes-Corporations	1,612	1,702	1,821	1,989	1,976	1,976	1,968	2,036Income-	Federal	1,311	1,271	1,356	1,482	1,484	1,480	1,468	1,496Provincial	301	431	465	507	492	496	500	540Withholding Taxes-Federal	116	125	127	140	132	140	140	148Indirect Taxes	4,947	5,565	5,879	6,648	6,424	6,608	6,748	6,812Federal	2,190	2,401	2,451	2,847	2,696	2,824	2,928	2,940Provincial and Municipal	2,757	3,164	3,428	3,801	3,728	3,784	3,820	3,872Investment Income	1,126	1,257	1,376	1,519	1,488	1,508	1,484	1,596Federal	409	448	502	547	560	524	520	584Provincial and Municipal	717	809	874	972	928	984	964	1,012Employer and Employee Contributions to Social Insurance and Govern-	ment Pension Funds	787	812	847	892	870	900	892	900Federal	510	518	534	558	556	568	552	556Provincial and Municipal	277	294	313	334	320	332	340	344Transfers from Federal Government-	Provincial and Municipal	1,128	1,134	1,169	1,254	1,164	1,300	1,264	1,288Total Revenue	12,227	13,325	14,130	15,849	15,292	15,796	15,948	16,360Federal	6,668	6,851	7,163	8,132	7,876	8,088	8,188	8,376Provincial and Municipal	5,559	6,474	6,967	7,717	7,416	7,708	7,760	7,984
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TABLE 12-Concluded

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1961	1962	1963	1964	1964(0	IQ	2Q	3Q	4Q(Millions of dollars)	Government Expenditure-	Goods and Services	7,236	7,710	8,024	8,607	8,564	8,524	8,544	8,796Federal-	Non-defence	1,369	1,345	1,363	1,490	1,488	1,452	1,520	1,500Defence	1,613	1,678	1,576	1,552	1,672	1,544	1,496	1,496Provincial and Municipal	4,254	4,687	5,085	5,565	5,404	5,528	5,528	5,800Transfer Payments to Persons	3,441	3,729	3,838	4,159	4,148	4,096	4,200	4,192Federal	2,006	2,112	2,137	2,235	2,256	2,216	2,236	2,232Provincial and Municipal	1,435	1,617	1,701	1,924	1,892	1,880	1,964	1,960Interest on Public Debt	1,170	1,302	1,420	1,532	1,500	1,520	1,528	1,580Federal	786	866	935	995	984	988	992	1,016Provincial and Municipal	384	436	485	537	516	532	536	564Subsidies	251	292	311	317	284	268	248	468Federal	221	260	275	278	248	228	208	428Provincial and Municipal	30	32	36	39	36	40	40	40Transfers to Other Governments-	Federal	1,128	1,134	1,169	1,254	1,164	1,300	1,264	1,288Total Expenditure	13,226	14,167	14,762	15,869	15,660	15,708	15,784	16,324Federal	7,123	7,395	7,455	7,804	7,812	7,728	7,716	7,960Provincial and Municipal	6,103	6,772	7,307	8,065	7,848	7,980	8,068	8,364Deficit (-) or Surplus (+)	-999	-842	-632	-20	-368	88	164	36-455	-544	-292	328	64	360	472	416Provincial and Municipal	-544	-298	-340	-348	-432	-272	-308	-380Total Expenditure Minus Deficit of Plus Surplus	12,227	13,325	14,130	15,849	15,292	15,796	15,948	16,360Federal	6,668	6,851	7,163	8,132	7,876	8,088	8,188	8,376Provincial and Municipal	5,559	6,474	6,967	7,717	7,416	7,708	7,760	7,984
([DOT]'Seasonally adjusted at annual rates.
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1962-63	1963-64	1964-65	1963	1964	IQ	1 2Q	1 3Q	1 4Q	IQ	1 2Q	a CO	4Q1. Budgetary revenue	5,878	6,253	7,136	1,479	(Mill 1,393	ions of dc 1,489	)llars) 1,683	1,688	1,772	1,721	1,8352. Supplementary period adjustment11'	-3	-21	-10	-125	125	-146	146	3. Extra-budgetary revenues Old Age Security tax collections	692	747	956	180	197	170	178	202	247	214	220Prairie Farm Assistance Act levy	8	9	10	2	1	4	2	2	3	4	2Unemployment insurance employer-employee contributions	286	297	307	74	67	76	77	77	71	78	79Government pension funds, employer-employee contributions	237	245	251	60	59	60	61	65	63	62	64Interest receipts of social insurance and government pension funds	126	143	157	34	34	35	36	38	37	39	394. Corporate income tax1!>: excess (+) of accruals over collections..	8	38	-137	-17	-10	4	51	-7	-123	-3	105. Profits before taxes (net of losses) of government business enterprises 	166	207	244	26	57	54	53	43	56	52	856. Interest on loans, advances and investments	172	175	169	36	40	37	60	38	40	38	427. Less: Budgetary return on investments	-293	-392	-380	-65	-67	-43	-170	-112	-102	-60	-958. Less: Postal revenue	-194	-201	-230	-47	-48	-43	-58	-52	-53	-49	-709. Budgetary revenue items offset against budgetary expenditures™	-106	-109	-112	-27	-27	-27	-27	-28	-29	-29	-3010. All other adjustments to budgetary revenue11'	-31	-44	-48	-22	-7	-13	12	-36	-9	-14	711. Total Revenue, National Accounts Basis.	6,946	7,347	8,313	1,588	1,814	1,803	1,958	1,772	3,119	2,053	2,188~	
[DOT]uvuu uuppivuivuvuijr	and oui litu HU KUC lUUUWlUg usual Citi .
(2)	Taxes on government business enterprises are excluded from this item and included in item 5.
(3)	See also line 10, expenditure reconciliation.
<4)These adjustments are largely revenue items not relevant for the National Accounts such as proceeds from sales of existing assets.
April 26, 1965	COMMONS DEBATES
The Budget-Appendix
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TABLE 13-Concluded
						1963				1964		
IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q1.	Budgetary expenditure	6,570	6,872	7,219	2,070	(Milh 1,374	ons of do 1,604	liars) 1,629	2,265	1,420	1,675	1,8092.	Supplementary period adjustment	-55	-33	-6	-376	376	-	-	-409	409	-	-3.	Expenditures of extra-budgetary funds Old Age Security Fund payments	734	808	889	185	186	187	217	218	220	221	222Unemployment insurance benefits	403	366	332	178	115	42	59	150	102	40	52Government pension fund payments	78	89	97	21	22	21	22	24	24	24	24Prairie farm assistance payments	15	11	10	11	1	-	3	7	-	-	24.	Transfers to extra-budgetary funds	-105	-66	-63	-14	-21	-15	-15	-15	-15	-16	-165.	Adjustment to place other government funds and crown agencies on a disbursement basis<2>	55	19	-30	6	-47	29	32	5	-93	41	-190.	Budgetary expenditures offset against income of government business enterprises Post Office expenditures	-189	-206	-211	-51	-47	-53	-53	-53	-51	-50	-53Deficits of government business enterprises	-100	-86	-80	-6	-59	-4	-5	-18	-26	-21	-117.	Capital assistance to non-defence industry <3)	-35	-60	-77	-14	-12	-20	-10	-18	-26	-21	-118.	Reserves and write-offs	-41	-161	-42	-11	-47	-13	-14	-87	-11	-11	-10<J.	Budgetary revenue items offset against budgetary expenditure'4)	-106	-109	-112	-27	-27	-27	-27	-28	-29	-29	-3010.	All other adjustments to budgetary expenditure	121	109	55	-51	77	65	-11	-22	25	45	-2111.	Total Expenditure, National Accounts Basis	7,345	7,553	7,981	1,921	1,891	1,816	1,827	2,019	1,919	1,898	1,93812.	Surplus (+) or deficit (-), National Accounts basis	-399	-206	332	-333	-77	-13	131	-247	170	155	25013.	Surplus (+) or deficit (-), budgetary basis	(-692)	(-619)	(-83)	(-591)	(+19)	(-115)	(+54)	(-577)	(+352)	(+46)	(+26)14.	Total, National Accounts basis	6,946	7,347	8,313	1,588	1,814	1,803	1,958	1,772	2,119	2,053	2,18815.	Surplus (+) or deficit (-), National Accounts basis, seasonally adjusted at annual rates	(-399)	(-206)	(332)	(-344)	(-588)	(-188)	(-48)	(+64)	(+360)	(+472)	(+416)
0>ln the National Accounts, expenditures on goods and services in the supplementary period are split evenly between adjacent fiscal years. Other expenditure items are shifted entirely to the next fiscal year.
<2>This adjustment replaces budgetary appropriations to various funds and agencies by the outlays actually made by these funds and agencies.
<3>Government capital assistance to industry appears as part of business gross capital formation and is removed from the government sector to avoid double counting in the National Accounts.
<<>The largest component of this item consists of revenue from sales of goods and services by the government sector. These sales appear as final expenditure of the private sector and are deducted to avoid double counting.
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The National Accounts presentation of the government accounts is shown in Table 12. A reconciliation of the federal government's public accounts and the National Accounts presentation for recent annual and quarterly periods is set out in Table 13.
Structure of Governments' Revenues and Expenditures
Table 12, which displays the principal revenue and expenditure sources of the federal government and of provincial and municipal governments combined, according to National Accounts definitions, is the main basis of subsequent analysis. Some definitions and highlights are given below.
Direct taxes on persons consist of payments made to the various governments. (These data include personal income, estate, gift, and inheritance taxes.) In 1964 about three-fourths went to the federal government and about one-fourth to provincial governments. Similar proportions of corporation direct taxes went to the federal and provincial governments.
Indirect taxes, according to National Accounts definitions, consist of customs duties and sales and excise taxes of the federal government; sales, gasoline, motor vehicle, natural resource and other taxes of provincial governments; and property taxes of municipal governments. It can be observed that they exceed all other tax sources combined, and that they are the main source of provincial and municipal governments' revenues.
/ Investment income consists of interest on funds, loans and investments, and profits of government business enterprises. The latter comprise crown corporations and agencies of the federal government, including government-owned business enterprises. Provincial enterprises include liquor control boards and public utilities. Municipal enterprises include gas, water, sewer, transport and other enterprises which levy specific charges designed to cover operating and other costs.
Revenues of funds include the public service pension receipts of the three governments, including both employer and employee contributions. Revenues of the federal unemployment insurance fund and of provincial workmen's compensation funds are also included here. It may be noted that old age security is financed by tax revenue and is, therefore, not included in the funds shown here.
The item "transfers from other governments" shows that the federal government transferred to provincial and municipal governments an amount of just over $1,250 million in 1964. Provincial governments transferred a roughly equivalent amount to municipal governments in that year. These transfers are discussed in greater detail below.
Turning to the expenditure side of Table 12, the largest item is expenditure on goods and services which consists of wages and purchased materials and services which are supplied by private sectors of the economy. Included are capital goods such as roads, buildings and public works in general, except those built by government business enterprises, which are included in business investment.
Transfer payments to persons include old age security, family allowances, veterans' pensions, unemployment insurance benefits, and other payments by the federal government. Provincial and municipal transfers to persons include direct relief, workmen's compensation, and various health and welfare payments, including payments to hospitals.
Debt interest is the gross amount paid on the outstanding public debts of the three governments, without deduction of interest revenue from loans and investments, which is shown separately on the revenue side.
[Stage Direction]
April 26, 1965
The Budget-Appendix
Transfers to other governments were mentioned briefly above. It will be noted that they do not affect the combined deficit of all governments, since the payment by one government represents an equivalent receipt by another. In comparing government revenue and expenditure with gross national product or similar aggregates, it is necessary to remove any duplication in total revenues or expenditures which occurs when funds are transferred between governments before they are finally spent. It was noted earlier that the amount of federal government transfers to provincial governments is almost exactly equalled, on balance, by the amount of provincial government transfers to municipalities. While transfers between governments may have certain redistributive consequences, these are not analysed here. Some additional comment is made subsequently on the transfers between provincial governments and their municipalities.
Trends in Revenues and Expenditures of Governments
In the period from 1950 to 1964, taxation revenues of all governments advanced somewhat more rapidly than gross national product. While they amounted to 21.3 per cent of gross national product in 1950, they had risen to
26.0	per cent in 1964. The major part of the increase was due to provincial and municipal taxation revenues, which rose from 6.5 per cent of gross national product in 1950 to 11.0 per cent in 1964. The federal government's taxation revenue as a percentage of gross national product was 14.8 per cent in 1950,
16.0	per cent in 1955, 15.3 per cent in 1960 and 14.9 per cent in 1964. These comparisons reflect changes that occurred in federal-provincial tax-sharing arrangements during the period, as well as in individual governments' tax rates and in the growth of the various economic sectors from which tax revenues are derived.

[Stage Direction]
TAXATION REVENUE OF GOVERNMENTS AS A PROPORTION OF GROSS NATIONAL PRODUCT, SELECTED YEARS 1950-1964 (National Accounts basis)
-	1950	1955	1960	1964	S Millions	Per- centage of G.N.P.	$ Millions	Per- centage of G.N.P.	$ Millions	Per- centage of G.N.P.	$ Millions	Per- centage of G.N.P.Federal Government	2,660	14.8	4,346	16.0	5,542	15.3	7,027	14.9Provincial Governments...	677	3.7	960	3.5	1,688	4.7	3,267	7.0Municipalities	503	2.8	851	3.1	1,458	4.0	1,890	4.0Total	3,840	21.3	6,157	22.7	8,688	24.0	12,184	25.9Gross National Product...	18,006	27,132	36,287	47,003	
Expenditures on goods and services by governments represent public consumption out of the nation's total production of goods and services. These amounted to 18 per cent of gross national product in 1964. Their trend and rela-* tive composition since 1950 are brought out in Table 15 below. In addition, governments engage in what might be termed redistributive activities, partly via intergovernmental transfers and eventually vis-a-vis the private economy. It can be calculated from Table 12 above that total expenditure of all governments (excluding intergovernmental transfers in order to avoid double counting of total expenditures) was the equivalent of 31 per cent of GNP in 1964. The difference between the 18 per cent expenditure on goods and services and the 31 per cent total expenditure is represented by transfers to persons, debt interest
April 26, 1965
[Stage Direction]
The Budget-Appendix
and subsidies, and is the equivalent of 13 per cent of GNP. Transfers to persons include pensions and other social security outlays, as well as grants to hospitals and other institutions, and amounted in total to $4,159 million or 9 per cent of GNP in 1964. They have grown at a faster rate than gross national product since 1950. The remaining 4 per cent consisted of debt interest and subsidies, which together were slightly larger relative to gross national product in 1964, than they had been in 1950.

[Stage Direction]
(National Accounts basis)
1950	1955	1960	1964	$ Millions	Per- centage of GNE	$ Millions	Per- centage of GNE	$ Millions	Per- centage of GNE	$ Millions	Per- centage of GNEFederal Government	
Provincial Governments	977	5.4	2,510	9.3	2,730	7.5	3,042	6.5and Municipalities	
GNE	1,367 18,006	7.6	2,282 27,132	8.4	4,039 36,287	11.1	5,565 47,003	11.8
Federal government expenditures on goods and services increased rapidly at the time of Korea and the subsequent defence buildup, but have since tended to grow less rapidly. The stability in defence spending is of course the main reason, while the ratio of non-defence expenditure on goods and services to GNE has not changed significantly. Goods and services expenditures declined to 6.5 per cent of GNE in 1964, while other kinds of expenditure were relatively stable. Table 16 shows that federal transfers to other governments were 2.7 per cent of GNE in 1964. The main trends in federal government expenditures are illustrated in the following chart.

[Stage Direction]
(National Accounts basis)
1950	1955	1960	1964	s Millions	Per- centage of GNE	$ Millions	Per- centage of GNE	. S Millions	Per- centage of GNE	$ Millions	Per- centage of GNEGoods and Services	977	5.4	2,510	9.3	2,730	7.5	3,042	6.5Transfer Payments to Per-	sons*1)	615	3.4	1,232	4.5	1,976	5.5	2,235	4.8Interest on the Public	Debt	427	2.4	494	1.8	753	2.1	995	2.1Transfers to Other Levels	of Government	251	1.4	450	1.7	994	2.7	1,254	2.7Other	60	.3	75	.3	207	.6	278	.6Total	2,330	12.9	4,761	17.5	6,662	18.4	7,804	16.6
^Excluding interest payments.
[Stage Direction]
April 26, 1965
The Budget-Appendix

[Stage Direction]
Nolionol Accounts Basis
Turning to the fiscal position in 1964, the sum of taxation and other revenues of the federal government was 18,132 million on a National Accounts basis in 1964. This amount was somewhat greater than expenditures so that there was a surplus on a National Accounts basis. Provincial and municipal governments' tax and non-tax revenues plus transfer receipts were $7,717 million in the same period. This was somewhat less than their combined expenditures, so that they incurred a small deficit. In the combined total of all governments' revenue and expenditure, there existed an approximate balance on the national accounts basis, in the past year.
The effect of intergovernmental transfers is brought out in the following table. These transfers include both conditional grants, that is, those which can be allocated to specific expenditures such as school or hospital construction, and unconditional grants which cannot be specifically allocated according to function. The following table is based on National Accounts definitions.
It is apparent from the table that transfers from the federal government to provincial and municipal governments reduce the federal government's share of combined tax and non-tax revenues from 56 to 47 per cent of the total revenue, while raising the provincial and municipal governments' combined share from 44 to 53 per cent of the total revenue. It has already been mentioned that provincial governments transfer to municipalities an amount almost equivalent to that which they receive from the federal government.
April 26, 1965
[Stage Direction]
The Budget-Appendix

[Stage Direction]
ADJUSTMENT FOR INTERGOVERNMENTAL TRANSFERS, 1964 (Millions of dollars)
(1) Taxation and other revenue	(2) Minus: Transfer payments to other governments	(3) Plus: Transfers received from other governments	(4) - (1 + 24-3) = Revenue after transfers	$	%	$	%Federal	8,132	56	-1,254	6,878	47Provincial-Municipal	6,463	44	+1,254	7,717	53Total	14,595	100	-1,254	+1,254	14,595	100


[Stage Direction]
Current Position of the Federal Sector
During 1964, the position of the government of Canada was tending toward a surplus on a National Accounts basis. Business conditions proved to be more expansive than had been anticipated and revenues reflected an even stronger rise, as a result of both special factors and the normal cyclical responses of taxes and tax bases. Quarterly changes in federal government revenue during the past three business cycles are shown in the following chart, in which the shaded areas represent cyclical contractions. It is quite apparent that revenues fall off substantially in contractions, and expand rapidly in prosperous periods. The final chart at the end of this section shows that both the surplus or deficit position and the unemployment rate (inverted) are similarly subject to changes in general business conditions.
[Stage Direction]


April 26, 1965
The Budget-Appendix

[Stage Direction]
All major components of revenue were affected by the general improvement in business conditions in 1964. Personal direct tax revenue showed a very substantial increase in 1964, partly due to the increase in the Old Age Security Tax rate on personal income and partly due to the built-in responsiveness of the personal income tax to cyclical variations in general activity. Corporation tax liabilities to the government also rose considerably in the first quarter, but levelled off in subsequent quarters. The special depreciation allowances introduced in 1963 have tended to moderate the growth in corporation tax liabilities in 1964. Indirect tax revenue also reflected the general expansion, with customs duties on imports and the manufacturers' sales tax both showing substantial increases.
Much of the increase in total expenditure in 1964 occurred in the first quarter of the year, as a result of increases in both defence and non-defence expenditures on goods and services. In the second quarter, increased payments to provincial governments more than offset a decline in defence expenditure. Other expenditure components changed very little. In the third quarter, defence expenditure declined once again but small increases in transfers to persons and in expenditure on goods and services, resulted in no overall change. Most of the above components showed decreases in the fourth quarter of 1964, but they were offset by an increase in subsidies. Several of these factors are temporary, being related more to variations in the quarterly timing of government expenditures than to any basic change in trend.
Provincial Governments and Municipalities
Summing up the revenue and expenditure components of provincial governments and municipalities in terms of their surplus or deficit position on a National
April 26. 1965
[Stage Direction]
The Budget-Appendix
Accounts basis, provincial governments are close to balance and municipalities are incurring substantial deficits.
PROVINCIAL GOVERNMENTS AND MUNICIPALITIES DEFICIT (-) OR SURPLUS (+)
(National Accounts Basis)
(Millions of dollars)
1959	1960	19610)	19620)	19630)	19640)Provincial	
+112	- 76	-128	+ 94	+ 80	+104Municipal	
-341	-390	-416	-392	-420	-452Total	
-229	- 466	- 544	- 298	- 340	- 348
'^Preliminary estimates by the Department of Finance.
The municipal deficits have been occurring despite annual increases in transfers from provincial governments to municipalities, mainly in the form of grants to school boards or districts and grants for roads. Total transfers from provinces to municipalities increased from $622 million in 1959 to $1,143 million in 1963.
The major increases in provincial expenditures are in the field of education; this is also true of municipal expenditures. Large absolute increases in expenditures on health, welfare and transportation (roads, bridges, etc.) are also evident.
The consequences of this rate of increase in expenditures have been fourfold. First, municipal governments have incurred deficits every year and this has led to progressively greater increases in debt. Provincial debt has also increased annually. The total annual increase in gross debt, of course, has been greater than the operating deficits of governments shown above, since they also borrow to finance investment in municipally- and provincially-owned public utilities. The latter are shown in the business sector of the National Accounts.
Second, as expenditures continue to grow, provincial and municipal governments have found it necessary to introduce new taxes and increase rates on existing taxes. Because of the nature of provincial and municipal tax structures, increases customarily take place in the consumption and property tax fields. In recent years gasoline and general sales tax increases have been common. However federal abatements on personal income tax and corporation taxes have allowed more tax room in these fields to provincial governments.
Third, federal government personal income tax abatements increased substantially in 1962-63 when new tax-sharing arrangements were completed and all provinces levied their own corporation and personal income taxes. Prior to
1962-63 Ontario and Quebec alone levied their own corporate income taxes and Quebec levied her own personal income tax. Under the earlier system, the rental rate (or abatement rate for non-agreeing provinces) on the personal income tax was 13 per cent. The abatement under the new arrangements was increased to 16 per cent in 1962-63 and increased annually by one point until 1964-65, when it reached 18 per cent. It will increase by 3 points in 1965-66 (to 21 per cent) and by a further 3 points in 1966-67, to reach 24 per cent.
Finally, with the new arrangements beginning in 1962-63, there was also an increase in unconditional transfers to the provincial governments. Further, in 1964-65, the equalization formula was revised resulting in a substantial increase in total payments from the federal government to the provinces.
[Stage Direction]
April 26, 1965
The Budget-Appendix

[Stage Direction]
(1)	FEDERAL GOVERNMENT ONLY.
(2)	ESTIMATE.

[Stage Direction]
Both the labour force and the number of people with jobs again rose in 1964. At the end of the year, despite another substantial increase in new-comers to the labour market, the unemployment rate (apart from seasonal influences) was lower than it had been in any month since early 1957.
The total civilian labour force in 1964 grew by 183,000 persons, or 2.7 per cent, over the 1963 average. The number of employed rose by 231,000 or 3.6 per cent. Unemployment, expressed as a percentage of the labour force, dropped from the 1963 average of 5.5 per cent to an average of 4.7 per cent in 1964. These developments are illustrated in the following chart.
The growth in the labour force consisted of an increase of 102,000 women and 81,000 men, as the female participation rate continued to edge up. The participation rate is the percentage of the total number of people in a given age group who are at work or are actively seeking work. The total participation rate for males continued its long-term decline in 1964, although it rose temporarily during the summer months, when demand for labour was particularly strong and a number of older workers returned to the labour force for a limited period. The student participation rate also rose slightly during the summer, reflecting to some extent the greater availability of jobs.
The teen-age population, 14 to 19 years of age, rose by 102,000 persons in 1964. This rise, like that of 1963, was a reflection of the sharp upward shift in the birth rate which occurred after the end of the second world war.
April 26. 1965
[Stage Direction]
The Budget-Appendix

[Stage Direction]
MILLIONS OF PERSONS	MILLIONS OF PERSONS
^SEASONALLY adjusted estimates by the department of finance
ANNUAL INCREASE, POPULATION 14-19 YEARS (Thousands of persons)
1959	1960	1961	1962	1963	196468	74	77	80	91	102
The teen-age labour force rose by 28,000, as many of these young people entered the labour market permanently. At the same time, the teen-age participation rate continued its long-term decline, owing to the continued trend towards a longer period of formal education.
PARTICIPATION RATE, POPULATION 14-19 YEARS (Labour force as a per cent of population)
1959	1960	1961	1962	1963	196437.9	37.9	36.5	35.4	34.6	34.2
April 26, 1965
The Budget-Appendix
The teen-age unemployment rate fell slightly in 1964, to the lowest level recorded in recent years. Unemployment in this age-group, however, remains substantially above the average, as many young people in the modern economy are handicapped by lack of skills and experience.
UNEMPLOYMENT RATE, LABOUR FORCE 14-19 YEARS (Unemployed as per cent of the labour force)
1959	1960	1961	1962	1963	196411.1	13.0	13.2	11.5	11.4	10.3
While the influx of steadily-growing numbers of teen-agers into the labour force has become a major feature of the employment picture, the now-established tendency of women to increase their participation in the labour force in response to employment opportunities remains a significant factor. Thus, as employment rises and unemployment declines, these conditions themselves induce a more rapid increase in the labour force than would be brought about by population factors alone. Conversely, when employment opportunities decrease many women withdraw from the labour force. In 1964, the female participation rate in all age groups rose to a greater extent than in the previous two years, with the result that the total female participation rate rose quite sharply.
PARTICIPATION RATE, WOMEN, ALL AGE GROUPS (Labour force as a per cent of population)
1959	I 960	1961	1962	1963	196426.7	28.0	28.8	29.1	29.6	30.5
The participation rate for men of all ages continued its long-term decline in 1964, falling to 78.4 per cent from 78.8 per cent in the previous year. Men between 25 and 65 years of age maintained the high and steady rates characteristic of the group, but participation rates among men 20 to 24 years fell from 88.9 per cent to 88.2 per cent. The major contributing factor here, as in the teen-age group, is the tendency to extend the years of formal education.
Adult unemployment rates in 1964 varied by age-group and sex. Unemployment rates for men averaged 5.3 per cent, but young men 20 to 24 years of age experienced an unemployment rate of 7.9 per cent, while in the 35 to 44 group the rate was 3.8 per cent. The rates for men were uniformly higher than for women, as men remain in the labour force and continue to seek work if they become unemployed, whereas women (as observed above) tend to withdraw in the same circumstances. The 1964 average unemployment rate for women of all ages was 3.1 per cent. In the 20 to 24 age-group the percentage was 3.0, and in all other adult groups recorded, the level of unemployment was even lower.
Regional developments in 1964 employment revealed a further substantial improvement in unemployment conditions in the Atlantic and Quebec regions, although all parts of Canada experienced a more rapid increase in employment than in labour force.
Unemployment expressed as a percentage of the labour force therefore declined in all regions. The decline was particularly marked in the Atlantic region and Quebec, although there was a further marked improvement also in British Columbia. The declines in Ontario and the Prairie region, where unemployment was already lower, were smaller. Thus, the sharp increase in employment which occurred in 1964 was achieved without the development of generalized pressures in the labour market.
April 26, 1965	COMMONS DEBATES	509
The Budget-Appendix
The 3.6 per cent growth in employment in 1964 was accompanied by a 8.7 per cent increase in wages, salaries and supplementary labour income. Average hourly earnings in manufacturing rose by 3.1 per cent from $1.95 to $2.01 (11 months data period). Earnings in construction industry rose from $2.14 to $2.25, a rise of 5.1 per cent, and in mining from $2.24 to $2.31, a rise of 3.1 per cent. Average weekly hours of work in manufacturing rose from 40.8 to 41.2 and average weekly earnings in manufacturing rose by 4.2 per cent from $86.17 to $89.81.

[Stage Direction]
REGIONAL INCREASES IN LABOUR FORCE AND EMPLOYMENT (Annual averages-thousands of persons)
1962 1961	1963 1962	1964 1963	Labour Force	Employ- ment	Labour Force	Employ- ment	Labour Force	Employ- mentAtlantic	8	10	i	8	13	22Quebec	30	59	50	49	46	63Ontario	19	47	52	62	78	89Prairies	21	28	7	10	21	26British Columbia	13	22	17	19	27	32Totals	90	168	129	147	183	231
(Totals may not add due to rounding).

[Stage Direction]
UNEMPLOYMENT AS A PERCENTAGE OF THE LABOUR FORCE (By region-annual averages)
1961	1962	1963	19647.2	5.9	5.5	4.7Atlantic	ii.i	10.7	9.5	7.8Quebec	9.3	7.5	7.5	6.3Ontario	5.5	4.3	3.8	3.3Prairies	4.6	3.9	3.7	3.0British Columbia	8.5	6.7	6.3	5.3

[Stage Direction]
Relative stability of prices and costs was maintained across the economy as a whole throughout the year, despite the high level of employment attained in some regions in 1964. The generally stable price environment reflected the availability of adequate productive capacity in most industries, rising productivity per worker, and only moderate advances in wage-rates and hourly earnings. In the field of export and import prices, further price changes made in adjustment to the situation created by the devaluation of mid-1962 were less significant than the effects of changes in the world prices of many commodities important to the Canadian economy. Domestic prices and costs, as measured in the GNE implicit price deflator, continued the slight upward trend of recent years.
510
[Stage Direction]
April 26, 1965
The Budget-Appendix
The cycle-on-cycle charts on page 40 show the movements of some major price series over the course of the current business cycle, in comparison with developments in the two preceding periods of recession and upswing. These charts illustrate the sensitivity of the Canadian economy to changes in relative price levels in the international economy, both in the wholesale price index (which is heavily weighted with import and export goods) and in the consumer price index, which is influenced in part, in some cases with a substantial lag, by the movement of the wholesale index. The effects of the 1960-1962 changes in exchange rate values, which caused wholesale and (eventually) consumer prices to rise, although to a far lesser extent, can be seen on these charts.
The substantial changes in 1964 in world prices of non-ferrous metals products had some effect on the wholesale price index and some relevant sub-indexes, as shown in Table 20. Changes in import and export price indexes influence as well the implicit price deflator which is applied to the Gross National Expenditure and its components to derive a constant-dollar GNE. Table 21 shows the year-to-year changes in these various measures of price change.

[Stage Direction]
PERCENTAGE CHANGES IN WHOLESALE PRICE INDEXES (Annual averages)
-	1961 1960	1962 1961	1963 1962	1964 1963General Index	+1.0	+2.9	+1.9	+0.3Vegetable Products	-	+4.2	+7.6	-1.9Animal Products	+2.9	+3.1	-2.6	-1.8Textile Products	+2.0	+2.9	+2.8	+0.1Wood Products	+0.4	+3.5	+2.4	+2.4Iron Products	+0.7	-0.7	-1.0	+ 1.1Non-Ferrous Metals and Products	+2.1	+5.8	+2.8	-j-4.2Non-Metallic Minerals and Products	-0.2	+2.1	+0.2	+0.7Chemical Products	+0.3	+1.0	-0.6	+1.0Industrial Materials	+1.2	+2.0	+2.2	+1.9

[Stage Direction]
IMPLICIT PRICE INDEXES OF G.N.E. AND COMPONENTS (percentage price changes)
	Year		
-	1962 1961	1963 1962	1964 1963+1.3	+1.5	+1.5+1.3	+1.7	+1.7-0.3	+0.4	-1.1+2.0	+1.5	+2.2+2.9	+4.1	+2.6+2.6	+2.6	+3.6+2.8	+3.5	+5.7+2.2	+2.6	+2.74-2.7	+2.2	+3.2+3.1	+1.1	+2.3+4.1	+2.9	+1.7
+1.5	+1.8	+2.3
			
0) Price indexes of these sectors are measured by elements entering into costs (materials and labour purchased) rather than final selling prices, and generally it has not been possible to allow for changes in productivity. Over short periods of time, these cost indexes are not likely to vary to any extent from indexes of actual selling prices. Over longer periods, it may be that these cost deflators overstate price increases.
April 26, 1965
[Stage Direction]
The Budget-Appendix

[Stage Direction]
COMPARATIVE PRICE CHANGES, 1961-1964 (Year-to-year percentage changes)
Consumer Price Index	
General Wholesale Price Index	
Non-ferrous metals products___
Total fully manufactured goods
G.N.E. deflator <*	
Import Price Index<'>
Export Price Index<*	
[DOT]''Fourth Quarter
Dec. 1962	Dec. 1963	Dec. 1964Dec. 1961	Dec. 1962	Dec. 1963+1.6	+1.7	+ 1.9+2.4	+1.3	+0.3+3.4	+2.9	+6.0+2.4	+1.6	-0.1+2.2	+1.7	+2.4+2.7	+3.2	+0.1+1.7	+1.9	+1.6
The consumer price index average in 1964 rose by 1.8 per cent, about the same as the rise which occurred in 1963. Within the total index, the price index for services rose by 2.5 per cent, as the price of services continued its long-term upward trend. Other sub-aggregates rose less. These changes are set out in Table 23.

[Stage Direction]
(Annual averages)
-	1961 1960	1962 1961	1963 1962	1964 1963Total-All Items	+0.9	+1.2	+1.8	+1.8F ood	+1.5	+ 1.8	+3.2	+1.6Housing	+0.4	+ 1.2	+ 1.0	+1.6Clothing	+1.4	+0.9	+2.5	+2.5Transportation	+0.2	-0.1	+1.1Health and Personal Care	+0.5	+ 1.9	+2.6	+3.4Recreation and Reading	+ 1.2	+0.8	+1.4	+1.7Tobacco and Alcohol	+0.4	+1.3	+0.3	+1.8Supplementary Classifications	All Commodities	+0.5	+0.8	+1.7	+1.3Durables	-1.8	-0.7	+0.2	-0.9Non-Durables	+ 1.0	+1.2	+2.0	+1.7Non-Durables excluding Food	+0.6	+0.7	+1.0	+1.7Services	+1.3	+1.4	+1.4	+2.6Services excluding Shelter	+1.9	+2.1	+2.0	+3.7
In the construction of both the consumer price index and the GNE implicit price deflator, some components are more directly affected by changes in wage levels than are others. For example, in both private and public construction, the lack of final price data makes it necessary to use wage and material costs as a proxy for some prices. Some overstatement of price increases can occur when wage-rates rise, insofar as concurrent productivity increases in the construction industry may not be fully allowed for. There are similar problems in constructing indexes in the case of services. In the government sector, whose output has no market price, the value of the product also can be estimated only by measuring the cost of producing the service. These costs consist largely of wage and salary payments, and it is not generally possible to make any allowance for productivity gains, or for improvements in the quality of the service produced. This is equally true in the case of some consumer services. For some services productivity in terms of volume of output per man-hour cannot readily be increased. Rising wage levels are thus reflected in increases in the price of services.
512
[Stage Direction]
April 26. 1965
The Budget-Appendix

[Stage Direction]
CYCIE-ON-CYCLE SERIES Previous BusinessCycle Peak=100
April 26, 1965
[Stage Direction]
The Budget-Appendix
Developments in labour income, cost per unit of output and real output in manufacturing are depicted graphically in the chart on page 42. Real manufacturing output in 1964 rose by 8.6 per cent, and output per production worker man-hour by 2.8 per cent. Average hourly earnings in manufacturing were 3.1 per cent higher, and there was a fractional increase, of the order of 0.3 per cent, in wage costs per unit of output in 1964 over 1963. The wholesale price index of fully or chiefly-manufactured goods rose by 0.9 per cent. The rise in prices of consumer goods, which was somewhat higher than the rise at the wholesale level during the year, was also in part a reflection of rising costs in those service industries, such as wholesale and retail trade and business and commercial services, which are engaged in the task of distributing to the final purchaser the product of the factories. Some higher taxes, particularly on alcohol and gasoline, also affected consumer prices in 1964. Table 24 summarizes recent changes in some prices and costs, on a comparative basis.

[Stage Direction]
RECENT CHANGES IN COSTS AND PRICES (Percentage changes)
-	1963 1962	1964 1963
	+3.7 +3.5 +1.9 +1.8 +0.9 +1.8	+3.1 +3.7 +0.3 +1.8 +2.3
		
General Wholesale Price Index			
		
		
		
		
-=no change
The general stability in unit wage-costs in manufacturing, supported by the lack of significant pressure in other price aggregates, has continued to be a source of strength in Canada's international competitive position. Table 25 shows the changes recorded in wages and prices in Canada and six major competitors in world markets, during the two years ending second quarter 1964. These changes continue a trend of similar annual magnitudes, in which over a period of three or more years, when the Canadian dollar moved to a lower level, only the U.S. has recorded greater stability than Canada. Rising prices and costs in other countries are improving the price and profit situation for Canadian producers competing both abroad and in domestic markets.

[Stage Direction]
CHANGES IN PRICES AND WAGES OVER THE TWO YEARS ENDING 2ND QUARTER 1964 UNLESS SPECIFIED (Percentage changes)
Consumer Price Index	Wholesale Prices	Hourly Earnings in Mfg.+3.70) +2.6 +4.4 +5.0 +8.3 +11.6 +13.5	+1.20) -0.1 +4.9 +2.0 +4.4 +1.8 +8.4	+7.20) +6.6*>
+8.6 +14.9 +16.70) +22.0 +33.1U.S	U.K	
MThird quarter comparisons.
[Stage Direction]
April 26, 1965
The Budget-Appendix

[Stage Direction]
lnd«>
1949 = 100

[Stage Direction]
The deficit on Canada's external current account in 1964 of $453 million compares with that of $557 million incurred in 1963. The outturn for the year as a whole obscures some substantial changes in the size of the deficit during the course of the year, partly as a result of the timing of export deliveries of large orders of wheat, and partly as a result of some special factors affecting the timing of imports. The net effect of all this was a much lower deficit (on a seasonally adjusted basis) in the middle quarters of the year and higher deficits in the first and last quarters of 1964, as compared with the year as a whole.
It is particularly difficult to assess Canada's external position in 1964 simply in terms of the outturn on current account. The most obvious (but by no means the only) special factor operating in 1964 was the completion of the exceptional export of wheat and flour to the Soviet Union, begun in the previous year. Subtraction of the value of these shipments from Canadian exports would imply current account deficits of about $750 million in both 1963 and 1964. Not only is this, in itself, some improvement on the deficit of $874 million incurred in 1962; but even as between 1963 and 1964 it represents some relative reduction of the deficit when measured against rising national income, previous cyclical expansions, and a pattern of demand more heavily influenced by investment. Moreover, the contract with the Soviet Union was only one, though the largest, of a number of such contracts with the countries of Eastern Europe, and Communist China; and the earnings involved cannot simply be deducted from the export side of the balance sheet, since they will both have provided the means of payment, and generated demand, for additional imports. Therefore, when the balance of payments is referred to as "ex-wheat" or "ex-Russian wheat" in the following analysis, it must be remembered that this is simply a statement of actual levels of performance, and not of what would have happened in the absence of any special wheat sales.
April 26. 1965
[Stage Direction]
The Budget-Appendix
There was a rise in the surplus on merchandise trade in 1964, which came about as exports increased by 16 per cent, while imports grew by 15 per cent. In all, this led to a surplus amounting to $700 million, in contrast to a surplus of $503 million in 1963. Non-wheat exports rose by 16 per cent, rising more or less steadily throughout the year, following a very sharp upsurge in the latter part of 1963 and the early months of 1964. Imports, by contrast, after rising sharply throughout 1963 and into the early part of 1964, declined about mid-year and did not show any pronounced trend thereafter. The levels of imports in the early part of the year were associated with heavy purchases of machinery. The fourth quarter level of imports was affected by automobile strikes in the United States which held down the import of automobiles and parts.
The major improvement on merchandise trade account in 1964 was partly offset by a widening of the deficit on non-merchandise account which amounted to $93 million. Within the non-merchandise account, an improvement on freight and shipping transactions associated with movements on trade account was more than offset by other items. Travel expenditures swung by $72 million from a small surplus in 1963 to a small deficit in 1964. It would appear that, in this sector, the impact of devaluation has probably worked itself out; the swing likely also reflects rising levels of personal income in Canada, reductions in air fares to Europe, and poor weather during the summer of 1964 in Canada. Net outpayments of interest and dividends rose for the fourth successive year. The deficit on miscellaneous current transactions (such as business services) increased slightly. As a result, the total non-merchandise deficit rose again to $1,153 million in 1964, or to approximately the same level as in 1961, after being about $100 million less in the intervening two years.

[Stage Direction]
INTERNATIONAL PAYMENTS: CURRENT ACCOUNT
1959	1960	1961	1962	1963	1964Current Receipts- Merchandise exports (adjusted)	
Gold available for export	
Travel expenditures	
Interest and dividends	
Freight and shipping	
Inheritances and immigrants' funds	
Other current receipts	
Total Current Receipts	
Current Payments- Merchandise imports (adjusted)	
Travel expenditures	
Interest and dividends	
Freight and shipping	
Inheritances and emigrants' funds	
Official contributions	
Other current payments	
Total Current Payments	
Balance on Merchandise Trade	
Balance on other Transactions	
Current Account Balance	5,150 148 391 182 420 109 392	5,392 162 420 173 442 102 419	(Millions 5,889 162 482 209 486 103 403	of dollars] 6,380 155 562 202 509 124 451	7,082 154 609 223 560 149 449	8,238 144 661 287 642 166 4686,792	7,110	7,734	8,383	9,226	10,6065,572 598 671 525 165 72 693	5,540 627 653 533 181 61 758	5,716 642 770 568 174 56 790	6,203 605 794 595 175 36 849	6,579 589 869 641 182 61 862	7,538 713 960 703 191 68 8868,296	8,353	8,716	9,257	9,783	11,059-422 -1,082 -1,504	-148 -1,095 -1,243	+173 -1,155 -982	+177 -1,051 -874	+503 -1,060 -557	+700 -1,153 -453
April 26, 1965
The Budget-Appendix
On the capital side, the inflow of long-term capital which had been substantially reduced in the latter part of 1963, rose markedly in the course of 1964. Following an outflow of $37 million in the first quarter, there were inflows of $116 million, $171 million and $477 million in the second, third and fourth quarters of 1964. Largely accounting for this increase were substantial receipts from the delivery of new issues of Canadian securities. Some of these issues resulted from deliveries contracted for earlier, and from the "backlog" which arose in the course of the year, pending the enactment of the Interest Equalization Tax in the United States, and the accompanying "Canadian exemption" for new issues.
Movements of short-term capital during 1964 were important. In the first and second quarters there were inflows of $338 million and $108 million respectively, which were reversed by outflows of $230 million and $127 million in the third and fourth quarters. In the first quarter the net balance on long-term and short-term capital was not large enough to offset the deficit on current account and consequently, Canada's official holdings of gold and foreign exchange decreased by $127 million. In the second, third and fourth quarters, official reserves increased by $62 million, $97 million and $54 million. Canada's net position in the International Monetary Fund, that is the net resources provided by Canada to the IMF, increased by $277 million over the year. Of this amount $213 million represented the liquidation of an obligation to repay. The remaining $64 million represented Canada's creditor position in the IMF and under the General Arrangements to Borrow, which arose from drawings of Canadian currency by other members.

[Stage Direction]
SUMMARY OF BALANCE OF PAYMENTS (not seasonally adjusted)
		1963				1964		
IQ	2Q	3Q	4Q	IQ	2Q	3Q	4QMerchandise Trade Balance	+ 74	+ 74	(IV +151	[illions +204	dollar + 33	s) +149	+356	+ 162Deficit on Non-Merchandise Transactions..	-322	-278	-135	-325	-376	-305	-141	-331Current Account Balance	-248	-204	+ 16	-121	-343	-156	+215	-169Capital Movements (+ = inflow) (- = outflow)	+ 171	+477Long-Term Forms	+375	+209	+ 33	- 4	- 37	+116	Short-Term Forms	- 61	+ 106	-108	+153	+338	+108	-230	-127Sub-total	+ 66	+111	- 59	+ 28	- 42	+ 68	+ 156	+181Change in official holdings of gold and foreign exchange expressed in Canadian	+ 28	-127	+ 62	+ 97	+ 54dollars (+ = increase)	+ 66	+111	-145	(- = decrease)	Net International Monetary Fund position..	+ 86	+ 85	+ 6	-1- 59	+ 127+ 66	+111	- 59	+ 28	- 42	+ 68	+156	+181
A more detailed exposition of these developments follows.
Current Account
With some renewed growth in the size of the non-merchandise deficit, the overall improvement on current account in 1964 was wholly due to the increased surplus on merchandise trade.
April 26, 1965
[Stage Direction]
The Budget-Appendix

[Stage Direction]
BALANCE OF PAYMENTS ON CURRENT ACCOUNT: MERCHANDISE AND NON-MERCHANDISE BALANCE 1946-1964
	Merchandise Trade	Non- Merchandise Trade	Current Account Balance
	(Millions of dollars)		
1946	+571	-208	+3631947	+188	-139	+ 491948 	+432	+ 19	+4511949	+293	-116	+ 1771950	+ 10	-344	-3341951	-147	-370	-5171952	+489 - 58	-325	+ 1641953	-385	-4431954	+ 13 -211	-445	-4321955	-487	-6981956	-728	-638	-1,3661957	-594	-861	-1,4551958	-179	-952	-1,1311959	-422	-1,082	-1,504I960	-148	-1,095	-1,2431961	+173 +177 +503	-1,155	-9821962 	-1,051	-8741963	-1,060	-5571964	+700	-1,153	-453
From a peak deficit of $728 million on merchandise trade in the strong investment year of 1956, there has now been a swing of about $1.4 billion to a surplus of $700 million in 1964, although the latter year is affected by the special shipments of wheat under the Russian contract. Simple deduction from exports of the wheat sales under the Russian contract would still leave merchandise surpluses of approximately $300 million in 1963 and $400 million in 1964. The deficit on non-merchandise transactions rose in 1964, although it has not varied

[Stage Direction]
April 26, 1965
The Budget-Appendix
by much more than $50 million around an average of $1,100 million for the past six years. A substantial part of the increase was accounted for by a reversal of an earlier improvement on travel account, and most of the remainder by increased net payments of interest and dividends to non-residents. A modest improvement on freight and shipping and inheritances and migrants' funds was largely offset by lower production of gold for export and by higher official contributions. There was a slightly higher deficit on other non-merchandise transactions.
In 1964, total merchandise exports including re-exports were 16.3 per cent higher than in 1963. For all goods other than wheat, the increase in 1964 was 16 per cent; excluding the special shipments of wheat and flour to the Soviet Union, but including all other wheat, exports of which increased moderately, the rise was 15 per cent. By any of these standards, the improvement in exports outweighed the 14.6 per cent rise in imports in 1964.
On a quarterly basis, and allowing for seasonal factors, the improvement in the merchandise surplus gathered momentum very strongly during the first three quarters of the year, in contrast to the relatively level pattern shown in 1963. In the first quarter of 1964, imports of goods were already more than 14 per cent up on the average for 1963, in response to the heavy investment expenditures undertaken in that quarter. They then rose only slightly from the first to the second quarter, and fell back again in the third. There was some increase in the fourth quarter, although the automobile strikes in the United States held down the level of imports of automobiles and parts. Since wheat sales in particular raised exports substantially in both the second and third quarters, the trade surplus was running at an annual rate of well over a billion dollars by the third quarter, more than four times the level in the first. The completion of the special wheat sales to Russia in the third quarter and the increase in imports in the fourth led to a reduction in the merchandise surplus in the final quarter of the year from the exceptionally high level reached in the third quarter.
Apart from the special wheat sales, the pattern of export performance in 1964 was chiefly influenced by steady growth in most of the major traditional exports, and quite striking advances in some of the newer export sectors, especially manufactured goods. Between 1963 and 1964, exports of newsprint, lumber and woodpulp together rose by just over 10 per cent, those of nickel in ores, concentrates and scrap by 11 per cent, and those of aluminum, nickel and copper as metals, with their alloys, by rather more than 9 per cent. The value of crude petroleum shipments rose by nearly 12 per cent. These exports continued to account for well over 40 per cent of non-wheat domestic exports in 1964; but none showed as dramatic an increase as iron ores and concentrates, which rose by more than 32 per cent, or manufactured goods, which increased by more than 41 per cent.
A part of. the growth in exports of manufactured goods was accounted for by aircraft and parts, exports of which were 130 per cent higher in 1964 than in 1963. Since payment for such items as aircraft and ships tends to be spread out over the duration of the construction contracts, the effects of changes in such exports on Canada's balance of payments in any one year are normally much less than the crude trade figures suggest. In 1964 there were also further substantial increases in exports of agricultural machinery, locomotives, automobiles, engines and parts, and measuring, testing and data processing equipment; and these far outweighed a slight decline in exports of radio, television and radar equipment. Some of these exports of highly processed manufactured goods were financed by export credits, which have increased in importance in recent years.
April 26. 1965
[Stage Direction]
The Budget-Appendix

[Stage Direction]
MERCHANDISE EXPORTS BY COMMODITY GROUPS 1961 AND 1964*
-	Farm and Fish Products	Forest Products	Metals and Minerals	Chem- icals and Ferti- lizers	Other Manu- factured and Miscel- laneous	Re- Exports	Total1961 million dollars	1,301	1,623	1,861	251	719	140	5,896% of total	22.1	27.5	31.6	4.3	12.2	2.4	100.01964 million dollars	1,937	1,970	2,389	302	1,341	201	8,140% of total	
(year ending Sept. 30)	23.8	24.2	29.3	3.7	16.5	2.5	100.0% Increase 1964 over 1961....	48.9	21.4	28.4	20.3	86.5	43.6	38.1
Trade of Canada basis, excluding "Special Transactions-Non-Trade".
As in 1963, imports of automobile parts continued to rise strongly over the year as a whole in 1964, and there was also renewed growth in imports of complete automobiles. Farm equipment, tractors, non-farm machinery in general, and steel plate, sheet and strip were all imported in substantially higher volume than in the previous year; but there was a 3 per cent fall in the value of imports of crude petroleum in the first nine months of the year.
In terms of geographical areas, well over half the improvement in the favourable balance on merchandise trade with overseas countries was offset by an increase in the deficit with the United States. In 1964, the surplus with the United Kingdom increased by $138 million, or 28 per cent, and that with other overseas countries expanded 76 per cent, rising to $871 million partly, but not entirely, as a result of special sales of wheat; the surplus with these other overseas countries on items other than the wheat shipped to the Soviet Union rose from over $300 million in 1963 to roughly $565 million in 1964. The deficit with the United States, on the other hand, increased by 65 per cent, rising by $317 million to $805 million.

[Stage Direction]
United	United	Other	All	States	Kingdom	Countries	Countries	1963	1964	1963	1964	1963	1964	1963	1964(Millions of dollars)	Merch. Exports (adjusted)	3,970	4,397	1,017	1,218	2,095	2,623	7,082	8,238Merch. Imports (adjusted)	4,458	5,202	521	584	1,600	1,752	6,579	7,538Trade Balance	-488	-805	+496	+634	+495	+871	+503	+700Non-merch. receipts	1,507	1,589	279	355	358	424	2,144	2,368Non-merch. payments	2,202	2,443	375	417	627	661	3,204	3,521Non-merch. balance	-695	-854	-96	-62	-269	-237	-1,060	-1,1535,477	5,936	1,296	1,573	2,453	3,047	9,226	10,606Total current payments	6,660	7,645	896	1,001	2,227	2,413	9,783	11,059Current account balance	-1,183	-1,659	+400	+572	+226	+634	-557	-453
22620-34i
[Stage Direction]
April 26. 1965
The Budget-Appendix
On non-merchandise account, the increase of $93 million in the overall deficit in 1964 was more than accounted for by transactions with the United States, on which the deficit increased from $695 to $854 million, while there was a smaller deficit with the United Kingdom and a fall of $32 million in that with all other countries.
There appears to have been a deterioration in Canada's terms of trade in merchandise, as the export price index rose by 1.7 per cent in 1964, as against a rise of 2.7 per cent in the first nine months in the import price index. The strengthening of export prices derived in part from strong rises in world prices for non-ferrous metals during 1964; although these have since fallen back in most cases, and much of Canadian export trade in this sector is based on longer term negotiated contracts rather than on world market prices, the general level of metal prices is now significantly higher than during the late fifties and early sixties.
Nevertheless, by far the greatest part of the rise in Canadian export earnings in 1964 was due to the higher physical volume of merchandise shipped.
In contrast to the experience of previous postwar business expansions, the merchandise account has not deteriorated; indeed there has been a fairly steady improvement in the merchandise balance. Although the share of merchandise imports in Gross National Expenditure rose in 1964 to around the level reached at the peak of the previous expansion, in 1959, it was well below the earlier peak ratios of 1951 and 1956.

[Stage Direction]
While it is not possible to quantify the effect of the 1962 devaluation and subsequent relative stability in costs and prices upon Canada's current external transactions, it seems clear that their impact upon the merchandise account has been substantial and significant.
Canada's commercial and industrial policies, as well, have combined to improve her competitive position. This has brought about not only continued expansion of total exports (to which the level of economic activity in Canada's foreign markets also made a major contribution) but also their diversification, and especially a further marked rise in exports of manufactures.
April 26. 1965
[Stage Direction]
1953
1955
1957
1959
1961
1963
The Budget-Appendix

[Stage Direction]
BALANCE ON TRAVEL ACCOUNT All Countries
Receipts
Payments
Balance
(Millions of dollars)
302	365	-63305	389	-84328	449	-121337	498	-161363	525	-162349	542	-193391	598	-207420	627	-207482	642	-160562	605	-43609	589	+20661	713	-52
Apart from travel expenditures, which have already been described, the deterioration on non-merchandise account as a whole in 1964 was due to increased net payments of interest and dividends to non-residents. The gross outflow on this account rose from $869 million in 1963 to $960 million in 1964, or by 10 per cent; income on Canadian investments abroad rose from $223 million to $287 million at the same time, or by 29 per cent, but as a result of the preponderance of outpayments in this account the deficit widened by $27 million, or over 4 per cent. Official contributions rose from $61 million in 1963 to $68 million in 1964.

[Stage Direction]
NON-MERCHANDISE ACCOUNT (Seasonally adjusted at annual rates) (National Accounts Basis)
	Receipts	Payments	Balance
	(Millions of dollars)		
IQ 1963	1,948	2,920	-9722Q 1963	1,968	2,932	-9643Q 1963	1,992	3,076	-1,0844Q 1963	2,072	3,160	-1,088IQ 1964	2,192	3,312	-1,1202Q 1964	2,124	3,200	-1,0763Q 1964	2,184	3,308	-1,1244Q 1964	2,308	3,500	
April 26, 1965
The Budget-Appendix

[Stage Direction]
Capital Account
For the year 1964 as a whole there was a net capital inflow of about $800 million. The bulk of this net inflow was in the form of long-term capital, largely arising from sales of Canadian bonds. The amount of direct investment inflow remained at the relatively low level it had reached in 1963. Short-term capital inflows amounted to slightly less than $90 million for the year as a whole.
In the course of the year the movements of capital in long and short-term forms displayed sharp fluctuations. The announcement of the proposed Interest Equalization Tax in the United States in July 1963 had put a considerable strain on Canadian financial markets. Even with the exemption from the tax proposed for new issues of Canadian securities, the uncertainties pending the disposition of the legislation and their effect on financial markets had virtually caused the closing of the market for new issues in the United States for Canadian borrowers. By the fourth quarter of 1963, inflows of long-term capital in the form of direct investment and transactions in Canadian securities had also virtually disappeared. This trend continued through the first quarter of 1964. Subsequent to this, the net inflow of long-term capital increased substantially as deliveries on previously arranged new issues were received in larger amounts in the second quarter and some new issues began to be placed. In the last half of the year, the inflow of long-term capital was considerably above that of the first half. In particular the passage of the Interest Equalization Tax and the granting of the Canadian exemption were associated with a substantial increase in inflow from new issues which had been building up in anticipation of the passage of the Bill.
Movements of short-term capital in 1964 exhibited a different pattern with substantial inflows in the first half of the year being followed by outflows in the second half.
On balance, the total capital inflow in the first quarter of 1964 was not sufficient to cover the deficit on current account, and there was a decline in foreign exchange holdings. In the second quarter, the inflow of capital covered a smaller current account deficit and there was some increase in exchange holdings. In the third quarter, although the net movement of long and short-term
April 26, 1965
[Stage Direction]
The Budget-Appendix
capital was outward, the seasonally high current account position (which was in surplus) more than offset the capital outflow. In that quarter there was an increase in exchange holdings and a reduction in Canadian dollar holdings of the IMF. In the final quarter of the year, the deliveries of long-term capital which had been building up in anticipation of the passage of the Interest Equalization Tax, along with other forms of capital inflow, more than offset the current account deficit and there was an increase of $54 million in Canada's official holdings of gold and foreign exchange. IMF holdings of Canadian dollars were also reduced further. For the year as a whole, the capital inflow was sufficient to cover the current account deficit. Official holdings of gold and foreign exchange reserves increased by $86 million and Canadian liabilities to the IMF amounting to $213 million were eliminated. In addition, Canada provided resources amounting to $64 million through the IMF to countries in balance of payments difficulties.

[Stage Direction]
INTERNATIONAL PAYMENTS: CAPITAL MOVEMENTS
1961
1963
(Millions of dollars)
Direct investment in Canada	
Direct investment abroad	
Canadian securities-
Trade in outstanding bonds and debentures....
Trade in outstanding common and preference
stocks	
New issues	
Retirements	
Foreign securities (total)	
Loans and capital subscriptions by Gov't of Canada-
Advances, etc	
Repayments to Canada	
Columbia River Treaty, net(1>
Long-term capital transactions not included elsewhere	
Change in Canadian dollar assets of foreigners-
Deposits	
Government of Canada demand liabilities^...
Canadian treasury bills	
Canadian commercial paper	
Canadian finance paper	
Canadian finance company obligations not included elsewhere	
Bank balances and other short-term funds abroad.
All other transactions	
Net Capital Movements excluding monetary items shown below	
Official monetary movements in the form of:
Change in official holdings of gold and foreign
exchange	
Change in net International Monetary Fund
position	
Other special international financial assistance..
+650	+520	+495	+240	+165- 50	- 75	-109	-110	- 90+ 3	+ 61	+ 64	+ 39	+ 77+ 51	+ 39	-116	-169	- 97+447	+538	+728	+968	+1,053-265	-300	-320	-335	-357- 19	- 34	- 65	+ 23	- 57- 11	- 8	- 22	- 18	- 10+ 32	+ 37	+129	+ 25	+ 9-	-	-	-	+ 54+ 62	+132	-116	- 50	- 20+ 79	+ 34	- 13	+ 40	+ 25- 12	- 2	- 4	+ 1	+ 56	- 58	+ 4	- 27	- 16- 23	- 12+ 70	+100	+133	+ 52	+169l	+ 69	+ 68- 60	+140	+ 93	-255	-499+171	+148	+148	+233	+354+1,204	+1,272	+1,029	+703	+816- 39	+229	+537	+ 60	+ 86-	+ 61	-378	+ 86	+277- 4	-(1)	See reference to Columbia River Treaty on page 527.(2)	Demand notes of international investment agencies other than the International Monetary Fund, Trust and Deposit Account of U.S. Government with Government of Canada.

[Stage Direction]
INTERNATIONAL PAYMENTS: QUARTERLY CAPITAL MOVEMENTS
Cn
to
		1963				1964		
IQ |	2Q	3Q	4Q *	IQ	2Q	3Q	4QDirect investment in Canada	+67	+50	+60	(Millions +63	)f dollars) +50	+10	+30	+75Direct investment abroad	-22	-37	-21	-30	-40	- 45	-5Canadian securities-	+4	+ 14	+37	+22Trade in outstanding bonds and debentures	+23	+27	-7	-4	Trade in outstanding common and preference stocks	-56	-44	-27	-42	-44	-8	5	-40New issues	+408	+394	+100	+66	+142	+313	+ 100	+498Retirements	-52	-173	-40	-70	-109	-96	-58	-94Foreign securities (total)	+4	+24	-3	-2	-6	-36	-5	-10Loans and capital subscriptions by Government of Canada:	-8	-10	-8Advances, etc	-	-	-2	+2	-	Repayments to Canada	-	+6	-	+ 19	+4	+1	+2Columbia River Treaty, net*1*	-	-	-	-	-	-	+54	-Long-term capital transactions not included elsewhere	+3	-38	-21	+6	-36	-38	+17	+37Change in Canadian dollar assets of foreigners:	+43	+19	-37	+52Deposits	-29	+38	-12	-9	Government of Canada demand liabilities®	-	-3	-	+4	+4	*"3	-	+3Canadian treasury bills	+9	-17	+ 18	-37	+ 14	-16	-18Canadian commercial paper	-39	+15	-11	+ 12	+27	-20	-19	-Canadian finance paper	+9	-1	+12	+32	+67	+84	+7	+nCanadian finance company obligations not included elsewhere	-4	+26	+ 14	+33	+32	+35	-2	+3Bank balances and other short-term funds abroad	-62	-81	-137	+25	+ 154	-125	-160	-368All other transactions	+55	+129	+8	+41	+35	+132	-3	+190Net Capital Movement excluding monetary items shown below	+314	+315	-75	+149	+301	+224	-59	+350Official monetary movements in the form of:	+111	-145	+28	-127	+62	+97	+54Change in official holdings of gold and foreign exchange	+66	Change in net International Monetary Fund position	+86	+85	+5	+59	+127(1)See reference to Columbia River Treaty on page 527.	.
<*>
Demand notes of international investment agencies other than the International Monetary Fund, Trust and Deposit Account of U.S. Government with Government of Canada.
[Stage Direction]

s
o
01
[Stage Direction]

>
n
>
[DOT]o
to
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to
o>
cn
The Budget-Appendix
April 26, 1965
[Stage Direction]
The Budget-Appendix
Direct investment in Canada during 1964 amounted to $165 million or $75 million less than in 1963. The levels of capital inflow for direct investment in Canada in these two years were substantially below the levels reached during the decade 1953 to 1962. Over that ten year period, new direct investments in Canada, and the acquisition of existing businesses and refinancing, had aggregated close to $5.0 billion with more than half of these investments going into the petroleum, natural gas and mining industries.
Industrially, the largest part of the inflow for direct investment in 1964 was attracted by manufacturing enterprises, petroleum and natural gas industries. The outflow of capital for direct investment abroad amounted to $90 million in 1964, compared with an outflow of $110 million during 1963.
The volume of new issues of Canadian securities had been substantially reduced in the second half of 1963 and the first quarter of 1964. Proceeds of new issues, including deliveries of issues placed earlier, increased during the second quarter to $313 million. Following the enactment of the Interest Equalization Tax in early September and the granting of the Canadian exemption, there was a substantial increase in new issues abroad in the second half of 1964. As indicated in Table 35, new issues of Canadian bonds offered in the United States rose in the third quarter, and predhded a very large inflow in the fourth quarter. Towards the middle of the fourth quarter, long-term interest rates in Canada declined and the Canadian-U.S. interest rate differentials narrowed. A substantial reduction in the volume of new contracts arranged occurred late in the quarter.

[Stage Direction]
Period	Offerings	Deliveries	Un- delivered
	(Millions of dollars)		
1963-	512	394	451120	368	20930	92	14730	50	1271964-	96	130	93236	289	40293	87	246305	484	67
a>At end of period.
Retirements of Canadian securities in 1964 amounted to $357 million. Since 1961, international transactions have involved substantial capital outflows for the retirements of Canadian securities held abroad. In that four year period, retirements of Canadian securities have amounted annually to approximately $330 million or some $100 million more each year than during the period 1958 to 1960.
During the decade 1952 to 1961, trade in outstanding Canadian stocks had resulted in average net sales by Canadians of approximately $100 million annually. Since the first quarter of 1962 trade in outstanding Canadian stocks has resulted in net repurchases by Canadians of $382 million. In the course of 1964, net repurchases of Canadian outstanding common and preference stocks declined from previous years' levels. However, the gross volume of trade in Canadian stocks, which had declined markedly in the second half of 1963, increased in
1,964.	^
The net inflow of capital, resulting from trade in outstanding Canadian bonds and debentures, totalled $77 million in 1964 compared with $39 million in 1963. Gross trade in outstanding bonds and debentures, which had been substantially reduced in 1963, remained at low levels in the course of 1964.
[Stage Direction]
April 26. 1965
The Budget-Appendix

[Stage Direction]
Period	Canadian Bonds and Debentures	Canadian Common and Preference Stocks	Total	Sales To	Purchases From	Net	Sales To	Purchases From	Net	Sales To	Purchases From	Net(Millions of dollars)	1962-	IQ	225	228	- 3	250	263	-13	475	491	-162Q	192	188	+ 4	191	236	-45	383	424	-413Q	121	82	+39	114	140	-26	235	222	+ 134Q	162	138	+24	138	170	-32	300	308	- 81963-	IQ	67	44	+23	124	180	-56	191	224	-332Q	85	58	+27	131	175	-44	216	233	-173Q	39	46	- 7	75	102	-27	114	148	-344Q	48	52	- 4	85	127	-42	133	179	-461964-	IQ	38	34	+ 4	107	151	-44	145	185	-402Q	62	48	+ 14	164	172	- 8	226	220	+ 63Q	58	21	+37	137	142	- 5	195	103	+324Q	69	47	+22	127	167	-40	196	214	-18
+ "capital inflow - =capital outflow
There were also some marked changes between 1963 and 1964 in transactions in foreign securities. Following a net inflow of $23 million in these transactions, in the course of 1963, there was a net outflow of $57 million in 1964. A swing of $82 million in net trade in outstanding foreign securities (from an inflow of $42 million to an outflow of $40 million) largely accounted for this development. Sales of outstanding foreign securities in 1964 amounted to $515 million, an increase of $85 million from 1963. Purchases from foreigners rose to $555 million from $388 million in 1963.

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Sales
To
Purchases
From
1962- IQ 2Q 3Q 4Q
1963- IQ 2Q 3Q 4Q
1964- IQ 2Q 3Q 4Q
(Millions of dollars)
92	120	-2897	130	-3386	91	- 581	83	- 280	75	+ 5133	111	+2288	92	- 4129	110	+19122	126	- 4149	178	-29119	121	- 2125	130	- 5
+ "capital inflow - "capital outflow
April 26, 1965
[Stage Direction]
The Budget-Appendix
As a special financial arrangement between Canada and the United States in accordance with the Columbia Itiver Treaty, Canada received an amount equivalent to Canadian $273.9 million as payment for its share of the first thirty years' production of downstream benefits. All but Canadian $53.9 million of this amount was invested by the Minister of Finance in medium-term non-marketable United States securities, amounting to US $203.9 million and maturing as follows:


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U.S. $ million
4% maturing November 1, 1965	 $30.0 million
4|%	"	November 1, 1966	
30.04t%	"	November 1, 1967	
30.04i%	"	November 1, 1968	
30.04i%	"	November 1, 1969	
30.04}%	"	November 1, 1970	
30.04£%	"	November 1, 1971	
23.9
Upon their maturity, the proceeds of these funds are expected to be taken into the Exchange Fund Account. The equivalent of $53.9 million, corresponding to the difference between the receipts of $273.9 million and the holdings of $220 million in medium-term non-marketable United States securities in the hands of the Minister of Finance, was made available directly to the province of British Columbia for the purpose of retirement of foreign-held debt and represented an inflow of capital in the course of the third quarter.
Other long-term capital movements produced a net outflow of $20 million in 1964. These were more than accounted for by loans and advances under Government programmes related to the financing of Canadian exports.
Sharp fluctuations took place during the course of 1964 in the movements of short-term capital. In the January-June period there was a net inflow of $446 million which was substantially offset by outflows of $230 million in the third quarter and $127 million in the fourth quarter. Bank balances and other shortterm funds held abroad were substantially reduced in the first quarter from the record total of some $2 billion at the end of 1963. In the subsequent quarters these balances, including foreign currency deposits in the form of swap deposits by holders of Canadian dollars, increased substantially. The net outflow for the year as a whole was $499 million.
Net sales of Canadian finance company paper and other Canadian finance company obligations01 in the first half of the year amounted to $218 million. In the third quarter these inflows declined markedly and in the last half there was a net inflow of $19 million. Other short-term capital movements in 1964 represented a net inflow of $351 million.
Reference has been made earlier in this section to the geographical composition of Canada's current account balance. These data showed that Canada's deficit on current account with the world as a whole was more than accounted for by transactions with the United States, where there were deficits on both merchandise and non-merchandise account. To some extent, these deficits with the United States were offset by current transactions with the rest of the world, in which a net surplus was earned by virtue of a favourable balance on merchandise trade which exceeded a deficit on non-merchandise trade.
It is of considerable interest to examine the pattern of capital movements discussed above, in the context of financing the current account deficits incurred on a geographic basis.
(,) Bank loans, intercompany accounts, notes, etc.
[Stage Direction]
April 26, 1965
The Budget-Appendix
Although there are fluctuations from year to year in the size of the different components of current and capital account transactions with Canada's major trading partners, the general pattern has been unchanged over the past decade and more. Briefly, the inflow of capital from the United States to Canada has fallen short of the sum needed to finance the current account deficit incurred in transactions with the United States, and usually by a wide margin. The difference has been made up by the transfer to the United States of receipts of foreign exchange arising from current and capital transactions with the rest of the world and from gold newly produced in Canada. Any residual difference between current and capital transactions has, of course, been reflected in changes in Canada's official exchange reserves.
The following table demonstrates this broad pattern in terms of total flows from 1953 to 1962, and for the particular years 1962 and 1963. Complete data for 1964 are not yet available. Data relating to the current account only are presented in Table 30.

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(Millions of dollars)
-	1953-1962 Total	1962	1963Transactions with U.S. (excluding international financial agencies) Current account deficit (exc. gold)	-13,777	-1,277	-1,337Capital inflow from U.S	+8,679	+1,093*	+895Net amount to be financed by other transactions...	-5,098	-184	-442Other transactions-	Current account surplus with rest of world	+2,111	+248	+626Net capital movement from (+) or to (-) rest of world**	+2,185	+318	-278New gold production available for export	+1,538	+155	+154Increase (-) in Canadian holdings of gold and foreign exchange	-736	-537	-60Total financing	+5,098	+184	+442
* Including $3 million accounted for by exchange transactions in connection with special bilateral assistance.
** Includes changes in Canada's International Monetary Fund position.
The large volume of both current and capital transactions between Canada and the United States reflects their geographic proximity, the similarity of their institutions, the close network of commercial and financial inter-relationships between them, and the absence of restriction on bilateral flows of capital between their major financial markets.
This payments relationship between Canada and the United States is particularly significant in relation to the current discussion of the U.S. balance of payments situation. Over the past years (as indeed over virtually the whole post-war period) Canada has been a net provider of dollars to the United States economy.
April 26, 1965
[Stage Direction]
The Budget-Appendix
From the end of December 1963 to the end of April 1964, official holdings of gold and foreign exchange declined by US$114 million. Between May and the end of the year, official reserves rose by US$193 million to US$2,674.3 million at year end, so that for the year as a whole, official reserves were higher by some US$79 million. Monthly totals of reserves are shown in Table 39.

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End of Period	Gold	U.S. Dollars	Total
	(Millions of U.S. dollars)		
1963-June	754 6	1,937.0	2,691.6July	762.0	1,739.0	2,501.0August	767.8	1,702.7	2,470.5September	774.7	1,793.6	2,568.3October	784.4	1,797.0	2,581.4November	799.5	1,831.5	2,631.0December	817.2	1,777.8	2,595.01964-January	836.7	1,745.7	2,582.4February	849.7	1,692.6	2,542.3March	871.0	1,594.5	2,465.6April	892.2	1,588.9	2,481.1May	910.1	1,599.3	2,509.4June	931.3	1,602.6	2,533.9July	948.8	1,585.1	2,533.9August	969.0	1,606.9	2,575.9September	989.6	1,634.9	2,624.5October	1,001.1	1,685.5	2,686.6November	1,007.4	1,736.0	2,743.4December	1,025.7	1,648.6	2,674.31965-January	1,036.0	1,632.2	2,668.2February	1,040.6	1,608.1	2,648.7
During 1964, the holdings of Canadian dollars by the International Monetary Fund declined by US$241 million to US$367.5 million. Canada's transactions with the IMF involved net repayments to the Fund to the extent of US$166 million. This was partly offset by gold sales to Canada by the IMF of US$9 million and borrowings from Canada of the equivalent of US$15 million in Canadian dollars under the General Arrangements to Borrow. Other member countries drew from the International Monetary Fund the equivalent of US$99 million in Canadian dollars.

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million
IMF holdings of Canadian dollars at the end of 1963	 608.5
(minus) Repurchases by Canada (net)	 166.0
Drawings of Canadian dollars by other countries	 99.0 265.0
(plus) Gold sales to Canada by the IMF	 9.0
Borrowings from Canada under the General Arrangements to Borrow	 15.0	24.0
Net change during 1964	 -241.0
IMF holdings of Canadian dollars at the end of 1964
367.5
[Stage Direction]
April 26. 1965
The Budget-Appendix
The movements in the value of the Canadian dollar expressed in U.S. dollars are shown in the accompanying chart.


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The rate of the Canadian dollar moved in a very narrow range around its par value during the first seven months of the year. There followed a period of strength in the Canadian dollar as the rate moved steadily higher toward its upper limit in mid-November. This movement was related to the seasonal strength in the current account of the balance of payments. It was reinforced by heavy capital inflows following the enactment in September of the U.S. Interest Equalization Tax together with the exemption for Canadian new issues. The spot rate remained close to its upper limit for the remainder of the year and was 93.13 cents U.S. (U.S. $1.00 = Cdn $1.07f) at the end of 1964.
In the early part of the year, the Exchange Fund, in an effort to avoid a heavy capital inflow induced by the widening of the forward discount on the U.S. dollar, engaged in forward market operations. The forward discount on the U.S. dollar had been affected by transactions involving the covering of forward commitments arising from the substantial export order of wheat from the U.S.S.R. At the year end, forward commitments of the Exchange Fund were negligible.

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The nation's savings, which in the economic framework of the national accounting system are equivalent to the additions made to the nation's capital assets, rose by 15.8 per cent in 1964. Personal saving represented 24.3 per cent
April 26. 1965
[Stage Direction]
The Budget-Appendix
of the total and business sector saving accounted for the balance. The government sector as a whole, on a National Accounts basis, was in near-balance in 1964. This means that the government sector neither contributed to nor was a net user of total national saving.
The nation's investment, which represents that part of output which is not currently consumed, consists of increases in domestic physical assets such as housing, business plant and equipment, and inventories. In addition, the nation's claims on the resources of other countries properly count as additions to its wealth, and increases in claims by other countries must be counted as a deduction. Hence, the surplus or deficit on current international account is counted as part of national investment, a deficit being regarded as a negative item.
The disposition of saving in 1964, shown in Table 41, was dominated by the marked increase in business gross fixed capital formation. Business gross fixed capital formation represents capital spending in the non-government sector, as government sector purchases of capital goods, on a National Accounts basis, are treated as current expenditure in the year the investment occurs. As a result of this treatment, capital formation on a National Accounts basis is below the capital investment total as reported in the Private and Public Investment Outlook surveys and discussed elsewhere in these pages. Business gross fixed capital formation in 1964 amounted to $8,968 million, some 18.1 per cent above the 1963 total.
Inventory movements in 1964, which are part of total domestic investment, consisted of a moderate buildup in business inventories, partly offset by a decline in farm inventories (associated with record wheat exports). The buildup of total inventories in 1964 was slightly below that of 1963. In the same period, there was some slight narrowing of the deficit on international current account.

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BILLIONS OF DOLLARS	BILLIONS OF DOLLARS
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April 26, 1965
The Budget-Appendix
The distribution of saving among the various sectors continued the longterm trend in which the share of the business sector in the total of gross saving has been gradually increasing, due in part to higher levels of capital consumption allowances. This is a reflection of the capital investment record of the post-war years, as a result of which the proportion of capital to labour used in the productive process has been rising. This, of course, is the material basis of growth and the rise in output per worker and real incomes. Rising capital investment expenditures are accompanied by rising capital consumption allowances over time, and these allowances, as enterprises build up reserves for new capital outlays in the future, now form the largest single item on the saving side of the account.
The movement of national saving as a whole in recent years is shown in the chart on Page 59. The association of rising levels of saving with rising levels of economic activity and incomes is shown clearly on the chart, the shaded areas indicating the periods of recession which have been recorded during the past decade.
The changes in 1964 in both saving and investment were of somewhat greater magnitude than the changes which were recorded a year earlier.

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(National Accounts Basis)
(Billions of dollars)
-	1963 1962	1964 1963
	+0.5 +0.3	+1.1 +0.1
		
		
	+0.8	+1.2
	+0.2 +0.4 +0.3	-0.3 +0.8 +0.6
		
		
		
		
	+0.8	+1.2
(Totals may not add due to rounding)
The shift in the position of the total government sector from a deficit of $632 million to approximate balance contributed substantially to the overall increase in national saving, and was a reflection of the increase in revenues, particularly at the federal level, discussed elsewhere. Business gross saving increased not only on account of the growth in capital consumption allowances mentioned above, but because undistributed profits were considerably higher in 1964 than in 1963. As indicated in an earlier section, personal net saving in 1964 grew less rapidly than in 1963, when changes in farm inventories are included, but somewhat more rapidly with farm inventories excluded.
April 26. 1965
[Stage Direction]
The Budget-Appendix

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DISPOSITION OF SAVING (Millions of dollars, seasonally adjusted at annual rates)
-	1963	1964
	7,591 491 -524 182 7,740	8,968 380 -428 45 8,965
		
Surplus (+) or deficit (-) on current account with non-residents

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(Millions of dollars, seasonally adjusted at annual rates)
-	1963	1964
	2,466 6,283 973 5,172 138 -195 -632 -292 -340 -182	2,181 6,969 1,252 5,607 110 -121 -20 +328 -348 -44
		
		
(b) Capital consumption allowances and miscellaneous valuation adjust-		
		
		
		
		
		
		
	7,740	8,965

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The capital markets of Canada, including those for securities and bank loans, provided a greater volume of financing in 1964 than in the previous year. Notwithstanding this greater demand for funds and some serious uncertainties concerning market conditions which occurred during the year, interest rates were relatively stable in 1964 and were at a lower level at the end of the year than at the beginning. This performance in the fourth year of the current period of economic expansion is significant, reflecting a monetary policy which was effective in sustaining the rate of economic growth without permitting slackness in credit conditions together with a creditable degree of resilience in the capital markets.
During the year net new issues of securities (including finance company paper) by Canadian borrowers on all markets, both domestic and external, totalled $3,069 million compared with $2,801 million in 1963. Net new issues of Government of Canada securities in 1964 were $457 million, as compared with $827 million in 1963. Table 44 indicates that in 1964 Government Accounts made
[Stage Direction]
April 26, 1965
The Budget-Appendix
„	TREASURY BILL YIELDS
net purchases of Government of Canada securities of $253 million, diminishing by that amount the impact of Government of Canada financing on the securities market, while in 1963 net sales of $154 million of securities from Government Accounts increased the impact on the market resulting from the large increase in net new issues in that year. Thus the net market impact of Government of Canada financing was $204 million in 1964 compared with $981 million in 1963. Net borrowings by provincial and municipal governments were slightly higher than in 1963. Apart from the marked reduction in net borrowing by the Government of Canada, the dominant feature in the capital markets in 1964 was the corporate demand for new money. Net new issues of corporate bonds, continuing the upward trend in recent years, totalled $698 million compared with $555 million in 1963. Furthermore, whereas in 1963 there occurred a net retirement of $55 million in corporate stock, net new issues of corporate stock in 1964 amounted to $265 million. This increase in demand for funds by corporations reflected a substantial increase in fixed capital expenditures and a buildup of inventories to levels somewhat higher than in 1963. This demand was met in part by a considerable rise in the level of loans to businesses in the chartered banks. In 1964, loans by the chartered banks to businesses and instalment finance companies increased by $572 million compared with an increase of $334 million during 1963.
Total money supply increased by slightly less than 6 per cent in 1964, while the money supply in the hands of the general public rose by a little over 7 per cent. Total general loans by the chartered banks increased during the year, however, by over 15 per cent, with a substantial increase of 25 per cent in personal loans and an increase of 13 per cent in business loans. In accommodating this strong demand for loans the chartered banks sold $223 million in Government of Canada securities. The liquidity position of other financial intermediaries, together with central bank operations, enabled the market to absorb this liquidation by the banks. The more liquid assets of the chartered banks declined from 35.4 per cent to 31.9 per cent. The more liquid assets of the chartered banks comprised their cash reserves, day-to-day loans to investment dealers, call loans, Government of Canada securities, and net foreign assets.
April 26, 1965
[Stage Direction]
The Budget-Appendix

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LONG-TERM	,

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%
4
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1. Average of yields on all outstanding issues due or callable in 10 years or more.
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NET CHANGES IN SECURITIES*1) AND BANK LOANS*2) OUTSTANDING FOR CALENDAR YEARS
1961	1962	1963	1964	1963	1964	1st half	2nd half	1st half	| 2nd halfGovernment of Canada	(Millions of dollars)	
Securities		889	812	827	457	105	722	-289	746
Provincial Governments								
Securities*3)	936	695	893	928	611	283	570	358Bank loans	-83	-16	19	-18	-2	20	-20	2Sub-total	85S	679	912	910	609	SOS	550	360Municipal Governments	Securities	320	236	406	428	215	191	247	181Bank loans	30	-3	57	62	33	24	1	61Sub-total	i,50	233	46S	490	248	215	248	242Total Governments	2,092	1,724	2,202	1,857	962	1,240	509	1,348Private Canadian Borrowers	Corporate Bonds	359	416	555	698	467	88	333	365Corporate Stocks	249	341	-55	265	-213	158	109	158Finance Company Paper	-51	179	174	292	136	38	355	-63Bank loans to Business and Instalment Finance Companies	205	526	334	572	110	224	452	120Call and Day-to-day Loans	34	138	-84	5	-200	116	-78	83Other Bank Loans**)	182	225	234	417	16	218	161	256Total Private	978	1,825	1,158	2,249	316	842	1,332	919Grand Total	3,070	3,549	3,360	4,106	1,278	2,082	1,841	2,267
3
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a
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(^Includes Canadian and foreign pay issues.
<[DOT]>
Includes only Canadian dollar bank loans.	f,
([DOT]'Includes securities guaranteed by provinces.	"O
'[DOT]'Insured mortgage loans and all other chartered bank loans in Canadian currency not included elsewhere.	C!
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The Budget-Appendix
April 26, 1965
[Stage Direction]
The Budget-Appendix
The volume of net new issues of securities, other than by the Government of Canada, was notably high in the first half of 1964. With the U.S. market for new Canadian issues restricted during this period by the uncertainty surrounding the U.S. Interest Equalization Tax, approximately four-fifths of such new issues were payable in Canadian dollars and were mainly absorbed by the Canadian market. In the last half of the year the situation changed considerably. Issues payable in U.S. dollars which had been delayed pending clarification of the Interest Equalization Tax, (the impact of which is described in some detail in the section on the Balance of Payments), were taken up by the U.S. market and the general demand for Canadian securities by U.S. investors increased. This was particularly evident in the fourth quarter of the year when net new issues payable in U.S. dollars amounted to $434 million. Because of these significant purchases of new issues by investors in the U.S., the pressure of new borrowings on the Canadian market was eased. Long-term bond yields declined by \ of 1 per cent.

[Stage Direction]
Seasonally adjusted.
1. EkcI. day-to-day,call and C.S.B. loans.
One other significant external factor affected the Canadian market in 1964. On November 23, the Bank of England, reacting to a sharp decline in its gold and foreign exchange holdings, increased the Bank Rate from 5 per cent to 7 per cent; The U.S. followed this action with a \ of 1 per cent increase to 4 per cent in the discount rates of the Federal Reserve Banks and the Bank of Canada increased its Bank Rate from 4 per cent to 4J per cent. The Governor of the Bank of Canada stated at the time that the Bank wished to eliminate uncertainty in Canadian financial markets following changes in Bank Rates in the United Kingdom and the United States and described the new rate as one which was appropriate to
[Stage Direction]
April 26. 1965
The Budget-Appendix
the needs of the domestic Canadian economy and Canada's international financial position. The main impact of the Bank Rate change was felt in the very short-term market. Treasury bill yields had fluctuated during the year between 3.50 per cent and 3.90 per cent. The Bank Rate change consolidated the trading area in the upper end of this range. Long-term yields rose initially but after a very short period they returned to the levels prevailing before the Bank Rate change and by the end of the year had fallen below these levels.

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An unusual but anticipated complication during the year was the U.S. payment to Canada under the Columbia River Agreement and the consequent payment to the Province of British Columbia of Canadian $220 million as well as U.S. $50 million. Despite the magnitude of these payments to Canada and from the federal government to the province, their impact on the securities markets and the banking system was negligible. The Columbia River payments are described in detail in the preceding section on the Balance of Payments.
An indication of the relationship of Canadian bill and bond market yields to those in the United States can be seen in the charts on pages 62 and 63. Canadian treasury bill yields on both a covered and uncovered basis have remained very close to U.S. bill yields during 1964. Indeed at the end of the year, U.S. bill rates were higher than those obtainable in Canada. Canadian long-term bond yields moved closer to U.S. yields in the last half of the year, reducing the spread from close to 1 per cent to around 0.85 per cent. This spread was continuing to narrow at the end of the year.

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>
[DOT]d
1961	1962	1963	1904	1963	1964	1st half	2nd half	1st half	2nd halfChartered banks and Bank of Canada	940	-262	761	(Millions -146	of dollars) 477	284	-186	40368	870	560	1,038	-43	602	516	522
Total		1,308	608	1,321	892	434	886	330	562
								
Non-bank holders	1,257 51	520	1,389 -68	1,000 -108	391	997	310	69088	43	-111	20	-1281,308 1,762	608	1,321 2,039	892	1,34 844	886	880	6622,941	3,214	1,196	1,511	1,705
Total		3,070	3,549	3,360	4,106	1,278	2,082	1,811	2,267
								
of which: Government of Canada	84	-23	357	-199	-101	457	-134	-65Government of Canada securities held in Gov't accounts...	-222	26	-154	253	-226	72	-102	355Total	-138	3	203	54	-327	529	-236	290Public in Canada	237	1,026 1,529	150	412	-238	388	42	3701,467	1,515	1,721	781	734	1,186	5371,704 1,134 51	2,655 577	1,665	2.183	543 481	1,122 512	1,228 438	907993	1,168	73088	-68	-108	43	-111	20	-128
Total		2,889	3,220	2,590	3,193	1,067	1,523	1,686	1,509
								
Non-Residents	6	123	113	-4	143	-30	15	-19274	237	415	833	384	31	370	463280	860	528	829	527	/	885	444 -2439	-34	39	30	ii	29	6	
Total		319	326	567	859	538	30	391	468
								
('[DOT]Includes only Canadian dollar deposits.
<*>Balancing item.
([DOT]'Equals total holdings of securities and loans by banking system as above. ([DOT]'Excludes holdings by chartered banks.
([DOT]'Includes treasury bills.
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April 26, 1965
The Budget-Appendix

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The flow of funds into mortgages increased substantially in 1964. The major area accounting for the increase was conventional mortgage loans which in 1964 were 35 per cent higher than in 1963. Mortgage loans approved under the National Housing Act moved up 6 per cent in 1964 compared with the previous year. Despite this greater demand for mortgage loans, rates on such loans moved slightly lower through the year.

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-	1963	1964
	(Millions of dollars)	
Mortgage Loans Approved under the National Housing Act CMHC Direct Loans		
	253	312
	49	65
Total CMHC	382	377NHA Loans Through Approved Lenders	281	178
104	175
Total Approved Lenders	385	353Total under NHA	687	730Conventional Mortgage Loans New Buildings	249	294
403	518
Sub-total New Conventional	662	812Existing Buildings	304	444
126	196
Sub-total Existing Conventional		4S0	640
	373	507
Total Conventional		1,455	1,959
(*>
The figures on existing single dwellings do not include the top part of any 831% mortgages made. <!>This category includes commercial and industrial mortgages.
Source: Central Mortgage and Housing Corporation.
Total N.H.A. loans, which include C.M.H.C. direct loans and loans by approved lenders, totalled $730 million in 1964, $43 million higher than in 1963. N.H.A. loans made by approved lenders declined by $32 million during the year, despite a substantial increase in their loans for rental accommodation, particularly multiple dwellings. In the face of the heavy demand for loans and the reduced supply of funds from approved lenders to owner applicants and builders, C.M.H.C. increased its direct loans by $75 million in 1964 to $377 million.
April 26. 1965
[Stage Direction]
The Budget-Appendix
Conventional mortgage loans were especially strong in 1964, increasing by over $500 million, compared with 1963, to a total of $1,959 million. Loans on new multiple dwellings, existing single dwellings, and commercial and industrial building showed particularly significant advances over 1963. The increase in loans on existing houses has occurred following improved mortgage facilities offered by lending institutions and particularly the arrangements introduced in 1964 for loans of 83| per cent of appraised value at a cost usually about \ of 1 per cent above the conventional mortgage rate.
The conventional mortgage rate tended to move below 7 per cent early in the year and loans for buildings in favoured locations and for multiple structures were financed at 6J per cent. This easier condition prevailed at the end of the year.
Since 1961, C.M.H.C. has offered at public auctions blocks of N.H.A. mortgages from its own portfolio. The purpose of these auctions has been to provide a supply of mortgages to encourage the development of a secondary mortgage market in Canada and to assist in financing its own direct lending. A by-product of the auctions has been a reduction by CMHC in its requirements for cash from Government sources. Bids at these auctions have been competitive. The gradual development of a secondary market is indicated by the fact that, whereas at the end of 1955 only 0.8 per cent of N.H.A. approved mortgages were held by other than approved lenders, at the end of 1964 the proportion was 9.5 per cent. This compares with a figure of 8.5 per cent at the end of 1963.
The following tabulation outlines the results of the four auctions that were held in 1964:
Date	Allotted	Average Prices Paid at Auctions	Yields to Maturity	NHA Rate	Average Yield on Govt. Long-term Bonds6%	61-61%	6%	61-61%	6%	81-61%	(Millions of dollars)	Feb. 25	17.250	7.750	97.69	102.64	8.36	6.39	6i	5.20May 20	14.750	10.250	97.85	100.97*	6.33	6.37	61	5.26Sept. 23	16.500	8.500	99.24	101.00	6.12	6.36	61	5.24Dec. 15	16.000	9.000	98.24	100.96	6.27	6.37	61	5.06
*61% mortgages were offered in this and subsequent auctions.
Federal Government Debt Operations
In the Budget Speech in March 1964 a budgetary deficit of $455 million was forecast and total cash requirements were estimated to be $895 million. It was stated that "over-all borrowing requirements in the coming year will be about $750 million taking into account the fact that present cash balances are on the high side". These requirements included the $220 million payment in connection with the Columbia River Treaty described earlier, and also assumed, as is customary, a neutral position vis-h-vis the Exchange Fund.
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In addition to these cash requirements, the Government had to refund $1,950 million in market issues maturing during the fiscal year 1964-65. This figure does not include the regular weekly issues of three and six month treasury hills.

[Stage Direction]
1. Excludes securities involved in special currency arrangements between the Bank of Canada and other central banks.
As the year progressed it became apparent that the budgetary deficit would be lower, mainly as a result of higher Government revenues than had been originally forecast. However, at the same time non-budgetary cash requirements increased, partly as a result of the need to finance the requirements of the Exchange Fund. The increase of $253 million in holdings of securities by Government Accounts constituted a further use of cash. Taking into account these diverging movements it appears that cash requirements will be about the same as was originally forecast in last year's budget.
Table 46 indicates the projected changes in Government securities outstanding for the fiscal year. It is expected that the balance of the cash requirement will be financed by a decline in cash balances. Sales of Canada Savings Bonds will have accounted for considerably more than the net total of new money raised in the capital markets and there will have been a net rundown of $273 million in the outstanding amount of all marketable bonds and treasury bills.
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[Stage Direction]
(Millions of dollars)
	Increase	Decrease
	10	
-1 yr. due April 24/64			100
	475 17	
		
		183«>
502 -283	283
	219	
OExcludes $3 million of debt which matured in previous years but was redeemed in 1964-65.
Debt management policies have been directed towards supporting monetary and fiscal policies in influencing the performance of the economy. In the early part of the current economic expansion the aim of financial policy had been to facilitate

[Stage Direction]
1.	Excludes holdings of Government accounts
2.	Excludes changes in connection with special currency arrangements between the Bonk of Canada and other central bonks
22620-35£
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The Budget-Appendix
economic expansion. To this end nearly all new issues offered had been of a short or medium term in order to provide somewhat greater liquidity in the economy. As the economic expansion moved to a firmer base, more attention was paid to extending the term of the debt, while taking care not to inhibit economic growth. Table 47 contains details of the marketable Government of Canada bonds issued during the fiscal year 1964-65. The chief interest in the table lies in the choice of maturities for the refundings. During the calendar year 1964 three long-term issues totalling $175 million were offered. The last offering of long bonds was made in mid-June for delivery on July 1. Since that date, although the market has been receptive and economic circumstances appropriate, it has been felt desirable to avoid issuing bonds which might at the same time prove attractive to U.S. investors and provide competition in the domestic market for provinces and municipalities at the long end of the market. Since July 1, some worthwhile extension of term has been accomplished by offering two sizeable medium-term issues. The average term to maturity of Government of Canada marketable securities declined by one month during calendar 1964 to 7 years 9 months. The decline during 1963 had been six months.
Certain techniques which had been introduced in previous years were continued in 1964. Where possible, new issues consisted of additions to outstanding issues. This was done in nine issues in 1964. The purpose was to promote broader and more active trading markets and to provide greater flexibility in future debt management operations. In the issue of May 1, 1964 another advance refunding of the 3f% Bonds due September 1, 1965 was made in the amount of $250 million. In a further effort to reduce the amount of this issue in the hands of the general public, the Bank of Canada has offered to the public newly issued bonds in exchange for the 3|% Bonds due September 1, 1965, and at times new issues were designed to aid this operation. As part of the advance refunding program to bring the amount of the 3f% Bonds outstanding to a readily manageable size for refunding purposes upon the maturity of the issue, $175 million of the bonds held by the Government of Canada in the Securities Investment Account were cancelled on January 29,1965 followed by a further cancellation of $125 million on March 25, 1965.
Government cash balances were maintained in the range of $800-$ 1,000 million for most of fiscal 1964-65. These balances permitted the Government greater flexibility in conducting its debt management operations and facilitated monetary policy.

[Stage Direction]
Date of Issue	Maturing Bonds	Amount ($ millions par value)	New Bonds				Amount (S millions par value)	Net Change in Amount Outstanding	Term of New Bonds	Price at Issue (%)	Yield at Issue (%)	Commission to declare (%)
1964												
Feb. 1	31% Feb. 1, 1964	365	31 Feb.	i,	1965	65 1	1 year	99.15	4.38	0.1031 Feb.	i,	1966	105 1	-15	2 years	98.10	4.50	0.1541 Jan.	15,	1968	130 [	3 yrs. llj mos.	98.25	4.74	0.255	June	1,	1988	50 J	24 yrs. 4 mos.	96.25	5.27	0.75May 1	4% May 1,1964	360	31	July	1,	1965	200 )	1 yr. 2 mos.	98.90	4.47	0.1041	Dec.	15,	1966	50 i	+40	2 yrs. 1J mos.	99.65	4.64	0.155	July	1,	1969	75	5 yrs. 2 mos.	99.75	5.05	0.2551	May	1.	1990	75 J	26 years	98.63	5.35	0.7531% Sept. 1,1965	250	5	July	1,	1969	250	0	5 yrs. 2 mos.	99.75	5.05	-July 1	31% July 1,1964	175	31	July	1,	1965	200 \	+75	1 year	99.25	4.27	0.1051	May	1,	1990	50 /	24 yrs. 10 mos.	99.25	5.30	0.75Oct. 1	31% Oct. 1,1964	435	3)	Dec.	1,	1965	200 1	1 yr. 2 mos.	98.85	4.52	0.1031	Oct.	1,	1967	75	-35	3 years	97.25	4.74	0.155	Oct.	1,	1968	125 J	4 years	100.00	5.00	0.20Dec. 1	4% Dec. 1, 1964	240	31	Dec.	1,	1965	125	1 year	99.20	4.33	0.105	June	1,	1971	350	6 yrs. 6 mos.	100.00	5.00	0.25Dec. 15	31% Dec. 15, 1964	225	-	+2	C.N.R. 51%	Dec. 15, 1964	8	Jan. 29	31% Sept. 1,1965	175	-	-175	Feb. 1	31% Feb. 1,1965	415	31	May	1,	1966	175 \	+35	1 yr. 3 mos.	99.20	4.16	0.105	Oct.	1,	1973	275 J	8 yrs. 8 mos.	100.00	5.00	0.25Mar. 25	31% Sept. 1, 1965	125	-125	Totals (fiscal year 1964-65)	2,408	2,225	-183	
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April 26, 1965
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The Budget-Appendix


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Table of Contents
Page
Introduction	 549
Highlights of the government's financial operations during 1964-65. 549
Budgetary accounts	 553
Revenue	 554
Expenditure	 561
Assets and liabilities as at March 31, 1965	 586
Summary	 586
Liability accounts	 587
Asset accounts	 596
Net debt	 605
The cash position	 605
The public debt	 608
Supplementary detailed tables	 615
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This Part of the Budget Papers presents in summary form a review of the accounts of the Government of Canada for the fiscal year 1964-65. The fiscal year of the government ends on March 31, but under the provisions of section 35 of the Financial Administration Act, for thirty days after the end of each fiscal year, payments for the discharge of debts properly applicable to the old year may be made and charged to that year. Consequently the books must remain open for some time after the fiscal year-end to take into account these payments and to record various adjusting entries. The figures used in this report are based on eleven months actual and one month estimated. The final figures when they become available next July or August will vary to some extent from those given in the following pages.

[Stage Direction]
This section outlines the financial operations of the government giving a brief summary of the budgetary and non-budgetary transactions, the unmatured debt transactions and the changes in the cash position and the debt position during 1964-65. More detailed explanations of these transactions are given in subsequent sections of this Part.
The following table summarizes the budgetary and non-budgetary transactions for 1964-65 with comparative figures for 1963-64 and indicates how these transactions affect the government's cash balances:
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(in millions of dollars)
Summary of Budgetary and Non-Budgetary Transactions and Changes in Cash Position
Fiscal year ended March 31
(estimated)
6,338
7,186
1,581 5,638 7,£19
5,533 720 6, £58
1,723
5,149
6,87£
Budgetary transactions-
Revenue-
Tar	
Non-tax	
Expenditure-
Defence	
Non-defence	
Deficit (-)	 -83	-619
Non-budgetary transactions (excluding unmatured debt transactions)-
Receipts and credits-
Repayments of advances to exchange fund	
Repayment of temporary loans to old age security fund_
Repayment of other loans, investments and advances..
Net annuity, insurance and pension account receipts...
Other	
Disbursements and charges-
Temporary loans to old age security fund	
Decrease in non-interest-bearing notes payable on demand.
Other loans, investments and advances	
Advances to exchange fund	
Other	
Net amount available from or required for (-) non-budgetary
transactions	
- 345	337Overall cash requirements to be financed by increase In unmatured debt or decrease In cash balances	
-428	-282
Net Increase in unmatured debt outstanding in the hands of the
public	
277	734Net Increase or decrease (-) In Receiver General bank balances_	-151	45213564	50	262553	384188	198855	97958219	170706	31920	255	951 ,£00	6i£
Budgetary transactions
The budgetary revenue, expenditure and deficit as forecast in the budget speech of March 16, 1964 and the figures as now estimated for the fiscal year 1964-65 are shown in the following table:

[Stage Direction]
(in millions of dollars)
Budgetary Transactions for Fiscal Year 1964-65	Budget forecast March 16, 1964	Actual (estimated)	Increase or decrease (-) compared with March 16, 1964 forecast	
			Amount	Per cent
Revenue		6.700.0 7.155.0	7.136.0 7.219.0	436.0 64.0	6.5 0.9
Expenditure					
Deficit					
	455.0	83.0	-372.0	
				
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Revenue
Budgetary revenue of the government in the fiscal year 1964-65 is estimated at $7,136 million. This is $436 million or 6| per cent more than the March 16, 1964 budget forecast and $883 million or 14 per cent more than the total of $6,253 million collected in 1963-64.
Tax revenue accounts for $805 million and non-tax revenue for $78 million of the increase over 1963-64 receipts.
The yield from personal income tax, corporation income tax and the tax on dividends, interest, etc., going abroad is $513 million more than collections in 1963-64. The increase is due to the higher level of personal incomes during the year, higher corporate profits, the acceleration during the fiscal year of the payment period for corporation income taxes and to higher dividends paid to non-residents in 1964.
Receipts from the sales tax are $247 million more in 1964-65 due in part to the imposition, effective June 14, 1963, of a 4 per cent sales tax on building materials and production machinery and equipment (increased to 8 per cent effective April 1, 1964). Receipts from customs import duties are $36 million more due to the greater volume and value of imports during 1964-65.
Expenditure
Budgetary expenditure of the government in 1964-65 is estimated at $7,219 million, $64 million or almost one per cent higher than forecast and $347 million or 5 per cent higher than expenditures in 1963-64.
Defence expenditure at $1,581 million is 22 per cent of total budgetary expenditure, compared with $1,723 million or 25 per cent in 1963-64 and is again the largest category.
Civil or non-defence expenditure at $5,638 million compares with $5,149 million in 1963-64, an increase of $489 million. The main changes are increases of $95 million in fiscal, subsidy and other payments to provinces, $55 million in public debt charges, $38 million in contributions to the provinces under the Hospital Insurance and Diagnostic Services Act, $25 million in payments by the external aid office for economic, technical, education and other assistance, $35 million in contributions to provinces under terms of the Trans-Canada Highway Act and $14 million under the winter house building program and a decrease of $65 million in the net operating loss of the agricultural stabilization board. The increase also includes a payment of $27 million to The St. Lawrence Seaway Authority in respect of the accumulated Welland Canal deficit incurred by the authority for the calendar years 1959 to 1964 inclusive and $27 million in youth allowances effective from September 1964.
Deficit
Expenditure of $7,219 million exceeds revenue of $7,136 million resulting in a deficit of $83 million compared with a deficit of $455 million as forecast on March 16, 1964 and the deficit of $619 million in 1963-64.
Non-budgetary transactions (excluding unmatured debt transactions)
Non-budgetary transactions are those which increase or decrease the government's asset and liability accounts and do not enter into the calculation of the annual budgetary surplus or deficit.
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In 1964-65 estimated net disbursements and charges of $1,200 million exceed net receipts and credits of $855 million resulting in a net requirement of $345 million. In 1963-64 net receipts and credits totalled $979 million, net disbursements and charges totalled $642 million, resulting in net receipts of $337 million.
Old age security fund
Receipts by the fund during 1964-65 are estimated at $953 million and exceed estimated payments of $889 million from the fund by $64 million. In 1963-64 payments were $808 million and receipts were $750 million.
The excess of $64 million of receipts over payments reduced outstanding temporary loans by the Minister of Finance to $36 million at March 31, 1965.
The transactions in the account during 1964-65 compared with those for
1963-64 are as follows:
Fiscal year ended March 31
(estimated)
(in millions of dollars)
Tax receipts	
953	750Pension payments	
889	808Excessofreceiptsoverpaymentsorpaymentsoverreceipts(-)	64	-58Temporary loans by the Minister of Finance carried forward.	-100	-42
Temporary loans by the Minister of Finance outstanding at
fiscal year-end	 36	100
Unmatured debt transactions
Unmatured debt transactions in 1964-65 reflect an increase of $277 million in unmatured debt outstanding in the hands of the public compared with an increase of $734 million in 1963-64.
Cash position
Receiver General bank balances were $678 million at March 31, 1965, a decrease of $151 million from the March 31, 1964 total. The decrease in cash balances is the result of the non-budgetary requirements of $345 million plus the budgetary deficit of $83 million partly offset by the increase of $277 million in unmatured debt outstanding in the hands of the public.
Debt position
As a result of these budgetary and non-budgetary transactions the gross public debt increased by $724 million to $26,648 million, net recorded assets by $245 million to $11,099 million and net debt by $479 million to $15,549 million at March 31, 1965. The increase in net debt reflects the budgetary deficit of $83 million plus an adjustment of $396 million in respect of prior years transactions. The adjustment of $396 million covers the write-off to net debt, upon parliamentary approval, of the unamortized portion of the actuarial deficiency in the public service superannuation account of $277 million and $119 million in respect of an actuarial evaluation of the account as at December 31, 1962 as calculated by the Department of Insurance.
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iooo r
500 i

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Millions of Dollars
v\

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Fiscal Years Ended March 31 Billions of Dollars
500
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1961 1962 1963 1964 1965*
expenditurerevenue-

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Estimated total revenue at $7,136 million for 1964-65 is $883 million more than the total in the previous year. Estimated total expenditure of $7,219 million is $347 million more than the total for 1963-64. The estimated deficit is $83 million compared with $619 million in the previous year.

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Budgetary Revenue, Expenditure and Deficit (in millions of dollars)
Fiscal year ended March 31
1956		
1957		
1958		
1959		
1960		
1961		
1962		
1963		
1964		
1965	(estimated)
Budgetary revenue	Budgetary expenditure	Surplus or deficit (-)4,400.0	4,433.1	-33.15,106.5	4,849.0	257.55,048.8	5,087.4	-38.64,754.7	5,364.0	-609.35,289.8	5,702.9	-413.15,617.7	5,958.1	-340.45,729.6	6,520.6	-791.05,878.7	6,570.3	-691.66,253.2	6,872.4	-619.27,136.0	7,219.0	-83.0
April 26, 1965
The Budget-Appendix
BUDGETARY REVENUE	BUDGETARY EXPENDITURE
BY MAJOR SOURCE	BY MAJOR FUNCTION
For Fiscal Year Ended March 31, 1965
Eitimatad
1.	D.
2.	Do** not include thoi* pay i lor (pacific purpoioi.
mad* to provincial and municipal povarnmont*
Revenue
Budgetary revenue in 1964-65 is $7,136 million, $883 million or 14 per cent over the total of $6,253 million received in 1963-64. Tax revenue is $6,338 million accounting for 89 per cent of the total revenue for the fiscal year and non-tax revenue at $798 million accounting for 11 per cent.

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Fiscal Years Ended March 31 Billions of Dollars


[Stage Direction]
Eitimatad
4
0
1963
1965'
1965'
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The more important items are increases of $243 million in personal income tax collections, $251 million in corporation income tax collections and $247 million in sales tax receipts.

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Budgetary Revenue by Major Sources (in millions of dollars)
	Fiscal year ended March 31				Increase	
Source	1965 (estimated)	1964	or decrease (-)	Amount	Per cent	Amount	Per cent	Amount	Per centTax revenue- Income tax-	2,108.0	29.5	1,865.1	29.8	242.9	13.01,510.0 144.0	21.2	1,259.0	20.1	251.0	19.9On dividends, interest, etc., going	2.0	124.5	2.0	19.5	15.7Excise taxes- Sales(1)(2>	1,193.0 270.0	16.7	946.1	15.1	246.9	26.13.8	273.4	4.4	-3.4	-1.2617.0	8.6	581.4	9.3	35.6	6.1406.0	5.7	393.3	6.3	12.7	3.289.7	1.3	90.6	1.5	-0.9	-1.00.3	0.1	0.2	200.06,338.0	88.8	6,533.5	88.5	804.5	14.5Non-tax revenue-	414.0	5.8	366.4	5.9	47.6	13.0234.0	3.3	200.7	3.2	33.3	16.6150.0	2.1	152.6	2.4	-2.6	-1.7798.0	11. S	719.7	11.5	78.3	10.97,136.0	100.0	6,253.2	100.0	882.8	14.1
(^Excluding tax credited to the old age security fund-
Personal income tax	
Corporation income tax	
Sales tax	
1964-65 (estimated)	1963-64
.. 432.0	302.6
... 143.0	115.7
... 378.0	331.8
953.0	750.1
0>Net after deduction of refunds and drawbacks.
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Federal-provincial fiscal arrangements
Under fiscal arrangements, that commenced in 1962, the federal government withdrew in part from the field of direct taxation and left the vacated area to the provinces. The federal government offered to collect provincial income taxes without charge, provided that the provincial personal income tax was expressed as a percentage of the federal personal income tax otherwise payable and the provincial corporation income tax applied to taxable income calculated in the same way as for federal income tax purposes. To allow for the imposition of the provincial income taxes, the Income Tax Act was amended to abate the federal income tax otherwise payable by individuals in all provinces by 16 per cent in 1962, 17 per cent in 1963 and by 18 per cent in 1964. This tax is to be abated by 21 and 24 per cent in 1965 and 1966 respectively in all provinces other than Quebec and it is proposed to abate the federal tax in Quebec by 44 per cent in 1965 and by 47 per cent in 1966. The federal corporation income tax rates are abated by 9 percentage points for taxable income earned in a province other than Quebec and by 10 percentage points for taxable income earned in Quebec. The federal government has entered into tax-collection agreements under which it collects the provincial personal income taxes for all provinces except Quebec and the provincial corporation income taxes for all provinces except Ontario and Quebec. With the exception of Saskatchewan and Manitoba, the provinces which have entered into tax-collection agreements have imposed personal and corporation income taxes equivalent to the federal withdrawal. The Provinces of Manitoba and Saskatchewan have each imposed their personal income tax at a rate exceeding the federal abatement by 6 percentage points and their corporation income tax at the rate of 10 instead of 9 per cent of the taxable income of corporations in 1962, 1963 and 1964.
Under these collection agreements, payments are made monthly to the provinces based on an estimate of the provinces' tax revenue. When the actual amounts of assessed returns are established, usually in the month of December following the end of the fiscal year, adjustments are made with the provinces.
Under the 1962-67 fiscal arrangements, the federal government agreed to abate its estate tax by 50 per cent in the fiscal years 1962-63 and 1963-64, and by 75 per cent in the fiscal years 1964-65, 1965-66 and 1966-67 in any province that imposed its own succession duties. To a province that did not wish to re-enter the succession duty field the federal government agreed to pay 50 per cent of the federal estate tax revenue in 1962-63 and 1963-64 and 75 per cent in 1964-65, 1965-66 and 1966-67. During 1962-63, Quebec and Ontario collected their own succession duties while the other provinces received a payment in lieu of imposing duties. Starting in 1963-64, British Columbia imposed its own succession duties. When the abatement was raised to 75 per cent in 1964-65, British Columbia increased its rates accordingly but Quebec and Ontario accepted in lieu of the extra abatement a payment equivalent to 25 per cent of the federal estate tax in those provinces.
Tax on personal income
In 1964-65 the largest source of government revenue is again the personal income tax. The yield (excluding the old age security tax) is $2,108 million or 30 per cent of all budgetary revenue. The increase of $243 million or 13 per cent over 1963-64 collections is due principally to the higher level of personal incomes during the year. In addition to the federal revenue, $362 million was allocated to the provincial tax collection agreements account under the terms of the Federal-Provincial Fiscal Arrangements Act. In 1963-64 federal revenue from this source was $1,865 million and $287 million was allocated to the provincial tax collection agreements account.
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The tax on personal incomes levied under the Old Age Security Act and credited to the old age security fund is $432 million compared with $303 million in 1963-64.
Corporation income tax
The corporation income tax is the second largest source of government revenue. The yield (excluding the old age security tax) is $1,510 million or 21 per cent of budgetary revenue. The increase of $251 million or 20 per cent over 1963-64 collections is due mainly to higher corporate profits for the calendar year 1963 upon which corporation income tax collections in 1964-65 are largely based and to the effect during the fiscal year of legislation passed in 1963 which moved forward the payment period for corporation income taxes. In addition to the federal revenue, $124 million was allocated to the provincial tax collection agreements account under the terms of the Federal-Provincial Fiscal Agreements Act. In 1963-64 federal revenue from this source was $1,259 million and $97 million was allocated to the provincial tax collection agreements account.
The tax on incomes of corporations levied under the Old Age Security Act and credited to the old age security fund is $143 million compared with $116 million in 1963-64.
Taxes on dividends, interest, etc., going abroad
Revenue in this category is derived from taxes withheld on payments of dividends, interest, rents, royalties, alimony and income from estates and trusts paid to non-residents. Collections for 1964-65 are $144 million, an increase of $20 million or 16 per cent over the 1963-64 total. The increase reflects higher dividends paid to non-residents in 1964.
Excise taxes
Revenue under this heading includes collections from the general sales tax and other excise taxes.
From a revenue standpoint the general sales tax is the most important tax levied under the Excise Tax Act. Receipts therefrom (excluding the old age security tax) are $1,193 million or about 26 per cent higher than in the previous fiscal year. The increase reflects the imposition, effective June 14, 1963, of a 4 per cent sales tax on building materials and production machinery and equipment and the subsequent increase in the rate of the tax to 8 per cent effective April 1, 1964.
The tax on sales levied under the Old Age Security Act and credited to the old age security fund is $378 million and includes the 3 per cent tax on building materials and production machinery and equipment effective January 1, 1965.
The yield from excise taxes levied under the Excise Tax Act, other than the general sales tax, at $270 million is $3 million less than in 1963-64.
Customs import duties
Receipts from this source are $617 million compared with $581 million in 1963-64. The increase of $36 million or 6 per cent reflects the greater volume and value of imports during 1964-65.
Excise duties
Excise duties are levied on alcoholic beverages, other than wines, and tobacco products. (Additional taxes on tobacco products are levied under the Excise Tax Act.) Net receipts in 1964-65 are $406 million compared with $393 million in 1963-64.
Gross receipts of $241 million from duties on alcoholic beverages ($135 million in respect of spirits and $106 million in respect of beer) and $171 million from duties on tobacco products have been reduced by refunds and drawbacks of $6 million. Comparable figures in 1963-64 were $232 million, $166 million and $5 million.
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Fiscal Years Ended March 31 Millions of Dollars
Estate tax
Revenue in this category is derived under the Estate Tax Act. Net receipts of $90 million are $1 million less than in 1963-64. The increase in revenue attributable to growth in the size of estates was more than offset by the effect of the entry of the Province of British Columbia into this field in 1963 and the increased abatement allowed to estates in that province in 1964-65.
Other taxes
Revenue under this heading during the fiscal year is $300 thousand compared with $100 thousand in 1963-64.

[Stage Direction]
Non-tax revenue is $798 million, an increase of $78 million or 11 per cent over the 1963-64 total.

[Stage Direction]
(in millions of dollars)
Non-Tax Revenue	Fiscal year ended March 31	Increase or decrease (-)	1965 (estimated)	1964	Amount	Per cent414.0	366.4	47.6	13.0234.0	200.7	33.3	16.621.0	26.9	-5.9	-21.953.0	51.3	1.7	3.324.0	28.5	-4.5	-15.830.0	27.2	2.8	10.312.0	9.7	2.3	23.70.2	0.2	9.8	8.8	1.0	11.4
798.0	719.7	78.3	10.9
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Return on investments
These receipts, in an amount of $414 million, consist of income derived from loans and advances made by the government and from investments by the government in productive or earning assets. In 1963-64 receipts were $366 million.

[Stage Direction]
(in millions of dollars)
Return on Investments	Fiscal year ended March 31	Increase1965 (estimated)	1964	decrease (-)Loans to, and investments in, Crown corporations- Bank of Canada-profits	128.0	116.4	11.6Canadian National Railways	12.7	13.0	-0.3Canadian Overseas Telecommunication Corporation. . ..	2.9	2.6	0.3Central Mortgage and Housing Corporation	90.5	85.5	5.0Eldorado Mining and Refining Limited	1.5	2.0	-0.5Export Credits Insurance Corporation	2.1	1.1	1.0Farm Credit Corporation	14.0	10.9	3.1National Capital Commission	2.6	2.3	0.3National Harbours Board	3.6	3.4	0.2Northern Canada Power Commission	2.5	1.6	0.9Northern Ontario Pipe Line Crown Corporation	0 7	1.6	-0.9Polymer Corporation Limited	3.8	3.5	0.3The St. Lawrence Seaway Authority	42.8	2.6	40.2Miscellaneous	0.9	0.5	0.4108.6	W-0	61.6Other loans and investments-	United Kingdom	1.2	21.1	-19.9Other national governments	5.9	5.1	0.8Provincial governments	0.7	1.3	-0.6Soldier and general land settlement loans and veterans land act advances	7.2	7.4	-0.2Exchange fund account	62.0	62.6	-0.6Securities investment account	3.5	1.4	2.1Sinking fund and other investments held for retirement of unmatured debt	1.7	0.3	1.4Interest-bearing deposits with chartered banks	17.8	13.7	4.1Profit on bond exchange	0.9	2.7	-1.8Unemployment Insurance Commission	0.2	0.2	Miscellaneous	4.3	3.6	0.7106. 4	119.4	-14.0414.0	366.4	47.6
Receipts from Crown corporations at $309 million are $62 million more than in the previous year. The main changes are increases of $12 million in the Bank of Canada profits paid to the government and $40 million in payments by The St. Lawrence Seaway Authority in respect of deferred interest.
The yield from other loans and investments of $105 million compares with $119 million in 1963-64. The decrease of $14 million is more than accounted for by a reduction of $20 million in interest received on the loan to the United Kingdom caused by the deferment of the interest payment due December 31 1964.
Post office revenue
Gross post office receipts are $268 million but authorized disbursements from revenue for salaries and rent allowances, other allowances and commissions at semi-staff and revenue offices, commissions at sub-offices, transit charges on Canadian mail forwarded through and delivered in foreign countries, etc., in the amount of $34 million, brings net revenue to $234 million. In the previous fiscal year gross revenue was $236 million, authorized disbursements were $35
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The Budget-Appendix
million and net revenue was $201 million. The increase of $33 million in net post office receipts is due mainly to increases in several postal rates and in the volume of mail.

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(in millions of dollars)
Post Office Revenue	Fiscal year ended March 31	Increase1965 (estimated)	1964	decrease (-)Postage-	249.7	219.3	30.44.5	4.4	0.19.3	8.4	0.92.2	2.1	0.11.8	1.6	0.2LC88- Salaries and allowances at semi-staff and revenue offices.	267.5	256.8	51.7-28.8 -1.3	-30.0 -1.8	1.2 0.5-3.4	-3.3	-0.1-SS.5	-85.1	1.6234.0	200.7	33.3
As costs of operating the Post Office Department during 1964-65 (excluding the $34 million charged to revenue) amount to $211 million, net revenue exceeds costs by $23 million. However, in making this comparison, it should be noted that the total shown for post office revenue does not reflect any payment for the franking privilege covering parliamentary and departmental mail or for certain miscellaneous services provided for other government departments and agencies, nor does the total for operating expenses reflect any charges for premises occupied by the Post Office Department or for certain accounting and miscellaneous services provided by other departments.
Refunds of previous years' expenditure
Refunds in 1964-65 of expenditures made in prior years are $21 million, a decrease of $6 million from the comparable total for 1963-64.
The Department of National Defence received $12 million due mainly to refunds of $3 million on defence contracts and a refund of $5 million from Canad-air Limited of federal sales tax paid by the department, and the Department of Veterans Affairs received $2 million in refunds of veterans' pensions, allowances and re-establishment credits.
Services and service fees
Revenue at $53 million during 1964-65 is $2 million more than the previous fiscal year.
The Department of Transport received $20 million, including aircraft landing fees of $11 million, marine steamers earnings of $4 million, harbour dues and wharfage of $2 million and air-ground radio service fees of $2 million; the Royal Canadian Mounted Police received $15 million for police services mainly to provinces and municipalities; the Department of Agriculture received $8 million, of which $5 million was for services in connection with the inspection, weighing, storage and elevation of grain and $1 million for race track supervision; the Department of National Health and Welfare received $5 million, due mainly to a reimbursement of $3 million by the provinces for treatment of Indians in federal government hospitals; and the Department of Trade and Commerce received $2 million mainly from weights and measures and electricity and gas inspection fees.
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Proceeds from sales
Receipts of $24 million from this source are $5 million less than the total for 1963-64.
The Department of Defence Production received $9 million mainly from the sale of surplus Crown assets and Central Mortgage and Housing Corporation received $5 million from the sale of properties
Privileges, licences and permits
Revenue from this category totals $30 million for 1964-65, $3 million more than receipts of $27 million in 1963-64.
The Department of Transport received $13 million mainly for rentals, concessions and radio licence fees; the Department of Northern Affairs and National Resources received $4 million, of which $1 million was in respect of oil and gas and $1 million for transient motor vehicle licences; the Department of Justice received $3 million for copyright, patent and trademark fees; and the Department of Public Works received $2 million for rental of public buildings and sites.
Bullion and coinage
Revenue of $12 million derived from the operations of the Royal Canadian Mint consists mainly of a net gain on coinage. Small amounts are also obtained from gold refining charges, handling charges and gain on gold refining. In 1963-64 revenue from this source was $10 million.
Other non-tax revenue
Other non-tax revenue in the amount of $10 million for 1964-65 is $1 million more than in 1963-64.
Expenditure
Budgetary expenditure is estimated at $7,219 million for 1964-65, $347 million or 5 per cent higher than in 1963-64.

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Fiscal Years Ended March 31
Billions of Dollars


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1961	1962	1963	1964	1965*	1965*
1. Do*I not indud* ihoi* payment* mad* to provincial and municipal gov*rnm*ntt for ip«cif1*d purpose*.
3. Do*i not includ* pention payment* out of tfi* old age security fund not charged to budgetary *xp*nditur* in th* year in which they war* paid. [DOT] Estimated
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Statement or Budgetary Expenditure by Departments and Major Classifications
(in millions of dollars)
	Fiscal year ended March 31				Increase	
-	1965 (estimated)	1964	or decrease (-)	Amount	Per cent	Amount	Per cent	Amount	Per centDefence expenditure-	National Defence	1,539.0	21.3	1,683.5	24.5	-144.5	-8.6Defence Production 	22.0	0.3	20.6	0.3	1.4	6.8Industry(1)	20.0	0.3	19.0	0.3	1.0	5.31,581.0	21.9	1,723.1	25.1	-142.1	-8.2Non-defence expenditure-	Agriculture	168.0	2.3	225.7	3.3	-57.7	-25.6Atomic Energy	47.0	0.7	45.9	0.7	1.1	2.4Canadian Broadcasting Corporation...	88.0	1.2	87.6	1.3	0.4	0.5Central Mortgage and Housing Corporation 	14.0	0.2	13.5	0.2	0.5	3.7Citizenship and Immigration	83.0	1.1	71.5	1.0	11.5	16.1External Affairs	128.0	1.8	97.0	1.4	31.0	32.0Finance-	Public debt charges	1,048.2	14.5	993.7	14.5	54.5	5.5Fiscal, subsidy and other payments to provinces	
Government's contribution to the public service superannuation account	349.7	4.8	254.3	3.7	95.4	37.555.6	0.8	54.0	0.8	1.6	3.0Other	120.5	1.7	104.4	1.5	16.1	15.41,574.0	11.8	1,405.4	tO. 5	167.8	11.9Fisheries	26.0	0.4	23.7	0.3	2.3	9.7Forestry	50.0	0.7	41.8	0.6	8.2	19.6Justice	54.0	0.7	41.0	0.6	13.0	31.7Labour	168.0	2.3	172.3	2.5	-4.3	-2.5Unemployment Insurance Act administration and government's contribution	116.0	1.6	108.1	1.5	7.9	7.3*84.0	5.0	*80.4	4.0	8.6	1.3Legislation	14.0	0.2	12.9	0.2	1.1	8.5Mines and Technical Surveys	77.0	1.1	67.8	1.0	9.2	13.6National Health and Welfare-	Family allowances	546.2	7.6	538.3	7.8	7.9	1.5Government's contributions under the Hospital Insurance and Diagnostic Services Act	430.0	5.9	392.2	5.7	37.8	9.6Other	324.8	4.5	273.4	4.0	51.4	18.81,801.0	18.0	1,208.9	17.6	97.1	8.1National Research Council, including	the Medical Research Council	57.0	0.8	47.3	0.7	9.7	20.5National Revenue	87.0	1.2	83.0	1.2	4.0	4.8Northern Affairs and National Resources	85.0	1.2	77.3	1.1	7.7	10.0Post Office	211.0	2.9	206.9	3.0	4.1	2.0Public Works	213.0	3.0	154.8	2.2	58.2	37.6Royal Canadian Mounted Police	75.0	1.0	66.9	1.0	8.1	12.1Trade and Commerce	72.0	1.0	72.5	1.1	-0.5	-0.7Transport	475.0	6.6	423.3	6.2	51.7	12.2Veterans Affairs	353.0	4.9	333.7	4.9	19.3	5.8Other Departments	102.0	1.4	64.5	0.9	37.5	58.15,638.0	78.1	5,149.3	74.9	488.7	9.5Total budgetary expenditure	7,219.0	100.0	6,872.4	100.0	346.6	5.0
<*>
Does not include non-defence expenditure which is included in ''All Other Departments".
April 26. 1965
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The Budget-Appendix PRINCIPAL CLASSES OF BUDGETARY EXPENDITURE
Fiscal Y«ars Ended March 31
1961	62	63	64	65*	1961	62	63	64	65*
1.	Th. unihodad ar.ai ol Ih. column, in (li« chart (or haallh, wollaro and loclaJ lacurity r.p.c.nt p.n.lon payment, out of old ago MCurtty fund nol charged to budgetary expenditure in the year In which lhay warn paid.
2.	Doai not include fhoia poymanU made to provincial and aunicipal governments for (pacific purposes.
Estimated

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Expenditures of the Department of National Defence and defence expenditures of the Department of Defence Production and the Department of Industry-are again the largest category of government expenditure. The total of $1,581 million for 1964-65 is 22 per cent of the aggregate budgetary expenditure of the government for the year and is $142 million less than the total of $1,723 million for 1963-64 when it was 25 per cent of total expenditure.
National Defence
Expenditures of the Department of National Defence are $1,539 million compared with $1,684 million in 1963-64.
Expenditures for air services are $655 million compared with $701 million in the previous fiscal year, for army services $434 million compared with $453 million, for naval services $273 million compared with $298 million and for inspection services $7 million, approximately the same as in the previous year.
The government's contribution to the Canadian forces superannuation account, of an amount equal to If times the contributions of permanent services personnel, is $59 million, $1 million less than that in the previous year. A further amount of $15 million, equal to one fifth of the actuarial deficiency of $75 million arising out of pay increases, will be charged to budgetary expenditure in 1964-65 upon parliamentary approval.
The expenditure of $15 million is due to a special contribution of $75 million credited to the Canadian forces superannuation account and charged to "deferred charges-unamortized portions of actuarial deficiencies" to provide for additional liabilities due to an actuarial evaluation arising out of pay increases. Actuarial deficiencies arising out of pay increases authorized in 1964-65 and subsequent years are to be amortized over a five year period commencing in the year in which the increase is authorized.
Defence research and development costs at $57 million compare with $46 million in 1963-64.
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(in millions of dollars)
	Fiscal year ended March 31		Increase
DfiFlcMCk Ea-PkNDII UHK	1965 (estimated)	1964	decrease (-)
Department of National Defence-			-25.0
Naval services	273.0	298.0	Army services	434.0	452.7	-18.7Air services	655.0	700.8	-45.8Inspection services	7.0	7.3	-0.31,369.0	1,468.8	-89.8Canadian forces superannuation account-	-0.7Government's contribution	59.0	59.7	Amortization of deferred charges	15.0	15.0Special government contribution	76.5	-76.5Defence research and development	57.0	46.1	10.9Mutual aid to NATO countries including contributions	towards military costs of NATO	27.0	28.9	-1.9Administration and general	12.0	13.5	-1.51,539.0	1,683.5	-144.5Department of Defence Production*"-	Canadian Arsenals Limited	4.6	4.5	0.1Defence Construction (1951) Limited	2.4	2.5	-0.1Production capacity and capital assistance	
Administration and general	1.0	1.2	-0.214.0	12.4	1.6lt.0	tO. 6	1.4Department of Industry*"-	20.0	19.0	1.0Technological capability	1,581.0	1,723.1	-142.1
("See also under "All Other Departments" at the end of this section.
Mutual aid to NATO countries including contributions towards military costs of NATO at $27 million is $2 million less than in 1963-64.
Defence Production
Defence expenditures of the Department of Defence Production including those for Canadian Arsenals Limited and Defence Construction (1951) Limited total $22 million compared with $21 million in 1963-64.
Industry
Defence expenditures of the Department of Industry are $20 million, an increase of $1 million over the previous year. The increase is due to higher outlays in connection with the government program instituted in 1959-60 of supporting selected defence development programs in order to sustain technological capability in Canada's industry.
Cash outlays for defence
In addition to these budgetary expenditures for defence, there are other cash outlays which must be considered in arriving at the cost of Canada's defence program.
Section 11 of the National Defence Act provides that materiel, not immediately required for the use of the Canadian defence forces or the Defence Research Board, may be sold to such countries and upon such terms as the Governor in Council may determine. The proceeds of such sales are credited to
April 26, 1965
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a special account to be used for the procurement of materiel. In 1964-65 credits to, and cash outlays from, the account are each less than $500 thousand. The balance in the account at March 31, 1965 is $1 million, approximately the same as at the previous fiscal year-end.
The Department of Defence Production also makes cash disbursements for the procurement of materials for use in the manufacture of defence equipment which are not recorded as budgetary expenditures. For purposes of accounting and control, these amounts are charged to the defence production revolving fund and are treated as assets on the books of the government until they are charged to the Department of National Defence or sold to defence contractors for use in the manufacture of defence equipment. During 1964-65 purchases of $85 million exceeded proceeds from sales of $84 million bringing the balance in the account at March 31, 1965 to $29 million.
TABLE 10 (in millions of dollars)
Cash Outlays fob Defence	Fiscal year ended March 31	Increase1965 (estimated)	1964	decrease (-)Budgetary expenditures-	Department of National Defence	1,539.0	1,683.5	-144.5Department of Defence Production*1)	22.0	20.6	1.4Department of Industry(1)	20.0	19.0	1.01,681.0	1,723.1	-142.1Disbursements for-	Defence production revolving fund (net)	1.4	-11.3	12.7Replacement of materiel account-sec. 11, National	Defence Act (net)	0.1	-0.11.4	-11.2	12.eNet cash outlay for defence	1,582.4	1,711.9	-129.5
(1)See also under "All Other Departments" at the end of this section.

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Agriculture
The expenditures of the Department of Agriculture amount to $168 million, a decrease of $58 million from the 1963-64 total of $226 million.
A decrease of $65 million in the operating loss of the agricultural stabilization board is offset in part by increases of $4 million in land rehabilitation, irrigation and water storage projects and $3 million in production and marketing costs.
The decrease in the operating loss of the agricultural stabilization board is due mainly to the fact that the 1963-64 loss included an inventory adjustment of $51 million.
Outlays for production and marketing are $42 million, an increase of $3 million over the 1963-64 expenditures.
Research expenditures at $29 million compare with $28 million in the previous year.
566	COMMONS DEBATES	April 26, 1965
The Budget-Appendix
Expenditures for land rehabilitation, irrigation and water storage projects total $28 million, an increase of $4 million over the 1963-64 outlays.
TABLE 11 (in millions of dollars)
Agriculture	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
'Vgricultural stabilization board-net operating loss	57.0	122.2	-65.2Production and marketing- Animal and animal products	17.3	16.2	1.1Plant and plant products	8.7	7.0	1.7Health of animals	13.3	13.2	0.1Administration and general	2.4	2.1	0.341.7	S8.5	S.2Board of grain commissioners	6.8	6.7	0.1Land rehabilitation, irrigation and water storage projects. ..	27.5	23.7	3.8Research	28.9	27.6	1.3Prairie farm emergency fund-deficit	0 4	1.1	-0.7Agricultural products board-net operating loss	0.3	1.0	-0.7Farm credit corporation-net operating loss	1.5	1.1	0.4Administration and general	3.9	3.8	0.1168.0	225.7	-57.7
Atomic Energy
Budgetary expenditures in respect of Atomic Energy of Canada Limited and the Atomie Energy Control Board are $47 million compared with $46 million in 1963-64.
During the fiscal year 1964-65, Atomic Energy of Canada Limited received $46 million from the Government of Canada in respect of its research program. Of this amount $35 million is for current operation and maintenance and $11 million for construction or acquisition of buildings, works, land and equipment. In 1963-64 the company received $45 million of which $31 million was for current operation and maintenance and $14 million for construction or acquisition.
TABLE 12 (in millions of dollars)
Atomic Energy	Fiscal year ended March 31	Increase1965 (estimated)	1964	decrease (-)Atomic Energy of Canada Limited- Research program- Current operation and maintenance	35.0	31.4	3.6Construction or acquisition of buildings, works, land and equipment	10.5	13.5	-3.045.6	44-9	0.6Atomic Energy Control Board- Grants for research	1.4	0.9	0.5Administration	0.1	0.1	1.6	1.0	0.647.0	45.9	1.1
Atomic Energy of Canada Limited also received $5 million which is charged to expenditures of the external aid office of the Department of External Affairs on behalf of the Government of India for information and design data on nuclear power stations.
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Canadian Broadcasting Corporation
Payments of $88 million by the government to the Canadian Broadcasting Corporation and charged to budgetary expenditure are approximately the same amount as in 1963-64.
Grants for net operating requirements are $86 million, $8 million more than in 1963-64. There are no grants for capital requirements in 1964-65 compared with $7 million in 1963-64.
In addition loans of $14 million were made to the corporation for capital expenditure.
TABLE 13 (in millions of dollars)
Canadian Bboadcasting Corporation	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Grants in respect of national broadcasting service- Net operating requirements	85.9	78.4	7.5Capital requirements	7.3	-7.386.9	86.7	0.8International broadcasting service	2.1	1.9	0.288.0	87.6	0.4
Central Mortgage and Housing Corporation
The budgetary expenditures of the government in respect of Central Mortgage and Housing Corporation at $14 million are approximately the same as in 1963-64.
Loans in the amount of $7 million, originally made to municipalities and municipal sewerage corporations, were forgiven by Central Mortgage and Housing Corporation pursuant to section 36G of the National Housing Act and will be written off to budgetary expenditure upon parliamentary approval.
Contributions of $4 million to municipalities to assist in clearance, replanning, rehabilitation and modernization of blighted or sub-standard areas are approximately the same as in 1963-64.
TABLE 14 (in millions of dollars)
Central Mortgage and Housing Corporation	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Loans forgiven by the corporation		7.0	5.8	1.2
Contributions to municipalities to assist in clearance, replan-			
ning, etc		4.0	3.8	0.2
Losses sustained-			
Federal-provincial projects	1.4	1.4	Sale of mortgages	0.4	1.0	-0.61.8	s.i	-0.6Housing research and community planning	1.2	l.i	0.1Construction of national defence housing	0.4	-0.414.0	13.5	0.5
April 26, 1965
The Budget-Appendix
Citizenship and Immigration
Expenditures of the Department of Citizenship and Immigration (which includes Indian affairs) in the amount of $83 million are $12 million more than the 1963-64 total.
Indian affairs expenditures are $65 million, $10 million more than the previous fiscal year due to increases of $5 million in respect of education, $3 million for welfare, $2 million in administration and general costs and $1 million for Indian agencies and a decrease of $1 million for economic development.
Immigration expenditures of $15 million are $1 million higher than in the previous year.
TABLE 15 (in millions of dollars)
Citizenship and Immigration	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Indian affairs-	35.8	31.3	4.517.0	13.6	3.46.4	5.7	0.72.6	3.5	-0.93.5	1.5	2.065.8 14.6	65.6 13.2	9.7 1.41.9	1.6	0.31.2	1.1	0.1
83.0	71.5	11.5
External Affairs
Expenditures of the Department of External Affairs are $128 million for
1964-65, $31 million more than the previous year's total due mainly to outlays of $77 million by the external aid office which are $26 million more than in 1963-64.
TABLE 16 (in millions of dollars)
External Affairs	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
External aid office- Economic, technical, education and other assistance-	48.5	41.5	7.0
	7.0		7.0
20.9	9.6	11.31.0	0.6	0.477.1>
17.5	51.1 16.5	25.7 1.0Contributions to international multilateral economic and	9.7	7.6	2.1Assessment for membership in international (including com-	9.5	8.7	0.8Other payments to international organizations and programs.	1.0 12.9	2.9 9.6	-1.9 3.3
128.0	97.0	31.0
Included in the expenditures of the external aid office is a payment of $5 million to Atomic Energy of Canada Limited on behalf of the Government of India for information and design data on nuclear power stations.
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Finance
Expenditures for the Department of Finance are $1,574 million compared with $1,406 million in 1963-64.
The main changes resulting in the net increase of $168 million are increases of $95 million in payments to provinces and $55 million in public debt charges.
TABLE 17 (in millions of dollars)
Finance	Fiscal year ended March 31	Increase1965 (estimated)	1964	decrease (-)Public debt charges	1,048.2	993.7	64.5Fiscal, subsidy and other payments to provinces	349.7	254.3	95.4Public service superannuation account- Government's contribution	55.6	54.0	1.6Amortization of deferred charges	10.0	10.065.6	64.0	11.6Grants to municipalities in lieu of taxes on federal property..	34.0	31.5	2.5Grants to universities- Payments to the Canadian Universities Foundation	27.1	26.8	0.3Office of the Comptroller of the Treasury	25.0	23.8	1.2Government's share of medical-surgical insurance premiums.	9.3	9.3	Government's contribution as an employer to the unemployment insurance fund	0.8	0.8	Municipal development and loan board-forgiveness of indebtedness	2.5	2.5Administration and general	11.8	12.2	-0.41,574.0	1,406.4	167.6
Public debt charges
Public debt charges are again the third largest item of budgetary expenditure being surpassed only by those for defence and those for health, welfare and social security.
TABLE 18 (in millions of dollars)
Interest and Other Public Debt Charges	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Interest on public debt- Unmatured debt including treasury bills- Payable in Canada	781.0	745.3	35.7Payable in London	0.3	-0.3Payable in New York	16.0	16.4	-0.4797.0	762.0	25.0Other liabilities-	Annuity, insurance and pension accounts	208.0	189.4	18.6Deposit and trust accounts	3.0	3.1	-0.1211.0	192.6	18.6Total interest on public debt	1,008.0	954.5	53.6Other public debt charges-	Annual amortization of bond discounts and commissions	37.0	36.3	0.7Cost of issuing new loans	1.9	1.9	Servicing of public debt	1.3	1.0	0.340.2	29.2	1.01,048.2	993.7	54.5
April 26, 1965
The Budget-Appendix
Public debt charges consist of interest on the public debt, the annual amortization of bond discounts and commissions, the cost of issuing new loans and other costs incurred in servicing the public debt. These charges are $1,048 million for 1964-65 or 14 per cent of all budgetary expenditures compared with $994 million or 14 per cent for 1963-64.
Interest on public debt amounts to $1,008 million of which $797 million is in respect of unmatured debt and $211 million in respect of other liabilities. In 1963-64 the comparable amounts were $955 million, $762 million and $193 million respectively.
The increase of $35 million in interest on unmatured debt is due to an increase in unmatured debt. The increase in interest on other liabilities is due mainly to increases of $6 million in respect of the public service superannuation account and $8 million in respect of the Canadian forces superannuation account.
Other public debt charges at $40 million are $1 million higher than in 1963-64, mainly attributable to annual amortization of bond discounts and commissions.
When considering the magnitude of these public debt charges and the burden they place upon the public treasury, it must be borne in mind that a substantial portion of the debt is attributable to, or is invested in, productive or earning assets. Therefore, in calculating the net burden of the government's annual interest charges, the income derived from loans, investments and other productive assets must be taken into account. For 1964-65 this income totals $414 million as shown in the non-tax revenue section under the heading "return on investments". This amount deducted from the gross total of $1,008 million for interest as shown in the accompanying table leaves a net amount of $594 million compared with a net of $588 million in 1963-64. Measured as a percentage of the net debt the burden of the net annual interest charges is 3.82 per cent in 1964r-65 compared with 3.90 per cent in 1963-64.
TABLE 19 (in millions of dollars)
Net Burden op Annual Interest Charges	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
	1,008.0 -414.0	954.5 -366.4	53.5 -47.6
			
			
	594.0	588.1	5.9
			
	3.82	3.90	
			
Fiscal, subsidy and other payments to provinces
Payments to provinces in the amount of $350 million are $95 million more than in 1963-64.
However, in addition to the above payments, $486 million in provincial income taxes collected by the federal government on behalf of the provinces has been allocated to the provincial tax collection agreements account under the terms of the Federal-Provincial Fiscal Arrangements Act. A more detailed explanation of these arrangements is given in the tax revenue section of this Part.
April 26, 1965
[Stage Direction]
The Budget-Appendix
TABLE 20 (in millions of dollars)
Fiscal, Subsidy and Other Payments to Provinces	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Payments under Federal-Provincial Fiscal Arrangements Act	311.7 23.6	220.9 23.6	90.8Transfer of certain public utility tax receipts	10.6	9.8	0.83.8	3.8
349.7	254.3	95.4
A summary of payments, by provinces, during 1964-65 is given in the following table:
TABLE 21 (in millions of dollars)
Fiscal year ended March 31, 1965 (estimated)
Fiscal, Subsidy and Other Payments to Provinces	Payments under fiscal arrangements	Statutory subsidies	Transfer of certain public utility tax receipts	Crown Corporations (Provincial Taxes and Fees) Act	TotalNewfoundland	37.4	1.7	0.2	0.4	39.7Nova Scotia	40.3	2.1	0.7	0.2	43.3Prince Edward Island	9.1	0.6	0.1	(1)	9.8New Brunswick	35.9	1.8	(1)	0)	37.7Quebec	113.2	4.0	5.0	1.7	123.9Ontario	15.1	4.6	1.1	1.1	21.9Manitoba	25.5	2.1	0.1	(1)	27.7Saskatchewan	25.6	2.1	(1)	(1)	27.7Alberta	9.6	2.9	2.9	(1)	15.4British Columbia	
Yukon Territory	1.7	0.5	0.4 (i)	2.6 (i)311.7	23.6	10.6	3.8	349.7
<*>
Less than $50,000.
Public service superannuation account
The government's contribution to the public service superannuation account, in an amount equal to the estimated current and prior service payments of individuals in 1963-64, is $56 million in 1964-65. In 1963-64 the government's contribution was $54 million.
A further amount of $10 million, equal to one fifth of the actuarial deficiency of $50 million arising out of pay increases, will be charged to budgetary expenditure in 1964-65 upon parliamentary approval.
The expenditure of $10 million is due to a special contribution of $50 million credited to the public service superannuation account and charged to "deferred charges-unamortized portions of actuarial deficiencies" to provide for additional liabilities due to an actuarial evaluation arising out of pay increases. Actuarial deficiencies arising out of pay increases authorized in 1963-64 are to be amortized over a five year period commencing in 1964-65 and those arising out of pay increases authorized in 1964-65 and subsequent years are to be amortized over a five year period commencing in the year in which the increase is authorized.
[Stage Direction]
April 26, 1965
The Budget-Appendix
Municipal development and loan board-forgiveness of indebtedness
The municipal development and loan board, during the fiscal year 1964-65, forgave loans to municipalities in the amount of SI million and provided a reserve of $2 million for forgiveness of indebtedness in accordance with sec. 11 of the Municipal Development and Loan Act.
Fisheries
Expenditures of the Department of Fisheries are $26 million in 1964-65, an increase of $2 million over the 1963-64 total.

[Stage Direction]
(in millions of dollars)
Fisheries	Fiscal year ended March 31	Increase1965 (estimated)	1964	decrease (-)Fisheries management and development-	7.9	8.0	-0.12.2	2.2	Canadian share of the expenses of international com-	1.3	1.1	0.21.0	1.7	-0.74.6	3.2	1.417.0	16. S	0.87.5	6.2	1.3Administration and general	1.6	1.3	0.226.0	23.7	2.3
Forestry
Expenditures of the Department of Forestry amount to $50 million in 1964-65 compared with $42 million in 1963-64.
The increase of $8 million is due mainly to higher expenditures in respect of land rehabilitation, irrigation and water storage projects under the Maritime Marshland Rehabilitation Act and the Agricultural Rehabilitation and Development Act which are $10 million in 1964-65 compared with $5 million in 1963-64.

[Stage Direction]
(in millions of dollars)
Forestrt	Fiscal year ended March 31	Increase1965 (estimated)	1964	decrease (-)Freight assistance and grain storage costs on western feed	19.5	18.7	0.8Contributions to the provinces- # Assistance in forest inventory, reforestation, forest fire	5.3	4.5	0.83.1	3.6	-0.58.4	8.1	0.85.5	5.5	3.1	2.5	0.61.7	1.2	0.5Land rehabilitation, irrigation and water storage projects... Administration and general	10.0 1.8	4.6 1.2	5.4 0.650.0	41.8	8.2
April 26, 1965
[Stage Direction]
The Budget-Appendix
Justice
Expenditures of the Department of Justice at $54 million in 1964-65 are $13 million higher than in 1963-64. due mainly to outlays for construction or acquisition of buildings, works, land and equipment in respect of correctional services.
TABLE 24 (in millions of dollars)
Justice	Fiscal year ended March 31	Increase1965 (estimated)	1964	decrease (-)Legal and other services-	Judges salaries, allowances and pensions	8.6	7.7	0.9Patents, copyrights and trademarks	3.0	2.6	0.4Administration and general	2.9	2.9	U.s	IS.8	l.SCorrectional services-	Administration, operation and maintenance	25.5	21.8	3.7Construction and acquisition	14.0	6.0	8.089.6	17.8	11.754.0	41.0	13.0
Labour
Expenditures of the Department of Labour, including the Unemployment Insurance Commission, total $284 million in 1964-65 compared with $280 million in 1963-64.
TABLE 25 (in millions of dollars)
Labour	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Payments to provinces authorized by the Technical and			
Vocational Training Assistance Act	105.0	136.4	-31.4Municipal winter works incentive program	
Payments under the Government Employees Compensation	36.9	26.7	10.2Act	2.8	2.5	0.3Winter house building program	
Payments under the Vocational Rehabilitation of Disabled	14.5	0.1	14.4Persons Act	1.9	0.7	1.2Administration and general	6.9	5.9	1.0168.0	178.8	-i.sUnemployment Insurance Commission-	Government's contribution to the fund	62.0	59.3	2.7Administration and general	54.0	48.8	5.2116.0	108.1	7.9284.0	280.4	8.6
Under the winter house building program payments are made, in accordance with terms and conditions approved by the Governor in Council, of $500 per dwelling unit substantially built during the periods December 1, 1963 to April 15, 1964 and November 15, 1964 to March 31, 1965. In 1964-65 payments amount to $15 million compared with less than $100 thousand in 1963-64.
574
[Stage Direction]
April 26, 1965
The Budget-Appendix
Payments under the municipal winter works incentive program to provinces and in respect of Indian bands are S37 million in 1964-65, $10 million higher than in 1963-64.
Payments of $105 million to provinces under the Technical and Vocational Training Assistance Act are $31 million less than the 1963-64 total.
Unemployment Insurance Commission
Administration and general costs of the commission amount to $54 million compared with $49 million in 1963-64. The government's contribution to the fund is $62 million compared with $59 million in 1963-64.
Unemployment benefit payments are not charged to budgetary expenditure but are paid from the fund which is financed by equal contributions from employers and employees, by interest earned on investments and by the government's contribution of an amount equal to one fifth of the combined employer-employee contributions. Further information about the fund is given under the liability category "annuity, insurance and pension accounts".
Legislation
Costs of Legislation in 1964-65 at $14 million are $1 million more than the 1963-64 total.
TABLE 26 (in millions of dollars)
Legislation	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
House of Commons	11.0	10.1	0.9The Senate	2.6	2.5	0.1Library of Parliament	0.4	0.3	0.114.0	12.9	1.1
Mines and Technical Surveys
Expenditures of the Department of Mines and Technical Surveys at $77 million are $9 million more than the 1963-64 total.

[Stage Direction]
(in millions of dollars)
Mines and Technical Surveys	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Dominion coal board	23.2	20.6	2.615.6	15.0	0.6Field and air surveys	6.9	6.7	0.210.0	7.0	3.0Geological research	7.1	6.6	0.55.8	5.3	0.53.1	2.4	0.71.6	1.5	0.1Administration and general	3.7	2.7	1.077.0	67.8	9.2April 26, 1965	COMMONS DEBATES	575
The Budget-Appendix
Outlays of $23 million for the Dominion Coal Board consist mainly of payments in connection with the movement of coal under conditions prescribed by the Governor in Council and to a lesser extent to subventions in respect of eastern coal under agreements entered into pursuant to the Atlantic Provinces Power Development Act. In 1963-64 these payments totalled $21 million.
Payments of $16 million under the Emergency Gold Mining Assistance Act are $1 million higher than in 1963-64.
Outlays of $10 million for marine surveys and research consist of $7 million for administration, operation and maintenance and $3 million for construction or acquisition of buildings, works, land and equipment. In 1963-64 comparable amounts were $7 million, $6 million and $1 million.
National Health and Welfare
Expenditures of the Department of National Health and Welfare are $1,301 million, an increase of $97 million over the 1963-64 total.
Welfare services account for $767 million, an increase of $51 million over 1963-64 and health services account for $494 million, an increase of $42 million.

[Stage Direction]
(in millions of dollars)
National Health and Welfare	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Welfare services-			
Family allowances	546.2	538.3	7.9Youth allowances	27.2	27.2Old age assistance	45.2	39.2	6.0Blind persons allowances	5.6	5.0	0.6Disabled persons allowances	23.3	20.2	3.1Unemployment assistance	111.0	107.4	3.6Fitness and amateur sport	3.0	1.6	1.4Other	5.3	4.1	1.2766.8	716.8	51.0Health services-	Government's contributions under the Hospital Insurance	and Diagnostic Services Act	430.0	392.2	37.8Grants to provinces-	General health	35.5	31.0	4.5Hospital construction	22.0	22.0	Other	6.8	6.9	-0.149/,-S	1,52-1	it. 2Medical services	33.2	30.6	2.6Food and drug services	4.4	3.4	1.0Administration and general	2.3	2.0	0.31,301.0	1,203.9	97.1
Family allowances
Family allowances are payable in respect of all children under sixteen years of age, resident in Canada, with minor exceptions such as in the case of children of immigrants who must reside in Canada one year before an allowance is payable. The monthly allowance is $6 if the child is under 10 years of age and $8 in the age group 10 to 15. Children of immigrants receive family assistance at the same rates during their first year of residence in Canada from appropriations of the Department of Citizenship and Immigration.
22620-37^
[Stage Direction]
April 26/ 1965
The Budget-Appendix
In 1964-65 payments of $546 million account for 8 per cent of all budgetary expenditure compared with $538 million and 8 per cent in 1963-64. The increase of $8 million reflects the increase in the number of children in the eligible
age groups.

[Stage Direction]
(in millions of dollars)
Family Allowances Payments	Fiscal year ended March 31	Increase1965 (estimated)	1964	decrease ( -)16.9	16.7	0.221.8	21.8	3.3	3.3	19.1	19.2	-0.1164.1	162.2	1.9179.0	175.5	3.526.0	25.7	0.326.9	26.7	0.242.1	41.2	0.945.7	44.7	1.01.3	1.3	
546.2	538.3	7.9
Youth allowances
An Act to provide for the payment of Youth Allowances was given Royal Assent on July 16, 1964.
Under provisions of this act payments of $10 per month are payable in respect of all persons resident in Canada who have attained the age of 16 years and have not attained the age of 18 years who are in full time attendance at a school or university or are by reason of mental or physical infirmity precluded from attending school or university. Payments were effective from September 1964. During 1964-65 payments amount to $27 million.
Old age assistance, disabled persons allowances, blind persons allowances and unemployment assistance
Under the Old Age Assistance Act, the federal government reimburses the provinces by paying 50 per cent of the lesser of $75 monthly or the amount of assistance given by the provinces in the form of monthly pensions to eligible persons in need who are in the age group 65 to 69. (Under the Old Age Security Act, all persons 70 years and over who satisfy the residence requirements of the act may receive a pension of $75 per month from the federal government out of the old age security fund.) Similarly, the federal government reimburses the provinces under the Blind Persons Act for allowances of not more than $75 per month to blind persons in need 18 years of age or over by paying 75 per cent of the total payments, and under the Disabled Persons Act by paying 50 per cent of not more than $75 per month for allowances to disabled persons in need 18 years of age or over. In 1964-65 payments for old age assistance of $45 million, for disabled persons allowances of $23 million and for blind persons allowances of $6 million compare with $39 million, $20 million and $5 million respectively in 1963-64.
These increases resulted from amendments to the Old Age Assistance Act, the Blind Persons Act and the Disabled Persons Act which raised the maximum pension towards which the federal government would contribute from $65 to $75 per month, effective December 1, 1963.
April 26, 1965
[Stage Direction]
The Budget-Appendix
Under the Unemployment Assistance Act, the Minister may, with the approval of the Governor in Council, enter into an agreement with any province for the payment by Canada to the province of contributions not exceeding 50 per cent of unemployment assistance costs in the province. All provinces have signed agreements with the federal government. Contributions in 1964-65 in the amount of $111 million compare with $107 million in 1963-64.
The following table presents a distribution of these payments to provinces for 1964-65:

[Stage Direction]
(in millions of dollars)
Federal Share or Old Age Assistance, Disabled Persons Allowances, Bund Persons Allowances and Unemployment Assistance	Fiscal year ended March 31, 1965 (estimated)			
Old age assistance	Disabled persons allowances	Blind persons allowances	Unem- ployment assistance2.2	0.8	0.3	4.82.3	1.4	0.5	1.90.5	0.4	0.1	0.32.3	1.0	0.4	1.816.7	9.1	1.9	40.510.5	7.3	1.2	25.42.4	0.7	0.3	5.32.3	0.8	0.2	4.92.9	0.8	0.3	8.83.0	1.0	0.4	17.20.1	(i)	0)	0.1
45.2	23.3	5.6	111.0
(1>Less than $50,000.
Government's contributions under the Hospital Insurance and Diagnostic Services Act
Contributions of $430 million to the provinces under the Hospital Insurance and Diagnostic Services Act are $38 million higher than the 1963-64 total of $392 million.
TABLE 31 (in millions of dollars)
Government's Contributions Under the Hospital Insurance and Diagnostic Services Act	Fiscal year ended March 31		Increase
	1965 (estimated)	1964	
	9.9	8.7	1.2
	15.2	15.2	
2.1	1.9	0.214.2	12.6	1.6123.2	113.9	9.3152.1	136.0	16.120.6	19.7	0.923.0	21.3	1.732.9	28.3	4.635.9	33.7	2.20.9	0.9	
430.0	392.2	37.8
General health grants and hospital construction grants to provinces
Grants to provinces for general health services total $36 million and for hospital construction $22 million in 1964-65 compared with $31 million and $22 million respectively in 1963-64.
[Stage Direction]
April 26, 1965
The Budget-Appendix

[Stage Direction]
(in millions of dollars)
General Health Grants and Hospital Construction Grants	Fiscal year ended March 31, 1965 (estimated)		
General health grants	Hospital construction grants	TotalNewfoundland	1.0	0.5	1.5Nova Scotia	1.7	0.9	2.6Prince Edward Island	0.3	0)	0.3New Brunswick	1.3	1.0	2.3Quebec	10.6	6.0	16.6Ontario	10.7	6.6	17.6Manitoba	2.0	1.1	3.1Saskatchewan	1.8	1.2	3.0Alberta	2.7	2.5	5.2British Columbia	3.3	1.9	5.2Northwest and Yukon Territories	0.1	0)	0.135.5	22.0	57.6
<'>Less than $50,000.
National Research Council, including the Medical Research Council
Expenditures of the National Research Council, including the Medical Research Council, are 157 million compared with $47 million for 1963-64. An increase of $6 million in scholarships and grants in aid of research account for most of the change.
TABLE 33 (in millions of dollars)
National Research Council, including the Medical Research Council	Fiscal year ended March 31	Increase1965 (estimated)	1964	decrease (-)Scholarships and grants in aid of research	23.6	17.7	5.9Construction or acquisition of buildings, works, land and equipment	4.8	4.4	0.4Assistance towards research in industry	2.2	1.6	0.6Administration and general	26.4	23.6	2.857.0	47.3	9.7
National Revenue
Expenditures of the Department of National Revenue amount to $87 million, an increase of $4 million over the 1963-64 total.

[Stage Direction]
(in millions of dollars)
National Revenue	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Customs and excise division	44.0	42.3	1.7Taxation division	42.7	40.5	2.2Income tax appeal board	0.3	0.2	0.187.0	83.0	4.0
April 26, 1965
[Stage Direction]
The Budget-Appendix
Northern Affairs and National Resources
Expenditures of the Department of Northern Affairs and National Resources at $85 million are $8 million more than 1963-64 expenditures.

[Stage Direction]
(in millions of dollars)
Northern Affairs and National Resources	Fiscal year ended March 31	Increase1965 (estimated)	1964	decrease (-)35.1	34.1	1.027.2	23.0	4.212.3	10.3	2.0Contributions to the provinces to assist in the development	8.6	8.1	0.61.8	1.8	
85.0	77.3	7.7
Expenditures in respect of the national parks branch increased by $4 million due mainly to an increase of S3 million in construction costs.
The increase of $2 million in expenditures of the water resources branch was due to an increase of $1 million in administration costs and SI million in contributions to provinces towards the construction of dams and other works to assist in the conservation and control of water resources in accordance with agreements entered into between Canada and the provinces.
Post Office
Costs of the Post Office Department charged to budgetary expenditure are $211 million compared with $207 million in 1963-64.
TABLE 36 (in millions of dollars)
Post Office	Fiscal year ended March 31	Increase1965 (estimated)	1964	decrease (-)Charged to budgetary expenditure- Operations-salaries and other expenses of staff post offices, district offices and railway mail services; and supplies and equipment and other items for revenue post offices	136.0	135.6	0.4Transportation-movement of mail by land, air and water	68.8	65.9	2.9Financial services	3.5	3.3	0.2Administration and general	2.7	2.1	0.6ttl.O	106.9	4.1Charged to revenue- Operations-salaries of postmasters and staffs at revenue and semi-staff offices, commissions paid at suboffices and other disbursements	33.5	35.1	-1.6244.5	242.0	2.5
April 26, 1965
The Budget-Appendix
Costs of operations at $136 million are approximately the same as in the previous year and costs of movement of mail are $3 million more than in 1963-64.
Remuneration of postmasters and staffs at revenue and semi-staff offices and certain other authorized disbursements are paid from revenue. These payments at $34 million ($1 million less than in 1963-64) bring gross post office expenditures to $245 million in 1964-65.
Public Works
Expenditures of the Department of Public Works amount to $213 million, $58 million more than in 1963-64.
TABLE 37 (in millions of dollars)
Public Works	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Accommodation services- Maintenance and operation of public buildings and grounds- Ottawa and Hull	20.2	18.8	1.4Other than Ottawa and Hull	31.0	27.5	3.5Office furniture and furnishings	2.3	1.8	0.5Acquisition of equipment and furnishings other than office furnishings	1.6	0.6	1.0Construction, acquisition, major repairs, etc. of public buildings- Ottawa	12.4	11.4	1.0Other than Ottawa	17.6	14.2	3.486.1	74.5	10.8Harbours and rivers engineering services- Operation and maintenance	6.6	6.8	-0.2Construction or acquisition of equipment	0.7	0.4	0.3Construction, acquisition, major repairs, etc. of harbour and river works	20.9	16.4	4.528.2	*5.6	4.6Roads, bridges and other engineering services- Operation and maintenance	0.4	0.4	International, interprovincial and other bridges	2.8	2.6	0.2Northwest highway system	9.3	0.1	9.2Trans-Canada highway- Contributions to provinces under terms of the Trans-Canada Highway Act	74.1	39.2	34.9Construction through national parks	0.2	2.1	-1.986.8	44-4	45.4Testing laboratories	1.1	1.0	0.1Administration and general	11.8	11.5	0.3213.0	154.8	58.2
Accommodation services
Expenditures for these services are $85 million, $11 million higher than the 1963-64 total.
Maintenance and operation of public buildings, etc. at $53 million are $5 million higher, acquisition of equipment, etc. at $2 million are $1 million higher and construction or acquisition of buildings, etc. at $30 million are $4 million higher than in 1963-64.
April 26, 1965
[Stage Direction]
The Budget-Appendix
Harbours and rivers engineering services
Expenditures for these services total $28 million, $5 million higher than in 1963-64 due mainly to an increase in costs of construction or acquisition, etc. of harbour and river works which are $21 million compared with $16 million in the previous year.
Roads, bridges and other engineering services
Expenditures for these services total $87 million, $42 million higher than in 1963-64.
Contributions to provinces in respect of the trans-Canada highway of $74 million are $35 million higher, outlays of $9 million in respect of the northwest highway system are $9 million higher and costs of constructing the trans-Canada highway through national parks at $200 thousand are $2 million lower than in 1963-64.
Royal Canadian Mounted Police
Expenditures of the Royal Canadian Mounted Police are $75 million in 1964-65 compared with $67 million in 1963-64. Arising from these expenditures are receipts of $15 million, which are credited to revenue, for policing certain provinces, territories and municipalities. In 1963-64 the same amount was received and credited to revenue.
Included in the headquarters administration costs is an amount of $700 thousand, equal to one fifth of the actuarial deficiency of $3^ million in the Royal Canadian Mounted Police superannuation account due to an actuarial evaluation arising out of pay increases, which will be charged to budgetary expenditure in 1964-65 upon parliamentary approval.
TABLE 38 (in millions of dollars)
Royal Canadian Mounted Police	Fiscal year ended March 31	Increase1965 (estimated)	1964	decrease (-)Land, air and training divisions	56.1	49.6	6.5Headquarters administration and national police services...	9.6	8.4	1.2Pensions and other benefits	4.2	4.0	0.2Government's contribution to Royal Canadian Mounted Police superannuation account	3.1	3.1	Marine services	2.0	1.8	0.275.0	66.9	8.1
Trade and Commerce
Expenditures of the Department of Trade and Commerce at $72 million are approximately the same as in 1963-64. The main change is a decrease of $6 million in the carrying costs of temporary wheat reserves which is more than offset by small increases in the other categories.
582
[Stage Direction]
April 26. 1965
The Budget-Appendix
TABLE 39 (in millions of dollars)
Trade and Commerce	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Canadian Wheat Board-			
Carrying costs of temporary wheat reserves	34.0	39.6	-5.6Prairie Grain Advance Payments Act	0.6	0.9	-0.3Si. 6	40.5	-5.9Dominion Bureau of Statistics	13.5	12.3	1.2Trade commissioner service	6.8	6.3	0.5Canadian government travel bureau	5.0	3.9	1.1Standards Branch	3.3	3.0	0.3National Energy Board	0.7	0.6	0.1Administration and general	8.1	5.9	2.272.0	72.5	-0.5
Transport
Expenditures of the Department of Transport are $475 million, an increase of $52 million over 1963-64 expenditures of $423 million.
Air services
Outlays for air services at $136 million are $15 million higher than the 1963-64 total due mainly to an increase of $9 million in the expenditures of the telecommunications and electronics branch of which $4 million is in construction or acquisition of buildings, etc. with respect to the satellite communications ground station and $3 million is in administration, operation and maintenance and an increase of $4 million in the expenditures of the civil aviation branch of which $1 million was for the purchase of property for the extension of the Vancouver international airport.
Railway and steamship services
Expenditures for these services are $106 million compared with $99 million in 1963-64.
Cost of construction or acquisition of buildings, works and land, etc. are $10 million, $9 million higher than 1963-64 costs; the subsidy in respect of a railway to Great Slave Lake is $25 million, $3 million higher than in 1963-64; and payments under the Maritime Freight Rates Act are $15 million, $2 nillion higher than in 1963-64.
Outlays in respect of the Victoria Bridge, Montreal are $1 million due to the discontinuance of tolls. In 1963-64 expenditures totalled $7 million of which $4 million reflected the discontinuance of the collection of tolls and $3 million was for rail diversion.
The charge of $39 million to budgetary expenditures in 1964-65 to cover the 1964 operating deficit of the Canadian National Railways is $4 million less than the charge of $43 million in 1963-64 to cover the railway's 1963 operating deficit.
Board of Transport Commissioners
Expenditures in respect of the board amount to $84 million in 1964-65 compared with $82 million in 1963-64.
Included are $70 million in payments to the railways for the maintenance of the rates of freight traffic compared with $68 million in 1963-64, $7 million in
April 26, 1965
[Stage Direction]
The Budget-Appendix
each year in payments to the railways for maintenance of trackage and $5 million in each year in contributions to the railway grade crossing fund.
Marine services
Expenditures for marine services of $64 million are approximately the same as in 1963-64. These include $37 million in respect of the Canadian coast guard, $2 million higher than in 1963-64 and $11 million in respect of aids to navigation which in 1963-64 cost $13 million.
Canadian Maritime Commission
Expenditures of the commission in the amount of $41 million are $9 million less than in 1963-64 due mainly to a reduction from $40 million in 1963-64 to $32 million in 1964-65 in capital subsidies for the construction of commercial and fishing vessels.
TABLE 40 (in millions of dollars)
	Fiscal year ended March 31		Increase
1965 (estimated)	1964	decrease (-)Air services-	62.5	3.7Civil aviation branch	66.2	Telecommunications and electronics branch	41.0	32.3	8.7Meteorological branch	22.5	20.6	1.9Administration	6.3	5.7	0.6Railway and steamship services-	tse.o	m.i	14.9Railway to Great Slave Lake	
[DOT] Maritime Freight Rates Act-	25.0	21.7	3.3Difference between tariffs and normal tolls	15.1	13.4	1.7Victoria Bridge	0.8	6.7	-5.9Construction or acquisition	
Deficits-	10.3	1.4	8.9Canadian National Railways	38.7	43.0	-4.3Newfoundland ferry and terminals	11.0	8.6	2.4Prince Edward Island ear ferry and terminals	
Yarmouth, N.S.-Bar Harbour, Maine, U.S.A.	4.1	3.3	0.8ferry service	0.3	0.2	0.1Other	0.7	0.4	0.3Board of Transport Commissioners for Canada- Payments to the railways for the maintenance of the	106.0	98.7	7.Jrates of freight traffic	70.4	68.1	2.3Maintenance of trackage	7.0	7.0	Contributions to the railway grade crossing fund	5.1	5.1	0.1Administration and general	1.5	1.4	Marine services-	84.0	81.6	9.4Canadian coast guard	36.9	35.4	1.5Aids to navigation	11.1	12.6	-1.5Marine regulations	3.3	3.4	-0.1Ship channel services-St. Lawrence and Saguenay rivers	3.2	7.1	-3.9Canals	8.1	4.4	3.7Administration and general	1.4	1.2	0.264.0	64.1	-0.1Canadian Maritime Commission	41.2	49.8	-8.6National Harbours Board	
Canals and works entrusted to The St. Lawrence Seaway	8.2	0.3	7.9Authority	30.0	3.0	27.0Administration and general	5.6	4.7	0.9475.0	423.3	51.7
584
[Stage Direction]
April 26, 1965
The Budget-Appendix National Harbours Board
Non-active advances to the board in 1964-65 total $8 million compared with $300 thousand in 1963-64. The increase is due mainly to advances of $7 million to cover expenditures in connection with the 1967 World Exhibition.
Canals and works entrusted to The St. Lawrence Seaway Authority
The increase in this account is due to a payment of $27 million to The St. Lawrence Seaway Authority to reimburse the authority in respect of the accumulated Welland canal deficit incurred by the authority for the calendar years 1959 to 1964. As provided for by The St. Lawrence Seaway Authority Act the Welland canal was transferred from the Department of Transport to The St. Lawrence Seaway Authority for operation and management effective April 1, 1959.
Veterans Affairs
Expenditures of the Department of Veterans Affairs at $353 million are $19 million higher than 1963-64 expenditures.

[Stage Direction]
(in millions of dollars)
Veterans Affairs	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Welfare services, allowances and other benefits-			
War veterans allowances	97.0	86.7	10.3Other benefits including treatment allowances	5.5	5.2	0.3War service gratuities and re-establishment credits	0.5	0.5	Administration and general	4.0	4.0	107.0	96.4	10.6Pensions-	Disability or death	179.3	173.2	6.1Administration and general	2.7	2.6	0.1182.0	176.8	6.2Treatment services	48.7	46.4	2.3Soldier settlement and veterans land act-	Provision for reserve for conditional benefits	3.1	3.2	-0.1Administration and general	4.5	4.5	7.6	7.7	-0.1Administration and general	7.7	7.4	0.3353.0	333.7	19.3
War veterans allowances of $97 million are $10 million higher than in 1963-64, pensions of $179 million for disability or death are $6 million higher and costs of $49 million for treatment services are $2 million higher.
All Other Departments
Expenditures of the departments not dealt with individually amount to $102 million, an increase of $38 million over the total for 1963-64.
April 26, 1965
[Stage Direction]
The Budget-Appendix
TABLE 42 (in millions of dollars)
All Other Departments	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Atlantic Development Board	4.4	0.2	4.2Auditor General's Office	1.6	1.3	0.3Board of Broadcast Governors	0.4	0.3	0.1Canadian Corporation for the 1967 World Exhibition	23.0	1.1	21.9Office of the Chief Electoral Officer	0.6	11.9	-11.3Civil Service Commission	6.4	5.2	1.2Defence Production^)	2.4	1.9	0.5Economic Council of Canada	0.9	0.2	0.7Emergency Measures Organization	8.0	6.9	1.1Governor General and Lieutenant-Governors	0.7	0.5	0.2Industry (*	3.2	0.7	2.5Insurance	1.5	1.4	0.1National Capital Commission	9.9	12.2	-2.3National Film Board	6.4	5.8	0.6National Gallery of Canada	1.3	1.1	0.2Privy Council	4.5	2.9	1.6Public Archives and National Library	1.5	1.1	0.4Public Printing and Stationery	2.8	2.2	0.6Office of the Representation Commissioner	0.2	(I)	0.2Secretary of State	22.3	7.6	14.7102.0	64.5	37.5
<'>See also under defence expenditures at the beginning of this section. (*Less than $50,000.
Expenditures of the National Capital Commission which in previous years were included in the expenditures of the Department of Public Works and the Canadian Corporation for the 1967 World Exhibition which in the previous year were included in the Department of Trade and Commerce are now included as separate headings under "All Other Departments".
The increase of $22 million in expenditures of the Canadian Corporation for the 1967 World Exhibition is due to an expenditure of $6 million for the federal share of the cost of construction of an ice control structure and an increase of $16 million in advances to the corporation. The increase of $15 million in the expenditures of the Department of the Secretary of State is due mainly to a grant of $10 million to be made, upon parliamentary approval, to the Canada Council for the purposes of the arts, humanities and social sciences. The decrease of $11 million in expenditures of the Office of the Chief Electoral Officer is due to a reduction in costs for elections.
[Stage Direction]
April 26, 1965
The Budget-Appendix

[Stage Direction]
The assets and liabilities of the Government of Canada at March 31, 1965, the comparable balances at March 31, 1964 and the changes in each category during 1964-65, are shown in condensed form in the following table.

[Stage Direction]
Summary or Assets and Liabilities or Canada (in millions of dollars)
	Balance at March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Liabilities			
Current and demand liabilities	1,521.5	1,620.0	-98.5Deposit and trust accounts	237.2	196.5	40.7Annuity, insurance and pension accounts	5,684.0	5,131.0	553.0Undisbursed balances of appropriations to special accounts...	105.7	111.6	-5.9Deferred credits	110.8	119.4	-8.6Suspense accounts	6.0	5.1	0.9Unmatured debt	18,982.7	18,740.1	242.6Total liabilities	26,647.9	25,923.7	724.2Assets	Current assets	1,294.6	1,287.1	7.5Advances to the exchange fund account	2,621.0	2,601.0	20.0Sinking fund and other investments held for retirement of	unmatured debt	6.0	6.0Loans to, and investments in. Crown corporations	5,007.5	4,584.2	423.3Loans to national governments	1,207.0	1,195.7	11.3Other loans and investments	1,160.1	1,197.8	-37.7Securities held in trust	39.0	38.9	0.1Deferred charges-	Unamortized portions of actuarial deficiencies-	Canadian forces superannuation account	60.0	60.0Public service superannuation account	39.8	276.7	-236.9Royal Canadian Mounted Police superannuation	account	2.9	2.9Unamortized loan flotation costs	112.1	123.7	-11.6214.8	400.4	-185.6Suspense accounts	0.1	-0.1Capital assets	0)	(1)	Inactive loans and investments	94.8	94.8	Total recorded assets	11,644.8	11,400.0	244.8Less reserve for losses on realization of assets	-546.4	-546.4	Net recorded assets	11,098.4	10,853.6	244.8Net debt, represented by excess of liabilities over net re-	corded assets	15,549.5	15,070.1	0)479.4
<*>
Shown at nominal value of $1.
(*) Reflecting the budgetary deficit of $83 million plus an adjustment of $396.4 million in respect of prior years' transactions.
Summary
The gross liabilities of the government are estimated at $26,648 million as at March 31, 1965 compared with $25,924 million at March 31, 1964. Th6 main items effecting the increase of $724 million are increases of $553 million in annuity, insurance and pension accounts, $243 million in unmatured debt and a decrease of $99 million in current and demand liabilities.
April 26. 1965
[Stage Direction]
The Budget-Appendix
Net recorded assets are estimated at $11,099 million as at March 31, 1965, an increase of $245 million over the total at March 31, 1964. The main changes are increases of $423 million in loans to, and investments in, Crown corporations and a decrease of $186 million in deferred charges.
The net debt of Canada, or the excess of liabilities over net recorded assets, in the amount of $15,549 million is $479 million higher than the total of $15,070 million at March 31, 1964. The increase reflects the budgetary deficit of $83 million plus a charge to net debt of $277 million in respect of the unamortized portion of the actuarial deficiency in the public service superannuation account and $119 million in respect of an actuarial evaluation of that account as at December 31, 1962 as calculated by the Department of Insurance.

[Stage Direction]
Fiscal Years Ended March 31 Billions of Dollars
1961	1962
* Estimated
1964
Liability Accounts Current and demand liabilities
These consist of obligations of the government payable currently or on demand.
During 1964-65 a net decrease of $99 million in these obligations brought the total at March 31, 1965 to $1,522 million.
The main changes during 1964-65 are a decrease of $219 million in noninterest-bearing notes payable on demand and increases of $20 million in outstanding treasury cheques and $73 million in accounts payable.
Non-interest-bearing notes are those portions of Canada's equities in the capital of certain international agencies which are not covered by cash or gold. Notes in respect of the international monetary fund in the amount of $345 million are $221 million less than at March 31, 1964 and notes in respect of the international development association in the amount of $23 million are $2 million more.
[Stage Direction]
April 26, 1965
The Budget-Appendix
TABLE 44 (in millions of dollars)
	Balance at March 31		Increase
Current and Demand Liabilities	1965 (estimated)	1964	or decrease (-)Outstanding treasury cheques	340.1	319.9	20.2Accounts payable	
Non-interest-bearing notes payable to-	415.2	342.7	72.5The international development association	22.9	21.0	1.9The international monetary fund	345 0	566.0	-221.0S67.9	587.0	-219.1Matured debt outstanding	21.3	26.8	-5.5Interest due and outstanding	104.0	91.9	12.1Interest accrued	235.0	216.0	19.0Post office-outstanding money orders	33.0	30.5	2.5Outstanding letter of credit cheques	4.0	4.1	-0.1Other current liabilities	1.0	1.1	-0.11,521.5	1,620.0	-98.5
Deposit and trust accounts
Sundry funds deposited with, or held in trust by, the Receiver General of Canada for various purposes are recorded in these accounts.
TABLE 45 (in millions of dollars)
Deposit and Trust Accounts	Balance at March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Indian trust funds	30.1	29.2	0.9Guarantee deposits- National Revenue	5.0	4.9	0.1Northern Affairs and National Resources	20.0	22.4	-2.425.0	27. S	-2.SPost office savings bank	23.0	24.6	-1.6Crown corporations deposits- Atomic Energy of Canada Limited	5.0	5.0Crown Assets Disposal Corporation	0.5	0.4	0.1Eldorado Mining and Refining Limited	11.2	13.2	-2.0Export Credits Insurance Corporation	10.0	IS. 6	10.026.7	IS. 1Canadian Pension Commission-administration trust fund...	14.0	13.5	0.5National Harbours Board-special accounts	12.4	13.3	-0.9Instalment purchase of bonds, public service	11.0	12.5	-1.5Contractors holdbacks	7.0	8.6	-1.6Contractors securities-sundry departments- Bonds	4.0	6.0	-2.0Cash	1.0	1.4	-0.4Certified cheques	5.0	0.6	-0.68.0	-s.oArmy benevolent fund	6.0	5.8	0.2Canadian Arsenals Limited pension fund	1.0	1.4	-0.4Central Mortgage and Housing Corporation	3.0	1.0	-1.0Common school funds-Ontario and Quebec	2.7	0.3Emergency gold mining assistance-holdbacks	2.3	2.2	0.1Immigration guarantee fund	1.4	1.1	0.3National Research Council-special fund	2.3	2.3	Northwest Territories revenue account	2.4	2.4	0.3Permanent services deferred pay	4.0	3.7	Provincial tax collection agreements account0)	42.0	2.5	42.0Royal Canadian Mint-prepayments	1.0	-1.5Veterans land act trust account-general	5.0	4.3	0.7United States of America	1.6	5.1	-3.5Veterans care trust fund	3.0	2.7	0.38.0	8.7	-0.7237.2	196.5	40.7
(i) Included in the asset category "other loans and investments" at March 31, 1964.
April 26, 1965
[Stage Direction]
The Budget-Appendix
There was a net increase of $41 million during 1964

65 bringing the total to $237 million at March 31, 1965.
The main changes are a credit balance of $42 million in the provincial tax collection agreements account (at March 31, 1964 this account reflected a debit balance of $10 million which was included in the asset category "other loans and investments") and an increase of $13 million in Crown corporations deposits, partly offset by a decrease of $4 million in the United States of America account and $3 million in contractors securities.
Annuity, insurance and pension accounts
Recorded herein are moneys held in the consolidated revenue fund to the credit of various annuity, insurance and pension accounts.
During 1964-65 an increase of $553 million brought the total balance to $5,684 million at March 31, 1965. The main changes are increases of $304 million in the public service superannuation account and $218 million in the Canadian forces superannuation account.
TABLE 46 (in millions of dollars)
Annuity, Insurance and Pension Accounts	Balance at March 31		Increase or decrease( -)
	1965 (estimated)	1964	
	56.3 -43.0	16.8	39.5 -43.0
			
Uninvested funds on deposit with the government				
	13.3 2,160.7 2,039.5 1,302.2 55.8 112.5	16.8 1.856.4 1.821.5 1,284.2 46.0 106.1	-3.5 304.3 218.0 18.0 9.8 6.4
			
			
Royal Canadian Mounted Police superannuation account				
	5,684.0	5,131.0	553.0
Unemployment insurance fund,
The balance in the fund at March 31, 1965 was $56 million (of which $17 million represents a liability for unredeemed warrants and deposits from employers) and consists of $43 million invested in special government bonds (plus accrued interest) and $13 million on deposit with the Receiver General. The balance in this fund at March 31, 1964 was $17 million consisting of cash deposits with the government. However, there was a liability of $16 million for unredeemed warrants and deposits from employers.
Receipts of $373 million during the fiscal year include employee and employer contributions of $309 million, the government's contribution of $62 million and $2 million in interest from investments. As benefit payments totalled $334 million, receipts exceeded payments from the fund by $39 million during 1964-65. Receipts during 1963-64 totalled $357 million and included employee and employer contributions of $297 million, the government's contribution of $59 million and $1 million in income from investments. Benefit payments during 1963-64 totalled $366 million resulting in a deficit for the year of $9 million.
[Stage Direction]
April 26, 1965
The Budget-Appendix
TABLE 47 (in millions of dollars)
Fiscal year ended March 31
Unemployment Insurance Fund	1961	1962	1963	1964	1965 (esti- mated)Revenue- Contributions-	275.2	277.8	286.4	296.6	308.755.1	55.5	57.3	59.3	61.62.7	6.2	2.5	i.i	2.50.1	0.1	0.1	0.1	0.1333.1	339.6	346.3	357.1	372.9Expenditure-	-513.9	-454.7	-403.2	-365.7	-333.8-0.4	-3.0	-0.2	-0.2
Excess of revenue over expenditure or expenditure	-181.2	-118.1	-56.9	-8.8	38.9
					
	184.7	66.6	9.7	0.9	39.8
	67.0				
Unredeemed benefit warrants and deposits from	12.9	11.6	16.7	15.9	16.5
					
	264.6 -247.0	78.2 -63.6	26.4 -11.8	16.8	56.3 -43.0
					
	17.6	14.6	14.6	16.8	13.3
					
<'>
Contributions by employees and employers are on an equal basis.


Government contribution is equal to 20 per cent of the combined employee-employer contributions.
Government annuities account
There was an increase of $18 million in this account during the year bringing the balance to $1,302 million at March 31, 1965. Receipts of $78 million include $27 million from premiums and $51 million in interest from the government. Disbursements of $60 million consist mainly of vested annuity and commuted value payments and refunds of premiums. In 1963-64 receipts amounted to $78 million and disbursements were $58 million.
Public service superannuation account
The balance of $2,161 million in this account at March 31, 1965 is $304 million higher than the balance at the previous fiscal year-end.
Receipts of $367 million consist of a credit of $119 million to this account in 1964-65 to bring the balance in the account into line with an actuarial evaluation as at December 31, 1962 as calculated by the Department of Insurance, a credit of $50 million in respect of salary revisions made in 1963-64 and 1964-65, contributions of $61 million by individuals, $56 million by the government, $3 million by certain Crown corporations and interest of $78 million credited to the account by the government. Contributions by the government and Crown corporations are equal to the estimated current and prior service payments of individuals in 1963-64. Interest at 4 per cent per annum is credited to the account quarterly and is computed quarterly on the outstanding balance at the end of the previous quarter.
The credit of $50 million to the fund to provide for additional liabilities due to an actuarial evaluation arising out of pay increases was charged to "deferred charges-unamortized portions of actuarial deficiencies". Actuarial
April 26. 1965
[Stage Direction]
The Budget-Appendix
deficiencies arising out of pay increases authorized in 1963-64 are to be amortized over a five year period commencing in 1964-65 and those arising out of pay increases authorized in 1964-65 and subsequent years are to be amortized over a five year period commencing in the year in which the increase is authorized.
Disbursements totalled $62 million and included $51 million in annuities and $11 million in withdrawals of contributions.
In 1963-64 receipts totalled $189 million and disbursements totalled $57 million.
Canadian forces superannuation account
The balance of $2,040 million at March 31, 1965 reflects an increase of $218 million during the fiscal year.
Receipts of $247 million include $39 million in contributions by personnel, $59 million in regular contributions by the government, $74 million in interest credited by the government and a credit of $75 million in respect of additional liabilities due to an actuarial evaluation resulting from increased rates of pay. Regular government contributions are made at the rate of one and two-thirds times the current and prior service contributions by personnel. Interest at 4 per cent per annum is credited to the account quarterly and is computed quarterly on the outstanding balance at the end of the previous quarter.
The credit of $75 million to the fund to provide for additional liabilities arising out of pay increases was charged to "deferred charges-unamortized portions of actuarial deficiencies". Actuarial deficiencies arising out of pay increases authorized in 1964-65 and subsequent years are to be amortized over a five year period commencing in the year in which the increase is authorized.
Disbursements of $29 million include $18 million in pensions and retiring allowances and $11 million in cash termination allowances and return of contributions.
In 1963-64 receipts were $239 million and disbursements were $23 million.
Royal Canadian Mounted Police superannuation account
The balance of $56 million in this account at March 31, 1965 is $10 million over the total of $46 million at the end of the previous fiscal year.
Receipts of $11 million consist of $2 million in contributions by personnel, $3 million in contributions by the government, $2 million in interest credited to the account by the government and a credit of $31 million in respect of additional liabilities resulting from increased rates of pay.
The credit of $31 million to the fund to provide for additional liabilities due to an actuarial evaluation arising out of pay increases was charged to "deferred charges-unamortized portions of actuarial deficiencies". Actuarial deficiencies arising out of pay increases authorized in 1964-65 and subsequent years are to be amortized over a five year period commencing in the year in which the increase is authorized.
Disbursements are due mainly to annuities and allowances of $400 thousand and cash termination allowances and return of contributions of $200 thousand.
In 1963-64 receipts were $9 million and disbursements were $600 thousand. Old age security fund
Under the Old Age Security Act, as amended, pensions of $75 per month are paid, without a means test, from the old age security fund to all eligible persons seventy years of age or over.
[Stage Direction]
April 26, 1965
The Budget-Appendix
During 1964-65 receipts of $953 million exceeded pension payments of $889 million by $64 million. Receipts consist of $432 million from the 4 per cent tax on personal income (maximum $120), $378 million from the 3 per cent sales tax and $143 million from the 3 per cent tax on corporation profits.
During the year temporary loans from the Minister of Finance were reduced by $64 million to $36 million at March 31, 1965.
In 1963-64 pension payments of $808 million exceeded receipts of $750 million requiring temporary loans of $58 million from the Minister of Finance. Loans to the fund at March 31, 1964 totalled $100 million.
TABLE 48 (in millions of dollars)
Fiscal year ended March 31
Old Age Security Fond	1961	1962	1963	1964	1965 (esti- mated)Tax receipts-	270.2	284.9	302.2	331.8	378.0229.4	259.0	273.7	302.6	432.0103.5	100.1	115.2	115.7	143.0603.1	644.0	691.1	750.1	953.0-592.4	-625.1	-734.4	-808.4	-889.010.7	18.9	-43.3	-58.3	64.0-28.0	-17.3	-41.7	-100.01.6	Temporary loans from the Minister of Finance to	17.3	41.7	100.0	36.0
1.6			
					
A distribution by provinces of pension payments from the old age security fund for the last two years is shown in the following table:
TABLE 49 (in millions of dollars)
Old Age Security Payments	Fiscal year ended March 31		Increase
	1965 (estimated)	1964	
Newfoundland	16.8	15.4	1.4Nova Scotia	40.4	37.1	3.3Prince Edward Island	7.1	6.5	0.629.7	27.2	2.5190.9	172.0	18.9Ontario	323.5	292.5	31.0Manitoba	53.4	48.9	4.5Saskatchewan	55.1	50.8	4.3Alberta	60.1	54.8	5.3British Columbia	111.4	102.6	8.8Northwest and Yukon Territories	0.6	0.6	
889.0	808.4	80.6
April 26. 1965
[Stage Direction]
The Budget-Appendix
Undisbursed balances of appropriations to special accounts
These special accounts record the undisbursed balances of appropriations for which moneys have been appropriated by Parliament and from which disbursements may be made for authorized purposes in periods subsequent to that in which the appropriation was made. A net decrease of $6 million in these accounts during the fiscal year brought the balance at March 31, 1965 to $106 million.
During the fiscal year a grant of $49 million was credited to the Colombo plan fund and charged to budgetary expenditure. Disbursements of $44 million result in a balance of $89 million in the fund at March 31, 1965. In 1963-64 there was a grant of $42 million and disbursements were $43 million.
TABLE 50 (in millions of dollars)
Undisbursed Balances of Appropriations to Special Accounts	Balance at March 31			Increase or decrease (-)
	1965 (estimated)	1964		
89.0	84.5	4.59.6	17.6	-8.0(i)	6.4	-6.47.0	3.0	4.00.1	0.1	
105.7	111.6		-5.9
<*>
Less than $50,000.
The balance of $10 million in the railway grade crossing fund at March 31, 1965 is $8 million less than at the previous fiscal year-end. The decrease is the result of disbursements of $13 million exceeding the amount of $5 million credited to the fund and charged to budgetary expenditure.
The balance in the national capital fund is less than $50 thousand compared with $6 million at the previous fiscal year-end. Disbursements of $11 million from the fund exceed credits of $5 million by the government.
The balance in the centennial of confederation fund was $7 million at March 31, 1965, an increase of $4 million over the balance at the previous fiscal year-end. During 1964-65 an amount of $4 million was credited to the fund and charged to budgetary expenditure. No disbursements were made from the fund during 1964-65.
Deferred credits
Recorded in these accounts are amounts due the government in respect of which payment is deferred. These are contra accounts to corresponding items under the asset categories: "loans to, and investments in, Crown corporations", "loans to national governments", and "other loans and investments". A net decrease of $9 million in these accounts during the fiscal year brought the balance at March 31, 1965 to $111 million.
Deferred interest in respect of The St. Lawrence Seaway Authority, which is a contra account to a corresponding item in "loans to, and investments in, Crown corporations", decreased by $25 million during the year bringing the balance at March 31, 1965 to $39 million. See the asset account for explanation of decrease.
[Stage Direction]
April 26, 1965
The Budget-Appendix
TABLE 51 (in millions of dollars)
	Balance at March 31		Increase
Deferred Credits	1965 (estimated)	1964	or decrease (-)Deferred interest- The St. Lawrence Seaway Authority	39.0	63.8	-24.8United Kingdom Financial Agreement Act, 1946	63.8	44.2	19.6Northern Canada Power Commission	2.0	1.6	0.4104-8	109.6	-4-8Balances receivable under agreements of sale of Crown assets.	3.0	4.7	-1.7Crown Assets Disposal Corporation-government equity	3.0	5.1	-2.1110.8	119.4	-8.6
Deferred interest in respect of the loan under the United Kingdom Financial Agreement Act, 1946, which is a contra account to a corresponding item in "loans to national governments", increased by $20 million during the year bringing the balance at March 31, 1965 to $64 million. See the asset account for explanation of increase.
Balances receivable under agreements of sale of Crown assets are contra accounts to corresponding items under the asset category "other loans and investments". During the year payments of $2 million leave an outstanding balance of $3 million at March 31, 1965. There were no new agreements of sale during the year.
The government equity in the agency account of Crown assets disposal corporation is a contra account to a corresponding asset account under "other loans and investments". The balance in the account at March 31, 1965 was $3 million, a decrease of $2 million from the total at the previous fiscal year-end.
Suspense accounts
These consist of balances where some uncertainty as to disposition exists.
A net increase of $1 million during 1964-65 brought the outstanding balances to $6 million at March 31, 1965.
The replacement of materiel account, which was established by section 11 of the National Defence Act, is credited with amounts realized from the sale of materiel that has not been declared surplus to requirements but has been authorized by the Governor in Council to be sold to other countries. The account is debited with disbursements representing amounts paid for procurement of replacement materiel. During 1964-65 credits to and disbursements from the account were approximately $500 thousand each resulting in the balance of $1 million remaining approximately the same as at March 31, 1964.
TABLE 52 (in millions of dollars)
Suspense Accounts	Balance at March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Replacement of materiel, sec. 11, National Defence Act	1.0	1.0	Unclaimed cheques	1.0	1.3	-0.34.0	2.8	1.26.0	5.1	0.9
April 26, 1965
[Stage Direction]
The Budget-Appendix
Unmatured debt
Unmatured debt at March 31, 1965 totalled $18,983 million, $243 million more than at the end of the previous fiscal year. Obligations payable in Canada were $18,607 million and those payable in New York were $376 million. At March 31, 1964 unmatured debt consisted of $18,364 million payable in Canada and $376 million payable in New York.
TABLE 53 (in millions of dollars)
Unmatured Debt	Balance at March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Payable in Canada- Marketable bonds		10,866.3 5.557.0 43.0 16,466. S 2.140.0	11,041.4 5,092.3 16,1SS.7 2,230.0	-175.1 464.7 43.0 SS2.6 -90.0
Non-marketable bonds- Canada savings bonds				
Unemployment Insurance Commission				
Treasury bills				
Payable in New York<*				
	18,606.3 (2)376.4	18,363.7 «>376.4	242.6
			
	18,982.7	18,740.1	242.6
<*>
Marketable bonds.
(,) Converted at the official parity rate of $1 U.S.=$1.08108 Canadian.
Details of the various loan issues, maturities, redemptions and cancellations resulting in the net increase are described more fully in the section "The Public Debt".

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


[Stage Direction]
[DOT]961	1962	1963	1964	1965*	1965*
* Estimated
I. As shown on tabU "Summary of assets and liabilities". This chart does not reflect the reserve far losses on realisation of assets.

[Stage Direction]
April 26, 1965
The Budget-Appendix
Asset Accounts
Current assets
These accounts consist of working capital advances and revolving funds, the security investment account and various cash accounts.
Total current assets at $1,295 million reflect an increase of $8 million during 1964-65. The main changes are a new account of $219 million in investments in special United States of America securities-Columbia River Treaty and decreases of $151 million in cash in current and special deposits, $38 million in the agricultural commodities stabilization account and $40 million in the securities investment account.
TABLE 54 (in millions of dollars)
	Balance at March 31		Increase
Current Assets	1965 (estimated)	1964	or decrease (-)Cash in current and special deposits^1)	678.0	829.0	-151.0Cash in hands of collectors and in transit	169.0	155.6	13.4Departmental working capital advances and revolving funds- . ... Agricultural commodities stabilization account	26.0	64.0	-38.0Defence production revolving fund	29.2	27.8	1.4Royal Canadian Mint	20.0	29.4	-9.4Miscellaneous departmental imprest and advance ac-	17.0	counts	17.0	10.8Stockpiling of uranium concentrates	24.3	13.5	Other	17.0	17.1	-0.1188.6	168.8	-86.8Securities investment account	59.9	99.9	-40.0Investments in special United States of America securities-	219.4Columbia River Treaty	219.4	Moneys received after March 31 but applicable to the current	17.0	year	17.0	1.0Post Office-cash on hand and in transit	17.5	16.5	Bank of Canada settlement account re outstanding treasury	0.3	cheques	0.3	1,294.6	1,287.1	7.5
(D Receiver General year-end balances in London, New York, Paris and Bonn are at the Canadian dollar equivalent of exchange rates at March 31, 1964 and March 31, 1965.
The agricultural commodities stabilization account records the operations of the Agricultural Stabilization Board. The board's operations resulted in a net decrease of $38 million during 1964-65 bringing the balance at March 31, 1965 to $26 million.
The balances of $20 million in the Royal Canadian Mint bullion and coinage accounts at March 31,1965 are $9 million less than at the previous fiscal year-end.
The stockpiling of uranium concentrates account records the acquisition of uranium concentrates in accordance with contracts entered into with the approval of the Governor in Council by the Eldorado Mining and Refining Limited on behalf of Her Majesty in the right of Canada with certain mining companies. During 1964-65 this account increased by $11 million to a balance of $24 million at March 31, 1965.
"Investments in special United States of America securities-Columbia River Treaty" is a new account which records special securities issued by the Government of the United States of America in connection with the terms of
April 26, 1965
[Stage Direction]
The Budget-Appendix
the Treaty between the Governments of the United States and Canada and the agreement between the Governments of Canada and the Province of British Columbia. The balance in the account at March 31, 1965 was $219 million.
The securities investment account decreased $40 million during 1964-65 to a balance of $60 million at March 31, 1965.
Advances to the exchange fund account
Advances during the year to the exchange fund account to finance the purchase of gold and foreign exchange amounted to $699 million and repayments to $679 million, an increase of $20 million resulting in a balance of $2,621 million at March 31, 1965.
During 1963-64 advances were $840 million, repayments were $975 million bringing outstanding advances at March 31, 1964 to $2,601 million.
Sinking fund and other investments held for retirement of unmatured debt
Holdings in this account totalled $6 million at March 31, 1965 compared with a nil balance at the end of the previous fiscal year. These consist of $4 million of the 2f per cent loan due September 1, 1974 and $2 million of the 2f per cent loan due September 15, 1975, both issued in New York.
Loans to, and investments in, Crown corporations
Loans and investments in this category amounted to $5,008 million, an increase of $423 million over the total at March 31, 1964.
TABLE 55 (in millions of dollars)
	Balance at March 31		Increase
Loans to, and Investments in, Crown Corporations	1965 (estimated)	1964	or decrease (-)Atomic Energy of Canada Limited	66.6	53.6	13.0Bank of Canada	5.9	5.9	Canadian Arsenals Limited	7.5	7.5	Canadian Broadcasting Corporation	3.0	3.0	Canadian Commercial Corporation	5.5	5.5	Canadian National Railways	1,430.6	1,405.9	24.7Air Canada	3.6	5.0	-1.41,434.2	1,410.9	2S.SCanadian Overseas Telecommunication Corporation	56.3	55.5	0.8Central Mortgage and Housing Corporation	2,137.1	1,916.1	221.0Eldorado Mining and Refining Limited	8.2	8.2	Export Credits Insurance Corporation	92.2	58.4	33.8Farm Credit Corporation	441.3	338.9	102.4National Capital Commission	30.1	21.9	8.2National Harbours Board	200.7	198.1	2.6Northern Canada Power Commission	28.8	22.4	6.4Polymer Corporation Limited	30.0	30.0	The St. Lawrence Seaway Authority-	Loans	370.4	352.0	18.4Deferred interest	39.0	63.8	-24.8Recovery likely to require parliamentary appropriations-	409.4	415.8	- 6.4Canadian Broadcasting Corporation	14.2	14.2National Capital Commission-Greenbelt	34.5	31.1	3.448.7	Sl.l	17.6Other Crown Corporations	2.0	1.4	0.65,007.5	4,584.2	423.3
April 26, 1965
The Budget-Appendix
Canadian National Railways (including Air Canada)
Outstanding advances to the Canadian National Railways at March 31, 1965 of $1,434 million were $23 million more than the total of $1,411 million at the previous fiscal year-end.
TABLE 56 (in millions of dollars)
Advances to the Canadian National Railways	Balance at March 31	Increase1965 (estimated)	1964	or decrease (-)Capital Revision Act, 1952-	1,020.2	995.5	24.7'100.0	100.0	27.0	27.0	28.4	28.4	238.0	238.0	17.0	17.0	3.6	5.0	-1.4
1,434.2	1,410.9	23.3
During the 1964-65 fiscal year the government made available to the company $68 million and received repayments of $45 million. In 1963-64 comparable amounts were $73 million and $101 million respectively.
TABLE 57 (in millions of dollars)
Advances to, and Repayments by, the Canadian National Railways	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Advances- For interim financing of income deficits- Canadian National Railways	38.7	43.0	-4.3Air Canada	4.6	5.0	-0.4Total advances	43.3	48.0	-4.7Purchase of 4 per cent preferred stock (C.N.R. Capital	Revision Act, 1952)	24.7	24.8	-0.168.0	72.8	-4.8Repayments-	Advances for capital and refunding purposes	-53.7	53.7Advances for interim financing of income deficits- Canadian National Railways	-38.7	-43.0	4.3Air Canada	-6.0	-4.5	-1.5-U-7	-101.2	fifi.fiNet increase or decrease (-) during the fiscal year	23.3	-28.4	51.7
To assist the company to finance further capital expenditure during the year, the government purchased $25 million of the 4 per cent preferred stock of the company. This stock is issued under the authority of the Canadian National Railways Capital Revision Act, 1952, in an amount equal to 3 per cent of the gross revenue of the company.
The government also provided the company with temporary loans of $39 million in respect of its 1964 income deficit which were repaid when the company's income deficit was charged to 1964-65 budgetary expenditure.﻿April 26, 1965
[Stage Direction]
The Budget-Appendix
At March 31, 1964 temporary loans of $5 million were outstanding to Air Canada in respect of its 1964 operations. An additional $1 million was advanced during the year for its 1964 operations. These have been repaid by the company during 1964-65. However, additional loans of $4 million have been made during 1964-65 in respect of the company's 1965 operations.
Central Mortgage and Housing Corporation
The balance of $2,137 million in this account at March 31, 1965 is $221 million higher than at March 31, 1964, and comprises the Crown's investment of $25 million in the capital of the corporation and $2,112 million in loans and advances.
Loans and advances to the corporation were $321 million in 1964-65 and repayments were $100 million. In 1963-64 advances were $199 million and repayments were $86 million.
Advances comprise $245 million for direct lending and limited dividend housing, $22 million for federal-provincial projects for housing, $32 million in respect of municipal sewage treatment and $22 million for university housing.
Repayments comprise $100 million of which $82 million was for direct lending and limited dividend housing, $14 million for housing and $4 million in respect of acquisition or construction of real estate.
TABLE 58 (in millions of dollars)
Advances to, and Repayments by, Central Mortgage and Housing Corporation	Fiscal year ended March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Advances-	244.7	120.0	124.721.7	9.4	12.332.6	48.0	-15.422.0	22.0	321.0	199.4	121.6Repayments-	-82.0	-68.1	-13.9-13.8	-3.7	-10.1-0.3	-11.7	11.4-0.2	-0.1	-0.1-3.7	-2.5	-1.2-100.0	-86.1	-13.9221.0	113.3	107.7
Canadian Broadcasting Corporation
There was no change in the advance for working capital during 1964-65, the balance remaining at $3 million at March 31, 1965.
However, during the year advances to the corporation for the purpose of capital expenditures totalled $14 million. Recovery of these advances is likely to require parliamentary appropriations in subsequent fiscal years.
[Stage Direction]
April 26, 1965
The Budget-Appendix Export Credits Insurance Corporation
The balance of $92 million in this account at March 31, 1965, consisting of $5 million in capital stock, $5 million in working capital and $82 million in loans under section 21a of the Export Credits Insurance Act, reflects an increase of $34 million over the previous fiscal year-end.
Farm Credit Corporation
The government provides loans to the corporation which makes loans on farm property. The balance of $441 million in the account at March 31, 1965 consists of the Crown's investment of $17 million in the capital of the corporation and $424 million in loans and advances. At March 31, 1964 the balance was $339 million consisting of capital investment of $13 million and loans and advances of $326 million.
The 1964-65 transactions in the account consisted of additional subscriptions by the government of $4 million to the capital of the corporation, loans and advances of $111 million and repayments by the corporation of $13 million.
The St. Lawrence Seaway Authority
Outstanding loans in this account amounted to $370 million at March 31, 1965, an increase of $18 million over the previous year-end balance of $352 million. No repayments were received in 1964-65.
Deferred interest decreased to $39 million at March 31, 1965 due to a payment of $43 million offset in part by a charge to the account of $18 million in respect of the deferment of interest due on December 31, 1964.
The large repayment of deferred interest was made possible by a payment of $27 million by the Minister of Finance to the authority in respect of the accumulated deficit of the Welland Canal for the calendar years 1959 to 1964 which was charged to Department of Transport expenditures in 1964-65 and a loan of $13 million, subject to such terms and conditions as the Governor in Council may approve.
National Capital Commission
Loans to acquire property in the "Greenbelt" area increased by $3 million during the year bringing the balance to $35 million at March 31, 1965. Recovery of these loans is likely to require parliamentary appropriations in subsequent fiscal years.
Loans to acquire property excluding the "Greenbelt" area increased by $8 million to $30 million at March 31, 1965.
Other Crown Corporations
Loans to Atomic Energy of Canada Limited increased by $13 million during 1964-65, loans to the Canadian Overseas Telecommunication Corporation by $1 million, loans to the National Harbours Board by $3 million and loans to the Northern Canada Power Commission by $6 million.
Loans to national governments
A net increase of $11 million in this category during 1964-65 brought total balances to $1,207 million at March 31, 1965 from $1,196 million at the previous fiscal year-end.
The Government of the United Kingdom deferred the payment of principal and interest due December 31, 1964 on the $1,185 million loan made under the $1,250 million credit authorized by the United Kingdom Financial Agreement Act, 1946, the principal outstanding at the close of the year remaining at $995 million and deferred interest increasing by $20 million to $64 million. The
April 26, 1965
[Stage Direction]
The Budget-Appendix
deferment of principal and interest was by an agreement between the Government of Canada and the Government of the United Kingdom that was approved by a 1957 Act to amend the United Kingdom Financial Agreement Act, 1946. The agreement which became effective April 29, 1957, permits the United Kingdom in lieu of any right of waiver hitherto existing to defer after December 31, 1956, seven instalments of principal and interest under certain conditions. Interest at 2 per cent is payable on deferred instalments of both principal and interest.
Advances under Part II of the Export Credits Insurance Act to Belgium, France and The Netherlands to assist them in the purchasing of goods in Canada were reduced by a repayment of $2 million during the fiscal year, bringing the balance at March 31, 1965 to $127 million. The decrease of $2 million was the regular annual repayment by the Government of Belgium. There were no repayments by the Governments of France and The Netherlands as each of these countries had made advance payments in 1962-63 covering instalments up to and including the 1969 instalment.
Special loans from Canada to Colombo plan countries to finance the purchase of wheat and flour amounted to $12 million at March 31, 1965, a reduction of $5 million from the previous fiscal year.
Loans to India for the purchase in Canada of aircraft and associated spare parts, amounting to $9 million at March 31, 1965, were reduced by a payment of $1 million during the fiscal year.
TABLE 59 (in millions of dollars)
Loans to National Governments	Balance at March 31		Increase or decrease (-)
	1965 (estimated)	1964	
Loans to United Kingdom- The United Kingdom Financial Agreement Act, 1946...	995.1	995.1	Deferred interest	63.8	44.2	19.61,038.9	1,039.S	19.6Loans under the Export Credits Insurance Act, Part II- Belgium	27.7	30.0	-2.3France	67.0	67.0	The Netherlands	32.1	32.1	126.8	129.1	-2.3Special loans to Colombo plan countries to finance the purchase of wheat and flour from Canada- Ceylon	
India	0.8	1.1	-0.310.7	15.4	-4.711.6	16.5	-6.0Miscellaneous loans and advances- India-loan for purchase in Canada of aircraft and associated spare parts	9.0	10.0	-1.0France-interim credit-consolidated interest	0.7	0.7	Other	0.1	0.1	9.8	10.8	-1.01,207.0	1,195.7	11.3
Other loans and investments
Balances in these accounts totalled $1,160 million at March 31, 1965, a decrease of $38 million from the previous fiscal year.
Canada's subscriptions to the capital of international organizations are $8 million higher due to additional subscriptions of $8 million to the international development association. Working capital advances and loans to international organizations are approximately the same as at the previous fiscal year-end.
[Stage Direction]
April 26, 1965
The Budget-Appendix
Loans to provincial governments were reduced by $5 million to $109 million at March 31, 1965. The main items making up the reduction are: a decrease of $10 million in the provincial tax collection agreements account (at March 31, 1965, this account reflects a credit balance of $42 million which is recorded in the liability category "deposit and trust accounts"); a decrease to $13 million in
TABLE 60 (in millions of dollars)
Balance at March 31
Increase
Other Loans and Investments
Subscriptions to capital of, and working capital advances and loans to, international organizations-
Canada's subscriptions to capital of-
International bank for reconstruction and development	
International development association	
International finance corporation	
International monetary fund	
Working capital advances and loans to international organizations	
(estimated)
or
decrease (-)
80.5
40.7
3.5
577.3
80.5
32.8
3.5
577.3
7.9
8.0
710.0
8.0
702.1
7.9
Loans to provincial governments-
Alberta	[DOT]__
British Columbia	
Manitoba	
New Brunswick	
Newfoundland	
Nova Scotia	
Saskatchewan	
Provincial tax collection agreements account
6.3
12.5
11.0
39.2
0.5
11.4
28.1
109.0
6.8
15.5
11.6
34.4 0.5 7.2
27.2
10.4 US. 6
-0.5
-3.0
-0.6
4.8
4.2
0.9
-10.4
-4.fi
Veterans land act advances	
Less reserve for conditional benefits-Veterans Land Act, 1942	
255.5
-24.3
2S1.2
243.3
-26.3
217.0
12.2
2.0
14.2
Municipal development and loan board advances	
Less reserve for forgiveness of indebtedness	
Miscellaneous-
Assisted passage scheme (section 69, Immigration Act,
R.S. 1952)	
Balances receivable under agreements of sale of Crown
assets	
City of Montreal-
Atwater tunnel	
St. Remi tunnel	
City of Whitehorse	
Construction of dock and rail facilities for Steep Rock
Iron Mines Limited	
Crown Assets Disposal Corporation-
Government equity in agency account	
Dominion Coal Company Limited	
Hamilton Harbour Commissioners	
Housing projects for Canadian forces	
Municipal Improvements Assistance Act, 1938	
New Westminster Harbour Commission	
Northwest Territories	
Old age security fund-temporary loans	
Town of Oromocto Development Corporation	
Yukon Territory	
Recovery likely to require parliamentary appropriations-Town of Oromocto, New Brunswick	
Other	
9.3
-1.8
7.6
4.0
4.0
2.0 1.0
2.0
1.0
3.0
4.5
2.0
19.5
1.0
1.0
4.0 36.0
1.0
4.9
4.0
7.5 102.4
1,160.1
2.7
6.0
1.9
1.1
2.0
1.3
5.2
5.0
1.5 17.9
1.1
1.5
3.2
100.0
1.2
4.2
3.7
5.6 165.1
1,197.8
9.3
-1.8
7.5
1.3
-2.0
0.1
-0.1
-0.3
-2.2
-0.5
0.5
1.6
-0.1
-0.5
0.8
-64.0
-0.2
0.7
0.3
1.9
-62.7
-37.7
April 26, 1965
[Stage Direction]
The Budget-Appendix
loans to British Columbia due to a repayment of $3 million by the province; an increase to 139 million in loans to New Brunswick due to new loans during the year of $9 million partly offset by repayments by the province amounting to $4 million; and an increase in loans to Nova Scotia to $11 million due to new loans during the year of $4 million.
Advances are made by the government under the Veterans Land Act for the acquisition, by the Director, of properties, buildings, materials, live stock, farm equipment and commercial fishing equipment for purposes of the act, for sale to qualified veterans of world war 2 and Korea under sales agreements which carry specified conditional benefits if the terms of such agreements are adhered to by the veteran. Advances during 1964-65 of $38 million and repayments of $26 million brought outstanding advances at March 31, 1965 to $255 million. This is partially offset by a reserve for conditional benefits amounting to $24 million, resulting in a balance in this account of $231 million at the year-end.
Under the Municipal Development and Loan Act, assented to on August 2, 1963, advances are made to the Municipal Development and Loan Board to provide financial assistance by way of loans to municipalities to augment or accelerate municipal capital works programs. Where the municipal project in respect of which a loan is made is completed on or before March 31, 1966, the board shall forgive payment by the municipality of 25 per cent of the principal amount of the loan. If a project is not completed as at March 31, 1966, the board shall forgive 25 per cent of that portion of the loan that has been advanced to the municipality as of March 31, 1966. At March 31, 1965 advances totalled $9 million. These loans are partly offset by a reserve of $2 million for forgiveness of indebtedness.
Miscellaneous loans and investments in the amount of $102 million reflect a net decrease of $63 million from the March 31, 1964 total. The decrease is due mainly to a reduction of $64 million in temporary loans by the Minister of Finance to cover the deficit in the old age security fund. A payment of $500 thousand due by the Dominion Coal Company Limited on December 31, 1964 has not been paid and discussions concerning it are proceeding with the company.
Securities held in trust
Recorded herein are the security holdings of various deposit and trust accounts and annuity, insurance and pension accounts. Bonds and certified cheques held in connection with contractors' securities included in the deposit and trust category are also recorded under this heading. The balance at March 31, 1965 was $39 million, approximately the same as at the previous fiscal year-end.
Deferred charges
The balance of $215 million in this category at March 31, 1965 was $186 million less than at March 31, 1964, reflecting a net decrease of $174 million in the unamortized portions of actuarial deficiencies in the superannuation accounts and a decrease of $12 million in unamortized loan flotation costs.
Unamortized portions of actuarial deficiencies
These accounts record the unamortized portions of the actuarial deficiencies in the public service, the Canadian forces and the Royal Canadian Mounted Police superannuation accounts which are set up as deferred charges.
During 1964-65 the unamortized portion of the actuarial deficiency in the public service superannuation account was increased by $119 million as a result of an actuarial evaluation as at December 31, 1962 as calculated by the Department of Insurance and $50 million as a result of salary revisions made in 1963-64 and 1964-65. However, upon parliamentary approval the unamortized portion
[Stage Direction]
April 26. 1965
The Budget-Appendix
at March 31, 1964 of $277 million plus the actuarial evaluation of $119 million will be charged to net debt and $10 million, representing one fifth of the $50 million in respect of salary increases, will be charged to budgetary expenditure. These transactions resulted in a net decrease of $237 million bringing the balance to $40 million at March 31, 1965.
During 1964-65 the unamortized portion of the actuarial deficiency in the Canadian forces superannuation account was increased by $75 million as a result of salary revisions, of which one fifth or $15 million will be charged to budgetary expenditure upon parliamentary approval, leaving a balance of $60 million in the account at March 31, 1965.
During 1964-65 the unamortized portion of the actuarial deficiency in the Royal Canadian Mounted Police superannuation account was increased by $3| million as a result of salary revisions, of which one fifth or $700 thousand will be charged to budgetary expenditure upon parliamentary approval, leaving a balance of $3 million at March 31, 1965.
Unamortized loan flotation costs
This account records the residual balances of discounts, commissions, redemption bonuses and conversion premiums on loan flotations that have not been charged to budgetary expenditure. The balance at March 31, 1965 of $112 million is $12 million less than the previous year-end balance.
TABLE 61 (in millions of dollars)
	Fiscal year ended March 31	
Unamortized Loan Flotation Costs	1965 (estimated)	1964Balance of account at beginning of fiscal year	123.7	131.6New flotation costs to be amortized-	Z\% loan May 1, 1964-July 1, 1965	3.9	5% loan May 1, 1964-July 1, 1969	0.3	5i% loan May 1, 1964-May 1, 1990	2.3	31% loan Oct. 1, 1964-Dec. 1, 1965	3.6	3|% loan Oct. 1. 1964-Oct. 1, 1967	2.1	5% loan Dec. 1, 1964-June 1, 1971	0.6	3£% loan Feb. 1, 1965-May 1, 1966	1.6	5% loan Feb. 1, 1965-Oct. 1, 1973	
Adjust ment8(1)	0.5	0.3	3.2Treasury bills discount	13.2	13.8Canada savings bonds-adjustment of previous issues	1.4	1.0Canada savings bonds-new issue	10.0	9.63J% loan June 1, 1963-July 1, 1964	1.25% loan June 1, 1963-June 1, 1988	1.83}% loan Oct. 1, 1963-Oct. 1, 1964	2.04J% loan Oct. 1. 1963-Apr. 1, 1965	0.75% loan Oct. 1, 1963-Oct. 1, 1968	0.131% loan Dec. 15, 1963-Dec. 15, 1964	2.14|% loan Dec. 15, 1963-Dec. 15, 1966	0.331% lo*n Feb. 1, 1964-Feb. 1, 1965	0.63*% loan Feb. 1, 1964-Feb. 1. 1966	2.241% loan Feb. 1, 1964-Jan. 15, 1968	2.45% loan Feb. 1, 1964-June 1, 1988	2.389.8	43.8Less- Amortization applicable to fiscal year- Canada savings bonds and general loans	-37.0	-36.3Discount on treasury bills charged to interest on public debt...	-13.8	-14.9-50.8	-51.8Increase or decrease (-) during the year	-11.6	-7.9Balance of account at end of fiscal year	112.1	123.7
<* Adjustments due to cancellations, exchanges, conversions and additional issues of existing loans.
April 26, 1965
[Stage Direction]
The Budget-Appendix
Cost of new loans issued during 1964-65 and charged to the account amounted to $39 million, of which $13 million is in respect of treasury bills discounts which will be charged to interest on public debt in 1965-66. Credits to the account were $51 million of which $37 million was a charge to the budgetary item "annual amortization costs" and $14 million (representing discount applicable to 1964-65 on treasury bills sold in 1963-64) was a charge to the budgetary item "interest on public debt".
Suspense accounts
The only item in this category was the cheque adjustment suspense account which reflected unadjusted balances resulting from the reconciliation of payments for redemption of paid cheques with the amount of those cheques as subsequently determined in adjustment of the outstanding cheque account. The balance of $200 thousand will be charged to net debt in 1964-65 upon parliamentary approval.
Capital assets
Assets of the government such as land, buildings, works and equipment, etc., that are charged to budgetary expenditure at the time of acquisition or construction, are included in this category and are shown on the statement of assets and liabilities at a nominal value of $1.
Inactive loans and investments
Loans and investments which are not currently revenue-producing or realizable are recorded herein. Included are the loan of $49 million to China under the Export Credits Insurance Act, loans of $24 million and $7 million made to Roumania and Greece in 1919-20 and 1920-21 respectively and advances of $15 million in respect of the implementation of guarantees (Ming Sung Industrial Company Limited).
Reserve for losses on realization of assets
There was no change in this reserve during the year, the balance at March 31, 1965 being $546 million, unchanged from the end of the previous fiscal year.
Net Debt
The net debt of Canada, or the excess of liabilities over net recorded assets, amounted to $15,549 million at March 31, 1965, $479 million higher than at March 31, 1964. The increase reflects the estimated 1964-65 budgetary deficit of $83 million plus a charge to net debt, upon parliamentary approval, of $277 million in respect of the unamortized portion of the actuarial deficiency in the public service superannuation account and $119 million resulting from an actuarial evaluation of the account as at December 31, 1962 as calculated by the Department of Insurance.

[Stage Direction]
The government's cash account represents balances of current and special deposits to the credit of the Receiver General of Canada in the Bank of Canada, chartered banks in Canada and certain banks in London, Paris and Bonn. These balances totalled $678 million at March 31, 1965 compared with $829 million at March 31, 1964 a decrease of $151 million.
The cash position of the government is affected not only by budgetary transactions but also by changes in the government's unmatured debt and other non-budgetary transactions. Non-budgetary transactions are those which affect the government's asset and liability accounts and must be taken into account when considering the full scope of the government's financial operations and their effect on the economy of the country.
606
[Stage Direction]
April 26, 1965
The Budget-Appendix
On the assets side, the non-budgetary transactions consist, for the most part, of loans and advances to, and repayments by, Crown corporations and other government agencies and funds (including the old age security fund), national, provincial and municipal governments, international organizations, veterans and other borrowers. On the liability side they relate mainly to receipts and payments in connection with the many deposit and trust accounts, and annuity, insurance and pension accounts held or administered by the government.
The following statement summarizes both the budgetary and non-budgetary transactions for 1964-65 and indicates their effect on the government's cash position. For purposes of comparison the corresponding figures for 1963-64 are also shown.
TABLE 62 (in millions of dollars)
Changes in Cash Position	Fiscal year ended March 31	
	1965 (estimated)	1964
Budgetary transactions-		
Revenue		7,136.0	6,253.2 -6,872.4 -610.2
Expenditure		-7 j 219.0 -83.0	
Deficit			
Non-budgetary transactions (excluding unmatured debt transactions)- Receipts and credits (net)-		
Repayments of loans, investments and advances	114.6	112.5Annuity, insurance and pension accounts	553.0	3S4.0187.8	165.2865. i	661.7Disbursements and charges (net)-	Loans, investments and advances	-726.0	-89.7-474.0	-235.3-i.too.o	-S25.0Net amount received from, or required for (-), non-budgetary	transactions	-344.6	336.7Overall cash requirement (-) to be financed by increase in un-	matured debt or decrease in cash balances	-427.6	-282.5Net increase in unmatured debt outstanding in hands of the public- TJnmatured debt-	Canada savings bonds	464.7	510.2Market issues	-175.1	214.6Treasury bills	-90.0	65.0Special issues to the Unemployment Insurance Commission...	43 0	-11.5242. e	778.SSecurities investment account	40.0	-66.4Sinking fund and other investments	-6.0	22.3276.6	734.2Net increase or decrease (-) in Receiver General bank balances...	-151.0	451.7
In 1964-65 a deficit of $83 million and net requirements of $345 million for non-budgetary transactions (excluding unmatured debt transactions) resulted in an overall net requirement of $428 million. As outstanding unmatured debt increased by $277 million there was a reduction of $151 million in Receiver General bank balances. In 1963-64 a budgetary deficit of $619
April 26, 1965
[Stage Direction]
The Budget-Appendix
million and non-budgetary net receipts of $337 million (excluding unmatured debt transactions) resulted in a net cash requirement of $282 million and as outstanding unmatured debt increased by $734 million, Receiver General bank balances increased by $452 million.
Non-budgetary receipts and credits (excluding unmatured debt transactions) As shown in the previous table, non-budgetary receipts and credits totalled $855 million in 1964-65. Further details are presented in the following table:
TABLE 63 (in millions of dollars)
Fiscal year ended March 31
Non-budgetary Receipts and Credits (Net)
(estimated)
Repayments of loans, investments and advances- Agricultural commodities stabilization account. Northern Ontario Pipe Line Crown Corporation
The St. Lawrence Seaway Authority	
Old age security fund	
Other	
38.0
6.4
64.0
6.2
114.6
75.0
110.6
-24.9
-58.3
10.1
118.5
Annuity, insurance and pension accounts- Public service superannuation account.. Canadian forces superannuation account Other	
304.3
218.0
30.7
55S.0
132.3
215.7
36.0
[Stage Direction]
Other receipts and credits-
Outstanding treasury cheques	
Accounts payable	
Provincial tax collection agreements account
Unamortized loan flotation costs	
Interest due and outstanding	
Interest accrued	
20.2
72.5 52.4
11.6 12.1 19.0
187.8
855.4
53.3
75.3 -2.7
7.9
12.4 19.0
165.8
661.7
608	COMMONS DEBATES	April 26, 1965
The Budget-Appendix
Non-budgetary disbursements and charges (excluding unmatured debt
transactions)
As already indicated, non-budgetary disbursements and charges were $1,200 million in 1964-65. Further details are presented in the following table:

[Stage Direction]
(in millions of dollars)
Non-Budgetary Disbursements and Charges (Net)	Fiscal year ended March 31	
	1965 (estimated)	1964
Loans, investments and advances-	13.0	0.4
	14.2	
	23.3	-28.4
	0.8	6.2
	221.0	113.3
	33.8	23 4
	102.4	69.9
	11.6	12.1
	2.6	5.5
	6.4	3.4
	219.4	
	20.0	-135.0
	11.3	-15.1
	10 8	13.5
	7.9	
	5.8	-0.5
	14.2	21.0
	7.5	
Other disbursements and charges-	7 26 0 219.1	89.7 170.3
	13.4	21.5
Unamortized portions of actuarial deficiencies-	159.3	
	60.0	
	2.9	
	19.3	43.5
	474.0	m.s
	1,200.0	325.0

[Stage Direction]
Gross and net debt
The gross debt of Canada was $26,648 million at March 31, 1965. Unmatured debt, including treasury bills, in the amount of $18,983 million accounts for approximately 71 per cent of the total. The remaining liabilities, consisting of current and demand liabilities, deposit and trust accounts, annuity, insurance and pension accounts, undisbursed balances of appropriations to special accounts, deferred credits and sundry suspense accounts, amount to $7,665 million or approximately 29 per cent of the total debt.
The net debt of Canada in the amount of $15,549 million at March 31, 1965 was $479 million more than the net debt at March 31, 1964. Total liabilities of $26,648 million are $724 million higher and net recorded assets of $11,099 million are $245 million higher than the March 31, 1964 totals.
April 26, 1965
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Statement of Public Debt, Unmatubed Debt, Net Recorded Assets and Net Debt
of Canada
(in m i 11 i on 3 of dollars)
Gross Public Debt	Less net recorded assets	Net debt	Increase in net debt during fiscal yearAs at March 31	Un matured debt	Other liabilities	Total	1961	16,067.9	5,534.9	21,602.8	9,165.7	12,437.1	347.91962	16,945.7	5,962.1	22,907.8	9,679.7	13,228.1	791.01963	17,961.8 18,740.1	6,837.4	24,799.2	10,879.5	13,919.7	691.61964	7,183.6 7,665.2	25,923.7	10,853.6	15,070.1	1,150.418,982.7	26,647.9	11,098.4	15,549.5	479.4
Unmatured debt
The total unmatured debt of Canada at March 31, 1965 was $18,983 million, reflecting an increase of $243 million over the previous fiscal year-end balance of $18,740'million.
The government's holdings of its own securities totalled $65 million at March 31, 1965, comprising $59 million in the securities investment account (of which $31 million is in respect of the employees instalment purchase plan) and $6 million in the sinking fund and other investments account. This is a decrease of $14 million from the previous year-end figure when holdings were $99 million in the securities investment account (of which $31 million was in respect of the employees instalment purchase plan).
Of the total unmatured debt, $18,607 million or approximately 98 per cent is payable in Canada and $376 million in New York. Securities payable in New York have been valued at the official parity rate of $1 U.S. = $1.08108 Canadian.

[Stage Direction]
Billions of Dollars

[Stage Direction]
Billions of Dollars
[Stage Direction]
April 26. 1965
The Budget-Appendix

[Stage Direction]
(in millions of dollars)
Unmatured Debt Transactions	Fiscal year ended March 31	
	1965 (estimated)	1964
Balance at beginning of year	 New issues-	18,740	17,962
For cash-		
Canada savings bonds series 17			103
Canada savings bonds series 18		103	1,097
Canada savings bonds series 19 (net)		1,012	
Marketable bonds	1,975	1,725Non-marketable bonds (Unemployment Insurance Commission)	87	66Weekly treasury bills (net)	10	658,187	s.oseBy renewals and conversions-	Marketable bonds	250	266Total new issues	3,437	3,322Leas-	Matured marketable bonds	
Redeemed non-marketable bonds (Unemployment Insurance Com-	-1,850	-1,511mission)	-44	-77Conversions	-250	-266Canada savings bonds redeemed or matured	-650	-690One-year treasury bills	-100	-2,894	-2,6UUnmatured marketable bonds (purchased and cancelled)	-300	-3,194	-2,544Increase in unmatured debt	243	778Balance at end of year	18,983	18,740
Summary of security issues and maturities, redemptions, conversions and cancellations
During the year ended March 31, 1965 the government issued securities payable in Canada in the principal amount of S3,437 million (excluding the refunding of treasury bills which mature weekly).
Securities payable in Canada amounting to S3,194 million matured, were redeemed or cancelled during the year.
During 1964-65 net sales of Canada savings bonds series 19 were $1,012 million and additional sales of Canada savings bonds series 18 were $103 million. Redemptions prior to maturity of series 8 to 18 amounted to $650 million. The net increase for all series was $465 million and the amount outstanding for all series at March 31, 1965 was $5,557 million.
Treasury bills outstanding at March 31, 1965 in the amount of $2,140 million consisted of $1,360 million in three-month bills and $780 million in six-month bills.
April 26, 1965
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Debt Matured, Redeemed or Cancelled during the Fiscal Year Ended March 31,1965 (estimated)
-	Matured	Redeemed	Cancelled	Total$	$	$	$100,000,000 360.000.	000 175.000.	000 250.000.	000 185.000.	000 240.000.	000 225.000.	000 350.000.	000 65,000,000	100,000,000 360.000.	000 175.000.	000 250.000.	000 185.000.	000 240.000.	000 225.000.	000 350.000.	000 65.000.	000 550.000.	000 649,840,300 43.000.	000 1,500,0004% 1961-64	31% 1963-64	3i% 1961-64	3}% 1963-64	4%' 1961-64	3j% 1963-64	3j% 1962-65	3 Wo 1964-65	3j% 1958-65	<*>550,000,000	Canada savings bonds S.8-18	649,840,300 43,000,000 1,500,000	Unemployment Insurance Commission (non-marketable bonds)- 4*%	4j%	
1,950,000,000	694,340,300	550,000,000	3,194,340,300
<*>$300,000,000 purchased and subsequently cancelled; $250,000,000 exchanged for 1964-69 , 5% loan and subsequently cancelled.

[Stage Direction]
New Securities Issued During Year Ended March 31, 1965 (estimated)
-	Issue price	Yield at price to government	Total amount issued	Amount issued for cashMarketable bonds- Loan due July 1, 1965 34%	$ 98.90	per cent 4.47	$ 200,000,000	$ 200,000,000Loan due July 1, 1965 34%	99.25	4.27	200,000,000	200,000,000Loan due July 1, 1969 5%	99.75	5.05	<*>325,000,000	75,000,000Loan due May 1, 1990 5J%	98.63	5.35	75,000,000	75,000,000Loan due May 1, 1990 5J%	99.25	5.30	50,000.000	50,000,000Loan due Dec. 1, 1965 34%	98.85	4.52	200,000,000	200,000,000Loan due Dec. 1, 1965 3j%	99.20	4.33	125,000,000	125,000,000Loan due Oct. 1, 1967 3}%	97.25	4.74	75,000.000	75,000,000Loan due June 1, 1971 5%	100.00	5.00	350,000,000	350,000,000Loan due May 1, 1966 34%	99.20	4.16	175,000,000	175,000,000Loan due Oct 1, 1973 5%	100.00	5.00	275,000,000	275,000,000Loan due Dec. 15, 1966 44%	99.65	4.64	50,000,000	50,000,000Loan due Oct. 1, 1968 5%	100.00	5.00	125,000,000	125,000,000Non-marketable bonds- Unemployment Insurance Commission 4i%	100.00	4.50	43,000,000	43,000,000Unemployment Insurance Commission 4f%	100.00	4.62	44,500,000	44,500,000Canada savings bonds Nov. 1, 1963-Nov. 1, 1975 44-54% S.18	100.00	<'>5.03	102,463,150	102,463,150Canada savings bonds Nov. 1, 1964-Nov. 1, 1974 4*-5*% S.19 (net)	100.00	<«5.00	1,012,000,000	1,012,000,000Weekly treasury bills (net)	various	various	10,000,000	10,000,0003,436,963,150	3,186,963,150
<*>
$250,000,000 issued in exchange for 1958-65, 3J% loan. <*>
If held to maturity.
Interest rates
The average interest rate on the government's unmatured debt did not vary to any great extent in 1964-65. It was 4.32 per cent at March 31, 1965 compared with 4.22 per cent at the end of the previous fiscal year.
[Stage Direction]
April 26. 1965
The Budget-Appendix
The yield on three-month treasury bills at tender on March 25, 1964 was 3.88 per cent. On June 11, 1964 it had dropped to a low of 3.53 per cent and on November 26, 1964 it had risen to a high of 3.87 per cent and was 3.62 per cent on March 25, 1965.
The yield on six-month treasury bills at tender on March 25, 1964 was 4.04 per cent. On June 11, 1964 it had dropped to a low for the year of 3.69 per cent, on November 26, 1964 it had risen to a high of 4.06 per cent and was 3.73 per cent on March 25, 1965.
The following table shows the high and low yields together with the yield on the latest issue of three-month and six-month bills for the fiscal years 1960-61 to 1964-65 inclusive:

[Stage Direction]
Treasury Bill Yields at Tender
Fiscal year ended March 31	High	Low	Last issueper cent	per cent	per centThree-month bills-	1.68	3.211961 	3.95	1962 	3.34	2.26	3.121963 	5.51	3.04	3.621964 	3.90	3.19	3.881965 	3.87	3.53	«>3.62Six-month bills-	4.07	1.99	3.371961 	1962 	3.49	2.53	3.291963 	5.74	3.19	3.741964 , 	4.06	3.30	4.041965 	4.06	3.69	0)3.73
(*>
At tender on March 25, 1965.

[Stage Direction]
As At March 31
Indirect debt or contingent liabilities
In addition to the direct debt set out in the statement of assets and liabilities, the government has assumed certain indirect or contingent obligations. These consist of securities of the Canadian National Railways, guaranteed as to principal and interest, and a number of miscellaneous guarantees, the chief of which
April 26. 1965
[Stage Direction]
The Budget-Appendix
are the guarantee of insured loans made by chartered banks and other approved lending institutions under the National Housing Act, 1954, deposits maintained by the chartered banks in the Bank of Canada, bank advances to the Canadian Wheat Board, advances under the Export Credits Insurance Act and bank loans under the Farm Improvement Loans Act.
The government's liability under its guarantee of loans under the National Housing Act, 1954 was $4,200 million at December 31, 1964 compared with $4,499 million at December 31, 1963.

[Stage Direction]
Summary of Indirect Debt or Contingent Liabilities (estimated)
-	Amount of guarantee authorized	Amount outstandingRailway securities guaranteed as to principal and interests-	$ 35,000,000	$ 35,000,0002. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.	50,000,000	50,000,00072,300,000	72,300,00055,800,000	55,800,00070,000,000	70,000,00040,000,000	40,000,000190,561,500	190,561,500200,000,000	200,000,000Canadian National 2$% due June 15, 1975, U.S. $6,000,000	6,486,480 84,150,000	6,486,480 84,150,000300,000,000	300,000,00099.500,000 164,500,000	99,500,000164,500,000
1,368,297,980	1,368,297,980
Other outstanding guarantees and contingent liabilities- 14. Deposits maintained by the chartered banks in the Bank of rann.Hn.(« 	Unstated	875,834,21315.	Loans made by lenders under Part IV of the National Housing	25,000,000	15,863,47516.	Insured loans made by approved lenders under the National	6,000,000,000	4,200,000,00017.	Liability for insurance and guarantees and other commitments with respect to long-term financing under sections 21 and	1,000,000,000	466,656,83618.	Loans made by chartered banks under the Farm Improvement	86,400,000	70,900,00019.	Loans made by chartered banks under the Veterans' Business	15,000	15,00020.	Loans made by chartered banks and credit unions under the	2,700,000	200,00021.	Loans made by chartered banks under the Small Businesses	37,400,000	9,600,00022.	Loans made by chartered banks under the Canada Student	40,000,000	21,000,00023.	Loans made by chartered banks to the Canadian Wheat	416,000,000	49,800,000
5,709,869,524
24.	Loans maintained by approved lending institutions under	Unstated	Indeterminate25.	Guarantees to owners of returns from moderate rental housing	Unstated	Indeterminate
(*As at December 31, 1964.

As at February 10, 1965.	,	,	...
O)As reported (in accordance with Sec. 45, National Housing Regulations) by approved lenders at December 31, 1964.
<4>As at December 31, 1964. Includes contingent liability in respect of alternative payments to nonparticipating provinces.	...
O'Funds totalling $3,901,429 are held by Central Mortgage and Housing Corporation for the purpose of settling claims. In 1964 rental guarantee contracts totalled $14,629,600.
April 26, 1965	COMMONS DEBATES	615
The Budget-Appendix
SUPPLEMENTARY DETAILED TABLES Revenue Expenditure
Annual Changes in Loans and Investments Unmatured Debt
22620-40J
[Stage Direction]
April 26, 1965
The Budget-Appendix
STATEMENT OF REVENUE FOR THE LAST FIVE FISCAL YEARS (in millions of dollars)
-	1960-61	1961-62	1962-63	1963-64	1964-65 (estimated)$	$	$	$	$Tax Revenue Income tax-	Personal^)	1,711.2	1,792.7	1,744.6	1,865.1	2,108.0Corporation O)	1,276.6	1,202.0	1,182.8	1,259.0	1,510.0On dividends, interest, etc., going abroad....	88.2	112.3	129.2	124.5	144.03,078.0	3,107.0	3,056.6	3,248.6	3,762.0Excise taxes-	Sales tax<l><2 3>	720.6	759.7	806.0	946.1	1,193.0Other excise taxes-	Automobiles	59.6	25.3	(3)	(3)	(3)Cigarettes, tobacco and cigars	193.7	207.6	217.8	226.9	220.0Electric power export	1.6	1.0	0.5	0.1	(3)Jewellery, watches, ornaments, etc	5.9	5.6	5.8	6.4	6.6Matches and lighters	0.8	1.1	1.2	1.3	1.2Television sets, radios, tubes and phono-	graphs	15.9	18.4	19.9	22.0	23.5Toilet preparations	8.4	9.4	10.2	11.1	12.5Wines	3.2	3.3	3.7	3.8	4.1Sundry commodities	1.1	1.1	1.2	1.3	1.4Interest and penalties	0.8	0.7	0.5	0.8	1.0Less refunds	-0.3	-11.0	-0.4	-0.3	-0.3290.7	262.5	260.4	273.4	270.0Customs import duties	498.7	534.5	645.0	581.4	617.0Excise duties-	Spirits	108.5	114.1	122.1	129.4	135.0Beer	91.0	92.7	98.2	102.9	106.0Cigarettes, tobacco and cigars	149.6	160.5	166.5	165.7	171.0Licences	(3)	(3)	(3)	(3)	(3)Less refunds	-4.2	-4.5	-4.9	-4.7	-6.0SU-9	362.8	381.9	393.3	406.0Estate tax	<*>84.9	<'>84.6	<*>87.1	90.6	89.7Miscellaneous tax revenue	(3)	0.1	(3)	0.1	0.3Total tax revenue	5,015.8	5,111.2	5,237.0	5,533.5	6,338.0Non-Tax Revenue	Return on investments	283.8	307.5	311.9	366.4	414.0Post office-net postal revenue	173.6	183.7	192.8	200.7	234.0Other	144.5	127.2	137.0	152.6	150.0Total non-tax revenue	601.9	618.4	641.7	719.7	798.0Total revenue	5,617.7	5,729.6	5,878.7	6,253.2	7,136.0
<*>
Excluding tax credited to the old age security fund
[Stage Direction]
196(MS1	1961-62	1962-63	1963-64	(es'^r™d)Personal income tax	
229.4	259.0	273.7	302.6	432.0Corporation income tax	
103.5	100.1	115.2	115.7	143 0Sales tax	
270.2	284.9	302.2	331.8	378.0
(2) Net after deduction of refunds and drawbacks as well as transfers to the old age security fund. <3>
Less than $50,000.
<*>
Includes duties levied under the Dominion Succession Duty Act.
April 26, 1365
[Stage Direction]
The Budget-Appendix
STATEMENT OF EXPENDITURE BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS (in millions of dollars)
-	1960-61	1961-62	1962-63	1963-64	1964-65 (estimated)$	%	$	$	%Agriculture-	Administration and general	3.0	4.1	3.3	3.8	3.9Agricultural commodities stabilization	account-net operating loss	53.4	22.0	71.8	122.2	57.0Agricultural products board account-	net operating loss	4.9	0.9	1.0	0.3Board of Grain Commissioners	6.3	6.5	6.2	6.7	6.8Farm Credit Corporation-net opera-	ting loss	1.1	1.5Prairie farm emergency fund-deficit..	9.2	47.7	7.3	1.1	0.4Production and marketing	35.8	41.5	39.0	38.5	41.7Contributions to Alberta, Saskatch-	ewan and Manitoba-unharvested	crops	1.4	Payments to western grain producers	40.5	40.1	0.1	Rehabilitation and reclamation proj-	ects	18.7	25.1	27.8	23.7	27.5Research	26.2	26.8	27.0	27.6	28.9194. B	918.7	183.4	995.7	168.0Atlantic Development Board	(1)	0.2	4.4Atomic Energy	38.9	34.7	63.2	45.9	47.0Auditor General's Office	0.9	1.1	1.2	1.3	1.6Board of Broadcast Governors	0.3	0.3	0.4	0.3	0.4Canadian Broadcasting Corporation-	Grants toward the net operating and	capital requirements of the radio	broadcasting and television services	64.9	76.5	79.0	85.7	85.9International service	1.9	1.7	1.8	1.9	2.166.8	78.9	80.8	87.6	88.0Canadian Corporation for the 1967	World Exhibition	0.3	1.1	23.0Central Mortgage and Housing Cor-	PORATION	3.7	5.8	8.7	13.5	14.0Office of the Chief Electoral Officer.	0.6	0.4	11.8	11.9	0.6Citizenship and Immigration-	Administration and general	2.4	2.6	2.6	2.7	3.1Immigration	12.2	11.9	12.5	13.2	14.6Indian affairs	46.4	50.4	51.0	55.6	65.361.0	64-9	66.1	71.5	83.0Civil Service Commission	4.2	4.7	4.8	5.2	6.4Defence Production-	Defence expenditures	17.5	19.6	21.0	20.6	22.0Non-defence expenditures	2.1	2.1	1.9	1.9	2.419.6	91.7	99.9	99.5	34-4Economic Council of Canada	0.2	0.9Emergency Measures Organization. ..	3.7	5.1	6.4	6.9	8.0External Affairs-	Administration and general	35.6	28.9	23.7	28.8	33.1External aid	55.8	53.9	46.5	51.7	77.4Representation abroad	11.6	12.8	15.0	16.5	17.5103.0	9S.6	85.9	97.0	198.0Finance-	Administration and general	19.1	18.8	31.8	22.3	24.4Office of the Comptroller of the Treas-	ury	20.6	22.0	23.3	23.8	25.0Grants to municipalities in lieu of taxes	on federal property	24.5	24.7	29.2	31.5	34.0Grants to universities	19.0	19.4	26.3	26.8	27.1
April 26. 1965
The Budget-Appendix
STATEMENT OF EXPENDITURE BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Continued
(in millions of dollars)
1961-62
1963-64
(estimated)
Finance-Concluded Public service superannuation account-
Government's contribution	
Amortization of deferred charges.... Payments to provinces-
Statutory subsidies	
Tax-sharing arrangements, 1956 act..
Fiscal arrangements, 1961 act	
Transfer of certain public utility tax
receipts	
Crown Corporations (Provincial
Taxes and Fees) Act	
Transitional grant to Newfoundland. Additional grants to Newfoundland. Public debt charges-
Interest on public debt	
Cost of issuing new loans and annual amortization of bond discounts and
commissions	
Servicing of public debt	
41.4
20.7
504.9
4.2
0.3
7.7
756.7
40.2
0.7
1,480.0
46.9
23.5
503.3
6.4
8.0
802.9
35.3
0.8
1,512.0
51.1
54.0
23.5 23.6 241.8 220.9 10.0 9.8
881.6
954.5
34.6	38.2
1.6	1.0
1,354-8	1,406.4
55.6
10.0
23.6 311.7
10.6
3.8
1,008.0
38.9
1.3
1,674.0
Fisheries.
19.2
23.1
23.3
23.7
26.0
Forestry-
Administration and general	
Freight assistance and grain storage
costs	
Rehabilitation and reclamation projects	
10.3
19.2
1.5
31.0
14.8
17.5
1.0
33.3
16.2
14.4
1.2
31.8
18.5
18.7
4.6
41.8
20.5
19.5
10.0
50.0
Governor General and Lieutenant-
Governors	 0.4	0.5	0.5	0.5
0.7
Industry-
Defence...
Non-defence
2.9 4.4 0.1 0.1 3.0 4-6
8.0 19.0 20.0 0.4 0.7 3.2 8.4 19.7 23.2
Insurance.
1.3	1.4
1.4	1.4
1.5
Justice-
Administration and general	
Correctional services	
Patents, copyrights and trade marks..
8.1
19.6
2.7
30.4
8.8
23.8
2.8
35.4
9.1 10.6 25.4 27.8 2.5 2.6 37.0 41-0
11.5
39.5 3.0
64.0
Labour-
Administration and general	
Technical and vocational training assistance payments to provinces	
Unemployment Insurance Commission-
Administration and general	
Government's contribution	
15.6
8.5
42.1
55.1 121.3
Legislation-
House of Commons... Library of Parliament Senate	
6.3
0.3
1.9
8.5
Mines and Technical Surveys-
Administration and general	
Dominion Coal Board	
Emergency gold mining assistance___
27.7
19.3
12.1
69.1
31.6
35.7
46.0
55.6
168.9
6.2
0.3
1.9
8.4
35.3 19.9
12.4 67.6
34.9
208.0
48.1
57.3
348.3
5.9
0.4

[Stage Direction]
National Capital Commission.
6.3
8.7
13.0
12.2
9.9
April 26, 1965
[Stage Direction]
The Budget-Appendix
STATEMENT OF EXPENDITURE BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS- Continued
(in millions of dollars)
-	1960-61	1961-62	1962-63	1963-64	1964-65 (estimated)National Defence- Defence forces, army, naval and air	$	t	$	$	$services	1,406.0	1,502.8	1,433.9	1,458.8	1,369.0Defence research and development - Canadian forces superannuation account-	41.9	40.4	41.1	46.1	57.0Government's contribution	
Special government contribution	
Amortization of deferred charges	40.5	56.0	58.1	59.7 76.5	59.0 15.0Mutual aid to NATO countries	
Pensions-payments under Defence	14.6	11.1	25.0	28.9	27.0Services Pension Act	6.7	7.3	7.5	7.9	8.0Other	5.6	5.4	5.5	5.6	4.01,515.3	1,623.0	1,571.1	1,683.5	1,539.0National Film Board	4.9	5.1	5.6	5.8	6.4National Gallery of Canada	0.9	1.0	1.0	1.1	1.3National Health and Welfare-	Administration and general	
Health services- General health grants and hospital	1.7	1.8	1.9	2.0	2.3construction grants	
Government's contributions under the Hospital Insurance and Diag-	48.0	49.0	50.3	53.0	57.5nostic Services Act	189.4	283.9	336.7	392.2	430.0Other	
Welfare services-	5.6	6.3	6.6	6.9	6.8Family allowances	
Youth allowances	506.2	520.8	531.6	538.3	546.2 27.2Fitness and amateur sport payments Old age assistance, blind persons and	0.2	1.1	1.6	3.051.3	51.4	62.7	64.4	74.1Unemployment assistance	51.5	92.0	96.5	107.4	111.0Other	3.3	3.3	3.4	4.1	5.3Medical services	26.8	28.1	28.9	30.6	33.2Food and drug services	2.4	2.5	2.8	3.4	4.4886.2	1,039.3	1,122.5	1,203.9	1,301.0National Research Council, Includ-	ing the Medical Research Council..	34.4	38.8	40.6	47.3	57.0National Revenue	73.4	75.3	78.6	83.0	87.0Northern Affairs and National Re-	8OURCE8	70.8	78.4	86.4	77.3	85.0Post Office	178.4	185.0	189.4	206.9	211.0Privy Council, including Prime Min-	ister's Office	1.3	3.5	2.1	2.9	4.5Public Archives and National Library	0.8	1.0	1.1	1.1	1.5Public Printing and Stationery-	Publications	1.4	1.9	2.0	2.2	2.8Public Works-	Administration and general	23.6	15.5	15.7	17.7	25.6Accommodation services	
Harbours and rivers engineering serv-	81.7	81.4	71.6	74.3	85.1ices	36.9	35.8	29.4	23.6	28.2Trans-Canada highway contributions.	48.7	41.6	33.0	39.2	74.1Office of the Representation Commissioner	190.9	m.s	149.7	154.8 (i)	213.0 0.2Royal Canadian Mounted Police	56.0	60.5	65.4	66.9	75.0
April 26, 1965
The Budget-Appendix
STATEMENT OF EXPENDITURE BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Concluded
(in millions of dollars)
-	1960-61	1961-62	1962-63	1963-64	1964-65 (estimated)$	$	$	$	$Secretaky or State	3.0	3.2	4.8	7.6	22.3Trade and Commerce-	Administration and general	12.3	14.9	14.5	16.1	18.8Assistance re storage costs of grain	48.2	48.8	35.2	39.6	34.0Canadian government travel bureau...	2.7	3.0	3.4	3.9	5.010.4	24.6	11.9	12.3	13.5National Energy Board	0.4	0.4	0.5	0.6	0.774.0	91.7	65.5	72.5	72.0Transport-	Administration and general	2.6	5.8	5.9	4.7	5.6Air services	133.9	150.0	136.9	121.1	136.0Canadian Maritime Commission	6.9	10.2	31.0	49.8	41.2Marine services	49.1	48.6	57.8	64.1	64.0Non-active assets-	National Harbours Board	0.6	4.9	5.2	0.3	8.2Railway and steamship services	5.0	4.6	14.6	30.2	36.8Maritime Freight Rates Act	14.1	12.2	12.9	13.4	15.1Deficits-	Canadian National Railways	67.5	67.3	48.9	43.0	38.7Newfoundland ferry and terminals	5.4	7.3	8.2	8.6	11.0Prince Edward Island car ferry	and terminals	2.6	3.0	3.3	3.3	4.1Yarmouth-Bar Harbour ferry	service	0.1	0.1	0.2	0.2	0.3Board of Transport Commissioners	1.2	1.3	1.3	1.4	1.5Freight Rates Reduction Act	20.4	19.0	20.6	Payments to the railways for the	maintenance of the rates of	freight traffic	50.0	50.0	68.1	70.4Maintenance of trackage	7.0	7.0	7.0	7.0	7.0Contributions to the railway grade	crossing fund	15.0	10.0	5.8	5.1	5.1Air Canada-deficit	2.6	6.5	3.5	Canals and works entrusted to The St.	Lawrence Seaway Authority	2.4	2.6	2.9	3.0	30.0SS6.4	410.4	416.0	42s. S	475.0Veterans Affairs-	Administration and general	10.2	10.4	10.3	10.0	10.4Pensions	150.7	177.9	175.9	173.2	179.3Provision for reserve for conditional	3.4	3.3	3.2	3.2	3.1Soldier settlement and veterans land	acts	5.2	4.6	4.6	4.5	4.5Treatment services	50.1	48.1	46.4	46.4	48.7Welfare services, allowances and other	benefits	72.7	88.9	95.2	96.4	107.0292. S	SSS.2	SS5.6	S3S.7	S5S.0Total Expenditure	5,958.1	6,520.6	6,570.3	6,872.4	7,219.0
<0 Less than $50,000.
April 26, 1965	COMMONS DEBATES	621
The Budget-Appendix

[Stage Direction]
(in millions of dollars)
[Stage Direction]
-
[Stage Direction]
1960-61
[Stage Direction]
1961-62
[Stage Direction]
1962-63
[Stage Direction]
1963-64
[Stage Direction]
1964-65 (estimated)
[Stage Direction]
%
[Stage Direction]
$
[Stage Direction]
S
[Stage Direction]
$
[Stage Direction]
$
[Stage Direction]
Loans to, and investments in, Crown corpo-
[Stage Direction]
rations-
[Stage Direction]
Air Canada
[Stage Direction]
1.3
[Stage Direction]
0.2
[Stage Direction]
-0.4
[Stage Direction]
0.4
[Stage Direction]
-1.4
[Stage Direction]
Atomic Energy of Canada Limited
[Stage Direction]
1.5
[Stage Direction]
4.9
[Stage Direction]
-12.5
[Stage Direction]
0.4
[Stage Direction]
13.0
[Stage Direction]
Canadian Broadcasting Corporation
[Stage Direction]
3.0
[Stage Direction]
14.2
[Stage Direction]
Canadian Commercial Corporation
[Stage Direction]
1.0
[Stage Direction]
3.0
[Stage Direction]
-0.5
[Stage Direction]
-4.0
[Stage Direction]
Canadian National Railways
[Stage Direction]
-116.5
[Stage Direction]
72.3
[Stage Direction]
274.7
[Stage Direction]
-28.8
[Stage Direction]
24.7
[Stage Direction]
Canadian National (West Indies) Steamships
[Stage Direction]
Limited
[Stage Direction]
-1.0
[Stage Direction]
-0.7
[Stage Direction]
-0.6
[Stage Direction]
Canadian Overseas Telecommunication Cor-
[Stage Direction]
poration
[Stage Direction]
9.1
[Stage Direction]
6.2
[Stage Direction]
11.4
[Stage Direction]
6.2
[Stage Direction]
0.8
[Stage Direction]
Central Mortgage and Housing Corporation
[Stage Direction]
192.0
[Stage Direction]
190.3
[Stage Direction]
101.8
[Stage Direction]
113.3
[Stage Direction]
221.0
[Stage Direction]
Export Credits Insurance Corporation
[Stage Direction]
5.2
[Stage Direction]
19.6
[Stage Direction]
23.4
[Stage Direction]
33.8
[Stage Direction]
Farm Credit Corporation
[Stage Direction]
40.1
[Stage Direction]
54.2
[Stage Direction]
59.0
[Stage Direction]
69.9
[Stage Direction]
102.4
[Stage Direction]
National Capital Commission
[Stage Direction]
7.4
[Stage Direction]
6.2
[Stage Direction]
9.4
[Stage Direction]
12.1
[Stage Direction]
11.6
[Stage Direction]
National Harbours Board
[Stage Direction]
11.4
[Stage Direction]
6.0
[Stage Direction]
13.8
[Stage Direction]
5.5
[Stage Direction]
2.6
[Stage Direction]
Northern Canada Power Commission
[Stage Direction]
0.9
[Stage Direction]
-0.3
[Stage Direction]
-7.2
[Stage Direction]
3.4
[Stage Direction]
6.4
[Stage Direction]
Northern Ontario Pipe Line Crown Corporation
[Stage Direction]
2.2
[Stage Direction]
-4.7
[Stage Direction]
-8.4
[Stage Direction]
-110.6
[Stage Direction]
The St. Lawrence Seaway Authority
[Stage Direction]
24.0
[Stage Direction]
0)28.3
[Stage Direction]
<1)22.7
[Stage Direction]
<*24.9
[Stage Direction]
<«-6.4
[Stage Direction]
Other
[Stage Direction]
0.1
[Stage Direction]
0.6
[Stage Direction]
176.8
[Stage Direction]
871.1
[Stage Direction]
482.8
[Stage Direction]
116.1
[Stage Direction]
428.8
[Stage Direction]
Loans to national governments-
[Stage Direction]
United Kingdom-
[Stage Direction]
The United Kingdom Financial Agreement
[Stage Direction]
Act, 1946
[Stage Direction]
-16.7
[Stage Direction]
-17.1
[Stage Direction]
-17.5
[Stage Direction]
-17.8
[Stage Direction]
<019.6
[Stage Direction]
Export Credits Insurance Act
[Stage Direction]
-15.2
[Stage Direction]
-15.3
[Stage Direction]
-105.9
[Stage Direction]
-2.3
[Stage Direction]
-2.3
[Stage Direction]
Special loans to Colombo plan countries to
[Stage Direction]
finance the purchase of wheat and flour from
[Stage Direction]
Canada
[Stage Direction]
-3.5
[Stage Direction]
-5.0
[Stage Direction]
-5.0
[Stage Direction]
-5.0
[Stage Direction]
-5.0
[Stage Direction]
Loan to India for the purchase in Canada of
[Stage Direction]
aircraft and associated spare parts and equip-
[Stage Direction]
ment
[Stage Direction]
10.0
[Stage Direction]
-1.0
[Stage Direction]
Other
[Stage Direction]
-0.9
[Stage Direction]
-1.0
[Stage Direction]
-0.6
[Stage Direction]
-S6.S
[Stage Direction]
-88 4
[Stage Direction]
-129.0
[Stage Direction]
-18.1
[Stage Direction]
11.8
[Stage Direction]
Other loans and investments-
[Stage Direction]
Subscriptions to capital of, working capital
[Stage Direction]
advances and loans to, international organ-
[Stage Direction]
izations-
[Stage Direction]
Canada's subscription to capital of-
[Stage Direction]
International monetary fund
[Stage Direction]
15.0
[Stage Direction]
21.0
[Stage Direction]
12.6
[Stage Direction]
International bank for reconstruction and
[Stage Direction]
development
[Stage Direction]
2.8
[Stage Direction]
6.8
[Stage Direction]
International development association
[Stage Direction]
8.5
[Stage Direction]
7.9
[Stage Direction]
8.5
[Stage Direction]
7.9
[Stage Direction]
7.9
[Stage Direction]
Working capital advances and loans to inter-
[Stage Direction]
national organizations
[Stage Direction]
-0.3
[Stage Direction]
-0.1
[Stage Direction]
6.2
[Stage Direction]
0.2
[Stage Direction]
Loans to provincial governments
[Stage Direction]
-1.1
[Stage Direction]
-0.5
[Stage Direction]
5.8
[Stage Direction]
-0.5
[Stage Direction]
5.8
[Stage Direction]
Provincial tax collection agreements-advances
[Stage Direction]
13.1
[Stage Direction]
-2.7
[Stage Direction]
-10.4
[Stage Direction]
Balances receivable under agreements of sale
[Stage Direction]
of Crown assets
[Stage Direction]
-3.9
[Stage Direction]
-1.5
[Stage Direction]
-2.3
[Stage Direction]
-2.3
[Stage Direction]
-2.0
[Stage Direction]
Housing projects for Canadian forces
[Stage Direction]
0.1
[Stage Direction]
1.9
[Stage Direction]
6.1
[Stage Direction]
5.4
[Stage Direction]
1.6
[Stage Direction]
Municipal development and loan board
[Stage Direction]
✓
[Stage Direction]
7.5
[Stage Direction]
Old age security fund
[Stage Direction]
-10.7
[Stage Direction]
-17.3
[Stage Direction]
41.7
[Stage Direction]
58.3
[Stage Direction]
-64.0
[Stage Direction]
Unemployment Insurance Commission
[Stage Direction]
67.0
[Stage Direction]
-67.0
[Stage Direction]
Veterans land act advances
[Stage Direction]
14.5
[Stage Direction]
11.3
[Stage Direction]
18.6
[Stage Direction]
21.0
[Stage Direction]
14.2
[Stage Direction]
Other
[Stage Direction]
0.3
[Stage Direction]
2.5
[Stage Direction]
-0.3
[Stage Direction]
-0.2
[Stage Direction]
1.7
[Stage Direction]
92.2
[Stage Direction]
-41.8
[Stage Direction]
116.8
[Stage Direction]
87.1
[Stage Direction]
-87.7
[Stage Direction]
Net total of changes in loans and investments..
[Stage Direction]
232.4
[Stage Direction]
290.9
[Stage Direction]
470.6
[Stage Direction]
188.1
[Stage Direction]
396.9
[Stage Direction]
(l) Includes deferred interest. Deferred interest.
[Stage Direction]
April 26, 1965
The Budget-Appendix
UNMATURED DEBT INCLUDING TREASURY BILLS AS AT MARCH 31, 1965 AND THE ANNUAL INTEREST THEREON (estimated)
[Stage Direction]
Date of
[Stage Direction]
Rate
[Stage Direction]
Amount
[Stage Direction]
Annual
[Stage Direction]
maturity
[Stage Direction]
per cent
[Stage Direction]
of loan
[Stage Direction]
interest
[Stage Direction]
Payable in Canada-
[Stage Direction]
S
[Stage Direction]
$
[Stage Direction]
Loan of 1962
[Stage Direction]
AT
[Stage Direction]
15
[Stage Direction]
1965
[Stage Direction]
Apr.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
110,000,000
[Stage Direction]
4,675,000
[Stage Direction]
Loan of 1963
[Stage Direction]
CT
[Stage Direction]
2
[Stage Direction]
Apr.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
90,000,000
[Stage Direction]
3,825,000
[Stage Direction]
Loan of 1964
[Stage Direction]
CT
[Stage Direction]
10
[Stage Direction]
July
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
400,000,000
[Stage Direction]
14,000,000
[Stage Direction]
Conversion loan 1958
[Stage Direction]
T
[Stage Direction]
27
[Stage Direction]
Sept.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
449,890,600
[Stage Direction]
16,870,898
[Stage Direction]
Canada savings bonds 1953
[Stage Direction]
S
[Stage Direction]
8
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
*>45,349,000
[Stage Direction]
1,700,588
[Stage Direction]
Loan of 1964
[Stage Direction]
CT
[Stage Direction]
13
[Stage Direction]
Dee.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
325,000,000
[Stage Direction]
11,375,000
[Stage Direction]
Loan of 1963
[Stage Direction]
AT
[Stage Direction]
19
[Stage Direction]
1966
[Stage Direction]
Feb.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
225,000,000
[Stage Direction]
7,875,000
[Stage Direction]
Loan of 1964
[Stage Direction]
CT
[Stage Direction]
7
[Stage Direction]
Feb.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
105,000,000
[Stage Direction]
3,675,000
[Stage Direction]
Loan of 1965
[Stage Direction]
CT
[Stage Direction]
16
[Stage Direction]
May
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
175,000,000
[Stage Direction]
6,125,000
[Stage Direction]
Ninth victory loan
[Stage Direction]
P
[Stage Direction]
7
[Stage Direction]
Sept.
[Stage Direction]
1
[Stage Direction]
3
[Stage Direction]
245,202,200
[Stage Direction]
7,356,066
[Stage Direction]
Canada savings bonds 1954
[Stage Direction]
S
[Stage Direction]
9
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
<'>28,178,000
[Stage Direction]
915,785
[Stage Direction]
Loan of 1961
[Stage Direction]
AT
[Stage Direction]
6
[Stage Direction]
Dec.
[Stage Direction]
15
[Stage Direction]
41
[Stage Direction]
175,000,000
[Stage Direction]
7,875,000
[Stage Direction]
Loan of 1963
[Stage Direction]
CT
[Stage Direction]
5
[Stage Direction]
Dec.
[Stage Direction]
15
[Stage Direction]
41
[Stage Direction]
125,000,000
[Stage Direction]
5,625,000
[Stage Direction]
Loan of 1961
[Stage Direction]
AT
[Stage Direction]
9
[Stage Direction]
1967
[Stage Direction]
June
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
275,000,000
[Stage Direction]
11,687,500
[Stage Direction]
Loan of 1962
[Stage Direction]
AT
[Stage Direction]
12
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
100,000,000
[Stage Direction]
3,750,000
[Stage Direction]
Loan of 1964
[Stage Direction]
CT
[Stage Direction]
14
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
75,000,000
[Stage Direction]
2,812,500
[Stage Direction]
Canada savings bonds 1955
[Stage Direction]
S
[Stage Direction]
10
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
<'>26,946,000
[Stage Direction]
875,745
[Stage Direction]
Loan of 1962
[Stage Direction]
AT
[Stage Direction]
11
[Stage Direction]
1968
[Stage Direction]
Jan.
[Stage Direction]
15
[Stage Direction]
41
[Stage Direction]
250,000,000
[Stage Direction]
10,625,000
[Stage Direction]
Loan of 1964
[Stage Direction]
CT
[Stage Direction]
8
[Stage Direction]
Jan.
[Stage Direction]
15
[Stage Direction]
41
[Stage Direction]
130,000,000
[Stage Direction]
5,525,000
[Stage Direction]
Refunding loan 1950
[Stage Direction]
P
[Stage Direction]
9
[Stage Direction]
June
[Stage Direction]
15
[Stage Direction]
21
[Stage Direction]
308,581,000
[Stage Direction]
8,485,977
[Stage Direction]
Loan of 1963
[Stage Direction]
CT
[Stage Direction]
3
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
441,000,000
[Stage Direction]
22,050,000
[Stage Direction]
Canada savings bonds 1959
[Stage Direction]
S
[Stage Direction]
14
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
<'>914,953,000
[Stage Direction]
45,747,650
[Stage Direction]
Loan of 1960
[Stage Direction]
T
[Stage Direction]
39
[Stage Direction]
1969
[Stage Direction]
Apr.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
80,000,000
[Stage Direction]
4,400,000
[Stage Direction]
Loan of 1962
[Stage Direction]
AT
[Stage Direction]
16
[Stage Direction]
Apr.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
100,000,000
[Stage Direction]
5,500,000
[Stage Direction]
Canada savings bonds 1956
[Stage Direction]
S
[Stage Direction]
11
[Stage Direction]
May
[Stage Direction]
1
[Stage Direction]
4
[Stage Direction]
<"48,341,000
[Stage Direction]
1,933,640
[Stage Direction]
Loan of 1964
[Stage Direction]
CT
[Stage Direction]
11
[Stage Direction]
July
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
325,000,000
[Stage Direction]
16,250,000
[Stage Direction]
Loan of 1962
[Stage Direction]
AT
[Stage Direction]
13
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
80,000,000
[Stage Direction]
4,400,000
[Stage Direction]
Loan of 1958
[Stage Direction]
T
[Stage Direction]
24
[Stage Direction]
1970
[Stage Direction]
May
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
200,000,000
[Stage Direction]
7,000,000
[Stage Direction]
Canada savings bonds 1957
[Stage Direction]
S
[Stage Direction]
12
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<"389,142,000
[Stage Direction]
18,484,245
[Stage Direction]
Canada savings bonds 1960
[Stage Direction]
S
[Stage Direction]
15
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
<"414,231,000
[Stage Direction]
20,711,550
[Stage Direction]
Loan of 1964
[Stage Direction]
CT
[Stage Direction]
15
[Stage Direction]
1971
[Stage Direction]
June
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
350,000,000
[Stage Direction]
17,500,000
[Stage Direction]
Canada savings bonds 1961
[Stage Direction]
S
[Stage Direction]
16
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<"342,962,000
[Stage Direction]
15,433,290
[Stage Direction]
Conversion loan 1958
[Stage Direction]
T
[Stage Direction]
28
[Stage Direction]
1972
[Stage Direction]
Sept.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
1,267,203,100
[Stage Direction]
53,856,132
[Stage Direction]
Loan of 1965
[Stage Direction]
CT
[Stage Direction]
17
[Stage Direction]
1973
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
275,000,000
[Stage Direction]
13,750,000
[Stage Direction]
Canada savings bonds 1958
[Stage Direction]
S
[Stage Direction]
13
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<"109,312,000
[Stage Direction]
4,645,760
[Stage Direction]
Canada savings bonds 1964
[Stage Direction]
S
[Stage Direction]
19
[Stage Direction]
1974
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<"1,012,000,000
[Stage Direction]
45,540,000
[Stage Direction]
Loan of 1959
[Stage Direction]
T [DOT]
[Stage Direction]
36
[Stage Direction]
1975
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
310,361,000
[Stage Direction]
17,069,855
[Stage Direction]
Canada savings bonds 1963
[Stage Direction]
S
[Stage Direction]
18
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<"940,000,000
[Stage Direction]
42,300,000
[Stage Direction]
Loan of 1960
[Stage Direction]
T
[Stage Direction]
38
[Stage Direction]
1976
[Stage Direction]
Apr.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
436,198,000
[Stage Direction]
23,990,890
[Stage Direction]
Loan of 1954
[Stage Direction]
T
[Stage Direction]
11
[Stage Direction]
June
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
247,046,500
[Stage Direction]
8,029,011
[Stage Direction]
Canada savings bonds 1962
[Stage Direction]
S
[Stage Direction]
17
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<"1,285,536,000
[Stage Direction]
57,849,120
[Stage Direction]
Loan of 1953 and 1958
[Stage Direction]
T
[Stage Direction]
5
[Stage Direction]
1978
[Stage Direction]
Jan.
[Stage Direction]
15
[Stage Direction]
31
[Stage Direction]
207,911,500
[Stage Direction]
7,796,681
[Stage Direction]
Loan of 1954
[Stage Direction]
T
[Stage Direction]
13
[Stage Direction]
1979
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
343,246,500
[Stage Direction]
11,155,511
[Stage Direction]
Loan of 1962
[Stage Direction]
AT
[Stage Direction]
14
[Stage Direction]
1980
[Stage Direction]
Aug.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
120,000,000
[Stage Direction]
6,600,000
[Stage Direction]
Conversion loan 1958
[Stage Direction]
T
[Stage Direction]
29
[Stage Direction]
1983
[Stage Direction]
Sept.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
1,992,679,450
[Stage Direction]
89,670,575
[Stage Direction]
Loan of 1963
[Stage Direction]
AT
[Stage Direction]
21
[Stage Direction]
1988
[Stage Direction]
June
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
100,000,000
[Stage Direction]
5,000,000
[Stage Direction]
Loan of 1964
[Stage Direction]
CT
[Stage Direction]
9
[Stage Direction]
June
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
50,000,000
[Stage Direction]
2,500,000
[Stage Direction]
Loan of 1964
[Stage Direction]
CT
[Stage Direction]
12
[Stage Direction]
1990
[Stage Direction]
May
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
125,000,000
[Stage Direction]
6,562,500
[Stage Direction]
Conversion loan 1956
[Stage Direction]
T
[Stage Direction]
15
[Stage Direction]
1998
[Stage Direction]
Mar.
[Stage Direction]
15
[Stage Direction]
31
[Stage Direction]
197,045,000
[Stage Direction]
7,389,188
[Stage Direction]
Loan of 1936
[Stage Direction]
P
[Stage Direction]
1
[Stage Direction]
Perpetual
[Stage Direction]
3
[Stage Direction]
55,000,000
[Stage Direction]
1,650,000
[Stage Direction]
("3.62
[Stage Direction]
1,360,000,000 780,000,000 43,000,000
[Stage Direction]
51,109,850 30,327,000 1,988,750
[Stage Direction]
<2>3.73
[Stage Direction]
Special non-marketable bonds (U.I.C.)...
[Stage Direction]
4!
[Stage Direction]
18,606,314,850
[Stage Direction]
803,846,257
[Stage Direction]
Payable in New York-
[Stage Direction]
1974
[Stage Direction]
Sept. Sept. Oct.
[Stage Direction]
1
[Stage Direction]
2} 21 5
[Stage Direction]
<"65,087,502 <3>41,047,527 <"270,270,000
[Stage Direction]
1,789,906 1,128,807 13,513,500
[Stage Direction]
1975
[Stage Direction]
15
[Stage Direction]
Loan of 1962
[Stage Direction]
1987
[Stage Direction]
15
[Stage Direction]
376,405,029	16,432,213
							18,982,719,879	820,278,470
Note-The interest shown is a projection for one year at the annual rates on principal amounts outstanding at March 31,1965. Where various rates of interest are applicable during the term of a loan the interest rate in effect at March 31, 1965 has been used.
<" Estimated.
<!>
Rate of discount at tender on March 25, 1965.
1') Conversion rate $1 U.S.=$1.08108 Canadian.
[Stage Direction]
Tuesday, April 27, 1965