1966-09-09

Hon. G. J. Mcllrailh (Minister of Public Works):: Mr. Speaker, I thought it would be helpful to hon. members if I were to take a moment to outline the government's intentions regarding the program for today's sitting. In an effort to do this I should indicate to hon. members that they will notice on today's order paper under government notices of motions a motion to amend the terms of reference of the joint committee dealing with consumer credit so that committee will be instructed "also to inquire into and report upon the trends in the cost of living in Canada and factors which may have contributed to changes in the cost of living in Canada in recent months." Some reference was made to this motion last night in the speech of the Minister of Finance. I believe that motion in the normal course of business will be transferred under standing order 21 (2) to orders of the day for consideration later this day or at the next sitting. I believe that is the form.
This motion could be called when we come to orders of the day, and it could be debated and carried on the understanding that immediately that is done we would call the estimates of the Department of Finance and continue our discussion of the estimates, as was done yesterday. Or we could call the estimates first and then consider the motion later in the day.
We also have to put the formal motion for adjournment, which is in the precise terms of the motion carried on July 14. Perhaps I can refresh the minds of hon. members by indicating that that motion read, in part, in this way: "that when this house adjourns at the end of the ... this ... sitting it shall stand adjourned until Wednesday, October 5, at 2.30 o'clock p.m.". Then there was the proviso about an earlier calling back should that be necessary. That motion will require to be put at some time, and if it is agreeable I propose to move it when we reach motions in our proceedings today.
I am open to suggestions from other house leaders or other hon. members as to what disposition we should make of the other notice of motion to which I referred, the notice of motion enlarging the terms of reference of the committee to investigate the rising cost of living. If hon. members prefer to discuss the estimates first, that would be of no concern to the government. I think any matter that can be discussed under the one item can be discussed under the other, but I am open to suggestions as to which one hon. members would wish to have called first.
That is the way, Mr. Speaker, that we propose to proceed today, and I thought it useful to put this statement on the record at this time so that hon. members would be clear as to the program we have in mind for today's sitting of the house.


Hon. Gordon Churchill (Winnipeg South Centre):: Mr. Speaker, I suggest to the minister that the motion with regard to the committee on consumer credit be held till later
this day so the debate will follow immediately along the subject matter that we were on yesterday. I say this just in case we might be diverted on some technical argument which does not occur to me at the moment but which is always a possibility in this house, and I think we should keep the order of business as it now stands.


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, we too think it would be better not to interrupt the debate that was taking place last evening but that it would be preferable to continue with the debate on the finance department's estimates, leaving the motion regarding the committee until later this day. I might also indicate that if the motion for a recess is put sometime today, bearing in mind some of the other problems that are with us we may have something to say about it.


Mr. Raymond Langlois (Meganlic):: Mr. Speaker, on behalf of our group I would prefer to delay this motion for the moment and continue with the business we were dealing with yesterday, the estimates of the Department of Finance. We could probably put the motion later on this day.
September 9, 1966

Inquiries of the Ministry


Mr. A. B. Patterson (Fraser Valley):: Mr. Speaker, the suggestion that has been made is perfectly satisfactory so far as we in this group are concerned. Also the adjournment motion will be acceptable to us whenever it is introduced.


George James McIlraith: Mr. Speaker, I propose when we come to orders of the day to call
first the estimates of the Department of Finance, and then later in the day to call the motion enlarging the terms of reference of the committee.
I am not clear on the other point as to whether it is desired to call the motion to adjourn now, on motions, or at a later stage in the day.


Stanley Howard Knowles: Later.


George James McIlraith: Mr. Speaker, before motions are called I should like the government notice of motions called in the ordinary way and transferred to orders of the day under section 2 of standing order 21.



CONSUMER CREDIT


[Stage Direction]
On the order: Government notice of motion:
That the joint committee of the Senate and House of Commons appointed by this house on March 15, 1966, to inquire into and report upon the problems of consumer credit, be instructed to also inquire into and report upon the trends in the cost of living in Canada and factors which may have contributed to changes in the cost of living in Canada in recent months;
And that a message be sent to the Senate to acquaint Their Honours thereof and to request the concurrence of that house thereto.
Mr. Speaker:: Pursuant to section 2 of standing order 21 this notice of motion is transferred for consideration under government orders later this day or at the next sitting of the house.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, in view of the fact that the United Nations will have been convened before we meet again, provided the motion for adjournment is accepted later this day, will the minister now say on behalf of the government of Canada what the attitude of the government is going to be on the

question of the seating of communist China in the United Nations? In that connection, what is the government's stand in respect of Formosa and the necessity of assuring that that government and people will not be sacrificed in consequence of any action taken?


Hon. Paul Martin (Secrefary of Slate for External Affairs):: Mr. Speaker, the general assembly will open on September 20. The question of mainland China's admission to the United Nations will not be disposed of or dealt with until some time later during the assembly, very likely some time around the end of November. The position of Canada with regard to universality of membership has been stated and reaffirmed by me in the general assembly. We strongly support the position taken by the secretary general that the principle of universality should be observed. To this end we expressed the view last year that we would hope it would be possible for all sovereign bodies to take their places in the United Nations.
The question of Formosa does not present a problem in this regard. It is not the intention of the government of Canada to deny the right of 12 million people in Formosa to participate in the world body. We continue to express the hope that the conditions laid down by mainland China for admission, as stated by her foreign minister Chen Yi on September 29 last, will not be raised again this year. There will be an opportunity later during the session, in the light of events, to say more about this matter.


John George Diefenbaker: Has there been any
change in the attitude of the minister that communist China should be admitted, as he was reported to have stated on August 15 at Banff? Has there been any change in that attitude since then? In particular, has there been any change in relation to the fact that, as the minister then stated, no acceptable means of bringing communist China into the United Nations has been offered or, indeed, has seemed possible?


Paul Joseph James Martin: No, there has been no change in that statement. It was made after the most careful consideration. I would hope that if there is any solution to this it might be put forward by interested countries with which we are having consultations. There can be no doubt as to the view of the Canadian government, having regard to the serious situation in the world, of the
September 9, 1966
desirability of participation in the United Nations by all sovereign states.
If a way can be found to meet the principle of universality in this situation we would wish to do so. In stating this we are taking into consideration the position of countries with which we have close association, and I do not refer only to the United States; I refer also to Australia, to New Zealand, to Japan, to countries in Asia and to other countries which feel that in the interests of world peace this problem of the admission of China to the United Nations should be resolved.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, I wish to address a question to the Minister of National Health and Welfare. In view of the fact that Bill No. C-227 on the order paper in the hon. gentleman's name provides for medicare to come into effect by July 1, 1967, will the minister be standing by that provision in his own bill?


Hon. A. J. MacEachen (Minister of National Health and Welfare):: The answer to that question was made obvious yesterday.


Stanley Howard Knowles: A supplementary question, Mr. Speaker. We were told yesterday of the decision made by the Minister of Finance. I was asking the Minister of National Health and Welfare where he stands.


Mr. Speaker:: Order please.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. Gerard Laprise (Chapleau):: Mr. Speaker, may I put a question to the Minister of Labour? I should like to ask him if he has been informed of the accusation of partiality made against the arbitrator who has been asked to settle the problem of labour conditions in the harbours of the St. Lawrence. If there is no basis to the accusation, will the minister take the necessary steps to ensure the prestige and authority of commissioner Picard?


Hon. J. R. Nicholson (Minister of Labour):: The qualifications and background of the industrial commissioner were gone into very
Inquiries of the Ministry carefully prior to his appointment. The government has every confidence in the industrial commissioner. His experience is not, as the paper has alleged, solely on the side of management. He has acted for workers as well. As I say, we have every confidence in him and we hope he will continue on the job to which he has been appointed.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Gordon Minto Churchill: I have a question for the Minister of National Defence based on a statement he made in the House of Commons on May 12, 1964, appearing in Hansard at page 3188: "There will, of course, always be soldiers, sailors and airmen." I ask the minister if those words, "soldiers, sailors and airmen" as designating the different fighting components of the armed forces will be officially retained in the new model force which he is creating.


Hon. Paul Hellyer (Minister of National Defence):: As I made very clear at that time, any force with the responsibilities which our forces now have and will continue to have in the years ahead will require soldiers, sailors and airmen trained in their particular professional capacities.


Gordon Minto Churchill: My question has not been answered, Mr. Speaker, and that is typical of the minister. I ask him a supplementary question. Will the soldiers, sailors and airmen in the new model force continue to wear uniforms of the style and colour so long familiar as distinguishing each branch of the service?


Paul Theodore Hellyer: This is not the kind of urgent question which, under the rules, is ordinarily answered on the orders of the day.


Gordon Minto Churchill: Here is your successor, Mr. Speaker.


Hon. J. A. MacLean (Queens):: As a related question, Mr. Speaker, I would like to ask the Minister of National Defence can he assure the house that during the time parliament is adjourned, if the motion which will be proposed later this day carries, no action will be taken by him or anyone on his behalf in the Department of National Defence which does not already have the authority of parliament?



September 9, 1966
Inquiries of the Ministry


Paul Theodore Hellyer: Yes; most certainly, Mr. Speaker, I will give that assurance. No action has been taken which was not authorized by this parliament, and you can be very sure none will be.


Gordon Minto Churchill: That isn't accurate.


Mr. Frank Howard (Skeena):: As a supplementary question to the minister in his concern about soldiers and sailors, would the minister classify himself as a tinker or a tailor?


Gordon Minto Churchill: Mr. Speaker, I have a question for the Minister of National Defence. In view of the fact that General Allard has assured the Royal 22nd Regiment that its identity will be retained in the future, with which I agree, will the minister give a similar assurance with regard to the Lord Strathcona Horse, the Princess Pats, the Fort Garry Horse and other famous regiments now in the regular army?


Some hon. Members:: Hear, hear.


Paul Theodore Hellyer: Mr. Speaker, it has been made perfectly clear on several occasions that identity would be retained at the unit level. Therefore there is no difficulty in giving my hon. friend the assurance that he requests.
While I have the floor, Mr. Speaker, may I just say in respect of the question raised by the hon. member for Skeena that what I presume he meant is, am I a tailor or a builder. In reply to that question may I say that along with the associate minister I am attempting to tailor the armed forces of Canada in such a way that they will be able to meet the real needs of this country and support its foreign policy, and to build the kind of power and effectiveness necessary to help deter war and preserve the peace.


Gordon Minto Churchill: On a point of order, Mr. Speaker.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order, please.


Gordon Minto Churchill: May I ask you, Mr. Speaker, if you were able to discern any answer to the question in the speech which has just been made by the Minister of National Defence?



WATER RESOURCES


[Stage Direction]
On the orders of the day;
Hon. E. D. Fulton (Kamloops):: Mr. Speaker, in the absence of the Minister of Mines and Technical Surveys may I ask the Secretary of State for External Affairs whether an invitation has yet been received by the government, or any department thereof, to the international conference on water to be held in Washington later this year.


Paul Joseph James Martin: Mr. Speaker, may I ask my hon. friend to repeat his question. I was just thinking of the implications of the question put by the hon. member for Skeena.


Edmund Davie Fulton: I can well appreciate that that question and its implications could cause the gravest concern to all those on the government benches. I asked whether the government or any department thereof has yet received an official invitation to the international conference on water to be held in Washington later this year.


Paul Joseph James Martin: No, the official invitation has not come but we expect it at any time.


Edmund Davie Fulton: Then may I ask on this same subject whether, when the invitation is received, since we have been informed that it is expected, the government will give consideration to the position that Canada has commitments with respect to its own conferences on water; and as Canada's position with respect to these matters has hardly been definitively established, Canada's participation in this conference, if we are to participate, should be minimal so as to avoid the danger which, because we have not properly considered-


Mr. Speaker:: Order, please. I think the question may have been lost in the speech.


Edmund Davie Fulton: I did not quite catch what you said, Mr. Speaker. I was asking the minister for an assurance. I think the purport of my question was clear, that Canada will not make any commitment to any position that has not been considered and discussed in parliament.


Paul Joseph James Martin: Mr. Speaker, I will say we have not yet decided whether we will participate in the conference. Likewise no firm position has been taken with regard
Seplember 9. 1966

to the proposed subject matters. Beyond that I am sure my hon. friend will understand I cannot go.


Mr. David Lewis (York South):: Mr. Speaker, I have a question for the Secretary of State for External Affairs related to the one asked by the hon. member for Kamloops. I should like the minister to inform the house whether the United States consulted Canada, or in his knowledge any other country, before setting the date, and apparently the agenda, for the water conference to which the hon. member referred.


Paul Joseph James Martin: I really cannot answer that question, Mr. Speaker. I would have to inform myself and that I shall do.


David Lewis: Mr. Speaker, may I chop my question and instead of referring to other countries ask the Secretary of State for External Affairs whether the Canadian government was consulted about the date or the agenda before the conference was set down by the administration in the United States.


Paul Joseph James Martin: Mr. Speaker,
the hon. gentleman may chop his question but I hope he will not chop my head. I will simply have to inform myself on that question.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. E. Nasserden (Rosthern):: Mr. Speaker, may I direct a question to the Acting Prime Minister. In view of the reported consideration being given to strike action by Saskatchewan farm organizations and because of the long delay by the government in bringing forward agricultural legislation, could the Acting Prime Minister give us an indication of when we can expect the legislation promised by the Prime Minister during the last few weeks?


Paul Joseph James Martin: First of all, Mr. Speaker, I should have thought my hon. friend who comes from western Canada would be among the first to note with satisfaction the achievements of the present government and the present Minister of Agriculture in the area which interests him so much.


Some hon. Members:: Hear, hear.
Inquiries of the Ministry


Paul Joseph James Martin: I shall take note of his question.


Edward Nasserden: Surely, Mr. Speaker, the Acting Prime Minister cannot slough off a question as important as that with the type of assertion he has just made. This government and this Minister of Agriculture have not done anything.


Mr. Speaker:: Order, please.


Paul Joseph James Martin: Mr. Speaker, I must take umbrage. In view of my well known interest in agriculture I am rather hurt by the observation of the hon. member.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. J. Chester MacRae (York-Sunbury):: Mr. Speaker, I would like to direct a question to the Minister of Labour. Has the government given any consideration or is it presently giving any consideration to the establishment of a labour court as a means of settling industrial disputes?


John Robert (Jack) Nicholson: Mr. Speaker, I think the only answer I can give to that question at this time is that the government has given consideration to the advisability or otherwise of some changes that might deal more effectively with problems of the nature raised by my hon. friend. It was for that reason that the Prime Minister announced just before his departure to the Commonwealth prime ministers' conference that a task force was being set up to study this important problem, under the leadership of Dean Woods of McGill University. I might say that Dean Woods is in Ottawa today conferring with officials of the office of the Privy Council, my deputy minister and others on this important matter. I doubt whether it would be wise for me to say anything further until we have had the recommendations or suggestions from the task force.



NATURAL GAS


[Stage Direction]
On the orders of the day:
Mr. L. R. Sherman (Winnipeg South):: Mr. Speaker, I should like to ask the minister of Mines and Technical Surveys a question but in his absence I will ask his parliamentary
September 9, 1966

Inquiries of the Ministry secretary whether he is able to report on the substance of this morning's meeting between some members of the government and members of Trans-Canada Pipe Lines on the subject of gas transmission lines.


Louis Ralph (Bud) Sherman: Mr. Speaker, I did not receive an answer to the rhetorical question which I put a few moments ago to the parliamentary secretary to the Minister of Mines and Technical Surveys under the erroneous impression that he was present in the house.
May I now direct my question to the Minister of Mines and Technical Surveys. Is the minister in a position at this time to report on the substance of this morning's meeting between some members of the government and some members of the Trans-Canada Pipe Lines?


Hon. Jean-Luc Pepin (Minister of Mines and Technical Surveys):: No, Mr. Speaker. We received representations, and we will study them now.



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Mr. Robert C. Coates (Cumberland):: Mr. Speaker, I have a question for the Acting Prime Minister. In view of the fact that Canada faces a financial crisis as indicated by the Minister of Finance in his statement last evening, and the possible break-up of the cabinet, does the Acting Prime Minister not consider that the Prime Minister should be back in Canada facing up to these internal difficulties rather than worrying about the future of Zambia?


Some hon. Members:: Shame.


Paul Joseph James Martin: Mr. Speaker, it is strange that my hon. friend should mention these internal difficulties, because I had a dream last night.


Some hon. Members:: Oh, oh.


Paul Joseph James Martin: I dreamt that the hon. member for Humboldt-Melfort-Tisdale (Mr. Rapp), for whom we all have great respect, because of differences with his leader had resigned as whip of the Conservative party. I am glad to learn this morning that this dream is greatly exaggerated, and so is the rumour to which the hon. member has referred.


Mr. Rapp:: On a question of privilege, Mr. Speaker, this must have been a pipe dream.


Some hon. Members:: Oh, oh.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Raymond Langlois: Mr. Speaker, I should like to direct a question to the Minister of Forestry and possibly to the Acting Prime Minister since the question is not only whether Motion No. 48 on the order paper concerning livestock feeders in eastern Canada and British Columbia but also at what date after October 5 next, when the house resumes, this motion can be brought down for debate?


Paul Joseph James Martin: Mr. Speaker, that is a question that can only be decided after a conference of the house leaders. I hope an arrangement can be reached to the satisfaction of the hon. member.



EDUCATION


[Stage Direction]
On the orders of the day:
Mr.  R. Gordon L. Fairweather@Royal: Mr. Speaker, I have a question for the Minister of Finance. I wonder whether the minister's attention has been drawn to a statement made yesterday by Dr. John Deutsch, chairman of the Economic Council of Canada, related in this morning's Globe and Mail, to the effect that Dr. Deutsch said, "priority must be given in the immediate future to the growth of post-secondary education, including a substantial increase in funds for postgraduate study and research." Has the minister's attention been drawn to this statement, and does he remain adamant in the cut-backs he announced yesterday for research and the scholarship fund of the government?


Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, I think the statement of Dr. Deutsch, which I have not read, illustrates why it is necessary to give first place to the most important matters, within our ability to pay. I can assure the hon. gentleman who has asked this question that it did not require Dr. Deutsch to draw this matter to our attention. Moreover, it is our intention during the discussions with the provinces to support, even more than we have in the past, the provisions for post-secondary education. May I say, in
September 9, 1966

order to prevent this sort of canard being repeated, that I have not cut back any existing programs; I am simply pacing our progress in the future.


Edmund Davie Fulton: A supplementary question, Mr. Speaker. May I ask the Minister of Finance, who has just referred to the discussions with the provinces, whether in the light of his statement last night, his statement on television the previous evening and his reference now, there will be at this conference a discussion of priorities and objectives for Canada, for which the premier of Manitoba has been pressing.


Mitchell William Sharp: Mr. Speaker, this government in all its actions has always recognized the importance of priorities. It continues to recognize them. I am very happy to see that the premier of Manitoba is supporting us.


Edmund Davie Fulton: A further supplementary question, Mr. Speaker. If the government recognizes the importance of priorities, why is it that the Prime Minister on behalf of the government refused to discuss the subject in that context at earlier conferences?


Mitchell William Sharp: Probably because it was raised in a political rather than any other sense.


Some hon. Members:: Oh, oh.


Mr. Heward Graffiey (Brome-Missisquoi):: Mr. Speaker, my question is directed to the Minister of Industry who reports to the House of Commons on research matters. Will the minister make the strongest possible representations to the Minister of Finance so that medical research will be increased, if we in Canada are to retain in the next year doctors and medical teachers?


Hon. C. M. Drury (Minister of Industry):: Mr. Speaker, I fully share the desire, I think of all members of this house, to make the best possible use of all our resources and to accord a high priority for research. I think one can accept the assurance of the Minister of Finance that there has been no cut-back in this area or any other.


William Heward Grafftey: Will there not even be a freeze in relation to medical research, in view of the serious problem facing the country?
Inquiries of the Ministry NATIONAL DEFENCE



RIVERS, MAN.-REPORTED INTENTION TO CLOSE TRAINING CENTRE

[Stage Direction]
On the orders of the day:
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, I have a question for the Minister of National Defence. Could the minister indicate when the scheduled meeting between the government of Manitoba and himself or his representatives will take place with respect to the continuing role of the Rivers tri-service air base?


Paul Theodore Hellyer: To the best of my knowledge no date has yet been set. I think it was suggested that a meeting might be arranged some time during the month of October.


Walter Gilbert Dinsdale: I have a supplementary question, Mr. Speaker. I would presume that under an integration program the role of this station would be increased rather than decreased.


Mr. Speaker:: Order, please. That is argumentative.



FINANCE


[Stage Direction]
On the orders of the day:
Frank Howard: Mr. Speaker, I have a question for the hon. member for Essex West in his capacity as chairman of the committee on finance, trade and economic affairs. Before I pose my question, may I compliment the Minister of National Defence on having taken such a long time to come up with so much boloney.


Paul Theodore Hellyer: Mr. Speaker, I rise on a question of privilege. I was about to reply to the question when the hon. member for Kamloops was given the floor.


Some hon. Members:: Order.


Mr. Speaker:: Order, please.


Frank Howard: I did not catch that delightful comment of the minister, but obviously I can get along without it.


Paul Theodore Hellyer: I will send it to you.


Frank Howard: May I ask the hon. member for Essex West when it is intended that a meeting of the committee will be called to deal with the bill relating to the Bank of British Columbia, which I understand is the
September 9, 1986

Inquiries of the Ministry only subject matter before that committee of which the hon. member is chairman.


Mr. H. E. Gray (Essex West):: Mr. Speaker, I am pleased to be able to answer this question, and I hope the hon. member will not consider my answer to be boloney. The bill to which the hon. member referred is not the only business before the committee. That committee also has before it at this time a bill in respect of the Bank of Western Canada, which we hope to deal with when the amendments to the Bank Act are referred to the committee.
In so far as the bill in respect to the Bank of British Columbia is concerned, I hope to find an early opportunity to consult with the steering committee in order to ascertain a suitable date for hearings in this regard which will be satisfactory to the sponsors and those in the province of British Columbia who are interested in this matter.



DOMINION-PROVINCIAL RELATIONS QUEBEC-REPLIES FROM PREMIER RESPECTING FEDERAL LEGISLATION

[Stage Direction]
On the orders of the day:
Mr. Maurice Allard (Sherbrooke):: Mr. Speaker, I should like to direct a question to the Acting Prime Minister (Mr. Martin).
Could he tell the house whether the government has received any reply from the government of the province of Quebec concerning a certain federal legislation?


Paul Joseph James Martin: Mr. Speaker, the hon. member asked that question the day before yesterday and I should have been able to answer him.
I shall immediately ask the Prime Minister's secretariat to supply me with the information so that I can give an answer as soon as possible.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. Lloyd R. Crouse (Queens-Lunenburg):: Mr. Speaker, I should like to direct a question to the Acting Prime Minister. He has already given us an indication of his vast experience in agricultural matters and by this time he should also be an expert on fisheries affairs. Can the Acting Prime Minister tell us

whether any progress has been made in establishing geographical co-ordinates from which the base lines will be drawn to provide Canadian fishermen with a 12 mile limit?


Paul Joseph James Martin: Mr. Speaker, as the hon. gentleman is aware, during the discussions I had with Secretary Rusk about six weeks ago I informed him that we proposed to take certain steps in connection with this matter, and in that regard I made a proposal. I have reason to believe that I may receive the United States reaction to this proposal some time next week. When a reply is made available to me I will be able to tell the house the precise nature of the proposal Canada has made.



VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. G. L. Chalterton (Esquimalt-Saanich):: Mr. Speaker, I should like to direct a question to the Minister of Veterans Affairs. In view of the large backlog of cases before the pension commission and the subsequent long delay in adjudicating applications, will the minister consider enlarging the membership of the commission and the appropriate medical staffs so these applications may be dealt with within a reasonable length of time?


Hon. Roger Teillet (Minister of Veterans Affairs):: Mr. Speaker, I expect that this matter among other things will be considered by the Wood commission. I believe I should wait for the report of that commission before I make any further studies of the kind suggested. There may well be a point in the hon. member's question which should be looked into.



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Mr. S. J. Enns (Poriage-Neepawa):: Mr. Speaker, my question is directed to the Postmaster General. Is he aware that post offices across the country are in the business of selling $2 federal waterfowl hunting permits, and does he not agree that these permits should be made available to the regular provincial hunting licence vendors so that tourists and other hunters will not be inconvenienced by having to make two stops in order to obtain these hunting privileges?
September 9, 1966


Hon. Jean-Pierre Cote (Postmaster General):: Mr. Speaker, I am aware of that fact but my department has adopted that policy and I agree with it.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. H. W. Danforih (Kent (Ont.)):: Mr. Speaker, in the absence of the Minister of Trade and Commerce perhaps I may be permitted to address a question to the Minister of Finance in respect of a matter with which he is quite familiar. Can the minister inform the house whether any progress has been made during the long tariff negotiations which have taken place at Geneva, and will he indicate when these negotiations may be concluded?


Mitchell William Sharp: Mr. Speaker, there has been considerable progress made. I expect that we shall live ud to the schedule if only because the authority of the United States will be expiring shortly. I do not know whether the outcome will be as favourable as the late President of the United States, Mr. Kennedy, originally hoped for, but I am sure there will be a substantial outcome.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Edward Nasserden: Mr. Speaker, I should like to direct a question to the Minister of Finance. In view of the government decision to defer the effective date of medicare to July 1, 1968, has the government any plan or intention of participating with those provinces which already have a medicare plan in such a way that will be of benefit to them?


Mitchell William Sharp: Mr. Speaker, I think the decision of the government as announced yesterday speaks for itself in regard to this matter.


John George Diefenbaker: Mr. Speaker, by way of a supplementary question I should like to ask the Secretary of State for External Affairs whether letters have been written to the provinces indicating the revisionary nature of the medicare proposal, and whether when he
Inquiries of the Ministry gave his answer in the house yesterday regarding this question he was aware of the fact that changes had already been anticipated and made by the cabinet.


Paul Joseph James Martin: Mr. Speaker, the Minister of Finance sent copies of his speech to provincial representatives yesterday. Just for purpose of emphasis I may say that the government proposes, as was stated by the house leader last night, to see that the medicare bill is passed this session. This will be another contribution by this government, and the party to which we belong, to the program of social security in this country, which I think compares with that of any country in the world.


John George Diefenbaker: Mr. Speaker, in view of that gratuitous addition from dreamland I should like to ask the minister whether it is the intention of the government to make changes in the general ukase that was issued to the provinces in order that the plan may be reformed and altered to become completely comprehensive.


Paul Joseph James Martin: Mr. Speaker, the Minister of Finance made it clear in his statement yesterday that with the exception of the effective date there will be no change in the bill, which I am sure will commend itself even to my right hon. friend.


John George Diefenbaker: Five provinces have not agreed to it.


Paul Joseph James Martin: Five provinces may not be in agreement, but this government has been opposed by provinces in respect of other such measures. However, the fact is that as the result of the initiative taken by the governments of Mackenzie King, St. Laurent and Pearson, we do have programs of benefit to the people of Canada.


John George Diefenbaker: It only took 36 years for health insurance.


Stanley Howard Knowles: Mr. Speaker, may I ask the Secretary of State for External Affairs whether that is another of those canards that the Minister of Finance was talking about a minute ago.


Paul Joseph James Martin: As my hon. friend knows, I have not had an opportunity to express this kind of canard for over three years.


Stanley Howard Knowles: That was a real one today.



September 9, 1966
Supply-Finance TRANSPORT



PRINCE EDWARD ISLAND CAUSEWAY-INQUIRY AS TO POSTPONEMENT

[Stage Direction]
On the orders of the day:
Mr. Heath Macquarrie (Queens):: Mr. Speaker, I should like to direct a question to the Minister of Finance and to relate it to one of the "painful reviews" he mentioned yesterday. Can he assure the house and the Atlantic region that the construction of the Northumberland causeway is not one of those good projects which is planned for postponement or deferment?


Mitchell William Sharp: Mr. Speaker, the position of the government on the construction of the Northumberland causeway was never changed. We intend to proceed with it and complete it.

The house in committee of supply, Mr. Batten in the chair.
DEPARTMENT OF FINANCE Administration-
1. Departmental administration including administration of the Guaranteed Loans Acts and the Inspector General of Banks' Office, and payments to provinces and grants as detailed in the estimates, $4,332,900.
[DOT] (11:50 a.m.)


Mr. Mongrain:: Mr. Chairman, I started last
night to give my impression from the standpoint of an independent member in this house and you will agree that it can be different from the opinion expressed by the Minister of Finance (Mr. Sharp) and from certain comments made by the spokesmen of the opposition parties.
I said that, in my opinion, the minister's speech appeared to me as a courageous diagnosis which, for instance, a surgeon would make after examining a patient and finding out that his condition is getting worse. And the diagnosis is all the more courageous because the minister admitted that the condition of the patient-Canada or the Canadian economy in the circumstances-became worse these last five months, when he had anticipated that it would improve.
I added, Mr. Chairman, that the problem of inflation is a rather complex matter, that it seemed to me that the minister is quite qualified to suggest cures, since he has at his disposal a whole team of experts and he has had himself a wide experience in government matters, in short, that he is always in consultation with financial experts from all over the

world with whom we have financial connections.
And I think I could say as much if we had a Conservative government, because I presume that the Leader of the Opposition (Mr. Diefenbaker) would have tried to choose as head of that department a competent man who could benefit also from the same advice of experienced people.
Mr. Chairman, I added that I had a lot
more confidence in the minister's directives, precisely because of his qualifications, than in some remedies-which remind me of quacks' or old wives' remedies-proposed by some hon. members who cannot offer the same qualifications.
Mr. Chairman, it was said during this debate that the government was probably to blame for inflation. The public was thus given the impression that Canada is the only country faced with inflation, and yet it is raging throughout the world. One has only to read a financial publication to find evidence thereof. For instance, in the September 2 issue of Time there is an article which reads as follows:

In West Germany, credit is so tight that Frankfurt last week cancelled plans to build a new subway system, while Dusseldorf was forced to call off construction of a new city hall, auditorium and athletic stadium.

You will note, Mr. Chairman, that those are countries which are reputed for their solid financial structure and which do not indulge in fantasy.

In Switzerland, commercial banks last month raised the prime interest rate from 5 per cent to 6 per cent, the first such increase since 1937 in the frugal little country.
In Sweden, the shortage of loan funds is such that high-priority apartment construction in Stockholm has been cut back 40 per cent, and the average wait for an apartment is now ten years.
In Norway, big and small businesses this summer are getting bleak answers when they make loan applications as longtime bank customers: "Sorry, but we don't have money."
In Britain, banks are now within 1 per cent, or $47,500,000 of the ceiling on the amount of money that they can lend;

And it continues along the same lines, and we note, Mr. Chairman, that the same situation prevails in all the countries of the world. Even the U.S. which is supposed to be a
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leader in the financial field is faced with problems. This was evidenced this morning in the statement of President Johnson, who must take austerity measures concerning industry and high finance-fortunately-rather than against the small people.
Again in the September 9 issue of Time we read that even Wall Street financiers urge the government to take emergency action, and I quote on page 79 from the section entitled- [English]
Ordinarily, talk about higher taxes is not very cheery. But U.S. stock and bond investors last week seemed to brighten up just when word got out that the Johnson administration was seriously considering tax increases as an adjunct to tight money in the fight against inflation.
[DOT] (12 noon)

This disease is common not only to Canada, but to the whole world. In every country, you have all kinds of governments: conservatives, liberals, democrats, republicans, and I believe the most affected country is England whose government is closely related to our New Democratic Party. We will not put the blame on any individual, any party, because it is a general disease, and so we must have the courage to take the necessary measures to prevent this disease from spreading and bringing on disaster.
That is why, Mr. Chairman, I come to certain conclusions. I believe all Canadians should be reassured for two reasons: the first is that today's governments are prepared to deal with the situation, to prevent it from turning into a catastrophe, because we have experts today who are able to make financial forecasts and counsel governments, so that these governments may take the necessary steps when it is time. I repeat that, in this matter, I have full confidence in the hon. Minister of Finance.
There is also a second reason. We now have in Canada social legislation providing our economy with hundreds of millions of dollars, if not over a thousand million each year, which helps to stabilize the Canadian economy. But in spite of all this, strong measures will have to be taken. I will say only this to the hon. Minister of Finance: In the measures you are going to take, do your utmost to spare the small wage-earner, the one who lives with austerity the year round.
Let us not take away the butter on his bread, for pity's sake, and let us endeavour to impose austerity onto those who have the means to pay, the financiers, manufacturers, and businessmen who can always make out,
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and let us go as easy as possible on the wage-earners, particularly the low wage-earners.
And I will now point out to the hon. minister it is time to remember that this government has been accused of indecision, procrastination and weakness in dealing with certain problems; so it is now time for the government to prove that it has the necessary determination to apply to the Canadian economy the measures necessary to put it back on its feet. The time has come to face this crisis bravely, to make all Canadians understand that an operation, never a pleasant thing, is absolutely necessary. No one is happy when his surgeon tells him that he will have to remove a vital part of his body, but when he learns that he will get worse and die unless he is operated on, he reconciles himself to that fact, and asks the surgeon to be quick.
I think the government will show courage and determination. It has all it needs to understand the situation. It must not let itself be impressed by the criticism of some irresponsible or inexperienced journalists, by some members of this house who are more interested in promoting the interests of their party than in working for the good of the Canadian economy. The minister would be wise to listen to some of the suggestions, because the members of the opposition have made some that are worthwhile, but I think he should concern himself only with constructive criticism. He should not let himself be dissuaded from the course of action he has taken. In the present situation, he should himself forget the political considerations of his own party, forget future elections, and believe that Canadians today are better informed than they have ever been, that they will not swallow anything and that they will not be bluffed. Canadians realize more than ever that a financial crisis does exist and they expect their government to come forward with remedies or cures, or even painful operations, to prevent the problem from becoming more serious.
Mr. Chairman, I have one last point to make and then I will resume my seat. Last evening, during the debate, an hon. member bluntly stated that I would probably go back to the Liberal party before too long. He might have meant it as an insult; I will simply remind this kind hon. member that I left the Liberal party of my own accord, that I am happy as an independent, that I can now say out loud what everybody thinks and says in a whisper, that I do not have to keep

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silent for political reasons, that I can stand up and criticize the government when I conscientiously believe I should do so, but, on the other hand, I would be ill-advised and remiss in my responsibilities toward my constituents if I failed to recognize the good things accomplished by the government, to recognize especially that the government has certain responsibilities to discharge, and, also, if I did not give the government the support to which it is entitled, because, as an independent member, I do not work for the Liberal party but for Canada, for my province, for my constituency.


Mr. Matheson:: Mr. Chairman, I wish to commend the last speaker, the hon. member for Trois-Rivieres (Mr. Mongrain) for the speech, full of wisdom and objectivity, he has just delivered, and also for his contribution to this most important problem.

I listened last night with great interest, Mr. Chairman, to the contributions that were made by two Conservative members, one N.D.P. member, the leader of the Ralliement party and the leader of the Social Credit party. I struggled to discover what was the conclusion of these hon. members to this inflationary problem that faces Canada and, as the hon. member for Trois-Rivieres has indicated, the entire western world. I was confused about this. It almost appears to me, sir, that we have forgotten somewhat the experience of the thirties. Certainly, during the time I have been a member in the last four parliaments we have shown considerable preoccupation with long and middle-run economic problems, problems relating to exchange and growth and distribution. But in so far as shorter term problems relating to cyclical fluctuation are concerned, it would appear that we have tended to forget them even though they were so much the concern of the pre-war generation in Canada.
The hon. member for Brome-Missisquoi made a carefully prepared speech last evening. He spoke in terms of excessive interest rates. He spoke about the need to control inflation. Then he stated his fear that the minister had enunciated negative, short-term remedies to combat inflation and, in effect, urged the federal government to increase substantially its expenditures on such matters as retraining, housing, zoning, the ARDA program and so on. He spoke about the need for long-term measures to be taken to combat inflation. This was the burden of his remarks.

Actually it is difficult to find very much that was truly unique and different in the remarks of the hon. member for Qu'Appelle. He was derisive of the Minister of Finance for the financial measures adopted, which he argued were as old and as orthodox as fiscal and monetary policy could be. For my part I am very grateful for the fact that following the study of the commission on Canada's economic prospects, the royal commission of 1957 which addressed itself in the main to manpower, productivity and output, and the need for trained manpower and research, we have had two important studies by the Economic Council of Canada.
The first study related to economic goals for Canada by 1970. In December, 1965, there was the more searching and shorter term study which addressed itself to a sustained and balanced economic growth. I am grateful for the fact that we have as Minister of Finance a man uniquely qualified in graduate studies, first at Manitoba and later at London School of Economics; a man with practical experience having discharged important duties in the finance department and the Wartime Prices and Trade Board, a scholar who in 1947 became director of the economic policy division of the Department of Finance, who in 1955 and 1956 led important teams to negotiate trade agreements with Russia and Japan, basically in the field of food, who led many important deliberations for the western world in GATT, who in 1963 succeeded to the important portfolio of Trade and Commerce and then took over the watchdog duties of the Department of Finance. We must regard our Minister of Finance as the guardian of the nation. It is his duty to represent all of the people, and I would think in particular the consumer. We have in the minister a man who understands the machinery for fiscal controls at the government's command and knows how and when to use them.


Mr. Scott (Danforth):: You are straining, John.


John Ross Matheson: Am I straining? One of the important comparisons I would make between the minister and the members who spoke last night is the note of optimism which appeared in the minister's comments as opposed to what appeared to me to be the despair of the Conservative members and the spokesmen for the other parties.
[DOT] (12:10 p.m.)
What are the pressures with which we are faced? On March 21, 1966, the Minister of
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Finance spoke honestly and frankly, just as he did last night. He said in part that our problem was not to put a brake on the economy but to see that we do not press too hard on the accelerator and throw the car off the road. If one gathers together the several speeches which have been made by the hon. gentleman in the field of balance of payments, in the field of exports and imports, in the field of growth, and now more particularly in the short-run area of cyclical theory, I think we have as fine a set of addresses on economic problems in Canada as we can find from any Minister of Finance who has ever held this portfolio. We have had good ministers of finance during periods of war and some during post-war periods, but not many have had the chance to assume different portfolios and responsibilities which cover the entire range of our economic problems.
In another address relating to the problem of poverty the Minister of Finance said that Canada's major problem in 1966 seems to be to restrain the economy from trying to expand more rapidly than physically possible. That was his conclusion of many months ago. In another address he indicated that prosperity tends to widen the gulf between the rich and the poor, just as depression tends to be a leveller. His advice to the nation was that we should proceed with discipline. In naval terms, we must advance line abreast, not line astern.
Some of the N.D.P. members seem to be uproarious in their laughter, but my contention is that regardless of where a man fits into society, whether he be an old age pensioner, a worker in a trade union, a school teacher, a clerk or doctor, even a person clipping coupons, there is essentially only one way in which the nation can advance and that is line abreast. It is ridiculous to suggest that simply by taxing away profits we can right this distortion of inflation, at the same time encouraging price increases in other directions.
The problems that are facing Canada are clearly understood by bankers, businessmen and economists, if not by some of the members of parliament.


Paul Joseph James Martin: And by labour.


John Ross Matheson: And by labour, as the
Acting Prime Minister indicates.


Stanley Howard Knowles: That was not in the text.
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John Ross Matheson: No, but it is a useful intervention because we are getting some very able and responsible assistance from labour today on matters not entirely along the lines indicated by members of the opposition. I do not think that Canadians are so naive as to overlook the dangers with which we are currently faced.
This is the longest period of economic expansion in Canadian peacetime history. It has produced an extended series of annual increases in before-tax profits of corporations. In some instances the profits of certain corporations, perhaps those in a monopolistic or quasi-monopolistic position, have been so high that there has been, as in the case of the United States and as in the United Kingdom, the danger of high-profit industries being able to pay labour so well that they are more or less able to entice them away from other industries which are operating marginally, therefore increasing the danger of bottlenecks.
This year, though business activity continued to expand strongly, rising costs which are associated with an economy operating at levels closer to capacity than at any time for a decade were beginning to take their toll of profits. In the early months of this year in Canada and the United States business forged ahead at a rate that was clearly unsustainable. The hon. member for Brome-Missisquoi and the hon. member for Qu'Appelle are apparently not interested in these facts.
It appears to me that cyclical theory now requires us to look through a microscope at the special problems of the top quarter of the upswing. If I can make an analogy, it seems to me that what we have to do is to exercise the art of riding a surfboard. If that can be done with skill, courage and aplomb, growth will quite conceivably continue onwards. Indeed, there may be many higher waves behind this wave and we do not need to be the helpless victims of circumstances. But for us to suggest or to think for one moment that this situation is something within the easy control of the Canadian government alone is specious and untrue.
The economies of both the United States and Canada have been operating at very close to capacity for several quarters and the signs of strain that had begun to appear in 1965 have become unmistakable. Therefore when we use the expression "overheating", that is a simple statement of fact.
Many records have been achieved in Canada this year as this high level of activity

September 9, 1966
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has increased. There is no doubt that the increase in real output, in spite of the many labour differences which have occurred, will be in the neighbourhood of 6 per cent. But the upward trend in prices and costs is causing concern. The consumer price index has risen by over 2 per cent in 1966 and the wage settlements negotiated so far this year have resulted in considerably larger wage increases than in previous years. So that we are facing a new plateau of higher prices and higher costs which is going to take some time to work its way through the economy. But these price increases may accelerate unless a determined effort is made to counteract the increasing inflationary pressures. The threat of inflation has increased, and this will weaken Canada's competitive position both at home and abroad.
I have been looking at the publication of
the Ontario Department of Economics and Development which is called "Ontario Economic Review". In its volume for April of this year there were 12 graphs. On these 12 graphs we find depicted an increase in business, industrial and engineering contracts in Ontario, in new orders for manufacturing in Canada and in wages and salaries in Ontario. Relatively, the consumer price index is flat; it shows a much more modest increase. Yet the gross national product is still increasing steadily, and this increase appears to be relatively higher than that shown by the consumer price index.
When we consider the combination of increasing prices, increasing wages and also the increase in investment capital, which is another factor in the rigidities and illiquidity which has developed, we are facing a major problem which must be met by these fiscal and monetary techniques.
In the May-June issue of the same publication of the Ontario Department of Economics and Development appears a report produced by Mr. H. Ian Macdonald, chief economist. He talks about construction contracts which are currently being awarded in Ontario and indicates that many large construction awards were recently placed in that province, all of which were for very valid purposes. The hon. member for Nanaimo-Cowichan-The Islands thinks that there is no limit to this expansion. When I look at the construction which is being carried out, such as the Beaverton home for the aged, a building at Ottawa university, provincial highway projects, and so on, I commend them. I find myself much more enthused about hospital extensions than

I am about shopping centres and mail order buildings.
What is the effect of all this? The effect must be that if we do not accomplish greater co-operation with the provinces, particularly the industrialized provinces in central Canada, in pacing production, we shall fail by trying to do too much too quickly. That is the advice and guidance we have had from the minister and it is important that this advice should be followed. This I think, emphasizes the importance of the forthcoming dominion-provincial discussions with respect to the solving of such constitutional difficulties as may exist inhibiting action.
[DOT] (12:20 p.m.)
Mr. Graham Towers points particularly to the matter of credit and says:
-I doubt that the pace of the recent credit expansion can be maintained without causing trouble.
He indicates to us that the gross national product in North America last year grew in excess of 9 per cent and, while price increases accounted for a portion of that, the real increase on a per capita basis was in the neighbourhood of 4J per cent. In other words, we are growing and we shall continue to grow, but we should not allow greed to push us over the brink.
It is easy, of course, to be a Liberal administration if you have opposition that comes from both the Conservative side of the house and from the New Democratic Party or socialist group-


John George Diefenbaker: And also within your own party.


John Ross Matheson: Perhaps I should say, from the Progressive Conservative party, in answer to the right hon. gentleman who interjected. It is easier to be a Liberal if you are going to move forward guided by advice from a side which supports some restraint. There are some who desire to conserve and there are others who have an enthusiastic interest to progress rapidly and to be as progressive as possible without any concern for restraint. We have not had in the twenty six and twenty seventh parliaments, certainly not in the twenty seventh parliament, any serious words of restraint.


Mitchell William Sharp: Not from the opposition.


John Ross Matheson: Not from the opposition. I think this is manifestly so. Certainly we have not had them from the first two Conservative speakers in this debate. Their emphasis is that it is only by further pump priming that
September 9, 1966

we can remove ourselves from our present difficulties.


William Heward Grafftey: Nor have you had any from the right wing of your cabinet.


John Ross Matheson: From the right wing?


William Heward Grafftey: From the chancery wing. From the old guard.


John Ross Matheson: I have high regard for what people such as John Deutsch, Louis Rasmin-sky and Robert Bryce have to say. I have high regard for what the Minister of Finance, who is responsible and trying to be as fair and just as he can be under these circumstances, has to say, namely, that it is only by adopting certain disciplinary measures that remedies to inflation can be found.


An hon. Member:: What does the Minister of National Health and Welfare say?


John Ross Matheson: John Meyer has warned us. I know the official opposition are not interested in his warning, but here we have a case where the mid-year survey of capital investment commitments by government shows that, despite a reduction of 4.9 per cent, they are still running at 8.9 per cent ahead of last year's expenditures. It is clear from the various articles that John Meyer has written that the progress in the first quarter of this year cannot possibly be expected to continue. There is such a thing as overheating, and one must take care of the economy. Certainly one sees the wisdom of looking after an engine. We have to consider the wisdom of looking after our our own industrial and financial situation in much the same way.


Edward Nasserden: May I ask a question?


John Ross Matheson: I should prefer to carry on at this time. When I have finished I shall try to answer questions.
I might suggest to the Minister of Finance one excellent way in which $12 to $15 million could currently be saved. I think it might be worth while to examine the proposal with respect to the electrification of the Rideau canal and river system. This has been considered for some years and certainly engineering studies and advice exist. The proposed electrification is, I think, unnecessary and undesirable.
If I may refer to the wise remarks of the hon. member for Trois-Rivieres, he indicated the universal character of the inflationary problem. At first blush many of us would be happy to consider bold and dramatic steps to
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cope with the cost of living. The question we find continually raised in the United States and in Canada is whether wage and price controls should be implemented. A lot of thought has been given to this matter.
I note in the current issue of XJ.S. News and World Report that there is reference to pressures in late August and September and to government action to clamp down on the overheated boom in that country. They estimate in the United States that the boom has reached a critical stage, requiring the most careful handling. A sober analysis is given in U.S. News and World Report, which says that in the United States there is ahead a period of growing strain and mounting pressure, and that labour shortages, skilled and even unskilled, will grow more severe. Unemployment in the United States, now at 3.9 per cent of the work force, will slip to 3.5 per cent. I believe in Canada we are in the region of 3.5 per cent to 4 per cent. The report indicates that by the end of the year the United States figure will perhaps fall to 3.1 per cent. People generally and businessmen and politicians do not like controls, and short of an emergency such as a world war they do not work.
I was impressed by the column by Henry Wallich which appeared in the September 5 issue of Newsweek. It is headed: "Can We Stop Inflation Without A Recession?" He studies the question of direct price controls. He comes to the conclusion as a result of careful analysis of this problem that fiscal and monetary restraints are the only tools that can be relied on to do anything in the immediate future.
With reference to what the hon. member for Brome-Missisquoi said last night, in Canada we are in a somewhat different position from the United States. We have a very limited constitutional power. The government may assume certain powers during a national emergency, but we do not at this time have the powers to step in to exercise the kinds of controls which have been referred to and which are clearly beyond federal jurisdiction. I do feel that continuing discussion with the provinces is of the greatest importance, and I am sure that the wise men of Canada, representing both federal and provincial governments, will not allow constitutional limitations to impede them in formulating the policies that they in their wisdom feel may be necessary.
It is interesting to note, Mr. Chairman, the characteristics we find both in the United

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States and to a lesser extent in Canada. This is so because through the wisdom of the Minister of Finance those problems have been anticipated. One sees that the conditions we are faced with in Canada almost meet the classical situation as described by James S. Duesenberry, the cyclical economist, and the great cyclical authority, Dr. Von Haberler. This aspect of economics was studied intensively throughout the 1930's until the outbreak of world war II. In a 1964 publication Dr. Von Haberler gives a description of what we may find in the fourth quarter of the business cycle, and says:
As more and more unemployed factors of production are drawn into employment, the supply of factors of production and of goods in general becomes more and more inelastic, and a constant expansion in terms of money will lead to a smaller and smaller increase in output and to a larger and larger rise in factor and commodity prices. In other words, at the beginning of the expansion, a large part of the increase in monetary circulation will have been absorbed by a rise in the output and turnover of goods, and a smaller part by increasing prices. When full employment is being gradually approached, this necessarily changes.
[DOT] (12:30 p.m.)
Then he went on to say:
When one category of factors after the other is becoming scarce-the transition to full employment is of course gradual and not sudden-it becomes more and more difficult to expand at various points at the same time.
This is the overheating problem, the problem of trying to do too many things at the same time.
If one industry increases its demand for means of production and succeeds in attracting labourers by offering higher wages, it lures them away from other industries. The same holds true of raw materials and semi-finished products. The expansion of the industry is possible only at the expense of a contraction somewhere else.
Mr. Chairman, a Minister of Finance who is not prepared to recognize these things and deal with these matters with the courage and the guts displayed last night has no right, in my way of thinking, to hold this important key office.


Mr. Horner (Acadia):: Suppose he recognizes these things too late?


John Ross Matheson: After that investigation I should like to remind hon. members that there was not one pay increase which the official opposition had not pressured.


John (Jack) Henry Horner: We take no responsibility for the two you gave.


John Ross Matheson: You take no responsibility at all.


John (Jack) Henry Horner: We will take
responsibility when it is ours but we are responsible for nothing like the 30 per cent increase your government approved earlier this year.


An hon. Member:: You are mad.


John Ross Matheson: Well, 48 members from the prairies were quite prepared to settle the shipping strike on any terms.


Some hon. Members:: No.


John Ross Matheson: That was their message to Canada-get the grain moving. This minority government had to survive tests of strength and pressures in this country nearly all of which were challenges to put more money into circulation, even in directions which could not possibly produce more growth.


Some hon. Members:: Hear, hear.


John Ross Matheson: Everyone in this country is concerned about the situation of the old age pensioners. Members of this house are terribly concerned about those who live on veterans' allowances, about the transport workers-


John (Jack) Henry Horner: Everybody but the pensioners.


John Ross Matheson: but when there is a condition of virtually full employment, pumping more money into circulation will simply blow the top off.


John (Jack) Henry Horner: Exactly what you have done.


John Ross Matheson: There are some members of the official opposition who do not give a damn about this. Their actions have been neither responsible nor helpful. They do not really care about the overheating process.
Bruce Hutchison asks us whether we have the courage and the wisdom to avoid disaster. The real question before us is not political in the ordinary sense-


Edward Nasserden: I rise on a question of privilege. The hon. member has charged that it was the opposition which pumped money into the economy of Canada.


Some hon. Members:: He did not.


Edward Nasserden: It is the action taken by the Minister of Finance which has increased the money supply in Canada over the last 18 months.


Some hon. Members:: Oh, oh.


John (Jack) Henry Horner: The last month.
September 9, 1966


John Ross Matheson: The real question is whether we have the courage to do the things which we recognize must be done. As Bruce Hutchison so ably said, the nation itself has been brought to trial.
There are many examples of a more fruitful partnership between labour and management which we could examine. I spent some time in Europe this year and I was much impressed by the co-operation I saw in certain European countries where I found evidence of an increasing understanding in this field which was helpful to all those concerned, to those they loved and to society generally. I commend to the people of Canada the excellent discipline which has been shown by the people of Switzerland where the problems of labour-management relations have been solved for several years, where automation is not opposed and where industry has been so productive and successful that it has been necessary to import workers from abroad to an extent never before equalled.
During the early thirties labour strife had presented such problems that labour and management, which had always considered each other as institutional adversaries-what was good for labour was supposed to be bad for industry, and vice-versa-became fed up with this state of affairs and began to seek a way out of the impasse. Two men, one of them Conrad Ilg, president of the Metalworkers and Watchmakers Union, and the other, Ernest Ducbi, president of the Swiss Association of Industrialists, both of them friends of Albert Schweitzer, were largely responsible for the events which followed. Together they signed a peace agreement for ten years concluding in 1939. This agreement was accepted by all leading unions and it was subsequently extended for three further decades.


The Chairman:: I regret to interrupt the hon. member for Leeds but I must remind him that the time allotted for his speech has expired.


John Ross Matheson: Could I be given a few moments more?


Herman Maxwell Batten: Does the hon. member have unanimous consent to continue?


Some hon. Members:: No.


John George Diefenbaker: Mr. Chairman, the matter before us is one of grave national importance-accelerating inflation in respect of which the opposition has asked for action for
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months and in respect of which the government has failed to act.
Apparently, to judge by the general tenor of speeches made by government members, a new responsibility will rest on members of the opposition-the responsibility for failure to meet the serious situation. Of course, those hon. gentlemen realize that only the government can take action in respect of these matters. Only governments can deal with these things, and members in other parts of the house have neither power nor right to introduce legislation of a financial nature.
We have pressed for action and have been met by derisive contempt. The Minister of Finance has made frightful mistakes. Yesterday he had to admit that he was $150 million out in the estimate he made of expenditure at the time of the introduction of the budget.
We have the cabinet made up of those with orthodox views and also a revisionist group. The Prime Minister belongs to the latter. They make changes from time to time. I can recall no important measure of legislation introduced in this house by the government which has not sooner or later been completely altered. This is a government which does not know where it is going. Over and over again this has been shown. What a galaxy of calisthenic performances we have witnessed with ministers having rugs pulled from under them. It was a performance which the house had never previously seen. Both the Minister of Labour and the Minister of National Health and Welfare made their speeches on the labour question last week, and as they concluded the Prime Minister pulled the rug from under them.
[DOT] (12:40 p.m.)
Again we have an example of another minister in that category, the Minister of National Health and Welfare. Yesterday he found himself in that very uncomfortable position of being flat on the floor because of the action of another minister. What a strange performance between the revisionist and the orthodox groups, the competitors for leadership, a struggle extending far beyond the ordinary purview of the front bench, with each following his own course. I tell the Minister of Finance that recently he was one of the leading horses but he slipped back.


Mitchell William Sharp: I still have my smile.


John George Diefenbaker: I do not know what position the Minister of National Health and Welfare now occupies in the race, but from his understandable appearance this morning

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it is obvious that he is not pleased. Indeed, last evening when the Minister of Finance spoke on the radio he said in effect, "I can understand he feels badly."
Where is the consistency? The medicare legislation was bruited around as a wonderful piece of work. We said it would not work in the form in which it was presented-


Mitchell William Sharp: Were you opposed to it?


John George Diefenbaker: -that it could never become effective with some of the provinces not participating. No matter what the government may say, its postponement is simply not on the basis that it would be a contribution to inflation. That is an excuse. It is simply the result of the power struggle going on within the cabinet.


Mitchell William Sharp: Pure fabrication.


John George Diefenbaker: I have heard the minister talk about fabrication previously, and may 1 say there is no one more authoritative on that subject than the hon. gentleman. He does not even know that there is inflation. The copy of his speech that he gave to the press yesterday was headed, "The Need to Prevent Inflation." Doesn't he realize that we are now in the midst of inflation and that it has been accelerating?
I recall when we sat on the government benches and looked at these paragons of political and economic perfection as they told us what to do. I remember what they said: "Place us in office and there will be no more deficits."


Mitchell William Sharp: We have reduced them very substantially. We have reduced them down to virtually nothing.


John George Diefenbaker: They said, "No more deficits-we have got the solution."


Mitchell William Sharp: Yes, we use responsibility.


John George Diefenbaker: I realize that the minister is disturbed.


Mitchell William Sharp: I am not disturbed. I still have
my smile.


John George Diefenbaker: If he is not disturbed then let him just maintain that smiling silence that becomes him so well. They said the day of deficits would be over, and instead of high taxes they were going to cut taxes. In the 1962 and 1963 elections 10,000 scholarships for university students were dangled before the young men and women of the nation. "We will bring them in," said the Prime Minister, "and at once."

Those scholarships were dangled as sugar plums before the eyes of the students of the nation. Now, after three years, the government is going to make a saving by not providing the $10 million for those scholarships. Yet within the last few weeks we have embarked on an extensive expenditure program for other nations, accelerating the expenditures already made by Canada which is contributing greatly to international funds. At the same time the government says to the student body of Canada, "What we promised you we now find, after three and a half years in office, we cannot carry out."
It has been strange to watch this government. It has had recommendations from the Economic Council as to what should be done. It has had the advice of the governor of the Bank of Canada as to what should be done. The minister's speech was headed, "The Need To Prevent Inflation," and there is promise of additional taxes not to meet inflation but to meet other expenditures.
The increases in wages and salaries for the armed forces were announced by Mr. Lee-


Mr. Winkler:: Carrots.


John George Diefenbaker: -weeks ago, and he said the amount was going to be large. That is how the government believes it will soften the blow of its ill-digested policies on unification.
Inflation is running wild. They condemned us; but we took measures to get the economy under way. In those days they did not say that the situation in the United States affected Canada, a time when there were 4J million people unemployed in the United States, greater proportionate unemployment than we had, but today they say our difficulties are largely as a result of the situation in the United States. Isn't it strange? But the truth will out.
In the 1962 and 1963 elections they said, "The country is bankrupt." What about the attempted sales of government bonds recently? The reaction of the investing public showed the loss of national confidence in this government.


Some hon. Members:: Hear, hear.


John George Diefenbaker: Now the minister says that the longest period of expansion in the history of the country has taken place, that we have had a long and strong economic expansion in the past five and a half years. That is interesting. They now admit that the expansion began when we were in office, that by our action we started it rolling.
September 9, 1966

Repentance is not always followed by forgiveness. They repent now for the false picture they placed before the people of Canada. They knew better.


Mr. Bell (Carleton):: The public won't forgive them.


John George Diefenbaker: What about the stock markets? They have gone down and down to the lowest point in two and a half years. What about the interest rates they used to complain about? They are now the highest in 40 years. These things have happened under this government of financial wizards who had all the answers. It is quite a picture. The picture has not been improved by the minister's belated speech yesterday. The night before he spoke on television and gave his considered opinion of the duties of an opposition. He said we were responsible and he could not understand what we were doing.
[DOT] (12:50 p.m.)
I recommend for the minister's reading over the week end the views of the Prime Minister as to the duties of an opposition-I may return to that in detail later-or the views of the Secretary of State for External Affairs, that longtime and able parliamentarian who this morning was promoted to the No. 1 position in the leadership stakes of the Liberal party by the Globe and Mail, a position which he will fulfil with dignity. I am referring to his position in the race.


Some hon. Members:: Oh, oh.


John George Diefenbaker: They say they are a minority government and if they were only a majority government, how they would be able to act. What about their allies? Whenever they need help they are always assured of Social Credit support, no matter what takes place, and this gives them a majority on every occasion. Indeed, the hon. member for Medicine Hat is the waterboy for the Liberal party on almost all occasions. But it is because they are a minority government that they have difficulty and are unable to act, so they say. This represents the attitude of the government but I never expected it to be so clearly revealed as by the minister the night before last when he said:
-this wouldn't matter so much in a house in which we had the dominant majority, but we have slightly fewer than half the members, and therefore what happens in parliament today and the attitude of the opposition is far more important than it has ever been.


Mitchell William Sharp: That is right.
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John George Diefenbaker: When we were in the minority they did not think that. I never heard them arguing that way when we were in the minority. Then there are these immortal words:
If we were sitting there with 175 members we could ignore the opposition-


Mitchell William Sharp: Read the words.


John George Diefenbaker: This is the verbatim report of the minister's statement.


Mitchell William Sharp: Read the words exactly as they are. Read the following sentence.


John George Diefenbaker: The minister said:
If we were sitting there with 175 members we could ignore the opposition and say: "Well, you know that's just what you expect".


Mitchell William Sharp: Read the next sentence.


John George Diefenbaker: Did I not read enough?


Mitchell William Sharp: No. Read the next sentence.


John George Diefenbaker: The next sentence is:
But they are sitting in a position of much greater influence upon the outcome and therefore they should have a greater sense of responsibility than they are now exercising.


Some hon. Members:: Hear, hear.


John George Diefenbaker: The minister has done this before, he is always willing to applaud his own words. This is further evidence of that humility of which we read which is so characteristic of him and is one of his abiding attributes. Is there a national crisis?


An hon. Member:: Yes.


John George Diefenbaker: I think the situation is very, very serious. We have been pointing that out for months. It has been described by the Prime Minister as a disaster. There is fear creeping into the thinking of the people, fear of a potential recession. Have the government acted? They have pushed it aside. The minister does not admit it yet because the heading of his speech is, "The Need To Prevent Inflation".
How is the minister going to prevent inflation? He is going to prevent it by imposing extra taxes so the government will be able to provide for the old age allowance of $105 a month for those in need and extra salary and allowances for the armed forces. Why is there delay in this regard? Inflation has picked the pockets of all Canadians. The depreciating dollar is becoming the vanishing dollar, but the government's attitude, as the heading of the minister's speech says, is still; "The Need To Prevent Inflation".

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They said they were going to cut expenditures if they came into office. The minister says: Let us tighten our belts. This government is spending this year $1.6 billion more than we did in the last year we were in office. All across this nation promises were spread around by the Prime Minister-here a building, there a building, here a rink, there a rink. The situation is serious and the responsibility in large measure is the government's.
Somebody suggested today that we were the ones who asked for increased salaries. This government has been piling on high salaries for the top civil servants. Did we ask for those things? What about the expenditures that were expected but now are held up? The dreams of the Minister of National Defence as he marches in martial array into greatness as a competitor in the race? There was to be an expenditure of $100 million for a defence establishment of I do not know how many storeys. They say it will be less than that, but I am referring to the original estimate. Another minister thought we should spend $6 million on a picture. That is the philosophy of the government. Yet the minister tells the people to tighten their belts. Why doesn't he tell that to his colleagues, because they are not doing it?


Mitchell William Sharp: Mr. Chairman-


John George Diefenbaker: I have the floor. If the minister wants to answer afterwards, he may. Why doesn't he say that to his colleagues? On every hand they are spending. It has become a colossal race between ministers to find out what new plans they can evolve that will mean the expenditure of money. The government does not yet know that there is inflation, because the subject of the minister's speech was "The Need To Prevent Inflation." Small business across Canada is being driven out on every hand, unable to get money. Interest rates are mounting to a degree never before equalled. What does the government do? It just plays around with this problem. What is the reaction of the small businessman across Canada? Thirty thousand of them in one organization have already asked for guideposts. The Canadian Importers Association has said it has asked for guidelines, as has the Retail Merchants Association. If there be need to establish the fact that there is inflation, you just have to meet the average Canadian today and find out. Last night the minister announced what is described by the Gazette this morning as

the autumn budget. It is a withered leaf. It is
a promise that something is going to be done five, six or seven weeks from now. This government has been very self-satisfied.
[DOT] (1:00 p.m.)
We have been asking for action but we have received only contemptuous and smiling evasions of our requests. Indeed, on July 14 the hon. member for Northumberland asked the government what it was going to do about the situation and the minister said, as recorded at page 7663 of Hansard for that date:
A great deal of our legislation is already having that effect-
He meant that it was containing and counteracting inflation. This government has refused to take any action.
Let me read from a special issue of the Gazette dated September 3, 1966. The heading is "From T-bone Steaks to Cat Food, Prices Are Up, Up...And Up". The article then states:
Across the board, prices on the food market shelves are moving up and up . . . and up.
Sometimes it's only a penny a can, sometimes about 100 per cent increase . . .
The causes are many and varied . . .
Housewives feel the pinch when they pick up a package of bacon priced at $1.35 which sold for 89 cents a year ago and 69 cents the year before that-an impressive and costly increase of almost 100 per cent in two years.
Let me ask this question, and I think the answer is obvious. Who is getting this thick layer of fat?
Let me continue with this article which states:
Tomatoes, which in some stores sold for roughly 15 cents a pound last year, now cost 35 cents a pound in the same stores.
The article then covers the whole picture and states that $10 bought a pile of groceries a year ago but that the same pile of groceries today costs $13.08.
The index does not tell the true story even though it does indicate a tremendous increase. We had the benefit of a speech over the air by the minister in which he suggested that the opposition was to blame, and now we have had the benefit of the speech he made yesterday. We have been asking for action but what is now being produced? What is going to be done to meet the pickpocket of inflation? The President of the United States described inflation in striking phraseology. He said that inflation is an enemy which eventually makes victims of its allies.
September 9, 1966


Mitchell William Sharp: And there is one of the allies speaking now.


John George Diefenbaker: Mr. Chairman, the hon. gentleman holding the powerful position of Minister of Finance says that we are the allies of inflation. Is it any wonder that one begins to question his thinking regarding the function of an opposition? What he says is that if we were not here in large opposition the government could tell us to take a jump in the lake. That is his attitude and it is a denial of the basic principles of democracy and parliamentary government. The minister knows that, but he still has that senior civil service mentality that affects so many of the frontbenchers of the Liberal party.


Mitchell William Sharp: The hon. gentleman has never learned anything.


John George Diefenbaker: Prices are increasing at a gallop but we find that farmers are not reaping the benefits of these tremendous increases. I do not have the latest figures available but as of 1965 the farmers' share of the dollar paid by consumers was 40 cents generally across the board.
The government is going to increase taxes. It increased taxes last April by 10 per cent to be paid by all except about 40 per cent of the people. What effect did that have? It now takes about 14 hours of a 40-hour week for the average Canadian taxpayer to pay for federal, provincial and municipal taxes. Prices are increasing as never before and the minister says that some action should be taken to meet potential inflation. His words, undertakings and actions are almost effective as a rubber mallet. He tells the people not to spend too much and to start saving something. Perhaps the government should think of doing the same. The government suggests that action must be taken, but the action they recommend is nothing more than a palliative caricature of action.
What will be the result of the announcement made by the minister that within a month or six weeks there is going to be a baby budget? He has announced in advance what it is going to contain. This is the first time I have ever known such an unconstitutional thing to happen, at least since Mr. Gordon had three boys fix up his budget. The minister announced that there would be action five, six or seven weeks from now. I can now only think that the hon. member for Davenport, the former minister of finance, will become even more attractive to his supporters 23033-523
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than he has been, at least by comparison, because what he did appears to be brilliant compared to what this minister has done in announcing what action will be taken six weeks from now.
What will be the effect of this announcement? What will the individual do as a result of the knowledge that something is going to be done? Business will be unable to make plans, not knowing exactly what is going to happen. Everyone will want to know when, how and where tax increases will hit. I suggest that the minister's announcement will bring about the greatest uncertainty in the economic field that this country has ever known. Everyone will have to look ahead weeks before knowing what they should do.
I do not think the government has any plans. They have not been able to bring together the orthodox and the revisionists with the result that they have no plans. They now suggest that if we get out of here they will go to work and come up with something. We want action to be taken and we want it to be taken now, not next month. We are here now and we should deal with the situation. The question of inflation is the most important matter facing Canada today. What will happen in the next six weeks? Prices will climb and climb and individuals will hoard and accumulate. The result will be economic uncertainty in the nation. Why not bring in legislation now? That is a very simple question.
Our attitude is this. Canada faces a difficult situation and unpopular courses must be followed. If the government will go ahead and act now instead of playing with this problem, we will co-operate to the fullest degree in taking effective action in the national interest. [DOT] (1:10 p.m.)
The minister has not as yet put forward one suggestion of any effective action to be taken. By how much is he going to cut expenditures of various departments today accelerating? Why is it that in his estimate of expenditures he is already out by $150 million since the budget was brought in? Can something not be done to control these grasping ministers, each building an empire for himself?
We want action now. If the minister will propose effective action we will be prepared to stay and support it to the fullest degree. As a result of his failure to act, we are faced with a national crisis. We will co-operate by supporting effective legislation. We ask the minister to take action rather than tell us to go home now and deal with the Bank Act

September 9, 1966
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when we come back. How they kicked the matter around to find an interest rate, and what fighting went on in the cabinet between the orthodox and the revisionists. The fight is still on.
While they disagree the economy suffers. They proclaim in loud voices what they will do five or six weeks from now and they swallow silently when action should be taken now. Why not bring in legislation? What intermediate measures has the minister in mind? Let him bring them in. Postponing action for weeks will result in employees stiffening their demands. What about the small group which profiteers at the expense of the nation? What will they do during that five or six-weeks period? They will be encouraged. About two months will elapse before legislation can be brought in. They will be two months of grace extended to the hoarders and to those who will make a run on durable goods. An upward pressure of prices will result. There can be consumer panic in the face of threatened legislation if action is not taken immediately. We ask for that action.
In the field of labour the government, by the 30 per cent settlement which was brought about in Montreal and on the Great Lakes, made it impossible for the responsible union leaders of this country to stand. The Pearson formula is now accepted as having received governmental approval. We were not to blame for that, were we? We asked you to get it settled.


Mitchell William Sharp: That is right, at any price.


John George Diefenbaker: That there was a suggestion that the matter be settled at any price is an unadulterated departure from the truth.


Mitchell William Sharp: Just as is what the hon. gentleman has now said.


John George Diefenbaker: I do not think that what I just said was unparliamentary. If it was, I will substitute for it by saying that this is another of the minister's terminological inexactitudes.
Why did you not bring the matter of the 30 per cent settlement before the house? You wanted to play around with the problem and bring about a solution by offering more than was actually asked for in one case, I believe, so that you would be known for settling labour difficulties. You set greater fires of inflation than have ever existed before. What is happening? Profits of food companies are going up and up. A committee will be set up
[Mr. Diefenbaker.!
by the house to ascertain what is happening. What has the government been doing? While pockets were being picked by inflation the guardian and his government were asleep. I say this in spite of the highly commendatory eulogy of the minister given by the hon. gentleman who preceded me. He deserves a promotion.
What about prices of commodities in the future? I quote a man who is politically removed and therefore cannot be suspected of being activated by other than the facts of life. He is Maurice Amyot, president of the Grocers' Association of the province of Quebec. The day before yesterday, September 7 Le Soleil quoted him as saying: "Prices for groceries are going up 15 per cent to 18 per cent in 1967." These are the facts and the government will not act. Surely the minister should decide that the time has come to act now. Last March he gave a clarion call for restraint, but it fell on deaf ears. The deafest ears were those of his cabinet colleagues.
This government does not follow its own rules. The newspapers reported the Minister of Industry as saying that Canada had bought seven jets from France which would be used by cabinet ministers.


Mr. Pickersgill:: I am sure the hon. gentleman does not want to repeat that misrepresentation. The statement has been denied categorically a dozen times.


John George Diefenbaker: It has been denied but the purchase has not. It was a completely unnecessary and unjustifiable expenditure.


John Whitney Pickersgill: The hon. gentleman says that the transport services of the department are unnecessary.


John George Diefenbaker: The government does not wish to bear the expenditure which they ask other people to bear but they willingly impose taxes.
What action can the minister take at this time? I would think that, having regard for the constitutional position and in co-operation with the provinces, he should endeavour to bring about agreement for legislation to be passed by both the federal parliament and the provinces. Indeed, when I suggested it the Prime Minister admitted that this was going to be done. On August 29 I asked that the government call together the provinces with a view to reaching an agreement on some form of co-operative legislation. The reply of
September 9, 1966

the Prime Minister, as it appears in Hansard of that day at page 7761, was:
Mr. Speaker, on September 14 there is to be a meeting between the federal and provincial ministers of finance. This very important matter is on the agenda and will be discussed with the provincial ministers of finance at that time.
[DOT] (1:20 p.m.)
When the provincial treasurers across this nation heard about it they said: "There is nothing to it, we have never heard about it." The Minister of Finance answered for the Prime Minister two days later and said that there should be action along that line. The provinces are just as anxious as we in the federal arena that galloping inflation shall be met. The Premier of Quebec announced yesterday he is going to set up a committee of the legislature to consider this matter.
There should be a strengthening of the combines investigation staff so that a thorough examination may be made into unjust price fixing, price fixing resulting from demand. There should be set up immediately a price spreads commission. The information is largely available now through the Economic Council. In addition, there should be the fullest investigation into the whole problem of unjust and unfair profiteering. It is occurring. All you have to do is go to the stores and markets to know that today's price is different tomorrow. Yet we are asked at this time and under these circumstances to wait another five, six or seven weeks so the government can think of some plan.
So serious is the matter in connection with food that if one examines the periodicals one finds that in many cases food items are 25 per cent higher than in the United States. Why is this so? We want action. We are prepared to stay here. Produce your legislation. Do not postpone consideration for six weeks. At the rate prices are going up the dollar will be a vanishing dollar. The problem is a tremendous one. The implications to our nation demand action. The suggestion was made by the hon. gentleman who preceded me that, whatever the constitutional difficulties, we do not have to pay attention to them; at least, that is how I interpreted his words. I do not accept that view. I believe that the provinces would be only too willing to co-operate to meet a problem that is eating at the vitals of this nation.
No longer can the minister say that the opposition is to blame. Bring in your legislation. You have always tried to tie somebody to the stake for your responsibility. As I listened to the minister the other night I must
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say that his description of me, by inference, could only be applied to His Satanic Majesty. I am to blame for almost everything. No matter what this government does not do, it is the Leader of the Opposition who is to blame. When I think of the three or four years of calumny that has been heaped on me, when I think of the colouring books, the truth squads, the pigeons, and all those other instruments, mental offspring of some of the members now sitting on the front bench, I realize that they have tried everything. Those in the press who support them have joined in. They pictured me as suffering from an incurable disease. I have an incurable disease and it is this, the desire to do something for Canada.


Some hon. Members:: Hear, hear.


John George Diefenbaker: They spread these falsehoods. They put them in their literature. However, I never expected that a man with the wide experience and benevolent appearance of the Minister of Finance would go on television and place the responsibility on the opposition. We say to you now that many of the things you have done we pressed for. You did not want to do them but you had to do them for the benefit of the people. We say to you now, keep parliament going. Do not send us home. Act now, because what you have done in the production or revelation of a budget to be introduced only in six or seven weeks is a constitutional contravention. It is a detriment to Canada. We ask you to bring in your baby budget now. Certainly, it did not take long for the gestation. One day the government said it was not going to have it and the next day the government said, we are going to produce a baby budget. Bring it in and we will join with you in a spirit of co-operation in the national interest provided you do something effective, because this is a dangerous situation.
I am not very hopeful that the challenge will be accepted because you have not an idea in the world about what should be done under the circumstances except to criticize the opposition.


Mitchell William Sharp: Would the right hon. gentleman permit just one question, Mr. Chairman, a very mild one? Is it not so that you give notice of budgets quite a long way in advance? This has been our constitutional practice for years and years and was the practice of the right hon. gentleman.

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John George Diefenbaker: Always, but you have already said what you are going to do. You have said, we are going to have a budget but this time you have said what you are going to have in the budget, including taxation in order to cover certain matters. This is where you made your mistake.


Mitchell William Sharp: I deny this categorically and I defy the right hon. gentleman to show any-were in the statement I made anything of that nature except with respect to one matter already announced to this house, namely, that when the guaranteed income program was brought forward there would be an increase in taxes. This is well known. Otherwise I was very careful to make it clear I was not committed to do anything else.


John George Diefenbaker: Not committed to do anything.


Mitchell William Sharp: Exactly.


John George Diefenbaker: I agree with that.


Mitchell William Sharp: Have it whichever way you want.


Gordon Minto Churchill: The last word of the minister was, "exactly", and Hansard has it.


Mrs. Maclnnis (Vancouver-Kingsway):: Mr. Chairman, yesterday morning a social worker called me from Vancouver. She was deeply concerned about the impending debate on inflation and the cost of living, and she communicated with me to find out whether anything was known or could be gathered about what was going to be done. She was concerned not only about the low income groups but because of the general state of affairs in the city of Vancouver where the cost of living is now beginning to cut deeply into the moderate income groups above the poverty level with which social workers are concerned. I was not, of course, able to tell her anything about what would be in the minister's statement. However, I know quite well how that social worker is feeling today. I believe that even in her deepest moments of concern she could not have foreseen the completely devastating statement made by the Minister of Finance last evening.
[DOT] (1:30 p.m.)
I do not want to misquote the Minister of Finance so I will use his exact words as they appear in Hansard. First of all, in regard to the winter housebuilding program he said

that the decision had been taken to discontinue the winter housebuilding incentive program. In regard to research grants he said that the government will have to exercise more restraint in the rate of increase this year. The minister may explain that in any way he sees fit, but to the ordinary person that means in plain English a cut-back in research grants.


Mr. Chretien:: No.


Winona Grace MacInnis: Yes, that is what it means in plain English.
Then the Minister of Finance went on to say that the scholarship program, which it had been the original intention of the government to introduce this year, will be deferred, but he made no attempt to say for how long.
Fourth, he said that the agreements with the provinces in support of certain forestry programs expire next March and the government has decided that they should not be renewed because, he added, the government felt that the provinces could carry on without such programs. That is again a highly debatable point, especially if the views of the provinces are taken into consideration.
In regard to medicare I would not even try to paraphrase what he said but will read his words from Hansard as they are recorded on page 8217:
We have decided that we must defer the commencement of one major program that is already before the house. Many of the provincial governments have indicated that they feel we are attributing too much urgency to the introduction of full medicare programs right away, and they do not feel prepared to proceed to put such programs into effect next summer as provided for in the bill before the house. We therefore propose to defer the effective date of the plan for a year until July 1, 1968. The legislation will be proceeded with in the house as a high priority item when we reassemble at the beginning of October. The government has no intention of changing the substance of the bill other than its effective date.
I wanted to say "dishonest" but I do not know whether that expression is parliamentary. In any event, it is not honest to say that this matter has high priority and should be rushed through the house this fall when it is pigeonholed until one year from now. No one in this country will be fooled by such tactics. People know that this is merely a device to try to trap the public into thinking that the matter is being advanced a stage further.
Let me suggest, Mr. Chairman, that what the minister did last night in this regard was to put the whole medicare scheme back a long, long way. We were on the verge of
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having that scheme in June had we given first reading to the bill that afternoon. Now neither the government nor anybody else knows when medicare will become effective, its date of application. What some of us said in June is equally true now, namely, that the interval of time between today and July 1, 1968 is going to be used by all of the forces opposed to medicare in order to delay and, if possible, prevent entirely the bringing in of a medicare scheme.
In regard to old age pensions, let me again repeat the words of the minister relating to that other big program, as reported at page 8217 of Hansard:
When we have before us, perhaps in late October, the measures to authorize the increased revenues made necessary by the income guarantee plan we will be able to review our general fiscal position and consider what changes are desirable in the light of the economic and financial situation.
Translated into plain English, this means that the whole question of an increase for the old age pensioners is once again left in doubt. Perhaps the Minister of Finance knows when the matter will again be brought forward, but outside of the Minister of Finance nobody has any idea when in the world anything will be done for the old age pensioners of this country. This is true also of members of the government. I suggest that what this debate and the announcement of the Minister of Finance yesterday have done is to reveal beyond the shadow of a doubt who is the strong man in the Liberal government. There may have been doubts about it before but I do not think there remains even a shadow of a doubt now.
The Minister of Labour got his some time ago, as did the Minister of National Health and Welfare and the Minister of Manpower. Each one of them was slapped down, and we now finally see who is the real boss in the cabinet, the Minister of Finance. He has shown that the reason he is boss is that he speaks for the people for whom this government is really legislating, the big financial and corporate interests of Canada. This has been revealed by this debate. That is how we feel about it.
Yet, Mr. Chairman, this is the government that less than a year ago went on platforms throughout the country and on the radio and television stations of Canada and said to the people of the country: "Elect us and we will give you a winter works program and other necessary things which should be done. We will give you a vastly increased research program. We will give you programs to aid
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the students in our universities and other institutions of higher learning. We will give you a medicare program absolutely, definitely and unshakably, by July 1, 1967. We will give you a better deal for the old age pensioners". The Prime Minister was reported to have said that the better deal would be in the neighbourhood of $125 a month.
These are the things which were said by this government when they were purporting to represent all of the people of this country. They made a particular appeal to the people who really wanted help from government, people with low incomes, people who were less secure and had less of the affluent society which we are told exists around us. All this has happened this year.
I contend that the people of Canada are not going to be deceived now by these lame excuses. The government has shown whom it is really representing. It is the big, vested financial and corporate interests of this country. I do not care what the members of the government say. Let them wag their heads in denial. When the chips are down and the programs come in, these are the people who benefit from the fiscal and economic policies which are being put forward by the government. This was demonstrated only too well and too thoroughly by the Minister of Finance yesterday.
The former minister of agriculture referred to the statement of the Minister of Finance yesterday as being a complete victory for the establishment. I call it a devastating defeat for the ordinary people of this country. Still further, I call it a "punish the poor" policy. We have always known that the worst crime to commit in this country is to be poor. We now find that the punishment is fitting the crime and becoming the most severe punishment imaginable, a cutting off of the very means which are needed in order to have a moderate and decent sort of living standard in this country.
I want to indicate, as I have already said, that those who get hurt the most by these policies are those who are the least able to protect themselves. A number of us have been brought up to admire the tradition of the sea, which is something we in this western democracy should be proud of. In cases of shipwreck or disasters at sea the tradition is for women and children, the weak and helpless, to go to the lifeboats first while the others, the strong men, stay on deck and go down with the ship if there are insufficient safety devices available for all.

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What do we find in the statement of the minister, Mr. Chairman? At the first sign of economic heavy weather the women and children, the sick and the poor, the helpless and the young people who need education, are herded not into the lifeboats but are dumped into the sea so that there will be easier going for those whom this government is really seeking to protect. Let us not fool ourselves about that. That sort of thing is not going to stop with low income groups.
[DOT] (1:40 p.m.)
I well remember a story that hon. members will have read in their school days. I refer to the Masque of the Red Death by Edgar Allan Poe. In the story the powerful, the affluent and the comfortable seated themselves in a castle while the red death was raging outside, under the impression that they were secure because they were comfortable and because their incomes were sufficient, so to speak. They thought they were protected from the read death outside. As the story goes on, a horrible certitude creeps in that the red death in time will penetrate even to these people in the very centre of comfort and security. This is what will happen if we continue with this sort of policy, because what is wrong with the Canadian economy is that it suffers from a complete maldistribution of income, power and wealth. This is what must be dealt with.
I will read the testimony of a couple of witnesses. Here is what Claude Jodoin, President of the Canadian Labour Congress, said recently:
Worry about inflation never seems to arise until workers ask for their share of an even more prosperous economy. Wage increases obtained by some groups this year have followed huge rises in corporation profits and an increase in the cost of living. Looking at the Canadian economic scene as a whole, we find that between 1961 and 1965 corporation profits, after taxes, rose by 67 per cent while, in the same period, average weekly wages and salaries went up only 16 per cent. It is obvious that Canadian corporations have not only failed to share this prosperity with their employees but they have also deprived Canadian consumers of benefits which could have been provided by these prosperous conditions.
If we had a government that was concerned about protecting the people of this country and the consumers of this country, surely it would be proposing that corporations, the profits of which have risen by 67 per cent, should be heavily taxed rather than blaming the poor or groups such as railway workers who have demanded increased wages so that they can have enough to live on. This is the sort of thing I am talking about.
[Mrs. Maclnnis (Vancouver-Kingsway).l
I shall now quote another witness. He is a former vice president of the Canadian Federation of Agriculture. Before that he was the president of the Farmers Union in Alberta. This is what he had to say the other day:
In the past 15 to 20 years, the dollar return to the farmer for farm produce has been, on the average, less than the take-home pay of labourers working for $1.00 per hour or less. Within the total group of farmers are some 10 per cent who, because of certain circumstances or conditions, are able to maximize these returns into large incomes.
Another 20 per cent manage fairly well and depend on inflated land values to give them a decent retirement fund. The other 70 per cent continue on a day to day basis with day to day commitments that are dependent on their ability to sell something even if that sale gives them no profit. Their whole situation is created because of their effort to get into the 30 per cent category by operating on term credit.
And so on. This farmer is not taken in by the language that has been used about labour to the effect that it is the organized trade unions that are robbing him of the value of his produce. He puts the matter better than I could and I will use his words. He says:
The real issue is the continuation of archaic attitude toward the distribution of wealth and purchasing power. It is the attitude that some people have more right to wealth than others. It is the attitude that some people make greater contributions to the production of wealth than do others. It is the attitude that insists the only way that wealth should be distributed is by the individual's capacity to compete for it, without recognizing the fact that there is no longer any free competition between individuals for the wealth they, as a whole or a group, make available to a nation.
It is imperative therefore that at this particular time it is necessary to rise above the side issues presently being argued in the press, radio and street corners. The rail strike, packinghouse strike and various other protest actions are only symptoms of the real crisis, maldistribution of purchasing power.
These are the things that we agree with. We say at this time, when we speak of inflation and other economic difficulties, that to use the present policies against the poor, against those of modest income, against the farmers, the organized workers and the sick, is merely compounding the difficulties and setting aside terrible troubles for a day of reckoning that is bound to come.
We must stop talking in terms of averages. The trouble is that we think of people in great big lumps. We have come to the conclusion that because the average person is getting along all right and the average wage or average income is adequate, we need not worry. That was exactly what was said by the smiling face of the Minister of Finance as he assured us that everything was just fine. God is in his heaven, everything is all right
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in his world. But the Liberal party is not managing to deceive the rest of us about what is going on in the country.
It is not true that people are averages. Averages do not eat, wear clothes, pay rent. But people do need food and do pay rent and wear clothing. We must provide ways and means for people to be able to do these things.
We must stop using the old cliches. We must stop kidding ourselves with cliches and get down to the business of finding out how to provide a decent, reasonable standard of living for the people of this country. There are people in this house who have been impressed with the elaborate economic jargon we have heard. I say to them that there are many people in Canada who believe that the business of government is to run the affairs of the country so that every man, woman and child in the country will have a chance to have a modern, decent standard of living. It is the business of government to provide a contribution to the welfare of the country to make that standard of living possible. That is what we are here to do.
We have to do two things. First, we must establish a guaranteed annual income for the people of Canada. We have got to do that today, without waiting for this year, next year, some time or never. As I say, we must do that now. The Minister of National Health and Welfare has been talking to people about the need of having a guaranteed annual income. The Liberals of western Canada, when they met recently, passed a resolution urging that the question of a guaranteed annual income be gone into. The Minister of Agriculture has provided some sort of guaranteed income for farmers who give up their farms under the ARDA program. That has been embodied in the agreement between the federal government and the province of Ontario.
In a recent editorial the Vancouver Sun, which is as staunch a Liberal party organ as can be found in this country, had this to say on August 1 of this year:
The idea of a national guaranteed income is worth considering. Credit must go to Health Minister Allan MacEachen for raising the possibility during his recent visit to Vancouver.
And so on. Then, going on to examine certain things that have been raised in the Liberal party, it says:
There are, however, a lot of questions to be posed. Can you guarantee an income and a cost of living to match it? Is it right to propose a costly
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welfare program in times of inflation? Most important, would GI destroy incentive?
There is raised the curious possibility that in a Utopian society circa 2,000 we might work for fun because we'd all be paid a fixed wage for doing nothing.
But it could well be that a guaranteed income is the most effective method of fighting poverty, ensuring employment, promoting stability in labour-management relations and administering welfare.
It can be done without the kind of means test which is so abhorrent to critics of the present welfare system, either by straight subsidy or by a negative income tax.
It is worth a look; but a very sober and far-seeing look.
That is not a sudden convert to socialism speaking, or anything like that. That is the very sober and sometimes very reactionary Vancouver Sun editorially speaking words of sense and of good, sound wisdom in this instance.
[DOT] (1:50 p.m.)
I suggest that if the Minister of Finance would try to find ways and means of putting buying power into the hands of the poor, those who need it, many difficulties would be solved and there would be no need to pace the boom and so on. He should do some solid thinking about getting a guaranteed income into the hands of the public because it has been seen that a guaranteed income works very well for some of us. The minister should pay some heed to the case for getting a guaranteed income into the hands of the people who need it today. Guaranteed income works beautifully for members of parliament. It works beautifully for senators. It works beautifully for civil servants. Why would it not work well for people who have no means of getting a good steady income or enough income to make a decent standard of living possible? This is one of the things that should be done right now to deal with the situation.
A second is to explore ways and means of stabilizing the cost of 1'iving at a level which those on guaranteed incomes can afford to pay. The two are tied inextricably together and cannot be dealt with separately.
I know the Minister of Finance will be attending a conference with the premiers of the provinces in the coming week. I also know, because he has told us so, that he is not going there with any plan having to do with prices and wages. I wish that for once this federal government would go to such a conference with a program to lay before the premiers.
I agree entirely with the views of the Leader of the Opposition on this point. I

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believe the provinces would welcome a well-conceived plan from the federal government designed to stabilize the cost of living for the consumers of this country at least as far as food, clothing, rent, household articles and medical care are concerned. These are things about which the provinces are worried and there is no reason in the world why the Minister of Finance should not go to this conference to seek a delegation of provincial powers to the federal government in order to help stabilize the cost of living and fight inflation. Certainly it would be a brave provincial government which would say no if the federal government had a good plan for stabilizing the cost of living and if it sought a delegation of provincial powers to enable it to carry out at least the beginnings of such a plan. I believe this should be done.
There are, of course, many difficulties in the way. The minister has spoken about difficulties. He should know what they are because he had a hand in this sort of thing as a civil servant during the second world war. I suggest that the real difficulties are neither constitutional nor administrative. What really prevents the Prime Minister going to the provinces with a program to stabilize the cost of living is the absence of the will to do it. That is the greatest difficulty. The Minister of Finance and the cabinet behind him have today proven that they are the servants not of the people of Canada who need them but of the people who do not need them, the big financial concerns and corporations of this country who can help themselves and who have already done so.
I wish to turn to some of the things which we believe should be done and deal with them briefly. We believe a start should be made by reversing the decision to cut back certain programs. Provision for medicare and the old age security program should be continued as formerly planned. To cut these things is a disaster. The old age pensioners have scarcely been able to wait until the fall in order to get some relief. How will they greet the news that the government intends when the fall comes only to look at the fiscal situation and see whether anything should be done?
We believe the Prime Minister should go to the provincial conference with a plan to stabilize the cost of living. Parliament has already shown that it can and will place curbs on wages. It has done so. I suggest there are thousands and thousands of people in this country who will not be afraid of measures to

control the prices of the things they need in order to enjoy a decent living standard. The only people who are afraid are the people who stand to lose by such a program of stabilization and control.
I think it is a good idea to get an investigation of this whole subject under way but I am under no illusion that this is likely to be a fast-acting procedure. I would point out that in the United States they have gone ahead a great deal faster than we have in Canada along these lines. On August 3 the Senate agriculture committee asked Secretary of Agriculture Orville L. Freeman to investigate recent increases in prices for milk, bread and other foodstuffs throughout the country. He got busy right away and asked the federal trade commission to investigate. In the course of its inquiries, which have been under way for most of the month of August, the commission brought to light some interesting facts which I should like to draw to the attention of the government.
Mr. Freeman himself testified before the city council committee in Manhattan. There and elsewhere he absolved the farmer from blame for escalating prices. He declared that while farm prices rose 6 per cent in the past year they are still nearly 2 per cent below the base period of 1947-1949, though retail food prices are 34 per cent higher.
Further, he declared that in 1965 consumers paid a total of $77.6 billion for farm-produced food, up $34 billion from the base period. Of this gain he said that only $6.6 billion, or 19.3 per cent, "trickled down to the farmer". At the same hearing representative Lester Wolff, Democrat, New York, a former marketing consultant, laid the blame for some of the spiraling prices of bread and milk on wasteful delivery methods and collusive and corrupt practices.
At the same hearing officials of the Farmers Union and other farm groups argued that the farmer cannot be blamed for the price hikes in bread or other products. One of them, Harry L. Graham, cited a pattern of monopolistic price fixing and organization in the bakery field. In the meantime, representative Leonard Farbstein introduced a bill to impose a 90-day freeze on food prices. This was needed, he argued, in order to halt inflation.
These are some of the things that are going on in the United States. They are getting along much faster there than we are in Canada. Reference was made yesterday by my hon. friend from Nanaimo-Cowichan-The Islands to sacred cows. In Canada profits
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have always been regarded as sacred cows not to be touched. But these things are changing. I read the other day that in India they are beginning to look around for ways and means of controlling the population of sacred cows in that country. They have even been suggesting that birth control might well be tried out on sacred cows as a means of popularizing it in other quarters.
I know these things will not be easy. But I also know they can be done by a government which really wants to do them. They have been done in time of war. The period in which we are now living may be a period of prosperity for a few people but it is a period of depression and misery for a great many. The alternative to action is strikes and more strikes as the stronger and better organized workers try to protect themselves, leaving those who are less well organized in still greater misery while those on the land are forced to abandon their job of food production.
[DOT] (2:00 p.m.)
Increasing numbers of people will be forced on to the relief rolls because they are not getting enough money to live on and the stage will be set for chaos and disorder. I suggest that now, before we are confronted with run-away inflation, is the time to deal with these things. I suggest that now, before inflation gets carried away by its own momentum, we should deal with it.


Mr. Pilon:: Mr. Chairman, it can be seen from the speech made by the hon. Minister of Finance (Mr. Sharp), notwithstanding the opinion of the hon. members sitting opposite, that logical measures will be applied to remove the spectre of inflation.
Any objective measure in the interest of the Canadian people makes sense. We must admit that certain signs show that the danger of inflation exists. Canadians are going through a period of prosperity at the present time, a period of sound and productive investments. The economic growth we are experiencing is rational and supported by a tendency to consume more than we can produce. It is therefore useless to repeat here the percentages concerning manpower and productivity already mentioned.
Although in some areas of our production, consumption and productivity are balanced, in other areas a little more time will be needed before this equilibrium is reached by
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filling the gaps in manpower. One may gather upon hearing the speech made by the hon. Minister of Finance that the harsh measures mentioned in his speech, are timely throughout Canada. The cost of labour and social welfare programs, in relation to demand, is excessive; every citizen is partly responsible for the increase in prices. Under such circumstances, how can a responsible government act? As the minister has so rightly stated, and as several editorial writers have been repeating in the morning papers, it is by taking restrictive measures. For instance, by controlling capital expenditures, while giving priority to certain programs which are particularly stimulating for our national economy and maintaining full employment. Some social welfare measures will be deferred. Obviously, this is unacceptable to a party, from a political point of view, but you will agree that, in order to face up to such a situation, the government has no other alternative.
I see nothing drastic about the discipline which all Canadians should impose upon themselves. The right hon. Prime Minister (Mr. Pearson) repeated this during the last election campaign. We have seen several countries, which may not have experienced a situation similar to ours, accept to tighten their belt. New taxes may be levied, and provincial programs may also be viewed with a critical eye.
The situation in which we find ourselves today is being reflected tenfold. As for the social measures mentioned in the statement of the Minister of Finance, the poorer people of the country would be affected. Every measure included in this consolidation program will be applied, possibly at a later date, and they may also turn against the Minister of Finance and possibly the government.
Everything has been put aside to prove once again that leadership is a characteristic of the Liberal party.
Our country has progressive economists and other objectives; all that is needed is to weigh the welfare of all Canadians in all areas of our economy. Our financial and banking system is the best organized in the world, in spite of what some opposition party may claim; our institutions play an all-important role and, in years gone by, they have been a stepping-stone for our economy. These institutions have supplied statistics and surveys and have helped the government to complement controls without the least restrictive effects, which could have slowed down

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the implementation of theories concerning productivity, manpower and consumption.
Industry alone controls our future as long as its development remains under Canadian control.
Enough pomposity; let us see action. I believe the program announced by the Minister of Finance must provide the assurance that we will go through this crisis and come out stronger than before.
We must understand that we are part of an economic entity very closely related to our neighbour to the south.
Mr. Chairman, let us ignore the gibes of the opposition, their empty speeches, their destructive criticisms, and let us show that we are the government, and let us govern in the best interest of all Canadians.


Mr. Hees:: Mr. Chairman, when he gave his presentation yesterday the Minister of Finance simply described the situation which everyone in Canada knows very well exists in this country today. He told us nothing new, and he merely announced several additional negative steps which the government intends to take to try to shore up its obvious failure to curb inflation. During his presentation the minister very nearly broke his wrist trying to pat himself and the government on the back for what he termed the excellent job which the government had done in controlling inflation. I suggest it might be profitable for us to look at just what the government has done in this matter since the minister presented his budget last spring.
In his budget the minister forecast that during the next 12 months there would be an increase in the price level of between 3J and 4 per cent. According to Dominion Bureau of Statistics figures released yesterday, the price index during the past 12 months has risen 5.5 per cent, and at this very moment is increasing at the rate of 7.2 per cent for a whole year.
[DOT] (2:10 p.m.)
This increase will go up even faster in the months ahead because of the 30 per cent wage increase guide lines which the government established a few months ago. The reason is, and it is obvious, that no union leader will dare to propose to his members that they accept anything less than a 30 per cent increase in wages because he knows that if he does he will be looking for a new job in the very near future. His union members will simply say to him, "The union leader of the

Montreal dock workers got his people 30 per cent. The union leader of the seaway workers got his people 30 per cent, and these were authorized by the government of Canada. If you cannot get us 30 per cent then we will get somebody who can." That is the reason no union leader can agree on behalf of his members to accept anything less than a 30 per cent wage increase in the future.
Let there be no doubt that when the negotiations between the railway workers and railway management are concluded some time this autumn, the wage increase will amount to at least 30 per cent. These 30 per cent settlements, the pattern of which was set by the government last spring, will of course be passed on to the consumer, and will by that amount accelerate the rise in the cost of living.
If the program for controlling inflation which the government have been following is considered by them to be a success-and according to the minister's statement yesterday he obviously considers it is a success-I should like the minister to explain to the house what his idea of a failure would be. As I have said, the increase in the cost of living has been accelerating almost day by day. Several months ago the minister forecast an increase of 3J per cent to 4 per cent. Yesterday it was announced by the Dominion Bureau of Statistics that the increase between August of last year and August of this year was, 5.5 per cent. During July the increase was 7.2 per cent, calculated on a yearly basis.
The causes of these increases are happening almost hourly. I learned during the lunch interval that the Minister of Agriculture, in a conference which he held this morning and at a press conference which he gave afterwards to announce the results, said that the cost of butter to the consumer was to be increased by 2 cents a pound and he promised consideration of an increase in the price of other products to the consumer. So we see that daily, almost hourly, this government, by increasing prices to the consumer, by entering into wage negotiations and forcing their views upon those negotiations, is increasing the cost of living by its direct action.
Therefore, Mr. Chairman, there is no question that the problem of inflation lies squarely on the shoulders of this government, and it is absolutely ridiculous for members of the government to claim that the opposition is irresponsible in this regard. I have already since the first of the year made several speeches in this house pointing out to the
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government what would happen if they continued to maintain their present policies. I pointed out the inflation that would take place, and the results that would accrue from that inflation. My colleagues, to mention only two, from Prince Edward-Lennox and Simcoe East last spring also made very effective speeches, and almost every member of this party has been making presentations to the house outlining to the government what was going on from their personal experience regarding the increase in the cost of living.
We have been making positive suggestions as to what could and should be done to control the increase in the cost of living but we have always been ignored. We have been told that the government was pursuing the best of all possible plans, that the country had nothing to worry about, and all we had to do was sit tight, say nothing and put our faith in the government. The figures I have mentioned today outline clearly that we have come to a very serious state of affairs in this country and that from now on the voice of the opposition must be heeded by this government, because obviously they are unable to discern themselves what is the problem, what should be done about it, and present to the house concrete plans for dealing with it.
It is obvious to all of us that we are in a crisis situation regarding this runaway inflation, and that is not too strong a word to apply to it. It must be controlled. But unfortunately the government's plans, as they were announced by the Minister of Finance in his budget last spring and in his presentation to the house yesterday, are both negative and sterile. They are out of date. They are the old plans that were used many, many years ago and it is about time this country was treated to something more imaginative, something more modern and something more effective.
A good example of this sterile and negative attitude was illustrated in the minister's speech yesterday when he announced that the government intended to slow down the assistance which is being given to research and defer their scholarship program. As we know, one of the chief causes of inflation is low productivity which sends costs and prices up. Two of the best ways to increase productivity are, first, to increase research and, second, to increase scientific education. Through both these methods we will find out what are the best products for us to produce and better methods to produce those products. By adopting these methods we can increase productivity, lower costs, thereby lower selling prices and thus control inflation.
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But what do we find this government doing? They are cutting out or greatly diminishing their assistance to two of the programs that can assist this country in fighting inflation. The kind of sterile, negative program which this government is following will achieve the same results as did an exactly similar program in late 1956 and early 1957, when their tight money policy and negative approach brought on a recession which was well launched when the Conservative party took office on June 21 of that year.
Having said that, Mr. Chairman, I think we should examine this question and see what can be done to deal with the problem of inflation in a positive rather than negative manner. We know that inflationary pressures are caused by too much money chasing too few goods. We know that these pressures can be reduced either by the negative method of decreasing the volume of money available to chase the goods or by the positive method of increasing the volume of goods available for purchase.
As one would expect, knowing this government, they chose the negative method and have been reducing the volume of money steadily over the past year by doing two things, first, increasing taxes and, second, imposing a tight money policy on the economy of this country. A young and growing country with Canada's potential for growth should be increasing, not decreasing, production, and it is shameful that we should be adopting the negative policy of decreasing production at this time. Increasing production was the policy of the Conservative party when we formed the government from 1957 to 1963, and that will be our policy when we form a government again in the very near future.


Some hon. Members:: Hear, hear.


George Harris Hees: We have a right to ask ourselves why this government is not following such a positive program. The answer is that this situation resulted from a critical shortage of skilled labour in this country which this government permitted to occur. During the past year this shortage has become more and more evident. For some time it has been clear that the technical training schools which were established when we were in government and which have been doing a good job are unable to produce a sufficient number of skilled workers each year to allow production to expand fast enough to meet the demand for products both here in Canada and in export markets.
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[DOT] (2:20 p.m.)
Earlier this year I asked the Minister of Trade and Commerce why our exports were not increasing at a faster rate and he replied that we in Canada could not produce enough goods to satisfy the Canadian demand and a growing world market demand. That is a shocking admission for the government to make. Once world markets are lost and customers find alternative sources of supply they are very often reluctant to return to the original sources. We are losing sales abroad which we will probably never recapture and we are losing the sales because we cannot produce enough in this country to meet the demand.
As a result of the shortage of skilled workers we do not produce enough goods to satisfy the expanding potential world markets or the Canadian demand which has grown tremendously because Canada has become an affluent society. This situation has caused inflation which is the problem with which we are faced today. Because Canada is an affluent society there is a great deal of money available for the purchase of consumer goods. People wish to satisfy their demands and desires and are bidding more and more for what has turned out to be a limited and insufficient supply of goods.
I suggest that this government should have embarked at least two years ago on a program which embraced the following four policies: first of all, a greatly accelerated program for training the skilled workers needed to carry out an expansion program to meet the increased demand for goods both at home and in the export markets; second, an immigration policy which would attract the number of skilled workers required to supplement the insufficient number being trained by our technical training schools.


John Robert (Jack) Nicholson: Will the hon. member permit a question?


George Harris Hees: I will answer your question at the conclusion of my remarks.
The third step would be to create incentives encouraging industry to increase productivity and thereby lower the cost of manufacturing goods and the selling price. The result of this step would make our manufactured goods more competitive and in turn increase sales in the export market. The final step would involve a policy of providing industrial loans at reasonable interest rates so that Canadian industries could expand and 
keep pace with the world demand for products. This would of course reduce inflationary pressures at home.
These policies must be introduced even now so that this country can meet the problems associated with inflation and growth in a positive rather than negative manner. If the government refuses to take these steps it will soon realize it has blundered and pushed this country into another recession similar to the one which occurred in late 1956 and early 1957. When we took office we found that inflation was already well on its way and it took us some three to four years to pull the country out of it. I urge the government to throw away its sterile and negative policies, which is all they seem to be able to think of today, and adopt positive policies such as those I have outlined.


John Robert (Jack) Nicholson: Mr. Chairman, the hon. member for Northumberland was good enough to indicate that he would answer a question. Does the hon. member not agree that the constructive policies and actions of this government over the last 18 months have resulted in almost tripling the number of immigrants to this country over 1962, with more than half of the breadwinners among them qualifying as skilled workers?


George Harris Hees: Mr. Chairman, perhaps the government has made a small move in the right direction but as yet the results have not been sufficient. As the minister knows, anyone in business who sees a shortage of labour developing accelerates his attempt to hire more skilled men. The shortage to which I referred was obvious and it should have been obvious to the government. The government should have made things so attractive in this country to skilled labourers abroad that they could not afford to do anything else but come to Canada. The minister must realize, having been a prominent businessman before coming to this house, that a successful businessman will lure skilled workers from his competitors in order to meet demand. That is exactly the policy that should have been followed by this government.


John Robert (Jack) Nicholson: Mr. Chairman, I asked a very simple question. I did not quote the exact figures involved, but the program followed by this government resulted in an increase in the immigration of skilled workers amounting to three times what it was in 1962. Is it not a fact that the policies followed by the former government were such that the immigration of skilled and other workers
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shrivelled between 1958 and 1962 from 200,000 per year to less than 70,000 per year?


George Harris Hees: That is a very easy question to answer and I am pleased that the minister has posed it. The former Liberal government which went out of office in 1957 had been warned of the impending situation by the so-called hidden report early in 1957. In spite of that fact and as a result of the negative and sterile policies of that government we experienced a recession that was well launched by the time this party formed a government, and it was not until 1961 that we were able to pull the country out of this difficulty. In spite of the former government's mismanagement and negative policies we were able to bring the country out of this recession and create a momentum that has not yet ended.
The problems faced by Canada during that recession were not related to the lack of skilled workers but rather to the lack of jobs. In contrast, within the last two years it has become apparent that there is a lack of skilled workers. We have unfortunately not been able to do anything about this shortage in the past two years because we have not been in office. I assure the minister that we will be back in office soon and something will be done to alleviate the problem.
[DOT] (2:30 p.m.)


John Robert (Jack) Nicholson: Is the hon. member not in agreement with the fact that the policies and actions of the government in the last 18 months have resulted in almost tripling immigration as compared with three and a half years ago, and that the great majority of these breadwinners among the immigrants are skilled workers?


George Harris Hees: I should like to give the minister this answer. If he were the president of a company and was reporting on the company's activities at a directors' meeting-


Joseph Jacques Jean Chrétien: Reply to the question.


George Harris Hees: I am replying to the question. If he were reporting to his directors that he had tripled a certain program but was still far short of achieving the objective the company set out to achieve, would he receive commendations from his directors? No, he would be asked why he had not gone a lot faster than he had. Obviously the minister thinks that any improvement is satisfactory. I will tell him on behalf of the Canadian people that it is not nearly satisfactory enough and that he had better get off his seat and get out and
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earn his salary, which obviously from his own words he is not earning at the present time.


Mr. Oito:: Mr. Chairman, I do not intend to reply to the hon. member by blaming Tweedledee or Tweedledum back and forth. The fact is that while the opposition was in government the same mistakes were blamed on them, and I will not blame the opposition any more than I will criticize the minister. I think the minister did the best he could with the concepts he was given by his department. What I will take up with the minister, if I can debate with him, is that his staff, those keen young fellows who 30 years ago were great followers of J. Maynard Keynes who propounded a new concept of economics, have forgotten that times have changed.


Raymond Langlois: The problems are still the same.


Steven Otto: I heard the hon. member for Northumberland say that inflation means we have too much money chasing too few goods and therefore if there is inflation there is too much money and too few goods. This is nonsense. It is quite possible to have inflation at a time of unemployment and with a surplus of goods. I have gone over the speech of the minister and I believe that many of the concepts on which he has based his policy are the same as those used by the Conservatives and the N.D.P.
First, there is the concept of supply and demand. Ever since the time of Adam Smith people have supplied goods and others, the consumers, have had to make a rational choice as to how they will spend their earnings and what goods they will buy. This is a presumption. The fact is that today the consumer does not exercise his own demand. Since the time of Adam Smith, and in fact since the time of John Maynard Keynes, we have had advertisements and psychological promotion. We now have the television medium and we have the use of every conceivable emotional method to try to get people to buy goods. The people who exercise control over promotion are the same people who manufacture the goods. In other words, the economists and, I dare say, to this day even the minister's staff, presume that if a manufacturer decides there is too much soap on the market he will stop manufacturing it and transfer his money to the manufacture of shoes or another commodity. This is nonsense; he does not do that. What he does is to

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put another $50,000 or $100,000 into promotion and he says: Do not buy that other soap, it has too much suds; buy mine, it has no suds. Eventually he may even say: Eat soap, it is good for you.
The manufacturer and the supplier are one and the same person. They control both supply and demand, which alters the situation. There is supply and competition among the suppliers as to who will create the greatest demand. The supplier controls the demand through the powerful media of advertising. Does the supplier discriminate with regard to demand? Does he say, you should not buy a Cadillac, to someone who has an income of $2,000 a year? He does not. He does not care what the buyer's earnings are. He says: You must have a colour television set. He makes sure that the child goes home and says: "Daddy, are we so poor that we cannot have a colour television set? Everyone has a colour television set." Very powerful but insidious methods are used, and therefore to presume that there is such a thing as demand is incorrect.
Another phrase was used in the speech to the effect that a restriction of the money supply will dampen expansion. Normally this would be the case. In days gone by, when a manufacturer decided money was too tight he would not increase his sales or his production facilities. However, this does not happen these days. The supplier does not care as long as he can sell. If he thinks he can promote a profit he will sell at any price. He knows everyone else is in the same position and he does not care if he pays 10, 12 or 15 per cent for it. He will do it if he thinks he has the sales.
I read the following this morning in one of London's daily newspapers:
Imperial Chemical Industries Ltd., Britain's biggest industrial combine, yesterday announced lower profit and plans to raise a $180 million loan at a rate of interest that will yield more than 8 per cent.
A restriction was put on credit by the U.K. government, but whether a company has to pay 8 or 10 per cent does not matter. An entrepreneur will borrow money to expand his plant. He does not care about the cost he pays because he knows he will be able to pass it on.
Another statement made in the speech was that we are producing all we can. This is a comment that is sometimes made and I will not question it. I think it is the minister's

department which should question that concept. But are we really producing all we can? We are not. I have no hesitation in saying that most of our industries can produce another 40 per cent.
Many comments have been made about the high demands of labour. I do not think that is the case. A labourer will work as hard as a man can work because he wants to produce. However, he also wants to see the result of his production. It is all very well to say that labour is not producing. The fact is that labour looks at junior and senior executives and finds that they come to work at 10 a.m., have long lunch hours from noon to 3 p.m., have club memberships and live high oil the hog with diner's club memberships and everything else. That is not true. Management works during hours when labour does not see them. The trouble is, however, that there is no leadership. We lack the quality of leadership in our country. Management has to pull up its socks. It has to indicate to the workers that there is some purpose in the work of the company and that it is not all going to waste.
We are hampered, of course, by the method of distribution of shares in today's corporations. The management class is not really concerned about dividends. The whole share structure has been so diversified that management can sustain itself almost indefinitely until there is a strong movement among the shareholders to throw management out. We have to think about reforming these methods. We can produce a lot more.
There is also a presumption that both labour and management will deny themselves greater profits and will do what is good for the country. I have been in business myself and I can tell you that a businessman will admit he has only one interest and that is to make money. This is his immediate concern and he is shortsighted in that way. He knows that if he wants a greater profit he must demand and get a higher price. Labour takes the other point of view and asks for higher wages. Therefore, to presume that management and labour are angels is wrong. They are not angels; they are human beings and they will act in this way.
If we are to put forth policies calling for voluntary restriction we are not going to be very successful. There is also a presumption that savings flow back. The phrase used in the speech was that savings will flow into industrial development. Savings do not flow into industrial development. Savings are those moneys that one scrimps for and does
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without in order to gather. You do not gamble this kind of money. This is security money. If you happen to make some easy money-dividends or profits-that is the type of money that goes back into investment but not savings.
[DOT] (2:40 p.m.)
How much do we have in savings? It was estimated we had about $16 billion in savings. After the Rothschild and a couple of other robberies, the Dominion Bureau of Statistics upped its estimates and it is said we now have savings amounting to $27 billion. This is not being used for investment. We do not gamble it because the Canadian is not the type to gamble. If you presume that if you enforce more savings you are going to have more money into ventures is to eliminate the risk. To assume that we are going to expand our savings when we introduce insurance measures and social measures, and that they will mean less use for savings in the future, is wrong.
I believe that what we should do to induce money into ventures is to eliminate the risk. This is the Canadian Development Corporation idea, and I feel we have to get along with that. I am rather worried about the reduction in education grants. I am worried because I do not believe it is proper, reasonable or feasible to presume that when a student interrupts his education he is going to pick it up again. There are human factors that enter into a consideration of this problem. A student may get a job or get married when he interrupts his education and the chances of that person picking up his education again are rather remote. I feel that the danger of injury to the nation as a result of this course is greater than the savings that might emerge.
I believe the minister is correct in saying that we are going to improve and increase our grants to the provinces. I hope that these conferences will not hinder the education program or the scholarship program. I feel that the actions of the minister are going to be successful, according to what I have heard this morning about the market. It appears to me that we may level off.
I am not going to say these policies are not going to be successful. I think we will probably put a brake on the inflation. All I am saying is that we are going to go through this situation every four or five years unless we conduct an examination of our whole economy. No matter whether it is this government or any other government, we are going to
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face this situation over and over again, with a constant need for immediate solutions without the time to delve into these problems in depth. We will be faced, as we have been faced this time, with a declining stockmarket. People borrow money on the stocks they own. The banks will advance an amount equal to 75 per cent or 80 per cent of the value of the stock. When the market drops the people have to come up with more money. When there are lay-offs and there is no place to dispose of assets the people may be forced to sell their stock. At any time there could be a panic. I do not believe it will happen this time; in fact, I know it will not. We have survived. However, this situation will occur again.
The question is, why should we keep putting ourselves into this position all the time? The restrictions the government is going to impose upon itself in connection with capital spending will, I feel, have an influence. I hope that everyone does not start pulling in their horns. I believe that expansion is something we should be promoting. I do not like restriction. I think it is a negative approach.
Let us consider the housing market. I believe the minister did mention it and referred to the high cost of housing. I have been in this business 18 years and I can show the minister figures to prove that in 1951 we were paying $10.30 per square foot for house construction. I can show figures to prove that today, 15 years later, we can build houses for around $9.73 per square foot. You see, we have very little use for carpenters today. A lot of the components are pre-cut. Window frames and door frames are pre-cut; kitchen cabinets are assembled ready to instal as are stairways. The technique has improved. However, the cost of land has gone up from $1,300 to $3,000 per lot.
The demand is there for houses and it is going to increase as long as people have to have a place to live. They want to pay a reasonable price, and if we do not provide accommodation somebody else will. You cannot remove the demand by saying there is no supply. The demand is there. They want a house or an apartment and they want it at a reasonable price. The price of land has gone sky-high, first, because it is a wonderful ploy for speculators. Second, and possibly more important, land is used as a hedge against inflation. If you put money into land you are going to get good money for good money. If you put money into mortgages or bonds you will get cheaper money for your good money.

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More and more people are hedging, and I include investment funds, union funds and others. They are investing in land without any intention of building but are holding it as a hedge against inflation. Land has taken the place of gold and diamonds for this purpose; it is better than anything else.
[DOT] (2:50 p.m.)
You have the normal pressure of more people moving into the urban centres and you cannot increase the supply of people without increasing the supply of places for them to live. The type of action I should like to see in connection with the problem the minister mentioned would be reform measures in the taxation field to remove the speculative aspect on land. This can be done by reform in municipal, provincial and federal taxation. I should like to see the hedge against inflation removed as a pressure against land. I believe it would be much more reasonable to urge these people to buy government bonds, and this could be done if the government would attach an escalator clause to them so that the return would increase as the cost of living increased. In other words, if a person bought a bond for $100 he would be sure of getting $100 for it in ten years' time. This would remove the pressure from land.
The minister in charge of housing has just left the chamber, but he could do a lot to expand the supply of land by encouraging the supply of services, by using new ideas for sewers and other services. I have told the minister before that by one little change in the National Housing Act he could reduce the cost of land. I believe this could be done by paying the first draw on the mortgage when the builder has picked up the title to the land rather than when he has the roof on the house. This would enable builders to develop small parcels of land by themselves. This would leave the high cost land to speculative developers, the developer who in order to make money has to put up big money. They are the things we should look to, the solution being not to restrict but to expand.
One remark in his speech which struck me was that we would never have as good a standard of living as that in the United States. This exemplifies our attitude, and it is too bad. I ask, why not? We have more resources, more gas, more electrical power. We have a monopoly of uranium in the world. We have the seaway now extending to the centre of our nation. We have hard-working people. We have everything except the necessary spark. What we as a party should

be doing is promoting the greatness of Canada rather than admitting or saying that we are always going to be second. Why not try for first place.
In conclusion, I hope that the parliamentary secretary will convey to the minister the content of my remarks in this vein: that I think he has done as good a job as he could do with the advice he has been given and the emergency of the situation. Granted, he could not investigate all of the points I have mentioned and delve into them fully and then come up with a solution, because it might be too late. But I think he did the right thing in this immediate measure, and I should like the parliamentary secretary to tell the minister that now is the time when we should be looking carefully into our fiscal policies so that the next time this situation occurs we will be prepared.


Raymond Langlois: Mr. Chairman, I have just seen the hon. member for Lotbiniere and he is perhaps glad that I am going to speak in this debate. I am going to prove to this committee that the remarks just made by the hon. member for York East in respect to publicity and advertising in Canada are somewhat along the line of thinking of the hon. member for Lotbiniere when he said that the poverty in this country is due in large measure to the over-advertising that we have. For example, people spend money on things they should not buy but are influenced to do so by television advertising, and the situation has reached the point where people are buying more than they can afford. The hon. member supposed that this accounted for the poverty which exists in this country, and this government has now declared war on poverty.
I would ask them how they explain the situation in India, which is a poorer country than Canada and does not have any advertising. There are numerous countries in the world which have no publicity or advertising and are poorer than we are.


Steven Otto: May I say that I did not say that was a good thing. I said that it was a reality of life that control over demand does not lie with the individual. I did not say that was good or bad.


Raymond Langlois: I was continuing the line of thinking in light of what the hon. member for Lotbiniere had said. I think the television station in Quebec city, CFCM-TV, took care of that in an editorial after the broadcast when they hoped that the free
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publicity received by the hon. member for Lotbiniere would not result in his constituents being any poorer.
We are now facing a series of declarations from all sides of the house, but what concerns me most is what the minister said yesterday about the need for preventing inflation. What he said amounted to nothing less than the birth of a monster of his own creation.
I should like to bring to the minds of government members the date of May 18 last year when the former minister of finance brought in a measure on which I commented and as a result he called me at that time a "so-called prophet". The only thing I am sorry about is that the former minister of finance is not now sitting across the way, but there are very few Liberals here today.
Let me recall to the government my words at the time. When the amendment to the Bank Act was brought in reducing the reserves of the chartered banks from 8 per cent to 7 per cent, I told the government at the time that it was an election measure and that immediately after the election credit restrictions would follow. In the middle of the summer of 1965 the government did take measures to slow down construction enterprises and plans. The minister admitted in his own statement that in the middle of the summer last year the government slowed down construction programs. He said further that these measures were not sufficient.
At that time the then minister of finance, the present hon. member for Davenport, told me that I was trying to prophesy something and he called me a "so-called prophet". Two of my prophecies have been borne out. We did have an election in the fall and immediately following the election credit restrictions were imposed. These led up to the present situation and the drastic measures now proposed.
The measures announced yesterday by the Minister of Finance are a living paradox. One day the government announces a war on poverty, but from the minister's speech we are wondering how the government will go about waging that war. It is not a war on poverty in view of the issues we have now; it is a war on the poor that we are waging. We are still operating under this D.D.T. system *-debt, deficits, taxes.
This party has been blamed in the past. Some Liberals went around during the last election and in 1963 saying "Beware of Social Credit; beware of inflation". Who in the Sam Hill is bringing about inflation now, the
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members of the Social Credit party or the Liberal government across the way?


Frank Howard: And Premier Bennett.


Raymond Langlois: I have nothing to do with Premier Bennett, but I very distinctly remember there being a socialist government in Saskatchewan and even the rats would not live under it but moved to Alberta.


David Lewis: Only the rats?


Raymond Langlois: Some provinces have expanded and I have nothing to say against their administrations. But one thing I do know is that provincial governments as well as municipal governments and individuals depend on the monetary policies of the federal government. When these policies are not quite correct and need amendment and shining up, they do not get it. These policies need modernizing. We have today the same situation we faced in 1928 prior to the great world economic crisis.
In 1956-57, when the Conservative government took over, the Liberal government left us on the doorstep of an economic crisis. The Conservatives left us a similar situation in 1962 and in 1966 we meet once more a situation similar to that of 1957. The Tories might say that they coped with the situation. They made a big fuss about the Coyne affair; yet immediately after the election of 1962 credit restrictions were imposed. Coyne was right after all. That was an open admission that Coyne was right.
A fuss was made about this in 1961. People said: Do not apply tight money policies; let us conclude the election first and then you can put them on. Coyne went out and Rasminsky came in. Then we had the 1962 election with credit restrictions in the fall.
[DOT] (3:00 p.m.)
Mr. Chairman, when we look at the measure presented yesterday by the Minister of Finance, we see the following:
Speaking generally, Canadians have been very impatient to get on with very many things both directly and through their governments and now we are paying the price for trying to do too much all at once.
I say that we are not doing enough. It is not that we are doing too much. How can we conceive of such contradictions? How can we compromise, by cutting down credit restrictions? On the one hand it is said that we do not produce enough, and when one turns the page we are told we are producing too much. The small industrialist is blamed, as is the

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businessman, because both want to sell goods. That is their job. The job of the manufacturer is to manufacture. The job of the government is to administer, to see to it that the goods, production and services reach the consumers, so that they fill the needs of the consumers.
It is not production that is missing in the economy of this country. The hon. member for York East said that we have lots of wheat in Canada. We have lots of oil, and practically the whole world's deposit of uranium. We have 85 per cent of the world's supply of asbestos. We have natural resources in abundance, even to the extent of pure drinking water, which possibly is one of our greatest natural resources.
We have a smaller population than the United States, yet we have a lower standard of living than that country. The Minister of Finance says that we cannot have the same standard of living, and adds: "The people must tighten their belts".
. What kind of reasoning is that, Mr. Chairman? The natural resources are not missing, nor is the will to produce on the part of the Canadian people. It is purchasing power that is lacking. Yet the government imposes credit restrictions and taxes. How does the minister expect to lower the costs of production by imposing additional taxes? When he said that by the middle of last year it was evident that costs and prices were rising rapidly he should have included, in brackets, the 11 per cent tax on building materials as a contributing factor.
In the summer of 1965 the government cut back on its construction program, urging others to do the same. But the minister said that that was not sufficient. He also said as reported at page 8213 of Hansard:
We cannot all get what we want and do what we .van t, and if everyone tries there is going to be an sxcessive rise in prices and in costs because right aow the country just could not, no matter how nard it tries, produce enough to meet all the demands.
This, Mr. Chairman, is absolutely false.
Some time ago I heard arguments about bringing skilled immigrants into this country. Yet the government cut off 10,000 student loans which would have produced skilled workers in one, two or three years. The government is going against the logic of its own argument, if one can call it logic. If the government wishes to invest in human capital, to develop skilled workers, let it provide the means for the necessary schooling to

produce skilled workers. That will not be done by imposing credit restrictions.
This government will probably be known as the dancing government. It will be called the tango government-one step forward, one sideways and two backwards. Ask the Minister of National Health and Welfare what he thinks of that. I have never seen a government which has sidestepped, somersaulted and jumped over issues as this one has. This government has blackmailed the Canadian people into accepting its measures. Does it think that the people are going to swallow this measure that easily? Oh no, no, surely not. The Canadian people are broadminded enough and awake enough to notice that the means of production are here, and that they can buy what is produced.
Will imposing new taxes help matters? We shall probably lose another part of our external trade, because our competitive position in world markets will suffer because of the imposition of new taxes. One may ask the members of the former Conservative government about pulpwood, and about what happened when taxes were imposed. There was trouble. The Liberal government will be faced with the same trouble.
I heard the hon. member for York East, but I do not know where he got his figures when he was speaking of savings. The government thought that $16 billion of savings was hidden in stockings and cellars. The hon. member said that after doing a little research it was suggested that that figure should be increased to $27 billion. How is it possible, then, to reduce this purchasing power? I believe the figures were obtained from the governor of the Bank of Canada to show that the total cash in Canada is approximately $2-J billion, with an additional $18 billion being represented as purchasing power in the form of credit. I hope that these figures are correct, and I hope the hon. member knew what he was talking about.


Mr. Cowan:: Do you?


Raymond Langlois: The hon. member always makes interjections from his seat.
If those figures were obtained from a newspaper, they may not be right, because the newspaper may not be correct. If the minister was trying to cover up mistakes, he was certainly not helping the cabinet, because he is tearing it apart. Probably he was not trying even to speak for himself, but instead, was speaking for some back-seat string pullers, whose puppet the Minister of Finance is.
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The minister may be pale; he may lose his smile; he may lose his skin-but he will still go along with these people I have referred to. They organize the world as if it were a game of chess.
I know that this inflationary situation is one that faces the whole world. But because it is a world situation, I think we ought to set an example of trying to combat it logically, instead of following others as if we were a herd of sheep following one shepherd. In 1928, before the crash came, the situation was also world wide. It must be remembered, as the minister said, that we are in danger of having a boom-bust affair. Normally when you have a boom in progress, you do not stop it. Usually you kick somebody in the rear end for not moving fast enough. Right now the government is hitting the country on the forehead, trying to stop the boom.
[DOT] (3:10 p.m.)
I can take the minister around the country and show him where there is unused production capacity, not because goods cannot be manufactured but because people cannot purchase them. Inflation occurs when the balance between production and over-all purchasing power is uneven. Over-all purchasing power should be sufficient to buy the total production of a country and as productivity increases more purchasing power should be made available to every individual.
This is the job of the minister. He should not kick industry because it is trying to sell its products. That is the job of industry-to sell products. The job of the hon. gentleman is to finance and administer. I know that he has not, so far at least, proposed the devaluation of the dollar. That came about in 1962 under the Conservative government. I am a teacher of physics, or at least I was, and I think I should go back to teaching physics.


Some hon. Members:: Hear, hear.


Raymond Langlois: We do not propose the devaluation of our units of measure or length. Countries which have to import timber from Canada do not cut down a 12-foot plank to 11 feet and pay for 11 feet. A cord of wood is always the same size. A mile, whether in England or in Canada, is always 5,280 feet. A yard is always three feet. No one alters that. A pound is always 16 ounces, as anyone who goes into a store knows, and if a shopkeeper fools around with his scales he is sent to jail.
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How is it possible to change another unit of measure, the purchasing power of the dollar, which is after all a measure of value? If we attempt to change the ordinary measures of length and weight, we get into trouble. But because we do not control our financial system we are forced to permit a variation in the value of this other Canadian unit of measure, the dollar. Someone is controlling it; somebody is influencing it, and it is not the Minister of Finance.
This means that the Minister of Finance is little more than a puppet. The Minister of National Health and Welfare has been obliged to defer his medicare plan to another year. I sympathize with the hon. gentleman; he did not seem very happy today. But he will get used to it-one step forward, two steps sideways and two steps backward. We should all take care lest this system lead the Canadian people another kind of dance-a war dance.
I have been reading some of the statements made yesterday by the hon. member for Three Rivers. Knowing his background, I would agree that he has a perfect right to say what he said.


Joseph-Alfred Mongrain: Mr. Chairman-


Raymond Langlois: I have not said anything about the hon. member yet. I merely said I had read his speech.


Joseph-Alfred Mongrain: On a point of order. My city is called Trois-Rivieres, not Three Rivers.


Raymond Langlois: Let me give the hon. member for Trois-Rivieres a little grammatical lesson on that. There is no mistake in a proper noun. Look up your grammar on that. But I am quite ready to agree with the hon. member for Trois-Rivieres, if it will help him-though whether you like your water in English or French, it is still the same place. What is more important to me is the guy who represents that place. This is what he said:

When I heard the hon. member for Villeneuve (Mr. Caouette) and the hon. member for Red Deer (Mr. Thompson) tell us that the government stated, without any evidence, that we had reached our maximum production, I asked myself some questions. I told myself that explanations should have been given, of course.
Right. The hon. member for Trois-Rivieres (Mr. Mongrain) gave an explanation. What was it?
I think the minister meant our maximum production with the means at our disposal right now.

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He thinks, he believes, he is not sure. The minister is not sure, nor is the hon. member for Trois-Rivieres. Who is, in that case?
What is the meaning of "we have reached our maximum production"? I indicated a while ago that this was false, Mr. Chairman, and that if we afforded opportunities for our industries to produce according to their capacity and as they thought fit in this country, our gross national product would have doubled in two years.

I can well understand the hon. member for Trois-Rivieres speaking that way. He is a very logical man. Right now, his political colour is white-independent. But if he swerves too far into the Liberal left he comes out a silly, pink colour and I would advise him to stay on his own feet, not try to cover up mistakes of the government. He is a good hearted man, a kind man; I know that. But that will not help the government at all.


Joseph-Alfred Mongrain: On a question of privilege, might I direct a question to my hon. friend? It may be that I am becoming a heretic but does he not think this is because I have a mad sight in front of me?


Raymond Langlois: I am glad to find that somebody in this house has been influenced, though for my part I think the influence is coming more from the left of the hon. member. He is turning it from white to pink, but at least I can congratulate him because he is the only one who has ever been influenced in this house. I, for my part, do not need anyone to influence me because I am convinced of the soundness of my opinions.
The minister is forced to confront the need for taking measures against inflation because of his stupidity in maintaining an obsession with outmoded financial and fiscal policies. I do not see why he should try to maintain the system which has led us from chaos to crisis, and from crisis back to chaos.


Mitchell William Sharp: May I ask the hon. member a question? Does he believe it is because of the outmoded socialist system in Britain that they are having their troubles over there?


Frank Howard: They have a leader with guts over there, anyway.


Raymond Langlois: I am not saying they are likely to find a better solution, but unless Canada or any other country chooses to arrange its fiscal and economic machinery

along different lines we shall always be facing the kind of situation which confronts us now.
[DOT] (3:20 p.m.)
Will the means and methods that have brought us bankruptcy, chaos and crises, lead us to success and prosperity? I say you have to change your methods of operation, and change your ways and means, but the minister will have to tell some of his back-seat string pullers to leave the scene, cut the strings and let him act as he should-not as a politician, not as a puppet for some high financiers, but as a statesman, looking not to the future of the next election but to the future of the next generation.


Mr. Choquette:: You are quoting Duplessis.


Raymond Langlois: Maybe the hon. member for Lotbiniere will have something to say himself.


Auguste Choquette: That is not one of your finds. Maurice Duplessis said that: Next election, next generation.


Raymond Langlois: That is quite true. Maurice Duplessis may have said it, but he was still premier of the province of Quebec for 16 years and he must have had some good in him.


Auguste Choquette: You don't have to be very bright to think along the same line as Duplessis.


Raymond Langlois: To continue, Mr. Chairman, I wish to give the Minister of Finance notice that when we return after October 5 to deal with the Bank Act revisions in committee, we will have a lot to say and many questions to ask concerning this situation. Before any members of the government go out on public platforms again and say, "If you let the other guy in you are going to have inflation," I would remind them of a fellow named Dupuis who hollered and yelled and paid thousands of dollars for television time, and who said, "If you are going to vote Social Credit you are going to have inflation." He has been defeated since and now is back home.
Now we have a Liberal government and there is inflation. But Dupuis had been told to say that, the same as the Minister of Finance
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was told to write the speech he made yesterday. Maybe somebody else wrote it for him, but he delivered it and he will have to take the comebacks on it. In conclusion, I hope the minister will not retain this tight money, belt-squeezing attitude toward the Canadian people but will introduce measures in the near future to open up better prospects for them.


Mr. Wahn:: Mr. Chairman, rather suddenly everyone in Canada is concerned about inflation and the rising cost of living. It is an important problem but it is not a new one. I recall speaking in this house in 1963 on the evils of inflation, and particularly the injustice to those on fixed incomes, and in 1964 putting a question on the order paper with regard to methods of controlling inflation while maintaining full employment. Undoubtedly, however, the present widespread interest in the problem is due to the fact that during the last year the pace of inflation has increased.
Since 1949 the cost of living in Canada has increased on the average by about 2.7 per cent a year. During the last year it has gone up about 4 per cent. Therefore we should welcome the restraints announced by the Minister of Finance last evening.
It is interesting that among large trading countries Canada has maintained the value of its currency and the purchasing power of its money better than any other country, with the exception of the United States. The July, 1966, monthly economic letter of the First National City Bank contains a table summarizing clearly the depreciation which has taken place in major world currencies in the last 10 years, and I would like to refer to this table to show what our record has been.
In this period of 10 years United States currency has depreciated by 1.7 per cent on the average per year, Canadian currency by
1.8	per cent, United Kingdom currency 3 per cent, French currency 4.6 per cent, the currency of the Federal Republic of West Germany 2.2 per cent, that of the Netherlands 3 per cent, of Norway 3.3 per cent, of Denmark
3.8	per cent and of Sweden 3.6 per cent.
In comparison with other countries our record in Canada is excellent, so it is nonsense to say, as the Leader of the Opposition said earlier today, that inflation is running wild in Canada. It is not only nonsense, it is irresponsible. And to say, as did the hon. member for Northumberland earlier today, that there is to be a final increase of at least 30 per cent in railway wages is also, in my
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opinion, irresponsible. If such a speculative statement has any effect at all it will fan the fires of inflation. The hon. member knows very well that the final railway settlement will depend upon negotiation, and if that fails, arbitration. To forecast the outcome at this time is not only irresponsible but improper.
It has also been proven time after time that the seaway settlements earlier this year were based on the fact that many of the men were part-time workers and there were special factors involved which form no precedents for the railway, or any other labour dispute.
All of us know how often N.D.P. members urge us to follow the socialist policies of certain of the Scandinavian countries. It should therefore be of great interest to them to read the figures I have given which show that in Scandinavian countries the cost of living has increased much more rapidly than it has in Canada and the United States. We cannot say that our trading position is undermined by inflation, or that the prosperity of the average Canadian is in danger. The cost of living has gone up in Canada. However, wages and salaries and social security benefits have gone up even faster. In point of fact, despite high costs the prosperity of Mr. and Mrs. Canadian is at a record level.
There is in fact no sudden crisis, but restraints are necessary and all hon. members should welcome and support the action announced by the Minister of Finance last evening. For while there is no sudden crisis, the federal government must accept responsibility for maintaining the value and the purchasing power of our money. Subsections 14 and 15 of section 19 of the British North America Act give to the federal government exclusive legislative authority over banking, currency, coinage and the issuance of paper money. Is there anyone in this house who would suggest that while the federal government has exclusive authority to issue money it is without legislative authority to take appropriate action to maintain the value and the purchasing power of the money it issues?
Under our constitution parliament, by properly drafted legislation, clearly has the exclusive legislative jurisdiction to maintain the purchasing power of the Canadian dollar. It is true that such legislation may possibly affect property and civil rights within the provinces. However, such conflicts are not unusual, and it is well established that in the event of any such conflict the federal legislation must prevail.

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Can we maintain the value of our currency without throwing our economy into a recession? That is a good question and one that economists have debated at length. It is the reason why the Minister of Finance and the government must avoid radical measures such as those advocated by the hon. member for Qu'Appelle, and must proceed slowly and with care.
The favourable reactions today on the stock markets of the world reflect confidence in the action announced by the minister last night.
Professor Clark some years ago in his authoritative report on old age security said this:
[DOT] (3:30 p.m.)
The maintenance of a stable price level in the coming decades is, in my opinion, as in that of many other economists, compatible with practically full employment ... I believe the achievement of these two goals, though difficult, is highly desirable and feasible most of the time, hut, such is the nature of economics, I cannot prove it in any conclusive way. The attainment of these goals will require co-ordinated government and central bank policies more vigorously directed to these ends and a greater degree of restraint on the part of some strategically placed trade unions and business executives than has been exhibited in Canada and the United States in the past decade. The initial and prime responsibility for achieving these goals must rest primarily with the federal government, but it is not likely to succeed fully without full support from labour and business leaders.
The views of the Economic Council of Canada are to the same effect. The desirable goals are high employment, a good rate of growth and stable currency-and they are all important. In a recent article Dr. John J. Deutsch said this:
At the end of the war, the governments of many countries, including those in Great Britain, the United States and Canada, accepted responsibility for the maintenance of high levels of employment. In the light of subsequent events, it is noteworthy that this far reaching change in the role of governments was not matched with an equal concern for the maintenance of the value of money. For some years at any rate the pursuit of expansionist policies designed to promote full employment was an overriding and almost single aim. This onesided emphasis in both monetary and fiscal policy was, of course, the heritage of the great depression and of the long history of business cycles in the 19th and 20th centuries.
Hon. members will recall that not too many years ago we had high rates of unemployment in this country. The former government, headed by the present Leader of the Opposition, time and time again refused to accept responsibility for that unemployment. Members of that government referred repeatedly to high unemployment in the United States and western Europe and said that
[Mr. Wahn.l
Canada was helpless in the face of a worldwide recession.
The present government, on the contrary, has taken the position that even with its open-ended economy Canada can achieve full employment and control its economic destiny, and it is our obligation to do just that. The present government has accepted that responsibility and is achieving that great goal. It is the same with inflation. If we are to eliminate inflation and maintain the value of the Canadian dollar we must believe that this is possible even at full employment levels, and we must accept responsibility for doing that. In his book "The Affluent Society" Professor Galbraith said:
Next only to the virtues of competition, there is nothing on which the conventional wisdom is more completely agreed than on the importance of stable prices. Yet this conviction leads to remarkably little effort and, indeed, to remarkably few suggestions for specific action. Where inflation is concerned, nearly everyone finds it convenient to confine himself to conversation. All branches of the conventional wisdom are equally agreed on the undesirability of any remedies that are effective.
This describes pretty well the speeches of most members of the opposition since last evening-a great deal of talk but so few, if any, helpful suggestions. The problem is an urgent one because in terms of purchasing power the Canadian dollar today is worth about 70 cents as compared with 1949, and 35 or 40 cents as compared with 1939. I emphasize that this is not the result of any sudden inflationary crisis but of a long continued creeping inflation which has been permitted by all governments whatever their political stripe, and particularly the previous government with its large and continued budget deficits.
The consumer price index shows that compared with 1949 we are today paying 43.8 per cent more for our food, 44.3 per cent more for housing, 25 per cent more for clothing, 51.1 per cent more for transportation, 80.7 per cent more for health and personal care, 59.2 per cent more for recreation and reading and, surprisingly enough, only 25.1 per cent more for alcoholic beverages. Incidentally, Mr. Chairman, the exceptionally high percentage increase in the cost of health services emphasizes that the cost of medical care is likely to increase rapidly, whatever method of financing it is adopted. Not so long ago anyone who urged and supported sound money was considered a diehard reactionary. This apparently is no longer true. The clever people, the wealthy people who can hire trained investment advisers to look after their interests can
September 9, 1966

protect themselves very well against the rising cost of living. The people who are hurt by the rising cost of living are the old, the weak and all those who are least able to look after themselves. Professor Clark in his report on old age security said:
Inflation is inherently unfair to those economically or politically incapable of defending their interests. This includes some categories of salaried employees and those on pension-both private and government. Recipients of government old age pensions are in a position to exert some political pressure on their own behalf;-
Many of us know from personal experience that this is true.
-those on private pensions usually have little opportunity and no contractual claim to have their pensions raised to offset inflation since their retirement. Those widows, orphaned children and retired persons who are largely dependent financially on the proceeds of life insurance policies, annuities, interest on government or corporate bonds or other investments of fixed, or nearly fixed, rates of interest, suffer from inflation with no prospect of relief.
Professor Kenneth Boulding has said:
Inflation is a refined method of taking bread out of the mouths of the aged, the infirm, the widows and the orphans.
It is sometimes asked whether any government will take effective action to end inflation, because governments themselves profit immensely from inflation. Inflation sends up governmental tax revenues and makes the burden of their outstanding debt much lighter. Governments have borrowed millions of dollars, and with inflation can pay back not only the interest but the principal of that borrowed money with cheap or deflated dollars.
If you paid $100 for a government bond in 1949 you have now lost $30 in purchasing power and the government has gained $30. In effect it has imposed a $30 capital levy upon you because you were patriotic enough to buy government bonds. Inflation is in fact a tax upon the general public which bears most heavily on those who are least able to protect themselves. Moreover it is a tax which is authorized by no statute of parliament, without the consent of the people or any of their representatives in parliament, and without even an order in council passed by the government. It is a tax imposed by administrative action or lack of proper action. In fact it is taxation without representation, which is something about which all members of this house should be particularly concerned. For this is the reason we should welcome the action announced by the Minister of Finance
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last evening. Because inflation is such a convenient tax, it will be given up completely only if the people of Canada, through their representatives in parliament and through all the organs of public opinion, insist that the government accept responsibility not only for containing the 4 per cent inflation of the past year but also for eliminating the creeping inflation that has gone on for so long and under all governments.
This is particularly important for a young, underdeveloped country such as Canada. In Canada we are few in number, inhabiting a great area with vast undeveloped natural resources. Our need for developmental capital is almost unlimited; yet there is a world-wide shortage of capital. Nevertheless, with our stable political system and highly developed and efficient banking system we could attract capital from every country in the world if only we could assure investors that the purchasing power of our money will be maintained, and that our currency will not be depreciated.
Many members of the house are concerned about the very large amount of foreign equity capital in Canada. They would like to see more foreign loan capital instead of equity capital. How can we expect this if we propose to pay back loans in devalued dollars? If we can guarantee lenders that our dollars will not be depreciated we will get the loan capital we need, and in time this will reduce foreign control in our business and industry.
[DOT] (3:40 p.m.)
Sound money will also encourage increased savings and investments by Canadians in Canada. The traditional copybook virtues of hard work, thrift and honesty are not obsolete. We need them, and we need them far more than do the older, more fully developed countries. But these virtues have been made to seem old-fashioned and have been discouraged by a continuing and creeping inflation.
I welcomed the statement of the Minister of Finance because I took it as a declaration by the present government that here in Canada we propose to have both full employment and sound money, and that the federal government accepts full responsibility for achieving these objectives. I hope that as policy develops, new methods will be applied in addition to those referred to by the minister. For my part I think we should adopt the technique we have adopted in recent years in launching our successful attack on unemployment. We emphasized that an industry by

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industry approach with a view to increasing employment in the secondary manufacturing and service industries was selective. However, it has been successful.
Similarly with inflation, some commodities have gone up in price more than others. Some price increases have a basic effect on the economy and have triggered other price increases. We must concentrate our forces to prevent price increases of strategic materials in scarce supply.
In attacking inflation in Canada we must use the rifle, not the machinegun. We should know our target and have good reasons for firing. We have an adequate arsenal in our monetary, fiscal, credit and rationing powers. I think most of us would agree with the minister when he says that we must not rely entirely on monetary measures, and that we also would agree when he says this is not the time for any general wage or price controls. However, we should be prepared when necessary to use all the weapons in our arsenal against selected targets.
In leafing through the Criminal Code the other day I came across a section that makes coin clipping an indictable offence and provides that any one who impairs, diminishes or lightens a gold or silver coin is guilty of an indictable offence and is liable to imprisonment for 14 years. Over the years governments in all countries of the world, including our own, have consistently permitted their currency to be depreciated. I think it is time this was stopped. I am glad this government has set an example, and I urge it to continue so that soon we will be in a position to guarantee the people of Canada that our currency can be accepted in full confidence, and that its value and purchasing power will be maintained.


Mr. Fairweaiher:: Mr. Chairman, I appreciate having a minute or two to take part in this debate. I cannot help but recollect the series of metaphors used by the hon. member for Megantic when he described the Minister of Finance. Perhaps the minister is now thick-skinned enough that he is able to accept such descriptions. As I understand them, the Minister of Finance is a chess-playing, fancyskating shepherd who indulges in tangos, and is a puppet. In view of that combination I am sure the minister has a career ahead of him that will be flexible, to say the least.
The hon. member for St. Paul's, who just resumed his seat, discussed the rise in the cost of living and quite rightly laid great stress on the strength of Canadian currency.

He had a poignant word or two to say about the real sufferers from inflation-the sufferers that we who represent them in the parliament of Canada should keep in mind. He was referring to the people who are on fixed incomes.
The hon. member for St. Paul's mentioned that the increase in the cost of living last year was 4 per cent. I am not going to get into a debate on percentages because I think they can be made to fit almost any argument. However, the figures I have seen show an increase in the cost of living for the last 12 months of 5.5 per cent. Perhaps some expert will point out why I am wrong.


Ian Grant Wahn: I think I can clear that question up. The 5.5 per cent figure represents the number of points the cost of living index has risen, which in turn works out to a 4 per cent increase.


Robert Gordon Lee Fairweather: As usual, a lawyer from Royal needs a lesson in economics from a lawyer from Toronto. I accept that explanation. I agree that the Minister of Finance is right in some aspects of his speech, but I do not want anyone to believe for one minute that I feel his proposal to cut back on scholarships and on government spending for research is one which meets with the approval of the opposition. Neither do I personally approve of the postponement for a year of the medicare plan.
I think the minister is right in wishing to mobilize the total population of Canada to the danger that faces us. It interests me as a member of this house, and one who takes an interest in the system of parliament and its relevancy to contemporary affairs, to note that on many occasions we debate issues after the events. I acknowledge immediately that the hon. member for St. Paul's discussed the problem of inflation in 1963 and asked a question about the matter in 1964. Surely that has been the exception that proves the rule. I am delighted that the hon. member mentioned the subject, but I think it can be said generally that members have ignored the problem of inflation in their participation in debates in parliament.
It is my submission that Canadian people are starving for candour and frankness. I also happen to believe that they are starving for leadership; but that is a subject about which we would obviously disagree. I also believe that we as political people underestimate the ability of Canadians to take their medicine.
September 9, 1966

The other day I was reading an English publication about problems in the United Kingdom and how the ordinary citizens of that country tried in rather bizarre ways to lend their support to the efforts of the Wilson government to stem the economic crisis. I admit that I was reading an editorial which appeared in Punch, which is not noted as a thoughtful journal' on political affairs. I was struck by the fact however that a good many people in Britain were doing their best to think up ways and means whereby they could aid the government in its plans. One old lady wanted to knit scarves and balaclava helmets. I think she has forgotten it was 20 years ago that they were necessary.
[DOT] (3:50 p.m.)
Another gentleman who had investments in the midland mills in Britain said he was not going to sell his shares in the textiles mills because if he withdrew his money the mills might suffer thereby. This is perhaps trifling but it is an example of a mood which I think we must encourage in this country. We must alert the public to the dangers that confront us.
I had hoped that when the minister made his announcement last night some of the more spectacular plans for government spending might have been phased out-I think that was the minister's phrase. I hope that this great triple tower, this defence structure that is about to go up, will be phased out. I cannot see any feature of Ottawa or any landscape that would be improved by this building. There are other aspects of government expenditure that might also undergo a phasing out process.
I wish to speak for a moment about medicare and to offer a suggestion. I was going to presume to become a bridge between differing opinions in the cabinet, but this role is not really one that I can assume. However, I do have this suggestion: We are told that we are to debate medicare in the next month or two and that parliament is to pass a statute on it. There are a great many people in Canada who live on fixed incomes, people in receipt of old age security and old age assistance who will become the pilots or the first phase of the government's medicare program.
As we all know, recent amendments to the social security act in the United States have brought into the medicare plan people in receipt of social security who are over the age of 65. I think this could also be applied in Canada and might be a very good way of augmenting the scheme of medicare for the
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whole nation. If we could bring into the plan the older people of 68, 69 and 70 years of age, as well as those living on old age assistance who are over 65, we would be keeping our promises to them. I also think we should not postpone the date of July 1, 1967 on which the medicare plan is to start. I think there are very few centennial projects that would attract me more than that the older population of Canada on the hundredth anniversary of our country would be given the benefits of medicare. As I say, this would be a pilot for the massive plan which the government has announced will take place on July 1, 1968. If this modest plan could alleviate the problems faced by the Minister of National Health and Welfare, then I would offer it to him without any copyright.
The hon. member for Vancouver-Kingsway discussed sacred cows and birth control. I also was interested in the announcement from India that birth control devices were about to be used which would result in fewer sacred cows. I wish this device could be instituted in parliament, because ever since the beginning of this emergency session we have had a good many of them trotting up and down the corridors of this chamber. One of the sacred cows, of course, is that everyone seems to be busy trying to find out whether someone is to the left, to the right, or in the middle. I was rather interested in the railway debate because some of the hon. members on the right voted with the so-called "left" although for different reasons. Nevertheless the sacred cows in that debate were very much in view, and they have been trotting around. One of them is that all the blame should be put on industry. We heard from the hon. member for Megantic that they all live on diners' credit cards and take three hours off for the luncheon period. Some people from industry have used the well worn phrase that if it were not for the incessant demands of labour there would be no inflation and costs could be kept down.
I will trot out my sacred metaphor and say: A plague on both your houses. At this point I will try to be my best left wing self-I am large enough to be both-and say that anybody who has watched the immense profits reaped by industry in this country in the last three years cannot be very surprised at labour,-although they cannot have had the service of economists who are available to a good many other sectors of our national life,-making incessant and I think quite proper demands for increased wages. On the

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other hand the sacred cow of compulsory arbitration, or the concept that we must use the free instruments of collective bargaining to solve all our problems, does not appeal to me in the least. I think-and here I will become my right wing self-there is a large area of public or quasi-public employment where some definitive system of adjudication of perfectly natural demands for increased wages must be augmented, without the necessity of a strike which cripples the whole nation.
I have now covered the whole gamut from left to right and perhaps my comments have not been very fruitful. Nevertheless I wanted to make them. May I be allowed to end my remarks with one other appeal to the minister. My first one was a suggestion to grant medicare to our older people. The second one is a plea to the minister to remember that in some parts of this country the problems brought on by inflation and unemployment are not the same as in others.
I recently read a review by the Atlantic Provinces Economic Council on Agriculture regarding that area. I think that all hon. members, be they from the maritime provinces or any other part of Canada, should read this document and digest the startling facts that are contained in it regarding the drastic reduction in the incomes of the farming population of that area. This is statistical evidence of the pressures under which this part of the community lives.
I hope the minister will be flexible enough in his phasing out program to take into account the fact that there are many places in this country where unemployment is still far too high. I admit that this problem is improving and I give credit where credit is due, but unemployment is still much above the national average, dangerously so, and a fixed program of phasing out is not applicable in the maritime provinces. The minister's own Economic Council can bear this out.
[DOT] (4:00 p.m.)
I do want to say one other word about the education program. In response to a question of mine this morning the minister stated that the priorities that have been suggested by the premier of Manitoba were not discussed by the Prime Minister because there were political motives behind them. I did not want to tie up the house during the question period with a battle on semantics. If the premier of Manitoba is not indulging in politics, and I use the word in the best sense, and the minister himself is not indulging in politics,

then what on earth are we about in this land? It happens that the first public announcement I saw about the need for priorities came from the premier of Manitoba. If this simple fact is politics, and if the government is so sensitive that an idea which comes from the premier of some other province must be political, then I despair for the nation and for the oncoming needs of that nation.
Now that priorities are fashionable the minister is clasping them to his breast. He is issuing them out over the Canadian Broadcasting Corporation in a most persuasive interview, I may say. Priorities, therefore, are the "in" thing and because they are "in" the minister is adopting them. Well, the first comment on priorities that gained public recognition so far as I was concerned came from the premier of Manitoba. I am glad the Minister of Finance for Canada is now on the Roblin bandwagon and recognizes, although there is no evidence of it in his speech, that the major priority in this country must be massive help for technological and postsecondary education.


Mitchell William Sharp: I should like to ask the hon. gentleman if he is on the Roblin bandwagon?


Robert Gordon Lee Fairweather: On the matter of whether the premier of Manitoba speaks for the nation and the need for priorities, I am on the Roblin bandwagon completely-and I hope the country is, too.


Auguste Choquette: Mr. Chairman, I want to pattern my remarks after the attitude taken by the hon. member for Chambly-Rouville (Mr. Pilon), who made a concise and very realistic speech which will have a great influence on the next financial measures the minister will bring before the house.
Also, Mr. Chairman, since we are in a mood for congratulations and admiration, I wish to thank and congratulate the minister for his lucid and masterly statement, which is very interesting to read, and I am sure that the parliamentary secretary to the minister (Mr. Chretien), with his good judgment, had something to do with the position he took.
Mr. Chairman, I have only a few remarks to make as I have just said, perhaps to rectify a wrong impression that may have been given the house a while ago by an hon. member opposite, when he said that I was opposed to commercial advertising as such.
September S, 1966

I must say that I have had an opportunity-in the past to speak on the matter and I have been misquoted, for I am of the opinion that commercial advertising is absolutely necessary. However, this afternoon I understood that the hon. member for York East (Mr. Otto), in a flight of oratory, expressed opinions similar to those I have aired in the past, and I would like to take advantage of this opportunity today to rectify that impression.
As I said, Mr. Chairman, commercial advertising is a necessity. However, today's concept of commercial advertising exercises a detrimental influence through the media of the radio, television and the press. One wonders how the demand can be so excessive and how prices can increase so exorbitantly.
I wonder, Mr. Chairman, whether we should not inquire, without making violent accusations, into the part played by commercial advertising in this field, for to those in contact with the people, the masses, it is obvious that they are constantly urged by commercial advertising to buy goods which they cannot afford. Among the main techniques used by commercial advertising, three are obvious and easily detected.
First, they use magic enticements. When they want to sell a product, they say: Do you want to have a great life? You will live in dream-like surroundings. They tempt you with a product supposed to be so wonderful that you escape from reality into an unreal, wonderful and dream-like world.
Another technique of commercial advertising is their trading upon people's vanity. To sell a product, for example a hair preparation, we are shown a young man who is unpopular at parties and whom nobody cares to know. As soon as he uses the hair preparation, all the women chase and love him. These are the kinds of techniques used by commercial advertising, Mr. Chairman.
It is easy to say that people are free, but there will always be naive and credulous people and ways will be found to exploit them and I am convinced that commercial advertising, as strong as it is today, gets the better of the small consumer's freedom of choice.
Mr. Chairman, another method used by commercial advertising is to stress the low cost of the product. One hears all the time: You can get this or that at an unbelievably low price. Here are the current formulas: "Ridicously low prices"; "No down payment"; "36 months to pay". The individual enjoys his purchase for one, two or three months and
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after that come the lawyer's letter, proceedings, impounding, even the Lacombe Act which forces people who no longer can afford to fulfil their obligations to deposit their salaries at the office of the clerk of the Magistrate Court. That applies to cases in the province of Quebec.
Mr. Chairman, I wanted to point out those three methods which exercise a harmful influence, as I said earlier.
And the Minister of Finance (Mr. Sharp) knows how much the psychological factor is important in political economy; it is precisely those things which should be stressed sometimes to explain the economic events which cannot be explained except by great theories which ordinary people are not able to assimilate.
That is the reason why, Mr. Chairman, I wanted to call the attention of the house to those questions and see if it would not be advisable to study the problem and even to impose restrictions, because commercial advertising is supposed to be a way to promote sales, but today it has become an industry, an end in itself.
In England, a board conducted an investigation on trusts and has just tabled its report. That investigation lasted three years. That board recommended among other things that Unilever Limited and Procter and Gamble Limited reduce by an average of 20 per cent the wholesale price of domestic soap and by 40 per cent the sales costs of those products. The investigation discovered, in fact, that in 1964 those two companies had spent almost 20 per cent of the retail price of domestic soap on sales promotion, particularly in advertising.
People say: prices are going up. Prices are going up because sales promotion is exaggerated. And who pays for the promotion of sales, publicity that is? Here again it is the consumer.
Mr. Chairman, the minister pointed out yesterday in his speech that there is a law against monopolies. I wonder if this law should not be extended so as to include a provision against sales promotion monopolies. Advertising has now come to a point, as I was saying a while ago, where the consumer's freedom to choose is overpowered and I believe that, considered in this light, sales promotion can become a cause of poverty.
I repeat that I am not against commercial advertising in itself, because it is necessary. But in the present context, with its intensity and frequency being increased by radio and

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television, it inevitably exercises a prejudicial influence on the consumer and, at that point, the state must investigate and find the necessary remedy to correct the situation.
[DOT] (4:10 p.m.)


Edward Nasserden: Mr. Chairman-


George James McIlraith: I wonder whether the hon. member would permit me to ask a question for convenience of members. I wonder whether it would be agreeable that some indication be given as to the point in this afternoon's proceedings at which we should rise and report progress from this committee in order to bring forward the motion to enlarge the terms of reference of the committee dealing with consumer credit. If during the course of the hon. member's remarks I could have some indication from hon. members as to the point at which this would be agreeable, it would be helpful. May I thank the hon. member for permitting me to make this request.


Edward Nasserden: Mr. Chairman, in rising to take part in this debate I would first of all remind hon. members that this is the first item of the estimates of the Minister of Finance. We were dealing primarily yesterday, and are again today, with remarks made by the Minister of Finance in opening discussion of his estimates for our consideration. It is only a matter of a few months ago when the minister presented to parliament a budget which he said at the time would control the inflationary forces which were at work in this country, a budget which he said would bring about a further appreciation of the progress that was being made economically in our country.
Looking at the statement which he has made on this occasion, and thinking back to the utterances that have come from former finance ministers over the years-and I have read most of them going back to the earliest years of Canadian history-I have never seen a more dismal denial of Canada's future than that which we see contained in this document that has been presented by the minister on this occasion.
The first sentence of the remarks of the minister, as reported at page 8212 of Hansard, read in this way:
Mr. Chairman, the fact that the committee and the government regard the threat of inflation as an important and urgent matter is evidence that Canada will not drift into a period of continually rising prices and costs.
[Mr. Choquette.l
The minister and the government opposite were warned months ago of what was taking place in this country, of those things that were contributing more than anything else to the inflationary trends that were robbing the Canadian consumers and the Canadian taxpayers of the dollar value of their wage packets.
The minister ridiculed those on the opposition benches, and when we rose in our places in the house, as is our right and duty, to warn of the dangers that lie ahead the minister and the government opposite threw at us time after time the charge that we were trying to obstruct the orderly business of parliament.
The minister went before the television camera the other night and told the people of Canada that we were trying to do too much in too big a hurry. Does that sound as though there has been obstruction in the House of Commons, Mr. Chairman? Certainly not. This gives the lie to the propaganda that has been issuing forth from the National Liberal Federation headquarters, from government benches, ministerial offices and the offices of individual members who sit opposite. The opposition members of parliament have warned about the dangers of inflation for months now. The government has continually said that it had things under control, that the policies that they were employing would meet and overcome the problems that might face this nation in this regard.
The minister went on in his third paragraph to say that we have had a long and strong economic expansion in the past five and a half years. What an admission to come from hon. members opposite, Mr. Chairman, in view of the charges that they made not so many years ago about the government of that day, about the Minister of Finance of that day and about the actions that were being taken at the time to overcome the depression and recession that resulted from the 22 years of Liberal administration prior to 1957.
As I view the document that was presented to the house and to the nation by the Minister of Finance on this occasion, I cannot help but think this afternoon of a former minister of finance, the Hon. Donald Fleming, who during the years tackled the problems which had been created by many of those who sit opposite and laid the foundation for the prosperity and expansion which has taken place today; and I would say that to the Acting Prime Minister who is in his seat today.
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Paul Joseph James Martin: Why single him out?


Edward Nasserden: The Minister of Finance also said that by the middle of last year it was evident that costs and prices in the field of construction were rising too rapidly. Was that not what the opposition parties told the government when they instituted the 11 per cent sales tax? Each one of the ministers opposite knows the effect that that sales tax has had on construction costs. Buildings which would have cost $800,000 are today costing $1,100,000.


John Robert (Jack) Nicholson: Will the hon. member permit a question?


Edward Nasserden: After I have finished I would be very glad to. When we told hon. gentlemen opposite of the effect that this tax would have, they laughed. They denied that the implications that we at that time said were involved would have any effect on the cost of our economy, and as a result they have built the highest cost economy in the entire history of our nation.
During the budget speech of the Minister of Finance a few months ago he admitted this fact when he started the progressive reduction of that tax. But this delayed reduction has left disastrous effects on the construction industry of the country and on the productive capacity of the nation. The minister said that the government had kept this policy of restraint since that time, though it had not achieved as much success as he would have liked to see. The Minister of Finance cannot say that he was not warned. When we issued those warnings in the House of Commons we were told we were obstructing.
Canada faces today a crisis in regard to a cost of living which is the highest in the entire history of the country. We have the highest interest rates in the entire history of the country. This is undeniable evidence of the failure of the government to discharge their duty. These are the same gentlemen who, in the years when the right hon. gentleman who is today Leader of the Opposition was prime minister, said of his administraton that it was not a businessman's government. These boys sitting across the way had all the answers. They had the business experience and were going to get this country rolling again. They were going to fight the pitfalls of inflation, the way it eats into the consumer's dollar and into the daily lives of all our people.
[DOT] (4:20 p.m.)
A good deal has been said today about high demand, and the fact that it raises prices. It has not been the great demand for goods in Canada that has raised prices, it has been the taxation policy of the government and the financial policies of the government that have raised prices in this country. The fact that when it presented its budget a few months ago the government opposite saw fit to raise income taxes, has had the effect of lowering the take home pay of the individual consumer in this country. The Secretary of State for External Affairs knows that, as well as I do.
The Minister of Finance reached a state of hysteria that we have seldom seen in the House of Commons when he went on to say: "We have reached a position that is unstable". Have you ever heard of a minister of finance in the entire history of Canada saying that we have now reached a position that is unstable? He went on to say that the present trends just cannot continue for long into the future. There are no plans to alleviate the situation; there are just pious hopes. I say that this nation cannot much longer withstand the rigours of the kind of administration that we have had during the last three years.
Listen to these words in the minister's statement:
We are now producing about all we can in Canada this year. We have excellent market opportunities at home and in other countries. We have again been lucky in getting huge grain crops at a time when grains are in great demand. Our labour force is growing at a rate of a bit over 3 per cent a year and is becoming better educated and trained.
Yet this government, in the face of these optimistic factors is, in the words of the minister, facing a prospect that cannot be described as anything but dismal denial of the future of our nation. That is not all, because the minister went on to say this:
We must also recognize that the average Canadian, although he is a fortunate citizen of the world and can look forward to a steadily rising standard of living, cannot have the same standard of living as the average United States citizen-
An hon. member,-I believe the hon. member for York East,-wondered why. I say to the House of Commons, to the government and to the Minister of Finance that this statement made by the Minister of Finance was an indication to the trained young Canadian citizens in our land to seek opportunities in other lands, because by this statement more harm to the future of this nation

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was done than has been done by any other single statement within the recent history of our country. That statement is an absolute denial of faith in young Canadians and is an absolute denial in the future of our country. That is what we are to get from the language of the minister, who is in many respects the first minister, when he talks about the economic prospects of the nation.
We on this side of the house cannot help wondering at the words of the hon. member for Leeds, who drew on all the wonderful qualities of the minister, and who talked of the preparation that the minister has had to come to his present position. An hon. member in this debate mentioned mistakes. May I say that people learn from their mistakes. Do you know, sir, if one were to apply that to the present government, it would qualify as the best educated government in the history of our country?
I recall vividly when it came to office that everyone talked of the 60 days of decision. This government said that in those 60 days it would do more than the former government had done during its entire period in office. That 60 days of decision has changed to 60 days of dismissal, sending the members of the House of Commons back to their own constituencies while the government trims its lamps, hoping that the problem of inflation will somehow disappear, and that all will be well.
The businessmen of this country must wonder at the antics of the government, when they listen to the statement which was made by the Minister of Finance with respect to things that should be done, only to hear him say that those things are not to be done because of the problems that face this nation-that these things will not be done for another six to eight weeks. Certainly, that is hard to understand.
You know, sir, the minister made this very interesting observation:
An alert and informed public opinion can play an important role, as well as those directly involved.
The people of this nation know all about inflation. Every time a housewife goes to the store to buy groceries, clothes or any of the commodities necessary for life, she draws a direct comparison between costs today, and the costs of yesterday. Often, within a week, one can see prices increase a few cents here and a few cents there. The people of the nation do not have to be informed. Those who have to be informed of this are hon. gentlemen opposite.

Not only must they be informed about the problem, but they must make up their minds about what we are to do. As seen from this side of the house, this faceless administration cannot make up its mind on the important problems facing the nation. That is one of the undesirable attributes of the present government.
Referring again to the minister's remarks, he had this to day:
The expansion of the money supply and bank credit has been held in check and interest rates have risen in response to insistent demands for credit.
In recent months the minister has tried to hold in check the money supply. That was not the case a few months ago when the government was pumping every cent it could into the financial system of this country, until the banks held up their hands in terror at what was happening, and the minister had to reverse the process. The government opposite cannot shelve the responsibility that it faces with regard to interest rates. I say this, because of the bank legislation which should have been before parliament before this time and which is still being held up for consideration. By its attitude the government has shown that it favours a high interest rate policy for this nation, and by virtue of that it has encouraged a higher trend of interest rates. In addition, the government has not done anything to alleviate the situation which prevents money being provided at lower costs.
I could go on dealing with other factors in the minister's statement. There was one statement which was of interest to the province of Saskatchewan, and that has to do with the deferring of the medicare program for another year.
This program will cost the province of Saskatchewan in excess of $14 million. All I have to ask the minister is: What has he got
against the province of Saskatchewan?
I want to say something of what the government should have done long ago. This subject has been raised from this side of the house on more than one occasion. It should have brought in a consumer loan legislation program whereby the consumers of this country could purchase the things they need at reasonable rates of interest, as certain consumers can today under the farm improvement loans legislation.
[DOT] (4:30 p.m.)
They could have eliminated the 11 per cent sales tax which they imposed. They could
September 9, 1966



have set up a department of urban affairs to take care of the problem of urban development in this country. I well recall the way in which members opposite went to people living in urban areas during the election campaigns of 1962, 1963 and 1965 saying: the Tories are the farmers' party; we will do something for those of you who live in the cities and towns. But they have utterly failed to meet this problem of urban development in an effective way.
There is another thing they could do. They could get a prime minister who would put a face on the government opposite, one who would give the government a purpose which we, and all Canadians, could see. If that were done, Canadians would have something to work for and the Minister of Finance would not have to say in the House of Commons that we as Canadians will never achieve the standard of living which our friends in the United States enjoy.
We have the resources. We have a keen, resourceful people. Moreover, as a result of the action taken when the Leader of the Opposition was Prime Minister, we set in motion the greatest technical training program in the entire history of this nation, giving people the opportunity to train themselves for jobs which could build a greater Canada. Yet here we find a government which says it intends to cut back on research spending, to cut back on education. Already in the course of this debate we have seen hon. gentlemen opposite change their minds in this regard. The statement by the Minister of Finance was an ill-considered statement put forward without proper thought.
The other night on television the Minister of Finance made another admission which is even more interesting. He said, in effect, that it was the opposition who were responsible for the troubles we have here in Canada. Analyse that statement and you will find that in a democratic society like our own it means that the opposition could have done a better job than the government has done in the last several years in conducting the affairs of this country.
Consider the situation. The consumer price index has never been higher. A committee of the House of Commons and of the Senate is being set up to study the situation so that the government may have an excuse for not taking action. No move has been made to make money available on reasonable terms to those who are paying excessive interest rates. Then there is the statement by the Minister
Supply-Finance
of Finance that we have now reached a position which is unstable.
How true this is in Canada today. Look at the labour situation. Look at the situation with regard to agricultural income. Look at what is happening in our armed forces. Look at the state of dominion-provincial relations. Look at the prospect of rising interest rates, and look at this latest attempt of the government to deal with inflation, this erosion of the value of the savings and earnings of Canadians-a thief stealing from the pockets of Canadians and doing so with the co-operation and, apparently, with the consent of the government opposite.
As I look at the proposals which hon. gentlemen opposite have offered I cannot convince myself that they are likely to have the effect for which the minister is hoping. After all, medicare is not yet in being, so nothing will be saved by delay in that field. The scholarship program is not yet in effect, so nothing will be saved by delay in this regard, either.
It amounts to this. All the government proposes to do as a means of combating inflation is to increase income tax and direct the people to exercise the restraint which the government has refused to exercise. This is the only answer the Liberal party has ever had. Yet they were able to convince the people of Canada that they had other programs, and were able to put out of office a government which took over the administration at a time of unemployment when the-economy was stagnant-


Mitchell William Sharp: And produced a financial crisis.


Edward Nasserden: -and which was able to create such a favourable climate that in 1961 there began the greatest period of expansion in the entire history of our nation. Every hon. gentleman opposite is proud of the expansion which took place as a result of those policies.


Mitchell William Sharp: Why are you not still in office?


Edward Nasserden: Because of the fraudulent, claims made by hon. gentlemen opposite, particularly by the hon. gentleman who now holds the portfolio of finance. I remember the statement which the hon. gentleman made on devaluation. He thought the Canadian dollar was not going to be worth anything at all.
I will end simply by asking: What is Canada's dollar worth today, under a Liberal government?

September 9, 1966
Supply-Finance


John Robert (Jack) Nicholson: The hon. gentleman was good enough to say he would answer a question at the end of his remarks. I should like to ask him now whether he seriously suggests that the 11 per cent tax on building materials which is now in effect does not have a salutary effect in tending to reduce unnecessary construction in the country.


Edward Nasserden: Here is another minister who has a poor memory. The tax is imposed not only on building supplies but on production machinery-it has these two aspects. Is it not this tax, its two parts taken together, which began the spiral of inflation we are experiencing now in Canada? The Minister of Finance admitted as much when he decided to repeal it at the time of the last budget-


John Robert (Jack) Nicholson: The hon. gentleman is making a speech. I asked him a question, I hope he will answer it.


Edward Nasserden: I know I cannot give the minister the answer for which he is looking. He knows in his heart that this measure had a more damaging effect on the Canadian economy and on the value of our dollar than any other single factor which has entered the financial picture in recent years.


John Robert (Jack) Nicholson: The hon. gentleman still has not answered my question.


Edward Nasserden: If the minister would repeat his question I would be glad to answer it.


John Robert (Jack) Nicholson: Does he seriously suggest that the 11 per cent tax on building materials does not have a salutary effect in tending to minimize unnecessary construction at this time?


Edward Nasserden: I had a purpose in asking the minister to repeat his question. We need to go back to the time of the imposition of this sales tax and the uproar which followed in parliament. The former minister of finance imposed the tax by stages-a certain percentage now and a certain percentage later-in order to encourage building in this country. Did that have a salutary effect on inflation?


John Robert (Jack) Nicholson: Questions are not answered by asking others. I have asked my question three times and if the hon. member cannot answer it I am satisfied.
[DOT] (4:40 p.m.)


Edward Nasserden: Mr. Chairman, the minister cannot get around it that way since there is

no doubt in the world that the tax on building supplies has raised the cost of construction in this country by more than 11 per cent because there are added costs over that 11 per cent.


Mr. Salisman:: Mr. Chairman, it is with some reluctance that I interrupt this private debate, but there are a number of comments I wish to make on the baby budget brought forward by the Minister of Finance. During the last two days the minister has taken quite a beating, and on occasion he has had to exit from the chamber to restore himself in order to continue to face the blast.
I hope I can make my remarks with as much equanimity as I can muster despite the anger that must be aroused when one sees the way in which the government proposes to solve the problems of inflation. This budget is a good example of the old adage about generals who are fighting the present war with the weapons and techniques of the last.
I understand that the Minister of Finance is a student of Keynesian economics. Certainly Keynesian economics teach us the use of monetary and fiscal policies and the way we can maintain full employment, and thus are a tremendous improvement over the attitudes and economics that prevailed previously. However, the minister can become too enamoured of this attitude toward our society, and this type of economics does not have the answer to all the problems in our society. Although many changes are taking place, apparently those changes are not within the purview of the minister, nor is he prepared to adopt new attitudes to the new problems that must face Canada.
The problem of the future is that this or any other government that hopes to rule and command the respect of the people of Canada must be dedicated to full employment policies. When such full employment policies are in effect there is a constant pressure on the economy and a great danger of inflation. That danger has to be faced, and I think to some extent we have to accept that part of the inflationary pressure may be a very good thing in moving a society forward along the dynamic path. However, the usual policies of monetary control and fiscal attitudes are not going to be sufficient to contain inflation.
When speaking about his previous budget the minister was full of self-congratulations. He said it had worked. He also felt that his policies would be successful in bringing down
September 9, 1966

the interest rate. Despite the minister's confidence in his policies, the facts of the situation do not warrant such a euphoric attitude.
I would like to quote from the Ottawa Journal of June 22 in which Professor Welsh-ans is reported as saying:
High interest rates are likely to prevail in the Canadian economy for the next ten years-
There does not seem to be any possibility that there will be a let-up in the pressure on interest rates, and certainly the minister's reliance on monetary policy and a free market to bring down those rates is due to fail. He will have to do something in a far more positive way if he is to be successful in this endeavour.
When the minister introduced his 5 per cent withholding tax on industry as a means of curbing inflation it was hailed as a most imaginative approach, but it was quite obvious to most people on the opposition benches that it could not possibly work. If he was serious about containing inflation, if he really wanted to curb some of the growth, some of the steam in the economy, then that 5 per cent withholding loan should have been a tax because it shows up in a company's books as an asset and a company simply borrows against it.
The Monetary Times of June 1966, commenting on the minister's policies said:
Despite Ottawa's pleas for restraint many industries simply cannot afford to slow down.
Budget restraints and Ottawa pleas notwithstanding, Chemcell (1963) Ltd. is going ahead with the $35 million of capital expansion it earlier scheduled for this year.
A report in the Globe and Mail of August 3 said this:
Businessmen have ignored Mr. Sharp's warning of the danger of inflation and disregarded his special tax measures designed to slow down capital spending.
The policies that the minister instituted, the ones he was so hopeful about, simply have not worked. He should recognize this and should recognize the limitations of monetary policy in the kind of economy that we have now. He should also recognize that the fiscal policy he is introducing, although it may be effective in the over-all approach towards containing some of the inflationary pressures, will cause enormous inequities and great injustices to many people.
The minister has called for restraint on the part of government. As a matter of fact he has done more than that. He has just about abandoned every government project that all 23033-525
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of us had been hopeful of seeing implemented. He is calling for restraint, but it is for restraint on the part of the little man, on the part of the man who has always had to pull his belt in whenever sacrifices had to be made.
We hear that we cannot afford low cost housing in Canada, and that there is not enough money for mortgages. Yet commercial construction spending is soaring. It is not that we have a shortage of goods and services. It is that we have a misuse of goods and services, and that we have an abominable allocation of these goods and services, a distorted sense of values as to what is important and what is not important. Apparently the work that the government does on behalf of the people of Canada is not important. We need increased educational opportunities for our people in order to sustain a long-term growth, in order to see that our people get the advantages of a rich and healthy society, yet we are told we have to cut back on educational grants.
[DOT] (4:50 p.m.)
The scholarships that were offered are no longer available. We also have to cut back on research despite the statements made time and time again by the government that they recognize the inadequacy of the research program in Canada, that they recognize that Canada simply must do more in this field in order to progress, that Canada must spend more money on research if only to keep her skilled scientific people in this country and offer them incentives. This program has been set aside; we can no longer afford it.
We cannot afford medicare. Of all programs, there is no justification for the government taking this attitude with regard to medicare. Medicare by and large would be a transfer payment. It would not be a new sum of money taken out of the economy; it is a better way of utilizing the money we are already spending on behalf of the people of Canada. This program has to be abandoned; it can no longer be proceeded with.
Mortgage assistance to our people is a luxury we can no longer afford. We have a mobility program that is trying to increase productivity in this country as a whole by moving people from depressed areas, from areas where employment opportunities do not exist into areas where workers are needed. What do we do? We make sure that we sabotage this program by not seeing that houses are available to the migrants as they

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Supply-Finance
move from one part of Canada to another. This is a fine way of conducting a mobility program; you don't let it get off the ground. Then we complain that there is a disparity between what we are capable of producing and what we are actually producing.
Housing is practically out the window now. In connection with the situation in my own riding I should like to read from the Evening Reporter of July 2. The article is headed "Construction of Houses Takes 50 Per Cent Drop" and it say:
Only half the number of houses have been built in Galt during the first five months of this year compared to a year ago at the same period.
Then from an adjacent municipality the situation is described by the Kitchener-Waterloo Record of May 30 in this way:
50% of Families Can't Buy Home.
At least 50 per cent of the family heads in Kitchener are earning less than $5,000 a year and cannot afford the cheapest new single-family home on the market-
There is a definite need for housing for all families earning less than $5,000 a year.
There is an apparent housing need for those families in the $5,000 to $6,000 category.
The need in the lower income groups is not only for small families but large families as well.
We are not even talking about the poverty-stricken in Canada but the industrial worker who would be considered to be earning a reasonable wage. Yet even the industrial worker finds it almost impossible to buy a home for himself and family. The minister in his statement pointed out that we cannot have everything, and that is quite right. No country, no matter how rich it is, and no people can have everything they want at the same time. But the statement of the minister would ring much truer, would evoke a great deal more understanding and sympathy if we did not read in the newspapers articles pointing out that, while we are talking about what we cannot afford, commercial construction spending is soaring.
It is not that we cannot afford certain things but that the government has decided we are not going to afford them. I would submit to the minister that these things are far more important in terms of priority than the spending going on in other areas. Apparently there is no shortage of funds in other fields. There is no halting of the building of banks and bank offices, despite the fact that Canada probably has more banks in relation to its population than any country in tne world. I do not see any curtailment of the building of service stations. Again, we have
[Mr. SaltsmanJ
more service stations than we need. The report of a royal commission in British Columbia pointed out recently that there should be a moratorium on the building of service stations because they are already overbuilt; but there does not seem to be any shortage of funds for these projects. There does not seem to be any shortage of funds to build tall, air-conditioned office blocks as head offices for companies. I know that air conditioning is very nice, but there is no shortage of office space that would justify this new construction. This is a luxury.
If you are to ask for belt-tightening, should not belts other than those the minister indicated be tightened? If we are to have an increase in the old age pension and a medicare program, obviously these things will cost money because you cannot get things for nothing. Such programs will cost money and taxes will have to be raised in order to provide adequate funds for them. The hardheaded man may very well ask: Where does this money come from? The answer of course is that it comes from the people of Canada; it has to come from them. But it is a question of whose pocket it comes from and for whose benefit the money is raised. I would suggest to the minister that all kinds of taxation possibilities are open to him at this time, especially when he talks about belt-tightening. I understand that exploration in the oil industry is going on apace, despite the fact that our known reserves are adequate for at least 21 years even if we do not take into consideration the oil sands.
I would suggest that the minister look at his policies regarding the depletion allowances to see whether it is fair to give these allowances to companies that really do not need help, when at the same time we are asking the older people of this country to tighten their belts and are telling them that we cannot afford an increase in the old age pension because of inflationary pressures. If we want to afford these things, we can. It does not make any difference in the total distribution picture who gets the money, from an inflationary point of view. The important thing for the government to decide is the allocation of the rewards and resources of this society. The government has made that decision, but I would suggest it has been a very bad decision and is unfair to the older people, the poorer people and those who need housing in this country.
The great challenge facing Canada is how we can take advantage of the dynamic situa-
September 9, 1966

tion that exists, and keep it dynamic instead of slowing it down. The great challenge that faces this country is how we can improve our productivity, how we can manufacture and provide more goods and services and see that they are distributed in a fair and equitable manner. We are not going to do this by relying on the market mechanism and saying that the market will make the decision.
[DOT] (5:00 p.m.)
The minister is saying that if people are
willing to pay more they will do so, and if they are willing to bid up prices they are entitled to the commodities at an increased price. We are not going to contain this trend by having the government cut back public expenditures. Surely this cannot be accomplished by a postponement of school and hospital construction, or by the postponement of the institution of a medicare program. The government should not take a first step in this way, or by saying to the older people of this country that we cannot afford to give them an increase in old age pensions.


Mitchell William Sharp: Mr. Chairman, may I ask the
hon. gentleman to quote his authority for all these extraordinary statements, none of which appear in my statement. All I proposed of this nature was the postponement of medicare for one year. I said that we should pace our progress; I did not say that we should cut things back.


Max Saltsman: I appreciate the minister's
interjection. Perhaps I may be allowed to ask him a question. Supposing next year he finds himself in the same position-


Herman Maxwell Batten: Order, please. I apologize for interrupting the hon. member, but it being five o'clock shall I rise, report progress and request leave to sit later this day or at the next sitting of the house?


George James McIlraith: Mr. Chairman, before you rise and report progress I wonder whether we could have some indication of the wish of this committee. Does the committee wish merely not to see the clock at this stage in order to permit the hon. member to continue his remarks, or does it feel that we should rise and report progress pursuant to the rules?


Frank Howard: Mr. Chairman, even though I was not the one speaking at five o'clock I should like to make a comment in respect of a change in our rules as to the sitting. I think it would be preferable if we discussed such a change after we have reported progress. If
23033-525J
Business of the House we find at that time it is desirable to make a change, and I for one believe it is, an order of the house can be made to dispense with or defer private members hour.
Progress reported.



BUSINESS OF THE HOUSE

George James McIlraith: Mr. Speaker, I should like to ask hon. members whether they would be agreeable to postponing private members hour, with the understanding that the bills retain their position on the order paper.


Mr. Deputy Speaker:: Is it the wish of the
house to postpone private members hour?


Some hon. Members:: Agreed.


George James McIlraith: Mr. Speaker, so there will be no confusion at six o'clock perhaps I should ask for concurrence in the suggestion that we continue to sit after six o'clock in order to complete the business before us and the motion to which I referred earlier today, when I spoke about the business of the house for today s sitting. If that is agreeable I would ask that an order of the house be made that we continue to sit after six o'clock.


David Lewis: Mr. Speaker, has the minister
any time limit in mind?


George James McIlraith: The agreement was that we would discuss inflation for one day on the estimates of the Minister of Finance (Mr. Sharp). We have now gone considerably beyond that time. The government has no desire to cut off members who wish to speak. At the conclusion of this debate it is our desire that a motion to amend the reference to the committee on consumer credit be broadened to permit that committee to inquire into the increase in the cost of living. Having completed that, it is proposed that the motion to adjourn the house be put exactly in accordance with the terms I indicated when speaking on motions at the beginning of today's proceedings.


David Lewis: Mr. Speaker, would the minister consider tabling the motion to sit beyond six o'clock until we reach six o'clock, and reassess the situation at that time? If we require another half hour at six o'clock to complete the debate, that is one thing, but if it is obvious that more time is required that is another thing.
We must also realize that if the resolution standing in the name of the Minister of

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Business of the House Finance leads to any kind of debate we might be required to put in a good deal more time; so perhaps we should consider the situation again at six o'clock. I am not suggesting how we in this group or anyone else may look at the situation, but it seems to me we ought not try to make a decision at this time without knowing what we are headed for in an open-ended situation.


George James McIlraith: My reason for wishing to raise the matter now is simply this. During this resumed session, which was called to deal with the railway situation and two specific bills a request was made by the Leader of the Official Opposition (Mr. Diefenbaker) that we spend a day debating the subject of inflation. That request has been acceded to by the government. A subsequent decision was made to carry on that discussion on the estimates of the Minister of Finance because it was felt that would provide the most suitable opportunity for that kind of a discussion.
In the minister's opening remarks there was a reference made to one matter that might have some bearing on the subject of inflation. I refer to the suggestion about the committee of the two houses being empowered to inquire into one aspect of this matter. It seems to me that we have kept our commitment quite conscientiously in this regard. It does not seem to me that there could be anything for debate in a motion to extend the terms of reference of a committee, which could not be debated during our consideration of the estimates. It is my hope that an order can be made now so that at six o'clock we will not be caught up in some kind of a procedural difficulty. I am not suggesting that an hon. member speaking at six o'clock should be cut off or curtailed. We wish to give every member an opportunity to comment at this time.


Gordon Minto Churchill: Mr. Speaker, I support the suggestion of the hon. member for York South, that the motion to continue sitting after six o'clock be considered at a later time.


Mr. Deputy Speaker:: Does the house agree that a motion to continue beyond six o'clock be considered later this day?


Frank Howard: Mr. Speaker, I did not know that the motion had been put. I thought the whole procedure was to be deferred and reconsidered at six o'clock.


George James McIlraith: Mr. Speaker, so there will be no controversy about this at six o'clock I

should like to put the motion now and ask that it be stood over for reconsideration later.
I think that would meet the hon. member's request.


Mr. Deputy Speaker:: Does the house agree that the motion be put now by the Chair and stood over for consideration later this day?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: It is now proposed that the motion of the hon. Minister of Public Works that the house sit after six o'clock if necessary, and that an order of the house be made in relation thereto, be now put.


George James McIlraith: No, Mr. Speaker. It is my understanding that the motion be stood, and discussed later today.


Mr. Deputy Speaker:: Shall the motion stand for discussion later?


Frank Howard: No, Mr. Speaker. Surely it is not being stood for discussion, and that is why I asked that the motion be not put forward by the minister. Let us make a determination at six o'clock as to whether or not it is then the desire of the house to sit beyond that time. If it is now set down for discussion the implication is that we are waiving the right of hon. members to object to the motion.


George James McIlraith: Mr. Speaker, it was my intention to have the motion stand so that hon. members who wish to object to it would have the right to do so at six o'clock, and not be requested to assert that right now. That is what I was seeking to do.
[DOT] (5:10 p.m.)


Raymond Langlois: In that case, Mr. Speaker, you cannot put the question and ask us to accept the motion now. What is the use
of discussing the motion at six o'clock if we accept it now? I do not see how the Minister of Public Works can co-ordinate these two requests. He can give us his notice of intention now. At the opening of the session today he told us he intended to put this motion before the house, but I do not think, Mr. Speaker, you can place the motion before us now. I am not ready to accept the motion as it is put until we get closer to 6 o'clock for the simple reason that other members of my party may wish to speak on the matter before us. My party has no representative on the special committee which was established to study these estimates, and therefore we are trying to keep a close watch to ensure that
September 9, 1966

those of us who wish to speak on this subject are given the opportunity to do so now. That is why we do not want to adopt something now which might not be acceptable.


Mr. Deputy Speaker:: Is it agreed that the motion stand?


Some hon. Members:: Agreed.

The house in committee of supply, Mr. Batten in the chair.
DEPARTMENT OF FINANCE Administration

1. Departmental administration including administration of the Guaranteed Loans Acts and the Inspector General of Banks' Office, and payments to provinces and grants as detailed in the estimates, $4,332,900.


Max Saltsman: Mr. Chairman, may I ask the minister a question? In which way has he done the things that I have suggested? Surely the Minister of Finance is not so naive as to think that he can call for the curtailment of public expenditures and can indicate that he will approach the provincial governments urging them to use restraint, while at the same time he does not seem to realize what restraint means to provincial governments. After all what sort of facilities do the provincial governments construct? They are the very same facilities about which we are talking.
I would suggest that if the minister is stating that the federal provincial and municipal governments must apply this kind of restraint he is in effect saying to them that according to him the schools, hospitals and libraries which they are building have a very low priority.
When the minister said that he is only deferring medicare and not abandoning it, I wonder whether next year the situation will have changed. I do not believe that it will change in view of the policies which the minister is now introducing. Will the minster not come back to the house next year and say: "I had sincerely hoped that we could have introduced medicare at this time, but just as last year, the year before, and in the last 47 years it is not possible and therefore I hope we will be able to do it the following year." May I suggest to the minister that he could introduce medicare this year if he were willing to call on that small section of our population who are really causing the inflation and say to them: Tighten your belts, and
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stop this needless and useless construction. However, I do not think the minister is prepared to say this. He is telling us that the sacrifices should be made in the public sector.
I was very interested in the remarks made by the hon. member for Lotbiniere who spoke about advertising. I hope the minister listened to this backbencher. Perhaps I should not call him a backbencher because he acts like a frontbencher most of the time. I hope the minister was listening to him because he made some good points. He spoke of the fantastic sums of money which were being spent in this country on advertising, and which are being completely ignored. The minister speaks of restraint. What about restraint being exercised in terms of permissible deductions for advertising? Would this not bring in a nice revenue to the government? If advertising is as potent as people claim it to be, then advertising increases the demand for goods and services. Restraint in this field might be an excellent way of slowing down an overactive economy and at the same time creating additional tax revenues. This has not been suggested by anyone on the government side.
I think this budget will make every Canadian sad. The people of our country will say to themselves: The government has decided that all those things that it promised us and that it said were good will not be possible now because of inflation. They will also say: My government has also decided that the service stations, the new banks and the new shopping centres are far more important; they are more important, when I need medicare or an increase in my old age pension.
I really do not see how the minister has arrived at this set of values. The government may justify it by saying that we cannot have everything all at once and therefore we have to defer these plans until a future date.
May I suggest in closing that the government would be on far sounder grounds if it said to some of the people who are causing inflation in the private sector: You cannot have everything you want exactly when you want it, simply because you can go into the market and pay whatever the market demands for these services regardless of the needs and of the welfare of the Canadian people.
This, Mr. Chairman, is what I suggest is the effect of the budget. It is too much to hope that the minister will listen to the opposition. But I hope he will listen to some of the members of his own party who I am

September 9, 1966
Supply-Finance
sure feel very much the same way and who are very disturbed by the budget. They will have to go back to their constituencies and explain why the promises made to them during the compaign cannot be fulfilled at a time when their party is in power.


Mr. Lalulippe:: Mr. Chairman, I would not like to take too much time and my remarks will be very brief.
I want to talk about the policy of the happy medium, the inflationary system and the means to remedy it without upsetting everything, breaking everything, taxing everyone, in short without increasing taxes of all kinds, so as to enable the government to administer and the people to stop working.
The people must continue to work, to get ahead and to progress. The economy must not be slowed down in any way. There are means to take in that respect and I think that the government does not always see them, does not know the main ones to take. I wish to explain a method to the government, and particularly to the minister, if he would like to try it. Changes will have to be made within his department and that would be for the greater good of the country.
In Canada therefore, in 1966, on this 9th day of September, when the fear of the fight against inflation makes us forget the fight against poverty-we know that a war against poverty has already been declared and we have forgotten it already, because it is said that everyone has tod much money, that the citizens are asking for too much, that there is too much inflation, that the citizens are asking for too much in salary increases, that there is a deficit throughout the country and in everyone's budget. I want to remind everyone that there is no need to get panicky, that God is always with us in all His power and wisdom and that He is at our disposal all the time.
Mr. Chairman, not one of us is afraid that the earth will stop producing tomorrow morning, that we will run short of goods, not even the minister. But we all are terribly afraid of running short of money. The minister is taking steps to restrict credit under the pretext of waging war against inflation. He does it by increasing poverty, by making the poor poorer and the rich richer.
It is the responsibility of the present government to act and restore the national economic balance between production which will reach $56 billion in 1966, consumption which

will reach $38 billion and capitalization which will reach $18 billion.
[DOT] (5:20 p.m.)
Before capitalizing over $18 billion, we should guarantee the right to live to 12,600,000 Canadian citizens who have no personal income through their work and their capital and who are dependent on 7,400,000 working citizens and capitalists who divide among themselves production and profits.
Mr. Chairman, in the field of production, there are two kinds of citizens: the employers and the employees totalling 7,400,000.
In the field of consumption, there are the same employers, the same employees and, in addition, 12 million dependent citizens who are consumers and who do not have the personal income to buy the goods and services they need to live.
Thus, we have two types of citizens: the producers and the dependents. If the 7,400,000 producer citizens have a purchasing power by their work and their income, the other 12,000,000 dependents, having no personal income, also have the right to live.
This is a natural and divine right, legally acknowledged in Canadian legislation, namely under Chapter 44 of the Revised Statutes of Canada, and more particularly in the Bill of Rights. However, this essential right has never been acknowledged in terms of dollars; therefore, this right is completely ignored, scrupulously measured, violated even.
For instance, $6 per month, that is 20 cents a day, for a child up to ten years old in his home, that is abnormal, antifamily, antisocial and antihuman, in this plentiful twentieth century.
These same governments pay $65 for a young child in a foster home, and up to $120 in an orphanage.
Due to these conditions, the family budget is completely out of balance, far from the financial and physical realities of the country; taxes imposed by our old-fashioned governments take away the livelihood of a great many of our families and no logical means can be found to stabilize the family budget. Instead of restoring the situation, it is made more confusing and alarming.
Mr. Chairman, what was already in a bad shape, is now in worse shape. There is only one workable national economic policy for Canada, if the political and financial leaders wish to see harmony between production,
September 9, 1966



distribution and consumption, while maintaining the necessary reserves for constant and balanced capitalization.
The numerous strikes at present are proof of the population's dissatisfaction over the lack of national agreement between employers, employees and dependents. All these wage increases for labour, increases in the rates of interest for credit and capital, are responsible for upsetting political and economic balance to a further degree.
However, the greatest cause of national instability and population dissatisfaction remains unheeded.
Management always demands more than labour. Workers receive personal remuneration regardless of the dependents in the various families, the number and age of dependents of different workers: wives and children. It is useless to try to prove that the difference in tax takes care of the situation and balances the two, or that the ridiculously small family allowances re-establish the balance. The most precise calculations of these two adjustments do not even show $10 a month per dependent, but barely 30 cents per day.
All those who are politically influential are favoured by a salary which makes the government family allowances of no consequence to them. Thus the great mass of the people, the five or six million wage-earners, farmers or poor people, cannot fight for their rights unless they form unions. But there again, they are not considered as heads of families. The problem of the father of a family is not discussed in comparison with that of the bachelor.
Mr. Chairman, intentionally or not, production is meant for the consumer first, and then for capitalization.
In speaking of inflation, few know exactly what it is. Inflation throughout the country would be a bad sign. Normal prosperity throughout the country would be proof of good government.
Now, some people say, even members, that inflation was getting to be the normal thing, that there is inflation in the United States and in all European countries and that it is normal for a country to live with such things and to accept an inflationary system. I think it is abnormal, antisocial and antihuman. We must not, and it is nonsensical, accept such a state of affairs in Canada. If other countries deal with this in a certain way, we do not have to follow suit. If someone goes and jumps in the lake we do not have to do
Supply-Finance
likewise. We have other means at our disposal to start the Canadian economy rolling again.
After the war, in 1945, everybody seemed prosperous and nobody talked about inflation. Canadian production was estimated at $12 billion; $10.8 billion were either spent or consumed and about 10 per cent of our production, or $1.2 billion, was capitalized.
In 1966, Canada will produce for $56 billion; $38 million will be consumed and $15 billion capitalized, $15 billion by large companies and $3 billion by private citizens. For directors and shareholders of companies especially, this means a capitalization of 32 per cent of our production, whereas consumption takes up only $38 billion or 68 per cent.
[DOT] (5:30 p.m.)
This goes to prove that there is inflation, as far as capital is concerned, and deflation with regard to consumption, purchasing power and dependent citizens especially, since the 7,400,000 citizens who participate in production have their salaries debated or fixed by the unions.
That part of the population which is experiencing deflation counterbalances for the part which has known inflation continuously since 1945 and, throughout the country, the ills of inflation have passed rather undetected, even though the increasing destitution of most Canadians, especially of the 12 million citizens without an adequate income and their dependents, is not realized.
Mr. Chairman, the inflation of capital is an imbalance. Deflation with regard to inadequate consumption paralyses consumption and discourages any initiative. This is the essential point about the situation of our national economy which is being threatened not so much by partial, occasional and localized strikes, but by this national economic imbalance between incomes, expenses and profits, between individuals, families and companies, between taxes and reserves, between production, consumption and capitalization, on the national level.
In every segment of our economy, strikes are only occasional symptoms of a chronic disease that has been developing over the last 20 years. This is how matters stand. This is the analysis of the situation, the synthesis of our research. Now is the time to make the precise diagnosis which will enable us to find a national, economic and normal balance within the regular framework of monetary, economic and political procedures, adjusted

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according to Canadian, capitalistic and orthodox facts and realities.
Mr. Chairman, every time the workers' wages are increased, every time interest rates and dividends are increased, each time the cost of living is increased for 12 million dependents and those who support them or are responsible for them, a total of 16 million people who have to pay more for all goods and services, without corresponding incomes.
The economic system is always off balance; it should be balanced through a forwardlooking economic policy, taking as an essential basis not labour and capital, but human beings and their essential requirements.
Mr. Chairman, we know the increase in the cost of living and in transportation results from wage increases. There are two methods to ensure that the price figures and the money figures balance: either reduce the prices or increase the contents of the pocket-book.
Social Credit would do both, without hurting anyone while helping everybody.
Under the present system, it is impossible to reduce prices without hurting the producers and to line the pocketbooks without increasing prices.
We have often heard workers asking for wage increases. Why? Because their wages, a money figure, are out of proportion with the price figure on the products. They have grounds for complaints because they have needs which are not met while products are piling up. But if the workers obtain wage increases, such increases are included in the prices. The price figures rise and the spread remains between the price figure and the money figure needed to purchase the products.
The solution would be, Mr. Chairman, to increase the purchasing money without increasing the prices. For that, the extra money should come from a source other than industry. The financial system advocated in our doctrine would do just that. That is what the Creditistes call a national dividend.
On the other hand, the doctrine we advocate also has a monetary mechanism to reduce prices, but without affecting producers, because it would return to sellers the discount which the purchasers would not have to pay.
The two combined together, price reduction and dividend, would be calculated so as to balance the money figure with the price figure.
[Mr. Latulippe.i
Those who persist in saying that one must be employed to be entitled to products on the market are forced to try to employ everyone, while progress reduces employment. As they cannot stop progress, they try to create new needs, so that there might be new jobs. Thus they lead to materialism, or else they apply themselves to war work, to war itself, which is the most efficient means of destroying production and making people work.
The Creditistes want to place progress at man's service, to free man more and more from material concern, enabling him to engage in other human activities, in addition tc the simple productive function.
A dividend for everyone, in addition to being a participation by each and every one to the income of a productive community capital, is also the most direct formula to achieve the right of every human person to share in material wealth, a basic right that man has by his very nature, as was so well emphasized by Pope Pius XII.
Mr. Chairman, I would have many things to add, but I do not want to prolong this debate. But when the Minister of Finance says in the face of the population that the productive function in Canada has nearly reached its limit, I say to him that he did not study his economy, that he is not aware of a productive economy in Canada, in short that he is not aware of the manufacturing function in Canada.
Within two years we can double our national production. By putting everyone to work, all those who do not work now-and we have nearly 50 per cent of the population not working; we still have unemployment pockets, we have citizens of 40, 45, 50 and 60 years of age who could work, but cannot find any work, because there are no jobs for them-in short, if there was a desire to increase production in Canada, a simple solution would be to create jobs, to finance industry, to finance production and also consumption. By so doing, everything would go smoothly. Under the present system, only the production is financed, but we fail to finance consumption. In these times it is consumption that has to be financed first, if production is to reach its objective.
A tight money policy is not the ideal thing in Canada. The ideal procedure for Canadians would be to have credit at their disposal so that they can forge ahead. But, at the present time, our credit is a debt credit. Every dollar in Canada is a debt dollar. And as more money is borrowed, more debts are piled up.
September 9, 1966



That is why a tight money policy is envisaged as well as restrictions in every field, even in all spheres of the national economy. It is unfair and nonsensical to talk about inflation in an affluent country where so many needs are to be satisfied. It is nonsensical to accept such a system in the midst of plenty.


An hon. Member:: Some people are still starving.


Henry P. Latulippe: Mr. Chairman, production is good in Canada and it could be better still; yet, in spite of this production, numerous needs are to be satisfied. As I said a moment ago, 12 million citizens have no other income except their low wages; some men, women or children are unemployed and cannot earn any money. There is inflation in Canada at the present time, but there is also deflation, and this is much worse.
A bomb exploded recently in parliament and if this economic problem is not dealt with there will be other bombs exploding, God forbid; I would not want that to happen, but the way this country is run and the way the future of this country is planned will lead to such incidents. We are on the brink of a revolution. The country is prosperous thanks to science and technical know how. The Canadian people know it and want to share in this scientific progress, and we have no right to stop them.
[DOT] (5:40 p.m.)


George James McIlraith: Mr. Chairman, I move that the committee rise, report progress, and ask leave to sit again.


Herman Maxwell Batten: Is it the pleasure of the committee to adopt the said motion?


Some hon. Members:: Agreed.
Progress reported.



George James McIlraith: Mr. Speaker, I wonder, since I have had an intimation that hon. members want to make a few remarks on the motion to enlarge the terms of reference of the committee, if we could now put the motion mentioned earlier this afternoon, and ask that the house continue to sit after six o'clock this day.


Gordon Minto Churchill: What about a time limit?
Consumer Credit


George James McIlraith: I hope we would rise immediately we have both the motion enlarging the terms of reference and the motion to adjourn the house carried. I hope that that would be very shortly after six o'clock.


Frank Howard: Mr. Speaker, I wonder if you would permit me a bit of leeway to talk upon the suggestion of the Minister of Public Works, that we sit beyond six o'clock.
If it were simply a question of enlarging the terms of reference to the particular committee in question, to deal with the cost of living, I do not think there would be any objection toward that, because perhaps it is a course that should be followed. But I cannot see the point of sitting beyond six o'clock. The minister wants us to adjourn to October 5, thereby indicating that the government is refusing to convene parliament next week to deal with vitally important questions which we have just been discussing, plus the Bank Act, medicare, and various other items on the government order paper. I cannot see any reason in sitting beyond six o'clock, when we are ready to come back next week. If the government is afraid to come back, that is the government's responsibility.


Mr. Speaker:: Is it the intention of the minister to put the motion, that the house continue to sit after six o'clock.


George James McIlraith: Yes, Mr. Speaker. I move that the house do continue sitting after six o'clock.


Frank Howard: I for one disagree, Mr. Speaker.


Mr. Speaker:: There being only one member objecting, the motion is deemed to be carried.


[Stage Direction]
Motion agreed to.


Mitchell William Sharp: That the Joint Committee of the Senate and House of Commons appointed by this House on March 15, 1966, to enquire into and report upon the problems of consumer credit, be instructed also to inquire into and report upon the trends in the cost of living in Canada and factors which may have contributed to changes in the cost of living in Canada in recent months;

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And that a Message be sent to the Senate to acquaint Their Honours thereof and to request the concurrence of that House thereto.
He said: Mr. Speaker, I should like to amend the motion. Perhaps one of my colleagues might move the amendment. I would move that the words on the second line "by this house on March 15, 1966," be deleted, or struck out, and that the following be added to the motion, as the second paragraph: "That the committee have leave to sit notwithstanding any adjournment of this house;".


Mr. Speaker:: Is there unanimous agreement for the minister to amend the motion?


Some hon. Members:: Agreed.


George James McIlraith: I so move.


[Stage Direction]
Amendment agreed to.
David Lewis: Mr. Speaker, I do not think this motion should be adopted without something being said about it. First, it is obvious that we cannot oppose the motion, since it cannot do any harm, and may be of some value in giving the members of the committee an opportunity to expose the true facts about the causes for increasing the cost of living.
But I suggest that the minister's motion is a mere ruse to shelve the problem which faces him, instead of solving it. It seems to me that it cannot be anything else than a political move to seem to be doing something, when in fact referring the subject matter to a parliamentary committee is doing nothing to deal with the problem of the cost of living.


An hon. Member:: It is shelving it.


David Lewis: I remind the house, Mr. Speaker, that the Minister of Finance made a great to do about the inflationary pressures in our economy in his budget speech last spring. And if there was any value in referring the matter to a parliamentary committee, he should have done it then, so that by now we would have a report from the committee and some facts.
[DOT] (5:50 p.m.)
Moreover, Mr. Speaker, is not the Minister of Finance playing with this house and with this country. He came in yesterday and spoke as if he knew all the facts, as if he knew precisely what the problems were, as if he had the obvious solutions to those problems. He sets out policies which will have the effect

of cutting important social services and cutting back social capital and doing things which in the opinion of this group, as has been stated eloquently and well by my colleagues, amount to a disservice to the country.
The minister then says to parliament: I want this matter sent to a committee so that I can find out the facts and learn what the trends in the cost of living are, and what factors may have contributed to changes in it in recent months. What was he talking about yesterday if he did not know what those trends are and if he did not know what the factors were? What was the basis of his policies? Perhaps they were based on ignorance of both the trends and the factors involved. Perhaps they were merely traditional policies thrown out without reason and without ground.
I suggest-and I use strong language because I feel strongly about this-that it was a shabby way of dealing with the cost of living of the Canadian people. To bring down a policy, to insist that it is a right policy, to say that all the various circumstances are understood and then to say, in order to be able to make some political speeches across the country, that the question is being sent to a committees for study, is not good enough.
If any investigation of this question should have been made by a parliamentary committee it ought to have been done before the minister produced those policies. In that case those policies might have served the interests of the people of this country rather than doing the opposite, as I feel they do.


Mitchell William Sharp: Would the hon. gentleman permit me to ask him whether he read or listened closely to the remarks I made yesterday as reported at page 8215 of Hansard, when I said that "an alert and informed public opinion could play an important role, as well as those directly involved?" Certainly, one of the purposes of this committee would be to help inform the public and, I hope, the hon. gentleman, too, of some of the facts about this situation and the kind of response which would be most suitable.


Edward Nasserden: On the point of order the minister raised, I always thought a committee was set up not to inform the public but to get information from the public.


Some hon. Members:: Both.


David Lewis: Let me say to the minister that I listened to him carefully and I have no
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doubt that an informed public opinion may be of help in this case as in many other cases. This may be the small element of value which will come out of the committee's sitting.
What I rose to say, as emphatically as I could, is that the minister either did not know what he was doing yesterday or this reference to a committee is a sham.


Mitchell William Sharp: It is neither.


David Lewis: It ought to be clearly understood by the people of Canada that the minister can only have it one way or the other. He cannot have it both ways.


Raymond Langlois: Mr. Speaker, if I recall the time when the hon. minister brought down his budget, last spring, it was noticeable that it was an American hat, not made to suit the head of Canadians, but for a Canadian head shaped to wear an American hat.
After his last trip to the United States, at the last conference, the minister came back with the price of the hat.

After having the hat adjusted to fit the American head, the minister would fasten the price tag on that hat as furnished by the Americans, and we cannot go to a committee to find out what is wrong. Sometimes I think that with this program we have been given a pretty close shave.
I do not have anything against parliamentary committees, especially when the Secretary of State is the chief witness. We always get amiable answers from her, if not the correct ones. I do not accept that the setting up of this committee will change the situation very much. The minister has set out the government's policy and by the time the committee is in a position to report he may well have put his policies and restrictions into operation as far as possible, so that if the committee does make any recommendations they will come too late, as the hon. member for York South (Mr. Lewis) has stated.
The minister told us yesterday that as long ago as midsummer of last year he began to take precautions. Well, he might have taken even greater precautions and got this committee set up then. We are now in the middle of this inflationary situation. We have the hon. gentleman's own policy to deal with, though at the same time he is asking a committee to 23033-526^
Consumer Credit
find out what is wrong. If he does not know what is wrong, how can he be sure his policies are correct?
In the circumstances we have little choice, however, and we must let this subject go to a committee for examination.


Mr. R. N. Thompson (Red Deer):: I agree with most of what has been said by the hon. member for York South (Mr. Lewis). Unfortunately, this committee is being set up much too late and the information which it is likely to bring out not necessarily basic to the issue. The underlying reasons for our present difficulties go much deeper and our troubles will never be corrected until financial policies are followed which are very different from those enunciated by the minister last night.
Having said this, I would add that the urgency of a committee study is more acute than it was earlier, simply because as we enter upon centennial year there are problems which are bound to show up within the economy as far as the cost of essential items is concerned; I am thinking of the cost of food. I believe that even at this late stage the work of the committee will be extremely important.
Thus, while in my opinion it would have been far better for this committee to have begun its work much earlier, and though many of the factors which affect the cost of living are beyond the control or range of the committee as they relate to government policy, it is none the less imperative that the committee be assembled at this time, because real urgency attaches to the matter.


Edward Nasserden: Has the Minister of Finance
considered the possibility of placing a date-


Mr. Speaker:: Order. We are not now in
committee and I suggest that a further exchange of questions and answers at this stage would not be appropriate.


Edward Nasserden: I would suggest, then, Mr. Speaker, that it would be a good thing if a date were placed in this resolution by which the committee could try to conclude its hearings. The committee studying consumer credit has been sitting, now, for two years. We do not want this other committee to be sitting for two or three years before making a report.


An hon. Member:: It is the same committee.


Stanley Howard Knowles: Mr. Speaker, I should like to say a few additional words with regard to this

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proposal to refer this matter to a special committee. I support the position which has been taken by the hon. member for York South (Mr. Lewis). It strikes me that even while this special committee is inquiring into changes in the cost of living in Canada, further changes will take place.
[DOT] (6:00 p.m.)
One of the reasons there will be further increases in the cost of living is because of the speech the Minister of Finance made yesterday. While he was careful not to forecast the exact type of tax increases that would be made, nevertheless he made it clear that there would be tax increases, and newspapers across Canada today are putting those increases into figures and letting Canadians know that tax increases are coming. It is inevitable that some of the very practices the minister referred to yesterday will continue. People in all sectors of the economy, in all walks of life, will be doing their best to protect themselves against the increased taxes that are coming in the fall, and this is bound to push prices up.
If the Minister of Finance and his government have any measures to cope with the present situation they should be bringing them before parliament now. We should be sitting here next week and we should have those measures before us.
Since I have said a word about what the minister has done in announcing his tax increases I also want to protest against the context in which he announced them. I quote a few words from the minister's speech, as reported at page 8217 of yesterday's Hansard:
When we have before us, perhaps In late October, the measures to authorize the increased revenues made necessary by the income guarantee plan we will be able to review our general fiscal position and consider what changes are desirable in the light of the economic and financial situation.
As a result of that statement it is already being asserted in the press that the reason we are going to have increased taxes is because of what the government calls its income guarantee plan. We all know that that is the phrase which is being applied to the government's proposal to increase old age pensions under the conditions announced by the Minister of National Health and Welfare on July 14.
I remind the Minister of Finance that according to a table on page 2824 of the Canada Gazette, Part I, dated Saturday, August 27, 1966, the taxes that he is taking from the Canadian people for the purpose of

old age security are running on an average of $24 million a month more than is being paid out in old age security. The figures have varied from month to month, but in the month of July the surplus of tax receipts for pensions over the amount paid out was $29.9 million, and for a period of four months the average has been $24 million a month. In other words, there is something in the order of $300 million of a surplus building up in old age security tax receipts in this fiscal year.


Mitchell William Sharp: Mr. Speaker, may I be permitted to ask a question. Has the hon. gentleman looked beyond the immediate future to see that surplus disappear very rapidly?


Stanley Howard Knowles: Mr. Speaker, we have been through this in various ways a number of times. When the government raised the old age pensions from $65 to $75 a month it said there had to be an increase in taxes, but after being pressed on the point, and having seen fit to lower the eligible age from 70 to 65 on a year-by-year basis, the government then said revenues were more buoyant and it would not be necessary to increase taxes for that purpose.
I submit that the revenues are turning out to be more buoyant than the government itself had anticipated, and that for the immediate future there is no need to increase taxes to pay the kind of pensions the government has in mind.
The Minister of National Health and Welfare on July 14 said that the cost in the initial year of the program he announced that day would be of the order of $225 million. The Minister of Finance is collecting an extra $300 million or more in this fiscal year. Therefore he has no right to say to the Canadian people, as he did yesterday, that one of the reasons, or indeed as some newspapers interpret it, the reason for having to increase taxes is because of the plan to increase pensions.
If the minister wants to raise taxes for some other reason, I think he should be straightforward with us and tell us what that other reason is. It is not for the purpose of pensions, because as I have pointed out, and I have quoted from official government statistics, the amount being collected in sales tax, corporation tax and individual old age security income t?.x in the current fiscal year-and these taxes are collected on an earmarked basis for old age security-is running at an average of $24 million a month more than is being paid out.
September 9, 1966

I do not think it is fair to suggest to the people of Canada that any pittance that is going to be given to the old people on a needs or means test basis is of an amount that requires additional taxation. Therefore I say that instead of this matter being referred to a committee, which will have to study not only price increases which have taken place in recent months but will be confronted with the price increases taking place while it is sitting, we should be staying here dealing with the problems of inflation, our fiscal problems, and above all meeting the emergency needs of our senior citizens.


John George Diefenbaker: Mr. Speaker, I am not going to go over the ground that I covered earlier but I want to repeat that adjourning at this time is a perversion of the responsibilities of parliament to meet a major problem, namely that of inflation. There are also other problems that should be dealt with. Instead of facing the issue the government produces an amendment to a motion giving a committee the power to inquire into and report upon trends in the cost of living in Canada and factors which may have contributed to changes in the cost of living. It is not investigations such as this that are needed at this time; it is action by the government, a government which has no apparent realization of what should be done, how to do it, when to do it, or even whether to do it.
I say no more than that the setting up of this committee is simply political eyewash on the part of the government, and an adjournment at this time-I must join both together-is a gross perversion of the responsibility of parliament to meet a problem that will intensify in the weeks of the adjournment and with regard to which legislation cannot possibly be brought before parliament before the expiry of six weeks.
What is the committee to look into? I thought the Economic Council of Canada had looked into this matter. I thought the minister was the embodiment of all the information that anyone could possibly secure on this subject, with the outstanding staff that he has available. I thought the Bank of Canada had looked into this matter. The minister comes along and says to parliament now: I want to empower a committee to look into the question.
This is nothing but a political dodge designed to give the government extra time to consider a matter with regard to which they
Transportation
have apparently been dormant while it has multiplied and intensified. Of course, we cannot vote against this committee because, after all, committees will meet; but too often the setting up of a committee is nothing but a subterfuge on the part of the government to get away from making any decision or taking any action that has to be taken.
[DOT] (6:10 p.m.)
I conclude by saying that the people of Canada will not be fooled into believing that it is the opposition that makes it impossible for this government to act, and that is one of the major trends and political devices of the government at this time. We are sitting here now; let us act if you have any policies. Up to the present time in this regard you have shown a poverty that is both unseemly and a matter for deep condemnation. As the government postpones further action by another committee, the thief of inflation continues to pick the pockets of Canadians.


Mr. Speaker:: Is the house ready for the question? Is it the pleasure of the house to adopt the said motion?


Some hon. Members:: Agreed.
Motion as amended agreed to.



TRANSPORTATION


John Whitney Pickersgill: Mr. Speaker, I wonder whether I may have leave of the house to do something I quite frankly confess I forgot to do yesterday after the motion to send my bill to the committee was adopted. I should have asked leave to allow that committee, if it was felt expedient and there was general agreement, to sit during the period of adjournment in order to consider Bill No. C-231. If that is agreeable could an order be made?


Gordon Minto Churchill: No.


Mr. Speaker:: Mr. Pickersgill moves, seconded by Mr. Mcllraith, that the transport and communications committee have leave to sit, notwithstanding any adjournment of this house.


Gordon Minto Churchill: Mr. Speaker, an objection was made to the introduction of this motion.


Mr. Speaker:: I regret that I did not notice an objection. Of course the minister needs

September 9, 1966
Business of the House Unanimous agreement to move such a motion. Apparently there is no such agreement so the motion cannot be put.



BUSINESS OF THE HOUSE


[Stage Direction]
Hon. G. J. Mcllrailh (Minister of Public
Works): I move:
That, when this house adjourns at the end of this sitting, it shall stand adjourned until Wednesday, October 5, 1966, at 2.30 o'clock p.m. provided always that if it appears to the satisfaction of Mr. Speaker, after consultation with Her Majesty's government, that the public interest requires that the house should meet at an earlier time during the adjournment, Mr. Speaker may give notice that he is so satisfied, and thereupon the house shall meet at the time stated in such notice, and shall transact its business as if it had been duly adjourned to that time.
In the event of Mr. Speaker being unable to act owing to illness or other cause, the Deputy Speaker shall act in his stead for the purpose of this order.
Perhaps I should say, Mr. Speaker, that this motion is in the same terms as the motion of July 14.
Frank Howard: Mr. Speaker, I rise on a point of order. I did not hear the minister preface his motion by a request for unanimous consent. This is the type of motion which requires unanimous consent. On the face of the situation I for one am not prepared to give that consent unless the government admits it is pushing this motion before the house because it is unable to meet parliament next week as it does not have its legislative program ready and is not prepared to go ahead with items such as inflation, the medicare bill, which is on the order paper, the Bank Act and, even though this is regional, the proceedings relating to a bill regarding the Bank of British Columbia. Like the right hon. Leader of the Official Opposition (Mr. Die-fenbaker) and many others here, I am of the opinion that parliament should meet next week to deal with the public's business rather than run off across the country on holidays, regardless of how inept the government is in handling its business.


George James McIlraith: Mr. Speaker, in respect of the question about consent, I understood there was consent to put the motion given earlier today, when I raised this matter during motions.
In any event I should clarify some of the misconceptions that seem to have arisen in the hon. member's mind on the subject of the adjournment. The house stood adjourned from July 14 until October 5. It was called

back to deal with what I think all hon. members will agree was an emergency situation requiring the immediate and urgent attention of parliament, namely, the stoppage of railway services. To have them resumed the government submitted the railway legislation, popularly called the strike bill, and the transportation bill having to do with the substantial railway legislation arising out of the MacPherson report.


Gordon Minto Churchill: That was smuggled in.


George James McIlraith: As was made evident in the speeches made by hon. members, this latter bill was regarded as an important and urgent matter and it was debated by this house.
At the opening of this emergency session as well as during the proceedings it was made clear that the government's intention was to deal only with the legislation for which the house was assembled. There was also a request made by the right hon. Leader of the Opposition that there should be a day's debate on inflation.
In accordance with that request it was agreed that we sit for one day to discuss inflation, but in point of fact we have discussed it for more than a day and a half. It was a very proper request. Our commitment was kept.
What is being put forward now is a motion on which the house had passed its judgment on July 14. It is only a technicality that requires us to put this motion again. I would point out to the hon. member that in the fight against inflation, as should be clear from the speech made by the Minister of Finance (Mr. Sharp) last evening, a good many steps must be taken, one of which was the creation of this committee, but many of which require the attention of the government.
I wish to draw the attention of the house to the fact that the International Labour Organization is meeting here next week. It is an important meeting in this period of the development in labour relations, moreover, Canada is the host country. This is a very great honour. The proceedings of this organization are to be opened in this chamber next Monday morning. It is hoped and expected that all the plenary sessions of that meeting will be held in this chamber.
I believe this meeting will continue for about two weeks. Immediately afterward the meeting of the Commonwealth Parliamentary Association is to take place. That will be of great interest, I think, to most or all hon. members, and we hope to have hon. members
September 9, 1966

available to take part in those meetings. That cannot be done while the house is sitting.
At present the Prime Minister is attending the Commonwealth Prime Ministers Conference. I think all hon. members will agree that the business before that meeting is of the utmost concern to Canada as a member of the Commonwealth. We have indicated our firm intention, and indeed, our program for the balance of this session. When we adjourned in July the house set October 5 as the date for reconvening. I think it should be very clear to the hon. member that the decision to recess now until October 5 is not only consistent with the earlier action of the house in fixing that particular date, but is the appropriate one having in mind all the circumstances as they exist at the moment. I think hon. members will agree that is a fact.
[DOT] (6:20 p.m.)
Now, I am glad to welcome the hon. member back to the house. I hope he will be equally tolerant if 1 myself want to be absent from this place for a few days. I hope he will view my proposals in the kindly light in which I have viewed his return. I hope he will welcome me on October 5 with all the warmth with which I will welcome him on that occasion, when we meet to deal with the second reading of the bank legislation, the medicare bill, and the other important legislation that lies before us.


Gordon Minto Churchill: And the defence act.


Frank Howard: I wonder if I could say that at least we have a kindly gentleman in the government house leader. I should like to deal, point by point, with the reasons he has given. I believe that there is not one of them that is valid. He spoke of parliament being called back for the purpose of dealing with some particular items. There is no doubt that was the motivation, in the first instance, for parliament having returned. However, in Votes and Proceedings for Monday, August 29, there is set out the following:
Alter consultation with the government, I am satisfied that the public interest requires that the House of Commons, which was adjourned on Thursday, July 14-
Then, the dates are set out, and I continue:
-should meet at an earlier time. In pursuance to the order of the House of Commons passed Thursday, July 14, 1966, I hereby give notice that the House of Commons shall meet on Monday, August 29, 1966, at 2,30 o'clock p.m., and transact its business as if it had been duly adjourned to that time.
Business of the House
The business of the House of Commons is really the business of the people of Canada. There is no indication in there that parliament was returned specifically to deal with two particular items of legislation. The information given by the Minister of Public Works (Mr. Mcllraith) to the effect that parliament came back solely to deal with two items is incorrect. The information he gave, that the debate on inflation was an extraordinary arrangement made to suit the convenience or at the request of the Leader of the Opposition (Mr. Diefenbaker), is also incorrect, because these were the normal sitting times of the House of Commons.
Monday will be a normal sitting day as well, and at that time we could carry on with whatever business the government deemed it advisable to call for that time, if it deemed anything to be worthy of the consideration of this house. Reference was made to the Minister of Finance (Mr. Sharp) having dealt with the matter of inflation succinctly. This assertion has been pretty well demolished by everyone on the opposition side who took part in the debate, both on the estimates of the Department of Finance and the motion to enlarge the terms of reference of a particular committee, indicating that whatever the Minister of Finance advocated was, in the word of the Leader of the Opposition, "eyewash" and in the words of the representative of this party, "A coverup for complete ineptitude in this field".
The matter of the I.L.O. meeting, of course, is something which undoubtedly was planned some time ago. I am quite sure the delegates from the International Labour Organization will not be inconvenienced if they are asked to sit in the Senate chamber rather than here. Whether or not the senators are there, it is really a vacant place and it should be put to some worth-while use. However, the reference to the I.L.O. conference and the Commonwealth Parliamentary Association conference as reasons why parliament should not meet next week is merely an admission on the part of the government that affairs in other countries are far more important than the affairs of the people of Canada. Even the reference to the Prime Minister being away in London buttresses that sort of reasoning. So far as we are concerned, the affairs of the people of Canada are the important ones with which we should be concerning ourselves. So far as the Prime Minister being absent in London is concerned,-good heavens, we have been carrying on the business of this country

September 9, 1966
Transportation
for the last two and a half years without a Prime Minister. I do not see why we should worry about his presence in London.
All that I can glean from the reasons, spurious and false, which are given by the Minister of Public Works is simply that the government is not prepared to meet parliament and to deal with the affairs of the nation; that it would rather push things to one side for another three or four weeks in hopes that some of these problems will disappear and that in the intervening period they will find something to deal with and present to parliament on October 5. In the light of this sad admission of an absolutely complete bankruptcy by way of program, ideas and legislation on the part of the government, we have no other choice but to adjourn.


Mr. Speaker:: The motion is to the effect that when this house adjourns such and such will happen. Is the house ready for the question?


Stanley Howard Knowles: Mr. Speaker, perhaps enough was said before the motion was put to make clear how we feel about this motion. We think there is an emergency in this country with which we should be dealing-it has been highlighted in recent days-namely the rising cost of living and its effect in particular upon our old age pensioners. We were sent home on July 14 with only a statement and we were asked to wait till fall. We are now asked to wait again. We think it would be far better to stay here and deal with the nation's business, particularly this important issue of raising the old age pension. I am against the passing of this motion.


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


Stanley Howard Knowles: On division.
Motion agreed to on division.



TRANSPORTATION


John Whitney Pickersgill: Mr. Speaker, I wonder whether I might be permitted to make an appeal to the right hon. Leader of the Opposition (Mr. Diefenbaker), one of whose followers took exception to my motion a little while ago, to say that it was not intended to have the committee meet immediately, but it was thought that if it could meet around

September 27, a week before the house resumes, it would be possible to hold some of the hearings and hear some of the members of the public who might wish to appear. When this session resumed we would be in a better position to get down to the detailed consideration of the bill. I wonder if the house would consider an appeal, if there were general agreement in the steering committee, for the committee to be permitted to sit before the house resumes?
[DOT] (6:30 p.m.)


Gordon Minto Churchill: Mr. Speaker, in reply to the request of the hon. minister, if he were not quite so late I should like to draw to his attention certain episodes in the past when any slight error on the part of the government of that day and on the part of the house leader were trumpeted across the country. We are more charitable than the minister. I will not give him a lecture on his incompetency and inefficiency on this occasion. I have consulted with some members of our party who are intensely interested in the committee work and are members of that committee. They tell me it is not possible for them to meet with this request. Consequently, we must on this occasion-


Frank Howard: Reluctantly?


Gordon Minto Churchill: Yes, reluctantly decline the suggestion of the Minister of Transport to pull him, and with him the incompetent government, out of the mess they are in.
I think the business of the transportation committee will be satisfactorily dealt with when it meets in October. The people who are preparing briefs should have time to get those briefs ready. They have to study a very extensive bill, and here again a little extra time for people like that will be advantageous. The minister will end up eventually with a very much improved bill.


John Whitney Pickersgill: Mr. Speaker, I am much too charitable to say that what the hon. gentleman said makes a mockery of what we have been listening to for the last 15 minutes.


Gordon Minto Churchill: Nonsense. I wish I had extended my remarks and really exposed how incompetent the government is.


Stanley Howard Knowles: I wonder if I might ask the government house leader, or somebody on the government side, a related question. If it is deemed necessary to have this kind of motion to enable a committee to sit when the house is in recess, I wonder if an appropriate step
September 9, 1966

will be taken with respect to another committee? I personally doubt whether a motion is necessary, in view of the fact that the Canada Pension Plan committee sat at the time it did without such a motion. But what about the committee that has had referred to it the three bills dealing with the public service, and notably the one dealing with collective bargaining in the public service? Perhaps an answer might be given to that question. An emergency is building up-


Gordon Minto Churchill: Let the house come back next week and get on with it, then.


John Whitney Pickersgill: If hon. members cannot be here for the committee, how can they be here for the house?


George James McIlraith: I want to answer the question asked by the hon. member for Winnipeg North Centre about the committee on the public service. That committee, I had hoped, would find it possible to meet a week before the session resumed on October 5. There seems to have been considerable opposition within that committee to that plan.


David Lewis: Not from us.


Stanley Howard Knowles: We are ready to meet.


George James McIlraith: That is why I did not propose to amend their terms of reference, to give them that authority.
I do hope that our rules could be changed to deal with the subject. I do not want to get into the question of legal opinion but there seems to have been some doubt as to the need for this power to be granted by the house. The better opinion seems to be that it is legal and certainly, in the interest of caution, if the committee is going to sit, leave should be granted. As I say, the better opinion seems to be that it is needed.


John George Diefenbaker: What does the minister mean by saying there is some doubt?


George James McIlraith: Doubt about the requirement that a committee needs to be granted power to sit while the house is adjourned. There is no doubt that a committee requires authorization by the house to sit while the house is sitting and that a committee has no power to sit after the session is prorogued. But as to what might happen when the house merely recesses, there are two opinions, and I regret to have to say that the better opinion seems to be that the house has to authorize a committee to sit during the period when the house is adjourned.
Transportation


John George Diefenbaker: That is the reason I asked the question. I thought that was obvious.


Stanley Howard Knowles: May I put one other question to the leader of the house?


Gordon Minto Churchill: What order of business are we discussing, now?


Stanley Howard Knowles: That is a good question.


Mr. Speaker:: Of course, the questions which have been asked, and the statements which have been made, were all by leave. I am sure there is nothing before the house at the moment. The only thing the Chair would entertain would be a motion to adjourn. But I suppose, by unanimous agreement, there would be no objection to hon. members asking what the business of the house is to be, or seeking information of that nature.


Gordon Minto Churchill: Will it be in order if I subsequently direct some questions to the Minister of National Defence, because there are two or three questions I should like to put to him?


Mr. Speaker:: I thought the hon. gentleman had asked all the questions he had in mind.


Gordon Minto Churchill: Oh, no.


Stanley Howard Knowles: I have just one brief question. In view of the fact that committee work does seem to be piling up, will the government consider during this recess the possibility of calling parliament back and giving authority to the committees so that they can get down to their work, including the work of the defence committee in which the hon. member for Winnipeg South Centre is interested? There might be sufficient urgency to justify calling the house back earlier than October 5 in order to get these committees functioning.


George James McIlraith: I can give that assurance because the government has already started to look at the possibility of having a rule to deal with this subject.


Gordon Minto Churchill: May I now ask a question? What are all these mysterious sentences used by the leader of the house? He tells us the government is looking at something to see whether there is a rule for something. Let us have parliament in session and have things out in the open.


George James McIlraith: I would be very glad to bring them out in the open. The leader of the

September 9, 1966
Transportation
house finds it very necessary that an examination be made of possible changes in the rules with a view to deciding whether they are suitable to be recommended for the consideration of this house at some future time. One of these rules is, I believe, No. 117. At any rate it is the final standing order used in the United Kingdom and it has to do with adjournment. Instead of the motion we put a few minutes ago we would rely on the standing order. Another is the rule permitting committees to sit while the house is adjourned. I find on examination that our committees have on many occasions sat on Saturdays when the house was adjourned and no leave had been granted.


Gordon Minto Churchill: Oh, yes, but that is not what was in the mind of the committee on the rules which sat a couple of years ago. That committee wanted the house to be adjourned and a committee system introduced so that the government could be free from the question period every day, and the business of the house shelved.


Some hon. Members:: Oh, oh.


George James McIlraith: I was merely trying to answer questions which had been asked. I have no idea what that committee had in mind at different times.
[DOT] (6:40 p.m.)


Gordon Minto Churchill: May I ask a question of the Minister of National Defence now, sir?


Mr. Speaker:: I suppose we have concluded the item "chit chat."


George James McIlraith: Mr. Speaker, I move that the house do now adjourn.


Paul Theodore Hellyer: May I second that motion.


John George Diefenbaker: The Minister of National Defence certainly gets off the hook now.


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


Some hon. Members:: Agreed.
Motion agreed to and the house adjourned at 6.43 p.m. until Wednesday, October 5, at 2.30 p.m.

Wednesday, October 5, 1966	ADMINISTRATION OF JUSTICE