1966-05-06

COMMITTEES OF THE HOUSE


[Stage Direction]
Mr. Gerard Pelletier (Hochelaga) presented the sixth report of the standing committee on broadcasting, films and assistance to the arts.
[Note: Text of the foregoing report appears in today's Votes and Proceedings.]
Mr. Gerald Laniel (Beauharnois-Salaberry):: On a point of order, Mr. Speaker. You continued with motions, when I had myself a report of a standing committee of the house to present. May I continue?



SECOND REPORT OF STANDING COMMITTEE ON VETERANS AFFAIRS

[Stage Direction]
Mr. Gerald Laniel (Beauharnois-Salaberry)
presented the second report of the standing committee on veterans affairs.
[Note: Text of the foregoing report appears in today's Votes and Proceedings.]
[DOT] (11:10 a.m.)


Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, since I introduced my budget on March 29 some questions have been raised as to the precise coverage of income tax resolution No. 3 which, as the house knows, exempted interest payments on certain bonds and other obligations from the 15 per cent non-resident withholding tax. There has been some uncertainty about the exact scope of this measure, and in order to remove this uncertainty I thought it was important to make a statement as soon as possible.
In view of the fact that the measure applies in respect of such bonds issued and being issued since April 15, 1966 it is important for those concerned to know at this time in
precise terms what issues we intend should be exempt, after considering the detailed legal comments we have received on the resolution.
We propose that with respect to bonds, debentures, bills, notes, mortgages, hypothecs or similar obligations issued after April 15, 1966 interest on such obligations (a) of or guaranteed by the government of Canada; (b) of the government of a province or an agent thereof; (c) of a municipality in Canada or a municipal or public body performing a function of government in Canada (this includes a school board or commission); (d) of a corporation, commission or association not less than 90 per cent of the shares or capital of which is owned by Her Majesty in right of a province or by a Canadian municipality, or of a subsidiary wholly owned corporation that is subsidiary to such a corporation, commission or association; (e) of an educational institution or a hospital where repayment of the principal amount thereof and payment of the interest thereon is to be made, or is guaranteed, assured or otherwise specifically provided for or secured by the government of a province, be exempt from the 15 per cent nonresident withholding tax.
These terms will be specifically spelled out in the bill to be introduced following the adoption of the income tax resolution.


Mr. Colin Cameron (Nanaimo-Cowichan-The Islands):: Mr. Speaker, I would like to make a comment because I am interested in this. I have had correspondence with the minister with regard to some of the local governmental authorities that did not appear to be covered in the resolution. I am taking it that I have understood the minister correctly when I suggest that such bodies as the Greater Vancouver Water Board and the Greater Vancouver Drainage and Sewage Board will be included in this exemption.


Mitchell William Sharp: Mr. Speaker, I always hesitate to give legal opinions in the house. I have tried to set out the terms as clearly as possible. I suggest to the hon. member that after he has had an opportunity of looking at the statement he might, on another day, ask me questions on the orders of the day, or perhaps the best time would be when the resolution itself is under discussion.
May 6, 1966

Inquiries of the Ministry


Mr. Siarr:: On a point of order, Mr. Speaker, are we launching into a debate?


Mr. Speaker:: That is a very good comment. I would draw attention to the proposition made by the Minister of Finance.



CANADIAN LIVESTOCK FEED BOARD


Hon. G. J. Mcllraith (Minisler of Public Works):: Mr. Speaker, as I indicated at the close of the sitting on Wednesday last, item No. 48 on the order paper, being a resolution preceding the introduction of a measure to establish a corporation to be known as the Canadian livestock feed board, has an inadvertent omission in it. It has been drawn to my attention that a provision in the bill is neither provided for nor referred to in the resolution. I would ask the unanimous consent of the house to withdraw the existing item No. 48 and replace it by the new and correct version.


Mr. Diefenbaker:: Would the minister point out what is the change?


George James McIlraith: The only change in the resolution is the addition at the end thereof of the words:
-plus any amount advanced to the board as authorized by the Governor in Council pursuant to the said measure.
I may say that His Excellency the Governor General recommends the resolution to the consideration of the house.


Mr. Speaker:: Has the minister leave of the house to substitute the revised resolution which has been recommended to the house by His Excellency the Governor General, to replace the resolution appearing as item No. 48 on the order paper?


Some hon. Members:: Agreed.



HOUSING


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, I should like to direct this question to the Minister of Labour. It arises out of his statement regarding government policy in respect of loans and Central Mortgage and Housing Corporation. Since making that announcement has the

minister been advised by builders organizations and other ancillary trades across Canada that there have been an increasing number of lay-offs in construction; and in the face of these seriously increasing lay-offs in the building and ancillary trades is the government giving consideration to making provision for additional amounts of mortgage money, instead of requiring builders to find their own funds elsewhere at interest rates that are prohibitive?


Hon. J. R. Nicholson (Minisler of Labour):: Mr. Speaker, I have had a few such communications, but not nearly as many as I had expected having regard to some of the representations which were made before the announcement was made. The government has the matter under constant study, but I do not contemplate any change in our policy as announced earlier in the week.



INDUSTRY


[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquillam):: Mr. Speaker, my question is for the Minister of Finance. In view of the fact that the cost of living index for April was 4 per cent higher than for the same month in the previous year, has the attention of the minister been drawn to the fact that some of the copper producing companies are likely to raise their domestic price above the present level of 45 cents a pound and if so is the government planning to take any action to prevent this increase which could stimulate another rise in the cost of living?


Mitchell William Sharp: Mr. Speaker, I was not aware of the intention of the copper producers. I do know something about the copper situation. My colleague the Minister of Trade and Commerce has taken measures to protect the domestic supply. The measures the government has taken have had a very moderating effect on the price, which is much lower in Canada than it is in many parts of the world.


Thomas Clement (Tommy) Douglas: Mr. Speaker, may I ask a
supplementary question. I should like to ask the minister to tell us how it is that the United States, with all the inflationary pressures in that country, is keeping copper at a price of 36 cents when it is not possible for the Canadian government to keep the price at 45 cents?
May 6. 1966


Mr. Speaker:: Order. The question is argumentative.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. Real Caouette (Villeneuve):: Mr. Speaker, may I direct a question to the future minister of manpower?
The other day I asked the minister if he had received other requests for imported labour. Can he tell us now if other provinces have made similar requests for help at harvest time?


Hon. Jean Marchand (Minister of Citizenship and Immigration):: Mr. Speaker, as far as I can remember two provinces have requested help to pick the fruit and vegetable crops; I think they are British Columbia and Alberta.


Mr. W. B. Nesbitt (Oxford):: I have a supplementary question. Will the Minister of Citizenship and Immigration make sure that this year the officials of his department see to it that workers coming into Canada from other countries are not sent out of the country before they complete their jobs, as has been the case on numerous occasions in the past?


Mr. Speaker:: Order, please. I am sure the minister has made note of the hon. member's representations.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and Victoria):: Mr. Speaker, I should like to direct a question to the Minister of Mines and Technical Surveys regarding a statement he made to the effect that 6,500 Nova Scotia coal miners are to be replaced by automation as the result of a switch from the use of coal to electricity and atomic energy. Can the minister inform this house when these miners will have to be transferred from their present employment, as he has suggested, and indicate his basis for this statement?


Hon. Jean-Luc Pepin (Minister of Mines and Technical Surveys):: The newspaper article to which the hon. member is apparently
Inquiries of the Ministry referring indicates that I made reference to 65,000 miners. The number involved is actually 6,500. Obviously the reporter who wrote that article was not fully attuned to the intricacies of this problem. What I did say related to an assessment of the difficulties miners are experiencing, particularly those in Cape Breton. I also said that coal was not playing the role in today's economy it played in the nineteenth century. I merely analysed the problem without expressing any views as to what might be done in respect of the situation in Cape Breton. I could not do that, because that would involve government policy and we are not ready to make an announcement as yet.


Robert Muir: I have a supplementary question. In view of the fact the minister is quoted as having said these miners will have to be transferred to other employment, I should like to know whether he considers that a statement of that magnitude should be announced at a meeting of the Hull Jaycees before such information is made available to members of the House of Commons, the people of Nova Scotia and the miners who will be affected by such a decision.


Mr. Speaker:: Order, please. I believe the discussion is now becoming an argument between the hon. member and the minister.


Mr. Donald Maclnnis (Cape Breton South):: Mr. Speaker, I have a supplementary question for the Minister of Mines and Technical Surveys. In view of his statement about the role being played by coal in today's economy, and in view of the fact that the Dominion Coal Board acts in an advisory capacity to the minister, will he consider what that board has to say about the use of coal at the present time and in the future, in order that he can bring himself up to date on this subject?


Jean-Luc Pepin: Both the Minister of Finance and myself have had conversations with Dosco, if that is what the hon. member is suggesting. We have done so as part of the process of considering everything that can be said by anybody on the subject.


David Réal Caouette: Mr. Speaker, may I put a supplementary question to the Minister of Mines and Technical Surveys?
Is the minister taking similar steps concerning miners in the gold mines of northwest Quebec? Is he now considering the
May 6. 1966

Inquiries of the Ministry problem and has he come to a conclusion or to an agreement with the authorities of the provincial Department of Mines?


Jean-Luc Pepin: Mr. Speaker, the problem is one of manpower; it is a social matter and the hon. member for Villeneuve knows as well as I do the position taken by the province of Quebec on these matters. We have informed the Quebec government that we are at its disposal for any co-operative action that could be taken.


David Réal Caouette: Is co-operation coming, is it in the making?


Mr. Speaker:: Order. I think the hon. member for Villeneuve will agree that his question is not acceptable at this time.
[English1 [Later:]


Robert Muir: Mr. Speaker, my question is for the Minister of Mines and Technical Surveys and is supplementary to a question I posed a few moments ago. Since the minister claims to be another of those misquoted and misunderstood ministers, may I ask him to make available to the house the text of his address to the Hull Jaycees so that we might better appreciate his statement regarding coal mining, in view of the fact that he appears more willing to discuss the matter with the Jaycees than with the coal miners of my province.


Mr. Speaker:: Order, please.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I have a supplementary question, without the argument, and it is directed to the Minister of Citizenship and Immigration. In view of the urgent situation created by the unemployment of coal miners-


Mr. Speaker:: Order, please. Are we not getting argument in your question?


Herbert Wilfred Herridge: No, sir; I am quite sure this is a statement of fact. Has the Minister of Citizenship and Immigration brought to the attention of these miners the job opportunities available for miners in the Kootenays at the present time?


Mr. Speaker:: Order, please.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. R. N. Thompson (Red Deer):: Mr. Speaker, I intended to direct my question to the Minister of Fisheries but in his absence perhaps I should direct it to the Secretary of State for External Affairs. What steps is the government taking to mediate the dispute between Canadian and United States salmon fishermen arising out of the controversy about the Noyes island area of the north Pacific, particularly in view of statements made yesterday in the United States congress which would indicate that this is a very critical situation?


Hon. Paul Martin (Secretary of State for External Affairs):: Mr. Speaker, I would ask the acting minister if he would deal with this question.


Hon. J. W. Pickersgill (Acting Minister of Fisheries):: I think the only way I can deal with the hon. gentleman's question is to bring it to the attention of the Minister of Fisheries, which I shall be glad to do.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the orders of the day:
Mr. Robert Simpson (Churchill):: Mr. Speaker, I should like to direct a question to the Minister of Transport. Have representations been made to the minister protesting the discontinuance by Canadian National Railways of cargo service to Churchill, Manitoba, thereby increasing the cost of shipping automobiles by more than 300 per cent?


Mr. Speaker:: Order, please. I doubt whether the question is so urgent that it should be asked now.


Some hon. Members:: Oh, oh.


Mr. Speaker:: But perhaps it might be allowed.


Robert Simpson: On a point of order, Mr. Speaker-


Mr. Speaker:: Is the hon. member objecting to my allowing the question?


John Whitney Pickersgill: Mr. Speaker, the allegations of the
May 6. 1966

hon. gentleman-and I use the word "allegations" because in the notice of his question he used the word "apparently"-have not yet come to my notice; but if they should prove to be correct I expect I will be receiving representations.


Robert Simpson: A supplementary question, Mr. Speaker. Would the minister be prepared to look into such representations immediately in order to rectify this situation?


John Whitney Pickersgill: That is done almost automatically in these matters.


John George Diefenbaker: "Almost" automatically.



FINANCE


[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, in view of our approaching centennial, and to promote the spirit of unity in this house and in Canada, I wish to address a question to the Minister of Finance. Can the Minister of Finance explain why sales tax is charged on centennial projects which are entirely financed by grants from various levels of government?


Mr. Speaker:: Order, please. I would invite the hon. member to place that question on the order paper.


Herbert Wilfred Herridge: I wish to rephrase my question to bring it in order. Has the Minister of Finance received any representations from persons or groups in Canada objecting to the payment of sales tax on centennial projects financed by grants from all levels of government?


Mitchell William Sharp: Yes, Mr. Speaker; from many people.


David Réal Caouette: Mr. Speaker, I should like to put a supplementary question to the Minister of Finance following his answer to the hon. member for Kootenay West (Mr. Herridge) concerning the numerous representations he received with regard to the 11 per cent tax.
Could the minister tell us what answer he gave to those representations or to those who complained to the minister?
Inquiries of the Ministry

What was the minister's answer to these complaints from people in Canada with regard to the 11 per cent tax?


Mitchell William Sharp: Well, Mr. Speaker, I gave part of that answer in my budget speech, when I promised to remove that tax beginning next year and the year after on production machinery.


Michael Starr: After the buildings are completed.


Mitchell William Sharp: In so far as buildings are concerned, I said the tax would not be removed.



NATIONAL PARKS


[Stage Direction]
On the orders of the day:
Mr. Lawrence E. Kindt (Macleod):: Mr. Speaker, I should like to direct a question to the Minister of Northern Affairs and National Resources, but since he is not in his seat perhaps his parliamentary secretary will accept the question. I would ask the minister to table a copy of all correspondence between the minister and park officials both in Ottawa and Waterton Lakes national park concerning the replacement of a softball diamond for the use of all in Waterton park, which park officials and the minister have refused to re-establish somewhere in the park.


An hon. Member:: Let's play ball.


Mr.   Kindi@: That is what I and the people out there are asking the minister to do.


Mr. Speaker:: Order, please. The question cannot be accepted.



INQUIRY AS TO REPORT ON ASSISTANCE PROGRAM

[Stage Direction]
On the orders of the day:
Malcolm MacInnis: Mr. Speaker, I have a question for the Minister of Finance. I would ask the minister whether the Donald report has yet been received. If not, when does he expect it, and upon receiving it will it be released?


Mitchell William Sharp: The Donald report has not yet been received. When it is, we shall determine whether it would be appropriate to have it tabled.
4792	COMMONS
Inquiries of the Ministry


Malcolm MacInnis: I have a supplementary question to the Minister of Mines and Technical Surveys with respect to the same problem. Since the government has been declining to answer questions in respect of the mining problem in Nova Scotia because the Donald report had not yet been delivered, on what grounds does the minister now publicly state that he is worried about a situation which the Donald report and government policy were supposed to alleviate?


Mr. Speaker:: Order, please. The question is argumentative.


Malcolm MacInnis: So is
the attitude of the government.



CROWN CORPORATIONS


[Stage Direction]
On the orders of the day:
Hon. Alvin Hamilton (Qu'Appelle):: Mr. Speaker, my question concerns a minor housekeeping item. I should like to ask the Minister of Mines and Technical Surveys the following question. In view of the complete cessation of the operations of the Northern Ontario Pipe Line Crown Corporation, has the minister any plans to announce the repealing of the legislation which keeps this now defunct organization in existence?


Jean-Luc Pepin: Mr. Speaker, I am aware of the problem. Could I take the question as notice, and I will try to provide an answer soon.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. Barry Mather (New Westminster):: Mr. Speaker, I wish to direct a question to the Minister of Agriculture. Could the minister say whether a request has been received from the farmers union asking for the establishment of a royal commission to inquire into all aspects of the food industry? If so, what consideration is being given to this request?


Hon. J. J. Greene (Minister of Agriculture):: Mr. Speaker, I thank the hon. member for giving me notice of this question. This request was made by the farmers union in their brief to the government, but at the present time the government has no intention of establishing such a commission.

DEBATES	May 6, 1966



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. Howard Johnston (Okanagan-Revelstoke):: Mr. Speaker, I have a question for the Minister of National Health and Welfare. In view of the variety of statements being made with reference to the drug LSD, particularly in regard to its dangers, is the department studying this problem and can we expect a statement on control measures or a comprehensive policy to be followed by his department?


Mr. Speaker:: Order, please. I cannot recognize that this matter is of such urgency that the question should be answered at this time. The hon. member may wish to place it on the order paper.



FAILURE OF DRUG MANUFACTURERS TO SPECIFY CHILDREN'S DOSES

[Stage Direction]
On the orders of the day:
Mrs. Grace Maclnnis (Vancouver-Kingsway):: Mr. Speaker, I have a question I would like to direct to the Minister of National Health and Welfare. In view of yesterday's statement by the head of the pediatrics department of the Ottawa Civic hospital that the health of children is endangered by the failure of drug manufacturers to specify the size of doses for them, would the minister say what the government proposes to do about this situation?


Hon. A. J. MacEachen (Minister of National Health and Welfare):: Mr. Speaker, I shall be glad to take the question as notice.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question to the government house leader with reference to our procedures. My question arises out of the fact that the program today includes dealing with estimates. What does the government or the government house leader intend to do about the order of the house which was passed at the last session calling for the establishment of a special committee to work out rules for dealing with estimates, in the light of our new provision of a 30 day limit?
May 6, 19S6


George James McIlraith: Mr. Speaker, the short answer would be to make the necessary motion to set up such a committee. Perhaps I should explain that I have taken a little time to do this for the simple reason that in view of the heavy demands being made on committees now, with such a large number of them having so much work before them, and the fact that members of such a committee undoubtedly would wish to have a few weeks' time to observe the handling of estimates in committees before making their final recommendations as to what the procedure should be, I thought it would be better if we left this matter to a later stage in the session. I must say that this is not just my own conclusion; I discussed it with some other members of the house to get their opinion as to what would be the best procedure, and that seemed to be the consensus as to the best way of handling this matter.


Michael Starr: Mr. Speaker, on this point-and this is not in the form of a question, as it is difficult for me to form a question on this point-in view of what the government house leader has said as to consideration of this matter later in the session; in view of the fact that the government today is introducing the estimates of certain departments for consideration, and the time spent on the departments now will be deducted from the 30 day limit, in order that we in the opposition and government members also, for that matter, might be able to contain ourselves to some degree on these various departments I think we should take steps now to establish some schedule on these departments.


George James McIlraith: Mr. Speaker, I shall be very glad to take the necessary steps to have the committee set up right away in view of what has been said.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Right Kon. J. G. Diefenbaker (Leader of the Opposition): Mr. Speaker, I direct a question to the Secretary of State for External Affairs in connection with complaints to which I made reference the other day, that Canadian citizen Eerik Heine has had his reputation bandied about by the C.I.A. of the United States as having been a communist. I asked what action the government was taking
Inquiries of the Ministry to protect the good names of Canadians, and the Secretary of State for External Affairs said the matter was being taken up with the authorities in the United States. I ask him whether the strongest possible protest has been made to this most unjustifiable way of assassinating the reputation of a good Canadian.
Paul Joseph James Martin: Mr. Speaker, the matter to which my right hon. friend directs his question this morning was also raised by him three days ago. I indicated then that we were discussing this matter with the United States. In this situation judicial proceedings are of course involved. I would share my right hon. friend's concern if the facts as they eventually appear warrant the conclusion which he has placed upon them. In any event, my right hon. friend may be assured that the matter is receiving our attention. I hope I shall be able some time later to give a definite answer with regard to another aspect of the question which he asked three days ago.


[Stage Direction]
On the orders of the day;
Mr. John Addison (York North):: Mr. Speaker, I should also like to direct a question to the Secretary of State for External Affairs. Has he received any criticism in connection with the new type of Canadian passport now being issued by his department and, if so, is his department planning on making any changes?


Mr. Speaker:: Order, please. I suggest to the hon. member that this does not appear to be a very urgent question and should be placed on the order paper.


[Stage Direction]
On the orders of the day:
David Réal Caouette: Mr. Speaker, I wish to put a question to the hon. Secretary of State for External Affairs.
In view of the statement recently made in London by Mr. Thant, Secretary General of the United Nations, whereby the only real solution to the problem is the withdrawal of all foreign troops from Viet Nam, including those of the United States, Russia, China and others, is this position supported by the minister and the government?
May 6, 1966

Inquiries of the Ministry


Mr. Speaker:: Order. As put by the hon. member, this question is of a general nature and out of order.


[Stage Direction]
On the orders of the day:
Mr. J. R. Keays (Gaspe):: Mr. Speaker, I have a question for the Minister of Trade and Commerce, who answers to matters concerning Expo '67. Have any representations been made to the minister to the effect that American made mechanical equipment is being dumped on the Canadian market and is used in Canadian pavilions at Expo '67 without consideration to fair evaluations of quality and market value?


Mr. Speaker:: Order, please. The hon. member may wish to place the question on the order paper. In the meantime I am sure the minister has noted the hon. member's comments and representations.


James Russell Keays: On a point of order, Mr. Speaker. If I put it on the order paper possibly all the mechanical equipment will have been purchased before I receive an answer.
tTranslation]


[Stage Direction]
On the orders of the day:
Mr. Auguste Choquette (Lotbiniere):: Mr. Speaker, I should like to refer to the section of the standing orders of the house which allows a member to put a question to another member about matters concerning the business of the house.
[English1
I should like to direct my question to the right hon. Leader of the Opposition. Will the right hon. gentleman inform the house if it is the intention of any other Quebec members of his party to resign their seats?


John George Diefenbaker: I am sure the house would look forward with earnest and hopeful anticipation to the hon. gentleman himself leaving this place.


Mr. Speaker:: Order, please. The question was out of order.
[Mr. Caouette.l


Auguste Choquette: I rise on a question of privilege, Mr. Speaker. I am sure the right hon. gentleman will leave the house before I do.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. P. V. Noble (Grey North):: Mr. Speaker, I should like to direct my question to the Minister of Agriculture. In view of the fact that agriculture in Canada has become highly mechanized, can the minister make a progress report to the house with regard to his efforts in connection with farm safety?


Mr. Speaker:: Order, please. The hon. member recognizes, I am sure, that this is not a question that can be asked now. It might be placed on the order paper.


Percy Verner Noble: I rise on a point of order, Mr. Speaker. I asked this question of the Minister of Agriculture about a month ago and he promised he would have a report to make to the house. I believe he must have something constructive to say now.


Mr. Speaker:: Perhaps the minister has, but he might want to do it in some other way than by answering a question on orders of the day.



CONSUMER CREDIT


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I, on behalf of a colleague who has been called out of the house, ask a question of the Minister of Finance, notice of which was sent to him? I shall, however, abbreviate it. In view of the report that one of the provincial treasurers in the west is concerned about the lack of co-ordination of consumer credit legislation in the various provinces, is consideration being given to the calling of a conference to try to co-ordinate this legislation as between the provincial and federal jurisdictions?


Mitchell William Sharp: The provincial treasurer of Alberta has written to me suggesting that I consider inviting appropriate provincial ministers and their officials to meet with me later this year to discuss the subject of consumer credit and interest disclosure. Ministers from other provinces have also indicated they would be interested in such a meeting.
May 6. 1966

I have undertaken to give this suggestion the careful attention it deserves. Before we have such a meeting I wish to review the current federal and provincial legislation in this field, the question of jurisdiction that may be involved, and the reports and recommendations which have been made to governments on the subject.
This would include, the house will be interested to know, the important work undertaken in this field by the royal commission on the cost of borrowing money, cost of credit and related matters in the province of Nova Scotia; by the select committee of the Ontario legislature on consumer credit; by the special committee of the Manitoba legislature on consumer credit, as well as that of the special joint committee of the Senate and House of Commons on consumer credit. This review is under way, and I will be consulting further with the provinces on the question and timing of the proposed meeting.



AIR CANADA


[Stage Direction]
On the orders of the day:
Mr. L. R. Sherman (Winnipeg South):: should like to ask the Minister of Transport a question, of which I more or less gave him notice earlier. I should like to ask the minister how close to completion is the job of translating the Thompson report, which has delayed its presentation for so long. This report concerns Winnipeg's aviation future.


John Whitney Pickersgill: I apologize to the hon. gentleman, but this was one case when something that is almost automatic, was not. I failed to make the inquiry of the Privy Council office which I will have made today, and I will let the hon. gentleman know.


Hon. J. A. MacLean (Queens):: I should like to direct a question to the Minister of Transport for clarification. Did he use the word "automatic" or "autocratic"?


John Whitney Pickersgill: I do not believe, sir, they are synonymous.


An hon. Member:: They are over there.
DEBATES	4795
Canada-U.S. Automotive Agreement INDUSTRY



APPROVAL OF CANADA-U.S. AGREEMENT ON AUTOMOTIVE PRODUCTS

[Stage Direction]
The house resumed consideration of the motion of Mr. Drury:
That it is expedient that the houses of parliament do approve the agreement concerning automotive products between the government of Canada and the government of the United States of America, signed on January 16th, 1965, and that this house do approve the same.
Mr. Speaker:: When the house rose last night it had under consideration the question of the admissibility of an amendment proposed by the hon. member for Grey-Bruce (Mr. Winkler) and seconded by the hon. member for Saint-Hyacinthe-Bagot (Mr. Ri-card) which reads as follows:
That after the word "same" in line 4 there be added the following:
"provided that the said agreement may not be renewed in its present or in an amended form without the prior consent of parliament."
I indicated that I would consider the matter overnight, although I had expressed my views during the course of the arguments advanced by hon. members. Having considered the matter further I should like at this point to give a ruling on the proposed amendment. A moment ago I reminded hon. members of the terms of the amendment, which perhaps I should repeat:
That after the word "same" in line 4 there be added the following:
"provided that the said agreement may not be renewed in its present or in an amended form without the prior consent of parliament."
I expressed some doubts as to the legality of the amendment and invited hon. members to express their views on the procedural aspect of the amendment to the motion. The argument was advanced by the hon. member for Edmonton West that it should be within the right of parliament to impose by its vote the type of condition which is contained in the amendment.
I am in full agreement with the hon. member on this aspect of his argument. However, with respect I suggest that the proper procedure to achieve this aim is not by way of amendment to the resolution but rather by way of substantive motion, with due notice. I agree with the contention put forward by the Minister of Transport that this amendment is in fact a new proposition. In my view it goes beyond the very limited and narrow terms of the question.
I should point out at this moment that on many occasions in the past hon. members
May 6, 1966
4796	COMMONS
Canada-U.S. Automotive Agreement have tried to introduce amendments to resolutions of this type, and found it extremely difficult to draft one that would be acceptable to the Chair. I know the hon. member for Edmonton West, the hon. member for Winnipeg North Centre and the hon. member for Grey-Bruce joined in an attempt to move this amendment and knew of the difficulty they faced.
An excellent precedent which reviews rather exhaustively the rules and precedents applicable to the present case may be found in Votes and Proceedings of the House of Commons for June 11, 1958. Mr. Speaker Michener, commenting on a proposed amendment to a motion for approval of the NORAD agreement between Canada and the United States, said:
[DOT] (11:50 a.m.)
If the amendment has the effect of denying the motion it is unnecessary and irrelevant because those members who wish to disapprove the agreement have only to vote against the motion as it stands.
If the amendment adds something to the motion in a positive way it is a declaration of principle in these terms, that it is advisable for the government to give consideration to the taking of such steps as are necessary to integrate these agreements within the structure of NATO. Assuming that the amendment and the motion were accepted you would have the agreement approved but you would have added to it a declaration of this independent principle which is not related to the motion nor is it necessary for the decision of the motion in question.
Further on Mr. Speaker Michener comments:
A motion clearly could be brought forward for the purposes of this amendment but it would have to be on notice and as an independent motion.
Mr. Speaker Michener then declared the amendment out of order, and I believe the reasons he invoked are applicable to the present amendment.
The proposed amendment is in the nature of a declaration of principle in that it proposes the adoption of a procedure relative to international agreements which would be a substantial departure from established practice. The hon. member for Winnipeg North Centre referred the Chair to citation 201 of Beauchesne's fourth edition at page 168. The citation reads in part as follows:
201. The object of an amendment may be to effect such an alteration in a question as will obtain the support of those who, without such alteration, must either vote against it or abstain from voting thereon, or to present to the house an alternative proposition either wholly or partially opposed to the original question. This may be affected by moving to omit all the words of the question


after the first word, ''That", and to substitute in their place other words of a different import. In that case the debate that follows is not restricted to the amendment, but includes the motives of the amendment and of the motion, both matters being under the consideration of the house as alternative propositions.
I understand, however, that this type of amendment, declaratory of a principle, does not apply to a resolution. As confirmed in Mr. Michener's ruling, May, Bourinot and Red-lich are authorities for the proposition that the only motions upon which amendments declaratory of principle may be considered are motions for an address in reply to the speech from the throne, motions to go into committee of ways and means and supply and motions for the second reading of public bills. I believe that motions for third reading of public bills can also be amended in the way suggested in citation 201 of Beauchesne's fourth edition.
I should add that I have been unable to locate a single precedent where this type of amendment to a resolution was allowed, while there are a great many instances where similar amendments were ruled out of order for the reasons I have just outlined. It is therefore with regret that I must declare the amendment out of order.
Is the house ready for the question?


Mr. H. E. Gray (Essex West):: Mr. Speaker, I should like to speak briefly in support of this resolution and to urge this house to support its adoption, in this way confirming the progress that has already been begun in the automobile industry since the tariff changes were put into effect last January.
A number of suggestions by certain opposition speakers in this debate were made last night, that somehow or other in bringing forward this treaty the government had made a decision which will have put the Canadian automobile industry under United States control. As has already been pointed out by one opposition speaker, the industry in question went out of Canadian ownership or control over a generation ago. To me it seems that the effect of this treaty is to make this particular industry act more in the interests of Canada than it has in the past.
Surely this is the result of arrangements which bring about increased production and increased employment in Canada. I believe the hon. member for Waterloo South (Mr. Saltsman) last night suggested that instead of making these arrangements as have been described, we should have considered in some way the taking of a step or the making of a
May 6. 1966

decision which would have created an entirely independent national Canadian automobile industry. It is interesting to note, Mr. Speaker, that in this suggestion he seemed to be in conflict with the argument put forth very clearly by the hon. member for Danforth (Mr. Scott), his party colleague, who pointed out in effect that the decision by the Canadian people not to take a step of this nature had been made many, many years ago.
The hon. member for Waterloo South made references to the situation in Sweden, Britain and Germany. However, it seems to me, Mr. Speaker, that the automobile industries in those countries reached their present status and acquired their present nature not basically as a result of government action, but as a result of the initiative of management and businessmen initially, and because of decisions by consumers to accept the models produced by firms in those countries even though there was competition from other makes of cars from outside those countries.


Thomas Clement (Tommy) Douglas: Is the hon. member aware that the Volkswagen company was a wholly owned government company?


Herbert Eser (Herb) Gray: The Volkswagen company started out being owned wholly by the government in order to provide employment for people who had been working in those factories by producing these cars, where previously there had been produced only various types of war materials. The German government, as I understand, at the present time has begun divesting itself of the ownership of that concern.


Thomas Clement (Tommy) Douglas: The government started it.


Herbert Eser (Herb) Gray: Yes, but the continued prosperity of the company was due to the design of the product, the initiative of management and the acceptance of consumers. I think the free enterprising Chancellor of Germany, Dr. Erhard, would be surprised at the suggestion that he would have kept the Volkswagen in production if there had not been market acceptance for it.
Sweden has no limitations of any kind on imports of parts and cars. Swedish industry must meet competition from all types of automotive products.
The point I am trying to make, Mr. Speaker, is that rather than lessening the benefits to Canada, the aim of this treaty is to increase benefits through increasing production and employment for Canada. I suggest,
DEBATES	4797
Canada-U.S. Automotive Agreement Mr. Speaker, that the evidence to date indicates that we have made very substantial progress in meeting this aim of the treaty. Reference has already been made to the fact that the production of cars and trucks has increased by over 350,000 units in the past three years; that production of automotive parts, comparing only 11 months of 1963 with 11 months in 1965, has increased by some $230 million.
These figures help to destroy the argument of the hon. member for Oxford (Mr. Nesbitt), who suggested that two of the major automobile firms in Canada, Chrysler and Ford, were importing all their parts from the United States as a result of this treaty.


Wallace Bickford (Wally) Nesbitt: I did not say all. I said most.


Herbert Eser (Herb) Gray: I thought you said all.


Wallace Bickford (Wally) Nesbitt: You should read Hansard.
[DOT] (12:00 noon)


Herbert Eser (Herb) Gray: Even if I would accept the hon. member's interjection that what he had intended to say was that they were importing most of their parts, I suggest this would not be possible because of the content requirements included in the automotive agreement. The very fact that the production of parts has increased so substantially in Canada demonstrates the weakness of suggestions that the increased production in the vast Chrysler and Ford plants in Canada arises merely from assembly operations.
We also note the substantial increase in employment in both the automobile manufacturing industry and in the automotive parts manufacturing industry. If we compare the increase which took place between 1963 and 1965-I am speaking of average monthly employment in the manufacturing field-from
57,000	to over 76,000, it seems to me that even taking into account the suggestion by the hon. member for Wellington South, the spokesman for the official opposition, based on one or two isolated instances of lay-offs, we must all reach the conclusion that this vastly increased range of employment could not have taken place if those assertions had been correct.
I invite hon. members to look at the situation in the city of Windsor. In 1962 the employment index was 72.1 upon a base of 100 in 1949, meaning that 32,128 people were employed in industry. I am not referring to the automotive industry alone but to employment in industry generally in the area though it is, of course, well known to all members of
May 6, 1966
4798	COMMONS
Canada-XJ.S. Automotive Agreement the house that the automotive industry plays a most important part in the economy of the Windsor area. By December, 1965, the employment index had risen to 105.7 with more than 47,600 people on the job. I do not intend by going into detail to remind the house which government was in office in 1962. I think it is obvious that very significant changes have taken place not only as a result of the automotive pact itself and its predecessor, the initial export incentive program of the present government, but also because of the area development program introduced by the present administration.
Take one example of a major Windsor industrial firm, the Chrysler Corporation. According to reports in the Windsor Star this undertaking has more than doubled in size, production and the amount of employment provided since 1962. It is at present employing more than 11,500 people according to the press report to which I referred and it was recently announced that further expansion is expected to add at least another 1,500 jobs to that figure.
One of my hon. friends has just referred me to page 4770 of Hansard where hon. members may find the official report of what was said by the hon. member for Oxford (Mr. Nesbitt). He is reported as having said that the Chrysler Corporation and, to a lesser degree, the Ford Motor Company, have imported all their auto parts from their wholly owned subsidiaries in the United States. If the Hansard reporter did not get what was said, the hon. member's quarrel is with him, not with me. I think hon. members are already aware of the investment of over $50 million in new and improved plant and equipment by the Ford Motor Company in Windsor.


Michael Starr: Would the hon. member permit a question at this point?


Herbert Eser (Herb) Gray: I would be very happy to accept questions from any hon. member once I have completed my remarks, if there is time. I do not think they will be too extended.
I think the house has already been made aware of the new General Motors trim plant in Windsor which it is expected will employ some 1,700 workers when in full operation. This expansion also involves independent parts manufacturers in Windsor such as Kelsey Steel. According to records kept by the Department of Industry, since this automotive expansion program has been in '.effect there is official knowledge of six new
[Mr. Gray.l

plants and 28 expansion programs in the auto industry in the Windsor area.
Reference has been made to the effect of this pact on our balance of payments situation. In 1963 exports of motor parts from Canada amounted to only $81.3 million. Had this figure continued at the same level it is apparent that the deficit today would be something like $871.9 million rather than $687.1 million.
It is clear that the increased export opportunities, indeed, the actual increase in exports made possible by this treaty, have helped in controlling the balance of payments deficit which would have been much higher in the absence of the agreement. The trend is such that in future, as can already be seen, this deficit will be vastly reduced.
In any event it seems to me, contrary to what was suggested by some speakers last night, that the main test of the agreement is not the balance of payments situation but its effect on production and employment in Canada. Already the treaty has had a positive beneficial effect in Canada not only upon the automotive industry but upon the economy in general.
We should note too that one of our most important aims is to give the Canadian automotive industry access to the vast United States market which, because of its larger population, obviously affords much greater opportunity than is available in Canada. If we consider this objective we find we are already making substantial progress. Exports of automobiles and parts have increased from a value of $81.3 million to over $265 million in the current year, an increase of more than 226 per cent if my arithmetic is correct.
This helps to answer the contention which was put forward last night that the growth of production and employment in the industry is due only to the expansion of the Canadian market. The impressive increase in exports demonstrates that our Canadian parts industry too is able to sell to the United States market and I am confident that the initiative and ability of our Canadian parts manufacturers, with the support of the Department of Industry, will lead to further expansion of their present sales in this market.
Some criticism was advanced last evening concerning the manner in which the tariff changes made necessary by the agreement were put into effect. Members complained that the changes in the tariff rates were made by order in council without reference to
May 6, 1966

parliament. I suggest that this order in council was put into effect under powers which had already been given to the executive by parliament when it passed the Customs Act .giving the administration power to vary tariffs and schedules without reference to parliament. In other words, the government was using a power which parliament had already given to it to make changes of this type.
I would remind hon. members opposite that when the previous government put into effect its extremely limited and scarcely effective program involving the import of transmission parts it did so by order in council without any reference to parliament beyond the tabling of the order. It is obvious that the present government was free to make these tariff changes by virtue of the power already given to it by parliament in order to permit the expansion for which provision was made in the first export incentive plan to continue without the interruption which would have taken place had there not been this ability to maintain continuity between the first plan and the second plan.
[DOT] (12:10 p.m.)
Another important aim of this treaty is to give Canadian consumers the opportunity to purchase cars at prices reasonably similar to those available to their counterparts in the United States. I think it was said right at the beginning that this result was something that could be expected over a period of years, but it is very encouraging to note that already there have been decreases in the prices of cars to Canadians which are such that, according to one suggestion, if these decreases are totalled they approximately equal the amount of duties which the government supposedly is not collecting from the automobile companies because of this treaty arrangement.
However, I suggest that basically jobs are just as important or more important than prices. Lower prices do not mean too much if people do not have the money in their pockets to afford them. Reference was made to the
80,000	cars being manufactured by Chrysler in Windsor to be sold to the United States. Let us not forget that there are people working today to manufacture those cars who were not working several years ago when production and employment by Chrysler at Windsor were a lot lower than what they are today because of this and other programs of the government.


Michael Starr: What other programs?
DEBATES	4799
Canada-U.S. Automotive Agreement


Herbert Eser (Herb) Gray: I am referring to the area development program which has helped bring thousands of jobs, a number of new plants and the expansion of others to the Windsor and other areas of the country. According to information that is publicly available, in Windsor alone the Ford Motor Company is making fresh investments of $50 million in new plant and equipment.
Frankly, I was rather surprised to hear speakers from the New Democratic Party calling for an immediate removal of the tariffs in a way that would permit individual consumers to drive over to Buffalo or Detroit, buy new cars there and bring them back without reference to existing tariff requirements. I suggest that if that step had been taken before the Canadian industry had been given a reasonable opportunity to readjust itself, to rationalize its production, to bring its costs in line with its American competitors, the basic effect would be to throw some
80,000	Canadian auto workers out of jobs.
At the present time, because of the way this treaty and the surrounding arrangements have been created, Canadian plants and workers continue to have privileged access to the Canadian market, with a new access to the American market that they never had previously. An N.D.P. spokesman said last night that the removal of tariffs for individual purchases at this time would be the quickest way to protect the Canadian consumer. I suggest that if that were done at this time it would be the quickest way to destroy thousands of jobs.


Mr. Scoil (Danforth):: I hope the hon. member does not mean to misrepresent what I said. I indicated that if the auto companies do not pass on the savings to the public the quickest way to force them to do so would be to reduce the tariff on individual purchases.


Herbert Eser (Herb) Gray: I am glad of the interjection by the hon. member for Danforth (Mr. Scott) because it reinforces the point I was about to make, namely, that the removal of tariffs is certainly an ultimate weapon to be used by the government when in its opinion parity of costs of production has been reached between American and Canadian cars but without reasonable parity of prices being achieved. Obviously this would be a step to be taken not immediately but after a reasonable time has been given for the necessary adjustments to be made in Canadian production.
The hon. member for Edmonton West (Mr. Lambert) asked a very important question
May 6. 1966
4800	COMMONS
Canada-U.S. Automotive Agreement about the value of the auto parts agreement to the west. I think I should remind him, his colleagues from the west and the people of the west, that it has been estimated that at least one job in every seven in this country is linked in some way to the automotive industry.


Mr. Lambert:: You can link all sorts of things.


Herbert Eser (Herb) Gray: The hon. member interjects that you can link all sorts of things. I do not know what need we would have for our chemical industry, our steel and iron industry, our oil industry and even our forest industry to the extent that we have them today without the requirements of the automotive industry. I doubt that there would be the markets there are today in Canada for Alberta's oil, wheat and other products without the demand created not only by the Canadian automotive industry directly but by the incomes generated by the workers employed in it and their families.


Marcel Joseph Aimé Lambert: At our expense.


Herbert Eser (Herb) Gray: I suggest, Mr. Speaker, that there are too many types of separatist comments coming from all corners of the country today and I would have hoped a more constructive approach would have been taken by this leading spokesman for the west, one that could not be construed as a form of western separatism.
This treaty has a more direct benefit to ridings such as my own, that of the hon. member for Essex East (Mr. Martin), that of the hon. member for Ontario (Mr. Starr)-


Michael Starr: Don't include me. Just keep it to yourselves.


Herbert Eser (Herb) Gray: If the hon. member for Ontario is not happy with the benefits brought to Oshawa as a result of the expanded production and employment, I am sure his constituents will be surprised and disappointed.


Michael Starr: We have always had them.


Herbert Eser (Herb) Gray: Even before prices are at a level comparable with those which American consumers pay, this treaty is something of definite advantage to all people in Canada at this time because of the increased opportunities for production in many related industries and the increased buying power created by the increased incomes earned by people in these industries.
[Mr. Gray.l

In conclusion let me suggest that the evidence is very clear that the trend as we have seen it so far is impressive and seems to indicate very positive benefits as a result of this treaty. Reference has been made to dislocation but I think the evidence before us, including the evidence produced by opposition speakers, indicates it has been slight in comparison with the sizeable number of firms in the industry, both the parts industry and the automotive industry itself, the sizeable number of people who were working when this pact came into existence and those who have been added to the industry work force as a result of the increased opportunities created by it.
The government has already taken steps to assist, where necessary, workers in the automotive industry and individual firms as well. But in a sense what has been done up to now is experimental. We are trying things that have never been attempted previously in Canada. We are engaged in this concept of rationalizing an entire industry, of trying to make it more efficient with the support and encouragement of a specific government policy.
I think it is clear that if government policy is attempting to achieve this type of result then the government must be prepared, where necessary, to add to and to extend existing measures of assistance to workers and firms. I think it is also clear that the major automobile manufacturers, who have been given greater opportunities and greater potential benefits because of this treaty, have a special responsibility to their workers and to the Canadian people in general, a responsibility to pass on to the Canadian consumer as quickly as possible the benefits of this opportunity for rationalization of the Canadian industry.
They have a responsibility to adopt attitudes which in my opinion some elements of the industry have not adopted to the extent that they should have, attitudes whereby they are willing to keep government and workers more fully informed, as far in advance as possible, of plans which may have an effect on workers and the community so that there may be time to work out readjustment programs where necessary. If existing measures are shown to hamper or not permit a proper opportunity for Canadian firms to compete, to meet production requirements, to fulfil opportunities in Canada and in the American market, then the government must be prepared to take further steps.
May 6, 1966

[DOT] (12:20 p.m.)
The same applies if trends of dislocation accelerate beyond what they seem to be today, trends which so far have been very slight in comparison to the not only vastly expanded opportunities for employment but also actual increases in jobs which the evidence before us demonstrates. Taking into account all aspects of the treaty itself, including the definite increase in production and employment in the automotive industry in Canada, I think the evidence is such that this house should support the resolution before us. I urge the house to join with supporters of the government and others and vote in favour of this resolution so that with confirmation of the treaty by the House of Commons we may hope for even more by way of expanded opportunities for production and employment in the automotive industry and for all secondary industry in Canada.


Michael Starr: Mr. Speaker, I have a question for the hon. member for Essex West which has to do with what he said in the fictitious discourse to which we have listened for the last number of minutes. He compared the unemployment figures of 1962 and 1963 with the figures at the present time. I realize there has been an increase through a normal advance in production. Can he tell me what the increase in the figures for employment is between January, 1965, when this treaty came into effect, and the present time in addition to what would have been the normal increase in employment?


Herbert Eser (Herb) Gray: I do not have the full figures available, Mr. Speaker, but according to partial information made available to the Department of Industry I understand that at least 10,000 new jobs can be attributed directly to new plants and expansions of which the Department of Industry has been informed. This is only partial information because I understand there is no obligation on the firms to give complete and detailed information in every case. I am trying, if you will pardon the expression, to be conservative in the figures I am putting forward. It may be that when the minister concludes the debate he will be able to supplement my partial information.


Michael Starr: After that strange and more fictitious answer may I ask this question? Primarily the treaty was for the purpose of cutting down the automobile industry trade deficit with the United States which stood at some $520 million during the month of
Canada-U.S. Automotive Agreement January, 1965. Can he explain why the deficit has increased rather than decreased and will the objective of cutting it in half be reached by the end of 1968?


Herbert Eser (Herb) Gray: First of all, I take issue with my hon. friend when he suggests that the primary aim of the treaty was to cut down the deficit.


Michael Starr: Of course it was.


Herbert Eser (Herb) Gray: The primary aim was to increase production and employment in Canada and increase the number of jobs-


Michael Starr: There is some more fiction.


Herbert Eser (Herb) Gray: -available to Canadians. If my hon. friends in the official opposition would be as interested in job opportunities for human beings as they are in dollar signs-


Michael Starr: The only reason there are jobs available now is that the former government put into effect policies which brought this about. The hon. member admitted that the upward trend of employment started in 1961 when you were not even in office.


Herbert Eser (Herb) Gray: I will say to my hon. friend that I certainly did not intend to make remarks which would create bitter controversy.


Michael Starr: Then why do you not speak the truth?


Herbert Eser (Herb) Gray: I think, Mr. Speaker, that my hon. friend is not expressing himself in a way which is worthy of the position he held and holds in this house.


Michael Starr: But I always tell the truth in this house.


Herbert Eser (Herb) Gray: I am attempting to tell the truth to no lesser extent myself. I am sure he will have an opportunity to make a speech if he wishes. In answer to my friend, I should like to point out that in so far as the Windsor area is concerned jobs certainly did not increase in 1961, they dropped in 1962 and began rising only after the present government took office.


Michael Starr: After devaluation of the dollar.


Herbert Eser (Herb) Gray: Employment in Windsor dropped the month after devaluation of the dollar came into effect.


Michael Starr: How can you sleep at night?


Herbert Eser (Herb) Gray: When I look at the facts in the city of Windsor as a result of the policy of
May 6. 1966
4802	COMMONS DEBATES
Canada-U.S. Automotive Agreement the present government in contrast to the situation which existed before April, 1963, I am sure I sleep not only as sound as my hon. friend but more soundly.


Michael Starr: Yes, because of the devaluation to 92J cents.


Herbert Eser (Herb) Gray: In answer to my hon. friend's question, if the devaluation of the dollar had come about as a planned measure to help the economy of this country he and his friends would be entitled to all the credit they are trying to assume for themselves, but unfortunately it was a panic measure in so far as the balance of payments was concerned.


Mr. Danforth:: Get away from partisan politics and get down to facts.


Herbert Eser (Herb) Gray: I am trying to be non-partisan and deal with facts. If hon. members did not ask the questions which require these answers they would not be getting them. In respect of the balance of payments the hon. member asked if I thought the deficit was increasing. I think this is an effect of the removal of the duties because of the greater opportunities to bring things in over the short run. I think this comes about as part of the short term effects of the program of rationalization. Without the treaty I think you would have seen this very great increase in the deficit in any event. I regret that my hon. friend should think I am trying to be partisan-


Michael Starr: I said you were fictitious.


Herbert Eser (Herb) Gray: You said a few other things. If I wished to attempt to bring this debate down to a level which I think should not exist in this house, I could take grave issue with some of the terms hon. members opposite have used. Had it not been for this treaty, I think the figures in respect of the deficit between exports and imports in the automobile industry would have been greater than they are today. I am confident this gap will continue to narrow, and certainly the rate of increase will not be what it was before the treaty. I think the hon. member for Oxford has a question.


Wallace Bickford (Wally) Nesbitt: The hon. member for Essex West in his very interesting remarks has told us what a great success the treaty has been and that it has achieved its intended objectives. At the end of his remarks I believe he said it was experimental and that we may have to take further steps. I am wondering

what objection the hon. member would have to this treaty being sent to an appropriate committee such as the committee on commerce and industry in order that those persons who have experienced some difficulty in respect of this treaty would have an opportunity to make presentations to the government and other members of the house so that improvements could be made if necessary. Would the hon. member tell us why the government flatly refuses-he obviously must have the ear of the minister-to allow this treaty to go before a committee where members of labour organizations who feel aggrieved and members of the Canadian auto parts industry could present their case?


Herbert Eser (Herb) Gray: First of all, I should like to correct the suggestion of my hon. friend. I did not say it had as yet met all its objectives. I said it is making very substantial progress toward meeting its objectives. I do not think I would take issue with anyone who said the time has not yet come that every one of these objectives in the treaty to which I and others have referred has been met in its entirety.
[DOT] (12:30 p.m.)
When I used the word "experimental" I was referring specifically to the measures put into effect by this government rather than to the treaty itself, to assist in the readjustment where necessary of auto parts firms and workers who may require transitional assistance.
The point I was attempting to make was that so far the predictions that adjustments would be relatively slight in comparison with the total range of the industry fortunately have turned out to be correct. It is interesting to note that in the criticisms put forward by the official opposition, and they are only doing their job in this regard and I do not object to that, they were only able to refer to two definite cases, the Ingersoll firm and another firm at Beaverton.


Wallace Bickford (Wally) Nesbitt: I only mentioned those as examples. I could have mentioned quite a few more.


Herbert Eser (Herb) Gray: It would have added quite a bit of substance to their criticisms had hon. members come forward with names and details, including facts and figures as to the alleged harm being done to firms and employees. That was not done and I suggest to my hon. friend that it could not be done except in a few cases because the over-all
May 6, 1966

effects in all phases of the industry have been good.


Wallace Bickford (Wally) Nesbitt: That is what you say.


Herbert Eser (Herb) Gray: We have this House of Commons, the government and the opposition in order that we can put forward our different points of view. The hon. member has made reference to a committee. I feel flattered that he thinks I have the ear of the minister. I will ask the minister to give careful consideration to this suggestion put forward by the hon. member for Oxford. I must leave it to the minister to state any official point of view in this regard.
At this point, after taking into account the debate on the amendment moved by one of the opposition parties to a supply motion last year, after taking into account the opportunities for debate we are now having in this house, and after taking into account the full opportunity that has been and will be given to individual firms and their trade associations to come forward with their representations and discuss them with the minister, his colleagues and individual members of this house on all sides, I think there has been ample opportunity for discussion and that the need for a study to which the hon. member referred does not in my opinion have the priority that he sought to assign to it.


Wallace Bickford (Wally) Nesbitt: Does the hon. member apply that argument to functioning of all committees? If he does there is no purpose in having any committee meetings.


Herbert Eser (Herb) Gray: I do not accept that statement. We are dealing here with a particular case and in regard to this situation I believe we have followed an appropriate course. It may be that as time passes we will want to consider the progress made under this treaty. At that time we may seek an opportunity under the new committee structure to look into the matter. At this time I believe we have had reasonable opportunity for discussion. Certainly so far as I am concerned the industry, either from the point of view of individual firms or trade organizations, has had full access to the minister and individual members to put forward their positions. As far as I am aware they will continue to do so, and I am certainly willing to assist them in this regard in so far as I am able to as a private member.
[Translation1


Mr. Maurice Allard (Sherbrooke):: Mr. Speaker, for the past few minutes, I have 23033-305
Canada-U.S. Automotive Agreement been listening to questions and answers popping up from both sides of the house, particularly intent upon weighing the administration of the present government and that of the government prior to 1963.
I hardly think that time should be wasted on judging governments while we have under consideration such an important item as a new agreement. If the government prior to 1963 emphasized exports and the present government wants to emphasize employment, I think quite objectively that it is ill-advised in both instances to champion such tendencies exclusively, because the economic field, whether in exports or in employment, is not solely influenced by the Canadian government but also by foreign and provincial factors that weigh upon economic patterns.
There is before the house a proposed resolution moved by the Minister of Industry and Defence Production (Mr. Drury) as follows:
That it is expedient that the houses of parliament do approve the agreement concerning automotive products between the government of Canada and the government of the United States of America, signed on January 16, 1965, and that this house do approve the same.
In the text of the agreement distributed by the Department of Industry, we read that the agreement is entitled: Agreement concerning Automotive Products between the Government of Canada and the Government of the United States of America.
Well, Mr. Speaker, this agreement is a very important event. I congratulate the government as well as the officials of the various departments who have shared in the formulation and the completion of such an agreement.
This is an important event since it concerns our relationship with the United States and our foreign trade. As concerns the United States, we have reached the point of selfawareness. Canada, with its small outlet of 20 million people, next to a giant with 200 million inhabitants, with geographic and economic conditions at times different, is at the point where it is establishing a closer and more profitable relationship. We have improved our economic problems, our commercial relationship with that country, and the areas of production and employment within Canada.
Thus, this agreement is a loyal gesture and I hope it will constitute a precedent, an open door to further agreements in this direction.
Since yesterday we have been hearing a lot of criticism, that is the members' role. I often
May 6, 1966
4804	COMMONS DEBATES
Canada-XJ.S. Automotive Agreement criticize myself and I have some criticism to offer this morning. We are at the experiment stage with this agreement. It will have to be reviewed in six months. The agreement itself, in section 4, subsection 3,1 think, provides for frequent consultations between the two governments.
Therefore, this is an experiment which should be tried with an open mind. It is worth trying to make it work by every possible means. Yet, the agreement raises very delicate questions. Our economic and trade position with the United States-our trade deficit with the United States is noted -is what we must try to improve constantly.
[DOT] (12:40 p.m.)
The hon. member for Essex West (Mr. Gray) stated that the deficit with the United States with regard to automotive products totalled $687 million. That is a fantastic amount and this agreement tries, of course, to improve that aspect of the trade deficit and to make the situation better.
There is also a new spirit between our two countries. The American parent companies have issued directives to their Canadian subsidiaries. On the other hand, the Canadian subsidiaries of those American companies seem to have complied with the directives issued to them by the Minister of Trade and Commerce (Mr. Winters). It might be appropriate during this debate or some time soon for the Minister of Trade and Commerce to inform us about the reactions of the Canadian subsidiaries of American companies to the 4,000 letters which were sent to them, so that we might be in a position to judge if those companies, whose parent companies are outside Canada, are willing to see the situation in the same light as the Canadian government, the Canadian people, in short if they want to co-operate in the development of Canada, together with the other sectors of the Canadian economy, in the fields of trade, industry, investment and development.
This agreement also has some influence on our industrial production, our exports and our imports. It also has repercussions in the field of automation, on the qualifications of labour, its mobility, on the production of automobiles in Canada. The government and more Canadians should take an interest in the production of automobiles in Canada and set up Canadian firms with the help of the government and the support of either the Industrial Development Bank or that new

federal body, namely the Canadian Development Corporation, whose establishment we have been expecting for a year or two.
I hope very much that the government or the responsible minister will introduce shortly in the house a bill dealing with the creation of that development corporation-and that is urgent-to enable Canadians to take over their own economic development.
The agreement aims at allowing the manufacturers to engage in the automobile business without custom duties between Canada and United States, to increase employment -there is talk of 60,000 new jobs-to reduce production costs, to improve the efficiency and productivity of the Canadian plants and also to reduce our $600 million deficit with regard to the automobile trade.
Those are the five objectives covered by this international agreement on automotive products between Canada and United States. These are very commendable aims which we must support so that positive results will be achieved in this regard.
Statistics show that exports to the United States of Canadian-made cars were as follows: 1962, 1,136 units; 1963, 3,504 units; 1964, 19,094 units and, in 1965, from January to October inclusive, 29,202 units. The total value of cars exported from Canada to the United States from January 1965 to November 1965 (these are the latest figures available on exports, in March 1966) amounted to $68,800,000. As to cars, of similar models which are best sellers, the price of the Canadian models, in 1965, was on the average 8 per cent higher while in 1966, the difference ranged from 3 to 5 per cent.
It can be seen that, inthe autmotive parts industry between Canada and the U.S., a. very significant trading area is involved which is full of promises and destined to a growing economic future. This agreement initiated by Canada and the U.S. and subject to frequent consultations, of course, will likely bring results and be advantageous to both countries.
We know, of course, that this agreement was ratified by order in council passed in January 1965, while its terms are submitted to us for approval in May 1966. This means in fact an interval of a year and a half. This delay in my opinion is too long. We notice that in the United States, the matter was submitted much more promptly to the representatives of the people for consideration and approval. I understand, as the hon. member for Essex West (Mr. Gray) pointed out,
May 6, 1966

that there is no control and that the federal government is authorized to pass such an order. I am not discussing the legal aspect of the order in council, but I am of the opinion that the government took too long in submitting this agreement to the house. I believe that, in future, when similar agreements are signed with the United States or other countries, the house should be informed as soon as possible of the provisions of these agreements, so that we may issue the necessary warnings, bring about corrective measures and so that Canadians may bring forward their opinions in order that there may not be too much time between the formulation and the implementation of agreements as sound as this one and that corrections made be included in these important trade agreements.
Several voices have been heard in Canada with respect to this international agreement. For instance, the production director of the General Motors plant in Ste. Therese is quite enthusiastic about it. Indeed, as reported in the newspaper La Presse, of Wednesday May 4, 1966, he stated:
Next year, General Motors will double its production at its Ste. Therese plant and will export a part thereof to the United States.
[DOT] (12:50 p.m.)
This was the statement made to the representative of La Presse by Mr. D. C. Lowe, production director of the plant.
Also, the president of the Ford Motor Company of Canada, Mr. Scott, said that the agreement restricting free trade between Canada and the United States is a bold experiment in industrial policy, justified by very plain economic considerations.
We were also informed of a press release made by the Minister of Industry dated December 29,	1965 and containing very
interesting information on automotive production and trade. I quote:
As a result of the assistance given by the department, 187 companies announced the expansion of their plants or the acquisition of new facilities. Of these companies, 71 have stated that the expansion will increase the number of workers by about 15,000 and 91 that the new capital investments amount to almost $402 million.
During the first nine months of 1965, Canadian exports of automobiles and automotive parts reached $220.8 million, that is 83 per cent more than the corresponding figure for 1964. Exports to the United States reached $123.9 million for the same period in 1965, double the value of the corresponding exports in 1964. Imports from the United States rose by 18 per cent, from $427.4 million in the first seven months of 1964 to $541 million for the corresponding period this year.
23033-305i
Canada-U.S. Automotive Agreement
This program resulted in an appreciable narrowing of the price differential between Canadian and United States prices for comparable models of cars.
In August, the government established the Adjustment Assistance Board, to provide loans for auto parts manufacturers and transitional assistance to workers in the industry.
This, Mr. Speaker, is in my opinion a most eloquent press release, which for several months has allowed us to hope for important and useful results from the agreement recently presented in the house.
Several Canadian and American economists obviously see this agreement as a modern counterpart of free trade. This is, of course, the present trend in world trade and each country must study the possibility of more lively commercial exchanges with one or more countries, always considering its own interests.
In importing and exporting commodities and in abolishing trade barriers, it should be considered that too great an influx of foreign products would, for example, be harmful to Canadian industry, or the good results expected may be wiped out by bad consequences in other sectors of the economy.
For a number of years, say since 1955, international organizations have been established throughout the world, for example the European Common Market, the Group of Seven, the	Common Market of Latin
America-and there is talk of a Pacific, south Asian common market.
At all events, it is obvious that governments, businessmen and economists intend to consider seriously the question of setting up a policy of free trade between various countries.
The agreement under consideration follows this course. However, I would ask the minister and the government to be very careful. I was indeed happy to notice that section 4 of the agreement provides for frequent consultations, during this pilot experiment, if I may call it that, which will perhaps be the first of a series of agreements with the United States and other countries.
Hence, it is important that the Canadian government should keep a close watch on certain areas of the production of automotive parts and other products, if manufacturers settle in Canada. This agreement will have to be revised if necessary, in order to protect, in the first place and very efficiently, the Canadian manufacturer and then favour substantially the Canadian consumer.
May 6, 1966
4806	COMMONS DEBATES
Canada-XJ.S. Automotive Agreement
Consideration should not be given to the manufacturer only; the latter and the consumer are not so far apart. Both must be taken into account, for the same reasons, in all agreements, in all provisions. The common good, the general welfare should be considered.
That is why, on the whole, it is the interest of the Canadian consumer that has to be taken into consideration in the automotive field. We must wait some time to see whether the Canadian consumer, the worker, the farmer, the white collar worker, the small wage earner, who needs an automobile to go to work or for recreation, will benefit by a reduction in the prices of automobiles.
There is some talk about it now, but there was a lot more talk about it during the last election campaign.
But let us put aside all partisan or fanatic considerations. This is quite a delicate economic matter; it is a pilot experiment. Personally, I am going to wait for the minister and the government to have these consultations and all the relevant material made available to us from one period to another, to see what is good or dangerous in the provisions of this agreement.
At the present time, Mr. Speaker, we know that Canada produces 4 per cent and consumes 7.5 per cent of the North American automobile production. In 1966, Canada should produce 12 per cent. In the forthcoming months, we are going to watch very carefully the effects of this agreement.
Of course, voices were heard which means that Canada is a democratic country; sometimes these express controversial opinions because there has not been praise only and a general, categorical and spontaneous acceptance of this initiative of the Canadian government. Some people have already mentioned its ill effects. For instance, the Canadian Labour Congress, in the brief it presented this year to the federal government, mentioned and regretted the fact that the agreement between Canada and the United States concerning free trade of automotive parts had not brought about a decrease in the price of cars.
[DOT] (1:00 p.m.)
This organization represents a good part of the Canadian workers, precisely that class of citizens to whom I referred a while ago. They reflect in a more direct way the general welfare and common good and they deserve,

as consumers, the ultimate and main consideration.
We also have competent journalists who made criticisms, following the decision of the Canadian government to be a party to such an agreement. And I quote, among others, who said in a Clement Brown editorial dated February 10:
One year later, it is found that Canadian exports of cars went up indeed, but that, on the other hand, imports of American cars greatly exceeded our exports. There was, it is true, an increase of some $200 million in our exports, but there was also an increase of $500 million in imports of American cars.
If you do not call that being taken in, then, facts no longer mean anything.
Mr. Speaker, this is one point of view which should be taken into account by the government and the minister.
The effects of imports and exports, those figures we will be getting in the months to come, will speak highly of the desirability for Canada of such an agreement.
Also, when Canada and the United States spoke about consulting each other and taking a decision along the live of today's agreement, some countries apparently expressed concern and made protests. In his final statement, the minister may be in a position to tell us about the concern of some foreign countries or about the assurance Canada and the United States gave to those other countries which are members of international organizations to which Canada belongs such as GATT.
I note, however, that section 3 of the agreement should allay the concern of other countries, since it reads as follows:
The commitments taken by the two Governments under this agreement prevent neither one nor the other from doing anything provided for under the obligations undertaken in Part II of the General Agreement on Tariffs and Trade.
Mr. Speaker, you are doubtless wondering why I have again risen to participate in this debate. I do not claim to be an expert on automobiles, far from it; I can just barely drive my own car adequately. On the other hand, I am most interested in the interventions of several members on the question, as well as the efforts of the hon. member for Brome-Missisquoi (Mr. Grafftey) to convince us that automobile safety should be increased. If I have taken part in the discussion, it is because I believe that the members have a duty to speak on the main items of legislation, and this is one of them, because this pilot experiment will probably bring
May 6, 1966

forth many other agreements which will help Canada along on the road to progress.
Therefore, I believe that every member should state his views on this question, because such an agreement may have some bearing on the industries in his own riding.
For instance, in the wonderful riding of Sherbrooke-you may possibly believe it is somewhat like in Hong Kong-all sorts of problems seem to crop up. Obviously, it is a model constituency from the viewpoints of industry, its bilingual character and the mutual understanding which exists in the industrial areas, but this agreement does not provide adequate protection in its regulations for the producers of original parts for the automobile industry.
I would like to bring to the attention of the minister a complaint originating with a Sherbrooke concern, the Bemis Associates of Canada Limited, manufacturers of vinyl covered fabrics, which is not considered as a supplier of original parts for the automobile industry. This company, as a result, does not meet the eligibility requirements under the regulations for assistance to the automotive products industry.
I would ask the hon. minister to consider the point of view of the Bemis and other companies which often face the same problem, and to extend the agreement so as to include the suppliers of materials to the automobile industry. These Canadian companies, like many others, are interested in going ahead with their industrial expansion and are willing to support the Canadian government in all good projects which, like this one, may bring about certain clashes which we hope to be temporary. We ask the minister to bring remedial measures in all fields and particularly those which could be affected by such a trade agreement between Canada and the United States.


Hon. Gordon Churchill (Winnipeg South Centre):: Mr. Speaker, I am very much interested in this topic for a number of reasons. I have been listening to the debate and reading what was said yesterday by hon. members who spoke then. The ground has been well covered and I do not wish to repeat some of the arguments that have been used already. I noticed that the hon. member for Wellington South (Mr. Hales), the hon. member for Danforth (Mr. Scott), the hon. member for Oxford (Mr. Nesbitt) and the hon. member for Edmonton West (Mr. Lambert) put forward quite a number of very good arguments
DEBATES	4807
Canada-U.S. Automotive Agreement yesterday in connection with this very important matter. We have heard today from those who have been defending the agreement and attempting to indicate how useful it has been for Canada.
When the matter was raised in the house a year ago a great deal of emphasis was placed on the fact that our balance of payments situation, particularly as it affected the automotive industry, would be improved by the operation of this plan. However, we have had the evidence presented to us yesterday by the hon. member for Wellington South that this has not been the case. He pointed out that the net automotive trade deficit with the United States rose from $578 million in
1964	to $674 million in 1965, an increase of almost $100 million. The great fanfare that we listened to a year ago to the effect that the balance of payments situation would be improved was just propaganda and not based on an accurate assessment of exactly what was going to happen.
I have looked at the index for Hansard tor
1965	and just as an indication of how important the automotive industry is to Canada, as reflected by questions and debate in the house, you will find that the references in the index to the automotive industry in various forms cover one and a half pages. It is a vitally important subject, not only to those in central and eastern Canada who are engaged in the manufacture of automobiles but to those living in other parts of Canada who are consumers and pay the price for automobiles. Hope was held out to us a year ago that there would be a reduction in the price of cars as a result of this agreement but that hope has not been realized. We have not seen the benefit of that yet.
There was a great deal of talk about increased employment, but offsetting that has been a decrease in employment depending on the segment of the automotive industry at which you are looking. As was pointed out in the debate yesterday, you may have an increase in employment on the assembly line and a decrease in employment in the parts manufacturing area. All told, therefore, it is an uncertain course that has been pursued by the government.
One of the main complaints from this side of the house, and one with which I want to deal, is the method by which this agreement has been brought before parliament. A year ago we were advised that the government had signed an agreement with the United States. We were told there would be an
May 6. 1966
4808	COMMONS
Canada-U.S. Automotive Agreement opportunity for parliament to consider the matter but that opportunity was not brought forward by the government; it was seized by the opposition.
[DOT] (1:10 p.m.)
The leader of the New Democratic Party moved an amendment to a supply motion in order to deal with the subject, and questions, of course, where raised from time to time from this side of the house. But the actual agreement was not brought forward to us for ratification. Yet it is strange that on May 10 of 1965 the Minister of Industry said, as found on page 1126 of Hansard:
The measures on the Canadian side were brought into operation by order in council in January of this year. The agreement itself will come into full operation on both sides of the border as soon as Congress has enacted duty free entry into the United States and the resolution presented to parliament has been approved by the Canadian parliament.
That was in May, 1965. This is now May, 1966. One year later the resolution is placed before us. As recorded on page 1125 the minister had already said on the same occasion:
There has never been any intention on the part of the government to sign, implement, ratify, or consummate a treaty without first seeking the approval of parliament, accompanied by an appropriate debate and on opportunity for the expression of opinions.
I suggest, sir, that those statements of the minister scarcely accord with the facts. This agreement was made known to the house in January, 1965. It should have been debated immediately. It should have been settled by the house one way or another before it became operative. But parliament was bypassed. Now, almost a year and a half later, parliament is asked to validate this agreement. Parliament is asked to be a rubber-stamp for executive action. This places parliament in a very awkward situation indeed. I find it rather disturbing.
I notice that when the Minister of Transport was dealing with the point of order raised last night he said, as found on page 4781 of Hansard:
We all know that under the strict interpretation of the constitution these agreements are ratified by the Crown and they do not in fact require-though it is a constitutional practice-to ask for approval of the house.
Then he went on to say:
If what has become a constitutional practice is followed, the agreement would not be ratified by any future government without the consent of the house, if it came forward again. If the ordinary


constitutional practice which we now have is followed, any agreement of this sort is brought by the government to both houses before there is ratification.
This has not happened. The constitutional practice has not been followed. This agreement was not ratified with the United States after parliament had approved it but before. Therefore you have a break with constitutional practice which I think should be very carefully examined by parliament. I think that the other house, if it is not too burdened with duties, might very well examine the encroachment on the rights of parliament by the executive. It is my belief that the power of the executive in this country is increasing. In the famous words of the past, it has increased, is increasing and ought to be diminished.


Mr. Bell (Carleion):: Hear, hear.


Gordon Minto Churchill: This is a first class example how the power of the executive has been used to derogate the rights of parliament, which runs quite contrary to the history of our country.
Prime Minister Mackenzie King was frequently heard to speak about the supremacy of parliament. He frequently raised objections, as have other hon. members of the house from time to time, against the encroachments of executive power. When he was prime minister he put before parliament in June, 1926, a treaty or international agreement which he wanted ratified by the house. He was very careful to indicate that parliamentary approval was essential. On page 4762 of Hansard for 1926 he used these words:
The present government by this resolution is asking parliament to approve of a course of procedure which will involve with respect to treaties, involving military and economic sanctions, the approval of parliament before the government of the day agrees to any obligation implied in the treaty being undertaken in the name of the country.
That was sound doctrine in 1926. It is sound doctrine for today.
On page 4767, during the course of the same debate, Mr. Cahan, the then member for St. Lawrence-St. George, speaking on behalf of the opposition used these words:
I understand that the duly authorized representatives of the Canadian government may. In accordance with its terms, properly sign treaties or conventions on behalf of Canada without having received the prior authority of the parliament of Canada to do so-
May 6, 1966	COMMONS
This is the important sentence corresponding with what Prime Minister Mackenzie King said:
-but that no such treaty or convention or agreement so signed shall be binding upon Canada until it has been formally approved by the parliament of Canada.
That has been the constitutional practice throughout our history. There are many instances of the signing of international treaties by representatives of the government of Canada, but those treaties have not become effective and have not been applicable to the Canadian situation until they have been ratified by parliament. Here we have an instance where constitutional practice has been completely ignored. The supremacy of parliament has been placed to one side, and by executive action in January, 1965, this country was committed to a treaty with the United States dealing with economic matters, without ratification by parliament.
A year and a half later, in order to validate this agreement, the minister has come before us asking for our consent. You can see the awkward position that we are placed in if parliament refuses to assent now. You can readily realize the disruption that would occur because of the very extensive changes which have occurred in the automotive industry during the last year and a half. A blunderbuss is placed at the head of parliament. We are in effect told to approve of the treaty or a chaotic condition will result in the automotive industry. So, whether Canada has benefited or not, and I am not debating that issue at the moment, parliament in effect is almost compelled to assent to something that was done without its authority a year and a half ago.
[DOT] (1:20 p.m.)
How far is this to go? Is the power of the executive to be exercised in the case of other agreements of a similar nature without the approval of parliament or is parliament going to assert its control over the executive? Mackenzie King's oft-repeated statement about the supremacy of parliament must be considered here. The reason I raise this issue is that in the course of remarks made yesterday by the hon. member for York East (Mr. Otto) these words occur as reported at page 4773 of Hansard:
There is some talk about extending this agreement to, or making a new agreement with, the timber and lumber business. We can also do it in the plastics business, the chemicals industry and the services industry. We might find ourselves with 1,000 agreements with United States manufacturers.
DEBATES	4809
Canada-U.S. Automotive Agreement
The hon. member then went on to present arguments in favour of this method of expanding our trade. Is this kite-flying by a member on the government side to encourage the minister to make further agreements of this kind, to accustom the people of Canada to the fact that other agreements may be made by executive action without the consent of parliament? The hon. member for York East said nothing about the ineptitude of the present method. He said nothing about the supremacy of parliament. He just accepted the fact that the executive, according to his philosophy of political life, may make agreements of this kind and then bludgeon parliament into agreeing to them.
I would suggest to the hon. member for York East that a cautionary note with regard to his proposal has come from a high source in the hierachy of the Liberal party. I have not yet had an opportunity to read the book which has now been published by the hon. member for Davenport (Mr. Gordon) and I regret having to advertise it as others have done. Nevertheless it may be worth reading. I was not sure that I would buy the book and read it until I saw a comment in a newspaper as to its contents. The contents seem to disclose a sharp division of opinion within the ranks of the Liberal party with regard to economic matters and whenever I discern a sharp difference of opinion within the Liberal party I like to read any article or book in which reference is made to it because I am very much concerned about the survival of the Liberal party.
The newspaper-it is the Globe and Mail of today's date-refers to Mr. Gordon's book and says:
He rejected the concept of continentalism for Canadian and United States business saying he would not favour extension to other industries of the 1965 conditional free trade agreement in cars.
So here we find one of the leading members on the government side, the former minister of finance, suggesting there should be no further extension of agreements of this nature and therefore in effect disapproving of the present agreement. I suggest to the hon. member for York East and to others who may be of his opinion that this kite-flying with regard to the extension of agreements of this nature should be checked out with the author of this book, the hon. member for Davenport. Maybe they are saying the wrong things at the wrong time and will cause dissension and disruption within their party, something which should, of course, be avoided.
May 6. 1966
4810	COMMONS
Canada-U.S. Automotive Agreement
Taking into account the weight of an opinion expressed by a former minister of finance, I think we are right on this side in asking for a very careful examination of the operation of this agreement. I am surprised that the Minister of Industry (Mr. Drury) did not accede to the request put forward yesterday that the agreement should be referred to a committee. Why would he resist such a suggestion? I would draw the attention of the house to the intense interest which was shown by hon. members when the automobile industry was discussed last session. That interest is still evident. The industry we are considering is one of the great industries of Canada. We all want it to be strong and flourishing. We all want to see the development of the automobile industry in Canada. We would like a great number of highly skilled Canadians to be involved in it. We would like to see our exports of automobiles increase. We would like to see the development of parts manufacturing in Canada. We would like to see a reduction in the cost of automobiles to the consuming public.
This being the case and in view of the intense interest taken in the industry, why should there not be a full examination of this subject? We have committees here which could look into the matter and hear evidence not only from officials of the government but from representatives of the automobile industry and the public. We could carry out a first class examination of this agreement as well as of the development of the industry in Canada.
The minister would, I think, reject the idea of an examination by a committee, though I am not sure. A motion proposing such an examination was ruled out of order. Possibly he will not object to this proposal. Indeed, he may be the one to suggest it and persuade Mr. Speaker to accept a motion made by him to that effect. If the agreement were dependent upon an immediate settlement of this question the minister might argue: there is no time; we must sign the pact now or the whole arrangement will fall through. That would be a serious argument. But the agreement has been in effect now for a year and a half. It was not brought forward in 1965 for ratification by parliament; it was brought forward a year and a half later. A fait accompli has been achieved.
In these circumstances there can be no serious objections to there being a little further delay so as to enable a committee to


make an examination of this agreement. Indeed, the minister himself should be the one to suggest that all these matters might very well be placed before a committee. Let us give him the benefit of the doubt. His ideals with regard to the automotive industry may have been very sound and his actions may have been taken with the best motives in the world. I am not quarrelling with him on that score at all.
[DOT] (1:30 p.m.)
On the other hand, the agreement may not have worked out as it was depicted to us in such glowing colours a year ago. If it has not, let us know about it and perhaps the defects can be corrected. Why should we not have a committee to investigate this matter and why did we not have one last year? I doubt that there is anything more disturbing than what happened last year when we had to get our information about this agreement second hand from Congressional investigations in the United States. That is the wrong way to go about things. Yesterday the hon. member for Danforth (Mr. Scott) drew our attention to this when he said, as recorded at page 4764 of Hansard:
As a matter of fact we obtained most of our information from the hearings in Washington. Incidentally, it has always been embarrassing to me as a member of the House of Commons that we have to rely on the senators in Washington to snap their fingers and get the detailed information which we wanted from our own government in Canada but could not get.
I recall the questions put and the answers given in this house last year on that very subject of information coming out of Washington through a Congressional committee about a matter upon which we could not get information here and yet it was just as important to us as to anybody in the United States. Now, a year and a half later, I suggest to the minister we still have an opportunity to appoint a committee, if you like a joint committee of the Senate and the House of Commons, to investigate the automotive industry and this agreement in order to see whether the agreement is really operating as it should or should be modified. If it is found that it should be modified the matter should then be taken up with the United States.
Another reason can be advanced for appointing a committee of inquiry at the present time. I understand this agreement runs for three years.


Mr. Drury:: No, unlimited duration.
May 6. 1966	COMMONS


Gordon Minto Churchill: That is all the more reason for an investigation.


Charles Mills (Bud) Drury: Why don't you read the agreement?


Gordon Minto Churchill: This is all the more reason for an investigation because, if it is a perpetual agreement, we need to know whether it will benefit Canada or will be to our disadvantage. Why should this rest solely with the executive, a few people elevated to brief authority who make a decision in perpetuity of this nature without parliament giving its approval prior to the signing of the agreement?
I am glad the minister interrupted and corrected me because it shows exactly how serious the matter is. The executive of this country is setting itself above parliament and above the people of the country. It is tying us forever to an agreement with the automotive industry of a powerful neighbour, an agreement which may be to our serious disadvantage. If we are at equality with the automotive industry in the United States let us settle that point by a thorough investigation. But if we will be at a serious disadvantage in the future let us find out now so that steps can be taken to correct the situation. This emphasizes the whole point of the argument with which I started, that the cabinet has gone beyond its powers in making an international agreement without the sanction and authority of the House of Commons. The supremacy of parliament has been completely ignored.
The executive has set itself up as the supreme authority in this country and apparently is prepared to do anything it likes without the authority of parliament. Once it sets this precedent it can move from that point to another. It can break the constitutional procedure of the past and the precedents set in the past. This is what the executive has done. It reminds me of those years in the 1950's when we were battling about the excessive powers of the executive.
The minister was trained in that particular school when the government of that day wanted to ride roughshod over parliament. Now he is doing the same thing without having fully considered the extent of the derogation of parliament that has ensued from his action. I suggest that the supremacy of parliament must be re-established in this country and that the power of the prime minister and the executive must be diminished.


John Hollings Addison: Would the hon. member permit a question?
DEBATES	4811
Canada-U.S. Automotive Agreement


Gordon Minto Churchill: Of course.


John Hollings Addison: I listened to his speech with great interest and I was unable to ascertain, even though he felt that parliament would reluctantly agree to this agreement, whether or not he was in favour of further agreements of this type. Is he?


Gordon Minto Churchill: That is a hypothetical question. I was simply dealing with the automotive agreement. I brought to hon. members' attention an expression of opinion of one of the senior members of his party, and I suggest that the hon. member talk to the hon. member for Davenport.


Mr. Milton L. Klein (Cartier):: Mr. Speaker, I rise only to discuss one statement made yesterday by the hon. member for Danforth (Mr. Scott) when he said, as recorded at page 4763 of Hansard:
Of course, the agreement brings out the whole problem of foreign ownership. The real problem, it seems to me, about foreign ownership in Canada does not come out of trying to make political decisions. The real problem that I have encountered in the little travelling I have done in Canada is that the Canadian people themselves do not have the guts to build a Canadian owned economy.
This statement is partially true. One of the real problems facing Canada is that Canada does not have enough people. We cannot expect to be big if we remain numerically small. We cannot expect to compete on the North American continent or share the North American continent when we remain at the ratio of 20 to one population wise.
The strength of the United States lies in the fact that it does not have to export, that its domestic market is big enough to absorb the productive capacity of the nation. We are not in that position. We can produce much more in this country than the citizens of the country are able to consume.
It would seem to me that the only way to deal with the question of foreign ownership is not by creeping nationalization or creeping expropriation but by diluting foreign ownership in this country through creating Canadian investment. If there is an industry where, for example, foreign control is in the ratio of 80 per cent to 20 per cent Canadian, the way to deal with that problem is to introduce in that particular phase of commerce Canadian competition so that over the years we will be able with a greater population to reduce that 80 per cent and the 80 per cent foreign control will by dilution become 20 per cent and the Canadian proportion will rise to 80 per cent.
May 6, 1966
4812	COMMONS
Canada-U.S. Automotive Agreement
[DOT] (1:40 p.m.)
This, however, will take time. It will take years to accomplish, but we will accomplish economic sovereignty with political maturity. At this stage I believe it is politically immature to complain about foreign investment in this country when so many Canadians are dependant for their very livelihood on foreign investment in Canada.
It has been suggested that the Studebaker plant in Hamilton should be purchased. It would seem to me that here is an excellent opportunity to create a pilot corporation. I always ask myself this question: If Sweden can manufacture an automobile completely, why cannot Canada manufacture its own car? It might be a very good suggestion if the government would consider, along with the labour unions of this country and the banks, the purchase of the plant in Hamilton so that it might be operated as a joint venture of the government, the labour unions and the banks. It seems to me that the labour unions in this country could play a much larger role than they are playing now in an effort to remedy the situation about which the hon. member for Danforth is complaining.
The labour unions of Canada possess huge treasuries. If it requires legislation to release pension funds, if it requires legislation to allow trust companies to invest in Canadian enterprises of this kind, I think this is the way to tackle the problem presented yesterday by the hon. member for Danforth. It could be so arranged that the government, if it did participate in this joint venture, could participate in a manner by which it could dispossess itself of its shares in the enterprise by releasing them to the public when the corporation was in a healthy state of existence. So I would say to the hon. member for Danforth that there are many avenues through which he might be persuaded to help our economy and one is by getting the New Democratic Party and the labour unions of this country to favour wide-scale immigration into Canada.


Reid Scott: We do.


Milton L. Klein: You do not. The New Democratic Party is opposed to immigration. You will accept immigration of skilled labour only. You will not accept wide-scale immigration into this country and I say it is this practice which is keeping this country down.


Reid Scott: I know the hon. member wishes to be accurate. That is not the position of the New Democratic Party. If the
[Mr. Klein.)

hon. member wishes, we would be glad to send him the convention manifesto which would make it clear that this party for years has favoured much wider immigration than this government has been prepared to permit.
I am intrigued by this venture into socialism in respect of the buying of the Hamilton factory. I wonder whether the hon. member could indicate to us how this would work, who would buy the cars, how would you merchandise them, where would you sell them?


Milton L. Klein: I do not know how we would do it. I am merely trying to indicate some of the things we could attempt to do to bring about the very things about which you were complaining in your speech. There was a period in recent history when Canada was the fourth largest manufacturing company in the world. That was because we were exporting the products of Canadian companies to those areas in Europe which at that time were devastated by the war and were not manufacturing the same articles themselves. So we had ready-made markets for the products of Canadian industry. Today those countries to which we were shipping products yesterday are producing them themselves. Therefore I think it would be a very splendid idea for Canada, if we are no longer able to export the product, to import the customer.
I would reiterate that the basic problem in Canada is the fact that when we speak of Canada we must know what we are speaking about. We are speaking about five, six, or maybe ten industrial centres. It is not that the rest of Canada is not important but from the point of view of population Canada consists only of Montreal, Toronto, Winnipeg, Hamilton, Vancouver and a few other centres. Aside from these eight or ten centres Canada is a barren, empty country. In order to remedy the situation my plea today is that we should have a broader and wider immigration policy.


John Hollings Addison: 
Gordon Minto Churchill: The cabinet needs a lot of *direction like that.


An hon. Member:: It was coincidental.


John Hollings Addison: The agreement has been considered very thoroughly both by the minister in his opening remarks and by members from each party in the house. There are two aspects of the agreement which bother me, as I am sure they bother other members in the house.
[DOT] (1:50 p.m.)
One of my reasons for asking the minister to bring the agreement before the house as soon as possible is the activity and interest in Canada in respect of safety in so far as the automobile industry is concerned. The United States government and the United States manufacturers who control the automobile industry and manufacturing facilities in Canada have agreed to work in co-operation to provide legislation in so far as safety equipment is concerned. Therefore we will be automatically included under this agreement. It seems to me we should know exactly where we stand in this parliament if we are going to be asked to pass laws to increase highway safety. Standards of safety in the United States might be different from those we feel are necessary in Canada. Certainly in the past there has been a difference in the specifications of a United States manufactured car and a Canadian manufactured car.
We have all read the guarantees which form part of this agreement. I hope that we will continue to enjoy distinctively Canadian automobiles but I suppose this will depend on the good will of the manufacturers. Over the years we have developed distinctive names for Canadian manufactured cars and I hope this situation will continue. In the future I hope we will see more research and development in Canada but at the present time very little of that type of activity takes place here. While manufacturing facilities are being used primarily to produce automobiles and provide employment in an effort to alleviate our balance of payments problem, I hope that some development will take place in Canada whereby manufacturers will undertake to bring skilled people into this country.
The hon. member for Danforth (Mr. Scott) asked what the alternative would be if the price of cars in Canada did not come down so as to be more comparable with existing prices in the United States. In my opinion these prices will come down over a period of time
DEBATES	4813
Canada-U.S. Automotive Agreement because it is in the best interests of manufacturers, unions and everyone concerned with the automobile industry to bring our prices into favourable comparison with United States prices.
We all realize that this agreement pertains only to manufacturers and at the present time only to manufacturers of original equipment. There is no suggestion that someone could go from Canada to the United States and purchase an automobile at a lower price and return with it. That is not the purpose of this agreement. However, in connection with the suggestions of the hon. member for Danforth, there should be some voluntary aspects in price labelling of automobiles in the future and I believe that prices should be clearly indicated and that these labels should remain affixed to the automobiles until they have been delivered.
The advantages of this agreement have been enumerated by previous speakers. In my own area, which is about half way between Oshawa and Oakville, the opportunities for new manufacturing facilities are immense and already one factory is located in the township of Whitchurch.


Mr. Winkler:: We should have a little more decentralization.


John Hollings Addison: I should like to comment briefly on Canada's automobile industry so far as foreign markets are concerned. We supply quite a large number of automobiles to the Caribbean market, which is a favourable one for Canada, not only because of our relationship with Caribbean countries but because this trade signifies to them, many of whom are emerging as independent countries, that Canada is a real friend. As a result of our distinctive Canadian automobiles going into these areas we are able to build up a good reputation in these markets.
The hon. member for Winnipeg South Centre (Mr. Churchill) was critical of the government for the way this treaty was brought about. It seems to me that over the last 15 months we have had a reasonable opportunity to observe the effects of the agreement, which to this point have been excellent. I think the Minister of Industry (Mr. Drury) and the government should be complimented in this regard.


An hon. Member:: Hear, hear.


Eric Alfred Winkler: Well, you have one supporter but he only used one hand.
May 6, 1966
4814	COMMONS DEBATES
Canada-U.S. Automotive Agreement


John Hollings Addison: The hon. member for Winnipeg South Centre made reference to a book now being published, written by the former minister of finance. I have read excerpts from this book which appeared in the Globe and Mail on Thursday, May 5, and I should like to quote a portion of the article:
Referring to events during his term as finance minister, Mr. Gordon indicated that Time and Reader's Digest magazines were exempted from the Canadian ownership legislation of 1965 as a tradeoff to secure passage through Congress of the auto agreement. The legislation extended to newspapers and magazines the existing law requiring that control of Canadian radio and television stations must be held by Canadian nationals. Time and Reader's Digest were exempted on the grounds, Mr. Gordon said, that these periodicals had operated in Canada for many years and recently had been doing their printing in this country.
"Many people were unhappy about the exemption of Time," he said. "Its preferred position makes the establishment of new Canadian magazines more difficult."
I hope in this particular instance, where we have a strong, equitable bargain, that we have not at the same time traded away the possibility of distinctively Canadian publications being successful. I realize that the automobile business is, as the hon. member for Danforth said, a horse trading business. When we renegotiate this agreement, which runs in perpetuity, I hope we shall do so with wisdom. The agreement has the stipulation that it can be cancelled after one year and at the end of 1968 it will be renegotiated. I am sure Canadian manufacturers will eventually be expected to stand on their own feet. The guarantees presently enunciated in the agreement will sooner or later disappear, at which time we will be expected to produce automobiles in this country at prices comparable with prices existing now in the United States. I am sure we will be successful.


Mr. D. V. Pugh (Okanagan Boundary):: Mr. Speaker, I had no intention of participating in this debate but after listening to the remarks of some hon. members the thought struck me that because this agreement is to last forever there will have to be amendments made from time to time. That is only a common-sense approach to the situation because we could not have a hard and fast treaty with terms that are suitable now applying in the future in the light of changing world conditions.
The point I am making is that it would be a good idea to refer this agreement to a committee of the house before renegotiating in order that parliament might have all the

existing facts before it. Obviously we are not going to be successful in having this resolution referred to a committee prior to its approval because the government will not accept that proposal. However, in future, because of changing world conditions, a committee of this house should make a thorough examination of conditions at the time of renegotiation in order that the aims and purposes of this treaty can be attained.
The last speaker has just suggested that the Canadian automobile industry will be expected to stand on its own feet in the future. I think the industry is standing on its own two feet now and that if we continue to take advantage of the favourable parts of this treaty the industry will benefit. One must remember that we are now operating on a devalued dollar basis. What would happen if a situation developed in which there was closer parity between the Canadian and U.S. dollar? It is in the light of this type of consideration that I suggest a committee of this house should have the most up to date information possible regarding the difference in automobile prices between Canada and the United States.
There is a host of other points which must be taken into consideration when this treaty is renegotiated. The last speaker referred to research. I agree wholeheartedly that if and when greater and better research facilities are developed here trained Canadian researchers will remain in the Canadian industry.
[DOT] (2:00 p.m.)
It would seem to me that these are all matters we should be discussing as we proceed from the point of passing this treaty. We should be discussing them not ]ust when any change is considered desirable in future but right through the piece so that we in the House of Commons will be kept up to date.


Mr. Robert McCleave (Halifax):: Mr. Speaker, my intervention in this debate will be very brief because the matter I intend to raise by way of a question to the Minister of Industry (Mr. Drury) is rather outside the scope of the agreement now being debated in the house. It arises from a question I asked the other day and the fact that Nova Scotia, which is one of the three automobile producing areas of Canada, apparently faces a difficulty regarding tariff arrangements. The voluntary economic planning board of the province has pointed this out. Therefore, Mr. May 6, 1966
Speaker, my point is simply to ask the minister whether he and the government will bring their good offices to bear, if necessary, to see that an infant industry in my province is protected.


Some hon. Members:: Question.


Mr. Deputy Speaker:: Order. I must advise the house that if the minister speaks now he will close the debate.


Charles Mills (Bud) Drury: Mr. Speaker, I think we have had an interesting and not too protracted discussion of this particular question. I have found it most interesting, instructive and helpful. I am very glad indeed to have noted that there has been on all sides of the house general agreement with this agreement. Observations have been made as well as some complaints, but I have sensed in this house, as elsewhere in the country, general agreement with the fact that the government has made this kind of agreement with the United States.
I would particularly point out that although there have been some coy suggestions about eventually giving approval, no one has suggested that this agreement entered into in 1965 was a bad thing and should not have been entered into. I agree that it has given rise to some questions in the minds of members. There have been suggestions made that perhaps years and years ago we should have organized our automobile industry in a way different from that which existed in 1965 but that given the facts of the nature, structure and size of the automobile industry in Canada in 1965 this agreement is a sensible and useful course of action for Canada to have taken.
One might divide the observations made into two classes, one procedural and the other relating to substance. I shall try to deal with them in that order. A number of members have mentioned the fact that this agreement has been in existence for some 15 months and only now is ratification being sought. It has been referred to as a treaty. I should, without appearing to be trying to give a lecture, distinguish between a treaty and an agreement. A treaty is a formal instrument between two nation states which binds the states as states. Reference has been made to Mr. Mackenzie King's procedure in dealing with treaties in that in the normal course of events treaties call for ratification by the legislative bodies of the two nation states. But in this case this is not a treaty. It is an agreement between the administrations of
Canada-U.S. Automotive Agreement two countries governing the exercise of their normal administrative functions-


Gordon Minto Churchill: Is it binding?


Charles Mills (Bud) Drury: -in carrying out their duties as authorized by the legislature of the United States and the parliament of Canada. This is all that is being done. In the case of the United States a formal reference was made to the United States Congress in respect of this agreement, not with a view to ratifying a treaty but in order to implement their undertakings, and to do the things they wanted to do the United States administration had to seek from Congress a change in the law of the United States. We were more fortunate in that the operations in Canada could be carried out without any change in the law.


Marcel Joseph Aimé Lambert: Under what authority?


Charles Mills (Bud) Drury: Under the various laws providing for the administration of Canada.


Marcel Joseph Aimé Lambert: Including the remission of duty?


Charles Mills (Bud) Drury: Including the remission of duty.


Marcel Joseph Aimé Lambert: As a general policy of remission of duty or simply the power to remit duty in particular cases?


Charles Mills (Bud) Drury: The power to remit duty.


Marcel Joseph Aimé Lambert: In particular cases?


Charles Mills (Bud) Drury: The power to remit duty. If this had been a treaty I would have agreed with the hon. member for Winnipeg South Centre (Mr. Churchill) that ratification would be required and that such a treaty could not become operative until ratification had been sought and obtained. The object in introducing a resolution to be approved by parliament was to provide members with an occasion for a discussion of this agreement. Perhaps the fact that it has been, to some degree in any event, in operation for a period of 15 months makes such a discussion much more intelligible than would have been the case if it had all been purely hypothetical. It is quite clear to me that hypothetical questions of a serious character are not at issue in respect of this agreement.


Gordon Minto Churchill: Mr. Speaker, could I ask the minister a question?


Charles Mills (Bud) Drury: Some doubts have been expressed as to the way in which this agreement is operating. Some questions have been

May 6. 1966
4816	COMMONS
Canada-U.S. Automotive Agreement asked regarding whether the results are good or bad. But surely we are in a much better position to judge the results when we have partial results than if nothing had been done at all.


Gordon Minto Churchill: Could I ask the minister a question?


Charles Mills (Bud) Drury: Yes.


Gordon Minto Churchill: If the agreement was turned down by parliament, would the cabinet simply ignore parliament's opinion?


Charles Mills (Bud) Drury: If parliament failed to approve this agreement, obviously we would have exactly the same situation as when the House of Commons declines to approve an act of policy of the government which it is within the administrative abilities or functions of the government to carry out without parliamentary approval. This normally, of course, takes the form of a confidence motion. The result of failure to approve the agreement in this case would be exactly the same as failure of the government to secure the support of the house on a motion of confidence. I do not think I need tell the hon. member for Winnipeg South Centre that.
If I may continue from the point at which I was interrupted, Mr. Speaker, a consequence of deferring discussion on this agreement until such time as it had been in partial operation for a while makes such discussion more intelligible and consequently, I think, more constructive. I would hope that members of the house would welcome this delay rather than deplore it for purely technical, procedural or hypothetical reasons.


Marcel Joseph Aimé Lambert: Would the minister accept that principle in regard to other legislation or does it apply only in this case?
[DOT] (2:10 p.m.)


Charles Mills (Bud) Drury: No, Mr. Speaker, this is not legislation. We are not dealing with legislation.


Marcel Joseph Aimé Lambert: Oh.


Charles Mills (Bud) Drury: I would stop the hon. gentleman there. The suggestion has been made that this agreement might be referred to a committee for examination. The reason advanced is that there is great interest in the agreement and it will enable the house to be better informed as a consequence of examining both members of the administration and outside witnesses. As evidence of this interest, the hon. member referred to the large


number of references in Hansard in the course of the past year to the automobile agreement. I note in passing that there is a page and a half in the Hansard index-not Hansard text-showing where information is to be obtained and was given and coupled with the debate we have already had on a supply motion this does seem to me to provide a fair and adequate answer to the charge or suggestion that the government has not been providing any information on this subject and has been withdrawn and secretive.
In so far as reference to a committee is concerned, I believe the house will recall the discussion we had a few days ago on the problem of securing quorums for parliamentary committees and the desirability of reducing them. The argument was made that this was necessary because there were so many committees meeting simultaneously and they had so much work to do that it was impossible to secure a very large attendance. To refer this to a committee would indicate a lightheartedness and disregard really for what are urgent questions for discussion by committees. To refer this matter to a committee on the grounds that somebody might be interested does not seem to me to be a very practical or businesslike way of conducting the business of parliament.


Eric Alfred Winkler: Will the minister permit a question? Does he not think that at this stage, after the agreement has been in effect for so many months, the benefit of advice from manufacturers themselves would be essential to parliament to determine whether the government had indeed done something valuable or otherwise? This is all we are asking; this is all we have asked during the entire debate.


Charles Mills (Bud) Drury: Mr. Speaker, if a parliamentary committee is going to endeavour to ascertain from the manufacturers whether they en-dorese this agreement, which they have already done in the form of letters tabled in the house, I do not believe that anything will be gained, to be quite frank. In my view it would be a misuse of parliamentary time to thrust this additional chore onto already overloaded parliamentary committees.


Eric Alfred Winkler: It would at least be a democratic exercise.


Charles Mills (Bud) Drury: Perhaps I should not comment on that. If the hon. gentleman equates democracy and inefficiency, perhaps there is some substance in what he says. I have the view,
May 6, 1966

however, that democracy can be common-sense and efficient and still be democratic, and this is what we should be aiming at.
In so far as questions of substance are concerned, I listened to a number of members impute to the government statements that the object of this agreement was to reduce or rectify or correct our balance of payments deficit with the United States. Although it is supposed to be bad form to quote oneself, I should perhaps refer to the statement I made when this agreement was first announced. This statement on January 15, 1965 expressed in clear terms the objectives of the agreement. At that time I said:
This program is designed to achieve a substantial expansion in production and employment and promote improved competitive efficiency in this important sector of Canadian manufacturing.
That is the opening paragraph of the statement and it contains, therefore, a statement of the objectives of this agreement. It has been quite evident from the comments of hon. members that these objectives are in the course of being achieved. I am prepared to admit quite frankly that the added bonus for which one would have felt grateful had we been able in the first year of operation to cure the imbalance has not been achieved. However, it should be quite clear to hon. members that the rate of growth of our exports is very much larger than the rate of growth of our imports in this field. If, as one would expect, there will be a continuation of this trend as the agreement becomes fully implemented and effective and this satisfactory trend continues, there will as a consequence be an improvement in the long run in our balance of payments deficit.
As I mentioned in my opening remarks, there has been an increase in absolute terms in the deficit in the first year of operations. It is unrealistic to expect that the industry in Canada, which manufactures only some 60 per cent of total sales of automotive products in Canada, will arrive at a situation in a vastly and rapidly expanding market where our imports would not seem to increase, but we have not been able in the first year to make a sufficient penetration of the American market to offset the increase in imports needed to serve the increase in our domestic sales.
However, I would ask the house to be patient with us and share with me the expectation that the current favourable trend of more rapidly rising exports than the rate of rising imports will continue and that there will be not only an anticipated but a real
DEBATES	4817
Canada-U.S. Automotive Agreement improvement in our balance of payments in this field.
I point out again that this is not the main and cardinal object of the agreement. The main object is to increase production in Canada on a more efficient basis and to provide more employment opportunities in our country. This, I suggest, is demonstrably under way.
Reference has also been made to the kind of expansion in production taking place and as a consequence the quality of the labour and the type of jobs which are being created. Mention has been made of the fact that so far there have been created some 10,000 new jobs. I believe the suggestion has been made by some members that all these will be men who put on nuts and bolts on the assembly line and that rather more skilled labour will be disappearing. I should point out that of these 10,000 new jobs slightly less than half of them are in the parts manufacturing industry. This, I think, would indicate that we are not becoming merely assemblers of motor vehicles. Indeed, in terms of total production, the house will recall that one of the things on which we insisted in the arrangements with the motor car companies was that they must maintain in Canada a ratio of assembly to total domestic sales no lower than they had in the past. I am glad to say that in terms of assembly operation in relation to total operation, this ratio continues to be substantially what it was at the outset of the agreement.
[DOT] (2:20 p.m.)
Reference was made also to the sales tax and duties and the difficulties facing manufacturers in expanding when forced to pay sales tax and duties on new production machinery they had to acquire in order to meet the expanded production. In the view of some members this was imposing on them an impossible task, and a rather more moderate view was that this was unfair. The answer, of course, to the question of the impossibility of both paying sales tax and duties and making other expenditures is given in the number and size of the expansions already achieved. If it were impossible to expand or set up new plants as a consequence of this taxation statute, then a very large number of Canadian manufacturers of both automobiles and components have succeeded in achieving the impossible.


Wallace Bickford (Wally) Nesbitt: Are those independent manufacturers or subsidiaries of the major automobile companies?
May 6, 1966
4818	COMMONS
Canada-U.S. Automotive Agreement


Charles Mills (Bud) Drury: Both, independent manufacturers and automobile manufacturers themselves and their subsidiaries. I am glad to say that this expansion has taken place over the whole spectrum and is not confined to one particular area. As to the contention that payment of sales tax and duties at a time when expansion is being urged upon them is unfair, I feel this is probably a question for the judgment of the Minister of Finance (Mr. Sharp).
As he explained in his budget with regard to the prospective rate of expansion in Canada at the present juncture, the object of his budget in popular terms was to remove some pressure on the accelerator, namely, to slow down the rate of expansion. It has not been evident to me so far that as a consequence of the non-removal of the sales tax it will not be possible for the Canadian automotive industry to meet contracts, both with respect to quantity and in relation to other aspects of the agreement. Whether they will be able to do this on as profitable terms as they would have been able to do had the sales tax been removed is, of course, another question. There is no doubt about it that the manufacturer who is relieved of tax payments has more money available for retained earnings than if he had to pay the tax.
I do not know, and I do not have reason to know, that the proposal of the Minister of Finance to remove progressively over the next two years the sales tax on production machinery will make it impossible for both motor car manufacturers and parts manufacturers to achieve the targets toward which the agreement has been aimed. In so far as duties are concerned on imported machinery, which appears to be one of the main apprehensions, it has been stated that most of the manufacturers who have to import this production machinery because it is not manufactured in Canada are placed at a serious competitive disadvantage in relation to United States competitors by reason of having to pay a duty of 22.5 per cent on their production machinery. The fact of the matter is, I am advised, that in the case of production machinery not manufactured in Canada, which is imported by the automotive industry for the manufacture of automobiles, there is a tariff drawback of 99 per cent of the duty. This means that for all practical purposes there is no imposition of this 22.5 per cent duty on machinery required for expansion.
[Mr. Nesbitt.)


Wallace Bickford (Wally) Nesbitt: Would the minister permit a question in this regard? Will the minister agree that in many cases, with regard to machinery used for production purposes of a class or kind made in Canada, on which there would be a duty of 22.5 per cent if it were imported from the United States, under present economic conditions in Canada there may be a waiting period of a year or a year and a half before this machinery can be obtained in Canada, so in order to meet production schedules it becomes necessary to import it from either the United States or the United Kingdom?


Charles Mills (Bud) Drury: I agree that this is the kind of choice that faces every entrepreneur. He has to make his choice on the balance of economic advantage. Perhaps in this regard I should say that the problem of levying duty on machinery of a class or kind which could be manufactured in Canada, but which in actual fact cannot be manufactured within what I might call a practical time, is receiving consideration by the government now. I suggest that in so far as machinery not made in Canada is concerned, in practical terms there is no duty levied.


Wallace Bickford (Wally) Nesbitt: I am very glad to hear that.
[DOT] (2:30 p.m.)


Charles Mills (Bud) Drury: One other question which was raised was car prices. I think in my opening remarks I did indicate that the only intelligent comparison that can be made of car prices or car costs would be at the manufacturers' level. When I say "intelligent comparison", I am talking in relation to this agreement. The agreement does not purport to influence or affect the rates of provincial or state taxation, nor the general scheme and structure of distribution in effect with respect to automobiles and automobile products in the two countries. This agreement is directed to the manufacturing operation and consequently manufacturing costs. In measuring its usefulness one should look, therefore, at these costs at the manufacturing level. If changes are indeed desirable at that more distant level in the distributive process, then I suggest that is another question altogether. It is quite clear that at the manufacturing level there has been a narrowing, even in our first year of operation of the agreement, of the differential in costs between the cost of manufacture in the United States and the cost of manufacture in Canada. I think that hon. members should perhaps look slightly askance at some of the figures given in
May 6, IS66

relation to retail prices on the other side of the border.


Marcel Joseph Aimé Lambert: Is not that what concerns the public?


Charles Mills (Bud) Drury: I agree, Mr. Speaker. What concerns a member of the public is the final price that he pays. This, which I would suggest is the concern of members of parliament, is not relevant to this particular agreement.
Another thing which was briefly examined was the question of continentalism and whether this agreement is leading us into continentalism as distinct from its antithesis which is internationalism. I should point out that in so far as Canada is concerned we are in this agreement dealing with an industry which is almost entirely owned and controlled by parent companies in the United States. The Canadian side of this agreement does offer to any country in the world precisely the same rights of entry and the same advantages that are offered to the United States. Because the control of the largest segment of the automobile industry rests with the United States, it must be remembered that any international agreement, or any agreement having international scope in so far as Canada is concerned, must be oriented in terms that bear in mind the automotive industry of the United States.
By reason of this I would suggest to hon. members that this does not represent the first step toward continentalism. I do not think it is conceivable, nor would it be a practicable exercise for Canada at this stage, to endeavour to buy back, out of the accumulated savings here, the automotive industry in Canada from its present owners in the United States. We have a vast need for additional capital to carry out the expansion that we all look for in this country and that we are trying to bring about. To endeavour to take what savings we are able to generate in this country and devote them to the single, very large and concentrated task of buying back the automotive industry would be in my view a wrong use of our savings. We can use them much more effectively and much more productively. To develop our national identity and our national interest we should employ such savings, I suggest, in new enterprises controlled in Canada rather than concentrating all the effort which would be required even to contemplate the repurchase of the automobile industry, to buy back that industry.
DEBATES	4819
Canada-U.S. Automotive Agreement
I am grateful, Mr. Speaker, as I said at the outset, for the observations and comments which hon. members have provided in relation to the automotive agreement. I am very glad indeed that there has been on the part of all members a recognition that this agreement is in the interests of Canada. I undertake to take note of the observations which have been made in relation to its future operation.


Wallace Bickford (Wally) Nesbitt: Mr. Speaker, I wonder whether the Minister of Industry would allow me to ask a question. I am sorry to have missed the first part of his remarks. If he has dealt with what I am about to ask, I apologize.
One matter that I brought up in my remarks last evening was that at least one of the large automobile manufacturers, and to some degree another of the big three, does not permit independent Canadian automobile parts manufacturers even to tender on job lots of automobile parts. Indeed, independent Canadian manufacturers have been told: "No, we will not even accept your tenders no matter how efficient or how competitive your prices may be since we would rather buy from our own wholly-owned subsidiary plants across the border."
I am sure the minister knows of this. Does he intend to use his good offices to try to rectify this situation? It has been my understanding that the automobile parts manufacturers say: "If we are not competitive, then we are not competitive and that is the end of it. But when we are competitive and are not given an opportunity to tender we feel that there is something the government did not anticipate when the automobile parts agreement was entered into."


Charles Mills (Bud) Drury: Mr. Speaker, the government did anticipate this. Consequently the department is prepared to use its good offices to rectify this situation. I suggest that the problem to which the hon. member has made reference should be rectified by the Canadian manufacturer looking, as he has done, for a product which the United States wishes to buy rather than persisting in trying to get the U.S. manufacturer to buy or forcing him to buy something he does not want.


Wallace Bickford (Wally) Nesbitt: That is not the situation I am speaking of.


Charles Mills (Bud) Drury: It does not make economic sense for our manufacturers to endeavour to have pressure put on the United States to buy things they do not want.
4820	COMMONS
Canada-U.S. Automotive Agreement


Wallace Bickford (Wally) Nesbitt: Nobody is suggesting that.


Charles Mills (Bud) Drury: United States manufacturers do Not want to buy from us, or from outside their own manufacturing facilities, articles that they manufacture themselves. That is the situation here. Vertical integration has taken place in the United States to such a degree that components are manufactured by the motor car manufacturers themselves. They do not want to buy components outside.
It has been suggested to Canadian component manufacturers that they should expect this. It has been suggested that they should abandon the manufacture of those kinds of articles not wanted and look to other fields. In this process of looking about for other fields and establishing the manufacture of different items, the automobile industry has every assistance-


Wallace Bickford (Wally) Nesbitt: The minister and I are thinking of different sets of circumstances. I was referring only to a situation where the automobile manufacturer requires an integral part of a car, which I shall call X and which has to meet certain specifications, that can be produced either by a wholly-owned subsidiary or by an independent firm. In this case the independent firms are not permitted even to tender on the specifications required. The minister and I are thinking of different things. However, if the minister has used his good offices in this instance I hope he will continue to do so.


Mr.   J.-A. Mongrain@Trois-Rivieres: With your permission, Mr. Speaker, I should like to direct a question to the hon. minister.
I listened very carefully to the objections raised by several members, to the effect that the house was not consulted beforehand about this agreement, that there was no committee set up.
[English1


Mr. Deputy Speaker:: Order, please. The hon. member for Trois-Rivieres is apparently rising to make a speech.


Mr. Mongrain:: I apologize. I am just explaining my question to the minister; other-wish he may not understand my point.


Mr. Deputy Speaker:: Order, please. I pointed out to the house when the Minister of Industry rose to speak that he would close the debate.

DEBATES	May 6, 1966
[DOT] (2:40 p.m.)


Joseph-Alfred Mongrain: I wish to put a question to the minister. I am not trying to raise an argument. I will make my intervention as short as possible. Would the minister consider setting up a committee to study amendments to this agreement between now and the end of the argument so that the house may be able to make some suggestions before it is renewed?


Charles Mills (Bud) Drury: The principal responsibility for the administration of this agreement rests with the Department of Industry. There are a great many occasions for example, when the estimates of the Department of Industry are before one or other of the standing committees, when this matter can be raised. I would hope, of course, to have the views of hon. members on modifications to this agreement at the time of the review which is specified in the agreement and I will certainly give consideration to the best possible means of seeking the views of members of the house at the time of the contemplated review.


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


Some hon. Members:: On division.
Motion agreed to on division.



BRETTON WOODS AGREEMENTS ACT


[Stage Direction]
Hen. C. M. Drury (for the Minister of Finance) moved that the house go into committee to consider Bill No. C-144, to amend the Bretton Woods Agreements Act.
Motion agreed to and the house went into committee, Mr. Rinfret in the chair.
On clause 1-Payment of subscriptions out of C.R. fund.
Mr. Chretien:: Mr. Chairman, I do not have any comments to make.
This bill has been fully considered in committee; experts of the Department of Finance and the Bank of Canada, and interested members participated very conscientiously to get information. Now, the bill was agreed to without amendment by the committee on finance, trade and economic affairs.
May 6, 1966

[English1


Mr. Lamberi:: Mr. Chairman, I should like to confirm what the parliamentary secretary has said. This bill was before the Standing Committee on Finance, Trade and Economic Affairs for two or three sessions. Advisers from the Bank of Canada, the World Bank and the Minister of Finance were present and the subject was canvassed at large. I think we are satisfied. If anyone wishes further information the reports of the committee are available. So far as we are concerned we are prepared to proceed right now without further commentary. The study has been made.


Thomas Clement (Tommy) Douglas: The representatives of this party on the committee have gone over the material and listened to the witnesses. We are fully satisfied with the evidence which has been adduced and can see no need for further discussion now.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Title agreed to.
Bill reported and read the third time and passed.
[Stage Direction]
The house in committee of supply, Mr. Rinfret in the chair.
DEPARTMENT OF NATIONAL REVENUE Customs and Excise-
I. General administration, operation and maintenance, including authority, notwithstanding the Financial Administration Act, to spend revenue received during the year from firms and individuals requiring special services, $49,278,000.
Mr. Benson:: Mr. Chairman, knowing the time limit which the house has placed upon itself for dealing with all estimates in this chamber I do not intend to speak at any great length with respect to the Department of National Revenue.
I am now approaching my second year as minister of this particular department and this is the first time I have taken the time of the committee to make a general statement about the estimates. I should like to take this opportunity to commend the staff of the department and especially to commend the work which was done by the former deputy minister, Mr. Dave Sim, who left the department shortly after I became minister.
I believe the Department of National Revenue operates as efficiently as does any government department. The expenditure

Supply-National Revenue over the years-the cost of collecting money both in the customs and excise division and in the taxation division-has tended to decrease. I can give the committee an example of what is being done in the department in the field of income tax. In 1950 the department was handling 3,360,000 income tax returns. In 1965 this number had risen to 6.7 million tax returns; I am referring to both individual and corporate returns. In 1950 the permanent staff numbered 10,629. In 1965 it was 5,909.
In addition we employ a large temporary staff in connection with the computer operation used to deal with personal income tax returns. A good many hon. members have recently been out to see how we operate at this time of the year when millions of returns have to be dealt with and some 2,000 people are employed for a few months when the computer load is at its peak.
An interesting fact with respect to the taxation division-and this applies equally to the customs and excise division-is that it costs a good deal less today to collect $100 in taxation than it did only a few years ago. The collection cost per $100 amounted in 1950 to $2.16. In the 1965 fiscal year this cost had been reduced to 86 cents. Sometimes the efficiency of the department frightens me as a taxpayer.
[DOT] (2:50 p.m.)
I do not think I really wish to say much more with respect to the department other than there is a reorganization going on within it as a result of the Glassco report. We have been working toward this and during the coming year in the customs and excise division we shall open the first district office to deal with appraisal and rulings as distinct from the head office where all appraisal has been done in the past.
We are going to take the first step of this plan in London, Ontario. If it proves successful and operates efficiently, as I am sure it will, and provides better service to businesses in dealing with customs and excise matters, we would move on to establish similar offices in other parts of Canada. This will bring appraisal and rulings with regard to customs and excise much closer to the businessman in Canada and he will not have to go to the trouble of sending to Ottawa any time he wants a ruling. I shall be pleased to answer any questions hon. members have with respect to the estimates.


Norman Platt Lambert: Mr. Chairman, in limiting his remarks the minister has followed the good
May 6. 1966

Supply-National Revenue example of one of his predecessors with whom I was associated for a number of years and who, on occasion, was even briefer than the present minister. Mind you, he also had a very efficient operation.
With respect to the figures the minister used regarding staff and improvement in staff, I think this has been a gradual process since the early years with the exception that with the development of technology within the last five years there has existed the possibility of a great reduction in temporary staff to process individual tax forms. This work is now concentrated in the processing centre especially built for the purposes of the department rather than as formerly in one of the ramshackle wartime buildings.
I propose to deal with a number of relatively minor points, and my colleague from Carleton also wishes to address himself to a number of matters.
One of the problems of the taxation division has been the difficulty in maintaining experienced assessors due to the improper classification of assessors within the civil service. The department was a training ground for accountants who, because of the limited pay and limited opportunity for advancement, were soon attracted elsewhere. The department trained many of them and many other people who also later went to work with outside organizations as tax advisers. I hope the minister can report that a more realistic approach has been taken toward assessors by the classification bureau and the pay research bureau.
These people are not merely accountants in the ordinary sense of the word. They have a tough job to do. One of the difficulties for the department is to have an inexperienced assessor coming up against the public. His job is not something that is learned overnight. I have always admired the tact and, from the accounting point of view, the skill of experienced assessors. The tax assessor or collector, by the very nature of his work, is not the most popular of men; yet much depends on his contacts with the taxpayer.
Exemptions for donations to charitable organizations have always been a knotty problem. I am glad to see this is now being placed on a rational basis in that any organization which will continue to enjoy the status of a charitable organization must report to the minister. There must be some control. This has created difficulties in some areas as a result of lack of experience. Church donations created the biggest problem but this is

now being worked out, and I trust that in a short period there will be general acceptance of the practice that has been introduced.
The third item on which I wish to speak is really a budgetary matter, the correction of which would require a proposal from the Minister of Finance. I am speaking about the administration of estate tax, and this is not the first time I have spoken about it. I have advocated an extension of the six month period for payment of estate tax to something longer, and not within the limited exceptions that are at present permitted.
Perhaps the minister may be able to tell us about the result of the amendments made about five years ago to the Industrial Development Bank Act which were designed to alleviate the problem of the forced sale or fire sale of equity interests in Canadian companies in order to provide liquid funds to pay estate tax. Many Canadian companies have been lost to foreign ownership because the principal shareholder or shareholders had to liquidate holdings under pressure in order to provide for estate taxation. A good case can be made for widening the provisions of the act to allow time payments in appropriate cases of shares held by individuals in closely controlled companies so that the shares need not be sold.
I know there are differences of opinion on this matter, and for some reason or another the administration side of the estate tax division is reluctant to have these files continue open. However, I urge that this be done because it is one area in which we can assist in maintaining Canadian ownership of equity stock in Canadian companies.
It will be interesting to see how the proposed re-organization works out on the customs and excise side. In Edmonton it would simplify matters and cost less if the customs and excise branch facilities were concentrated within the new postal facilities. At present there is a shortage of prime government office space in the Edmonton federal building, and the customs and excise branch occupies prime ground floor space. So far as the public is concerned, however, it is quite inaccessible. The bus service is poor and I think there could be savings effected by a concentration of these facilities and staff in the new postal terminal building so as to minimize handling charges. These are all the remarks I should like to make at this time. I may have some further remarks on individual items.
May 6, 1966	COMMONS
[DOT] (3:00 p.m.)


The Deputy Chairman:: The hon. member for Trois-Rivieres.
(Translation)


Joseph-Alfred Mongrain: Mr. Chairman, at the outset I wish to extend my most sincere thanks to the representatives of the New Democratic Party and the Railliement Creditiste who agreed to let me have the floor now because I must leave the house this afternoon for very serious reasons.
I would like to take this opportunity, Mr. Chairman, to say that the two independent members here appreciate the consideration which the house has shown them up to now in some trying circumstances. I see that respect for minorities has become a reality, possibly because some are saying to themselves that one of these days they might also be a minority. But, in any case, that respect exists, and I am very happy about it.
I hasten to add that I do not intend to take advantage of my colleagues' indulgence because I have only one thing to say.
All the more so, since 1 heard the minister tell us a little earlier that he was scared himself to see how efficient his department is. Imagine then how careful we must be ourselves if we must deal with that matter.
I would like to draw the minister's attention to one point. I get-and I think that other members do also-quite a lot of mail in which people complain about the way the minister's officials deal with the receipts for charitable donations. I know that it is an extremely difficult matter to settle. As a matter of fact, I had the opportunity to see that the minister takes that matter seriously, but I think that the standards that have been set are not realistic.
I even feel that to oblige the members of the clergy, of any denomination whatsoever, to give receipts for every donation, constitutes, in my opinion, interference in a field which should normally be surrounded with secrecy; by asking them to do that, we make their task much more difficult.
I saw myself lately income tax returns which had been sent back and in which large cuts had been made with regard to charitable donations, and it seems to me that those cuts are not always very realistic.
Would it not be possible to go back, within reasonable limits, to that practice-even if it was too generous in the past-of setting a percentage which would be allowed without
DEBATES	4823
Supply-National Revenue receipts, because there are always charitable or welfare campaigns in our municipalities for which there is no opportunity of asking for receipts. There are all kinds of charitable organizations, card parties, public subscriptions, etc.
I am thinking in particular about the head of a large family with children of 16, 17, 18, 19, 20 and sometimes more who are still studying and whom he has to support financially. His charitable donations, which he pays himself, are multiplied by four, five, six and sometimes they are multiplied by ten. Then, when he asks why the amount he claimed for charitable donations has been reduced, he is given this answer: if you want us to accept your figures, send us receipts. That is not always practical, nor possible.
I think I am not the only one who will raise the matter in the house, but I believe that the minister should, if my suggestion is in order, set up some kind of special committee to consider that situation, which would give a hearing especially to representatives of all charitable organizations, bona fide social organizations, in short representatives of all religions who might have justified representations to make on that matter.
It has been alleged, Mr. Chairman, that the committees of the house are overworked, and that, consequently, it was useless to set up any more. I have my doubts about that. It may be that a few committees have too much work, but I believe there are others that are not overworked. I could mention two or three-three committees-I am on, where a meeting has not been called more than twice since the beginning of the session. These could surely work a little harder. The fact that some members are not overworked was demonstrated recently in a news report where it is said that some arrogant young members are threatening to start a revolution within their party. Well, it might be more profitable to keep them busy, say, in the field under discussion, the automobile industry, and it would be a good thing to set up a special committee for all concerned to discuss charitable donations.
That would provide an opportunity to consider, not donations or subscriptions of $10, $15, $20 or $25,000 for which it is easy to get a receipt, but rather to discuss the case of small wage earners who distribute their donations by quarters or dollar bills. Everyone knows that charitable campaigns are very popular. And the little man has to finance a
May 6. 1966

Supply-National Revenue large family. In short, make a study of that kind.
I suggest it would be most appropriate to consider thoroughly the whole question, because it is settled in an arbitrary and summary fashion, and the taxpayer cannot help himself, because in most cases he is unable to get a receipt.


Maurice Rinfret: The hon. member for Kootenay West.


Herbert Wilfred Herridge: Mr. Chairman, as is my usual custom, I will not detain the house for any length of time. I do wish, however, to take this opportunity to thank the minister for his courtesy and promptness in dealing with all matters which I have had the opportunity to bring to his attention. I might say that he has had one or two rather peculiar questions to deal with, which he has dealt with in a very satisfactory way from the point of view of the member for Kootenay West and the people of the constituency he represents.
I would like to thank also the headquarters staff in Ottawa and the regional and local staffs for their work which, shall I say, goes unsung so far as the people in this country are concerned because by its very nature it has to do with figures, taxation, and things of that sort which do not have a very glamourous appeal to the country. I think these people should be commended for their devotion to this type of work throughout the years and for their efficiency and accuracy.
I cannot let the remarks on these estimates go by without making reference to my old friend, Mr. David Sim, who has retired from his duties as deputy minister of customs and exise; he was very fond of the country which I represent, and any time he visited the Kootenays he took every opportunity to tell me how much he enjoyed the country and the people. I am sure all members of this house will wish him a long and happy retirement.


Some hon. Members:: Hear, hear.


Herbert Wilfred Herridge: I use the word "retirement" in the symbolic sense, because I am sure there will be plenty of opportunities for him still to serve Canada and the community in which he lives.
At the kind invitation of the minister, with other members I went to the headquarters here, where we were taken through the data centre and where we saw all the machines which are absolutely beyond my capacity to

understand. I was brought up in a different
generation. Some of my colleagues might say that it is quite beyond me. I am not one of the intellectuals. I went to the Data Centre as an old farmer looking at some of the great mechanical improvements of the 20th century.
It was very interesting when we went from the place where the letters came in to the place where we saw them processed through the various machines and finally saw either the refund cheques-I didn't see any great number of those-or the returns going back to the persons who had made their returns to the department. It was very interesting indeed. Personally I think many people in Canada are unaware of the developments within the income tax branch, in particular the new developments with regard to the processing of returns, collections, and so on. I think understanding brings co-operation, just as I have mentioned in respect of other spheres of government, and it would be a good idea to publish some in expensive pamphlet to provide the public of Canada with information as to what happens in the data centre from the time a letter is received until a reply is sent out, perhaps to include some appropriate photographs and so on.
[DOT] (3:10 p.m.)
I do not believe in getting something for nothing. I was not brought up on that philosophy and I have never found it to be a very successful way of life. It is my opinion that Canadians would be willing to pay 25 cents or 50 cents for a booklet of this type containing information in respect of income tax returns. A large number of people I am sure would then have a better idea of what is happening regarding the collection of income tax and would appreciate the developing and improved efficiency within the department as a result of improvements in machinery.
At the same time I think it would be advantageous to bring regional and local staffs to Ottawa whenever the opportunity presents itself. Having talked with individuals in local offices I am sure they are almost as ignorant about what happens around Ottawa as I was until I went through the division here a few days ago. Their conversations, approaches and language all indicate that they think in terms of what has been the practice in the past. It would be a good investment on the part of the department periodically to bring some of these regional and local officials here to Ottawa for one or
May 6. 1966	COMMONS
two day courses on the operations of the income tax collection branch.
Let me now turn to less interesting subjects, from the minister's point of view. I shall not try him to any great extent. I asked a question today of the Minister of Finance, but once again I was nipped in the bud by Mr. Speaker. I feel it is appropriate at this time to ask the minister how he can reconcile, from a philosophical point of view, the collection of sales tax on centennial projects which are being built entirely as a result of grants from federal, provincial and municipal governments. An answer would be very interesting because it looks as though government funds are subject to taxation.
Every possible precaution should be taken to make sure that a thorough examination is made before any organization is given the right to issue receipts for income tax purposes on the basis of charitable or religious donations. This practice should not be extended beyond the intents and purposes of the Income Tax Act, and inquiries should be made when officials of the department do not have the information that should be available to them. There should be a strict insistence that proof of receipts for charitable and religious donations for income tax purposes must be provided.
The province of Alberta has made some rather drastic changes in its estate tax laws. I do not know whether that province is leading the way, but we in British Columbia look forward hopefully to enjoying the same advantage. Because of the changing practices that exist in various provinces, it is time the Minister of National Revenue made a review of this whole estate tax field. Federal practices in this regard should be fair and just in comparison to legislation that is being given effect to in the various provinces.
Having made those few remarks, Mr. Chairman, I shall now take my seat so that other members who wish to instruct and advise the minister will have an opportunity of doing so.


David Réal Caouette: Mr. Chairman, I have just a few comments to make on the estimates now before us, the estimates of the Department of National Revenue.
I fully agree with the statements of the hon. member for Trois-Rivieres (Mr. Mongrain) on charitable donations. For four years now we have been insisting every time these
DEBATES	4825
Supply-National Revenue estimates were before us, on overall legislation to cover charitable donations in a uniform manner all across Canada.
The law now provides that a taxpayer is entitled to donate up to 10 per cent of his net income and claim a deduction for that same amount. Now, in every case submitted to us in the past few years, most taxpayers who have complained to me claimed exemptions around 6 or 7 per cent of their income.
In nearly 90 per cent of these cases, the officials of the Department of National Revenue did not allow these claims, did not accept the exemptions claimed, or they granted the taxayers an exemption from $100 to $150, to which any taxpayer is entitled.
Now, if usages and customs of the officials of the Revenue Department are not to accept these receipts or these claims for charitable donations, it should be so stated in the house and not proceeded with secretly, in an underhanded way, as hypocrites, to make people believe that the Income Tax Act, as far as charitable donations are concerned, is generous to the Canadians who are making these donations to charitable institutions.
Mr. Chairman, the minister is well aware of the situation. I would suggest that the act be made uniform. Instead of saying that a taxpayer is entitled to give up to 10 per cent of his income for charitable donations, if it is felt that 10 per cent is too high, this should be reduced to 5 or 6 per cent, but it should be the same for all, for the whole population, so that everyone would be entitled to it. At present, everyone is not entitled to it. First, I note that the exemptions of $200 to $250 are not allowed this year.
[DOT] (3:20 p.m.)
Furthermore, I am told that from now on those charitable organizations must be recognized by the federal government.
But the legislation is not clear on that point. Will parish priests have to apply for a licence? Will they be given a collar to wear around their neck when they are issued a licence authorizing them to receive charitable donations? How does the government intend to apply that legislation? What does he mean by organizations recognized by the federal government? What will have to be done to be recognized? That is with regard to donations to charitable organizations.
Mr. Chairman, charitable donations are not made only in rectories. They are made outside also, for instance, to the Red Cross, any welfare association in a parish, the Boy Scouts or any tag day or apple sale. I think that people who give $1, $2 or $5 on such
4826	COMMONS
Supply-National Revenue occasions are making charitable donations. Social clubs, such as the Richelieu, Rotary and Kiwanis clubs who work tor underprivileged children, the poor, are charitable organizations-I am sure of that-but such receipts are not accepted. The money given to those people is not allowed. I think that the Income Tax Act is impossible to understand and can be taken to mean this or that, so that everyone is at sea. Even the minister does not understand the situation and we tolerate such administration.
With regard to another matter, I must say that for four years I have been asking the Minister of National Revenue to allow workers to deduct from their income the money spent to buy the tools they need for their work in any industry whatsoever. For instance, a mechanic should be allowed to deduct from his total income the cost of the tools he needs to work at his trade, and the same privilege should be given to construction workers, carpenters, woodworkers. Nothing is being done. There is discrimination there.
A doctor who buys office equipment, instruments, lancets to operate, can deduct such expenditures from his income, because it is considered that he needs them to practise his profession. But workers, carpenters, woodworkers, mechanics also have the right to purchase tools to work at their trade.
Why is such discrimination practised against the workers, against those who earn their living as honestly as any doctor or lawyer? And yet the doctor or the lawyer has the right to deduct from his income expenditures made to purchase office equipment or instruments.
Another thing. A doctor who must make visits, has an office 50 miles away and must travel by car, has the right to deduct his travelling expenses to practise his profession outside his house.
Strangely enough, a workman using his car in his work, in any industry, is not allowed to deduct travelling expenses from his revenue. He is told it is a normal means of transport. Is it not the same for a lawyer or a doctor? Why is this not considered by the Minister of National Revenue? These are facts and, in many cases, the income tax department makes arbitrary decisions concerning citizens as responsible as those allowed an income tax exemption or deduction.
Mr. Chairman, we have also called the minister's attention to the basic exemptions, from the income tax point of view. At the
[Mr. Caouette.l
DEBATES	May 6, 1966
moment, the government allows an exemption of $1,000 for single people and $2,000 for married people. We have been suggesting for a long time that this be increased to $2,500 and $5,000 respectively. Since taxes are necessary, let us tax those who have the means to pay and not those who do not.
There are, in Canada, United States industries and Americans who make money out of our natural resources and pay nothing or next to nothing to the Canadian government for their operations. These are the people who should fill the pockets of the Minister of National Revenue instead of the workers, the miners, the small settlers, the farmers, ordinary people who work developing our resources for the benefit of foreigners. Why not tax those who have the means, those who benefit most from the development of our natural resources, instead of taxing those who work like mercenaries for foreigners in Canada.
I understand the Minister of National Revenue has a huge income in comparison to his expenditures which are not too high. We are asked to give him a further $94,565,800, increasing his revenue to something like $9 billion. The administrative expenses of this department are not excessive.
Before resuming my seat, however, I should like to draw the attention of the minister to another point. Last March 23, the hon. member for New Westminster (Mr. Mather) asked the government what its revenue was from the sale of liquor, lager, ale, spirits and wine. According to the minister's answer, in 1965 lager brought in $106,394,832 in excise duties, spirits $145,268,424, and wine $4,204,677, for a grand total of $225,867,933. Furthermore, from January to October 1965 only, liquor imports brought in $27,668,505 in customs duties. Thus excise and customs duties together brought in a total of 252 million. A note at the bottom of the answer on page 3047 of Hansard for March 23, 1966 says:
Above revenue figures do not include the 11 per cent federal sales tax which also applies but is not identifiable with specific commodities.
Mr. Chairman, imagine an 11 per cent tax on the sales total. What a fantastic sum this tax must bring the Department of National Revenue.
In answer to the question of the hon. member for New Westminster who wanted to know whether the government was spending money to encourage public temperance and
May 6, 1966

support programs fighting against alcoholism, the government said:
Insofar as the Department of National Health and Welfare is concerned, expenditure on promotion of temperance and supporting anti-alcoholic programs was nil.
We make tremendous expenditures to enlarge hospitals and to cure sick people, tor instance, and this is in order. But nothing to educate the people. This is what I want to emphasize. I realize that it is perhaps not for the Department of National Revenue to decide on broadcasts over the C.B.C., but I would ask the minister, who perhaps gets $500 or $600 million a year from alcoholic beverage consumption alone, to impress on his colleagues that they should urge the government to have the C.B.C. provide free time so as to educate our younger people, and adults too, on the importance of temperance in Canada.
Mr. Chairman, I know that it is not the Department of National Revenue which will decide on such programs, but I wanted to point out to the house on how profitable the consumption or sale of alcoholic beverages in Canada is for the Department of National Revenue.
As far as the expenditures of this department are concerned, as I said, they are not excessive, as compared to the income which pours into the coffers of the said department.
In conclusion, I should like to repeat that, for instance, the section of the act governing charitable donations should be applied uniformly so that all Canadians without exception might be treated the same without any discrimination. This is the first point.
Second point: Our workers should be entitled to deduct from their income the cost of the equipment used in their profession.
Third point: Travelling expenses of workers being transferred, whether they use their own car or public transportation facilities, as in the case of doctors, lawyers, engineers or any other social class should be deductible.
Finally, we ask that basic exemptions be increased from $1,000 to $2,000 for unmarried persons and from $2,500 to $5,000 for married people and heads of families.
If such significant basic exemptions are granted to our workers, then the government will be able to claim that it has rendered a service, not only to one class of society, but to the whole country, because, in the final analysis, if workers have more money to spend, it is obvious that a large part of this money will return to the national treasury, since taxes
Supply-National Revenue are collected at every level of the Canadian economy.
The minister should consider this. Every year, he promises to do so, but once the year is over, he fails to keep his promises and to look effectively into the problem so as to achieve results.
Mr. Chairman, I sincerely believe that the Income Tax Act can be adjusted and adapted to the needs of the Canadian people, instead of taking advantage of them as at present.
Let this act be amended so as to deal fairly with the little people as well as the rich and vice versa, but let everyone be treated fairly.
[DOT] (3:30 p.m.)


Mr. Bell (Carleton):: Mr. Chairman,
32 years ago next month I started my first job, that of assistant private secretary to the then minister of national revenue. Since that time I have had what might be described as a filial feeling for the department and a most sympathetic understanding of the dedicated public servants who make up its staff. Consequently, to participate briefly in discussion of these estimates brings some nostalgic memories.
The hon. member for Kootenay West has mentioned that this is the first time the estimates of the department have been presented to the committee since the retirement of David Sim, the former deputy minister for customs and excise. To members of this house of all parties, Dave Sim, for many years the dean of deputies, was a model and an example to all public servants. I say to you, sir, that Canada has never had a more devoted, knowledgeable, impartial and intelligent deputy minister, and certainly not one so understanding and responsive to the role of parliament and of members of parliament. May I add that the department and the country is exceedingly fortunate in his successor, Ray Labarge. Neither has suffered from his early training in association with this House of Commons.
There are several matters, sir, which I should like to raise with the minister, matters diverse in nature, but each of significance to taxpayers generally, and most of which will relate to the taxation division. The minister is aware of my very grave concern about the lack of provision for refund or rebate of overpaid employers' contributions collected by the department under the Canada Pension Plan. These overpayments may arise in a number of ways. For example, wherever a
4828	COMMONS
Supply-National Revenue person receives an emolument from more than one employer, there will be overpayment. A member of parliament who receives a stipend or emolument from another source or sources will pay twice or more, and he may recover his share of the overpayment, but the payer may not.
Just this morning, sir, I talked with one man who now has Canada Pension Plan contributions deducted by 13 companies with which he is associated. He himself can get back the 12 overpayments which represent his share, but these companies are unable to recoup anything.
In the construction industry an employee might easily work for several employers during the one year and the extent of overpayment could be very serious indeed. Employers are entitled also to a refund when the employee fails to earn the minimum $600 for the year, or where an employee does not receive credit for the full $600 exemption.
I submit that the minister has taken a very casual approach to this problem. In answer to a question by the hon. member for Wellington South on March 16, as reported at page 2777 of Hansard, he was very cryptic indeed and not a little arbitrary. I say, Mr. Chairman, that it would be morally wrong for any individual to accept these overpayments and decline to make refunds or rebates and it is no less morally wrong for the government of Canada. If a private corporation converted funds to its own use, it would be charged in the courts. The government ought not to hide behind its immunity, while converting and misappropriating funds to which it has no moral right whatsoever.
I am not at all impressed by the suggestion that in the United States they have been unable to work out a system of refunds of employer overpayments. I say that it must be within the wit of the officials of the Department of National Revenue to work out a system without invading the privacy of the individual taxpayer. If the minister has a genuine desire to solve the problem, it can be solved. I believe the government of Canada must not be a party to conduct so immoral, so unjustified, that it would amount to conversion if it were done by a private citizen. Let the minister achieve the will to end this unjustified conversion by the government of funds which belong to the taxpayers, and a settlement of the problem can be achieved.
Now, Mr. Chairman, one of the minor irritations for which the present minister is directly responsible is the growing insistence

DEBATES	May 6, 1966
upon payment by certified cheque. During the past 18 months I have heard more taxpayers complain about this than about the amount of tax they pay. In my view this is simply administrative arbitrariness and personally I believe it is without colour of right. I know of nothing in the Bills of Exchange Act or any other act which enables the creditor, in the absence of some consensual arrangement, to insist that a debt be paid in any particular way. I say the practice of the department of sending back uncertified cheques has no basis in law and should stop. I see the minister shakes his head. Let him examine his forms. The practice in my view is impeding payment rather than facilitating it. The minister's tidy accountant's mind is simply self-defeating. I do not believe that the taxpayers like to be told that they should go to their bank to arrange payment. The taxpayer, in my view, has the right to pay however he likes and he should not be shoved around by the minister.
Then, sir, I should like to draw attention to an answer made to a question of mine on Wednesday, May 4, as it appears in Hansard at page 4688. The question is this:
1.	Will it be the practice of the Department of National Revenue to include the commuted value of a survivor's pension under the Canada Pension Plan in determining the value of a deceased estate for estate tax purposes?
The answer to this question is:
Yes, under the provisions of the Estate Tax Act as they now are.
The second question is:
2.	If so, upon what basis or principle will the commuted value be determined?
The answer is:
The pensions will be calculated, as far as possible, in accordance with existing regulations and tables.
The third question is:
[DOT] (3:40 p.m.)
3.	Will the government consider an amendment to the Estate Tax Act exempting payments made pursuant to the Canada Pension Plan from estates tax?
Of course, I got the answer which I expected I would get. The answer is that "this is a matter of government policy and if any changes are to be proposed in the Estate Tax Act, they will be announced at the appropriate time". I recognize that this is partly a policy matter and therefore primarily under the jurisdiction of the Minister of Finance. However, I think it is proper to say at this time that the inclusion of the commuted
May 6, 1966
value of survivor's pension under the Canada Pension Plan will frustrate a great deal of estate planning heretofore done. All persons would be well advised to re-examine their testamentary arrangements. Personally, I believe the tax revenue from this source will be relatively minor, having regard to the major nuisance to the crown and to the taxpayers. I, personally, would urge the Minister of National Revenue and the Minister of Finance to consider the total exemption of the commuted value of the Canada Pension Plan payments for estate tax purposes.
I have one further word about the estate tax. The present exemptions, in my submission, are obviously out of date and wholly obsolete. All costs have risen steeply since these rates of exemption were established. The exemptions today represent nothing like the value they did when they were established. Ontario has recently raised the widow's exemption to $75,000. I submit that this is the barest of minimums the government should now propose, and propose at this session of parliament. Personally, I believe the exemption should be considerably higher. May I submit, sir, that the same comments I have made may be appropriately applied as well to the provisions for exemption in relation to the gift tax of either $4,000 or one half of the difference between income and income tax payable and as well in relation to the once-in-a lifetime gift of a total of $14,000.
When the minister replies, Mr. Chairman, I should like him to give the committee some indication of the manner in which the tax collection arrangements with the provinces are now working out. Is he in a position to estimate the cost to the federal treasury of the services performed for the provinces? If so, would he tell the committee what that cost is? Are the provinces satisfied with the arrangements? Have there been any discussions about amended arrangements? If so, what was the nature of the discussions which have taken place?
Since we are so close to April 30, sir, one could hardly avoid saying a word about the complexity of the income tax returns. I think they have become a statistician's nightmare. I appreciate the problem of the Minister of National Revenue when the fault is really that of the Minister of Finance, who is making our tax structure so complex and so unwieldy. But the collection process in my view is likely to break down unless we can simplify the tax returns. I wonder if the
23033-306J
Supply-National Revenue minister, when he replies, will share with the committee his views on this matter One would hope that one salutary result of the Carter commission would be a less complex tax structure and much simplified tax forms. I feel we cannot simply go on and on putting more and more detail in tax forms which intelligent and thoughtful citizens have great difficulty in understanding.
In his initial statement, the minister made some comments with regard to the cost of collection of various taxes and duties. I think perhaps he should put on the record rather more detailed information as to the trend over, say, the last five years of the cost of collection of these various taxes and duties in the various sections of his department.
Then, sir, I should like the minister, if he would, to report to the committee upon the action taken to implement a proposal made in the Budget speech of April 26, 1965 when the hon. member for Davenport said, as reported in Hansard at page 436:
An important tax concession will also be provided to encourage industry to take new steps to prevent the waste products from their operations polluting our streams and lakes. This will take the form of an amendment to the Income Tax Regulations to permit capital expenditures made until the end of 1966 by businesses primarily for the purpose of preventing water pollution to be deducted at the rate of 50 per cent. This provision will also be reviewed following the report of the Royal Commission on Taxation and after we have the results of studies being made of the problems of pollution and the means of dealing with them.
I should like to ask the minister when these regulations were put into effect? If they have been, what is their nature? The last time I made a detailed inquiry, which was, I believe, in February of this year, they had not been put into effect. Yesterday, we witnessed, from the lips of the Minister of Mines and Technical Surveys, the cynicism and indolence of the present cabinet in respect of the enormous problem of water pollution. He indicated all this government wants to do is to educate where, in effect, no education is necessary. What they really want to do is to avoid the issue, remain inactive, remain complacent, in so far as that project is concerned.
Then, I should like to ask the minister if he has any plans to extend this scheme concerning capital cost provisions for water pollution to similar outlays to prevent pollution in the air, and in the waters of our ocean harbours.
I ask him, what action has he taken? Will he report to the committee in respect thereof?

4830	COMMONS
Supply-National Revenue
I think all of us in this committee recognize that the tax collector can never be a popular figure. In Canada I think we are fortunate in the integrity of our Department of National Revenue and in the quality of its staff. Such strictures as I may have are exclusively for the minister. I want, in conclusion, to suggest to him that he do not allow his new, added important duties as President of the Treasury Board to dilute the very major administrative responsibilities which he has as Minister of National Revenue.


Howard Earl Johnston: When I rose to speak a few minutes ago, I did not realize that the thoughts in my mind would have been paralleled so exactly by the member who has just sat down. However, I feel that the reiteration of some of these points will not be out of place at all. I should like to thank the Minister of National Revenue for his kind invitation to visit the data processing centre the other day. I had to decline the invitation because I was meeting a delegation of farmers at that time. I trust that the interests of that group will always be very high on my list of priorities.
The points I should like to raise are these: Having just recently completed my own income tax form, I was distressed at the tendency to increase the complexity of the form. I really do not see why the form cannot simply say of the provinces and of the federal government, "This is their tax", rather than getting involved in pretending that something is being handed back to us because the province has already taken it away from us.
We do not really expect gifts from the tax department. I do not believe the department should, in its forms, suggest this is what is happening. I have my suspicion that the forms for next year, following the Budget which was recently presented, will be even more complex, as a much greater effort is made to suggest that the income tax has not really been increased, but somehow we are not being given back quite as much as was the case last year. I am sure if I had visited the data processing centre I would have been made aware of the tremendous efficiency being built into our tax collection system. I did question the total result of that efficiency, though, when I received a complaint that refunds which were acknowledged last December have not yet been paid. It seems to me the revenue department might send along interest on any refunds held for a period longer than three months.

DEBATES	May 6. 1966
[DOT] (3:50 p.m.)
It is the practice of the income tax branch to charge interest if there is a delay. As the machinery becomes more effective, if there are cases where, for unusual reasons, the refund is delayed for more than a normal period of time, then I submit that the taxation branch should have the same consideration for the people to whom it owes money as those people have with respect to the department when they owe money to it.
One of the points raised by the delegation of farmers was a plea that the minimum of estate taxable be raised to $100,000. I suggested to them that they might advocate the complete abandonment of the estate tax concept I have always considered that to be iniquitous, especially when it is applied to the estate of a farmer who has spent a lifetime in building up a farm. Farming does not lend itself to get-rich-quick schemes or to shady practices. The value of a farm is usually accumulated very slowly and painfully over long years of enormous toil. Then, at the end of that time to have the whole future of the farm, as a unit, jeopardized because through rapidly increasing prices of land the farm becomes an estate, I think is unfair.
Despite the fact that all monies earned on the farm throughout the years have been taxed, and taxes have been paid on everything that has gone into the farm, the estate tax nevertheless is levied. The process of handing down farms from generation to generation is jeopardized by this tax. The desire of agricultural departments to propagate paying and functioning farm units is also jeopardized. Through the estate tax there is a tendency for viable farm units to be broken up at the time the original owner dies.
In this connection I think that the Alberta government has taken a lead in its proposals to reduce or totally eliminate estate taxes, if the federal government co-operates. I hope the minister and his department in the government will give this matter the fullest and most careful consideration, and that he will look at the estate tax picture as it applies to agriculture. There is not much point in waging a war on poverty if we remove incentive from farm people to form farms that will be units of some value.
The last point I wish to raise, and raise very strongly-and I reiterate the words of the previous speaker-is the point regarding the
May 6, 1986	COMMONS
Canada Pension Plan, and especially the requirements that require the employer to contribute and that allow a refund of the contributions respecting employees who have earned less than $600 per annum.
The minister in his letter of April 4 points out:
The plan does not provide for a refund of an overpayment to an employer who has made contributions as required on pensionable remuneration paid to an employee.
Here again the principle is important, although the present procedure is wrong from the word go. By failing to refund overpayments the plan strikes particularly at the tourist industry in a province such as British Columbia, where there is a short season and where many employees are hired for the minimum period. Many employees do not earn the $600 per annum, because of the extreme shortness of the season.
This is happening at a time when both provincial and federal governments are urging the development of every facility in order to provide for the vastly increased number of tourists who will come to Canada. I think it important that the plan be revised as quickly as possible in order to allow refunds. The letter from the minister goes on to say:
During the initial period of the operation of the plan we intend to observe how the various provisions work out in practice. After this period of observation we shall be in a better position to consider any amendments that may be appropriate.
However, we know that the concept is wrong. The refund is not paid. Yet, if the employer fails to make a contribution, then the entire weight of the Department of National Revenue is brought to bear on him. If his contribution is delayed, interest is charged. The Department of National Revenue makes very sure that it collects these payments from business people very quickly. I do not at all see why, if the department over-collects, it should not then be obligated to refund this amount. If you are considering only one employee, the refund may seem small. However, it would not take a very large business to have ten employees. During the height of the tourist season a small employer may often employ that many persons. An overpayment for each one of them would mount up. It is wrong that this is not refunded. The employer who has his own business, by the nature of the plan is forced to pay the entire contribution. He also pays to the plan half the contribution of all his employees. On top of that we ask him to subsidize the plan by a further gift, through
DEBATES	4831
Supply-National Revenue the overpayment with respect to the employees.
I do not believe that we are in any way justified in asking individuals in this country to subsidize the plan for the rest of us. I urge the minister to give this matter his most urgent and his most careful consideration.


Mr. Baldwin:: Mr. Chairman, I have a very brief comment to make on these estimates. I want to deal with a matter I raised last when the then Minister of Finance introduced the amendments to the Income Tax Act. I particularly want to deal with the amendment which provided for the first time that a farmer could claim a deduction for clearing land.
I welcomed that at the time. By reading the amendments I was struck, by the idea that there might be some difficulty in interpretation, and that some farmers, as well as those people who help them file income tax returns, might be confused when the returns are made out. This has been confirmed, because I have had one or two letters on the point. The issue has arisen. I might add that I hope the minister when he replies will be kind enough to indicate answers to my questions.
[DOT] (4:00 p.m.)
Can the words "for clearing" be interpreted to include or to cover the debrushing of land, the cultivation of the land and also the breaking of the land? The word "clearing" still has a distinct connotation in my part of the country, one of the last parts left where homesteading remains fairly active. In the last four or five years several thousand new homesteaders have come in and most of them have been obliged to clear the land on which they settle. The brush has to be taken off and the ground has to be broken and brought under cultivation before any revenue can be expected. So this is an important matter. These people who take on the formidable task of clearing the land and making it suitable for cultivation are surely entitled to the full benefit of the widest interpretation of this section. It used to be said in my part of Canada that pioneering of this kind needed a strong back and a weak head. Possibly it would be said by some of my constituents that at least the last half of that formula could apply to me. Be that as it may, I should be grateful if the minister could look into this question, consider the proposition I have made, and give me an answer.
After the clearing of the land has beer-completed it takes two or three years befum
May 6. 1966

Supply-National Revenue any revenue can be expected. I would hope that by averaging income, or by giving farmers a right to select a particular year as the year in which a deduction would be claimed, an arrangement could be arrived at of some benefit to those who find themselves in the position I have described. I would ask the minister to give some thought to this problem.


Robert Jardine McCleave: The question I wish to raise can be briefly stated. I realize that the Minister of Finance is the minister directly responsible for the Income Tax Act; but what I have in mind also relates to the collection of income tax, which is the somewhat more grisly occupation of the Minister of National Revenue. It would be in his department that most difficulties of this type would be directed, and I am sure a considerable correspondence exists in the department on this subject.
This matter was reported to me by a man in my own area whose wife was confined to hospital for two months last year. Since there are three small children it was necessary for outside help to be engaged to carry on housekeeping. If this woman had been ill at home and if a nurse or a nursing assistant had been employed to look after her, it seems clear under the income tax regulations that the man would have been allowed tax relief by way of deduction in respect of the money so spent. But the wife was in hospital during a time he had to employ a housekeeper.
It may be possible to draw a fine distinction between a woman being cared for in hospital and a woman being cared for in her own home. But I do not think such a line does, in fact, exist. It must have been a comfort to this woman to know that her children were being properly cared for in her absence. It must also have been a great help to the homeowner. But the department, as it is bound to do, advised the man that he could not make a claim in respect of the housekeeper when filing his income tax return. I suggest that probably hundreds of Canadians are involved each year in situations such as this, and that it is worth considering whether some tax relief could not be afforded in such cases.


Winona Grace MacInnis: wish to raise two points. The first has to do with a matter I raised earlier in the session-Canadian employees of foreign embassies in Canada who are not eligible to join the Canada Pension Plan. Earlier this session I asked why such people could not enter the plan as self-employed persons pay-

ing the whole assessment themselves, and the Minister of National Revenue promised to look into the matter.
I have been approached by an employee of one of the foreign embassies in Canada. She is a native born Canadian and she feels she is being discriminated against in her own country. She is willing to be classed as a selfemployed person, but she does feel that though she works for a foreign employer she should have the right to come under the provisions of the pension plan. A number of other Canadians are in a similar position. They feel that ways and means should be found to enable them to enrol in this plan, particularly since they are working in their own native country.
The other matter I wish to raise concerns this question: When is an employer not an employer? The answer appears to be: When she is a woman. I have had many cases brought to my attention of women who are working outside the home but who are classified as employers in connection with the Canada Pension Plan. They have to pay the assessment of 1.8 per cent on behalf of their household help.
Let me give the committee details of one of these cases. Here is a woman, married with two children. Her husband is working and she, too, is working outside her home. From her salary she pays her housekeeper $135 a month. Of course she has also to pay the contribution of 1.8 per cent on the housekeeper's account. She is taxed at the single rate, so she pays about $80 a month in income tax. Under the Canada Pension Plan she is called an employer; yet she is not allowed to be an employer under the Income Tax Act.
This woman points out that under the Income Tax Act employers are allowed deductions for expenses of all kinds. The expense involved in paying a housekeeper is an essential one in the case I have just mentioned, because the woman cannot go to work unless she has household help in looking after her husband and the two children, who still need care at home. I am sure the minister will remember the representations from delegations of women from coast to coast urging that a deduction ought to be permitted in cases such as this to professional women doing work outside the home.
[DOT] (4:10 p.m.)
I suggest this discrimination is most unfair. It means that the government is still thinking in terms of an economy when most women
May 6, 1966

were in the home working, and their husbands salaries and expenses were the only things that had to be taken into account. Now more than a quarter of the married women are gainfully employed outside their homes, and by 1970 that figure will rise to half the married women.
I have no intention of raising the whole question of allowances for help within the home. It is something I should raise on the proper budget resolution. The only reason I raise this particular matter, however, is that I feel it comes under the Minister of National Revenue, since collections for the Canada Pension Plan fall under his jurisdiction. I would most earnestly ask that he try to find ways and means, which apparently the Minister of Finance was not able to do, to correct this situation. I think the minister could find ways and means to provide that a woman, who is declared an employer under the Canada Pension Plan, is also declared an employer under the Income Tax Act, so that she may not be discriminated against, and may have the right to list her expenses of employment in the same way that any male employer is permitted to do in connection with his income tax.


David Vaughan Pugh: Mr. Chairman, my interest is in Hal Banks and his income tax payments. I have asked questions about this previously and at one time was assured that in Quebec a hypothecate had been put on certain property of his. Since he has departed from Canada I want to be sure that a plaster was put on his property to cover any income tax he had to pay to Canada. I understand there is a question as to his status as a Canadian citizen for income tax purposes. Did he file his returns up to the time he left? Has he paid his taxes? If he has not filed a return has the government taken steps to assess the amount due and owing and, having done so, has the government relied on the hypothecate placed in the province of Quebec?


Mr. Brewin:: Mr. Chairman, the hon. member for Carleton has already raised the matter about which I wish to speak, and if a remedy for the situation could be effected I think the public image of the government would be improved, an objective no doubt close to the minister's heart. The problem is the delay in making rebates in cases of deductions at source, where overpayments have been made to the department.

Supply-National Revenue I have in mind a particular case about which I have written to the minister, although he may not yet have received my letter. I am sure however that in his usual efficient manner he will have somebody look into it. It concerns a man who was employed by the city of Toronto and was injured in an accident in 1964. As a result, he was able to work for only eight months in 1965 and had to cash in on a private pension plan. From the payment made to him under the pension plan over $200 was deducted, which eventually will come back to him. In addition, from his income nearly $180 extra was deducted, so that the government owes him something in the neighbourhood of $400. He filed his return in February and has not heard a word about it since.
The minister may tell me that this sort of delay is inevitable, and that the mechanical system now used cannot ensure a more rapid return. But when the ordinary taxpayer owes the government money he gets plenty of letters telling him what will happen to him. If it is overdue he has to pay interest. But where the reverse situation obtains there is not the same speed, and a sum of $350 is a lot of money to a man with a modest income. This particular case is only an illustration of many complaints I have received. In the interests of good public relations, if rebates can be speeded up, then this ought to be done.


Mr. Fairweather:: Mr. Chairman, it has been my privilege to work with the regional offices and I have always found the officials to be understanding and extremely helpful. But now, with the new tax data centre, or whatever it is called, it seems that the god of efficiency is being worshipped in place of-if there is one-the god of humanity. The minister shakes his head.
However, I have discussed this problem with many of the minister's officials in various regions who have an idea that the tax data centre does not really pay for itself and that the old system-here I am, a Tory, talking about the old system-the old system of employing people for three months of the year to process returns and authorize rebates was, believe it or not, more efficient and quicker than the present system operated by the processing centre. I would like to know whether it costs the government more money now to collect taxes than it did under the old system?

Supply-National Revenue


Edgar John Benson: Mr. Chairman, I believe in my opening statement I gave statistics indicating the great decrease in costs and in the number of employees over the past several years.


Robert Gordon Lee Fairweather: I regret I have not been able to follow all of this afternoon's proceedings, as I was otherwise engaged, but that is wonderful news: We have saved money. I am still not sure, however, that the human aspect has been preserved. That is a matter of judgment between the minister and those who are in consultation with the taxpayer.
I do not believe the cliche-and I say this sincerely-that the government is just gobbling up things indiscriminately. I bring this question up because of the very good relationships the taxpayer has had when the basis was a regional one, and not a centralized machine. In the coal mining area of Minto and Chapman in New Brunswick, for many years the minister's department allowed a reasonable deduction for miners' clothing and lamps and other necessities. Just two years ago, I believe, this deduction was withdrawn. I have brought this matter to the attention of the Minister of Finance, and I now bring it to the attention of the Minister of National Revenue. There has been no diminution in respect of the expense the coal miners have in furnishing themselves with this equipment. I would hope that the minister would look into this problem to see whether it is possible to restore the deduction. I believe the allowance was an amount of a couple of hundred dollars a year; it is not a huge amount from the standpoint of the government, but it is a sizeable amount to the taxpayer.
[DOT] (4:20 p.m.)
While I am on this subject, it always has intrigued me why the professional man-the lawyer, the doctor, and so on

is able to deduct in various ways either his library or medical equipment, and yet the government discriminates against a person such as a motor mechanic when he offers himself for work, or is self-employed by preference, and chooses to use his own tools. This is an administrative problem which could be overcome instantaneously, if the minister would snap his fingers. He is a man of ability and somebody said a man of humanity. Will he extend this exemption to motor mechanics who are engaged in their lawful occupation?
Perhaps my next question already has been answered, and if so I shall sit down. However I should like to know the average number of

DEBATES	May 6, 1966
tax appeals, say in the last five years. If that is a toughy, let us make it three years; I am easy, too. I should like to know the percentage of overpayments of tax and the percentage of underpayments. There is a most interesting analysis of this in a recent issue of the Reporter in so far as these statistics apply to the United States. I should like to have them for Canada.
I remember that some time ago when the act was amended to provide ease and cheapness of appeal procedures, this matter met with great approval across the country. I should like to know how many appeals there are and whether, in the minister's opinion, the appeal procedure is as simple and as cheap as it might be. If not, might I suggest the establishment of regional appeal boards-and here I am back in the regions, and the minister will not like this, although it is one area I like-so that appeals can be handled with a minimum of expense and inconvenience to the public.
Lastly may I remind the minister, although I do not think he needs reminding that, after all, the government is a government of laws and not of men. This cliche has been stated many times, but I think we have an obligation to repeat it: No citizen ever should be at the mercy of the official. That is the role we should play as members. We should see that there are-and I hope the minister can tell me there are-efficient and reasonable remedies for the citizen when he feels aggrieved.


Mr. Monieiih:: Mr. Chairman, I shall be very brief. Following the comments of the hon. member for Carleton, I should like to add a word or two. This of course concerns deductions by employers on behalf of employees, and also the matter of the deductions not being refundable in the case of dual employment, and so on. He mentioned the case of one gentleman who was having deductions made by 13 employers. This, I agree, probably is an exceptional case. I should like primarily, however, to bring to the attention of the committee the construction industry, where possibly many people fill the same position over the term of a year. Deductions must be made from each one, and where that person has worked a sufficient length of time in other positions as well, his pension will be overpaid by the employer, or several employers, but not the employee. In the case of the employee it is refundable.
My comments go back to the time when the Canada Pension Plan was before the committee, and I recall this question being raised. If
May 6, 1966

I am mistaken, I will be glad to be corrected; but I am quite sure the reply we were given to our queries, concerning why this procedure was being followed and why no rebate of overpayments of deductions could be made to the employer, was to the effect that the United States never had found a way, that this was the procedure in the United States, and their plan had been in force since 1934, 1935, 1936, or something like that. We were told they never had found a way to make these overdeductions refundable.
I think this goes back to the horse and buggy days. I recall following my profession for many years at a time when certain practices were considered to be difficult. But in these days, with the electronic computer and all this other modern equipment, I cannot see any reason why some way should not be devised to compute these overpayments by employers, and as a consequence make them refundable. I believe at that time the answer was to the effect also that these overpayments were taken into the actuarial calculations of plan; but, to me, this does not seem to be sufficient reason to justify these overpayments.
[DOT] (4:30 p.m.)


Mr. Lalulippe:: Mr. Chairman, I will not take too much time. I simply want to share my impressions on the income tax form.
I believe this form should be redesigned, because as it now stands, it entails certain inequities.
First, there are two forms: one for individuals and one for institutions and corporations. Why two forms? Why not make them more simple and combine them into one? Only one form, so that everyone would be on the same footing. If there are now different classes in society who enjoy some protection from the Department of National Revenue, that is not equitable. It is not fair. If some citizens are paying too much tax while others are not paying enough, let us have an adequate form and let it be used by everyone and let everyone be treated on the same footing.
It is not because I am in favor of taxes. On the contrary, deep in my mind I think taxes are robbery, and the way in which they are collected from the individuals is depriving them of the purchasing power they need for their livelihood. Some people who pay their taxes are unable to pay their debts. And it is considered normal to make them pay their taxes and to leave their debts outstanding.
Supply-National Revenue
There are small companies and small industries that have paid a lot of taxes and that are unable to meet their debts, while some large companies have a certain separate tax and pay less, and they are entitled to build up reserves, declared and undeclared reserves. They are not overly bothered, those reserves are not declared. In addition, there are four or five kinds of reserves, allowing these institutions to invest money in other places, on the stock market for instance, or in other bodies which do not pay any taxes and which are passed off as capital surplus which is not taxable. That is where the tax form should be redesigned in order to put everyone on the same footing. There should be some degree of justice in the tax form so that everybody would be equal and on the same footing.
In the province of Quebec, for instance, as concerns the sales tax, those who collect that tax for the province of Quebec are receiving 2 per cent.
Well, the federal government has the taxes collected by industrialists, businessmen, employers and those employers are required-the tax forms are so complicated and the situation is so involved-to pay accountants, qualified men to collect the tax and prepare tax returns.
In the case of the general tax collection, the income tax or the 11 per cent tax and others which the federal government levies, nothing is given to those people who are collecting for the federal government.
If the province of Quebec has seen fit to give 2 per cent, why should the federal government not give something to the industrialists or the individuals for collecting? This would prevent an increase in the cost of goods. All those operations are included in the cost of goods. It is always the little people who stand the racket and pay taxes.
When one considers the taxes paid by corporations and individuals, one finds that individuals and workers pay much more than corporations. There are approximately 80,000 corporations in Canada. There are large corporations with a big turn-over which invest billions and hundreds of millions of dollars, and yet pay much fewer taxes than the Canadian workers. This is unfair, and that is why I say there should be only one income tax return form, a simple one, simplified in all respects. Let us simplify it as much as possible and we shall give satisfaction.
With regard to the 11 per cent tax and other taxes collected, I should like to point
4836	COMMONS
Supply-National Revenue out to the minister or his representative that industrialists or businessmen who sustain losses have to pay the 11 per cent tax just the same. If people go bankrupt, if the situation is confused, it is because the system is defective. It forces people to go bankrupt and compels them to pay the 11 per cent tax just the same.
I would ask the minister to consider the matter of bankruptcies, because small businessmen or dealers who suffer such losses also have to pay the tax. This is further injustice. This tax should be deducted from the loss. The state must be able to take its share of bankruptcies just like individuals, small companies or small industrialists.
I would have many things to say on tax collection in Canada. There are so many kinds of taxes, direct and indirect, that we do not know which way to turn. The taxpayer pays more taxes than what it costs him for his living. It costs him less to live than the taxes he pays. The citizens are so taxed now that taxes will have to be reduced, because they are much too high. Instead of being reduced, they are increased, and at the same time, the cost of living is rising. The government creates inflation because of the taxes it levies. In the case of those who charge excessive rates of interest, nobody protests against that, against these companies; there is something wrong in our economic situation. The governments are now endorsing and protecting high finance. And the people are fleeced. The people are on the verge of bankruptcy. The people are so heavily taxed and indebted that they do not see the day when they will be able to get out of it.
For some years we have been saying that there is prosperity in Canada. It is because the government and the citizens have been allowed to run into debt that the Minister of Finance (Mr. Sharp) has to impose restrictions on credit and investments; citizens are too heavily indebted.
Mr. Chairman, I shall conclude my remarks by advising the Minister of National Revenue to simplify as much as possible and to do that immediately, because our people can no longer afford such absurd and abominable taxes. They must at least have the right to live. This right is taken away from them as well as the right to breathe, they are forced to get along on credit, with borrowed money.
The Minister of National Revenue should open his eyes. This concludes my remarks.

DEBATES	May 6, 1966
lEnglishl


Mr. Nasserden:: Mr. Chairman, there are only two subjects to which I wish to refer. The first relates to a duty or tax of some kind on farm equipment parts imported from the United States and other countries. Many people feel this is an unfair tax because these parts are used for machinery used in the production of farm produce. Unfortunately I left my file in Saskatoon relating to this tax but I will provide the minister with this information at a later date.
The other subject upon which I wish to comment relates to income of dairy farmers who obtain cash payments for fluid milk at an early point in a production year, while at the same time a reserve is established to their credit by the company to which they deliver their products.
[DOT] (4:40 p.m.)
In some cases the department has ruled that this reserve is taxable at the time it is set up to the credit of the individual producer, and in other cases they have allowed the producer to elect to consider it taxable at the time the company actually passed it out to him in the form of cash. It has been brought to my attention by one or two people that they feel they have been discriminated against because the department in their cases has asked that the reserve be considered as cash for the year in which it was set up to their credit. I do not know whether I need say any more in this regard. Perhaps the minister is familiar with this problem and can deal with it, and I will leave it at that.


Eric Alfred Winkler: Mr. Chairman, I have just a few words to say with regard to these estimates. A contribution by another member brought this point to mind. I refer to the situation in regard to itinerant construction workers, about which I have received a tremendous number of complaints. The complaint is that these workers are not allowed to deduct as an expense the cost of transportation from their home to their place of work, as other businessmen are permitted to do. An hon. member pointed out that professional and businessmen are allowed to make these deductions to a substantial degree, and in my opinion a percentage of the total of these expenses should be deductible in the case of these construction workers. Because of the field in which they are employed, their income is not as great as that of professional and businessmen, and I think it is only right and
May 6, 1966	COMMONS
just that these people be given consideration in this respect.
I should also like to bring this matter to the attention of the minister. This is a difficult area, I know, but many people in the country believe that in those special instances where field officials are sent from the offices of the department to carry out investigations, they should employ a much greater degree of diplomacy. Of course if a taxpayer believes, rightly or wrongly, that an injustice has been done to him, he usually becomes very annoyed if Department of National Revenue officials come to exert pressure upon him to pay the proper taxes. Most other departments of government are set up to serve the public, and consequently these people feel that if taxing officials have unilateral powers in this area, a greater degree of diplomacy and propriety should be employed. I draw this matter to the attention of the minister because these complaints come to us as representatives of the people.


Edgar John Benson: Mr. Chairman, a good many subjects have been dealt with this afternoon in the field of taxation. To meet many of the suggestions would require changes to be made in the Income Tax Act. This responsibility is, of course, that of the Minister of Finance. However, I can assure hon. members who have made representations in this regard that I will bring their representations to the attention of the Minister of Finance. Indeed hon. members will have an opportunity to bring their questions to his attention in the house when we are debating the budget resolutions in the very near future.
I should like to deal quickly with some of the points that have been raised, and I shall try to deal with as many of them as I can. The hon. member for Edmonton West raised the question of keeping good staff in the Department of National Revenue. It is because of the high quality of staff in the department, the professional people such as chartered accountants and lawyers who come to us and receive good training in the field of taxation, that it is difficulty to keep them. The reason for the difficulty in keeping staff is that salaries offered in industry and the professions are often higher. However, our recruiting has been going along reasonably well.
I believe that the new system of civil service classification which will be coming into effect soon, together with some of the practices Treasury Board have authorized to 23033-307J
DEBATES	4837
Supply-National Revenue assist in recruitment and maintenance of staff in the taxation division, will be very helpful. I am hopeful that we will be able to build up and maintain as good a staff as we have always had and indeed, if possible, improve the calibre of the staff in the department.
Several hon. members raised questions with regard to charitable donations. When the Minister of Finance introduced his budget it included some proposed changes with respect to the handling of charitable donations under the Income Tax Act. The Minister of Finance indicated at that time that I would make a full statement when the budget resolution came forward. Indeed, Mr. Chairman, I intend to do that. I do not think I could add anything today to what I have said in the last couple of years about the problems we have had in regard to charitable donations deductions. I would point out, however, that we have reached a situation where the system is much better than it ever has been with regard to the misuse of deductions for charitable donations.
A question was raised with respect to estate taxes and an extension of the period for payment. I can assure the hon. member for Edmonton West that if the Minister of Finance decided to change the system of payment, we in the Department of National Revenue could administer it, although it does, as the hon. member knows from his previous experience with the department, create some difficulty. I would point out in this regard that 75 per cent of estate taxes go to the provinces. So the hon. member is actually asking the provinces to take this money over a longer period of time. The hon. member for Edmonton West also raised a question with respect to the customs office in Edmonton. I will have my officials look into the situation which was brought to my attention.
The hon. member for Kootenay West raised several questions, one of which concerned the number of refunds made by the department. In 1965 we made 4,200,000 refunds out of an estmiated 7,100,000 returns. There were
1.210.000	errors in these 7,100,000 returns. Payments were received with returns in
1.800.000	cases and out of the 7,100,000 returns-


Marcel Joseph Aimé Lambert: Who found the errors?


Edgar John Benson: This is done by computer. The errors are thrown out. A question was raised, I think by the hon. member for Royal, with regard to the slowness of making refunds to taxpayers. If there is an error in the return,
May 6, 1966

Supply-National Revenue the return goes back to the district office and the officer at that office then deals directly with the taxpayer. The mechanical work is carried out at the data centre. Officials at the district office are the people who make themselves always available to taxpayers.
The hon. member for Kootenay West raised a question with regard to the payment of sales tax on centennial projects and asked for a supporting philosophical argument. I cannot give the hon. member a philosophical reason for this tax being collected, but would point out that we do it because the law requires it to be done. Sales tax is applicable to these projects, and therefore it is the duty of my department to collect it.
The hon. member for Carleton raised a question that is, or course, a matter of great interest, namely the over-contribution of employers to the Canada Pension Plan. The hon. member indicated that he felt we were swindling the public, and so on, in this respect. I should like to assure him that all we are doing is applying the law as this parliament passed it. This is not done by regulation.
[DOT] (4:50 p.m.)


Marcel Joseph Aimé Lambert: Over protest.


Edgar John Benson: This question was gone into very thoroughly in committee. I believe there are several pages of discussion in committee on this particular point. I can assure hon. members that we have not given up our search to find a system of refunding, but if and when a system is found it will require a change in the law.
The hon. member for Carleton said the government would keep this money, which is not true. The money goes into the Canada Pension Plan fund and it is turned over by investment to the provinces, and it will ultimately be paid out in benefits to those covered by the plan. Therefore the government as such, does not keep any of this money.


Jay Waldo Monteith: May I ask the minister one question. Was I correct when I recalled an answer in committee to the effect that actually these overpayments were taken into the actuarial figuring of the plan?


Edgar John Benson: I cannot at the moment recall this point, but I believe that they probably were. As you know, involved are large amounts of money, but relative to the total amount in the fund the over-contributions are not very big. The collections, as I recall, were estimated at $500 million in a year, and the over-contributions, according to the estimates given by the committee, would be


about $5 million a year. So it would not have a serious effect on the actuarial computations of the fund.


Stanley Howard Knowles: I believe the member for Perth was correct in his statement that that answer was given.


Edgar John Benson: Yes, perhaps that is correct. It is not a simple matter to refund the amounts involved. The hon. member knows some of the difficulties involved; they are indicated in the evidence of the committee. However I shall be pleased to go into it at length at any time. It is not simply an accounting problem, where a computer can come up with an answer, because you get into the problem of which employer to give back the funds. Suppose someone worked for five employers during a year and the employers had overcontributed, you then run into the question of which employers to give the over-contribution back to, and in how to calculate the percentage entitlement of each. There are some really difficult problems involved. I should like to assure hon. members that we have not given up on this, although I have not been able to see any simple solution, from all the suggestions that have come forward to us, and have been developed in the department itself to date.
There was another question raised by the hon. member for Carleton, and that was the matter of the requirements of certified cheques by my department. The only place where the department requires certified cheques to my knowledge is in employees' deductions, where the money is sent to Ottawa rather than deposited in a bank to the credit of the Receiver General. The reason for this is that we entered into a system last year which has been generally accepted by most employers in Canada; I believe something like 90 per cent have accepted the system as being simpler. What is involved is that instead of having to make up a form every month and sending it off to Ottawa, they could simply tell the bank, at the time they made up their payroll or when they made a deposit, the amount of money they had deducted from their employees, which would be immediately credited to our account in the bank and transmitted to Ottawa. I should like to point out that this has worked out very well and most people are quite happy with it. It has also resulted in quite a saving in labour to the department.
I heard an estimate the other day from an official in the department that where it used
May 6, 1966	COMMONS
to take 668 man-days to account for this each month, it now takes one hour of computer time to run through all the employee tax deduction remittances in Canada. The reason we require certified cheques in this particular instance is to be fair to the person who is using the other system, because if he went to the bank and said, "I owe the Receiver General so much for employee tax deductions", it is immediately deducted from their account. On the other hand, supposing a person chooses the other system, which they can, and payment of a sizeable amount of money is mailed to Ottawa from Vancouver, they would have the use of the money for perhaps three, four or five days until the cheque was cleared through their local bank. The reason for the certified cheque was so that the people depositing money in the bank and crediting the Receiver General would be in exactly the same position as those sending money direct to Ottawa.
With respect to the water pollution regulations, these were amended by order in council dated January 19, 1966 and I will be glad to supply the hon. member for Carleton with a copy of them. The regulations apply to 1965 and subsequent years. I believe the Minister of Finance indicated in his budget speech that this program was going to be carried on.
The hon. member for Peace River raised the question as to whether clearing includes debrushing, breaking and cultivation? The answer is yes. If a farmer does not have a profit in a particular year, then he can deduct the cost of clearing for the year and, through the averaging process available to all farmers, he can receive credit in the years he has income.
The hon. member from Halifax raised the question as to housekeeper deductions and the hon. member for Vancouver-Kingsway raised the same question from a little different aspect. This of course would require a change in the law to allow deductions for housekeepers. I know representations have been made to the Minister of Finance and to previous ministers of finance with respect to this particular matter, and it was decided that government would not act in this regard.
The interesting question which the hon. member for Vancouver-Kingsway raised, with respect to a woman who was deemed to have been an employee under the Canada Pension Plan and an employer at the same time, is a normal situation. One can be both an employer and an employee, but employers do not as she indicated, have the right to
DEBATES	4839
Supply-National Revenue deduct any amount of expenses that they want. The only expenses they can deduct are those involved in earning their business income.


Winona Grace MacInnis: I
was referring to the case of a woman helper.


Edgar John Benson: But she is not deriving her income from the business; she is deriving it from employment. She is both an employer and an employee. On the employer's side, by having a housekeeper, she does not have any income. She is receiving her income as an employee. However, I can assure the hon. member that this cannot be done by regulation; it would require a change in the Income Tax Act.
A question was raised by the hon. member for Okanagan Boundary with regard to Mr. Hal Banks. I cannot give him an answer because I cannot give information with regard to individual taxpayers, other than to say that we make every effort to collect all the taxes due to the government of Canada. I was able to give him information with respect to the hypotheque that we put on Mr. Banks' home in Montreal, because this was a registered public document. However, to indicate here whether he has paid his taxes or has not, or has filed his return, I just cannot do, the same as I cannot do it in the case of members of parliament or any other taxpayers in the country.


Winona Grace MacInnis: Mr. Chairman, I should like an answer to my question about the Canadian employees at foreign embassies.


Edgar John Benson: Yes, I would be pleased to answer that question. Such employment can be made pensionable if the foreign government signs an agreement with Canada to have such employment made pensionable. We are attempting to get them to do that, but it was considered inadvisable at this time to permit persons to contribute as self-employed and pay 3.6 per cent because the foreign governments might not then wish to sign an agreement. However, we are hopeful that they will agree to have their employees covered by the Canada Pension Plan.
[DOT] (5:00 p.m.)


[Stage Direction]
Item agreed to.
Herman Maxwell Batten: This concludes the main estimates for the Department of National Revenue for the fiscal year ending March 31, 1967. It being five o'clock, shall I rise and report progress?

May 6, 1966
Business of the House
Progress reported.
Resolutions adopted in committee of supply this day reported and concurred in.



BUSINESS OF THE HOUSE

George James McIlraith: I wonder if, before we proceed with the consideration of private members' business, I might be permitted to announce the business we propose to submit to the house for consideration on Monday.


Mr. Deputy Speaker:: Is it agreed?


Some hon. Members:: Agreed.


George James McIlraith: On Monday, the first item I propose to call is No. 56 on today's order paper, the resolution preceding a bill to reorganize government departments; item No. 12, second reading of a bill to amend the Northwest Territories Act; item No. 13, second reading of a bill to amend the Yukon Act; item No. 5, second reading of a bill to provide for the establishment of a fund for the economic and social development of special rural development areas. If we conclude those matters we would take item No. 49, a resolution preceding a bill to authorize certain payments to the provinces. If, by any extreme good fortune, we finished that we would proceed with item No. 52, a resolution preceding a bill to introduce a measure to give effect to term 29 of the terms of union of Newfoundland with Canada, Then, we would go on with item No. 55, second reading of a bill to provide for the establishment of the Company of Young Canadians. On Tuesday, I would want to call the business in a different order, and not continue with this order.



INDIAN AFFAIRS


Mr. Frank Howard (Skeena) moved: the second reading of Bill No. C-8, to repeal the British Columbia Indian Reserves Mineral Resources Act.
He said: In 1943, Mr. Speaker, the parliament of Canada passed the British Columbia Indian Reserves Mineral Resources Act, which I now seek to repeal. The reasons for the initial passage of the bill were outlined by Hon. Mr. Crerar, who was then minister of mines and resources in the Liberal
[The Chairman.]
government of that day, as found on page 4921 of Hansard for July 16, 1943
To go back a little, a question arose as to the ownership of the minerals which might he found on lands transferred to the dominion in British Columbia and a test case was taken to the Privy Council to decide the ownership of the precious metals. The Privy Council gave judgment that the precious metals belonged to the crown in the right of the province.
Then, Mr. Hanson, the then hon. member for York-Sunbury, asked the minister for the citation, and Hon. Mr. Crerar went on to say:
The case was decided in 1889. An extract from the judgment of the Privy Council reads:
"The precious metals in, upon and under crown lands, are not incidents of the land but belong to the crown, and under section 109 of the British North America Act, 1867, beneficially to the province".
That judgment, of course, established that if precious metals were found on such lands, the dominion had no claim to any benefits arising from the exploitation of these precious metals.
Having read these words of Mr. Crerar, I want to go on to indicate that, in my view, Mr. Crerar misrepresented the judgment of the Privy Council. Parliament was led to believe that certain things existed when, in fact, they did not. In the first place, the Privy Council decision of 1889, to which reference was made, had nothing whatever to do with Indian reserve lands as such. This decision was related to the land grants or the 40-mile swath of land which was given to the Canadian Pacific in consideration for building the railroad and carrying out one of the terms of union between British Columia and Canada.
The matter came to a head when gold was discovered in 1884 in an area within this 40 mile land grant. A dispute arose as to the proprietory ownership of gold. This was the case that went to the Privy Council. Under section 92 of the British North America Act, which gives jurisdiction to the provinces, certain things are exempted from provincial jurisdiction, such as railways which are interprovincial. Section 91 of the B.N.A. Act, part 24, specifically gives exclusive jurisdiction to the parliament of Canada in the matter of Indians and lands reserved for Indians.
If I recall the quotation from Mr. Crerar, in 1943 the government of that day took the 1889 decision of the Privy Council related to lands conveyed by the dominion and applied it to Indian reserves. They distorted the position of the Privy Council, either deliberately or otherwise. The matter which was
May 6, 1966

before the Privy Council related to the railway and the terms of union between the province of British Columbia and Canada, and the issue with which the Privy Council concerned itself was the words "public lands". In giving this citation I submit that Hon. Mr. Crerar misrepresented what the Privy Council did. I should like to read a portion of the Privy Council judgment as found on page 306 of The Law Reports, Appeal Cases, 1889:
Their Lordships are for these reasons of the opinion that the judgment appealed from must be reversed, and that it ought to be declared that the precious metals within the railway belt are vested in the crown, subject to the control and disposal of the government of British Columbia, and they will humbly advise Her Majesty to that effect.
The decision of the Privy Council specifically spelled out in this way was concerned with precious metals within the railway belt. This decision of the Privy Council reversed previous decisions by the Exchequer Court of Canada and the Supreme Court of Canada, which held that these precious metals were within the domain of the dominion government. There was in 1943 a deliberate conspiracy of arrogation on the part of the federal government and on the part of the provincial government as well. We must remember that the federal government was the Liberal party in office. In British Columbia in those days we had a coalition government, which was a marriage of convenience between the Liberals and the Conservatives. In that coalition government the Liberals were in majority. The individual who was the then minister of mines in British Columbia was the late Hon. Ernest Carson, who was a Conservative in that coalition.
[DOT] (5:10 p.m.)
The people in that government, on the basis of having misrepresented the decision of the Privy Council in London, undertook to deal arrogantly with the rights of our native Indian people in British Columbia, in so far as mineral resources are concerned.
At no time could I find any reference in the speeches in Hansard, either of the House of Commons or of the Senate, when this matter was being considered, or indeed in any other documents or records, to any consultation or discussion with the native Indian peoples themselves. It was just a matter of the usual practice of governments running
Indian Affairs
rampant over the rights of a group of people who were in this country long before anybody else and who have, and I submit still have in British Columbia, the original rights to the land and to the resources.
I think that the schedule to the bill passed in 1943 misled parliament in at least three respects. In the preliminary part of it there are four whereases, the first of which was misleading, and I want to show to what extent. I shall read it:
Whereas from time to time treaties have been made with the Indians for the surrender for various considerations of their personal and usufruc-tury rights to territories now included in the province of British Columbia, such considerations including the setting apart for the exclusive use of the Indians of certain definite areas of land known as Indian reserves:
That statement and that whereas is grossly misleading, because we know that the number of treaties in effect in British Columbia is relatively few and affects only a very small portion of the landed area, and of the people themselves. By and large the native Indian people in British Columbia have never entered into any treaty with any government over their land. It was simply a matter of encroachment by European settlers and by the government of those days on to the land held by the native Indian people from time immemorial.
Sir, the first whereas is false and misleading because it leaves the impression that treaties have been made to set aside certain landed areas as reserves, and such was not the case.
The second whereas says:
And whereas the said Indian reserves were conveyed to the dominion government as trustee for the Indians under the terms and conditions set forth in an agreement dated the 24th day of September, 1912, between the dominion government and the province of British Columbia;
That is misleading because it follows the first whereas, and the implication is that this was done with the consent of and by the agreement of the Indian native peoples in British Columbia. The facts of the matter are that it was not.
Never at any time have the native peoples in British Columbia agreed to accept the so-called agreement of 1912, the findings of the McKenna-McBride Royal Commission, the provisions of the Indian Land Settlement Act, or any of the unilateral means used by government for its purposes. There has not been one iota of agreement by the Indian

May 6, 1966
Indian Affairs
peoples to the one-sided approabh that dealt with their original hereditary land claims.
The third whereas is misleading also, because it says as follows:
And whereas the precious metals in, upon, or under the lands comprising such reserves are not incidents of such lands but belong beneficially to the crown in the right of the province of British Columbia with the result that the development of all the minerals in, upon or under such lands is at present impractical since the precious and base metals are closely associated and cannot be mined separately;
That is misleading because it takes the 1889 decision of the Privy Council that related to the C.P.R. land grants and says that, in effect, that decision applied to Indian reserves. Such was not the case.
Based upon that an agreement was signed to deal arbitrarily with the rights of the native Indian people with respect to their mineral resources. The effect of that was shown in a document recently circulated by the Indian affairs branch under date January 18, 1965, dealing with this matter. It points out that before the mineral resources of any reserves can be developed they must-and there is no question about this; the document asserts the term-they must be surrendered. In other words, in order for mineral resources on any Indian reserve to be developed today, under the terms of the agreement which was ratified in 1943 by the law which I now seek to repeal, it was made a mandatory provision that the Indian peoples must give up their rights to these resources, must toss them to one side, must surrender them and no longer have any rights in them.
This surrender is then followed by the administration of the resource itself being given to the government of the Province of British Columbia, and the relevant law of that province being made applicable. The income from any of the operations of mining or leasing, or from prospectors' licenses or the like, in fact the income from any such activity is, under the agreement, divided 50-50 between the province of British Columbia and the government of Canada.
It is interesting to note that the government of Canada persistently has claimed that it exercises that income and administers it in trust for the Indian Band concerned. It is interesting to note, too, that in the whole period of time since 1943, since this agreement has been in effect, the total amount of money that has accrued from the exploration or exploitation of mineral resources on Indian 
reserves in British Columbia has come to the grand total of $10 exactly. There is $6.25 from one reserve, and $3.25 from another.
However, as the memorandum of the Indian affairs branch dated January 18, 1965, points out, a tremendous amount of interest has developed in the last year to two in mineral resources and mineral exploration in British Columbia. The Indian affairs branch points out that there has been an increasing interest in the mineral resource potential on Indian reserves in British Columbia, and that this interest may serve to accelerate in developing these resources.
This parliament should want to repeal the act, for the reason that it was initially an imposition upon a group of people by unilateral action on the part of the government of Canada and the government of the province of British Columbia. The act was passed without consultation.
We are in an era now when there is an undivided opinion that the key to success for Indian peoples, and for their advancement, rests in their being able to control their own affairs. If we repeal this imposing legislation we shall return to the situation that existed prior to 1943 and we shall give to the Indian people the right to decide for themselves what they want to do with the mineral resources on their reserves. There was misinterpretation of a Privy Council decision. There was no consultation with the Indian people. In fact no advice was given to them about it. Parliament was misled, as I have indicated, and the question of land and mining resources has never been really settled.
[DOT] (5:20 p.m.)
The government has indicated on a number of occasions-although it has not done anything about it, yet-that it wishes to deal with this land question in a fair and just way. I submit that it is not possible to do so, and to meet the original and hereditary claims of the Indians of British Columbia, so long as this statute remains on the books. I sincerely hope that parliament will repeal this law at the earliest possible moment.


Mr. Grant Deachman (Vancouver Quadra):: The hon. member for Skeena (Mr. Howard) has spoken well on a public bill which is of considerable interest to Indians and reserve Indians in British Columbia. He has spoken with his usual feeling for the Indian people of the province, and with the capability he
May 6, 1966

always brings to a case in their interest when he speaks before this house.
I listened with a great deal of interest as he discoursed on this problem of mineral rights on Indian lands in British Columbia. The bill which he has brought before the house is a little bill which simply seeks the repeal of the British Columbia Indian Reserves Mineral Resources Act. The hon. member for Skeena says in the explanatory note to his bill:
The agreement provides that the administration, control and disposal of all minerals and mineral claims, both precious and base, in, upon or under all Indian Reserves in British Columbia shall be subject to the laws of the province of British Columbia.
The agreement further provides that any revenues collected by the province of British Columbia in respect of any sale or other disposition of minerals and mineral claims shall be divided between the government of Canada and the government of British Columbia on a 50/50 basis.
This is the purpose of the little bill, a measure which arises out of the historical background which has already been discussed by the hon. member for Skeena and which I intend to review to some extent, though possibly with the emphasis differently placed.
The province of British Columbia entered confederation in 1871. Clause 13 of the Articles of Union provided that the dominion would have charge of Indian affairs and that the province would from time to time convey to the dominion such lands as were required for reserves. The selection of lands for the Indians caused a great deal of trouble between the two governments and resulted in a number of commissions being set up either jointly or by each government separately. The matter was finally disposed of in 1938 by order in council 1036 of the Lieutenant Governor in Council of British Columbia, by which reserves were conveyed to the dominion.
From the very begining the dispute over surface rights involved mineral rights and the administration thereof, with both the dominion and province claiming jurisdiction. This dispute became even more complicated when in the precious metals case-Attorney General of B.C. v. Attorney General of Canada, 1889-the Judicial Committee of the Privy Council ruled that the precious metals, gold and silver, were vested in the crown in the right of the province.
The administration was then divided -precious metals to the province and
Indian Affairs
base metals to the dominion. The province later entered a claim for administration over the base metals as well. The bickering led to the passing in 1943 of the British Columbia Indian Reserves Mineral Resources Act, by which administration of base mineral rights would pass to the province upon surrender by the Indians. This act settled no legal rights but was merely an attempt to place administration in one place since, with the previous divisions, no development could take place, as in British Columbia gold and silver are contained in almost all the ores of the remaining minerals.
Anyone who sets out to mine base metals in British Columbia finds he is involved not only in a base metal mine but in a gold mine and a silver mine. For this reason, dividing minerals into precious minerals and base minerals presented an impossible situation.
While the hon. member for Skeena was addressing the house and referring to the action of the federal government in respect of this matter of the British Columbia Indian Reserves Mineral Resources Act, I sent out for a copy of Hansard covering the debate from which he quoted, and I have before me the debates of the House of Commons for the session of 1943, volume 5. I wish to turn to the debate to which the hon. member referred. There was a good debate in the House of Commons that day. I see that the report begins on page 4920 and continues for several pages, to page 4927. A number of speakers took part, so it cannot be said that this little bill was cavalierly dealt with, or passed over very quickly by the parliament of that year. It received a good deal of consideration, and Hansard stands on record to that effect.
Hon. Mr. Crerar introduced the bill, and it is interesting to note that among those who entered the discussion was Mr. Coldwell the leader of the C.C.F. party in the house during that period. Another hon. member who played a considerable part and had a good deal to say about the bill-he finally called for it to be passed on division-was Mr. Neill, who was a long-time member for Co-mox-Alberni, whose able successor I see in his place in the house today. Mr. Neill was himself a member of the old C.C.F. party. Or was he an independent?-I stand to be corrected.
Indian Affairs

May 6. 1966
[DOT] (5:30 p.m.)


Mr. Barnett:: If the hon. member is referring to the earlier member for Comox-Alberni, he sat in this house as an independent. I sat at one time as a member of the C.C.F. caucus, but that was later than 1943.


Grant Deachman: Mr. Neill was a well known member of the house. He was well known in B.C. and was quite a critic of the government of the day. He said, as recorded at page 4923 of Hansard for that year:
The general principle of this bill is undoubtedly good-*
He was raising some question in relation to the jurisdictional dispute going on, but he said:
The general principle of this bill is undoubtedly good because it does away with the objection that has been in existence for many years in British Columbia, that if the Indians-or anyone acting for them-discovered a valuable mine, it could never practically be worked because the other party, the provincial government or the dominion government, would step in and say, "You may take out your silver but you must not touch our lead, for instance."
This is the old problem of trying to work any claim, and the divided jurisdiction between base metals and precious metals, recognition that precious metals under Indian reserves belong to the crown in the right of British Columbia, and that development of all minerals, under the laws of Canada and British Columbia, independently, is impractical since precious and base metals cannot be mined separately.
The act also provided that as a matter of convenience, without affecting legal rights, the province of British Columbia should have charge of development of all minerals under the Indian reserves. It went on to provide that the administration and development of the minerals shall be subject to the laws of the province, following surrender pursuant to the Indian Act.
It went on to say that there should be no prospecting or right of entry to the Indian reserves until permission had been obtained from the Indian agent, and then it said that the agreement concerns only metallic minerals.


Francis Andrew Brewin: Would the hon. member permit a question?


Grant Deachman: Yes.


Francis Andrew Brewin: I am following his argument with considerable interest, but is he going to

deal with the point made by the hon. member for Skeena (Mr. Howard), which was that this act was passed upon an erroneous assumption that the situation of Indian lands was legally the same situation as railway lands whereas, in fact, by the provisions of the B.N.A. Act Indian lands were explicitly put under federal control and therefore were not provincial crown lands?
I wonder if, in the course of his interesting discussion, the hon. member is going to deal with that point, because it seems to me that the crux of the very excellent argument put before us by the hon. member for Skeena was basically that this act was passed on a misconception of the actual situation, passed upon an assumption that these were provincial lands, and therefore some arrangement had to be made with regard to mineral rights in respect of Indian lands in the province. In fact, if the hon. member for Skeena is right-and I studied the case in the Privy Council to which he referred-the whole assumption was erroneous, and minerals on Indian lands are strictly under federal control.


Grant Deachman: My hon. and learned friend is skilled in the law and I am not. I see here an argument which is basically a legal one, and a deep constitutional matter involving the validity of the act itself. I do not think this is a matter upon which my hon. friend would expect me to be skilled or to discuss as skilfully as he did. In fact, I do not know very much about it at all.
If time permits and my hon. friend would like to elucidate further upon this point I certainly would be willing to listen to him develop that argument. It would be valuable to us to hear his discourse on that subject, and I would welcome his entry into the debate. Does my hon. friend wish to ask another question?


Francis Andrew Brewin: I was going to ask my hon. friend if, in the course of his preparation for his contribution to this debate, he did not pay attention to this rather crucial problem?


Grant Deachman: I must apologize to my hon. friend for my preparation. It was rather lightning-like, and somehow I skimmed over the very important constitutional point which my hon. friend is raising. As I say, I think it would be of value to our discussion if he were to explain the principle more fully when he himself has a chance to speak in the debate.


Frank Howard: The bill has only been on the order paper since January 24.
May 6, 1966


Grant Deachman: Since the effective date of the act, mineral surrenders to only six out of a total of 1,600 reserves in British Columbia have been approved by Indian bands, and none has been approved since 1950, which is a rather interesting note on the effectiveness of any program relating to the development of minerals under Indian lands in B.C.
Administrative responsibility for the use of the land resources is divided between the two governments, once a band has approved a mineral surrender. The mining or subsurface rights are administered by the B.C. government, whereas the rights to use land surface for mining purposes are administered by the federal government in consultation with the band council. There has been no development of mines on B.C. Indian lands, and exploratory work has been practically negligible.
The Indians' half share of revenues collected by the province would include only fees for recording claims and assessment work, etc., until such time as a mine had produced for three years, when it would become taxable under the British Columbia Mineral Taxation Act. There are no provisions for acreage rentals or cash bonuses on claims staked under B.C. legislation.
There have been discussions between the governments of B.C. and Canada in recent years, in fact within the last year or so, and progress is being made toward what is hoped to be a better situation for the Indians, and the administration of these lands for mining purposes.
In 1956 and 1957 discussions took place with the provincial deputy minister of mines in respect to interpretation of the act, and these led to some understandings which I will discuss. First, the revenue to be shared between the province and Canada, for band benefit, includes that collected under the Mining Income Tax Act by the province.
The band council could negotiate terms with an applicant for the use of surface for mining purposes, including payment to the band of acreage rental, cash bonus, amount per ton mined or a percentage of the value of mineral produced. On approval of terms, the band council could authorize the Indian agent to grant permission to the applicant to enter, prospect and stake claims on the reserve under the act and other provincial legislation.
[DOT] (5:40 p.m.)
No serious exploration or development of mineral resources resulted from these understandings, so a formal approach was made to
Indian Affairs
the province of British Columbia for a revision of the agreement through an exchange of correspondence between ministers in 1961. My notes, in researching this, go on to say that the provincial ministers could not agree to transferring administration of minerals on Indian reserves to the federal government and, further, the province claimed ownership not only of precious metals, but also of base metals on some reserves. So the jurisdictional dispute continued. In particular was the fact that the province certainly did not want to see a situation in which two mining laws applied to the province, one which applied to commercial mining and one which now had sprung up under this act.
In subsequent discussions, Indian affairs officers produced evidence to invalidate the province's claim to base metals, and an appeal was made to leave questions of legal ownership unsettled in favour of reaching an agreement which would give the Indians in British Columbia similar benefits from minerals as was enjoyed in other provinces. At that time provincial officers found our general proposal unacceptable, but they offered no alternative proposal.
This is virtually where the negotiations stand today between the federal government and the province of British Columbia. I understand from the minister and from officers in the department that negotiations are going on steadily, that interviews have been held between officials of both governments and that to date no suitable solution has been found which would bring about a settlement of the question.
In conclusion, Mr. Speaker, I should like to say I am as much in sympathy with the purposes of this bill as is my hon. friend. I am not certain that the simple repeal of the act, as he suggests, is the way to approach it. I think there will have to be further steps, and I believe these must be taken together. I think they have to be taken under the aegis of the government. There may be some question in respect of whether or not we are involving ourselves here in the handling of a money bill. I believe the government is aware that the problem exists. There is every evidence that it is being pursued by the dominion government and the provincial government, and that the government has at heart the interests of the Indian and native in working toward a solution of this problem.

May 6, 1966
Indian Affairs
I am sure the discussions in the chamber today, which have been aired by the introduction of the hon. member's bill, give impetus to the solution of a problem which needs a solution, and which we all would welcome.


Thomas Speakman Barnett: Mr. Speaker, having seconded the bill introduced by the hon. member for Skeena (Mr. Howard), I should like to say just a few words to indicate my support for it. I have been listening as closely as I could to the argument being advanced by the hon. member for Vancouver Quadra (Mr. Deachman). In his analysis of the situation it would seem to me that he was in error in certain particulars at least, although I am glad to know he indicated his sympathy with the purposes of this bill. The hon. member had something to say about the matter of unification of mining laws in respect of mining operations in the province of British Columbia, regardless of the class of lands involved.
I should like to suggest to the hon. member, Mr. Speaker, that the act which the hon. member for Skeena is seeking to repeal really is not concerned with the question of a certain set of rules for the conduct of mining operations, but rather is concerned with a certain division of the revenue. It seems to me that this is the important principle involved in the proposal of the hon. member for Skeena-that is, that an error was committed by parliament in ratifying the agreement with the province of British Columbia and that grievous injury was done in fact by the province and its government of that day in seeking to impose this kind of jurisdiction on the Indian affairs branch on behalf of the Indian people of their full rights to the revenues from the properties.
This, to me, is the issue. Had there been some discussion with the Indian people in an effort to seek agreement that there be general application of the mining rules on their property similar to those which apply to mining operations in the province, then that might have been a proper field of negotiation for the province of British Columbia and perhaps the Indian affairs branch on behalf of the Indian people.
I submit there is a distinction there. I also would suggest that I might have a word to say here on the question that was raised by the hon. member for Greenwood (Mr. Brewin). In doing so, may I say I certainly am, shall we say speaking on, layman's level to

the hon. member for Vancouver Quadra. In this connection I should like to point out, with particular reference to the decision of the Privy Council on which apparently this original law was based, the distinction between lands in the railway belt and the Indian reserve lands which, to my layman's mind at least, appears to set out the very important distinction which has been established within the British North America Act itself.
In section 92 of the British North America Act, which has to do with the fields in which the legislatures of the provinces may exclusively make laws, we find in No. 10:
10. Local works and undertakings other than such as are of the following classes:
It mentions specifically railways and other works or other undertakings connecting the province with any other or others of the provinces. This, it seems to me, puts the situation in respect of any lands granted to a railway in a very different category from that in which the Indian reserve lands are placed by the British North America Act, because thereference to Indian reserve lands is set out very specifically in section 91, which deals with matters which lie exclusively within the jurisdiction of the federal authority. As has been mentioned in many discussions in relation to Indian problems in this house, it makes specific reference to Indians and lands reserved for the Indians.
In my understanding of the matter of land title, the basic rule is that unless there is a specific reservation in the title of the land for a specific purpose, such as the reservation of mineral rights, then the title to the land includes everything that is on it and under it. I am not going to go into the question of what may be above it. I think this is a pretty clear understanding. I know for example, in the title to my own property in Alberni, in respect of the E & N railway belt there is a specific reservation of mineral rights to the present owner, the C.P.R. It seems to my lay mind at least that this is the point the hon. member for Greenwood was raising in his question, and I felt that I should express it in lay language, with the hope that the hon. member for Vancouver Quadra (Mr. Deachman) would understand me and perhaps agree with me.
[DOT] (5:50 p.m.)


Grant Deachman: May I ask the hon. gentleman a question? Does he not agree that the dispute which arose between the provinces
May 6, 1966

and the federal government in regard to mineral rights on lands which the provinces, after confederation, had to transfer to the dominion government for the purposes of establishing Indian reserves, involved a jurisdictional conflict which has not yet been solved? Does he not agree that the whole problem with which we are dealing today arose as a result of a failure on the part of the federal and provincial governments over the years to determine just who has mineral rights? Is that not the basis of this whole case?


Thomas Speakman Barnett: Mr. Speaker, my understanding is that under the terms of union with British Columbia and the original provinces which formed the Dominion of Canada, provision was made that the British North America Act of 1867 would apply. It is clearly stated in that act that Indian lands come under the jurisdiction of the federal government, as trustees for the Indian people.
My own view is that the province of British Columbia has always taken a very narrow and parsimonious approach to the rights of Indian peoples, and that the grounds on which it has chosen to involve itself in disputes as to Indian rights have created serious injustices to these native peoples. I think it is part of our responsibility in this house to make sure that this situation is reversed. If we intend to deal with the question referred to by the hon. member for Skeena (Mr. Howard), the first thing we should do is repudiate these bad arrangements, which were agreed to probably with an incomplete understanding and appreciation for the rights of Indians.


Lawrence Elliott Kindt: Mr. Speaker, I want to make one or two observations concerning the Eden valley Indians in southern Alberta. This land was purchased by the federal government in order to create a reserve. I am told that the mineral rights were reserved, which is distinctly different from what happened in respect of the mineral rights on other reservations, where they were retained in the name of the Indians in the form of a settlement made prior to 1905. I have in mind the situation regarding the Brocket, Gleichen and Sarcee reserves. I understand the Indians on these reserves possess the mineral rights.
It has always been my feeling that, since the federal government purchased those lands from private operators to create these Indian reserves, the Indians occupying these lands
Indian Affairs
should have the mineral rights. I rise at this time to speak on behalf of the Eden valley Indians and to place their difficulties, which have been brought to my attention on a number of occasions, before this house. I feel that these Indians should by all means have title to these mineral rights.
In order that a vote may be taken on this bill, which seems to have found favour in the eyes of most members of the house, I will sit down at this time.


Mr. B. S. Mackasey (Parliamentary Secretary to Minister of Labour):: Mr. Speaker,
I rise at this time to express my opinion about the provisions of this bill.


Stanley Howard Knowles: That will take just about long enough to prevent a vote.


Bryce Stuart Mackasey: I do not wish to vote without expressing my opinion, and I think it would be in contravention of the open-minded approach normally taken by the hon. member for Winnipeg North Centre if I was not allowed the opportunity of speaking on this subject. There is a great deal I could say about this subject in relation to the very able contribution made by the hon. member for Skeena (Mr. Howard), who is interested in problems of this kind, but whose general contributions are made during other debates in a belligerent manner.
Mr. Justice Macdonald summed up the best attitude toward this problem in the Brantford courthouse on April 22, 1959 when he said:
It is a matter of common knowledge that Indians in their dealings with white men generally get the worst of the bargain.
The hon. member for Skeena has done the Indian people of Canada a service by bringing this obvious miscarriage of justice to the attention of the house. In all fairness, the reason I am speaking at this time, even though the amount involved may be less than $10, is that the agreement in question was obviously arranged between the Dominion of Canada and the province of British Columbia. It relates to how the revenues derived from mineral rights should be shared. Money bills should not be introduced in this house under the guise of private members business. I find myself reluctant to express my opinion at this time, because I do not wish to talk the bill out, and I regret that I do not have more time at my disposal.
May I call it six o'clock.

May 8, 1966
Indian Affairs


Mr. Deputy Speaker:: Order, please. The hour appointed for the consideration of private members' business has expired.


Frank Howard: Mr. Speaker, in order to give the hon. member for Verdun an opportunity to complete his remarks, perhaps the house will agree by unanimous consent to put this bill in first place on the list of public bills for discussion on the next appropriate occasion.


Bryce Stuart Mackasey: I am agreeable to that suggestion, if it expresses the will of this house.


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

[Stage Direction]
Customs and Excise-
1. General administration, operation and maintenance including authority, notwithstanding the Financial Administration Act, to spend revenue received during the year from firms and individuals requiring special services, $49,278,000.
Taxation-
5. General administration and district offices including recoverable expenditures on behalf of the Canada Pension Plan, $44,986,300.
Tax appeal board-
10. Administration expenses, $171,500.
[Stage Direction]
Monday. May 9. 1966