1966-06-07

PUBLIC SERVICE


Mr. Bernard Pilon (Chambly-Rouville) moved:: That the members of the House of Commons on the joint committee of the Senate and the House of Commons to introduce a measure to provide for the establishment of a system of collective bargaining, approved April 25, 1966, be Messrs. Aiken, Ballard, Bell (Carleton), Caron, Chatterton, Crossman, Emard, Faulkner, Hymmen, Isabelle, Keays, Knowles, Lachance, Leboe, Lewis, MacRae, McCleave, Munro, Orange, Ricard, Richard, Rinfret, Tardiff and Walker: and that a message be sent to the Senate to acquaint Their Honours thereof.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Hon. Michael Starr (Ontario):: Mr. Speaker, I wish to address a question to the Minister of Labour and ask whether he has anything further to report on the longshoremen's strike. What hopes are there for a settlement of this prolonged strike which has now lasted for some four weeks, and does the situation look hopeful at the moment?


Hon. J. R. Nicholson (Minister of Labour):: All I can say, Mr. Speaker, is that the mediator is meeting with the parties today. He met with some representatives of the longshoremen this morning and I understand there is a further meeting this afternoon. I am anxiously awaiting the outcome of that meeting.


Michael Starr: A supplementary question, Mr. Speaker. In view of the situation that has been prolonged to this extent, does the government not wish to change its position in endeavouring to bring about a settlement of this dispute?


John Robert (Jack) Nicholson: I think I have announced the government's position more than once in the house. We sincerely believe that every
effort should be made to settle this dispute by the collective bargaining process. It is still our hope that this will come about. That is all I can say at this time.


Michael Starr: A further supplementary question, Mr. Speaker. Does not the minister believe that his attendance at the negotiation table would also be a form of collective bargaining, and would probably bring about better results than have been achieved heretofore?


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


Mr. Eldon M. Woolliams (Bow River):: supplementary question, Mr. Speaker. In view of the statement of the Minister of Labour I would like to now put a question to the Minister of Finance. What effect has this long strike had on the fulfilment of the wheat contracts that were made by the wheat board with other nations?


Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, this strike is having a very serious effect.


Eldon Mattison Woolliams: A further supplementary question, Mr. Speaker. When the minister says "a very serious effect" does he mean that sales will be lost in respect of wheat agreements made between the wheat board and those countries purchasing our grain?


Mitchell William Sharp: I do not know whether this in fact will happen. I do not think it need happen. All I can say is that this strike is having a very serious effect upon the delivery of grain that the wheat board has already sold, and it is beginning to back up the movement into the country, making it more difficult for the wheat board to equalize its quotas.


Mr. R. N. Thompson (Red Deer):: A supplementary question, Mr. Speaker. I would ask the Minister of Labour in view of the decision of the Canadian Brotherhood of Railway, Transport and General Workers to strike later this month, an action that would tie up the seaway from Montreal to Sault Ste. Marie, whether the government is taking any initiative to deal with this threatened strike before it actually takes place.

June 7, 1966
Inquiries of the Ministry


John Robert (Jack) Nicholson: Yes, Mr. Speaker.


Mr. Jorgenson:: Mr. Speaker, I have a supplementary question.


Mr. Douglas:: Mr. Speaker, the question I want to ask-


Mr. Speaker:: Order, please. The hon. member for Provencher has the floor.


Warner Herbert Jorgenson: I wish to ask the Prime Minister whether he is aware of the statement made this morning by the chairman of the Canadian Wheat Board, that every day the strike is prolonged will do irreparable harm to Canada's ability to market grain in the future.


Eldon Mattison Woolliams: I have a further supplementary question, Mr. Speaker.


Mr. Speaker:: The hon. member for Bur-naby-Coquitlam has the floor.


Thomas Clement (Tommy) Douglas: If the question of the hon. member for Red Deer was supplementary, then mine is also a supplementary question. I wish to ask the Minister of Labour what action the government will take in view of the fact that the workers on the St. Lawrence seaway have taken a strike vote and set a deadline of June 17. Is the minister planning any steps to bring the two parties together in the hope of effecting a satisfactory settlement?


John Robert (Jack) Nicholson: Mr. Speaker, my colleague the Minister of Transport and I have given the matter some thought. We will be meeting again later today to discuss it. I have nothing further to say at this time.


Thomas Clement (Tommy) Douglas: I have another supplementary question, Mr. Speaker. Is the minister able to announce to the house that he will be appointing a mediator to look into this question? If so, how soon does he expect such a mediator to be appointed, in view of the fact that only 10 days are left before the strike deadline?


John Robert (Jack) Nicholson: I would rather not make any statement before concluding my discussions with my colleague.


Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, my question is supplementary and I wish to direct it to the Minister of Finance. Has the minister received any inquiries from our regular wheat customers indicating concern over the strike, and is he preparing a statement that special

efforts will be made in order to meet our commitments to deliver grain to these countries?


Mitchell William Sharp: Mr. Speaker, the government is making every possible effort to settle this strike. I do not think it is necessary for me to make any representations in this matter.


Eldon Mattison Woolliams: Mr. Speaker, I wish to ask a further supplementary question directed to the Prime Minister. Can the Prime Minister tell us whether his government anticipates bringing in legislation to end the strike on the St. Lawrence seaway, in view of its prolonged duration and in view of the statement made by the Minister of Finance?


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, we hope this strike will be ended shortly by the process of free collective bargaining.


Some hon. Members:: Hear, hear.


Mr. H. A. Olson (Medicine Hat):: I should like to address a question to the Prime Minister and ask him whether the government is considering taking action on one or more current labour disputes in the transportation field similar to that taken by Right Hon. Louis St. Laurent in 1950, when he dealt with the very serious labour dispute then involving vital transportation.


Lester Bowles Pearson: Mr. Speaker, there is one dispute that has been discussed, and it is being dealt with. That is the only one which at the moment has the serious implications my hon. friend refers to. I do not think I can add anything in that regard to what has been said.


Stanley James Korchinski: I have a question for the Minister of Finance. Have any negotiations for any possible future wheat sales been postponed or cancelled as a result of the current dock strike?


Mitchell William Sharp: Not to my knowledge, Mr. Speaker.


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I have a question for the Minister of Labour in connection with the longshoremen's strike. Has the government prepared draft legislation in the event that the government decides to intervene, and has the government reached a decision as to the conditions precedent to the introduction of such legislation?
June 7, 1966

Inquiries of the Ministry


Mr. Speaker:: Order. I suggest the hon. the house that the federal-provincial confer-member's question is hypothetical and should ence scheduled for Victoria will go on as not be asked at this time.	scheduled?


Mr. Lee Grills (Hastings South):: Mr. Speaker, I wish to direct a question to the Minister of Labour. Due to the waterfront strike in Montreal some of the garment manufacturers in my riding are down to one week's supply of fabrics. Several have written me asking if there was any hope of this strike being settled and if the government intended to take any action to bring about a settlement. Could the minister give me any advice on that?


Mr. Speaker:: Order. It seems to me that the statement made at the beginning of the proceedings this afternoon answered the question of the hon. member.


Lee Elgy Grills: As a supplementary question, I am informed by these garment manufacturers that employees will be laid off within a week or ten days.


Mr. Speaker:: Order, please. This is not a supplementary question; it is a supplementary statement.



DOMINION-PROVINCIAL CONFERENCE QUEBEC-INQUIRY AS TO AUTHORIZED REPRESENTATIVE

[Stage Direction]
On the orders of the day:
Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, may I put a question to the Prime Minister?
Is the right hon. gentleman in a position to tell us which government will be authorized to represent the province of Quebec at the next federal-provincial conference which is to be held next week?


Mr. Speaker:: Order. This question is the concern of the provincial authorities.


Gilles Grégoire: Mr. Speaker, I shall put my question so that it may be the concern of the federal authorities.
Can the Prime Minister give us the assurance that the federal government will not accept any provincial government which is not truly representative of a province at the forthcoming federal-provincial conference?


Mr. Heward Graffiey (Brome-Missisquoi):: May I ask a supplementary question, Mr. Speaker. Can the Prime Minister now assure


Lester Bowles Pearson: Mr. Speaker, last evening I telephoned the premier of British Columbia about certain developments which had a bearing on the proposed conference which was to have opened in Victoria on June 16, developments which concerned three provinces. It was agreed by the host premier, Mr. Bennett, and myself that because of the developments I have just mentioned, a postponement of the conference was unavoidable. I then sent telegrams to the various heads of provincial governments and asked if they-


Some hon. Members:: Which ones?


Lester Bowles Pearson: -the heads of various provincial governments-and asked if they agreed with the suggestion made by Mr. Bennett and myself that the conference should be postponed, perhaps until a date in the autumn. They have all replied that they agree to the postponement. They have agreed also to the suggestion that the conference, when it is held, will be a normal, business conference and not part business and part ceremonial as the one would have been next week. It will be held in Ottawa. One or two of the premiers hoped that the postponement would not be long and that perhaps we could have a conference before the autumn.


Hon. Theoqene Ricard (Sainl-Hyacinlhe-Bagol):: In the case of the province of Quebec, will the Prime Minister indicate with whom he communicated?


Lester Bowles Pearson: Yes, Mr. Speaker; I communicated with the Prime Minister of the province of Quebec.


J.-H.-Théogène Ricard: A further supplementary question. Will the Prime Minister indicate whether it was the elected Prime Minister of Quebec or the late one?


Gilles Grégoire: Mr. Speaker, may I put a
supplementary question?
Will the Prime Minister tell us with whom he intends to communicate in Quebec concerning the forthcoming federal-provincial conference?


An hon. Member:: He just said it.

June 7, 1966
Inquiries of the Ministry


Thomas Clement (Tommy) Douglas: May I direct a question to the Prime Minister. In view of the postponement of the federal-provincial meeting which was to be held on June 16, and in view of the fact many students, if they are to commence their academic year in September, will need to know about scholarships and bursaries, is there any likelihood of the Prime Minister communicating with the provincial premiers and arranging to have legislation introduced this summer?


Lester Bowles Pearson: We will be giving consideration to this matter in the light of the postponement of the conference. I appreciate the factors mentioned by my hon. friend. I point out, however, that in so far as assistance to universities is concerned, which would have been the main subject of the conference, that has already been provided for 1966-67.


Gilles Grégoire: Mr. Speaker, I should like to put a supplementary question.
Is it the intention of the Prime Minister to include on the agenda of the forthcoming federal-provincial conference the request of the new premier of Quebec that 100 per cent of direct taxes be returned to the province?


Mr. Speaker:: Order. I suggest that the hon. member put his question on the order paper.


Mr. T. S. Barnett (Comox-Alberni):: I
should like to address a question to the Prime Minister arising from information he gave to the house early today about the cancellation of the federal-provincial conference at Victoria, and his reference to certain ceremonial aspects of that conference. Has the federal government given consideration to any alternative means of recognizing the fact that Vancouver Island has had a constitutional link with the mainland of what is now Canada for 100 years?


Lester Bowles Pearson: Mr. Speaker, it was Mr. Bennett's suggestion, in which I concurred, that if the meeting were to be put off for some time-some weeks, as seems inevitable- it should be a conference devoted not only to education but to other matters; that it would take somewhat longer than the one proposed for next week and therefore should be held in Ottawa and not considered in any way

connected with the important ceremonial occasion to which my hon. friend has referred. We also considered the importance of recognizing that important occasion in some other way.



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Hon. E. D. Fulton (Kamloops):: Mr. Speaker, since we have just been dealing with provincial matters perhaps I could ask the Secretary of State whether her office is aware of a communique put out by the centennial committee which advises that 70 foreign and 41 Canadian students are involved in three tours which will end in mid June. If so, I should like to ask the hon. lady why it is apparently not considered that those students should visit the province of British Columbia, the most beautiful and certainly the most politically interesting of all the provinces of Canada.


Mr. Speaker:: Order, please. The question should be placed on the order paper.


Edmund Davie Fulton: It is a matter of urgency, Mr. Speaker, because this tour is concluding in mid June. If action is not taken now these students will be deprived of a great advantage. I would ask the hon. lady's seatmate if he would use his charm and influence in connection with this matter.


Mr. Speaker:: The minister has noted the representations of the hon. gentleman, I as-isume.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. Lloyd R. Crouse (Queens-Lunenburg):: I should like to direct a question to the Minister of Transport. In view of the fact that the survey made by A. D. Margison and Associates has now been made public, is the Minister of Transport in a position to report when a second ferry may be put into service between western Nova Scotia and the United States?


Hon. J. W. Pickersgill (Minister of Transport):: No, sir; but perhaps I might be permitted to say that I have some copies of the study to which the hon. gentleman adverted. Though the study was prepared primarily for the government of Nova Scotia, if any hon. member would be particularly interested in having a copy I would be very glad to make one available.
June 7, 1966



COPPER-CALLING OF CONFERENCE BY UNITED NATIONS

[Stage Direction]
On the orders of the day:
Hon. George Hees (Northumberland):: Mr. Speaker, may I direct a question to the Minister of Trade and Commerce. Has the government received an invitation to attend a conference on copper being held by the United Nations? If so, does the government intend to attend the conference?


Hon. Robert Winters (Minister of Trade and Commerce):: Mr. Speaker, I have seen reference in the press to the fact that the United Nations might be calling a conference on copper. I know nothing more than that, and we have not received an invitation.



ATLANTIC DEVELOPMENT BOARD


[Stage Direction]
On the orders of the day:
Mr. Robert C. Coates (Cumberland):: Mr. Speaker, I should like to direct a question to the Minister of Transport. Is the minister in a position to indicate when we might expect legislation to be introduced which would propose amendments to the Atlantic Development Board Act to increase the amount of money available to that board?


John Whitney Pickersgill: I hope, sir, very soon.


Robert Carman Coates: A supplementary question. Could the minister indicate whether he expects to bring this legislation forward before any proposals which are presently before the board have to be deferred because of the lack of funds of the board at the present time?


John Whitney Pickersgill: Mr. Speaker, it largely depends on the co-operation of the hon. gentleman and his friends, and I am sure that will be forthcoming.


An hon. Member:: It certainly was yesterday.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. J. M. Forrestall (Halifax):: Mr. Speaker, I have a question also for the Minister of Transport but not quite along the same lines. I wonder whether he might be able to clarify for the house, and particularly for the people
Inquiries of the Ministry of Nova Scotia, the reasoning behind the diversion of 150 international flights from the Halifax international airport to other airports owing to the alleged lack of adequate facilities.


John Whitney Pickersgill: Mr. Speaker, I would first have to clarify myself-


Mr. Speaker:: Order, please.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. A. D. Hales (Wellington South):: Mr. Speaker, I should like to direct my question to the Minister of Finance. In view of the unfair competition suffered by Canadian manufacturers of colour television, would the minister consider removing the 11 per cent sales tax and the 15 per cent excise tax?


Mr. Speaker:: Order, please.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question to the Minister of National Revenue. In view of protests made by the Civil Service Federation of Canada, can the minister make a statement concerning the salary adjustments of group B civil servants, which were to be made retroactive to October 1 of last year?


Hon. E. J. Benson (Minister of National Revenue):: Mr. Speaker, I have received a letter from the chairman of the national joint council of the civil service associations objecting to the holding up of some salary revisions in group B with respect to people who are being reclassified. Although I have just received this letter, which appeared on my desk this morning, the matter is under review and will be replied to in the very near future.


Stanley Howard Knowles: A supplementary question, Mr. Speaker. Can the minister give the assurance that these people will not lose their salary adjustments because of the structural changes which are in prospect?


Edgar John Benson: Mr. Speaker, I have learned better than to give assurances to my hon. friend from Winnipeg North Centre.

June 7, 1966
Inquiries of the Ministry


Stanley Howard Knowles: Mr. Speaker, I wonder if I may put a delayed supplementary question to the Minister of National Revenue. I appreciate his timidity about giving me certain assurances, and I think I know why, but could he give assurances to the group B civil servants concerned that they will not lose out so far as their pay increases are concerned because of organizational changes that are in prospect?


Mr. Speaker:: Order, please. The question is of a very general nature, and I do not think it should be asked at this time.


Stanley Howard Knowles: Mr. Speaker, I suggest it is a specific question related to a protest that the minister received today.


Mr. Speaker:: The hon. member for Peace River.


Mr. Barry Mather (New Westminster):: Mr. Speaker, I would like to direct a question to the Minister of National Revenue. Would the minister say if he is in a position to answer the question I sent him earlier today with regard to civil service negotiations?


Edgar John Benson: Mr. Speaker, 1 would like to indicate to the hon. member that the representations made by the national joint council will be given every possible consideration.



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Robert Norman Thompson: Mr. Speaker, my question is to the Postmaster General. I wonder whether the minister could tell the house just what is the state of the strike in Windsor which was brought about yesterday by workers belonging to the Canadian Union of Postal Workers?


Hon. Jean-Pierre  Coie@Postmaster General: Mr. Speaker, I am not aware of any strike in Windsor. I am sure if it had been anything very serious I would have been notified.
T Later:]
Mr. Speaker, in reply to the question by the hon. member for Red Deer (Mr. Thompson) about stoppage of work in the Windsor post office, I would just like to say I am advised that there was really no walkout or strike in Windsor.
[Mr. Benson.)



NOVA SCOTIA-INQUIRY AS TO ASSISTANCE PROGRAM

[Stage Direction]
On the orders of the day:
Mr. Donald Maclnnis (Cape Breton South):: Mr. Speaker, I have a question for the Minister of National Health and Welfare. Would the minister indicate when the government proposes to carry out the policy statement which he made with respect to the $25 million in aid?


Mr. Speaker:: Order, please. The question the hon. member has posed is not too clear. Perhaps he might elucidate it somewhat.


Malcolm MacInnis: Mr. Speaker, apparently it is not that the question is not clear, but that the minister is holding a book and is not paying any attention to the question. I wonder, sir, if you would call to the attention of the Minister of National Health and Welfare the fact that I am trying to address a question to him.


Mr. Speaker:: Order, please. The hon. member for Northumberland.


Malcolm MacInnis: Mr. Speaker, the Minister of National Health and Welfare apparently is not hearing too well.


Mr. Speaker:: Order, please. The Chair has recognized the hon. member for Northumberland.


Some hon. Members:: Oh, oh.


Hon. A. J. MacEachen (Minister of National Health and Welfare):: Mr. Speaker, the rules of the house oblige me to listen to the hon. member. Surely they do not oblige me to look at him.


Some hon. Members:: Oh, oh.


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


Mr. Speaker:: Order, please. Is the hon. member rising on a point of order?


Malcolm MacInnis: Yes. On the point of order, Mr. Speaker, I realize that the minister is not compelled to answer any question put to him. I should like to ask, sir, in view of the fact that you ruled my question was not properly put, whether you would not now rule on the answer given by the Minister of National Health and Welfare.


Mr. Speaker:: Order, please. The Chair
recognizes the hon. member for Northumberland.
June 7. 1966


Malcolm MacInnis: I have a question for the Prime Minister. I would ask him whether the government intends to act on the policy announced by the former minister of labour with respect to the $25 million grant to the Nova Scotia coal industry.


Lester Bowles Pearson: The position of the government on this matter has been made clear.


Malcolm MacInnis: Mr. Speaker, I wish to direct a question to the Minister of Finance. Since the Prime Minister has indicated the government's position on the $25 million for the Nova Scotia coal industry; and since the Minister of Transport along with the Minister of National Health and Welfare have made it clear that there is no change of policy in that respect, when will the $25 million be available?


Mitchell William Sharp: Mr. Speaker, in all these matters government policy is announced in due course when decisions are made.


Malcolm MacInnis: Is not
the minister aware that this policy announcement was made last October and they are still waiting?


Mr. Speaker:: Order, please.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the orders of the day:
George Harris Hees: I
should like to direct a question, Mr. Speaker, to the Minister of Transport. In view of the report in this morning's press that a strike by the Canadian Brotherhood of Railway, Transport and General Workers against the Canadian National is inevitable later this month, can the minister make any comment?


John Whitney Pickersgill: The only comment I care to make, sir, is that I hope the report is wrong.


George Harris Hees: My question is for the Minister of Transport. Has he or his department received notification from the C.B.R.T. that they intend to take strike action against the Canadian National Railways? If so, what course has the hon. gentleman decided to follow?
Inquiries of the Ministry


John Whitney Pickersgill: To the best of my knowledge the answer to the first part of the question is no, and the answer to the second part would follow from the answer to the first. But I will make inquiries.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Hon. Gordon Churchill (Winnipeg South Centre):: I should like to address a question to. the Minister of National Defence, to save him from complete oblivion. Will the ministers of national defence of the NATO countries be meeting soon to co-ordinate the changes in military matters that are indicated by the present conference of foreign ministers?


Hon. Paul Hellyer (Minister of National Defence):: Yes, Mr. Speaker. There is a meeting planned for late July.


Mr. Andrew Brewin (Greenwood):: I have a related question, Mr. Speaker. It is close to a supplementary question, and it is addressed to the Minister of National Defence. I have not given him notice, but I am sure he has the information at his fingertips. Is it proposed to integrate the Canadian bases at Metz, and Marville from which Canada is to withdraw shortly with the bases in Germany, as. reported from Brussels today?


Paul Theodore Hellyer: I indicated to the house earlier that no decision has yet been taken by the government as to what the forces' structure will be in the years ahead and, particularly, what the disposition will be of the headquarters at Metz and the squadrons at Marville.



HOCKEY-POSSIBLE CONTRAVENTION OF COMBINES LEGISLATION

[Stage Direction]
On the orders of the day:
Mr. Ron Basford (Vancouver-Burrard):: should like to direct a question to the Minister of National Health and Welfare; he does not have to turn round in order to see me. It arises out of the wide ranging statement on hockey made the other night. Would the minister refer to the committee making this inquiry Bill No. C-132, which would bring the National Hockey League within the provisions of the Combines Investigations Act? Would he specifically refer this measure to the committee for a decision as to whether the hockey league-
June 7, 1966

Inquiries of the Ministry


Mr. Speaker:: Order. This question is not urgent, and should be placed on the order paper.


Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I wish to direct a question to the Minister of National Health and Welfare and ask whether the study of hockey, announced by him several days ago, will take into consideration the position of youngsters who, if they wish to play hockey, at the age of 13 or 14 have to sign forms which in effect tie them down to one hockey team.


Mr. Speaker:: Order. The question is argumentative, is not urgent, and should be placed on the order paper.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. W. M. Howe (Wellingion-Huron):: have a question for the Minister of Agriculture. I should like to preface it by saying I hope those westerners haven't got him yet. Is it the intention of the government to pay a deficiency payment to dairy farmers based on 1965 production, as was done in 1965?


Hon. J. J. Greene (Minister of Agriculture):: The westerners are still after me but they haven't caught me yet.
With respect to the deficiency payment, the hon. member may have seen the announcement to the effect that since the national weighted average for milk during the past year is more than $3.50 there will be no deficiency payment payable in the current year.


William Marvin Howe: In view of the fact that the returns to the cream producers fall far short of the $4 per hundred-we'ght guaranteed by the government, is it the intention of the government to assist the family farms by amending the dairy policy so that cream producers will realize the $4 per hundredweight they were promised?


John James Greene: The policy was announced and explained in detail, and I think it speaks for itself. It will certainly provide for a $4 average for manufacturing milk, the highest, I believe, for manufacturing milk in Canadian history. I believe that when we came into office the national average price was $2.80.


Some hon. Members:: Hear, hear.

Mr. W H. A. Thomas (Middlesex West):
Mr. Speaker, I should like to direct a question to the Minister of Agriculture supplementary to that posed by the hon. member for Wellington-Huron in connection with the plight of cream producers in Canada. Would the minister be willing to have the prices now being received by cream producers reviewed for the purpose of seeing whether these people are in fact receiving an equitable deal under the dairy support program?


John James Greene: Mr. Speaker, we have the prices and the situation under constant review, and if additional action is necessary it will, of course, be announced in the house in the proper fashion.



THE SENATE


[Stage Direction]
On the orders of the day:
Mr. Melvin McQuaid (Kings):: My question is one of extreme urgency and considerable national importance. I ask the Prime Minister whether he can give us any idea when the representation of Prince Edward Island in the Senate will be brought up to full strength.


Mr. Speaker:: Order. I doubt that the question is so urgent that it ought not to be placed on the order paper.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. Robert McCleave (Halifax):: My question is for the Minister of Transport. In view of the minister's statement yesterday in Montreal, how soon can this house expect a national transportation policy?


John Whitney Pickersgill: A national transportation policy is evolving from day to day.


Michael Starr: From speech to speech.


John Whitney Pickersgill: I hope the house will be able to deal with certain aspects of it in the autumn.


Mr. Fairweather:: Is the evolution as complicated as the minister's speech in Newfoundland the other night?
June 7, 1966


John Whitney Pickersgill: No, just as simple and just as clear.


Some hon. Members:: Hear, hear.


Hon. Alvin Hamilton (Qu'Appelle):: My
question is related to the answer just given by the Minister of Transport. It is directed to the Prime Minister. Did the Prime Minister really clear the speech which the Minister of Transport delivered in Newfoundland on Saturday?


Mr. Speaker:: Order, please. This question is out of order.



NORTHERN AFFAIRS


[Stage Direction]
On the orders of the day:
Hon. W. G. Dinsdale (Brandon-Souris):: have a question for the Minister of Northern Affairs and National Resources. Was the minister announcing government policy in Winnipeg last Saturday when he indicated that the roads to resources program would be scrapped in favour of a national roads policy, with Ottawa doing the planning?


Mr. Speaker:: The question is not acceptable in that form. My understanding of the rules is that an hon. member may not ask whether a statement represents government policy.


Walter Gilbert Dinsdale: Then may I direct my question to the Prime Minister. Is the government contemplating replacing the roads to resources program by a national roads policy, with Ottawa doing the planning?


Lester Bowles Pearson: I would have to take that question as notice and consult with the minister concerned.



SUGGESTED CHANGE IN STATUS OF PROTECTIVE STAFF

[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: wish to ask a question of definite national importance, which concerns every member of this house. In view of a press release issued today by a distinguished official of this house concerning security measures on the premises of parliament, and in view of the duties presently performed by the protective staff and the fact that they are practically under military discipline without much right of appeal, can the Solicitor General tell us
Inquiries of the Ministry whether consideration is being given to making members of the protective staff peace officers of the crown?


Hon. L. T. Pennell (Solicitor General):: believe this is a question which should be directed to the Chair, not to the Solicitor General.


Mr. Speaker:: According to the rules the hon. member may wish to write to the Speaker about the matter.



PARLIAMENT HILL


[Stage Direction]
On the orders of the day:
Gilles Grégoire: Mr. Speaker, I should like to direct a question to the Solicitor General.
In view of the fact that a large number of French speaking citizens visit Parliament Hill during the tourist season, would the Solicitor General see to it that R.C.M.P. officers on duty on Parliament Hill can speak both languages?


Mr. Speaker:: I am sure the Solicitor
General has taken note of the hon. member's suggestion.


Gilles Grégoire: Are you sure of that, Mr. Speaker?



DEFENCE PRODUCTION


[Stage Direction]
On the orders of the day:
Mr. Thomas M. Bell (Saint John-Albert):: My question is directed to the Minister of National Defence. In view of the lay-off of 600 skilled men at the shipyard in Saint John and the possible loss of these men to the industry, can the minister give us any up to date information about when we shall finally see the beginning of the revised destroyer escort program?


Paul Theodore Hellyer: I would be pleased to take this question as notice and refer it to the Minister of Industry.


Thomas Miller Bell: Will the minister make a report to the house on the present position of these recommendations in which he has been involved, bearing in mind the lay-offs which are presently taking place in the depressed shipyards of Canada.

June 7, 1966
Customs Tariff


Paul Theodore Hellyer: I think this is really a subject for discussion when the estimates of the department are under consideration.


Mr. H. Russell MacEwan (Piciou):: Can the
minister say when he expects contracts to be awarded for two supply ships in respect of which tenders have already been called?


Paul Theodore Hellyer: Fairly soon, I think; but the question is one which might be placed on the order paper.


Thomas Miller Bell: Ten o'clock for this, Mr. Speaker.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. D. R. Gundlock (Lethbridge):: I have a question for the Minister of Agriculture. Would the minister indicate when there may be a decision on the request of the Charolais Cattle Breeders' Association of Canada for permission to export these animals to countries abroad?


Mr. Speaker:: Order. I gather that the same question was asked a few days ago, and is listed for consideration in the adjournment debate at an early date.


Deane Roscoe Gundlock: Mr. Speaker, I realize that probably I did not put my question properly, but with your forbearance I would again like to ask the minister, because time is very short, if there will soon be a decision on this matter of the Charolais cattle. Time is running out, and all I am asking is whether there will be a decision.


Mr. Speaker:: Order. I would like to remind the hon. member that the same question was asked a few days ago and a decision was taken that the matter would be discussed in an adjournment debate, which might be tonight.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Batten in the chair.

[Stage Direction]
1. That schedule A to the Customs Tariff he amended by striking out tariff items 945-1, 7905-1, 20925-1, 21045-1, 23505-1, 23705-1, 24100-1, 26325-1, 41105-1, 42205-1, 44043-1, 44047-1, 44125-1, 70500-1, 70505-1 and 84805-1, and the enumerations of goods and the rates of duty set opposite each of those items, and by inserting therein the following items, enumerations of goods and rates of duty:
Mr. Lambert:: Mr. Chairman, unless my memory tricks me this resolution was called on April 22 and there has been no subsequent discussion of it. At least Votes and Proceedings would indicate that was the last time it was called, and since the budget debate there has been no discussion on the amendments to the Customs Tariff. I would have thought the minister would have an explanatory statement to make, but due to the haste of his colleagues to carry the items I have to protect the interests of the house.
If the minister is prepared to make an explanatory statement which may obviate some of the questions that I and other members are prepared to put to him, then I am quite prepared to cede the floor to the minister and resume my comments after he has made that statement.


Mitchell William Sharp: Mr. Chairman, I should say that I propose first to call the resolutions on the Customs Tariff, then on the Excise Tax, and then on the Income Tax.
So far as the Customs Tariff changes are concerned, I would like to refer back to my budget speech when I mentioned that with the Kennedy round of tariff negotiations taking place in Geneva I was proposing few changes in the Customs Tariff this year.
[DOT] (3:20 p.m.)
It might help the members of the committee if I were to make some very general remarks about them.
There are four resolutions relating to the Customs Tariff. The first and second resolutions provide for amendments to schedules A and B of the Customs Tariff and contain 18 tariff items. Some of the items are new and for some the coverage is being broadened, while others are merely being continued without change for a further period. The third resolution provides for a technical amendment to an item in schedule C of the Customs Tariff, and schedule C lists the goods which are prohibited entry. The fourth resolution deals with the coming into force of the three previous resolutions.
That is all I have to say by way of general comment on the structure of the changes that are being proposed and perhaps at this point I should sit down and respond to questions.


Marcel Joseph Aimé Lambert: Mr. Chairman, when we are dealing with Customs Tariff resolutions of the type we have before us they seem to receive relatively little attention from the house and the communications media. I do not understand why it is that there is great attention
June 7. 1966

paid by commentators and writers of editorials to budgets. There is always a great buildup before the delivery of a budget and a great amount of coverage given immediately following its delivery, but when we come to studying the items contained in detail in the budget, members of the communications media all leave and we see very little if anything written about that study. If one wants to clear this house of people involved in the field of communications one need only speak about budget resolutions and the bills that follow those resolutions. Yet everyone is affected by them.
For many years I have worked on budgets on both sides of this house; yet when I spoke it seemed as though I were almost conducting a monologue, along with a few others including the Minister of Finance. This is an astounding fact when we consider that under the Customs Tariff Act the government receives 9 per cent of its revenue, which is not inconsiderable in relation to attempted raids by provincial governments on the general revenues of the government of Canada. During a recent political campaign certain people asserted that matters coming under the Customs Tariff should be the subject of a dialogue between the government of Canada and the governments of the provinces. In fact, some went so far as to say that trade, and I presume that included matters associated with trade such as customs tariffs, should be the prerogative of the provinces. Of course, I have never heard such utter nonsense in my life.
This country was founded on a constitution which set forth that there should be no obstruction to trade by the provinces. If provinces got their hands on customs tariffs or the deliberations as to customs tariffs or matters of trade we would see the greatest chauvinistic policies ever followed. If ever there was a move to balkanize Canada it would come as the result of moves toward changing jurisdiction in respect of acts such as the Customs Tariff Act.
Let us look at what the minister has proposed in respect of customs tariffs. This year the minister was wise enough to say that he did not propose to do very much in light of negotiations under the Kennedy round. I suggest that the minister proposes to do nothing because nothing happened under the Kennedy round. As a matter of fact, the progress made under that round of talks prior to the delivery of the minister's budget speech was almost nil. In fact, progress, if anything, was retrograde.
Customs Tariff
When we look at the items contained in the budget, other than those which deal with the automobile agreement which are tied in with sales tax on machinery for the purpose of auto parts manufacturing, we find there is precious little in the over-all that really affects Canada's customs tariff. Let us look at the items in relation to Canada's economy. What does "Feeds for use exclusively in the feeding of trout, on and after July 1, 1968" mean? There is also a reference to July 1, 1966, but what does this actually mean in terms of the economy?
Although the next item may be of interest to the individuals who are concerned, what will the change in "carnation cuttings in their first year of introduction" mean in terms of our economy? There is another item which I suppose will have some effect on small people. It relates to liquorice blocks, granules, paste or powder, not sweetened. What will that mean in terms of the economy?
Then we go from the sublime to the ridiculous in terms of these tariff items. Without casting any reflection on any business that may be connected with this item, move from liquorice blocks to captive balloons having a volume of 150,000 cubic feet or more which are to be used in the logging industry. The members of this house will require some education in this field because I am sure very few here know what this type of equipment is or how it is used. Are these balloons hung onto a mountainside from which a boom is suspended hauling logs out of inaccessible areas? In any event, I am sure that this change will not cost the crown a great deal of money because the use of captive balloons in this industry must be somewhat restricted.
The items also include a number of chemicals and minerals that are again of a kind which are used to a lesser degree than others. There is reference also to guns and rifles of a class or kind not made in Canada, parts thereof. Then there is an item for "oriental rugs or carpets with pile hooked or knotted by hand". This may have some appeal to those with aesthetic tastes, and the minister may want to point out the particular trade agreement under which the tariff reduction on this item was decided. There is a substantial reduction in the tariff here. Again, I think we would want an explanation from the minister as to how he is going to amend the regulations governing a settler's effects. Will this have to do with automobiles and an increase in the valuation of a settler's effects? Before

June 7, 1966
Customs Tariff
the resolution is passed we should have some indication from the minister in this regard.
[DOT] (3:30 p.m.)
Last year and the year before-when I was on the government side I spoke privately to the then minister of finance about this matter-I wondered why items 44043-1 and 44047-1, dealing with aircraft engines of a particular size, were not incorporated on a permanent basis. I believe we have gone through the performance, in the nine years I have been in this house, of giving an annual extension to these particular items. How long is this to go on? Is this a sort of exclusive pragmatic approach? Those are the only remarks I shall make in regard to the particular items that appear under Customs Tariff resolution No. 1.
Resolution No. 2 deals with the question of drawback. This is a somewhat more important matter and I am sure other members of the house will wish to speak on it because it affects the operations of Canada's automobile industry under the automobile parts agreement when we see that there is introduced a 99 per cent drawback on "machines; precision instruments and apparatus for heat treating, welding, sorting, testing, inspecting or correcting; control panels for use with the aforementioned machines and precision instruments and apparatus; all of the foregoing of a class or kind not made in Canada; accessories", etc. The amendment is:
When used in the plants of manufacturers of automobiles and motor vehicles or of automobile or motor vehicle parts for the manufacture of automobiles and motor vehicles or of automobile or motor vehicle parts; or when used for the manufacture of dies, jigs, fixtures or moulds which are used in the production of automobile or motor vehicle parts.
In actual fact this amendment goes one step back of the actual manufacture or assembling of automobiles or parts therefor in that the minister is including dies, jigs and machine tools that go to make up these automobiles and parts. The comments of the hon. member for Wellington South and others on behalf of the opposition clearly indicated that this would provide some very special relief. I think the minister must be commended for making this change and trying to help our auto parts manufacturers to achieve a position of relative equality with their counterparts and competitors in the United States, because the American manufacturers do not have to pay a comparable sales tax. That amendment is introduced under the Excise
TMr. Lambert.]
Tax Act. There is also the relief from any duty under the Customs Tariff when these machines are not made in Canada. That is all well and good in the event that we want to make the auto parts agreement function in the best possible way.
The third item has to do with certain very important matters, namely, used or second hand mattresses or materials therefrom. I think the minister should enlighten the house why this particular item was negotiated. Was it on behalf of a particular industry? I could talk to the minister about other industries which have made representations as to tariff changes. I know that his officials have had correspondence for instance, with the manufacturers of drilling bits in Canada who are trying to found a small, albeit important, secondary industry in the Canadian oil industry. They are in competition with a much larger industry in the United States. They are in competition with, shall we say, much more entrenched business habits which are in fact restrictive agreements on the part of American manufacturers who have distributing agencies and branches in Canada which lay down restrictive marketing practices. A supply house in Canada, whether it be a branch supply house or an independent Canadian supply house, that wants to handle a particular type of drill bit manufactured in the United States cannot do so unless it agrees that the item will be handled exclusively. This make it very difficult for any Canadian business to get started in this field.
I want to draw to the minister's attention that there are many industries in the oil business in Canada to which in the past certain customs tariff relief has been given. I remember that some five or so years ago a plant producing sucker rods was given protection. This meant the difference between a large plant continuing in business or closing down completely. Fortunately the government of the day saw the wisdom of imposing a reasonable tariff compared with the American tariff. I believe we imposed a tariff of 10 per cent. The Canadian manufacturer could supply the North Dakota field and service it but in the face of a 22\ per cent United States duty.
A great many of these goods come in under a one-way flow. It is all very well to allow commodities to be imported into Canada free of duty, but try to do the same thing into the United States and one runs into a very high tariff wall. One might say that one of the incongruities of the Kennedy round of talks
June 7, 1966

is the offer to slash tariffs by 50 per cent in respect of certain commodities that may be negotiated. It is very well to say you will slash tariffs from 10 per cent to 5 per cent but this is not really meaningful if the countervailing American duty is 50 per cent or 37J per cent because cutting that one in half means that the tariff is still relatively very high. Therefore all of the proposals of the Kennedy round of talks have to be studied very carefully; they can be deceptive on the surface.
The next matter I wish to speak about is in the general nature of a discussion with regard to the Customs Tariff as it relates to surcharges and particularly British surcharges. We have read comments that the British government-this was disclosed by the Chancellor of the Exchequer in his most recent budget declarations-proposes that by next November the British surcharges will have largely disappeared. It has been suggested in many quarters, and I would say informed quarters, that the reason these surcharges will be removed is that because of the pattern of British trade they really have not meant too much.
[DOT] (3:40 p.m.)
In fact, looking at today's headlines in the financial press one sees "pound hits 18 months' low point". There must be a very serious problem of imbalance of payments. If the pound is now down to the 18 months' low point it means that the customs surcharges are not having the effect of correcting the serious imbalance in British trade. Perhaps the minister will advise us on his thinking in this regard, although I am not inviting him to put himself in the role of the Chancellor of the Exchequer of the British Government. I am simply asking him to indicate to us his thinking on the nature of these surcharges.
He might also tell us what might be the effect on Canadian trade and Canadian customs of the devaluation of the Indian rupee. All these factors are affecting our trade. I realize that all these matters are partly under the jurisdiction of the Minister of Trade and Commerce. However, I am sure that the minister will take into account events which have come to pass since the Budget debate and, after listening to this discussion, will give us his views, because I believe the house and the country are entitled to know precisely what his thinking is in this regard.
As I said at the outset, Mr. Chairman, the Customs Tariff resolution is a relatively short one. The items are relatively inconsequential,
Customs Tariff
with the exception of one or two, and therefore I will limit my remarks at this time to what I have said. I am sure there will be other members of the house who will wish to raise other points on this resolution.


Mr. Scott (Danforth):: Mr. Chairman, there is one matter on which I want to ask the minister whether at some stage in the future he will consider making a statement to the house. I suppose that technically speaking it comes partly under the Department of Trade and Commerce but it is of such importance that perhaps the minister will take it into consideration.
I wish to say a few words about the Kennedy round of trade negotiations. When the trade expansion act was passed in 1962 it was greeted with wide acclaim and most parties in this house indicated an interest in it and a desire for Canada to participate. Recently, at the joint interparliamentary meeting in Washington, we had the opportunity to have some very frank discussions with members of the Senate and the House of Representatives concerning the Kennedy round of trade negotiations. Those discussions left us with the distinct impression that there is a very grave danger of the Kennedy round of negotiations ending in failure or becoming completely bogged down. Hon. members are certainly aware that a good deal of Canada's future trade and tariff policy is tied to the success of the Kennedy round.
The trade expansion act expires, I believe,, in June of next year, although I am not: positive of the date. The information which we received in Washington, and which we could not get here in Canada, was to the effect that the United States has not as yet been told by the European economic community the price which that community intends to set for the entry of U.S. agricultural products into Europe. This is really what the United States is after; they are primarily concerned with gaining access to the European economic community for their agricultural products. According to the United States people with whom we talked, a huge squeeze play is in progress. The European community is dragging its feet and has not yet told the U.S. the price it will demand. All the indications at present point to the fact that the European community will continue to do this until they run out the string, so to speak, until the trade expansion act has almost expired. They will then indicate to the United States the price which they intend to put on the entry of these U.S. products into
<6066

June 7, 1966
Customs Tariff
Europe. This means that the U.S. Congress will then be faced with the very real problem [DOT]of trying to arrange for an extension of the trade expansion act.
When that act was passed in 1962 nobody in the United States had any idea of the implications that the provision of the Kennedy round of negotiations might have on U.S. industry. In order to assuage the fears of many Americans the United States incorporated certain forms of adjustment and assistance in the trade expansion act. They were very vague but they were put in to allay fears in the United States regarding the imbalance which might result from actions taken under that act. Of course, in the interval there have been many test cases under this legislation and, as our U.S. friends told us, the legislation has not been successful and is not acceptable any more. Therefore once the renegotiation of the trade expansion act starts there will be a far greater amount of lobbying and pressuring in the U.S. than was the case in 1962. Fears were expressed to us that it will be very difficult to renew the trade expansion act in the same terms and that even if it is renewed, which is probable, the terms will be very different from those adopted in 1962.
I was very impressed with what the U.S. legislators told us. I felt that we got from them a greater degree of frankness and candour than we have been able to receive from successive ministers of trade and commerce here in Canada. We have received glib statements that the round is proceeding nicely and that everybody is happy, that Canada is sharing in frank discussions and that the outlook is bright. Yet when we spoke to the people responsible for the success of these talks we gathered from them that the outlook was one of pessimism and gloom for very obvious practical reasons.
That is why I hope that at some stage we will receive a frank statement from the government regarding its status in the negotiations. I realize that Canada is in a difficult position and that before the completion of negotiations between the United States and the European economic community it will be difficult for Canada to evaluate its position. However, I feel that to some extent we have been misled. There appears to be no second string to Canada's bow. We seem to have hitched our wagon to the success of this round of negotiations. This may not be the case and I would be very glad to have an indication to the contrary from the minister.

We have always been told since I first came to the house in 1962 that Canada's future trade patterns will embody a rationalization arising out of these negotiations. As I have indicated previously, the information we gathered from our talks in Washington was that the European economic community will keep the U.S. hanging in the air, will then tell them the price to be paid and then the squeeze play will begin in the United States to see whether or not the pressures at home are too great to permit renewal of the act. It seems to me this would pose great problems for Canada because of our dependence on U.S. trading patterns and our proximity to that country. I think that at some time in the future the business community in this country will be most interested in receiving a frank and realistic appraisal of the Kennedy round of negotiations.
Some of my colleagues will speak on other points in the Customs Tariff resolutions regarding such matters as carnations, trout and so on, which are not of great importance. However, there are some broader issues on which we hope to hear from the government at some time.
[DOT] (3:50 p.m.)


David Orlikow: Mr. Chairman, at this time I should like to raise a question concerning not what is in the proposals made by the minister but rather what should be in them. I believe the minister ought to explain to the house and the country the reason for this omission. I refer to the refusal of the minister to deal in any way at all, except by ignoring them, with the concrete recommendations made on a number of occasions by the Restrictive Trade Practices Commission. After a careful study of alleged combines the commission recommended that one of the most effective ways of dealing with combines and of guaranteeing that public money will not be stolen by some of the biggest corporations in Canada through combining to raise the prices of the products they sell and to eliminate competition, is to remove the tariff protection these industries have which enables them to mulct the Canadian public of millions of dollars.
Combines legislation in this country is probably more than 50 years old. I suggest that tens of thousands of speeches must have been made by Liberal cabinet ministers and by Liberal prime ministers concerning the wonderful legislation passed by a Liberal government under Mackenzie King, which first proposed such legislation to protect the
June 7, 1966

rights of the Canadian people and protect them against business concerns getting together to raise prices and eliminate competition. This legislation, Mr. Chairman, has been almost completely ineffectual.
I bring to the attention of the Minister of Finance an editorial which appeared in the Toronto Star, a Liberal newspaper which I think needs no defence from me, on August 13,	1964, headed, "Who's Watching The
Road"? I should like to read a couple of paragraphs from this editorial dealing with the question of combines:
The anti-combines legislation is inadequate. The Liberal Party said so when in opposition-indeed they charged that changes made by the Diefenbaker government weakened the law. Yet 16 months after forming a government no amendments are before the House of Commons.
The highest fine that has ever been levied in the history of prosecutions was $25,000 even though parliament removed the limit some years ago. Such fines are little more than a licence to rob when compared to the illegal gains that companies can accumulate during years of price fixing.
In a return made in answer to a question which I asked in 1963 concerning the names of companies which had been prosecuted, I received a list tabled by the then minister of justice running to six pages. The list contained the names of almost 200 companies. I suppose if it were brought up to date, and I believe I have a question on the order paper now asking that this be done, there would probably be at least 300 companies on that list. Some of them are influential and respected companies in Canadian business life such as Canada and Dominion Sugar Company, the KVP Company, Howard Smith Paper Mills, Anglo-Canadian Pulp and Paper Mill.
One could go down the list and find that some of the biggest companies engaged in every type of business and commerce have been found guilty of violating the anti-combines legislation. The largest fine ever assessed was $25,000, although the law permits more. Never in the history of Canada have we followed the example of the United States when several years ago, in a case having to do with electrical companies, a number of the officials of those companies were sent to jail for a month. I am sure that for highly influential and respected businessmen this must have been a rather traumatic experience. We have not followed that course. Our legislation has been to a large extent not only ineffective but really a hoax.
One of the few things we could do if we meant business would be to exercise our right to remove the tariff concession in the case of
Customs Tariff
an industry guilty of violating our anticombines legislation. In 1962, following an exhaustive study, the Restrictive Trade Practices Commission, after looking into the question of the acquisition by Bathurst Power and Paper Company of Wilson Boxes Limited, recommended that appropriate tariff changes ought to be made to restore competitive conditions in the supply of containerboard and shipping containers. This was one of the recommendations of that commission. Yet when I asked the minister whether the government was considering implementing that recommendation his answer was, as found in Hansard of June 1, page 5814:
Yes, the restrictive trade practices commission did make a recommendation along these lines. This recommendation, together with other recommendations which have been made by the commission on tariff matters, is being studied in connection with international trade negotiations.
That means precisely nothing. It means that this is a bargaining point for Canadian negotiators. It means the government is not prepared to use the removal of tariffs as a means of getting companies which have been tried and convicted of violating our combines legislation to toe the line, to live up to the law. It is not surprising, therefore, that the Winnipeg Free Press, with which I do not often agree, contained an article on June 2, 1966, written by Maurice Western, with regard to the answer the minister gave to the effect that what the government was doing was studying this specific recommendation in connection with trade negotiations. Mr. Western said:
It is precisely what all Canadian governments have done. They have treated the tariff provisions as so much window dressing. It may appear to the consumer simple justice that a firm which abuses the tariff privilege should lose it. But the official view has always been different. It is proper, evidently, that the organizers of combines should be punished by fines but improper that they should be deprived of the protective barrier which permitted them to combine in the first place.
This is not the only illustration. I do not pretend that I have made a definitive study but I made a quick check this morning of some reports made by the Restrictive Trade Practices Commission and I should like to refer to one in 1952 dealing with rubber products. I shall quote just a few lines from page 683:
[DOT] (4:00 p.m.)
Another detrimental aspect of the arrangements is related to tariffs: There is substantial tariff protection on most of the products with which the arrangements are concerned. It was of particular


$068 COMMONS DEBATES
[Stage Direction]
June 7, 1966
Customs Tariff
*significance in respect of certain mechanical rubber goods and tires and tubes. Now when domestic manufacturers are competing behind a tariff barrier, the tariff is serving its intended purpose of protecting the domestic industry against prices from without the country which the domestic industry, in spite of reasonable efficiency, cannot meet or better-
They go on to suggest that when the tariff is used to hold the price up this is improper and the tariff ought to be removed or reduced. This report was published in 1952, 14 years *ago, but there has been no action to date.
In the report on fine papers in 1953 the Restrictive Trade Practices Commission made the following recommendation at page 413 of the report:
It would appear likely that a modification of the tariff would have a substantial tendency toward the restoration of freedom of opportunity for entry into the wholesale fine paper trade, which has hitherto been so closely restricted, and would assist generally in the restoration of competition throughout the industry and trade.
I am sure the minister is concerned, as he should be, about the fact that the party he represents has only one seat in the three prairie provinces. This is not surprising because one of the factors of life in western Canada is that on the whole its people are purchasers of manufactured goods. We have to pay the price which industry in eastern Canada charges, industry operating behind the protection of tariffs.
We do not object to that, Mr. Chairman, because we realize it is necessary. But we do think, in fact we know, that Canadian industry like every other Canadian businessman, farmer, or worker should be required to observe the laws of Canada. The anti-combines legislation is just as much the law of Canada as laws having to do with picketing in labour disputes, laws having to do with goods and services or laws having to do with the provision of required standards for products.
As I said earlier, Mr. Chairman, the anticombines legislation has been on our statute books now for 50 years. The people of Canada know from experience that this law is not very effective. The right of the government to impose and to remove tariffs is the only effective weapon the government has in this regard. Yet the Minister of Finance, like past ministers of finance, has refused entirely to use this weapon.
I believe that rather than the minor changes he is recommending today the minister should take another look at the question. I
[Mr Orlikow.]
think he ought to look at the recommendations made by the Restrictive Trade Practices Commission over the years as a result of inquiries it has conducted into almost every aspect of Canadian business life. If the minister means to enforce the law and if the government means this legislation to be more than a law gathering dust in law libraries across Canada, the minister ought to use the power he has to adjust the Customs Tariff so as to make Canadian companies which have been guilty of violations of the anti-combines legislation live up to that law.
Mr. Nielsen:: Mr. Chairman, I have one or two simple questions I should like to ask the minister which he could perhaps answer now.
The item listed in the resolution as 44043-1 contains these words:
Aircraft, not including engines, under such regulations as the minister may prescribe:-
Then it continues:
-44043-1-When of types or sizes not made in Canada.
The following item deals with the same subject matter. My understanding-and perhaps it is because of my lack of appreciation of the complexities of budget resolutions-is that the tariff is intended to protect the type or size of aircraft made in Canada. Yet we have two tariff items here which are purportedly placing a tariff upon types or sizes of aircraft not made in Canada, a tariff which apparently would be imposed upon every aircraft imported into Canada. Would the minister explain those two items before I make my representations on the imposition of the tariff to the minister.


Mitchell William Sharp: Mr. Chairman, perhaps I might deal with the specific question put by the hon. member for Yukon. These tariff items dealing with aircraft and aircraft engines relate to the renewal of free entry under the most favoured nation tariff for another year. They do not impose anything; they renew free entry for another year for items which would otherwise be subject to duty. Both of these items were established in 1952 and have been periodically renewed since then.


Erik Nielsen: At the same rate?


Mitchell William Sharp: Free. The Air Transport Association on behalf of aircraft operators and the Air Industries Association representing the producers both support the extension of free entry for another 12 months. May I say in answer to the general question which the
June 7, 1966

hon. member put to me that the reason many items of a class or kind not made in Canada are in the tariff and subject to duty is that they might be made in Canada, and the duty provides some protection for industries which might want to establish.


Erik Nielsen: Then the representations 1 have can be confined to the imposition of a tariff of 15 per cent, which I believe is the rate charged now, on aircraft of a class or kind made in Canada, 4,000 pounds or less gross weight. I refer to the tariff which I believe was increased either from zero to 15 per cent or from 10 to 15 per cent as soon as Found Brothers commenced manufacturing their aircraft. I believe their first aircraft was placed on the market last summer.
I presume that the increase was brought about by a regulation which the minister was empowered to make. But I would draw to his attention, and through him to the attention of the government, an aspect of the matter which was perhaps not fully considered when this tariff was imposed. While it is a laudable objective to protect Canadian industry, particularly in this field, in the manufacture of aircraft of this class or kind or any other class or kind, there is another industry in the country which is being harmed by the imposition of this tariff, the general aviation industry.
I speak as one who comes from an area where a good many aircraft, most of which are of a class or kind of less than 4,000 pounds gross, are required. The industry in that particular area of northern Canada and also in the northern portions of the provinces now finds itself in the position of being penalized if it wishes to purchase an aircraft for use in the charter business of a size or class of 4,000 pounds or less gross unless it is a Found Brothers machine.
[DOT] (4:10 p.m.)
I believe that a safety factor has been worked into the regulation in that Found Brothers must take 10 per cent of the market before the tariff is attracted. I am sure the minister will see immediately that all that is required in order to upset this formula is for one well-heeled distributor to purchase 10 per cent of the total number or dollar value of aircraft of that class or kind imported from the United States or anywhere else. This is not too difficult since the number of aircraft in this class that are imported is in the neighbourhood of 150 to 250 a year. It is not
Customs Tariff
too difficult to concede that one dealer could purchase 15 to 25 aircraft.
My main point to the minister is that the general aviation industry in Canada, particularly in those areas where these types of aircraft must be used in operations, is being harmed. The objective here is laudable enough but so is the objective of providing vital communication for our northern areas. We cannot say generally to the aviation industry, to all departments of government involved and to commercial and industrial enterprises endeavouring to supply and open up the Canadian north: You must use a particular type of aircraft. This is the kind of result that this tariff is having on the aviation industry generally in these areas.


Mitchell William Sharp: Mr. Chairman, as the hon. member for Yukon has recognized in his remarks, the application of duty to this particular aircraft was an administrative ruling founded upon the law which has been on the statute books for many years.
I might say to him that when an application or a request for tariff protection of this kind based upon a classification of "made in Canada" is received from a Canadian manufacturer, extensive inquiry is made by the Department of National Revenue for the purpose of determining whether an item should be transferred from "not made in Canada" to "made in Canada". These rulings are usually based upon a minimum supply of 10 per cent of the known market. The department endeavours to satisfy itself about this. Before it made its ruling on January 12, 1966, with regard to this aircraft it made a very thorough investigation and satisfied itself that the aircraft in question is being produced in Canada in a quantity sufficient to justify its classification as of a type or size made in Canada.
By way of further explanation may I say that until that ruling the only aircraft ruled to be of a type or size made in Canada, and thus subject to the 15 per cent mostfavoured-nation duty, were single engine, fixed wing aircraft having a gross weight of 4,500 to 8,000 pounds. Pursuant to this administrative ruling the "made in Canada" ruling was extended to cover high wing, fixed undercarriage, single engine aircraft having a gross weight of 2,701 pounds to 3,300 pounds, but all aircraft engines are ruled to be of a class or kind not made in Canada.


Erik Nielsen: I have a couple of questions I should like to ask the minister or perhaps he

June 7, 1966
Customs Tariff
could comment on what I have to say. By placing a tariff on this class of aircraft there have been excluded from equality of market availability to industry in the north aircraft such as the Cessna 185 which is extensively used in the north, the Cessna 180, the Cessna 172, the Cessna 140, the Stinson Voyageur, the Stinson Station Wagon, the Super Cub, the Piper Cub and a host of other aircraft. This has been done in favour of one aircraft. What is happening is that the industry is being forced either to use one particular aircraft or pay a 15 per cent penalty if that aircraft is not used.


Mitchell William Sharp: I can assure the hon. gentleman that his representations will receive very serious consideration.


Walter Gilbert Dinsdale: Mr. Chairman, on the last point I heartily concur with what the hon. member for Yukon has said. I might also mention to the minister that the point raised is applicable to those flying in the south.


An hon. Member:: And in the east.


Walter Gilbert Dinsdale: And in the east. We do not want to go to all points of the compass today. I was differentiating between the peculiarities of flying in the north and flying in other parts of Canada.


An hon. Member:: Flying club activities.


Walter Gilbert Dinsdale: Yes. The flying clubs across Canada have made a very significant contribution over the years to the progress of aviation. I am not going to make a long speech about how important they have been in peace and in war in terms of transportation and the development of the general economy.
It is the flying clubs which in the past have largely been, and are at present, the source of supply of adequately trained pilots. We are well aware that there is a shortage of pilots at the moment in Canada. That has been dealt with in the house. Because there is a shortage of pilots, we are faced with a situation in relation to national defence which compels us to provide a financial incentive and inducement for military pilots to remain in the Canadian defence forces.
Any adverse financial penalty, such as the one in the administrative decision that has been referred to, works adversely with regard to the operations of flying clubs. I am sure that the minister will take this into consideration in his review, because we do have a
[Mr Nielsen.]
chronic shortage of trained pilots at the moment.
May I draw one other aspect of flying to his attention. Flying is becoming to an increasing extent an important part of farming in western Canada. The flying farmer movement is growing by leaps and bounds. Aircraft are used in spraying and in other activities. Just two weeks ago I attended a flying farmer fly-in and was amazed to see the tremendously increased interest of our prairie farmers in the use of small, light aircraft in their farming operations. I am sure that the minister will also take this fact into consideration as he carries out his annual review with respect to this matter.


Mr. Nesbitt:: I have a brief question, Mr. Chairman, and it concerns carnation cuttings. I see it is suggested that carnation cuttings be allowed in free of tariff whereas previously there has been a small tariff. Could the minister tell us why carnation cuttings have been considered as opposed to other flowers in commercial use such as roses and the like?
[DOT] (4:20 p.m.)


Mitchell William Sharp: As the hon. gentleman has, I think, noted, the only change in this item is the deletion of the word "rooted" which formerly appeared before the word "carnation". The effect is to provide free entry for unrooted as well as rooted carnation cuttings.
The reason we did this was that we had received representations on behalf of those who wished to obtain unrooted cuttings. This amendment was supported by the Canadian Horticultural Council. It is understood that no Canadian firm is engaged in the business of growing carnation cuttings. I would suggest to the hon. member that there might be firms which would have been prejudiced had we extended similar treatment to other forms of cuttings.


Mr. Prittie:: The point I wish to raise has to do more with administrative arrangements than with the actual legislation concerning the Customs Tariff. I have in mind the difficulty which some Canadian firms experience in their efforts to obtain specialized production machinery, particularly when there is little demand for the type of machinery in question. As I understand it, if such firms wish to obtain a tariff advantage they are required to find out first whether there is a Canadian supplier of the machines they wish to purchase. One of the departments, either the Department of Defence Production
June 7, 1966

or the Department of National Revenue, provides some assistance by furnishing lists of Canadian manufacturers or suppliers.
As usual I have a particular case in mind. Hon. members usually do when they speak on a subject of this kind. The party concerned had followed this procedure, had obtained the list of possible suppliers and made contact with them. I might add that this takes a great deal of time. Eventually a possible supplier was found and, as sometimes happens-this is one of the problems of our geography-the possible supplier was located in Quebec while the party I have in mind was established on the west coast. Nevertheless contact was made. Only later was it discovered that the firm supplying this equipment was not geared to making the size specified.
The point is that a considerable time necessarily elapsed before it could be determined that there was no Canadian supplier of the type of machinery required. It is true the department made assistance available but I am wondering whether arrangements could be made to speed up this whole process.
When it has been determined that the article required is not made in Canada, the customer can go ahead and import it, usually from the United States, at the tariff advantage. However, as I have shown, a great deal of time is consumed and I wonder whether the process could not be shortened.
There is another question I should like to raise briefly with the minister. I notice in looking at this list that of the items which are not made in Canada some enter free and others are subject to various percentages of duty. If an item is not made in Canada I am somewhat at a loss to know why there should be a customs tariff at all, particularly on production machinery which, of course, is used to create more wealth in this country.
I suppose the question I am really asking is this: To what extent is the customs tariff a revenue resource for the country? Is this the purpose? It seems to me it must be the only purpose because if an item is not made in Canada and it is used for production there can be no other point in imposing a tariff at all. I am inclined to think that all goods of this type should be free to enter without any tariff being imposed.


Mitchell William Sharp: Perhaps I may reply to the two specific questions raised by the hon. member for Burnaby-Richmond and then go on to comment on earlier remarks made during the discussion.
Customs Tariff
I am assured by the official from the Department of National Revenue who is sitting in front of me today that the process of determining whether the goods are made in Canada has been speeded up considerably in recent years and that endeavours are being made to make the process even more rapid than it is today. So there is really no difference of view between the hon. member and the government on this point.
The hon. member asked why customs duty should be applied to articles not made in Canada. First of all, although this is becoming less and less important, there may be some useful revenue to be derived from this source even if the customs tariff is no longer regarded as a source of revenue-


Robert William Prittie: I specified production machinery.


Mitchell William Sharp: Even in the case of production machinery there might at one time have been a reason for imposing duty as a source of revenue in days before our tax laws became as sophisticated as they are today.
However, there is another reason for imposing a tax in some instances on goods not made in Canada. I would not say this argument necessarily applies to production machinery. It affords a small amount of protection to a manufacturer who wishes to get started in Canada in the period before he is able to obtain a "made in Canada" ruling. This is a device which has a good deal of historical validity. I have known instances where manufacturers might not have been prepared to take the initial risks of getting started had they not enjoyed some measure of protection during the early years of production.
This brings me to another point which has been raised by a number of speakers in this discussion, namely, why there is so little in the list of items included in the budget affecting the Customs Tariff. The reason is the one I gave at the beginning of my remarks today, namely, that we are engaged upon the most extensive tariff-cutting exercise in our history and we are using in our bargaining whatever bargaining levers we have to the maximum extent.
I am one who believes in freer trade and it has been my endeavour both before being in politics, at least as an elected member, and while I have been a minister, to press in favour of freer trade. I have had to recognize, as have many others in this field, that it is important to this endeavour to obtain as

June 7, 1966
Customs Tariff
many concessions as one can from the countries to which Canada is selling goods. So while it might be advantageous to Canada to reduce its tariff on a particular item it is more advantageous if Canada can both reduce its tariff and bring about the reduction of tariff in a country to which we can sell.
[DOT] (4:30 p.m.)
This in general is the reason why it is not desirable to make unilateral tariff cuts even in cases where we have recommendations from the Restrictive Trade Practices Commission. If we are going to make these cuts it is better that we use them to obtain concessions in foreign markets. If we make them unilaterally we will get no thanks or reciprocal concessions.
A number of comments have been made on the Kennedy round. The hon. member for Danforth spoke about the briefing that the Canadian members of the interparliamentary group received when they were in Washington recently. I wish I had been there; I am sure I would have profited as much as they did.
It was clear from the beginning that this was going to be a difficult exercise but I have always felt, and so has the government, that Canada should co-operate to the utmost in ensuring its success. I do not think I have ever been other than realistic in my assessment of the chances of success, but I do not think it would be in Canada's interests, nor in the interests of the success of the Kennedy round, if we were to talk in any way that would suggest that the Kennedy round may fail and that we should be looking about for alternatives.
That would only indicate we had lost confidence. I do not think that would be in the interests of the success of these negotiations and I for one would not want to be party to any statements of that kind. I do believe that Canada should continue to support the Kennedy round. I know that progress is being made. I believe that one can be somewhat more hopeful now than one could have been even a few weeks ago about the ultimate success of the negotiations.


Mr. Rynard:: The minister has partially answered one of my questions which has to do with an automotive parts company that rebuilds motors. The man who owns it tells me he is finding it difficult to be competitive. The motors come in free under the auto pact

agreement but the parts he imports for rebuilding them are taxed. He thinks this will put him out of business and I am wondering what consideration has been given to people in that plight.
I am sure the minister knows about Lake Simcoe Industries which manufactures small parts for sale to General Motors, Ford and other companies. They feel they are being pushed out of business because of transport costs, and a lot of their work is being sent to their parent company in the United States. This may be the pattern in Ontario, Quebec and other provinces and I ask whether something can be done to help. We give aid to depressed areas. Surely we could give some help to the manufacturers of small parts.


Mitchell William Sharp: Mr. Chairman, the whole question of the effects of the automobile agreement upon industry has been engaging the attention of various departments of government for many months. In the proposals that are before the committee, indeed not only those relating to customs tariffs but those relating to excise taxes, we have tried to do what seemed to be feasible and possible to relieve the situation and to improve the bargaining position of Canadian manufacturers. We had to recognize from the beginning that there might be some casualties. But we did know, and this has certainly been justified by events, that there would be a far greater expansion in output in Canada than the contraction that would take place as a result of the falling by the wayside of certain industries.
We are continuing to study this problem. The measures proposed in the budget and now under discussion will help a bit and we are continuing to explore other possibilities that do not necessarily require changes in the law.


Thomas Speakman Barnett: Mr. Chairman, I wish to speak about the importation of face respirators, a matter which may involve a minor amendment to the Customs Tariff but not one which would involve many people and certainly not one that would involve a substantial amount of revenue to the crown. Nevertheless the argument is one that can be justified on sound grounds.
A number of years ago the son of one of my constituents contracted a serious illness as a result of polio and had to spend an extensive period of time in the Pearson Hospital in Vancouver, a hospital which endeavours to provide rehabilitative treatment
June 7, 1966

6073;
for polio victims and the necessary care they require. The son has remained almost completely paralysed and has to wear a respirator at all times unless he is in a rocking bed.
His family desired to have him home from time to time and made arrangements to secure the necessary equipment for his treatment at home. Inasmuch as the hospital was not able to provide the rather expensive equipment, the family bought a rocking bed and a respirator and later, to ensure that there was no risk in having their son at home, acquired a second respirator. This equipment costs roughly $1,500 when purchased from the makers in Denver, Colorado.
This situation came to my attention when both of the respirators went out of order rather suddenly and the family had to make a request for a rush shipment by air of a temporary machine while the two they had were sent for repairs. The family discovered that even though the temporary machine was imported on a loan basis it was theoretically necessary for them to pay the full import duty on the machine. However, after some negotiation with the department they were able to have the matter adjusted and except for a deposit of $25 the duty was waived. Inasmuch as the repair of their own equipment had not been completed and the machines returned within 30 days they had to make an application for renewal.
[DOT] (4:40 p.m.)
As I understand the existing law, if equipment of this sort is imported into Canada by a public hospital it comes in duty free. However, when the same equipment is imported by a private individual apparently he is liable to the tax. If the machines are shipped to the manufacturer, the only people apparently who can effect the necessary repairs, tax has to be paid on the value of the repairs each time they are required. This appears to me to be unfair and unreasonable under circumstances where the family faces a terrific expense over a period of years. That family must pay the tax whereas a hospital requiring similar repairs for its machines does not.
I have in my hand a letter dated December 29, 1965 over the signature of E. E. Burridge of the port administration branch, written to one of my constituents in answer to an inquiry he made. I should like to quote a part of it to indicate that my suggestion that some amendment is required is borne out by an
Customs Tariff
opinion of the national revenue department. The letter states in part;
As indicated in our previous letter the best possible treatment that may be accorded when an article is returned to Canada after being repaired in the United States is assessment of sales tax on only the value of the repair work. There is no provision in the customs law under which this assessment or payment of tax on repair parts may be waived. Any further relief from payment of tax would require a change in the legislation.
It seems to me, in a matter of this kind which obviously involves only a very minor change in the existing legislation, that on a purely humanitarian basis, if on no other, this is something which the minister might readily accept.
I am no authority on the ins and outs of entry documents but on the entry document in respect of this case there is listed "one carton-face respirator", and the tariff item applied is noted as being No. 41024-1. This document relates to the importation of a loan machine. It indicates that the arrangement is similar to what I stated earlier in that the levy is only $25. It also has on it the words, "authority for one-sixtieth entry attached." The tax exemption is allowed because of special circumstances relating to this being only a temporary importation.
It is my submission that in cases where machines of this kind are brought in on a temporary or loan basis or for that matter for the permanent use of a patient in Canada, a family desirous of importing such equipment should be on all fours with public hospitals. I cannot envisage any likelihood of abuse of this privilege by individuals inasmuch as no-one is going to want equipment of this kind unless he really requires it.
The importation of equipment for the purpose I have described could be authorized by hospital authorities who would indicate that the equipment was necessary. Would the minister indicate whether he is prepared to give some consideration to making this minor but very humane change in the customs law?


Mitchell William Sharp: Mr. Chairman, a number of representations similar to those made today by the hon. member who has just spoken have been received by my department not only recently but over a period of several months. As a result the question relating to appropriate tariff treatment to be applied to equipment of this kind has been referred to. the Tariff Board for report. This matter is important and I assure the hon. member that as soon as the Tariff Board has, reported we

June 7, 1966
Customs Tariff
will consider specifically the kind of case he has mentioned today.


Thomas Speakman Barnett: I should like to ask one further question in relation to the reply made by the minister. May I take it from what he has said that, subject to the Tariff Board report, this will be an item which he will be prepared to consider for inclusion in the next set of Customs Tariff resolutions accompanying the presentation of the next budget?


Mitchell William Sharp: I hope that the Tariff Board report will be brought down in time for the next budget. Perhaps I should add that not [DOT]only is the question of rates being considered by the Tariff Board but also the scope of the [DOT]exemption that should apply.


Wallace Bickford (Wally) Nesbitt: Mr. Chairman, I should like to bring one matter to the attention of the minister which I am sure has been brought to his attention both inside and outside this house on previous occasions. Perhaps he can give us his ideas or thoughts in this regard.
Since the automobile pact came into force a .situation has arisen which is causing genuine hardship to some automobile parts manufacturing companies which could be corrected in a relatively easy way. A number of independent Canadian owned automobile parts manufacturers could very well compete with their United States competitors except for one reason related to the present consideration. It is very difficult sometimes to obtain production *machinery because of long delays on the part of Canadian manufacturers in filling present orders. Has the minister given any consideration to some sort of legislative change whereby if a manufacturer of automobile parts *could show that it was not possible to obtain production machinery of a class or kind manufactured in Canada within a reasonable time relief could be provided in the payment of tariff on the importation of such machinery?
[DOT] (4:50 p.m.)
I am sure the minister is aware that very [DOT]often a company may require a machine for a particular production process and be told that it is not possible to obtain the machine for 18 months or even two years. Such machine may be obtainable perhaps three or four months earlier from the United Kingdom or the United States but, of course, there is a considerable tariff on such machinery coming into this country provided similar machinery is made in Canada. In view of the present circumstances, wherein orders in Canada often fall far behind reasonable delivery dates

because of excessive demands, people are being penalized in their attempts to compete with their competitors in the United States and elsewhere because of the extra tariff.
I realize that this situation may not always exist in the future and for this reason I would not suggest to the minister that there be a permanent change in the Customs Tariff regulations. But while this situation does exist, while production facilities in Canada are lagging behind with respect to delivery because of the failure to obtain a particular machine, the minister might suggest to his colleagues that when the Budget bills are introduced they include legislative provision to relieve the payment of customs duties in these circumstances.


Mitchell William Sharp: Mr. Chairman, the general answer to the question put by the hon. member is yes. The government has been giving consideration to this particular point, not with relation to motor vehicle manufacturers but parts producers. There are instances, as the hon. member has said, where machinery held to be of a class or kind made in Canada is not in fact available in a reasonable time from Canadian sources, and this very question is under the most careful examination.


Mr. Mongrain:: Mr. Chairman, I have one suggestion to make; it is somewhat out of the ordinary and though it may not be of major importance, I think it is deserving of the minister's attention.
I gather from the contents of the file that the minister is already informed and that he intends to deal with it. If I bring it up, it is simply to call the attention of the house to certain cases, possibly marginal cases, and also to insist once again, so that it will not be forgotten when the next budget is being prepared.
It is a suggestion which, I thought, concerned the Department of National Revenue, but after discussion with the head of the department, it was decided that this came under the Department of Finance.
To state the case clearly, I am taking the liberty of reading a request that was made to me by a group of English speaking citizens in my constituency. I think it is the best way to explain what I have to say.
I quote:

I understand that a person can receive "an unsolicited gift" from a person outside the country up to the value of $10 duty free. This regulation
June 7, 1966

apparently has been in effect for many years. If this is so, a gift costing $10 ten years ago would cost much more today, and therefore a gift that would have come in free ten years ago can no longer enter the country free.
(Translation)
I now come to the most important part of the letter.

Second, I understand there is a ruling that an article 100 years old can be considered an antique, and in consequence can be brought into the country duty free. However, the wording of the law does not state 100 years old at date of entry into Canada, and must therefore be interpreted as 100 years old at date of making the regulation. Therefore if this regulation was passed say in 1954, the article would have to be 112 years old now instead of 100 years old.
This situation arose through the conversation of an employee of the customs department, who claimed it caused problems to try to establish the date of manufacture, rather than that it was approximately 100 years old.

Such is the core of the suggestion. Obviously a major amendment to the act is not involved, it is rather a question of detail, the effects of which are rather sentimental. I wonder if this is not the time, while the resolution is before us, to point out to the minister that there are undoubtedly grounds for an amendment.
I believe that such is the intention of the minister, as I said a moment ago. It is not for me to suggest that this is the proper time, or that it should be done next year when the budget is being prepared, but if those who are versed in procedural matters suggest that this could be embodied in an amendment, it might be just as well to do it now. I have a letter from the minister in which he says, once again, that he intends to deal with this.
That is the only suggestion I wanted to make, Mr. Chairman.


David Orlikow: Mr. Chairman, I want to turn for a moment to the matter which I raised earlier because, frankly, after the minister's answer I am as confused as I was before. The minister is in theory at least, as a member of the Liberal party, a believer in free trade. I must say that I am in theory neither a free trader nor a protectionist. I believe in using the tariff to benefit people to the maximum degree. If the tariff helps, fine. If it does not help, we should not have it.
I can understand the minister's general argument that we should not unilaterally
Customs Tariff
reduce all tariffs, that we should reduce our tariffs in respect of other countries as they reduce their tariffs in respect of Canada. That makes a good deal of sense. However, I was not dealing with the question of tariffs in general at all. I was dealing with the specific case of industries or businesses which have been found guilty by the restrictive Trade Practices Commission, and in some cases by the courts, of violating the law by combining to increase prices, to overcharge the public, to steal from the public.
I should like the minister to explain to me why, if he used the power he has to remove the tariff in a particular case, not every Monday and Thursday, not even every week but once every four or five years, he feels this would affect the ability of Canada to negotiate tariff reductions and concessions with other countries. It seems to me, as I said earlier, that the one provision of the anticombines legislation which the government can use effectively, if it really means its protestations about wanting to keep prices down and seeing that industry does not combine to raise prices, the one club it has -perhaps the minister does not like that word but sometimes business has to be clubbed-in trying to achieve this objective is the threat to wipe out the tariff or reduce it unless industry lives up to the law. Also, unless the threat is followed occasionally by action it is useless. I should like the minister to explain to me how this would hurt the general negotiations which have to be carried on.


Mitchell William Sharp: Mr. Chairman, perhaps I could answer this question by pointing out that in engaging in the Kennedy round Canada is not following the practice of the United States, the United Kingdom or the main industrial countries of Europe. We are not proposing to offer an across-the-board cut in our tariffs in response to an across-the-board cut in tariffs of our principal markets. We negotiated at the beginning from the position that an across-the-board cut of 50 per cent in our tariffs would be far more beneficial to the countries with which we were negotiating than a 50 per cent cut in their tariffs would be to us.
[DOT] (5:00 p.m.)
We therefore obtained international agreement to the proposition that we should be authorized to offer concessions of equivalent value. This is a matter of judgment. In the offers that we are making we are proposing specific cuts in specific tariffs and therefore every item in our offer has a value. That is

June 7, 1966
Customs Tariff
why I said I was very reluctant to make unilateral cuts in our tariffs which I might be able to use as offers in the international negotiations in which we are now engaged. Indeed, I am sure it is no secret or a surprise to hon. members who are familiar with international negotiations that the first offer we made was not considered adequate and therefore we have had to increase our offers so as to gain an adequate response. Otherwise our customers will begin cutting back on concessions that are particularly valuable to us.
That is why I have no hesitation in saying that I think it would be inadvisable at this particular stage for us to make unilateral cuts on individual items, even for worthy purposes such as those which have been put forward by the hon. member for Winnipeg North, and that it was prudent on our part to include such items in the bargain that we are attempting to strike in Geneva.


David Orlikow: What the minister is saying, not to me but to those companies which have in the past and are probably at the present time getting together in combines to increase prices to the consumers of Canada, is that one thing they do not have to worry about is the possibility that he will reduce the tariff and make them compete with producers and suppliers from other countries. The minister is saying to them that no amendments will be made to the anti-combines legislation and the worst they will have to worry about is a very small fine of $10,000, $15,000 or $20,000. Since 1939 about 300 business enterprises have been fined. They will be very interested in the remarks of the minister because he has given them a licence to continue to steal from the public.


Mitchell William Sharp: Mr. Chairman, of course I quite disagree with what has been said. What they face is the possibility of a cut in the tariff.


David Orlikow: When?


Mitchell William Sharp: In the negotiations which I hope will soon be successfully concluded.


David Orlikow: But in the illustration I gave the recommendation of the Restrictive Trade Practices Commission was made four years ago. I suppose this is something similar to the 60 days about which the Prime Minister spoke two elections ago. The word "soon" seems to mean forever so far as this government is concerned.


Mitchell William Sharp: If we can obtain the results that are promised by the Kennedy round I do

not think that a negotiation lasting two or three years is very long.
Items 945-1,	7905-1,	20925-1,	21045-1,
23505-1, 23705-1, 24100-1, 26325-1, 41105-1, 42205-1, 44043-1, 44047-1, 44125-1, 44725-1, 57210-1, 70505-1, and 84805-1 agreed to.


[Stage Direction]
Resolution agreed to.
Resolutions 2 to 4 inclusive agreed to.

[Stage Direction]
That it is expedient to introduce a measure to amend the Excise Tax Act and to provide among other things:
1.	That effective March 30, 1966,
(a)	dies, jigs, fixtures and moulds,
(b)	patterns for dies, jigs, fixtures and moulds, and
(c)	tools for use in or attachment to production machinery that are for working materials by turning, milling, grinding, polishing, drilling, punching boring, shaping, shearing, pressing or planning, when for use by manufacturers or producers directly in the manufacture or production of goods, be exempt from sales tax.
2.	That the combined rate of tax under the said act and the Old Age Security Act on the following goods (other than goods described in paragraph 1) shall, effective April 1, 1967, be reduced to 6% and effective April 1, 1968, be reduced to zero, namely:
(a)	machinery and apparatus sold to or imported by manufacturers or producers for use by them directly in the manufacture or production of goods.
(b)	equipment sold to or imported by manufacturers or producers for use by them for exhausting dust and noxious fumes produced by their manufacturing or producing operations,
(c)	safety devices and equipment sold to or imported by manufacturers or producers for use by them in the prevention of accidents in the manufacture or production of goods,
(d)	equipment sold to or imported by manufacturers or producers for use by them in carrying refuse or waste from machinery and apparatus used by them directly in the manufacture or production of goods,
(e)	gasoline-powered and diesel powered self-propelled trucks mounted on rubber-tired wheels for off-highway use exclusively at mines and quarries.
(f)	internal combustion tractors, other than highway truck tractors, for use exclusively in the operation of logging, such operation to include the removal of the log from stump to skidway, log dump, or common or other carrier,
(g)	logging wagons and logging sleds,
(h)	machinery, logging cars, cranes, captive balloons having a volume of 150,000 cubic feet or more, blocks and tackle and wire rope; all the foregoing for use exclusively in the operation of logging, such operation to include the removal of the log from the stump to skidway, log dump, or common or other carrier,
(i)	pipes or tubes commonly known as "oil-country goods", being casing or tubing and fittings,
June 7, 1986
[Stage Direction]
couplings, thread protectors and nipples therefor; drill pipe; all of the foregoing for use in connection with natural gas or oil wells,
(j)	machinery and apparatus, including drilling bits and seismic shot-hole casing, for use in exploration for or discovery or development of petroleum, natural gas or minerals,
(k)	repair and maintenance equipment sold to or imported by manufacturers or producers for use by them in servicing goods described in sub-paragraphs (a) to (j) that are used by them,
(l)	parts for goods described in sub-paragraphs (a) to (k),
(m)	drilling mud and additives therefor,
(n)	geophysical surveying precision instruments and equipment for use exclusively in prospecting for, or in the exploration and development of, petroleum, natural gas, water wells and minerals, or for geophysical studies for engineering projects, including the following: magnetometers; gravity meters and other instruments designed to measure the elements, variations and distortions of the natural gravitational force; field potentiometers, meggers, non-polarizing electrodes, and electrical equipment for making measurements in drill holes; instruments and equipment for seismic prospecting; geiger muller counters and other instruments for radioactive methods of geophysical prospecting; electrical and electronic amplifying devices and electrical thermostats designed to be used with any of the foregoing; repair parts, tripods and fitted carrying cases for any of the foregoing, and
(o)	articles and materials for use in the manufacture of goods described in sub-paragraphs (a) to (n)
but not including:
(p)	goods for use by persons exempt from payment of consumption or sales tax under subsection (2) of section 34 of the said act,
(q)	office equipment or
(r)	motor vehicles except those described in subparagraphs (e) and (h).
3.	That effective March 30, 1966, the consumption or sales tax on goods described in paragraph 2 that are produced or manufactured in Canada shall be imposed, levied and collected at the rate of tax in effect at the time when the goods are delivered to the purchaser and shall be payable at the time or times provided in paragraph (a) of subsection (1) of section 30 of the said Act.
4.	That effective March 30, 1966, stained glass windows of handmade or hand rolled glass technically called antique glass and materials for use exclusively in the manufacture thereof be exempt from sales tax.
5.	That effective March 30, 1966, natural gas be exempt from sales tax.
6.	That effective March 30, 1966, fuel oil for use in the generation of electricity be exempt from sales tax.
7.	That effective March 30, 1966, a person engaged in the business of retreading tires be deemed to be a producer or manufacturer.
8.	That effective March 30, 1966, prepared surgical skin closure devices, plastic surgical drapes for use during surgical operations, artificial teeth and articles and materials for use in the manufacture of the foregoing be exempt from sales tax.
23033-385J
Excise Tax Act
9.	That effective March 30, 1966, the present exemption from sales tax for lobster pots, lobster traps, and materials to be used in the manufacture thereof be extended to include crab or shrimp pots, crab or shrimp traps, and materials to be used in the manufacture thereof.
10.	That effective March 30, 1966, the present exemption from sales tax for steel pens and complete parts thereof for farm animals be extended to include steel stalls and complete parts thereof for farm animals.
11.	That effective March 30, 1966, tobacco dryers, not including buildings, for use on the farm for farm purposes only, parts therefor and articles and materials for use in the manufacture thereof be exempt from sales tax.
12.	That effective March 30, 1966, vegetarian food products manufactured from vegetable and mineral ingredients to simulate meat products and materials for use in their manufacture be exempt from sales tax.
13.	That effective July 1, 1966,
(a)	dressers and dyers of furs shall be subject to sales tax on the aggregate of the current market value of raw furs dressed or dressed and dyed by them and the dressing or the dressing and dyeing charge, and
(b)	dyers of furs who dye tax-paid dressed furs
shall be subject to sales tax on the dyeing charge only,	"
and that for the purpose of the said Act, dressed or dressed and dyed furs shall be deemed not to be partly manufactured goods and shall be deemed to be sold at the time they are delivered out of the possession of the dresser or dyer.
14.	That effective July 1, 1966, where tax-paid dressed or dressed and dyed furs are delivered to a producer or manufacturer to be incorporated by him into articles on which sales tax is payable a deduction from tax payable shall be allowed to such producer or manufacturer equal to the tax paid on the dressed or dressed and dyed furs less the amount of any deduction previously allowed in respect of such tax.

- 

 u«, laoo, wnere oy tne
said Act or An Act to amend the Excise Tax Act Chapter 12 of the Statutes of Canada 1963, a deduction from or refund of tax is provided for or a payment by the Minister in an amount equal to tax paid is provided for, and circumstances exist which render it difficult to determine the exact amount of such deduction, refund or payment by the minister
Intif£!f1Stter mty'	the consent of the person
entitled to such deduction, refund or payment
grant a deduction or refund or pay an amount determined, m such manner as the governor in council may by regulation prescribe, to be the correct deduction, refund or amount.
16.	That effective March 30, 1966, the tax imposed under section 5 of Schedule I of the said act on electron tubes, not including cathode ray tubes, the duty-paid value or the sale price of which, as the case may be, does not exceed five dollars per tube, be changed from "fifteen per cent, but not less than ten cents per tube", to "ten cents per tube".
17.	That effective March 30, 1966, the tax imposed under section 3 of Schedule I of the said act on devices commonly known as lighters be changed from "ten per cent but not less than ten cents per device" to "ten cents per device".
[Stage Direction]
June 7, 1966
Excise Tax Act
18.	That effective March 30, 1966, in calculating the sale price of goods manufactured in Canada for the purpose of determining the excise tax payable under Part IV of the said act, there shall not be included the amount charged as price for or in respect of any other goods contained in or attached to the wrapper, package, box, bottle or other container in which the goods are contained.
Wallace Bickford (Wally) Nesbitt: Mr. Chairman, there are two or three items which I would like to bring to the minister's attention, and perhaps when the minister makes his statement he might be kind enough to comment on my observations.
I think the terms of the resolution on excise tax which the minister is presenting are more to be criticized for their non-feasance than for their misfeasance. The items I wish to bring to the minister's attention are as follows. First of all, I think that perhaps most hon. members have had representations made to them at one time or another by various branches of the jewelery trade concerning the existing 10 per cent which is still levied on jewelry. I believe most hon members will perhaps agree that the retention of this tax on luxury items of jewelry may well be justified because these are items which should be taxed. However, there are a number of items in the jewelry trade which I would suggest are not in fact luxuries at all. I am now referring to inexpensive watches and items such as wedding and engagement rings. I suggest that the minister might well give careful consideration to removing the 10 per cent tax on watches and also on wedding and engagement rings below a certain value.
May I point out to the minister that this tax was levied during the last war. Since then the tax on luxury items has been reduced from 25 per cent to 10 per cent. On a great many luxury items such as furs, candy, firearms, golf clubs, fishing rods, cameras and projectors and many other articles which are clearly more in the nature of luxury items than inexpensive watches or wedding rings, the tax has been removed. I think the minister might give careful consideration to the removal of the tax on inexpensive watches and wedding and engagement rings below a certain value. I believe it can be safely said this would be of some benefit to the jewelry trade but it would also be of benefit to the average person who has to buy these articles which in fact are not luxury items.
There is another matter which I should like to bring to the minister's attention, the tax on materials used for centennial projects. I think many hon. members can probably cite a number of apparently anomalous situations. 
In my own constituency a public library was built as a centennial project and was exempted from tax. However, another project of a public nature was undertaken-I believe it was the building of a municipal hall-and in this case the tax was levied. Of course the reason for this is that public libraries are exempt from tax. However, I would think that when other buildings are being constructed as centennial projects they should also be exempted. This matter is very much in the people's minds these days because it is rather difficult to raise funds for these centennial projects. I therefore ask the minister to give consideration to removing the sales tax in the case of buildings which are constructed as centennial projects.
[DOT] (5:10 p.m.)
Another specific item of concern is a type of equipment being used for strictly agricultural purposes. This type of equipment, as most hon. members know, is the kind of equipment that has always caused trouble in individual cases because agricultural equipment is sometimes difficult to describe. In this instance I refer to a type of agricultural equipment which is imported and sold by a firm called Canadian Hydroponics Limited near the town of Tillsonburg, Ontario. The Department of National Revenue has had extensive correspondence with this company in this regard and it was held that the equipment would be taxable. This type of equipment can only be used for agricultural purposes since it produces, by means of hydroponics, certain fodder for cattle during the winter months. At one point this type of equipment was not subject to any sales tax because it was used in the production of other materials. After 1963, of course, this exemption was removed and it was again subject to sales tax.
Since this equipment is used particularly and exclusively for agricultural purposes and could not possibly be used for anything else, I request the minister to give consideration to exempting this specific item when the bill is presented. It is not the intention, as I understand it, of the legislation now in force that this kind of equipment should be subject to tax. As has happened many times in the past, equipment which is designed exclusively for and can only be used for agricultural purposes is being taxed simply because it does not come within the technical ambit of the legislation. I hope the minister will give consideration to this matter and include it in the appropriate budget bill.
June 7, 1966


Mitchell William Sharp: May I ask the hon. member for Oxford to which item he referred? I am sorry, I did not catch it.


Wallace Bickford (Wally) Nesbitt: It is an item which is being imported. It is a type of agricultural equipment which produces, by means of hydroponics, fodder that is used to feed cattle during the wintertime. The firm in question, although no doubt there are others, is Canadian Hydroponics Limited at Tillsonburg, Ontario. The equipment was not subject to sales tax prior to 1963 because it was used in the production of other things. Since then it has been used strictly for agricultural purposes but has been subject to tax. I hope the minister will give consideration to including this item in the appropriate budget bill.


Mr. Lamberi:: There are a number of things about which I wish to speak in connection with the Excise Tax Act. This resolution has a far greater impact than the previous one. First of all, when we consider the resolution in its entirety we see that parts of it are a companion to the Customs Tariff Act amendments particularly in relation to dies, jigs, fixtures, moulds, etc., which go into the manufacture of automobile parts or production machinery and for materials in connection with the manufacture of automobiles. There is also the withdrawal by the minister, effective April 1, 1967, of 5 per cent of the sales tax in so far as it affects both the Excise Tax Act and the Old Age Security Act. I do not know just how the combination is going to be effected in legislation. In any event, we see that over a number of items the sales tax is being entirely removed in relation to both acts.
If we go down the list of these particular items, naturally we come to the general classification of production machinery. This is all to the good. It shows that the minister has seen the benefits to the economy of the removal of this retrograde tax which was introduced in 1963. I suggest that the fact he has decided to remove it gradually is caused by the same general approach to the budget -do not do anything directly, just do it gradually. I do not know, but if he were worried about an increase in prices, as he should have been, he should have gone directly to the root cause of the government induced stimulus to prices which came about from 1963 onward. He should have gone, in this Budget, lock, stock and barrel after the whole of the 11 per cent sales tax in regard to production machinery.
Excise Tax Act
In so far as the effect on the automobile industry or the parts industry is concerned, I am going to leave some of my colleagues to deal with that. However, when I look over the items to which the reduction in sales tax is going to apply I am particularly struck by one item, and that is the type of commodity known as oil country goods. There is a restriction in the resolution saying, "all of the foregoing for use in connection with natural gas or oil wells", that is, "pipes or tubes commonly known as 'oil-country goods', being casing or tubing and fittings, couplings, thread protectors and nipples therefor", shall be subject to a tax reduction. However, I should like to ask, what about the production of oil from the bituminous tar sands? There is a $250 million refinery of a peculiar type being erected in Alberta which is due to come into production in 1967. It is true this company is not engaged in drilling for natural gas or oil but it certainly is using tubings, fittings, couplings, thread protectors and nipples therefor. They do not use drill pipes, at least not extensively to my knowledge.
Why, if this company is engaged in the production of crude oil, should it be placed at a disadvantage? I draw this to the minister's attention, and it may call for immediate study to see why this particular developing industry should be placed in a peculiar position. I am not going to ask for an immediate answer. I certainly ask the officials, both in the Department of Finance and the Department of National Revenue, to have a particular look at this segment of the oil industry and how it is to be affected by this provision.
There is one area in which I wish to commend the minister and the government because they have finally agreed there is nonsense in the distinction, which was imposed by the Department of National Revenue, continued I believe by the Tariff Board and, less understandably, the Exchequer Court, between natural gas which was used in internal combustion engines and that which was used in gas turbine engines, although destined for the same ultimate use, the production of energy. Those who were using gas turbines were denied the exemption from sales tax.
[DOT] (5:20 p.m.)
There were bodies such as the city of Edmonton which had extensive retroactive assessments following rulings by the Tariff Board. There were also chemical concerns and utilities which were faced with this problem and which operated primarily in the

June 7, 1966
Excise Tax Act
Alberta area. They found themselves with these retroactive assessments on the natural gas that they had been using following the ruling made by the Department of National Revenue.
May I say, Mr. Chairman, looking back upon the evidence of officials from the National Research Council and others, that how this artificial distinction between natural gas in an internal combustion engine and in a gas turbine was conceived and maintained would be completely beyond the comprehension of the members of this house. I am glad that the distinction has now been wiped out.
There is no provision in this resolution for any changes in the excise tax on liquor. Ever since I have been a member of the house the distilling industry has been putting forward briefs in regard to the amount of the excise tax and also the excise itself on alcohol. Merely to indicate the level that taxation has reached on this particular item and to indicate where it reaches its point of diminishing return, people have often said that if the Minister of Finance wants some more money he can tax liquor. If a province wants to increase its revenue it taxes liquor. This the provinces do, whether through their budgets or otherwise. I ran across some interesting information the other day. I am not making any particular brief here; I just want to put certain facts on record.
I am informed that in so far as the distiller is concerned he has made but one price increase since November 2, 1956. The increase on an in-bond basis since 1935 on premium priced whisky has been as little as $1.69 per case. That covers a period of over three decades. In 1935 the federal duty was $5.65 per case. Today it is $17.02 per case. Some people may suggest that the duty should be $37.02 per case. Others may suggest that it should be less than $7.02 per case. I am not going to argue this point; I merely draw to the attention of the committee the difference between the $5.65 in 1935 and the $17.02 in 1966. Then the provincial government adds on its mark-up and steps in with various sales taxes. The people who buy whisky should know just what goes into the cost of any given quantity of whisky.
To further heighten the tax burden the federal sales tax has increased from 6 per cent to 11 per cent or from $1.13 to $3.50 per case. In Ontario in 1935 the mark-up on laid-down cost was 51 per cent. Today, notwithstanding the very largely increased turnover, the mark-up is apparently 77 per cent.

I am sure that the various liquor control boards across the country are not far behind the province of Ontario in this regard. When it comes down to taxation of liquor, we know very well that every liquor control board takes its orders directly from the cabinet. They have nothing really to say about the over-all retail pricing of the commodities they sell. All that happens is that the provincial treasury determines how much revenue the liquor control boards of the province shall bring in. They are each assessed a certain revenue and on that basis the control boards set their prices. It is taxation quite directly but never with the approval of the legislature involved.
That is all I should like to say on that particular item, Mr. Chairman, by way of observation. The Minister of Finance of the government of Canada is, of course, much more straightforward in this regard. He is bound by the levels of taxation set out in the Excise Act and in the Excise Tax Act; not so the provinces.
There are a number of other minor items in the resolution on which I think not much need be said. However, there is one point I should like to draw to the attention of the minister, and I have drawn it to the attention of his colleague the Minister of National Revenue. It concerns a complaint I have received from many distributors of certain auto parts. Agricultural farm machinery as so classified today has many automotive parts which are absolutely interchangeable with those used in automobiles and farm motor trucks. I need not point out what happens. A farmer buys a replacement part ostensibly for a combine, say a carburetor or any part for a motor. Such things as spark plugs and other parts fit self-propelled farm machinery, trucks and even private automobiles.
If these parts are purchased for the repair of farm machinery they are not subject to sales tax. If they are purchased for the repair of automobiles or trucks they are subject to sales tax. So a loophole has been created. In all fairness, I must say I agree with the farmer who buys his parts ostensibly for use in farm machinery. If we consider that farm machinery should be exempt from sales tax, then so should the replacement parts. But let us not have any person who is entitled to buy sales tax exempt equipment and parts turn them aside for a use for which he should pay sales tax. This does affect the position of automobile parts distributors.
June 7, 1966

I am sure there are other members of the committee who wish to speak about certain other aspects of this resolution, and I may-make some further remarks depending on the answers I get from the minister.
[DOT] (5:30 p.m.)


Mr. Honey:: Mr. Chairman, in considering the excise tax resolution I want to deal with a particular aspect of the agricultural industry. This is a matter which I have referred to the minister and his predecessor. I am disappointed that it has not been dealt with in the resolution and I want briefly to recap the presentations I have made so that the minister will have an opportunity to consider and deal with them in the legislation following this resolution.
The change I am urging on the government is the provision of sales tax exemption for plastic netting used for the bailing of farm products. I refer particularly to the materials used in the Christmas tree industry. Currently, from my understanding of the law, sales tax exemption is provided for binder twine, wire, and other tying materials used in the bailing of farm products. Such exemption is not extended to the plastic netting used for bailing purposes in the Christmas tree industry.
The 11 per cent sales tax adds significantly to the cost of production for those using this type of material. I might say that it is a modern and new type of packaging which the government should take cognizance of and encourage.
I think I can best and in the shortest time outline this new innovation in the packaging industry by reading a descriptive release dealing with this matter which illustrates how it relates to the Christmas tree industry:
Several Canadian Christmas tree growers, hard pressed for manpower, are experimenting with a new wrapping method using plastic netting.
The new system will be used most extensively in the Pontypool, Ontario region, one of Canada's main growing areas. Growers there will use a simple funnel-like device developed by grower Sam Manetta of Pontypool. Several other devices using plastic netting are being developed in other areas.
By using the Manetta device, growers estimate they will wrap as many trees per day with three men as they formerly did with five, thus compensating for a shortage of harvesting labor. The tree is fed into the mouth of the funel and pulled through the neck. As the compressed tree emerges from the neck it is enveloped in a sleeve of plastic netting. No tying is involved. All experimental devices will accommodate any size of tree; the diameter of the sleeve varies with the tree size.
Excise Tax Act
In addition to increasing wrapping speed, the sleeve protects the tree from damage during loading and unloading by keeping all branches uniformly compressed. As a result, the frozen trees can be dragged or piled without danger of snapping off protruding branches. Trees packaged in plastic netting also present an attractive well-rounded package.
Growers in the Pontypool area concentrate on Scotch pine. Plantations cover thousands of acres- about 1,000 trees to the acre. Trees are shipped to all regions of Canada and the United States by tractor-trailer and railway.
I have mentioned the manpower shortage and the assistance that this type of packaging gives to the grower in the packaging of his trees. I want to mention briefly the considerable advantage to Canada accruing from the Christmas tree industry. In 1964 we exported over 9 million trees to the United States for about $6,200,000, thus providing a source of valuable foreign exchange. About 65 per cent of the trees grown in Canada go to the United States market.
May I also urge the government, in considering the amendment which I have requested in order to encourage this industry, to protect the industry against inroads being made by sales of artificial trees. In the United States artificial trees take over 35 per cent of the Christmas tree market.
That is all I can usefully say on this subject. I urge the minister to consider what I have said. Plastic netting ought to put the farmers and growers using it on the same basis as those using other materials to tie their produce. I hope that the minister will be able to include my suggestions in the legislation which will follow the adoption of this resolution.


Mr. Lewis:: Mr. Chairman, I suppose my main difficulty in accepting the minister's proposals at this point derives from a basic difference in our approach to the economy: what purposes the economy ought to serve and what purposes any steps taken in the fiscal field ought to serve. I suggest that one of the major difficulties about the kind of indirect, blunt instrument which the minister is using here, as elsewhere, to attempt to slow up investment is that it does harm in socially desirable areas irrespective of whether or not it does good in other areas.
I look, for example, at the proposal with regard to the gradual removal of the sales tax on certain machinery. I ask the minister, if I may, what value is there from the point of view of the productivity of our economy in retaining the sales tax at all?

June 7, 1966
Excise Tax Act
If I understood the minister's budget speech correctly, he said in effect that he had come to the conclusion that the sales tax on production machinery and equipment ought to be removed, but for the purpose of slowing down the tempo of the investment boom he felt that the removal ought to be gradual rather than immediate. I hope I have not misrepresented what he said.
I look at some of the machinery and equipment concerned and I ask the minister whether, in logic, encouraging employers, firms and businesses to purchase, instal and use such machinery and equipment now might not lead to a greater contribution to the economy and to a lowering of prices than the complicated business he has presented to us?
I look at paragraph 2 subparagraph (a) which read:
-machinery and apparatus sold to or imported by manufacturers or producers for use by them directly in the manufacture or production of goods.
Presumably we are dealing with the replacement of old, worn-out machinery by new machinery. Presumably no industrialist of any consequence will change machinery or buy new machinery or equipment or new apparatus unless the apparatus he has is inefficient.
[DOT] (5:40 p.m.)
I ask myself: By what investigation did the minister persuade himself that discouraging the purchase of machinery which could and would improve productivity would do good for the economy? I intend to read several of these items:
2(b) equipment sold to or imported by manufacturers or producers for use by them for exhausting dust and noxious fumes produced by their manufacturing or producing operations,
(c)	safety devices and equipment sold to or imported by manufacturers or producers for use by them in the prevention of accidents in the manufacture or production of goods,
(d)	equipment sold to or imported by manufacturers or producers for use by them in carrying refuse or waste from machinery and apparatus used by them directly in the manufacture or production of goods.
It is the same kind of thing all through. The machinery, equipment and apparatus listed and described in this resolution is machinery or apparatus which would improve the production process, in other words, it would result in improved productivity and a lower cost of production per unit. Surely this is the best way of improving the productivity of industry, to turn out goods which are needed on the one hand and to take steps

toward reducing unit costs of production on the other. Surely this could make a more important contribution toward lowering price levels or preventing them from increasing further, than the mere postponement of sales tax reductions would ever do.
If the minister's assumption that it is necessary to slow down the investment boom is correct, and if he is right that fiddling with the sales tax can be an instrument for slowing down the boom, why is he doing it in steps? If he is right, if there is a threat of inflation and if it is desirable to remove the sales tax in such a way as to do something about this situation, why does he not remove the entire 11 per cent on April 1, 1967? Obviously it would be a much better inducement for the manufacturer to postpone the purchase of machinery until next year if he stood to gain 11 per cent rather than 6 per cent by so doing.
If the minister's answer is that he wants to postpone purchases for two years I should like to ask him by what crystal ball was he able to ascertain that it was necessary to postpone these things for two years until April 1, 1968? If the minister reached the conclusion that it was socially desirable to remove the sales tax on production equipment and machinery of the kind described in the resolution, the sensible thing would have been to have removed it now in order to give manufacturers and producers the greatest incentive to improve productivity and thereby reduce the cost of production per unit. This is by far the best way of improving the economy. If, on the other hand, the minister has decided that he wishes to postpone this move in order to arrest the investment boom, then again he is taking mincing steps where decisive steps should have been taken.
I would indicate the same difference of philosophy in respect of the minister's refusal to remove the sales tax on building supplies. He said in his budget speech that he was not impressed by the need for this to be done. Yet, one of the effects of government policy has been to reduce housing starts.
I have before me a clipping from the Ottawa Journal of May 31. It is a report from the Canadian Press to the effect that there was a 26 per cent decline in housing construction starts in April compared with April, 1965, and a decline of 5.3 per cent in March compared with the same month a year earlier. This represents a serious decline in
June 7, 1966

housing construction. The first part of the story reads:
The housing boom continued to taper off In April with a 26 per cent decline in construction starts from a year earlier. Central Mortgage and Housing Corporation reports. March starts declined 5.3 per cent from a year earlier.
The federal government's housing agency said that in the first four months of this year the number was down by almost seven per cent from the corresponding period last month.
Side by side there has been an increase in the cost of housing in all metropolitan centres of Canada. So we have a policy which the government claims is intended to reduce inflationary pressure but which in fact produces inflationary pressure as a result of the increased price of housing and the decline in housing production.
In case hon. members have not noticed it, may I draw the attention of the committee to the fact that in the consumer price index housing and household operations are given what the statisticians call a component weight of 32. In other words, they are given a 32 per cent weight in the total consumer price index structure. The government says it is taking these various measures in order to curb inflationary pressures and reduce prices. At the same time, the very programs it undertakes result in an increase in the cost of homes and of running homes. I earnestly suggest to the minister that in this field, as in the field of machinery and apparatus, he would serve the Canadian economy a great deal better if he would remove the sales tax and enable the construction of homes to increase as it should.
Finally, from my little knowledge of the effects of these economic forces, I have never yet known a plan designed to produce a certain result which did not at the same time have an opposite effect. The minister and his advisers must constantly figure out whether the advantages or the disadvantages would be greater. I maintain that the only way in which the government can achieve the results it wishes to achieve, presumably a slowing down of economic expansion, would be to slow it down in the right places by the encouragement of housing at the expense of costly shopfronts and stores, the encouragement of building homes for the aged and for the lower income groups at the expense of splendid but unnecessary bank buildings.
[DOT] (5:50 p.m.)
The only way they can achieve that kind of social weight in what they do is by seeing to
Excise Tax Act
it that socially desirable projects are continued and those less necessary are halted or slowed down. This should be done by direct measures, not by the indirect measures of reducing some taxes and spreading other reductions over two years and exerting moral persuation on people who do not listen to that kind of thing when the efficiency and profitability of their businesses are concerned. The government should take steps which will directly channel investment into the areas where we need investment and directly reduce investment in areas where such reduction or postponement does not produce undesirable social results.
Although I hope he will, I do not expect the minister to accept the general proposition I have made, but I do appeal to him, first, to reconsider the postponement of the elimination of the sales tax even on his own terms. He will get much better results if he does away with it altogether on April 1, 1967. At least there will then be some real inducement to postpone investment this year, and that may be enough. In fact, if he overdoes it he may induce things he does not want such as a contraction of some considerable proportion in our economic activity.
Second, I hope it is possible to persuade him to take another look at the removal of the sales tax on building supplies in order to stimulate the building of houses, in which field there is now a slowdown.
I was .in my constituency last week end, Mr. Chairman. I have, as I am sure other hon. members do, a centre to which those of my constituents who think I may be able to assist them can come. Among the many peo-ply who came to see me was a young couple with two children. The man is not unemployed. He is employed at a plant in Toronto which is unionized by one of the strongest unions in the country. He is provided with quite a considerable wage compared with other wages. He has a wage rate of over $2 an hour which compared with others is a pretty good rate, but this young couple cannot afford to pay the necessary rent to get decent housing.
They told me they could not find any housing, whether an apartment or a house, for less than $130 a month. This represents nearly one and two-thirds weeks of the man's earnings, much beyond what rental ought to be as a proportion of wages. Twenty per cent is the optimum figure, whereas he was going to have to pay something like 40 per cent or more of his wages.

June 7, 1966
Excise Tax Act
When they came to see me they had been living in a place where they were paying $60 a month rent but, because of difficulty with the landlord with whom they had been sharing the home, at that point on a Saturday morning, with his wife and two children he was living in a home in which both the water and electricity had been cut off. His children were aged five and two, and their mother could not provide them with hot food. Because of the pressure on housing and the cost of homes even a man with $4,000 a year has difficulty obtaining decent housing.
The circumstances I have outlined should move the minister to take steps to control investment in order that the production of homes, and particularly of low income homes, is not cut down. Because of this 11 per cent tax on building materials and other measures taken by the government, the majority of the working people cannot afford decent accommodation. These are the observations I wanted to make at this stage in the hope that the minister may again look at the reduction of the sales tax in the areas I have indicated.


Mr. Lind:: Would the hon. member permit a question? The other day I was reading a report put out by Mr. MacDonald, the new economist hired by the Ontario government, in which he stated that housing construction is up 10 per cent in the first three months of 1966 compared with the same period last year. Can the hon. member comment on that?


David Lewis: I have not seen that report, Mr. Chairman. I know Mr. MacDonald and I am sure he would not make an inaccurate statement, but if I am to guess at the explanation for the discrepancy between what the hon. member has referred to and what I have referred to, I suspect he may have limited his statement to certain kinds of housing such as non-apartment, duplex housing. In fact some housing starts have actually increased. I do not know whether Mr. MacDonald was referring to housing starts or to housing completions, but the information I alluded to refers to housing starts rather than completion of homes.


James (Jim) Gordon Lind: He said housing completions.


David Lewis: Then of course the difference might well be that, because last year housing starts were relatively higher than in previous years and therefore the completions would be fairly high this year compared with other years.


Mrs. Maclnnis (Vancouver-Kingsway):: I
would like to know why the 11 per cent sales tax was not taken off the price of drugs because it affects many people across the land who find the cost of drugs exceedingly onerous. A calculation has been made that one-fifth of the cost of drugs is due to the 11 per cent sales tax.
There should not be a tax on illness and this tax on drugs amounts to exactly that. Unfortunately illness is connected intimately with income in this country. The lower the income the higher is the incidence of disease and the costs to cure it. This is one area in which an exemption from the sales tax should definitely be made.
Members have received complaints not only from individuals but from organizations like the Canadian Pharmaceutical Association which is compelled to put up with this sales tax and whose members feel it is unjustifiable to charge this extra amount in the case of illness. I would ask the minister to give further consideration to taking the sales tax off drugs.


The Chairman:: Order. It being six o'clock and in order that the house may proceed to the consideration of private members' business it is my duty to leave the chair.
[DOT] (6:00 p.m.)


PROCEEDINGS ON ADJOURNMENT MOTION
Mr. Deputy Speaker:: It is my duty, pursuant to provisional standing order 39A, to inform the house that the questions to be raised at ten o'clock this day are as follows: The hon. member for Trois-Rivieres (Mr. Mongrain), Labour Relations-Quebec-stoppage of work by longshoremen; the hon. member for Winnipeg North Centre (Mr. Knowles), Old Age Security-use of fund surplus to increase pensions; the hon. member for Macleod (Mr. Kindt), Agriculture- Charolais cattle-sales to U.S.
It being six o'clock the house will now proceed to the consideration of private members' business as listed on today's order paper, namely private bills and public bills.



PRIVATE BILLS


Mr. Joseph Macaluso (Hamilton West) moved: the second reading of Bill No. S-12, to
June 7, 1966

incorporate Income Disability and Reinsurance Company of Canada.
He said: Mr. Speaker, on May 24 of this year second reading was given to a bill in relation to the incorporation of the Income Life Insurance Company of Canada and it was then referred to the committee on finance, trade and economic affairs. I ask hon. members to treat Bill S-12 in the same manner.
The Income Disability and Reinsurance Company of Canada was incorporated under the Corporations Act of Ontario by letters patent dated September 19, 1960, as a private company. At that time it was incorporated under the name "Income Insurance Company of Canada" as a private company, and by supplementary letters patent dated February 23, 1965 the name of the company was changed to Income Disability and Reinsurance Company of Canada and the company was converted to a public company.
This company was created for the purpose of selling accident and sickness insurance. Subsequently in December of 1963 a second company was incorporated by letters patent from the province of Ontario known as the Income Life Insurance Company of Canada and a bill in relation thereto was given second reading on May 24, 1966.
The original authorized capital was $1,500,000 divided into 15,000 shares of a par value of $100 each. The initial capital of approximately $300,000 was raised. The company was licensed by the province of Ontario in March, 1961, to transact the business of accident and sickness insurance. Subsequently the company was licensed to transact the same classes of insurance in the province of Manitoba in May, 1961, in Alberta and British Columbia in April of 1962 and in Saskatchewan in January, 1963.
In February of 1965 the company was converted into a public company and the authorized capital was increased from $1,500,000 to $5 million and there was a public underwriting of its shares whereby an additional $2,400,000 of capital was raised.
The head office of the company is located at 75 James Street South, Hamilton, Ontario. As stated, the company transacts business in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario.
The existing directors of the company are the petitioners listed in the petition for incorporation of the federal company. Administrative operations, including underwriting, claims, accounting and actuarial facilities, are 23033-383J
Private Bills
provided from the head office in Hamilton. Management staff are employed on a fulltime basis and each has many years' experience in the insurance field.
Perhaps I should state that a substantial amount of business is placed annually by insurance companies with professional reinsurers. The company has the staff and the contacts able to develop, assess and administer this portion of the business and the company anticipates substantial revenue from this source.
The company entered into an agreement on January 1, 1965 with Income Life Insurance Company of Canada whereby the latter company provides office space, telephone service, office supplies, equipment and furniture and the services of certain office personnel at the head office of the said company, Income Life Insurance Company of Canada, at the same address, 75 James Street South, Hamilton, for a monthly rental. Either party may terminate this agreement at any time on 30 days prior notice in writing to the other.
That is about all the information I can give at the present time to members of the house about this company. However, most of the material which I referred to on May 24, 1966 in respect of the Income Life Insurance Company of Canada pertains to this company. I ask hon. members to give second reading and refer this bill to the committee on finance, trade and economic affairs in order that it and Bill S-ll can be considered at the same time. If there are any questions I shall be pleased to answer them to the best of my ability.


Marcel Joseph Aimé Lambert: Mr. Speaker, I wish to say briefly that since this bill, should it be given second reading by the house, will be referred to the committee on finance, trade and economic affairs before which representatives of the incorporators will appear, we intend to reserve our questions and comments until that time. I think this is the treatment which should be accorded all bills for the incorporation of insurance and finance companies.


Mr. Frank Howard (Skeena):: Mr. Speaker, the bill now before us is an intriguing companion to the bill we dealt with a couple of weeks ago. I reiterate what I said then. We are considering four separate companies rather than the one referred to in the bill before us. The two companies concerned are somewhat like husband and wife in that they are almost indistinguishable in some of their relationships but distinguishable as individual

June 7, 1366
Private Bills
entities in others. The main distinction is the difference in the names. However, their directors are almost identically the same, their activities take place in the same fields, they have the same offices and employ the same people. Presumably they deal with the same people in selling and underwriting insurance.
We are not now simply dealing with the company referred to in Bill S-12 but rather, because of interconnections, with four companies, one of which was dealt with by the house a couple of weeks ago and the other two of which were incorporated by letters patent under the laws of the province of Ontario.
[DOT] (6:10 p.m.)
It is interesting to note the scant attention that was given to these bills by the Senate. I should think that august body could engage itself in a little more intense consideration of a matter as important as this rather than just glossing over the surface and accepting the pronouncements of the sponsor of the bill in the other place that it was just a routine matter and really was not of much consequence.
We have in the bill some interesting individuals as the provisional directors: William Ewen Brunning who is an insurance executive from Burlington, Norman Graham James who is also an insurance executive from Burlington, Haliwell Soule, a trust executive, also of Burlington, Thomas Henry Baker, an investment executive from Toronto, William Richard Latimer, a solicitor from Toronto, Charles Alfred Read, a chartered accountant from Winnipeg, and Thomas Alexander Harriott, an insurance consultant from Winnipeg.
That is the extent of the provisional directors of a company which seeks the authority of this parliament to conduct its affairs throughout Canada, a company which already does business in the province of British Columbia but has not yet got around to finding a provisional director of the company from that particular province. I think this is a shortsighted policy because we have eminently qualified and capable people in British Columbia who would be a tremendous asset to Income Life Insurance Company of Canada and to Income Disability and Reinsurance Company of Canada. I wish the sponsor of the bill were in his place now so that I could direct some questions to him which he could answer in his closing remarks on second reading. My confrere from Tim-iskaming indicates that not only is the

sponsor of the bill not here, but there is not a quorum in the chamber to consider the proper conduct of the business of the house and the bill that is before us. However, Mr. Speaker, I am sure you will not let that deter me from continuing my remarks.
As the sponsor of the bill announced, the company also does business in Alberta and-I am sure no one will disagree with this-in the province of Alberta there are likewise eminently qualified and capable persons who could become provisional or permanent directors of a company such as this. It seems rather a shame that this province, within which the company has undoubtedly done a tremendous amount of business, should have been left out in the selection of provisional directors.
We find therefore that the control of the company in so far as directors are concerned is contained within the provinces of Ontario and Manitoba and there is no one on the board of directors from any of the other provinces. Be that as it may, perhaps we should look further at the situation that the head office of the company will be in the city of Hamilton. It is not that there is anything that would detract from the operations of the company by having its head office in Hamilton or in the province of Ontario for that matter, but it is interesting that here again we have an addition to the control complex of the insurance world that exists in the southern Ontario area, out from which will extend the appendages of the company throughout Canada to extract insurance premiums and the like from whomsoever it is able to extract them.
It seems to me that in considering whether this company should be authorized to conduct its business in Canada we should look at the orientation of the company in terms of geographic location and effective control. As I have said, both are the insurance control complex that exists in southern Ontario surrounding and including the city of Toronto. It is proposed that the company's capital stock will be $5 million divided into shares of $5 each and the amount to be subscribed and fully paid before the general meeting for the election of directors is called shall be $1,750. This seems to me a rather small amount of money to be subscribed before the calling of the meeting to elect directors. It simply means that the provisional directors could very easily amongst themselves have already subscribed and paid the amount of $1,750 into
June 7, 1966

the company. They would thus be in a position to call the general meeting for the purpose of electing its permanent directors and in effect have themselves elected to the permanent directorship of the company. They would thus exclude, at least for the initial period, from the opportunity of becoming a director of this company anybody who may subscribe to the share capital of the company after the initial $1,750 has been subscribed and before the time the company actually gets into the business of selling insurance.
In order for the company to get to that stage it must have a subscription of at least $1,736,800 of its capital stock bona fide subscribed and at least $1,736,800 paid thereon. This means that all the stock subscribed for must be paid for before the company can get into business. This seems to me to be a kind of engineered arrangement whereby the sponsors or promoters of the company ensure that they become the permanent directors of the company, because they have incorporated in the bill a provision that the insignificant amount of $1,750, in terms of the $5 million capital structure of the company, is all that is required to be subscribed in order that the first meeting may be held.
It does not jibe with our concept of democracy for the promoters of a company of this sort to come to parliament and ask parliament to endorse a provision whereby they can establish a private law relating to their own election to the office of director of the company. What other reason can there be for keeping that figure at such a low level as $1,750?
I must apologize, Mr. Speaker. I have been making reference to the situation relating to a company and inadvertently I picked up Bill No. S-ll which we passed a couple of weeks ago. It is the companion bill to S-12 which is the one before us at the moment. I am surprised that the sponsor of the bill did not notice the error I was committing in referring to the capital stock of the company, its directors and the like. I must apologize for that oversight on my part and I will pick up the correct bill and look at it.
[DOT] (6:20 p.m.)


Mr. Deputy Speaker:: I am quite sure the hon. member for Skeena will now proceed to discuss Bill S-12.


Frank Howard: Yes, Mr. Speaker. As I was saying, I apologize for having made that error.
Private Bills


Mr. Walker:: Mr. Speaker, I have a point of order to raise. Is the time which the hon. member has taken to be included in the time allowed him?


Frank Howard: Mr. Speaker, I did not hear the point of order of the hon. member.


David James Walker: Is there a time limitation placed on the speech made by the hon. member?


Frank Howard: Mr. Speaker, may I point out that the hon. member has voluntarily placed a time limitation on his own speeches because he is not making any in the house. This is an indication of how far he has removed himself, along with the Secretary of State for External Affairs (Mr. Martin), from politics and political happenings.
Mr. Scot! (Danforth): Is this a filibuster?


Mr. Macdonald (Rosedale):: The hon. member for Skeena should take note of who is speaking.


Frank Howard: Mr. Speaker, I wonder if you would protect me from those interruptions.


Mr. Deputy Speaker:: It might be wise if both sides of the house reverted to the discussion of Bill S-12.


Frank Howard: I was seeking to do that, Mr. Speaker, after noticing that I was in error. In looking at Bill S-12 I see that the provisional directors of that company are almost the same people as the directors of the company under Bill S-ll. I also notice that the Income Disability and Reinsurance Company of Canada is more generous in its token recognition of democracy because it requires that $2,500 be paid before electing its directors. That is a bit better than the $1,750 required by the Income Life Insurance Company of Canada. There are only six or eight provisional directors of this company and undoubtedly this group of people could find $2,500 amongst them with great ease. Having subscribed $2,500 they are in a position to call a general meeting for the electon of permanent directors.
As is the case with the Income Life Insurance Company of Canada, the Income Disability and Reinsurance Company of Canada would thus exclude from potential membership on the board of directors anybody who happens to become a shareholder of the company after those who have sponsored the bill have obtained control. I submit that this is not good enough and I hope that

June 7, 1966
Private Bills
when we get to the committee stage I will be in a position to move an amendment to the relevant clause substantially increasing the amount of money that must be subscribed before the election of directors can take place in order to ensure that the widest possible opportunity will be given to all shareholders to be elected to the board of directors of such a company.
There is one other item with which I should like to deal, and this also applies to Bill S-ll. The company we are discussing under Bill S-12 has its headquarters likewise in the city of Hamilton. This is not surprising in view of the declaration made by the sponsor of the bill that both companies share the same offices and the same employees, underwrite each other's business, scratch each other's back and generally do whatever they can to help each other. What they should really be doing is helping the policyholders with whom they do business.
I am rather disturbed by one of the principal provisions in the bill which says that certain relationships which this company may enter into with another company cannot come into effect until the proposal concerning the merger or acquisition of one company by the other is approved by the Treasury Board. It seems to be a tall order to ask parliament to give Treasury Board, an all-powerful agency of the federal government which seeks to become even more powerful, the right to interfere in the operations of a private company to this extent. Treasury Board should not be the one to make decisions concerning the relationship between this company and some other company. This should be a decision of the Superintendent of Insurance whose duty it is to oversee the operations of insurance companies and to see that they meet the requirements of the public law.
I hope to be able to raise this matter again at the committee stage when I will move an amendment to the bill to limit the activities of Treasury Board with regard to the relationship between this company and another company.
While I am on the subject of the public law which should be enforced regarding the operation of insurance companies and particularly the Income Disability and Reinsurance Company of Canada, may I say that this company has a lot of temerity to ask parliament to adulterate the principles of democracy and permit the provisional directors to become permanent directors by means of the endorsation of this provision in regard to the

insignificant amount of money that must be subscribed.


Mr. Deputy Speaker:: Order, please. I must advise the hon. member that the time allotted to him has expired.


Frank Howard: I had so much more to say.


Thomas Speakman Barnett: Mr. Speaker, in rising to speak on this bill I want to say at once, in spite of what I consider were rather frivolous interjections from the other side of the house, that the matter we have before us is in my view quite an important one. I think the gist of it is set forth in the opening part of the bill commonly referred to as the preamble in which certain private citizens of the country pray that their petition be enacted. It seems to me that the substance of the question we are debating is expressed in the phrase, "it is expedient to grant the prayer of the petition." The question we have to consider in relation to such bills as we now have before us is whether or not it is expedient that parliament should grant the particular petition set forth in Bill S-12. I think this perhaps sums up the principle of the bill we are considering.
In considering this bill my thoughts turn back to the subject matter of the discussion we were having in committee of the whole prior to our consideration private bills. We were discussing matters which seriously affect the economy and welfare of our country, namely, the taxation of production machinery, the sales tax and so on. We were discussing matters related to whether or not taxation should be imposed upon industry, upon production machinery and other things and whether or not this was an appropriate action to take in the light of our economic situation. I presume this was a serious matter which was considered important enough to be dealt with by the Minister of Finance (Mr. Sharp). On the other hand, this bill in my view asks us to do something which indirectly at least will authorize private individuals to impose upon citizens of Canada a form of taxation in many respects more onerous than the sales tax proposed by the Minister of Finance today, and when we think of the multiplicity of other bills seeking the authorization of private insurance companies we realize we are not considering proposals that will add to the production of the country. We are setting up machinery under which certain private individuals can garner an increasing measure of the surplus wealth of the country.
June 7, 1966

[DOT] (6:30 p.m.)
The more often we authorize new incorporations such as the one being requested in this bill, the greater the proportion of the savings of the people of Canada which will be drained off in useless, unproductive costs for overhead and operation. It is basically for this reason that I seriously question the advisability of granting the petition of the persons named in this bill. I think the time will come when there will be an increasing appreciation of the serious impact that this useless activity by an increasing number of citizens in our community is having on the total welfare of the nation. This is a matter which will require serious consideration by the members of this house.
When we were considering what was referred to as the companion bill, No. S-ll, in view of the close relationship of the personnel involved and the similarity of the title I made reference to the fact that Bill No. S-ll might as well be one to incorporate the Tweedledum company and this one might be referred to appropriately as the Tweedledee company. This may have been a somewhat jocular reference to the setting up of a sort of dual organization. Apparently these two firms are to operate as Siamese twins and rather than seeking an operation which would allow them to lead an independent existence they seem desirous of maintaining and strengthening the relationship.
It might be suggested that a more appropriate name than the Income Disability and Reinsurance Company, would be simply the redundant insurance company. I mean no discredit to the individuals who are involved in this application. As matters stand they are quite within their legal rights to make this kind of application. I am not suggesting they are any better or worse than thousands of other citizens of Canada who are interested in carrying on this kind of activity. But this is the parliament of Canada, Mr. Speaker. When we are called upon to consider whether certain actions on our part are expedient or not, our primary concern should be not for the individuals involved in a particular company but whether or not the action we are asked to endorse will be in the general interests of the people of Canada. My submission is that basically it is not. In other words, when it becomes obvious that this proliferation of insurance companies is being carried to the extreme we must begin to question seriously allowing this process to continue.
Private Bills
These are some of the questions with which the sponsor of the bill should attempt to deal when he asks us to give our assent to the passage of the bill. So far all I have heard from the sponsor-his introduction was no better and no worse than that of other sponsors-has been a reference to where the head office of the company would be and the names of some of the provisional directors of the company. I think it is time that members of the house who are prepared to sponsor bills of this sort should, in addition to giving us that type of factual information, be prepared to justify the bill they are sponsoring on the grounds of whether it is for the welfare of Canada. This is something they have not been doing. This is one reason I am raising these questions. I am not the member sponsoring this bill. I suggest there should be an onus on the sponsor of the bill to prove that the measure will be in the interests of the Canadian people and not merely something designed to provide a special privilege for a few particularly favoured individuals. These are the questions of principle that are involved.
It is not good enough in my submission for the sponsor of any private bill to be content to justify it on traditional, narrow grounds. In my opinion these bills ought to have a broader purpose than is apparent in this and other similar bills. So far as I am concerned, Mr. Speaker, that is the challenge I put to the sponsors of these bills. I say that on my part at least there is an increasing dissatisfaction with the placid approach we have been prepared to take to the passage of bills of this type.
[DOT] (6:40 p.m.)
The hon. member for Skeena made reference to the fact that this bill had received rather casual treatment in the other place. I have not examined the records so I am not in a position personally to say whether or not his assessment of the situation is correct. What I am suggesting is that if we in this house are to be asked to consider whether it is expedient to allow this proliferation of insurance activity to continue with, as I have suggested, an increasing measure of basic economic inefficiency in providing insurance protection to individuals in various fields and with an increasing waste of the abilities and potential value to Canadian society of individuals absorbed in this sort of duplicating activity, then the sponsors of such bills in this house will have to provide more than

June 7, 1966
Private Bills
cursory justification for the proposals they sponsor.
This company, so the sponsor tells us, has been expanding its original operations in the province of Ontario to certain other provinces. When I was discussing Bill No. S-ll, which was put forward basically by the same people from the same part of Canada, I suggested that there was another aspect to the matter of companies of this kind which have apparently been engaged in business within a province and then come to parliament for a federal charter. It is the question of the division of jurisdiction and whether or not what we are being asked to do in effect is to circumvent some of the rights and powers of the provinces in the field of property and civil rights.
In my remarks on that question I referred to what I thought were the relevant sections of the British North America Act. I know that on that occasion the sponsor of the bill really did not have the opportunity to deal with these issues in connection with Bill No. S-ll, but perhaps before this bill carries he will give us his viewpoint on the question of our being asked to agree to federal incorporation which, if my understanding is correct, will swallow up the rights of the various provinces which have agreed to allow this company to conduct business therein.
As has been pointed out by the hon. member for Skeena, the bill has some very interesting clauses and arrangements. The hon. member dealt with the question of the basic lack of democracy in the operations of companies of this kind. I am not sure I agree that that is restricted entirely to insurance companies. In my view there is a basic lack of democracy in the operations of many business enterprises in Canada under our present company laws.
My own feeling on the matter of insurance is this. If this company is not going to be operated under public auspices, where I believe it would be operated much more efficiently and economically, then it could much more properly be conducted under true co-operative principles where real democracy on the part of the shareholders prevails and policyholders rather than to a small group of individuals. However, that involves another area of debate and is perhaps not relevant to the question whether it is expedient that this insurance company be given a federal charter.
I think, Mr. Speaker, that that pretty well covers the questions in my mind at this time in relation to this bill. As the hon. member

for Skeena said, certain questions arise on some of the individual clauses which should have rather detailed discussion at the appropriate stage. But certainly in my view the hon. member who is sponsoring the bill should give us a much broader basis for his sponsorship than he has before the house is asked to assent its passage on second reading.


Mr. Arnold Peters (Timiskaming):: Mr. Speaker, I notice that the sponsor of the bill has been making some notes but I would suggest to him that it is rather late for him to justify his position now. He was given the opportunity to do so and took advantage of it. Therefore I do not expect that he will redeem himself in relation to many of the matters which have been raised.
I am one of those who agree that if a member of this house sponsors a bill he must act very responsibly. By this bill the sponsor is really doing something for which there appears to be considerable support, that is, allowing the Superintendent of Insurance to make a decision whether the company is justified and whether the capitalization is sufficiently democratically oriented toward the special privileges which will be granted to the shareholders who, when the amount of $2,500 is raised, will be appointed directors of the company.
Many of these questions were asked when the hon. member was discussing these matters a week ago in connection with another bill. While I realize that the situation we are now discussing is better than the situation created by the sister bill in that the directors will have to raise another $750, this does seem a very small amount of money in return for the advantages which will obviously accrue to the directors and shareholders of this particular company.
Another problem which has been raised and which affects sponsors of this sort of bill-if you check the order paper, Mr. Speaker, you will find bills relating to a number of similar companies-is the question of the public good and the responsibility relating thereto. We are given to understand that this company originally applied to the Ontario government for a licence to operate in that province. By an act passed by the legislature of Ontario it was authorized to conduct business in that province.
I presume that the company has met certain requirements in relation to the operation of the insurance act of Ontario over the period of years it has been in business, but
June 7, 1966

the fact remains that it is now coming to the federal parliament for a federal charter. Therefore it behooves the house to give consideration to whether or not the company can assure members of parliament and the country in general that its operations will be for the good of the citizens of Canada and that there is a need for its operations.
In my opinion there is no justification for the statement that has been made that this company is a free enterprise operation which will operate in a competitive society. In my opinion there are no insurance, assurance or reinsurance companies which operate in a competitive manner at all. These companies have identical rates for identical risks, though the risks may vary somewhat and the type of insurance may vary. But the rates are identical for the same type of insurance in a given area. Therefore the system is not competitive; there is no free enterprise system operating. What we are really giving the insurance companies of Canada is a monopoly in the issuance of insurance. We have to be sure that there is some purpose involved and that special concessions are not being given to five or six people who want to enlarge the scope of their operations from the provincial to the federal field.
[DOT] (6:50 p.m.)
We held a meeting with some officials of the house, including the house leader, with a view to arriving at some formula whereby such bills might be dealt with in another way. I know that in theory sponsors of these bills act without remuneration. In practice that often happens. Many times the sponsoring of these bills is a Joe-job handed out to various members and they therefore pay limited attention to it. I do not say that is true in this case because the company in question is in the riding of the hon. member sponsoring the bill. I presume he has an interest in it. The house is entitled to a better explanation about this company than the one he gave in committee where he indicated that he was aware of the good deeds performed by this insurance company and of its need to expand.
It would be surprising, Mr. Speaker, if we were to grant federal charters to insurance companies which have no interest in doing business in Canada. Doubts have been raised in my mind whether a federal charter might not be sought for reasons other than ostensibly reinsurance. It seems to me it should be the responsibility of the committee that is
Private Bills
charged with the administration of our financial institutions to give direction to this bill and to look into the things I have suggested.
It is very interesting to note that clause 8 (2) of the bill reads:
No agreement between the Company and the Provincial Company providing for such acquisition and assumption shall become effective until it has been submitted to and approved by the Treasury Board of Canada.
It is unfortunate that the sponsor of the bill did not explain this but so far as I can see that indicates that there are financial advantages to be gained under a federal charter which have no bearing to the issuing of insurance or reinsurance. Questions of tax may be involved. This company's business might be more advantageously conducted in the federal than in the provincial field. In this connection, some insurance companies are questioning the desirability of remaining in certain provincial fields. In at least two provinces there are indications that insurance companies there will have to serve the needs and interests of the people better or they will not remain under the control of their boards of directors and will be expropriated. I suggest that the expropriation of this company at $2,500 is not going to be an expensive proposition and should be undertaken.
I therefore reiterate that we are not giving serious enough consideration to the sponsoring of such bills because we lack knowledge about the companies and we lack explanations as to why many things are being sought. We are no longer willing to accept such things as a matter of course. Why should anyone come to parliament for a charter to issue insurance? It amounts to the same thing as asking for a charter to make money. Obviously the $2,500 needed with respect to this company will be found and also the $5 million in capital stock.
While we are reluctantly prepared to support this bill, as we did the other one, we should be prepared to rename this company when the bill returns, "Macaluso Income Disability and Reinsurance Company of Canada", because I think it would be more appropriate than caling it "Income Disability Company".


Joseph Angelo Macaluso: I hope that the hon. member will support this measure. I might add that I have no shares or interest in this company. I have not attempted to answer questions-

June 7, 1966
Excise Tax Act


Mr. Speaker:: Order, please. Does the hon. member understand that by speaking he is closing the debate?


Marcel Joseph Aimé Lambert: He has spoken.


Mr. Speaker:: The hon. member for Edmonton West has said that the hon. member has spoken. Is it the pleasure of the house to adopt the said motion?


Frank Howard: On division.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on finance, trade and economic affairs.
Mr. Speaker:: It being seven o'clock the hour set aside for the consideration of private members' business has expired and the house will now proceed to consideration of the business interrupted at six o'clock.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Rinfret in the chair.

[Stage Direction]
That it is expedient to introduce a measure to amend the Excise Tax Act and to provide among other things:
1.	That effective March 30, 1966,
(a)	dies, jigs, fixtures and moulds,
(b)	patterns for dies, jigs, fixtures and moulds, and
(c)	tools for use in or attachment to production machinery that are for working materials by turning, milling, grinding, polishing, drilling, punching, boring, shaping, shearing, pressing or planing when for use by manufacturers or producers directly in the manufacture or production of goods, be exempt from sales tax.
2.	That the combined rate of tax under the said act and the Old Age Security Act on the following goods (other than goods described in paragraph 1) shall, effective April 1, 1967, be reduced to 6% and effective April 1, 1968, be reduced to zero, namely:
(a)	machinery and apparatus sold to or imported by manufacturers or producers for use by them directly in the manufacture or production of goods,
(b)	equipment sold to or imported by manufacturers or producers for use by them for exhausting dust and noxious fumes produced by their manufacturing or producing operations,
(c)	safety devices and equipment sold to or imported by manufacturers or producers for use by them in the prevention of accidents in the manufacture or production of goods,
(d)	equipment sold to or imported by manufacturers or producers for use by them in carrying refuse or waste from machinery and apparatus used by them directly in the manufacture or production of goods,

(e)	gasoline-powered and diesel powered self-propelled trucks mounted on rubber-tired wheels for off-highway use exclusively at mines and quarries.
(f)	internal combustion tractors, other than highway truck tractors, for use exclusively in the operation of logging, such operation to include the removal of the log from stump to skidway, log dump, or common or other carrier,
(g)	logging wagons and logging sleds,
(h)	machinery, logging cars, cranes, captive balloons having a volume of 150,000 cubic feet or more, blocks and tackle and wire rope; all the foregoing for use exclusively in the operation of logging, such operation to include the removal of the log from stump to skidway, log dump, or common or other carrier,
(i)	pipes or tubes commonly known as ''oil-country goods", being casing or tubing and fittings, couplings, thread protectors and nipples therefor; drill pipe; all of the foregoing for use in connection with natural gas or oil wells,
(j)	machinery and apparatus, including drilling bits and seismic shothole casing, for use in exploration for or discovery or development of petroleum, natural gas or minerals,
(k)	repair and maintenance equipment sold to or imported by manufacturers or producers for use by them in servicing goods described in subparagraphs (a) to (j) that are used by them,
(l)	parts for goods described in sub-paragraphs (a) to (k),
(m)	drilling mud and additives therefor,
(n)	geophysical surveying precision instruments
and equipment for use exclusively in prospecting for, or in the exploration and development of, petroleum, natural gas, water wells and minerals, or for geophysical studies for engineering projects, including the following:	magnetometers; gravity
meters and other instruments designed to measure the elements, variations and distortions of the natural gravitational force; field potentiometers, meggers, non-polarizing electrodes, and electrical equipment for making measurements in drill holes; instruments and equipment for seismic prospecting; geiger muller counters and other instruments for radioactive methods of geophysical prospecting; electrical and electronic amplifying devices and electrical thermostats designed to be used with any of the foregoing; repair parts, tripods and fitted carrying cases for any of the foregoing, and
(o)	articles and materials for use in the manufacture of goods described in sub-paragraphs (a) to (n)
but not including:
(p)	goods for use by persons exempt from payments of consumption or sales tax under subsection (2) of section 34 of the said Act,
(q)	office equipment or
(r)	motor vehicles except those described in sub-paragraphs (e) and (h).
3.	That effective March 30, 1966, the consumption or sales tax on goods described in paragraph 2 that are produced or manufactured in Canada shall be imposed, levied and collected at the rate of tax in effect at the time when the goods are delivered to the purchaser and shall be payable at the time or times provided in paragraph (a) of subsection (1) of section 30 of the said Act.
June 7, 1966
[Stage Direction]
4.	That effective March 30, 1966, stained glass windows of handmade or hand rolled glass technically called antique glass and materials for use exclusively in the manufacture thereof he exempt from sales tax.
5.	That effective March 30, 1966, natural gas be exempt from sales tax.
6.	That effective March 30, 1966, fuel oil for use in the generation of electricity be exempt from sales tax.
7.	That effective March 30, 1966, a person engaged in the business of retreading tires be deemed to be a producer or manufacturer.
8.	That effective March 30, 1966, prepared surgical skin closure devices, plastic surgical drapes for use during surgical operations, artificial teeth and articles and materials for use in the manufacture of the foregoing be exempt from sales tax.
9. That effective March 30, 1966, the present exemption from sales tax for lobster pots, lobster traps, and materials to be used in the manufacture thereof be extended to include crab or shrimp pots, crab or shrimp traps, and materials to be used in the manufacture thereof.
10. That effective March 30, 1966, the present exemption from sales tax for steel pens and complete parts thereof for farm animals be extended to include steel stalls and complete parts thereof for farm animals.
11.	That effective March 30, 1966, tobacco dryers, not including buildings, for use on the farm for farm purposes only, parts therefor and articles and materials for use in the manufacture thereof be exempt from sales tax.
12.	That effective March 30, 1966, vegetarian food products manufactured from vegetable and mineral ingredients to simulate meat products and materials for use in their manufacture be exempt from sales tax.
13.	That effective July 1, 1966,
(a)	dressers and dyers of furs shall be subject to sales tax on the aggregate of the current market value of raw furs dressed or dressed and dyed by them and the dressing or the dressing and dyeing charge, and
(b)	dyers of furs who dye tax-paid dressed furs shall be subject to sales tax on the dyeing charge only,
and that for the purpose of the said act, dressed or dressed and dyed furs shall be deemed not to be partly manufactured goods and shall be deemed to be sold at the time they are delivered out of the possession of the dresser or dyer.
14.	That effective July 1, 1966, where tax-paid dressed or dressed and dyed furs are delivered to a producer or manufacturer to be incorporated by him into articles on which sales tax is payable, a deduction from tax payable shall be allowed to such producer or manufacturer equal to be tax paid on the dressed or dressed and dyed furs less the amount of any deduction previously allowed in respect of such tax.
15.	That effective March 30, 1966, where by the said act or an act to amend the Excise Tax Act, chapter 12 of the statutes of Canada 1963, a deduction from or refund of tax is provided for or a payment by the minister in an amount equal to tax paid is provided for, and circumstances exist which render it difficult to determine the exact amount of such deduction, refund or payment by the minister, the minister may, with the consent
Excise Tax Act
of the person entitled to such deduction, refund or payment, grant a deduction or refund or pay an amount determined, in such manner as the governor in council may by regulation prescribe, to be the correct deduction, refund or amount.
16.	That effective March 30, 1966, the tax imposed under section 5 of Schedule I of the said act on electron tubes, not including cathode ray tubes, the duty-paid value or the sale price of which, as the case may be, does not exceed five dollars per tube, be changed from "fifteen per cent, but not less than ten cents per tube", to "ten cents per tube".
17.	That effective March 30, 1966, the tax imposed under section 3 of Schedule I of the said act on devices commonly known as lighters be changed from "ten per cent but not less than ten cents per device" to "ten cents per device".
18.	That effective March 30, 1966, in calculating the sale price of goods manufactured in Canada for the purpose of determining the excise tax payable under part IV of the said act, there shall not be included the amount charged as price for or In respect of any other goods contained in or attached to the wrapper, package, box, bottle or other container in which the goods are contained.
[DOT] (7:00 p.m.)
Mr. Chretien:: Mr. Chairman, I believe clauses 13 and 14 of this resolution are to be amended. Unfortunately, I do not have the text of that amendment here with me.


Gordon Minto Churchill: That is typical of this government.


Marcel Joseph Aimé Lambert: Mr. Chairman, while waiting for the minister I wish to raise a point that I failed to discuss in my opening remarks. I trust that the minister will give us a little more information in reply on this resolution than he did on the Customs Tariff resolution regarding the points that have been raised. Questions are being raised for the purpose of eliciting information. I want to know why on this particular occasion it has been decided that those who are engaged in the business of retreading tires shall be deemed to be producers or manufacturers. My question relates to the imposition of sales tax on tires which have been retreaded.
I would be glad to hear the minister tell us why it is being done. We notice some of the other exceptions. The lobster fishermen have been given something which was contained in the act before. Steel pens for farm animals is an expression now to include steel stalls. I suppose this change resulted from a disagreement about interpretation; it depended on how a farmer wanted to keep his animals; whether horses or cattle, he still had to decide

June 7, 1966
Excise Tax Act
whether he wanted pens or stalls so as to avoid paying another 11 per cent.
I should like to come back to the point I made about the item dealing with oil country goods, the production of crude oil from bituminous tar sands and the application of sales tax. Are we now to be confronted with an artificial distinction, since this production will not be from oil wells?


Mitchell William Sharp: As the committee will notice there is one excise tax resolution and the resolution is divided into 18 paragraphs. I have been listening to the interesting remarks of members of the committee. Some of them were of a general character dealing with the principles which underlie these proposals. Others were more specific. I was waiting until I thought the committee had made their general observations before getting down to the text of the resolutions themselves.
It is difficult to know how best to deal with these matters. I myself have one amendment to propose and I will do this in due course; it arises out of representations which have been made since the budget was brought down. Perhaps I might deal now with one or two of the observations which have been made so far by members of the committee. First, as to the question raised by the hon. member for Edmonton West about the equipment used in the bituminous sands operation in Alberta. My understanding of the position is that this kind of equipment would probably all be of a character which would be defined as productive machinery while this specific item (i) deals with equipment used in natural gas or oil wells.
In other words, item (i) is an addition to a general description. I cannot vouch for this and it is difficult for me to give a legal opinion. My officials were puzzled by the representations from the hon. member because this point had never arisen before. But it is their belief, which I will confirm when the bills are before the house, that the kind of machinery which would be used in this bituminous sands operation would be covered in another part of the list.


Marcel Joseph Aimé Lambert: Yes, but the minister will understand from his experience of the administration of the act that unless something is specifically spelled out there is a great tendency to say it is not included. The words are "all of the foregoing for use in connection with natural gas or oil wells". I am thinking of tubing, fittings, couplings, thread protectors and nipples in connection with piping. It is not drill casing I am concerned with. I

wish to avoid an overly restrictive interpretation. Of course, I am glad if the minister can give us an assurance that this is covered elsewhere. If it is, so much the better.


Mitchell William Sharp: As far as I know, the intention is not to be unduly restrictive. However, I will have the point examined in preparation for bringing the bill before the house.
A specific matter relating to drugs was raised by the hon. member for Vancouver-Kingsway. In my budget address I made it clear that the government is prepared to remove the sales tax from drugs, should this course be recommended by the committee of this house which is concerned with the question of drugs and drug prices. The reason is that the government would like to be assured that the benefits of a reduction in tax would be passed on to the consumers; this is the only reason for our reluctance to move ahead now before the report of the committee has been presented.
As to the general question raised by the hon. member for York South-he is not here at the moment, but he will no doubt read this in Hansard when he gets an opportunity-regarding the economic effects of removing the sales tax on production machinery in one or two stages, we considered this matter very carefuly when we were preparing the budget proposals. The proposal to remove the sales tax from productive machinery in two stages was a deliberate decision in order to produce a specific effect upon the economy.
As I said in my budget speech, and as was said by the hon. member for Edmonton West, this is not a desirable kind of tax. It was imposed only because of the urgent need for revenue when we took office in 1963. I know that my former colleague, the hon. member for Davenport, agreed with me that the time had come to remove the tax which he never defended as being more than a necessary evil. He did not regard it as being a desirable form of tax. We were then faced with the question of how to remove it. If we had removed it immediately an unwanted impetus would have been given to expansion. Speaking of this, the hon. member for York South used words which I would never use. He said I was trying to reduce expansion. That is not what I am trying to do. What I am trying to do is to ensure that the expansion is within our physical capabilities. If we were to proceed on the assumption that it does not matter how much is attempted-that it can all be achieved-we would be making a
June 7, 1966

false assumption. When demands are in excess of physical capacity the only result is an undesirable and unwanted further increase in prices. We had a choice. We could have removed the sales tax prospectively on April 1, 1967-the whole of it. However, our analysis of the economic outlook was that inflationary pressures would probably be severe for the next 18 months or so, and we had to think of the effect of removing this tax upon expenditures during this 18 months period.
[DOT] (7:10 p.m.)
We felt it desirable to go some distance, if we could in removing the tax because it is an undesirable tax in itself. We do not want to prolong its effect in increasing cost of production any longer than necessary.
As the hon. member for York South himself admitted, one has to balance considerations. Any tax that increases costs is in itself not particularly desirable. On the other hand, to the extent that the tax takes purchasing power out of the economy at times of excessive demands, it may have a useful effect. We decided that to remove the tax in two stages, coupled with the application of our refundable tax, and coupled with reduction in capital cost allowances, would produce the desired reduction in proposed capital expenditures.
You may recall, Mr. Chairman, that in my budget address I went so far as to indicate the order of magnitude of the reductions I was attempting to achieve, which were of the order of $300 million or $400 million out of a total capital expenditure of the order of $10 billion. The effects the budget was trying to achieve were moderate-


David Lewis: The minister means minimal effects.


Mitchell William Sharp: I know the hon. member will agree that we did not want to reduce economic activity below what is physically attainable. We did not want to produce unemployment, and there are no signs of that. If, on the other hand, in 1967 we were to discover that the economy was beginning to recede from its physical capacity, and if there were signs of slack appearing, then of course we could very quickly take off the whole of the tax.
This is one of the elements of flexibility in the budget, like the 5 per cent refundable tax and the time it is repayable. Therefore I submit to my hon. friend that we were not fiddling with this tax. We did these things deliberately and for a purpose.
Excise Tax Act
It would be very desirable if we could take all projects in the country, line them up, and decide which were desirable and which were not. Perhaps in a socialist state we could do that; I do not know. But I do not think my hon. friend would want to have the task of deciding what is desirable and undesirable in an economy with so many variables as the Canadian economy.


David Lewis: May I ask the minister if he does not see a difference between deciding what is desirable and undesirable, and deciding between what is more desirable and less desirable which, in effect, is merely deciding on the priorities in a society? Surely that is not a task he would deny being able to perform.


Mitchell William Sharp: Well, I think we can make broad generalizations, but in order to achieve the moderate effects we were aiming at, it is better to allow some of the economic pressure to exert a moderate effect rather than to attempt to decide whether a particular project has priority over another project, particularly when many projects are very similar to one another.
As the hon. member himself has said, we are not dealing here with things that are obviously good or obviously bad. We are dealing here in the main with things we would like to do this year if we had the physical capacity to do all of them.


David Lewis: May I ask another question, as I would like to understand this. The minister has said that a total reduction in proposed investment by the application of the three measures, the sales tax and the other two, would be $300 million out of a total of $10 billion. Could the minister tell us how much would be involved in immediately withdrawing the sales tax on this machinery and equipment? What kind of inducement to investment would that have meant, by doing it all next year instead of in two stages?


Mitchell William Sharp: I would find it very difficult to put a figure on this-upon any of these items. We had to make some estimates for our own purposes when we were preparing the budget, but perhaps I might put the argument this way: If we had taken off the sales tax immediately we should have had to put on other taxes or to take other repressive measures. To take the tax off immediately would have had effects counter to what we were trying to achieve. It would have given an
609S

June 7, 196$
Excise Tax Act
immediate stimulus to demand. The choice was whether to take it off in the future in one or two stages, and also at what time.
These were the main points. I thank the hon. member for Durham for bringing this question of plastic netting to our attention. This is a new product and I do not remember having looked at it specifically. I am glad the matter was raised.
The hon. member for Oxford raised the perennial problem of the jewelry trade. I received representations from the jewelry trade asking that the special excise tax be removed. The government looked at this proposal carefully and sympathetically. We would have liked to do it, but we came to the conclusion that this ought to be looked at in the context of the general revision of the tax structure now being studied by Mr. Carter and his colleagues.
With respect to the centennial projects, as the committee probably knows expenditures by the provincial governments are not subject to sales tax but all expenditures by municipalities are, and we did not think that municipal centennial projects in particular could be singled out for special treatment. After all, many projects are being undertaken now which would have been undertaken at some other time.
We shall look into the suggestion of the hon. member for Oxford about equipment for making hydroponic products.
[DOT] (7:20 p.m.)


Mr. More:: Frankly I am a little confused by the minister's statement that the government is prepared to take the tax off drugs but wants to wait for the committee report to be assured that the change will pass on a saving to the consumer. For the life of me I just do not see how the committee can make a report that would guarantee this, any more than I can understand how the minister by contacting and negotiating with manufacturers could give an assurance that this action would follow with a resulting savings to the consumers of drugs. It seems to me that the minister and the government are in a stronger position than the committee in this regard, and because of the impact on the health and welfare of the people of this country it seems to me desirable that something should be done.
The government seems to be using the committee consideration solely as an alibi for not taking this desirable action. It has tried on the one hand to convince the people that it

is ready to take action, but does not do so because the committee is considering the situation, with the suggestion that if a report is received from the committee in favour of saving consumers some money on the purchase of drugs it will take action. That is not the type of attitude that should be taken in dealing with a problem of this nature.
I listened with interest to the case put forward by the minister in respect of the removal of the sales tax in stages rather than all at once. I should not like to misquote him, but I think he said that removing sales tax all at once would create an undue impetus. The corollary of that is that the imposition of the tax all at once created an undue restraint at a time when expansion was desired. Had this tax not been imposed at that time we might now be free of some of the pressures on our economy that the minister has to counter in this way. The minister has given us enough evidence to prove that the argument we made against the action taken by his predecessor was warranted. Had his predecessor listened to our arguments the present minister's job at this time would be much easier.
In connection with the sales tax, I am sure the minister has had many representations from various organizations. The Canadian Chamber of Commerce made representations to him in a brief as early as January or February. A committee of that chamber of commerce has given a great deal of study to this matter. I have observed very little that would indicate the minister has taken any cognizance of the representations made.
Certainly the removal of this sales tax from services will relieve some of the problem, but there is still a problem which exists in regard to uncertainty in the operations of certain industries as to whether the tax will or will not be required. The decision is apparently up to the tax administrators to decide, with complete authority resting in the minister, and with no appeal procedure. Representations have been made to the effect that this is unacceptable and is not conducive to an efficient operation.
Over the years it has become virtually impossible for the average small manufacturer to know what kind of decision is to be made under given circumstances. These people assume that the tax will have to be paid and they go ahead and estimate the cost of jobs accordingly in the hope that they will be able to make rebates at a later date. The result is that the cost is higher than it would
June 7, 196G

Excise Tax Act
be if there was some certainty about decisions. This in turn adds to the cost of living, a situation with which we are all concerned at this time.
One section of the Canadian Chamber of Commerce brief, at page 21, refers to the fact that prior to June 13, 1963 productive equipment to be used directly in the manufacture of goods was exempt from sales tax. This exemption was withdrawn effective June 14, 1963. As a result all new productive facilities are subjected to tax, and taxation also is levied on the articles produced by these productive facilities. Since this tax on the productive facilities forms a part of the cost included in the sale price of the manufactured article there is an element of compounding of sales tax, because the cost of productive facilities represents a significant part of the cost of production in many manufacturing industries. This same situation applies particularly to the manufacture of auto parts, where amortization of productive facilities may exceed 20 per cent of production costs.
In the recommendation of that chamber of commerce they ask the minister to consider the suggestion that there should be embodied in new legislative provisions adequate provision for complete appeal procedures. It seems that no attention has been paid to this recommendation. They also recommend that there should be written into the act those principles which underlie current departmental rulings, regulations and practices. They suggest that until these proposals are incorporated the department should codify and make generally available bulletins, regulations and rulings on the administration of the act. If this were done the people concerned would have some guidance.
The chamber of commerce is also concerned about some of the operations in respect of the recovery of sales tax, and they state at the bottom of page 21:
Section 29 of the Excise Tax Act provides that included in the definition of sale price are amounts charged for such matters as advertising, financing, servicing, etc. It is the understanding of the executive council that even though the amounts charged are subsequently recoverable by the purchaser through means of a credit, nevertheless a recovery cannot be made of the sales tax paid on these charged items.
Their recommendation is that the sales tax and excise taxes should be recoverable on all amounts credited to the purchaser when such credits are, in effect, a reduction of the original sale price. They conclude by suggesting that the definition of sale price requires
the sales tax to be paid on any amount that a purchaser is required to pay the vendor in respect of financing. They point out that if the purchaser pays financing charges to someone other than the vendor, they do not become part of the sale price. They state that this situation is anomalous, and they request that vendor financing be treated in the same manner as non-vendor financing.
Before we approve of this measure I should like the minister to indicate what consideration these representations have received, and explain in a little more depth why the government is so reluctant to take action to remove the sales tax on drugs.


Mr. Faulkner:: Mr. Chairman, I do not wish unnecessarily to delay the proceedings of this committee because there seems to be a disposition on the part of members to pass this resolution. I should however like to reiterate a point I made during private representations to the minister concerning the application of excise taxes on clocks and watches.
As the minister and members of this committee are aware, the application of this excise tax seems to be plagued with anomalies. Over a period of years we have been able to eliminate this tax on items such as electrical appliances, firearms, motorcycles, golf clubs, golf balls, fishing rods and fishing reels, but we have been unable to eliminate this tax on clocks and watches.
In the budget speech the minister said he would not be considering a wholesale revision of these items until after the Carter commission had reported. That seemed to me to be a very sensible approach, yet he did find it possible to modify the excise tax on electronic tubes and cigarette fighters. I do not know the reason behind those exceptions, but it irritated the Westclock people, who are located in my area, in view of the fact they had presented what they felt were reasonable figures and representations to the minister and his predecessor in respect of the elimination of the tax on clocks and watches.
[DOT] (7:30 p.m.)
The urgency of this situation is fairly straightforward. The manufacturers of clocks and watches are in competition with manufacturers of many items in respect of which excise taxes have been removed. So what we have is a situation wherein the clock and watch manufacturing industry is operating under terms which can only be described as

June 7, 1966
Excise Tax Act
unfair competition. I understand the difficulties the minister is faced with at this particular point in time, but I would urge him to reconsider the position in respect of the clock and watch manufacturing industry, bearing in mind that the revenue produced from the excise tax on these particular items is not considerable. It would appear to me, therefore, that there is a very strong and compelling case for the elimination of the excise tax on clocks and watches. My point is simple: I would urge the minister to consider this request.


Winona Grace MacInnis: Mr. Chairman, I would like to ask the minister a question. I was very much interested in his remark that the government would be willing to take the 11 per cent sales tax off drugs provided they could be sure that the benefit would be passed on to the consumer. I would like to ask, what kind of machinery would the minister propose to ensure that this would be done? This is a matter of very great concern to the consumer and I would like to know what the minister would visualize as being a safeguard in this respect.


Mitchell William Sharp: Mr. Chairman, I have always understood that the reason for having this committee look into the prices of drugs was to find means of bringing them down. We thought as a government that the responsible thing for us to do was to accompany our action in removing the tax with whatever action is recommended by the committee in order to bring down the price of drugs generally. I understand that the committee was formed because it was felt that the price of drugs was excessive for reasons other than the sales tax.


Winona Grace MacInnis: Therefore the minister does not believe in taking off the tax by degrees?


Mitchell William Sharp: As I said in my general remarks about this resolution, it is in 18 paragraphs, and I would suggest that in order to expedite the work of the committee so they will know what is in my mind by way of amendment, paragraphs 13 and 14 be considered together. Before they are considered by the committee I should like to propose that they be amended. I will ask my colleague the Postmaster General to move the following amendment:
That the Excise Tax Act resolution be amended by deleting paragraphs 13 and 14 thereof and substituting therefor the following:
"13. That effective July 1, 1966, a person who receives dressed or dressed and dyed furs from a

dresser or dyer shall, whether or not he is a licensed wholesaler or manufacturer under part VI of the said act, be subject to sales tax payable at the time such furs are delivered to him, on
(a)	the aggregate of
(i)	the current market value in their raw state of the furs so received by him, and
(ii)	the dressing or dressing and dyeing charge in respect of such furs, or
(b)	the dyeing charge only where the furs so received were tax-paid dressed furs at the time they were delivered to the dyer,
and that for the purpose of the said act, dressed or dressed and dyed furs shall be deemed not to be partly manufactured goods and a licensed wholesaler shall not be entitled to import tax free dressed or dressed and dyed furs for resale.
14.	That effective July 1, 1966, where a tax-paid dressed or dressed and dyed fur is delivered to a person to be incorporated by him or on his behalf, into an article on which sales tax is payable, a deduction from tax payable by him shall be allowed, at such time as the minister may by regulation determine but in any case at a time not later than the time when the tax in respect of an article in which the fur is incorporated is payable, in an amount equal to the tax paid on the dressed or dressed and dyed fur less the amount of any deduction previously allowed in respect of such tax."


David Lewis: Mr. Chairman, perhaps the minister would help us understand the two paragraphs by telling us the differences the amendment introduces, if that is not an imposition on him.


Mitchell William Sharp: I shall be very happy to do so, Mr. Chairman, but I think the motion should be moved first. I would ask my colleague the Postmaster General to move the motion.


Mr. Cote (Longueuil):: I so move, Mr. Chairman.


Mitchell William Sharp: In order to explain the rewording of paragraphs 13 and 14 now before the committee it is necessary to say something about the reason for the amendments proposed by those paragraphs as originally drafted and as now presented in a revised form.
These two paragraphs as originally drafted, and as now revised, propose a change in the method of collecting the sales tax on furs. It is not proposed that there be any over-all increase in the amount of tax nor is any change to be made in the existing requirement that manufacturers of articles made from fur must pay sales tax when they sell the goods they manufacture. The purpose of the proposed change in the wording of the act is to provide greater certainty and efficiency in the collection of the sales tax on articles made from fur. In this industry many retail outlets carry out some manufacturing of fur
June 7, 1966

garments. It has proven difficult to ensure that sales tax is paid in all cases on the products of these manufacturing operations and this situation has been unfair to other manufacturers and unsatisfactory from the point of view of the treasury. What is proposed is to introduce a new procedure under which sales tax is collected at the stage where furs are dressed and dyed as well as at the time when fur garments are sold. In calculating the tax at the time fur garments are sold credit will be given for the tax paid at the dressing and dyeing stage.
As originally drafted, paragraphs 13 and 14 of the resolution proposed that dressers and dyers of furs would be responsible for the payment of sales tax on furs processed by them. This tax would have been payable by the dresser or dyer when he delivered furs to a manufacturer of fur garments. The manufacturer of fur garments would have been required to pay sales tax on the selling price of the garments and other articles made of fur manufactured by him at the time he sold these goods but in computing this tax he would have been allowed to take a deduction for the amount of tax already paid by the dresser and dyer on the furs he used in his manufacturing operations. That was the first proposal that I made and it was included in the resolutions tabled at the time of the budget.
Representations were made to the government by the dressers and dyers of furs that this arrangement would place them in very serious financial difficulties. Dressers and dyers of furs are not normally the owners of the furs they process. They only perform a service. It is traditional that the dressers and dyers extend long-term credits to the owners of the furs for the payment of the charges made for dressing and dyeing. Because of this arrangement the dressers and dyers would have been required to wait for many months for reimbursement from the owners of the furs for the sales tax paid by the dressers and dyers at the time they delivered the furs to their owners.
The only change of substance to be made in paragraphs 13 and 14 by the amendments now placed before the committee is to shift the liability to pay tax at the dressing and dyeing stage from the dressers and dyers to the person who takes delivery of processed furs from a dresser or dyer. That is, I hope, a simple explanation of what we are about.
Income Tax Act


Marcel Joseph Aimé Lambert: What this amendment does is shift the assessment of sales tax from an intermediate stage to really the final manufacturing stage. However, it does raise a question in my mind as to the identification of the furs as they pass through these various stages. I suppose in paragraph 14, where the minister is allowing a credit for a portion of the sales tax which may have already been paid at the dyeing and processing stage, it becomes a question of identification, and I think there may be a little difficulty here. However, that is a matter of administration.
[DOT] (7:40 p.m.)


Mitchell William Sharp: Yes, Mr. Chairman, the hon. member has put the situation accurately. What we are concerned with here is collecting the tax. There would be no problem were it not for the fact that some manufacturers of furs are also retailers. The question of collecting the tax at the final stage is inefficient and in the past has not proved as reliable as we would have liked. The purpose of this amendment, in its original form and now in its amended form, is to impose tax at a somewhat earlier stage, and to impose it upon the manufacturer who, when he sells his goods, may be able to credit the tax that has already been paid.


The Deputy Chairman:: It is moved by Mr. Cote (Longueuil) that the Excise Tax Resolution be amended by deleting paragraph 13 and 14 thereof and substituting therefor the amendment read by the Minister of Finance.


Marcel Joseph Aimé Lambert: In order to pass this Excise Tax Act resolution properly I think we could take it paragraph by paragraph. The minister has introduced an amendment which we will either accept or reject when we come to paragraphs 13 and 14.
Paragraphs 1 to 12 inclusive agreed to.
On paragraphs 13 and 14.


Maurice Rinfret: An amendment has been moved to these paragraphs.


[Stage Direction]
Amendment agreed to.
Paragraphs 13 and 14 as amended agreed to.
Paragraphs 15 to 18 inclusive agreed to.
Resolution reported.

[Stage Direction]
That it is expedient to introduce a measure to amend the Income Tax Act and to provide among other things:
1.	That for the 1967 and subsequent taxation years the deduction from individual income tax equal to
[Stage Direction]
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Income Tax Act
the lesser of 10 per cent of basic tax or $600, described in subsection (4) of section 33 of the said Act, be replaced by a deduction equal to the lesser of 20 per cent of basic tax or 20, and that for the 1966 taxation year the deduction be equal to the aggregate of
(a)	4 per cent of basic tax or $240, whichever is the lesser, and
(b)	12 per cent of basic tax or $12, whichever is the lesser.
2.	That for the 1967 and subsequent taxation years,
(a)	a gift made to a charitable organization in Canada exempt from tax by paragraph (e) of subsection (1) of section 62 or to a corporation or trust resident in Canada exempt from tax by paragraph (f) or (g) of that subsection may be deducted in computing taxable income for the year only if the donee is a registered Canadian charitable organization, and for this purpose a registered Canadian charitable organization shall mean
(i)	a charitable organization in Canada exempt from tax by jaragraph (g) of subsection (1) of section 62 or a corporation or trust resident in Canada exempt from tax by paragraph (f) or (g) of that subsection, or
(ii)	a branch, section, parish, congregation or other division of an organization described in (i) that receives donations on its own behalf, that has been registered in a prescribed manner with the Minister of National Revenue and has filed a return in prescribed form; and
(b)	the aggregate of gifts that a taxpayer may deduct in computing his taxable income for a taxation year by virtue of paragraph (a) of subsection (1) of section 27 of the Act may include a gift made
(i)	to the United Nations or any agency thereof,
(ii)	to a university outside Canada prescribed to be a university the student body of which ordinarily includes students from Canada, or
(iii)	to a charitable organization outside Canada to which Her Majesty in right of Canada has made a gift during the calendar year coinciding with or ending in the taxation year.
3.	That with respect to bonds or other obligations issued after April 15, 1966, interest on such bonds or other obligations
(a)	of or guaranteed by the Government of Canada,
(b)	of the government of a province,
(c)	of an agent of a province, an educational institution or a hospital, where repayment of the principal amount thereof and payment of the interest thereon is guaranteed by the government of the province, or
(d)	of a municipal or local government established under provincial law,
be exempt from the 15% non-resident withholding tax.
4.	That with respect to taxation years ending after March 29, 1966, a corporation whose principal business during the year after that date was trading or dealing in bonds, shares or debentures will not be eligible to pay tax at that special 15 per cent raate of tax provided by section 70 of the said Act.
5.	That with respect to dividends received after March 29, 1966, a non-resident-owned investment
[The Deputy Chairman.]
corporation may not deduct from its income in computing its taxable income a dividend received by it from another non-resident-owned investment corporation other than a dividend paid by a nonresident-owned investment corporation that had previous to the payment of the dividend, and at a time when it was taxable as a non-resident-owned investment corporation, paid dividends (other than dividends on which no tax was payable under the said Act) the aggregate amount of which is not less than the corporation's surplus determined in the manner prescribed for purposes of subsection (la) of section 106 of the said Act for taxation years for which it was not taxable as a non-resident-owned investment corporation.
6.	That for the 1966 and subsequent taxation years an employee may not deduct in computing his income an amount in respect of tuition fees paid on his behalf by his employer in excess of the amount included in his income in respect of the said fees.
7.	That with respect to a benefit received after March 29, 1966 by virtue of a plan under which a corporation agrees to sell or issue shares to its employees, the rules described in subsection (2) of section 85A of the said Act that an employee may elect to use to calculate the amount of tax on the said benefit be amended so that the 20 per cent of the amount of the benefit referred to in subparagraph (ii) of paragraph (b) of the said subsection will not exceed $200, but that this amendment shall not apply if the right to acquire shares was given to the employee before 1965 and the benefit is received before January 1, 1967.
8.	That it be declared for greater certainty that the expression "in Canada" in the said Act includes and has always included the sea bed and sub-soil of the submarine areas adjacent to the coasts of Canada in respect of which grants are issued, by the government of Canada or of a province, of a right, license or privilege to explore for, drill for or take any materials or substances.
9.	That with respect to operations that come into commercial production after March 29, 1966, the definition of a mine be amended so that all wells, the material that is extracted from sylvite deposits by means of which is sent to a single plant for processing, be deemed to be one mine, and that where an operation that would qualify as a mine by reason of an enactment based on this resolution came into commercial production within the 3 years preceding March 29, 1966, that part of the income of the operator thereof that is attributable to commercial production therefrom in the part of the first 36 months of such operation that falls after March 29, 1966, shall be deemed to be income from the operation of a mine.
10.	That the date before which a new manufacturing or processing business must have commenced manufacturing or processing in reasonable commercial quantities in a designated area in order to qualify for an exemption from tax on its income from such operations for 36 months after the commencement of operations be changed from April 1, 1967 to April 1, 1968 in the case of a manufacturing or processing business where evidence satisfactory to the Minister of Industry is furnished to establish that
(a) the facilities to be used in the said business were in the process of being constructed, installed or assembled on the site of the proposed business premises on March 29, 1966, and
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[Stage Direction]
(b) the said business is unable to commence manufacturing or processing in reasonable commercial quantities before April 1, 1967, by reason of an event beyond the control of the said business
11.	That the provisions of section 79C of the said Act dealing with deferred profit sharing plans be revised and in particular that the said provisions
(a)	authorize the Governor in Council to make regulations to define the property in which funds of a trust governed by a plan may be invested,
(b)	require that property of a trust governed by a plan be vested in the employees who are beneficiaries under the plan, and
(c)	provide rules for taxing amounts reallocated when employees who are beneficiaries under a plan cease to be beneficiaries under the plan.
12.	That paragraph (u) of subsection (1) of section 11 be amended to provide that the deduction from income provided thereunder shall not apply with respect to amounts paid after March 29, 1966, to a trustee under a deferred profit sharing plan.
13.	That section 79A of the Act, dealing with supplementary unemployment benefit plans, be amended to provide for the registration of such plans for the purposes of the said Act and to authorize the making of regulations governing the qualifications required of such plans for registration.
14.	That with respect to each taxation year included in whole or in part in the period commencing May 1, 1966, and ending October 31, 1967, a special refundable tax at the rate of 5% shall be payable by all corporations that are not exempt from tax under the said Act by virtue of section 62 thereof and by all trusts (other than trusts arising on death) calculated, in the case of a corporation, on a tax base (hereinafter called the corporate tax base) comprising the aggregate of
(a)	its taxable income or loss,
(b)	amounts deducted under paragraph (a) of subsection (1) of section 11 in computing its income,
(c)	amounts deducted under paragraph (b) of subsection (1) of section 11 in computing its income,
(d)	business losses sustained in other years that are deducted in computing its taxable income,
(e)	the amount by which any amounts deducted under section 83A of the said Act in computing its Income exceed any expenses described in that section actually incurred by it in the year,
(f)	dividends received from corporations described in paragraphs (d) and (e) of subsection
(1)	of section 28 of the said Act that are deducted in computing its taxable income, and
(g)	income from the operation of a mine not included in computing its income by virtue of subsection (5) of section 83 of the said Act,
minus the aggregate of
(h)	$30,000, but where the corporation is associated with one or more other corporations in the year then 30/35ths of the amount allocated to it for the year under subsection (3) or (3a) of section 39 of the said Act,
(i)	the aggregate of the payments made in the year by the corporation (not exceeding the aggregate of the amounts specified in sub-paragraphs (b) and (e)) each of which was a payment as or on account of principal made in retirement of a debt owed by the corporation or made into a
Income Tax Act
sinking fund that under an agreement in writing entered into before March 30, 1966 was required to be established for the purpose of the retirement of a debt owed by the corporation, if
(i)	the original term for full repayment of the debt was three years or longer,
(ii)	the payment was required to be made in the year under an agreement in writing entered into before March 30, 1966, and
(iii)	the payment was made to a person with whom the corporation was dealing at arm's length,
(3) payments made in the year by the corporation to redeem shares of its capital stock where such redemption was authorized by or on behalf of the corporation before March 30, 1966, or required by an agreement in writing entered into before that day, and
(k)	the following taxes payable by the corporation in respect of the year, namely
(i)	income tax payable to Her Majesty in right of Canada,
(ii)	income tax and logging tax payable to Her Majesty in right of a province, and
(iii)	income and profits taxes payable to the government of a country other than Canada,
and in the case of a trust, on a tax base (hereinafter called the trust tax base) comprising the aggregate of
(l)	its income or loss from all businesses carried on by it,
(m)	its rental income not included in computing the amount determined under subparagraph (1),
(n)	amounts deducted under paragraph (a) of
subsection	(1)	of section	11	in	computing the
amounts specified in subparagraphs (1) and (m), and
(o)	amounts deducted under paragraph (b) of
subsection	(1)	of section	11	in	computing the
amounts specified in subparagraphs (1) and (m), minus the aggregate of
(p)	$30,000,
(q)	the aggregate of the payments made in the year by the trust (not exceeding the amount specified in subparagraph (n)) each of which was a payment as or on account of principal made in retirement of a debt owed by the trust, if
(i)	the original term for full repayment of the debt was three years or longer,
(ii)	the payment was required to be made in the year under an agreement in writing entered into before March 30, 1966, and
(iii)	the payment was made to a person with whom the trust was dealing at arm's length, and
(r)	income and profits taxes payable in respect of the year to the government of a country other than Canada.
15.	That for the purposes of the special refundable tax, the corporate tax base and trust tax base for any taxation year part of which is before May 1, 1966 or after October 31, 1967, shall be that proportion of the said tax base that the number of days in the taxation year that are after April 30, 1966 or before November 1, 1967, as the case may be, is of the total number of days in the taxation year.
16.	That payment of the special refundable tax shall be made,
(a) in the case of a corporation, in monthly installments on the last day of each month commencing with May 31,	1966, and ending with
[Stage Direction]
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Income Tax Act
October 31, 1967, with each installment calculated by reference to the corporate tax base for the same taxation year of the corporation as is used in computing or estimating the corporation tax payment that is due on the same day, and
(b) in the case of a trust, in equal installments on June 30, September 30 and December 31, 1966, and In equal installments on March 31, June 30 and September 30, 1967, calculated by reference to the trust tax base for the preceding taxation year or the estimated trust tax base for the taxation year in which the installments are paid.
17.	That each installment of special refundable tax shall be,
(a)	in the case of a corporation, that proportion of the tax calculated or estimated to be payable for the taxation year, that one is of the number of installment payment dates in the taxation year that are after April 30, 1966 and before November 1. 1967 and
(b)	in the ease of a trust, one third of the tax calculated or estimated to be payable for the taxation year,
and that
(c)	the final adjusting payment, if any, shall be due, in respect of each taxation year, three months after the end of the taxation year, and
(d)	a return in prescribed form shall be filed by a corporation within six months from the end of each taxation year, and by a trust within ninety days from the end of each taxation year.
18.	That the special refundable tax shall be refunded together with interest at 5% per annum to taxpayers at such time or times as may be prescribed but not less than 18 months nor more than 36 months after the later of
(a)	the day on which the payment of tax to be refunded was due; or
(b)	the day on which the payment of tax to be refunded was paid.
Mitchell William Sharp: Mr. Chairman, perhaps I should begin our consideration of the Income Tax ^Resolution by saying to the committee that I shall have two amendments to propose to these resolutions arising out of representations that have been made following the presentation of the budget. Those amendments will relate to paragraphs 7 and 14.


Marcel Joseph Aimé Lambert: Mr. Chairman, we will now consider the principal part of the Budget resolutions, the one that has the greatest impact. I suppose most people look to it for some measure of glad tidings or for tidings of woe. This year I think in two senses it brought woe. First there was an increase in personal income tax-rendering ineffective that loudly hailed tax cut of last year, which was a pure election bait-and the other woe was to the economy. But the spelling of the word is whoa.
The editorial commentator in the Canadian Tax Journal of March-April, 1966, comment-
[The Deputy Chairman.]
ing on this particular aspect of the budget said:
Logically, since the measure was designed to dampen spending, last year's cut-which was designed to increase demand-might have been fully reversed-
One would think so-
-instead of increasing the tax cut for 40 per cent of the taxpayers.
Undoubtedly the increase in tax this year will hit some people harder. This will take a lot of computing. I suppose that if it is the intention of the government to restrain the economy, some sort of a tax should be imposed, but I am wondering whether the imposition of personal income tax is the right way to go about it. It certainly hits those people who have money to spend and it might deter them from spending money, depending upon how much the tax is increased. On the other hand, the person who pays no tax is not affected. All he is subject to is the burden of the increasing cost of living. This is fully understandable.
The minister, in his budget speech and certainly in his white papers, indicated he did not think the increase in the cost of living in 1966 should be smaller than it was in 1965. Therefore we are in for another rise in prices.
I was disappointed in certain aspects of the budget speech. First of all I had hoped that the minister would have realized the impropriety of the ministerial discretionary provisions which were introduced in 1963 with regard to associated companies. A great deal of objection was voiced both in and out of the house-as a matter of fact there was a great deal of objection from certain members supporting the present minister-when his predecessor introduced these discretionary powers. I find them completely repugnant and I sincerely regret that the minister did not remove them from the act.
There is one thing however in which we can perhaps rejoice and that is in the fact that the minister has not introduced the capital gains tax. If he has given a look to the initial drafts of the Carter Commission report he may or may not have seen that some indication was given there to the necessity of introducing a capital gains tax into Canada's tax structure. Personally, I do not think we should do so since we are trying to encourage development capital in this country. This is what the minister and his predecessors have been endeavouring to do at all times, to encourage equity investment. The
June 7, 1966

introduction of a capital gains tax would be an absolute deterrent to equity investment.
I find it rather odd that my friends to the left of us in the house on the one hand advocate a capital gains tax and on the other hand want Canadians to invest more in the development of our own resources. The two propositions are quite incompatible. Some countries have considered a capital gains tax only after they have achieved a mature investment state, and even in those cases I am sure that in essence a capital gains tax, under today's economic structure is improper. If there is a capital gains tax, surely there must be an allowance for capital losses. We never hear about them. They are always to be taken as part of the price of living. Rather, they go after the gains. This is something that must be taken to be quite improper, something that will stultify all initiative and activity. In my opinion, unless you are prepared to make a concession on the losses, then do not talk about taxing gains.
[DOT] (7:50 p.m.)
One other matter that I do find regrettable in this income tax resolution is the element of retroactivity. One need not belabour the undersirability of having retroactive features in any taxing statutes. However, there is that feature in this Budget. It deals with the restriction now placed on certain stock options. I must say that there have been many representations made, both by the financial press and elsewhere, and I should like to read some excerpts from a document written by a business concern in this country where the employees do have stock options. This article is written from the point of view of equity and what happens as a result of the provisions which are contained in subparagraph (7) of the resolution.
The amendment to section 85A of the Income Tax Act proposed in the Budget speech of March 29 has the following effect: As the act stands at present, an employee may elect to pay a tax on benefits received from the employee stock option plan at his average tax rate for the previous three years, less 20 per cent of the benefits. The 20 per cent reduction, which at present is not limited, would now be limited to $200. I would say that in most cases this limitation results in a very substantial extra tax burden on the employee.
Now, this provision has no bearing on the restraining of the expansion or the limiting of the inflation which seems to be the main theme of the Budget. If it is related to the
Income Tax Act
closing of a loophole, then it is difficult to imagine what abuses have taken place or could take place under an employee stock option plan. After all, the granting of stock options in so far as public companies are concerned is rigidly policed by the stock exchanges in order to guard against any abuses. Now, why has this provision been made retroactive?
As I said, the 20 per cent deduction of benefit has been limited to $200, making the stock option a relatively costly form of remuneration. The changes, apparently, will not apply to options granted before the beginning of 1965 and exercised before the end of 1966, and the result is to trap a number of situations which cannot meet this exemption requirement. I am sure there are many employees, of one category or another, who undertook certain employment or who committed themselves on the basis of the tax law as it was. Now, along in the middle of the game, a change is made. So far, the minister has not been able to explain or has not explained why the change was made. What was the nature of the abuse, if there was one? I feel we clearly have to have an explanation. As will be seen the minister, in order to justify this income tax amendment, must overcome the objection to retroactivity, which is always a repugnant feature in any taxation statute.
I should like to say that I am pleased to see important efforts have been made to regularize charitable organizations, so that one can readily establish the continuing charitable nature of any organization which is prepared to apply initially to the Minister of National Revenue for status, and be able to grant a receipt which is good for income tax deduction purposes. However, I do believe there will be some administrative difficulty. This has not been disclosed in the resolution, but with regard to religious bodies is it the intention to have every parish, every church, which would normally be entitled, under section 62 I believe of the act, to grant a charitable donation receipt, register and file its report? Will this be done, for instance, through the presbytery, through the diocese or the archdiocese, so that there will be one regional authority in regard to the church? Will the various religious bodies certify to the Minister of National Revenue that such and such a parish is in good standing and has the authorized person to issue charitable donations receipts? Otherwise, there is going to be

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Income Tax Act
a tremendous staff required by the Department of National Revenue to examine and file these annual statements called for by this amendment.
One feature with regard to charitable donations which I find neglected in this year's budget and which I feel would have merited a great deal of support in the house and in the country, concerns donations in excess of the statutory limit, provided those donations are made to a recognized educational institution. This would encourage endowments to university foundations. I feel we could do a great deal more than we have done. I spoke about this during the Budget debate. There are some things that have been done at the University of British Columbia during the past year or two, where tremendous gifts have been made to the university by people who have been able to amass a jolly good share of this world's goods, and who are putting it to good public use. I think we should be in a position to encourage this type of thing.
[DOT] (8:00 p.m.)
The last matter about which I want to speak, because there will be a number of others who will want to do so, concerns the refundable levy. This has really been called in some quarters a corporation tax loan. Because that is all it is. The minister says that corporations and certain types of trusts shall, if their income exceeds $30,000 a year, pay a 5 per cent levy on the excess over that income, which may be refundable with interest up to some period not exceeding 18 months. It is a forced loan, and I know that many concerns will be caught. Some concerns because of their cash position, will have to borrow the money in order to pay this tax. It will be interesting to know whether they will be able to claim as a business expense the interest on the money which they have to borrow in order to pay the so-called corporate tax loan.
On the other hand, the 5 per cent interest which the crown will pay on the refund I am sure will be charged as taxable income. So I trust the interest on the money borrowed to pay this tax should be charged as an expense. I seem to recall that in the past there were some monarchs who incurred a great deal of censure when they forced their subjects to make loans to the crown. History today finds their conduct rather reprehensible.

Here the government is doing the same sort of thing; they are forcing some of our subjects to make loans. I do not know what is the government's justification for telling these people that it is going to force them to pay this money; that they will be paid less than the going rate of interest on the money; and that they will have to pay tax on this interest. To me this is not justifiable.
I do not know how this is going to help the economy. As the Canadian Tax Journal forecasts, is something of the nature of $145 million to be removed from the economy? I would have thought that if the minister had been able to exercise the degree of influence with his provincial counterparts he would have done far more good by having them reduce the totality of the provincial budgets by $145 million. The economy would have benefited far more than by this roundabout method of going after corporate business. I am not too sure that corporate business in this country should be loaded down with more and more burdens. There is such a thing as killing the goose that lays the golden egg; or perhaps I can use another simile- knocking the milk cow on the head.
The economy of Canada must continue to retain a viable form. It must produce economic activity. It must produce income or revenue if the government is anticipating that the economy will be able to pay its share of the expense of administering the country, provide for the many government programs, as well as provide for an expansion of the economy. It always seems that whenever the economy is expanding, public authority wants a bigger and bigger slice of the expansion. I think that is evident. When I say "public authority" I refer to the municipalities, the provinces and the federal government. That is the public authority which is going after a bigger and bigger portion of the economic expansion, a manoeuvre which, of course, is self-defeating.
Somehow or other we have to bend our energies toward finding some other solution. In this regard I trust we will derive some help from the report of the Carter Commission. I know that all the Minister of National Revenue wants is a nice straightforward and simple system whereby he can collect his taxes. We know that he is not the one who sets the budget: The Minister of Finance does that, though from the way the Minister of National Revenue is looking at the present time he might have had a few suggestions to make with regard to the present budget.
June 7, 1966

I know many other members of the committee wish to make some remarks at this stage. The exact detail of this resolution and of the legislation will be better studied in committee of the whole when the bill is before us.


David Lewis: Mr. Chairman, may I very briefly and in a rather elementary way indicate the framework of the remarks I wish to make. First of all I want to ask, what are the purposes which a fiscal system ought to serve? Unless one has those purposes in mind it seems to me he goes in a routine way from one problem to another, whether it be a budgetary or any other type of problem. What purposes should a fiscal system serve in addition to raising revenues to meet the necessary expenditures?
I suggest there are two major purposes which are equally important for the economy, for the people who make the economy function and for whom the economy exists. Some spokesmen I listen to are economists and some are politicians. Sometimes they are both, or from other groups. But many of them talk about the economy as if there were something useful in the economy itself aside from the people the economy has to serve. It is as if you are making something function just because there is some virtue in making it function per se. I see no virtue in making the economy function, other than that it be made to function for the welfare of the people not only in this country but in other countries as well.
Therefore, Mr. Chairman, from that point of view I suggest that the tax system ought to have two purposes in mind; and I am not saying that either one is more important than the other. The first is to use the fiscal system as a means of income redistribution. If there is anything true about our present society it is that inequality of income persists, and indeed grows greater rather than smaller, as our wealth increases. That is the first purpose that a fiscal system should serve. Second, it ought to serve the purpose of being one of the tools by which the economy is kept functioning at full or as near full capacity as possible.
It seems to me that what has happened is that the minister and those around him have gone about as far as John Maynard Keynes -perhaps not quite as far-and have stopped there. I suggest that it is not enough today to deal with rates of investment in the total, global sense, but that in modern societies you must be much more selective about
Income Tax Act
your channels and direction of investment, as well as your global rate of investment. When therefore the Minister of Finance sets out in a time of expansion, because he fears inflation, to reduce the total purchasing power in society he takes a step that is bound to discriminate against those who can suffer discrimination least. That is what this budget does.
[DOT] (8:10 p.m.)
I start therefore with a question so simple that the economists, certainly under the guidance of the Minister of Finance, seem to have overlooked it. The simple question is: How much does it cost for a family consisting of a mother, father and two children to live, not luxuriously, but relatively decently? We find that the Social Planning Council of Metropolitan Toronto produced a guide to family budgeting some time ago for such a family. Their budget was designed to provide for a level of living sufficiently above the subsist-ance survival level as to be consistent with the maintenance of good health and a sense of self respect, and yet considerably below any level of living that might be called luxurious. In another part of the introduction to this budget the Social Planning Council of Metropolitan Toronto states that in the budget some commonplace wants are included that are so important to the social and emotional well-being of families that they rank with necessities.
This is the kind of budget I have in mind, providing for decent yet not luxurious living for a mother, father and two children, one 13 and one nine. The budget provides only $112 a month for food, $38 a month for clothing for all four; 75 cents a month for school needs; $4.55 a month for life insurance; and $115 a month for rent, heat, water, electricity and gas, all inclusive.
This budget provides for no more than any family in Canada ought to have as a minimum. It shows the absolute floor to income of a family of this size, in order for that family to live decently. Bringing that budget up to date, what would it cost a family to live decently in April, 1966? You have a requirement, according to the budget for that family, of $389.49 per month, or $4,673.88 per year. That, according to an authority that is as impartial as may be is the minimum required for a family of four to live in relative self-respect.
What does that mean? It means, I suggest, that the Minister of Finance in looking at this

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Income Tax Act
budget should, as I urge, come to the conclusion that any family of four persons that makes no more than $4,000 a year ought not to have to pay income tax at all.
Instead, what does the Minister of Finance do? He plays around with bits and pieces of window dressing. He restores the income tax that was cut last year. He ostensibly changes the percentage of the cut from 10 per cent to 20 per cent, and then imposes a ceiling of $20 on it. The result, as will be found on page 3384 of Hansard for March 29, 1966, is that the married taxpayer with two dependant children eligible for family allowances has to pay on the $4,000 income, if he makes it, $97 in 1966 instead of the $100 which he paid in 1965, and presumably that would be $95 in a total year, with respect to, say, 1967, instead of the $100 he paid in 1965.
This family which already, according to the budget of the Social Planning Council for Metropolitan Toronto has an income which is $700 below that necessary for a relatively reasonable standard of life, still has to pay $95 in income tax. That is not all. That is why we of the New Democratic Party believe that the minister's budget this year-and I am putting this strongly and deliberately-takes no cognizance of the needs of the lower income groups of this country. Not only does the family I have referred to have to pay $97 in taxes this year and $95 in income tax next year but, in addition, as a result of the Canada Pension Plan the head of a family has to contribute to that plan, if my calculations are correct, some $61 a year, or 1.8 per cent of $3,400. The head of the family therefore this year has to pay $61 that he did not have to pay last year. In addition, the head of the family must pay an additional $52 old age security tax. On top of that, in most provinces he will have to pay an additional $30 in provincial taxes. This means that the family which already is $700 below the minimum income level required for living with reasonable self respect has to pay $210 roughly in federal taxes of one kind or another, plus $30 in provincial income taxes, plus sales tax for various things such as drugs, which the minister has refused to exempt.
We say consciously and deliberately knowing precisely what we say; the minister says consciously and deliberately knowing exactly what he is doing, that the family of four, already in receipt of a gross income below what it ought to have, will have its purchasing power still further reduced in order to make sure that the economy keeps going.

That, in my submission, ignores the basic purpose of a fiscal system, which has to do with the redistribution of income, in order to help those at the lower levels of income to make some kind of half decent living.
I therefore urge the minister even at this late date to consider rearranging the tax structure so that below a certain level of income-and $4,000 for a family of four is the level I have based my submissions on-income should not be taxable at all. I want to make clear that I am not proposing that the exemptions be raised. If you raise the exemptions that would make a difference to those in the higher income brackets to a much greater extent than to those in the lower income brackets.
I am proposing a reconstruction of the total income tax rate structure so that families consisting of a father, mother and two children of, say, six and seven and earning only $4,000 a year do not have to pay any income tax. That family will still be paying toward the Old Age Security Act, and toward the Canada Pension Plan. It will be making many other contributions, as a result of which its income will not be a net income, but will be gross, before deductions.
[DOT] (8:20 p.m.)
Parliament should say to this family: We will take no more money from you. This would mean that the minister would have to find his revenue elsewhere; he would have to increase the taxes which those of us who make the salaries we make as members of this parliament, perhaps plus added income as well, would have to pay, and that is precisely what, morally and socially, the income tax system ought to accomplish. It should give those at the bottom of the ladder an opportunity to live in decency. If this means that those of us who are at the middle or top of the ladder must pay more, then we should pay more.
I was not particularly moved by the plea of the hon. member for Edmonton West, that there should not be a capital gains tax because it would lead to a drying up of investment. People said this about the corporations tax when it was first introduced. They said it would kill initiative, destroy business sense, murder private enterprise and ensure that the economy would come to a halt. But since the corporations tax was introduced our economy has grown by leaps and bounds.
The fact that the corporations have had to pay income tax on their profits has not prevented them from showing phenomenal
June 7, 1966

increases in the rate of profit every year for the last few years. The same thing would happen, I am sure, if there were a capital gains tax.
If the minister, being moved as he ought to be by humane considerations, and as he is capable of being by virtue of his character, were to remove the tax from people receiving small incomes and ask where he was to find the money to replace this revenue, my answer would be: You will find it in the capital gains tax and in the incomes of those who make gains, sometimes large and sometimes small, without doing anything except take the risk of investment. I am not saying that this risk should not be recompensed. It certainly should be. But there is no reason why earnings of this kind should be free of tax, whereas every other type of earning is taxable.
My learned friend, the hon. member for Edmonton West, asks: What about compensation for losses? If he would put the question differently I would have no quarrel with him. He is saying that in some areas one makes gains, and in other areas losses, and that therefore the losses should be taken into consideration.
I would have no objection to a capital gains tax scheme which provided for the averaging of returns over a period greater than one year. Whether the period should be two, three or five years, I would not say; that is an administrative detail with which we are not concerned at this point. But it is certainly possible to devise a capital gains tax system which would make allowances for the year in which there were losses.
I cannot refrain from drawing attention to the distinction between the way the minister addresses himself to the lower income groups in our society and the way he addresses himself to those companies for which the hon. member for Edmonton West, if he will excuse me for putting it this way, wept so charmingly some minutes ago.


An hon. Member:: Copiously.


David Lewis: No, not copiously. It was like the minister's attempt to control the economy: It was moderate weeping. The hon. member said it was a terrible thing to impose a refundable income tax on these people, even though it was to be repaid with interest at 5 per cent. It amounts to a forced loan, says he. I do not care what he calls it. Since there is, I believe, a floor of $30,000 under profits before the refundable income tax 23033-387
Income Tax Act
provision applies, I do not think we should weep copiously or even moderately for these corporations.
But look at the way we treat another group in our community. We say to the $4,000 a year man, who has'a family of two children, that in addition to the contribution he must make to the old age pension plan amounting to $61 a year, and in addition to the $52 he has to pay in old age security tax, he will still have to pay a further $97, or about $2 a week-and he will not get it back, with or without interest. "Too bad", says the Minister of Finance. "But because I realize the difficulty of your situation I will be generous: Last year you had to pay $100 in tax, this year you'll have to pay only $97. And I ask you to be grateful to me for this indication of my generosity." Three bucks a year.
What a difference of approach when it comes to the corporations. Even when he takes the slight step of imposing a refundable tax of only 5 per cent, as a faint-hearted measure to control the rate of expansion in the economy the minister promises to return it to them after 18 months, to do with as they will, plus 5 per cent interest on top. I submit this is characteristic of the kind of society we have built and the kind of social attitudes which motivate us in this nation. This is the protest I am bound to make.
It is to be noted that neither the former minister of finance in 1965 nor the present Minister of Finance has made any change in the income tax structure. I summarize what I have said by making an appeal to the minister to reconstruct the income tax system altogether, not necessarily in terms in which the Carter Commission might propose, but in the simple terms whereby those earning less than a certain amount will not be taxed at all.
I repeat: Do not increase the exemptions, but reconstruct the tables so that a family with two children does not need to pay any taxes out of an income of $4,000. Should the income be less than $4,000 a year, the family should certainly pay no taxes. Even under the new scheme a man with $3,500 a year would have to pay $53 a year in taxes. I submit that such a family with two dependant children, already $1,200 below the minimum for self-respecting living, cannot afford the dollar a week we propose to take from it in income tax. I urge the minister to give this whole question his consideration.

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Income Tax Act
[DOT] (8:30 p.m.)
I turn now to the refundable tax. My hon. friend from Nanaimo-Cowichan-The Islands and I made reference to this in our speeches on the budget, and I wish to do so again. It is a great pity that the minister did not have the courage to introduce this very useful planning lever in a meaningful way once he started. He has taken a weak step in the direction of some form of investment planning. It is an inadequate step. It will not do anything because the amount he is going to take out of the investment total is so very low that it will have no effect at all.
The fact is that there is a great deal in the investment reserve idea. I do not have to tell the minister about the Swedish plan. Under it a carrot rather than a stick is used. A corporation may put into the investment reserve some 40 per cent of its total undistributed profits, and this amount remains in the reserve with the corporation not having to pay taxes on it. This is the carrot, and a very large carrot.
The reserve is held in government hands, and the corporation is given two alternatives. Either it can withdraw the money when it desires to do so, in which case it pays the income tax at that time, or it can leave the money in the reserve until the government decides that the investment needs of the country require it, in which case the corporation is given certain remissions, the details of which frankly I cannot remember. In this way the government can undertake real planning.
But the major part of the Swedish plan which I commend to the minister is that when the government releases the funds, it says where they are to be invested, where a factory or whatever it is is to be built. In that way you have a useful area development plan, as well as a plan that helps keep the economy as a whole going.
I cannot sufficiently emphasize, and I hope I am not too far from right in economic terms, that we are past the stage when we should consider the economy globally every time we take some step. It is necessary for us to consider the various areas of the economy and how they are each affected. The great value of the Swedish plan is that you have a relatively large reserve available to the government for investment. I think it is the Bank of Sweden and the Swedish Labour Market Board which indicate not only when but where the money is to go, in what kind of industry and in what area of the country.

This is the kind of plan which in the view of the New Democratic Party is absolutely minimal under the present circumstances of the complex society in which we live, and it is essential for us to take steps for such planning. The minister looked at that, but instead of adopting the Swedish plan, or some version of it that would give him a real planning lever, he took this miniscule, mincing step of the 5 per cent refundable tax which will accomplish nothing, and which will help those who need help least in the business world.
I suggest that the large corporations, many of which are subsidiaries of American parent companies, will easily replace the amount of the 5 per cent refundable tax from the treasuries of their parent companies. Others will be able to borrow from the money market, even if the interest rate is a little higher. Further, if they take that 5 per cent from their American parent companies, that will be a further injection of U.S. funds which may be something that the minister wants.
Those who will be hurt by this 5 per cent refundable tax are the smaller companies with profits of more than $30,000, with no parent companies to replenish what the minister has taken from them, nor can they afford to go to the money market where interest rates are relatively high.
This is constantly the way in which we do our fiscal work in this country. We take a step which in effect means no harm at all to those who can best afford to be hurt, and which does most harm to those who can least afford to be hurt.
I could deal with a good many other points which are in this income tax resolution but I have spoken long enough and have tried to touch upon the two points that most concern us in the New Democratic Party. I conclude by saying that we will not have a fiscal system that meets the needs of a modern society unless we have the courage to use it effectively and conscientiously for the redistribution of income. We should have the courage to use it to enable the lower income groups to have the highest standards they can in the circumstances of their income, by not taking any income tax from them, and we should have the courage to use it as part of a plan to make sure not only that the economy as a whole expands but, more importantly, that every area in the economy benefits from that expansion.
June 7, 1966

[DOT] (8:40 p.m.)


Gilles Grégoire: Mr. Chairman, I should like to take advantage of the consideration of those items to say a few words about the Income Tax Act. In the first place, I think it would be advisable to mention to the Minister of Finance (Mr. Sharp) that this is probably one of the last years he will be managing or controlling direct taxes collected in the province of Quebec.
Indeed, we all know that not only before-and this can indicate the seriousness of the statement-but especially since his coming to power, the new Quebec premier has deemed advisable to state that from now on Quebec will ask and demand 100 per cent of direct taxes collected in the province, including personal and corporation income taxes.
Mr. Chairman, I believe that the new Quebec premier was right in making that request and we admire him for it because he is trying to obtain what belongs to Quebec, under the British North America Act and our constitution, that is all direct taxes collected within the province.
The Minister of Finance can start preparing a budget resolution for next year or earlier, so that 100 per cent of corporation income tax and personal income tax will go to Quebec and not a cent to Ottawa.
I hope that, as requested by the new premier since the elections, the Minister of Finance will start as soon as possible discussions to give back to Quebec 100 per cent of direct taxes.
Mr. Chairman, the second point I want to discuss tonight deals with the 10 per cent reduction of personal income tax granted by the minister's predecessor. The Minister of Finance told us that it was to enable the small wage-earners to keep a little more money, but if you analyse the figures given by the minister in his budget speech, you will notice that the small wage-earner barely gets more than before and that the one who has the most to gain in this transaction is still the Minister of Finance, the government. And the government practically cancels the income tax reduction granted last year.
I believe that the time has now come for the government to agree to an income tax cut even bigger than the one granted last year; it should not bring it to the high level where it stood before, because we have always asked the government to exempt from the income tax any unmarried taxpayer earning less than
Income Tax Act
$2,000 and any married taxpayer earning less than $4,000.
We believe that such an exemption for the head of a family would be appreciated and even necessary. The Minister of Finance must know that the head of a family cannot go very far with that and if he needs some evidence, he should try to live on $4,000 next year. He will find out personally that $4,000 is not enough. If he wants to try it, I think that within three months he will understand what I mean, namely that he cannot live with $4,000 a year.
Therefore, I ask him to reduce the income tax in the case of those who earn less than $4,000, that is to exempt completely from income tax married men earning less than $4,000 and unmarried taxpayers earning less than $2,000.
Another item mentioned in the Income Tax Act deals with the income tax exemption for people who make charitable donations. Paragraph (a) of subsection (2) reads as follows:
-a gift made to a charitable organization in Canada exempt from tax by paragraph (e) of subsection (1) of section 62 or to a corporation or trust resident in Canada exempt from tax by paragraph (f) or (g) of that subsection may be deducted_
So, Mr. Chairman, with an act so written, one wonders again how income tax inspectors^ auditors can think. I would like to speak out in particular of the Quebec district, since that is the one I know today.
I should like to mention a letter written by one of my electors to the Minister of National Revenue, Income Tax Division, 950, Boulevard Charest East, Quebec 2, Attention, Mr. A. Renaud. This Mr. Renaud is a public servant and the letter is dated June 2, 1966. Therefore it is not too old. Here is the letter:
- - 

juut jcuci ui iviay ll
last, advising me that the charitable donation receipts of the Jesuit Fathers at Val Racine, of the Arvida Richelieu Club and the Saguenay General Hospital cannot be accepted.
The three organizations mentioned, the retreat house of the Jesuit Fathers at Val Racine, near Chicoutimi, whose sole source of revenue is charitable donations, the Arvida Richelieu Club-in other districts Richelieu Club receipts are accepted and people who make donations to the Richelieu organization are helping needy children. That organization has always been recognized as one whose charitable receipts were accepted. If there are members of the Richelieu Club here I believe they know that, in districts other than that of Quebec, charitable receipts are accepted.

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And the letter continues:
If you look through your files, you will find a letter from the Department of National Revenue, Income Tax Division, advising the Arvida Richelieu Club that it was authorized to give out charitable receipts which the department would accept for income tax purposes. That letter was sent to the Richelieu Club toward the end of 1962 or early in 1963. Anway, what entitles you to refuse the same receipt in one case and accept it in another?
I feel the argument is more than reasonable and I would ask the Minister of Finance to look into the matter. Why would the Richelieu Club receive, in 1962 or in 1963, a letter from the Minister of Finance advising that the charitable receipts given out by the Arvida Richelieu Club would be acepted, when in 1966 a new, perhaps zealous civil servant of the Income Tax Department decides to refuse them? It might be well also to know why, when you refuse the charitable receipts of the Arvida Richelieu Club, you accept those of other Richelieu clubs.
You also refused a receipt from the Jesuit Fathers. There again, how can you establish, miles away and without checking with the bursar of the Jesuit House, whether or not that amount was paid?
I think the request of this elector is perfectly reasonable, because if he makes a charitable donation to the retreat house of the Jesuit Fathers at Val Racine, near Chicoutimi, how can an overzealous civil servant of the income tax division in Quebec city cancel this receipt, without even inquiring of the bursar at the house of the Jesuit Fathers, who live on public donations, and those who are kind enough to make donations to these charitable institutions should be allowed those deductions.
As for the receipt from the General Hospital of Saguenay, please consult your files once again and you will find a letter of the Department of National Revenue authorizing the issuance of charitable receipts for the same reason as the Canadian Cancer Society, the Red Cross or the Anti-Tuberculosis League for an annual subscription in favour of this hospital.
Those receipts have always been accepted up to this year.
[DOT] (8:50 p.m.)
There again, I am asking the minister to investigate and find out what has happened and to try to enlighten those civil servants who seem most confused this year in Quebec.
I go on quoting from the letter:
The act states that receipts should not exceed 10 per cent of taxable income. If you add it up, you will find that, in my case, it amounts to 6.9 per cent, which leaves 3.1 leeway and the 6.9 per cent has effectively been paid to the institutions involved.

And the letter goes on:
I understand and admit that laws are made to be observed, but I cannot admit that they can be interpreted by minor public servants paid by Canadian taxpayers.
Either the law allows 10 per cent of taxable income, provided the taxpayer supplies receipts. Now, these receipts are in your hands, so I am within the law. Or the law is inoperative, in which case just change it.
Such, Mr. Chairman, is a letter written to an official of the Department of National Revenue by one of my electors living in Arvida in the constituency of Lapointe.
I think there are grounds for an investigation by the Minister of Finance. At the same time, he should hold a general inquiry into what is going on in the income tax office. We have long been asking for an investigation in that office. It was never made. There are civil servants there who are following their own whims.
I have another letter here, dated May 1, 1966, in which one of my constituents writes:
I have never taken the trouble to write you before, but the amount of my income tax receipts has been reduced by at least $125. This is the second time they have done that to me, the dirty dogs.
Remarks of this kind are made by the public about federal civil servants.
The amount is always the same. Charitable receipts are reduced to a fixed amount of $225 for everybody. Those who write to me never fail to say: 'My charitable receipts have been cut down to $225." No investigation either.
I am asking the Minister of Finance to set up a board of inquiry. If there is anything wrong with the act, he is the one responsible, for the estimates we are considering this year are introduced by him.
He should amend the act along the lines suggested by the voter I quoted a moment ago. If the act is inoperative, just amend it. There is no other way if it cannot be applied or respected.
Mr. Chairman, I have here a whole file of letters I have received over the past 15 days which I could quote.
This is what civil servants are doing. I will quote a letter sent out by the income tax division; they are all the same:
The amount of your claim for charitable donations is reduced to $225, the amount of your parish receipts being reduced to a more realistic amount as far as anonymous donations are concerned. Any representation must be supported by vouchers.
June 7, 1966

Taxpayers then write us: "We have some vouchers, receipts signed by our parish priests." But the inspectors will not take them into account.
It seems that cause for dissatisfaction must be given to the province of Quebec, as if the situation were not serious enough at the present time.
I ask the Minister of Finance to revise his legislation as soon as possible, so that Canadian taxpayers will not always be in conflict with the Department of National Revenue.
Until then-and I hope it will be next year-I ask that an investigation be made at the Quebec office of the Department of National Revenue.
Mr. Chairman, there is another item of the budget resolutions which confused me at first and prompts me to put a question to the minister.
I refer to clause 8 which reads as follows:
That it be declared for greater certainty that the expression "in Canada" in the said act includes and has always included the sea bed and sub-soil of the submarine areas adjacent to the coasts of Canada in respect of which grants are issued, by the government of Canada or of a province, of a right, license or privilege to explore for, drill for or take any materials or substances.
I wonder if, under that clause, the minister intends to legislate on a matter which the present federal government has referred to the Supreme Court of Canada. Is the minister trying to bring in by the back door a problem on which the federal government in now at issue with the provinces? It is a fact that there is a dispute about the matter that the provinces are demanding jurisdiction over natural resources on the sea bed and in the sub-soil of submarine areas inland or adjacent to the Canadian coast. Now, the minister is trying to have a rather equivocal clause passed.
I ask the minister to let us know the reason for that clause, and if he has only that reason, I ask him to withdraw it, since the matter is already before the Supreme Court of Canada for consideration and it does not belong to the Minister of Finance to reach decisions before the Supreme Conrt of Canada or in its place.
There is another point which I would like to discuss during the consideration of budget resolutions.
For some time we have been making a request that, we think, can be granted by the minister. It deals with those who buy tools to earn a living, such as garage employees for
Income Tax Act
instance; for some time, we have been asking the government to allow for deduction from taxable income of the amounts spent on the purchase of tools used by workers in the ordinary course of their work.
It seems to me that this is a suggestion that the minister should take into consideration, before those budget resolutions are carried.
The minister could surely tell us what v ould be the true cost of that proposal to the federal government. I do not believe it would represent a large amount for the federal government, but it is an important one for the worker who paid for his tools out of his salary. Therefore, I ask the minister to give us figures in that connection. His officials are with him and could give them to us. Thus we would know what amount would be involved. Such exemptions would be only fair, for even though those workers are paid, they have to take some of their money to buy tools, and this is an inherent expenditure in their job. It would therefore be absolutely normal that they be allowed to deduct those amounts from their taxable income.
Mr. Chairman, those are the few remarks I wanted to make tonight. They are not very elaborate because I keep on thinking that the Minister of Finance will grant the request which was announced to us publicly and which will be made by the government of Quebec, that is a request for the return to Quebec of 100 per cent of direct taxes, including personal and corporate income taxes.
I always anticipate, and I for one, will support any such request from the government of my province.


Mr. Pugh:: Mr. Chairman, I should like to say a few words on the budget resolutions with reference only to paragraph 15 which applies to corporations. I refer to the special refundable tax which will be imposed upon corporations with an annual income of $40,000 and over between now and, supposedly, the next 18 months. I start out by saying that I am against this tax, on principle, because I think it is just one more nuisance for business to contend with and should not have been imposed. I would hope the minister will take into consideration the various representations that have been made to him in this regard, will see fit to reconsider this tax, and will take it off before it does any harm.
I have only to point out that the predecessor of the Minister of Finance in his first and succeeding budgets made numerous proposals and many of those proposals, because of the

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cry that was raised in the house and by business generally throughout Canada were taken off or modified. To point up my argument I have only to remind the minister of the 11 per cent sales tax on building materials and production equipment. Such a howl was raised at the time this tax was imposed that I believe the then minister would have liked to withdraw it. The howl in connection with this tax came from business in this country and the arguments used were good ones. The argument was that it would hamper business in Canada, increase the costs, would not bring in any revenues and would hamper Canada in her trade throughout the world. I believe it would have been withdrawn right away had the previous minister of finance not made so many withdrawals that one more would have probably pulled the plug out from the bottom of the boat and let him sink. What he did instead was to impose it in three stages.
[DOT] (9:00 p.m.)
The one thing that we have inherited from the last budget is the statement made by the minister that he will gradually withdraw the tax on building materials. The reason I pointed this out is that I believe the refundable tax, this levy against corporations, will have a very harmful effect indeed. The minister said in his budget speech:
The other temporary measure Is designed to divert and immobilize temporarily a modest portion of the flow of funds that is the chief source of finance for the increasing capital expenditure of businesses.
Mr. Chairman, I will ask the minister a question. Who decides whether a particular business should make or should not make further capital expenditures? If it is necessary for a business to make capital expenditures, then surely it is up to the business itself to decide. The government should not put its foot down on normal capital expansion.
The minister said there is a purpose behind this, and that he is doing it so as to divert capital from the market. He may be right in certain things, but I think that in this case no benefit whatsoever is derived from this withholding tax. If money for capital expenditures is withheld from a business for a period of one and a half to three years, then it will have to get its money elsewhere. In his Budget speech the minister said that this will be done at no expense to business, and that he is even going to pay them 5 per cent. I would like to see any corporation in Canada

trying to borrow money on the open market at anywhere near 5 per cent. I say that if capital expenditure must be made by a corporation, then there is no question at all that it will cost it more than 5 per cent.
One of the avowed intentions of this government, and I believe of previous governments as well, has been to let Canadians use their own capital to develop their country. In fact, only a few days ago the Minister of Trade and Commerce stated to the Canadian Manufacturers Association that Canadians should use their own capital to develop their country, that they should be masters in their own house. He also said that we welcome foreign capital because we cannot do without it. That is all the more reason why every effort should be made to use all the money that we can.
Where will the funds come from? There is only one answer. If this government will put this money in the fund, withhold it and then pay it back after one and a half to three years, then that money will have to come from outside Canada. This is just one more factor in the imbalance of payments which the minister says we always have in boom times, because capital has to flow in from foreign sources. He also stressed this in his budget speech. Why then withhold this Canadian capital and not use it for capital expenditures, while at the same time allowing corporations to borrow it from foreign sources? This will certainly increase our trade imbalance which has already reached the danger point. For the life of me I cannot see why the minister should take away this money from the corporations. Mind you, he does not steal it-it is called a tax-but he takes it away and says it will be deferred for a period of possibly 18 months. However, it has been my experience that once a tax is imposed, it remains, and will probably be kept forever. According to the budget resolution, the corporations will be paying a modest tax for three years. In fact I do not think it is modest. I wonder how much it will grow.
This money will be taken off the market for three years, and if the tax continues it will never be repaid because of the nature of this revolving fund. No corporation will see any of the moneys which they have paid in. They will only receive 5 per cent on it, and if they need capital they will have to borrow it at more than 5 per cent.
We have heard a lot about the Canada development fund. This is a great fund which is to be established to help Canadian industry
June 7, 1966

to develop. Why not let our Canadian industrialists and manufacturers do their own developing? Why take away the money with one hand, and hold it out with the other? I do not believe anything much will come from the Canada development fund. However, even if something comes of it, I say to you beware, because the money that is taken away from you at 5 per cent interest will be loaned to you under another name, and you will be charged considerably in excess of 5 per cent, cent.
I believe I have demonstrated that this special refundable tax put forward under section 15 of the budget resolution will inevitably create a chain reaction which can only harm Canada. The government in loco parentis says to business "We are doing it in your best interest", on a take-it-or-leave-it basis.
I believe this tax is wrong and I believe it is harmful to the economy of Canada. I believe it makes this large pool of money sterile for business and development purposes. It is all very well for the minister to say we will have a nice reserve fund to which we can look forward. I say that if this tax is imposed it will remain, because such is the history of taxes. The money will be kept off the market for good and all; and as the corporations grow, as we know they grow in Canada, moneys paid in will never be repaid.
[DOT] (9:10 p.m.)
Well, sir, I once again ask, when we are trying to cut down expenditures within Canada, who should decide whether a company makes a capital expenditure? Should it be the government or business? Obviously, it should be business. I should like to ask one more question at this time. Who should be saving money on capital expenditures, government or business? Why is it that when you tell business that we do not want it to make a capital expenditure now, because we believe that is part of the inflationary trend, we say it is all right for government to do it? How can government justify that attitude at the present time? How can the government justify the national defence complex which is to be built at a cost of $100 million? We are told that is what it is going to cost.


Paul Theodore Hellyer: I rise on a question of privilege, Mr. Chairman. I think this figure should be corrected without further delay. It was rather unfortunate that no estimate was given at the time the release was made. The newspapers made their own estimate. The actual estimate is something approximating
Income Tax Act
$30 million, and allowing for the normal escalation of costs, it may go to $40 or $50 million. The estimate was nothing like $100 million and I appreciate this opportunity to set the record straight.


David Vaughan Pugh: I believe the minister has tried to set the record straight, Mr. Chairman. It is a very important point. Even if the expenditure were only $2 million, I do not believe it should be made at the present time. I pointed out to the minister that in so far as the escalation of costs is concerned, everything seems to change in the department which he heads. The same situation applies in the Department of Transport. I point to the Dorval airport. What was it going to cost at the beginning, and what was the final cost? I believe it was four or five times the original estimate. I point to the basement of this large structure which is to be erected near our national war memorial. I do not know what it cost or what the original estimate was, but I should like to know. There is no question about it, when the minister talks about the escalation of costs, he is talking my language. I have never yet seen any proposal made by the government concerning which, after the original plans were laid, some bright-eyed person did not say, "We have to have"-this or that or "We have to change this", and the costs went up. I do not believe $100 million is going to be out of the way for this complex.
Regardless of that fact, even if the building were only going to cost a few million dollars, it is just one of a number of things which I believe the government should cut down. What is our position in the world? What is our position in world trading? What harm was done by the 11 per cent tax on building materials and production equipment? What were the objections raised by business at that time? Everybody on the government side gives lip service to the idea that Canada must maintain her competitive position. This has become a hackneyed phrase. I say to the minister now, cut out this tax and give more than lip service to the idea that Canada must maintain her competitive position. I say that this tax is an added cost and will mean that we are less competitive not only in the world markets but in our domestic markets. We will be subject to sniping from abroad and we will lack the ability to be competitive at home.
I am not going to say any more on the subject, except to reiterate that I am against this budget resolution, this change in the Income Tax Act. I refer specifically to the

June 7, 1966
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section which applies to corporations a special refundable tax. I believe that this is one thing this government will live to regret, along with the many other things they have had to withdraw.


Edgar John Benson: I should like to make a brief statement about paragraph 2 of the income tax resolution, particularly to explain what is planned as regards the registration of charitable organizations. My department has been concerned for some time about the abuses which have developed in the matter of exaggerated receipts for which charitable donation deductions were claimed, a situation with which all hon. members are well acquainted.
I should like to point out to hon. members that where a charitable donation is claimed that should not be claimed, in the case of an individual a deduction of 13.5 per cent and up to 80 per cent is being made, and in the case of a corporation a deduction of 21 per cent or 50 per cent is being made.
Another source of concern is the possibility that organizations which once had been given formal approval could subsequently change the nature of their activities so that they no longer qualify. There is also the question of those organizations whose names could lead to the ready acceptance of their receipts, when in fact those bodies might not qualify as proper charitable organizations. The officials of my department have done excellent work to cope with the many problems engendered by the situation. They have, however, been handicapped in their efforts by the lack of provisions for regulatory control in the income tax law.
The Auditor General recognized this and, in his report for the fiscal year ended March 31, 1965, recommended that consideration should be given to the setting up of adequate controls over the many charitable organizations now recognized. It is therefore being proposed that the necessary amendments to the Income Tax Act be introduced to provide for the required controls. Paragraph (a) of the resolution is intended to bring in more clear cut and specific provisions in respect of gifts to charitable organizations in Canada. Paragraph (b) is to permit the deduction of donations to certain specified classes of charitable organizations outside of Canada. It should be noted that neither of these provisions will affect the existing provision whereby a taxpayer may deduct up to $100 for charitable contributions and medical expenses without submitting receipts.

In accordance with paragraph (a) of the resolution, it is proposed that all charitable organizations in Canada will be required to register and to file annual returns of information if donations to them are to be permitted as deductions from income. Each individual organization, whether it is a branch, section, or other division of a greater organization, will have to register and file an annual return of information if it receives donations on its own behalf and wishes to have its receipts qualify for deduction. Receipts will still have to be filed as evidence of payment of the amount given, but the proposal is that they be in a form which meets certain requirements. Regulations will be published for the guidance of those concerned.
[DOT] (9:20 p.m.)
The prescribed form of application for registration will be designed to obtain the particulars required to permit an intelligent assessment of the validity of the request for approval. There is already a form known as T511, which has been used in the past by organizations voluntarily seeking approval for income tax purposes. While a new form will be designed for the purposes of the new proposal, it will probably be very similar to the existing one. It is the intention to make these new forms available as soon as the proposed legislation is passed so that the work of registration can commence immediately. It would be my hope that the great bulk of registrations could be completed before the beginning of next year, at which time the proposals, if passed, will become effective. That is, they will become effective on January 1, 1967.
It is felt that every well-managed charity, congregation, parish, or like body can readily produce some kind of financial statement each year. Indeed most, if not all of them, now prepare such statements either for their own good management, for distribution to their members, or even for publication. The annual return of information to be prescribed will include the production of a statement which will give the revenue from different sources and some details of the operating and functional disbursements to show how the money was spent, and determine the nature and the extent of the activities carried on by the organization.
It is thought that a copy of the financial statements now prepared by the organizations concerned will, in the majority of cases, meet the requirements. The intention is to design
June 7, 1966

the annual return of information form in such a way as to include some questions that can readily be answered yes or no, questions that will, as well as provide some indication of the continued compliance with the requirements, serve as guide lines to the organizations themselves.
As to receipts, it is proposed that they should preferably be prenumbered and that, definitely, duplicate copies should be retained. In addition, they should, with the name of the organization, bear the statement that the organization has been registered as a Canadian charitable organization, and quote the registration number. The intention is that, commencing with the 1967 taxation year, any claims for charitable donations which are not supported by such a receipt will be disallowed.
Effective control is not possible without judicious examination of the affairs of the organizations recognized and some examination of the records. It is not proposed that all charitable organizations will be examined or audited each year. But a reasonable number should be looked at each year to test the efficacy of the system and, certainly, those which give indication that their operations should be examined further will be investigated.
In brief, Mr. Chairman, I am indicating that what we are trying to do is to find some system of tying in the number of receipts issued by a charitable organization with the total annual receipts which they report in their financial statement to the people contributing to the organization.
To carry out the implementation of the new provisions, my department proposes to organize a new unit to be known as the charitable organizations section, in the assessments branch of the taxation division. The official in charge of this section would be called the registrar-examiner of charitable organizations. The functions of the section would be to receive and review all applications for registration, keep adequate records of the registrations, receive and examine the prescribed information returns filed yearly, direct the program of audit and investigation to be carried out by the assessing staff at the district offices, develop the forms required and the regulations necessary, recommend such changes or amendments as might become advisable, and generally carry out the new provisions of the law.
I should like to indicate to all hon. members that in moving toward a little more 23033-388
Income Tax Act
control over the use of receipts for charitable donations in Canada it is not the intention of the government or of my department to disallow any legitimate charitable donations to organizations who are approved as charities and who carry out charitable purposes in this country. Rather this is a move toward a system of control whereby people may not abuse the right of being a charitable organization to the detriment of all other taxpayers in Canada, and thus force those taxpayers to pay more tax to make up for the advantage taken of this system by people who should not do so.


Alfred Dryden Hales: Would the minister permit a question. Would he explain to the committee why he or his department did not give some consideration to removing the existing regulations whereby an individual is allowed to deduct $100 without producing receipts for charitable donations? Does the minister not feel that such charitable organizations as the United Appeal would be able to collect more money if people were made to produce receipts for all donations which they made? I think the minister realizes that a lot of people fail to give because they get a $100 exemption, whether they give or whether they do not give. I am just wondering whether the minister has given some thought to making this change.


Edgar John Benson: Indeed, Mr. Chairman, this matter has been considered carefully by my department, and of course by the Department of Finance in the past. One must recall that the $100 exemption is for both medical receipts and for charitable donations.
The reason the $100 exemption was enacted-and if my memory serves me right it was enacted by the previous government, though I may be wrong-was that taxpayers were required to produce receipts for medical expenses in excess of 3 per cent of net income, and in addition charitable receipts to build up to the figure of, say, $100. The work involved in examining these receipts and determining the amount in question was far greater in terms of cost than simply allowing everyone to take a flat $100 deduction. If people make charitable donations and incur medical expense beyond the $100, they can still claim them. In these cases one can examine the receipts, and the cost of examination is probably not greater than the amount of error found in examining the receipts. But by putting in a $100 exemption it eliminated the

June 7, 1966
Income Tax Act
examination of millions of receipts for charitable donations and medical expenses filed by individuals.


Gerald William Baldwin: I have one simple question. I do not have section 62 before me, but it is my recollection that there is no precise definition in the act of what constitutes a charitable organization. If that is correct, I would ask the minister whether it is the intention of the amendment, as it will be brought down in bill form, to provide a clear-cut and precise definition of a charitable organization. Will this be done in the the act or in regulations? It may be that section 62 does cover the matter, but my recollection of past discussions is that it does not.


Edgar John Benson: Mr. Chairman, the provision which arises from paragraph 2 of the income tax regulations does not change the general situation regarding the definition of a charity.
I think that under the law we have not run into too many difficulties in the department with regard to the matter, though there are always some marginal cases with respect to determining what is a charitable or educational organization under the meaning of the act.
I think that over the years things have worked out fairly well, and that under the existing law the problem is not that of definition but rather of control after registration. That is the problem we are trying to solve in the income tax resolution.


George Harris Hees: Mr. Chairman, I should like to say a few words on behalf of the mayors, reeves and municipal councillors in all parts of the country, who do such a tremendous job for people in the municipal field in Canada. I think we would all agree that the people who do this work all across Canada are really the backbone of our whole political system. They do a tremendous amount of very hard work, and get very little monetary reward for it. During the course of their service during the year, they incur considerable expenses. The tasks which bring about these expenses are carried out with the greatest of good will, and I think this should be taken into consideration when we determine the amount which people in this category should pay by way of income tax.
[DOT] (9:30 p.m.)
I would urge the minister to consider very carefully the possibility of considering the first $1,000 of salary which the people in the municipal field receive, as expenses, and

therefore tax free, and to consider one third of any salary above that amount as expenses, and therefore tax free.
The members of this house set an example in this regard a year or so ago when they voted themselves an increase in salary, and made one-third of that increase tax free, because the members of this house have a good many expenses to meet in the course of the year. I think it was perfectly correct for one third of the $18,000 which the members of this house receive, to be considered as expenses, and therefore tax free. I think we should extend the right that we have voted to ourselves to those who do such a tremendous job for Canada in the municipal field.
I believe that the suggestion I have made should be considered, particularly when one considers the expenses incurred by those people in the municipal field who are doing the very important work they do for our country.


Herbert Wilfred Herridge: They do not charge $400 a day, either, in expenses.


George Harris Hees: That is quite correct, Mr. Chairman, and that is something we should bear in mind.


Herbert Wilfred Herridge: Parasites do that.


George Harris Hees: I should also like to speak for a moment about the 5 per cent refundable tax by which this government is attempting to discourage industry from increasing its facilities to increase production. When the Minister of Trade and Commerce, in the examination of his estimates in committee the other day, was asked by myself why it was that the rate of increase in export sales has fallen oft very considerably in the last year as compared with the year before, he said that it was largely because Canadian industry could not produce enough to make available the required volume of goods for export. He said that our demands in Canada have increased very considerably, and that the productive capacity of industry in this country was taxed almost to the full, and there was very little left over for the export market.
What we must obviously do, therefore, is to increase our productive capacity in this country so that we can fill the orders which are waiting to be filled by Canadian goods in the export market. If those orders are not filled by Canada, they will be filled by someone else, as they obviously are being filled today, and will be filled in the future. If we do not fill them, our customers will become satisfied with the goods they are receiving from other
June 7, 1966

countries, and the sales we ought to be making will be lost in the future, with a very real loss to Canadian production and to the Canadian standard of living.
It is obvious, Mr. Chairman, that this country must produce more. But if we are to increase production we must first of all increase the means of increasing production. That needs two things, Mr. Chairman. First of all it needs more capital, and second, it needs more skilled workers, which are in such short supply today. It is obvious that the Minister of Finance can make a very real contribution in this regard. He and the government can ease the tight money policy that has been reducing the amount of money available to industry to expand production. Also, the Department of Citizenship and Immigration can attract more skilled workers to this country by making it so attractive for them to come here from other industrial countries that they literally cannot afford not to come. That is the program followed by industry, as we all know. When industry is expanding and needs certain key personnel, it goes out and literally lures them away from its competitors.
If we want more skilled workers, we must either greatly increase our means of training those skilled workers in Canada, which this government has failed sadly to do, or we must attract skilled workers from other countries. Alternatively we can engage in a combination of these activities. We know that the situation respecting skilled workers cannot be allowed to remain as it is, because such a shortage is making it impossible for Canadian industry to increase production, and so increase the volume of goods called for by world and market demand.
I say, Mr. Chairman, that if the Minister of Finance will ease the tight money policy, and thus make it possible for those who want to increase production to obtain the funds they need to do so; and if the Minister of Labour will increase the training facilities in order to produce the additional trained personnel that this country so urgently needs; and if the Department of Citizenship and Immigration attracts the skilled workers that are so necessary, then we shall continue with the prosperity which was started and made possible by the previous government in early 1961, and which has been carried on over the past five years.
If we do not do these things, it will not be many months before this country suffers from a business downturn in exactly the same way 23033-388!
Income Tax Act
as in late 1956 and early 1957, when the policies now followed were then followed, and persisted in by the Liberal government of that day.
I urge the Minister of Finance and the rest of the members of the government to get their heads out of the sands, and to read the warning signals which are appearing almost daily in the financial pages of our newspapers, before it is too late.


Winona Grace MacInnis: Mr. Chairman, I wish to talk about some definite points in connection with the income tax resolution. Before doing so I should like to associate myself with the remarks made earlier by my colleague the hon. member for York South, and to suggest that it is not the amount of tax that one pays that is important, but the amount one has over after one has paid taxes. I, for one, am not complaining about the tax imposed on people in our income bracket, or on those in higher brackets. I think it is important that those who have lower incomes, and who therefore cannot afford high taxes, or those who do not even have enough income to pay taxes, should be considered before those in the higher income brackets.
Having said that, I want to go on with some definite points in connection with income tax. First of all, may I say that the income tax structure in this country has been reviewed by a number of speakers tonight, and changes have been proposed. I should like to suggest several things which have not been mentioned, but which are also necessary.
The income tax structure was organized at a time when the man of the family was the sole breadwinner and when it was taken for granted that the woman would be staying home in the role of a dependant. Conditions in this country have changed very greatly, as they have in other parts of the world. We have a situation where professional women frequently, and in increasing numbers, are continuing to work after their marriage, which is advantageous from the point of view of bringing in extra income to the family.
[DOT] (9:40 p.m.)
There is, in addition, a situation in which women in the lower income brackets, many of whom have not been trained for other work, are taking jobs in industry because they need extra income in the family to make possible the purchase of the equipment and other conveniences which spell a modern

June 7, 1966
Income Tax Act
standard of living in the home. When we consider that today about 30 per cent of the Canadian labour force consists of women and that almost half of the women who work in industry are married, we are bound to realize that this is a situation which the minister should be considering in relation to the tax structure.
There are a number of changes which need to be made in the tax structure. First, the amount which a married woman is allowed to earn before deductions are made from her husband's taxable income is far too low, bearing in mind the present cost of living. The amount a married women is allowed to earn is now $250. Various organizations across Canada have requested that it be raised. I shall mention some of these organizations; they cover a wide spectrum. The most recent was the Ontario Women's Liberal Association, meeting in Toronto on May 6.


An hon. Member:: They are not listening.


Winona Grace MacInnis: I
know they are not listening, but they will one of these days when the women of this country begin to make their demands heard. The Ontario Women's Liberal Association passed a resolution requesting that the amount be raised. Then the Canadian Horticultural Association, meeting back in February, passed a resolution on the same subject requesting that the amount a married women should be allowed to earn without interfering with her husband's exemption should be raised to $500. The Canadian Federation of University Women, who were of course thinking largely in terms of professional work, said the amount should be $950.
I wish the Minister of Finance would listen to these things. He is not hearing only one voice here tonight. These are resolutions by women's organizations, and these examples can be multiplied across the country. I have mentioned only two or three. Incidentally, I am not doing this in any feminist way. I am no feminist and I never have been in my life. I am suggesting that a large section of people has been added to the labour force both in industry and in the professions and that we shall have to reckon with this in terms of taxation policy.
The second change I would propose-and this is even more urgently demanded than the first-is that the wages of housekeepers should be deductible from the taxable incomes of mothers working outside the home. A request for this has come from individuals and from

organizations all across the country. Indeed these requests have become a regular flow.
I am glad to see there is a resolution on the order paper, No. 58, requesting that the cost of baby sitters and housekeepers be deductible as an expense for the purposes of personal income tax in the case of married working mothers engaged in certain occupations. I believe that regardless of their occupation, these people, if they are working outside the home, should be eligable for deductions in respect of home help.
Unless we make these expenses deductible it matters little how much we spend in other directions trying to keep homes intact. The homes suffer. We cannot afford situations where women, often with small children or children of school age, are not in a position to provide the help they need at home. The consequences of neglect to make such a provision are increased delinquency, irregular living habits and the lowering of moral standards.
This would be by no means the whole solution to the problem of women working outside the home. But it is one step which should be taken. People working in business are allowed to make certain costs deductible for income tax purposes. Similarly women working outside the home should have the right to deduct the expense of a housekeeper or household help. It is no use telling us that it is all very well for lawyers and businessmen to deduct such necessary expenses but that it is quite another matter for a woman working outside the home to ask for the right to make the same sort of deductions. The expenditure is just as necessary. In fact, it is more necessary because it has been established over and over again that the vast majority of women who go to work in industry do so from economic necessity, and there is no question of their being able to meet the costs of a housekeeper from outside earnings.
I wish to suggest in the third place that the salary paid to a wife employed by her husband should be treated as a separate income in the wife's hands. This would also apply to a partnership in which the wife is a member with her husband. I ask that this be allowed when the service is actually performed and the compensation is no greater than would be paid to another person for the same services. Again, this is a request which seems to be fair and reasonable. The woman is definitely contributing to building up income and should have her salary treated as if it were in her own hands.
June 7, 1966

There is a further group of people who I think should be recognized. Members of this committee have no doubt received a letter from the association known as the Single Parents Association. The members of this association represent a considerable segment of Canada's population who through unfortunate circumstances are either divorced, separated or widowed. One in every 12 families, they tell us, is a family in which a divorce has occurred. These are all men and women who are having to bear the burdens of parenthood alone. This is an unfortunate aspect of modern society which brings misery to thousands of parents and their children.
As single parents these people say that their living costs are considerably higher because it is necessary for them to hire housekeepers. Whether they be men or women, there is only one parent in the home and that parent must go out to work to earn an income. These people feel they should have broader tax exemptions to help them raise their children as educated and responsible citizens, and not as school dropouts or delinquents who in turn will create a burden on social agencies and on the taxpayers. These are problems which should be faced.
[DOT] (9:50 p.m.)
There is another problem which is ignored in the budget and its accompanying resolutions, and that is the problem of a home in which one parent suffers a lengthy illness and the other has to go out to work. No account is taken of the expense involved in looking after the disabled parent, which necessitates the hiring of a housekeeper or of a nursing service. There are many people in these categories.
Some members of the government may have been inclined to dismiss the theory which my colleague was outlining as doctrinaire or theoretical socialism, but the government has got to the point where it knows it has to wipe out poverty, if it can do so. The only way that can be done, on the scale that it must be done, is by a wide redistribution of income in this country. People are poor, not because of cussedness or inferiority but because they have not got enough income to stay out of poverty, and they have no way of getting that income under present conditions.
I should like to summarize the points I have made. First there should be an increase in the amount which a married woman is allowed to earn before her husband's income tax exemptions are affected.
Income Tax Act
In the second place, in the case of mothers working outside the home there should be a deductible income tax allowance for the wages of a housekeeper, a baby sitter or whatever other household help is needed.
In the third place, the salary paid to a wife who is employed by her husband, or who is in a partnership, should be treated as separate income in her own hands.
In the fourth place, the case of a single parent, whether he or she be divorced, widowed, separated, income tax deductions should be permitted for the services of a housekeeper or other household help.
In the last place, but by no means the least, in the case where one parent is disabled exemptions should be permitted for housekeeping services for the care of that parent who has to remain at home.
These are problems which affect a great many Canadians and if they are solved it will stop a great many people from having to go on welfare. It is the inability to afford a housekeeper or baby sitter which prevents many married women from being able to go out and stand on their own feet and earn a living.
I have received many letters from women across the country who cannot understand why the government does not take into account the changed status of women. It is not as if this were a temporary thing and that this 30 per cent of the labour force would be going back into the home. Large numbers of married women came out of the home during the second world war to work in war plants, and have never returned on a permanent basis to the home. At least on a part-time basis they are permanently working in industry and the professions, and this factor should be recognized in our tax structure and by many departments of government. I hope the minister will take this into account, or that he has at least got to the stage of thinking about it, even though no result is apparent in these budget resolutions.


Francis Andrew Brewin: Mr. Chairman, I am not quite sure whether the house proposes to sit after the usual hour of adjournment at ten o'clock, and since it is very close to that hour I would ask you to see the time as ten o'clock.


Michael Starr: Mr. Chairman, I think there are only about two members in this party who wish to make a few remarks, and if the committee were in agreement we could sit until we complete these resolutions.
6120	COMMONS
Proceedings on Adjournment Motion


Herbert Wilfred Herridge: No, Mr. Chairman.


Thomas Clement (Tommy) Douglas: Mr. Chairman, there are quite t. few members who still wish to speak. Also, we want to hear from the minister, and that in turn may require more discussion after we have heard him. We cannot possibly finish in a reasonable time.


Michael Starr: Then if we cannot complete the resolutions this evening there is no point in going on beyond ten o'clock.
Progress reported.
Resolutions (Customs Tariff) reported and concurred in.
Resolution (Excise Tax Act) reported and concurred in.
[DOT] (10:00 p.m.)



BUSINESS OF THE HOUSE

Michael Starr: Mr. Speaker, I wonder whether we could have some indication as to the government's intention in respect of the business for tomorrow?


Mr. Stewart:: Mr. Speaker, I understand that the proposal for tomorrow is that we continue consideration of the resolution concerning amendments to the Income Tax Act, this to be followed by the estimates of various departments and agencies, specifically, Citizenship and Immigration, Veterans Affairs, Legislation, Privy Council, the Unemployment Insurance Commission, Labour and Public Works, generally in that order.


Michael Starr: May I ask the parliamentary secretary whether that order will be followed on Thursday, or will there be some change?


John B. Stewart: Mr. Speaker, I do not think this list should be regarded as a commitment for Thursday, because it is quite possible we will turn to legislation on that day.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the house under provisional standing order 39A deemed to have been moved.

Mr.   J.-A. Mongrain@Trois-Rivieres: Mr. Speaker, last Tuesday, I directed to the Prime

DEBATES	June 7, 1966
Minister (Mr. Pearson) the following question:
In view of the disastrous circumstances of the present longshoremen's strike, should the minister not take drastic and extraordinary steps so that the activity will be resumed while negotiations are under way?
It will be understood, Mr. Speaker, that this strike considerably affects my constituency and that, in short, my comments also concern the harbours of Montreal and Quebec City.
To state that it is a disastrous and catastrophic strike, Mr. Speaker, would be redundant and I will spare the house some examples which I could give in that connection.
Mr. Speaker, I think the situation has become untenable and I spent part of the day yesterday on the docks at Trois-Rivieres, talking with the longshoremen and the employers, and I repeat that the situation has become untenable.
It is not my intention to lay the blame on anyone and I should like to avoid statements likely to cast oil on the flames at a time when a settlement is being hopefully sought. But, Mr. Speaker, I should simply like, with many other members of the house, to insist by every possible means upon extraordinary measures to be resorted to, in order to settle the situation.
On this question, Mr. Speaker, I should like to note that there seems to be some differences of opinion among certain labour leaders, since Mr. Jodoin stated a few days ago-Mr. Jodoin, chairman of the C.L.C.

that he objected to compulsory arbitration and I note that a few weeks ago, the president of the United Auto Workers, an affiliate of the American Federation of Labor, and the C.I.O. was saying that this must be stopped-and I quote-it was quoted in Time, I believe.
These strikes endanger survival of society and must be stopped . . . We can no longer tolerate a situation where a group of employees, even demanding things they are entitled to, can paralyse the economy of the whole community.
It will be understood, Mr. Speaker, that Mr. Reuther was not asking for compulsory arbitration unconditionally. He suggested:
A three-party commission should be set up without delay representing workers, employer and the government to evolve new systems and policies to arbitrate without delay strikes in the public service.
I think this is a case where such extraordinary measures should be taken to achieve a settlement before the economy is further affected.
June 7, 1966

Such an experiment should be made now or never.
Longshoremen are anxious to return to work, but it is understandable, of course, that they should defend their livelihood. What seems to concern them most is that the gangs are to be reduced and the workload increased. They want some protection in this connection, since they are seasonal workers.
This might also provide the house with the opportunity to look into the measures required to cope with the disadvantages of automation which will surely put a great many people out of work.
There is some talk that the Shipping Federation of Canada, allegedly connected with the British merchant marine, would not be over-anxious to settle its problem in Canada as long as the present tension exists in British ports. It seems that the federation would consider this as a fine opportunity to starve the Canadian longshoremen by extending the deadlines.
I refuse to believe in such cynicism, unless toiven proof to the contrary, but I say again that the minister should ask the house, if necessary, for the authority required to take exceptional measures for compulsory arbitration, so that the operations may be resumed before what I call a disaster is allowed to go on unduly.
We received today a release of the Shipping Federation in which it boasts of having fully co-operated with Judge Lippe. We have proof that it did not fully co-operate, since on two occasions at least, perhaps three, it declined judge Lippe's invitation to attend a conciliation meeting.
I notice in the same release that the Shipping Federation adds a thing that I consider unfair and dishonest. It says this:
During recent years, the Montreal harbour especially has gone through a period of labour unrest and has suffered Increasing losses due to thefts.
Why introduce this idea of theft when an agreement is being negotiated in that dispute? Why insinuate that longshoremen are responsible for thefts and connect them with those thefts, so as to discredit them before public opinion?
I think, Mr. Speaker, that is unfair and indicates an attitude on the part of the Shipping Federation of Canada which explains probably why it is impossible to reach an agreement in that dispute.
Proceedings on Adjournment Motion Mr. Speaker, I do not submit my request on behalf of the people of Trois-Rivieres only, because I know that the problem is the same in Montreal and Quebec city; however, I think it is high time for the minister to forget even those traditions calling for normal conciliation, quietly and peacefully, between workers and employers. The employers have delayed too long. A drastic measure must be taken and I can see nothing else but immediate compulsory arbitration.


Mr. B. S. Mackasey (Paliamentary Secretary to Minister of Labour):: Mr. Speaker, I noted with a great deal of interest the very intelligent remarks of the hon. member for Three Rivers (Mr. Mongrain) who was denied, unfortunately, the opportunity-


Joseph-Alfred Mongrain: Mr. Speaker, on a point of order.
May I point out to my hon. colleague that the city of "Three Rivers" does not exist.


Bryce Stuart Mackasey: I apologize to the hon.
member.

I said "Three Rivers" due to a habit I acquired in my youth.

This is carried over, I am afraid, from my earlier days.
Mr. Speaker, last Wednesday we had an opportunity on the estimates of the Department of Labour to discuss this matter briefly. There is a good deal of noise from the far corner. When the socialists have done talking then a good capitalist will speak up.


Some hon. Members:: Oh, oh.


Bryce Stuart Mackasey: I will not change my remarks.


David Lewis: On a point of order, Mr. Speaker, I think the hon. member for York-Humber (Mr. Cowan) will object to being classified as a socialist. I hope he does.


Mr. Cowan:: I never have yet.


Bryce Stuart Mackasey: Mr. Speaker, I noted with a great deal of interest the remarks of the hon. member for Trois-Rivieres and I appreciate his concern, because we do have a tendency in discussing the longshoremen's strike to
June 7, 1966
6122	COMMONS
Proceedings on Adjournment Motion refer only to the port of Montreal. We forget the disruption to the economy of the city of Trois-Rivieres and, of course, to the city of Quebec.
I noted with interest, of course, the hon. member's reference to the possibility of introducing compulsory arbitration and also his reference to one of the leading labour leaders of the United States as an advocate of compulsory arbitration under certain circumstances. I think you will agree, Mr. Speaker, that the principle of compulsory arbitration in general is one that is rather reprehensible to us, who have witnessed the struggle of the labour movement in Canada for free collective bargaining.
[DOT] (10:10 p.m.)
At the same time I realize, as do I am sure most members of the house, that some extraordinary measures will eventually have to be taken if this longshoremen's strike is to be brought to a satisfactory conclusion. I should like to repeat what the Minister of Labour mentioned earlier in the day. He said that the negotiations which are taking place under the guidance of Judge Lippe have been much more encouraging this afternoon and this evening than they had been at this time yesterday. We can only hope that the need for extraordinary measures, as suggested by the member for Trois-Rivieres (Mr. Mongrain), will not be necessary.



OLD AGE SECURITY-USE OF FUND SURPLUS TO INCREASE PENSIONS

Stanley Howard Knowles: Mr. Speaker, on the orders of the day last Tuesday, May 31, I put a question to the Prime Minister, which is to be found in Hansard at page 5745. It reads as follows:
Pending action on a permanent basis, will the government consider taking the necessary steps in order to use the surplus in the old age security fund to increase old age security pensions by the amount that surplus would make possible?
Mr. Speaker seemed to be of the opinion that it would be more appropriate to put this question at ten o'clock than on the orders of the day, and I agreed to do so.
It is my firm view that the day will come when the old age security pension will be increased to not less than $100 a month. I believe it should be done at this session and I hope the government will see it that way.
However, if it is going to take a bit of time to convince the government of the necessity of taking this action on a permanent basis, I suggest that temporary action be taken along
[Mr. Mackasey.i

the lines implied in my question, namely that the huge sum of money that is lying in the old age security fund be used for the purpose of increasing the old age security pension during this fiscal year.
According to table No. 53 to be found on page 163 of the budget papers that were appended to Hansard of March 29, a round figure of $215 million was to be found in the old age security fund on March 31, 1966. The surplus of receipts over expenditures during the fiscal year ending March 31, 1966, was $240 million but a $25 million transfer had been made to the consolidated revenue fund leaving in the old age security fund a surplus of $215 million. In the last fiscal year it took $923 million to pay a pension of $75 a month. If one does a bit of simple arithmetic he will find it is therefore possible to pay to the same number of people for one year an additional $17.40 a month out of the $215 million. That would be using only the surplus that is in the fund left over from last year. I suspect that the surplus in that fund is still mounting and that, all told, there is now probably enough in the fund to pay the extra $25 to bring the pension up to $100 a month.
My question is what Mr. Speaker thought it was, a suggestion that the government should follow this course. I know there are answers that the Minister of National Health and Welfare may give. If he has the time, he will no doubt quote from the speeches he is making around the country about the Canada Assistance Plan and about so-called better ways of assisting our old age pensioners; but this is something about which he and I will have to continue to disagree. I believe the only solution that is appropriate is an across-the-board increase to not less than $100 a month.
The minister may also say something about the fact that in some years the old age security fund has run a deficit and that this should be remembered in a year when there is a surplus. I remind him that I was here when we built the Old Age Security Act. We recognized at the time that we were building a plan that was on a pay-as-you-go basis. During the years when we had a deficit in the fund, that deficit was taken care of by a loan out of the general revenues of those years. In this period, the last fiscal year and this year, we are collecting from our people in the three old age security taxes more than we are paying out in pensions to our retired citizens. I suggest that in keeping with the
June 7, 1966

pay-as-you-go principle, which was the principle of the Old Age Security Act, we should use that money to increase pensions at least by the amount that surplus would make possible.
I know that the minister may use as another argument the fact there is no authority in the Old Age Security Act to use this money that is in the fund for the purpose I am suggesting. He knows, as well as I do, that there is nothing he could get through this house quicker than the necessary legislation to make it possible to use this money that is lying there to improve the position of our senior citizens.
It is not necessary, Mr. Speaker, for me to make a case in broad general terms concerning the need of our older people. It is not necessary for me to remind the house of the sympathy there is for our older people in this House of Commons. What we need is action. I know of nothing that would raise the prestige of this parliament more effectively than doing something for our senior citizens. I urge that long range action be taken as soon as possible, but in the meantime I ask the minister if he will consider seriously using the $215 million that there is in the fund by way of additional money we have collected over and above what we are paying out, to increase the pensions of our senior citizens. I say again that it could be done, on the basis of what was there last year, to the amount of $17.40 per month, and I suspect that if we used what we are now collecting by way of excess taxes, we could easily pay $25 to bring the pension to $100 a month which our senior citizens so well deserve.


Allan Joseph MacEachen: Mr. Speaker, I appreciate the continuing interest of the hon. member for Winnipeg North Centre (Mr. Knowles) in the retired citizens of Canada, an interest which is shared by all members of the house and certainly by the members of the government.


Stanley Howard Knowles: By their votes you shall know them.


Allan Joseph MacEachen: I appreciate the dedication with which the hon. member probes my social conscience periodically with respect to the whole range of social welfare activities within the ambit of this department. I assure him that his probings always touch a very responsive chord, but not all the arguments in respect of his sentiments are as sound as his sentiments. This morning my hon. friend
Proceedings on Adjournment Motion attended the opening session of the committee on health and welfare, at which it was possible for hon. members to gain a general view of the very great activities of this department in the field of health and welfare.
Certainly it is an impressive statistic to note that 28 per cent of the federal government's expenditures are directed toward the health and welfare of the Canadian people in the amount of $2.3 billion. The largest single component of that is support for the older citizens of Canada in the amount, for the current year, of $1,035 million. As my hon. friend knows, the Canada Pension Plan is intended to be a long-term solution to retirement support for the wage earners of Canada, the great bulk of the Canadian people.
The hon. member is also aware that steps have been taken to decrease annually the age at which old age security will become payable, thus bringing in on the average an additional 100,000 recipients under the umbrella of old age security.
[DOT] (10:20 p.m.)
The joint committee which studied the Canada Pension Plan recommended that further steps be taken by the government of Canada to assist a particular category of the Canadian population, namely those who are currently retired and unable to benefit from the provisions of the Canada Pension Plan, and those who will not be able to contribute for a sufficient length of time to qualify for the undoubted benefits of the Canada Pension Plan.
I want to tell my hon. friend that this in a sense is the key problem in rounding out or adding to the support for the senior citizens who comprise this particular group and represent a transitional section of our older citizens. Since I have taken over this job I have certainly been grappling with the most effective plan that can meet the problems and the needs of this particular body of people, and this plan will be appropriately integrated with the Canada Pension Plan and the Canada Assistance Plan. While I appreciate that-


Mr. Deputy Speaker:: Order. I must advise the minister that his time has expired.


Stanley Howard Knowles: But he has not answered the question.


Allan Joseph MacEachen: I was just getting there.



AGRICULTURE-CHAROLAIS CATTLE-SALES TO U.S.

Mr. Lawrence E. Kindt (Macleod):: Mr. Speaker, I welcome this opportunity to speak
June 7, 1966

Proceedings on Adjournment Motion on behalf of the Charolais Association of Western Canada, from which I received word today. I am also glad to see the Minister of Agriculture in his seat.
The Charolais cattle in Canada and the United States are all descendants from 37 head which were imported into Mexico a number of years ago. Progeny from Mexico were sold to Canada and the United States. The Charolais Association have been in touch with me as a member representing the foothills area of Alberta, where many of the big ranches are located, in order to assist them in getting new blood into Canada for the Charolais cattle. We have not been allowed to import any because of foot and mouth disease, and restrictions which are in effect in Canada and the United States. This foot and mouth disease is not only carried by the animals but is in the semen as well. Therefore we have been unable to import these cattle up until a year and half ago, when the former minister of agriculture permitted the importation from France of 113 head.
Officials went over to France and were given permits to buy three. These were brought to Grosse Isle, near Quebec, and there kept in quarantine from October 21 of last year until quite recently. They were then moved from Grosse Isle to various parts of Canada, there to remain another 30 days in quarantine. The purpose of bringing the cattle to Canada was to cross-breed them with range cattle. The cross-bred calf, of which I have seen many, is up to 50 lbs. heavier than the ordinary heifer. Consequently that means more money in the pockets of people if they can cross breed cattle. So, the range people have wanted Charolais cattle to improve herds which have been going downhill because of inbreeding, and that sort of thing. Therefore such cattle were obtained. And for what purpose? In order to make cattle available to the breeders of Canada, and to improve Canadian herds, but not to be shipped to the United States at this time, because there is foot and mouth disease. United States buyers who are coming here and buying cattle are simply using Canada as a back door, and this government is permitting the cattle to be sent down, contrary to the spirit of the good neighbour policy.
Moreover, should foot and mouth disease break out, it would close the entire border for Canadian cattle. The United States provides the traditional market for the range men of the west.

Now there is talk of freedom of enterprise. Our buyers were permitted to buy three animals. They now say: "We want freedom of enterprise". But I will tell you this: In a matter of this kind a mistake was made by the former minister of agriculture, and the present Minister of Agriculture is perpetuating it. I have asked him, as has the association, to restrict the export of these cattle until such time as the price increases, so that the breeders in Canada can be taken care of. Let us increase the numbers of these animals in Canada, and if someone from the United States wants to buy them, let them come to Canada. If profits are to be made, let the people in Canada make them. We do not want somebody to bring them in under government supervision, quarantine and so on, and turn around the next day to make a fast buck. The man who bought the $10,000 bull in British Columbia sold a half interest for $84,000, after he left Grosse Isle to the western United States Charolais Association. Now there is talk about the traditional open door for cattle.
Certainly some people want the door kept open to our cattle. But we do not want to take the chance of foot and mouth disease going down there. Furthermore the United States has kept on its embargo on the shipment of cattle from France. We are taking a chance by bringing such cattle in here, when we may get foot and mouth disease. It may be all right to do that in Canada, but there is no reason why we should use the open door policy with respect to the United States, and get into trouble. The livestock men of the west are saying that those who want to make a fast buck out of cattle which have been brought in are doing so by using Canada as the back door to get into the United States.
A certain amount of government money was spent by the minister's going across to France. Veterinarians' expenses and things of that sort were involved. I have not totalled them up.
May I say that a resolution was unanimously passed at the directors meeting of the Charolais Cattlemen's Association in Calgary on May 31 to this effect:
The directors of the Charolais Cattle Association request a course of action to stop export of all French imported females and their female progeny until December 31, 1968 and to be reviewed at that date.
[DOT] (10:30 p.m.)
The second resolution was to the effect that the permits for the 66 importations be allotted to those members who were Canadian
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Charolais breeders and hence in the Charolais cattle business prior to the announcement of the importation beginning December 31, 1964.
The president of the association, Mr. Ohler, took it upon himself to make a trip to Saskatoon to talk with the minister. The minister gave him the brush-off. That is my word-a straight brush-off. He passed him over to Bennett, who was his secretary. He told him he could do nothing. In other words, the former minister made a mistake. If he had said that these cattle ought to remain in Canada until such time as they could breed, there would be nothing much which could be done.
Telegrams are being sent out and I hope some helpful replies are being received. The association in the west is extremely exercised about this situation. I wish I had time to put its views on record. But I see my time is up.


John James Greene: I would first commend the hon. member for his keen interest in this question. I would point out that my predecessor in this office embarked on a very sound policy, one which was pursued for the first time by reason of his dynamic leadership in this area. The first group of Charolais were brought in as a result of his incentive and keen desire to see this matter brought to a head. Along with many other good things he did, this commendable action of the minister who preceded me received all too little credit.
I would also point out to the hon. member that in my opinion some of his concern in this regard has arisen because he has not been too well informed. I know he is sincere in his protestations. Certainly from the presentation he has made here he has acquired a fine and comprehensive knowledge of the history of this breed. But as far as more recent events are concerned I do not think he is well informed. First, I would say that my department has no evidence whatsoever of any exportation of these cattle. Granted, there is nothing in the rules to prevent it. But
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Proceedings on Adjournment Motion in view of the great excitement displayed by the hon. member in the house the other day I became somewhat concerned, since he seemed to feel keenly on this matter.
Accordingly I sent out the telegrams to which the hon. member has referred to see whether in fact any of these cattle are being exported. The bull to which the hon. member referred has not been exported at all. It is my understanding it is still in Canada. Americans have bought an interest in this animal, but surely this does not do any of the harm the hon. member has envisaged.


Lawrence Elliott Kindt: What about bull 698 and heifer 662?


John James Greene: I do not have the bulls by number.


Lawrence Elliott Kindt: They are in quarantine even if they have not been exported yet.


John James Greene: Let me say this to the hon. member: We sent wires to all the persons who had imported these cattle and we have received returns from about one third of them; and not a single one of them has any intention of exporting these animals.
These are the only returns we have. There is no law to prevent their being exported. My hon. friend is quite right. I do not follow his argument with respect to foot and mouth disease. These cattle have gone through a very comprehensive quarantine, as do any cattle which are imported here.
With respect to the danger of closing the border, it is certainly my view and that of the party I represent that the border should be kept as open as possible with respect to the free flow of cattle and beef both ways, just as it is now. I can think of no action more likely to close the border than for us to close it unilaterally one way for one particular breed of cattle. I think that would be very dangerous.
Motion agreed to and the house adjourned at 10.38 p.m.

Wednesday, June 8, 1966