1966-04-01

[Stage Direction]
First report of special joint committee on consumer credit-Mr. Basford.
[Note: Text of foregoing report appears in today's Votes and Proceedings.]

Hon. Paul  Marlin@Secretary of Stale for External Affairs: I wish to table a copy of an aide memoire from the government of France to the government of Canada dated March 29. This copy is in French. The English translation will be tabled before one o'clock.


Mr. Speaker:: Has the minister leave to table the document to which he has referred?


Some hon. Members:: Agreed.



CANADA CORPORATION ACT


Mr. Maurice Allard (Sherbrooke) moved: for leave to introduce Bill No. C-163, to amend the Canada Corporations Act.


Some hon. Members:: Explain.


Maurice Allard: Mr. Speaker, the statements made yesterday by the Minister of Trade and Commerce (Mr. Winters) on Canada subsidiaries of American firms were in perfect accord with the spirit of this bill which had been put on the order paper of the house last Wednesday.
This bill was prompted by the effects of the American guide lines on the Canadian economy. Its purpose is to amend the Canada Corporations Act and to require Canadian subsidiaries of American firms to submit a financial report annually, which report will be examined and will show their financial operations.
Motion agreed to and bill read the first time.
[English1


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, I should like to ask the Prime Minister whether he is in a position to report on the discussions he had yesterday with our high commissioner to the United Kingdom, and whether there is any basis in fact for the report which came over television that as far as the embargo against Rhodesia is concerned it has proven to be only 50 per cent effective, and that if there is to be any effective action further steps will have to be taken.


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, in discussing this matter with the high commissioner we naturally went into the effectiveness of the economic measures against Rhodesia. The high commissioner is chairman of the economic sanctions committee which was set up at Lagos, and that committee is to meet in London next week. But we have no information which would justify any percentage figure of effectiveness.
We did not discuss any further steps to be taken. That will have to be considered by the committee itself and by the governments concerned, although we did mention the possibility of United Nations action in the security council, under chapter 7, because that has been indicated by one or two members of the commonwealth as being the next step if the economic measures now being taken are not satisfactory.


John George Diefenbaker: Is there any basis in fact for the reports that have come out that so far as the present embargos are concerned they have not been effective in achieving the objectives that were in mind at the time they were imposed?


Lester Bowles Pearson: Mr. Speaker, they certainly have not been effective as of this moment, but we should not accept the conclusion that they will not be ultimately effective to accomplish the purposes we had in mind at the Lagos conference.
April 1, 1966

Inquiries of the Ministry [Translation]


[Stage Direction]
On the orders of the day:
Mr. Gerard Laprise (Chapleau):: Mr. Speaker, I should like to put a question to the Secretary of State for External Affairs.
Would the minister tell us whether it is true that four Canadians have been arrested in Cyprus and whether the Canadian government has investigated or will investigate in this connection?


Hon. Paul Martin (Secretary of State for External Affairs):: Yes, Mr. Speaker, we are looking into the matter at present and I might have something to say Monday or Tuesday at the committee on external affairs.


[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquitlam):: Mr. Speaker, I wish to direct a question to the right hon. Prime Minister. In view of the re-election of the Labour government in Great Britain, about which I hope the Prime Minister has sent congratulations to Prime Minister Wilson, and in view of the fact that General de Gaulle has apparently removed France's objections to Britain making an application for entry into the European common market, I want to ask the Prime Minister if the Canadian government is making any strong representation to Great Britain in order to safeguard Canada's traditional free entry into the British market for wheat and other primary products, prior to Great Britain beginning negotiations for entry into the common market.


Lester Bowles Pearson: No, Mr. Speaker. We have not made what my hon. friend calls any strong representations to the British government on this matter in one way or another, because I do not feel there has been any change in the European situation which would require representations on our part, although no doubt we will be discussing this matter with Prime Minister Wilson and his new middle of the road government from time to time.


Thomas Clement (Tommy) Douglas: As a supplementary question, has the Prime Minister given any thought to having the Minister of Trade and Commerce visit Great Britain prior to the beginning of any negotiations for entry into the European

common market, in order to protect Canada's interests in the event of that happening?


Lester Bowles Pearson: Mr. Speaker, if there were any negotiations of that kind in the offing certainly we would wish to make our views known to the governments concerned, the United Kingdom and other governments, and the Minister of Trade and Commerce would be a very good minister for that purpose.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. R. N. Thompson (Red Deer):: Mr. Speaker, I wish to direct a question to the Minister of Finance. Does the announcement yesterday that the Bank of Canada decreased the total money supply in Canada by $62 million for the past week indicate the policy of the government to deal with the inflationary tendency, which the minister emphasized so much in his budget presentation?


Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, I can assure the house that the policies being followed by the Bank of Canada and by the government of Canada are thoroughly consistent with each other.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. Eric A. Winkler (Grey-Bruce):: Mr. Speaker, I have a question for the Minister of National Health and Welfare. Following representations, would the minister inform the house whether the government or his department intends to request other breweries in the Quebec area to dump existing stocks of beer?


Hon. A. J. MacEachen (Minister of National Health and Welfare):: No, Mr. Speaker, the report to that effect is without foundation. There is no intention to ask any other brewery to take that course of action.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Hon. Theogene Ricard (Saint-Hyacinihe-Bagot):: Mr. Speaker, I should like to put
April 1, 1966

a question to the Prime Minister. Could he inform the house on what date the excavating work of the Cite des Ondes in Montreal will start?
[English1


Lester Bowles Pearson: Before long, Mr. Speaker.


J.-H.-Théogène Ricard: Mr. Speaker, I should like to put a supplementary question to the Prime Minister. Could he tell us also when work will start on the C.B.C. building in Montreal?
[English1


Lester Bowles Pearson: Mr. Speaker, perhaps I will be able to say something about this before the Easter adjournment.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. J. M. Forrestall (Halifax):: Mr. Speaker, my question is addressed to the Minister of National Defence. Could the minister advise the house whether the government now is planning to drop from such great shore establishments as Stadacona and Shearwater the prefix "HMCS" and replace it with "CFB", and if so when this might take place.


Mr. Speaker:: Order. This question should be placed on the order paper.



EXPO '67 USE BY CITY OF EDMONTON OF &quot;KLONDIKE&quot; THEME

[Stage Direction]
On the orders of the day:
['Mr. Speaker, I received a report just before I came into the house to the effect that the parties put in a long work day together yesterday but have nothing really to report except some progress.']
Mr. Erik Nielsen (Yukon):: Mr. Speaker, my question is for the Minister of Northern Affairs and National Resources, as the minister responsible for the development of northern resources. Will the minister make immediate representations to prevent Expo '67 aiding and abetting the immoral if not unlawful use by the city of Edmonton of the Klondike theme, a resource of the Yukon?


Mr. Speaker:: This question should be
placed on the order paper, if it is acceptable as a question.


Erik Nielsen: Mr. Speaker, may I reword the question. Will the minister request his officials and those in the Department of
Inquiries of the Ministry Justice to consider the feasibility of immediately commencing legal proceedings against the city of Edmonton in order to prevent that city's continued larcenous exploitation of that Yukon resource?


Mr. Speaker:: As reworded, the question might be acceptable on the order paper.



[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, I should like to direct this question to the Secretary of State for External Affairs on behalf of Canadians of Greek origin throughout the country. Would the government bring to the attention of the President and government of Turkey the serious concern of the Canadian government in respect of the mounting evidence of harassment by Turkey against the ecumenical patriarchate of Constantinople and the forbidding of the archbishop to carry on religious services in the patriarchal church in the city of Constantinople, which in itself would appear to be a serious contravention of the United Nations charter in several decrees and in respect of several agreements which have been arrived at.


Hon. Paul  Marlin@Secretary of State for External Affairs: Mr. Speaker, I have had some discussions about this matter already, and in view of the question which my right hon. friend has put this morning I will give consideration to whether it is necessary to take additional measures.


John George Diefenbaker: Mr. Speaker, what are the measures that have been taken so far by the minister? Has there been a protest against the interference with freedom of religion which is an integral part of the declaration of human freedoms of the United Nations? Has there been a complaint by Canada, or what is the nature of the action taken so far?


Mr.   Marlin@Essex Easi: I have had discussions with representatives of the government of Turkey on a number of matters including purported violations of religious freedoms. I have just had handed to me the telegram in question. I will examine it and if I feel the discussions we have already had have not gone as far as the suggestions in the requests now being made, I shall give consideration to further action.

April 1, 1966
Inquiries of the Ministry LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. David Lewis (York South):: Mr. Speaker, I should like to address a question to the Minister of Labour, asking him whether he can tell us what progress, if any, is being made in the resumed negotiations between the parties to the trucking strike.


Hon. J. R. Nicholson (Minister of Labour):: Mr. Speaker, I received a report just before I came into the house to the effect that the parties put in a long work day together yesterday but have nothing really to report except some progress.



AIR CANADA


[Stage Direction]
On the orders of the day:
Mr. Heward Graffley (Brome-Missisquoi):: Mr. Speaker, I should like to direct a question to the Minister without Portfolio in relation to his responsibilities with the Department of Transport. In view of the substantial profit just reported by Air Canada, will he make immediate representations to Air Canada for improvements to ground services?


Mr. Speaker:: Order, please. I suggest to the hon. member that this is a question of a general nature which should be placed on the order paper.


William Heward Grafftey: My question, I know, was out of order and I am not going to reword it. However, I think it would be unfortunate if I left the wrong impression. The general import of my question related to an improvement in the ground services, namely telephone reservations, baggage service and that sort of thing. I do not want to be responsible for confusion by having a general question of that nature remaining on the record. I will put my question on the order paper.



NATIONAL EMPLOYMENT SERVICE


[Stage Direction]
On the orders of the day:
Mr. Thomas M. Bell (Saint John-Albert):: Mr. Speaker, I should like to direct a question to the proposed minister of the new

manpower department in respect of this matter of the relocation of manpower offices in Halifax rather than Moncton, as announced the other day. When is a decision going to be made in this regard, will every opportunity be given for representations, and will the minister make certain that all plans in Halifax are held in abeyance while this matter is being reconsidered?


Hon. Jean Marchand (Minister of Citizenship and Immigration):: Mr. Speaker, no decision will be reached until after the Easter holiday, and I hope during that time everyone will have an opportunity to make representations.


Thomas Miller Bell: I thank the minister for his answer. Will he also make sure that the bilingual nature of this office and what that means to the entire New Brunswick Acadian community is taken into consideration?


Jean Marchand: Mr. Speaker, we shall try to take all elements involved in this problem into consideration.


Mr. Robert McCleave (Halifax):: May I ask
a question of the Minister of Citizenship and Immigration supplementary to the one asked by the hon. member for Saint John-Albert. Having been born in Moncton and having moved to Halifax at the earliest possible date, when I was ten days old, will the minister take into account the superior advantages of Halifax for a regional office? There are substantial numbers in Nova Scotia who speak other languages besides English.


Mr. Speaker:: I am sure the minister will take these representations into consideration.



ROYAL CANADIAN MOUNTED POLICE


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to direct a question to the Solicitor General. In view of the fact that Inspector E. Carriere of the R.C.M.P. in Montreal advises that the investigation of the documents seized from the Seafarers' International Union was completed over ten days ago and a report forwarded to Commissioner McLelland of the R.C.M.P. in Ottawa, will the minister inform the house when he expects to be able to announce the cabinet decision in respect of this report?
April 1, 1966


Hon. L. T. Pennell (Solicitor General):: Mr. Speaker, I neither confirm nor deny the assertations made by the hon. member. I am sure he understands that investigations frequently involve something more than an investigation of documents.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day;
Mr. Willian Dean Howe (Hamilton South):: Mr. Speaker, I should like to direct a question to the Minister of Citizenship and Immigration in his capacity as minister of manpower. Is the government prepared to give any financial assistance to the more than 300 men still unemployed as a result of the closing of the Studebaker plant at Hamilton?


Jean Marchand: Mr. Speaker, I think those unemployed men from the Studebaker plant are entitled to supplementary unemployment benefits under the SUB plan. We have reached no decision as far as TAB is concerned, but this matter has been submitted to the appropriate committee. We are not yet certain whether this assistance can be provided under the regulations of TAB.


William Dean Howe: I have a supplementary question, Mr. Speaker. Is something going to be done fairly soon to help these men?


Jean Marchand: Mr. Speaker, we are trying to help these men at this time through our N.E.S. What they need mainly are jobs, and that is what we are trying to accomplish.



CRIMINAL CODE


[Stage Direction]
On the orders of the day;
Mr. P. V. Noble (Grey North):: Mr. Speaker, I should like to direct this question to the Minister of Justice. On January 27 I asked him the following question:
Would the government give consideration to amending the Criminal Code so that breathalizer tests can be made mandatory?
I now ask the minister whether he would indicate to the house if this decision will be reached in time to be made public at the Canadian Highway Safety Council convention which is meeting in Calgary during the first week of May.
3719
Inquiries of the Ministry


Hon. Lucien Cardin (Minister of Justice):: Mr. Speaker, I cannot give the hon. member that assurance.



ROYAL CANADIAN AIR FORCE


[Stage Direction]
On the orders of the day:
Hon. J. A. MacLean (Queens):: Mr. Speaker, in the absence of the Minister of National Defence I should like to direct a question to the Associate Minister and ask whether steps are now being taken to change the name of Royal Canadian Air Force bases to something which will not contain the word "royal".


Hon. Leo Cadieux (Associate Minister of National Defence):: Not to my knowledge, Mr. Speaker.



PUBLIC WORKS


[Stage Direction]
On the orders of the day:
Mr. G. H. Aiken (Parry Sound-Muskoka):: Mr. Speaker, I have a question for the Minister of Public Works. In view of the cut-back in government projects announced in the budget, when are members likely to know the fate of planned local projects of the department?


Hon. G. J. Mcllrailh (Minister of Public Works):: I would hope, Mr. Speaker, in the next few days. I shall try to do it before the Easter recess.



CANADIAN CENTENNIAL


[Stage Direction]
On the orders of the day:
Mr. Heath Macquarrie (Queens):: Mr. Speaker, I should like to direct a question to the right hon. Prime Minister. On January 31 he said he would look into this matter. Can he now advise the house of the progress of discussions or arrangements regarding the very desirable possibility of Prince Charles opening the centennial youth parliament?


Lester Bowles Pearson: Mr. Speaker, I apologize for not having previously informed my hon. friend of the results of my looking into this matter. I am still looking into it.
April 1, 1966

Inquiries of the Ministry



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and Victoria):: Mr. Speaker, my question is for the Associate Minister of National Defence. I should like to ask whether he is in a position today to provide any information with regard to the question I posed yesterday.


Léo Alphonse Joseph Cadieux: Yes, Mr. Speaker. I do appreciate and share the concern of the hon. member in regard to this matter, but I have to remind him that we have now reached the last stage of the closing down of the naval supply depot at Sydney. As of today the establishment ceases to exist. We must now dispose of the material in use by the staff. For this purpose the Commodore Superintendent, Atlantic coast is sending to Sydney from Halifax 12 hand picked men to perform the operation. They will assume custody of the material, remove it to Halifax, transfer the accounts, later close the accounts, submit final reports and be available to answer to the auditors. I hope this answer is satisfactory to the hon. member.


Mr. Donald Maclnnis (Cape Breton South):: A supplementary question, Mr. Speaker. Does the minister realize that the answer he has given is the original question?


Mr. Benson:: No, it is not.



INDIAN AFFAIRS


[Stage Direction]
On the orders of the day.
Hon. Arthur Laing (Minister of Northern Affairs and National Resources):: Mr. Speaker, yesterday the hon. member for Burnaby-Coquitlam and the hon. member for Skeena asked a question with reference to the Indian Walter Johnson and the medicine chest case. I may tell them that I have instructed my officers to get in touch with Mr. Johnson and ask him whether he is desirous of taking an appeal to the Supreme Court, and if so we will finance that appeal as we have in the past.


Some hon. Members:: Hear, hear.


Thomas Clement (Tommy) Douglas: May I ask a supplementary question following the answer the Minister of Northern Affairs and National Resources gave a moment ago. I thank him for his assurance that
fMr. Pearson.]
his department is prepared to underwrite an appeal if the native Indians desire to make it. May I ask the minister, are we to take this decision by his department as meaning that they have decided not to supply health services to the native Indian population, or is the minister merely offering to meet these appeal costs while a decision is being arrived at?


Arthur Laing: Mr. Speaker, I do not know how to answer that question, because I think the effect of a decision in favour of Walter Johnson in Saskatchewan would have put a requirement upon the provincial government rather than ourselves. I should like, if I may, to take the hon. member's question as notice, and I might give a reply on Monday.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Robert Norman Thompson: Mr. Speaker, my question is directed to the Minister of Justice. In view of the arrest this morning by the R.C.M.P of an employee of the federal government on charges of illegally accepting some $33,000 in connection with securing hospital construction grants, I wonder whether the minister could tell us if any others are involved in this particular case and whether this situation is now under control.


Mr. Speaker:: Order, please. It seems to me that this is not the type of question that should be asked at this time.


Mr.  R. Gordon L. Fairweather@Royal: have a supplementary question, Mr. Speaker, which I think will be in order, but you can watch me carefully to see that it is. I wish to ask the Minister of National Health and Welfare whether the fact that charges were laid today is indicative of a wider investigation into the awarding of hospital grants.


Mr. Speaker:: It would be difficult to allow the second question after having refused the first.


Erik Nielsen: I should like to ask the Minister of National Health and Welfare whether any investigation is under way in his department in respect to the improper acceptance of moneys for the improper activities of employees in the awarding of hospital construction grants.
April 1. 1966


Allan Joseph MacEachen: This matter is being investigated in the proper way.


Erik Nielsen: I am not raising the issue that is before the court. I am asking the minister if any investigation is under way in his department in this regard.


Mr. Speaker:: I do not want to prevent the minister from answering that question, but it seems to me it was answered the first time the hon. member asked the question.


Erik Nielsen: With great respect, Mr. Speaker-I will not sit down at the behest of hon. members opposite. This is a question on which I believe all members are entitled to information. It is a very simple question. Would the minister inform us whether there is in fact an ihvestigation under way in his department with respect to the matters I referred to? Yes, or no.


Allan Joseph MacEachen: Mr. Speaker, I said earlier that an investigation had been undertaken some time ago in the proper way, which resulted in the action that is being taken in the courts, which has resulted in removing any possibility that similar incidents can occur in the future.



REQUEST FOR REPORT OF COMMITTEE ON CORRECTIONS

[Stage Direction]
On the orders of the day:
Mr. Ron Basford (Vancouver-Burrard):: On
Monday last I addressed a question to the Solicitor General about the prospects of speeding up the work of the committee on corrections so that we could undertake a review and reform of the Criminal Code. Now that he has met with the committee, I wonder if we could have a date when we might expect this report to be forthcoming.


Lawrence T. Pennell: As
promised, Mr. Speaker, I did raise the matter referred to by the hon. member with the chairman of the committee. Another meeting is scheduled for April 14, when the matter will be discussed again.



WINTER WORKS


[Stage Direction]
On the orders of the day:
Gérard Laprise: Mr. Speaker, I wish to ask the Minister of Finance a question of which I gave him notice.
Inquiries of the Ministry
Could he tell us if directives were issued by his department to chartered banks asking them to refuse to grant loans to municipalities for winter works?


Mitchell William Sharp: Mr. Speaker, the answer is no.


Gérard Laprise: Mr. Speaker, would the future minister of manpower make an investigation to find out if the chartered banks took that decision themselves or if they received order to that effect from a federal or provincial authority?


Jean Marchand: Mr. Speaker, I cannot see what kind of authority in that field the Minister of Citizenship and Immigration could have on banks.


Gérard Laprise: Mr. Speaker, it is about the winter works that the banks are now refusing to grant loans to complete or extend-
[English1



DOMINION-PROVINCIAL CONFERENCE INQUIRY AS TO DATE AND AGENDA

[Stage Direction]
On the orders of the day:
["With regard to the government's interest in providing assistance for the civilian population, which of course would be our interest as my hon. friend knows, there are two projects in being. The project under the direction of Dr. Gingras has not yet been effective because the authorities in South Viet Nam have not yet, in answer to our urgent requests, put at our disposal the facilities which would be essential for the program."]
John George Diefenbaker: I should like to ask the Prime Minister whether there is any basis for the view generally held that a dominion-provincial conference is to be called for June. Have any indications gone out? Would the Prime Minister say what particular matters he has in mind at the moment for consideration at the conference?


Lester Bowles Pearson: At the last federal-provincial conference it was agreed informally that the next conference would be held early in June of this year in Victoria, British Columbia. We are in the process now of exchanging views as to the exact date. It will probably be within the first fortnight of June, and it is too early to say what the agenda will be.


John George Diefenbaker: Is the date June 2, and
has there been any indication by the Prime Minister of the particular subject matters considered to be of pre-eminent importance at this conference?


Lester Bowles Pearson: June 2 was one date suggested, and if that is agreeable to all provincial premiers it would be agreeable to the federal government. I am not in a position now tO' indicate any particular subject, but perhaps I will be before long.
3722	COMMONS
Inquiries of the Ministry [Translation]


Mr. Gilles Gregoire (Lapoinie):: Mr. Speaker,
I wish to direct a supplementary question to the Prime Minister.
Could he tell us if the project of a royal commission on organized crime in Canada will be discussed at that federal-provincial conference?


Lester Bowles Pearson: I should think that might be one of the subjects, unless there is a meeting of provincial attorneys general with the federal Minister of Justice or the Solicitor General beforehand.



[Stage Direction]
On the orders of the day:
Hon. Gordon Churchill (Winnipeg South Centre):: I should like to ask the Secretary of State for External Affairs what progress he has made in supplying medical and hospital services for South Viet Nam, either for the participants in the war or for the civilian population. What is the extent of that assistance?


Paul Joseph James Martin: With regard to the government's interest in providing assistance for the civilian population, which of course would be our interest as my hon. friend knows, there are two projects in being. The project under the direction of Dr. Gingras has not yet been effective because the authorities in South Viet Nam have not yet, in answer to our urgent requests, put at our disposal the facilities which would be essential for the program.



EDUCATION


[Stage Direction]
On the orders of the day:
Mr. Howard  Johnsion@Okanagan-Revel-stoke: Mr. Speaker, considering the recent proposals of the Canadian Association for Adult Education, and in particular the recent announcement of a forthcoming provincial conference on education, is the government contemplating the establishment of a federal office of education?


Mr. Speaker:: Order, please. The hon. member is asking a question relating to general policy which cannot be considered urgent to the extent that the question should be allowed at this time.

DEBATES	April 1, 1966


Mr. Robert Slanbury (York-Scarborough):: Mr. Speaker, may I ask the Prime Minister whether the government in the full spirit of co-operative federalism has received an invitation for representatives from any federal departments to attend the interprovincial conference announced by the education ministers of Ontario and Quebec, and if so, what federal departments will be represented at the conference?


Lester Bowles Pearson: Mr. Speaker, I will have to look into that. I do not think such invitation has been received, though I do recall the Minister of Education of the province of Ontario indicating that federal representation would be useful at that conference. I shall be glad to look into this.


Robert Douglas George Stanbury: A supplementary question, Mr. Speaker. If such an invitation is forthcoming, will the government seek at that conference, or at the federal provincial conference in June, appreciation of the need for a federal office of education-


Mr. Speaker:: Order, please.


Robert Douglas George Stanbury: -which does not interfere with but assists the provinces in attainments of national objectives in education?


Mr. Speaker:: Order, please. The second part of the question is hypothetical.



FOOD AND DRUGS


[Stage Direction]
On the orders of the day:
Mr. S. J. Enns (Porlage-Neepawa):: My
question is directed to the Minister of National Health and Welfare. In view of the fact that the very important question of the high cost of drugs is being referred to a special committee on food and drugs, can he say whether that committee will be formally organized before the Easter recess?


Allan Joseph MacEachen: It is my expectation that an organizational meeting might be held next week.



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, in order to comply with the traditional spirit of this day, and in view of the
April 1. 1968
fact that this is related to foreign affairs, I wish to direct a question to the Secretary of State for External Affairs. Is there any truth in the rumour that there is a movement on foot in the Liberal caucus to trade the hon. member for York-Humber (Mr. Cowan) for the hon. member for Kootenay West?


Hon. Paul  Marlin@Secretary of Stale for External Affairs: Mr. Speaker, I am sure that any party in this house would give careful and due consideration to such a transfer.



COMBINES


[Stage Direction]
On the orders of the day:
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, may I address a question to the President of the Privy Council. Several weeks ago I asked if his department was looking into the uniform and large increase in the price of newsprint announced by all plants. He said he would look into the question. I asked him whether this was within the province of the anti-combines legislation. I wonder if he has any report to make.


Hon. Guy Favreau (President of the Privy Council):: Mr. Speaker, I have referred the question to the director of investigation and research. I must make the same answer as has previously been made in these cases; that I am not in a position to say whether or not an investigation is going on. I may assure the hon. member that if the director reached the conclusion that the facts were such that an investigation was warranted, he would carry out his responsibilities.



BILINGUALISM AND BICULTURALISM


[Stage Direction]
On the orders of the day:
Maurice Allard: Mr. Speaker, in the absence of the Secretary of State, I should like to direct a question to the Prime Minister (Mr. Pearson) based on the program "Aujourd'hui" broadcast by the C.B.C. last night
Is the Prime Minister aware of the major dispute between the researchers of the Laurendeau-Dunton Commission and the discrimination practised against French Cana-
Inquiries of the Ministry dian researchers and would he agree to have an inquiry made in that connection?


Mr. Speaker:: Once again, this is a rather general question which hardly seems urgent, and I would suggest that the hon. member put it on the order paper.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, my question is for the Prime Minister. Two weeks ago yesterday the Secretary of State for External Affairs who was Acting Prime Minister for that day, in response to a question of mine said we could expect the legislation respecting collective bargaining in the federal civil service soon. Can the Prime Minister tell us whether the legislation will be on the order paper before Easter? If not, how soon may we expect it?


Lester Bowles Pearson: Mr. Speaker, I hope there will be a resolution on the order paper before the Easter recess, and I hope this will be legislation which we can reach very quickly after that Easter recess.



HIGHWAY SAFETY


[Stage Direction]
On the orders of the day:
Percy Verner Noble: I should like to direct a question to the Prime Minister. Would the Prime Minister give the house the assurance that he would have a representative of the government attend the Canadian Highway Safety Council convention in Calgary in the first week in May?


Lester Bowles Pearson: I think, Mr. Speaker, at a conference of this importance there should be an official representative from the government. I think there will be. No doubt the hon. member for Brome-Missisquoi (Mr. Grafftey) will want to be there too.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, I have a question for the Minister of

April 1, 1966

Inquiries of the Ministry National Health and Welfare arising out of a short discussion that took place when we were considering the final supplementary estimates of his department. I raised the matter of an increase in the level of hospital construction grants, and I asked the minister to give us some information on this question.
I wonder if the minister is in a position to give the house any information as to where this matter stands at the present time.


Allan Joseph MacEachen: Mr. Speaker, at the conference of health ministers last January I announced that the hospital construction grants would be continued at the present levels for an additional two years, until 1970. It is not the intention of the government to recommend an increase in the level, although the period has been extended for an additional two years.



NATIONAL REVENUE


[Stage Direction]
On the orders of the day:
John George Diefenbaker: I should like to direct a question to the Minister of National Revenue and ask him whether an order or directive has been issued in his department to the effect that a Canadian car produced in Canada and shipped to the United States by reason of the automobile agreement, then purchased in the United States by a Canadian and brought back to Canada is not subject to tariff in any way?


Edgar John Benson: Mr. Speaker, this is not the case.


John George Diefenbaker: What is not the case?


Edgar John Benson: Automobiles imported from the United States by individual Canadians, regardless of their source of manufacture, would be dutiable on coming into Canada. Individuals may not import new cars without paying duty. Also there is an absolute prohibition against the importing of used cars except in very special circumstances,


John George Diefenbaker: I am talking about new cars.


Erik Nielsen: A supplementary question, Mr. Speaker. Is it not the case that in this regard Canada is the only country imposing a duty on goods manufactured in this country?


Mr. Speaker:: Order, please. This question is not in order.


Hon. Michael Starr (Ontario):: Duty is paid on goods made in Canada which are shipped to the United States and brought back to Canada.



THE BUDGET


[Stage Direction]
The house resumed, from Tuesday, March 29, consideration of the motion of Hon. Mitchell Sharp, (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Hon. J. W. Monteith (Perth):: Mr. Speaker, last Tuesday evening I called the presentation of the Minister of Finance, which we are again debating today, a dead end budget. I repeat that, Mr. Speaker. It has no goals or directions.
This budget does little to control inflation. It virtually ignores the country's international payments deficit. It leaves many injustices uncorrected. It does nothing for the forgotten pensioners. It maintains mountains of paper work for the bureaucracy. It will reduce incentives, and it does nothing to develop the long term goals of the country's destiny.
This is a bureaucratic budget which is confusing, full of paper forms and even paper clips, one might say. It starts with the assumption that you can get away with anything if you confuse the people and if you confuse business enough. In other words, Mr. Speaker, and I am only interjecting this in a facetious manner, you can play any tune on the piano if you hum loudly enough.


Paul Joseph James Martin: You have to have a piano.


Jay Waldo Monteith: Sir, I believe this is a budget involving economic myopia. Only a few short months ago we were in an election campaign. We heard many promises from the present leaders on the government benches. They said "Give us a majority and we shall do wonders".
I would remind these hon. gentlemen of a few of those promises. I would ask the Minister of Finance what provision has been made for the skating rink in Vancouver. What about the $1 million for Digby harbour, or the millions more promised for housing? What provision has been made for the causeways, or I suppose now one might say "pause
April 1, 1966	COMMONS
ways"? What about the $25 million for Cape Breton coal, the dams which have been promised all over the country, the undertaking to provide home mail delivery in small towns, the study of fish which was to be made in Newfoundland, or the $100 million promised for road building in the Yukon-a promise which, incidentally, did not have the effect desired by the government on election day? These are all things which were promised but for which I see no provision made.
[DOT] (11:50 a.m.)
I would be lax in my duty, I feel, if I did not congratulate the minister on his success in the dumping of his predecessor's budget items and the complete reversal of earlier policies both good and bad. "Troubled Canada", Mr. Gordon wrote. "Troubled Walter", Mr. Sharp says. The hon. member for Davenport (Mr. Gordon) lowered income taxes. The Minister of Finance (Mr. Sharp) raised them. The hon. member for Davenport put an 11 per cent sales tax on production machinery. The Minister of Finance is timidly removing it. The hon. member for Davenport made much of his billion dollar Canada Development Corporation, which was to have done wonders. The Minister of Finance has forgotten all about it. In fact I suggest Mr. Sharp has forgotten all about Mr. Gordon. In less than a year we have seen a complete switch-round in Liberal direction. We are substituting for the 60 days of decision the present minister's stiletto and 365 days of incision.
I should like to put on record a few extracts to show what sections of the press think about this budget. First I would quote from an editorial which appeared in the Toronto Daily Star of March 30:
Mr. Sharp's budget is a shotgun affair which applies to the whole country without regard to regional differences. It ignores the fact that while some regions, such as Ontario have been experiencing a boom verging on inflation, the good times have hardly touched the maritimes and eastern Quebec, where unemployment rates remain far higher than in central Canada. In these depressed areas, the anti-inflation budget could be a recession one.
Then I would quote one or two passages from Le Devoir by Mr. Claude Ryan. I do not think I should burden the house with my French; I have had the passages translated into English and I will read them in English.
While there should be no hesitation in accepting Mr. Sharp's basic outlook in this connection we may well ask ourselves, however, if he has indeed chosen the proper means for the realization of his purposes.
DEBATES	3725
The Budget-Mr. Monteith
In the case of the federal government we should have been able to contemplate a severe reduction not only of spending in respect of construction, but also of the entire spending estimates. Instead of that Mr. Sharp was content to announce a very inconsequential 10 per cent cut in Ottawa's building program. A reduction of approximately $35 millions in total expenses totalling nearly $9 billion is obviously but a drop in the ocean. It may well be wondered what actual effect such a timid move will have on the decisions of other governments as well as on the actual performance of the economy generally. If the federal government really had wanted to set an example it has proceeded very timidly indeed.
Again:
They take no account whatever either of the variety of capital investment problems as they apply to various types of industry nor of the different levels of industrial development as achieved by one area as opposed to another.
And here is an interesting passage:
A year ago the floodgates had been thrown wide open to allow for free play of individual initiative. Since the people were to be called upon to vote they had to be treated as pleasantly as possible. One year later we find ourselves, once again, in the position in which we were before Mr. Gordon's election budget. Whatever Mr. Sharp may say, this is a difference which cannot be explained away entirely by changes in economic circumstances. Its explanation must be looked for, to some extent, in the opportunism of the party in power. If we are now returning to soundly based austerity it is simply because there is no fear of early elections.
Incidentally I think I should put on record the concluding sentence in this editorial:
Unfortunately, nobody thought of encouraging Canadians to invest in their own future, which is perhaps driving short term caution a little iar.
These two editorials give a concise picture of how inept this budget really is. I claim it is leading Canada down the proverbial garden path. I would commend the minister on accepting at least a few elements of the Progressive Conservative party's program. Naturally it is heartening to any political party to find its opponents adopting some of its "policies for people." I refer to the announcement by the Minister of Agriculture offering $4 per hundredweight for industrial milk, which of course was in our program. I refer also to the decision to treat potash solution mining in the same way as any other type of mining for tax purposes. This too was one of our policies. But why did it take so long? Now that parliament has a new senator from that province the government will be able to keep in touch with the needs of the people out there. This is an important decision for Saskatchewan.
The 11 per cent sales tax has now been removed from certain production machinery,
April 1. 1966

The Budget-Mr. Monteith jigs and moulds, and notice has been given that in one or two years from now it will be reduced and finally eliminated in respect of all production machinery. We hope the minister lives up to this budget undertaking better than his party has lived up to its campaign promises. We deplore the fact that the minister has not gone further in this direction, as our party has suggested.
The president of the Auto Parts Manufacturers Association of Canada emphasized the seriousness of this tax in a statement reported in yesterday's Globe and Mail. His industry is being told to compete with the United States giants which are not required to pay a comparable sales tax. Not only do Canadian firms have to meet competition from these bigger, low cost United States firms, but they have to pay an 11 per cent tax as well. The Minister of Industry told them "Have courage to expand." The manufacturers wanted to know why the Minister of Industry had not talked to the Minister of Finance. As the president of the manufacturers association said in the Globe and Mail: "When a government advocates free trade and then does something like this, you just wonder where the brains are."
[DOT] (12:00 noon)
We have pressed for the removal of the 11 per cent sales tax on building machinery, supplies and materials. In fact, we were firmly against it from its inception. The minister has said that in the course of a year or two this tax will be wiped out so far as machinery and equipment are concerned. I ask, why not now? His answer, of course, may be twofold, first, that he needs the money and, second, that he is seeking to delay orders for machinery and equipment for a period of time until demand slackens.
I believe the minister and the government have gone about this whole thing backwards. How in the world can the demand be satisfied if the means of producing for that demand are going to be delayed and delayed? I feel encouragement should be given to industry to provide the required facilities to produce so that the demand can be satisfied. I do not believe that the required production facilities needed across Canada should be delayed. We do not want to set this country back. We want to see the demand satisfied.
The minister has been trying to squeeze down the demand and ignores the fact that the government should be encouraging production on the supply side of things. The

Minister has pretended that he has been dealing with inflation while he has only been monkeying around with the economy, which in turn will be self-defeating.
Let me now turn to the items in the budget which are prominent by their absence. Why did the minister not discuss the auto parts agreement when his predecessor boasted so proudly of it only last year?


Mitchell William Sharp: Because it is on the Order Paper.


Jay Waldo Monteith: We welcome the jobs the agreement may provide but we are concerned that a weak government here in Ottawa will do nothing to stand up for this country's interests. How much of that $50 million in tariff reductions have Canadians received in lower car prices? How are our parts manufacturers getting along? Why are we not told? There is plenty to be discussed in the auto agreement but I think the government does not want to discuss it.
This is quite a different song from last October and November when the Prime Minister (Mr. Pearson) and various other ministers were falling all over themselves with boastful praises. We have heard the good part but now we are hearing the other side. There are many things the government should have done. We had hoped for something for our old age pensioners, and I suggest that the government's flippancy in this respect is a shame and a disgrace.


Some hon. Members:: Hear, hear.


Jay Waldo Monteith: auto parts manufacturers asked the Minister of Industry (Mr. Drury) to talk to the Minister of Finance (Mr. Sharp), I suggest that the Prime Minister talk to the Minister of Finance. The older people of this land are still waiting. Does the government care? I say no, Mr. Speaker.


John George Diefenbaker: There are only four ministers in the house now.


Jay Waldo Monteith: Then there are other items like the sales tax on drugs. We promised to remove it. Last year the former minister of finance said he was not acting on it because the Special Committee on Food and Drugs was studying the situation. This year the present minister says that the committee is still studying it but if the committee recommends removal of the tax the government will act. I have never heard such nonsense, Mr. Speaker, asking the committee to make a recommendation and telling it beforehand the effect of anything it might say. We wish the minister would follow the same policy with respect to the Economic Council's program for greater productivity.
There are some temporary measures in the budget. There are the changes in the capital cost allowances but they really mean very little in the over-all picture. They are going to frustrate and confuse immeasurably the plans of the small businessman. I know, having been an auditor for this type of client for many years.
They are also going to hurt the farmer. Yet over all they will do little to change the direction of the economy. Capital cost allowance changes are not going to affect the expansion plans of several large corporations. I think I should mention one or two such as the Steel Company of Canada, General Motors, and MacMillan Bloedell and Powell River. This type of corporation is not going to let depreciation changes affect its plans for the future. If there is any curtailment we believe that it will merely put off still further the day when consumer demand can be met.
The income tax changes mean greater taxes for many Canadians, probably the best proof we have that the government is not going to try for a majority this year. Last year was rather obvious-taxes down, an election. Then the Canada Pension Plan came in and wiped out the difference. Now taxes are up-certainly no election.
To me the income tax changes are meaningless. They do assist the minister in his financing but the amounts involved are not

The Budget-Mr. Monteith going to mean anything. Those who are gaining some minor benefits are going to spend the extra few cents a week, which is all it is going to amount to. Those who are receiving $25,000 and over are not going to let an extra $580 in tax deter them from buying a new car or anything else they may wish. In fact, the $580 could well be savings that would have been reinvested in Canada's future by people in this category. A married person with two children, earning $10,000 a year is going to pay something like $119 extra tax. Here again this is not really going to affect inflation, but we wonder why wage earners making $5,000 and up are being forced to pay more.
There is only one method to meet the problem of inflation and that is to increase supply to meet the demand. Mr. Speaker, if you really want to find something to challenge the willing, scare the daring and frighten the weak, you must try the minister's refundable tax on cash profits. It is not what it looks like; it looks like what it is not. I suggest the minister must have been reading Abe Lincoln when he thought that one up and he got carried away. Lincoln said:
Towering genius disdains a beaten path. It seeks regions hitherto unexplored.
Once again, Mr. Speaker, we see bureaucracy at work. The government is presuming to decide what is good for business and thinks it can do it better than business can decide for itself. I do not believe this is the case.
Let us just examine this 5 per cent refundable tax. Just what does this gimmick mean? I claim it is useless, impractical, unfair and unlikely to achieve the desired results. It is really nothing more than a forced loan to the government so that it can borrow money at 5 per cent, below the current market rate.
[DOT] (12:10 p.m.)
Inflation is expected to continue this year and the tax, therefore, is really a partial confiscation of capital, taken from business now and to be paid back when the dollars are worth less. It will be imposed on companies with no capital spending programs, and it is even possible to doubt that its real purpose is as an anti-inflationary measure. It will apply to any taxpaying corporation including banks, trust companies and companies in the service industry which have virtually no capital spending program. Therefore the tax cannot possibly curtail capital spending so far as these particular companies are concerned. It
April 1, 1966

The Budget-Mr. Monteith means an unfair burden on companies engaged in the exploration for natural resources as it includes depletion allowances in its tax base. This certainly is a field of endeavour which we do not want to curtail.
The minister said that this tax would affect only some 20 per cent of the major companies. I should like to quote from an article in the Financial Post of April 2, this week's issue. It is by Clyde Baxter and reads:
Sharp and his officials are confident most companies are already so advanced in their 1966 planning, and even in many cases for the next year, too, that the great majority will go ahead despite the new regulations.
I think that quotation sets out the whole thing in a nutshell. It is a personal opinion, but I would agree with Mr. Baxter. Most companies of any size have made plans for one, two, three, or more years in advance. Does the minister think for one minute that these large corporations from which he is going to take this refundable tax are going to cease their modernizing plans because of this tax? Surely the minister realizes that large corporations cannot operate that way. Just what is going to happen? Their own money in the form of this tax is going to lie dormant in the minister's hands while they go out to borrow funds to complete their modernizing requirements. It is going to cost them more; they are going to pay more than the five per cent which the minister is going to pay them. Who is going to pay the cost of that extra interest? Naturally, the consumer. It is going to increase the cost of living. It is going to be reflected right down to the consumer level. This again is one of those things that is going to make our industry and particularly our larger industry less competitive both in our foreign markets and in our domestic market.
International companies are going to be tempted to leave funds overseas rather than repatriate them. I could mention a few such as Hiram Walker, Distillers Corporation, Seagram Limited, Moore Corporation, and Massey-Ferguson. The only funds they may wish to bring back to Canada are those sufficient to pay dividends. Why would they bring home funds only to have to pay five per cent of them to the government and receive only five per cent interest? I might point out at this stage that the minister is going to get needed funds at five per cent interest and only yesterday he sold government of Canada treasury bills at a long time high interest rate. June 30 maturities averaged 5.06 per cent and one year ago they were at 3.62 per 
cent; September 30 maturities cost the government 5.30 per cent and a year ago they were 3.73 per cent. This shows how our money is going; it is becoming more expensive. Here is an opportunity for the minister to get money from these companies at five per cent when on the current market he is paying considerably more. These are forced loans that he is going to impose on quite a few of these larger corporations.
I know of one company which has a capital expenditure program of over $100 million which was decided upon two years ago. It is engaged largely in export. Will this move by the minister stop it from completing this program? Will it help them to know that in 1968 there will be no 11 per cent tax on machinery and equipment? Will it help the company to take five per cent of their surplus cash and force them into the market to borrow? The minister is keeping the production costs of this company higher than is necessary in two ways. They are going to have to pay the tax on their new machinery and equipment because they cannot stop in midstream. They are also going to have to pay to the department their five per cent refundable tax and probably borrow at a higher rate of interest to complete their expansion program. This can only increase their cost of production.
Let us look at the consequences of the increased cost of production, namely, increased prices and an increased cost of living to the average Canadian. Let us look at what the government is itself doing. It is reducing its expenditures by something like $35 million. Note that, Mr. Speaker, $35 million out of approximately $9 billion in total federal spending, an infinitesimal percentage. If it believes seriously that it wants to delay construction and expansion in industry, why does it not act more forcibly in its own sphere of activity? The government should take a hard line in curtailing its own spending. Why does it not reduce these budgetary figures? Goodness knows, there are enough areas. I suggest we could wipe out the entire Department of Industry. The government is suggesting that private industry should reduce expenditures but certainly it is not acting responsibly itself in this respect. It is failing to restrain expenditure as it expects the private sectors of our economy to do. I suggest, Mr. Speaker, that this is typical bureaucratic mentality as exemplified by this Liberal government.
The minister has paid lip service to the Economic Council of Canada. He did this on
April 1. 1966

more than one occasion in his budget speech but then proceeded to act contrary to their advice. He admits this himself. I would like to refer to one sentence in a column by Mr. Fraser Robertson in the Globe and Mail of March 31:
But Mr. Sharp's opinion of the Economic Council is only so-so. He takes from its report the parts he likes, rejects what he does not like, in the manner of a child fussing with its dinner.
I should like to quote a few words from the report of the Bank of Canada. The minister answered a question this morning. I am paraphrasing but I think it was to the effect that the Bank of Canada and the minister are in accord on policies. I do not think this can be accepted.


Mitchell William Sharp: Not like the old days.


Gordon Minto Churchill: There is nobody here.


John George Diefenbaker: All the minister's colleagues have left.


Jay Waldo Monteith: I should like to read one or two passages from the report of the Bank of Canada for the year 1965. I think 1 should start by reading the first sentence:
As the economy moved toward the completion of its fifth year of expansion,-
Even the minister is agreeing that the expansion did commence back in the days of the previous government. He is admitting that too. On the hustings during the last election campaign you never would have heard these words out of the mouths of the ministers of the government.
[DOT] (12:20 p.m.)
I think the following paragraph from page 3 of the Bank of Canada annual report for the year 1965 is very important. It states:
The output of the economy in 1965 could have been even higher if our productivity performance had been better. The productivity gains which accompanied the reduction in the margin of unused resources over the past year or so have been disappointing.
This next sentence is important.
This underlines the need for emphasis on policies bearing on "the supply side" of the economy which enhance our ability to produce. It is also the case that unemployment is still high in some areas, and output would be greater if the remaining pockets of unused resources were drawn into employment.
At page 11 of the same report the following is stated:
While we must continue to make the best arrangements we can for access to foreign capital to protect ourselves against the possible need for difficult and concentrated adjustments, I believe that
The Budget-Mr. Monteith we should be aiming at a pattern of economic growth which, while providing for full utilization of our resources, involves reduced dependence on net capital inflows. This does not mean that we should adopt inward-looking attitudes. On the contrary it means that we must attach great importance to increasing our ability to compete effectively with foreign producers both in other countries and in Canada. It means that we should be increasingly concerned with maximizing our productivity and industrial efficiency, with up-grading our labour and management skills, and with keeping our costs and prices in line.
This can only be done by concentrating our efforts on satisfying the demand and by concentrating on the supply side, as the governor of the Bank of Canada has said.
I should also like to quote from a pamphlet entitled "Private and Public Investment in Canada, Outlook 1966" published by the authority of the Minister of Trade and Commerce (Mr. Winters). There are one or two statements of interest in this pamphlet. I should like to quote from page 7:
Within the goods producing industries the greatest additional strength appears in the resource based forest and minerals industries where outlays are expected to increase by one-third compared with the 14 per cent rise recorded last year. Of particular significance are the programs currently planned by the mining industry. These involve a doubling of expenditures in iron mines and a similar increase in outlays for potash mines. In addition, spending for facilities for non-ferrous metal mines is expected to rise by about 50 per cent. The added strength in the forest based industries is entirely the result of a further substantial expansion of investment for pulp and paper mills, involving outlays some $120 million greater than those of 1965.
Does the minister want to stop this? These industries help our foreign exchange position; they provide employment and expansion. Expansion means efficiency which in turn means that these companies will then be able to compete in world markets. Surely we want our export industries to be able to compete efficiently in order that we can keep our costs down, which in turn will help our own citizens.
The Minister of Trade and Commerce has pointed out that new construction will increase by 12 per cent to reach a level of $9.2 billion and that expenditures for the acquisition of new machinery and equipment will increase by 17 per cent to reach a level of $5.4 billion. If the Minister of Finance wants to lower costs and wants to put the brake on inflation he should remove the 11 per cent tax now so that these companies will not have to pay the 11 per cent on new equipment.


Some hon. Members:: Hear, hear.
3730	COMMONS
The Budget-Mr. Monteith


Jay Waldo Monteith: The 11 per cent tax will only increase the cost of production, and the consumer will have to pay that increase.
In British Columbia a further rapid advance in capital spending for new pulp and paper projects and power development is anticipated. Incidentally, I should point out also that outlays for repair of existing machinery and the purchase of new equipment are expected to amount in total to $7.5 billion. Most of this repair work will be subject to the 11 per cent tax and repairs cannot be held up until its removal. If we take off that tax now the cost of production can be held down.
In Quebec the major advances in capital spending will occur in the manufacturing and commercial services sectors. Within the manufacturing group the major developments contributing strength are large increases in outlays in the pulp and paper and the primary metals industries.
I suggest we want to create supply to satisfy demand. One can only curtail inflation in this way. This is what the Minister of Trade and Commerce has to say in this regard:
While in the short run adding to the strong demand and cost pressures already present in the economy, larger capital spending programs, once completed, will substantially increase Canada's productive capacity.
That can be found at page 9 of the pamphlet to which I have referred. That is exactly what we want and that is what the Minister of Trade and Commerce suggests will happen. He states:
-larger capital spending programs, once completed, will substantially increase Canada's productive capacity.
The Minister of Finance is attempting to put on the brakes and I do not think this should be done. We think our choice is simple. We want to stop the cost of living from rising any further. We think the 11 per cent sales tax on machinery and equipment and building materials increases costs and hurts productivity. We think the refundable tax program is nonsense.
We suggest that we should approach our problems by expanding production, by increasing supply and not by sitting on demand. We do not want our old people to be told that there is something evil about wanting a decent pension or our young people to be told that they must not seek a better education. We do not want our wage earners to be told that they have no right to good wages or our industrialists to be told that they

DEBATES	April 1, 1966
should shudder at the sight of their own shadows.
It is higher productivity that will put some power back into the wage earners pay envelopes, that will permit industry to pay higher wages, that will keep prices from rising and that will make Canada competitive in world markets. Increasing supply is the road to a higher standard of living and a greater wealth for all Canadians. The governor of the Bank of Canada has said this, the Economic Council has said this and the Department of Trade and Commerce has said this. Why does the Minister of Finance not realize that this is the fact?
We have no confidence in this budget, Mr. Speaker, in that we do not believe it will meet the needs of Canada and its people. Therefore I move:
That all the words after 'that' be deleted and the following substituted therefor:
That the policies of this government have failed to deal constructively and effectively with major national problems facing Canada which require action now to provide policies for adequate incentives to increase productivity, stimulate export trade, to meet the serious and increasing imbalance of international payments, to maintain price stability, and to promote orderly and equitable development and expansion in all areas in the nation.
Mr. Speaker, we are tired of the "little Canada" approach. This is a big land crying out for development. We will never have it if we are afraid.
[DOT] (12:30 p.m.)


Mr. Isabelle:: Mr. Speaker, would the hon. member accept a question? Is there at least one good thing in the budget?


Jay Waldo Monteith: Yes, taking off the tax on the potash mines.


Some hon. Members:: Oh, oh.


Robert Muir: The member who asked the question does not know what potash is.


Mr. Colin Cameron (Nanaimo-Cowichan-The Islands):: Mr. Speaker, to the best of my recollection our present Minister of Finance (Mr. Sharp) is the sixth Minister of Finance whose budget I have had occasion to deal with in this chamber. Ministers of this government seem to have a rather short, if not merry, life, a sort of mayfly life, and we must make the most of this minister while we have him. I have always found that budgets are revealing not merely of the government's policies but also of the outlook on life and society of the minister. I hope the present
April 1, 1966

minister will not take it amiss when I suggest that I find this budget rather grey and cautious, imbued with the spirit of ca'canny which one might expect from someone of his ancestry.
In this budget there is none of that rather engaging, shall I say, "zany" quality of bold improvisation which characterized the budget of one of his predecessors, a budget that was presented with considerable panache. I suppose at this particular juncture in the world's history the question is which of these two courses is the better. In a world which is changing like a kaleidoscope, is it better to mount the steed of enthusiasm and ride off in all directions at once or ride one which stands almost still and hardly moves in any direction? At least we can be sure that the present Minister of Finance will not ride for a fall. His dagger is that he will petrify into an equestrian statue.
In light of the minister's personality, shall I say, his outlook on life, it is understandable that in the welter of conflicting advice which he no doubt has received, particularly in regard to the question of inflation or no inflation, inflationary pressures or no inflationary pressures, he should steer a careful, middle course between the bland, qualified optimism of Dr. Deutsch and the worried pessimism of Mr. Rasminsky. I have noticed that the minister seems to have come down pretty well on the side of the dangers of inflationary pressures.
I have been a bit disturbed by some voices, not particularly bright and rather simple-minded, that have been raised recently which equate the rise in the cost of living index with inflation. It is true enough that rising prices may be an indication of a general inflationary situation, but that is not necessarily so. There are indeed many other circumstances in our economy which will lead to a rise in prices rather than a general inflationary situation. We have such things, for instance, as administered prices which are set by corporations in monopoly and near-monopoly positions without very much regard to costs and with hardly any more concern than what the traffic will bear.
It is very often said that increased wages are the cause of price rises, and of course on occasion this is true; only a fool would deny it. But this is only part of the story. Very often, sir, increased wages impel the employer to adopt much more efficient methods of production and cause a drop in the unit cost of production which does not justify price
The Budget-Mr. C. Cameron increases but nevertheless causes price increases.
In my own province of British Columbia, in the principal industry of that province it is notorious that all wage increases are recouped by the employer with an additional 10 per cent or 15 per cent. It has happened repeatedly year after year, and more often than not the increase in price has taken place before the wage increase. When an employee tries to obtain an increase in wages he is really demanding a larger share of the wealth which he produces, and when employers refuse to grant him that larger share, which they do by maintaining their own profit position by increasing prices, then we get, stemming I suppose, from the wage increase a price increase.
However, Mr. Speaker, at this point there comes the question that we in this party have raised several times this session, namely, the necessity of taking some action with regard to spiralling prices. We have suggested that in co-operation with the provinces there should be a prices review board which could examine these increases, particularly in basic prices, to see whether they were justifiable. I suspect that all that would be required in many instances would be public exposure of the actual situation in any particular industry.
Of course, our minister does not take such a simpleminded view. He presents to us a much more sophisticated approach to the problem of inflation or inflationary pressures and tells us in effect that we are approaching the full utilization of our resources and consequently the danger of inflationary pressures becomes extremely severe.
There are roughly three sections of our resources. One is our natural resources; the second is the industrial plant by which those resources can be transformed into commodities, and the third is our human resources. To the best of my knowledge, neither the minister nor anyone else can tell us what our natural resources are. For one thing, they have not all been explored and for another, of course, their economic utility will depend on changing economic circumstances both in Canada and abroad.
It may be that our industrial equipment is working at full capacity or near full capacity today, but no one has suggested that it is necessarily working in the most efficient manner possible. Indeed, the minister himself in parts of his budget address made suggestions as to means of increasing productivity
April 1, 1966

The Budget-Mr. C. Cameron in our industry, which would indicate that he himself has some doubts whether Canadian industry is as productive as it should be. But there can be no question about the status of our human resources. When the minister tells us that we are approaching the full utilization of all our resources and consequently must be very concerned about the danger of inflation, he blandly ignores our 356,000 unemployed. These are the latest figures I could obtain, as at February 19, seasonally adjusted. Three and a half per cent of our total labour force are unemployed.
It would appear that the minister is prepared to dismiss this particular part of our resources, perhaps justifiably. Perhaps he takes the position that these unemployed are useless as factors of production. It may well be that because of defective education, lack of technical skills or poor physical health arising from long continued poverty, these
356.000	unemployed are actually not capable of being part of our productive force at the present time, that there is no place for them within our industrial economy, that they are in fact a burden upon the rest. To say this may very well be true. Admittedly, it is a very cold-blooded approach to regard human beings in this manner. I shall have something to say later, Mr. Speaker, about this social philosophy that impels us to so regard human beings, a social ethos which narrows man's potentiality, which confines him to the role of a producing and consuming animal. However, this is the way which, in the context of the minister's Budget, we must consider these
356.000	unemployed. We must consider them as people who are at present not valuable assets in the productive forces of our country.
[DOT] (12:40 p.m.)
Now, the minister implies this when he ignores this situation and at the same time tells us we are approaching the limit of utilization of our resources. In fact, he discards them as defective parts of the machine which, as I say, they may very well be. But, sir, I would point out that even if we set aside moral and humane considerations with regard to those who are dismissed from our active society, and I do not think we should do that, this is still a shocking, wasteful extravagance from an economic point of view and one that is simply unsupportable.
If the unemployed are unfit for the purposes of industrial society, and as I say there may very well be a case to be made out for

that, the fact we have had a hard core of unemployment lasting year after year which we are apparently unable to shrink to any appreciable extent would indicate that we have this large corps of people who cannot be fitted into the industrial machinery of our modern society. If that is so, Mr. Speaker, then it seems to me that obviously our task is, before we speak of the full utilization of resources, to sharpen, to polish and reshape these defective parts of our human resources so that they can be fitted into the production machine and become assets instead of remaining liabilities.
What do we find in the minister's budget? What do we find his policies portend for this reshaping process? Obviously, the most important thing in reshaping, repolishing and retooling our human resources is a vastly increased public investment in education and in technical training in order to prepare these people so that they may play their part in society, a vast public investment that would remove at least some of the conditions of abject poverty which make the possibility of these people being able to absorb an education very remote.
What do we find our government doing? The minister tells us he is going to cut his own government's spending. He is going to urge provincial and municipal governments to curtail their spending. He does this by means of exhortation and by leaving them in a rather difficult position to fulfil those functions which are largely provincial and municipal functions, education and training. For instance, he is not prepared to remove the 11 per cent sales tax to encourage and enable municipalities or school boards to increase their social capital as a basis for reshaping these presently defective units of our popultaion.
He tells us of the need for higher productivity and almost in the next breath he tells us of two steps he is taking which appear to be in the opposite direction. The minister says he is not going on with the development of the structures laboratory at the National Research Council. In the light of the tragic accident that occurred on Elgin Street yesterday I would think the folly of this type of curtailment would be underlined. In the next paragraph the minister says he is going to curtail investment in the experimental farm stations. Again, one would presume this project was designated to increase productivity.
April 1, 1966	COMMONS
These are two comparatively minor instances which illustrate the minister's reversal of his position. He says we need higher productivity and then takes steps to curtail our ability to achieve it. These are sins of commission, rather minor ones perhaps and not significant, but they are nothing like the sins of omission which must have much wider effect than the two small sins of commission I have mentioned. He ignores the existence of this large proportion of our labour force, 3.5 per cent, and blandly tells us that despite that we are near the end of the full utilization of our resources. We are faced with this fact, Mr. Speaker, that he possibly had to take this position because of past negligence on the part of this and former governments. As a result of this, he would not now be in a very good position to inaugurate any policy to reshape or retool these defective parts of our population.
To the best of my knowledge there has been no survey made by this government or previous governments as to the skills that will be required in the rapidly changing economy in which we live today. There has been no survey to find out what skills will be called for by the vast technological changes that are taking place continually. There has been no research, no surveys to the best of my knowledge with regard to the skills, capacities or qualities of those who are presently unemployed. We do not know, therefore, what we need from them.


Mr. Alkenbrack:: Mr. Speaker, may I rise on a point of order to ask the hon. gentleman a question?


Mr. Speaker:: This is not a point of order.


Almonte Douglas Alkenbrack: A point of privilege then?


Mr. Speaker:: It is not a question of privilege. The hon. member may seek the permission of another hon. member who has the floor to ask a question, which permission may be granted or refused.


Almonte Douglas Alkenbrack: May I?


Colin Cameron: Yes, if I have time I do not mind.
No survey has been made at all and consequently the government has tied its own hands when it comes to launching an effective program in the war against poverty. There is no doubt the recent war against poverty has become a byword in this country for a piece of government whitewashing. We do not know what skills are needed. We do
DEBATES	3733
The Budget-Mr. C. Cameron not know what capacities the unemployed have. No survey has been made, so what do we do? We sweep them under the rug. We do not include them in our potential resources utilization of which the minister tells us is reaching very close to the limit.
Of course, we have a new department recently appointed to achieve this, and I refer to the proposed ministry of manpower. I wonder how this new department will work when it comes up against the brick wall of some of the other policies of the minister? I have noticed in the minister's budget that he appears to be determined to accentuate a trend in investment in Canada which has created this situation and which, if continued much longer, must inevitably be disastrous. For the last five years at least there has been a growing disparity between investment in social capital and investment in private business capital. In 1961, 41.7 per cent of our total investment went into social capital and 58.3 per cent into business capital. By 1965 it had reached the point that 39.7 per cent was in social capital and 60.3 per cent in business capital. In the forecast produced by the Department of Trade and Commerce for 1966 we find that it is estimated that for the ensuing year the investment in social capital will have dropped to 38.4 per cent and the estimate of business investment will have risen to 62 per cent.
This, I suggest, sir, is a shocking and dangerous trend when we have reports on all hands of the failures and inadequacies of our educational system, when we have reports on all hands of the failure to provide adequate health services for the Canadian people to maintain them in the state of health that is reauired to sustain them as useful members of our society, when continually both business and government bewail the fact that we have a shortage of skilled personnel, when we have disgraceful slums in every city of the country, when we have poverty which is the breeding ground of crime and delinquency, and the non-utility of human beings as productive organisms.
[DOT] (12:50 p.m.)
Knowing this, what do we find? We find that the government is determined to allow this disparity in investment to continue. The government is determined to allow the shortages in social capital from which we suffer today to remain. The government does not wish to take steps at all to correct this imbalance that might start us at least on the
April 1, 1966

The Budget-Mr. C. Cameron path toward solving the problem of the usefulness of human beings in modern society.
It is true, I acknowledge, that the minister is proposing to place a curb on business investment. I would imagine the minister took one hesitating, rather timid look at what they are doing in Sweden and that he felt he had to do something of the same sort. Of course, the difference is so great that it is not merely a difference in degree but a difference in kind between what the minister is suggesting and what the Swedish authorities have instituted for several years past. In that connection let me say, Mr. Speaker, that while I think the 5 per cent refundable tax is a very faltering step, if it is the forerunner of more decisive action in this field it is to be welcomed.
I noted with interest the position of the spokesman for the Progressive Conservative party when he protested against business having to relinquish $250 million, on which it is going to draw 5 per cent, without a word being said about the $140 million that is going to be taken out of the taxpayers' pockets for which they will get no return and no interest.


An hon. Member:: It has to be paid.


Colin Cameron: It has to be paid. I thought that what the spokesman for the Progressive Conservatives said was very interesting because it indicates clearly the concern of the Official Opposition with a certain section of our society. To take money from business is, of course, the ultimate sin for Conservatives.
Let us compare what the minister is doing with what they are doing in Sweden. I have here a copy of the Harvard Business Review, which outlines the Swedish program. We find there that any Swedish corporation may allocate, at its own discretion and with no necessity for government permission, up to 40 per cent of its pre-tax income to an investment reserve for economic stabilization. The amount so set aside is a deduction from income for purposes of income tax. In every case 40 per cent of the amount allocated to the investment reserve must be sterilized by deposit to the corporation's credit with the Riksbank, the Swedish central bank. There is no sterilization of the remaining 60 per cent of the investment reserve. It must be charged on the books as a reserve but it remains in the corporation's hands as part of its working capital, similar to a reserve for depreciation or for bad debts.

The important part is this: While no government permission is required to allocate funds to the reserve, control over the taxpayers' reserve is largely in the hands of the government. Control is not exercised by the revenue administration but by the Labour Market Board, a government agency, whose primary duty is to combat unemployment. I would assume, Mr. Speaker, that that board has before it the results of the sort of survey that this government has never done. I would imagine that the Labour Market Board of Sweden has a very clear idea of the skills required in every part of their society, most of which they have today achieved.
In our own instance what do we have? We have a 5 per cent refundable tax on which we are going to pay 5 per cent interest. It is not going to have any flexibility as to the time of release. The minister must release the money at the end of 18 or 36 months regardless of the state of the economy. In fact, as a weapon for stabilizing investment it would seem to me to be of very minor effect and of minor use.
It may be, as I say, that it is one first, faltering step in the direction of rational control of investment programs and policies of Canada. If so, it is a very timid one. I suggest to the minister that he should perhaps borrow from his predecessor some of his rashness, some of his panache, and I suggest that he take bolder steps in that direction.
I have noticed that the minister has boasted, not merely on this occasion but on other occasions, that we are enjoying the longest period of economic expansion in our history. No doubt we have almost reached the new millenium. Perhaps we have. If that is the case, then we have a grim outlook before us.


An hon. Member:: Hear, hear.


Colin Cameron: We have a grim outlook before us when in a period of unexampled and unprecedented economic expansion, 25 per cent of the people still are categorized as living on the borderline of poverty, when we have still
365,000	unemployed persons, when the old age pensioner is receiving $75 a month. A retired civil servant telephoned me today to tell me of the plight of a friend of hers, also a retired civil servant, whom she found living on shredded wheat for a week waiting for the pension cheque to come. If this is what the longest unprecedented sustained period of economic expansion gives us, then I say the outlook is extremely grim, and I say that we
April 1, 1966	COMMONS
should take another look at the policies which have created this longest unprecedented spell of economic expansion.
May I call it one o'clock, Mr. Speaker?


Mr. Speaker:: I understand that the hon. member has three minutes only left for his speech. I wonder whether hon. members would wish the hon. member to complete his speech?


Colin Cameron: I plan to move a subamendment, Mr. Speaker.


Mr. Speaker:: Order, please. It being one o'clock, pursuant to the provisions of the resolution adopted in this house on January 21 I do now leave the chair.
At one o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 2.30 p.m.
Colin Cameron: As I said before the luncheon recess, Mr. Speaker, I propose to move a subamendment to the amendment placed before the house by the official opposition. I do so now. I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That the amendment be amended by changing the period at the end thereof to a comma, and by adding immediately thereafter the following words:
"and to meet the needs of taxpayers by changing the income tax structure so that single persons up to $1500 and married persons up to $3000 will not be required to pay income tax, or to meet the needs of Canadians whose incomes are below the income tax exemption levels by providing a guaranteed annual income."
The problem to which the subamendment calls attention is connected closely with what I was saying earlier in the debate. It is further proof of the inability of an unplanned market economy to distribute the fruits of expansion. Not only are we unable to distribute the fruits of our production but we place a levy on those in our society who can least afford to contribute to the operation of our economy.
I was speaking earlier of the curious manner in which the Minister of Finance had dismissed the 365,000 unemployed by making no mention of them and by suggesting at the same time that we had nearly full employment of all our resources. I suggest this is a situation which will continue to get worse. There can be no doubt that if those presently
DEBATES	3735
The Budget-Mr. C. Cameron unemployed, as appears to be the case, are unfit to perform a productive function in our society, the level of unfitness will continue to rise in line with the technological development which is taking place today, and more and more people will find themselves in this category of being unused and unuseful members of our society.
The level of usefulness, if I can use that term, is bound to climb and much more drastic steps will be required to cope with the situation than either the minister or the government have indicated up to the present. This is one of the big paradoxes of our present method of operating our society. It is the dilemma of the unplanned market economy that not only does it fail to distribute the fruits of production in an equitable manner but that it is similarly unable to allocate resources in a socially desirable way, since the only consideration affecting the allocation of those resources is that of profit. The curious thing is that the richer we become, the more quickly we approach the full use of our economic, natural and human resources, the more difficult it is for us to make sure that those who need it most are able to share in the new wealth production. This, I submit, will always be the case as long as we continue to operate on an unplanned market economic basis.
I believe the almost obsessive concern with the rate of economic growth is actually an escape mechanism to enable us to avoid this problem of equitable distribution. It stems from a social philosophy which regards organized society as merely a productive and consumptive machine and human beings as being merely an attachment to that machine.
It is true we must have growth in order to keep pace with the rising population. But it may very well be that a better allocation of our resources and a better distribution of the fruits of our society would be sufficient to provide us with decent and satisfactory lives instead of our present course which is a mad scramble to use up resources, destroy our environment, exploit the capacities of human beings and keep the machine going at any cost.
We are confronted today with a foretaste of what will be done to us in more acute form by the automation and cybernation which awaits us. The time is fast approaching when we shall be obliged to take a hard look at the philosophy of human purpose which we now have, and at the philosophy of organizing
COMMONS DEBATES	April 1. 1966
The Budget-Mr. C. Cameron
ourselves for the production and distribution of resources. I have always felt that in a modern state the goal of civilized state should be that of developing as far as possible an egalitarian society. I am not suggesting, here, any counsel of perfection; indeed, if that were possible, it might not be desirable.
We still have an immense number who are incentives. We have heard a lot about that this morning from the Official Opposition. I agree there must be incentives which will induce people to undertake the rigorous and lengthy training and education required to fill the most skilled positions in our society. But incentives used merely to encourage people to seek the most profitable places for investment land us in the state in which we find ourselves today where, in spite of the long and unprecedented economic growth, 25 per cent of our people are still living near poverty level.
[DOT] (2:40 p.m.)
We still have an immense number who are living in stringent circumstances and on whom, apparently, we must impose taxes. We still have old people, retired civil servants and disabled people living at substandard levels, and we still have a totally defective educational machine in this country incapable of producing the very productive force that the Minister of Finance tells us we must have.
Therefore I suggest we should not look merely at statistics. Statistics do not give us the real picture of our egalitarian society. We hear no mention of all the extra income acquired by those who happen to be in a position of prosperity. We hear no mention of the man who has a $50,000 home and who draws considerable income from the fact that he lives in this home and enjoys its amenities. He does not get taxed on that. I suggest that until some future government recognizes that we must divorce the idea of livelihood from that of a piece of machinery in a large productive machine we are going to have this continual trouble. We are going to continue to the point of expanding our economy and then being told that, because we are in an inflationary position, we cannot provide larger pensions for old people, and provide education as it should be provided, and cannot reduce income tax levels because we need the revenues.

This is because the whole of our society is geared to the production of profits, to the maldistribution of wealth in order that those who own and operate the productive forces of society may draw their first tribute from it and leave us the rest. If this continues we are going to have more throw-outs because of technological changes, but somehow we will have to achieve some means of distributing the wealth that automation and cybernation have made possible. This is one of the great opportunities for mankind, but if we are going to have the sort of program presented by the Minister of Finance in his budget we are going to lose that opportunity and from our wealth possibilities we are going to create more and more misery for more and more people.


The Acting Speaker (Mr. Rinfret):: The
question is on the subamendment.


Gilles Grégoire: Mr. Speaker, the night the Minister of Finance (Mr. Sharp) brought down his budget I could not help but note that the most wonderful progress there was in that budget speech was the one made by the minister in his manner of expressing himself in French. That was the greatest improvement, and I think the Liberal members will agree with me. As a matter of fact, to me, it was the only improvement because, apart from that, the speech was rather disappointing and fairly rough.
In a certain way, the Minister of Finance reminded me of some finance minister in a country where people are complaining about a shortage of hats due to an increase in population. So, they consult their economists. The first one replies; well, we shall build factories and they will manufacture hats. No, says the second one, we shall cut off heads and then there will be enough hats. That is exactly what our Minister of Finance has done in his 1966 budget. He cut off heads, he cut down the number of public works, and he asked the provinces to do as much. He also asked the industrial and manufacturing interests to cut down on their investments.
Everything is in progress, but man no longer knows what to do with progress. There are too many heads? Let us cut them off. Too much progress? Let us try and restrict it.
That is not the way to develop a country, Mr. Speaker. One never develops the economy of a country or the country itself by trying to limit its growth but by encouraging it.
April 1, 1966
We noticed also that the Minister of Finance overlooked one of the important problems he will have to face. He talked about budgetary revenue but he did not mention his budgetary expenditures, on the last page of Hansard for Tuesday, March 29, because they would be for him a source of great difficulties. What I will say is not mentioned anywhere in the budget of the Minister of Finance. It is not shown at all in his calculations.
He forgot to tell us that on May 1, 1966, that is in a month from today, a loan of 325 million dollars will come to maturity.
Where will he get the money? There is no mention of it anywhere.
And that costs in interests, for this year alone, $11,375,000. If only that was all for this year.
But no, another loan, in the amount of $245,202,200, will fall due on September 1 and another one, in the amount of $205 million, will also fall due on that date. Again in 1966, a $23,320,000-loan will fall due on November 1. On December 15, three other loans will fall due: one, in the amount of $175 million, another of $125 million, and still another of $150 million, making a grand total of $1,248,522,900 in loans falling due in 1966.
The Minister of Finance did not say how he would go about paying back all that money. Will he tell us-and I would like him to answer this question-that Canada is not paying its debts? Will he borrow to pay that debt? He will have to borrow to pay back all the loans falling due this year.
But here is what will happen then. As those loans were made a long time ago, when interest rates were low: 3J, 3|, 4, 4J and 4J per cent, any new loans he makes will bear a higher interest rate of 5J, 5i or 6 per cent. There will be fees to pay brokers who will issue new securities to face the $1,238 million debt falling due in 1966. And as we will see in next year's budget, if this amount has not been paid, interest rates will have gone up.
Could the Minister of Finance tell us where he will get the money to pay back those loans? Why did he not speak about this in his budget speech? Has he decided not to pay back Canada's debts? Has he decided to go bankrupt? This would be the time to do it-


Mr, Bechard:: There is the Bank of Canada.


An hon. Member:: No.
The Budget-Mr. Gregoire


Gilles Grégoire: Has he decided to go bankrupt?
[English1


Mitchell William Sharp: May I assure the hon. gentleman that is not my intention, Mr. Speaker.
[DOT] (2:50 p.m.)


Gilles Grégoire: Mr. Speaker, the Minister of Finance tells us that that is not his intention, but could he tell us where he will find the money to repay this amount of $1,200 million? Can he tell us? Is he not able to answer? Is he not?


Mitchell William Sharp: If the hon. gentleman will permit me, Mr. Speaker, I might say that had he read my budget speech correctly he would have seen that we took all these matters into account in order to meet the needs of the government. Also, there was some intimation in the White Paper and elsewhere that we intend to repay these loans and otherwise keep the finances of this country in good shape and maintain confidence in Canada and in the currency.


Gilles Grégoire: A businessman who would give such an answer would no longer be considered as a businessman, because since confederation, the Canadian government has never paid off one cent of its debts without borrowing elsewhere.
So this year, next year and the following years, we shall have to borrow in order to repay debts incurred in 1867 and even before. This means, Mr. Speaker, that the money spent by Canada to buy red coats for its soldiers who defended our country against the United States in 1812, has been repaid 25 to 30 times over in interest and that more money is being borrowed to pay off the capital.
And he will tell me that this is the proper way to manage a country. We have paid 30 times over; they no longer exist, but we still owe that amount and we will borrow again to pay what we still owe.
And that, Mr. Speaker, is not all the borrowings. In 1967, another amount of $867 million will become due. In 1968, debts in the amount of $1,981 million will mature. Every year, the government will have to borrow anew to pay off its previous loans and each time it borrows, service charges have to be paid. It has to kowtow to finance in the

April 1. 1966

The Budget-Mr. Gregoire United States, Great Britain, Europe or elsewhere. And the cost of refinancing comes high. Interest rates are going up all the time.
If, this year, the Minister of Finance obtains $1,248 million to refinance the national debt of Canada, which will not help the country in any way, that will mean $1,248 million less in savings to invest in the development of our natural resources and of our industries, in short, the development of Canada.
The Minister of Finance seems to take that stoically. It is quite simple, we borrow to pay what we owe and we have been doing that for a hundred years.
I cannot understand why not a single minister of finance has had enough imagination in his noggin-


An hon. Member:: His what?


Gilles Grégoire: -to find the way of making this country run with debt-free money. I wonder if the minister was here when his colleagues voted for that.


Mr. Bechard:: That was not what we voted for.


Gilles Grégoire: I think he was about to rise and say he was not here, thereby blaming his old colleagues for having voted in favour of that.
But, Mr. Speaker, when a country is sovereign and autonomous, when it is really the master of its own destiny, it should not be compelled to do business with private financial institutions. It ought to set up, as a non-profit government body, a public development bank that would finance without interest public expenditures and public development.
This, Mr. Speaker, should be the goal of any sovereign and independent country. But Canada is still controlled by financial interests.
Mr. Speaker, there are in fact two problems facing the country today, or so it seems according to the speech made by the minister.
First, there is the increase in the cost of living. Second, our balance of payments shows a deficit.
The increase in the cost of living, where does it come from and for what reason? Almost everyone tries to hide it from himself and the hon. Minister of Finance especially refuses to see it. But the reason for the increased cost of living during the last year or two is mostly the increase in taxes.

When a province increases taxes by 2 per cent, prices go up 2 per cent. When there is a 1.8 per cent or 1.9 per cent tax increase, as there was last year, prices go up. When the employer is also forced to pay 1.8 or 1.9 per cent more, prices rise. When an 11 per cent tax is charged on building materials, prices inevitably go up.
Through the creation of all sorts of new taxes, we have come to the point where the businessman, simply to make his reports to the government on pensions, health unemployment insurance, income tax for his employees, deductions at the source, taxes on profits, personal income tax, etc., has to hire a whole staff of accountants, secretaries and assistants to figure out all those things and divide everything according to each department. You can imagine that this increases production costs for industrialists and manufacturers contributes to increase prices.
Taxes are the main factor of the rise in the cost of living at this time. The minister complains that the cost of living is on the rise. But he is the first one responsible, for it is not the opposition which raises taxes, but rather the Minister of Finance who decides such things. And as this is the primary cause of inflation, the man responsible for inflation in Canada is the Minister of Finance every time he makes a decision to increase taxes.
Today whether you want it or not, there is 47 cents worth of tax in everything you buy. Every dollar's worth of products includes 47 cents in various taxes, either income, municipal, provincial, school or other tax. In every dollar's worth of production, there are 47 cents in taxes.
The minister wonders what inflation stems from. It stems from taxes or levies, which are higher here in Canada than anywhere else.
The second problem the country has to face is that of the balance of payments. Let us note this however: if we have a deficit, it is not that our exports are inferior to our imports. On the contrary, they are greater than our imports, but over and above that, huge amounts of money go out of the country in dividends, profits and interests paid to foreign companies. That is what causes the deficit in our balance of payments because, as a matter of fact, if we consider only the value of products we ship outside this country and those we bring in, our exports exceed our imports, but we have to pay the tax on money sent to foreign investors who develop our natural resources because we never had a government that could do it.
April 1. 1966

That is why, each year, we send $1.2 billion, I believe-at least, that was the figure two years ago-abroad in the form of dividends, profits and interest.
What does the minister say about that? In his budget speech, he says:
We do not want to restrain export demands-we need the proceeds of exports to pay for imports and meet our very heavy obligations in respect of interest and dividends payable outside Canada.
There you have the heavy obligations: interest and dividends payable outside Canada.
Mr. Speaker, I should like to ask the Minister of Finance a question: if the United States had enough money to develop their own country, their natural resources, their industries and their trade and if, in addition, they had enough to go and develop natural resources and industries in South America, Africa, Europe, Asia and Canada, can the minister tell us why we Canadians should not be able to find the credit required to develop our own natural resources, our own industries and our own trade like the Americans have done?
[DOT] (3:00 p.m.)


Mitchell William Sharp: Mr. Speaker, may I ask the hon. gentleman a question? Is he suggesting that the people of the United States have been converted by his eloquence and are following the policies he has been advocating?


Gilles Grégoire: Mr. Speaker, my eloquence did not win them over. They were converted before that and before the advent of the present Minister of Finance. The United States succeeded in the last hundred years or so, with their own capital and their own credit, in developing their country. Why were we unable to do the same thing and did we have to borrow their capital and credit? The minister is unable to answer. Are we less intelligent or is their Minister of Finance more intelligent? The Americans can do it, not only for themselves, but for South America, Africa, Canada and the countries of Europe. How is it that they have capital to invest throughout the world? Why?


Mitchell William Sharp: Mr. Speaker, may I ask the hon. gentleman again whether he is suggesting that the United States should follow Social Credit policies in its administration?
The Budget

Mr. Gregoire [Translation]


Gilles Grégoire: I am not suggesting that at all, Mr. Speaker. Far from it, but I claim, for instance, that the Americans put into practice at least part of the philosophy of social credit in the sense that they are capable of finding capital and credit to develop their resources, their industries and ours also, whereas we are unable to develop ours. Seventy eight per cent of our natural resources and our industries were developed with American capital. Where did it come from? Could we not have capital to develop our resources, not theirs, or those of Africa or South America, but our own. The Minister of Finance should ask himself how it is that other countries did it and why we were unable to do it, except for 22 per cent, and Americans for 78 per cent. How is it that the United States could do it by themselves? The minister never asked himself that question. He never asked himself why we could never do it alone.
Now, the Minister of Finance is at the complete mercy of the United States or other foreign countries, for they control 78 per cent of our natural resources and industries.
Mr. Speaker, it is precisely because we have not developed our own sources of capital to invest in our natural resources that we must now face heavy obligations related to interest and dividends payable outside Canada. This is interest on capital invested here by Americans and dividends from such capital. We must face our heavy obligations. The phrase is not mine. It was used by the Minister of Finance.
We have our obligations to the United States, while they have none to Canada. I suggest to the Minister of Finance that he should give special consideration in this matter in order to consider the desirability for Canada to develop its own sources of capital and credit. It can use the Bank of Canada for this purpose, so that, in the future, we will no longer need Americans, Englishmen or Europeans to develop our country.
The second problem facing Canada is its balance of payments which will then no longer be a problem but an asset, for Canada is an exporting rather than an importing country, and a comparison between our exports and imports will prove it. When this problem of interests, dividends and profits is solved, our balance of payments will be in our favour.
Mr. Speaker, a third point-
April 1. 1966

The Budget-Mr. Gregoire


Mr. Laniel:: Mr. Speaker, may I direct a question to the hon. member? As the hon. member has shown, the social credit doctrine has not, up to now, been beneficial to him or his predecessors. Has he never considered preaching it in other countries to find out whether it would be accepted?


Gilles Grégoire: Mr. Speaker, had I known the hon. member would have asked such a stupid question, I would not have resumed my seat so as to allow him to do so.
The propagation of ideas through preaching does not always bring results. Often one is preaching in the wilderness, to deaf ears, as in the case of the hon. member who just put this question. Wheat seldom grows on stone or rocky soil.
On page 11 of his budget speech, the Minister of Finance spoke about government expenditures and, among other things, said this:
Now that we are better able to appraise the total economic situation this year, and our part in it, the government believes it should exercise further restraint upon its own expenditures, particularly in the field of construction, during this coming fiscal year.
[DOT] (3:10 p.m.)
In the following paragraph, he adds:
This will mean deferring a number of plans that have been under consideration, or which we have been requested to undertake by the provinces or others.
Cuts in the field of construction, cuts in the projects under consideration, cuts in the field of public works. That reminds me of the economist who suggested to cut off heads because there were not enough hats, instead of making more hats. Because our country is expanding, the minister wants to slow down that growth.
Since when has it been a wise policy to slow down progress? There is not a single businessman in Canada who would say: "My industry is growing too rapidly, I must cut sales, I must reduce production, I must turn customers down." Not a single industrialist or merchant or businessman would say that.
But, the Minister of Finance wants to curtail works; moreover, he also asks the provinces to curtail their projects. He says:
I hope that the provincial governments, whose construction programs have apparently increased even more than ours this year, will be able to contribute to this desirable restraint upon aggregate demand by holding back until a later year some of the projects they have scheduled for this year.

There are not enough hospitals in the province of Quebec; sick people wait two or three weeks before being admitted to the hospital, and the Minister of Finance is suggesting that the construction of hospitals be stopped. There are not enough classrooms in our schools, colleges, universities and technical schools, and the minister is suggesting that the construction of hospitals, roads, bridges, leges, be stopped. There are not enough roads. We have the asphalt, the lands, the manpower, the unemployed to build them. Is the minister suggesting that we should stop building roads? Is he suggesting also that we should stop building bridges? That is progress. And we would put a stop to that. Fortunately, I hope that the provinces will not listen to that suggestion or recommendation of the federal Minister of Finance, because it would be a disaster to put a stop to the construction of hospitals, roads, bridges, colleges, universities, in short to stop building so that the country can grow. I hope that the provinces will disregard the suggestion of the Minister of Finance.
The Minister of Finance suggests moderation, not only in the public field, but also, and I quote from the budget speech:
It is clear that action should be taken promptly to moderate the present boom and to maintain a steady and sustainable rate of growth in our economy. We must avoid the kind of boom that will lead to a bust.
"Action should be taken promptly to moderate the present boom and to maintain a steady . . . rate of growth." Since when should a boom be moderated? When a country goes through a period where it seeks to grow the government on the contrary must help that expansion, because, by attempting to slow it down, it reduces development at the risk of stopping it.
The Minister of Finance also suggests that private expansion be cut down when he says:
The first measure .... reduces the capital cost allowances that may be claimed for various classes of capital assets acquired during the period between now and October 1, 1967-about 13 months. This appears-
Take note, Mr. Speaker, these are strong words.. .
-to me the period over which special inducements to postpone business capital expenditures are likely to be necessary, though of course this is a difficult matter to forecast.
These are 1930 methods. During the last depression, or economic recession, the government offered $2 for the piglets whose birth the farmers prevented.
April 1, 1966	COMMONS
Fifty cents were paid in New Brunswick for every apple-tree that was cut down. And the Minister of Finance says he will provide special incentives to business to defer capital investments.
I am warning the Minister of Finance that I intend to defer some business investments I expected to make next year; I shall only make them 25 years from now. Then the minister can give me those special incentives. This reminds me of the farmer who wrote the minister of finance 30 years ago and told him: You offer $2 for each piglet which is prevented from being born. Inasmuch as 3,000 piglets have not been born on my farm this year, please send me $6,000. That is the way things were being done during the depression years. Incentives were provided to stave off production, when people were starving to death. Now, the minister is coming back with the same old proposal, providing special incentives to defer business investments, to encourage people to stop producing and investing.
Mr. Speaker, it is a return to medieval, obsolete methods.
How much will the Minister of Finance pay? He did not say. Will he provide a sizeable incentive to prevent investments? Can he tell us what will be those special incentives to prevent us from investing? The minister might tell us what kind of special incentives he will provide or better still, what kind of bonus those who will cut down production or refrain from expanding industry may expect.
As things stand, Mr. Speaker, one wonders whether our Minister of Finance believes he is living in the 17th or 18th century. You know, those backward economists remind me of the farmer who was driving his ox-cart loaded with two or three cords of wood. Arriving in town, he saw a sign saying: Speed-30 mph. He said to his ox: "Let's get out of here, we cannot go that fast." Some economists are like that, Mr. Speaker, and in this century, they cannot keep up with progress.


The Acting Speaker (Mr. Rinfret):: Order. I
regret to interrupt the hon. member but since speeches on the budget are limited to 30 minutes, under the rules, I must advise him that his time is up.


Gilles Grégoire: Mr. Speaker, in view of the fact that I was interrupted once or twice, may I be given a minute to finish my remarks.
DEBATES	3741
The Budget-Mr. Gregoire


The Acting Speaker (Mr. Rinfret):: Order. I
regard, I must say to the hon. member that the chair, the deputies, and the officials of the house without mentioning the three clocks around us, have noted the time taken by the Minister of Finance while he interrupted the hon. member two or three times.
I may ask if it is the pleasure of the house to allow the hon. member to continue his remarks.


Some hon. Members:: Go ahead.


An hon. Member:: Let him speak of federal matters.
lEnglish1


Mitchell William Sharp: Mr. Speaker, perhaps the hon. gentleman might at least finish his story.


Some hon. Members:: Oh, oh.


The Acting Speaker (Mr. Rinfret):: Order. Do I understand that the hon. members agree to allow the hon. member for Lapointe to finish his remarks?


Some hon. Members:: Agreed.


Gilles Grégoire: Mr. Speaker, I shall only take two or three minutes, since the Minister of Finance wanted me to finish my story and I have done so.
All economists today are incapable of adapting themselves to progress and to the age of automation in which we live. If the Minister of Finance really wanted to be progressive, he would devise a system other than the present one and would stop offering incentives to cut down production; on the contrary, he would give special encouragement to producers.
That is why I can only blame him for offering special incentives to delay the business worlds' capital expenditures.
In conclusion, Mr. Speaker, I should like to say a word about the receipts for charitable donations which the minister mentioned in his speech when he said:
All charitable organizations will be asked to register and to file annual returns of information. Only donations to such registered charitable organizations will be permitted as deduction from income in future years.
I should like the minister to enlighten us on this subject. All charitable organizations will be asked to register; does this mean that all priests will have to register or will the cardinal of the Montreal diocese be able to

April 1, 1966
The Budget-Mr. Leboe register in the name of all the priests of Montreal? Does it mean that the Department of National Revenue will have records for every rectory? Will rectories have to obtain a special licence to hand out receipts? Will they have to hire accountants to present their annual returns of information to the government?
Mr. Speaker, the Minister of Finance should enlighten us on the subject. In any case, I wish to say that the Department of National Revenue has no business to ask vicars and curates to register with the department. Parish priests and curates should not have to submit reports to the Department of National Revenue. They cannot be ordered around like employees of the federal government; they have their own flocks to attend to.
The Minister of Finance should find a new method with regard to this question of receipts for charitable donations and he should not try to regiment and enlist parish priests and curates as he tries to do now.
Mr. Speaker, we are disappointed with this budget. There is no tax reduction; on the contrary, we find an increase in the income tax, at least taxes that were lowered last year were increased once more. There is no mention of increasing family allowances and old age pensions, or of raising tax deductions to $1,500 or $3,000, as was suggested by our colleagues of the New Democratic Party. We find their amendment is satisfactory and we are going to vote for it.
As for the Conservative amendment, it seems to us satisfactory at first sight. I did not have the opportunity to consider it thoroughly, but at first glance it seems satisfactory and, as far as we are concerned, we shall also vote for it.
[DOT] (3:20 p.m.)


Mr. Bert Leboe (Cariboo):: First of all, Mr. Speaker, I should like to say to the minister that we sympathize with him greatly in so far as his problems are concerned. We do not agree with what he has offered but we certainly sympathize with him in so far as the problems of taxation which he faces are concerned. In his opening remarks the minister referred to the Royal Commission on Taxation. If one were to summarize what he was saying, one would say that he was presenting a stopgap Budget while waiting for more information. I do not feel this is too much out of the way.
[Mr. Gregoire.)
However, I take strong exception to the position the minister is taking regarding the boom in Canada. I do not believe that the boom about which he is talking is prevalent all over Canada. I think that the problem he and the country face is the proper distribution of goods and services. This is where I feel the real problem lies. He has said we must retard the vehicle, that we should ease up on the gas a bit because we are getting into a position where it is not physically possible for Canadians to go any farther.
I should like to remind the minister that it should be our duty in this parliament to assist the provinces to increase production and make more goods available. If there are inflationary pressures, it is not our duty to impede the provinces and put stumbling blocks in the way of provincial growth. After all, capital investment must precede production. If we are going to cut down on capital investment, then surely what we are saying in no uncertain terms is that we are going to cut down on the growth of production because without capital investment we cannot have the type of production we need.
If we believe what the minister says, then it simply means that we have too much money chasing too few goods. The provincial governments are playing a very extensive role in Canadian life. As time goes on the role played by the provincial governments is going to become larger in relation to the position of the federal government in Ottawa. History shows that this is taking place. We realize that this must be the case. The budgets of provincial governments are becoming more important, as are the budgets of the municipalities. At this stage in our political history it is a good thing we are fortunate enough to have strong, stable, provincial administrations. The confusion we have had in the federal field has convinced me that this has been one of the redeeming features of our system of government in Canada.
The minister has said that we must provide ample provincial revenues. I do not like repeating myself, but I must ask the minister why his department does not do some real research into the possibilities of a municipal bank? A municipal bank would reach down into the grass roots of our provincial needs. Everyone in this chamber knows that the needs of municipalities are greater than the needs of any other level of government in Canada today. The minister himself mentioned the initial responsibilities of
April 1, 1966

municipalities such as education, sewers, water and so on. These responsibilities of the municipalities could be taken care of by a municipal bank that would operate as a child of the Bank of Canada.
As I have said before, we could rent facilities from the chartered banks in order to make sure we would get the type of credit that is needed into the hands of the municipalities at cost. The first point in the minister's speech related to provincial revenues. The second point he mentioned was equalization payments. Here again, a municipal bank would assist in eliminating much of the stress on equalization payments because the need could be governed at the very root of the problem, the financing of services generally. I am sure this is where a start should be made and could be made.
The third point the minister mentioned was conditional grants. Here again, the case for such a bank would be very much in the forefront. Conditional grants would be tied in with equalization payments and provincial revenues. This would mean that our whole provincial policy would be much more flexible.
[DOT] (3:30 p.m.)
I come now, Mr. Speaker, to what I think is a very important point in the minister's speech. I refer to the International Monetary Fund. I hope I misunderstood the minister in this regard but in reading his Budget speech it seems to me he is stating we must have machinery on a world level to enable the International Monetary Fund to create money. I feel this would be a dangerous precedent. It would mean we would be doing away with a certain amount of our sovereignty. In the final analysis I think it would do away with the country known as Canada, as well as many other countries. I cannot help but sound a warning in connection with the matter of the International Monetary Fund and the minister's reference to its ability to create money. In that connection I should like to read from a little booklet called "Money Facts" put out by the 88th Congress of the United States. It was the report of the subcommittee on domestic finance, of the Committee on Banking and Currency in the United States.
The question here asked is, "Where does the federal reserve get the money with which to create bank reserves?" The answer is:
It doesn't "get" the money, it creates it. When the federal reserve writes a check, it is creating money. This can result in an increase in bank 23033-2371
The Budget-Mr. Lehoe
reserves-a demand deposit-or in cash; if the customer prefers cash, he can demand federal reserve notes, and the federal reserve will have the treasury department print them. The federal reserve is a total moneymaking machine. It can issue money or checks. And it never has a problem of making its checks good because it can obtain the $3 and $10 bills necessary to cover its check simply by asking the treasury department's bureau of engraving to print them.
This is the report of the subcommittee on finance in the United States, issued one year ago last September.
If we are going to find ourselves in a position where the International Monetary Fund is going to be given the right and the privilege to create money, we can, in my view, say that we are surrendering our sovereignty in a way that would not be contemplated by even the most foolish people. I believe that we should take a very close look at this situation. I am not saying that we should not help anybody, that we should not make a fund available to do any good that it is necessary to do in the world. I am not saying that we should not help starving people, or that we should not help in the development of underdeveloped countries. But surely, Mr. Speaker, we should never be put in the position of creating money for other countries that can create money for their own uses. This would be monstrous. This would be similar to the problem raised by the C.B.C. program, where a wild plant grew up and gobbled up everybody that came near it. We have to be sure that this International Monetary Fund is backed by a 100 per cent reserve basis.
Mr. Speaker, I was happy to note that the minister has captured in his speech another Social Credit phrase. He has captured the fourth point in the Social Credit program: that that which is physically possible can and must be made financially possible. I noticed that twice in his speech he mentioned our physical capabilities, in reference to production.
I say to the minister that it is nice to see him moving along the path, as did his predecessor, when his predecessor admitted that the federal government is actually practising, to a degree, the Social Credit monetary reform policy. I hope that this may be extended, Mr. Speaker. I believe it was raised on August 7, 1964, originally, but I regret that I forget the page number in Hansard.
As you see, Mr. Speaker, we are making progress, even though there are only five of us here, from this party. We each have our

April 1, 1966
The Budget-Mr. Leboe own job, and perhaps that is the nicest way to have it.
If I understand the minister's speech, it is that we must increase our productivity. Yet he is telling us that we must tax the businesses of the country so that they will not have so much money to spend. I should like to know how we are going to increase our productivity without spending money, when capital account is to come before production? It seems to me that in this we are slipping backwards. I do not know the real thinking of the minister, but I suppose that before the debate is over some of his colleagues will have enlightened us on some of his thinking.
One remark the minister made in his statement struck me as being very much to the point under discussion. He mentioned the subject of borrowing for social services. I think nothing can be more destructive to any country or to any province than borrowing money for social services.
Another statement that interested me very much I should like to quote. It appears on page 3379 of Hansard for March 29, 1966:
But in the longer run, with the whole world hungry for capital, we cannot assume that it will always be feasible for Canada to import such large amounts of capital as we have in the past.
This brings me to the point I wish to discuss. Why is the whole world hungry for capital? The whole world has its own resources. We have the means of creating money. I read into the record how the United States creates money. I need not tell the Minister of Finance how the banks create money, or how the Bank of Canada creates money, because he knows this. Why in the world should we allow foreign countries with their own banking systems to monetize our assets so that they can collect interest and dividends from their investments, when we have the capability of creating our own money here in Canada. I cannot see the common sense of letting foreign institutions create money on our assets.
By way of illustration, on a blackboard I used to draw a stump, then I would draw a factory, and people, and I would explain what this meant. When people watching asked me what this was all about, I said, "The people in the drawing are the people of Canada. These are the resources to which they apply their labour, in order to build a factory." Then when I was asked what the stump was for, I said, "That is for the foreign investor to sit on. When we finish working on our own resources, and build a factory, he

owns it." That is just about how inept we are in the handling of our finances.
I see no reason why foreign money making institutions should make the money that we can make, on our own assets. Foreign institutions are not going to raise money unless they have something with which to back it. In a little time I shall go back to the minister's statement with respect to that.
Another thing about the minister's attitude that puzzles me is his suggestion that we can have consumers without having money in the hands of the people. I do not follow this line of thinking. It seems to me that we cannot have domestic markets unless we have people who have money to buy the goods on that market. In this connection I should like him to take a look at the possibilities that exist with relation to the tight money policy, and with relation to the finance corporations in this country. I am sure that the minister could go to any bank in this country and find out that a tight money policy exists, and that as a result we cannot borrow money, no matter how well situated he is.
However, finance corporations, when they know that tight money is coming in, go to the chartered banks to raise their line of credit as high as possible. Then, when tight money is brought in they will be able to get the credit from the banks that you and I ought to have.
You can go to the bank today and not get a dime. Then you can go down to a finance company and get money on which they will charge 24 per cent interest. The finance company has obtained the money because of the line of credit it has from the bank. You and I should have had that money in the first place. That is exactly the situation.
[DOT] (3:40 p.m.)
I should like to deal with the tight money policy as it relates to exports and imports. It seems to me that a blanket tight money policy is going to hurt the primary producers of this country before it hurts anybody else. These are the people who are generally at the top of their lines of credit at all times. If any restrictions are imposed they have no room to move. Who are the greatest exporters in this country? The primary producers. The minister is crying for exports, yet he slaps a blanket tight money policy across the country, affecting our primary producers most. This is one more of the contradictions we find in the present budget.
April 1, 1966

I said I would have something more to say about interest and dividends being paid outside Canada. I appreciate the minister's statement in this regard because it emphasizes one thing which has been denied in some circles, namely that the public debt of Canada is owned by Canadians. The minister has told us that one of the problems here is the heavy obligation with respect to interest on dividends payable outside Canada. But he also went to great lengths to explain that the provinces, municipalities and government agencies should have the right to go to foreign markets to borrow money. I fail to see why they should do this when they are all going to use our assets in Canada to back these new funds which are being created.
I turn now to the situation produced by the government's decision to restrict parts of its construction program. I notice that first on the list of projects to be eliminated is the provision of grain storage facilities at Prince Rupert, British Columbia. I am sure that if the hon. member for Skeena (Mr. Howard) had spoken before me, one of the first things he would have mentioned would have been the decision taken with regard to these facilities. The minister talks about wanting to increase our exports. We are all aware of the bottleneck which slows down our efforts to get wheat out of Canada. Now he says we are not to build new terminals in Prince Rupert. The other day I read in the paper the number of box cars filled with grain which are scattered all the way from Golden to the coast, waiting to be unloaded-some 1300, held up because there are no facilities at the coast for handling them. Yet first on the list of projects to be eliminated are these facilities at Prince Rupert.
I hope that when he gives consideration to this matter the minister will not forget that an airport terminal at Prince George is very sorely needed. Maybe he could fly up to Prince George on a Sunday and see whether he can find a place to set his suitcase down there. I am sure he would be happy to recommend the expenditure of some money by the Department of Transport to make sure that the facilities are improved as quickly as possible.
The minister has admitted there are pockets of unemployment in this country. Surely we must devise some way of applying a tight money policy only in areas where there are inflationary tendencies while making sure that credit is available where it is needed. Some hon. members have spoken about the causeway over to Prince Edward Island. I
The Budget-Mr. Leboe have been in this house for nine years and during that time all I have heard has been speeches about the poverty of the maritimes. This being the situation, why in the world should we postpone the construction of such a causeway?
We hear a lot about equalization payments to the poorer provinces. This was mentioned in the budget speech. The province from which I come is one of the richer provinces. It is a matter of development and of looking after natural resources. All the provinces have this ability, provided they use the right policies.
I was a little surprised that the minister should have advocated more borrowing in the course of his speech. This vexes me. It seems wrong to me that we in this country should continually be borrowing money from outside and using our own assets to back up these loans. The minister says:
There should on the other hand be some saving to provinces and municipalities in what it is necessary to pay in interest to foreign lenders. I hope it will enable some borrowing to be done in Europe, despite the high cost of borrowing there.
When we have our own facilities in Canada, why in the world should we have to pay through the nose in order to borrow in Europe? It does not make sense to me.
I sympathize with the minister in his efforts to meet the situation caused by too many people spending too much money. In this connection I would remind the hon. gentleman to look again at the activities of the finance corporations which spend huge sums advertising for persons to enter their doors and get money. Once these people receive it it is a different story-24 per cent interest on the amount borrowed.
The minister tells us we are faced with a lack of skilled labour. This affects one area in which the provinces have no jurisdiction -control over immigration. If the minister really believes that more skilled labour is needed, let him get his colleagues together and make sure Canada receives the type of immigrants capable of filling these vacant positions, so that we can build up production, provide more goods and avoid too much money chasing too few things.
I agree with the minister in his attitude toward the protection, if one can call it that, of those in the lower income brackets as far as income tax changes are concerned. I think this is good. It is good that the minister has seen the light and promised to change the
April 1, 1966

The Budget

Mr. Gordon sales tax situation. I hope he goes all the way and removes this tax on production entirely.
I have described this budget as a stopgap budget and I am sure the people of Canada agree. But it is a budget which contains many contradictions. On one hand the minister tells us to spend. In the next breath, he says: Don't spend. He calls for exports, yet he restricts credit to the primary producers who do most of the exporting. He tells us to save, yet he reduces the reasons for saving.
In conclusion, I would say this: While pension plans of various kinds are excellent, the minister must recognize that these developments in our society create a psychological effect in the minds of the individuals concerned. If they are to be taken care of in their senior years they will not worry about spending too much money today.
[DOT] (3:50 p.m.)


Hon. Walter L. Gordon (Davenport):: As
this is the first time I have spoken during the present session I should like to begin by congratulating Your Honour, and the Deputy Speaker, on your new and important posts. I would also like to congratulate all hon. members on their choice of a Speaker for this house. In the way he has directed our proceedings, especially during some regrettably stormy periods, the Speaker has given clear evidence that our choice was an exceedingly happy one. We respect his decisiveness and quick firmness, and we appreciate his good humour and his pleasant smile when he delivers his rulings. I am sure all hon. members will agree when I say we are grateful to the Speaker for what he has done, and will do for us, but more importantly for what he is doing for the institution of parliament.
Some hon. members know that when I resigned from the government I resolved to make no speeches in or out of the house for a period of six months. I still have about a month to go but I am breaking my self-imposed vow of silence today, and only for today, in order to congratulate the Minister of Finance (Mr. Sharp) on his appointment as my successor, and to compliment him on his budget.
It seems to me the debate has opened on a rather high note and I congratulate the previous speakers, particularly the hon. member for Perth (Mr. Monteith) and the hon. member for Nanaimo-Cowichan-The Islands (Mr. Cameron), both of whom made excellent speeches this morning from somewhat different points of view. My mischievous friend,

the mellowing firebrand from Vancouver Island, has a caustic wit that is always refreshing, and sometimes he says some intelligent things that are worth listening to. But I had a little trouble following him this morning when he referred to my panache, which my particular dictionary refers to as a plume of feathers, especially a headdress. If by inference he was inviting me to join his particular band of fighting Indians, I shall think the matter over carefully, but I seem to remember that when I was a minister I felt that he and his band of Indians would have preferred to have eaten me if they had not thought I was too old and tough.
Mr. Speaker, the present minister for several years was a senior member of the staff of the Department of Finance and it must have given him great pleasure to return to head his old department. The job has its difficulties, at times, but also its satisfactions, and I am sure he will find the work is fascinating.
The minister has an excellent staff to help him. The deputy minister is the dean of the Canadian civil service. He is a wise and imaginative man who has served successive governments with loyalty, integrity, and complete discretion. Mr. Bryce is surrounded by a well-knit team of keen and able people who are competent to grapple with extremely complex issues, and I wish all of them, and their minister, the very best of luck.
It must have given the minister some feeling of relief, as well as of pleasure, to have presented his first budget. As one who has had some experience with a first budget I wish to say to him that if he is satisfied that his proposals are sensible in the light of present conditions he should not become overly disturbed if he receives a few criticisms.
After all, his critics, and he is bound to have a few, may not have the same facilities as are available to the Minister of Finance to assess the current situation, which puts them at something of a disadvantage. And I doubt if very many of them would have given as much concentrated thought over the last three or four months to the kind of policies that are called for in present circumstances, as did the minister.
I do not wish to suggest that the minister's critics will necessarily be all wrong, or that the minister will necessarily be all right in all of his points of view. There are no absolutes in this business.
April 1, 1966	COMMONS


Mr. Bigg:: Are you still remembering your first budget?


Walter Lockhart Gordon: There is that old voice again. It sounds like the cracked record I remember so well. I can only suggest that one of these days somebody should buy him a new one.
We shall have a better idea a year or so from now about the present budget, because it is really only in retrospect that one can properly assess the wisdom of any particular budget. In the meantime I wish the minister every success and a calm, quiet, but interesting life.
Before discussing some of the matters dealt with in the budget I should like to remark how very fortunate we are in Canada, at the present time at least, compared with people in other countries. It is now five years since the current upswing began. Unemployment is down, on a seasonally adjusted basis, to about 3J per cent of the working force. It is still higher than this in the Atlantic region and in the eastern part of Quebec, but in some parts of Canada there is virtually no unemployment. This a matter for great rejoicing.
Most people are busy, and most people are prospering. It is quite true the cost of living has risen, but compared with the experience in other countries prices in Canada over the last few years have been relatively stable. Certainly the standard of living of most Canadians has increased at a much faster rate than the cost of living.
Consumer prices increased sharply after world war II and again after the Korean war. Since then, that is in the following 14 years, consumer prices increased by about 1J per cent per annum, and I suggest that this record should be examined in the light of two factors in particular. The first is that the price indices do not reflect accurately or completely all the changes in quality and service that are now included in the things we buy. There has been a real increase in the cost of living over the past 14 years, but it has been less than the indices purport to show.
The second factor to remember is that prices have gone up much faster in every other country, with the exception of the United States, than they have in Canada. Our economy, as we know, is one of the most open in the world. We import a substantial proportion of our needs, and so it follows that some of the effects of price increases in other countries are bound to be reflected in the cost of the goods we import. I suggest that when
DEBATES	3747
The Budget-Mr. Gordon these factors are taken into account we can claim that our record over the past 14 years has been a good one, relatively speaking.
[DOT] (4:00 p.m.)
Last year, that is in 1965, the consumer price index went up by 2.4 per cent. This is higher than normal. This increase was due partly to increases in food prices caused by drought conditions at the beginning of the year and partly due to shortages of meat products in the United States which pushed prices up. It also was due in part to increases in automobile and health insurance premiums; this contributed to the over-all increase in the indices in 1965. But what is of concern now is the rate at which some prices are increasing at the present time. This especially is true in the construction industry and in some sections of the manufacturing industry where the demand has been exceeding the available supply.
The minister has proposed a series of measures which are designed to restrain moderately the present rate of capital spending, especially in the private sector. He has proposed a form of forced savings for corporations, through a special tax of 5 per cent, on adjusted net profits, which is to be refunded with interest some time during a period of 18 to 36 months after the time of payment. I believe this is a novel and interesting idea.
I was somewhat amused that both the hon. member for Perth (Mr. Monteith) and the hon. member for Nanaimo-Cowichan-The Islands (Mr. Cameron) criticized this policy, the one because it is a new idea and therefore suspect, and the other because it is not exactly the same as the measures followed in Sweden. Hence it does not quite fit the views of all good socialists who, after all, venerate Sweden almost with idolatry at times, despite the fact that both the character of that country and the nature of its economy are quite different from that of Canada.
The minister also has proposed fairly stiff reductions in the rates of capital cost allowances. The previous rates were designed to amortize the cost of capital assets over their useful lives and at the same time provide what in effect was a subsidy to businesses in financing their capital expansion programs. Under present conditions, especially if we think these conditions are likely to continue for some time, it is reasonable to withdraw or reduce the subsidy element in the existing capital cost allowance rates for many companies.

April 1, 1966
The Budget-Mr. Gordon
There are, however, three points which the minister may wish to consider and possibly enlarge upon at the appropriate time. The first is that most large companies are in a position to raise money for expansion purposes in the capital markets when this seems necessary or desirable. Canadian subsidiaries of foreign concerns normally can look to their foreign parents for capital when they need it, although this may be a little less easy for some of them to do under the United States guide lines policy. Neither of these courses is available to small or medium sized Canadian owned businesses. The inherent disadvantage, under which the moderate sized and small Canadian owned companies operate vis-a-vis their much larger competitors, or vis-a-vis Canadian subsidiaries of foreign concerns might, I suggest, be taken into account and compensated for when the new regulations are being drafted. At the same time consideration might be given to the position of the independent automobile parts manufacturers who must expand their facilities under the United States-Canada automobile agreement, if they are to stay in business.
My third point under this heading is to point out to hon. members that the minister reminded us and the public that the special rates of capital cost allowances, for manufacturing companies with a degree of Canadian ownership, which have been in effect for the last three years are due to expire at the end of this year or April 1967, as the case may be. It might be helpful, I think, if the minister were to state that when the present threat of inflation is over and the old rates of capital cost allowances are restored, the principle of granting a subsidy to assist the financing of new capital expansion-because that is what a rate of capital cost allowance in excess of the so-called engineering life of a piece of equipment essentially is-will be continued for Canadian companies and companies with a degree of Canadian ownership. This would be consistent with government policy expressed yesterday in the guide lines for Canadian subsidiaries announced by the Minister of Trade and Commerce (Mr. Winters). I should like to take this opportunity to congratulate the Minister of Trade and Commerce and the government on yesterday's announcement; I thought it was an excellent announcement as I am sure all hon. members will agree. At the same time I would urge the government to take whatever steps are necessary to see that these guide lines are realized in practice.

Exhortations and guide lines are fine, but they need to be enforced.
To revert back to the budget, in so far as the public sector is concerned the 10 per cent deferment or stretch-out of capital expenditures by the federal government is a logical move in present circumstances. We know however that capital expenditures by provincial and municipal governments at the present time are much higher than those contemplated by the federal authorities. It will be important therefore to urge provincial and municipal governments to adopt a similar policy of deferring or stretching out their capital expenditure programs, except in those regions of the country where there is still an appreciable amount of unemployment.
I believe the minister should be commended for his efforts to restrain inflation. He is in a position to reverse these measures quickly when and if it should appear that the present business up-swing may be coming to a close. On the other hand, if the present measures should prove to be inadequate, I am sure he will not hesitate to bring in additional proposals to supplement those outlined in the present budget.
I am sure all hon. members will be particularly pleased that the minister has found it possible to grant an immediate exemption from sales tax for production tools, jigs, dies, and so on, and to eliminate over a two year period the sales tax on production machinery and equipment. I have said often that I agreed with hon. members opposite that this was not a good tax, and it is one which I am delighted to see the end of.


Mr. Pugh:: Hear, hear.


Walter Lockhart Gordon: I had a feeling that if you would keep quiet for a little bit you would have a chance to cheer.
I also wish to congratulate the minister on his decision not to impose the 15 per cent withholding tax on interest payments to non residents on new government bond issues after April 15. This will reduce the cost of borrowing in New York and is to be welcomed for that reason.
I have been watching the clock a bit, and there is not time for me today to comment on all of the other budget proposals, but I shall look forward to further participation later and in more detail when the various budget bills are brought forward. However, at this point, I would like to digress for a few minutes on another slightly different topic.
April 1, 1966

[DOT] (4:10 p.m.)
It seems to me that some times Canadians become too preoccupied with their particular problems, and I should just like to mention tour of them. Only a few years ago we were worried about the state of our national finances. That problem was tackled in a forthright fashion and has now been satisfactorily resolved.
At the moment a lot of people are worried about inflation, and some people are getting almost panicky about it. Certainly this is not a danger that can ever be ignored, but the minister has presented policies for dealing with it. If they are not successful we can assume, as I have said, that other supplementary measures will be promulgated. In other words, when something needs to be done, we should be prepared to act, not just sit around wringing our hands and crying about it. The minister has shown that he is quite capable of acting.
I should now like to mention another problem about which Canadians are concerned. For 100 years or more we have been worrying about the difficulty of holding our country together. In the last few years these worries have been increased. I believe we are getting closer to an appreciation of the changes in relationships that are needed to meet the changing conditions and the changing viewpoints of our times. I suggest that it is vitally important that French and English speaking Canadians try to understand each other better, be more appreciative and sympathetic of each other's gifts and aspirations and less critical of each other's shortcomings.
We should and must all work to reduce tensions, not exacerbate them. If we do, and if we approach this fundamental problem reasonably and with a determination to be fair, I believe we shall be successful and that Canada will not only hold together but will become much stronger in the process. Every hon. member of this house has a direct and personal responsibility in this matter. It is up to us, every one of us, to do everything within our power to promote unity and understanding. It is up to us-every one of us-not to do anything or say anything that would have the opposite effect.
We are still worried, and properly so 1 think, about the annual deficits on current account in our balance of payments. These deficits were reduced substantially in 1963 and 1964, but increased last year to about $1,100 million. If nothing were done the deficit on current account this year
The Budget-Mr. Gordon would be considerably higher. This is a problem that we should face up to, and if we do so it also can be resolved.
One of our difficulties in this country is that so much of our industry is controlled abroad. We have gained a great deal in the past from foreign investment and the scientific, technological and managerial know-how that has come with it, and in many cases, the assurance of markets. This has helped to develop our economy faster than otherwise would have been possible.
But the trend to absentee control of Canadian resources and Canadian businesses has gone too far. This is related to our balance of payments difficulties, as the recent United States guide lines have made perfectly clear to everyone. I believe that we must take positive steps to reverse the trend toward ever increasing foreign control over the Canadian economy. I have views about how this could be accomplished, but this is not the time to put them forward. Apart from anything else, I have just finished writing a book, as some hon. members may know, and I do not want to scoop myself today.


Thomas Clement (Tommy) Douglas: Let's have no commercials.


Walter Lockhart Gordon: All I wish to say about this subject now is that, while it is a problem-and I believe a serious problem-we can resolve it if, having understood its implications, we tackle it head on.


Mitchell William Sharp: Mr. Speaker, may I be permitted to ask the hon. gentleman a question? Who is publishing his book and at what price will it be sold?


Some hon. Members:: Oh, oh.


Thomas Miller Bell: May I also ask whether it is fiction or history?


Walter Lockhart Gordon: Perhaps I may answer one question at a time. I can assure the hon. minister that he will receive an advance copy, free of charge.


Mr. Vincent:: What about other members of parliament?


Walter Lockhart Gordon: That depends on which side of the house they are located, but I will be glad to send you a copy.


John George Diefenbaker: This is going to be a one-sided presentation.


Walter Lockhart Gordon: Mr. Speaker, it never occurred to me that the right hon. Leader of the
April 1, 1966

The Budget-Mr. Gordon Official Opposition (Mr. Diefenbaker) would show or express interest in anything that I might put forward, but I certainly shall send him a free copy of my book.


John George Diefenbaker: I do not want to interrupt the hon. gentleman, but I should like to say I have read everything he has ever produced and I will be looking forward to his new book. I read both for profit and for amusement.


Walter Lockhart Gordon: On this occasion, Mr. Speaker, I think he will gain some profit from it.
I have been talking about some of our problems, and I suggest that Canadians should examine their problems in perspective. If they do, they will not seem too stupendous. We should remind ourselves that the total net output of the Canadian economy, after eliminating price changes, has more than doubled in the 20 years since the war. Following the period of post-war readjustment, that is to say, since 1949, the net output per capita in real terms, after eliminating price changes, has gone up by an impressive 40 per cent. The average income of Canadians has been increasing rapidly and our standard of living is improving all the time.
The potential of this country is simply enormous, which means that if we manage our affairs with reasonable skill, which I am happy to say I believe we are doing, our standard of living should continue to improve at a rapid rate. We are, or we should be, the envy of the people of every other country in the world, and I even include the people of the United States when I say that.
It was my privilege about ten years ago to preside over a royal commission that made some educated guesses or forecasts about the future prospects of our country. Many people at the time thought our conclusions were wildly optimistic. They became convinced of this shortly afterwards when there was a recession and the pace of Canada's development was slowed. However, now, after four years of rapid growth, I believe the royal commission was too cautious in its forecasts.
[DOT] (4:20 p.m.)


Mr. Speaker:: Order, please. I regret to interrupt the hon. member, but his time has expired.


Some hon. Members:: Go ahead.


Walter Lockhart Gordon: I am grateful to hon. members, Mr. Speaker, and I shall not delay them for more than a minute or two.

The prospects for this country are tremendous. We must not set our sights too low. I think it is perfectly all right to plan for the short term with reasonable caution, provided we are prepared to revise our estimates upward as we go along and provided we keep our minds and policies flexible and are prepared to change them as conditions change. It is in this spirit that I would urge all hon. members to support the budget that was presented to the house last Tuesday.
One day-and I hope it will be many, many years from now-Chief Justice Ilsley, Mr. Justice Abbott, Walter Harris, Donald Fleming and I, if we are still extant, will welcome the minister to the select circle of ex-Ministers of Finance. In the meantime, I wish him good health, pleasure in his work and every success in his endeavours.


Some hon. Members:: Hear, hear.


Hon. Alvin Hamilton (Qu'Appelle):: Mr. Speaker, my first words will not be addressed to the present Minister of Finance (Mr. Sharp) but to the ex-minister of finance. As I listened to his speech today I felt that I was hearing the swansong of a man who has ambitions for quieter and higher things. I could not help but be impressed by his tendency to try and point out to Canadians some of the objectives we should have. I believe the house will join with me in saying to the hon. member that in his resignation last November he created a niche for himself in the history of this country because, regardless of the reasons for his resignation, we felt that here was a man of principle making a decision on the basis of his own ethics.


Some hon. Members:: Hear, hear.


Francis Alvin George Hamilton: I want to be honest and say that I never disapproved of the hon. member's purposes and objectives in finance policy, but I honestly believed, and still do, that his techniques and methods were those of the previous century.
My comments on the present Minister of Finance will be slightly different. As I read and re-read the budget speech of last Tuesday my thought went to a motion picture called "The Senator was Indiscreet". In this motion picture a senator, who wanted to be a candidate for his party in the presidential race, realized that he had to put forward policies that were pleasant to all groups in the forthcoming convention, so he put forward his slogan as being against inflation, against deflation, and for flation. This was my
April 1, 1966

impression of the budget. In effect, the minister's proposals seemed to be lacking in that desire to take the firm action which was a characteristic, rightly or wrongly, of the previous minister of finance.
I recall, too, that in speaking in the budget debate last year I had some fun-at least it was amusing to me-in saying that the then minister of finance was riding high and the future minister of finance was downgraded. I recall vividly how the then minister of finance went over, put his arm around the then minister of trade and commerce and showed that fellowship which can only be achieved in the House of Commons. Continuing the next day, I think it was, the then minister of trade and commerce spoke in the debate and said he would stand or fall with his colleague the minister of finance.
Well, Mr. Speaker, last Tuesday night at least he was standing in the same place and I cannot help but comment on the little by-play that we saw at that time. If the previous minister of finance was following nationalistic policies that are 60 years out of date, I think it can be said of the present Minister of Finance that he is only 25 years out of date. If, for instance, he thinks the idea of enforced savings-a policy we used during the war- can be implemented in peacetime, I say it is of some doubtful validity. I shall deal with that subject later.
Last year the minister supported his predecessor's proposals. Last year the minister and his predecessor ignored the clear and present warnings which we on this side of the house gave about inflation. Last year the Minister of Finance indicated that he would stand or fall with his colleague. This year I think one can say he has done nothing in particular, and has done it very well.
I was moved during the budget debate last year, which has been referred to as the election budget, to observe that the then minister of finance was sincere. I still hold that view, and I believe that the present Minister of Finance is equally sincere. It is just that there is something lacking in the sense of taking dynamic action. I know that the minister's failure will come as a disappointment to one member of this house, a Liberal member whom I shall not mention by name. This man is loyal to his colleagues; he is a man who believed that the last election was necessary and wrote to his supporters with a forthrightness which one can only admire. I should like the minister to hear what this loyal, dedicated Liberal wrote 23033-2381
The Budget-Mr. Hamilton to his supporters in a letter dated September 13 last:
To my friends . . .:
An election has been called for November 8th. I am pleased that the Prime Minister has decided to hold one.
Canada faces some critical and difficult problems in the next year and I believe that it must have a government with a clear mandate and a working majority to deal with them. The present minority government has achieved much in two and one half years. The country is very prosperous. Many people, including some editorial writers, generally believe that we should have carried on, but I have lived and worked in this parliament and I believe that an election now is in the interests of this country.
It is vital that Canada have a government that can act in the general interest of the country as a whole with the confidence that it won't be defeated tomorrow on some unimportant issue or by accident.
I am particularly concerned about the tough, hard decisions which must be taken to preserve national unity and ensure steady economic progress. These decisions must be taken without more delay or Canada will suffer. To be specific:-
[DOT] (4:30 p.m.)
The government at Ottawa needs a working majority to deal effectively with the provinces-all of which, like Ontario and Quebec, have majority governments. Continuing and difficult negotiations will have to be carried on with the provinces in the years ahead. No government can defend the national interest on the vital problems facing confederation-and on which decisions are being made now-unless it has a clear mandate from all parts of the country.
There is an urgent need to reform our tax structure. Canada's railway system badly needs modernization. Our banking laws are urgently in need of improvement. Decisions in these fields require firm, confident handling, backed by a mandate from the people and a solid backing in the House of Commons.
None of these matters can be put off. We must face them now. If we don't Canada will suffer.
I will again be presenting myself to the Liberal nominating convention as your candidate. I have deeply appreciated your support in the past and I ask for your help in the days ahead.
Then, the signature follows. This letter was not written by the ex-minister of finance. This letter was written by a Liberal, appealing for nomination, who would tackle these hard problems with bold decision and in dynamic fashion.
The tragedy of this budget, Mr. Speaker, is that the minister has not faced up to the fundamental decision which confronts Canada, and that is how to utilize the human and material resources of Canada so that the economy can operate closer to its essential capacity. The minister's policy would leave these human and material resources for ever and ever untapped at a time when consumer demand is there.
The minister is like King Canute; he has ordained that consumer demand should stand
April 1, 1966

The Budget-Mr. Hamilton still and wait for two or three years, instead of courageously attacking the problem industry by industry, region by region. The minister allowed himself to be seduced by a false god, the cult of the gross national product. This doctrine, which is resurrected from time to time, is like the old fashioned mother who, when one of the children is sick, gives everybody in the family castor oil. The quarrel which one must have with the minister is that he has accepted from his advisers the blunderbuss which the Department of Finance steadily loads and hands to the minister whenever there might be what is described as a financial hunting season. Only this time, I wish that some friendly person had printed the words "cow" or "horse" on some of the animals that were shot by mistake.
There were three inflationary pressures in 1965, all of which I tried to outline carefully in my speech during the budget debate last year. It was obvious the money supply had been expanded too rapidly. Now, of course, the inevitable over-correction has followed. It was obvious last year that the plan envisaged was inadequate for certain key industries. It was also obvious that skilled manpower was in short supply in several of our large metropolitan areas. The so-called election budget of 1965 was not directed at any of these problems. As we raised the income tax the other evening, the minister remarked that the 1965 cuts had served their purpose. His budget proposals fell on industries where there is under-capacity, and fell on industries where there is over-capacity, in a blind disregard of existing economic factors in those industries.
It is obvious, for example, that the capacity of the iron and steel industry in this country must be increased. It is obvious that we must expand our capacity in petrochemicals, particularly fertilizers. It is obvious from measures already taken by this government, even before this budget, that something has to be done about the construction industry. It is suffering from under-capacity if it is to meet the demands placed on it by the economy. The minister's proposal, to dampen-that is using his word-the expansion of this industry is merely ensuring a continuing build-up of inflationary pressures for the next year or so. The minister has reduced the demand on the construction industry, quite correctly I believe, but he has failed to outline positive policies to increase the supply of skilled manpower which this industry requires.


On this occasion, Mr. Speaker, I want to make three points about the budget for 1966. First, the minister has rejected the concept of a regionally balanced economic development. The Second Annual Review of the Economic Council places great emphasis on the "relative disparity at average levels of income, as they presently exist, among these regions". This report argues that to get full national output "there must be the fullest and most efficient use of human and material resources available in the regions".
Then, too, the minister has rejected the principle of selectivity in industries. During the period of Mr. Howe we had the rise of the aggregate theory. In essence, it was that if the gross national product had risen, everything was all right in the country, and in every part. This was particularly noticeable to us in the tight money period before 1957. There was a rapid expansion in the industrial area; but the tight money policies were applied to every segment of the economy. No wonder those on fixed incomes, the farmers, the fishermen, rejected that philosophy in the elections of 1957 and 1958. Now, the minister is repeating that same mistake, the castor oil treatment.
With the exception of this new forced loan proposal, the minister has rejected new approaches to meet the economic needs of Canada at this particular moment in our development. Before I suggest any new policies to meet this present need, I should like to discuss two points. These two points are regional and selective policies. According to the Economic Council, and I am referring to page 9 of the Second Annual Review, the total economy is still not working at full capacity. If I may quote just the figures for 1965, the actual output of Canada as a percentage of potential was put at 97 per cent in 1965. Six times in the last 20 years Canada has reached 100 per cent or better, and yet we have this castor oil treatment all across the country when we have not even reached our full potential of material and human resources.
[DOT] (4:40 p.m.)
However, this percentage, though it is a national one, does not tell the real story or the whole story. There are regions in Canada with tremendous amounts of unused capacity and with tremendous amounts of unused human resources. These are mentioned and may be examined in the 40-odd pages of the Second Annual Review, in Chapter 5.
April 1, 1966
My conception of one Canada is where each segment of the economy and each area of Canada can have reasonable opportunity to share in the growth of the nation. At present, in certain areas and in certain industries there are inflationary pressures. I warned the government of these pressures last year, but my warnings were ignored. The government last year introduced a general expansionist budget that had no regard for region or industry. The heating up of the economy in 1965 in certain areas has become alarming. The rise in prices to those who have low or marginal incomes is a disaster.
During the last year the Bank of Canada reacted to the inflationary situation by imposing tighter money restrictions. The government at that time put some slight restrictions on some construction. This budget, however, adds several dampers to the economy. In some sections of the country and in some segments of the economy this is helpful. In other areas where we should be encouraging expansion to fully mobilize the nation's resources, it will not be helpful. Checks in these areas have also been imposed.
Let me illustrate some examples. Last year I warned of the danger of lack of plant capacity in the steel complex, in the petrochemical industry and in the pulp and paper industry. During the last year tremendous efforts by private enterprise have been made in the industries to get that extra capacity. I think that today, the first of April, 1966, we can say that the pulp and paper industry has gone over the hump. But there still remains a weakness in the petrochemical industry with respect to fertilizers, despite tremendous efforts this past year to create new plant capacity.
When the world needs our food producing capacity, Mr. Speaker, we are held back by lack of fertilizers. It causes Canadians no joy to know that we may have to import butter; that by 1969 we may have to import beef; to know that perhaps we may not be able to get all our wheat and cheese out to markets. This is a matter of great national loss, and not just a loss to the farming industry. Yet, under the present restrictions, it is going to be hard to get money for the expansion of port facilities, and for the increase of fertilizer production.
Steel, Mr. Speaker, is the heart of our industrial growth. Not many Canadians know how this industry has expanded in the last ten years or so. I do not want to quote the whole table, but I can quote some figures, particularly from 1954. Our production of
The Budget-Mr. Hamilton steel in Canada has risen from 3 million tons in 1954 to 10 million tons in 1965. That can only be described as fantastic growth.
As we increased our production, with the help of a devalued dollar, our imports of steel began to decline from the high point of 2.9 million tons to 1 million tons. Likewise, as we increased our production, our exports began to climb, from 73,000 tons, to 1| million tons. When one thinks of going from 73,000 tons to 1J million tons in the period between 1954 and 1964, he can see the tremendous effort undertaken by the industry to compete.
Look at what has happened in the last two or three years. Our production is still rising, and the steel plants are increasing their capacity, but our imports have also begun to rise again. They had reached a high figure of 2.9 million tons, and had gone down to a low of 1 million tons. In the last three years they have climbed from 1 million to 3 million tons. Also, our exports which were climbing, stopped in 1965, and have dropped from 14 million tons approximately to 1 million tons.
I know a little about the problems of the industry. All I can say is that these figures indicate to me that there are pressures of an inflationary sort. With the dampening effect of the new budget there will be no encouragement to the industry to expand. The result will be that this will cause higher prices in future, because it is well known that the production of the steel complex is basic to the whole pricing system.
The construction industry is a special case, and I shall not have time to deal with it unless I go a little faster. What has happened, Mr. Speaker, indicates to me that the minister is making the same mistake that previous ministers have made, namely the application of tight money, and also the placing of restrictions on all industries and on all areas, regardless of the need to do so. This is the castor oil type of program that defeated the government of 1957, and that may well bring the present government down to defeat.
I should like to conclude with mentioning some new policies which may be helpful. First, I ask why does the government not use the restrictive items of the budget on a selective basis, industry by industry, and region by region? For example, if it is agreed that the steel industry needs more expansion, why not exempt that industry from forced loans, new capital cost allowances permit cost allowances, etc., in order to stimulate it? Also, if it is agreed that we need more fertilizer plants, why not exempt that type of

April 1, 1966


Mr. Speaker:: Order. I am wondering
whether the house might give consent to
April 1. 1966

Question of Privilege
allowing the hon. member for Qu'Appelle this coming year. I should like to join in this (Mr. Hamilton) to continue until five o'clock. applause from the government side of the
house and congratulate the minister on his


Some hon. Members:: Agreed.	excellent presentation.


Francis Alvin George Hamilton: Thank you. The hon. member for Davenport (Mr. Gordon) suggested it was about time we brought the Gordon Royal Commission report up to date. It is out of date. I had hoped that as a result of the amendments ot the Combines Investigation Act and as a result of the budget provision in 1961 by which 150 per cent write-off provisions were made available to industry for research, that the great companies of Canada would have joined together to keep the Gordon report up to date as a service to the country and to themselves.
One of my personal disappointments was that we did not follow through and complete what we tried to do between 1957 and 1961 when we spent four years getting ready for the Resources for Tomorrow conference, which laid down the direction in which governments and private enterprise should move in making maximum use of renewable resources. The next step was to hold a conference on human resources. We have wasted these past five years. Had we held such a conference we would now have before us clear guidance as to the means of utilizing the capacity of those thousands of people who are today willing to serve our country, and who lack only the leadership to bring them into the work force where they can serve usefully.
The idea that people are handicapped or useless when they are over 65 years of age is altogether wrong. Their potential usefulness is tremendous. If we could employ these people in trouble spots to help us meet the shortage of skilled labour there would be no need to employ the restrictive devices which are used in the present budget. As I say, I think the country would have been well served had this conference on human resources been held. We made it a commitment in 1962. I hope somebody will take up this request and carry it forward, because we do need to marshall all our human resources, so that they are ready to help this nation at any time necessary.


Mr. J. E. Walker (Parliamentary Secretary to Minister of National Revenue):: I am sure the Minister of Finance was gratified the other night to hear the enthusiastic applause from the opposition benches as various measures were brought forward in his budget for


Gordon Minto Churchill: We applauded only one thing.


James Edgar Walker: It was very good. When further measures come up, I suggest the applause will be even more sustained, as a realization of what the budget actually means seeps through.
We all understand that at this time in Canada's economic life firmness, control and a sense of confidence in the management of the country is something for which the people are looking, and something they have found in this budget.
I have other matters to discuss and I shall certainly not cover them by five o'clock. May I call it five o'clock?


Mr. Speaker:: It being five o'clock the house will now proceed to the consideration of private members business as listed on today's order paper, namely public bills and private bills.



PRIVILEGE

[Stage Direction]
MR. MacINNIS-REJECTIONS OF QUESTIONS FOR ORDER PAPER
Malcolm MacInnis: Mr. Speaker, may I rise on a question of privilege occasioned by a note which was delivered to my office and in which your advice was given?
Today I placed before the Clerk of the House two questions for the order paper. In order to explain my question of privilege I should like to read those questions. The first was as follows:
1.	Did the present Minister of National Health and Welfare make a public statement prior to November 8, 1965, to the effect (a) that a new wharf would be constructed at St. Peters to facilitate the loading of pulpwood and (b) that an item would be included in the 1966-67 estimates for this purpose?
2.	Did the minister make a similar statement to the Richmond municipal council in February?
3.	Why has such an item not been included in the 1966-67 estimates?
4.	When does the government anticipate tenders will be called for this project?
The second question is as follows:
1. Did the present Minister of National Health and/or the Minister of Fisheries make a public statement or announcement prior to November 8, 1965, to the effect that a $150,000.00 expansion would be under way at the Lindloff Fish Hatchery, Richmond County, Nova Scotia, during the spring and summer of 1966?

April 1, 1966
Question of Privilege
2. If so, has work on this project begun? If not, when will it begin?
[DOT] (5:00 p.m.)
My question of privilege arises from correspondence just delivered by hand to my office, and the particular letter I refer to reads as follows:
April 1st, 1966.
Dear Mr. Maclnnis:
I regret the necessity of returning the two attached questions for the Order Paper which you handed to me this afternoon.
I have discussed both these questions with His Honour, the Speaker, and I have been instructed by Mr. Lamoureux to indicate to you that it is his opinion that they contravene recent rulings made in the house with respect to the form in which questions should be placed.
It is His Honour's opinion that it is not in order to make inquiries of a minister in areas other than those covered by his administrative responsibilities.
My question of privilege arises out of a long standing practice that ministers, unless they designate otherwise, in speaking outside the House of Commons are speaking for the government. It is directly related to the ministers to whom the questions were addressed, namely the Minister of National Health and Welfare (Mr. MacEachen), and the Minister of Fisheries (Mr. Robichaud).
I would direct your attention, Sir, to the second question I placed on record, where I said, "the Minister of National Health and Welfare and/or the Minister of Fisheries" pertaining to a matter directly under the responsibility and jurisdiction of the Minister of Fisheries. My questions have now been ruled out of order by the same process by which questions I asked during orders of the day over the last several weeks were ruled out of order, namely that it is not the minister's responsibility.
Apparently, sir, I have been labouring under a misapprehension because seemingly government ministers can go outside the house and make any or all statements they wish without accepting responsibility. However, I do not think I have been wrong in interpreting government responsibility and ministerial responsibility in these cases.
Therefore I firmly suggest, with all due respect to you, sir, that the rulings on the particular questions I put forward today give me a bona fide question of privilege to press for answers from the ministers who made these statements, since the statements were made without any indication that they were not speaking on behalf of the government, and especially with respect to the second

question where I stipulated, "and/or the Minister of Fisheries" who is directly responsible in this particular field.
The ruling that has been given today is a carryover from questions asked on orders of the day, and I say to you, sir, it is not in keeping with the practice that has been followed throughout the years that ministers making statements outside the house should be held responsible for them.


Mr. Speaker:: I can assure the hon. member for Cape Breton South (Mr. Maclnnis) that I do not want to discriminate in any way against him. The questions that he sought to place on the order paper were perhaps borderline to some extent, but I did feel they were an attempt, bona fide I am sure, to contravene the ruling which I made a few days ago, in which I firmly believe, and in which I believe I have been reinforced by the studies I have made in recent days of the situation in past months, and, I should say, in past years.
I realize that ministers should be held accountable in some way for statements they make outside the house, but my understanding of the rules and the practice-and there are a number of precedents on this-is that the Prime Minister can be asked whether a statement of policy made outside the house by a cabinet minister does in fact reflect the policy of the government. In this way the minister can be held accountable for a statement of policy which he makes outside, or indeed inside, the house.
I still feel today just as strongly as I did a few days ago that it should not be the policy in the house that ministers be asked to answer questions, whether written questions or verbal questions, in any capacity other than in their official capacities. While considering this matter in recent days it was brought to my attention-and I must say I understood this-that in some instances certain ministers are given areas of responsibility. For example, I might say that the Minister without Portfolio (Mr. Turner) in the present government is given, by acknowledgement on the part of the government, that portion of government responsibility in the realm of transport, is asked questions in that regard, and is expected to answer questions about the Department of Transport although he is not the Minister of Transport.
What I fear is that if we were to adopt the suggestion made by the hon. member for Cape Breton South, which may have been followed in some instances-I appreciate
April 1, 1966

that-we would have questions asked perhaps every day of ministers of the Crown, say, of the Minister of Public Works (Mr. Mcllraith) in his capacity as minister for eastern Ontario-


Stanley Howard Knowles: For Ottawa.


Mr. Speaker:: -and that he would answer a question on agriculture in his capacity as minister of agriculture for eastern Ontario; and the Minister of Northern Affairs and National Resources (Mr. Laing) might be asked a question on external affairs in his capacity as minister from British Columbia. If that were done it seems to me we would be reaching a situation which would make it impossible to determine with any kind of logic, how questions would be put, whom they would be addressed to, and who would be responsible for answering.
When there is any doubt about who is responsible, I suggest to hon. members that questions in such instances should be directed to the Prime Minister (Mr. Pearson), who has a general responsibility. This is what I said at the outset of my remarks, that if there is any statement of policy made outside the house by a cabinet minister, an hon. member who is dissatisfied with the statement and wants to seek additional information, should direct his query to the Prime Minister.
I regret very much that in so far as the particular questions to which the hon. member refers are concerned, I cannot really accept the contention that he has placed before me in his question of privilege, and I assure him that any particular question he places to the Chair, or that he wishes to put through the Chair, will be looked at individually. I can assure him I shall study them as objectively as I can without prejudice of objectively as I can without prejudice of any type or any nature.


John George Diefenbaker: On a point of order, if I might, Mr. Speaker, I think there is a misapprehension here about the nature of these questions and the interpretation that you are placing on them. If ministers can go abroad and make promises and give undertakings, they do so under the principle that the cabinet is responsible for the statements made. Surely there is no way in which a minister can be held responsible for making effusive utterances for political purposes, and promises that are not intended to be carried into effect, unless questions are asked later,
Question of Privilege
else they are given an aura of responsibility to which they are not entitled.
I suggest, sir, you review this matter because otherwise a minister can make any statement, any promise, so long as he is not making it for his own department, and then be above questioning in the House of Commons.


Mr. Speaker:: I am in agreement with the suggestion made by the Leader of the Opposition (Mr. Diefenbaker). I do not want to take a hard and fast position on this. I realize that in some instances some of these questions can be borderline, and I feel whenever there is any doubt an hon. member should be given the benefit of the doubt and allowed to ask these questions. In all such instances members should be given the benefit of the doubt and be allowed to ask their questions. I am quite prepared to review the general situation, and in particular the questions to which the hon. member for Cape Breton South has referred. But I would like to restate my position so far as the general principle is concerned, and I shall review the situation over the week end.


Mr. Maclnnis (Cape Breton Souih):: I have one further word, Mr. Speaker, in connection with your remarks in respect to the questions I placed before the Clerk of the House this afternoon. The remarks you have made quite possibly could apply to the first question if we were to follow the rulings that had been given. However, I would call your attention to the fact that the second question was directed to the Minister of National Health and Welfare and/or the Minister of Fisheries, and under no circumstances could this particular question be ruled out, unless there was something particularly wrong with the wording.


Mr. Speaker:: This is where virtue may come in allowing one and refusing the other; but I shall certainly look into the matter and I appreciate the hon. member's concern about the situation. I can assure him I shall give his representations, and those which have been made by the Leader of the Opposition, every possible consideration.


Malcolm MacInnis: Mr. Speaker, I just want to go back for a moment and review precedents in the house-
[DOT] (5:10 p.m.)


Mr. Speaker:: Order, please. I can assure the hon. member that, with the assistance of
April 1, 1966

British North America Act the Clerk at the table, I already have had an opportunity to look into a great number of precedents. I am sure I am aware of the precedents which the hon. member might wish to bring to my attention, and at the time of making my decision I will take those into account.
It being five o'clock, the house will now proceed to the consideration of private members' business as listed on todays' order paper, namely public bills and private bills.



BRITISH NORTH AMERICA ACT


Stanley Howard Knowles: the second reading of Bill No. C-15, to amend the British North America Act, 1867 (abolition of the Senate).
He said: Mr. Speaker, the purpose of this bill is to abolish the Senate. I realized, when I was given the opportunity to do this in private members' hour today, that it might be difficult to achieve this object in 60 minutes. I now find we have only about 47 minutes, so it will be that much more difficult.
The bill itself, Mr. Speaker, is one which most hon. members have seen on previous occasions, because this is not the first time I have introduced it. Indeed, my arguing for the abolition of the Senate goes back over a period of many years.
The terms of the bill are such that they would amend the British North America Act by striking out those sections which establish the Senate and all those sections which refer to it. However, there are one or two places in the British North America Act where we would need to retain some mention of the Senate, because of certain cross-references. The most notable instance of this is the section in the British North America Act which provides that no province of Canada is to have fewer members in the House of Commons than it has members in the Senate. My bill takes care of this by providing that in future no province would have in the House of Commons fewer members than it had in the Senate just prior to the abolition of the upper house.
May I say, Mr. Speaker, that this bill is not being presented in the context of recent appointments to the other place. Public opinion about those appointments already has expressed itself in various ways. It is not presented out of special concern over the amount of money which it costs to maintain the upper house; neither is it presented in

relation to anything the Senate has done or failed to do in recent months. I present it, if I may do so, in an academic sense; I present it on the basis of an appeal to the common sense of Canadians.
May I put it this way: If we in this House of Commons, or we as Canadians who happen to be here in this House of Commons, were called upon to draft a constitution for democratic government for the people of Canada, I do not know the details of the constitution we might produce, but I am reasonably certain we would start with the principle of democracy. I am reasonably certain we would stick with that principle; we would say that the main thing we should provide would be that the people who would govern the country would be elected by the people themselves.
I submit that, if we worked out provisions for election machinery, somehow bringing together in this capital city 200 or 300 members to represent the people, formulate their laws and provide for their government, having done so we would not then take the further step of providing for some one man to appoint a body of another 100 people, non-elected, who would have the authority to veto the decisions of the elected representatives. Is that not precisely what we have in the kind of parliament we have now?
We have this body, the House of Commons, elected by the people of Canada. Not only are we elected by them, but we are responsible back to them. We are here for only a limited period, following which we have to go back to the people who sent us here. On the basis of that authority-on the basis of our having been elected to act-we have the right to make the laws for the people of this country, to speak for them, and to provide, by our support or otherwise of the executive, for the government of this country. Yet we have as part of our constitution a provision for up to 102 men and women, not elected but appointed by the Prime Minister, who have practically all the authority or powers we have and, indeed, have the power to veto the decisions made in this house.


Bert Raymond Leboe: None of them would be elected.


Stanley Howard Knowles: I say, Mr. Speaker, apart from the kind of interest that mention of the Senate always produces, as has been reflected by the interjection of the hon. member for Cariboo (Mr. Leboe), that this does not reflect common sense, it does not reflect responsible government and it does not reflect the principles of democracy. I think we should take a
April 1, 1966

British North America Act
good hard look at the fact of our parliament's including a body which is not elected by the people of Canada.
I know in this country we tend to take the Senate for granted; it is part of our life. We have snow in the winter and taxes in the spring, and they have rain in Vancouver; these are just facts of Canadian life. So, the Senate is taken that way. However, I say, if we look at it in terms of political theory and in terms of common sense, in my view there just is not any place for a body that is part of parliament, which has all the powers we have, and yet is not responsible to the people of Canada. When a person is put in the Senate he may make mistakes, as members elected to this house may make mistakes; but if a member here makes a mistake he has to go back to his people in the next election.
On the other hand, if you make a mistake in the other place, you stay there-previously it was for life-until age 75. If you go there at age 35 or 40 you have a good many years in which to make mistakes, without any responsibility back to the people of this country. So it is on this basis, namely that common sense makes no provision for such an institution, that I think we should take steps to abolish it and provide for a parliament of Canada consisting, as the principal clause of my bill suggests of the Queen and the House of Commons.
[DOT] (5:20 p.m.)
Some members may ask how we are to achieve this objective if it is a worthy one, as I think it is. I recognize that problems are involved. To do this I think we have to achieve an amendment to the British North America Act, but I believe under section 91 (1) we do have the power in the Parliament of Canada to amend the B.N.A. Act in respect of matters that are federal.
I recognize that to get such a bill passed by parliament, as it is now constituted, would require the approval of this house and the approval of the other place as well. If we pass this bill between now and six o'clock I do not imagine the senators will, with any expedition, set out to approve of our action. This is going to take time, but it seems to me that the time can and will come when, the House of Commons in the name of the people having asked for the abolition of that body that is not elected, that other body will have to take a pretty good look at itself. It may turn us down the first time, but if the House of Commons has taken this stand and goes back to the people, making it one of the
issues of an election, and the people vote for the return of the government of the parliament that wants to abolish the Senate, then I think that moral and legal authority would prevail, and that the House of Commons would be able to take action along this line.
As a matter of fact, this has been made very easy for us by the government on the other side of the house as the result of the attitude taken toward Mr. Lesage's request regarding the upper house in Quebec, although I understand that matter is still in the works. However, I am freely admitting that there is a legal and constitutional problem, while at the same time I am suggesting that this can be done and that common sense calls for us to face up to this problem and do something about it at an early date.
May I now just briefly-because I do want to leave time for others to support this bill -deal with two or three of the arguments that are advanced in favour of our having a Senate. There are those who say we need it so it can give sober second thought to the things that are done in the House of Commons, so that it can review our legislation and check hastily passed or ill-conceived measures. In all frankness, Mr. Speaker, I must ask this question: Why should another body of non-elected people, responsible to no one, have the right to throw out things that we pass in this House of Commons? If we make mistakes, the people to whom we are answerable are not 102 individuals who are not responsible to anybody, but rather to the electors at the next election.
I think this whole idea of a body of non-elected elder statesmen-they are not all elder statesmen now; some are a bit younger, but they are still in the same category of non-elected people-having the right to throw out what we have done in this house is politically and morally wrong.
Another argument advanced in favour of the other place is that it is needed to protect minorities. I do not know what minorities have been protected by the other place, provincial, ethnic or otherwise. I suggest that the place where minorities in this country get their best protection is in the courts or right here in the House of Commons, where you have people who, as I say, have to go back to those same minorities and win their seats at the next election.
Another argument advanced for the retention of the Senate is that it sets up committees that do good work. I quite agree that it has set up a number of committees in recent
April 1, 1966

British North America Act
years that have worked hard on various subjects and have produced some good reports. It is a good idea for us to have people to whom we can assign the job of making surveys, carrying out studies and performing research, but we should do this by setting up commissions or committees to do specific jobs. There is no reason why the people to whom we assign these jobs should be at the same time fully paid on a year-round, lifetime or up to age 75 basis, who have the same legislative authority that we have, in the right to veto the things which are passed in this House of Commons.
There is a place for royal commissions, for research and for inquiries into specific subjects, but let us appoint experts to do that kind of job, and let their appointments be in respect of specific jobs. I do not think these people should at the same time, along with their right to investigate subjects, have the right to veto what we do in the House of Commons.
I know some members will ask why I keep referring to the use of the veto since the Senate does not use it very often. The number of times in history that the Senate has rejected something from this house can be counted on the fingers of one hand, but the power to do so is there and this is a power in excess of the power of the House of Lords in Great Britain, and it is a power in excess of the power of either house against the other in a set-up like that at Washington. The power is there and the Senate can use it year in and year out to veto a piece of legislation that we might pass.
Another argument which is advanced is that it is desirable in a country such as ours to have some means of bestowing honour upon people who have served during their day and rendered particular service to their country. I think there is a place for this, but the Senate is hardly used for that in any discriminating fashion.


Gordon Minto Churchill: Such as services performed during an election campaign?


Stanley Howard Knowles: That seems to be one of the services for which you receive the honour of being appointed to the Senate.
I believe our universities do a better job of honouring people when they bestow honorary degrees. There are other areas of our life where honours are much more appropriately given, so this is not a good argument for the retention of the Senate.

I have tried to discuss this question today, not in the context of some of the feelings which exist about the Senate. If I had brought down my file of letters, which I have received regarding the Senate, particularly in the last few weeks since certain appointments have been made, this would have produced interesting reading but a different kind of debate. I am asking members to look at this issue, not out of any feeling against any particular Senator over there, or any particular prime minister for the kind of appointments he has made, but in light of what is good for a political democracy and for representative government, which we believe we ought to have in this country.
There are those who suggest that the Senate should be reformed. That has been the cry since 1867. Every prime minister who has tried to reform it has failed, and the methods of reform we have had lately have hardly improved it. I think we should look squarely at it as something not to be reformed, but to be done away with entirely.
There are those who say we should elect our Senators. I suppose that would be better than having them appointed; but I submit that parliamentary government has got along just as well in Manitoba and Nova Scotia without the upper houses that those provinces had at the beginning of their histories. I submit that with all of the strains that we now have in Canada between the federal parliament and the provincial legislatures, between and among our various provinces, it would be just a little too much to have one more strain, namely a conflict between two elected houses which would have, in some sense, equal moral authority, which does not obtain at the present moment.
If the Senate were an elected body, I think it would be in the nature of a fifth wheel, adding nothing to our governmental or parliamentary machinery. For these reasons I believe that we should look seriously at the whole question of whether or not we should keep the other house. It is in this spirit that I have presented this bill today. I have tried not to indulge in personalities or in some of those things we say when we talk about the other place. I ask everyone to look at this bill in terms of what is good for representative parliamentary democracy.
In my opinion it would be better if all those who have a say in the laws which are passed in this country were themselves elected representatives, as they are in this House of Commons. For that reason I ask members
April 1, 1966

to support this proposal for the abolition of the other place.


Gordon Minto Churchill: I wonder whether the hon. member will permit me to ask a question, without indicating that I am for or against this bill? Has he considered whether or not the power which resides in the Senate might usefully be used for the protection of the rights of the people, if the growing power of the executive in this country were used to the disadvantage of the liberties of the people?


Stanley Howard Knowles: I recognize the problem my friend the hon. member for Winnipeg South Centre has raised, namely the contest between the executive and parliament. I think the place for the contest to be resolved is right here, between the executive and the elected House of Commons. I think we will have even more problems if, as against the authority of the members of parliament speaking for the people, we have two bodies, namely the executive here and the Senate over in the other place. 1 recognize the problem he has raised, but I think the use of the Senate to resolve that problem would be futile.
[DOT] (5:30 p.m.)


Mr. Richard Cashin (Si. John's West):: Mr. Speaker, I welcome the opportunity to discuss this evening the matter of our political institutions. As we know, in recent months-in fact, in recent years-the political institutions of this country have come in for some severe criticism. I must say, although I suppose it casts a reflection on some of those who are observers of our political institutions, there has been a noticeable lack of any in-depth analysis of the political institutions of this country. I believe this is unfortunate because I feel that those outside parliament could do more than they are doing to shape and inform public opinion on this very important matter.
We are discussing specifically this evening one aspect of our political institutions, namely the Senate. I think however that in this discussion we ought to bear in mind that our political institutions generally were taken 100 years ago from England. The ideals of parliamentary democracy in England and as they have been developed here are indeed very laudable. I believe however that one is not at all unpatriotic in saying that there may be some serious questions which Canadians ought to be asking about the function of our parliamentary institutions. After all, these
British North America Act institutions in our country were formulated and devised in a unitary state and have been adopted in a federal state which has great regional diversity, and the further complication of being bilingual. Perhaps one of the major weaknesses of our political institutions is that they do not permit an ample and proper reflection of this regional diversity in our country.
Therefore, Mr. Speaker, when we are talking about the reform or abolition of one segment of our political institutions, really the more serious and pressing question is their analysis in depth. There are two reasons for my finding it difficult to agree with the hon. member who has introduced this bill. One is that if we are to do what he asks today, I think we would not be accomplishing very much in terms of what needs to be accomplished in reforming and re-examining our whole parliamentary institution.
While this particular matter may be distasteful and offend the principles of democracy as espoused by the hon. member, I believe it is an academic question. I recognize the importance of his arguments but nevertheless feel that because of other practical difficulties, if we allow his distaste to linger a little longer, a man with his knowledge of the rules of this house, his love for parliament and perhaps his agitation in this matter, may be helpful to those on all sides of the house who would like to see reform in a more meaningful sense in our partiamentary institutions. This is one of the main reasons I find it difficult to support the hon. member's bill.
I shall deal with that matter a little later, but I would point out that one feature of the hon. member's bill makes it impossible for me to give it my support. However, Mr. Speaker, I will return to that subject in a moment because it is a very important matter that I do not believe has been discussed. Perhaps I may mention it now. One of the arguments that is used-and I have read the debate that occurred on April 6 two years ago on this matter-was the constitutional guarantees given to the provinces of New Brunswick, Prince Edward Island and Nova Scotia in relation to the number of members they shall have in this house. I would inform the house, for those who are not aware of the situation, that in my view this is no longer a practical matter because some very serious anomalies are apt to develop, particularly in regard to members of parliament from the provinces of Saskatchewan, Manitoba and particularly Newfoundland.
April 1, 1966

British North America Act
At the present time the province of New Brunswick is guaranteed 10 members because that is equal to the number it has in the other place. The province of New Brunswick has not been one of our more rapidly growing provinces in terms of population. The province of Newfoundland, which has been one of our more rapidly growing provinces in terms of population, is guaranteed seven members. However, Mr. Speaker-and I have given this matter some study-it is probable that in the next census the growth rate of this province will be fourth in Canada, and consequently it will lose a seat in the House of Commons and will have only six members.
At the same time, in relation to the province of New Brunswick, its population will have increased to such a point that on the basis of the actual population in the province, applying the same divisor as to the province of Newfoundland, it will be entitled to eight members. I believe this is a terrible inequity and I am surprised that the learned member for Winnipeg North Centre (Mr. Knowles) did not realize this when he introduced that clause in his bill. For this reason I cannot support the hon. member's bill and I suppose no Newfoundland or Manitoba member could support it, because the province of Manitoba would find itself in a very embarrassing position if this bill were passed.
I am glad the hon. member for Winnipeg North Centre is here when I oppose his bill because I would not want any member of my party to be able to go into his province and say about this man who can do so much for parliamentary reform, "You have less members in the House of Commons today because of a bill introduced and passed in that house by your own esteemed member." I assure you, Mr. Speaker, this is my sincere motivation in opposing this bill.
The rate of growth of Manitoba's population is at the present time much the same as the province of Newfoundland. What will happen? Perhaps it will take two censuses to establish this pattern, but Manitoba will begin to lose members in this house at a time when they may have a population almost twice as great as that of New Brunswick. I think this would be a terrible situation.
I believe I have illustrated this great weakness in the bill introduced by the hon. member for Winnipeg North Centre and hope that at some future date when the bill is re-introduced he will have redrafted it. In doing so he would perhaps be performing a service if

he could find a formula to remove the inequity that I suggest would occur with regard to the growth patterns of this great country.


Stanley Howard Knowles: Mr. Speaker, would the hon. member permit a question?


Richard Joseph Cashin: Yes.


Stanley Howard Knowles: Is the hon. member willing to enlist the services of his colleague the hon. member for Antigonish-Guysborough (Mr. Stewart) and others in drafting an appropriate amendment?


Richard Joseph Cashin: With regard to anything that will be for the good of Newfoundland and Manitoba-because they are both notorious provinces in regard to their members-I would enlist the support of any member of this house to help the hon. member for Winnipeg North Centre in drafting a bill. I was not aware that he needed such help because I believed that was an oversight on his part. However, Mr. Speaker, if there is one man who can give the hon. member for Winnipeg North Centre sound advice, it is the very distinguished member for Antigonish-Guysborough.
[DOT] (5:40 p.m.)
As I have mentioned, this is a very serious weakness in the bill. We should consider the reasons for instituting the other place as they were enumerated in 1867. Perhaps one reason-it is not the most prominent one but I am sure it was in the minds of the legislators at that time-was the idea that we should have the same kind of system in Canada as they had in the United Kingdom. It is a pity that we, in Canada, have not been able to bring about the changes in our system that they have been able to bring about in the United Kingdom. One of the changes brought about in the House of Lords has been referred to, but they have also brought about some meaningful changes in the House of Commons, far beyond anything we have been able to accomplish here.
This is another reason for my opposition to this bill. I should like to see the energies of the hon. member for Winnipeg North Centre (Mr. Knowles) devoted to this more important problem. There is another reason to which reference has been made by the hon. member, and that is the protection of minorities, the sort of guarantee of territorial equality for the maritimes or Upper and Lower Canada. If these guarantees of territorial equality had not been given at the time of confederaion, then it is quite probable the
April 1, 1966	COMMONS
maritimes and Lower Canada would not have federated.
I have just illustrated, I think, that these guarantees are no longer practical today. While they may, in effect, give guarantees to certain provinces of Canada they do so to the jeopardy of the smaller provinces. It is understood by some of the smaller provinces that, in relation to Ontario and Quebec as well as other larger provinces, they should have less members, but this is distateful to Manitoba and Newfoundland. In that sense, if this reason for territorial equality no longer exists, then before we do anything about Senate reform we should get that particular clause amended.
There has been a discussion over a period of years, off and on, of the suggestion that we ought to have reform of the other place. It seems to me that reform of the other place would not now be very attractive to hon. members of this house, nor indeed would it be attractive to the country generally because of the fact, as was pointed out by the hon. member, the other place possesses such powers. I suggest, therefore, to hon. members that since we do have the situation in which the other place possesses a great deal of power which it does not use, our only interest in taking the drastic step of abolishing the other place is really of academic interest. If we were to pass this bill today, we would And we have a lot of things to work out.
I do not believe the hon. member for Winnipeg North Centre has really thought through this problem. I see the hon. member for Saint John-Albert (Mr. Bell) in the house. I am sure that in any discussion of reform of the other place we would have the hon. member for Saint John-Albert and the hon. member for Antigonish-Guysborough (Mr. Stewart) crossing party lines and tackling both myself and the hon. member for Winnipeg North Centre. We would have questions of regional interest, the interests of New Brunswick and Nova Scotia, which would of course be predominant over the political interests of these two distinguished gentlemen. So, too, the hon. member for Winnipeg North Centre and I would be allied on the other side of the question.


Thomas Miller Bell: May I ask a
question in order to assist the hon. gentleman? Was Newfoundland aware of this disparity when she came into confederation?


Richard Joseph Cashin: I think at the time Newfoundland came into confederation, this was
DEBATES	3763
British North America Act not an issue. Perhaps the first time it has really been made an issue in Canadian politics, in a formal sense, has been in the introduction of this bill.


Stanley Howard Knowles: Would the hon. member permit a queston? Does he not realize that the clause in my bill about which he is talking is merely carrying forward something that has been in the British North America Act for 50 years? It is not something which is being introduced today.


Richard Joseph Cashin: Yes, but it is a situation with which I do not agree. I do not believe any Newfoundlander or Manitoban could agree with it. I am quite serious about this. At the next redistribution, we are going to make an issue of it.


Stanley Howard Knowles: Would the hon. member permit one more question? Has he not put his finger on the point? The major purpose of this bill is to get rid of the Senate, but the matter with which my friend is dealing relates to distribution and may be dealt with at the next redistribution.


Richard Joseph Cashin: Whether or not the hon. gentleman is getting rid of the Senate, I think he is perpetuating an unpleasant situation. I think his bill could be drafted in a much better way.


Mr. Stewart:: May I ask the hon. gentleman a question? I think his time is just about up, but I want to ask him this question. It is sometimes suggested that one of the better purposes performed by the Senate is that it permits a prime minister a good deal of flexibility in reshaping his cabinet. I can ask this question of the hon. member for St. John's West without, I hope, inviting too political an answer. I thought of addressing the question to the hon. member for Winnipeg North Centre, but I did not dare to do so. Is there some validity in this argument?


Richard Joseph Cashin: Perhaps in certain instances; but I do not think it is of such prime importance, at least to the hon. member for St. John's West, as to be dealt with further at this time.
In conclusion, I should like to say, as I said at the beginning, that I like the opportunity to talk about our institutions. I appreciate the sincere interest of the hon. member for Winnipeg North Centre in reform generally. While there are indeed some anomalies in the other place, I really do not see that any purpose would be accomplished by reform at
3764	COMMONS
British North America Act the present time. So long as it exists in its present form, particularly at a time when there is a great deal of criticism of parliament generally, we could serve a better purpose by having a discussion of some of the fundamentals.
I recall some views of my colleague, the hon. member for Antigonish-Guysborough, when he referred to the hon. member for Winnipeg North Centre as holding some congressional-like views. I think, in this case, the hon. member for Antigonish-Guysborough is being a bit of a traditionalist. However, this could be the subject of debate on another day. In such a debate I would find myself agreeing with the hon. member for Winnipeg North Centre.


Stanley Howard Knowles: Would the hon. member permit just one more question? Does he favour the abolition or the retention of the Senate?


Richard Joseph Cashin: I favour a thorough-going reform of parliamentary institutions. I think that we cannot approach part of the problem without looking at the over-all problem. If we are prepared to have a meaningful and in-depth analysis of our institutions, then I am prepared to examine all points of view. I think there is a very good case to be made out for the statement that our institutions in this country are not as effective at this time as they should be. I decry much of the criticism of our institutions which deals in personalities. I think that this is superficial. I do feel that we really have not gone into these matters in depth, and I would welcome the opportunity of doing that and listening to the views of one of the more informed members of the house, the hon. member for Winnipeg North Centre.
[DOT] (5:50 p.m.)


Mr. C. A. Gauthier (Roberval):: Mr. Speaker, I want to rise to support the bill of the hon. member for Winnipeg North Centre (Mr. Knowles) because long before I came to the house, I felt that if a referendum were held throughout the country, 95 per cent of the people would be in favour of abolishing the Senate. That is the question of the day. We are no longer in 1887 but in 1966 and we should get in step with the modern world.
I understand that today this body is not suited to take a vote. On the other hand, a vote should be taken on that bill and I wish most of the young members were here and the older ones, who keep hoping to go to that

DEBATES	April 1. 1966
dormitory for a rest, could be put aside. I wish the young members were here to discuss frankly our modern government.
I think, Mr. Speaker, that the great majority of the young members would be in favour of abolishing the Senate completely.
It would be one of the main reforms to make in our parliamentary system because, especially in view of the way appointments are made today, we have always considered the Senate a little as a cemetery of fossils. If only members who worked hard in politics, who devoted themselves to politics, were sent there, or even better, instead of being sent there, they should be paid a good pension and allowed to end their days among their family. But we force them to sit there. Old people of 75, 78, and 80 years old can be seen there. It is inhuman to keep old people there. Let us give them their pension and send them to rest quietly at home.
Today, more than that is done. Among the appointees are political organizers who never sat in this house, small politicians, not old but in the prime of life. They are sent to sit there and that is the greatest scandal of modern times, especially if you consider the appointments which have just been made and how they were received by the people. The public is disgusted.
Admittedly, an old man could be sent there to rest but sending a man in the prime of life there to sleep is to sacrifice him. And if he lived to be 80? That is why we support the complete abolition of that body.
The previous speaker said that it was an academic question. When I look at this, it is much more than an academic question. It is an economic question. We should not consider it only from an academic standpoint but ask ourselves how much we could save by abolishing that place, and that would be quite an amount.
Now, if only the legislation governing the Senate were improved so that senators would have to be elected by the people, like it is done in some countries.
If they want to look after public affairs and continue to legislate for the people, then they should go before the people.
For all those reasons and many others-this is such an interesting subject that it would take at least 15 days of discussion to say all we have to say-we shall vote for this bill.
When I see an hon. member who is getting on in years, I respect him. He has marvellous ideas. One always thinks of one's last resting
April 1, 1966
place. But when I see a young one like the previous speaker arguing for the retention of the Senate, I am wondering if he does not have somebody to switch him there, if you will pardon the expression.
Mr. Speaker, even if someone wanted to send me there, I would not go, because I am too active in life. I want to keep my freedom and, at the age of 55 or 60, I want to be home, peacefully watching over my business; that is all. I do not want to lose valuable time in the Senate.
For all those reasons, Mr. Speaker, I strongly support Bill C-18, like all members of my party.
I do not wish to speak any longer, because I realize we have only three minutes left and I ask all hon. members to take the vote on this bill.
LEnglisKl


Mr. Grant Deachman (Vancouver Quadra):: Mr. Speaker, I am delighted to have the opportunity of talking out this bill this evening because had I not risen in my place to see this bill through six o'clock, the Senate I am sure would no longer have existed on the morrow. I certainly hope that my party and my Prime Minister will see fit to reward me for this service to the other place in a way in which they would not otherwise be able to reward me had I chosen to stay in my place.
British North America Act
I want to say that the argument of my hon. friend, the hon. member for Winnipeg North Centre (Mr. Knowles) was ably presented in this house, but being an abolitionist, it appears he also wishes to abolish the Senate. I commend to him that he look again at the old institution, so that when this bill is again reached in the order of public bills, we can debate this question perhaps a little differently.
Also, there are in the library some good books about the Senate. I commend to the hon. member the use of the library. I see him there often. I commend to him a book entitled: "The Modern Senate of Canada", by F. A. Kunz, published by the University of Toronto Press. I commend to him page 368 particularly. Also, in that book he will find many anecdotes, incidents and references respecting the old members of the old C.C.F. and New Democratic Party which have sat in the house over the course of the years. In the book are given pages of Hansard.


An hon. Member:: Six o'clock.


Grant Deachman: Had I been going to speak longer on the subject I should have brought with me stories going back to 1926 with which to regale the hon. member.


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


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]


Monday, April 4, 1966