1967-02-14

SUPPLEMENTARY ESTIMATES (E) 1966-67

[Stage Direction]
A message from His Excellency the Governor General transmitting supplementary estimates (E) for the financial year ending March 31, 1967, was presented by Hon. E. J. Benson (Minister of National Revenue and President of the Treasury Board), read by Mr. Speaker to the house, and referred to the committee of supply.

[Stage Direction]
Sixth report of standing committee on justice and legal affairs-Mr. Cameron (High Park).

Mr. H. E. Gray (Essex West):: Mr. Speaker,
I have the honour to present the twentieth report of the standing committee on finance, trade and economic affairs, in English and French.

This report includes a copy of the minutes and proceedings concerning the establishment
of Canada Deposit Insurance Corporation.
[Note: Text of the foregoing reports appears in today's Votes and Proceedings.]



DOMINION-PROVINCIAL RELATIONS INQUIRY AS TO CONFERENCES ON FINANCIAL AND CONSTITUTIONAL MATTERS

[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 a question arising out of the exchange of letters between himself and the premier of Quebec. Pending the convening of the suggested conference dealing with the urgent matter of protecting investors in corporations, particularly those under federal jurisdiction, what steps is the government taking at this time to apply existing federal authority; and will the Prime Minister say whether any federal investigation is
taking place at the present time into the North American General Insurance Company which operated under a federal charter and federal jurisdiction?
Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, a number of questions were asked about the North American General Insurance Company at the time this company suffered as a result of the failure of its parent, the Prudential Finance Company. I think I answered those questions adequately at that time. If there are any further questions the right hon. gentleman would like to ask I will endeavour to answer them.


Mr. Diefenbaker:: Mr. Speaker, I just asked what steps are being taken now. Will the minister say what steps are being taken to assure foreign investors of the security of Canadian companies, other than the distribution of the Prime Minister's statement of February 1 by the Canadian consul general in New York to United States business leaders?


Mitchell William Sharp: Mr. Speaker, the question is of such a general character I am unable to follow it. It may be capable of answer but I think it should be more specific before I undertake to reply.


John George Diefenbaker: Is the minister aware of the fact that the consul general in New York, in order to assure United States businessmen of the security of Canadian shares and stocks, had the Prime Minister's speech distributed to United States business heads? That should be simple enough even for him to understand. When he is answering that question will he also state whether there has been any suggestion that in order to reassure businessmen in the United States regarding Canada's attitude, the Minister without Portfolio be sent on a speaking tour of the United States?


Mitchell William Sharp: Mr. Speaker, it is quite clear that the right hon. gentleman intended to make a statement. He did not ask for my comments.


Some hon. Members:: Hear, hear.


John George Diefenbaker: You haven't got an answer. You did not even know about it.
February 14, 1987

Inquiries of the Ministry


Mr. T. C. Douglas (Burnaby-Coquillam):: supplementary question, Mr. Speaker. Further to the exchange between the Prime Minister and the premier of Quebec regarding the federal-provincial conference on financial institutions and securities, I would ask the Prime Minister this question. In addition to the whole question of deposit insurance, what other items does the federal government propose or intend to suggest be placed on the agenda for this conference?


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, the proposed conference will cover the work of our financial institutions in a general way. We will be communicating later today with all the provinces, and if they have detailed items to suggest for these meetings they can make them known to us. There are discussions going on, I believe, at the present time among the officials of the various governments that will be concerned in working out the agenda for the ministerial conference.


Thomas Clement (Tommy) Douglas: Mr. Speaker, may I direct a further supplementary question to the Minister of Finance and ask him how many of the provincial governments have so far officially informed the minister that they intend to introduce legislation making it mandatory for the financial institutions coming within their jurisdiction to bring themselves within the purview of the legislation with which we will be dealing later today.


Mitchell William Sharp: The province of Ontario
through Mr. Rowntree, its minister concerned with these matters, indicated in the Ontario legislature that it would require all Ontario companies to be covered by federal deposit insurance. The attorney general of British Columbia, Mr. Bonner, made a statement to the effect-I have not had any confirmation as yet-that this is the intention of his government. I have communicated with all the other provinces and drawn to their attention the statement I made on second reading. I have not had replies other than those I have mentioned.


Hon. Michael Siarr (Ontario):: Mr. Speaker,
I have supplementary question for the right hon. Prime Minister. In view of the fact that he has acquiesced in the suggestion made by Premier Johnson of Quebec as to the holding of a conference on deposit insurance, would the Prime Minister reconsider his position in
[Mr. Diefenbaker.)

respect of Premier Robarts' call for a conference on our constitution, which would be very appropriate at this time?


Lester Bowles Pearson: In the first place, Mr. Speaker, it is not a conference on deposit insurance. In the second place, it is a conference to deal with a matter for which we have already been preparing with the provinces. Premier Johnson's suggestion is that we^ might have that meeting earlier than had been contemplated. Third, there is no connection whatever between a conference on constitutional matters and a conference on financial matters.


Michael Starr: Mr. Speaker, does not the Prime Minister think that a constitutional question is one that comes within the purview of the provinces, or is it only within the jurisdiction of the federal government?


Lester Bowles Pearson: It is also-


Mr. Speaker:: Order, please. I would think the question as asked is not acceptable.


Lester Bowles Pearson: Mr. Speaker, perhaps I should point out, as it is important, that there is also a difference between the two situations, in that Mr. Johnson asked the federal government to call the conference.


Some hon. Members:: Hear, hear.


Michael Starr: A further supplementary question, Mr. Speaker. Would not the Prime Minister take the initiative in respect of the call of Premier Robarts and have the federal government, now that we are in our centennial year, call a conference on the constitution?


John George Diefenbaker: We have asked for it over and over again.


Lester Bowles Pearson: Mr. Speaker, we have already indicated that in our view this is not the moment for a full conference on the amending of our constitution, until all the preparatory work has been completed.


John George Diefenbaker: A supplementary question, Mr. Speaker. What is constitutionally wrong with a provincial government convening a conference, in the absence of the federal government taking the action it should?


Lester Bowles Pearson: Mr. Speaker, the provincial governments do that every year.
February 14, 1967	COMMONS



EDUCATION


[Stage Direction]
On the orders of the day:
Mr. Raymond Langlois (Meganiic):: Mr. Speaker, I should like to direct a question to the Prime Minister in connection with the answer received to my question No. 2,090 concerning our external aid program. The government answered that on an average each student under the foreign aid program cost the government $5,467.29 per annum. Does the federal government contemplate changing its present policy in order to accommodate Canadian students and provide them with about the same amount of money, that is $5,500 per annum, to attend Canadian universities?


Mr. Speaker:: Order. I fail to see that this is the kind of question which should be asked at this time. The matter does not appear to be one of immediate urgency, and I suggest that the hon. member place it on the order paper.


Raymond Langlois: I placed a question on the order paper on October 25, Mr. Speaker, and it took the government so long to answer it that I hesitate to put down another. In the present circumstances, when a good deal of discussion is taking place at university level-


Mr. Speaker:: Order. The hon. member
knows his remedy. If he feels there is real urgency attaching to it he can debate it this evening.


Raymond Langlois: Ten o'clock, Mr. Speaker.



REQUEST FOR STATEMENT ON STUDENT SCHOLARSHIP PLAN

[Stage Direction]
On the orders of the day:
Mr. E. Nasserden (Roslhern):: I have a question for the Prime Minister. I should like to ask how long we must wait for an announcement with regard to the Prime Minister's urgent desire to provide 10,000 scholarships for Canadian students.


Lester Bowles Pearson: Before long, Mr. Speaker.



VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
Mr.  A. B. Pallerson@Fraser Valley: I have a question for the Minister of Veterans
Inquiries of the Ministry Affairs, of which I gave him verbal notice yesterday. Can the minister advise the house when he expects to be in a position to table the report of the commission established to inquire into veterans pensions and make recommendations with regard to them?


Hon. Roger Teillel (Minisler of Veterans Affairs):: According to my most recent information it will take some little time yet, because of a printing delay. But I will inquire again and obtain this information for the hon. member.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. Heward Graffiey (Brome-Missisquoi):: In view of the acute housing shortage now facing this nation I should like to put a question to the Prime Minister. Is the government seriously considering the recommendation made to it last week end that a ministry of housing should be established?
If not, is the government considering any other reorganization plan for the direction of housing policy?


Mr. Speaker:: Order, I would think the question is of too general a nature to be asked now. I fail to see how it could properly be asked at this time.


William Heward Grafftey: May I then direct another question to the Minister of Labour. In view of the critical housing situation at the present time can the minister inform the house when he expects to bring his cross-country study groups and symposia to a conclusion so we may get some action?


Hon. J. R. Nicholson (Minisler of Labour):: When the hon. member has concluded his histrionics and asks a new question, I will gladly give him an answer. I have already told him when the symposium will be brought to a conclusion.


William Heward Grafftey: The minister seems irritated. He is not as irritated as the thousands of Canadians who are looking for homes.


Mr. Speaker:: Order.


William Heward Grafftey: A further supplementary
question, directed to the Minister of Manpower and Immigration. In view of the record levels of immigration we have experienced and the consequent need for new housing, has
February 14, 1967

Inquiries of the Ministry the hon. gentleman impressed on his colleague, the Minister of Labour, the urgency of announcing this new policy very soon?


Mr. Speaker:: Order, please. I do not think the supplementary question is sufficiently urgent.


William Heward Grafftey: The urgency is that thousands of Canadians are looking for homes, and they want action. Is that not urgent?


Mr. Speaker:: I doubt whether the problem can be solved by asking a question at this time, though.



INCOME TAX


[Stage Direction]
On the orders of the day:
Mr. C. S. Smallwood (Battle River-Camrose):: I have a question for the minister of National Revenue. It arises out of a letter I have received from one of my constituents complaining that all the 1966 farm and fishery income tax forms sent to the post office in Lloydminster, Alberta were in the French language.


Some hon. Members:: Oh, oh.


Clifford Silas Smallwood: Can the minister explain why all these forms were sent to the Lloydminster post office, Alberta, in the French language?


Hon. E. J. Benson (Minister of National Revenue and President of the Treasury Board):: I did not realize that my department was taking bilingualism so seriously, but I will be pleased to look into the matter.


Clifford Silas Smallwood: Is this the Prime Minister's way of promoting bilingualism in western Canada?


Some hon. Members:: Oh, oh.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. P. B. Rynard (Simcoe East):: I have a question for the Minister of National Health and Welfare. In view of the deep anxiety caused by recent disclosures of the effects of cigarette smoking respecting the cardiovascular system and lung cancer, will the minister advise what further steps are being taken to control the consumption of cigarettes and
[Mr. Grafftey.l
decrease the mortality rates from these diseases?


Hon. A. J. MacEachen (Minister of National Health and Welfare):: Mr. Speaker, the department's health and education program concerning the well recognized and controllable hazards in connection with smoking, which are mainly cardiovascular and lung diseases will be continued. In addition, further research is being undertaken to learn more about the habit of cigarette smoking. There are a number of other programs in the department in the general area which are being accelerated.


Mr. W. B. Nesbitt (Oxford):: I have a supplementary question, Mr. Speaker. Has the minister allocated any funds for research in this regard to try to remove the offending carcinogens from cigarette tobacco so the industry may not be ultimately destroyed or severely damaged?


Allan Joseph MacEachen: I should like to take this particular question as notice.


Mr. Eric A. Winkler (Grey-Bruce):: I should like to ask the Minister of National Health and Welfare if he can inform the house whether there has been any increase in the program of research in the cardiovascular field?


Allan Joseph MacEachen: Mr. Speaker, the relationship between cigarette smoking and lung and cardiovascular diseases has been demonstrated by recent studies released by the department. The research program in this general area is being continued and as well a chronic disease program is being developed.


Eric Alfred Winkler: My question was in relation to the request of Canadian researchers who met some weeks ago at the Chateau Laurier in Ottawa.


Raymond Langlois: I have a further supplementary question for the Minister of National Health and Welfare. After the information has been made available as a result of these tests and inquiries, is it the intention of the government to amend the Tobacco Restraint Act so it will become more efficient and more practicable today?


Allan Joseph MacEachen: Mr. Speaker, the question is too vague for an intelligent answer at this moment.
February 14, 1967	COMMONS



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. Harold E. Winch (Vancouver East):: My
question is for the Solicitor General. On several occasions on orders of the day the minister has been asked what consideration has been given to the release of two Vancouver trade unionists who are now serving sentences resulting from trade union activities. Can the minister inform the house now whether this consideration has reached a conclusion, and if so when will the men be released?


Hon. L. T. Pennell (Solicilor General):: Mr. Speaker, the royal prerogative of mercy has been extended to the two men in question and the balance of their sentence, which was due to expire on March 31, will be remitted as of February 15.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Hon. Gordon Churchill (Winnipeg South Centre):: I have a question for the Secretary of State for External Affairs, who is now an advocate of quiet, old fashioned diplomacy. Why did the minister not arrange a meeting with Messrs Wilson and Kosygin a few days ago to consider reconvening the Geneva conference on Viet Nam? Are these gentlemen not yet aware of the minister's assessment of his importance in foreign affairs?


Mr. Speaker:: Order, please.


[Stage Direction]
On the orders of the day:
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, I have a question for the Secretary of State for External Affairs. I have notified him of the subject matter, if not the precise question.
Does the government intend to make any representations to the government of Portugal about the recent reintroduction of a decree providing for the exile outside of metropolitan Portugal of political prisoners, thereby reviving fears of the use of the concentration camps of the past?
Inquiries of the Ministry


Mr. Speaker:: Order. I wonder whether the hon. member would suggest that this is a matter of such urgency that this question should be asked today on orders of the day.


Francis Andrew Brewin: Your Honour has put a question to me. I think it is a matter of very great urgency because of the fact that many of the people languishing in jails in one of our allied countries are threatened with deportation or exile to concentration camps outside Portugal. This is a matter that concerns all people who are interested in the liberty of human beings and in human rights.


Gordon Minto Churchill: Mr. Speaker, on a point of order, would you address a question to me? I should like to make a speech, too.


Mr. Speaker:: Perhaps that is why I did not put a question to the hon. member.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the orders of the day:
Mr. R. N. Thompson (Red Deer):: I have a question for the Minister of Transport. It has to do with transportation by the Canadian National Railway of school students, scout troops and great numbers of other young people who are planning to visit Expo this summer. Some of these people have waited for ten months to get a reply from the company. Can the minister say how soon this transportation problem will be solved?


Hon. J. W. Pickersgill (Minister of Transport):: If the hon. member will let me have the data, and if he has not had a reply, I will do what I can to see that a reply is sent by the railway.



QUEBEC WINTER GAMES-NON-ATTENDANCE OF SECRETARY OF STATE

[Stage Direction]
On the orders of the day:
Mr. Robert McCleave (Halifax):: Mr. Speaker, I have a question which is appropriate for Valentine day which I address to the Secretary of State. In view of the fact that the minister for cultural affairs for Quebec, Hon. Jean-Noel Tremblay, has said that his heart belongs entirely to the Secretary of State, or so reports the Montreal Gazette, would she now confirm her regret that she did not go to Quebec city over the week end, where her department provided $700,000 in centennial funds for the winter games for
13008	COMMONS
Inquiries of the Ministry which no credit seems to be given to the hon. lady?


Hon. Judy V. LaMarsh (Secretary of State):: Mr. Speaker, I had suspected for a long time that the gentleman in question was a man of great cultural achievement. Now, of course, he has proven it. I should like to say that like my hon. friend he will have to stand in line, and I thank him for the valentine.



HISTORIC SITES AND MONUMENTS


[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and Victoria):: Mr. Speaker, my question is for the minister of northern development. May I ask him whether he is in a position today to reply to a question I posed some days ago with reference to the charge that one Jeremy Akerman had been laid off from his position as an archeologist at the fortress of Louis-bourg project because of political activity on behalf of the New Democratic Party. The minister will recall that he promised me some days ago that he would investigate the matter.


Hon. Arihur Laing (Minister of Indian Affairs and Norihern Development):: Mr. Speaker, I want to thank the hon. member for drawing this matter once more to my attention. The hon. lady member for Vancouver-Kingsway asked yesterday whether I would give a reply.
Mr. Jeremy Akerman was employed by us under contract as a junior archeologist on the Louisbourg project. It became apparent very quickly thereafter that he was interested in other things, when he made a very heavy attack on the operations of the federal fisheries department. My officers drew this to my attention and said that in light of the fact that this was not affecting his work at Louisbourg they did not intend to discipline him; and I agreed with that entirely.
Some time later he went on television and radio attacking his own senior officer in archeology, and my officers have now advised me that they have not the intention of renewing his contract when it expires; and I agree with that, too.
I am now reliably told, Mr. Speaker, that on February 13 Mr. Akerman accepted a nomination from the New Democratic Party in a riding in the province of Nova Scotia. From this I can only conclude that this young
[Mr. McCleave.)
DEBATES	February 14, 1987
man is determined to spend all his life digging into the past.


Thomas Clement (Tommy) Douglas: Mr. Speaker, I am sure that if he were to dig sufficiently into the past he would find the minister there. May I ask the minister whether he has confirmed by examining the text of the alleged radio and television programs that such an attack was made by this man upon his superiors; and has the minister himself checked to see whether it is true that he did become a candidate for public office? I would also ask the minister whether it is forbidden for civil servants to accept nomination for public office.


Arthur Laing: Mr. Speaker, I am assured by my officers that their decisions in both these affairs had nothing to do with any political activity this man was carrying on at all. The contract expires on March 31, 1967 I think, and I assume he will continue to work for us until then. Their decision not to renew his contract had nothing at all to do with his activity but only with his professional capacity.


Robert Muir: A supplementary question, Mr. Speaker. Was the gentleman in question a civil servant?


Arthur Laing: No; he was working for us under contract, a term contract.


Thomas Clement (Tommy) Douglas: A further supplementary
question. If the fact that he might be a candidate or that he had indulged in political activity had nothing to do with the minister's decision, what relevance has it in the minister's remarks today?


Mr. Speaker:: Order, please.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
John Robert (Jack) Nicholson: Mr. Speaker, on two recent occasions, latterly on February 9, the hon. member for Kootenay West inquired whether Donald Swait, secretary treasurer of the Seafarers International Union of Canada, had been named a co-conspirator in a United States court in Chicago where five persons are charged at present with the bombing of a Canadian ship, with the bombing of port tracks and the interstate transportation of dynamite for this
February 14, 1967	COMMONS
purpose. The hon. member also asked whether I had any information to give to the house regarding this matter.
In reply, Mr. Speaker, I would say that I have obtained a copy of a lengthy indictment in the United States district court, northern district of Illinois. In this indictment, which is dated January 17, 1967, five persons are named as defendants. Six other persons, among them Donald Swait, are named as coconspirators but not as defendants in the charges referred to in the indictment. Swait is not charged with an offence. He is named as a co-conspirator and I have been given to understand that he denies any complicity in the conspiracy.



CANADIAN CENTENNIAL


[Stage Direction]
On the orders of the day:
Mitchell William Sharp: Mr. Speaker, yesterday the hon. member for Perth asked me a question about the centennial issue of Bank of Canada $1 bills. He asked whether I could assure the house that there will be a sufficient supply to satisfy the demand.
I should like to reply, Mr. Speaker, that there is no reason why anyone should pay a premium for these notes. The Bank of Canada has already issued 518,000 of the notes in response to requests, and I can assure the house that the Bank of Canada will arrange for a sufficient supply to satisfy all demands.


Raymond Langlois: Mr. Speaker, a supplementary question. Does not the minister think it is a very serious undertaking to issue credit notes with no serial numbers on them?


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



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, I have a question for the Minister of Labour.
In view of the fact that union recognition by the Canada Labour Relations Board of the C.B.C. employees has become urgent and important as a result of the statement by a

Inquiries of the Ministry fourth labour organization to the effect that the C.B.C. employees should join them, is the Minister of Labour in a position to say whether the report of the special cabinet committee set up to consider this question has been supplied to the members of the Canada Labour Relations Board? Could he also inform us whether this report will be tabled in the house?


John Robert (Jack) Nicholson: No, Mr. Speaker. The report will not be tabled in the house, and the cabinet does not instruct the Canada Labour Relations Board.


Gilles Grégoire: Mr. Speaker, I should like to put a supplementary question.
Since this problem has taken on a national importance and is rather a matter of principle in labour relations, does the minister intend to intervene in this particular dispute and to put forward the terms and conditions pointed out to all Quebec members by the C.N.T.U.?


John Robert (Jack) Nicholson: Mr. Speaker, if the hon. member would draw to my attention any sections of the act he thinks I should consider I shall be pleased to look into the matter further.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Hon. Marcel Lamberi (Edmonton West):: Mr. Speaker, because of the government's decision to soon bring in Bill No. C-267 and its related resolution, I ask the Secretary of State when she anticipates being able to answer question No. 2012, which I put on the order paper on October 12. I feel that perhaps the hon. lady could rise to the occasion and answer the question, as she has done on a previous occasion this afternoon.


Julia Verlyn (Judy) LaMarsh: Mr. Speaker, I do not know why that information has not been available since October 12. Of course it must come from practically every agency and crown corporation and all branches of the armed service and so on. It is difficult to answer, but I shall inquire into it.


Marcel Joseph Aimé Lambert: I hope the hon. lady manages to stir up the various departments. This is just foot dragging by somebody.
February 14, 1967

Inquiries of the Ministry Miss LaMarsh: I spend most of my time stirring up my department to answer questions.



CANADA LABOUR CODE


[Stage Direction]
On the orders of the day:
Michael Starr: I wish to address a question to the Minister of Labour. Yesterday I addressed a question to him through his parliamentary secretary asking whether a decision has yet been arrived at with respect to applications for exclusion or deferment of the hours of work section of the labour code. Can the minister answer?


John Robert (Jack) Nicholson: Some time in January, Mr. Speaker, I assured the house that I would table a comprehensive report. I hope to be able to table the report tomorrow or Thursday, showing action taken under the labour standards code.


Michael Starr: A supplementary question, Mr. Speaker. I wonder if the minister could answer verbally whether a decision has been reached on all applications.


John Robert (Jack) Nicholson: No, Mr. Speaker. The report will show the reasons for some deferments, and for at least some of the delays where matters require further consideration.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Edward Nasserden: My question is directed to the Prime Minister. Is the government or a committee of cabinet studying rising construction costs as they apply to hospital construction?


Mr. Speaker:: Order, please. The question is much too general, and I suggest should not be asked on orders of the day.



AGRICULTURE

[Stage Direction]
EGGS-REPORTED RECENT DROP IN PRICES On the orders of the day:
Mr. Reynold Rapp (Humboldf-Melforf-Tisdale):: Mr. Speaker. I was waiting for the Minister of Agriculture or his parliamentary secretary to come in, but I have a question of urgency and I shall direct it to the minister from whom I always get a prompt reply, the Secretary of State for External Affairs. My 
question has to do with the prices of eggs. Those prices recently have dropped by as much as 20 cents per dozen. This is the biggest drop in prices since hens started laying eggs.


Michael Starr: This is right up to the minister's street. He knows more than anybody else about this.


Hon. Paul Martin (Secretary of State for External Affairs):: Perhaps I might discuss this question with Mr. Kosygin.



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Mr. Auguste Choquelte (Loibiniere):: Mr. Speaker, I should like to put a question to the Minister of Manpower and Immigration. I apologize for not having given him notice, but I wish to discuss it at ten o'clock.
My question is as follows: Has the minister received from the Estates General of French Canada a request for assistance in favour of French minorities in western Canada, in order to help them to take part in a plenary meeting which will soon be held?
Ten o'clock please, sir.


Some hon. Members:: Oh, oh.



ADMINISTRATION OF JUSTICE


[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. I have not given him notice but he is well informed on the topic. Has any final decision been reached yet with respect to the return of Harold Chamberlain Banks, who some are pleased to term that wonderful gangster who escaped to the United States from Canada?


Lawrence T. Pennell: Mr. Speaker, this matter is being considered by the crown attorney in Ottawa. I am awaiting word of his decision.



WATER RESOURCES


[Stage Direction]
On the orders of the day:
Mr. George Muir (Lisgar):: My question is directed to the Secretary of State for External
February 14, 1967

Affairs. Some time ago I asked the minister if he could report on the Pembina river project, the development plan being studied by the International Joint Commission. Can he reply
to that question?


Hon. Paul  Marlin@Secretary of Stale for External Affairs: I am sorry; I should have answered this long ago. The report of the International Joint Commission has not been completed. I inquired the day after my hon. friend asked this question and was told that the report would be available fairly shortly. I shall inquire again.



CANADA DEPOSIT INSURANCE CORPORATION


Mitchell William Sharp: that the house go into committee to consider Bill No. C-261, to establish the Canada Deposit Insurance Corporation.
Motion agreed to and the house went into committee, Mr. Dube in the chair.
On clause 2-Definitions.


Marcel Joseph Aimé Lambert: Mr. Chairman, I should not want clause 2 to carry in the hubbub of the resumption of the sitting. Clause 2 is the interpretation clause. Because of the rush to get this bill through, the transcript of evidence of the previous proceedings having been delivered to opposition spokesmen only during the lunch hour, it may be a little difficult to operate. With the evidence given by the minister and other persons with regard to this bill coming to hand so late we shall operate under a handicap. However, we shall do our best to discuss this bill section by section. Should there be some duplication between questions asked in the house during the course of debate and questions asked of the minister in the committee, that duplication I hope will be readily understood.
[DOT] (3:20 p.m.)
On the definitions clause the first point I would raise is the question of the definition of a deposit. There was a good deal of discussion on what should be a deposit receiving or accepting institution. In that connection the transcript is wrong where it classifies this as a deposit excepting institution, and I hope whoever has the responsibility for the transcript will make the necessary correction.
If it is impossible for parliament to define in this clause what a deposit is, then what
Canada Deposit Insurance Corp. hope is there for a definition of a deposit in the by-laws of the corporation? Why must the power to define a deposit, or the ambit of this bill, be assigned to the corporation by parliament, particularly since the corporation will not be directly responsible to parliament and not subject to review by parliament, except that its report will be tabled and I suppose we can discuss it on the estimates of the Minister of Finance?
This once more raises a subject I have discussed on many occasions, namely that delegated powers of this kind must at all times be subject to review by parliament, and not by the present procedure. This is a delegated power and parliament, or a committee thereof, must be in a position to annually assess performance under such delegated powers and the delineation of such powers. So far as this house and the other place are concerned, this is writing a blank cheque in that the government, in proposing this bill, has again refused to face up to its responsibilities.
The minister quite candidly admitted that there was difficulty in determining what is a deposit. Do deposits include certain types of demand bonds? Do they include Canada savings certificates? The government are quite content to say "Well, we will let the corporation determine what is a deposit." I cannot conceive any greater type of abdication of government responsibility. I could continue to speak about the abdication of responsibility in regard to the supervision and control of banks and near banks, but I shall not do that now because I will have a great deal to say about the matter when we are discussing the amendments to the Bank Act.
This, Mr. Chairman, is a stop gap measure. The minister said so before the standing committee. If it had not been for the action of the government of the province of Ontario the other day, this measure would not be under discussion now. Right at the very beginning, from page 4 of the transcript, we know that in the ordinary course of events the government would not have come forward with this bill. Why has the government suddenly got cold feet now? It had an appropriate opportunity to cover this matter of supervision and control when drafting the amendments to the Bank Act. It is as if the government came up to the front door, refused to open it, and then came back and tried to get in through a side door with respect to the control and inspection of near banks.
13012	COMMONS
Canada Deposit Insurance Corp.
I shall have more to say with regard to the provision respecting the consent of the provinces, but on this particular clause I ask the minister why it is that we in this house cannot define what is a deposit, in either in general enough terms to accept evolution in, shall I say, quasi banking practices, or if preferred by the draftsman, by itemizing what is meant by a deposit so that it may be clear cut?
The committee is considering deposit insurance, but it does not even know what is a deposit. It merely knows that the corporation, a group of individuals appointed by the crown, will at some future date determine what shall be a deposit. I would have thought an eminent lawyer like the Minister without Portfolio would have wondered at this. I mean the hon. member for St. Lawrence-St. George, since the other Minister without Portfolio is just an accountant in the terminology of other people. Why would the hon. member for St. Lawrence-St. George accept such a definition in this key clause? The bill is to be known as the "Canada Deposit Insurance Corporation Act," yet we cannot tell what is a deposit. Somebody else will have to tell parliament what it is. I would like the minister to interpret and explain just what is meant so far as this particular clause is concerned.


Mitchell William Sharp: Mr. Chairman, one of the principal reasons that no attempt has been made in this parliament to define a deposit is that we are going to make these facilities available to provincial corporations as well as to federal corporations. We do know what constitutes a deposit for the purposes of federal institutions. Indeed, the officers of the government are very well aware of the operations of federal institutions which they inspect. However, we are not in a position at the present time to know exactly the form of all the instruments which are issued by provincial companies, since we do not exercise any supervision over them. We have been urged by the province of Ontario and the province of Quebec to leave some flexibility in the legislation so we do not inadvertently leave out of the ambit of a deposit some instrument that, on examination, we might wish to insure.
When I spoke on second reading of the bill and in the standing committee I gave a general idea of the kind of deposits that would be insured. Of course in the bill itself such deposits are limited to $20,000, so we are not

DEBATES	February 14, 1967
asking for carte blanche. There are limitations in the bill, but generally speaking we would try to include deposits of up to five years maturity.
Another reason that I think it would be undesirable to attempt to define a deposit too precisely in the bill is that we shall endeavour to persuade institutions that come under our policies to make clear, on the face of those deposits that are insured, that they are in fact deposits. This may require a change in nomenclature or description, and for these reasons I believe the government is justified in asking the house to approve the bill with a considerable degree of flexibility in it. After we have had some experience it may be possible for us to describe more precisely in legislation the kind of instruments that hereafter would be insured. At the present stage, since this is the first legislation of its kind ever introduced in the house, I submit that some flexibility is desirable.
[DOT] (3:30 p.m.)


Mr. Gilbert:: Mr. Chairman, we in the New Democratic Party have serious objections to the failure of the government to define a deposit. Probably the minister is aware that in the United States under the Federal-Savings and Loan Insurance Corporation and also under the Federal Deposit Insurance Corporation a deposit is defined. In the Federal Savings Loan Insurance Corporation accounts are defined as all forms of savings and insured savings including share and investment certificates, while the F.D.I.C. insures demand savings and short-term deposits in commercial and savings banks.
The hon. member for Edmonton West has raised an excellent point with regard to what constitutes a deposit. One of the things which worried so many people in Ontario with regard to the Prudential Finance fiasco was that they thought they had deposits in particular institutions because they held guaranteed savings certificates. If we do not include these in our definition, we will be in very serious trouble because, as the minister well knows, the coverage in this bill does not include finance institutions. Many people making deposits in these institutions may well think that they are covered by this bill when in fact they will not be. One of the disappointments with regard to the Prudential affair was the failure of the government either to set up a royal commission on its own or jointly with the province to determine the reasons for the failure of that company. Such a commission
February 14, 1967	COMMONS
could have made recommendations with regard to such types of institutions which will not be covered by this legislation.
One comment made by the minister which is most welcome is the statement that depositors who will be covered by this legislation should and must know whether they have deposits within the definition contained therein. We welcome this because of the complexity of the definition and the difficulty which most people have in determining whether they have deposits.


Mitchell William Sharp: Mr. Chairman, I should like to make one short comment on the statement just made. While it is true that the provision before us does not define a deposit, deposits will be defined by the corporation and due notice will be given to all institutions and to all depositors of the exact description of the deposits which ultimately will be insured.


Mr. More:: Mr. Chairman, perhaps this point is open to argument. We are going to allow the corporation to define deposits if we pass this bill. By delegating the authority to the corporation we are taking it away from parliament. Why cannot parliament define deposits?
As found on page 8 of the transcript of evidence, in reply to a question asked by the hon. member for Nanaimo-Cowichan-The Islands, the minister said that he had not seen the Ontario legislation but that he understood it would require all Ontario companies to join the federal scheme once it is in effect. I take it that this means all Ontario companies taking deposits. Therefore it would seem to me that Ontario at least must have a definition of deposits.
I claim, that some of the provincial companies actually are under federal jurisdiction with regard to deposit-taking but the government does not exert its authority. However, in respect of the companies which are under federal jurisdiction because of the definition in the Bank Act and because of their charters, surely the minister must know which of their instruments are going to be insured. Therefore, why can they not be defined in the bill by such words as "such other instruments as may be determined by the corporation in consultation with the provinces"? At least parliament would have indicated its authority to that extent.
What we object to is the principle of delegating to a corporation the power to define what the bill actually covers. Our position, which I feel is justified, is that parliament
Canada Deposit Insurance Corp. when it is passing an act should define what it covers. When it is necessary that we know the definition of instruments in respect of federal companies which are going to be insured, why can this not be stated?


Mitchell William Sharp: Mr. Chairman, I do not think
we would advance our legislation very far if we were to say that deposits include what clearly are deposits, such as notice and demand deposits of chartered banks. That would be easy and obviously is covered by the bill. The more difficult cases arise when we get into deposit receipts which could be regarded from one point of view as a security and from another point of view as a deposit. That is where the complications arise. In preparing this legislation it seemed to us that in order to make the bill as useful as possible it would be satisfactory to the house to give the corporation some flexibility. Anything which obviously is a deposit will be insured. The problem is, what is the difference between a deposit and a security? We felt it desirable to study this question at some length, have some discussion with the provinces about the differences in practice, and endeavour to persuade the institutions concerned to make a clear distinction. In that way the public would be given greater security.
I do not think it will advance the cause at all if we say that deposits include notice and demand deposits in the chartered banks. That is obvious. If the committee wishes to amend the bill to the effect that it shall include notice and demand deposits and such other instruments as may be defined by the Governor in Council, I have no objection, but I do not think this will in any way clarify the situation for the general public nor for our discussions with the provinces.


Mr. Bell (Carleton):: Mr. Chairman, I wonder whether the minister would be just a little more precise in respect of one form of deposit. In recent times perhaps the most popular instruments which have been issued by near banks are what are called guaranteed investment certificates. Is it clear that guaranteed investment certificates are intended to be insured by this legislation provided their term is not more than the maturity mentioned by the minister, five years?


Mitchell William Sharp: It would be my intention to recommend to the Governor in Council that guaranteed investment certificates of up to five years and debentures of loan companies up to five years would be covered.
February 14, 1967

Canada Deposit Insurance Corp.
[DOT] (3:40 p.m.)


Mr. Bell (Carleion):: Mr. Chairman, I want to make only one further general comment on this clause. When the bill was at the second reading stage on February 3 I endeavoured to make my position very clear. I submitted that the minister had approached this problem in the wrong way. In my view the trouble is that parliament has abdicated its proper authority over banking. I am bothered because we have definitions such as the one in (j), "provincial institution", because there would be no such thing as a provincial institution in relation to deposit-taking if this parliament asserted its proper authority. Deposit-taking is the very heart and core of banking, and being the heart and core this parliament should assert its own exclusive authority over it. I am not going to argue further with the minister, but I wanted to make my position completely clear.
The minister ought to have moved to bring near banks under the supervision and control of this parliament, and having brought them under that supervision and control this legislation should have been universal and enforced in respect of all deposit-taking institutions. Because this has not been done I want to make it clear that I am not ready to be a party to the further abdication of the authority of this parliament. Because many of the clauses of this bill can be so interpreted, they will be passed so far as I am concerned on division.


Marcel Joseph Aimé Lambert: In this clause I believe we come up against the essence of the whole problem, and I fully subscribe to the views advanced by my colleague, the hon. member for Carleton, regarding the abdication of authority. Surely that suggestion has been supported by the minister as a result of his statement of a few minutes ago when he said it was all right for the government to recognize what are deposits in relation to federal institutions but it would be improper or impossible for the government to do so in relation to those institutions such as near banks operating under provincial charters of incorporation. That is the only right of supervision that should be granted to provincial authority in this field, the right of issuing a charter of incorporation.
The constitution makes it quite clear that the parliament of Canada has the exclusive right to deal with currency, interest and other financial matters. Let me refer to the precise terms of this exclusive right. In section 91 of

the B.N.A. Act the following are listed: subsection 14, currency and coinage; subsection 15, banking, incorporation of banks, and the issue of paper money; subsection 16, savings banks; subsection 18, bills of exchange and promissory notes; subsection 19, interest, and subsection 20, legal tender. What more could you require in this regard?
I find it incredible at this time that because of some unknown fear the federal government does not want to assume its exclusive right in the field of deposit insurance. Let me refer the minister to the representations of my colleague, the hon. member for Kamloops, at the committee hearings. Apparently there is a fear that because some isolated near bank might challenge the legislation such a challenge would ipso facto make this legislation suspect and non-operative. That proposition seems to be implicit in the minister's remarks. Quite contrary to the truth of the matter, there seems to be a feeling that if the parliament of Canada passed this bill and some corporation should challenge it it would not remain in effect. That is not so. It would remain in full effect until a judgment had been delivered ruling it ultra vires.
I want to know why we should allow the provinces to enter this field. I recognize the rights of provinces in their own spheres of jurisdiction, but this is one field which the constitution places exclusively within federal jurisdiction. Why should we now in respect of deposit insurance give the provinces the right to determine banking practice? The minister has said that the exact nature of deposits shall be determined by the interpretation of the provinces. Let me refer to the words of the minister as they appear at page 8 of the transcript of proceedings. He said that the Ontario minister, Mr. Rowntree, in his speech introducing the provincial legislation, had said that he was going to require all Ontario companies to join the federal scheme once it is in effect because he believes this problem can be handled more efficiently on a national than on a provinccial basis. I agree wholeheartedly with Mr. Rowntree in that respect.
What about the conflict in determining what is a deposit? What will happen to rights which may accrue to individuals during the interval between the provincial legislation and the federal scheme if a province determines a certain obligation in respect of a near bank and that determination is challenged by some of the holders? Where do we stand from
February 14, 1967

a federal point of view? Individuals and institutions are entitled to certainty. Some provincial governments may pass concurrent stopgap legislation. Why is it that the federal government will not recognize its responsibility in this regard?
If the minister is prepared to recommend to the Governor in Council that deposit obligations shall be covered for a period up to five years by deposit insurance, why does he not say so in the bill? The minister is making a decision by his statements to the house. Why does he not say so in the bill so that parliament will know what this corporation is going to do?
I may sound overly critical but I am concerned about the efficacy of this legislation. I am also concerned about the people who must be protected against delusion by the use of the phrase "guaranteed investment certificate" because the word "guarantee" only has a meaning in respect of an interest rate, not as to liquidity. If only these people knew that they could get just as good or better returns by going to reputable solicitors and placing their money in mortgages or by buying government of Canada securities they might not need so much protection, but we have to deal with all kinds of people. I suppose we must protect the most foolish of depositors.
Why, in legislation in respect of which we presumably have the initiative, are we unable to determine what is a deposit? After all, this bill is known as the Canada Deposit Insurance Corporation Act. Perhaps I should paraphrase that and call it the Canada "we do not know" Insurance Act, because the government refuses to tell us what it means by a deposit. I fully agree with my colleague, the hon. member for Carleton, on this point. I am not going to labour the question of "provincial institution" under subclause (j). I shall have to reserve judgment on this matter, and the clause at best will have to pass, on division.
[DOT] (3:50 p.m.)


Mitchell William Sharp: Mr. Chairman, I should just like to repeat what I said before, that there will be no uncertainty about the application of this legislation when the bylaws are issued. Full publicity will be given to the extent of the guarantee both to the institutions themselves and to the public. I can understand the comments of the hon. gentlemen who would like us now, before we have examined all these instruments, to define precisely what is a deposit. I regret that I am not in a position to do so, nor are my officials. They have a 23033-823
Canada Deposit Insurance Corp. fairly good idea of what should be included but they are very reluctant at this stage, before having examined the kind of instruments being issued by provincial institutions, to be too precise. I hope they will be able to do so shortly. They have been examining some of these instruments but have not completed their work.
May I comment upon another point. It is being assumed by the hon. member for Carleton and the hon. member for Edmonton West that one could define the business of banking as the business of taking deposits, but in fact, as we have seen from this discussion, what constitutes a deposit is subject to some uncertainty. I should like to draw attention to the Ontario act which was approved the other day, an act to establish the Ontario Deposit Insurance Corporation. That act says:
For the purposes of this act, a deposit shall be,
(a)	moneys deposited with a member institution in respect of which such institution is liable to the depositors;
(b)	moneys received under section 82 of the Loan and Trust Corporations Act by a trust company that is a member institution; and
(c)	debentures or like obligations issued by a loan corporation that is a member institution.
Then it goes on to say:
Each deposit with a member institution is insured by the corporation except,
(a)	a deposit that is not payable in Canada or in Canadian currency;
(b)	so much of any one deposit, including interest thereon, as exceeds $20,000; and
(c)	so much of a deposit as is insured under the Canada Deposit Insurance Corporation Act.
That is the bill now before us. The fact that there can be a difference in the definition of "deposit" is an indication that if one were to use the taking of deposits as a test of banking there would still be great uncertainty whether particular institutions were actually engaged in accepting deposits or whether they were engaged in issuing securities. So I suggest to my hon. friends opposite that even accepting their argument, which may be right and may be accepted eventually by the courts, that the taking of deposits is of the essence of the banking business, one still would not define precisely how far federal jurisdiction extended.


Marcel Joseph Aimé Lambert: To come back to this argument, Mr. Chairman, of course no definition of banking is limited to the acceptance of deposits, and no one has suggested that. The minister has bolstered the case of the opposition in this regard by quoting from the Ontario act, because as a lawyer I can go down
February 14, 1967

Canada Deposit Insurance Corp. the list and determine precisely what deposits are covered by the Ontario act. As a matter of fact, the last paragraph which the minister cited from that act is an anticipation by the government of Ontario that we are going to be weak-kneed or limited in this respect, and they have covered their people by saying: We will cover deposits in so far as they are not already covered by the federal act. This is perhaps anticipating a more limited coverage by the federal legislation.
A fair interpretation of that section clearly indicates what deposits are covered and what deposits are not covered. I am sure that any person contemplating investing money, making a deposit or buying securities in a near bank could go to his solicitor now and say, "am I covered or am I not covered, and the solicitor could answer with a reasonable degree of certainty, But why is there this abdication in the bill before us? I do not know why the minister feels that his officials at some indeterminate date in the future-I say "his officials" because the Superintendent of Insurance, the Inspector General of Banks and other people are to be part of the board of the deposit insurance corporation-will be able to determine this question better than parliament. Why is that? Is it that the government is afraid that parliament cannot face up to its responsibilities? I must confess that this seems to be the pattern of legislation which is presented to us. I do not know whether the minister's previous training in public affairs has conditioned his thinking in this regard and he is prepared to accept this philosophy, but as a member of the House of Commons I find it a rather repugnant principle that we always pass these questions to officials to determine. In this instance we will be leaving it to the officials to determine what shall and what shall not be the application of this legislation. When one looks at the title of the bill one sees it contains the word "deposit"; yet the minister cannot tell us what is a deposit. In other words, Mr. Chairman, frankly this is an exercise in frustration because we do not know what we are trying to do this afternoon.


Gilles Grégoire: Mr. Chairman, I should like to mention first of all that contrary to the announcement made at noon, we have not received, at least myself, a copy of the report of the committee on finance, trade and economic affairs concerning Bill No. C-261, an act to establish the Canada Deposit Insurance Corporation. The committee chairman, the


hon. member for Essex West (Mr. Gray), I believe, announced that the committee report had been tabled, but every attempt on my part to secure a copy has been unsuccessful. I think a few members of the house have received copies, and copies are available for only one or two and not for everyone, especially those who sat on the committee on finance, trade and economic affairs. If no copies are available for those interested in dealing with this problem, I wonder why the committee chairman bothers to announce the tabling of a copy of the report? I see he is about to rise. Would he have a copy for me? I am not sure if that is his intention, but we are now discussing this matter without a copy of the report of the committee of finance, trade and economic affairs. Could the chairman give us some information on this subject? Afterwards, I shall proceed with my remarks on clause 2 of Bill No. 261.
[DOT] (4:00 p.m.)


Herbert Eser (Herb) Gray: 
Gilles Grégoire: Mr. Chairman, I was not referring to the report tabled last Friday, February 10.1 clearly repeated when speaking of the report, what the chairman of the committee said himself, namely official evidence.
Now then, four or five hon. members received a copy, while the others did not.
Mr. Chairman, you will tell me that copies are distributed to official representatives of a group. But we, the three independent members, have received nothing. Even though we do not form a group, I can see no reason why all hon. members should not be treated equally. When one hon. member receives a transcript of official evidence heard before the committee, enabling him to examine the bill in the light of this evidence while another member cannot do so, then I submit that the 260 members of parliament who did not receive a copy-with the exception of the five hon. members and the chairman of the committee -should voice their protest.
I see some hon. members looking on, who did not receive a transcript of the official evidence. What are you doing there? Are you here solely for the purposes of the 20-member quorum? Should you not be here to consider the legislation before us? If that is the case, we should all have copies. There should be no question of distributing them to official representatives of each party only. Only one transcript per party is not enough, far from it; all hon. members have a right to the same privileges, whether they sit on the government side of the house, with the opposition, or with another minority party. Either we all have the same privileges, or else we no longer have a democracy; it becomes a plutocracy, and the administration of a country lies in the hands of a few persons who are not elected and who surely do not have more rights than other members.
I say, that when the chairman of the committee on finance, trade and economic affairs rises to table the report of the evidence given before that committee in connection with Bill No. C-261, every member of the house should have a copy of it, in French and in English, even before we start studying the bill. How do you want us to study a bill seriously when we are not even given a copy of the official evidence heard before the committee?
Mr. Chairman, I would go so far as to say that an attempt is now being made to make us pass this bill rapidly, because the Ontario legislature has introduced a bill on deposit insurance. The federal government prepared 23033-8235
Canada Deposit Insurance Corp. its own in a rush and brings it before the committee so as to push its passage. As the hon. member for Edmonton West (Mr. Lambert) said a while ago, this is a bill to establish the Canada Deposit Insurance Corporation, but it does not even define a deposit. Therefore, let us call it instead an act to establish an Insurance Corporation, to be defined later on by Canadian officials. That appellation would be more fitting, because though the bill proposes to set up a Deposit Insurance Corporation, it does not define a deposit. I shall therefore support the hon. member for Edmonton West when he moves that the title be modified to read: An act to establish the Canada "X" Insurance Corporation. It will make more sense than "Deposit Insurance Corporation", since it does not even define a deposit.
And we are asked to pass this bill on the double, before anyone else takes the same initiative or attempts to move into this sphere of jurisdiction.
Mr. Chairman, I have here a special coverage of the conference given by the president of the Quebec Pret et Revenu group. This group consists of four companies whose assets total $140 million-these are not small and insignificant companies. Now, Mr. Jean Paul Tardif, president of Pret et Revenu, made the following statement, as reported on page 20 of the Saturday edition of La Presse of February 11, 1967:
According to the president of Pret et Revenu, the bill as it now reads will cause provincially chartered financial institutions to come under federal jurisdiction.
He asks that the provinces be consulted before Ottawa passes the Canada Deposit Insurance Corporation Act.
Has the minister consulted the provinces? No. Federal-provincial meetings have been requested in this connection, but to no avail. And the president of Pret et Revenu, who is well known in Quebec-I see before me my friend the hon. member for Quebec-Mont-morency (Mr. Laflamme) who must be very familiar with this group and who must know its president very well. Mr. Jean Paul Tardif added:
The province of Quebec must absolutely obtain the convening of a federal-provincial conference on deposit insurance before the bill introduced last week by the federal Minister of Finance is passed, because Mr. Mitchell Sharp's bill as drafted means, in practice, that provincially chartered financial institutions would be transferred to the jurisdiction of a federal authority.
And the article goes on:
Such is the theory advanced yesterday-
13018	COMMONS
Canada Deposit Insurance Corp.
That is on February 10.
-before the study committee on financial institutions, by the president of the Pret et Revenu group of companies, Mr. Jean-Paul Tardif. Mr. Tardif, together with officials of the four companies in the Pret et Revenu group, presented a brief to the Parizeau committee which carries on its public hearings at Quebec.
And further:
The bill introduced in parliament by Mr. Sharp provides that a provincially chartered company must secure beforehand the authorization of its own province to be able to participate in the federal deposit insurance plan. But, Mr. Tardif pointed out, when such authorization has been granted, the provincially chartered company will have to comply with the federal requirements of the federal deposit insurance corporation.


Mr. Chretien:: Mr. Chairman, would the hon. member for Lapointe allow a question?


Gilles Grégoire: Yes.


Joseph Jacques Jean Chrétien: Has the hon. member for Lapointe read clause 16 (a) which provides that no provincial institution can become a member of this corporation without the prior consent of the province concerned?
[DOT] (4:10 p.m.)
Therefore, no provincial institution is forced to participate in the present plan without having secured beforehand the approval of the provincial authorities. The hon. member would not be saying any of this now had he read the bill in full.


Gilles Grégoire: Mr. Chairman, that is exactly what I just said. I will repeat the last paragraph I just read and the Parliamentary Secretary to the Minister of Finance (Mr. Chretien) will realize that I said it just before he took the floor. Was he listening? I will therefore repeat the last paragraph I read:
The bill introduced in parliament by Mr. Sharp provides that a provincially chartered company must secure beforehand the authorization of its own province to be able to participate in the federal deposit insurance plan.
I just said that and the Parliamentary Secretary wants to know if I read the bill. I would rather ask him if he had been listening before he asked his question, because I think he was not listening at all.
But, Mr. Tardif pointed out-
That is the important part and as I said, the parliamentary secretary was not listening and chose to ask a question about something he had not even heard.
But, Mr. Tardif pointed out, when such authorization has been granted, the provincially chartered company will have to comply with the federal

DEBATES	February 14, 1967
regulations and the requirements of the federal Deposit Insurance Corporation.
I read the whole paragraph earlier. As pointed out by the president of the companies Pret et Revenu, it really means that under the terms of this bill the provincially chartered financial institutions will fall under the jurisdiction of the federal government.


Joseph Jacques Jean Chrétien: Only if the provincial government agrees.


Gilles Grégoire: That is why we ask whether the provinces were consulted beforehand, whether there was a federal-provincial meeting on that subject. But no. They want us to pass a legislation in haste; they want to rush everything. In fact, they do not even want to take the time to consider what is taking place in that case.
I heard a moment ago the member for Carleton (Mr. Bell) say that the major business of banks was accepting deposits. I think that the member for Carleton does not know much about banking operations because, as the Minister of Finance stated the other day before the committee on finance, trade and economic affairs, the main and major business of banks is to create money. The minister himself stated in committee that banks were creating money. He cannot deny that, because it is entered in the proceedings of the committee and it was recorded on magnetic tape.
The minister stated that chartered banks created money. This is the major operation of banks rather than accepting deposits, because other institutions, such as trust companies and credit unions-which are not included among banking institutions-accept deposits but do not create money. This is the main difference between banks and nearbanks. The former have the right to create money, whereas the latter have not, but both have the right to accept deposits.
The hon. member for Carleton added-as well as the hon. member for Edmonton West, I think-that he was surprised that all deposit accepting institutions did not come under federal jurisdiction.
But, Mr. Chairman, the right or the privilege to accept deposits is not provided for in the B.N.A. Act quoted earlier by the hon. member for Edmonton West. Section 91 does not deal with currency or with the minting of coins. This is not part of banking, of the bank charter, of the issuance of bank notes, nor of the savings banks, nor of the letters of exchange to order nor of the interest on money.
February 14, 1967

There are institutions that accept deposits such as, for instance, dealers who tell their customers: If you want to buy a fur coat for your wife next year, start depositing now and when you have paid 50 per cent of the price of the coat, it will be delivered and this is not banking. The difference between banks and near-banks, is that the banks are allowed to create money.
Nothing in section 91 of the British North America Act prevents the provincial governments from giving out charters to financial institutions which would be authorized to accept deposits and make loans. But, such financial institutions would not be empowered to create money.
It would have been much more beneficial to the Canadian people if the hon. members for Edmonton West and Carleton had given vent to their indignation with regard to the intention of the government to leave in the hands of chartered banks the exclusive privilege of creating credit and money in Canada, since the government could have a state bank in order to finance public works.
At a sitting of the committee, the Minister of Finance was telling us that a system of debts was a very good thing indeed, and that we had to stick to such a system. This is accepted by the Minister of Finance. When I asked him if a system whereby debt free money would be created would not be preferable to a system whereby money is created through a debtor system, he replied: "I see nothing wrong with a debtor system". But each year, however, he presents us with a budget providing for interest payments totalling $1,250,000 million. That is all very well, that is acceptable; let us tax the Canadian people, they do not mind. Let us increase taxes-


Mr. Laflamme:: On a point of order, Mr. Chairman.


The Deputy Chairman:: Order. The hon. member for Quebec-Montmorency is rising on a point of order.


Gilles Grégoire: -sales taxes-


Ovide Laflamme: Mr. Chairman, it is not my intention to interrupt the hon. member for Lapointe who will undoubtedly have the opportunity, when the house resumes consideration of the Bank Act, to resume his present speech, but I respectfully submit that we should not have to listen once again to the Creditist philosophy this afternoon; it will
Canada Deposit Insurance Corp. once more be set forth when the house resumes consideration of the Bank Act, and it was explained to the committee for several months.
We are presently considering Bill No. C-261, namely the deposit insurance bill, and I cannot see why, at this stage, any member should be allowed to discuss the complete banking system and the details of transactions between banks.
I do not wish to interrupt the hon. member, but I feel we should be considering the bill before us and the hon. member should wait until we resume consideration of the Bank Act to make his speech.


Gilles Grégoire: Mr. Chairman, I wish to thank my colleague the hon. member for Quebec-Montmorency for his comments. I feel that, at any other moment, he would be right and the arguments he put forward to support his point of order would be perfectly justified.
Now, something different is occurring today. This is the first time we have been asked to study a bill without being told what it is about. We are told that a Canada Deposit Insurance Corporation will be set up, but a deposit is not defined. This doubtless leaves us much more scope, seeing what we are considering is not clearly defined, namely deposit insurance. What is a deposit? Section 2, (e) defines it thus:
-"deposit" means a deposit as defined by the by-laws of the Corporation:
Now, should the corporation which will govern this deposit insurance act define a deposit as the result of created credit, which is possible, for a deposit can stem from credit -if a chartered bank grants new credit, supposing I deposit it, my deposit is the product of credit-then, I claim I have the right to discuss the creation of credit. If the regulations of the corporation in fact do define a deposit as the result of the creation of credit, and I should discuss, today, the creation of credit and its products, I feel that I am in order and would say that in any other circumstances, my colleague would be right.


Ovide Laflamme: Mr. Chairman, I know of no ruling by virtue of which a member may do indirectly what he may not do directly. I rose on a point of order and maintain that the hon. member if out of order when he attempts to speak of the creation of money and credit; these matters fall within the scope of the Bank Act which will be studied later. His remarks have nothing to do with the section of the bill now under study.
February 14, 1987

Canada Deposit Insurance Corp.


Gilles Grégoire: Mr. Chairman, I will say to my hon. friend that I do not propose to discuss that point any further. However, when we resume consideration of the Bank Act, we shall have every opportunity to do so. Mr. Chairman, you have noticed, no doubt, that I was recalling some remarks made by the hon. member for Carleton and the hon. member for Edmonton West. Besides, I was using them to show the Minister of Finance that, at the present time-I think that the hon. member for Quebec-Montmo-rency should realize it also-and as was said earlier by the hon. member for Edmonton West, the government asks us to consider a bill that it cannot explain. We want to establish the Canada Deposit Insurance Corporation, but when the time comes to give a definition of what is a deposit, we are told:
[DOT] (4:20 p.m.)
"deposit" means a deposit as defined by the by-laws of the Corporation.
Then, the word "deposit" will be defined later on. That is why I wanted also to take this opportunity to mention to my hon. friend, the hon. member for Quebec-Montmorency, that actually this legislation encourages a discussion in indefinite terms.
But in any event, Mr. Chairman, I should like to return to the main point of my interjection and say that the provinces should have been consulted. In this connection, I should like to quote Mr. Jean-Paul Tardif, president of the Corporation de Pret et Revenu of the province of Quebec:
-the provinces must be consulted before the Deposit Insurance Act is passed by Ottawa.
Mr. Chairman, I believe the Minister of Finance should suspend the examination of this bill and convene a federal-provincial conference, so as to have the views of the provinces. There is nothing urgent as far as the passing of this bill is concerned, except that the minister would like to get on with it before the Ontario government passes its own measures. On the other hand, should the Ontario government wish to co-operate, it might be willing to wait and have its own bill go through only after such a federal-provincial consultation.
Besides, the minister is aware of the reaction of the Quebec government upon the announcement of the institution of such a Deposit Insurance Corporation, since that government declared it would create its own Deposit Insurance Corporation.

Again, the federal government, through its Minister of Finance wants to proceed alone in a joint jurisdiction, without taking into account the opinions and suggestions of the provinces. Now, in view of this stubbornness of the federal government to legislate without consulting with those who may be involved, I strongly urge the Quebec government to organize and create its own deposit insurance corporation and to refuse provincially chartered companies-as mentioned in Bill No. C-261-the authorization to have their customers' deposits insured through the federal corporation.
I may say that in view in this stubbornness of the federal government, I shall urge the Quebec government to create its own corporation and to stand in the way of such constant infringements by the federal government, be it in social security, indirect taxation, or in the field that concerns us all at the moment.


Marcel Joseph Aimé Lambert: Mr. Chairman, would the hon. member allow a question?


Gilles Grégoire: Certainly, Mr. Chairman.


Marcel Joseph Aimé Lambert: Since the hon. member is saying that the government of the province of Quebec has the right to set up its own deposit insurance corporation, could he tell me how the jurisdiction of the said corporation on the deposits of the institutions holding a Quebec charter and operating outside the province would be determined? Could that corporation insure the deposits of trust companies such as the Montreal Trust or the Royal Trust operating in Alberta or British Columbia? Could he also tell me what difficulties would arise from a disparity in the regulations of the province of Quebec and those of the other provinces since one must admit that if the province of Quebec states that it has the right to do this, that right still does not exceed that of the other provinces in that field? Would any province have the same right?
Could he explain how he could avoid the difficulties which might result from that?


Gilles Grégoire: Of course, Mr. Chairman, the state of Quebec has the right to establish such a Deposit Insurance Corporation since Ontario saw fit to introduce a piece of legislation to that effect. If Ontario has that right, the state of Quebec undoubtedly has it too. Quebec has the right to establish such a Deposit Insurance Corporation.
February 14, 1967

In reply to the question asked by my hon. friend, the hon. member for Edmonton West,
I point out that some corporations and financial institutions are federally incorporated. In such cases, of course, the federal government may require that deposits made in federally incorporated financial institutions, such as chartered banks with their head office in Quebec, be insured by the Canada Deposit Insurance Corporation. That is normal.
In the case of provincially incorporated financial institutions operating in Quebec, they may be insured by the Deposit Insurance Corporation which will be established by the state of Quebec. If these financial institutions operate outside Quebec, nothing will then prevent the provincial government from authorizing the provincially incorporated financial institutions from Quebec to insure deposits from other provinces through the federal Deposit Insurance Corporation. Just as is done in the case of foreign countries, provincial institutions accepting deposits from corporations in other provinces could do the same thing. Those are normal financial operations for institutions dealing in one or many provinces or in many countries. This will not disturb the financial operations of provincially incorporated institutions dealing with other provinces in Canada or with other countries.


Mitchell William Sharp: Mr. Chairman, I do not want to get into another discussion with the hon. member for Lapointe about the intricacies of Social Credit theory. We had our preliminary go during the committee meetings and I expect that when the Bank Act revisions come before the house we shall repeat the performance. However, so as not to anticipate the pleasure that the rest of the house will have in this dissertation and my reply, may I simply make one or two points.
First of all, I should like to assure the hon. member for Lapointe that it is not only pressure from Ontario that is persuading us to move immediately to ask the house to approve the Canada Deposit Insurance Corporation. I have had requests from all provinces except the province of Quebec to move quickly. They believe that this is a major step forward in improving the safety of deposits in Canada and improving the standards of financial supervision.
Second, it is, of course, important now that the province of Ontario has moved that federal institutions should not be at a disadvantage in attracting deposits. There are some

Canada Deposit Insurance Corp. smaller federal institutions in addition to the great chartered banks that would like to have the same assurance given to their depositers that is now enjoyed by Ontario institutions. I think that is an additional reason for proceeding quickly. But even if it were not so, Mr. Chairman, I would recommend to the house, apart altogether from any action that Ontario might have taken, quick action on this bill. I suggest to the hon. member for Lapointe that this legislation is very much in the interests of all Canada, including the province of Quebec.


Mr. Ballard:: Mr. Chairman, I believe that the once very clearcut definition of the responsibilities of the federal government and the provincial governments in the British North America Act has with the passage of years become very unclear. I suggest to the minister it is legislation such as this that has contributed to the muddying of the clear-cut definition. I agree with the hon. member for Carleton and the hon. member for Edmonton West that banking is strictly a federal responsibility. I believe it has been the lack of responsibility on the part of the minister and his predecessors in taking a stand in matters involving provincial and federal jurisdiction which has caused the definition to become clouded over the years.
In my view the reason given by the minister for not defining a deposit, namely, that he was reluctant to do so, is certainly not acceptable to hon. members. We are asked to give carte blanche approval to a bill 15 pages long which deals with nothing but deposits. If we in this house, cannot define deposits, how are we to express intelligently an opinion on a bill which deals with deposits? It seems to be a futile exercise.
[DOT] (4:30 p.m.)
I suggest to the minister that unless we are given a clearcut, precise definition of the word "deposit" before proceeding further with the bill, the minister is abrogating his responsibility. The minister has said that he is reluctant to define deposits, so what does he suggest? He suggests that the corporation will at some time in the future define the word "deposit". But what is the corporation? The corporation consists of some senior civil servants. The corporation is made up of the chairman, the governor of the Bank of Canada, who is not a civil servant, the deputy minister of finance, the Superintendent of Insurance and the Inspector General of Banks. If these senior civil servants can at some future time
February 14, 1967

Canada Deposit Insurance Corp. define what "deposit" means, surely the minister could approach them now and have them define the term. The minister, in turn, could inform the house. We do not know now what we are talking about. It is the responsibility of the minister to attempt to define deposits.
We cannot buy the minister's argument. The Ontario government did not lack courage. In its legislation it came out flatly and defined deposits. The Ontario government knew where it was going and took the responsibility of defining deposits in its deposit insurance act. The minister has the responsibility to do the same thing.
How will the minister define deposits finally? Will he hold a series of provincial conferences to ask provincial ministers of finance how deposits should be defined? If the minister intends doing that he will probably end with ten different definitions of deposits. To cover the wishes of the provinces-I am sure the minister would like to do that; he wants to be popular with the provinces-he will have to accept the weakest definition so that universal coverage may be extended throughout Canada. That is not good enough. The minister should take the responsibility of defining a deposit. The provincial governments should fall in line. Any provincial government not falling in line would have to contest the legislation before the Supreme Court of Canada. We would then have a clear ruling whether the federal government is empowered to direct banks and banking in Canada as defined by the B.N.A. Act.
To leave the responsibility for this definition to a group of civil servants is not good enough. It is an extreme example of the worst type of government by bureaucracy. We as a parliament are being asked to set up regulations to control something and we do not know what we will control. That is not clearly put but neither is the bill. For 15 pages the bill refers to deposits but does not define what a deposit is. As the hon. member for Edmonton West suggested, we might as well call this measure the "general X insurance corporation" bill, for all that we know about the matter. We cannot buy the minister's argument that he cannot define deposits because he is reluctant to do so. That is a poor argument. The minister ought to take the bill back to the committee and bring it back later with a clear definition of deposits in it.


Mitchell William Sharp: Mr. Chairman, the only definition we could put in the bill that would help the hon. members concerned about the lack of


a definition would be one that limited the term "deposits". This is the principal reason that we have been reluctant to place a definition in the bill. We believed it would be wiser and more in accord with the intent of parliament if we could make a careful examination of the kinds of instruments being issued by provincial companies-there is no difficulty with respect to federal companies-before finally laying down the lines.
Once the bill is passed with a limited definition in it parliament has acted and we would have to bring the act back at a later time when there was a further opportunity to consider a redefinition. It is most desirable, we believe, to make the definition as broad as possible, consistent with one principle. We do not believe that we should insure securities. We should insure deposits. In committee I indicated what we had in mind and I have no hesitation in repeating that here.


Marcel Joseph Aimé Lambert: That does not mean anything.


Mitchell William Sharp: It is an indication of the kind of thinking we are doing now and the kind of discussions we shall be having with the provinces. May I also add this word. If any province wants to define instruments which we are not insuring that it wants to include in its insurance plan, that is perfectly valid and proper. We have to decide what constitutes deposits and the criterion we have in mind Is that they are deposits and not securities that are traded. If a province wants to insure securities traded, that is perfectly proper. They can do that. Indeed, it is implicit in the Ontario act that if our definition of deposits does not accord with theirs they will nevertheless insure those obligations that we do not insure. That is quite within the competence of the provincial legislature.
We have in mind, first, moneys received by a member institution that are repayable on demand; second, repayable on notice, the notice not to exceed five years; third, repayable on a fixed date not more than five years after the date the money is received. We propose in addition that if moneys are received in exchange for the issuance of a receipt or other instrument, as contrasted with merely an entry in a running account, those moneys would not constitute part of a deposit unless the instrument was called a deposit on its face. We would also exclude instruments made payable to bearer or instruments designed to be readily negotiable. Thus, for the future we would include demand deposits and term
February 14, 1967	COMMONS
deposits up to five years but to avoid confusion we would not include anything not specifically called a deposit on its face.
This might mean that the term "debenture" or "guaranteed investment certificate" would virtually disappear in respect of maturities of five years or less. Instead, such instruments might be called "deposit receipts" or some such term. However, if a company wanted to continue to issue debentures for periods of five years and under it could do so but the instrument would not be insured. If a company wanted to use the term "deposit" in respect of an instrument with a maturity over five years and not callable earlier, the instrument would have to be stamped "not insured".
For the transitional period we would propose that all obligations on a member institution's books at the date the act comes into force, in respect of moneys received prior to that date, would be insured no matter what they are called if they are, first, repayable on demand, second, repayable on notice of not more than five years, third, repayable on a fixed date not more than five years after the act comes into force. This would mean that some instruments called debentures and some called guaranteed investment certificates, issued prior to the date of the act, would be insured, but this would be justified on the ground that prior to that date there was no reason to use one name rather than another. For the transitional period, it would do no harm to extend the insurance a bit wider than people might expect.
That may illustrate the reason for our reluctance at this stage to define too precisely what a deposit is. Otherwise we would not have the flexibility it is so desirable to have in dealing with instruments that would normally be insured. If we define the instruments now in some limited way we may find we have interfered with some very desirable kind of deposit taking activity that we would wish to insure.
[DOT] (4:40 p.m.)


Harold Raymond Ballard: The minister has given a good definition of what he expects deposits will mean. I would hope the definition he has just given would be a minimum standard for deposits. We would be satisfied if this definition were included in the bill with a provision for further extension of it. What I am saying is that we should have some starting point for a definition of deposits before we consider the rest of the bill.
Canada Deposit Insurance Corp.


Mitchell William Sharp: Mr. Chairman, I think the hon. member's remarks illustrate the point precisely. No sooner would we start with a definition than there would be somebody who felt they were left out. I believe it is very much in the interests of the success of this legislation that I should define generally what is the intention, for which later I and the government can be called to account, and then to leave the precise definition to the governor in council in the form of approval of the bylaws of the corporation. I should point out to the hon. member, who may have missed the point, that the corporation is not going to be free to define the nature of the deposits that are insured. The bylaws will have to be approved by the governor in council.


Kenneth Hamill (Ken) More: If I understand the minister correctly, there is no question as to what instruments will be insured so far as federally incorporated companies are concerned. Am I right in that?


Mitchell William Sharp: Generally speaking we know a good deal more about the kind of instruments they are issuing than we know about provincially incorporated companies.


Kenneth Hamill (Ken) More: Do I take it from the minister's answer that some instruments issued by federally incorporated companies may not come under the provisions of the bill, that there is some question whether they will be insured?


Mitchell William Sharp: If, after discussions with the provincial governments, we come to the conclusion that it would be desirable to include a particular form of deposit or a particular form of certificate, we would want to be free to extend the same treatment to federal institutions. We have a general idea what instruments issued by federal corporations we would insure, but until we have had an opportunity of discussing the matter with provincial governments and provincial institutions we cannot be precisely sure how far we want to go with the federal institutions. It is desirable that the coverage should be the same across the country in all provinces.
I wish to contradict what was said by a previous speaker, that there is going to be a different set of rules in each province. The exact, same set of rules will apply everywhere. We should have the same rules for federal institutions as for provincial institutions.


Kenneth Hamill (Ken) More: Earlier in answer to the hon. member for Broadview the minister spoke of
February 14, 1967

Canada Deposit Insurance Corp. the need for maintaining some flexibility and he mentioned the provinces of Ontario and Quebec. Subsequently he indicated that he was being pushed by nine provinces but not by the province of Quebec. Would he indicate to the committee when Quebec expressed its views and what consultations he had in which that province said it wanted some flexibility, which would indicate some interest on its part in this legislation? There seems to be a contradiction in what the minister said. Has Quebec expressed the desire that its provincially incorporated companies should come under this bill?


Mitchell William Sharp: Mr. Chairman, the discussions that have been held have been at the official level with all provinces. We have had a chance to have our officials visit the provincial capitals and, as I said previously, in nine of the provinces there is a very strong interest in having the federal legislation proceed immediately because they all wish their provincially incorporated companies to take advantage of it.
At present in the province of Quebec an investigation into financial institutions is proceeding. When we originally brought forward the proposal for federal deposit insurance I said in the house that we would not proceed immediately with the legislation but would welcome the views of the provinces on it. However, because of the great pressure that began to be put on us by various provinces and because of the pressure in the house to proceed with the legislation, I decided the best thing to do would be to proceed with it.
The province of Quebec has not yet had an opportunity of deciding what its position will be. It may be that that province, like Ontario, will want to have its own legislation relating to its own institutions. So far as I know that is certainly well within the jurisdiction of the province of Quebec, as it is within the jurisdiction of Ontario or any other province.
The exchange of correspondence that took place between the premier of Quebec and the Prime Minister of Canada is not directly but only partly related to this subject. The conference that has been proposed by Quebec is to apply to the whole range of financial institutions. It is to involve discussions about deposit taking institutions, finance companies, acceptance companies and so on. I even think it will extend into the field of securities legislation. We welcome that. We believe such a conference on a comprehensive basis would be a step forward because all of us have

reason to be concerned about recent developments in Canada, and governments as a whole ought to co-operate.
There is only one point which the province of Quebec made about this legislation. They hoped that this house would support clause 16, under which the permission of a provincial government is required before an institution can take advantage of the bill. I am referring to clause 16(a) which reads:
(a) the provincial institution is authorized by the province of its incorporation to apply for deposit insurance;
The province of Quebec said they hoped that this house would approve the bill with that provision in it because they would like to talk with us about the extent of the application.


Kenneth Hamill (Ken) More: The minister's answer indicated that perhaps universal coverage will be the largest common denominator of the views of each provincial government. I ask the minister whether on this basis the coverage he wants for federal institutions would be secure. It might be conceivable that the largest common denominator with respect to deposit proposals would be objected to by some of the provinces and therefore the coverage provided by the bill would not be as extensive as desired.
Further, I believe the minister told the standing committee that the insurance would come into effect for provincial and federal companies at the same time. He said it was desirable that this be so but that if provincial companies came into the scheme with the consent of their provinces before an examination had been made of their deposits, any losses that arose in such instances would not be a charge upon the deposit insurance corporation. The minister said all instruments would be covered during the transition period but subsequently some might not be because after examination they might not prove to be the type of instrument that this bill is designed to cover, even though during the transition period they came within the orbit suggested by the minister.
[DOT] (4:50 p.m.)
The minister speaks also of the prodding which caused him to speed up the examination of this bill by the committee and by parliament. What concerns me is that by this prodding which came about because of recent events-in my interpretation the collapse of Prudential Finance-the public may be misled to believe that this bill will in effect
February 14. 19S7

insure those instruments which Prudential issued and in respect of which they now find they cannot recover. I think this should be clarified. The flexibility of which the minister speaks in not defining deposits is not a flexibility which will in effect cover instruments such as those used by Prudential Finance in its operations. During the transitional period when the instruments that will be insured are being determined, will the provincial companies which will be involved in the inspection be required before inspection to stamp on instruments a clear indication to their customers that the instruments they are purchasing are in fact covered by this bill?


Mitchell William Sharp: Mr. Chairman, there seems to be some slight confusion in the mind of my hon. friend about this matter, but that may be understandable in view of the complexity of the problem. Before institutions are brought under the terms of the act there will be a clear definition of which deposits are and which are not insured. We will not bring the act into force until the governor in council approves the bylaws of the corporation. So there is no question about the range of instruments which would be insured. The purpose of inviting the provinces to bring their institutions under the deposit insurance provisions quickly at the same time as the federal institutions are brought under them is to give the provinces which wish to do so an opportunity to provide this insurance to depositors and to institute as quickly as possible at least the beginnings of the process of inspection. We will not discriminate among instruments on deposit when considering coverage. What we will be examining is whether the institutions as such are worthy of being covered by insurance. In other words, we will be looking into the financial management and the financial stability of the institutions themselves.
If it is found that an institution is not measuring up to the standards laid down by the corporation, then it will be given notice that it no longer will be covered. That will be the sanction. However, the kind of instrument which will be insured during the period of the insurance will be quite clearly defined in advance.


Kenneth Hamill (Ken) More: Did I understand the minister to say that if the instruments should be defined before the companies have been inspected they would not be the responsibility of the fund set up under the provisions of the act? It has been indicated to the public that if they apply even before the inspection 23033-824|
Canada Deposit Insurance Corp. they are insured. As I understood the minister there are no resources to which they can apply before they have been stamped "approved" after inspection. Therefore, will we have to wait until each provincial legislature has taken action and guaranteed these instruments during the transitional period before these companies can come under the scheme? Is this the position?


Mitchell William Sharp: The position is that if a province wishes its corporations to be covered before the federal corporation has an opportunity to inspect them, the province may ask that this be done. In this case the corporation will make an arrangement with the province concerning indemnification in the event of any losses in respect of an institution which is covered before there has been an opportunity to inspect it. During that period there will be no question raised concerning the safety of the deposits. Any losses incurred by depositors will be paid by the corporation and the corporation would look to the province for indemnification.


Kenneth Hamill (Ken) More: Would that agreement not require legislative action on the part of the province?


Mitchell William Sharp: Mr. Chairman, I really cannot answer that in advance. It would depend upon the provincial statutes. It is possible.


Mr. Monieith:: Mr. Chairman, I think the minister indicated that this act will not be proclaimed until the definition of deposits has been determined. At what stage in time is he anticipating that this will be done?


Mitchell William Sharp: Mr. Chairman, when the bill was before the house committee it was indicated that it would probably be in less than a month.


Richard Albert Bell: Mr. Chairman, I should like to put a question to the minister for clarification. I am not sure whether I misinterpreted him or whether he and I are at cross purposes. An hour ago I asked the minister specifically whether the important form of instrument known as a guaranteed investment certificate would be covered and I received from him an answer which I understood to be an unequivocal affirmative. A short while ago, in answer to a question asked by the hon. member for Calgary South, the minister said that during the transitional period some forms of guaranteed investment certificates and debentures would be covered. Earlier the minister said that probably once
February 14, 1967

Canada Deposit Insurance Corp. deposit insurance is permanent the use of the term "guaranteed investment certificate" would disappear and that this form of instrument would be called a deposit receipt.
There is some confusion between the minister and myself in relation to this matter and some confusion on the record. I wish the minister would make this very clear. When he does, would he also clarify what he said with relation to the appearance on the instrument itself of the word "deposit"? If I understood him correctly, he said it will be in the future a prerequisite to the insurance that there appear on the face of the instrument that it is a deposit. I certainly hope the minister will not take such a technical position that the word "deposit" must appear. There is no magic in the word. If it is in fact a deposit, then, before it is an insured document, why insist that that word shall appear? Indeed, I think that this very well might defeat the whole purpose of the legislation. It might be that some unscrupulous company would deliberately leave off the word "deposit" while advertising that the deposits are insured. They might leave off the word "deposit" in order to avoid paying the premium. Therefore, if I understood the minister correctly, the loan would not be insured. I venture to suggest that if there is to be some magic attached to the word "deposit" and it must be on the face of every document, this legislation very easily might be completely frustrated.
[DOT] (5:00 p.m.)


Mitchell William Sharp: Mr. Chairman, perhaps the hon. gentleman inadvertently has given support to the position I have taken that at this stage it is very difficult to define too precisely the meaning of "deposit". The answers I gave were intended to indicate the thinking that we had been doing in advance. It is our intention that, in general, guaranteed investment certificates of up to five years should be covered. We do believe it is desirable, however, after the corporation has passed through its process of formation and has gained some experience, that the public should have a clear idea of the kind of instruments that are insured and those that are not. I ventured some ideas as to how the distinction might be made. However, we are not quite satisfied yet that this is precisely the way it should be done. I thought it desirable to give the committee a general idea of our approach to the problem.
We do not want to interfere with the normal sort of operation now being carried on by

institutions that we intend to insure. We do believe it is desirable, however, to have some uniformity or a greater approach to uniformity in future so that the difference between insured and uninsured instruments will be quite clear.


Richard Albert Bell: Will the minister answer the second point in connection with the use of the word "deposit" on the face of the document?


Mitchell William Sharp: The point the hon. member raised about a company engaging in the practice of deliberately not putting the word "deposit" on the face of the document has been considered, and I am advised by one of the future members of the corporation that there would be a very severe penalty for any such practice. As to whether or not the word "deposit" ought to be included, let me say that obviously it follows from the fact that this act is for the insuring of deposits that no better word, so far as I am concerned, could describe what we are insuring. This would mean there would be a minimum of confusion.


Richard Albert Bell: I should like to urge upon the minister most vigorously that there not be some magic attached to that word. Surely it is the fact that is important, not the word attached to an instrument. If use of a word is made a condition of validity, then I submit very earnestly to the minister that this whole plan may be frustrated. There have been many instances of legislation which has been so technical that it has been frustrated by its technicalities. I suggest that will be the case if we do make as a condition precedent to the validity of an insured document that it contain a particular word to which some alleged magic is attributed. I urge the minister with great vigour not to fall into that trap.


Mitchell William Sharp: I thank the hon. member and I will take his views under very serious consideration.


Marcel Joseph Aimé Lambert: In respect of comments regarding different systems the minister suggests there will be a unified system of insurance. The minister cannot guarantee that, because if the provinces have the right to enter the field of deposit insurance they can do what they want. There may be great differences in definition between the provinces and theoretically at least there could be nine, ten or 11 different systems.
February 14, 1967


Mitchell William Sharp: May I interrupt the hon. gentleman? I did not intend to convey that impression. I meant only that the federal legislation shall apply uniformly throughout the country.


Marcel Joseph Aimé Lambert: I agree with the minister in that regard. I think that goes without saying. What the minister says about the nature of deposits here does not matter one whit because in the final analysis the courts will interpret what is the law as parliament passes it and what the regulations are as authorized by the act passed by parliament. Those are matters the courts will decide and they relate to the rights of individuals vis-a-vis depositors and the member institution. Therefore the regulations the corporation may pass may not be the same although they may have a general resemblance to what the minister has indicated this afternoon. I am not calling into question the intentions of the minister, but it does not follow that what he suggests this afternoon will become established legal rights. I therefore return to the question in respect of the definition of deposits.
There has been no indication so far that any provincial government has the authority to consent to an institution incorporated under provincial charter joining a federal deposit insurance scheme. Provincial governments cannot go beyond what they are authorized to do by law. I should like to know whether or not the minister is satisfied that any or all provincial governments have the legal authority, without the passage of express legislation, either to direct, as some provinces have indicated they intend to do, or consent to a provincially incorporated institution joining a federal scheme. We do not seem to have much information about the powers of provincial governments to do precisely what I have mentioned.
In order to bring this matter to a head, Mr. Chairman, I should like to move:
That clause 2, subclause (e) be deleted and that the following be substituted therefor:
(e) "deposit" means any obligation of a member institution payable in Canada in Canadian funds to the holder thereof on demand or on notice within a maturity date of five years from the making thereof;
In considering the general terms of this definition I point out that a member institution is defined by the act, and this falls within the terms the minister indicated he thought should apply to a deposit. It refers to a deposit payable in Canada in Canadian funds on demand or on notice within a maturity date of five years from the making thereof. The
Canada Deposit Insurance Corp. word "obligation" covers all the types of instruments listed by the minister. It might even go further, and I suggest it does, to include any possible form of deposit that might be authorized under a provincial scheme.
It is my hope that the minister will refer this amendment to his law officers. This is a very serious point. If the minister can show me that there is something gravely wrong with this definition I am prepared to accept that, but I put it forward in all seriousness. In an effort to assist the consideration of this bill I would agree to allowing clause 2 to stand while we consider subsequent clauses in order to give the minister and his officials an opportunity to consider the amendment.


Mitchell William Sharp: I am quite agreeable to the suggestion to go on with other clauses. I will have a look at the proposed amendment and make my comments later.
[DOT] (5:10 p.m.)


The Chairman:: Is it agreed that this clause shall stand?


Marcel Joseph Aimé Lambert: Yes, Mr. Chairman. I understand the minister accedes to my suggestion that the clause stand while the legal implications of the amendment I have moved are considered.


Herman Maxwell Batten: Is it agreed by the committee that clause 2 shall stand?


Some hon. Members:: Agreed.
Clause stands.


Herman Maxwell Batten: The committee will proceed to clause 3.
On clause 3-Corporation established.


Marcel Joseph Aimé Lambert: Mr. Chairman, I ask this question for clarification. With respect to clause 3(1) is the minister satisfied that the power to acquire, hold and alienate real and personal property would be sufficient to grant authority to the corporation to sell the assets of or merge an institution which had taken advantage of the lender of last resort facilities under the act, had failed to make good its obligations to the corporation and was in default?
It is all very well to say what shall be the procedure for entering into lender of last resort negotiations, determining the obligations of the corporation and of the member institution, and determining when there shall be default, but as in all legal contracts there
February 14, 1967

Canada Deposit Insurance Corp. must be a provision for resolving the default. How do you proceed once default has been established? I believe there are provisions under the United States legislation whereby the deposit insurance corporation may take a defaulting bank and sell its assets to another member institution, or merge the bank with one or more institutions. I think this is a salutary provision. It provides further flexibility in that the corporation, rather than acting as the curator and liquidator of a defaulting institution, in order to obtain the best deal, if one can use the word "deal", for the shareholders of the defaulting member institution is able to sell its assets or merge the institution under some form of share exchange with a going concern. Is the wording of clause 3(1) sufficient to achieve this purpose, or subsequently when we are considering-


Mitchell William Sharp: Clause 11.


Marcel Joseph Aimé Lambert: Yes. There are also the objects, powers and duties set out in clause 8, but certainly clause 11 applies. In any event,
I think the relationship is much more closely established in clauses 3 and 11.


Mitchell William Sharp: Mr. Chairman, clause 11(c) provides:
The corporation may do all things necessary or incidental to the objects of the corporation and in particular, but without limiting the generality of the foregoing, the corporation may, in furtherance of its objects,...
(c) act as a curator of a bank or liquidator or receiver of a member institution when duly appointed as such and appoint qualified and competent persons, whether employees or not of the corporation, to carry out any or all of the functions of the corporation as curator, liquidator or receiver:
Therefore, provided the court approved the corporation could as receiver bring about a merger or adopt any similar method of protecting the interests of the shareholders and depositors.


Marcel Joseph Aimé Lambert: Mr. Chairman, is the minister satisfied that the wording used is sufficient, rather than specifically spelling it out?


Mitchell William Sharp: Yes. This was in the minds of the draftsmen in the Department of Justice when the bill was drafted.


Marcel Joseph Aimé Lambert: Is the minister satisfied that a judge interpreting the act would be able to read the minds of the draftsmen?


Herman Maxwell Batten: Shall clause 3 carry?


[Stage Direction]
Clause agreed to.
Clause 4 agreed to.
On clause 5

Board of directors.
Marcel Joseph Aimé Lambert: Mr. Chairman, I wonder whether the hon. member for York Centre, who is somewhat of a carrier in these matters, would be able to give us the benefit of his knowledge in this connection.


Mr. Walker:: Some loads are lighter than others.


Marcel Joseph Aimé Lambert: Mr. Chairman, may I ask the minister where he would seek alternate directors? I know there are four individuals specified who hold senior positions with the government, and I think we are quite satisfied with the incumbents of those positions as members of the board of directors. But what about the alternate directors and why is there the limitation of a period not exceeding 30 days in respect of the time these alternate directors shall serve on the board of directors? Are these appointments to be made by order in council? What will be the position if, for instance, there is a long absence from the country by a director, or a long illness? I do not understand why there should be the limitation of 30 days.


Mitchell William Sharp: Mr. Chairman, the limitation was for the purpose of requiring that the officers named shall in fact carry out their duties. We felt that the appointment of alternates for 30 days would be sufficient to provide for any temporary absences; otherwise the governor in council might be able to replace the officers that are named in the bill by others that are not. With regard to the first question asked by the hon. member, we would have in mind appointing as alternates to these directors other public officials, probably their deputies.


Herbert Eser (Herb) Gray: On a point of order, Mr. Chairman, I think I should draw to the attention of the committee that the finance committee in its report to the house recommended certain amendments to clause 5 which are found at page 1310 of Votes and Proceedings for February 10 last. Perhaps I might take a moment to point out to the committee of the whole that the amendments are as follows:
(a) Immediately after subclause 2, add the following :
"(3) A vacancy on the board of directors does not impair the right of the remainder to act."
February 14, 1967

"(4) Where the office of chairman is vacant, the minister may appoint, for a period not exceeding 90 days, an acting chairman who shall, while so acting, be a member of the board of directors and have and exercise all the powers of the chairman.*'
(b) Renumber subclause (3) as subclause (5).


Herman Maxwell Batten: Order. Perhaps I should point out to the committee that the amendments referred to are recorded in Votes and Proceedings No. 205 for Friday, February 10. There are copies of Votes and Proceedings available at the table.
[DOT] (5:20 p.m.)


Richard Albert Bell: Has the minister considered whether any conflict arises between the role of the superintendent of insurance and the inspector general of banks under clause 5(1), and the role which they are given under clause 21? Under clause 21 these two officials are given the duty of inspection. In effect, they report to themselves in their capacity as directors. While I suggest there may possibly be a conflict between these two roles, I want to make it abundantly clear that I have the highest confidence in the present superintendent of insurance. He is a man in the great tradition of that office and I am sure he would not consciously involve himself in any conflict. But he has duties to carry out under the inspection clause. Is it appropriate, having inspected and reported to the corporation, that he should then be one of the controlling members of the corporation? Is it appropriate that the inspector general of banks, having carried out duties of inspection for the corporation, should be one of the directors?
I will put the position this way. If the two officers were other than such distinguished members of the public service and persons of such high integrity, I would oppose this clause vigorously as involving a conflict of interest. I do not wish to do so in view of my confidence in them, but the minister might consider that the matter I have raised does involve a point of some importance.


Mitchell William Sharp: I find it difficult to discover how a conflict of interest could arise. Perhaps the hon. gentleman would indicate the kind of circumstances in which there might be a conflict of interest, and on that basis I would be glad to comment.


Thomas Miller Bell: A case in which a conflict obviously arises is where the Superintendent of Insurance inspects and reports on a certain company. Then the private institution upon which he has reported, perhaps

Canada Deposit Insurance Corp. unfavourably, takes its case before the board of directors. The institution now finds it is dealing with the very person who made the unfavourable report, a person who is both the inquisitor and the judge. As 1 say, I have the highest of confidence in the integrity of the superintendent of insurance and of the inspector general of banks but a situation might easily occur in which great difficulty would ensue and I do not think such an invidious position should be allowed to arise.


Mitchell William Sharp: May I point out to the hon. member that insurance cannot be withdrawn from a federal institution? Insurance can only be withdrawn from a provincial institution. It is compulsory for a federal institution.


Marcel Joseph Aimé Lambert: The hon. member for Carle-ton has raised a point which escaped me entirely. I believe a difficulty arose in the United States during the last two years where the comptroller of the treasury has power to authorize the incorporation of banks. He gives them a certificate allowing them to commence business. There were two or three banks in the Pacific area which went bankrupt or got into difficulties to the extent that they closed their doors. They are, I believe subject to deposit insurance.
But let us look at the situation in Canada. A bank is authorized to commence business on the issuance of a certificate by the Treasury Board on the recommendation of the inspector general of banks. It is the inspector general of banks who gives the O.K. Cases might arise where an inspector general was over generous in his estimation of the ability of the incorporators of a bank to carry on the business of banking. Then the same inspector general sits in judgment as a member of the board of directors acting as a lender of last resort. One can see-and this is no reflection on the present incumbents of the two offices concerned-that the inspector general might be tempted to grant rather too generous terms in order to save his neck after he had authorized the issuance of a certificate to a banking institution when someone else might not have done so. He would be in a difficult position. It might be said that is only a theoretical possibility but unfortunately it is these theoretical possibilities which so often come to pass.
It seems to me on reflection that while the superintendent of insurance could carry out the duties of inspecting and reporting to the board the board must sit alone while assessing the reports made to it. The same applies
February 14, 1967

Canada Deposit Insurance Corp. to the inspector general of banks. I am persuaded that the view put forward by my hon. friend from Carleton is well founded and that notwithstanding the dignity of their offices and the probity of their reputations it is conceivable that the two officials who have been mentioned might be placed in a situation in which a conflict of interest could arise.


Mitchell William Sharp: I find it difficult to agree with these arguments. I certainly think it would be a waste of public money if we had to duplicate the work which is being done by the inspector general of banks and the superintendent of insurance by having one federal official sitting in judgment on the other, which is in effect what is being suggested here. We created this corporation and provided that its directors should include the inspector general of banks and the superintendent of insurance because they were in the best position to know about the functioning of federal institutions; they have to inspect them in any event.
It seemed to us that the standards which they apply would be of the same kind in connection with insurance as were applied by them in connection with their responsibilities under other statutes. I find this is a highly theoretical and hypothetical argument and I suggest to the committee that if we were to start again to create a corporation we would appoint to its board of directors precisely those officers who are in the best position to judge the financial stability and the management standards of the corporations which they are supervising and which make applications for advances under the rediscount facilities. I can see little which would be gained by naming the deputy minister of trade and commerce or some other official rather than those officials who are most expert and who must report to the minister in any event about the operations of those institutions.


Marcel Joseph Aimé Lambert: I admit that the minister has an argument. It is an arguable case. But surely the superintendent of insurance and the inspector general of banks have to submit to the judgment of the deputy minister of finance, the Governor of the Bank of Canada and an outsider who is to be the chairman. So why would it be more invidious if they were to submit to the judgment of two others in a situation where there would be no conflict of interest?


Mitchell William Sharp: At least they could bring to the deliberations of this corporation more expertise than any other two officers I can think of.


[DOT] (5:30 p.m.)


Richard Albert Bell: Undoubtedly that is true but it is not an answer to the question. Expertise on a board of directors can sometimes be very dangerous. I want to ask the minister about an answer he made. In purporting to reply to my initial question he said there was no possibility of cancellation of the insurance of a federal institution. Was he by that answer implying that someone other than the superintendent of insurance would be the person designated under proposed section 22 to examine the affairs of a provincial institution? I confess that I have been proceeding on the assumption that it would be the Superintendent of Insurance who would be designated under this provision.


Mitchell William Sharp: It would not necessarily be always those officers. In fact it is envisaged that sometimes provincial officials would be employed.


Richard Albert Bell: Of course it would not necessarily be, but is it not the intention in fact to have the superintendent of insurance do this work?


Mitchell William Sharp: Some of the staff of the superintendent of insurance may be engaged in these inspections. They will be reporting to the corporation as well as, of course, to the chief of their section. It is a very interesting point that has been raised by the hon. member for Carleton but I think it is more interesting than substantial.


[Stage Direction]
Clause agreed to.
On clause 6-Chairman.
Richard Albert Bell: Is the minister confident he will be able to secure a chairman of the standing he wants for a term as short as five years?


Mitchell William Sharp: Yes, Mr. Chairman, I have received one or two suggestions concerning very competent and highly experienced men. What we will be looking for, if there are any other applicants around, will be people such as retired bankers.


[Stage Direction]
Clause agreed to.
Clauses 7 to 9 inclusive agreed to.
On clause 10-Provincial institutions.
Maurice Rinfret: Shall clause 10 carry?


Richard Albert Bell: On division.


[Stage Direction]
Clause agreed to.
February 14, 1967
[Stage Direction]
On clause 11-Powers of corporation.
Harold Raymond Ballard: I am wondering whether there is not a conflict of interest in connection with clause 11, which I do not believe should occur. I am referring to subclauses (d) and (e). We have a peculiar situation here whereby a corporation that is a creditor of another corporation that is winding up becomes the liquidator and also the creditor corporation is capable of receiving, under subclause (e), the assets of the member institution from a liquidator or receiver thereof. I am just wondering whether this provision is not directly opposed to the Bankruptcy Act in that you have a creditor also acting as the liquidator. There may be a logical explanation for this but it seems to me incredible that the corporation should act in a dual capacity such as this.


Mitchell William Sharp: This clause was designed to enable the corporation to wind up the affairs of a deposit-taking institution in the most orderly way possible and with the least loss to the corporation that is being wound up as well as the least loss to its depositors. The provision was designed deliberately for that reason. It may be unusual, but the circumstances under which one of these institutions would be wound up would be most unusual because the depositors would be insured.
It is certainly in the interests of the public at large that the assets of the insured institution should be disposed of in as orderly a fashion as possible. The corporation, we believe, would be in a better position sometimes to engage in the business of liquidating or receiving than anyone else of whom we can think. This does not mean that in every case the corporation would act as liquidator or receiver, but we believe it should be empowered to do so.


Harold Raymond Ballard: Would the minister not agree that there are people in the business of winding up companies of various types who are more experienced in this process than the board of directors of this corporation? I suggest to the minister that he give consideration to appointing an independent liquidator in order to avoid the possibility of being accused of being partial in the sale and distribution of the assets of the liquidated corporation.


Mitchell William Sharp: Of course, the corporation as such will not have the staff or the employees to engage in liquidation or receivership. It would employ professionals for that purpose. The purpose here is to give the corporation
Canada Deposit Insurance Corp. complete control when circumstances arise where this seems suitable.


Mr. Lewis:: As I read the clause the corporation would not be appointed to this function except by a court. Is not that what subclause (c) means? Presumably the various reasons for having this corporation as liquidator or receiver would be before the court as against the interests of the other creditors. It seems to me that there may easily be a situation in which the corporation would be the best person to act in that capacity.


Mitchell William Sharp: I thank the hon. member for York South who is very experienced, I am sure, in such matters.


David Lewis: No, I am not; I have no knowledge at all.


[Stage Direction]
Clause agreed to.
On clause 12-Powers of directors and bylaws.
Richard Albert Bell: I should like to direct the attention of the committee to subclause 2, line 21, page 6. Under subclause 2 the directors of the corporation have all the powers conferred upon commissioners appointed under part II of the Inquiries Act. Then lines 21 and 22 of that clause read in part as follows:
-the directors may delegate such powers as occasion requires.
Here is a blanket delegation of authority under part II of the Inquiries Act. Part I of the Inquiries Act is of course the one that is more familiar because it gives power to royal commissions and the like. Part II deals with departmental investigations and is confined to a commissioner or commissioners appointed by a minister with authority of the governor in council. You know precisely who the commissioners are. The governor in council has to take responsibility for the person appointed as commissioner. These commissioners have substantial powers. They can compel the attendance of any person. They can compel such persons to produce documents and books. Where a person refuses to answer a question or produce any documents he is liable, on summary conviction, to a penalty of as much as $400. It seems to me that there is no real objection to this when the exercise is made by someone who is identifiable. But here we have a blanket delegation. We know not who may have the power under the Inquiries Act. Does the minister really believe that such a blanket delegation is necessary to carry out the purposes of this legislation? I
February 14, 1967

Canada Deposit Insurance Corp. think a considerable danger may creep in in this way.
[DOT] (5:40 p.m.)


Mitchell William Sharp: Mr. Chairman, quite frankly I don't know. I should like to have the opportunity of consulting with the draftsmen of the bill to find out why they included those words. There may have been a very good purpose with which I am not acquainted; nor is the official who is advising me. Therefore I should like a little time to consult with the draftsmen of the bill.


Thomas Miller Bell: Mr. Chairman, I would be very glad if the minister were prepared to let this clause stand. I personally think that all the words after "oath" in line 21 should be struck out. If there is any power of delegation that power of delegation should be subject to some supervision, such as the supervision of the governor in council.


Marcel Joseph Aimé Lambert: Mr. Chairman, I should like to add another reason for holding this clause for further consideration. We are holding clause 2 to consider the amendment I put forward. Under subclause (1) (g) power is granted to the board of directors to define the expression "deposit". If the expression "deposit" is defined in the definitions clause, then this power need not exist. Therefore, both for the reasons advanced by my colleague for Carleton and for this other reason perhaps this clause could stand.


Maurice Rinfret: Is it agreed that clause 12 stands?


Some hon. Members:: Agreed.
Clause stands.
On clause 13-Duty to insure.


Harold Raymond Ballard: Mr. Chairman, clause 13 of the bill seems to exempt certain depositors from insurance coverage. I believe one type of depositor has been omitted from this exemption. I have before me a financial statement of a Canadian bank which has just come to hand and I notice in this financial statement that there are several types of deposits listed. The liability for deposit is listed under five different nomenclatures, namely, government deposits, Canadian provincial government deposits, personal savings deposits, other deposits, and deposits by other banks.
I believe that in the categories "personal savings deposits" and "other deposits" there must be a number of deposits which are placed in a bank by trust companies and loan
(Mr. Bell (Carleton).]
companies which are incorporated under the federal Trust Companies Act or Loan Companies Act. There are also a number of deposits in this institution which are received from other banks. Initially those deposits from other banks and from trust and loan companies were insured under these acts. I submit that on that ground those deposits will in part, if clause 13 is left as it is, be covered a second time by deposit insurance, and I do not think that is the intention.
Therefore, Mr. Chairman, I propose to move an amendment to clause 13 which would exempt from insurance coverage deposits from any other federal institution as described in clause 9 of this bill, which clause defines federal institutions as banks and companies incorporated under the Trust Companies Act or the Loan Companies Act.
Specifically, the amendment I propose to suggest to clause 13 is as follows:
Delete "and" at the conclusion of subsection (b) and add a new subsection (c) as follows:
"a deposit of
(i)	a bank;
(ii)	a company incorporated by or pursuant to an act of the parliament of Canada that accepts deposits from the public and to which the Trust Companies Act or the Loan Companies Act applies; and
(iii)	a company the incorporation of which is continued by or pursuant to an act of the parliament of Canada that accepts deposits from the public and to which the Trust Companies Act or the Loan Companies Act applies.
Renumber the present subsection (c) as subsection (d).


Marcel Joseph Aimé Lambert: What about provincial institutions?


Harold Raymond Ballard: I am making reference here only to what are already defined in the act as federal institutions.


Herbert Eser (Herb) Gray: May I ask a question for clarification purposes? If under this bill it would be possible for provincial institutions to be members of the Canada Deposit Insurance Corporation, if I were to follow the hon. member's line of reasoning, which of course I do not accept, why should they not be included in the amendment as well as long as they belong to this scheme?


Harold Raymond Ballard: My answer to that is quite a simple one. When I drew up the amendment I hoped that the minister would be more definitive in his presentation of the bill and make it apply to all companies in Canada whether provincial or federal incorporations. I would not want on my own to go so far as to cover provincial institutions that may come under
February 14, 1967	COMMONS
this bill. However, I believe that the amendment I have proposed will alleviate this problem almost entirely. Therefore I would not be averse to some amendment being made which would include provincial institutions. However, I would not want to propose it myself.


David Lewis: Has the minister any comment to make on the likelihood of double insurance?


Mitchell William Sharp: In the first place I would point out that we are only insuring deposits up to $20,000. There are a great many people whose deposits will be insured but who will get very little insurance on the amount of their deposits. People with millions of dollars on deposit can get insurance only up to $20,000 of those millions. So even though we do in fact cover these deposits the amount of the coverage is quite infinitesimal.
Moreover, I think the question of double coverage can be answered in this way. Some institutions place deposits with other institutions. Indeed, one can imagine a situation where there is a complete circle. One institution deposits in another, the second in a third, the third in a fourth, the fourth in a fifth, and the fifth in the first. Only one of those institutions is likely to fall at one time. So the question of doubling up insurance is not a substantial point.
I would suggest to the committee that this introduces a quite unnecessary and unimportant amendment to the bill. It does nothing to make it more acceptable to the people and it certainly does not add anything to defray any cost to the institutions that might have to pay the small amount of insurance involved. But it would add enormously to the complications if it were to be accepted.


Mr. McKinley:: Mr. Chairman, I should like to know the reason for providing insurance on deposits only up to the amount of $20,000. There must be many people who, between the sale of one asset and the purchase of another, have hard earned money they would like to have insured and perhaps put on deposit for a certain length of time. Why would these people not be entitled to insurance to any amount?


Mitchell William Sharp: Mr. Chairman, the purpose of this bill is quite clear. It is to insure the deposits of people with modest means. Those who have large amounts on deposit are presumably able to make their investments or deposits with full knowledge of all the risks
Canada Deposit Insurance Corp. involved. The purpose of this bill is to provide insurance for those small depositors who cannot make the inquiries that are necessary to establish the relative risk of putting their deposits in one institution rather than another. I do not think this parliament needs to be concerned about larger depositors at the present moment.
[DOT] (5:50 p.m.)


Maurice Rinfret: Perhaps I should read the amendment for the information of the committee.


Mitchell William Sharp: Mr. Chairman, in the light of the explanation I have made I wonder whether the hon. member really wishes to proceed with his amendment?


Marcel Joseph Aimé Lambert: Something may be said for part of what the hon. member for Calgary South was saying. There are deposits that may be held, for instance, by credit unions as clearing accounts with the chartered banks. They would be insured up to the amount of $20,000. There are the accounts of all near banks with the chartered banks, used also for clearing purposes. They would be insured up to the amount of $20,000. Another area is the accounts of the treasury branches of the province of Alberta with the chartered banks, to participate in the clearing system. After all, the province of Alberta may insist that its treasury branches are not to be member institutions and that therefore they will not come under the aegis of this legislation. Notwithstanding that, the province may ask all trust companies and other institutions operating within the province to become member institutions.
I wonder whether one could say that the province would be a preferred claimant and should not be covered by deposit insurance. I think the provinces will assume part of the cost or responsibility for some time until this scheme gets going. I do not know why the government of Canada should be the sole government to put this matter beyond the pale. I would have thought that the provincial governments would also take the same position. If they are asserting and are being granted a right to intervene in the question of deposit insurance, I think they are having it both ways.
As to the point made by my colleague from Huron, I think the minister will agree that the deposit is limited and not the depositor. I take it that a person who comes in with $100,000 and wishes to deposit it for six weeks, say, to bridge a transaction, has to
February 14, 1967

Canada Deposit Insurance Corp. split his money into separate accounts. I should like the minister to comment on this interpretation. Could one split up that sum of money into five trust accounts each of $20,000 but together adding up to $100,000, with all accounts being insured?


Robert Elgin McKinley: Mr. Chairman, can the minister say whether that could happen? Is the minister aware that banks pay the maximum interest on amounts of over $25,000? Should there not be some togetherness between himself and the banks with respect to this legislation?


Mitchell William Sharp: Mr. Chairman, I think it is wise to restrict the coverage in this legislation to the smaller depositors. With regard to the definition of "deposit" it is the intention that the definition shall not be evaded by establishing a whole series of deposits in the name of a single individual. In other words, we shall establish the meaning of "deposit" in such a way that it will not be possible for a person to get coverage on $100,000 by making five deposits. The intention of the bill is to cover only $20,000 in a particular institution. Of course, anybody can make deposits in various institutions and cover the risk that way. All institutions are not likely to fail at once. I doubt whether that would be a profitable endeavour.
I am given to understand that the reason for clause 13(l)(b), which excepts from coverage a deposit in respect of which Her Majesty in right of Canada would be a preferred claimant, arises out of a provision of the Bank Act. I inquired from the inspector general of banks exactly what the position of a deposit by Her Majesty in right of Canada is. Because there are particular rights attaching to deposits by Her Majesty in banks, the clause is included.


Marcel Joseph Aimé Lambert: The minister speaks of
deposits in the right of Canada. What about deposits by Her Majesty in the right of any province participating in this scheme? The minister should look at that.


Mitchell William Sharp: The provinces do not have specific rights under the Bank Act.


Harold Raymond Ballard: My purpose in moving the amendment to clause 13 was to remove what I considered a minor annoyance to the banks and other like institutions which feel they are being covered twice by the insurance offered by this bill. After the lucid explanation and assurances of the minister that the banks will not mind to a certain extent paying double


insurance, I am prepared to withdraw my amendment.


Maurice Rinfret: Has the hon. member unanimous consent to withdraw the amendment?


Some hon. Members:: Agreed.
Amendment withdrawn.


[Stage Direction]
Clause agreed to.
Clauses 14 and 15 agreed to.
On clause 16-Insurance of provincial institutions.
[DOT] (6:00 p.m.)
Marcel Joseph Aimé Lambert: This is the clause which authorizes a province either to direct or to agree that an institution carrying on business in that province and incorporated within that province shall have the right to participate in this deposit insurance scheme. I have made many comments, both at the resolution stage and on second reading, about what I consider to be the unwarranted intrusion of the provincial authorities into the business of banking. They have no business whatsoever being there. At the moment they are being let in by default, and if this provision were challenged there would be justifiable argument that the provinces have no authority to engage in the business of banking or authorize the business of banking and near banking. I contend that they do not have the authority to direct near banks to participate in a federal system of deposit insurance.
I raised this point earlier with the minister, who did not answer it. Have the provincial governments the legislative authority either to direct or authorize provincially incorporated institutions, carrying on the business of near banking, to participate in a federal deposit insurance scheme? This point was discussed in the standing committee by Mr. Ryan, the department's legislation counsel, and my colleague, the hon. member for Kamloops, as recorded at page 24 of the unrevised transcript of the committee proceedings. Mr. Ryan was replying to a question and he said:
On which point, Mr. Chairman? On the authorization of the province? With respect to the authorization of the province of incorporation, I would like to point out a gray area that does exist ... These provincial institutions would be incorporated under the heading of a company with provincial objects. They would be authorized to carry out certain activities including the ones we are concerned about there, by their incorporating charter or their act, and they would also acquire in some cases all of their powers from that act, charter or statute, depending on the jurisdiction therein. In
February 14, 1967

some of these cases it may be beyond the powers of the company to take out insurance or to come into this scheme.
I do not know how it could be suggested by Mr. Ryan that this federal bill would cure a deficiency in the charter of a provineially incorporated company by providing that the provincial institution should be authorized by the province of its incorporation to apply for federal deposit insurance. I do not think any federal statute could do that.


David Lewis: May I ask the hon. member a question? I happen to agree with him in opposing this particular subclause. I am not a member of the standing committee but I have read what Mr. Ryan said. Am I wrong in my understanding that what Mr. Ryan said was that the provision for provincial authority would mean that a provincial statute could give companies, incorporated under provincial statute or charter, the authority to enter into this deposit insurance, which authority they otherwise might not have? In other words, I understand Mr. Ryan to have said not that the federal statute would cure the deficiency in the charter of a provincial company but that provincial authorization, presumably by provincial statute, would cure it. Am I wrong in that?


Marcel Joseph Aimé Lambert: This may be what Mr. Ryan meant, that there would have to be a provincial statute curing any deficiencies in the charters of any companies lacking this power.


David Lewis: That is what I thought he said.


Marcel Joseph Aimé Lambert: That may be one interpretation, but on the other hand on examining the unrevised edition of the transcript of last week's committee hearing I feel it was also suggested that clause 16 (a) would be deemed to cure such a defect by saying that if a province authorized a provincial company to apply it would qualify. This may be a less valid interpretation of what Mr. Ryan said than that suggested by the hon. member for York South.
If the argument put forward by the hon. member for York South is correct, then it will take some time for the various provinces to act and pass the necessary statutes. In addition, I believe some trust companies are incorporated by private bills and a lot of cleaning up will be required in the provincial legislatures. Further, I question whether without legislative provision, without a special act authorizing a provincial cabinet or cabinet minister to direct provineially incorporated

Canada Deposit Insurance Corp. companies to participate in the federal scheme, provincial cabinets or ministers can so direct because the executive of a provincial government, like the executive council of the federal government, cannot act beyond the powers granted to it by some specific statute.
I doubt that there is any general provision whereby an order in council may be passed to do this. Some of the provincial authorities may say that simply because the premier of a province delivers a ukase that is sufficient, but I would like to know first whether the Minister of Finance is satisfied that provincial governments have the authority to direct provincially incorporated companies to participate in this scheme or to consent to their participation.
Second, since provineially incorporated companies are authorized to operate within the confines of a province, participation in the federal scheme would be an extraterritorial operation, and it may be that the charters of such companies are not wide enough to permit them to participate in any activity outside the province. In that case a provincial statute might be passed to cure defects in companies' charters. Personally I do not like to see this provincial authority included in the subclause and I am going to move an appropriate amendment in that regard.


Mitchell William Sharp: When the bill was originally drafted clause 16(a) was not put in the terms that "the provincial institution is authorized" by its legislature "to apply for deposit insurance." It was put in much more general terms, saying "as authorized by the province of its incorporation."
The intention, and this certainly would be the practice, is that the deposit insurance corporation would accept from any institution a letter from the responsible minister giving permission for the institution to apply for insurance. That is the intent of the legislation and I am advised that that is why the bill is drafted in this form. It was deliberately drafted in this form to avoid requiring legislative action to permit a provincial institution to apply. Of course it may be that some provincial institutions may not possess the corporate powers to enter into a policy of insurance, but I am advised that this is very unlikely.


David Lewis: May I ask the minister whether this advice comes from Mr. Ryan, because it was Mr. Ryan suggested it?
February 14, 1967

Canada Deposit Insurance Corp.


Mitchell William Sharp: Yes, it is possible that Mr. Ryan, being a lawyer like my hon. friend, is always concerned about the exceptions and not the general rules.


David Lewis: Speak for Mr. Ryan and not for this lawyer.
[DOT] (6:10 p.m.)


Mitchell William Sharp: It is quite possible that some corporations might not possess the powers. If I were in the position of a law officer of the Crown, I would be very careful in my answers to see that I should not get tripped up by some exceptional case. If a province requires its companies to take out deposit insurance, as some of them may, then of course legislative action is required. It may also require legislative action for a province to assume the responsibility for losses if it should want to bring its institutions under deposit insurance before we as a federal corporation have had an opportunity to inspect them. All these things might require legislative action. This is another reason that it is desirable to get this bill through all stages while the provincial legislatures are still in session throughout the country. In connection with the particular point raised about the kind of authority that is required, it is our intention that the corporation would accept a simple authorization by a responsible minister.


Marcel Joseph Aimé Lambert: Again, Mr. Chairman, I am wondering what is the authority of the responsible minister to give that consent. The minister is much too experienced both as a senior public servant prior to his entry into politics and in his present position as Minister of Finance not to know that some powers are seriously circumscribed by statute. I might mention the Financial Administration Act, for instance. How can he be satisfied that a letter from a minister of the Crown of any province has been written based upon the appropriate power? This is what I want to be satisfied about. I wish to be satisfied that there shall be sufficient authority.


Mitchell William Sharp: Mr. Chairman, we do not anticipate any practical difficulty in this regard. After all, if the provincial institution itself has the power to enter into a policy of insurance with the corporation, it will go to the provincial government and say in effect that it would like authority to take out the policy. Either the provincial government gives it that authority or it does not. The evidence the corporation will accept is the written permission of the responsible minister.


Marcel Joseph Aimé Lambert: What is it worth?


John Gilbert: Mr. Chairman, we also are opposed to clause 16(a) of the bill which gives the provinces the power to consent to an application in respect of deposit insurance. We feel that the federal government is tacitly approving of the provinces participating in the monetary and financial affairs of the country. We also feel that it takes away from the voluntary aspect of a corporation participating in deposit insurance if the consent of the province is required. We believe the onus should be on the province-


Gilles Grégoire: Mr. Chairman, may I call your attention to the fact that we do not have a quorum at this time? There are not 20 members in the house.


Maurice Rinfret: I very much appreciate the hon. member's co-operation, but I am advised that there are a few members behind the curtains, and accordingly-


Gilles Grégoire: Mr. Chairman, I apologize; at least my remark will have had the effect of bringing in those who stand behind the curtains.


John Gilbert: Mr. Chairman, I was stating that we feel the onus should be on the particular province and that it should pass legislation if it does not wish its provincial institutions to participate in deposit insurance. This really is a tacit abrogation by the federal government. For these reasons I should like to move the following amendment:
That clause 16 be amended as follows:
1.	By deleting subclause (a).
2.	By renumbering subclauses (b) and (c) as subclauses (a) and (b) respectively.


Maurice Rinfret: May I have the indulgence of members of the committee to read the adjournment proceedings which will take place tonight at ten o'clock. It is my duty, pursuant to provisional standing order 39A, to inform the house that the questions to be considered are the following: The hon. member for Kootenay West (Mr. Herridge), Canadian Centennial-request for repeat tour of confederation train; the hon. member for Richmond-Wolfe (Mr. Asselin), Historic Sites and Monuments-restoration of home of Sir Alexander Galt; the hon. member for Megantic (Mr. Langlois), Education-request for increased assistance to Canadian students.
February 14, 1967	COMMONS


Mitchell William Sharp: Mr. Chairman, an amendment similar to that now moved by the hon. member for Broadview was moved in the committee on finance, trade and economic affairs and after some discussion it was defeated. I suggest it should be defeated again. The purpose of including clause 16(a), as I said in the committee, is to improve the climate of cooperation between the provinces and the federal government in the operation of deposit insurance. I believe it is very important for the success of this operation that the provinces should co-operate with the federal government in making this plan a success in so far as it applies to provincially incorporated institutions. If that clause were not included in the legislation a situation could arise in which, if an institution wanted to apply for federal insurance contrary to the wishes of the provincial government, it could be very difficult, it would seem to us, to provide the kind of inspection that is desirable.
Wherever possible we would like to use provincial officials. We believe, since these are provincial institutions, that we should have not antagonism from the provincial governments but active co-operation. We put that clause in the bill after mature consideration of the various points raised both in the committee and in the house. It would have been possible for us to have left it out. I gather that that is the view of the members of the Progressive Conservative party and the New Democratic Party who have spoken.
[DOT] (6:20 p.m.)
I agree that if we had been able in advance to have discussions with the provinces about the operations of deposit insurance it might have been possible to avoid having a clause like this. On the other hand, it might not have been possible because we might well have come to the conclusion even after discussions with the provinces that this clause should be kept in if only to show our good will and desire to avoid unnecessary conflicts with provincial authorities.
The Prime Minister tabled in the house an exchange of correspondence between the premier of Quebec and himself regarding a conference on financial institutions that Mr. Johnson had asked the Prime Minister to convene a conference of all provinces with the federal government. This is another reason I believe it would be desirable to retain this clause. During the discussions the Prime Minister had with Mr. Johnson following receipt of the letter the premier of Quebec specifically asked that this clause be retained.
Canada Deposit Insurance Corp.
He said he thought it would help greatly in discussing the problem as a whole.
If we in this house were to remove this clause I believe we would create a bad impression and would not help improve the chances of active co-operation between the province of Quebec and the federal government, or with other provinces, in the promotion of a desire shared by all of us, namely, the improvement of the safety of investors and the improvement of the standards of financial management in this country. Let me say to members of the committee that I have not changed my view after the discussions which took place in the committee on finance, trade and economic affairs. Indeed, developments since those discussions have only reinforced my view that we should ask the provinces for permission before we insure deposits in institutions that up until now, under the laws of this land, have been supervised by the provinces.


Marcel Joseph Aimé Lambert: Mr. Chairman, my only comment is that I think that supervision in respect of certain of the operations of these institutions fell to the provinces by default. This does not involve a question whether the federal government has or has not jurisdiction. In view of the absence of my colleague, the hon. member for Kamloops, who carried on the main discussion with the minister during the committee meeting the other day, I think it would be of value to place his views on the record. I was not able to attend that meeting but I should like to quote from the unrevised transcript beginning at page 27. The hon. member, who had been carrying on the discussion with Mr. Ryan and the Minister of Finance, said:
To make a contract for insurances with this deposit insurance corporation. That is your point.


Mr. Ryan:: Yes.


Mr. Fulton:: My answer to that is that if the company is in the business of taking deposits and the federal parliament legislates as to Canada wide requirements that must be met by all companies taking deposits, in my view that legislation is within the federal jurisdiction: the province could not stop its company from entering into that contract.


Mitchell William Sharp: Mr. Chairman, that is not what this bill is about. This bill is about the insurance of depositors, not about the taking of deposits.


Edmund Davie Fulton: My point is that if you say that all companies who take deposits are required to insure with the federal deposit corporation, in my submission no provincial or power exists to prevent a deposit-taking corporation entering into a contract of insurance. It is made a requirement of the taking of deposits in Canada.


Mitchell William Sharp: That may be, Mr. Chairman, but that is not what this legislation says. We are not trying
February 14, 1967

Canada Deposit Insurance Corp. to go as far as that. That may be eventually an act of this parliament, but that is not one that is before us for consideration today.


Edmund Davie Fulton: I realize that. I tried to stay off the ground, there are other grounds of difference between us. I think you should have made it mandatory, and it is not, and we have not time to change the legislation in that respect. I am speaking now in the narrow sense, but very fundamental objection by this subsection (a) of giving the provinces the jurisdiction which I do not believe they have and doing something which I do not think is necessary to the efficacy of your scheme because I said if you leave it purely voluntary- that is the present situation-and a provincial incorporated company takes advantage of that voluntary opportunity, then if it enters into a contract of insurance, in my view the contract would be valid unless legislation were to be successfully attacked and even while the court case might be proceeding the contract still exists and the depositors are protected unless the court should ultimately declare our legislation (ultra vires) which I think, neither you nor I feel there is the slightest possibility of happening.
That is the end of that exchange. I fully agree with my colleague. The hon. member for Broadview must have been reading my mind because I had an amendment drafted in precisely the same terms as the one he has presented. The remarks of the minister have reinforced my view that this provision represents the purchase of political peace. The price is being paid today for something that will come back to roost in the future.
I respect provincial autonomy in certain fields and I believe the federal government should stay out of those fields. I also believe that provincial governments should reciprocate, and in the particular field of banking and banking practices there is no provincial jurisdiction. One cannot assume provincial jurisdiction merely because these institutions have been provincially incorporated and supervised. I agree that the provinces can supervise these institutions in respect of annual reports and changes of directors and shareholders just as they do in respect of broadcasting companies and aircraft operating companies, but that is where their authority ends.
Provincial governments have no authority to say anything about the actual operation of broadcasting companies or aircraft operating companies. Because those companies are incorporated under provincial charter, that does not give the provinces the right to supervise their actual operation. They have no right to supervise or control the operations of banking institutions in spite of the fact that near banks are incorporated by provincial charter. The practice of banking followed by near

banks comes under the exclusive jurisdiction of the federal authorities. Anyone Who wants to move into the field of broadcasting can apply for a provincial charter or letters patent or may apply for incorporation by memorandum. This is all the province can grant. It is merely the registration of a document. The provincial government breathes life into an inanimate corporate body. The same thing applies in respect of any trust company or other company operating in the field of banking and banking practice, but this does not give the provinces the right to enter the field of banking practice. They have full rights in other fields but none in this specific one.
[DOT] (6:30 p.m.)


David Lewis: Mr. Chairman, I shall not be very many minutes. One statement the minister made is of great importance. I think it is his fault and the government's fault that we are in this position. Nonetheless I think it would be irresponsible not to consider that statement. I am sure the hon. member for Edmonton West shares with me the concern about the statement to which I shall refer, and will want to consider it very carefully.
I understood the minister to say that the premier of one of the provinces has specifically requested that paragraph (a) of clause 16 be not removed. I believe I understood the minister aright. Obviously you would really get into a battle which may be unhelpful to the total question of federal-provincial relations, not only in this field but in many other fields, if this committee and this House of Commons deliberately slapped the face of one of the premiers who asked that something that had already been proposed be not removed.
I say to the minister that in view of that statement we would like to give the amendment moved by my colleague, the hon. member for Broadview, a little more thought before eight o'clock. I repeat that I, as one Canadian, cannot feel that it would be to the benefit of Canada's future to slap the face of one of the premiers who made a specific request that a certain matter be retained in a bill. What I object to, and personally would like to make clear, having said what I have said, is that I think the government was weak-kneed and timorous when it included this paragraph in the clause.
I understand the policies of this government with regard to our constitution to be as enunciated particularly in the last year or so, namely that the federal government was taking the position that the powers given to the
February 14, 1967

respective jurisdictions by the British North America Act were going to be honoured, and the federal government therefore said it was withdrawing from certain activities in which it had formerly participated, to give the provinces added opportunities to obtain revenues so that the provinces could carry out those activities within their jurisdictions.
The same thing is true on the other side of the question. Canada will be a much happier place, in terms of the constitutional differences between the federal and provincial authorities, differences that I suspect can never be wiped out in any federal state-they will always be there, whatever the circumstances; there will always be differences-if the federal parliament asserts its authority within the jurisdiction that it clearly has. I believe if this were done it would be much better for those differences and the future of Canada.
I am not any more of a constitutional authority than the Minister of Finance, even though I have had some legal training and he has gained his knowledge by osmosis. I do not know whether legal training by osmosis is not really better than legal training in a lecture room. But I know of nothing in the law of Canada's constitution, or in any legal principle, that makes mandatory a provision in a federal statute offering deposit insurance to companies in Canada, whether federally or provincially incorporated, when they have the choice of accepting or not accepting it as they voluntarily decide. This is particularly the case when you are dealing with deposit taking institutions, particularly when there is so much legal opinion that a deposit taking institution is probably-in my humble opinion I would say "certainly", but the least one can say is that it "probably" is-carrying out banking functions and operations. It may have other operations and functions, but in so far as it is a deposit taking institution it is carrying out, some people will say "probably" but I would say "certainly", banking operations. In that situation paragraph (a) of clause 16 was not needed.
You do not, I suggest, improve the climate of co-operation by constantly giving way and compromising, and doing these things to a point where the ordinary depositor might suffer through some particularly angry exchange between the federal and provincial governments, that may have nothing at all to do with deposits.
If the federal government and a provincial government, whatever the provincial government may be, has an altercation of some sort
Canada Deposit Insurance Corp. and the provincial government says, "We are not going to let our provincially incorporated institutions come under this deposit insurance plan", the depositors of those particular institutions may be made to suffer for reasons that have nothing to do with deposits. I regret very much that the minister and the government felt it necessary to make this kind of concession in a field where it was not necessary and where I am personally confident -perhaps I have not sufficient evidence and the minister has better evidence than I, and I should be surprised if he has not-on the evidence I have that the provinces would not have objected, and the minister would have been able to sit down with the provincial authorities while the bill was before committee and the house, before it became an act of parliament, and work out some of the details that concern him with regard to inspection and the like.
I regret that paragraph (a) is in clause 16. I repeat what I said at the outset, that as a practical matter, the fact-and I have heard it for the first time, as I am sure other hon. members have-that the premier of Quebec specifically asked the Prime Minister, I understood the Minister of Finance to say, to make sure that this paragraph is not removed from the bill is a matter that deserves careful consideration, and my colleague and I intend to consult some of our other colleagues with regard to the amendment which we have moved.


Mitchell William Sharp: Mr. Chairman, may I add just a word to what I said previously, to emphasize one point. Clause 16(a) is not in the bill because we believe there is any constitutional limitation upon our right to enact this legislation, nor that it would be inappropriate that it should be offered to all provincial institutions that accept deposits. The clause is there simply because, as I said previously, we had reason to believe, on the basis of our earlier discussions with the provinces, that by seeking the permission of the provincial authorities we would better the chances of active co-operation in the inspection of these institutions. I say that because I would not want it thought that by including this clause we are in any way prejudicing the authority of this parliament.


David Lewis: You may not be prejudicing it, but you are certainly questioning it.
February 14, 1967

Canada Deposit Insurance Corp.


Mitchell William Sharp: I question that statement, Mr. Chairman. I am not questioning our authority. That is the reason I made this intervention. This clause is there purely for diplomatic reasons; it is not there because we have any doubt about our authority.


David Lewis: Mr. Chairman, perhaps the minister should have learned from his colleague, the Secretary of State for External Affairs, and undertaken a little quiet diplomacy instead of putting it in the bill.


Mitchell William Sharp: I think this is a very good instance of quiet diplomacy.
[DOT] (6:40 p.m.)
Finally, one other point. If we were asserting the jurisdiction of parliament over banking, then of course it would be most inappropriate for us to say that the ambit of our legislation could be effectively stopped by any province. But that is not the purpose of this particular clause. It is simply for the purpose of inviting greater co-operation from the provinces by giving them an opportunity of saying that they wish their institutions to come under deposit insurance.


Robert Norman Thompson: It almost seems that my remarks may sound redundant at this point I must, however, express my disagreement with the arguments which have been presented by the hon. member for Edmonton West, by the hon. member for York South and by the mover of the amendment; the hon. member for Broadview. I cannot agree with the arguments which have been put forward by the minister, either. To say, as he did, that the clause is here only for the sake of diplomacy is to make a very weak statement. I believe there is a principle involved which is far more important and basic.
If the clause were in the bill simply for the sake of quiet diplomacy, I would say the mover of the amendment was right. But I say that something far deeper is involved. We agree with the principle that monetary policy and banking legislation are within the province of the federal parliament. What the government has done is to exclude the near banks from the banking legislation we are considering at the present time. The committee records will show that both the Governor of the Bank of Canada and the Minister of Finance stated in reply to questions that they did not think it necessary at this time to include near banks under the umbrella of the banking legislation, chiefly because their operations accounted for only 1 per cent of the

total banking done in Canada in any year. Nevertheless the function which the near banks perform includes the expansion of credit, so we find ourselves in a difficult position with regard to this legislation.
I do not agree with the hon. member for York South that this is a case of being weak-kneed in our dealings with the provinces. But I do not think it is correct to try to assume, in this act, an act having to do with deposit insurance, a responsibility which really relates to the Bank Act itself.
Neither do I think the argument advanced by the hon. member for Edmonton West applies. He drew a parallel with a situation involving an aircraft company or a broadcasting company. This legislation basically provides deposit insurance protection for those institutions which are incorporated under the federal jurisdiction, and it leaves the door open to those institutions which are incorporated under provincial legislation as long as the provincial government which authorized the formation of those companies gives permission. If in this legislation we were dealing with something which was to happen in the future-the future incorporation of finance companies, trust companies or other forms of deposit accepting institutions-there would perhaps be reason for asserting that the legislation now before us could assume responsibility for such companies. But the fact remains that many of these trust companies have been operating under provincial legislation for many years, simply because the federal government had not assumed the responsibility which was theirs over this whole area of financial operations. I do not think parliament has any right to assume that in this present legislation it can impose upon provincially incorporated companies conditions which were not part of the original undertakings given by them, at least not without consultation with the provincial governments concerned.
It is my belief that every provincially chartered institution will want to be covered, and that it will make application accordingly. It will be much more simple and certainly much less expensive if all the deposit banking institutions in the country do come under this scheme. Nevertheless, to make membership a requirement for all deposit receiving institutions would be a direct infringement of the responsibility which the provinces have assumed, because the federal government has not occupied this field in the past. Since the
February 14, 1967

Canada Deposit Insurance Corp. provinces have assumed this responsibility I Mr. Lamberl: This past week end, at the do not think we have any right to say that all winter games? companies must be included under this legislation.	Mr. Sharp: Right.
I agree that the door is left open. If there should be some financial institutions which cannot obtain provincial permission to join, I believe they should take the logical step of applying for a federal charter. That is a course which is open to them. In the committee, the minister said he would welcome such applications if it proved impossible for institutions of this type to join under the conditions set out in this bill in clause 16(a) where we find the proviso that the provincial institution must have authorization from the province of incorporation.
If this provision is included for diplomatic reasons only, then let us take it out. I believe it is here because it respects the jurisdiction which by practice and default has come into the hands of the provincial authorities. Its presence will lead to much greater co-operation from the provinces. Therefore, for the reasons I have advanced, we cannot support this amendment, though we are not giving our support to the legislation for the reason put forward by the minister, that of quiet diplomacy. That is not a basic reason.
Let us not try to cover one mistake by making another. I believe the provinces will realize the worth of this legislation. They will see that it is good and necessary, and they will co-operate of their own volition. If it takes a special act of the provincial legislature to permit the necessary coverage, it does not really matter-the door is open. And if some provinces do not agree, then the companies concerned can become federally incorporated companies.
[DOT] (6:50 p.m.)


Marcel Joseph Aimé Lambert: A few minutes ago the minister indicated there was one premier who made a request with regard to this particular clause. I was wondering whether the minister was referring to the correspondence which was tabled on February 13, an exchange of correspondence between the Premier of the Province of Quebec and the Prime Minister. Is this the request to which the minister had reference?


Mitchell William Sharp: The request is not contained in the correspondence. This was a request made of the Prime Minister by Mr. Johnson when the two of them met in Quebec city.


Marcel Joseph Aimé Lambert: I think the request must be looked at in the context of Mr. Johnson's letter to the Prime Minister dated February 10. I believe I should put the pertinent portions of that letter on the record.

Mr. Chairman, at the beginning of his letter, the Quebec premier indicated that several intergovernmental conferences had been held to study this or that aspect of how to protect the public and the small depositors, especially what steps to take to that end, and also how financial institutions operate. And he added this:
In the course of their work, our officials have been called upon to meet yours as well as those from Ontario and the other provinces. Out of those meetings came the idea of a federal-provincial conference to study the whole field of financial institutions and securities. Such a conference would review all government legislation now in force in that field in order to recommend, in the light of our constitution and the amendments which could eventually be made thereto, the steps to be taken by each level of government to solve that problem once and for all.
In short, Mr. Johnson is suggesting that a conference could start with a meeting of officials to whom outside experts could be added to pinpoint the aim of the conference and orient their work.
A preliminary conference of the ministers concerned could also be held within a few weeks and we would suggest to the Prime Minister of Canada to submit to the premiers of the other provinces Mr. Johnson's views on the advisability of calling such a conference to study the control of financial institutions and the steps to take to protect the small depositors; the securities business could also be studied.
Mr. Chairman, I am quite willing to share Mr. Johnson's views in that respect. But, first of all, there must be a common legislation, with a common base, for the whole country. It is all right as far as business and securities are concerned, but there must be security for the public, not only in western Canada but also in the province of Quebec. There is no contention in that regard. But I do not think there is any reference to Bill No. C-261 or to section 16a not only in Mr. Johnson's letter but also in the Prime Minister's answer. I know that the minister told us that it was
February 14, 1967

Canada Deposit Insurance Corp. after a personal meeting, during the last weekend, that we learned about that request, but I would like to have more details.
It is not in the official release which we saw here in the house.


Mitchell William Sharp: I did not rise to interrupt the hon. member on that point. However, the letter the Prime Minister wrote to Mr. Johnson does contain, in its Anal paragraph, a reference to the bill that is now before us. The Prime Minister told Mr. Johnson that parliament was proceeding with this bill and he hoped it would be through in a few days.


Marcel Joseph Aimé Lambert: I think we can all share those sentiments. I am sure my colleagues do, too. We have no objection to the principle of deposit insurance but we feel that the government is going at it, to use a term, in a backhanded way. Certainly the provisions of the bill will be of considerable benefit but we are disagreeing with some of its details.
One of the essential features of the bill, of course, is this matter of provincial consent which, it seems to me, is introducing the question of a provincial veto in banking matters. I might comment upon the argument put forward by the hon. member for Red Deer, that notwithstanding the fact there may have been some vacuum into which provincial authorities have moved, this does not cure a situation in which they have no constitutional authority.
The fact that some provinces have assumed a jurisdiction which has not been challenged, in some instances an almost negligible jurisdiction, is no argument that we should not now assert the jurisdiction of the federal government.
May I call it seven o'clock, Mr. Chairman.


Herman Maxwell Batten: Pursuant to an order of the house passed on Friday, February 3, I do now leave the chair and the committee will resume at eight o'clock.



SITTING SUSPENDED


Marcel Joseph Aimé Lambert: Mr. Chairman, at the time of the adjournment I had been reading extracts from the letter written by Premier Johnson to the Prime Minister, and an exchange between 
the Minister of Finance and myself had followed. One argument I find rather strange in light of this letter is that of the Minister of Finance, who says that as a result of the request of a provincial premier the government felt impelled to include this particular clause in the bill in its present form.
We now know, Mr. Chairman, that this request was made at the week end. This bill has been considered on second reading and has been to the committee in its present form, so how the request of Premier Johnson, which was a verbal request made at the week end, could affect the nature of the clause I fail to see. The form of the clause was determined upon weeks ago and was not conditioned by any intimation, either verbal or written, given by Premier Johnson. So I just cannot follow that argument.
I would agree that perhaps the government's decision to include the clause in the bill in its present form, in view of the events of the week end, has as far as the government is concerned served to bolster an extremely weak case. On the basis of the speeches made by the minister on second reading and prior thereto, there is no doubting the fact that we were left with the impression then and this afternoon-the term "diplomacy" has been used but I would put it on the basis merely of political peace-that that was the reason this particular provision was put in the bill.
Regardless of whether this is the result of diplomacy or political peace, or what you will, it is still my view that it is wrong in principle to allow provincial governments to enter into this field, when according to my interpretation of the constitution, and I think according to the interpretation of many other people, they have no business to do so. On the other hand, the provinces do not hesitate to tell us, please, to remain on our side of the fence in other matters, and for that we respect them. I think that to have a frank exchange of opinions in this regard is fine, as long as they know they are going to be heard.
I notice that the government is anticipating a vote of some sort, Mr. Chairman, because even the members of the defence committee are now coming into the chamber, so just for their benefit I think I should cover one other aspect of this question.
I should be much more interested in knowing from the minister what official intimation has been received from the government of the province of Alberta in connection with this legislation. All we have seen in print is some
February 14, 1967

very briefly reported comment from the provincial treasurer. I am sure that the minister has received an official communication from the government of the province as to its attitude toward the bill, and the applicability or otherwise of the bill to what are the principal non-bank operations in that province. I am referring to the treasury branches of the province of Alberta, which have very extensive operations, some of which are of a banking nature and some not. If the minister could tell the committee just what is the impact of this legislation on the treasury branches, then I think we could get a certain facet of this operation cleared up.


Mitchell William Sharp: Mr. Chairman, may I comment on the remarks which have just been made by the hon. member for Edmonton West. During the preparation of this legislation some discussions were had between the officials of the federal government and the officials of the provincial governments. During those discussions the officials came to the conclusion, and so recommended to me, that in order to promote co-operation between the provinces and the federal government it would be desirable to include in the bill a clause like clause 16(a).


Marcel Joseph Aimé Lambert: This is the camel in your tent.


Mitchell William Sharp: The hon. member then asked: What connection is there with the discussions which took place over the week end? During the discussions which took place between the Prime Minister of Canada and the Premier of Quebec, the Prime Minister reported to Mr. Johnson the nature of the debate that had taken place in the committee and the motion that had been made to strike out this clause. He said to Mr. Johnson: "We had believed that it was desirable, in order to promote the purposes of this legislation, that we should have such a clause, and I should like to know whether you consider that this is important, as we had concluded from discussions at the official level".
Mr. Johnson then told the Prime Minister that he believed it was important to retain clause 16(a), which requires a provincial government to give its permission before any of these institutions came under deposit insurance. That is why I said, when speaking earlier, that recent events had reinforced the views we had formed when preparing this legislation for presentation to the house.

Canada Deposit Insurance Corp.
[DOT] (8:10 p.m.)
The province of Ontario has made its views known in connection with this matter, in legislation. We have not yet had formal representations from Alberta, nor any indication yet of their intentions. As I said earlier, I sent to all the provincial ministers a copy of the bill and my remarks on second reading, so that they would be acquainted with our policy and intentions. I have had a reply from only one province, British Columbia, in which Mr. Bonner notified me that he would let us know the attitude of his government as quickly as possible.
I am not as yet in a position to say what the official views of the provincial governments are nor what their intentions are. I do not know, from discussions my officials had with the provinces after the introduction of the bill, that all provinces are interested in the legislation and urge us to proceed as quickly as possible.


Marcel Joseph Aimé Lambert: This reinforces me. I quite understand the attitude of the premier of Quebec. He is the only one who has really shown the views of his government. Obviously if he has obtained the right of intervening, consent or veto, he will not give that up. I look upon this much as I look on an old saying: Once the camel puts his head in the tent you are stuck with him. That is what I am afraid of; the provincial camels have their heads in the tent of banking. But there we are.
I cannot agree with the provision. The hon. member for Broadview has an amendment, and I do not know what his revised attitude may be, with regard to it. His party indicated it might take another look at it. I hope its members have been able to look at the contents of the letter from the premier of Quebec that I read into the record, which has no reference to this matter. There was a passing reference to the last paragraph of the Prime Minister's letter, but there was no question about a reference with respect to the consent of the provinces, or otherwise.
I will be interested in knowing from the hon. member for Broadview what are the intentions with regard to the amendment.


Gilles Grégoire: Mr. Chairman, I very seldom agree with the Minister of Finance and Receiver General (Mr. Sharp) but for once and with regard to clause 16, I must admit-and I am pleased to say so-that I agree with the minister's idea to retain section 16(a).
February 14, 1967

Canada Deposit Insurance Corp.
It refers to institutions operating under a provincial charter and if we refer to Quebec financial institutions, they operate under a charter granted by the Quebec government. Besides, if those companies are provincially incorporated, it is quite appropriate for their operations to be subject to provincial control. And that is why it will rest upon the authority, in this case the provincial authority, to decide whether or not those institutions must contribute to the deposit insurance fund.
Then, Mr. Chairman, I want to tell the Minister of Finance and Receiver General that I, myself, support his decision to retain clause 16(a) in this legislation.


Thomas Miller Bell: Mr. Chairman, I do not intend to cover again the ground, I have argued earlier at length. I only want to say to the minister that I consider this subclause to be a real evil.
One of these days, and it may be fairly soon, there will be a reference, or a case before the Supreme Court of Canada in which the direct issue will be the interpretation of the word "banking". When that comes about I have no doubt counsel will take this particular clause and say, "Why, the Parliament of Canada itself admitted that it has no jurisdiction over deposit taking institutions incorporated by the provinces. Those deposit taking institutions are not within the field of banking,"
Sir, that abdication, if permitted today, will become firmly and improperly imbedded in our constitution. It is because of that that I point out the evil, and I protest against it as vigorously as I can.
Finally I want to urge the minister again to have this parliament occupy the full field of its jurisdiction over banking. If the minister does occupy that field he will not have any difficulty.


Some hon. Members:: Question.
Amendment (Mr. Gilbert) negatived: Yeas, 27; nays, 46.
[DOT] (8:20 p.m.)


Gilles Grégoire: Mr. Chairman, in connection with clause 16-the hon. member for Mercier (Mr. Boulanger) can go out, it does not matter a bit to me, for I would rather speak in front of an empty seat than an empty head.
Clause 16, Mr. Chairman, reads as follows:
On the application of a provincial institution therefor, the Corporation may insure the deposits with the provincial institution in the manner and to the extent provided in this Act and the bylaws, if


Subclause (b) reads as follows:
the provincial institution agrees, in carrying on its business, not to exercise powers substantially different from the powers exercisable by a trust company under the Trust Companies Act and a loan company under the Loan Companies Act; and
This means that we would ask a provincial institution to abandon the privileges it may exercise under its provincial charter, whereas it would have no other privileges, if it were given a federal charter. To me, it is irregular to ask a trust company or a loan company for instance, that is carrying on business under a Quebec charter or a charter from any other province, to abandon certain privileges in order to become subject to the terms of a federal charter only, whereas this provincial institution could benefit from some other advantages, if it had a federal charter.
Now, I would like to move an amendment to subclause (b) of clause 16. I shall read the amendment, Mr. Chairman. I do not know if I am going to have someone to support it, a seconder, but I am appealing to my friends opposite. Unfortunately, I could not explain the amendment to them, for lack of time, but I am going to read it and they are quite free to second it, should they wish to do so.
So, I move: That subclause (b) of clause 16 be amended to read:
"if the provincial institution agrees, in carrying on its business, to exercise the powers defined following an agreement between the Canada Deposit Insurance Corporation and the provincial authorities concerned."
The Canada Deposit Insurance Corporation and the provincial authorities could in this way open discussions in order to allow the provincial institutions to continue to take advantage of the privileges they may have. Therefore, I believe this motion is acceptable, and I see that my friend, the hon. member for Roberval (Mr. Gauthier), is willing to second it.


Some hon. Members:: There is no need for another seconder.


Gilles Grégoire: Mr. Chairman, that is why I move this amendment, and I hope the Minister of Finance (Mr. Sharp) will not object, since after all the only change being made is that instead of compelling the provincial institutions to obey a fixed and definite rule, as can be found in subclause (b), they are allowed to use their powers which will be determined after discussion and agreement between the Canada Deposit Insurance Corporation and the provincial authorities concerned.
February 14, 1967	COMMONS
I feel, therefore, that the suggestion is wholly acceptable. The Minister of Finance will probably not object, since those powers will only be accepted after discussion and agreement between the Canada Deposit Insurance Corporation and the provincial authorities involved.


Mr. Cole (Longueuil):: Do you have a copy of your amendment for the minister?


Mr. Lachance:: Do you have an English copy?


Maurice Rinfret: By leave, I shall read over again the amendment moved by the hon. member for Lapointe (Mr. Gregoire):
That subclause (b) of clause 16 be amended to read:
"if the provincial institution agrees, in carrying on its business, to exercise the powers defined following an agreement between the Canada Deposit Insurance Corporation and the provincial authorities concerned."

Is the committee ready for the question?


Gilles Grégoire: Mr. Chairman, might the Minister of Finance and Receiver General (Mr. Sharp) not give us his opinion on this matter?


Mitchell William Sharp: Mr. Chairman, I cannot accept this amendment. I do not think it carries out the intent of the bill. The intent here is to see that institutions that apply for insurance are not carrying on businesses of quite extraneous character that might affect the security of the deposits that are made with them. The whole purpose here is to see that, if a provincial institution comes forward and wants to be insured, it is carrying on a business under the same lines as provided by the Trust Companies Act and the Loan Companies Act. A provincial institution does not have to be insured. There is nothing compulsory in this bill. This is a way of bringing about some homogeneity and uniformity in the kind of institutions that are being insured.


Marcel Joseph Aimé Lambert: Mr. Chairman, we share the views of the minister on that point as it ties in with the amendment we moved a few moments ago. We want uniformity, across the nation, in this regard. This matter lies within federal jurisdiction. We can avoid, then, seeing Alberta stepping on the left foot, and the
Canada Deposit Insurance Corp.
British Columbia on the right, and Quebec, who knows, on either the right or the left foot.
Therefore, I feel that we should share the views of the member for Lapointe on that point.


Gilles Grégoire: Mr. Chairman, if you will allow me, it is obvious that this is federal legislation since it was introduced by the Minister of Finance and Receiver general.
None the less, it might happen that the legislation applies to provincial institutions. In any province, it will have to apply to institutions having a provincial charter.
Then, the fear inspired by the Minister of Finance and Receiver general clearly softens since the powers of such provincial institutions are defined not only by the Canada Deposit Insurance Corporation or the federal government, but jointly, after discussion between the Canada Deposit Insurance Corporation, which remains free to accept the terms, and the provincial authorities concerned, and these, also, will be free, according to circumstances. Consequently, this amendment would insure much more flexibility in the enforcement of the law in connection with provincial institutions and might allow a much greater number of these provincial institutions to become members of the Canada Deposit Insurance Corporation established under the act. This amendment would allow some provinces which, otherwise, would not give up the jurisdiction they have on provincial institutions, to agree to these provincial institutions joining the Canada Deposit Insurance program, for, then, the provincial authorities concerned will have had an opportunity to discuss with the authorities of the Canada Deposit Insurance Corporation and to enter into adequate agreements according to the circumstances in each province.
Then, I believe that if the minister will consider the amendment in that context, he will realize that it will introduce much more flexibility in the administration of the act, might allow a much greater number of provincial institutions to benefit from the legislation, in short, that it will make the act better and more profitable.

Amendment (Mr. Gregoire) negatived: Yeas, 3; nays, 78.


Maurice Rinfret: I declare the
amendment lost.
Clause 16 agreed to.
February 14, 1967

Canada Deposit Insurance Corp.
[DOT] (8:30 p.m.)
Clauses 17 to 21 inclusive agreed to.
On clause 22-Provincial institutions.


Maurice Rinfret: Shall clause 22 carry?


Marcel Joseph Aimé Lambert: There is an amendment to clause 22, Mr. Chairman.


Maurice Rinfret: I thank the hon. member for Edmonton West for reminding the Chair that this clause has been amended by the committee on finance, trade and economic affairs.


Marcel Joseph Aimé Lambert: With the greatest respect. I think it is incumbent upon the Chair to draw to the attention of the house as a whole that there is an amendment because the house now is much more heavily populated than earlier today.


Some hon. Members:: Oh, oh.


Marcel Joseph Aimé Lambert: Some hon. members may moan, but I believe we would proceed a little better in this way.


Maurice Rinfret: I should like to apologize to the committee for the oversight.
Shall clause 22 as amended by the committee on finance, trade and economic affairs carry?
Clause 22 agreed to.
Clause 23 agreed to.
On clause 24-Reporting defects or breaches.


Richard Albert Bell: Mr. Chairman, on clause 24, could the minister indicate what real sanction or penalty there is here. Assuming there is a finding by the corporation that the member institution is following unsound business or financial practices, or is breaching the bylaws and a report is made and incorporated in the minutes of the member institution. If nothing happens, then what transpires at that stage? Where is there any sanction if the member institution simply ignores the report of the corporation?


Mitchell William Sharp: Mr. Chairman, the disciplinary action comes through the superintendent of insurance or the inspector general of banks reporting to the minister in the course of their regular duties.


Richard Albert Bell: What disciplinary action could be exercised in that event?
[The Deputy Chairman.]


Mitchell William Sharp: The powers of the inspector general of banks and the superintendent of insurance are very extensive; they would extend to such things as publicity if necessary.


Richard Albert Bell: Is there any power in the superintendent of insurance to suspend the operation of the member institution; is there any power in the inspector general of banks to suspend the operation of the bank charter?


Mitchell William Sharp: I am assured that while neither the superintendent of insurance nor the inspector general of banks could suspend such an institution, I could, as Minister of Finance.


Marcel Joseph Aimé Lambert: But, Mr. Chairman, there is nothing in the act which says that the minister shall suspend the operations of an institution if it has not carried out its undertakings with regard to deposit insurance. This applies to a federally incorporated institution so far as clause 24 is concerned. But in clause 25 there is the limitation which I think my colleague from Carleton is looking for under this clause; that is, the termination of the deposit insurance.
In this particular instance I am just wondering whether there would be a case for suggesting that, in the event there is a default we would proceed on a basis parallel to the procedure in respect of provincial institutions, and rather than suspend the whole operations of the federally incorporated firm or trust company that it be given notice of cancellation of its deposit insurance-which I am sure, provided the system is working right, will be a very great sanction and would not be quite the blunderbuss of putting it out of business, to which I believe the minister referred.


Mitchell William Sharp: Mr. Chairman, the dilemma, if it is a dilemma, is that all federal institutions, whether banks, trust or loan companies, which accept deposits must insure those deposits. We cannot at one and the same time declare they are not insured and insist that they must be. It would be incongruous for the corporation to make a report-this is what is envisaged in clause 24-and for me as Minister of Finance to permit those institutions to carry on business without restriction.


Marcel Joseph Aimé Lambert: This means that there is a mandatory death sentence on any federal institution for infringement of the deposit insurance regulations. On the other hand, a provincially chartered institution which might lose its right to deposit insurance can just
February 14, 1967	COMMONS
retire within its shell within the province and carry on business. I am afraid that the minister will be resorting to the guillotine in the case of any infractions. There is no lesser penalty with regard to a federal institution. There is under the operations of the Trust Companies Act and under the Loan Companies Act, but there is not under deposit insurance. I doubt that the minister has given the flexibility which he would like to have in practice.


Mitchell William Sharp: Licences under the Trust
Companies Act and the Loan Companies Act, for example, are issued annually, and if I had received a report from the corporation to the effect that one of these institutions was following unsound business or financial practices I would issue the licence for the following year subject to certain conditions which would require them to change those practices. If they did not do that, of course they could not go on doing business. So, I have both the flexibility and the necessary authority. I do believe it is quite impossible to have both compulsory insurance and to have as sanction the withdrawal of the insurance.


Marcel Joseph Aimé Lambert: It is the same thing with the provinces.


Gilles Grégoire: Mr. Chairman, allow me first to rise on a question of privilege.
Earlier, I made some unkind remarks about the hon. member for Mercier (Mr. Boulanger).
I would now like to withdraw them without any mental reservation. And I say that, at the present time, neither his seat nor his head are empty. I take everything back, Mr. Chairman, fully, without any restriction, and furthermore without being asked to.


Maurice Rinfret: Shall clause 24 carry?
Carried.

Clauses 25 to 44 inclusive agreed to.
[DOT] (8:40 p.m.)


Maurice Rinfret: Shall clause 1
carry?


Marcel Joseph Aimé Lambert: Did the Chair call clause 1?


Richard Albert Bell: Perhaps we should deal
with clause 12(2).


Maurice Rinfret: Is it the wish of the house that we now consider clause 12 in respect of which there is a pending amendment for consideration?
Canada Deposit Insurance Corp.


Marcel Joseph Aimé Lambert: Clause 2 should be considered first.


Maurice Rinfret: We shall proceed by considering clause 12, to be followed by clause 2 and clause 1.


Marcel Joseph Aimé Lambert: I am sorry, Mr. Chairman, but clause 12 is consequential in respect of whether or not the amendment to clause 2 is accepted. Therefore I believe we should proceed with the consideration of clause 2.


Maurice Rinfret: Following the suggestion of the hon. member for Edmonton West we will now consider clause 2.
On clause 2-Definitions.


Mitchell William Sharp: Mr. Chairman, an amendment proposed by the hon. member for Edmonton West to clause 2 is now before the committee for consideration. It is:
That clause 2 subclause (e) be deleted and that the following be substituted therefor:
"(e) deposit means any obligation of a member institution payable in Canada in Canadian funds to the holder thereof on demand or on notice within a maturity date of five years from the making thereof."
During the dinner interval my officials have looked at this proposed definition and I should now like to give the committee some of their considerations, which I think will persuade them that this amendment is not suitable, and why it might throw doubt upon the ability of the committee at this stage to incorporate a definition which might be sufli-ciently comprehensive or exact-


Marcel Joseph Aimé Lambert: How do the officials acquire all the science?


Mitchell William Sharp: Let me comment on the deficiencies of this definition. It says that "deposit" means any obligation of a member institution payable to the holder thereof. That suggests it covers bearer instruments such as trading securities, bearer bonds or something of that character. It is not our intention to cover that kind of instrument. Our intention is to cover what might be termed "deposits", although it is very difficult to define them.
In addition to what is mentioned in this amendment we want to cover instruments payable at a fixed date rather than on demand or on notice. I referred to that in the course of my remarks on the definition of "deposit". We intend to cover not only deposits payable on notice or demand, such as would be found in trust companies and, in
13048	COMMONS
Canada Deposit Insurance Corp. some cases, in banks, but also instruments payable at a fixed date. They would not be covered by this definition.


Marcel Joseph Aimé Lambert: Oh, no.


Mitchell William Sharp: They would not be covered because this amendment states, "payable to the holder thereof on demand or on notice within a maturity date of five years". That would not cover the deposit that is payable at a fixed date. We may want flexibility in order to cover the type of instruments to be insured, although there is no desire to go beyond five years. It would be unfortunate if during discussions with the provinces we found that we wanted to go beyond five years. This is not a substantial point and I do not urge it strongly. There are some substantial difficulties involved in this definition which are more important.
We want to lump together all deposits by a particular person in a given institution, and this definition would not enable us to do that. This would treat each separate obligation as a deposit to be insured, and that is not our intention. We do not want anyone to circumvent the intention by getting insurance of more than $20,000 in any particular institution. This proposed definition would upset that intention.
We also need special provisions to deal with obligations on the books of institutions at the outset of the plan. For example, what would be the situation under this definition in respect of a ten year investment security that has only two years to run, when this act comes into force? Such an investment would also fall outside this definition. We want to deal with certified cheques, drafts and money orders on the books of member institutions in order that they may be insured.
The phrase "any obligation" as it appears in this proposed definition is so broad it would include trading debts and go far beyond receipts for money deposited. Those are some of the difficulties which have occurred to my officials on a cursory examination of this definition. With a little more time I am sure they could find ten more. These also illustrate the difficulties involved in trying to find a definition of "deposit" which will not unnecessarily limit the effect of the legislation.
It will be necessary for the bylaws of corporations to have quite extensive definitions to cover a multitude of deposits. I am very reluctant to suggest any definition at this time

DEBATES	February 14, 1967
because I believe it might be unnecessarily limiting or, on the contrary, might require us to insure obligations beyond the intent of the legislation.


Marcel Joseph Aimé Lambert: Mr. Chairman, I put forward the amendment in an attempt to find a basis for a definition of "deposits". I certainly agree that when putting forward a manuscript amendment during the course of a debate in committee one cannot necessarily cover all the points involved. The fact that the minister's officials have been able to suggest that this amendment could not cover all the requirements is a clear indication that they did not do their homework and come up with a definition, so this committee would know precisely what this bill covers.
While I recognize and object strenuously to the philosophy behind this measure, let me make it clear that we should not give a blank cheque to officials without providing some kind of review. We should know specifically what obligations are to be covered by this bill, and a definition of the term "deposit" should be clearly spelled out. Under the terms of this measure the officials could determine that the pay-off could be made in green cheese from the moon and we would have no review. Of course I use an extreme example.


Mr. Knowles:: In this day and age that may not be too far beyond the realm of possibility.


Marcel Joseph Aimé Lambert: As the hon. member for Winnipeg North Centre suggests, green cheese from the moon may not be beyond the realm of possibility.


Stanley Howard Knowles: That may happen before very long.


Marcel Joseph Aimé Lambert: I am confused and amazed by the attitude of the minister in this regard. He has said the department is experiencing difficulty and requires more time to consider this definition. I am sure the minister will agree that he has been considering deposit insurance since July or August of last year.
What on earth has been done in the past six or seven months to determine or define what is a "deposit"? We are now told that we must wait while another conference is held to determine what is meant by "deposit", yet we are not to be given the right to review that determination. I do not care what they say about the definition, but if hon. members want to study the mechanics of house rules in respect of the regulations to be made under this act they will realize, if they allow it to go
February 14, 1987	COMMONS
through as it now stands, that they may as well kiss goodbye to any possibility of review.
[DOT] (8:50 p.m.)
There is no provision at all that the regulations shall be brought before, say, the standing committee on finance. I am sure the hon. member for Charlotte would be most interested, as a member of the committee on finance, trade and economic affairs, in seeing what will happen in this regard. There is nothing that requests the government or makes it obligatory upon them to have this matter examined by the committee, to see whether it is worth while.
The minister says, "I will draw a great big sheet over this question now, and it is forever hidden from the House of Commons. My boys will look after it. You can trust us". Mr. Chairman, I do not trust them. As a member of parliament, I am concerned about this question, as I think every hon. member should be. We are being asked to pass legislation to deal with a very pressing problem. What is being done? It is being fobbed off to somebody to determine just how far this measure will go.
I would suggest that the minister has shifted from the position he took before dinner to that which he has taken after dinner with regard to the items that would be covered. We were told categorically that the period would be five years, but now the minister says we might go beyond five years. We want to take another look at this question. We do not know, nor does the minister, what this bill will cover. For this reason I confess that I am very disappointed in the bill.
The Depuiy Chairman: Is the committee ready for the question?


Marcel Joseph Aimé Lambert: Mr. Chairman, in so far as the amendment in concerned, I want to see it and I will call for a vote on the amendment.


Mitchell William Sharp: Mr. Chairman, the hon. member of course has that privilege, but I suggest to the committee that this would be a very unsuitable amendment to accomplish the purposes that all of us have in mind. I understand the wish of the hon. member to have this question of deposits defined somewhat more carefully. But may I point out that the government does not have very much leeway to add to the burdens upon the treasury nor to reduce them very much, because the main limitation on the insurance is that of $20,000.
I suggest to the committee that in view of the wishes of all the provinces that they 23033-8251
Canada Deposit Insurance Corp. should have an opportunity of discussing the kind of instruments that are issued by their institutions, we should approve this bill giving the governor in council the authority subsequently to approve the bylaws. It would not be disagreeable to me at any time if the bylaws and the approval of the governor in council were discussed in any committee. I have no doubt whatever that we shall be back to parliament within a year or so to ask for amendments to this bill on the basis of experience, at which time we will have plenty of opportunity to take positive action in this house to determine more precisely than we are in a position to do now the definition of "deposit".


Marcel Joseph Aimé Lambert: Mr. Chairman, I will make a reasonable offer to the minister. If he would undertake that the regulations will be tabled in the house within 15 days of the promulgation of this bill, or within 10 days of their proclamation, and that they shall be referred to the committee on finance, trade and economic affairs for consideration, I am quite prepared to withdraw my motion. But imperfect as my amendment may be, I want to register the intentions of this house with regard to the definition of "deposit", to make the bill meaningful.


Mitchell William Sharp: Mr. Chairman, I will certainly do everything I can to co-operate with the hon. gentleman and the house. The government has no objection to having a discussion in the committee on the terms of the bylaws of the corporation. I should point out, however, that I have no doubt, also, that before many months pass we shall be amending the definition of "deposit" on the basis of later experience. The great advantage of having a little flexibility is that we shall be able to do this and will not require to come back to the house within a short period of time and ask that some of the mistakes we have made in the definition of "deposit" be corrected in the house.


Marcel Joseph Aimé Lambert: Mr. Chairman, I want this matter referred to the committee on finance within 10 days of the promulgation of the bill, if parliament is sitting, or 15 days if parliament is not sitting. Then we can consider this matter.


Mitchell William Sharp: Mr. Chairman, I am personally willing to give an undertaking that we will do this as quickly as possible. I see no reason why it should not be within 10 or 15 days, as the hon. member says. The regulations will be
February 14, 1967

Canada Deposit Insurance Corp. published, and I have no objection to their being discussed in the committee.


Mr. Lamberl:: I am satisfied with that, Mr. Chairman. Then, with the consent of the committee I will withdraw my amendment to paragraph (e) of clause 2.


Herman Maxwell Batten: Order. Does the committee give unanimous consent for the hon. member for Edmonton West to withdraw his amendment to clause 2?


Some hon. Members:: Agreed.
Amendment (Mr. Lambert) withdrawn.
Clause 2 agreed to.


Herman Maxwell Batten: The committee will now consider clause 12.
On clause 12-Powers of directors and bylaws.


Richard Albert Bell: Mr. Chairman, the minister was going to consider over the dinner hour the last part of this clause, namely lines 21 and 22.


Mitchell William Sharp: Mr. Chairman, I am advised that the wording of clause 12, subclause 2 is copied from the Bank Act, in which the right to delegate powers conferred upon the directors as commissioners under the Inquiries Act is similar to the powers which can be delegated by the inspector general of banks. This wording was carried forward from the Bank Act and involves the same sort of powers. I do not know whether the hon. member has a substantial objection to this wording. I think it is desirable that the corporation should have powers similar to those of the inspector general of banks in relation to the Bank Act. They may be useful, and I do not think they extend the powers under the Inquiries Act to an undesirable extent.


Richard Albert Bell: Mr. Chairman, the objection is that we have no means of knowing to whom these very great powers under the Inquiries Act may be delegated. I have no objection if this house knows who may be exercising these powers, but here it may be any person. The clerk in the office, for example, would have the power to compel an examination and take evidence on oath, to seize books and command the production of books. There are very substantial penalties for refusing to do this. I believe there should be supervision in this respect. Under part II of the Inquiries Act the commissioner is a person who has been designated as such by the minister with the authority of the governor in


council. Here we know not to whom these powers may be granted. I object to this situation.


Herman Maxwell Batten: Shall clause 12 carry?


Richard Albert Bell: On division.
Clause 12 agreed to.


Herman Maxwell Batten: Perhaps this would be a proper place for me to point out to the committee that in the original bill clause 45 was deleted by the committee on finance, trade and economic affairs and was not called during the discussion of the other clauses. Shall clause 1 carry?
Clause 1 agreed to.


[Stage Direction]
Title agreed to.
Herman Maxwell Batten: Shall I report the bill as amended?
Bill reported.
[DOT] (9:00 p.m.)


Mr. Deputy Speaker:: When shall the bill be read the third time? By leave, now?


Norman Platt Lambert: Since amendments have been brought in the house would normally expect the bill to be printed with the amendments and the measure would be given third reading tomorrow. However, in the spirit of cooperation, we are quite agreeable to letting the bill go through with the amendments, and for it to be read the third time tonight.


Mr. Deputy Speaker:: Shall the bill be read the third time, now?


Some hon. Members:: By leave.


Richard Albert Bell: You will put the motion, will you not, Mr. Chairman? I wish to speak on third reading.


Mitchell William Sharp: the third reading of the bill.


Richard Albert Bell: Let me say
that I am enthusiastically in favour of a system of deposit insurance, and this bill makes some progress toward that end; but I want to express certain reservations which I have felt from the outset. There are grave dangers attached to this bill by reason of the fact that it amounts to an abdication by this parliament of the authority of the federal parliament over the field of banking.
I believe the minister has approached this question in the wrong way. He ought to have brought into the field of banking all the functions of the so-called near banks. Then this
February 14, 1967

legislation would have been universal and it would not have depended upon the consent or the authority of any of the provinces. If he had done that we would not find ourselves in the situation in which we find ourselves tonight, a situation in which this parliament is admitting that there is a field of banking over which it has no jurisdiction. I, for one, dispute that attitude completely, and when the subject of banking is before the Supreme Court of Canada I hope the admission made in this bill will not be used against the authority of the parliament of Canada in this field.
I trust that in the near future the minister will decide that he will occupy the whole field of banking, as was intended in the British North America Act.


Mr. Donald S. Macdonald (Parliamentary Secretary to the Secretary of State for External Affairs):: I intend to make only a few remarks in response to what the hon. member for Carleton (Mr. Bell) has said, and also in reply to remarks made by the hon. member for Edmonton West (Mr. Lambert) earlier in the proceedings on this bill.
As a good lawyer, the hon. member for Carleton knows that this parliament can neither appropriate nor abdicate a power conferred under the British North America Act. His suggestion that by this bill the federal government is in any way abdicating its power in the field of banking is therefore, as he knows, entirely false and misleading. If it should happen that this bill or any question with repect to jurisdiction over banking goes to the Supreme Court of Canada, the court will decide the issue in accordance with the law as it stands, and not in accordance with any statutory assertion made by this house or by any provincial assembly.


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


An hon. Member:: On division.
Motion agreed to and bill read the third time and passed.



WAYS AND MEANS

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

[Stage Direction]
Resolved that it is expedient to amend the Old Age Security Act to provide that for the 1967 and subsequent taxation years the maximum old age security tax payable on the taxable income of
Ways and Means
an individual be increased from one hundred and twenty dollars to two hundred and forty dollars.
Stanley Howard Knowles: It is not my wish to carry on ad infinitum or ad nauseam or in any other way the discussion which the Minister of Finance and I were having last night. But I should like to say another word or two with respect to the point I was trying to make.
It is my contention that the Minister of Finance is trying to have it both ways with respect to the raising of taxes for old age pensions. On some occasions he tells us that the old age security fund must be kept in balance. He goes on to say that we must look ahead and consider the charges to be made on that fund in the years immediately in front of us, and that our whole plan of old age security pensions must be related to the concept of a fund which is kept in some kind of balance. But when I pointed out last night that less than half of the new taxes now being raised will go into the old age security fund he replied that what had to be taken into account was cash inflow and cash outflow, and not the fund. His exact words as recorded on page 12998 of Hansard for yesterday were:
The question of what goes into the fund and into general revenues is not relevant to the question of how much cash is needed.
In other words, the minister argued last night that although he is collecting $135 million in additional old age security taxes and putting that money into the old age security fund, what has to be considered is that the $155 million he is collecting from an increase in the sales tax, and which does not go into the fund, must be looked on as part of the inflow required to meet the outflow. In other words-and I see that I am stating the minister's position to his satisfaction, at any rate-the hon. gentleman is arguing that pensions are on a pay-as-you-go basis. This is what I have in mind when I say the Minister of Finance is trying to have it both ways. He throws the old age security fund at us when it suits his purpose. He would not agree to our contention that there was a balance in the fund at the present time and that no immediate increase is needed, asserting that one must look ahead and consider the needs of the future, when more money will have to be put into the fund. But when the minister is asked to explain the fact that he is not putting all the money into the fund, he says: "That is irrelevant; what matters is cash inflow and cash outflow." This is looking at the old age pension question strictly on a pay-as-you-go basis. Frankly, I favour that basis. Frankly, I think that was the essence of the


Mitchell William Sharp: May I comment briefly, Mr. Chairman, on what has been said by the hon. member for Winnipeg North Centre. First of all, as he is aware and as I put on Hansard for December 19, page 11033, the fund itself during most of its life has been in substantial deficit. These deficits were to be found in the fund in every year from 1951-52 to 1959-60. There were small surpluses in 1960, 1961 and 1962. Then the fund went into deficit again. Part of these deficits were written off. This fund has never been, in that sense, in balance or anything like it.

In my speech on December 19, I dealt with two separate questions. The first question was the responsibility that parliament had toward the old age security fund, that is that it should be more or less kept in balance. This responsibility has been honoured more in the breach than in the observance. At any rate, that is the responsibility that is laid upon the government, to propose measures to keep the fund broadly in balance. As a means of doing that, I proposed that there should be an increase in the ceiling on the 4 per cent tax. This discharged the responsibility of the government toward the fund. Although as I say, in the past if you take the whole history of the fund there has never been enough in the fund to pay the costs of old age pensions, nevertheless as long as we have the fund we have a responsibility to keep it in balance.
I proposed changes in the old age security tax that will ensure that the fund is kept reasonably in balance for the foreseeable future. I did not feel I should make provision beyond a few years because that would be usurping the authority of later parliaments.
Then, as Minister of Finance, responsible for the finances of the country, I had to provide for the extra outlay over and above the amount that I was putting into the fund. From the point of view of the finances of the country, there was no place I could get the money except either from taxes or borrowing. There are no funds lying around in the old age security fund, for example, of which I am able to get hold. I did what I felt was wise, and what I think has appealed to the country as a whole, and that is that to the extent that government expenditures over all were being raised at that time by some $280 million, it was in the public interest that they should be offset by tax revenues, whether the moneys went into the old age security fund or whether they went into general revenues.


Stanley Howard Knowles: If there is no fund into which the minister can dip to find the money when we want to raise old age pensions, why does he argue that there is a fund that has to be replenished when, according to the books, it is in deficit?


Mitchell William Sharp: Well, Mr. Chairman, I have felt that I had a responsibility, since the old age security fund was established, of seeing it remains in balance or that it did not run into a big surplus, and I discharged that responsibility. Sometimes in the past it has been neglected. I did not feel, as Minister of Finance, that I should neglect that responsibility or
February 14, 1967

that duty. It was for this reason I made two separate provisions, one of them to keep the fund reasonably in balance in the foreseeable future, and the other to raise the remainder of the money which, one place or the other, I had to find.


Stanley Howard Knowles: I will keep my promise not to carry on this discussion interminably. It seems to me that the conversation we have had back and forth does underline the fact that this fund is just a device to be used in argument as to whether or not the pension should be increased. I hope that the day will come when the bookkeeping and the legislation will reflect the reality of our pension situation, namely that it is and should be on a pay-as-you-go basis.


Mr. Johnston:: I listened with interest to the reply of the Minister of Finance concerning the necessity for this extra tax for old age pensions. He may feel that his approach has been well received across the country, but I can assure him he does have critics. Within the last few days, I have received this petition signed by over 90 people. I should like to read a bit of the preamble to the petition as an indication of the thoughts that are in the minds of some people concerning this matter:
We the undersigned members of the old age pensions group No. 17 Winfield, B.C. and sympathizers of this group do protest the insinuation of Finance Minister Sharp in his speech on television pertaining to the cost of the increase in old age pension; whereby like all skilful politicians who do not make an iron clad statement at any time, but imply that the cost of the increase in old age pensions is the cause for the increase in taxation and increase in taxation means increase in the cost of living.
The community from which this resolution comes is a very pleasant one indeed. It has a goodly proportion of old age security pensioners, so it was not a difficult task, I am sure, for people to obtain over 90 signatures to this petition. I can understand the minister when he says his approach was well received because I know from my own reading that he was given a very good press across this nation for what was regarded as a very hard-headed approach to this particular addition to payments that are generally regarded as being part of the welfare payments. In some ways this hard-headed approach, I suppose, provided a certain balance for the guaranteed annual income scheme of the Minister of National Health and Welfare, which in many quarters was regarded as being something rather radical. At the same time, these old age pensioners had this petition drafted to make a
Ways and Means
point. They go on to inquire why certain other expenses have not had certain taxes raised as a means of covering these expenditures. They mention the costs of Expo '67 and the cost of aid to foreign countries, for example. I am not using these examples to suggest in any way that these projects, Expo and aid to foreign countries, are not worthy. The point is that the Minister of Finance knows that they are very worthy. Indeed, he would not want to impose any tax on these particular sections of government spending because they would then provide too easy a target for criticism.
[DOT] (9:20 p,m.)
With the old age security pension, which everyone in the house agreed well over a year ago had to be increased, there was no alternative but to increase the pension. The minister is perfectly free to point out that a certain tax has been applied to produce the revenue required. Although this may annoy some sections of the populace, there can be absolutely no possible demand that any of the amount paid to the old age pensioners should be reduced to prevent this increase in tax. The minister is perfectly safe in designating a tax as providing for this particular area of government spending. I very much doubt whether within one year's time when the medicare plan comes into operation it will be spelled out very clearly to the people of Canada which particular section of the tax bill is applied toward offsetting the cost of that particular scheme.
The sad thing about the reference to a tax designated for this specific purpose is that it strikes again at the heart of the concept of the guaranteed annual income, a policy that I urged the minister to put into practice some time ago and which he took up.
I realize that the mini-budget is unnecessary. Had the government acted with dispatch the minister's main budget would have included the provision for the old age security pension increase. It was obvious at the time the budget was introduced that something had to be done; that the old age security pension was a national scandal which would have to be rectified some time during the year. There was no way around that. The thing is, I suppose, that there was a hope that the Canada Assistance Plan would prove sufficiently palatable to allow the postponing of any increase in the old age security pension.
When this proved unworkable, then the government was happy enough to bring in the

February 14, 1967
Ways and Means
guaranteed annual income scheme, because this was a difficult concept and required several months of working out, thus giving the Minister of Finance time to dream up additional sources of extra revenue. But this hits at the heart of the idea that was in the mind of the minister of health and welfare when he talked of guaranteeing a certain income. It is basic to the idea of the guaranteed income that it is given as a right of the people.
The unfortunate thing about using this tax increase in this way is that the supplement to the old age income takes on the appearance of an extravagance instead of a right. It is as if the minister were saying: "All right, if you want that you will pay for it another way". I am sure that this is causing a great deal of annoyance, even anguish, to our old age security pensioners, many of whom regret that the basic pension was not first raised and the guaranteed income used to supplement that amount. Some of these pensioners will not profit very much from this supplement.
Therefore, Mr. Chairman, I think these petitioners are on good ground. The last paragraph is as follows:
Our government talks strongly of the wealth and prosperity of our people. We think finance minister Sharp should apologize to the old age pensioners for such an insinuation. If the government needs a scapegoat why don't they get someone more able to fight back than the old age pensioners?
Certainly this group, Mr. Chairman, is not in a position to fight very effectively against this measure that will, after all, provide them with some assistance. However, I regret that the minister, perhaps through lack of foresight or through failure to realize the determination of the people of Canada to insist that something be done for our old age security recipients, should have chosen this particular area to teach his hard-headed lesson in economics to the people of this country.


[Stage Direction]
Resolution agreed to.
Maurice Rinfret: The committee will now proceed to the consideration of a certain proposed resolution to amend the Excise Tax Act.


EXCISE TAX ACT
[Stage Direction]
Resolved that it is expedient to amend the Excise Tax Act to provide that, effective January 1, 1967, the rate of the consumption or sales tax imposed under section 30 of the said act be increased from 8 per cent to 9 per cent with respect to all goods subject to the said tax, except articles enumerated in Schedule V of the said act and building materials that were exempt from the said tax immediately prior to June 14, 1963.
Jay Waldo Monteith: Mr. Chairman, I do not wish to hold up the committee but I should like to reiterate my previous comment that this tax is hitting the very people to whom the minister in his budget speech on December 19 intimated he was attempting to present a Christmas present. This increase in the sales tax on all goods other than building materials, and so forth, of 1 per cent is going to hit the very people it presumably is intended to help.
As I have tried to argue before, I am not in a position to say what a difference of 1 per cent actually means to the consumers, but at any rate it does amount to a substantial sum to the pensioners who will have to buy clothes and other essentials out of their $75 plus. I say "plus" because a means test is applied above that amount, and in most cases the old age security recipients will not get the full amount.
This tax will undoubtedly increase the cost of living. We know that the people of Canada as a whole are being taxed to the very limit and beyond. We are now imposing a 1 per cent increase in the sales tax and this will affect everyone. I am not pleading the case of the medium income or high income groups; I am pleading the case of the low income group, people who will definitely be affected by this increase to the same degree as people in the higher income brackets.
I can only repeat that this increase in sales tax is detrimental to the welfare of the country. It will certainly increase the cost of living and will hit those old age security recipients whom the minister has intimated were going to be given a Christmas present.


Stanley Howard Knowles: Mr. Chairman, while we had some discussion on the other resolution we did not register any objection to it. We are in favour of the idea of raising the ceiling of the other tax; as a matter of fact we think it should be taken off altogether. But this resolution is a different kettle of fish. We are opposed to this increase and we shall make this clear at the appropriate opportunity if we do not manage to make it clear in debate.
We think that a further increase in sales tax at this time is inimical to the functioning of our economy. We think it is unfair to the consumers of this country, and that means all of the people of Canada. We think it is particularly unfair to the old age pensioners, on two counts. In the first place it is unfair to them because it effects an immediate increase in the cost of many items they have to buy,
February 14, 1967

and therefore cuts into the increased pension that some of them will be able to get.
[DOT] (9:30 p.m.)
It is also unfair to our old age pensioners, and this is the second point I alluded to a moment ago, because it creates across Canada the notion that this tax is made necessary because of the increase in the pension. No matter how much the minister may want to argue the difference between cash balances and fund balances, this legislation is drafted to make clear that the 1 per cent increase now being asked for in the sales tax is not for old age security purposes.
At present the federal sales tax is 11 per cent, made up of 8 per cent as a general tax and 3 per cent for old age security. If this resolution and the bill to be based on it passes, we shall have a 12 per cent federal sales tax, of which 9 per cent will be general tax and 3 per cent will still be for old age security purposes. In other words, when people have to pay 12 per cent instead of 11 per cent they are contributing the additional 1 per cent in sales tax to the general revenues of this country, despite the impression left across Canada that this additional percentage point is related directly to the old age pension question.
These two quantities, $290 million of taxation against $280 million of increased pension make, I would say, 99 people out of 100 think that what I have alluded to is the purpose for this increase in the sales tax. In this connection there is no more reason why old age pensioners should be labelled as responsible for a particular segment of our taxation than other items on which we spend federal money. If we are to follow this principle, why not have our taxes divided into little compartments, so that we know how much we pay for national defence, airports, to subsidize the railways, customs services and a whole raft of things. The hon. member for Edmonton West says it might have been further divided-by provinces.
We do not do that. We accept the theory of government finance and the theory of civilization as we know it, that taxes levied according to ability to pay are put into a common fund. Out of that fund we meet the costs of the services required for our kind of society. I do not think old age pensioners should be singled out for the complaint that is levelled against them by this kind of taxation method, that they are a particular charge on the funds of the country.
Ways and Means
Even calling these things transfer payments is not really in keeping with the kind of society we have today. I want to register most strongly our objection to this tax, to this increase from 11 per cent to 12 per cent, to this increase in general sales tax from 8 per cent to 9 per cent. I want also to register my strong objection to the way this has been done, creating the impression that old age security is this kind of particular charge on the revenues of this country, on our economy. Old age security has as much right as a charge on our total revenues as has national defence, roads, airports and any of the other services we provide. That is the way it should be, instead of this business of pinning it down and somehow attaching a stigma to our old age pensioners.
Let it be clear, if we can possibly make it clear to the country, that the sales tax change being asked for is not for an increase in the old age part of the sales tax. It is for an increase in general sales tax. When the tax becomes 12 per cent, if it goes through, the old age security tax will still be 3 per cent. The general sales tax is being raised to 9 per cent, and when people have to pay this extra money it will go into the general funds of this country.


Marcel Joseph Aimé Lambert: Mr. Chairman, many of the remarks of the hon. member for Winnipeg North Centre are applicable to the criticism of the division of tax. The minister tried to justify the imposition of this tax at the time of the budget. He justified it as paying for increases in the old age security. The position of this party was that there was sufficient in the old age security fund to pay for the increases which, after all, will not be disbursed until late next month or possibly in April. There was no great rush to get money into the old age security fund.
But when we look at the tax increase, that is not the way it will be done. None of this money will go into the old age security fund. It will go into the consolidated revenue fund. Next year, if the old age security fund has enough in it to pay the demand upon it, the minister can apparently turn around and use any of this money in the consolidated revenue fund for practically any purpose. One wonders at all this when he looks at the minister's position with regard to the necessity for delivering his budget late in December, after many postponements. As I said in the budget debate, the minister's dilemma was whether to tax or not to tax.

February 14, 1967
Ways and Means
He had to justify giving the budget speech. In August or September he had unfortunately said, apparently to take pressure off the government because of the increase in the cost of living, that he would bring down a budget. That pressure was the primer of the movement. Of course, the budget must be justified by some tax measure.
How convenient it was, Mr. Chairman,- how convenient. There is the promise to provide up to $30 a month for persons under a so-called income test. There was no need for money until March. We must remember that the tax was not to spoil Christmas, because the voters might get excited; so, from January 1 we had a 1 per cent increase in the sales tax.
The government came along and said to the older people of this country: "Look at the good boys we are. We are giving you a fine Christmas present, a fine end-of-the-year present with the increase in old age security payments for those people who need them." I should not say, "need them", I should say, "for those whose incomes are below a certain level."
e (9:40 p.m.)
But they did not turn around and say to them "We will take all of that increase, plus some more, from each and every one of you." There is no doubt that the full sales tax is paid, whether it be by a four-year-old infant who buys a taxable item, or an 85 year old senior citizen. The tax is paid by all concerned, and therefore the older persons are paying their share of the increase through taxation.
It was the same thing two years ago at the time of the introduction of the Canada Pension Plan. There was a gap for persons aged 65 to 70 and the government came along with a great fanfare of trumpets, introducing an amendment, something like a little trailer or rumble seat operation, whereby over a period of five years the government would pay old age security to older people progressively downwards from age 70 to 65. But the government did not tell those people that they were going to lose their $500 exemption under the Income Tax Act, and there was that loss for people between the ages of 65 and 70. There was also to be a diminution in benefits under the War Veterans Allowance Act.
Oh yes, Mr. Chairman, the government was handing it out with one hand, and with a number of hands was withdrawing a good deal of the benefit that elderly persons were deriving from the increase in old age security.

I believe the government should admit what it is doing, should tell old age pensioners just how their pension increase is being financed and how much they themselves will have to pay for it; but I will wager my bottom dollar that there will not be one piece of government propaganda to that effect when they describe social welfare measures. Millions of dollars were spent to publicize the Canada Pension Plan, but the publicity never mentioned the negative aspects of the amendments to the Old Age Security Act, the Income Tax Act, and the War Veterans Allowance Act to indicate what was being withdrawn from the elderly people.
The Minister of National Health and Welfare goes around the country trumpeting about this increase to $105, this so-called guaranteed minimum income for elderly persons, but he does not dare tell them that they are paying for part of it through this increase in tax.
This is the only justification for the minibudget because in the minister's speech, which no doubt somebody prepared for him, we heard a lot of self-evident observations and platitudes with regard to the state of the economy. It was interesting to note that many of the members on the government side did not even utilize the time available to them during the budget debate to review the economy or to plead with respect to particular problems presented to them by their constituents. A budget debate is much like a Throne Speech debate. Participation by members on the government side is expected to be equal to that on the opposition side, or even greater if the government has a majority. This is as it should be if there is going to be meaningful examination of the state of the economy.


Mitchell William Sharp: Does the hon. member think we ought to go through a budget debate like this twice a year? Does he not think it would have been a better use of the time of the house if this debate had been foreshortened?


Marcel Joseph Aimé Lambert: Members of the opposition used the time available to them in a responsible manner to discuss the economy, but the non-participation of government members was the sort of slick operation that the minister likes to see. Mr. Chairman, the minister had no need to bring in a budget at all. He is the man who occasioned the use of six days on a budget debate because it was the government's decision to bring in a mini-budget. It was not done by decision of the opposition,
February 14, 1967

and under those circumstances the opposition accomplished what it had to do. It discharged its responsibilities in examining many aspects of the economy.


Mitchell William Sharp: So did members of the government.


Marcel Joseph Aimé Lambert: For the first two days they did not participate at all.


Mitchell William Sharp: The major speech in this debate was made by the Secretary of State for External Affairs.


Marcel Joseph Aimé Lambert: I suppose the biggest blanket of smoke was spread by the Secretary of State for External Affairs, because from his convoluted phrases one has a great deal of difficulty extracting any iota, any glimmer of government policy. However, Mr. Chairman, we will now get the bills and I think they will be fairly short.
By the time we next discuss the Excise Tax Act I hope we will have seen the Carter commission report. If I remember rightly, its appearance should be just around the corner, although it has been a corner with many curves in it over the years. It has been difficult to reach the corner and see what is ahead, but I hope we shall reach it soon. When we do we will be able to make up our minds whether the excise tax can be changed so that this increase to 12 per cent may not be necessary. Quite frankly, the spread between the prices of commodities which are subject to excise tax, and the prices of commodities which are competitive as to use and not subject to excise tax, is far too wide, now that the tax has reached 12 per cent. That spread was too wide even at 8 per cent or 9 per cent, and it is getting worse as time goes on.


Mr. Pugh:: Mr. Chairman, I would like to speak briefly on the amendments to the Excise Tax Act which raised the sales tax from 8 per cent to 9 per cent on most of the articles sold in Canada. Like other hon. members I deprecate the attitude of the government in blaming old age pensioners for this increase in the sales tax. The government has to get the money somewhere, but it turns around and says, "You dear old people over 70 years of age are the cause of all this." To my mind that is wrong. As other speakers have pointed out, it was wrong in inception, wrong from the start, and wrong at the finish.
Members sitting on the government benches have never changed their minds with regard 23033-8261
Ways and Means
to old age pensioners. In 1957 those members were only too glad to say, "We are going to give you $6." From that time on they were known as the Six Buck Boys. On that occasion everybody in opposition said, "No, that is not enough." The Liberal party lost the ensuing election.
When the Conservative party took office it said the minimum rise should be $15, and that is what we paid. Later it gave a further increase over and above that $15. The old age pension was $40 under the Liberal regime. It was increased to $55 under the Conservatives and again to $65 under the Conservatives. Then what happened?


Mitchell William Sharp: It went up to $105.


Joseph Jacques Jean Chrétien: Under the Liberals.


David Vaughan Pugh: The minister says it is up to $105. Never has a more stupid statement been made in this house. If you will bear with me for a minute, Mr. Minister, I will tell you exactly why I say that. You were one of the people who sat in this house after the 1963 election, during which you promised the old age pensioners $75, and said, "No, no, no; we never said $75. That was only an election promise and we really did not mean it."
[DOT] (9:50 p.m.)
Many said that they did not even promise it. I listened to this on many, many platforms. I heard Liberal candidates stand up and say "$75-the heck with that; $100 it should be". In any event, what I am trying to tell the minister and all his colleagues is that after coming back here, for years after 1963 they resisted any increase in the pension from $65.
I might point out that the Conservative government, on supply, brought in a motion to the effect that it should be raised immediately to $75. The Liberal government, sitting over there in minority, suddenly realized that everybody on this side on the house, the Conservatives, the New Democratic Party, the Social Credit party and the Creditiste party, were saying that this must be put through. At that stage, mealy mouthed, they finally came through and brought it in. They now say, as the minister said, "We are giving $105". They are not giving that. They are saying that it must be proven by a means test that it is needed. So, do not say that you are giving $105, Mr. Minister, because you are not giving it to all old age pensioners.
In rising tonight I did not intend to prolong this question. It was only the rather silly interjection by the Minister of Finance which

February 14, 1967
Ways and Means
prompted me to continue with this. Today Canada is fighting for export markets. The sales tax is one thing which cuts in so deeply into our ability to enter into export trade. It not only affects our ability to produce in our own country for the export market, but also helps those who wish to sell to Canada from other countries. This 11 per cent sales tax on production equipment and building materials is bad enough. It cuts tremendously into Canada's ability to cope with outside manufacturers, those who would export into Canada. There is no question in my mind that the rather stupid raising of the sales tax will produce another inequity; that is, Canada's ability to stop those who would bring into Canada goods, and our ability to export outside. We fought this all through the years. When the former minister of finance brought this in I rather believe it was hoped by many members of the Liberal party that it would be discarded as another example of silliness on the part of the minister. Apparently, however, it is being perpetuated; not only that, it is being increased now from 11 per cent to 12 per cent.
Let me reiterate one more point. To step up and blame our old age pensioners for this, to my mind is completely and utterly wrong. Once again may I close by saying to the Minister of Finance that to say to the old age pensioners they will receive $105 is an utterly ridiculous statement. This is a statement which the minister has interjected from time to time as other hon. members were speaking.
It is great propaganda to say that the old age pensioners will get $105 a month, an extra $30. This just is not so. Many old age pensioners in Canada will not be entitled to qualify for this additional $30. As I have said, this was a stupid statement for the minister to make. There is no argument which he can put forward which will suggest otherwise.
Thank you, Mr. Chairman.


Gilles Grégoire: Mr. Chairman, I should not like to gloss over the 1 per cent tax increase. Naturally, the hon. minister can say: We are increasing the sales tax by 1 per cent to help the aged who would have no other source of income. But on closer look, we see that this 1 per cent increase leads to inflation, in fact it leads to an increase of far more than 1 per cent, it increases the cost of living by almost 4 per cent.

And in order to prove my contention, Mr. Chairman, let me illustrate my point by referring to an article or object a manufacturer would sell for $10.
The federal sales tax is said to have been increased from 8 to 9 per cent but, in fact, in view of the other 3 per cent federal sales tax, the hidden federal sales tax will rise from 11 to 12 per cent.
Let us take the case of an article a manufacturer sells for $10. Formerly, with the federal sales tax of 11 per cent, the article was sold by the manufacturer for $10 plus $1.10, that is the 11 per cent tax, which totalled $11.10. Since the sales tax has now reached 12 per cent, the wholesaler will have to pay $11.20 for the same $10 article. If the wholesaler wants to make his usual 10 per cent profit, since the article which used to cost him $11.10 and which he sold for $12.20 will now cost him $11.20, he will have to sell it for $12.32. This shows that the price of an article increases by more than 1 per cent when it passes from the manufacturer to the wholesaler.
If the commercial traveller also wants to make his profit of, say, 10 per cent, he will not make it on the $12.20 he used to pay, but on the price he must pay today, which is $12.32. This means that the retailer will pay not $13.42, but $13.55 because of this 1 per cent increase. And the retailer, who still makes a profit of 10 per cent on that, will sell it for $14.70, or if he sold it before for $14.76, he will sell it today for $14.91. This means that, in the past, the federal government could get 10 cents on $10 and that today the retailer sells it for 15 cents more. And when the retailer charges the 6 per cent provincial tax, he does charge it also on that federal tax. In the past, he charged 6 per cent on the 11 per cent federal tax; today, the federal government will charge the sales tax on 12 per cent, which means that, with the provincial tax, the $10 price will reach $15.81 instead of $15.64, and the price will be 17 cents higher. And the federal government will only get 10 cents out of that. But, through the process, the profit margins remaining the same, the consumer will pay 17 cents more, even if the federal government gets only 10 cents, which means that the cost of living has practically gone up 2 points.
And when the cost of living increases by two points, the worker asks for a salary increase of two points, that is, 2 per cent. This will not increase his purchasing power at all, but will merely counter-balance the higher
February 14, 1967

cost of living. We have now reached a 4 point increase in the cost of living, that is, goods will cost 40 cents more, whereas the federal government will only have obtained 10 cents, the elderly will only have received a 10 cent increase and the purchaser, the payer, the consumer will pay 40 cents more for any $10 item.
Well, Mr. Chairman, the minister wants to collect an additional 1 per cent tax in order to increase the old age pensions of those with an income less than $105 per month, but let us keep in mind, on the other hand, that the consumer will be paying 4 per cent more, rather than 1 per cent, in sales tax, but-
Mr. Chairman, since some are in a hurry to call it ten o'clock, may I point out that it is ten o'clock?
[DOT] (10:00 p.m.)

Old Age Security Act resolution reported and concurred in.
Progress reported on Excise Tax Act resolution.



BUSINESS OF THE HOUSE

Michael Starr: Mr. Speaker, I wonder whether someone acting for the house leader tonight can indicate that the program of business for tomorrow will be the same as announced last night?


Lawrence T. Pennell: Mr. Speaker, it is our intention to proceed with the business in the same order announced last night by the house leader.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Herbert Wilfred Herridge: Mr. Speaker, I should like to bring to the attention of the government and the house certain suggestions of my constituents contained in correspondence and by telephone calls regarding the appreciation of those who have had the opportunity to visit the confederation train. As a result of their comments to individuals who have not had such an opportunity it has been suggested that this train should make a repeat tour next year in order that as many Canadians as possible may have
Proceedings on Adjournment Motion the opportunity of seeing this train before it is dismantled.
I should like to read one letter, Mr. Speaker, to illustrate the type of letter I have received in his connection:
Dear Mr. Herridge:
I am writing as a temporary resident of Vancouver and a permanent resident of Kootenay West (Rossland); also because you have a reputation for answering all your mail.
I see that the minister has noted that fact. The letter continues:
The centennial train has just left Vancouver after a very successful visit-people wanting to visit the train had to wait in line for up to four hours throughout the time it was here. Several times radio announcers warned people to stay home because they didn't have a chance of getting on the train. It is very obvious that only a small proportion of people who wanted to see the train actually were able to see it.
This is my question: What is going to happen to the train after centennial year? Is there any chance that it will be able to make a repeat tour next year-including the places to be missed this year? Is there any possibility that it could become a permanent exhibit, or would the costs be prohibitively high? It seems a shame to take it apart.
I hope the answers are affirmative. Incidentally, I was one of the many who did not see the train and would very much like to see it. We were turned away because of the crowds.
Yours sincerely,
Mrs. G. C. Bilodeau.
That is the type of letter I have received in this connection. Because of these representations, yesterday in the house I asked the following question:
Mr. Speaker, I should like to address a question to the Secretary of State. In view of the tremendous public interest in the confederation train and the fact that many persons will not have the opportunity to visit this super excellent centennial project, has consideration been given to a repeat tour by this train next year?
Then Your Honour said, "Order, please." With due respect to Your Honour, I must point out that while in the first instance these representations came from my own constituency, this is a matter of national significance; and in the second instance there is a question of urgency because if there is to be any arrangement for a repeat tour next year, some revising of the schedule of the tour this year may be necessary and, of course, the cost of such tour will have to be considered in connection with next year's estimates.
I have taken advantage of this late show, Mr. Speaker, to bring my representations to the attention of the parliamentary secretary. I urge that serious consideration be given to
13060	COMMONS
Proceedings on Adjournment Motion the representations received from my constituents-and I understand other hon. members have received similar representations -so that the greatest number of Canadians will have the opportunity to enjoy this excellent confederation project.


Mr. Albert Bechard (Parliamentary Secretary to Secretary of State):: Mr. Speaker,
I first wish to thank the hon. member for Kootenay West (Mr. Herridge) for the great promotion he is giving to the magnificent confederation train on its tour throughout Canada. Prior to the suggestion of the hon. member for Kootenay West the centennial commission ascertained, at the request of the Secretary of State (Miss LaMarsh), the great interest of the population of Canada in this train. The centennial commission has made a serious study of the practicability of the confederation train repeating its tour during 1968.
It is true that a great part of the population of Canada will not have the opportunity to visit this magnificent train during its tour during our centennial year. While I am not in a position this evening to say to the hon. member for Kootenay West that the train will tour Canada for a second time in 1968, I can assure him that his very great interest in this matter, and that of his constituents and of the majority of the population of Canada are being taken into consideration. Every possible step is being taken in regard to this matter, and the progress is very encouraging.
[DOT] (10:10 p.m.)



HISTORIC SITES AND MONUMENTS-RESTORATION OF HOME OF SIR ALEXANDER GALT

Mr. Patrick T. Asselin (Richmond-Wolfe):: My question was addressed to the Minister of Indian Affairs and Northern Development in his capacity as minister responsible for the Historic Sites and Monuments Board. It was intended to lead to positive action; it was not an attempt to cry over spilled milk.
I feel it is useless at this time to try to find out who was to blame for the demolition of what we call Galt House, though I do believe the minister should make a complete and detailed study of this matter, and that those responsible should be punished.
Sir Alexander Galt emigrated to Sherbrooke in 1835 and in 1849 was elected from Sherbrooke to the legislative assembly of Canada, where he served until 1867. He sat in the House of Commons until 1872. He was a delegate to the Charlottetown and Quebec conferences of 1864 and to the Westminster

DEBATES	February 14. 1967
conference of 1866 and was one of the chief architects of the British North America Act. In 1867 he became the first finance minister of the Dominion and in 1880 was appointed the first Canadian high commissioner in London.
Time does not permit me to continue with this great man's accomplishments, but I wanted to draw these facts to the attention of the house to show why we felt it was so important to preserve his home. I understand the minister has announced that a monument, not just a plaque but a real monument, will be placed in Sherbrooke to commemorate this statesman. Of course we appreciate this very much. Nevertheless the Eastern Townships Historical Society has requested that the remaining portion of what we now call Galt House, the stable, or the carriage house-the portion of the house which was attached to the original house and which formed part of it-be preserved. Fortunately this portion was not demolished when the original home was destroyed. The preservation of the carriage house would, we feel, be preferable to the erection of a monument which in itself would have little of historical value. I may say that I have quoted a portion of an editorial which appeared in one of the local newspapers.
I do not wish to labour this question, I should like the minister to give us, if he can, a definite date on which he and the officials of the historic sites division can come to Sherbrooke to study this matter. At the same time I would be glad of an assurance that his visit will be made before any definite decision is reached with regard to the carriage house. We understand that the minister is burdened with other work in the department, but I should like to suggest to the hon. gentleman that he take the opportunity of meeting the people in the area and hearing them explain the historical value which they attach to this site-that he should visit the area before a final decision is taken and discuss with those people who are interested exactly what his department is prepared to do.


Arthur Laing: Mr. Speaker, it seems the happiest circumstance surrounding the commemoration of Sir Alexander Galt is the interest of the Eastern Quebec Historical Society. This is one of the finer evidences, I think, of the value of perpetuating places of history in this nation. We are apologetic still, and very sorry, over the disaster which befell our efforts to move the
February 14. 1987	COMMONS
house itself. It was going to be demolished in any case. We hurriedly put in a contractor who told us he thought he could move it, but when he touched the house it fell apart. We do not want the same thing to happen in any attempt to move what the hon. member calls a carriage house, but which I believe was actually a stable. We think that probably the same thing would happen in that case, because it is set upon rock. When we move the rock of 100 years ago, it just falls apart and we do not want that to happen again.
What we are planning at the present time, and the Historic Sites and Monuments Board has reviewed this on a number of occasions now, is to use a plot of land at the side of the estate about 300 feet from where the house stood and erect there a monument to Sir Alexander Galt. We have commissioned the well known sculptor Madame Guite of Quebec to make submissions to us which will be studied by the Historic Sites and Monuments Board. I want to assure my hon. friend that the officers of the historic sites division are going to the site later this month and will review the whole situation again.
We came to the opinion, based upon the recommendation of the Historic Sites and Monuments Board, that commemoration at this site was extremely important to Canadians. We intend to make a commemoration there worthy of Canada and worthy of Sir Alexander Galt and his contributions to Canada. I would be very happy indeed, and I will assure the hon. member that some time this year I will endeavour, to visit the site myself. We will seek there the co-operation, which I know will be forthcoming, of the historical society, because of all the efforts made theirs is the most valuable to the area and to his memory.



EDUCATION-REQUEST FOR INCREASED ASSISTANCE TO CANADIAN STUDENTS

Raymond Langlois: Mr. Speaker, I am just looking for the representatives of the Prime Minister's office and of the Secretary of State for External Affairs. The subject matter which I wish to discuss tonight is, I believe, very important since it relates to Canadian university students. Evidently no one in the Prime Minister's office or the office of the Secretary of State for External Affairs is interested. I understood that on this late show there was to be at least some representative of a minister Who would supply some information on this subject. However, in view of the information I obtained in answer to
Proceedings on Adjournment Motion question No. 2090 on the order paper, I feel the Canadian university students will answer for themselves. Then, perhaps the Prime Minister or the Secretary of State for External Affairs will give a more attentive ear than they are giving tonight.
Now, Mr. Speaker, I should like to refer to our external aid program under which students from foreign countries are helped to attend Canadian universities. I was astonished to learn from the Secretary of State for External Affairs that the average amount of money Canada extends to these students is $5,467.29 per annum per student.
How many Canadian students get that kind of money to go to school? Our students have to do part time work in restaurants to pay their way through school, because their parents cannot afford to finance the entire cost.
o (10:20 p.m.)
I have been wondering why there has been so much bickering and hollering over foreign aid. Canadian students at the present time are undergoing an injustice. We finance foreign students to come to Canada to study, students who do not have the same problems Canadian students have. As far as finances are concerned, they are treated better than Canadian students.
I would ask how many Canadian students have about $5,500 a year to go through university? This amounts to $22,000 over a four-year term; and this is the average figure, Mr. Speaker. Out of 900 odd students only 515 graduated. Some of these might have required $6,000; the average was $5,500. These are students who have been changing cars every year. They are about the brightest students from these underdeveloped countries. Some of them do not have to work so hard and some attend a minimum of courses. Their financial problems are minimal compared with some Canadian students who have to slave their way through university.
I am not saying that this amount is too much, but not many Canadian students can afford to pay this sum. If we can spend this amount on foreign students, then we can spend the same amount on Canadian students. The federal government is going to award 10,000 grants to Canadian students. Yet it can afford external aid to the tune of $259,360,000 in 1965, which is a staggering figure.
I believe the purpose of external aid is missed entirely. In one way or another the goals and aims of the external aid program are unrealistic. We give these foreign students
13062	COMMONS DEBATES	February 14, 1967
Proceedings on Adjournment Motion an education or train them at a Canadian university for a trade or for the professional field, so they can return to their homeland to render their country a service. The problem is, Mr. Speaker, they do not go back home. Some of the responsibility for this is upon the federal government at the present time for providing them with a high standard of living. No wonder they do not go back home to an underdeveloped country, when we spend $22,000 on them over four years.
The United Nations has also produced some staggering figures in this regard. Some 85,000 medical doctors did not return to India after taking their course. They are scattered around the world. They might not all be in Canada, but anyone versed in external affairs knows that Canada's reputation internationally is such that if they are trained here they are fitted to enter any country they desire. I know of no restrictions. At present we are not doing India a service in this respect, or any of the other underdeveloped countries; we are doing them a disservice. We are taking their best students away from them. They do not return to their homeland to practise what they have learned here, which was the main objective of the external aid program.
I suggest this program should be revised as soon as possible. Our own Canadian students are in no way assisted by these circumstances at the present time. They have to attend the same universities and undergo the same expenses as foreign students. Very seldom can they raise more than $2,000, but they have to compete with students from other countries who are financed by the Canadian government through Canadian taxpayers. It is the government's responsibility to look into the question of paying this $5,500 to Canadian students.


The Acting Speaker (Mr. Rinfret):: Order, please. The time allotted for the hon. member's speech has expired.


Albert Béchard: Mr. Speaker, if the member for Megantic (Mr. Langlois) allows me to answer in French, I will tell him first that I regret the absence of both parliamentary secretaries to the Prime Minister (Mr. Pearson). But as the member for Megantic knows probably, both of them have been away; one came back late tonight but I have been unable to reach him to ask him to answer the question of the hon. member. As for the Secretary of State for External Affairs (Mr. Martin), I think he is not at all involved in the question put today by the member who was only making a comparison with the answer given by the government to question No. 2,090 concerning aid granted to foreign students.
The question of the hon. member for Megantic which was couched in Shakespearean English, was as follows:

Does the federal government contemplate changing Its present policy in order to accommodate Canadian students and provide them with about the same amount of money, that is, $5,500 per annum, to attend Canadian universities?

As I am not informed of the studies of foreign students financed by the Canadian government, I am not in a position to give a satisfactory answer to the hon. member for Megantic. However, since he asks whether the government of Canada could not give the same assistance to Canadian students, I may tell him that for many years, here in this house, the party which he represents has always insisted on provincial autonomy in matters of education. I will tell him in closing, that education is the exclusive responsibility of the provincial governments.

Motion agreed to and the house adjourned at 10.30 p.m.

Wednesday, February 15, 1967