1967-06-01

Mr. David MacDonald (Prince):: Mr. Speaker, I rise on a question of privilege arising from a series of misleading statements and misrepresentation made in this house by members of the government with respect to a major governmental undertaking, the Northumberland strait causeway. I believe my question of privilege can be fully documented from the records of this house over the last year and a half.
Shortly after this first session of parliament began I put a question on the order paper concerning the expected date of completion of the Prince Edward Island causeway. The reply of the Minister of Public Works is found at page 1148 of Hansard, and reads as follows:
It is impossible at this early date to forecast accurately when a project of this magnitude and complexity will be completed. However, with maximum progress this project could be completed in late 1970.
One might say the minister protected himself well in that statement. However, outside of the house he went on record as announcing and in fact reiterating the earlier announcement of the proposed completion date of 1970. As if to underline the fact the government had indeed committed itself to a completion date late in 1970 the Minister of Finance, as recorded in his budget speech at page 3382 of Hansard, referred to one of the items for deferment or for rescheduling as follows:
A readjustment of the timetable for the next phase of the Northumberland causeway project in order to minimize the pressures on the peak summertime employment market and maximize winter employment possibilities;
Later the hon. member for Kings (Mr. McQuaid) sought assurance from the Prime Minister with regard to the completion of the causeway. The reply he received is recorded at page 3860 of Hansard:
-I can assure him there will be no delay in the completion of the project.
At an even later date, on April 19, a question was asked again by the hon. member for Queens of the Minister of Public Works who replied, as recorded on page 4030 of Hansard: I hasten to assure the hon. member that the Northumberland strait causeway is not being delayed in any way. The completion date is unchanged. It remains as it was when stated in the first announcement.
Later on the same day he said:
The new schedule provides for uninterrupted effort to build the P.E.I. approach to the proposed nine mile crossing.
After all these statements assuring us of this completion date, last Friday afternoon in this house the Minister of Transport was able to say, as reported on page 626 of Hansard:
The government has never at any time been so imprudent as to suggest a precise date for the completion.
I suggest, in the first instance, that there has been a very careful plan on the part of the government to mislead the members of this house as to whether in fact there will be completion of this important transportation link by late 1970. But, Mr. Speaker, I do not regard this as the basis of my question of privilege for it relates, in fact, to the very design and construction of the project itself. In January of this year, as will be found recorded on page 12408, I asked the Minister of Public Works, in the light of rumours of a possible report by O. J. McCulloch, whether indeed there would be design changes in the causeway. The minister replied on that date: Mr. Speaker, none are contemplated.
[DOT] (2:40 p.m.)
One might allow the minister some latitude at this point, Mr. Speaker; after all that was some months ago, and the government cannot be expected to be that accurate even after assessing this problem for three or four years. But this past month, on May 18, I again asked the minister whether he could tell the house when we might expect the awarding of the major contract called for March 31 so the next section could be gotten under way. In the first instance the minister was unable to reply, but in the second instance I put a supplementary question to him and asked whether the minister would assure the house that within the next two weeks we would
June 1, 1967

Prince Edward Island Causeway have an announcement of the awarding of the contract. The minister's reply, as reported at page 345 of Hansard, was as follows:
I expect we will have it within the next two weeks, Mr. Speaker.
Those two weeks have now come and gone, Mr. Speaker, and we have had no word on the awarding of this contract. Rather we have had word of a deferment. As my most conclusive argument, Mr. Speaker, I refer to Hansard for May 23, on which day I asked the minister once more whether any action had been taken by the government to defer or redesign this project. In a supplementary question I asked him whether the government was planning to defer this project, and the minister answered with a categorical "No, Mr. Speaker".
Some months ago a report was published in our local paper under the headline "Are our Islanders being taken for a toboggan ride?" I think the answer to that question today is a categorical "yes" because of the way in which this government through the past months has deliberately misled the members of this house and the people of Prince Edward Island with regard to this worth-while and important project.


Mr. Speaker:: I might bring to the attention of the hon. member that it is not according to the rules of the house to suggest that either one member or a group of members have deliberately misled other members of the house. I am sure that to this extent his words went beyond his thoughts.
I am sure the hon. member also realizes that fundamentally there is no question of privilege in what he is proposing at the moment. I refer him to citation 113 of Beau-chesne's fourth edition, which I will not read in its entirety. Generally speaking we are now dealing with what might be called a dispute or disagreement between members as to the interpretation of statements made in the house. This cannot qualify the proposal of the hon. member as a question of privilege.
In view of the circumstances I do not think I can allow the hon. member to propose a motion to follow his question of privilege.


David Samuel Horne MacDonald: Mr. Speaker, with due respect-


Some hon. Members:: Order.


David Samuel Horne MacDonald: It seems to me there is a disagreement about something that is a fact.


Mr. Speaker:: Order, please. A ruling has been made which is not subject to debate.


Hon. G. J. Mcllrailh (Minister of Public Works):: Mr. Speaker, may I rise on a point of order.


Mr. Speaker:: Order, please.


George James McIlraith: Your Honour made a ruling.


Mr. Speaker:: Order. Do I understand the minister to be rising on a point of order?


George James McIlraith: Yes, Mr. Speaker. Your Honour made two rulings in fact, but my point of order concerns the charge of deliberate misleading by the government, which must be withdrawn. The hon. member has not yet withdrawn that charge and I ask him to do so.


Mr. Speaker:: Order, please. I would count on the hon. member's usual co-operation with the Chair to see that his last words, which as I said went beyond the terms of the rest of his statement, are clarified.


David Samuel Horne MacDonald: Mr. Speaker, I
would not want anyone to think I considered that this government had done anything deliberately.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Perhaps the hon. member should go no further.


George James McIlraith: On a point of order, I do not wish to repeat-


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


George James McIlraith: Yes, Mr. Speaker, I raise a second point of order. The hon. member has deliberately abused the rules of this house-


Some hon. Members:: Oh, oh.


George James McIlraith: -and under the guise of stating a question of privilege has misrepresented what is said and recorded in the records of parliament, as found in Hansard. I invite all hon. members to read thoroughly the remarks which appear in Hansard. They will see who deliberately misled the house.


Mr. Speaker:: Order, please.



MR. VALADE-ANONYMOUS LETTER CONTAINING OFFENSIVE LANGUAGE

Mr. Georges Valade (Sainle-Marie):: Mr. Speaker, on a question of privilege. I am
June 1, 1967	COMMONS
sorry that the hon. member implicated in this matter is not in his seat to hear me.
My question of privilege deals with the respect that hon. members of this house must show each other, with the dignity and good reputation of parliament. If my intervention should cause any adverse reaction, such is not my intention. As an introduction to my question of privilege, I wish to quote from May's Parliamentary Practice page 43, chapter entitled "Breach of Privilege and Contempt," line 6:

Each house also claims the right to punish actions, which, while not breaches of any specific privilege, are offences against its authority or dignity, such as disobedience to its legitimate commands or libels upon itself, its officers or its members.

Yesterday afternoon, Mr. Speaker, after Your Honour had left the chair, I received an anonymous letter, written in block letters, obviously to prevent identification, and with the letter-head of the House of Commons.
Abusive, slanderous and defamatory remarks regarding myself had been written on the envelope and in the letter.


An hon. Member:: Would the hon. member
quote them?


Georges-J. Valade: Mr. Speaker, this is a question of privilege; the hon. member, by his antics, continues the interruptions and obstruction he has been making in the house for too long. I ask you, Mr. Speaker, to enforce the rules of the house.


An hon. Member:: Quote the remarks.


Georges-J. Valade: The standing orders of the house, Mr. Speaker, rule out obscene and non parliamentary language, so I must refrain from repeating the terms used in this letter.
After inquiry of the authorities of the house, I discovered that a Liberal member had resorted to this grotesque and cowardly conduct.
I regret to have to tell the house that, in this case, the member for Saint-Henri (Mr. Lessard) is involved and sought to hide his insults under anonymity.
My question of privilege, Mr. Speaker, is to prevent a repetition of such conduct far removed from the sense of responsibility each of us in this house should show.
My question of privilege, which I am bringing forward after great hesitation, is not intended to publicize the name of an unknown
DEBATES	819
Prince Edward Island Causeway member, but to demand and recall that between the members of this house, a dignified and respectful relationship should exist and and be jealously guarded by parliament, if the confidence of the people is to be maintained.


Mr. Auguste Choquette (Lotbiniere):: Mr. Speaker, with regard to the question of privilege raised by the hon. member-


Mr. Speaker:: Order. The hon. member rose on a question of privilege which was not followed by a motion. I do not feel, therefore, that the matter is so urgent as to be debated without delay.


Auguste Choquette: I rise on a point of order, Mr. Speaker. I feel the matter is important, especially in view of the absence of the hon. member for Saint-Henri (Mr. Lessard). The hon. member for Sainte-Marie (Mr. Valade) said that the letter contained abusive, slanderous, vile language, in short, he used every possible epithet in such circumstances. In my opinion, the hon. member should be expected to table the letter in the house, so that we may know what was written.


Mr. Speaker:: Order.


Auguste Choquette: The letter contained truthful statements.


Georges-J. Valade: On a question of privilege, Mr. Speaker.

The hon. member for Lotbiniere (Mr. Choquette) has just stated, so that the official reporter may take it down, that the contents of that letter reflected the truth. Since those contents were abusive, Mr. Speaker, I suggest that you should ask the hon. member for Lotbiniere to withdraw his words, because he keeps dirtying-as his party has been doing for the last two years-the hon. members of this house.
[DOT] (2:50 p.m.)



COMMITTEES OF THE HOUSE


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

-as usual, written in both French and English.
June 1. 1967

Prince Edward Island Causeway [English]
First report of standing committee on agriculture, forestry and rural development-Mr. Whelan.



TRANSPORT


George James McIlraith: Mr. Speaker, yesterday the hon. member for Queens asked me whether the Department of Public Works had completed its examination of the commentary by Mr. O. J. McCulloch on the Northumberland strait crossing and whether Mr. McCulloch's services would be utilized in our reassessment of the design of the crossing. I indicated that no consideration is being given to obtaining Mr. McCulloch's services but that I would make a statement on motions today as to the commentary and revised commentary sent to the department by Mr. McCulloch.
The contention of Mr. McCulloch is that the crossing should be built in precisely the way the Canso causeway was built, that is that it should be a solid causeway. In all his proposals Mr. McCulloch has assumed conditions existing as they were at Canso. This is patently not the case. The Canso causeway crossed a strait approximately three quarters of a mile long where changes in tidal conditions were not significant although there were some damage claims. The project we are now considering is a nine mile crossing located approximately in the middle of a 100 mile reach of the Northumberland strait.
While investigating the feasibility of the Northumberland crossing the government had a complete tidal study made. An analysis of this tidal study was made by the Liverpool Observatory and Tidal Institute of England to predict the results of placing a restriction in the strait. The results of their study, confirmed by subsequent model studies, indicated that a full causeway would change the tidal regimes throughout the strait. The changes would be very significant. At the crossing site the average tidal range at present is 7i feet, whereas complete closure would increase the tidal range by 5| feet on the east side and 2J feet on the west side. To these changes in tidal ranges it is necessary to add the effects of storm surges and wind setup. On the other hand, if a crossing is designed to provide a minimum of 35 per cent of the cross-section open to flow, changes in the present water level conditions throughout the strait are not significantly altered.

In considering these facts the government had surveys made to consider the direct costs which might arise as a result of property damage, flooding effects on roads, bridges, marine structures and dredging, if water levels were changed. These, at 1959 values, were estimated at $23 million. What these costs would be in 1967 is problematical, and to evaluate them would involve a completely new assessment of lands, roads and bridges, marine structures and development since the survey of 1958-59. What was impossible to forecast or estimate, however, was the extent of potential damage to individuals or corporations located in and using the strait for marine purposes where their facilities and potential development would be affected by changes in water levels. Added to this was the potential of disturbing the existing conditions as they may affect the fisheries industry which would involve not only changes in depth but also water temperature conditions and water flow generally.
Having regard to all these factors the government wished to maintain, in so far as possible, the existing tidal regime, and this is still our judgment. This is particularly so when we have carried our engineering investigations to such an extent that we can provide an opening which will maintain the tidal regime. We can make provision for ice, and we are proceeding on this basis and do not accept the alternative of a solid causeway.


Mr. Heath Macquarrie (Queens):: Mr. Speaker, it is very difficult to discuss such a technical statement without the text before me, and I am very much a layman in this field. However, Mr. Speaker, I am impressed by the assurance with which the minister seems to reject the suggestions of Mr. McCulloch. The minister described Mr. McCulloch's suggestion as a commentary. I have a copy of Mr. McCulloch's report before me, and it seems a little more ample than a mere commentary.
Considering the degree to which the department has had to admit errors and miscalculations I wonder at the presumption with which it is able to cast aside so summarily the suggestions made by Mr. McCulloch. Indeed I am wondering why in recent years Mr. McCulloch's submissions have not been more carefully studied. Although I hold no brief for Mr. McCulloch's suggestions I think it is fair to say he took stock of the resultant damage to the coasts of both provinces which would ensue from the building of a solid causeway-


George James McIlraith: No.
June 1, 1967


Heath Nelson Macquarrie: -and in his calculations he estimated the cost of remedial steps. The minister interjects from his seat that he did not. I contend he did, and have the document before me. Mr. McCulloch did take this into consideration. Considering the whole causeway crossing project it would also appear to me that the very phase which yesterday was reported to be under reassessment, and for which contracts were not awarded, is the causeway section on the New Brunswick side which would be built and could be built if Mr. McCulloch's plans were adopted. Therefore, I and many people in Prince Edward Island are still possessed of a feeling of uneasiness about this whole project, and I am not convinced that much has been done to dissipate that uneasiness by casting aside the practical suggestions made by Mr. McCulloch.
Since the government seems to have to reappraise so much, and this despite the fact that yesterday in an answer given to the hon. member for Cumberland it was revealed that $1J million had been spent on research, I would commend to the government that in its reappraisal it should have closer consultation with Mr. McCulloch, who has at least produced a plan that is economically feasible according to his figures. I believe such consultation would be very much in order.


Some hon. Members:: Hear, hear.



VETERANS AFFAIRS


Hon. A. J. MacEachen (Minister of National Health and Welfare) moved:: That the items listed in the main estimates for 1967-68, relating to the Department of Veterans Affairs, presented to this house at the present session, be withdrawn from the committee of supply and be referred to the standing committee on veterans affairs, saving always the power of the committee of supply in relation to the voting of public moneys.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Hon. Michael Starr (Ontario):: Mr. Speaker, I wish to address a question to the right hon. Prime Minister. Can the Prime Minister state whether as a matter of government policy support will be given at least in principle to
Inquiries of the Ministry the project of an all Canadian communications satellite, as proposed in a brief prepared by the Canadian telecommunications industry?


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, as I believe I indicated the other day, that very important question is at the moment under examination by the government and by experts appointed by the government. This, of course, is one of the proposals which will be considered.


Michael Starr: I have a supplementary question, Mr. Speaker. Will the government lend its full assistance, through the offices of the Secretary of State for External Affairs, in negotiating the necessary international arrangements in order that Canada may have as soon as possible the benefits of a satellite communications system which is all Canadian?


Lester Bowles Pearson: I am sure the Secretary of State for External Affairs will receive every assistance from other members of the government in any negotiations he may have to carry out with other governments in an effort to bring this very important project to completion.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquillam):: Mr. Speaker, may I direct this question to the right hon. the Prime Minister. In view of the statement made by the British Prime Minister and his foreign secretary yesterday calling upon all the maritime nations to join in a declaration that the gulf of Aqaba and the entrance strait of Tiran should be declared an international waterway with free access for all nations, is the Canadian government prepared to join in such a declaration?


Lester Bowles Pearson: Mr. Speaker, we have just received the information to which my hon. friend referred. We will be discussing this matter this evening with the Prime Minister of the United Kingdom. I would prefer not to say anything about it until I meet with him.


Thomas Clement (Tommy) Douglas: Mr. Speaker, may I ask the Prime Minister whether we can expect a statement of government policy in respect of this matter fairly soon. The whole situation is lying dormant and certainly will not improve unless there is some clarification on this point. Can we expect a decision tomorrow?
June 1, 1967

Inquiries of the Ministry


Lester Bowles Pearson: Very active consideration has been given to this very important element of the whole crisis during the last week or ten days. Our own position as a government in respect of these waters, which was stated on March 11, 1957 in a speech in this house and also in a statement made at the United Nations, is that these waters should be considered international waters. That is the position on which we have operated and that position has not been changed. We are considering at the moment, not only with the United Kingdom government but also with other governments, what steps if any should be taken collectively to reaffirm this position. That is all I can say about it now.


[Stage Direction]
On the orders of the day:
Mr. A. B. Patterson (Fraser Valley):: Mr. Speaker, my question, which is directed to the Secretary of State for External Affairs, is based on a report to the effect that the minister stated that membership in the Organization of American States is part of the ultimate destiny of Canada. I should like to ask the minister whether this implies that the government has made its decision in respect of this important matter. If so, when do they expect to make application for membership?


Hon. Paul Martin (Secretary of State for External Affairs):: Mr. Speaker, if my hon. friend will be good enough to continue to read that report he will see that the government explained why it is not taking a decision at this time.


Mr. Speaker:: The hon. member for Queens.


Heath Nelson Macquarrie: Mr. Speaker, my question has been asked by the hon. member for Fraser Valley.


[Stage Direction]
On the orders of the day:
Mr. Roland Godin (Portneuf):: Mr. Speaker, my question is directed to the Minister of Forestry and Rural Development and it follows up a question which I directed to him last Thursday, as shown on page 552 of Hansard concerning the officers of the R.C.M.P.
On the same page under the subtitle:
Possible implementation of school milk program- Godin

Mr. Speaker, although I have never raised that question and this title is completely wrong, for that day, I wish to say that I am not opposed to the principle and I ask the minister whether actually-


Mr. Speaker:: Order. Would the hon. member ask his question?


Roland Godin: Thank you, Mr. Speaker. I ask the minister whether milk will actually be distributed in schools and under what terms the members of the R.C.M.P. have accepted to perform that task?


Mr. Speaker:: I think that I had suggested, at the time, that the question might be placed on the order paper.



PUBLIC WORKS


[Stage Direction]
On the orders of the day:
David Samuel Horne MacDonald: Mr. Speaker, my question is for the right hon. Prime Minister. It has relation to my earlier motion and the statement on motions by the Minister of Public Works. I wonder whether the Prime Minister would assure the house, in view of the magnitude of this project in the estimates of the Department of Public Works, that we might have these estimates before us in the next week or so.


Lester Bowles Pearson: Mr. Speaker, my hon. friend knows that the order in which the estimates will be considered has been discussed with the opposition parties, and we are planning to discuss them in this order. If my friends opposite wish any change in that order perhaps they could take up the matter with the house leader.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. H. A. Moore (Wetaskiwin):: Mr. Speaker, I have a question for the Minister of Agriculture. Is it true that no further claims for milk subsidies for the 1966 dairy year, no matter how legitimate, will be paid due to funds no longer being available?


Hon. J. J. Greene (Minister of Agriculture):: Mr. Speaker, any claims for the past year which were valid and filed properly and on time will be considered and paid.
June 1. 1967	COMMONS



INSULIN-ASSISTANCE TO USERS IN LOW INCOME BRACKETS

[Stage Direction]
On the orders of the day:
Mr. Eric A. Winkler (Grey-Bruce):: Mr. Speaker, my question is for the Minister of National Health and Welfare. In view of the increase in the price of insulin I am wondering whether the minister could advise us whether any action is planned to protect those users of this drug who are in the low income brackets.


Allan Joseph MacEachen: Mr. Speaker, no further action is contemplated. I may say, however, there is a provision under which the provinces in collaboration with the federal government may assist insulin users who are in necessitous circumstances.


Eric Alfred Winkler: I have a supplementary question, Mr. Speaker, which I shall address to the Minister of Finance. Could he inform the house whether he anticipates eliminating the federal sales tax on drugs, particularly in respect of insulin, when he gives his discourse tonight?


Mr. Speaker:: Order, please.



WATER RESOURCES


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to address a question to the Minister of Energy, Mines and Resources. First of all I must welcome him back to this house, because I missed him while he was away. I ask this question because of the concern of many members with our important water problems. Is it the minister's intention to make a report to the House of Commons on the recent water conference held in Washington, and to give the house any information concerning proposals made or papers presented by the Canadian delegation which was in attendance?


Hon. Jean-Luc Pepin (Minister of Energy, Mines and Resources):: Mr. Speaker, I thank my good friend for his kind remarks. Next time I will consult with him before I leave. Communiques were issued by my department before the conference was held. I will see to it now that a communique is issued which will outline the Canadian participation during
DEBATES	823
Inquiries of the Ministry that conference. May I underline now that no proposals of a political nature were made at the conference by Canada.


Mr. J. E. Pascoe (Moose Jaw-Lake Centre):: Mr. Speaker, in view of the national interest in the question of water resources I should like to ask the minister to inform the house when this report will be made available to members of parliament.


Jean-Luc Pepin: We arrived back last night. I will make sure that it is out within the next two or three days.



TEXTILES-REQUEST FOR RESTRICTION ON IMPORTS

[Stage Direction]
On the orders of the day:
Mr. Maurice Allard (Sherbrooke):: Mr. Speaker, my question is directed to the hon. Minister of Finance and Receiver General.
In view of the unfavourable balance-sheet recently presented by Dominion Textile and other Canadian textile companies, does the government intend to impose over-all restrictions on textile imports from Japan and other Asian countries, and to see to it that textile imports come back to a level lower than the one they have now reached?


Mr. Speaker:: I suggest to the hon. member that his question is far too general in nature to be asked today.


Maurice Allard: Ten o'clock, Mr. Speaker. [English]



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbili (Oxford):: Mr. Speaker, I have a question I should like to direct to the Minister of National Defence. Were any war materials or strategic materials of any nature left behind in Egyptian territory when the Canadian forces left? If so, are there any plans to remove these materials from Egyptian territory?


Hon. Paul Hellyer (Minister of National Defence):: Mr. Speaker, the only equipment left behind was that which belonged to the United Nations. I think there are some minor exceptions. For instance, two generators and two mule forklifts that had outlived

June 1, 1967
Inquiries of the Ministry their usefulness were not considered worth bringing back. I understand all the other equipment which belongs to Canada or the Canadian forces has been removed to Cyprus or returned to Canada.


Wallace Bickford (Wally) Nesbitt: I have a supplementary question. In reply to my question the minister said there was some material which belongs to the United Nations which was left behind. Is this material which was transferred or contributed to the United Nations by the government of Canada?


Paul Theodore Hellyer: My information is that it was left in charge of the commander of the United Nations emergency force.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. R. N. Thompson (Red Deer):: Mr. Speaker, I should like to direct a twofold question to the Secretary of State for External Affairs. In view of the fact that a number of nations are removing their nationals from the eastern area of Nigeria which has recently seceded from the federated union, is Canada taking any steps to protect her nationals in that area? Does the minister have any information for the house regarding Canada's policy in respect of this difficult situation in Nigeria?


Hon. Paul  Marlin@Secretary of Stale for External Affairs: Mr. Speaker, an inquiry similar to the last part of this question was made yesterday, at which time I pointed out that the decision taken by one of the provinces of Nigeria was based on authority which rests in that country. This is a problem of a domestic nature in which we cannot interfere, although we are viewing events with great concern. So far as Canadians in the country are concerned, every step has been taken to make sure they are protected if there is any danger to their safety.



HATE LITERATURE


[Stage Direction]
On the orders of the day:
Mr. Marcel Prud'homme (Saint-Denis):: Mr. Speaker, I have a question for the Solicitor General of Canada.

In view of the fact that an association known under the name of L'Alerte de l'Oc-cident is now using the Canadian mail, or the royal mail of Canada, as you wish, P.O. box 185, station R, Montreal, to distribute hate literature against the Jews-which literature is liable to create social disorder in this troubled period in the Middle East-and since some hon. members have received that literature-


Mr. Speaker:: Order. The hon. member must ask a question.


Marcel Prud'homme: I am getting to my question, Mr. Speaker. Could the minister tell us if he intends to investigate that matter?


Hon. L. T. Pennell (Solicitor General):: Mr. Speaker, I will bring this to the attention of the R.C.M.P., and if an investigation has not already commenced I will ask that one be made. I am sure that my colleagues the Postmaster General and the Minister of Justice have also taken note of the question.



FINANCE


[Stage Direction]
On the orders of the day:
Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, on May 29 the hon. member for Nanaimo-Cowichan-The Islands asked me a question about a report relating to the Mercantile Bank. I assume that the report to which he referred was the one contained in the May issue of the Executive magazine. I have read this article, and it does not state that the owners of the Mercantile Bank of Canada will not comply with the laws of Canada. It merely expresses the opinion of the First National City Bank that one of the alternatives open to the Mercantile Bank under the provisions of the Bank Act may not be one which they will choose to use.



TRANSPORTATION


[Stage Direction]
On the orders of the day:
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, in the absence of the Minister of Transport I should like to direct this question to the acting minister. Will the acting minister inform the house when part I of Bill C-231, the transportation bill, will be proclaimed in order that the protection provided
June 1, 1967

therein will be given in respect of pending rail line abandonment applications? This is the assurance that was given to hon. members of this house during the debate on this bill.


Hon. John N. Turner (Acting Minister of Transport):: Mr. Speaker, I would prefer to have this question answered on Monday by the Minister of Transport, and I will bring it to his attention.



CAPE BRETON-INQUIRY AS TO INTRODUCTION OF LEGISLATION

[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and Victoria):: Mr. Speaker, I should like to direct my question to the Minister of Energy, Mines and Resources. Now that the province of Nova Scotia is in good, solid and sensible hands for at least the next four years, I should like to ask the minister when we can expect the introduction of the necessary legislation for the takeover of the Nova Scotia coal mines and the formation of the crown corporation.


Jean-Luc Pepin: Mr. Speaker, I have no comment in respect of the first part of the question. Let me say in answer to the second part that we have now nearly completed our preparation, and in view of the fact that the Minister of National Health and Welfare, who is also from Nova Scotia, is now the house leader, perhaps this will assist us in introducing this legislation earlier than we might have expected.


Robert Muir: I have a supplementary question. Is the great delay in the introduction of this legislation related to the fact that the minister from Nova Scotia has been in the cabinet all these months and-


Mr. Speaker:: Order, please. The election is over.



PUBLIC WORKS


[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: Mr. Speaker, in the absence of the Minister of Transport I should like to direct a question to the acting minister. Has the department received a telegram from the officers of local 2231 of the United Steel Workers of America
Inquiries of the Ministry at Amherst, Nova Scotia regarding an extension to the Pugsley terminal wharf? The tenders are apparently being called for early next week, which gives this question great urgency. The telegram requests the government to specify the use of Canadian materials in order to provide some 15,000 to 20,000 man hours of work for the steel industry in that area, which is now suffering from unemployment. Has such a telegram been received and, if so, what steps are being taken by the government to comply with this request?


John Napier Turner: Mr. Speaker, all I can say is that I have not had such a telegram brought to my attention, but I shall look into the matter immediately.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. Barry Mather (New Westminster):: Mr. Speaker, I should like to direct my question to the Minister of Fisheries. Has an agreement or an understanding yet been reached between his department and the government of British Columbia regarding the controversial Stellako river situation?


Hon.   H.-J. Robichaud@Minister of Fisheries: Mr. Speaker, on Thursday or Friday of last week I informed the government of British Columbia that I was prepared to cooperate in respect of a limited and controlled log driving operation this year on the Stellako river. I understand that the provincial minister concerned has been in Washington for the last seven or eight days attending the water for peace conference. I have not received any reply to my letter, but I have good reason to believe that my offer will be accepted.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. Alcide Simard (Lac-Saint-Jean):: Mr. Speaker, my question is addressed to the Minister of Labour.
What position does the government intend to take in reply to the application for recognition by the C.N.T.U. concerning C.B.C. employees?
June 1, 1967

Inquiries of the Ministry AGRICULTURE



QUEBEC-BEQUEST FOB INCBEASE IN INDUSTBIAL MILK QUOTAS

[Stage Direction]
On the orders of the day:
Mr. Anionio Yanakis (Berihier-Maskinonge-Delanaudiere):: Mr. Speaker, my question is addressed to the Minister of Agriculture whom the farmers admire very much and whom I should also like to congratulate for the magnificent building-


Mr. Speaker:: Order. The hon. member must put his question.


Antonio Yanakis: -which he inaugurated yesterday. He does honour to his department.
The minister could perhaps tell the house whether his department intends to revise the industrial milk quotas in favour of the farmers anxious to increase their production?


Auguste Choquette: Mr. Speaker, my question is directed to the always very pleasant Minister of Agriculture.
Does the minister intend to revise the milk production quotas in order to help the farmers, as has been suggested by several members on the government side of the house, including the hon. member for Berthier-Maskinonge-Delanaudiere (Mr. Yanakis)?


Mr. Speaker:: Order. The question has already been asked today.



CONSUMER CREDIT

[Stage Direction]
INQUIBY AS TO LEGISLATION THIS SESSION On the orders of the day:
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I should like to ask the Registrar General whether he intends to introduce legislation this session to incorporate any of the recommendations of the joint committee on consumer credit.


David Orlikow: Mr. Speaker, I should like to direct a question to the Registrar General and ask him whether, in view of the speeches he made recently which seemed to endorse the major recommendations of the joint committee on consumer credit, we can expect legislation on this matter in this session.
(Mr. Simard.l


John Napier Turner: Mr. Speaker, I can only say that the recommendations of that committee deserve favourable consideration, and that we are looking into them at present.



NATURAL GAS


[Stage Direction]
On the orders of the day:
Mr. H. A. Olson (Medicine Hat):: Mr. Speaker, I should like to direct my question to the Minister of Energy, Mines and Resources. In view of the fact that he has just returned from Washington, can he tell the house when he expects the federal power commission to make a decision regarding the Trans-Canada application in relation to the Great Lakes project?
The second part of the question is whether there is enough time left to build this line to overcome the shortage of 33 billion cubic feet of gas which will be required in Canada next winter.


Jean-Luc Pepin: It would have been quite improper for me to pay a visit to the federal power commission. The commission is not supposed to receive that kind of representation. I might say, however, in answer to a question posed yesterday to the Prime Minister, that when I was in Washington I took the opportunity to visit Secretary Udall and discuss with him the oil market situation for Canada in the United States. Technical meetings had been held previously on that subject, and further technical meetings will now take place. In our conversations I insisted on the importance of the Chicago loop for the growth of the Canadian oil industry, and I emphasized our desire to co-operate with the United States in a rational development of Canadian oil markets there.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Eric Alfred Winkler: Mr. Speaker, I have a question for the Secretary of State for External Affairs. I should like to ask the minister whether he has made any recent representations to the Cuban government on behalf of one Ronald Lippert, who is currently serving a jail sentence in Cuba.
June 1, 1967


Hon. Paul  Marlin@Secretary of Stale for External Affairs: Yes, Mr. Speaker; not too long ago I discussed this matter with the appropriate people.


Eric Alfred Winkler: Could the minister inform the house of the results of those discussions?


Paul Joseph James Martin: When I have some definite results I will be glad to communicate them.



PUBLIC BUILDINGS


[Stage Direction]
On the orders of the day:
Mr. Gaston Isabelle (Gatineau):: Mr. Speaker, I have a question for the Minister of Public Works.
Could the minister tell me whether a firm of architects has been chosen, or will be chosen shortly, to prepare plans and estimates for the federal buildings of the Department of Forestry and Rural Development which will soon be built in the French part of the national capital.


Mr. Speaker:: Order. The hon. member
should put his question on the order paper.


Joseph Gaston Isabelle: -in the vast and hospitable riding of Gatineau?



FINANCE


[Stage Direction]
On the orders of the day:
Mr. Ed. Schreyer (Springfield):: Mr. Speaker, my question is directed to the Registrar General. I should like to ask the minister whether he has received a petition signed by a number of shareholders of a Winnipeg based firm known as Damascus Steel Products Limited alleging fraudulent practices on the part of the provincial crown agency known as the Manitoba development fund, or certain of its officers. If so, can the minister say whether he has ordered an investigation into this charge?


John Napier Turner: Mr. Speaker, first of all I want to thank the hon. member for his courtesy in giving me notice of the question. I have received the petition, and I have asked the superintendent of bankruptcy to look into the matter. I am awaiting his report. I understand that there
Interpretation Act
have been no bankruptcy proceedings as such, but the superintendent of bankruptcy is looking into the matter and will report to me.



INTERPRETATION ACT


[Stage Direction]
The house resumed, from Thursday, May 25, consideration of the motion of Mr. Trudeau for the second reading of Bill No. S-6, to revise and consolidate the Interpretation Act and amendments thereto, and to effect certain consequential amendments to the Canada Evidence Act and the Bills of Exchange Act.
Mr. Speaker:: Perhaps I should remind the house that when this matter was debated a few days ago the Minister of Justice had the floor at the time and was closing the debate.


Hon.   P.-E. Trudeau@Minisier of Justice: Mr. Speaker, the other day I had in fact concluded my remarks but a few questions were asked, notably by the hon. member for Peace River (Mr. Baldwin), and I said that before finally closing the debate I would endeavour to answer them to his satisfaction.
Among other questions the hon. member asked to what extent the bill we are now considering differs from the bill which last March was referred back to the house by the standing committee on justice and legal affairs, and to what extent these changes appear in the bill now before us. I pointed out that there were four extremely minor changes. He asked me whether I could give him a list of them, and I have one here. Although the hon. member is not here at present, I am sure he and other hon. members would agree if I indicate these changes when we reach the particular clauses in which they appear. These changes are of a minor nature; for instance, a word is changed from the plural to the singular. I have the list with me now, but I suggest that perhaps this would be more expeditious.
The other matter was the question of the definition of "regulation". The hon. member asked whether I would point out in the bill the clauses where the word "regulation" appears. In fact there are only three clauses in which this word appears. They are to be found on page 8 of Bill S-6, in clause 23 (2); page 17, clause 33(1) (b); and page 19, clause 37 (g).

June 1, 1967
Interpretation Act
I should like to point out that the bill uses the word "enactment" on practically every page, and sometimes several times on the page. If we look at section 2 of the Interpretation Act we see that "enactment" includes a regulation. Therefore every time the word "enactment" or "enact" appears in a section it includes a reference to regulation. In that sense, therefore, although the word "regulation" does not appear in a great many places, it is really included in the word "enact" which does appear frequently. That is why it was found useful in clause 2 (1) (e) to define the word "regulation" in a general way which will apply to all sections of this act.
Incidentally, in rereading what I said the other night I noticed that I indicated that since "regulation" is defined in the bill it would tend to apply to all other statutes. Of course this is not necessarily so. Clause 2 (1) (e) gives the definition of "regulation". When it appears in other acts it will have the particular meaning ascribed to it in the context or in the definition in that particular act. This is the factual answer to the question put to me by the hon. member.
When we reach the particular clauses the hon. member may want to discuss the interpretation we give to these words, but 1 think he was perfectly justified in asking me to point out the usefulness of defining "regulation". I repeat, the usefulness of defining it is that it appears in the word "enactment" in a great number of clauses of this bill.
[DOT] (3:30 p.m.)
The third question, which is more substantive, was asked by the hon. member and was then taken up by the hon. member for Winnipeg North Centre (Mr. Knowles). Subsequently it was taken up by the hon. member for Carleton (Mr. Bell). I was asked to give examples of cases where a regulation, in this general sense, could be made under the authority of the governor in council and not by virtue of a statute. I answered in a general way that there would be many such cases where the governor in council acts by virtue of the royal prerogative, which of course is the most obvious one.
The hon. member asked me for some other examples. I shall give a few today in the hope this will help the discussion. For instance, Mr. Speaker, when an ambassador is appointed under the Great Seal, this is done by the governor in council but not by virtue of any statute. This action is taken under a prerogative which, from time immemorial, has belonged to the king or queen under our form

of government and has come down by way of prerogative to the governor in council who exercises the executive power. This is an example of a prerogative where an action is taken without the authority of a specific statute.
Another example is when the governor in council appoints a person as a queen's counsel or indeed confers upon him some other honour. These actions are not taken under the authority of any particular statute. It is a matter of the royal prerogative as it has been understood in this country.
If I may digress slightly, Mr. Speaker, I do want to remind hon. members that I am not at this time asking for the extension or indeed the restriction of the exercise of the prerogative. As I indicated the other night, perhaps this would be an interesting debate at some other time. Perhaps it might be useful if some members want to express their opinion on the utility of the restriction of the prerogative by statute. I do not want to enter into such a debate at this time. I merely want to remind hon. members that an interpretation act is certainly not the place to discuss this subject. An interpretation act merely tells us how certain words, certain sections of statutes or regulations should be interpreted. Such an act does not tend to create substantive law. Once again I say I do not believe the whole issue of the prerogative should be debated at this time.
I should like to give another example of action taken or regulations made under the authority of the governor in council but not authorized by statute. I cite the proclamation of a day to be observed, either in part or in totality, as a public holiday. There is no statute of which I know which authorizes the governor in council to do that. As an employer the government can do this. The government can decide to issue some rule, regulation, bylaw, whatever it is called in this definition, to the effect that today the employees can go home at three 'clock in the afternoon. This action is not taken under the authority of a statute. If such an order is given granting a holiday or part holiday or appointing a Queen's Counsel, it may be useful to know when the order takes effect. The Interpretation Act will permit us to say, if a day is mentioned, that it will begin on that day or, if an hour is mentioned, it will begin at that particular hour. The Interpretation Act will tell us whether it should be understood in terms of standard time or what.
June 1. 1967

These are a few examples. There are quite a few others which I could give if the discussion is continued. I do not want to prolong this debate. I believe I have given sufficient examples to indicate that the Interpretation Act is not increasing the government's power to issue regulations in the general sense. The intention of this bill is to show what the words mean, how they shall be interpreted in a case where the power does exist. However, Mr. Speaker, if the power does not exist under some statute or under some prerogative, then the Interpretation Act cannot create such power. If the power does exist under an act or under a prerogative, then the Interpretation Act tells us how the words we find in that act or regulation shall be interpreted. I feel I have covered the points which were raised in the first instance by the hon. member for Peace River (Mr. Baldwin), and I suggest we move to the clause by clause study of the bill.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Batten in the chair.
On clause 2-Definitions.
Mr. Howard:: Mr. Chairman, I hesitated in rising because I thought other hon. members were going to explore further the matter of the definition of regulations. If that is not the case, I should like to raise one matter, not in any formal way which would require a decision but just to express a thought about what I feel is a fiction rather than a fact. Somewhere along the line, even though the Minister of Justice did not feel it appropriate to debate some of these matters in any depth, I submit we must make a determination on the matters before us.
I should like to refer to paragraph (e) of clause 2 which relates to the governor in council. In order to understand what governor in council means, we have to look at clause 28 on page 12 of the bill. I should like to read it:
"Governor in Council" or "Governor General In Council" means the Governor General of Canada, or person administering the government of Canada for the time being, acting by and with the advice of, or by and with the advice and consent of, or in conjunction with the Queen's Privy Council for Canada;
This is a bit of fiction, really. When we are talking about the governor in council we are talking about the cabinet because we know that the governor general's office has no real authority attached to it. We know that the
Interpretation Act
authority which the monarch at one time exercised has been removed and rests in the hands of the prime minister and the other ministers. In view of all these definitions about who the governor in council is and what is the Queen's Privy Council for Canada, I would suggest that at some stage in our discussions we should dispense with them because in fact they are fiction.
[DOT] (3:40 p.m.)
I consulted my seatmate, the hon. member for Winnipeg North Centre, as to his understanding of what the Queen's Privy Council for Canada is and he substantiated what I understood it to be, that it embraces quite a number of people among whom are, of course, the Leader of the Opposition, Mr. Coldwell who for many years was leader of the C.C.F. party in Canada, and quite a number of others.


Mr. Knowles:: The hon. member for Winnipeg South Centre.


Frank Howard: In fact, most of the front benchers in the Conservative ranks, leadership candidates and others. They are all included in the definition of the Queen's Privy Council for Canada. However, I am sure that none of them is included in the definition of the governor in council because none of them, certainly those out of office, is consulted or invited to meetings of the Queen's Privy Council for Canada. The Governor General of Canada, in doing some of the things that is required of the governor in council, does not seek the advice of the privy council or ask for their consent or even work in conjunction with them.
I submit, Mr. Chairman, we should not perpetuate an archaic fiction of this sort in any law, whether it be the Interpretation Act or any other act. I would far sooner see us spell out what we are talking about here. When we are talking about the governor in council we are referring to the Governor General and the members of the federal cabinet, and that is all we are referring to. We do not include sundry other people who were at one time members of a cabinet or have been given honorary recognition by the title of "a member of Her Majesty's Privy Council for Canada". We should not perpetuate this fiction by continuing it in this act.
I understood the Minister of Justice in his closing remarks on second reading stage to say that he did not think that this was the place to become involved in any detail in the question of prerogatives. Yet, Mr. Chairman,

June 1, 1967
Interpretation Act
we are involved in them. The matter was raised by the hon. member for Peace River and by the hon. member for Winnipeg North Centre, who inquired what was meant by regulation. The Minister of Justice spent some time in explaining the reasoning behind doing things in this way.
I am wondering whether the minister of Justice has had any further thoughts about this question. For my sake I would far sooner see the phrase "governor in council" eliminated so that the Governor General is looked upon purely as a person with a title but with no authority in fact. I submit we should spell out in our law just what it is we are talking about when we talk of somebody having the authority to promulgate regulations, awards, proclamations, or whatever it is according to the definition here. If we define this authority as the cabinet or as the council of ministers, then let us say so instead of maintaining in the law something that is not the case in fact purely because we want to hang on to some piece of history which really has no present day value to us.
In this regard I am talking, of course, about clause 28, but we have to think about that clause in conjunction with clause 2. Certainly I think we should spell out what we mean by the Queen's Privy Council for Canada. We should say that it does not include everyone who happens to hold that title. If it is to include everybody who happens to hold that title, the Leader of the Opposition and his former cabinet colleagues should be invited to sit with the council when it makes decisions.
I am sure the minister would be surprised at the benefits that might flow from this sort of multi-party approach to government decision making. The Minister of Transport disclosed the other day that he was able to make a decision about a long standing issue merely because something had happened to him by accident. As the hon. member for Prince said, he would not presume that this government did anything deliberately. The admission on the part of the Minister of Transport that the government operates often by accident on a day to day basis leads me to suggest that the government would be well advised to draw into their council the Leader of the Opposition, or whoever may seek to replace him in that position, and others with the honorary title of a member of the Queen's Privy Council for Canada, which might give more sense to regulations that are put into effect from time to time.
Apart from that last light-hearted comment, Mr. Chairman, I would appreciate some indication from the Minister of Justice, fresh and new to his position as he is but with his tremendous background of perceptiveness in matters of this sort, which would give the committee the benefit of his thinking about this particular aspect.


Mr. Trudeau:: Mr. Chairman, the hon.
member for Skeena has raised a very interesting question of constitutional law. I would go so far as to say that he is more than 99 per cent right in saying that when we talk of the governor in council we are in fact talking about cabinet. There are cases where all privy councillors can be summoned, either by the Queen or by the Governor General, though the chances are that this would be mainly for honorific reasons. Nevertheless this body does exist in fact. When we talk about the cabinet the hon. member is quite right, we are talking about a portion of the privy council. In reality, I think that under our constitution we call it the committee of the privy council.
I would agree with the hon. member that the term used here is archaic. If the hon. member wishes to indicate once again that this is the time to withdraw such archaic expressions from our law, I would explain to him why I believe that under our constitution as it is written in the British North America Act the expression "cabinet" does not appear. Nor, indeed, do many of the other institutions of our parliamentary form of government exist under our written constitution. For instance, I do not think you will find in the B.N.A. Act any reference to the word "party". Yet everybody knows what an important part parties play in the formulation of our laws and the workings of our parliamentary system of government.
The point raised by the hon. member for Skeena was that we should remove these archaic expressions when we can. Here again I agree with him, but I would point out to him the consequences of removing this expression in such a statute as this. It would mean that we would, in a sense, be saying that regulations can be made by an instrument of state-cabinet-which in a technical sense under our constitution does not exist. To put that another way, Mr. Chairman, under our constitution as it is written the executive arm of government is controlled by the governor in council, not by cabinet. If we were, therefore, in some particular statute denying the

June 1, 1967

reality of the governor in council and replacing "governor in council" with the word "cabinet", we would be using a word which does not have any formal existence in our written constitution.
[DOT] (3.50 p.m.)
Obviously the hon. member may well reply that our constitution is much more than what is written in the British North America Act and that is correct. The constitution of Canada is only partly written, in much the same way as the constitution of the United Kingdom is partly written but to an even smaller degree. The constitution of the United Kingdom appears in a certain number of statutes but the overwhelming part of it exists really in a fiction which is accepted by the people of the United Kingdom and which allows them to accept their parliamentary way of government.
In Canada, because we were creating a federal form of government and because we had to write a constitution at least to the extent that we were dividing powers between the regional and central government, we added other factors in our constitution which are archaic not only now but were archaic when they were written. We perpetrated these fictions, these expressions, because they were understood by the people of Canada to refer to a parliamentary form of government upon which we were modelling ours. Indeed, the preamble to the British North America Act indicates that the parliament of Canada is based largely on the kind of parliamentary system which then existed in the United Kingdom. We were doing at that time, therefore, the only logical thing we could do.
The next point then is: Should we change this constitution? The hon. member's party and the government party have some differences of opinion on this subject, not so much as to the idea of changing the constitution, perhaps but as to the timing of this change. To use the kind of jocular note that the hon. member used, I suggest that even in his party there is some disagreement about the kind of change which would be required in the present constitution. I can only suggest to the hon. member that this is not the occasion, under the guise of the Interpretation Act, to try to bring all parties in this house and all hon. members into agreement as to what the constitution should be.
One of the easiest matters upon which we could all agree and which could be carried out would be to remove some archaic expressions in the constitution. This, I suppose, will 27053-531
Interpretation Act
be done when next we revise or rewrite the constitution. The hon. member knows that it has always been my feeling that this particular kind of symbolic issue is not the most urgent kind of issue. I feel that if we were to reopen the constitution of Canada and begin to discuss with each other or even to fight over a purely symbolic issue, we might soon find that it would have been wiser to leave the symbols alone when they were working well. I do not think that the hon. member will disagree with me if I suggest that when we talk of the governor in council we really mean a committee of that council called "cabinet", and that the fiction is working reasonably well. That being so, I suggest that this afternoon we continue using that fiction at least until this bill has been passed.


Frank Howard: May I just say that I have admired the tenacity with which the Minister of Justice has been glued to the archaic and the speed with which he wishes to move to stay in the same place.


Stanley Howard Knowles: Mr. Chairman, I wonder whether there is not a relationship between the subject that the Minister of Justice has just been discussing with the hon. member for Skeena and the subject on which he was commenting just before the bill was given second reading. In this instance I refer to the matter that was raised the other evening. It arises from the provision in clause 2 which refers to regulations passed by or under the authority of the governor in council.
In replying to the hon. member for Skeena the Minister of Justice said that as we are getting along all right under a fiction, let us leave it that way. When we come to the question of the governor in council passing certain kinds of regulations, such as for the appointment of ambassadors or having to do with certain honours or appointments, he is not satisfied to continue to operate under the fiction that the government has that authority. He wants to put it in the statute. With great respect, I ask the minister to be consistent. If he is satisfied to operate under a fiction in the one instance, why not leave the other fiction as it is?
The point that the hon. member for Peace River, I and others made the other night with regard to the definition of "regulation" is that the government, so far as passing regulations is concerned, and admittedly for purposes of clarification, is putting in words which may well seem to enlarge the authority of the governor in council, that fictional body about

June 1, 1967
Interpretation Act
which we are talking. I felt that the minister, who was disarming in this matter, was a bit hard pressed to find examples of regulations passed under the authority of the governor in council that were not provided for by statute. Even if I accept the examples which were given as significant ones, I put to him again the question which I put to him the other night. Has the government in the passing of any of these regulations to which he referred been under any disability because the words "by or under the authority of the governor in council" are not in the Interpretation Act? Since the minister seems to go so far as to admit that he understands our apprehension, why can he not leave the matter as it is?
Let me recapitulate. The government is able to pass regulations of the kind the minister has described without having the reference I have mentioned in the act. Why, then, put that reference in when there is a possibility that it may suggest that the government, in terms of orders in council, has more power than even he thinks it ought to have? If I may come back to where I started, why does the minister want to leave one fiction as it is but not leave the other one as it stands?


Pierre Elliott Trudeau: Mr. Chairman, I can put the same type of question with the same type of reasoning to the hon. member for Winnipeg North Centre. Does he want to abolish all fictions in this country? Does he, or does the hon. member for Skeena, wish to abolish all references to symbolic instruments? I am willing to accept a challenge from either of those hon. members, and we shall start now, if they wish. Would they like to say what they think is archaic that ought to be abolished from our laws? Do they wish to say what is archaic and should be abolished in this very room-beginning with the mace and with the throne at the end of this room? I see the hon. member for Lotbiniere is here. Perhaps he might join in the discussion. As hon. members know, part of our constitution exists largely because of its symbolic form, and certainly I should think that some members of the N.P.D. would admit that it is somewhat archaic in form.
[DOT] (4:00 p.m.)
I am saying that since we want to improve our laws in some specific instances, since we want to bring some of our statutes up to date by revamping the Interpretation Act for the first time in 100 years by including in it a number of definitions which will simplify the revision of our statutes and permit us, I hope,

to revise them much more frequently, and because in seeking to do this the government is removing some of the archaic features of former statutes or adding to the present act certain provisions which have been developed by the courts in line with more modern ways of interpreting things, hon. members could, I suppose, argue that we should do this with every statute and every institution of our parliamentary form of government. But once again I say this is surely not the place at which to begin to discard anything that is archaic in our form of government. At the same time, on any platform outside this house I would accept the challenge from the hon. member for Skeena to indicate things which are archaic in our form of government and I do not mind going on record as saying that I personally am against many of them.
As a matter of political efficiency, however, I do not think this house or the country should become bogged down over symbolic issues when it has much more important things to do such as revising the statutes of Canada or meeting certain economic and social problems which are very much the concern of members of this house. I do not accept the hon. member's statement that I am glued to archaic institutions. I am sure I have no more attachment to them than has the hon. member for Skeena.


Frank Howard: Except that I am not stuck with a prime minister who refuses to let me take any action.


Pierre Elliott Trudeau: No, but you are stuck with a leader who is stuck with a section in Quebec which has other views on the subject of archaicness than the hon. member appears to have.


Stanley Howard Knowles: I suppose that if I say the minister is playing those two items off against each other he will retort that it was I who mentioned both of them when I was on my feet a few minutes ago. But I would suggest that in his most recent intervention he did not give sufficient consideration to the point I was trying to make about clause 2(l)(e)(ii). I ask him this question: Is he completely satisfied that there is need for this paragraph and that there is no danger whatsoever that it will enlarge the regulatory power of the governor in council?


Pierre Elliott Trudeau: That is a very clear question. I will answer the second part very clearly by saying I am convinced that this revised Interpretation Act will not give any power to
June 1. 1967

legislate either by order in council or by the authority of the governor in council which does not exist in some other statute or under some other prerogative. In other words, we are not creating any new powers here. I am confident of this. I can undertake too that there is certainly no intention on the part of the government to introduce by way of the Interpretation Act new authorities which the governor in council would not have under our existing law.
As to the other part of the question, whether this provision is absolutely necessary, I would have to confess in all candour that the revision of this statute as a whole is not absolutely necessary. We could drop out this particular subclause. We could, in fact, drop out several of these clauses. We could continue, I suppose, to use the former Interpretation Act. As I say, the intention of the government in introducing this bill is to simplify the writing and the understanding of statutes so as to permit statute law in Canada to take on as modern and as simple a form as possible. Once again, the objection which is raised to this clause is not an entirely spurious one. We could exclude this clause, but I would have to say the same about the bill as a whole. We could very well continue to live with the act which has been in existence in its general form for a hundred years.
The purpose of this bill, however, is, in a sense, to modernize statute law in Canada and the first step in doing so is to introduce an Interpretation Act which is as complete as possible and which will as far as possible simplify the use of interpretation sections in all the other statutes which we enact. This is the only answer I can give to the hon. member.


Stanley Howard Knowles: May I ask one further question? Would it, then, be fair to say that the minister is in effect giving an undertaking that this government will not at any time when it passes an order in council claim section 2(l)(e)(ii) as the authority for that order in council?


Pierre Elliott Trudeau: Yes, Mr. Chairman, I can give that undertaking both for myself personally and in the name of the government. The government would not use this act or this particular section to give to itself an authority which it would not have under other acts or other prerogatives which might exist.
Interpretation Act
[DOT] (4:10 p.m.)


Auguste Choquette: Mr. Chairman, a most interesting discussion on the theoretical aspect is currently going on and I should like to look into the practical aspect of the question. Even though the principle that no one is deemed ignorant of the law is generally well respected in practice, I think its application has become extremely difficult today, since the legislation is getting more complicated every day, and I should like to ask the minister whether his department is willing to undertake an effort to popularize and bring within reach of the population some basic legislation which is totally unknown, yet in daily use.
For instance, the Queen's Printer, or the Official Printer if you will, could possibly publish booklets containing a summary of some important legislation which could be within reach of the population and could be made much more readily available. So I wonder if the minister could consider this possibility and see whether his department could make a special effort in this direction.


Pierre Elliott Trudeau: Mr. Chairman, the suggestion of the hon. member for Lotbiniere is a very sensible and practical one, and I find it quite worthwhile.
It is obviously a question which may arise indirectly from the consideration now being given to this bill and, as far as I am concerned, I believe the government should consider increasing the number of publications to inform our people on our political institutions, particularly our constitutional institutions.
The hon. member is aware that a certain number of booklets published for the use of the citizens explain the general operation of our constitution, of our parliamentary system, and these booklets are available to the people and to the schools wanting them.
I agree with him that it would be useful to increase the number of these initiatives in the area where legislation is of such interest that the citizens could profitably use the popularization tools the hon. member suggests.
I would only add, Mr. Chairman, that in one sense, the purpose of the present bill is to enable the well informed citizens, who are often lawyers or notaries, to have on hand statutes which will be revised more frequently and more especially, the first chapter of such statutes which, to a certain extent, will

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Interpretation Act
popularize the knowledge of the interpretation of the statutes making up the whole of our legislative system.


Mr. Fairweaiher:: Mr. Chairman, I was interested in the last suggestion. The translation is interesting for an Anglaise. It comes out "vulgarized." We Anglaise would not use that word but we would understand it. I think the object should always be clarity in drafting statutes, and I think there has been an improvement in the last decade. However, I wish to try out the hon. member for Lotbiniere on something and see if he is flexible enough to suggest the system which is now used in the United Kingdom where they have citizen advice bureaux in various centres throughout the country to help citizens. As a matter of fact, there is an excellent book about this by Lord Beveridge.
These bureaux advise and help the citizen interpret statutes, regulations, instruments, etc. I personally have an idea that this is an objective toward which we should be moving rather than even an ombudsman. The ombudsman is now almost a sacred cow but I have an idea citizens' advice bureaux would be a much more practical way in which to help citizens with advice on municipal, provincial and federal regulations. Like the Minister of Justice, perhaps the hon. member for Lotbiniere and others could debate this somewhere else.
I have been intrigued by this past hour. At times one feels able to sympathize with policy enunciated by hon. members to my left, but every once in a while one comes across that inflexibility which makes those of us who do not espouse the New Democratic cause a little more understandable, because surely it is the very organic nature of our constitution that we should be seeking to preserve as free men.
I hesitate to interpret the minister because he gave a very interesting example of the flexibility he is trying to maintain. However, I think it is good to have this type of debate every once in a while. The hon. member for Skeena jocularly talked about the minister being glued to archaic instruments. Of course the hon. member for Skeena is glued to archaic concepts of constitutionalism, and his speech pointed out this fact.
I share some of the minister's views on symbolism, but I also have a view, quite unlike the hon. member for Lotbiniere, that the abolition of symbolism without any reason for it, or any preparation of the public, is almost

as severe a blow to the spirit of the public as is a major act of surgery. That too could be debated somewhere else because we do not want to hold up progress on this bill. But while we patiently listen to the nihilists I think we should remember that symbols over 100 years in this country have come to mean a very great deal to a very great number of people and that we should not be tinkering with them unless we have given our citizens a good preparation.


Pierre Elliott Trudeau: I would just make one comment on the remarks of the hon. member for Royal. I would agree in turn with what he said on symbolism, and I would remind him of an idea which was put forward by a very noted French writer and philosopher that any movement which bases its reforms on a neglect of the past tends to be fascist.


Horace Andrew (Bud) Olson: A few moments ago some hon. members were apprehensive about whether this new interpretation bill would expand the powers of the governor in council. The explanatory note relating to clause 2 states:
The definitions of "act", "enactment" and "regulation" are new.
I would ask the minister whether or not the definition given for the word "regulation" is an expansion of the powers that are now considered to be proper so far as ministers are concerned and so far as the governor in council is concerned. The definition of "regulation" now includes such things as "an order, regulation, order in council, order prescribing regulations, rule, rule of court, form, tariff of costs or fees, letters patent," etc. I do not know whether that is an expansion of the concept of what can be attached to legislation by way of regulations and I would like the minister to explain it.
I would draw his attention also to clause 23(2). Without reading that rather long paragraph I would particularly direct the minister's attention to the explanatory note which reads as follows:
[DOT] (4:20 p.m.)
The concluding words are new and are intended to make it clear that a deputy has' not the power to exercise a minister's power to make delegated legislation.
Could the minister tell us whether or not there is any intention to expand the power of a minister to make delegated legislation by way of regulations? As is laid down in subclause 2 of clause 23, a deputy minister is not to have a minister's power to make delegated legislation. I am not aware that a minister
June 1, 1967

has any power at the present time to make delegated legislation, that is, to add regulations to legislation without passage by the governor in council. Apparently, however, when this distinction is made between what a minister may do and what a deputy minister may not do in so far as delegated legislation is concerned, the implication is that a minister does in fact have the power to make regulations which would be considered to be delegated legislation.
Since both these paragraphs in this bill are new I am wondering whether there is a real danger that there has been an attempt to expand the power of the governor in council to make delegated legislation or specifically the power of an individual minister to make delegated legislation by way of adopting regulations without securing passage of an order in council for those regulations which will be attached to the act.


Pierre Elliott Trudeau: Mr. Chairman, the point about a minister not having power to make delegated legislation, of course, is partly incorrect because a minister can under a statute issue a regulation. Many statutes authorize ministers to act by way of regulation or order or rules, and' so on.


Horace Andrew (Bud) Olson: Under the Regulations Act?


Pierre Elliott Trudeau: No, under particular statutes. You will see that particular statutes give ministers the power to exercise regulatory functions. I believe I am repeating myself somewhat, but I should like to say that in a sense all these questions indicate a real preoccupation on the part of members of the opposition with the desire not to give any kind of arbitrary power to the government. Personally I not only share their concern but admire them for being so ticklish about this issue. I think we should always be wary of arbitrariness in government in whatever form it might appear.


Stanley Howard Knowles: You are speaking from the inside now.


Pierre Elliott Trudeau: The inside of what?


Stanley Howard Knowles: Inside the government.


Pierre Elliott Trudeau: I realize that and I believe I am speaking in the spirit this government stands for. Once again, perhaps repeating myself but in an effort to meet in another way the objection raised by the hon. member for Medicine Hat, may I say that if a minister or the governor in council does not now under some act, statute or indeed prerogative or
Interpretation Act
general power have the authority to issue a regulation, rule of court, form, tariff and so on, that power will not be enlarged by virtue of this bill. Indeed, it matters little whether we call an arbitrary act a proclamation, a warrant, a bylaw, a resolution, or anything else. I believe it remains arbitrary and it would be foolish indeed for the government to think that it could hide an arbitrary act by giving it some other name or indeed a whole jumble of names such as those which appear here under clause 2(l)(e).
Therefore, to repeat myself once again, clause 2(l)(e) merely introduces the term "regulation" in this particular bill in order that every time the word "enact" or "enactment" appears in the following clauses of this bill-as I said earlier it appears on a great number of pages and sometimes many times on the same page-the intention, in the interpretation section of this bill, is to permit the whole act to have as wide application as possible. By the inclusion of the words "regulation" or "other instrument" we are merely making sure that when later in the bill we use the word "enactment" that will apply to all these particular instruments.
Let me give an example. If we should decide to appoint by proclamation a certain day as a public holiday or if we should decide to appoint an ambassador by giving him a commission under the Great Seal, a question for lawyers or for the courts may be how to interpret that particular proclamation or that particular commission under the Great Seal. They will look to the Interpretation Act and say: "Well, when we use such an hour or standard time, we will use subsection 34 of section 28 and this will permit us to know at what particular time the holiday begins or at what particular time the appointment under the Great Seal becomes effective".
To repeat what I was saying to the hon. member for Winnipeg North Centre, we could very well do away with many of these definitions. This would mean, however, that every time we have a proclamation, a statute, a warrant, a bylaw, a rule or regulation, at the beginning of the instrument we would have to indicate how the time factor is to be determined and when the day will begin, that is, whether it shall be at the expiry of the previous day or at the end of the day on which the proclamation is issued, and so on. The intention of the legislators in presenting this bill to revise and consolidate the Interpretation Act is to simplify the reading of these statutes and instruments and put in one place as great

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a number as possible of these sections which permit their easy interpretation.
[DOT] (4:30 p.m.)


Horace Andrew (Bud) Olson: Mr. Chairman, I am sure the minister will agree that administering regulations is not the same as making regulations. That is the reason I am wondering about what is included in both clause 2 and clause 23. I have no disagreement in respect of the way the regulations are being enforced by the various ministers, deputy ministers and lesser officers but, as I said, the making of regulations and the enforcing of them are two different things. I should like to hear some explanation of why it is necessary to spell out a distinction between the powers of a minister and the powers of a deputy minister in relation to specific regulations, as has been done on page eight. It seems to me that the Regulations Act is the authority which gives the governor in council the power to attach regulations to almost any act passed by this house for its proper administration. If there are conditions under which a minister without referring to the governor in council has the power to make regulations, for example, in respect of delegated legislation, I am wondering whether this bill increases those powers. Is there some increase or expansion in respect of the powers of individual ministers in that they are not required to go to the governor in council regarding regulations to be attached to acts after they are passed by this parliament?


Robert Gordon Lee Fairweather: Will the minister not agree that by this clause the powers are narrowed?


Pierre Elliott Trudeau: Yes, Mr. Chairman, the hon. member for Royal is right in that this narrows the powers. The hon. member for Medicine Hat may very well ask why it is felt necessary that we must narrow them. I suggest this relates to a very well known legislative principle, that when power is being delegated it is being delegated to a specific authority or individual. This clause is intended to make sure that we do not depart from this well known legal rule concerning delegated powers.
The intention of clause 23(2) is contained in the first part having regard to a minister being empowered to do something, and this includes another minister acting on his behalf. For example, when the prime minister is not in the house it is understood that the acting prime minister has the authority to answer certain questions or do certain public

acts on his behalf. If under a statute the authority is given to the prime minister to exercise a delegated legislative authority to make regulations and so on, it is understood that this is a specific delegation which does not apply to a deputy minister.
The intention of parliament in giving a minister authority under a specific statute is to make sure that the minister and no one else exercises that delegated authority. As the hon. member for Royal pointed out, the final words make it even more clear that under the accepted rule of law in respect of delegated authority to make regulations the minister and no one else will exercise that power.
As we all know, it is convenient in the absence of a certain minister to have the acting minister or the deputy perform certain functions. It is convient in such circumstances to have the acting minister or the deputy deputize on behalf of the minister. Under this clause an acting minister or a deputy cannot deputize for a minister in respect of delegated legislation.


Horace Andrew (Bud) Olson: Surely the minister is not talking about a deputized minister as being one of his colleagues in the cabinet. There must be a distinction between an acting minister and a deputy minister, and this is spelled out. It seems to me that the deputy minister referred to in this clause and the explanatory notes is the appointed deputy minister of each department. Surely he cannot be confused with an acting minister who is acting because of a temporary vacancy or in the absence of a minister.
I will accept the minister's explanation at this time, but let me say I hope that by spelling this out to make a distinction between a deputized minister and the minister of any department and adding a new interpretation in respect of regulations there is no intention to transfer any additional power to a minister, allowing him to make delegated legislation by way of regulation without obtaining the consent and approval of the governor in council.


Pierre Elliott Trudeau: Mr. Chairman, I share the concern spelled out by the hon. member for Medicine Hat. As I read this clause in relation to whether "deputy minister" means somebody who is deputized within the cabinet or who is a deputy minister in the sense of a civil servant, I think it would certainly apply to both.


[Stage Direction]
Clause agreed to.
Clauses 3 to 15 inclusive agreed to.
June 1, 1967
[Stage Direction]


On clause 16-Her Majesty not bound or affected unless stated.
Frank Howard: Mr. Chairman, while I know the minister does not wish to have an involved discussion about other matters, I think clause 16 is the only clause which relates to the item I should like to raise. It is my understanding that if a particular act relating to wages, hours or working conditions of employees in the public service does not specifically state that it binds Her Majesty the employees in the public service do not gain the benefits of that legislation. Certainly this is true in respect of a number of laws in the province of British Columbia which relate to working conditions. For example, provincial employees are not covered by the semimonthly payment of wages act.
[DOT] (4:40 p.m.)
I think the same situation exists at the federal level, that such laws as the Canada Labour (Standards) Code, which established certain conditions with respect to hours of work, wages, vacations and the like, are not applicable to employees in the public service because they do not contain the particular provision to which reference is made in the clause now before us. It would seem to me that perhaps this is a hold-over from the past. I am aware of the tender feelings of some hon. members for history and the preservation of old forms. However, I suggest that now is the time to change. Although I do not have as intimate a knowledge of such matters as the minister I believe that this provision came into being when employees in the service of the crown in England were not numerous and there was a tremendous struggle for workers' rights. The common acceptance of today for a short work day and a short work week, fair conditions, fair wages, statutory holidays, minimum wages and the like, did not exist in the days when this concept was developed.
It seems to me that what the parliament of Canada determines is fair and proper for employers and employees in private industry should also be fair and proper for employees in the public service of Canada, and rather than deal with this matter each time a new act comes before parliament relating to wages, hours, working conditions and the like I think we should deal with it here under this clause. We should not be asked to consider whether or not we want to make a particular law applicable to the employees in the public service each time a new act is passed. This should be considered standard practice, and 27053-54
Interpretation Act
the only way we can do it is by amending clause 16.
Incidentally, harking back to something the minister said, let me say that he will find I am less obstinate than others in regard to a variety of matters and perhaps just as amenable to a change of position as others. Possibly the minister can find a way in which we may attain the objective I have pointed out by some slight amendment to the clause. If he is agreeable in principle to what I am suggesting, it may be possible to hold this clause over to give us time to draft something and then come back to it after we have dealt with clause 43.


Pierre Elliott Trudeau: Mr. Chairman, the point raised by the hon. member for Skeena is indeed raised at the right place. The amendment which would achieve the object he seeks would be very simple. It would consist of deleting the clause completely. He is right. If we did it here it would apply to the whole of our statute law and it would abolish a very ancient principle of English common law according to which the crown is not bound by a statute unless it is specifically mentioned in the statute. I understand that the hon. member wishes to achieve this result, and this could be done simply by deleting this particular clause.
The only question I will put to the hon. member is whether or not it would be proper to do away with this very ancient principle in order to achieve the particular result for which he is hoping. Although this is only a wild guess, I suggest that we would not only be doing away with an ancient principle but with a very important one both in common law and in statute law, one which is a very important cornerstone of our constitution, because the deletion of this clause might be interpreted as an intention expressed by parliament to bind the crown under every statute. For instance, when laws are passed concerning taxation, tariffs or even provisions under the criminal law stating that no person shall do such and such, this would mean that these laws also bind the crown.
I am afraid that the effect which we would achieve would be of much greater consequence than the hon. member suspects. There are other ways of achieving the result he seeks, which I suggest in particular cases is a desirable objective. One is for parliament to use the reverse rule and to say in a statute that it binds the crown. If this was not done

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at the time the statute was passed, it is always open to parliament to express its intention to bind the crown under a particular statute. However, quite frankly I feel that to decide all at once that all statutes would be binding on the crown, without re-examining all our statutes thoroughly and completely, would be reckless at this time. I am afraid that if we did this we would find that the crown in right of Canada and indeed in right of the provinces would have its powers altered in a very drastic way. I suggest that if the hon. member wants to achieve the aim he is seeking, he can do it much more safely and efficiently by introducing an amendment to that effect in a particular statute rather than by attempting to do it through the Interpretation Act.


Frank Howard: Mr. Chairman, I should like to say a few words to the minister in reply. I raised a particular matter. The minister proposed his own solution and then proceeded to demolish his proposal. I did not suggest that we should delete this clause. That is what the minister suggested, and then he proceeded to say that if we did so, such and such consequences would flow from it. What I suggested was an amendment. I implied at least that I had no particular proposal to amend the clause but that if we desire to protect employees in the public service, which is my concern, to the same degree as we demand protection for employees in private industry, then perhaps we should consider amending clause 16.
[DOT] (4:50 p.m.)
I suggest that we could perhaps hold this clause over in order to amend it to provide such protection in the interests of the employees of the public service. I am sure the minister knows that I neither suggested we should wipe out this provision entirely nor did I intend to make that suggestion. I ask the minister to look at the matter in the light of the desirability of having applicable to the employees of the public service the minimum standards which we require private industry to meet. This is all I am suggesting.
The amendment might spell that out, if the minister is agreeable to moving such an amendment. I do not have any words to suggest that might fill the gap, but I would appreciate the minister considering the matter in the light of my suggestion rather than in the light of the suggestion I wanted to wipe out the whole thing.


Pierre Elliott Trudeau: I apologize to the hon. member. I did not mean to put intentions into his mind or words into his mouth. I was perhaps reasoning a bit theoretically when I was pointing out the consequences of a particular amendment to this particular section. I hope I will not irritate the hon. member if I indicate he is not being as consistent as I am if I refuse to agree that this would be a good amendment. I would argue in the same way els I was arguing when we were talking about clause 2 (1) (e). At that time I was arguing that the Interpretation Act is not the place to increase the powers of the governor in council or of any other authority. I would argue that the Interpretation Act is not the place to decrease such powers. In other words, the hon. member is suggesting an amendment which would be, in effect, substantive law and which would have the effect of decreasing powers conferred under some other statute.
Here again I respect the intention of the hon. member but I would plead with him that we will have some difficulty in ever agreeing upon an interpretation act if we use it on our side to increase powers which we might have under other statutes-which I denied was our intention-or if the other side uses it to decrease powers which are conferred on authorities under statutes. This is the suggestion of the hon. member. Once again I am not pleading that his argument is not well founded. I am just saying that it would defeat the whole spirit of the Interpretation Act if we were to use it in order to increase or decrease powers conferred under some other statute or under some other instrument.
Therefore I would not be agreeable to the suggestion that such an amendment be made, for reasons of logic and theory rather than for reasons of substance. It is a point of order more than a point of substance, Mr. Chairman.


Auguste Choquette: Mr. Chairman, before adding my support to that of the others, I should like a word of explanation about clause 16 which reads as follows:
No enactment Is binding on Her Majesty or affects Her Majesty or Her Majesty's rights or prerogatives in any manner, except only as therein mentioned or referred to.
If an hon. member, for instance the hon. member for Carleton (Mr. Bell), moves the abolition of the royal power of dissolution, which experts in constitutional law, such as Mr. Eugene Forsey, consider as the erosion
June 1, 1967

of the prerogatives of the crown, in short if the hon. member for Carleton, instead of introducing a resolution, had put a bill on the order paper, I should like the minister to tell me what should be done, according to the suggestion of the hon. member for Carleton, to arrive at the erosion of the prerogatives of the crown and more specifically at the abolition of the royal power of dissolution.


Pierre Elliott Trudeau: Mr. Chairman, I think I can give a brief answer to the question of the hon. member for Lotbiniere (Mr. Choquette).
If a statute were to remove the power of dissolution from any authority without spelling out what dissolution is involved, it would have to be understood that this in no way would affect the right of Her Majesty to use such right.
This clause clearly explains that if it was desired to deprive Her Majesty of her right to dissolve Parliament, this would have to be spelled out. It could not be inferred from an intent conferred upon another person in a statute.


Auguste Choquette: That is to say that the hon. member for Carleton, for instance, could introduce a specific piece of legislation to abolish the royal power of dissolution and then, if the House of Commons or the Senate were to adopt it, it would become law and it would no longer be necessary to consult the Parliament at Westminster or Her Majesty the Queen?


Pierre Elliott Trudeau: Mr. Chairman, the hon. member is right. If it were to be specified in this statute that such a right is abolished and if this statute or this legislation were to be passed according to the requirements of our parliamentary system, this would affect the power of dissolution as he has indicated.


[Stage Direction]
Clause agreed to.
Clauses 17 to 24 inclusive agreed to.
On clause 25-Time limits and holidays.
Stanley Howard Knowles: There is a minor point in connection with clause 25, Mr. Chairman, to which I made reference when we were at the second reading stage. I refer to it again now merely to ask the Minister of Justice whether he has given any more thought to it. Subclause 9 of clause 25 reads as follows:
A person shall be deemed not to have attained a specific number of years of age until the commencement of the anniversary, of the same number, of the day of his birth.
Interpretation Act
If I may put that in practical terms as I understand it, it would mean that if a person were born on June 1, 1949, he would be legally 18 as of last night at the stroke of midnight, today being June 1, 1967. In other words, he would have been legally 18 at the moment when this day started. As I pointed out the other night, section 3, subsection 1 of the Criminal Code reads as follows:
For the purposes of this act a person shall be deemed to have been of a given age when the anniversary of his birthday, the number of which corresponds to that age, is fully completed, and until then to have been under that age.
In other words, for the purposes of the Criminal Code the mythical person to whom I referred a moment ago who was born on June 1, 1949, would not be 18 years of age until midnight tonight. We are talking about a difference of only 24 hours, but it could mean quite a bit in terms of life or death.
I caught the force of what the minister said the other night when he answered me to the effect that the intent of the Interpretation Act was to reach uniformity as far as possible. But in spite of this, Mr. Chairman, does it not seem a bit odd to have two definitions of the point in time at which one reaches any particular age, so far as the law is concerned? As I say, I do not intend to engage the house at length on this question but I am wondering whether the minister has given any further thought to the matter and whether the government has considered having the same definition of one's age in all statutes.
[DOT] (5:00 p.m.)


Pierre Elliott Trudeau: Mr. Chairman, I have given the matter a little thought but I have not done sufficient research to permit me to give other examples of inconsistencies in our statutes. I can only repeat what I said the other night, that the purpose of the Interpretation Act is to simplify as much as possible the use of words and interpretation of meanings in all statutes, both those passed and to come.
Certainly there are many other statutes which give to particular words or computations of time particular meanings or rules. When this happens it may be that the legislative arm of government has decided that for a particular purpose it is good to change the general meaning given to words or computations of time in the Interpretation Act.
With regard to the example given by the hon. member, as I say, Mr. Chairman, I have not done the research which would permit me to speculate on the reasons that our Criminal

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Code computes a person's age in this particular fashion. I imagine that it is a traditional way of doing things. It has most probably issued from the common law and usages prevalent at the time when our criminal law in Canada came to be adopted. I cannot give any other reason. All I can say is that though the argument of the hon. member for Winnipeg North Centre is an interesting one it could be repeated in many other cases. He himself the other night gave another example of definitions in particular acts which meant different things from what they mean in this act. Here again I can only suggest, if such result is undesirable that when parliament has before it either the Criminal Code or any other particular statute it will have to bring its definitions and its interpretations into line with those suggested in the Interpretation Act.
At the end of the bill the hon. member will see reference to certain consequential amendments to the Canada Evidence Act and the Bills of Exchange Act. This is an attempt, in certain very simple cases which have some urgency and importance, to achieve the kind of consistency that the hon. member suggested was desirable and which I would agree is desirable. I think in these matters we should have as much simplicity and consistency as possible in the use of words and interpretation of statutes.
However, Mr. Chairman, I think once again we would delude ourselves if we thought we would be meeting the hon. member's objection to this particular clause by using a definition of "age" which would be consistent with that in the Criminal Code. Although we would be consistent with the definition in the Criminal Code we would most probably be very inconsistent with other computations of age which are prevalent in, shall we say, the business world for other purposes such as banking, insurance, pensions. Indeed, we would be changing the election act, giving it new meanings in terms of voting age, and so on.
I agree that consistency is an objective. I suggest that the Interpretation Act is achieving consistency as much as possible, but it does not purport to be amending at one feel swoop all other existing statute law and imposing the same definition and interpretation as those which will prevail as a result of this particular law. The effect that the hon. member desires and which I feel is desirable can

be achieved only by parliament giving attention to the particular statutes and amending them as they come before it.


[Stage Direction]
Clause agreed to.
Clauses 26 and 27 agreed to.
Clause 28-Definitions.
Pierre Elliott Trudeau: Mr. Chairman, I want to carry out the undertaking I gave a little earlier when I said there were certain minor changes in this bill from the bill referred back to this house without change by the standing committee on justice and legal affairs last March. If you will permit me, sir, I will indicate four places in this particular clause where very minor changes have been made. These four changes are the only differences which exist between this bill and that which went through the standing committee last March.
In the previous bill, which was Bill No. S-9, Subclause 2 of clause 28 read as follows:
"active service forces" means the components of the Canadian Forces that are referred to in the National Defence Act as the active service forces;
This clause has now been dropped completely. The reason for this is that on the coming into force of the Canadian Forces Reorganization Act the expression "active service forces" will no longer be used in the National Defence Act. Therefore, in a sense it is a definition which is redundant because it will no longer be used. That is the first change.
The second change is in subclause 18 of clause 28 of the former bill, which defined "holiday". Because of the renumbering of the clauses this provision has become subclause 17 in this bill. In the previous bill we had a subparagraph which specified that in the province of Quebec there existed certain nonjuridical days. This subparagraph has been dropped because between June, 1966, when this subparagraph was added to the definition in the former bill, and May, 1967, when this particular Bill S-6 was given first reading in the Senate, the civil law of Quebec had been changed in such manner that the particular holidays mentioned ceased to be non-juridical days. In other words, the civil law or, more precisely, the code of civil procedure of the province of Quebec was amended in such way as to make one particular part of clause 28 of the former bill now useless. The law of the province of Quebec is now the same as the law of the other provinces in this respect.
June 1, 1967

[DOT] (5:10 p.m.)
The third minor change in clause 28 appears in what were previously subclauses 32 and 33 where we used the expressions "regular forces" and "reserve forces". If one looks at the new subclauses 31 and 32 one will see, for reasons which are apparent to hon. members, that the plural has been replaced by the singular and that we no longer talk of "regular forces" but of "regular force" and "reserve force" in these new subclauses. This is, therefore, a minor change, though admittedly the reasons which led to it had been considered major by a great number of hon. members.
Finally, I wish to refer hon. members to clause 28, subclause 5, which speaks of the Commonwealth. This was formerly subclause 6. The definition of "Commonwealth" is the same in both subclauses except that the schedule to the bill which hon. members will find on page 22 of the bill now in their hands has replaced the schedule which appeared on page 22 of the previous bill. The schedule has been updated to reflect the recent additions to the Commonwealth membership, those being, of course, Barbados, Botswana and Lesotho. These states have been added to the schedule because they are now independent states and members of the Commonwealth. These are the four minor changes which I undertook to bring to the attention of hon. members.


Mr. Hales:: May I ask the minister a question. On page 11 there appears the word "broadcasting" which I notice is new. I wonder whether by this change in terminology the word "broadcasting" could in any way mean that a cable television operator would be classified as a broadcaster?


Pierre Elliott Trudeau: I confess, Mr. Chairman, that offhand I cannot answer this question. The hon. member is quite right in suggesting that the part to which he refers is new in terms of this Interpretation Act when one compares it with the original act of 100 years ago. I had not included the definition of this word in my four minor changes because the word "broadcasting" appeared in Bill S-9 which went before the standing committee on legal affairs. I was not present before the committee and I cannot say if a question similar to the hon. member's was answered at that time. I can only say that if it was raised it must have been answered to the satisfaction of hon. members because they sent the bill back to the house without amendment.
Interpretation Act


Alfred Dryden Hales: Will members have an opportunity to discuss this matter further?


Pierre Elliott Trudeau: Perhaps by reading the subclause I might be able to answer the hon. member's question. I stand to be corrected by any contrary-minded learned lawyer in the house, but I suggest that where this subclause refers to "radioelectric communication, including radiotelegraph, radiotelephone, the wireless transmission of writing, signs, signals, pictures and sounds of all kinds by means of Hertzian waves" it refers to transmissions or broadcasts without the use of cables or wires. The expression used in the subclause is "including", and that does not necessarily mean that other forms of broadcasting are excluded. I suppose that could be an interesting point in arguing before a court. Frankly, on my reading of this part of the subclause, I would not be able to answer the hon. member's question with certainty one way or the other. If the hon. member wishes to explain to me what has concern is I might be able to add some further words of explanation.


Alfred Dryden Hales: The point is that the people who operate cable television systems maintain that they are not broadcasters in any sense of the word. They are disseminators or relayers of programs which have been already produced. They are not broadcasters. I am not certain whether in adopting the terms used here we are not saying that operators of cable television systems are broadcasters.


Pierre Elliott Trudeau: On this point I can re-assure the hon. member. The definition of broadcasting here comes in reality from the Radio Act which is already a statute of parliament and has been one, I think, since 1952. This definition was taken from that act. This subclause we are now discussing does not and is not intended to take away from anybody powers that they had under the Broadcasting Act, nor does it give or intend to give anybody powers which they do not have under the Broadcasting Act.
I have a note here which I wish I could read because it has something to do with broadcasting legislation.


Stanley Howard Knowles: Maybe someone could broadcast from the gallery.


Pierre Elliott Trudeau: I see that somebody is trying to help me, and I am very thankful for that, by reminding me that this definition will be reviewed when the Broadcasting Act comes before parliament as it is supposed to do.

June 1, 1967
Interpretation Act


Stanley Howard Knowles: Mr. Chairman, in the references that the Minister of Justice made to the subclauses of clause 28 which have been altered slightly since last year he referred to subclause 17. I should like to direct his attention and that of hon. members generally to this subclause, and I wish to suggest the addition of a few words which I hope the minister will be able to accept. If by any chance he feels that he must consult with his colleagues before answering me, I trust that this can be done before we conclude the consideration of this legislation.
[DOT] (5:20 p.m.)
Subclause 17 of clause 28 gives the definition of "holiday". In the main part of the subclause the following days are listed as holidays: Sunday, New Year's Day, Good Friday, Easter Monday, Christmas Day, the Queen's birthday, or the day fixed by proclamation for the celebration of the birthday of the reigning sovereign, Victoria Day, Dominion Day, the first Monday in September, designated' Labour Day, Remembrance Day, and any day appointed by proclamation to be observed as a day of prayer or mourning or .as a day of public rejoicing or thanksgiving, :and so on. The "so on" refers to a couple of :subclauses relating to holidays proclaimed in a province, or in a city, town or municipality.
My concern at this time relates to certain of these specific holidays, the list of which I have just read. As hon. members know, some of these holidays fall on days which are fixed by tradition in such a way that we would not think of moving them one way or the other. Though Easter itself is a movable feast, Good Friday always falls, of course, on the Friday before Easter Sunday and Easter Monday is always on the Monday after Easter Sunday. Labour Day is always celebrated on the first Monday in September. Victoria Day is the day on which we celebrate the birthday of the reigning sovereign and we have declared by statute that this falls on the Monday preceding May 24, not on May 24 itself unless that day is a Monday.
Hon. members are probably aware by now of the point I am about to make, because I have asked questions about this on one or two occasions in recent weeks, namely, the somewhat strange situation which arises because the hundredth birthday of this nation, Dominion Day, 1967, falls on a Saturday, a day which is already a day off for many people. The result is that for a great many Canadians there will be no holiday in terms of a day off

work. My request to the Prime Minister was that because Dominion Day falls on a Saturday this year arrangements should be made for Monday, July 3, also to be a holiday.
I wish to make it clear that I was not suggesting and do not now suggest that Monday, July 3, should be Dominion Day rather than the Saturday, July 1. But 1 maintain that if there is any excuse at all for a long week end there should be a long week end in celebration of the hundredth birthday of this nation.
A few days ago an hon. member of this house brought in a bill to change the name of Dominion Day to "Canada Day" and at the same time to provide that it be celebrated always on the first Monday in July. I am very sympathetic toward the first part of his bill, the proposal that the name should be changed, but I am not yet persuaded that it would be a good idea to have it always on Monday because there is something traditional, almost sacred, about the first day of July, and I think that should be the date.
We already provide by statute that if July 1 falls on a Sunday, July 2 shall be a legal holiday. There are several laws of that kind in our statutes. That kind of provision originated, of course, in the days of the six day work week. The five day week is now reasonably general and I submit that the same motives as those which led to the decision that a holiday falling on a Sunday should result in a public holiday on the following Monday should now be applied here and that a holiday which falls on a Saturday should be followed by a legal holiday on the Monday immediately thereafter.
I asked the Prime Minister about this on Thursday, May 18, at which time he said he would look into the matter. I asked him about it again on Friday, May 26, as reported in Hansard at page 603, and perhaps I might read the right hon. gentleman's reply on that occasion. These are the Prime Minister's words:
I have been looking into the matter. It seems quite clear that in so far as the public service of Canada is concerned the subject is covered by the public service terms and conditions of employment regulations, which became effective in March of this year. In accordance with these regulations a great majority of public servants will get a holiday on July 3. So far as parliament is concerned, it will of course be the responsibility of the house to decide whether or not to sit on that day. There has been some discussion on that score among the house leaders.
There is one more sentence 1 should like to quote from the Prime Minister's reply. It
June 1, 1967

dealt with the whole point of my question. These were his words:
So far as declaring an additional public holiday in the country is concerned, that can only be done now by legislation, I believe.
1 hope this was not just an excuse on the part of the Prime Minister for not doing anything about it. I hope, rather, that he was conscious of the fact that Bill S-6 was before parliament and that we would have an opportunity to amend this legislation so as to provide that the Monday following a holiday which falls on a Saturday should also be a holiday.
That is the proposal I intend to make, and I shall place it before the committee of the whole house in the form of an amendment which I believe will meet the situation. I hope the government will accept this or, if the minister feels there has to be consultation with other ministers, that he will take the matter under advisement. In other words, I am not seeking a quick decision or an immediate vote. I think the point I am making is one which will appeal to hon. members generally and to the people of this country, and as such I trust it will be favourably considered.
In support of my argument let me say once again that it strikes me as passing strange we should have long week ends so often to celebrate so many things but when we come to this historic day about which we have all been thinking so much, July 1, 1967, the hundredth anniversary of the confederation of Canada, we should not have a long week end in which to celebrate it. Some people will get it. Apparently the public service will get it. I have heard that the banks are likely to declare this day a holiday and others may follow suit. Why should we not make it a general holiday?
I do not propose an amendement which will deal merely with this one day in this one year. I think that while we are dealing with the matter we might as well cope with the situation generally. The minister and my hon. friend from Skeena were debating a few minutes ago about which one of them was glued to a certain kind of chair. Let us all come up to date. Let us recognize that we are in the era of the five day week and that a holiday is not a real holiday to a great many people unless they get a day off as part of the celebration of that holiday.
This could be brought about very simply by adding a few words in line 33. I ask the
Interpretation Act
Minister of Justice and others to look at subclause 17 on page 12 of the bill. In line 33 after the words "Remembrance Day" one can simply put in the following: "any Monday which follows immediately after any of the foregoing holidays when any such holiday falls on a Saturday."
[DOT] (5:30 p.m.)
If hon. members look at my proposed amendment closely they will see it does not say the holiday is to be the Monday instead of the Saturday. It says Monday is to be a holiday as well as the holiday already defined in the earlier part of the subclause.


Pierre Elliott Trudeau: Since the hon. member's amendment is meant to apply to all the previously stipulated holidays, how would it apply to Labour Day which is the first Monday in September?


Stanley Howard Knowles: I was coming to that, Mr. Chairman. If the minister and others will look at the proposed amendment closely they will see that the wording is such that it could apply only to four of the days that are listed. It could not apply to Labour Day because it never falls on a Saturday. It could not apply to Good Friday because it never comes on a Saturday. It could not apply to Easter Monday because it never comes on a Saturday. We have already fixed the birthday of the sovereign on a Monday. The only dates in that list from lines 27 to 33 that can fall on a Saturday are Christmas, New Year's, Dominion Day and Remembrance Day.


Pierre Elliott Trudeau: Victoria Day?


Stanley Howard Knowles: I think the minister will agree with me that Victoria Day is just put in there for legalistic purposes. We do not get both the day for celebration of the reigning sovereign's birthday and Victoria Day, because by practice one is declared to be the other, and it now comes on the Monday proceeding May 24. What I am speaking about can refer only to four days, Christmas, New Year's Day, Remembrance Day and Dominion Day. Someone asks about Sunday, but Sunday never falls on a Saturday.


Mr. Byrne:: What about the Seventh Day Adventists? You have not covered them.


Stanley Howard Knowles: I believe, the Seventh Day Adventists do not call Saturday Sunday; they call it the seventh day. Please note, Mr. Chairman, that my amendment is not asking in a wholesale way for four extra holidays every year. There are some years in which

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Interpretation Act
none of these four days will fall on a Saturday. Two of them could fall on a Saturday in the same year, but only two. They are Dominion Day and Remembrance Day. They always fall on the same day of the week every year.


Mr. McCleave:: I think it would mean one day every two years.


Stanley Howard Knowles: Yes, I think the arithmetic of the hon. member for Halifax is correct. On one day out of every two years we would get a holiday falling on a Saturday which by the terms of my amendment would be recognized as the holiday but it would be followed by the Monday thereafter also being a holiday.
I offer this amendment as the answer to the plea made by the Prime Minister. On Friday morning, May 26, the Prime Minister seemed anxious to meet my request. He said that the civil service will get the day off but that as for parliament it is up to parliament itself. He added that as for the country generally it could only be done by legislation. My first thought was to produce a private member's bill, but the chance of getting it passed by July 1 would be nil. Then I realized we had this legislation before parliament and we could do it under this legislation.
To place the matter formally before the committee I move:
That subclause (17) of clause 28 of Bill S-6 be amended by inserting, on page 12, in line 33, immediately after the words "Remembrance Day;" the following words:
"any Monday that follows immediately after any of the foregoing holidays when any such holiday falls on a Saturday;"
If I may, I would like to read the subclause as it would then appear:
(17) "holiday" means any of the following days, namely, Sunday; New Year's Day; Good Friday; Easter Monday; Christmas Day; the birthday or the day fixed by proclamation for the celebration of the birthday of the reigning sovereign; Victoria Day; Dominion Day; the first Monday in September, designated Labour Day; Remembrance Day; any Monday that follows immediately after any of the foreogoing holidays when any such holiday falls on a Saturday; any day appointed by proclamation to be observed as a day of general prayer or mourning or as a day of public rejoicing or thanksgiving; and any of the following additional days-
I think my proposal really meets the wishes of members generally. I think it certainly would be in accord with the desire of the general public. Here we have the chance to see to it, since long week ends are a way of celebrating a holiday, that that is what we will have for our one hundredth birthday.


Auguste Choquette: Why did you not feel like including June 24 in your list? I remember you were one of those who moved the amendment to the house rules. You were one of those who accepted that June 24, Jean Baptiste Day, be a holiday.


Stanley Howard Knowles: I thank the hon. member for his reference to that. I had the privilege of drafting and moving the amendment to the house rules which, provides the nine holidays that the house has and June 24 is one of them. I have given serious thought to the point raised by the hon. member and I wish to make two comments. One is that maybe it is covered in paragraph (a) of subclause 17. However, there is some doubt as to the generality of that coverage and for that reason my colleague, the hon. member for Skeena, has an amendment to this effect sitting on his desk which will be moved after we have dealt with the one I have raised. We felt the two issues should be dealt with separately, but I have no objection to the desire of the hon. member.


Alfred Dryden Hales: Mr. Chairman, with respect to the amendment moved by the hon. member for Winnipeg North Centre I am in full sympathy with his thinking with regard to the July 1 week end, and I can see very good reasons for making it a holiday in the year 1967. I am in full accord with that, but I wonder whether we should pass legislation that will have effect in all succeeding years.
[DOT] (5:40 p.m.)
1 am thinking primarily of the retail businesses of this country. The retail stores count on Saturday being one of their biggest days in the week. If the holiday were moved to the Monday this would be very detrimental to the retail trade generally in Canada. If cases such as those mentioned by the hon. member arise, I think the municipalities would be in a position to take care of the situation and could introduce legislation to do so at that level of government. I conclude my remarks by saying what I said at the beginning. I am in accord with the hon. member's thinking for this year but I do not think the house should pass legislation affecting all succeeding years.


Pierre Elliott Trudeau: Mr. Chairman, I agree with the hon. member who has just spoken. I repeat once again the argument I seem to have repeated a great number of times since we began our discussion of this bill. I believe it is a mistake to use this act to achieve purposes which could be more rightly achieved in conformity with the intention of parliament by amending some other act.
June 1, 1967

The hon. member for Winnipeg North Centre referred to an existing statute which says that when a certain holiday falls on a Sunday it shall be celebrated on the Monday. Surely this would be the proper place to introduce an amendment of this kind or indeed, as he indicated, by way of a private member's bill.


Stanley Howard Knowles: That would be for our second centennial.


Pierre Elliott Trudeau: Before the hon. member feels too certain about what he says, I should like to point out to him that by introducing this kind of amendment in respect of this kind of a bill, in other words, by diverting the intention of the bill to achieve a particular purpose such as that which he hopes to achieve, he may in reality be defeating his own purpose. It is obvious, if this amendment should be accepted, that the hon. member would have introduced an amendment which does not apply to many other acts. For instance, it would not apply to civil service holidays because civil service holidays are not mentioned in this particular subclause and are not covered by the particular amendment which he suggests. Nor would it cover bank holidays which come under the Bills of Exchange Act. The other night he gave the example of the Canada Labour (Standards) Code which sets out a number of holidays. These holidays would not be affected by this particular amendment.
These are examples of the various holidays which would not be affected by this amendment. They would, however, be affected by a more specific bill such as that which he suggested he could introduce or by amendment to legislation dealing with holidays falling on a Sunday.
The burden of my argument is that parliament should exercise as much logic as possible. An effort, through laudable intentions, to get bits of legislation into acts by the side door really does not fit into the framework of statute law when those acts are designated for other purposes. If we did this frequently we would have statutes which would be more complicated than they are and we would have members of the opposition complaining that it was not intended that legislation should be introduced by the back door into statutes which were adopted by parliament for a certain purpose.
To sum up, I should like to say that if this amendment were adopted it would perhaps achieve in the short run the effect of giving a holiday in this particular year on the
Interpretation Act
Monday, whatever date it is, but in tire long run it would be introducing a principle of confusion into our statute law. I suggest that once again we would be defeating the whole spirit of the Interpretation Act if we use it to change substantive legislation in this way. It would be back-door legislation and I do not agree with that procedure. If the government were prepared to agree to the intention the hon. member has in mind, I would suggest the way this should be done would be to proclaim that particular day as a holiday which, as I say, is a right the government possesses in a particular case by virtue of the royal prerogative. Surely if the government wanted to do that it would do it, and if it should not want to do it surely it should not be expected to accept that it should be done by back-door or side-door legislation.


Robert Jardine McCleave: Mr. Chairman, I understand the effect of the amendment of the hon. member for Winnipeg North Centre is that whenever Christmas Day, New Year's Day, Dominion Day or November 11 fall on a Saturday these holidays should be celebrated on the following Monday. If I am correct in my calculation this would mean that probably only one day in every two years would be changed. There are four holidays involved and one would expect the ratio to be about four to seven so far as years are concerned. I find that July 1 and November 11 both fall on the same day of the year and Christmas and New Year's both fall on the same day of the year. In the case of Christmas Day and New Year's Day, they are one week apart; in the case of July 1 and November 11 they are several weeks apart.
I have some doubt whether I should support the amendment of the hon. member for Winnipeg North Centre. I have no very strong views concerning New Year's Day or Christmas Day, but I believe November 11 is not a day which should be celebrated as a day for a holiday but rather as a day for true remembrance no matter on what day of the week it should happen to fall.
For this very simple and perhaps emotional reason I have changed my position in the last ten minutes. I think we can handle any specific problems which arise. Perhaps the amendment could be introduced in a way which would be more acceptable so far as Christmas Day, New Year's Day and July 1 are concerned, but I would opt for the proclamation method rather than the statutory approach. For these reasons I shall vote against the amendment.

June 1. 1967
Interpretation Act


Stanley Howard Knowles: Mr. Chairman, there are two or three things I should like to say with regard to the remarks of the hon. member for Halifax and those of the Minister of Justice. First, I should like to make very clear again that in proposing these Monday holidays in the four cases mentioned I am not proposing-and the wording of my amendment would not accomplish this-that the holidays be on the Monday instead of the Saturday. This is not a proposal that July 3 be Dominion Day or that November 13 be Remembrance Day this year. It simply is a proposal that those days be days off as well as the Saturdays but that in both cases the day to be celebrated would still be the calendar day, July 1 for Dominon Day and November 11 for Remembrance Day.
[DOT] (5:50 p.m.)
The Minister of Justice suggested that this should be done by a bill amending the particular statute rather than by amending the Interpretation Act. That is a very nice suggestion if the government is willing to give consideration to such a bill. I could put a bill on the order paper but it would be number 115 or 120, and its chances of being reached would be nil. That suggestion has meaning and significance only if the government is prepared to adopt the idea.
The minister also suggested this should be done, if it is to be done, by proclamation rather than by legislation. Yet the other day when I asked the Prime Minister about it a second time, so he would get the point quite clearly, he said it could only be done now by legislation.


Pierre Elliott Trudeau: Perhaps the hon. member should read the passage again, because it seems to me the Prime Minister was talking in a general way about having this done in the future. I said specifically that if we were proclaiming it we would have to do it each time.


Stanley Howard Knowles: If the minister reads the question and answer as they appear on page 603 of Hansard for Friday, May 26, I think he will see that I was talking about a situation created by the fact that July 1 this year falls on Saturday. I asked the Prime Minister particularly whether Monday, July 3, 1967, might be declared a legal holiday so that all Canadians would get at least one day off for the celebration of our hundredth birthday. In other words, my question related only to the celebration of our birthday this year. I

read the Prime Minister's reply in full a few moments ago, but in his final words he said:
So far as declaring an additional public holiday in the country is concerned, that can only be done now by legislation, I believe.
I do not wish to make a debating point of the fact that the Prime Minister said one thing and the Minister of Justice has now said another, but if further research gives weight to the fact that this can be done by proclamation or by royal prerogative, let us be told about that. Let us not have the Prime Minister refusing on the ground that this can only be done by legislation and the Minister of Justice saying that it can be done if the government wants to do so by some sort of royal prerogative.
The minister accused me of trying to effect something by back-door legislation, or trying to enact something substantial in a statute which is just supposed to spell out meanings. Let me point out to him that his own bill is doing the very thing he suggest we should not do. It does so in paragraphs (a) and (b) of subclause 17. This, is not only back-door legislation; it is blank-cheque legislation. It provides that any day the lieutenant-governor of a province may appoint shall become a holiday for that province, or any day a city, town or municipality appoints as a civic holiday shall be a holiday for that area or district. In other words, we do not even know what holidays we may be creating by this legislation. I suggest that to criticize my amendment on the ground the minister did, in view of these provisions, is to be inconsistent.
I contend that I have followed the style and the language of the section which says "holiday" means, and then spells out a number of days. My amendment does not change the fact that July 1, 1967, will be celebrated on Saturday, but I suggest it is perfectly proper for us to say that "holiday" in this case means that when a statutory holiday falls on a Saturday there shall also be a holiday on the following Monday.
The minister talked about what this may do in terms of pay for people who have to work, and that sort of thing. Even the statute which provides for a holiday on Dominion Day does not say anything about people getting time off or being paid if they work. The statute does not say anything in this regard about Remembrance Day or Victoria Day. It merely says that these are legal holidays. All I am asking in these four cases is that when the legal holiday falls on Saturday the following
June 1. 1967	COMMONS
Monday shall also be a legal holiday. I suggest this amendment is one that ought to be accepted.


The Chairman:: Is the committee ready for the question?


Some hon. Members:: Question.
Amendment (Mr. Knowles) negatived: Yeas, 18; nays, 55.


Frank Howard: Mr. Chairman, the question posed by the hon. member for Lotbiniere and the answer given by my colleague, the hon. member for Winnipeg North Centre, disclosed my intention in respect of subclause 17. I will not make a lengthy argument but I wish to point out that standing order 2(4) contains the provision that the house shall not sit on certain days as listed in that standing order. One of those days is St. Jean Baptiste Day or, in English, St. John the Baptist Day. It seems to me that an extension of what this house has already considered appropriate should be acceptable here in the definition of holidays. That is in effect the amendment I wish to move.
In view of the fact I am about to move an amendment perhaps the minister would like to proceed past six o'clock in an attempt to conclude our discussion of this bill. Perhaps we should ascertain what the house wishes after the committee rises.


Pierre Elliott Trudeau: If it is envisaged that we can conclude the consideration of this bill I would be very appreciative if we could carry on. Perhaps we can vote on this amendment very quickly.
[DOT] (6:00 p.m.)
The arguments in favour or against the hon. member's proposal would be very similar to the ones that were made with respect to the amendment of the hon. member for Winnipeg North Centre. I do not feel there is any necessity for a long explanation of my position on this proposal since it would be the same in this case as in the previous case.


Herman Maxwell Batten: Order, please. If there is any disposition on the part of the committee to continue debate of this bill at this time the question should be decided with the Speaker in the chair.
Progress reported.
DEBATES	847
Proceedings on Adjournment Motion



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Depuiy Speaker:: It is my duty, pursuant to provisional standing order 3 9A, to inform the house that the questions to be raised at the time of adjournment tonight are as follows: The hon. member for York South (Mr. Lewis), Industry-northern Ontario- possible classification as a designated area; the hon. member for Waterloo South (Mr. Saltsman), Industry-nickel-possible restriction on amount available in Canada; the hon. member for Lac-Saint-Jean (Mr. Simard), Labour Relations-inquiry as to the right of C.B.C. employees to belong to a union of their choice.


Allan Joseph MacEachen: Mr. Speaker, I understand the hon. member for Skeena suggested that we continue in committee on the bill. If that is the suggestion, it is agreeable to us.


Frank Howard: Mr. Speaker, I was not suggesting it in particular. What I suggested was that the government might want to do so.


Mr. Deputy Speaker:: Is it agreed that the private members' hour be suspended and the house go back into committee for discussion of the bill which was interrupted at six o'clock?


Mr. Wahn:: Mr. Speaker, I am the sponsor of one of the bills which might have come up in private members' hour. Do I understand that if the matter now before the house is disposed of we will proceed with private members' hour if time remains before seven o'clock?


Mr. Depuiy Speaker:: It is the understanding of the Chair that if the bill now before the committee is disposed of before seven o'clock the house will proceed with private members' business. Is it agreed now that private members' hour will be suspended and that if the bill now before the committee is completed the house will go on with private members' business?


Some hon. Members:: Agreed.



INTERPRETATION ACT


[Stage Direction]
The house resumed consideration in committee of Bill No. S-6, to revise and consolidate the Interpretation Act and amendments
[Stage Direction]
June 1, 1967
Interpretation Act
thereto, and to effect certain consequential amendments to the Canada Evidence Act and the Bills of Exchange Act-Mr. Trudeau-Mr. Batten in the chair.
On clause 28-Definitions.
Frank Howard: 
Some hon. Members:: Hear, hear.


Frank Howard: To prevent any misunderstanding I will also read it in English. It reads as follows:
That subclause 17 of clause 28 be amended in line 31 thereof by inserting, immediately after the words "Victoria day;" the following "St. John the Baptist day;".


Stanley Howard Knowles: The hon. member's English is not bad.


Auguste Choquette: I did not know Mr. Cliche had such influence.
[DOT] (6:10 p.m.)


Pierre Elliott Trudeau: Mr. Chairman, the hon. member for Skeena is right. The type of argument I used in answer to the hon. member for Winnipeg North Centre cannot be applied in toto at this particular point, although the relevancy of the general argument about legislating holidays in this way, I believe, remains valid. With reference to the particular suggestion of adding an additional holiday, St. Jean Baptiste Day, I may say this is a very important day for French Canadians since it is the day of their patron saint. I should like to point out to the hon. member for Skeena that it is the general tendency of the federal government to try to speak for all the people of Canada. The intention of this subsection is to define holidays which are recognized throughout Canada as holidays and to leave to the particular provinces, cities, towns or municipalities the privilege of proclaiming particular holidays which fit a particular area of the country.
June 1, 1967



The hon. member will know that in the subclause under discussion there are, indeed, some days which are religious feasts and which are holidays. However, there are no days which can be described properly as ethnic holidays. I can understand the generosity of the hon. member in wanting to recognize a particular ethnic holiday, that of the French Canadians, but I am bewildered as to why he would not want to include in his amendment St. George's Day.


Some hon. Members:: Hear, hear.


Pierre Elliott Trudeau: Why not St. Patrick's Day?


Some hon. Members:: Hear, hear.


Pierre Elliott Trudeau: Then, there is St. Andrew's Day. I am being prompted, Mr. Chairman, to include St. Stanislas' Day, and why not? However, I believe we would be entering a kind of competition for ethnic popularity which is not the kind of competition in which this government is interested.
The idea of giving the provinces, cities, towns or municipalities the right under the law-I should not say the right but the recognition that they can proclaim days that will become holidays within the meaning of the Interpretation Act is not giving them an opportunity, in the derogatory words used by the hon. member, to have a blank cheque. Surely if it is done by proclamation by a constituted authority, as spelled out here, it is not the same as permitting anybody to do any old thing in any old way. It is a recognition of the fact that there are religious days and ethnic days of importance to particular sections of the country. But it is not proper for the federal government to embark upon this kind of competition for ethnic popularity. For this reason I do not believe this is the place to introduce such an amendment or to vote for it.


Robert Gordon Lee Fairweather: I think the minister has put this matter much more felicitously than I could. I was a member of the committee on procedure of the house which recommended to parliament that St. Jean Baptiste Day be a holiday. I have no difficulty in reconciling my feeling then and my feeling now to vote against this bid, so to speak. I felt then that we were members of a national parliament and as such I was very glad to recognize a holiday that meant a great deal to my colleagues here in parliament. If we begin legislating from this point of view for the provinces, so to speak, and that is what we would be doing, the holiday would lose its meaning.
Interpretation Act
Let us be frank about it. It would not be understood. I think this is really discrimination in reverse, which must be about as bad a form of discrimination as we can find. Furthermore, this holiday would have no application to most of the statutes of Canada but would only have application to the Interpretation Act and the occurrences that flow from it. As the minister pointed out, it does not affect the Labour Relations Act. Many other statutes do not incorporate this holiday. As a member of a national institution, fully conscious of what St. Jean Baptiste means to a good many of my colleagues, I can vote against this amendment.


Herbert Wilfred Herridge: I wholeheartedly agree, Mr. Chairman, with the comments made by the hon. member for Royal. I thought he approached the question from a practical and sensible point of view. I listened with a great deal of interest to the eloquent and tenacious arguments put forward by the member for Winnipeg North Centre. I do think, in view of the question put to the Prime Minister and in view of the reply of the Minister of Justice, the question the hon. member raised has to be given consideration. However, I believe that consideration should be given in connection with other legislation. I believe it is a matter that has to receive more consideration than we have been able to give it this afternoon.
I must say, as an Anglican, that I was delighted to hear the hon. member for Skeena recognize the religious significance of St. Jean Baptiste day. I give him full credit for his recognition of that day and his attempt by amending this bill to get it recognized. I agree that if we start to deal with the various holidays in this bill we could go on and deal with St. George's day, St. David's day or St. Patrick's day. I only mention this to show that the matter has to receive lengthy consideration.
I have every respect for my colleagues from the province of Quebec and the members of their faith wherever they live. I have never done anything to break down a person's religious belief, whether he be a member of Jehovah's Witnesses or any other faith, if he gets some comfort from that faith. I do not believe this is the type of measure under which to introduce this provision. I suggest it requires much greater consideration than we have given it today. It is a matter that the government can take under immediate consideration so that we get these holidays established on a national basis and not an ethnic group basis or on the basis of subdividing this country.

June 1, 1967
Interpretation Act


Frank Howard: I only want to say this with respect to the bewilderment, self-acknowledged, of the minister. This is not an attempt -I hope he did not mean this-to inject an element of competition amongst ethnic groups into this discussion. That was the farthest thing from my intention in introducing this amendment. It was only an attempt to give due recognition to that aspect of the culture of the province of Quebec to which recognition has already been given by the House of Commons in the standing orders, and that is all.


Herman Maxwell Batten: Is the committee ready for the question? I would refer the committee to standing order 6, section 7, which reads:
No vote shall be taken between 6.00 o'clock p.m. and 8.00 o'clock p.m. on Mondays, Tuesdays and Thursdays or between 1.00 o'clock p.m. and 2.30 o'clock p.m. on any day upon which a morning sitting oi the house is held.


Mr. Churchill:: By consent.


Herman Maxwell Batten: I presume that is what the standing order means, although I am sure if members of the committee wanted to read it in another way they could. However, if it is the wish of the committee to have the vote at this time, this can be done.
[DOT] (6:20 p.m.)


Mr. Nasserden:: Mr. Chairman, I have no objection to the vote being taken at this time but I hope that it will not serve as a precedent for other occasions. I would not want the intent to go further than just allowing consent at this time.


Herman Maxwell Batten: Is it unanimously agreed that the vote on this amendment be taken now?


Some hon. Members:: Agreed.
Amendment (Mr. Howard) negatived: Yeas, 6; nays, 51.


Herman Maxwell Batten: I declare the amendment lost.


[Stage Direction]
Clause agreed to.
Clauses 29 to 42 inclusive agreed to.
On clause 43-Proclamation.
Stanley Howard Knowles: Mr. Chairman, may I ask the minister when it is intended that this act shall come into force?


Pierre Elliott Trudeau: Mr. Chairman, no particular date is contemplated. It would have to be brought into force, of course, before any revised statutes were brought into force. Also it

would have to be brought into force as soon
as the previous act was repealed. However, no particular date is set in my mind. If the hon. member has representations to make I should be glad to hear them.


Mr. Bell (Carleton):: Mr. Chairman, can the minister give any indication at all as to when
he expects the revised statutes to be ready?


Pierre Elliott Trudeau: I am afraid I cannot. I have had no recent report on that.


[Stage Direction]
Clause agreed to.
Clause 1 agreed to.
Herman Maxwell Batten: Shall the title carry?


Robert Jardine McCleave: Mr. Chairman, on a point of order, there is a schedule on page 22 about which I should like to ask the minister a question.


Herman Maxwell Batten: Yes, there is a schedule on page 22 to be carried.
On the schedule-


Robert Jardine McCleave: Mr. Chairman, I was going
to ask the minister how quickly this legislation is able to move in tune with events similar to those which happened in Nigeria in recent days, that country now being threatened with being divided into two countries. Would we have to amend the bill or can this matter be handled in some other way?


Pierre Elliott Trudeau: Mr. Chairman, the answer is provided in the bill. Clause 28 (5) permits us to add to or subtract from the schedule as the need is felt.


Robert Jardine McCleave: In other words, by the proclamation that I suggested.


Pierre Elliott Trudeau: Yes.


[Stage Direction]
Schedule agreed to.
Title agreed to.
Bill reported.
Mr. Depuiy Speaker:: When shall the said bill be read a third time?


Some hon. Members:: Now.


Stanley Howard Knowles: Next sitting of the house.


Mr. Deputy Speaker:: Order. The house will now proceed to the consideration of private
members' business, as agreed at six o'clock.
June 1, 1967



PRIVATE BILLS


Mr. Grant Deachman (lor Mr. Basford) moved: the second reading of Bill No. C-113, to incorporate Commercial Solids Pipe Line Company.
He said: Mr. Speaker, Bill No. C-113 to
incorporate Commercial Solids Pipe Line Company stands in the name of the hon. member for Vancouver-Burrard (Mr. Basford), as will be seen from the face of the bill. As hon. members know, that "foolish" young man is headed toward the west coast this week end to give up the state of bachelorhood. As a consequence, at the moment I do not think he is very interested in this bill. But I think it shows how cool a cat the hon. member is when he carefully arranges to see that another member from the west coast takes this bill in his very necessary absence, necessary, that is, if he is going to lose his bachelorhood.
This bill deals with a company that wishes to operate a commercial solids pipe line. The pipelining of solids is not a new concept. The first commercial pipe line for transportation of solids was built in England, I understand in 1914 to move coal in water from the docks to a power plant less than 2,000 feet away. Short lines to move coal mine sludge were built in the United States as early as the 1920's. A 15-mile line to move 500,000 tons of salt a year in a saturated brine was built in Louisiana in the 1930's. Since then there have been some longer lines, notably the 108-mile pipe line between Georgetown and Cleveland to carry coal in water. There is also a 72-mile gilsonite line between Bonanza, Utah, and Grand Junction, Colorado.
[DOT] (6:30 p.m.)
With few exceptions, most pipe lines transporting solids today suspend finely ground particles in a liquid, the mixture being called slurry. This slurry can be handled in somewhat the same way as other liquids. Another possible method is called capsuling. This involves casing the solids in rigid or flexible containers which are moved through the pipe line. In this field probably the most advanced research in the world has been carried out by the Alberta research council. The capsule method has not, however, yet been developed to the point where it may be used commercially for long distances. An association known as the Solids Pipe Line Research and Development Association has now been formed in Canada to further this research.
Private Bills
Another active group is the Pulp and Paper Research Institute of Canada which has pioneered the pipelining of wood chips. The University of Saskatchewan and the Saskatchewan research council are working on the pipelining of potash slurries.
In summary, a number of short solids pipe lines have been proven and are in operation today and many research groups and private company laboratories both in Canada and elsewhere are working on the technology required for pipelining a variety of commodities over long distances. It is appropriate that this effort continue and even increase and that Canada be a world leader in this technology, because no other nation has such great mineral resources located far from either tidewater or consuming markets. It is important to Canada that it should be able to move its landlocked mineral resources such as coal, potash, iron ore and sulphur to market at tariffs that do not prejudice it vis-a-vis other countries, the resources of most of which are near tidewater.
There is therefore a wide potential for a company in Canada devoted to transporting solids by pipe line. The company believes that if this application is granted Commercial Solids Pipe Line Company will be instrumental in constructing in Canada solids pipe lines of a much greater length and capacity than have ever been constructed anywhere else in the world.
So far I have dealt with the pipelining of solids and the objects of Commercial Solids Pipe Line Company in a general way. I now wish to describe to the house one particular project that is being planned for the proposed company. This is the construction of a pipe line for the transportation of sulphur in slurry form from the producing plants in Alberta to the Canadian west coast.
The world demand for sulphur has increased at a rate of more than 6 per cent annually during the past three years. In 1966 the free world produced 24.1 million tons and consumed over 24.9 million tons of this commodity. The 1970 free world production of sulphur is estimated at 31 million tons.
Concurrently with the expansion of the world markets for sulphur the production in the province of Alberta has increased at an enormous rate. Shell Canada Limited is the largest producer of sulphur in Canada. From the time that Shell Canada Limited started the first sulphur production from natural gas in Canada at Jumping Pound near Calgary in 1952-producing the total output of Alberta

June 1, 1967
Private Bills
from natural gas at that time of approximately 10,000 tons annually-the production of sulphur in Alberta has increased today to more than 1.8 million tons a year. Since 1952 many new plants have been constructed and others will be built in the future. It is anticipated that by 1970 the production in Alberta will have increased to approximately 3.2 million tons a year.
As sulphur has not so far been transported in solid form by pipe line on a commercial scale, research still has to be done before the company can be certain that this 750 mile pipe line from Alberta to the west coast is feasible. Since to a large extent the exact location of the route will be dependent on the outcome of the research and development program which is presently taking place and which will continue after incorporation of this company, no specific route can be designated, at this time. The company's confidence, however, can be measured by the large sums of money it has already spent and will spend in the next two years, if this bill is passed, in developing this research to maturity.
The advantage to Canada of a pipe line that would transport this sulphur to the nearest port at a steady and economical rate is readily apparent, and such a line would be the first of its kind in the world, thus putting Canada well in the lead in the pipelining of solids.
The transportation of sulphur by rail, the present method used to convey this product from Alberta to the coast, is costly and the availability of suitable rail cars to handle this movement is a problem. These costs have recently increased to the extent that Shell has paid approximately $2.24 million in 1966 for transportation and handling between these points. They anticipate that the industry will spend $21 million in freight and handling charges for offshore movements in 1970, based on present day arrangements. It is expected that the sulphur pipe line would reduce these costs, not only to Shell but also to other Alberta producers utilizing this pipe line, by approximately one third. The pipe line would be available on mutually acceptable terms to all producers in Alberta who can conveniently tie in with the line. For those using the line, participation in the equity of the company would also be available. The resultant savings and stability of transport cost would help appreciably to improve the competitiveness of Canadian producers in supplying world markets and would aid in the negotiation of long term contracts for sulphur sales without fear of spontaneous and non-controllable freight increases.

The sulphur pipe line project which they have under study envisages a 12 inch main line with smaller diameter feeder lines. It will likely originate near the city of Calgary around which a gathering system would be built to tie in plants in the immediate area. The main line would go south in order to pick up throughput as southern Alberta plants including Shell's large Waterton plant. The line would then enter the mountains at the Crowsnest pass and go west until it reached the coast in the Vancouver area. A preliminary survey has been made of the approximate route of the sulphur line and the company has detailed sketches which demonstrate this. For reasons already given, there is necessarily nothing final yet concerning the route of the pipe line.
The cost of the line is estimated at $50 million, and the company would expect this project to be financed as to 25 per cent by equity capital and as to the remainder by bonds, debentures or other form of borrowing. The authorized capital of Commercial Solids Pipe Line Company for which they have applied is $100 million. This means that if the sulphur pipe line is built with 25 per cent equity financing, there will be ample capitalization remaining for several other solids pipe lines in Canada of a like magnitude.
With regard to Shell Canada Limited, which will be the principal shareholder of the new company, 17.5 per cent of the voting power is in the hands of the public, and these shares are traded on stock exchanges in Canada. The remaining 82.5 per cent is held by another Canadian company called Shell Investments Limited, the head office of which is also in Toronto. Shell Investments is in turn wholly owned by a Netherlands company situated at The Hague and, finally, the ownership of that company is divided as to 60 per cent in the hands of the Royal Dutch Petroleum Company at The Hague, and as to 40 per cent in the hands of the Shell Transport and Trading Company in London, England.
[DOT] (6:40 p.m.)
They are committing in excess of $1J million to slurry pipeline studies generally, of which $900,000 is directed to this sulphur effort. They are also confident that Canada can and should become the world leader in commercially adapting this technology to reduce overland transport costs for many other solid commodities including potash, wood chips, coal and iron ore, thus benefiting our
June 1, 1967

entire economy. The full weight of the technical ability of the Shell group is behind this application and they assure us that their efforts will be unstinting in forwarding the commercial adaptation of this technology.
I am not an expert on this subject. I am pinchhitting for my friend, the hon. member for Vancouver-Burrard. It is the practice of the house that bills dealing with pipe lines are referred to the committee on transport and communications so that their purpose and nature may be examined in the light of evidence from whatever witnesses hon. members may wish to call. A bill dealing with the new transport commission has already been before the house and before that committee. One of its clauses deals with the possible regulation of pipe lines by the commission.
I think it is likely that certain questions will arise in connection with the effect of government policy upon the proposals contained in this bill. There are all kinds of questions which hon. members might wish to ask in connection with this matter, answers to which could only come from the applicants themselves. My only request is that this bill be permitted to go to the committee where there would be an opportunity to examine it thoroughly. If there are hon. members present who object in principle to any aspect of the bill it is, of course, their privilege to kill it by talking it out when it comes back to this chamber. But I think it is of great importance to the development of Canada that we should lead the way in moving materials over long distances by new and more efficient forms of transportation.
For this reason I ask any member of the house who has reservations about these proposals not to carry them to the point of denying parliament an opportunity to consider whether this bill, either as it stands or with modifications, is not in the best interests of the economy of Canada. The only way in which we can find this out properly is by examining it in the standing committee on transport and communications. It is with this belief in mind that I place the bill before the house this afternoon.


Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, I fully appreciate the eloquence which the hon. member for Vancouver Quadra (Mr. Deachman), speaking as a substitute for the sponsor of the bill, has brought to bear upon this subject. I have some reservations though as to the efficacy of his last plea that our discussion of the principle of this bill, affecting a company which is making a
Private Bills
new venture in this field, should be limited to some 25 minutes. The question of a solids pipe line is one which deserves careful consideration, particularly since the hon. member has made this expose, telling us who is behind this bill and why it is wanted.
I think we should go further into the study of solids pipe lines and recognize that the basic work in this connection has been done, as indicated by the hon. member himself, through the research council of the province of Alberta, using not only funds provided by that province but in addition funds made available by the Department of Industry. The organizations taking part in this research are known as SPRDA-Solids Pipelines Research Development Association-and SPESA, standing for Solids Pipelines Economic Studies Association.
There was some difficulty attached to the federal legislation, which I thought was a lot of nonsense when I came into contact with it about a year ago, and since then I have had something to do with the working out of the details of the federal subsidies for the economic and development studies. The legislation and the regulations were not as clear as they should have been and in this particular case a fine line was drawn between the economic feasibility of solids pipe lines and the technical aspects-whether one could move solids via capsules. I thought this was a little too much. But there it was, and this artificial distinction had therefore to be drawn within the development associations.
Let us face it. Not only were government funds involved in these technical and economic studies but a consortium of about ten Canadian companies which are interested in transport was involved. The Canadian National Railways has an interest in SPRDA. So have the C.P.R., Canadian oil companies, and other industries.
This is a matter which deserves far more attention than has yet been given to it. Perhaps the sponsors of this bill are endeavouring to capitalize on the research which has been carried out. I preface my remarks with those observations because I think we have to put this whole matter in context, and I hope that representatives of all parties in this house on the transport committee will go into the history of what has actually happened with regard to solids pipe lines research and consider where the potential benefits should reside.
What we are primarily talking about here is the transportation of sulphur from the

June 1, 1967
Private Bills
province of Alberta to the Pacific coast. The sponsor rightly said that this was the real objective of the Shell Oil Company. More power to that company. We are vitally interested in the cheaper transportation of sulphur to export markets. Members of this house would be doing a disservice to the economy of this country and to our export markets if they reacted in a negative way to proposals for the movement of sulphur in the cheapest possible manner. The market is highly competitive.
But it is not only sulphur that is involved. There is the question of iron ore pellets from northwestern Alberta. There are other types of solids which have just as much claim to the benefits of research in this field as has sulphur. I think we ought not to concentrate exclusively on this particular product but look at the over-all picture. It is for this reason that while in principle I would like to see this application go to the committee I should like the committee to undertake a much more extensive investigation of solids pipe line projects and studies and related economic studies.
[DOT] (6:50 p.m.)
I feel that persons from the research council of Alberta and other research organizations should be called to tell us where we are heading, to say whether this is going to be beneficial; and if it is going to be of national import then certainly the Canadian National Railway, the Canadian Pacific Railway and others concerned with transportation must be brought into the picture.
I have talked to officials of the research council of the province of Alberta who have been involved in this particular project, and they paint a most imaginative picture. I do not think we should grant an exclusive monopoly, tantamount to a hunting licence, to any one particular firm. At the moment I am rather taken with the development in my own province of the Alberta Gas Trunk Pipe Line, which is financed publicly, the shares being first offered to residents of Alberta and then to other Canadians. If this were done Canadians could benefit in the equity financing of similar enterprises, without great international corporations coming in, financed by their own banks and insurance companies, and acquiring the lion's share of the equities and profits.
As I say, I am much more disposed to consider the system used in the financing of the Alberta Gas Trunk Pipe Line, rather than the system used for the Interprovincial

Pipeline and other types of operations. Indeed I am much more taken with that system than with the idea of using the Canada Development Corporation.
If solids are going to be moved through a pipe line from the province of Saskatchewan, I believe the people of Saskatchewan should be given a chance to get in on the equity ground floor. If pulp and wood chips are to be moved by pipe line from the interior of British Columbia, likewise let the people of British Columbia have the first crack at it. I offer this as a suggestion to hon. members, but I must say I am glad to see that somebody has realized the economic importance and economic potential of a solids pipe line, based primarily on experience in other countries and also on research work done by public authorities in this country working on behalf of and in co-operation with private industry.
Having said that, I am quite prepared to see this bill go to committee but I certainly hope a great deal of study will be made along the lines I have suggested, rather than confined to the narrow ambit of the financing of this particular group and what they intend to do. We should use this opportunity to look into the whole prospect of solids pipe lines as a means of transportation. One of the biggest difficulties we find in marketing the products of this country is the immensely high cost of transportation. If the railways can benefit by participation in pipe lines, more power to them, because the country as a whole will ultimately benefit as a result of these developments. I personally am prepared to accept this bill in principle, but with the suggestions I have given.


Grant Deachman: Do I understand that the hon. member would be disposed to see the bill go to committee, provided we in the house understood that when it is in committee this entire subject will receive the widest possible discussion and most searching examination by the transport committee? This is all I would ask, because I concur in literally every word the hon. member said. I do not want to see this bill forever revolving on the order paper, with nothing done about this important subject being thoroughly explored at committee level.


Marcel Joseph Aimé Lambert: All I will comment is that the hon. member has synthetized my remarks in his question.


Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, I listened quite closely to the hon.
June 1, 1967

member for Edmonton West (Mr. Lambert) and I really picked up my ears once or twice.
I thought he was beginning to sound dangerously like a socialist, but he soon veered away from that approach. I do not have much hope of converting him in the time that remains before seven o'clock, but I do wish to say that he did point out the wide ranging implications involved in the bill before us. He indicated it is a subject matter that should be of real concern to members in all parts of the house, and one that should not be rushed through lightly.
As I listened to the bill being introduced it occurred to me that in this, our centennial year, one might say that the last decades of our first century have been characterized in this parliament by many debates on the question of pipe lines. A historian in the future may be inclined to compare the end of our first century with the debates at the beginning of that century, which revolved around the development of railway transportation in Canada. As suggested by the hon. member for Edmonton West and the hon. member for Vancouver Quadra (Mr. Deachman), this is an indication that in a country of our large size the question of transportation, what its form should be, and under what auspices it should be built and managed, is one of the most fundamental that can be debated in the Canadian parliament.
The hon. member for Vancouver Quadra indicated that he was substituting for the hon. member for Vancouver-Burrard (Mr. Bas-ford), and I would like to join in the passing reference he made to the hon. member's absence, and in extending good wishes to him. The hon. member is now out in beautiful British Columbia, and before leaving informed me that he would be spending part of his time on beautiful Vancouver Island.


Grant Deachman: I wonder, in the remaining seconds before seven o'clock, whether the hon. member would be disposed to send this bill to the committee on transport and communications, as a wedding gift to the hon. member for Vancouver-Burrard?


Thomas Speakman Barnett: That is a very interesting suggestion but I think the hon. member for Vancouver Quadra used up those remaining seconds by his question. May I call it seven o'clock?


Mr. Speaker:: It being seven o'clock the hour appointed for the consideration of private members business has now expired. It being seven o'clock I do now leave the chair.
At seven o'clock the house took recess.
The Budget-Mr. Sharp AFTER RECESS
The house resumed at eight o'clock.



THE BUDGET


Mitchell William Sharp: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said: Mr. Speaker, through the courtesy of the Parliamentary Librarian I spent a few hours today browsing through the first budget speech presented to the House of Commons almost 100 years ago by Hon. John Rose, minister of finance. It gave me some consolation and encouragement to observe that Mr. Rose took a full afternoon and part of the evening to deliver his speech dealing with revenues and expenditures of less than $20 million, and that from time to time when he expressed his fear of wearying the house he was met with cries of "no, no". I promise not to repeat that performance this evening. I hope nevertheless for the same indulgence from hon. members.
Mr. Rose was an eloquent speaker and, on the occasion of this centennial budget, I should like to recall a few sentences from this first budget after confederation.
In viewing the facts-
Mr. Rose said:
-I think they point, under the blessing of a good Providence, to a certain and prosperous future before us. If we work together in harmony, if we endeavour to cement the Union, if we develop the varied and rich resources of the several provinces, we have the elements within us to build up a prosperous and powerful community. In Lower Canada we have a people frugal, industrious, and attached to the soil-not a nomadic, but a steady, contented people, well adapted for manufacturing pursuits; while in the West we have immense agricultural, and in the East equally important maritime resources. I am not an enthusiast, but I say that although we have a rigorous climate and many difficulties to combat, we have correspondingly hardy, energetic and thrifty population, and in the extent and variety of our resources we have as certain a promise of a good future as any country ever before enjoyed.


Some hon. Members:: Hear, hear.


Mitchell William Sharp: Some of the members of the house are cheering, just as the members cheered in 1868. Then Mr. Rose said, as all subsequent

June 1, 1967'
The Budget-Mr. Sharp ministers of finance have said and as all future ministers of finance will say:
Now, Sir, I would not wish it to be supposed that, in calling attention to these indications of the future prosperity of the country, I am desirous that we should rush into undue expenditure. On the contrary, I say that we ought to be most careful in, our outlay, and consider well every shilling we expend.
To which there were loud cheers on that day.
I trust that whatever government may be in power, the people will demand at its hands a thrifty and economical administration of public affairs. I claim that we who now occupy these benches have shown a desire to follow that course.
I repeat that claim. Finally, may I be permitted one more quotation from this budget speech of a century ago which caught my fancy:
Anyone who looks at the population of this Dominion-of Nova Scotia, New Brunswick, Quebec and Ontario-must see that while they differ in very important characteristics, they agree in this, that they are not extravagant or ostentatious in their habits, they are hardy, persevering, industrious and energetic, and possess all the qualities fitted for developing the resources of a new country. Though our wealth may not increase as rapidly as in some other climes, we spend little in ostentation and extravagance.
Then came this memorable sentence:
Reproduction is steadier and more continuous.
There is no indication as to whether that particular statement was met with enthusiasm or otherwise. I now turn to the budget of 1967, our centennial year.
[DOT] (8:10 p.m.)
Mr. Speaker, The past 18 months have been eventful ones in our fiscal affairs-a budget and a mini-budget, three bills to amend the Income Tax Act, one to amend the tax provisions of the Old Age Security Act, two to amend the sales tax, two temporary restraints on business capital investment, the commencement of the Canada Pension Plan which had major fiscal effects, several reviews of government expenditure policy, a major debate on inflation last September and a long series of hearings by a Joint Committee into the increases in consumer prices.
Fiscal Flexibility

 p
This experience indicates that we can achieve flexibility in the content and timing of our tax measures and other instruments of fiscal policy. Now that Parliament is normally sitting more or less continuously throughout the year and is modernizing its procedures, it

can act promptly enough to enact the measures necessary to implement a flexible fiscal policy without having to delegate extraordinary stand-by powers to the government, as has sometimes been suggested. We need not try by action in our annual budgets to anticipate economic possibilities during the ensuing twelve months that could be dealt with later when more was known about them.
Federal-Provincial Relations
In this past 18 months there have also been major developments in our fiscal and economic relations with the provinces. In the Tax Structure Committee we had important discussions on the fiscal arrangements which should be developed in the future between the federal and provincial governments. These arrangements have a significant effect both upon the use of tax fields by the two levels of government, and upon the expenditure programs of federal, provincial and municipal governments. On behalf of the federal government I proposed that we should seek through our fiscal arrangements to define more clearly the respective responsibilities of the two levels of government, with the objective of strengthening within their respective jurisdictions, the roles of both the federal and provincial governments. I suggested a new and comprehensive approach to the equalization of provincial revenues. This new equalization plan was incorporated in a major revision in the Federal-Provincial Fiscal Arrangements Act which Parliament approved in March of this year. With equalization payments rising automatically as provincial revenue requirements increase, the poorer provinces as well as the richer ones will now be in a better position to finance their growing responsibilities through provincial rather than federal tax measures. In the discussions we have recognized that the harmonization of federal and provincial priorities, both in respect of revenues and expenditures, should be the product of regular and comprehensive federal-provincial discussions, not just meetings every five years confined to tax sharing negotiations.
These new fiscal arrangements include important fiscal transfers relating to education. Federal personal and corporate income taxes have been abated in order to make it easier for the provinces to increase their taxes by a corresponding amount for the support of higher education. These tax transfers in combination with the adjustment grants and special equalization grants that Parliament has
June 1, 1967

authorized will ensure that the total fiscal transfer to the provincial treasuries will equal at least 50 per cent of the operating cost of post-secondary education, broadly defined. This new measure, which replaces the former system of assistance to universities and other post-secondary educational institutions, is a jmost important step in strengthening financial support to higher education, without impairing in any way whatever the authority and responsibility of the provincial governments and legislatures in respect of education. This increased support for higher education commenced at the same time as our technical and vocational construction grants were being phased out and our contributions under other technical and vocational training programs were being replaced by the new post-secondary education arrangements and our new adult training program. Because of this, the full extent of the financial burden that Parliament has undertaken in these new arrangements has not been entirely understood. I estimate that by our action in regard to postsecondary education and manpower training, after allowing for the phasing out of vocational training grants, Parliament will be providing in one way or another an additional $300 million this year as compared with last year for these essential purposes.
It became evident during last year's federal-provincial meetings that Canadian governments collectively, responding to the needs and demands of Canadians generally, have been expanding their activities to the point where each level of authority is most reluctant to impose the higher taxes necessary to achieve the objectives we have set for ourselves. Last October some quantitative expression was given to these combined requirements in the projections of public expenditures and revenues prepared for the federal-provincial Tax Structure Committee. Summary figures which were published show that provincial and municipal expenditures together might be expected to grow over the five years from last year until 1971 at a rate of about 81 per cent a year. Federal expenditures, as programmed in early 1966, would grow about 61 per cent per annum. Since that time both the federal and the provincial governments have undertaken some new expenditure programs. For example, in our, case the Guaranteed Income Supplement for old age pensioners will add to the total that was projected. Subsequent additions, however, have not changed the general trends revealed in the Tax Structure Committee projections.
The Budget-Mr. Sharp
The rate of growth in revenues, at the tax rates current last year, was projected at about 71 per cent a year both for the federal and for the provincial and municipal governments combined, under the economic conditions which were then assumed. Federal tax rates were raised moderately in December after this study was finished and some provincial tax rates have been raised this spring, but these do not substantially change the trends shown in the study. Confronted with our common need for increased revenues, and the house will observe that expenditures are projected to grow faster than revenues from existing taxes, it is natural that we and the provinces will find it hard to agree on the use of the different tax fields.
Royal Commission on Taxation
Since our major discussions with the provinces we have received and begun studying the report of the Royal Commission on Taxation. We have found it a thoughtful, radical and stimulating report, but one that bristles with both technical and policy problems and, need I add, political problems. It proposes major reforms in our income tax, including the incorporation into a comprehensive tax base of many receipts now exempt from tax or taxed under other statutes such as the Estate Tax Act.
The Commission, which I might add was appointed by the government which preceded us in office, and I have no criticism of this because I do believe that our tax system does urgently need reviewing, recommends to us a broad policy which places first emphasis upon equity, pursued with greater seriousness and logic than ever before. It would combine equity with the greatest possible degree ol economic neutrality in tax law in order to give the market and the private sector of the economy maximum freedom to make its decisions free from any distorting influence by the tax system. The Commission would have us rely mainly on expenditure programs to implement those policies where we seek by financial means to attain specific economic purposes such as the stimulation of research or other particular form of activity, such as mining.
There is one aspect of the Commission's report that deserves more public discussion than I have yet observed. It is that the comprehensive personal income tax proposed by the Commission must, according to the Commission itself, be used with restraint. As suggested by the Commission, this particular tax would produce revenues that were much

June 1, 1967
The Budget-Mr. Sharp less than half of the total public revenues required by all levels of government in Canada.
Consequently this would leave governments to continue to rely upon other tax instruments, at all levels, federal, provincial and municipal, to raise the majority of the revenues required. It is evident, therefore, that there is no easy answer either to the problems of taxation or to the federal-provincial issues with which we must deal.
Tax Reform Schedule
I have already announced that the government is not proposing to reach decisions on the main features of the reform of our tax system until others have had an opportunity to study the Royal Commission report and comment upon it. I have emphasized, however, that we cannot leave too long an interval for such study and comment.
I believe we can properly aim at a white paper late this year in which the government's main proposals can be expressed clearly without all the details of a bill. We would also plan to produce a draft bill to illustrate how the government's proposals could be enacted. I would welcome Parliamentary discussion of these. After receiving the views of Honourable Members and others, we would review our draft bill and then bring forward the legislation that we would propose Parliament enact. Obviously, our reforms will require considerable time and effort on the part both of the government and of Parliament during 1968. I do not expect that this revision of the income tax will be part of the budget procedure itself but a separate series of steps.
[DOT] (8:20 p.m.)
I have already invited taxpayers to comment in writing by the end of September on the major recommendations of the Royal Commission. I have already indicated elsewhere the list of major matters upon which I have invited comment and I shall not take the time of the house now to repeat them.
On these matters, which are the central core of the report of the Royal Commission, I will welcome of course hearing the views of hon. members of this house and of the other place, as well as views from taxpayers, experts and associations of one kind or another. From those outside Parliament, I would prefer to receive views and suggestions in writing in the first instance.
In speaking of our tax reform program, I have referred only to the income tax. The

Royal Commission's proposals about the sales tax involve many less complications and we shall not need as much advance work on them. I am therefore not inviting comments on them at this early stage.
The need to take time for proper study and discussion of the report before reaching decisions on it will inevitably leave some uncertainty for taxpayers who are making future plans. Some such uncertainty cannot be avoided once the report is published. This is a reason for pressing ahead as quickly as we reasonably and properly can but it is not a justification for haste or for not taking into account what people wish to express upon a matter that concerns them so deeply. On May 11th I endeavoured to remove some of the uncertainty concerning the possible timing of any termination of the inducement offered in the present law for the opening of new mines, should the government decide that the Commission's recommendations on this matter be accepted. This is the principal subject on which the present Act contains a major inducement about which uncertainty arises because of the Commission's report. I cannot undertake to offer assurances about all the various changes that might be made without anticipating decisions that the government has not yet reached and prejudicing the proper consideration of the subject.
Kennedy Round Tariff Changes
It is not only in tax policy that major changes have been in progress. For nearly four years representatives of the government have been engaged in the greatest series of trade and tariff negotiations ever undertaken. As is well known, these negotiations of the Kennedy Round have now been concluded successfully and the broad agreements reached are being worked out in detail. By agreement among all the negotiating countries the results will be made public about the 1st of July. I regret that I cannot indicate to the House at this time the important conclusions reached in these negotiations nor lay before you the tariff resolutions that will be necessary to implement some of the undertakings that Canada has made in order to secure concessions from others. It is my intention that we should keep the tariff resolutions which I am introducing tonight before the Committee of Ways and Means until after the announcement of the results of the negotiations, when we will make a full presentation to hon. members of the results both in our tariff and in foreign tariffs and introduce
June 1, 1967



in the committee the further tariff resolutions needed to implement those changes that Canada has offered to make. It will also be necessary before mid-1968 to amend the provisions of the Customs Tariff that govern the application of anti-dumping duties, which will be done after we have heard the views of those concerned, and I have invited publicly the views of all those who will be affected because there will be an interval before the time of the publication of the international convention and the necessity for us to implement it in our own legislation by the middle of 1968.
The basis of Canada's participation in the Kennedy Round was described in some detail by my predecessor who is now the President of the Privy Council in his budget speech on March 16, 1964. He explained that Canada would be offering to exchange tariff concessions of equivalent value rather than offering uniform percentage cuts across the board. He then outlined the following four basic considerations that would govern our participation: first, the principle of reciprocity in trade terms; second, the need to promote through these negotiations the balanced growth of the Canadian economy particularly through seeking new export markets for our secondary industries; third, the need to achieve a reasonable balance of concessions given and concessions gained for the various sectors and regions of the Canadian economy; fourth, the need to avoid the kind of tariff bargain that might worsen our balance of payments. I can now say without hesitation that all these basic considerations have been satisfied. This will be readily apparent when we are able to publish the results.
Economic Review [Translation]
I turn now to a consideration of the economic situation and its implications for the budget.
At the time I was preparing my budget last year it appeared that 1966 would be, as indeed it turned out to be, a year in which restraint was necessary-first monetary restraint, then fiscal restraint, and self-restraint on the part of those making demands upon the economy.
Some fiscal restraint occurred early in the year with the commencement of the payment of contributions to the Canada Pension Plan and Quebec Pension Plans. These were very substantial payments, amounting to nearly three quarters of a billion dollars a year. The funds were loaned to the provincial governments and their agencies. The fiscal restraint
The Budget-Mr. Sharp involved in the commencement of these contributions had been taken into account by my predecessor in his budget in April 1965 although, as he made evident, it was necessary also to take into account the effect that such funds would have upon spending by the provinces or their agencies. In the event, it may be noted the total net new issues of provincial and provincially guaranteed securities, in Canadian dollars, in 1966 increased by more than the total amount made available for investment in them in these two pension plans.
No doubt there would have been a substantial increase in such borrowing without the inception of the pension plan contributions, but the restraining influence of these contributions upon the economy would appear in retrospect to have been substantially offset by the greater disbursements of borrowed funds by provinces and their agencies.
A second element of fiscal policy last year was the efforts made to restrain the growth in public expenditures. This applied primarily to construction programs, since the strain of excessive demand upon the construction industry was particularly evident in the latter part of 1965 and the early part of 1966. Some success was achieved in deferring construction expenditure, though of course it was limited in many cases by the need to continue major projects already under way including the large complex of projects associated with Expo and the Centennial. Other public expenditures, particularly transfer payments to individuals under our social security programs, increased substantially. There were also substantial increases in public payrolls arising from the rapid rise in wage rates which confronted public employers as well as others.
[DOT] (8:30 p.m.)

The 1966 Budget
At the time of the budget last March it was evident that further fiscal restraint would be necessary. Two temporary measures were introduced directly affecting business capital expenditures, for which the usual winter survey indicated a quite substantial further rise was in prospect. One of these measures was a temporary reduction in capital cost allowances on new investments, to extend for a period of 18 months unless changed, and a second was a refundable tax on the "cash profits" of businesses. With the same purpose, it was proposed that advance provision be made for the removal of the sales tax on

June 1, 1967
The Budget-Mr. Sharp
production machinery and equipment in two the position of delicate balance which the steps on April 1st, 1967 and April 1st, 1968, economy appeared to have achieved, offering a further inducement to defer capital
expenditures.	The Easing of Restraints
It was also evident in March last year that some mild restraint should be imposed on the rising level of consumer expenditure. For that purpose the special tax cut which had been introduced in 1965 as an expansionary measure was reversed as of July 1st, with modifications to lighten the load on those with the lowest incomes.
I forecast that these various actions taken would reduce moderately the excessive rates of increase in the demands upon the economy in 1966. In concluding my budget statement I said:
"Our situation calls for some restraint in expansion; it does not call for deflation. As a nation we should ease up our foot on the gas pedal, not slam on the brakes. We want growth, but sustained growth, not erratic fluctuations. The keynote of this budget is moderation. This is what is needed today if we are to guide our economy towards successive years of expansion and continued prosperity."
These are the words I used in the budget of a year ago.
By September the force of the expansion was in fact beginning to moderate but we were all concerned over the inflationary tendencies that had become so widespread in the first half of that year, as well as with the growing number of serious labour disputes and with the large wage increases being made. In reviewing the situation in the house on September 8th, I announced on behalf of the government the deferral of some planned increases in expenditures and a continuation of restriction on our capital expenditure programs. These announcements, and the obvious concern shown by parliament over inflationary tendencies at that time, and the helpful response in certain quarters to the situation and to the appeal of the government, all contributed I think to cooling down the overheated condition of the economy.
By December the economic situation had improved, the rate of expansion in demand had clearly moderated and it did not appear necessary to introduce further measures of fiscal restraint. In the mini-budget on December 19th measures were introduced to increase revenue only by enough to counteract the effects then anticipated on our fiscal position and on the economy of the expenditures being authorized for the guaranteed income supplement. This was intended to preserve

During the first ten weeks of 1967 it became evident that the rapid rise of business capital expenditures had slackened off and that we could and should remove the restraint provided by the refundable tax on business profits. On March 10th I announced the government's intention to introduce legislation to terminate the collection of this tax at the end of that month. Shortly thereafter on March 22nd, for the same reason, we took action to terminate at the end of March the period during which new capital expenditures would incur reduced rates of capital cost allowances.
During this past winter and spring, as the excessive demands on our economy moderated, it has been possible to encourage an easing of monetary and credit conditions and to permit a more rapid growth in the supply of money and in bank lending. This was in accordance with the views I expressed in the House last September. Long-term interest rates however have as usual been substantially influenced by rates in the United States and by the need to maintain a flow of longterm Canadian borrowings from the U.S. capital market. I am glad to take this opportunity to record my full support for the management and policy of the Bank of Canada during the recent period of difficult and rapidly changing conditions in our money and capital markets.
During the winter the government relaxed the special restraint that it had been imposing since August, 1965 on its own capital expenditure programs. The result of this change has not been visible as yet in any large increase in our planned construction expenditures this year, but I would expect that it will give rise to a larger increase next year.
Broad Economic Objectives
In our general economic policies over these last few years the government has had as its broad objectives those which have been set forth by the Economic Council as being indicated in the terms of reference given the Council by Parliament. These are, as defined by the Economic Council itself:
-full employment
-a high rate of economic growth
-reasonable stability of prices
June 1, 1967



-a viable balance of payments, and
-an equitable distribution of rising incomes.
In retrospect it is clear that during last year we have attained some of these goals but not all. In particular our unemployment rate, which had been nearly 8 per cent in early 1961, when the long period of expansion started, had been reduced to about 3J per cent for the country as a whole, and to 2% per cent in Ontario and to 2.1 per cent in the Prairie provinces. Our rate of growth in the working force, and in capital, was high-but not in productivity. Our balance of payments was viable, thanks to a continued large inflow of capital obtained despite the problems in the U.S. capital markets. On the other hand, we had much too rapid an increase in costs of production and prices. The rates of growth in business investment and public expenditures were clearly abnormal and could not go on.
There were, of course, special influences at work during 1965 and 1966 which undoubtedly contributed to the excessive rises in prices and wages though it is hard to appraise their importance. The increase in food prices was due in considerable part to temporary shortages in the supply of meats. The regional distribution of our unemployment, and limitations on the skill and mobility of our labour force, of course had something to do with the rapid rise in wage rates. Some of the rapid changes reflected the efforts of workers in some areas of the country to catch up in wage rates with those who had been getting more. The extension of collective bargaining to new categories of workers-some of whom had suffered from relatively depressed salaries -had something to do with it. There were many institutional and historical factors at work in addition to the economic forces revealed in the labour market statistics.
Demands, Prices and Productivity
Whatever the complex causes, it is evident that we in Canada had not learned to pace ourselves; too many Canadians were anxious to exploit the situation quickly-to get while the getting was good-and in doing so they overloaded the economy with excessive demands. Higher prices were the result. We Canadians have not taken to heart the obvious point that increases in our incomes must be founded upon increases in our productivity if we are to avoid self defeating and inflationary efforts to profit at one-another's expense. In 1966 our productivity in industry and 27053-55
The Budget-Mr. Sharp trade increased very little, apart from the phenomenal grain crop and consequently there was little indeed to support an increase of the magnitude that occurred in average money incomes.
As time goes on we can expect to improve the skill and mobility of our labour force, the state of our technology, the efficiency of our management and the competitiveness of our industry. Such improvements should enable us to increase our productivity and get more real return for our work. In addition these improvements should enable the economy to operate with a lower proportion of unemployment without running into inflationary and unstable conditions, and thus should enable us to achieve the 3 per cent unemployment rate which the Economic Council proposed several years ago as a goal for 1970. If this is to come about, our immediate objective must be to combine growth with stability.
The Economic Prospect
In the light of this review of our recent experience let me now try to assess our position and prospects.
The current employment situation is reasonably satisfactory. Our labour force continues to grow rapidly. The overall rate of unemployment, seasonally adjusted, was 3.9 per cent last month. Production has of course increased over last year, but reflects the disappointingly small increase in productivity. Moreover, we cannot count on crops this year as good as the bumper crops of last year.
Our current account balance of payments is showing an improvement over last year, both in merchandise trade and in invisibles. Our export performance this year has again been gratifying. The rise in imports has been relatively moderate. We expect to receive very much more than usual from our tourist trade this year because of Expo and the Centennial. So far this year we are managing to finance our current account deficit in what is for us the normal way, by large scale long-term borrowing and by direct investment of foreign capital in businesses in Canada. Our arrangements with the United States concerning the balance of payments are working smoothly. We still have a larger current account deficit than I would regard as desirable as a long term objective. At present, however, this current account deficit and the related inflow of capital are powerful aids in meeting the large capital expenditures being made in Canada. Without them we would require a much higher volume of domestic savings.

June 1, 1967
The Budget-Mr. Sharp
I expect the demand both for exports and for consumer goods to continue fairly strong during 1967, though not at the same rate of increase as last year, especially in consumers' demands for durable goods. The rate of increase in government expenditures on goods and services has been slowing down, though social security payments are expanding more rapidly.
We are all aware of the survey that shows that capital expenditures planned by businesses are down slightly this year, particularly when account is taken of higher costs, whereas in past years such expenditures were increasing very rapidly. The removal of the temporary restraints imposed last year may well lead to some upward revision in such plans.
Outlook for Housing
House building is a key element in this year's situation. It was the chief victim of the boom in capital expenditures in 1965 and '66. The demands of business and governments for savings for other purposes left a shortage of funds available for housing. The continued growth in savings this year, a relatively small growth in business capital spending and a smaller requirement to finance increased inventories, taken together, should leave more funds available for mortgage financing.
The government is taking action to ensure that substantial funds are made available to finance housing. The capital budget of our Central Mortgage and Housing Corporation, tabled in January provides for disbursements of $788 million to finance housing in various forms, including direct mortgage lending program this spring of twenty thousand units, to ensure a revival of activity after last year's recession in house building. In the financial requirements for this year to which I shall refer later, I am including for housing finance, and for farm mortgage finance taken together, an amount that is equal to more than half the large total net borrowing of provinces and their agencies last year. This is a vivid illustration of our very substantial efforts in this field, and of the burden that this places upon government in raising funds. [DOT] (8:40 p.m.)
I feel confident that the increase of funds and resources available for housing this year will bring an increasing volume of building this summer and fall. I share the view of my colleague the Minister of Labour that we should reach this year a total of 160,000 housing starts.

Pressures on Prices
The most unsatisfactory aspect of the 1967 situation in Canada, as in many other countries, is the continuing upward movements in costs and prices. Consumer prices for all categories, other than for food's, continue to advance at a troublesome rate. It is possible to recognize many special influences from month to month and allow for them, and to recognize as well that the price index does not fully take into account improvements in the quality of the goods and services sold. Nevertheless when all allowance is made for such factors, the rate of increase of consumer prices is more than we can tolerate on a continuing basis. The increase that has taken place in food prices over the past two years reflects overseas needs and North American affluence pressing against North American resources. In other sectors, price increases are too often the result of demands for increased incomes and profits by those with strong market or bargaining power, or attempts by others to keep up with the leaders.
It is evident from the decline in profits that in general costs of production have been rising more rapidly than prices. Costs of many things purchased by business have increased -materials, components, capital equipment and buildings. Some of these are imports and reflect increased world prices, others are domestic products. The statistics of hourly earnings in such broad industrial groups as manufacturing and construction show a large increase over the past year, and are reflected in labour costs per unit of output in manufacturing. New wage settlements resulting from collective bargaining this year show increases as large as those of last year. Most of the increases now occurring in wage and salary rates, including executive salaries are substantially in excess of the general increases in productivity that have been taking place. They clearly imply that further increases in prices are likely to occur.
Short-term Prospects
Taking all the various factors into account, before allowing for any tax changes, I would expect a total increase in our gross national product this year less than the abnormally high increase last year. We expect to see this accompanied by a more moderate increase in employment than we had in the tight labour market of last year. When the expected large growth in the labour force is taken into account we could see a modest temporary increase in unemployment. I would also expect
June 1, 1967



a somewhat smaller increase in prices than last year, with some further squeeze on profits.
I venture to present these implications, unpalatable as they may be, because they are essential to an understanding of the uncomfortable short-term position that confronts us during the period of transition following the very rapid rate of expansion of the last several years.
Longer-term Prospects
Let me now look beyond 1967. I would expect to see a greater increase in our gross national product in 1968 than this year. The increase in housing expenditures should be greater, and so should the increase in business capital expenditures. Government expenditures on goods and services will probably continue to rise, particularly at the provincial and municipal level. While we cannot count on the good fortune we have recently enjoyed in respect of grain crops, I would think our exports will respond to the upturn that is now widely expected in the United States later this year, as well as to the improved trade opportunities arising from the new trade agreements. Forecasting beyond the current year is chancy of course and a country so dependent on international trade and finance as Canada must always recognize its position is riskier than those of more self-contained economies. Taking account of the uncertainties I think we can reasonably expect a more buoyant economy next year, with declining unemployment.
In the two or three following years we can expect a further substantial growth in the labour force, as the large numbers born during the post-war bulge in the birth rate continue to move into the labour force. The proportion of married women wishing to take jobs may also be expected to increase further. Our immigration policy will lead to further growth in the working force. We can expect our labour force to be better trained and more mobile. We shall have the manpower base for substantial growth.
There should be a growing rate of family formation, and a continuing migration within Canada. These will mean an increasing demand for housing and social capital. There should also be growing demands for durable consumer goods and for the industrial production and investment to support the expanding requirements of Canadian consumers.
In international trade Canada will have new opportunities because of the results of 27053-551
The Budget-Mr. Sharp the important trade agreements which are now being completed in Geneva. There will also be increased competition in our international trade. Our industry and our labour will have to compete vigorously with their counterparts in the United States and overseas. Costs will be important. The opportunities for trade, for production, for employment and for investment will be there-but we must seek them and hold them, not merely demand them.
In regard to future business investment it is encouraging to note that we do not appear now to have accumulated any general excess capacity. Canadian industry as a whole appears to require a stock of fixed capital equal in value to about 24 times the value of its annual production. To keep this capital stock modernized and growing at a rate in line with the growth in output appears to require on average that about 15 per cent of our GNP be spent on business capital investment. The proportion of GNP used for this purpose rose as high as 17J per cent in 1957, fell to about 12J per cent in 1962, and rose in 1966 to 16J per cent, which was probably an unsustainably high rate. Business investment has probably receded from that rate now, but it should be sustainable at around the 15 per cent level in the next few years if we manage our affairs properly. Business investment can and should remain the principal dynamic factor in our economy, in addition to exports.
A very large market for housing is certainly in prospect for the next few years. The growth and movement of the population will ensure this. But the costs of houses, and to a lesser extent of apartments, have been rising. So has the cost of serviced land, particularly in metropolitan areas. The heavy reliance on real estate taxation to finance local government and much of education is also adding to the cost of owning houses.
1 expect to see a growth in housing construction over the next few years, but we cannot expect to see it rise to satisfactory levels nor to see it result in the most desirable pattern of urban development until there is better planning, better control and better financing of urban development generally in Canada. That is one of the chief reasons why in the speech from the throne the government has proposed that a special study of urban development be undertaken in cooperation with the provincial governments.
In the field of government the Canadian people can be expected to want and demand

June 1, 1967
The Budget-Mr. Sharp increasing public facilities and services requiring expenditures by all levels of government. The problems of course will be to finance these expenditures, to determine priorities among them, and priorities between these government expenditures and business and consumer expenditures, in order that the total of all expenditures in the Canadian economy can be kept in balance with our ability to produce.
When one reflects upon these prospects for the next few years, I am sure the house will agree with me when I say that I believe our main problem is not likely to be maintaining a sufficiently high level of demand, as it was during the late '50's and early '60's. Instead I see two more difficult problems. The first is to achieve a better rate of growth in our productivity-which has been too low in recent years. The second is to restore some stability to our prices and costs of production. The problems are, of course, inter-related, and their solution is essential to the maintenance of a high level of employment.
[DOT] (8:50 p.m.)
Programs for Productivity
We are now pressing ahead vigorously with measures to improve our productivity.
Firstly, we are, at all levels of government, giving first priority to the education of our young people-both basic education and vocational, technical and professional education. In view of the high growth rate of the age groups from about 15 to 25 this priority for education is putting a very heavy burden on public expenditure. It is a good investment for the future but we should understand, and most of all members of parliament should understand, that it diminishes the immediate return that we can get as individuals in higher living standards now.
Secondly, we are now working urgently on a major program of training and retraining of adults in our labour force. Last year the government accepted this as a federal responsibility and decided to deal vigorously with it. Success in it will improve both the opportunities for work and the productivity of our work in future. To promote labour mobility we have now a realistic system of relocation grants and arrangements for workers, operated by a manpower service which is being expanded and improved, as it must be if such a system is to be effective.
Thirdly, we are devoting more men and money to scientific and technical research and development, particularly in industry, in a

wide range of programs designed to make our industry and our economy generally more productive. Both the federal government and the provincial governments are making better regional plans and offering better assistance to get industry to locate where it can utilize available labour which would otherwise be unemployed or poorly employed.
These major positive measures will improve our productivity as time goes on and also permit us to aim at progressively higher rates of employment without inflation. They will permit us to grow faster and further.
We are also planning to improve the opportunities for those now working in less productive industries and occupations. We are through ARDA and related programs promoting the radical improvement of the economies and societies of rural areas where productivity has been deplorably low. In other rural areas our regular farm credit programs and other farm programs are assisting and promoting the consolidation and improvement of farms so that our farmers can continue to improve their productivity and thus share constructively in our rising living standards. In the Atlantic provinces much is being done to improve the basic facilities for a productive economy and much success attained in enabling new industries to establish there. In Cape Breton special efforts are being made to re-orient and develop the economy on constructive lines to accompany the gradual phasing out of the unproductive coal mining operations.
Our trade and tariff policies will also help over time to promote the more productive and diminish the less productive units in industry. To help achieve this purpose it is our intention, should any industries be seriously affected by the trade agreements emerging from the Kennedy Round, to make available to them suitable measures to assist in making the necessary adjustments.
Essentially however productivity is not something that the government can achieve. It is a task for all of us. It is particularly a job for management and labour. It must be sought in all industries-those that are already productive as well as those that have lagged. Higher productivity should be sought not only where it can readily be measured, as in manufacturing industries, but also in many of the service industries and government where it cannot be measured. It is the real results in which we are interested. It is this and almost this alone which will enable Canadians to get higher living standards.
June 1, 1967

Prices and Costs
The chief obstacle I see to our attaining stable growth in the next few years is the danger of excessive increases in prices and costs. Our record in the past two years in this respect has deteriorated. Between April 1965 and this April the consumers price index has gone up by 7.3 per cent-and the rate has been accelerating recently for categories other than food. Wages and salaries have been rising at rates several times the overall increase in our productivity per man. Unit labour costs in manufacturing have increased by nearly 6 per cent over the most recent twelve months for which I have figures. Personal income per capita, which includes all kinds of income whether from wages, profits or government payments, has gone up by 17.6 per cent in the two years following the last quarter of 1964. This is the broadest indication of the upward movement in incomes, as compared to prices.
If unchecked, such increases in costs and prices must lead to increasing inequity and dissension in the country and to a worsening of our competitive position vis-a-vis the United States. This would impose a serious restraint on the growth of Canadian industry and frustrate our efforts to maintain a steady rate of expansion in the jobs available for our growing labour force.
These price and cost increases arise in part from the pressure of excessive demand on the economy or on important sectors of it. This has diminished somewhat in the past twelve months and should be noticeably less in 1967 as a whole than in 1966. We should and I believe we can manage our economy to avoid excessive demand pressures that must result in price increases.
But the trouble also arises from the exercise of market power by business and collective bargaining power by unions. We are all familiar with many examples of this in the past two years. It is more difficult to deal with this source of the inflationary tendency in our economy. Its roots are deep in the nature of our free society. Most of us are better organized and more active in promoting our own particular interests than we are in safeguarding the public interest-the good of all of us collectively.
Several times during the past year I have urged restraint upon those able to exercise market or bargaining power, asking that they take account of the public interest and do not take unreasonable advantage of the opportunities that our prosperous conditions have
The Budget-Mr. Sharp provided to so many now. I do so again here and now. Only by some care and restraint on a wide scale this year can we slow down the rate of increase in costs and prices. If we all endeavour to exploit the full measure of our bargaining power in the present situation we can certainly harm one another. Some will gain but others must lose.
We in Parliament have just undertaken to put collective bargaining into effect in our own public service. We have recognized and accepted the responsibilities which that involves for the government as an employer. We also have responsibilities to the taxpayers, on whom the costs will fall, as well as responsibilities in managing the economy as a whole. In the light of all these obligations the government and the representatives of its employees should strive to acheve settlements that are consistent with a pattern of settlements in the business sector which the economy can reasonably sustain.
From time to time during the past year I have spoken about the possibility of Canada adopting some sort of incomes policy or of guideposts for wage and price increases. Other countries have made attempts in this area, with varying degrees of severity and various degrees of success-or failure. Like the Governor of the Bank of Canada I would see great value in some means to support fiscal and monetary policies by mobilizing the force of public opinion behind non-inflationary behaviour on the part of those who are in a position to exercise strong market power. Like the Economic Council, however, I recognize the great difficulty of doing this in Canada by formal action that would find its expression in quantitative guideposts or specific patterns of behaviour. As I said last September eighth in the House, an effective policy of this kind would require active cooperation between federal and provincial authorities and a willingness in the business world as well as in unions and the ranks of labour to follow a central lead that commands a wide consensus of agreement and respect. Clearly we do not now have these necessary conditions.


Richard Albert Bell: Mr. Speaker, I rise on a point of order, though in a most kindly way, in an endeavour to assist the minister to make his speech. The minister is delivering his speech with the greatest rapidity and it is difficult for those in the chamber and galleries to follow what he is saying. If the minister could reduce his speed by about 20 per cent only, I am sure his speech would be greatly improved. Let me say that in inter-

June 1, 1967
The Budget-Mr. Sharp rupting the minister, and I hope that this fact is appreciated, I did so with the kindest of sentiments.


Mitchell William Sharp: I thank the hon. gentleman and I shall do as he asks. I was very conscious of the length of my speech and hoped that 1 should get through it in good time. I thought the argument I was making was familiar to hon. members and that it was being followed closely and carefully.


Thomas Clement (Tommy) Douglas: Hear, hear.


Mitchell William Sharp: I shall endeavour to observe the hon. gentleman's words.
As I said last September in the house, an effective policy of this kind would require effective cooperation between federal and provincial authorities and a willingness in the business world as well as in unions and the ranks of labour to follow a central lead that commands a wide consensus of agreement and respect. Clearly we do not now have these necessary conditions.
Although guideposts, as such, may not be practicable for Canada now, I intend to continue to state what the facts indicate to be possible and what they show to be illusory. I believe that by this means we can develop a better and more widespread understanding of what is physically possible so that public opinion can be mobilized in opposition to actions of a clearly inflationary nature. Such an opinion can help persuade management, labour and government to follow practices that will lead to a dampening down of the upward sweep in consumer prices that has been taking place in the past twelve months. This budget statement and the other economic statements that may follow from time to time should serve at least as contributions to the discussion of our possibilities and limitations, that will help develop not only more understanding but some form of that consensus so necessary for success.
[DOT] (9:00 p.m.)
Government Accounts
Mr. Speaker, I should at this point note briefly the government's accounts for the past fiscal year.
Budgetary revenues for 1966-67 are estimated to have been $8,366 million, which is an increase of just over $100 million from the revised forecast of my supplementary budget last December 19th. Budgetary expenditures amounted to an estimated $8,794 million compared with the December forecast of $8,580 million. The deficit on this traditional public accounts basis was $428 million, as against the forecast of $320 million in the mini-budget.
In terms of the national economic accounts there was a surplus of some $141 million on government operations for 1966-67 compared with 576 million the previous year.
Our total cash requirements for the last fiscal year, taking account of non-budgetary transactions, were $719 million of which $711 million was obtained from the increase in our unmatured debt outstanding and the remaining $8 million from reducing our bank balances.
The Budgetary Outlook
Our present tax laws, given the economic prospects I have outlined, should produce budgetary revenues of about $9,000 million in the current fiscal year 1967-68. If the House agrees I would include in Hansard at this point, for easy reference, a table showing these forecast revenues by major categories and also the old age security revenues.


Some hon. Members:: Agreed.
[Editor's note: The table above referred to
is as follows:]

June 1. 1967	COMMONS DEBATES	867
The Budget-Mr. Sharp



TABLE I

[Stage Direction]
Budgetary and Old Age Security Fund Revenues
Budgetary Revenues
Personal income tax	
Corporation income tax	
Non-resident withholding tax	
Estate tax	
Customs duties	
Sales tax	
Other duties and taxes	
Total taxes	
Non-tax revenues	
Total budgetary revenues	
Old Age Security Revenues
Personal income tax	
Corporation income tax	
Sales tax	
Total old age security revenues
1966-67 Preliminary	1967-68 Before Tax Changes
($ million)	($ million)
. 2,472	2,815
. 1,593	1,570
. 204	190
. 101	110
. 777	815
. 1,513	1,695
. 776	835
. 7,436	8,030
. 930	970
. 8,366	9,000
. 576	785
. 150	161
. 560	597
. 1,286	1,543
Mitchell William Sharp: Our revenues calculated on the basis used by the statisticians for our national economic accounts may be expected to total about $10,990 million. Details are given in tables showing our revenues and expenditures on this basis. I would ask permission that these tables appear in Hansard, following the ways and means resolutions, as has been usual in recent years.


Some hon. Members:: Agreed.


Mitchell William Sharp: Forecasting expenditures this year I find more difficult than forecasting our revenues, because we have so many new programs whose cost is difficult to estimate until we have more experience with them. For example, I have just been advised last week that our new program for adult training will cost $50 million more this year than the amounts requested in the Estimates. It will be noted in the white paper that our accounts for last year-1966-67-show a substantially larger total expenditure than was forecast in the budget, while revenues turned out to be within one per cent of the forecast. In forecasting this year, I have tried to take into account this experience, as well as the enthusiasm and persistence of my colleagues and other hon. members in support of worthy but expensive ideas.
X am putting the forecast total of our budgetary expenditures this year at $9,700
million. On the national economic accounts basis they would be $11,220 million. These figures, taken with the revenue forecasts, imply a deficit on our budgetary accounts, before tax changes, of $700 million, and on the national economic accounts basis a deficit of $230 million. None of these figures takes into account the revenues from the Canada Pension Plan, to be invested in provincial securities, which we forecast at about $640 million.
Overall Financial Requirements
In addition to our budgetary accounts of revenue and expenditures we must take note of many transactions which change our recorded assets and liabilities, when determining our total financial requirements. The largest of these other requirements for cash arise from the loans, investments and advances that we make to government corporate agencies to enable them to carry out their operations, including notably the large mortgage lending by the Central Montgage and Housing Corporation and the Farm Credit Corporation. There are also loans we make to others including both domestic programs and aid to underdeveloped countries. The total net requirements for these loans and investments this year I forecast at about $1550 million. Offsetting these are net cash receipts of

efficiency. The modest increases in aggregate demand that result from these changes will be of a size and nature that will help in sustaining production in this year of transition without adding to the general pressures upon prices and costs.
After reviewing the various requests and suggestions I have received for changes of detail in the income tax, pending the major reform scheduled for next year, I have decided not to propose any amendments to the Income Tax Act in this Budget. This should be welcome to a Parliament that has already dealt with many income tax matters in the past year and must look forward to much important and difficult work on the Income Tax in 1968.
As a result the tax changes being proposed are relatively simple and will I believe be generally welcome and beneficial.
Drugs
The first change I am proposing is the removal of the sales tax on drugs as part of a major government attack on high drug prices. The purpose is to benefit the consumer, particularly the unfortunate consumer who has to pay large amounts for medicine for himself or his family. The Special Committee of the House on Drug Costs and Prices has made a comprehensive report in which this step is recommended along with others. My colleagues who have particular responsibilities relating to drugs will be announcing shortly the government's policy relating to some of the other recommendations of the Committee. The removal of the sales tax must be part of an effective program to reduce drug prices, which requires competition within the industry in Canada and from abroad.
I am accepting the Committee's recommendation that action be taken to confine the application of dumping duties to drugs of a kind made in Canada, rather than to those of a class or kind made in Canada. The necessary Order in Council has been made today under the authority of Section 6 of the Customs Tariff. This change will narrow considerably the scope of application of the dumping duty and should encourage greater price competition.
It is not necessary now in my view to ask the Tariff Board to review the tariff structure in drugs as the Committee recommended. I have had my department do so already and I am proposing in the Tariff Resolutions tabled tonight a new schedule of rates to go into effect immediately. These proposals have 27053-56
The Budget-Mr. Sharp been taken into account in our negotiations in Geneva, but our chief objective in making the changes is to benefit the Canadian consumer.
With regard to the sale tax, I am proposing an exemption of a general character covering all drugs, whether prescribed or not, or whether for human or animal use. I considered the narrower exemption covering only prescribed drugs which the Committee recommended but this is difficult to define for a manufacturers' tax unless one lists the particular drugs to which it applies, presumably those saleable only by prescription. This would omit many common drugs that are extensively used and the government therefore favours the broader, more understandable exemption.
A serious problem arises in regard to the timing of the sales tax exemption for drugs, and its relation to the inventories of wholesalers and retailers acquired before the exemption. It is quite impractical to refund the tax that has been paid on such goods in stock, and it would be contrary to our general practice. It is most desirable that the reduction in the cost represented by the tax should be passed on to the consumer as soon as possible after it occurs. It is also desirable that the trade should be aware of the related changes in policy. I am therefore proposing that the sales tax exemption should take effect three months from now, on September 1st. Consumers should not expect the removal of the sales tax to be fully reflected in drug prices before that time.
The loss in revenue resulting from the sales tax exemption for drugs, as proposed, is estimated at $22 million per year-and perhaps half that figure for the current fiscal year. Three quarters of the reduction is in budgetary revenue, and one quarter in the Old Age Security Tax.
These changes in the sales tax, the tariff and the dumping duties taken together, along with the proposals to be announced by my colleagues, should bring about increased competition in the sale of drugs in Canada and in due course savings to the consumer greater than the amount of sales tax removed.
Production Machinery

My second major tax change relates to production machinery and apparatus. When we proposed that 6 percentage points of sales tax apply to production machinery and apparatus until next April 1st, we wished to induce the postponement of some capital expenditures.

June 1, 1967
The Budget-Mr. Sharp In the present economic circumstances we no longer wish to restrain capital expenditures and I am proposing that this remaining 6 per cent tax be removed immediately. This action will provide an additional benefit in reducing somewhat the costs of production in future arising from the acquisition of such machinery and equipment this year, thereby enabling Canadian producers to compete more effectively in future with producers outside of Canada.
I estimate this change will reduce revenues by about $60 million in this fiscal year, half of it in budgetary revenues and half of it in receipts of the Old Age Security fund.
I have considered numerous suggestions that I should remove the special excise taxes applicable to television sets, radios, phonographs, electronic tubes, jewelry and certain other goods. I have decided to consider these in connection with our program for tax reform but not to act on them at this time. I see no economic or social reasons that would justify the fairly substantial loss of the revenue this year and we would only be able to replace the revenue in the context of more general changes.
I have also received suggestions that the tax should be removed from television sets capable of receiving Ultra High Frequency telecasts, as a means of promoting the sale of such sets and thereby encouraging the use of many more television broadcasting channels. While I am sympathetic to the purpose for which this suggestion is made, I think it can better be achieved in another way.
[DOT] (9:20 p.m.)

Tariffs
I would like to mention three of the tariff changes I am proposing this evening.
The first relates to the tariff item which provides duty free entry for "internal combustion tractors". The proposed amendment is designed to restore the scope of this item to what it was prior to a declaration of the Tariff Board last September. When this item was first introduced into the Tariff there was little doubt as to the meaning of the term "tractor". However, over the years, advances in technology and changes in design brought about a gradual evolution of various kinds of self-propelled machines such as front-end loaders, dozers and log skidders.
Faced with the growing difficulty of drawing a distinction between tractors and other machines, the Department of National Revenue asked the Tariff Board to clarify the legal

position and state what criteria should govern the classification of goods under the tractor item as opposed to other tariff items. The Tariff Board on September 20, 1966, made a declaration in which it set forth a number of criteria. These criteria brought within the scope of the item a number of classes of machines which had not previously been admitted duty free under the MostFavoured-Nation Tariff, namely front-end loaders or tractor shovels, tractor dozers, log skidders and log loaders.
The Board made it clear it was ruling on the legal meaning of the tariff item and pointed out that in making such a legal ruling it could not take into account the effects on Canadian production.
The proposed amendment to the item will exclude from it the integrated self-propelled special purpose machines I have mentioned, and for greater certainty, a number of others that are not now being admitted under this tariff item. Production facilities for many of these machines had been established in Canada over the years, on the understanding that the equipment was properly dutiable under the machinery items in the Tariff. Tractor dozers, log skidders and log loaders will revert to the tariff classification that prevailed before the Tariff Board decision. I propose that the duty on integrated front-end loaders or tractor shovels be 15 per cent most favoured nation instead of 22J per cent. For this purpose I shall recommend a new tariff item. Farm tractors and other tractors will of course remain duty-free.
To explain the second tariff change I should recall that there has been a prohibition on the importation of margarine and similar substitutes for butter for many years. This rigid prohibition has been a source of hardship to people who suffer from certain allergies and have been denied access to special kinds of margarine not made in Canada.
I have had many letters and I am sure many members of the house have had similar representations.
I am proposing that the Governor in Council be given power to make exemptions from this prohibition by regulation in special cases.
The third proposed tariff change relates to the automotive program. There is now a tariff provision for a 99 per cent drawback of the duty payable on machinery and certain apparatus and precision instruments of a class or kind not made in Canada when used in the manufacture of motor vehicles and vehicle
June 1, 1967	COMMONS
parts. This provision is being broadened and is also being extended to cover manufacturers of motor vehicle accessories. This should be of particular benefit to the smaller Canadian firms producing automobile accessories.
Apart from those arising out of the Kennedy round which I will be introducing, the other tariff changes I am proposing either continue existing provisions for a further period or are of a relieving nature.
The tariff resolutions I am putting forward tonight would involve a small reduction in customs revenue but this should be fully offset by the increase in customs revenue to be expected as a result of the increased imports of production machinery resulting from the removal of the remaining portion of the sales tax on it. Customs revenues will of course be affected by the tariff changes resulting from the Kennedy Round agreements but these will not go into effect immediately and the revenue changes will occur only in the last months of the fiscal year. I have decided
DEBATES	871
The Budget-Mr. Sharp it would be unwise and unnecessary to try to anticipate them here.
Adjusted Budgetary Outlook
The tax changes I have proposed would reduce our budgetary revenues by an estimated $40 million in all this current fiscal year, and increase our forecast deficit by that amount-to $740 million. They will also reduce our Old Age Security fund revenues an estimated $33 million. This will leave a deficit of revenues, in our national economic accounts of about $300 million. Our overall cash requirements will also be increased by $73 million-to about $1590 million in all. If the House agrees Mr. Speaker, I would include in Hansard at this point a table showing forecast revenues before and after tax changes.


Some hon. Members:: Agreed.
[Editor's note: The table above referred to is as follows:]



TABLE II

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1967-68 Budgetary and Old Age Security Fund Revenues
	Before	After
	Tax Changes	Tax Changes
Budgetary Revenues	($ million)	($ million)
Personal income tax			
Corporation income tax			
Non-resident withholding tax	 Estate tax			190
Customs duties			
Sales tax			
Other duties and taxes			
		
Total taxes			
Non-tax revenues			
		
Total budgetary revenues			
		
Old Age Security Revenues		
Personal income tax			
Corporation income tax			
Sales tax			
		
Total old age security revenues			1,510
Mitchell William Sharp: Conclusion
Mr. Speaker, this is a budget for further progress, both in terms of our economic wellbeing and in terms of our continuing effort to pace our prosperity.
27053-56J
This year, just as in 1966, there is no one-shot economic nostrum guaranteed to keep uu healthy through the coming year. During the past 18 months our flexible approach was the most effective approach possible. This budget should be seen as a further stage in the continuing process of economic adjustment.

June 1. 1967
The Budget-Resolutions
The decision against an increase in income tax rates is a positive step allowing our budget to exert the degree of support our economy requires this year. Meanwhile we have launched a major program to bring down drug prices. We have gained in the Kennedy Round tariff agreements a further measure to add to the wide array of programs by which we are seeking to modernize our economic structure and increase our productivity. We must continue to pursue vigorously these long-range reforms. At the same time our immediate goal is clear: to achieve a steady, balanced economic advance, avoiding the reefs of inflation and other economic dangers that could wreck our hopes for continued growth.



RESOLUTIONS EXCISE TAX ACT RESOLUTION

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That it is expedient to introduce a measure to amend the Excise Tax Act and to provide among other things:
1.	That effective June 2, 1967, all goods listed in Schedule V to the said Act be exempt from sales tax.
2.	That effective September 1, 1967, any material, substance, mixture, compound or preparation, of whatever composition or in whatever form, including materials for use exclusively in the manufacture thereof, sold or represented for use in the diagnosis, treatment, mitigation or prevention of a disease, disorder, abnormal physical state, or the symptoms thereof, in humans or animals, or for restoring, correcting or modifying organic functions in humans or animals be exempt from sales tax but that this exemption shall not apply to cosmetics or confectionery products.
3.	That effective June 2, 1967, goods enumerated in tariff item 48100-1, namely "specially constructed boot or appliance made to order for a person having a crippled or deformed foot or ankle", and in tariff item 48105-1, namely "individual pairs of boots or shoes for defective or abnormal feet, when purchased on the written order of a registered medical practitioner", and articles and materials for use exclusively in the manufacture thereof be exempt from sales tax.
4.	That effective June 2, 1967, artificial breathing apparatuses purchased or leased on the written order of a registered medical practitioner by an individual afflicted by a respiratory disorder for his own use be exempt from sales tax.
5.	That effective June 2, 1967, plans, drawings, related specifications and substitutes therefor, and reproductions of the foregoing sold to or imported by manufacturers or producers for use by them directly in the manufacture or production of goods be exempt from sales tax.
6.	That where materials for use exclusively in the construction of residences for students have been purchased by or on behalf of a company wholly-owned and controlled by Her Majesty in right of a province and established for the sole purpose of providing residences for students of universities or other similar educational institutions, the Minister of National Revenue may, upon application by the company made in such form as the Minister prescribes within two years from the time of the purchase of the materials, pay to the company an amount equal to the tax imposed by Part VI of the said Act that has been paid in respect thereof.
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1. Resolved, that Schedule A to the Customs Tariff be amended by striking out tariff items 20925-1, 21045-1, 22001-1 and the heading thereto, 22002-1 and the heading thereto, 22003-1 and the heading thereto, 26325-1, 40938-1, 42761-1 and the heading thereto, 42702-1 and the heading thereto, 44043-1, 44047-1, 47G00-1, 56400-1 and 69315-1, and the enumerations of goods and the rates of duty set opposite each of those items, and by inserting therein the following items, enumerations of goods and rates of duty:
Rates in Effect Prior to Rates Proposed in this Budget
Tariff Item	-	British Preferential Tariff	Favoured- Nation Tariff	General Tariff	British Preferential Tariff	Most- Favoured-Nation Tariff	General TariffS805-1	Yeast, n.o.p	5 p.c.	10 p.c.	25 p.c.	15 p.c.	20 p.c.	25 p.c.15640-1	Tequila	per gallon of the strength of proof	$5.00	$5.00	$10.00	$5.00	$10.00	$10.00and in addition thereto, under all tariffs, $9.00 per gallon of the strength of proof	When the goods specified in this item are of greater or less strength than the strength of proof, the measurement thereof and the amount of duty payable thereon shall be increased or decreased in proportion for any greater or less strength than the strength of proof.	20925-1	Potassium chloride	
(Applicable to December 31, 1968)	Free	Free	25 p.c.	Free Free 25 p.c. (Applicable to December 31, 1967)	21045-1	Sodium hypochlorite in solution	
(Applicable to December 31, 1968)	15 p.c,	20 p.c.	30 p.e.	15 p.c. 20 p.c. 30 p.c. (Applicable to December 31, 1967)	22001-1	All medicinal and pharmaceutical preparations, compounded of more than one substance, whether or not containing alcohol, including patent and proprietary preparations, tinctures, pills, powders, troches, lozenges, filled capsules, tablets, syrups, cordials, bitters, anodynes, tonics, plasters, liniments, salves, ointments, pastes, drops, waters, essences and oils..	15 p.c.	15 p.c.	25 p.c.	17| p.e. 17| p.e. 25 p.c.	20 p.c. 20 p.c. 25 p.c.	3 25 p.c. 40 p.c. 60 p.c.
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The Budget-Customs Tariff

Tariff Item	-	British Preferential Tariff	Favoured- Nation Tariff	General Tariff	British Preferential Tariff	Most- Favoured-Nat ion Tariff	General TariffAny article in this item containing more than forty per cent of proof spirit shall be rated for duty at and	SI. 50 15 p.c.	$1.50 15 p.c.	$2.00 25 p.c.	$2.00 20 p.c.	$2.00 20 p.c.	$3.00 30 p.c.tms-i	Drugs, n.o.p	15 p.c.	15 p.c.	25 p.c.	15 p.c.	20 p.c.	25 p.c.26325-1	Compounds of tetramethyl lead, in which tetra-methyl lead is the preponderant constituent by weight	
(Applicable to December 31, 1965)	12? p.c.	12} p.c.	25 p.c.	12} p.c.	12} p.c. 25 p.c. (Applicable to December 31, 1967)	S5U0-1	Moulded shuttle blanks, not further manufactured than moulded, with or without metal tips, for use in the manufacture of shuttles	10 p.c.	10 p.c.	30 p.c.	10 p.c.	10 p.c.	30 p.c.40938-1	Internal combustion tractors other than highway truck-tractors and other than the following integrated self-propelled machines: front-end loaders or tractor shovels, tractor dozers, log skidders, log loaders, fork lift or lift trucks, combination excavating and transporting scraper units, combination excavating and loading machines, street sweepers, mobile compressors, and snow moving machines; accessories, n.o.p., and parts thereof, for tractors entitled to entry under this item; parts of tractors entitled to entry under this item	Free	Free	Free	Free	Free	Free4S711-1	Integrated self-propelled machines commonly known as front-end loaders or tractor shovels; parts of the foregoing	2} p.c.	15 p.c.	35 p.c.	Free 10 p.c.	Free 22} p.c.	Free 35 p.c.Machines and tools, including blades, loaders, rippers, rakes and related operating and controlling gear; all the foregoing for use on internal combustion tractors entitled to entry under tariff item 40988-1:	42761-1	Of a class or kind made in Canada; parts thereof...	10 p.c.	22} p.c.	35 p.c.	10 p.c.	22} p.c.	35 p.c.
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The Budget-Cmtoms Tariff
42762-1	Of a class or kind not made in Canada; parts thereof		Free	7i p.c.
	Aircraft, not including engines, under such regulations as the Minister may prescribe:		
44043-1	When of types or sizes not made in Canada	 on and after July 1, 1963	Free Free	Free 15 p.c.
	Aircraft engines, when imported for use in the equipment of aircraft:		
44047-1	When of types or sizes not made in Canada	
on and after July 1, 1968	Free Free	Free 15 p.c.Microfilm reader-printers and parts thereof	Free	Free47600-1	Surgical and dental instruments of any material; surgical needles; clinical thermometers and cases therefor; X-ray apparatus and X-ray film; microscopes valued at not less than fifty dollars each, retail; parts of the foregoing; electric light lamps designed for use with the foregoing	Free	Free56400-1	Church vestments, prayer shawls, prayer shawl fringes and prayer shawl bags; parts thereof	10 p.c.	10 p.c.69315-1	Antiquities (other than spirits or wines) produced more than one hundred years prior to date of importation, under such regulations, including proof of antiquity, as may be prescribed by the Minister	Free	Free35 p.c.	Free	7$ p.c.
35 p.c
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27$ p.c.	Free	Free	27$ p.c.27$ p.c.	Free	15 p.c.	27$ p.c.
(on and after July 1, 1967)
27$ p.c	Free	Free	27$ p.c.27$ p.c.	Free	15 p.c. (on and after July 1, 1967)	27$ p.c.10 p.c.	2$ p.c.	15 p.c.	30 p.c.
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Free	Free	Free	Free10 p.c.	22$ p.c.	35 p.c.Various	Various	Various20 p.c.	10 p.c.	10 p.c.	20 p.c.20 p.c.	27$ p.c.	50 p.c.25 p.c.	25 p.c.	35 p.c.Various	Various	VariousFree	Free	Free	FreeVarious	Various	Various
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The Budget-Customs Tariff

2. Resolved, that Schedule B to the Customs Tariff be amended by striking out item 97052-1 and the enumeration of goods and the rate of drawback of duty set opposite that item, and by inserting therein the following item, enumeration of goods and rate of drawback of duty:
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Portion of Duty (not including Special Duty or Dumping
Item	Duty) Payable as
No.	Goods	When Subject to Drawback	Drawback
97052-1 Machines, precision instruments, apparatus, and control panels therefor; all of the foregoing of a class or kind not made in Canada; accessories and attachments for use with the aforementioned machines, precision instruments and apparatus; parts of all the foregoing, not including consumable tools.
When used
(а)	in the plants of manufacturers of motor vehicles, motor vehicle parts, or motor vehicle accessories and parts thereof for the manufacture of motor vehicles, motor vehicle parts, or motor vehicle accessories and parts thereof; or
(б)	for the manufacture of:
(i)	dies, jigs, fixtures, moulds, and patterns therefor;
(ii)	cutting tools and parts thereof, for use with machines;
all of the foregoing for use in the production of motor vehicles, motor vehicle parts, or motor vehicle accessories and parts thereof	 99 p.c.
3. Resolved, that Schedule C to the Customs Tariff be amended by striking out item 99204-1 and the enumeration of goods set opposite that item, and by inserting therein the following item and enumeration of goods:
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Oleomargarine, butterine or other similar substitutes for butter, and process butter or renovated butter, unless in any particular case or class of cases exempted from the provisions of this item by a regulation of the Governor in Council.
4. Resolved, that any enactment founded upon the foregoing resolutions shall be deemed to have come into force on the 2nd day of June, 1967, and to have applied to all goods mentioned in the said resolutions imported or taken out of warehouse for consumption on or after that day, and to have applied to goods previously imported for which no entry for consumption was made before that day.

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The Budget-Customs Tariff
June 1, 1967
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The Budget-Customs Tariff
Federal Government Revenue and Expenditure on National Accounts Basis
-	1965-66	1966-67 Estimate	1967-68 forecast before tax changes
	(millions of dollars)		
A.-Revenue			
1. Direct taxes, persons	
2,755	3,154	3,6982. Direct taxes, corporations*1)	
1,627	1,620	1,5853. Withholding taxes	
170	205	1894. Indirect taxes	
3,364	3,646	3,9785. Investment income	
628	670	8016. Insurance and pension funds	
612	703	7437. Total revenue	
9,156	9,998	10,994B.-Expenditure	1. Goods and services: defence	
1,583	1,670	1,7172. Goods and services: other	
1,813	2,273	2,5543. Transfers to persons	
2,334	2,587	3,0924. Interest on public debt	
1,077	1,159	1,2375. Subsidies	
269	397	4446. Capital assistance	
72	65	727. Transfers to other levels of government	
1,432	1,706	2,1068. Total expenditure	
8,580	9,857	11,222C.-Surplus (+) or Deficit (-)	
+576	+141	-228
0) Excludes taxes on government business enterprises. These taxes are included with government investment income.
June 1, 1867
[Stage Direction]
The Budget-Customs Tariff
Federal Government Expenditure: Reconciliation op Public Accounts and National Accounts Presentations
1.	Budgetary expenditure	
2.	Supplementary period adjustment'*)	
3.	Expenditures of extra-budgetary funds
Old age security fund payments	
Unemployment insurance benefits	
Government pension fund payments	
Prairie farm assistance payments	
4.	Transfers to extra-budgetary funds	
5.	Adjustment to place other government funds and Crown agencies on
a disbursement basis'2*	
6.	Budgetary expenditures offset againt income of government business enterprises	
Post Office expenditures	
Deficits of government business enterprises	
7.	Reserves and write-offs	
8.	Budgetary revenue items offset against budgetary expenditures'3*..
9.	Other adjustments to budgetary expenditure	
10.	Total expenditure, National Accounts basis	
11.	Surplus or deficit, National Accounts basis	
12.	Surplus or deficit, budgetary basis	
13.	Total, National Accounts basis	
1965-66	1966-67 estimate	1967-68 forecast before tax changes
(millions of dollars)		
7,735	8,794	9,700- 6	-116	7927	1,075	1,401298	307	372114	128	1407	6	6- 66	- 69	- 73- 16	42	92-242	-265	-283-104	- 74	- 69- 59	- 78	-167-127	-140	-150119	247	2468,580	9,857	11,222576	141	-228(- 39)	(-428)	(-700)9,156	9,998	10,994
<*>
In the national accounts, expenditures on goods and services in the supplementary period are split evenly between adjacent fiscal years. Most other expenditure items are shifted entirely to the next fiscal year.
<!* This adjustment replaces budgetary appropriations to various funds and agencies by the outlays actually made by these funds and agencies.
'** The largest component of this item consists of revenue from sales of goods and services by the government sector. These sales appear as final expenditure of the private sector and are deducted to avoid double counting.
June 1, 1967
[Stage Direction]
The Budget-Mr. Monteith
Federal Government Revenue: Reconciliation of Public Accounts and National Accounts Presentations
-	1965-66	1966-67 estimate	1967-68 forecast before tax changes
		(millions of dollars)	
1. Budgetary revenue	7,696	8,366	9,0002. Supplementary period adjustment*')	56	7	- 163. Extra-budgetary revenues	Old age security tax collections	1,169	1,281	1,546Unemployment insurance, employer and employee contributions	328	340	370Government pension funds, employer and employee contribu-	tions	301	363	373Prairie Farm Assistance Act levy	10	11	11Interest receipts on social insurance and pension accounts	181	196	2264. Corporate income tax*3*: excess (+) of accruals over collections....	-128	-112	-1355. Profits before taxes (net of losses) of government business enterprises	242	204	2686. Interest on loans, advances and investments	222	270	3077. Less: Budgetary return on investments	-488	-522	-5568. Less: Postal revenue	-237	-256	-2609. Budgetary revenue items offset against budgetary expenditures*3*..	-127	-140	-15010. All other adjustments to budgetary revenue	- 69	- 10	1011. Total revenue, National Accounts basis	9,156	9,998	10,994
(i) jn the national accounts, revenues in the supplementary period are shifted to the following fiscal year. (*) Taxes on government business enterprises are excluded from this item and included in item 5.
<*>
See also footnote 3, expenditure reconciliation.
Hon. J. W. Monteith (Perth):: Mr. Speaker, I think there is one term which can be applied to this budget this evening. It is completely lacklustre; it is a gloomy budget. I think one might say it is a "ho hum" budget. I think this has been demonstrated completely by the appearance of the government benches. I have been here for all budgets which have been presented since 1953 and never in my attendance in this house have I seen such a slim and and inattentive audience.


Some hon. Members:: Oh, oh.


An hon. Member:: Look behind.


Jay Waldo Monteith: I am looking behind. I am looking behind me as well as in front of me. It is obvious what the government supporters feel about this budget. It just has nothing to offer to the people of Canada. I can quite understand the minister trying to speak somewhat hastily in order to get through the budget in a hurry, because he is so ashamed of it. Early in his remarks he compared this
budget to that of 1868. I should like to say that this budget bears sorry comparison with the budget of that day, 99 years ago.
There are one or two things for which I should like to commend the minister. He has taken the sales tax off drugs. This is what we recommended in the election campaign of 1965. He has taken the sales tax off productive machinery. The final 6 per cent is gone. It was a ridiculous tax in the first place. It should never have been put on and it definitely hurt Canadian expansion.


Richard Albert Bell: Does the hon. member for Davenport (Mr. Gordon) approve of it?


Jay Waldo Monteith: Now, Mr. Speaker, I do not intend to discuss in any detail this evening the content of the budget, without first availing myself of the opportunity to make the closest examination of all its implications. It has been suggested to me that what I should do simply is stand up, say this is the worst budget in Canadian history, and move the adjournment of the debate.
June 1, 1967

The Budget-Mr. Monteith


Some hon. Members:: Hear, hear.


Jay Waldo Monteith: Before moving that adjournment however, sir, I should like to make a few comments on the state of the country's economy, which I feel requires mentioning.
Before coming into the chamber I looked back over what I said on March 29, 1966 following the minister's budget presentation on that evening. I stressed then that the people of Canada were facing the largest government expenditure, the largest government tax bite, and the highest cost of living in our history. Actually that was the understatement of all time. The spending estimates for this fiscal year are up 20 per cent from those of last year-20 per cent, Mr. Speaker, one fifth. I ask, is there no levelling off to the spending of this government? It is undoubtedly the most expensive government to maintain in all Canada's history.


Michael Starr: Ruthless spending.
[DOT] (9:30 p.m.)


Jay Waldo Monteith: Mr. Speaker, we have a government where every minister sees himself, maybe even herself, as a potential leader. Every minister is trying, by spending a great deal, to get into the good graces of the citizens of Canada. All during this time the poor Minister of Finance has to pick up the tab and pass it on to all of us. He may mean well, but he is being overridden by his colleagues. These ministers are all empire builders, seeking power through the use of the money of the Canadian people. Every taxpayer in Canada is paying for the Liberal leadership stakes.
Let us look for a moment at the size of this government's spending activity. It appears that they have forgotten entirely that the private sector of our economy should receive some consideration. We are witnessing, not just a decline but the destruction of the private sector of the Canadian economy. Let us remember that no amount of government expenditure ever makes a profit. There is no incentive for Canadian investment in the economy today. If the party to which I belong were in office, we would not put the Canadian economy and the Canadian taxpayers in the position of having to raise hundreds of millions of dollars to finance overspending.
In this fiscal year 1967-68, at a time when the economy is tight, the government is heading for a monstrous deficit of $740 million. As a matter of fact, the money market is so tight that bond issues are being held up and private businesses are struggling to raise funds
fMr. Monteith.]
to expand and increase productivity. In spite of this the government steps in to raise hundreds of millions of dollars to pay for its big spending.
How many factories are there unbuilt; how many jobs have never been created and how many houses will never be built because this government is overspending and using too much of the economic resources of the Canadian economy-the resources required by private business and individuals? Tonight we have an example of deficit financing at a time when prices are still rising. This can lead to only one thing, inflation and higher and higher prices to the Canadian consumer. What has been proposed here tonight is that the Canadian housewife in the months ahead will find her bag of groceries containing less and less, while she pays more and more.
In short, the Liberal leadership campaigns are costly ones indeed, and place an immense strain upon the Canadian economy. As a Conservative I am deeply concerned with the government's attitude toward housing. The budget papers show a sharp drop in housing starts, with 1966 apartment buildings for example running one third below 1965, and despite some attempt to increase direct loans through C.M.H.C. the 1966 housing starts ran to 135,000, some 20 per cent below 1967 with 167,000 starts.
At the same time housing starts were declining, the price of housing was soaring out of reach, partly because the government had imposed the sales tax on building materials. I do not think the government has an answer in respect of Canada's housing crisis. As a Conservative, I resent the idea that housing should be used as a sort of fiscal gimmick, as a sort of bath tub tap that can be turned off and on. Our Conservative caucus has made our position very clear, and our policy statements show this. Housing should not be the first victim of a tight money policy. Home building should be steadily and continuously promoted, and home ownership should be encouraged. Decent housing is as important as three meals a day.
What do we see in this budget that is likely to assist in meeting these goals? I suggest that we see nothing. All we see is a continuing tight money policy with higher and higher home prices. This government never has been able to sense or feel the instincts of the average Canadian, the man on the street.
There will be much more to be said after a careful and detailed examination of this budget, but for the moment I should like to conclude by repeating my precious criticisms.
June 1. 1967
The net result of this evening's presentation by the minister is that we have the largest spending, the highest taxing, the highest cost of living, and practically the greatest deficit in all our history. What a record this is.
On motion of Mr. Monteith the debate was adjourned.


Allan Joseph MacEachen: Mr. Speaker, may I call it
ten o'clock?



BUSINESS OF THE HOUSE

Michael Starr: Mr. Speaker, I should like to ask the government house leader to give us an
Business of the House indication as to whether there is any change in the program of the business to be taken up tomorrow.


Allan Joseph MacEachen: No, Mr. Speaker. The program as outlined last evening still stands, and will stand until Wednesday evening of next week.


Mr. Speaker:: Is it agreed that the adjournment debate be suspended this evening?


Some hon. Members:: Agreed.


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

[Stage Direction]
presented by
the Honourable Mitchell Sharp, M.P., Minister of Finance for the information of Parliament in connection with the Budget of 1967-1968
June 1, 1967

[Stage Direction]
The purpose of these Papers is twofold:
1.	to present a general economic review of 1966, bringing together in one place and in convenient form some of the more comprehensive indicators of economic conditions prepared by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies, together with some comments;
2.	to present a preliminary review of the Government Accounts for the fiscal year ending March 31, 1967.
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June 1, 1967
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Economic White Paper for 1967
Page
The Canadian Economy-Review and Outlook	 887
Summary review of 1966	 887
Outlook in 1967	 890
Pressure of Demand	 894
Private and Public Investment	 896
Personal Expenditure	 899
Movement of Inventories	 901
Exports of Goods and Services	 903
Government Expenditures	 905
Problems of Supply	 905
Manpower Developments	 905
Employment	 908
Regional Employment Trends	 909
Income Developments	 913
Output, Productivity and Production Costs	 915
Price Developments	 922
Imports of Goods and Services	 926
Government Sector	 928
Balance of Payments	 933
Current Account	 933
Capital Account and Reserves	 938
Source and Disposition of Saving	 940
Financial Sector	 942
Introduction	 942
Demand and Supply of Funds through the Capital Markets	 943
Federal Government Debt Management	 949
Index to Reference Tables	 953
The tables and charts in this Budget Paper are based upon estimates provided
by the Dominion Bureau of Statistics, the Bank of Canada and other government
agencies. Some of the figures appear for the first time; others have been published
elsewhere. All 1966 estimates are preliminary and subject to revision.
June 1, 1967
[Stage Direction]
ECONOMIC REVIEW FOR 1966 THE CANADIAN ECONOMY: REVIEW AND OUTLOOK
The year 1966 began with great pressure on Canadian productive capacity and a rate of increase in output which was too great to be sustained. Associated with this pressure were substantial increases in costs and prices, which threatened the basis upon which the long period of business expansion had been founded. Expenditures of all kinds were rising rapidly, and the economy was in general being overloaded.
The generally well-balanced nature of Canada's economic progress during the years 1961 to 1965 was a notable feature of that period. The expansion in output which occurred, by exceeding the underlying growth in Canada's productive capacity, progressively absorbed unused resources of labour, plant and equipment. As these resources came close to full employment in the latter part of 1965 it became necessary to moderate the rate of advance, to avoid an economic disruption. During 1966 some desirable adjustments did in fact take place, influenced to a large extent by the monetary and fiscal climate of the period.
The objective of the 1966 Budget was a successful transition to a sustainable rate of growth, in which the growth in output would keep pace with the growth in productive capacity without bringing about either excessive cost and price pressures or slack in the economy. The achievement of such a transition depends upon avoiding excessive increases in -particular costs and prices on the one hand, and in the inventories, output or capacity of particular industries on the other, which cannot be absorbed without such serious readjustments as to threaten the stability of the economy as a whole. Events during 1966 indicated that excesses had developed, and measures designed to restore a better balance within the economy were put into effect. Afterwards there were continued, but more moderate, gains in output, employment and expenditures through the remainder of the year. The effects of excessive pressure, as reflected in price and cost movements, did not begin to diminish until the end of the year, and they continued, in a somewhat lesser degree, into 1967.
These developments, together with the largest wheat crop ever harvested, resulted in a gross national product in money terms that was 10.9 per cent higher than in 1965 (reference table 1). Prices, as measured in the national accounts, averaged 4.6 per cent higher. Real GNP thus rose by 5.9 per cent. (Major reference tables will be found beginning on page 75).
Expenditures
The pace of events in 1966 was set by the demands on the economy. During the latter months of 1965 activity in the construction industry had mounted, as the business sector stepped up its investment expenditures and as government outlays on public works and social capital needs continued to expand. These pressures continued into early 1966. At this time exports rose sharply, increasing by over 8 per cent in the first quarter as U.S. economic activity accelerated. Government purchases of goods and services rose strongly. Inventories
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June 1. 1967

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1955	* 1966
(SEASONALLY ADJUSTED AT ANNUAL RATES) BY QUARTERS
(Arithmetic Scale)

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I I I 11 1111 .U,t,i I I 111 I 111U11 I 1111 i 11 II111 111 I l [ I I 11 *^55 56 57 58 59 6 0 61 62 63 64 65 66
June 1, 1967
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began to mount. Consumer expenditures advanced more moderately than previously, but still added substantially to the first-quarter increase in demand These developments are summarized in reference tables 2 and 3.
In view of this strength in demand, the business sector revised its investment plans upward, a development which would have added still further to demand pressure. As prices rose and other evidence of strains upon supply capacity became evident this led to attempts to accelerate some expenditures. However, consumer expenditures in the second quarter advanced only fractionally, reflecting a number of special circumstances; the growth in government expenditures temporarily slowed down; and exports receded slightly from the exceptional first-quarter levels. In the later months of the year the large consumer sector resumed a comparatively rapid rate of growth, which provided strong and stable support to total expenditures. Government outlays also resumed more rapid growth. But the growth in business investment, which had been very rapid for three years, slowed down during the second half of the year.
Despite the pressures on the economy, the deficit on current international account declined moderately in 1966 to a level of about $1 billion. The reasons for this decline are not yet fully apparent. However, the explanation lies in part in larger wheat exports and some improvement in the balance on trade in automotive products.
Employment, Output and Productivity
The labour force and total employment in 1966 grew at very rapid rates, by comparison with recent Canadian experience and by comparison with other industrialized countries. This was a direct response to the high and rising level of demand for goods and services. The sources of growth were natural increase in the population of working age, higher labour force participation by women, and increased net immigration.
The sustained demand for workers led to a further decline in the annual average unemployment rate, which fell from 3.9 per cent in 1965 to 3.6 per cent in 1966. It also brought into the labour force a number of part-time workers; while 149,000 more women had jobs in 1966, 20,000 of these worked only part time. Many others, especially the younger ones, lacked experience.
Partly as a result of these developments, the gain in productivity per worker in the non-agricultural economy was very small during the year. Output of non-farm goods and services, or real domestic product, rose by 6.3 per cent during 1966, and the 5.4 per cent increase in non-agricultural employment indicated a gain in output per worker of less than one per cent.
Agriculture made a particularly notable contribution to total output in 1966. The bumper prairie grain crop was the main factor in the sharp increase of 12 per cent in total farm output.
Costs and Prices
As the demand for labour continued at high levels in most parts of Canada, wage rates moved up rapidly in most industries. This acceleration, which had first appeared in the construction trades, spread to both goods production and the service industries. New contract settlements provided for higher gains than have occurred in recent years, and longer-term contracts provide for further increases in the next two or three years.
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June 1, 1967
This combination of higher wage rates and a relatively small advance in productivity have brought about rising labour costs in production. In the manufacturing industries, where Canada's competitive position both at home and abroad is particularly important, labour costs for each unit produced, which had been falling as recently as 1964, rose by 3.8 per cent in 1966. In the non-farm economy as a whole, including government services, the 1966 rise in unit labour costs was 5.2 per cent. (Noway has yet been found to measure productivity in government and non-commercial services, and it is assumed for statistical purposes to remain unchanged, which exaggerates increases in unit labour costs.)
Profits per unit of output in the non-farm commercial economy declined in 1966. In such circumstances, some price increases usually follow. While prices rose throughout the year, the rise was most rapid in the first quarter, when suppliers were best able to cover current or expected increases in costs. Consumer prices also were affected by this conjuncture of events, and shortages of certain foods intensified the upward pressure on prices. The degree of pressure on food prices moderated as the year wore on. Increases in costs continued at high rates throughout 1966, even after demand pressures had moderated.
Monetary Developments
The high level of investment activity, and of economic activity generally, was reflected in heavy demands for credit. This occurred at a time when international capital movements also were affected by sustained demand for funds and high interest rates in the major industrialized countries. Interest rates in Canada, reflecting both the intense domestic competition for savings and the need to compete in U.S. markets for funds to finance the deficit on current account in the balance of payments, reached levels not recorded since the 1920's and remained quite high until the closing weeks of the year.
Outlook in 1967
The following review of the main segments of expenditure suggests that the growth in output in 1967 will be considerably less than that of 1966. Prices and costs are likely to increase again, although more moderately, as the pressures generated in 1966 work through the economy.
Consumer expenditures in 1967 are expected to constitute an element of strength in overall demand. Purchases of durable goods should be sustained by the continued strength of disposable income and the customary need for replacements. Some minor reductions may occur in the first half of the year, but an increase is likely during the second half of the year for non-automotive products because of an expected rise in housing activity. The remainder of personal expenditure, on non-durable goods and services, plays a very much larger part in the total than durable goods and is characterized by a steady long-term upward trend. Items such as food, clothing, shelter and professional services are purchased steadily. This imparts a substantial degree of stability to consumer expenditures and hence to GNP as a whole.
Expenditures by governments are expected to continue rising but at a more moderate rate than in 1966. Capital expenditures on schools, hospitals and universities are likely to rise substantially, while departmental outlays on public works such as buildings and highways are expected to continue at present levels.
June 1, 1967
[Stage Direction]
Operating expenditures by governments can also be expected to increase at a more moderate rate in the coming year, even after allowing for the effects on government payrolls of the acceleration in wage rates that has been taking place in the Canadian economy over the past year or so.
The outlook for exports depends upon developments in the economies of Canada's principal trading partners. The very rapid increases in economic activity in the United States in 1966 have been followed by a more moderate rate of expansion. In the latter part of 1966 there was a substantial build-up of inventories, and observers consider that this level of inventories will be worked down in the first half of 1967. Recent surveys of business investment suggest little change in the first half of the year and a moderate increase for the year as a whole. Total GNP in the United States is expected to increase at a rate considerably below the rate achieved in 1966.
The prospects for Canada's exports to other countries are mixed. There has been little change in output in the United Kingdom and Germany in the latter part of 1966, but modest increases in both countries are now expected. France, Italy and other European countries are continuing to expand, but at slightly lower rates than foreseen earlier. In general, there has been in recent months some scaling down of expectations as to the increases in output likely to be achieved in Europe this year. The Japanese economy is expanding strongly, as are Canadian exports to that country. Wheat shipments to the U.S.S.R. and to Mainland China are continuing at a high level.
In summary, Canada's prospects for exports of goods are favourable for the coming year. The rapid upsurge of the past year cannot be expected to be repeated, but the 1967 increase should nevertheless be substantial.
Expo '67 and the Centennial celebrations across Canada are expected to add considerably to Canada's receipts on non-merchandise trade.
Changes in merchandise imports depend to a considerable extent on trends in purchases of producers' equipment and consumer durable goods. The prospective steadiness in Canadian outlays on these goods can be expected to lead to a much smaller increase in imports in 1967 than occurred in 1966.
On balance, the current account deficit might be expected to decrease slightly in 1967.
The investment outlook report recently published indicated a very small increase in new fixed investment in 1967, in sharp contrast to the average annual increase of 16 per cent recorded in the three preceding years. In 1966, total investment amounted to 25.8 per cent of GNP; in 1967, the ratio is expected to be about 24§ per cent.

[Stage Direction]
1964	1965	1966	19671963	1964	1965	1966Business Capital	21.1	19.9	18.3	-0.2Housing	18.4	5.2	2.3	-0.SInstitutions (Schools, hospitals, etc.)...	-11.7	31.3	17.2	16.5Government Departments	13.7	16.7	19.9	1.8Total Investment	16.5	17.6	15.8	1.4
June 1, 1967
This moderation of the rate of growth has been brought about by a combination of forces. The most important of these is undoubtedly a reaction from the large increases in investment which businesses tried to undertake in 1965 and
1966.	In addition, businesses have been finding it more difficult to finance these large rates of increase, whether from their own internal sources or by borrowing, a reflection of the physical strain that had developed. Moreover, the increase in costs and the decline in unit profits that have taken place have undoubtedly influenced many investment plans.
Among industrial groups, manufacturing industries in recent years increased their outlays on fixed capital more rapidly than other industries, and their investment reached a sharp peak in 1966. Their plans for investment in
1967,	together with information available on capacity utilization rates, suggests that these industries have completed their existing major projects and that there is now a better balance as between their existing fixed capital and their immediate market prospects.
Within manufacturing, a few specific industries such as iron and steel, pulp and paper products, chemicals and cement account for the bulk of the current decline in investment expenditures. These industries had previously experienced the most rapid increases in investment (in some cases owing to special circumstances), and now appear to have adequate capacity at current or immediately prospective levels of output. The levels of investment planned for 1967 by other manufacturing industries differ little from 1966.
Utilities and transportation industries are planning further expansion in their capital outlays, though the increase will be somewhat smaller than in 1966. Increases are also continuing in retail and wholesale trade. Planned fixed capital outlays in the commercial service industries are lower, probably as a result of the completion of projects connected with Expo '67. There is also a small decline forecast in finance, insurance and real estate.
An acceptable ratio between capital stocks and output appears to have been achieved by the large additions to plant capacity which were made in the past three years. At the same time, although the available information on capacity utilization rates is limited, there is little evidence of general excess capacity relative to existing markets, such as existed in 1957. On the contrary, the available evidence points to a better balance between physical capacity and output, so that the adjustment from exceptionally rapid increases in capital investment expenditures to a more normal and sustainable rate of increase can be expected to be accomplished reasonably soon.
In 1966 capital investment plans by business were affected by a shortage of available funds, resulting in part from a decline in retained cash flow and from very heavy competition for funds on the market. Government fiscal and monetary policies reinforced these constraints. These constraints have now been removed. Excessive demands for funds are no longer pressing on the capital market, a move toward world-wide monetary ease has become more apparent since the beginning of the year, and fiscal restraints on investment announced in the 1966 Budget have been removed. The investment plans of business at the beginning of 1967, as shown in the investment outlook survey, were prepared before the nature of these changed circumstances became evident, and may now be revised.
Residential construction activity is expected to increase during 1967 as more funds become available from market and government sources. The greater availability of funds from private sources will be in part a consequence of the less
June 1, 1967
[Stage Direction]
vigorous competition from expanding business investment. In addition, the NHA interest rate was made more flexible and responsive to market conditions by relating it to the long-term government bond rate. It is also expected that the Bank Act revisions will make available additional funds as a result of chartered bark lending on residential mortgages. Continued direct lending by the Central Mortgage and Housing Corporation, which is undertaking a large spring lending programme for the first time in some years, will also contribute to the availability of mortgage funds. It is expected that there will be at least 150,000 new housing starts in 1967, a considerable improvement over the 135,000 starts of 1966. The house-building programme will gain momentum during the year, and this presages a higher level of house-building activity in 1968.
Inventory accumulation which was high in mid-1966 continued at a more moderate rate in the closing months of 1966, and there was a levelling off in inventory-sales ratios, which had been rising during the summer months. It is difficult to predict the trend in 1967, although it is possible that some working off of inventories may already have taken place. The situation varies by industry, some having adjusted their production to current shipments, while others have gone on increasing their stocks. New orders in some manufacturing industries have tended to level off, suggesting that some inventory stocks are being worked down to meet current demand. This adjustment has been taking place gradually, so that no large decline in inventory is expected in coming months. At the same time, not very much accumulation can be expected and hence inventory change is not likely to be an element of demand expansion in 1967.
To sum up the outlook for total demand during 1967, there will likely be considerable expansion in consumer spending on non-durable goods and services, government current outlays and exports. The strength of these factors, together with a smaller rise in imports than in 1966, should be more than sufficient to counterbalance the expected slower rate of increase in purchases of consumer durable goods and in business investment. Nevertheless, the growth in output, both in money and in real terms, is expected to be considerably less than the unsustainable rate of growth experienced in 1966.
Business fixed investment is expected to form a smaller proportion of gross national product than in 1966. Additions to inventories will also be substantially less. This means that the business sector will make less call upon the savings of the Canadian economy, which increase each year as the potential of the economy grows. Some of the savings will be absorbed by greater housing activity as the year progresses. Other savings may be absorbed by governments to the extent that the increase in government revenues, reflecting a more moderate growth in incomes, does not match the increase in planned expenditures. The crucial matter for the economy is how the balance between total saving and investment is reached. In periods when intended investment exceeds saving, pressures on costs and prices develop. On the other hand, when intended investment falls short of potential savings these savings need to be absorbed if resources are not to be wasted in idleness. The appropriate balance between saving and investment at high levels of employment, within a framework of price stability, is a delicate one to reach and sustain.
Supply
On the supply side, the present level of employment is over 96 per cent of the labour force; unemployment in the opening months of 1967 averaged about 3| per cent. Immigration is expected to continue at a high rate during 1967.
894
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June 1, 1967
However, the year 1966 was one in which the proportion of the population of working age which actually participated in the labour force increased unusually rapidly, and it is unlikely that the 1967 participation rate will again record such a remarkable advance. Between 1965 and 1966 the participation rate increased from 54.4 to 55.1 per cent, with a large part of this increase occurring in the younger age groups and among female workers of all ages. As a result of a more moderate rise in the participation rate, the increase in the labour force is likely to be somewhat less rapid in coming months than it was in 1966.
The productivity performance of the economy in 1967 is particularly difficult to forecast. The results of 1966 were disappointing for reasons that are not yet clear. However, using recent performance as a short-term guide, the combination of productivity and employment gains suggests that non-farm output is capable of increasing substantially in 1967, even if at a more moderate rate than in 1966. Substantial increases in capital equipment in the past three years have improved the industrial base for further increases in output and productivity in the Canadian economy. In the agricultural sector, it cannot reasonably be expected that last year's record wheat crop will be duplicated. In all, it would be reasonable to expect an increase in the supply capability of the economy as a whole in the neighbourhood of four per cent in 1967.
It is also difficult to predict how long the process of adjustment among costs, prices and profits will continue, but further increases in costs and prices can be expected during 1967. The extent of the increase is uncertain; it will be less than in 1966, because of reduced pressures of demand, but larger than is desirable from a long-term point of view.
In the past, increases in costs have exceeded those of selling prices in later stages of expansion, and profits have levelled off or declined. The levelling off in profits has usually been followed, after a lag, by a slowing down in the rate of new investment. In the current situation fiscal and monetary policy has aimed at moderating the excessive increases in investment and bringing about a smooth adjustment to a sustainable rate of economic growth. Increases in output are currently more in line with the underlying potential for economic growth, and levels of employment have remained high. The relationship of increases in incomes to productivity gains remains a crucial question; if the rate of increase in incomes moderates and productivity can be improved, it should be possible to have a rapid and smooth adjustment as between prices and costs. In turn, this would provide a profitable basis for a continuing and steady growth in investment, and improve Canada's international economic position. These developments would help to ensure that sustained economic expansion would continue into 1968.

[Stage Direction]
Demand for goods and services in the Canadian economy increased substantially in 1966. Following an unusually rapid rise in total demand in the latter half of 1965, the pace of demand quickened again in the first quarter of 1966. Consumer purchases of durables moved ahead, exports increased sharply, governments increased their expenditures, and there was a turnaround in inventory movements from decline to an accelerating rate of accumulation. The pace, however, was clearly unsustainable and total demand reverted to a more moderate rate of growth in subsequent quarters.
The adjustments to a more moderate rate of growth were not uniform among the various components of demand. Chart 2 illustrates the movements
June 1, 1967

[Stage Direction]
S BILLIONS	(RATI0 SCALE)	S BILLIONS
Note: Secular components include personal consumption expenditures of nondurables and services, and provincial and municipal government purchases; cyclical components include gross private domestic investment and personal consumption expenditures for durables; other components include Federal Government purchases and net exports of goods and services.
27053-57£
896	COMMONS DEBATES	June 1, 1967
which developed during the year. The secular components of total demand continued to advance while some of the more volatile and other components checked their quarterly gain from the exceptional rates recorded in the second half of 1965 and the early months of 1966. Total demand in money terms continued to advance to year-end despite these readjustments. Trends in demand for goods and services by consumers, governments, businesses for investment purposes and the external sector are reviewed in the following pages.
Private and Public Investment
The composition of total investment was altered in 1966 by the continued strength of the business investment boom, while housing construction showed weakness. Business investment increased its share from 61.7 to 63.0 per cent of

[Stage Direction]
i BILLIONS
15
9
6
4
2
June 1, 1967
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total investment, while the housing share decreased from 16.6 to 14.6 per cent. The share of government departments and institutions in the total investment programme rose slightly, from 21.7 to 22.4 per cent.
The slowdown in housing starts began to develop toward the end of 1965. During 1966, a growing shortage of funds flowing into the residential mortgage market was followed shortly by a downturn in actual housebuilding activity, particularly apartments financed from conventional sources. Apartment starts in 1966 were about one-third lower than they had been in 1965. On the other
hand, direct lending by CMHC helped to maintain the level of other residential starts, which numbered about 75,000 in all areas in 1966, little changed from the previous year. Total starts in 1966 numbered 135,000, about 20 per cent below the 1965 total of 167,000 starts. Completions numbered 162,000 units and the average value of work put in place was about equal to that of 1965.
At the same time, business capital formation was reaching boom proportions and this led to fiscal and monetary restraints designed to moderate the expansion, as noted above. These restraints reinforced developments in financial markets, and helped to moderate the growth in demand to a rate more in keeping with that of the available physical capacity. Despite attempts by businesses to increase their capital spending even more rapidly, as evidenced by the mid-1966 survey of business intentions, the actual quarterly record showed some levelling off in the second half of the year. Final confirmation of this change in actual
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June 1, 1967
and intended investment was given by the recent outlook survey, and details of business investment expenditures are presented in table 1 and reference table 5.

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1957	1963	1964	1965	1966
(Millions of dollars)
Agriculture and fishing	434	762	836	926	1,001	1,048Forestry	48	60	88	96	89	91Mining, quarrying and oil wells	606	521	632	735	994	1,001Manufacturing	1,479	1,358	1,831	2,340	2,803	2,498Utilities and transportation	2,308	1,771	2,059	2,423	2,892	3,157Construction industry	158	135	197	263	267	271Trade, finance and commercial services.	690	918	1,042	1,269	1,462	1,430Institutions	454	873	771	1,012	1,186	1,382Housing	1,430	1,713	2,028	2,133	2,181	2,170Government departments	1,110	1,282	1,460	1,668	2,022	2,055Total Capital Expenditure	8,717	9,393	10,944	12,865	14,897	15,103Total Capital Expenditure as a	percentage of Gross National	Expenditure	27.3	21.6	23.1	24.7	25.8	Index of total Capital Expenditure in constant dollars (1957 = 100)....	100.0	96.9	108.4	121.1	134.8	
Source: DBS and Department of Trade and Commerce: Private and Public Investment, Outlook, annual.
Social capital formation by government departments and institutions continued at a high rate in 1966, rising by 19 per cent over the previous year. The forecast for 1967 indicates a much smaller rate of increase, in the neighbourhood of 4 per cent over 1966. While construction of schools, hospitals and universities is increasing at a substantial rate, capital outlays by government departments for such items as highways, buildings and engineering construction are expected to remain unchanged from their 1966 levels.
Total private and public investment has been rising sharply throughout the past three years. In 1966, total investment reached a level of 25.8 per cent of GNP, fractionally below the previous peak level of 27.3 per cent of GNP in 1957, as shown in reference table 6. The recently-published investment outlook survey indicated an increase of less than 1 Jr per cent in total investment in the year 1967; the absolute level will account for about 24 J per cent of GNP compared with the post-war average of 23 J per cent.
June 1, 1967

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$ BILLIONS	ANNUAL	5 BILLIONS
Personal Expenditure
Consumer expenditures in 1966 rose even more rapidly than in 1965. However, consumer prices also rose considerably, and in real terms the 1966 increase in personal consumption, although substantial, was less than that in 1964 or 1965. This development reflected in a particularly striking manner the pressure of total demand that emerged in the early months of the year. Consumers, governments and business enterprises together attempted to increase their total final purchases beyond the capacity of the economy to meet these demands in the short term. This led to an increase in prices. Accordingly, the increase in real personal consumption was effectively limited to the physical amount of consumer goods and services the economy could make available.
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June 1, 1967
On a quarterly basis, consumer spending in value terms progressed unevenly through the year (table 2), due largely to the erratic movement of purchases of durables. Durable goods are a volatile component of personal spending, and are affected by changes in money income, consumer expectations and the availability of credit. Trends in new housing construction can affect sales of household

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1965 and 1966
	1965				1966			
	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q
	Current dollars-per cent change from previous quarter							
Consumer expenditure								
total	+1.2	+2.9	+2.8	+2.5	+1.8	+0.5	+3.5	+1.9durables	+5.7	+5.0	+8.5	-1.0	+2.2	-10.4	+12.5	-0.9non-durables	-0.1	+3.2	+2.1	+3.4	+ 1.2	+2.6	+2.2	-2.4services	+1.5	+1.9	+1.8	+2.7	+2.5	+1.3	+2.5	+2.2(total non-durables and services)..	+0.6	+2.6	+2.0	+3.1	+1.8	+2.0	+2.4	+2.3Constant dollars-per cent change from previous quarter	Consumer expenditure	total	+0.8	+2.1	+2.4	+1.8	+0.5	-0.7	+3.2	+1.0durables	+6.1	+5.0	+9.0	-1.0	+2.8	-11.3	+13.4	-2.3non-durables	-0.5	+2.0	+1.6	+2.6	-0.7	+1.8	+ 1.8	+1.9services	+0.8	+ 1.2	+0.9	+2.0	+1.3	+0.4	+ 1.6	+1.2(total non-durables and services)..	+0.1	+1.7	+ 1.3	+2.3	+0.1	+1.2	+1.7	+ 1.6
Source: DBS The National Accounts.
appliances and furniture, which are an important element in the total. In the first quarter of 1966, when employment conditions and incomes were particularly buoyant, expenditures on consumer durables were running at high annual rates. There was also some anticipatory buying, in Ontario, of cars and other durables, as a result of the advance announcement of the rise in April of two percentage points in the retail sales tax. The sharp drop in durables purchases in the second quarter, particularly of automobiles, was probably caused by a number of factors: incomes advanced less than in the first quarter, and price movements were limiting the growth in real income. Monetary tightness may have been a factor, as consumer credit outstanding changed very little; however, it may be that the slow growth of credit outstanding was an effect rather than a cause of the decline in purchases of durables.
The very strong advance in automobile sales in the third quarter was accounted for in large part by the price reductions which occurred at that time. These reductions were a reflection of the heavy inventories remaining unsold at the model changeover. Automobile sales remained at this level in the fourth quarter also, as credit became more readily available. Sales of furniture and home appliances were also little changed, possibly reflecting the decline in completions of new houses towards the end of the year.
Non-durable goods and services expenditures continued their customary advance through the year. Taken together, current dollar outlays on these two components have been advancing at an average of something over 2 per cent in each quarter since early 1965. However, the pace of advance speeded up in the fourth quarter of 1965 and showed a tendency to slow down in the first of 1966.
June 1. 1967	COMMONS DEBATES	901
This development probably reflected the acceleration in prices of non-durables which occurred in late 1965 and on into 1966, which would have resulted, initially, in higher current dollar outlays as consumers maintained their customary volume of purchases. There was subsequently some organized consumer resistance to the higher prices. Price developments are discussed in greater detail below.
Movement of Inventories
Business inventory investment remained relatively high through 1966. As shown in table 3, there was a particularly strong gain in inventories in the second quarter. Accumulation of inventories continued in the second half of the year, but at a slower rate.

[Stage Direction]
CHANGE IN NON-FARM BUSINESS INVENTORIES (Seasonally adjusted at annual rates)
	1966			
	IQ	2Q	1 3Q	1 4Q
		(Millions of dollars)		
Manufacturing	508	500	420	556Durables	468	348	200	316Non-durables	40	152	220	240Wholesale trade	-68	416	76	76Retail trade	284	412	76	-160Other industries	68	64	-8	108Total	792	1,392	564	580
Source: DBS The National Accounts.
The second quarter advance was associated with the decline in retail sales, particularly of durables, which occurred at that time. The decline in the rate of inventory investment in the third quarter was largely concentrated in retail and wholesale stocks as sales recovered. Automobile stocks played a large part in these movements.
Changes in the rate of inventory accumulation, which constitute a current addition to total demand, can also serve as an indicator of current or developing trends in demand. To examine this aspect of inventory movements it is useful to distinguish between movements in the stock of raw materials, of goods-in-process and of finished goods. Inventory changes on this basis in 1965 and 1966 are summarized in reference table 7, while Chart 6 illustrates the movements in the different components of manufacturers' inventories, and shows clearly the cyclical nature of these movements.
Movements in stocks of raw materials are likely to reflect business expectations about demand and price trends. Movements in the stock of goods in process tend to reflect changes in current production. Increases in finished goods held in stock by manufacturers might reflect strong expectations at a period when productive capacity can accommodate an increase both in shipments and in stocks. This is typical of the early stages of an expansion. Movements in finished goods held can also reflect unexpected changes in demand. An involuntary
902
[Stage Direction]
June 1, 1967
accumulation of inventories of finished goods is normally followed by cut-backs in production to reduce the excess inventories. The duration and size of such inventory adjustment has important consequences for production and employment.

[Stage Direction]
Ratio Scale
6.0	
5.0	
2.5	2.0
2.0	
1.4	1.5
1.2	2.5
1.0	2.0
.8	.2.25
1.0	2.0
.5	1.75
	1.0
0	.75
.5	.50

[Stage Direction]
'w
1955 56 57 58 59 60 61	62 63 64 65 66
*3 - month moving average
.50 LlimuuJ
[Stage Direction]

1955 56 57 58 59 60 61	62 63 64 65 66
Some inventory accumulation in 1966 occurred, as noted above, as a result of developments in final markets, and some modest adjustments took place in the third and fourth quarters. Thus, the quarterly movements in the different categories of inventories, together with the changes in shipments and in unfilled orders, shown in reference table 7, give some additional indication of the conditions of demand and supply prevailing. Stock-sales ratios have increased, but are not currently excessive. Any remaining adjustments to the more moderate rate of increase of final demand should therefore be of modest proportions.
The inventory situation in Canada is thus more favourable than that in the United States, where the increase in non-farm business inventories remained high to the end of the year. In the United States, durable goods accounted for the major part of the increase, but there was also a sharp year-end rise in inventories of non-durable goods. Inventory-sales ratios during the latter half of 1966 were exceptionally high, reflecting a slowdown in manufacturing and trade sales, and it is expected that both manufacturers and the trade sector will attempt to achieve a more acceptable inventory-sales ratio by mid-year.
June 1. 1967
[Stage Direction]
Exports of Goods and Services
The growth of 15.3 per cent in exports of goods and services1 in 1966 was well over twice the 1965 rate of less than 7 per cent, and nearly as great as the advance recorded in 1964. The improvement was due entirely to the rapid growth in commodity exports, which rose by 17.4 per cent. As in 1964, a large part of the increase was accounted for by shipments of wheat and wheat flour. Wheat exports under long-term contracts raised total sales to China by 75 per cent, and to the U.S.S.R. nearly 65 per cent. Purchases by other East European countries declined, but this was more than offset by shipments to India under the bilateral food aid programme.
Another factor contributing to the substantial increase in exports was a further large expansion of trade under the Canada-U.S. automotive agreement. The goal of this agreement, to rationalize the production of automobiles in the United States and Canada, and to reduce real costs of production, has involved substantial increases in two-way trade in automotive products between the two countries. Exports in this category were at nearly 3 times the 1965 level, despite a considerable slow-down in the demand for automobiles in the United States during the second half of the year. Moreover, imports of motor vehicles and parts rose less rapidly than exports, so that there was a significant reduction in the net trade deficit for this group of commodities.
Increases in trade in wheat and motor vehicles and parts, which accounted for over half of the increase in exports in 1966, were in part unrelated to the cyclical expansion. The greater part of wheat shipments is governed by long-term contracts, while trade under the automotive agreement is to a large extent a consequence of measures designed to rationalize the industry. Changes in the export figures for these two commodity groups therefore do not reflect, to the same degree as other commodities, broad cyclical developments in external demand, domestic competition for resources, or Canada's relative success in world markets.
When all due allowance has been made for the automotive agreement and the wheat sales, however, there was still a substantial increase in Canadian exports in 1966. Outside these two fields, the growth in the value of exports was better than 9 per cent. A relatively large increase in export prices contributed to this rise in earnings; but such was the pull of demand in foreign markets, and especially of defence demand in the United States, that export volume, apart from wheat and automobiles, rose by more than 5 per cent despite the higher prices. Although Canadian exports are in general of a kind and quantity which the domestic economy would not absorb in the absence of foreign demand, their production calls upon real domestic resources and contributes to domestic money incomes. Since levels of domestic demand were already high, the strength of foreign demand reinforced the pressures on Canadian productive resources, at least in the early months of 1966.
Exports of chemicals, fertilizers and other manufactured products continued to show higher than average rates of gain. Despite some easing in economic activity in the U.S.A. during the latter part of the year, total U.S. imports from all countries rose more rapidly than in 1965. The expanded demand for basic
(^Preliminary estimate on a balance of payments basis, which includes receipts of inheritances and immigrants' funds; on a national accounts basis, excluding such funds, the increase in exports of goods and services in 1966 was slightly smaller, at 15.2 per cent.
27053-58£
[Stage Direction]
June 1, 1967
materials was reflected in increased shipments of Canadian petroleum, newsprint, wood pulp and non-ferrous metals. The economic recovery in Japan and Italy in 1966 led to higher Canadian exports to those countries. France, too, experienced an economic upswing and a consequent rise in total imports, but Canadian shipments, which are a small part of the French market, showed a small fall.

[Stage Direction]
COMPOSITION AND DESTINATION OF DOMESTIC MERCHANDISE EXPORTS BY MAJOR COMMODITY GROUPS AND MARKETS 1962 and 1966
1962	1966	Per centMillions of dollars	%	Millions of dollars	%	change 1962 to 1966Wheat and wheat flour	659	10.7	1,144	11.4	+73.5Other farm and fish products	637	10.3	915	9.1	+43.6Forest products	1,697	27.5	2,232	22.2	+31.5Metals, minerals and products	2,105	34.1	3,020	30.0	+43.5Chemicals and fertilizers	251	4.1	385	3.8	+53.4Motor vehicles and parts	57	.9	994	9.9	+1,643.3Other manufactured and miscellaneous products.	772	12.5	1,382	13.7	+78.9Total domestic exports	6,178	100.0	10,071	100.0	+63.0of which to: U.S.A	3,608	58.4	6,028	59.9	+67.1U.K	909	14.7	1,123	11.1	+23.4E.E.C	455	7.4	637	6.3	+40.0Japan	215	3.5	394	3.9	+83.3CPE'sd)	197	3.2	583	5.8	+195.9Other	794	12.9	1,306	13.0	+64.4
Trade of Canada basis
d) Centrally planned economies, including U.S.S.R., other Eastern Europe and Mainland China.
The slowing-down in the German economy reduced the demand there for Canadian commodities. Canadian exports to the European Economic Community as a whole rose at about 2 per cent.
Exports to the U.K. declined for the second consecutive year, in part reflecting the British Government's policies in support of the balance of payments. Similarly, Canadian exports to Australia and South Africa were reduced by the effects of stabilization policies implemented in those countries. Lower exports to South America as a whole were largely a reflection of lower sales to Venezuela, the main Canadian market.
The improvement in the performance of Canadian exports in 1966 was, therefore, centred largely on the higher rate of shipments of wheat and motor vehicles and parts, and on the higher level of demand in the U.S.A. and Japan.
Receipts on non-merchandise transactions rose by 8.6 per cent, a little faster than in 1965. There was a continued decline in gold production available for export, and lower receipts of dividends from abroad; but receipts of interest were raised by the resumption of servicing on the postwar loan to the United Kingdom, receipts on the travel and the freight and shipping accounts continued to grow steadily, and there were particularly marked increases in respect of inward flows of inheritances and immigrants' funds and receipts from "all other" current transactions, the latter reflecting in large part the disbursements by foreign governments for their pavilions at Expo '67.
June 1, 1967
[Stage Direction]
Government Expenditures
In the sixth year of cyclical expansion, government outlays on goods and services rose by 16.4 per cent to a level of $11.2 billion. This was the largest year-to-year increase recorded in this component of demand since the beginning of the Korean War, when expenditures on defence accelerated sharply.

[Stage Direction]
Federal	Prov- incial	Mun- icipal	Total	Federal	Prov- incial	Mun- icipal	TotalDefence	Non- defence	Defence	Non- defence	(millions of dollars)	(per cent change over preceding year)	1961...	1,613	1,369	1,467	2,787	7,236	4.3	15.6	_	8.3	6.91962...	1,680	1,345	1,563	3,129	7,717	4.2	1.8	6.5	12.3	6.61963.. .	1,572	1,362	1,725	3,416	8,075	-6.4	1.3	10.4	9.2	4.61964.. .	1,584	1,462	1,929	3,679	8,654	0.8	7.3	11.8	7.7	7.21965.. .	1,562	1,705	2,234	4,095	9,596	-1.4	16.6	15.8	11.3	10.91966...	1,713	2,167	2,729	4,560	11,169	9.7	27.1	22.2	11.4	16.4
As indicated in this table, year-to-year increases in total purchases of goods and services by all governments combined over the period 1961 to 1966 ranged between 5 and 16 per cent, although considerable variation occurred as between the different levels of government. Municipal spending, for example, averaged a steady increase of close to 10 per cent per annum for this period, but provincial expenditures accelerated sharply from an annual increase of 6.5 per cent in 1962 to 22 per cent in 1966. This reflected higher capital expenditures as well as current purchases associated with health, education and other community services, and was further affected by rising wage and salary rates.
At the federal level, total outlays on goods and services show little annual change from 1961 to 1964. Since 1964, however, the non-defence component has risen sharply as the increased demands for government services had to be met at higher market prices.
That part of goods and services outlays classified as capital expenditures rose in 1966 by 21 per cent in the government sector as a whole. The major increases took place at the provincial and municipal levels, for streets, roads, highways and schools.
PROBLEMS OF SUPPLY Manpower Developments
The Canadian labour force grew by a record amount in 1966, and far more rapidly than that of other countries. The number of people in the labour force rose by a remarkable 3.9 per cent over the 1965 average, while the continued growth in job opportunities led to an even larger increase in employment of 4.2 per cent. Accordingly, the average 1966 unemployment rate fell to 3.6 per cent from 3.9 per cent in 1965.
[Stage Direction]
June 1, 1967

[Stage Direction]
1959 to 1966
	1959	1960	1961	1962	1963	1964	1965	1966
			(Thousands of persons)					
Labour force	6,242	6,411	6,521	6,615	6,748	6,933	7,141	7,420Employed	5,870	5,965	6,055	6,225	6,375	6,609	6,862	7,152Unemployed	372	446	466	390	374	324	280	267Year to year change	(Per cent)	Labour force	2.7	1.7	1.4	2.0	2.7	3.0	3.9Employed	1.6	1.5	2.8	2.4	3.7	3.8	4.2Average of monthly rates	(Per cent)	Unemployment rate*1*	6.0	7.0	7.1	5.9	5.5	4.7	3.9	3.6
U>Unemployed as a per cent of the labour force. Sou hoc: DBS The Labour Force, Cat. 71-001.
A significant rise in participation rates, further growth in the population of working age, and higher immigration all contributed to the increase in the working population. In addition, there was a further substantial movement of farm workers into non-farm occupations, as the non-agricultural labour force increased by 5.0 per cent, and non-agricultural employment rose by 5.4 per cent. These movements are shown in some detail in reference tables 8 and 9.
The striking rise in participation rates last year was one of the most important indications of growing pressure on resources. As table 7 shows, the slow but steady, long-term downward drift of labour force participation by men

[Stage Direction]
PARTICIPATION RATES 1960 to 1966
-	1960	1961	1962	1963	1964	1965	1966
			(Per cent)				
Total labour force participation	54.2	54.1	53.9	53.8	54.1	54.4	55.1Men	80.7	79.8	79.1	78.5	78.1	77.9	77.827.9	28.7	29.0	29.6	30.5	31.3	32.8Men, 14 to 19 years	42.8	40.3	39.6	39.2	38.3	38.7	38.6Women, 14 to 19 years	32.6	32.3	30.9	29.9	29.9	30.2	31.4
Source: DBS The Labour Force.
continued, but the uptrend in the female participation rate, which has been a feature of the Canadian scene since the early 1950's, accelerated markedly in 1966. As a result of these developments, the female labour force rose by 7.3 per cent while the male labour force grew by 2.5 per cent. The impact of participation rate change on labour force growth is illustrated in Chart 7.
June L 1967

[Stage Direction]
MILLIONS	MALE	MILLIONS
PER CENT	PER CENT
[Stage Direction]
4	-
3	-
2 -
25
CENT		PER C
	PARTICIPATION RATES	
- ^		TOTAL
	1 *	. 14-19 ^ -A
1111 n Ilanl11 il111 Ij i il* * 1111 ilmlmlii tini		
1955 56 57 58 59 60 61 62 63 64 65 66
30
908
[Stage Direction]
June 1, 1967
A second important source of additional workers in 1966 was immigration. While a number of different factors bear on immigration, the buoyancy of employment conditions in Canada undoubtedly has an important influence. The generally high level of demand for labour in 1966 had therefore a significant bearing upon the increase in workers coming from other countries. These new arrivals added substantially to the size of the labour force, and many brought useful skills with them. Table 8 shows the distribution of skills among immigrants in recent years, and indicates the rising proportion of professional, skilled and semi-skilled workers. Of the 99,210 immigrants destined to the labour force in 1966, over 25,900 were managerial or professional people. About 11,000 were destined for the relatively unskilled occupations.

[Stage Direction]
IMMIGRANTS DESTINED TO: THE LABOUR FORCE Distribution by Skills and Occupation
-	1962	1963	1964	1965	1966Managerial, professional and clerical	38.7	37.0	(Per cent) 37.6	38.1	39.5Other skilled and semi-skilled	47.5	50.0	48.2	49.1	49.7Labourers and agriculture	13.8	13.0	14.2	12.8	10.8Immigrants destined to the labour force	100.0	100.0	100.0	100.0	100.0
Source: Quarterly Bulletin, Department of Manpower and Immigration.
The movement of workers from the agricultural sector into the nonagricultural economy was again substantial in 1966. This movement has accelerated rapidly since 1963, when the decline in the agricultural labour force was 13,000, until in 1966 the number of farm workers declined by 51,000. The trend had been especially marked in the Prairie region. This movement, as well as the high rate of farm investment in new machinery and equipment in recent years, was also a response to heavy demand for additional workers in the nonfarm economy.
Of the total increase in the non-farm labour force, which amounted to 329,000 persons, almost half resulted from natural increase in the population of working age. Higher participation rates, net immigration and the movement off the farms accounted for the balance in approximately equal proportions.
Employment
Employment rose by a further 290,000 persons in 1966. Added to the increase of 253,000 attained in 1965, this shows that well over half a million new job opportunities were created in the last two years. Non-agricultural employment rose by 341,000 in 1966 (630,000 in the two years), the number of women with jobs rose by 149,000 in the year (258,000 in the two years), and the number of teen-agers with jobs was 41,000 higher, after a gain of 45,000 the previous year.
The magnitude of the changes in employment are shown in reference table 9. The 7.4 percent increase in the number of women with jobs was the largest recorded during the present decade. Many of these new additions to the labour
June 1, 1967
[Stage Direction]
force were part-time workers who responded to job opportunities. Some part of the increase may also be related to the decline in birth rates during the past few years. The most rapid rise in participation rates has, indeed, occurred among women aged 20 to 24; in 1966, 55.6 per cent of the women in this age-group were in the labour force, compared to 52.6 per cent in 1965. The unemployment rate for this group remains low.
While there was a lower rate of growth in teen-age employment in 1966 than in 1965, this was accompanied by a further decline in the teen-age unemployment rate.
The unemployment rate during the year, on a seasonally-adjusted basis, was lowest during the first quarter, when demand pressures were greatest, and during the closing months of the year was at about the average figure for the year of 3.6 per cent.
Regional Employment Trends
The annual unemployment rate again moved downward in 1966 in all regions with the exception of one. Table 9 shows that in British Columbia the labour force grew by a remarkable 6.6 per cent, while employment grew by an equally remarkable 6.1 per cent-both rates exceeding those of any other region in Canada. As a result, however, the unemployment rate rose slightly. There was an increase in agricultural employment in this region during the year. Also, the economy of the region provided favourable conditions for a continued rapid reduction in teenage unemployment.
The employment situation continued to improve in the Atlantic region and Quebec during 1966, and the unemployment rate continued to fall. Both Ontario and the prairie region started the year with relatively little labour force slack, and continued to experience tight labour supply. In the Atlantic region the average unemployment rate fell to 6.5 per cent, but remained the highest in Canada by a substantial margin (reference table 11). There was a very slight decline in agricultural employment, with all of the increase in employment occurring in non-agricultural occupations. Conditions were relatively favourable for increased employment of young people.
Non-agricultural employment in Quebec rose by 6.3 per cent, the most rapid rate of gain attained in any region. This increase was associated with a decline in farm employment amounting to some 8.6 per cent, and with a rate of increase in total labour force second only to that of British Columbia. The demand for labour was sufficiently strong to reduce the unemployment rate from 5.5 per cent in 1965 to 4.8 per cent in 1966.
In Ontario, both the labour force and total employment rose by 4.0 per cent. There was a further slight decline in agricultural employment. The unemployment rate for the year, at 2.5 per cent, was virtually unchanged from 1965.
The labour force of the prairie region in 1966 again exhibited flexibility and mobility. While the total labour force in this region rose only fractionally, nonagricultural employment advanced by 6.2 per cent and most of these new workers came from the farms. The regional unemployment rate, already low in 1965, fell from 2.6 to 2.1 per cent. There was no sign of slackening in the demand for labour as the year ended.
[Stage Direction]
June 1, 1967

[Stage Direction]
1965 and 1966
-	1965	1966	Change
	(Thousands of persons)		(Per cent)
Atlantic Region Labour Force:			
Total	611	626	2.5N on-agricultural	577	593	2.8Employment:	Total	566	586	3.5N on-agricultural	533	554	3.9Age 14-19 years	62	66	6.5Unemployed	45	40	-11.1Quebec Region Labour Force:	Total	2,022	2,116	4.6N on-agricultural	1,903	2,007	5.5Employment:	Total	1,912	2,016	5.4N on-agricultural	1,796	1,910	6.3Age 14-19 years	204	213	4.4Unemployed	110	100	-9.1Ontario Region Labour Force:	Total	2,614	2,719	4.0N on-agricultural	2,461	2,577	4.7Employment:	Total	2,548	2,651	4.0N on-agricultural	2,397	2,510	4.7Age 14-19 years	224	237	5.8Unemployed	66	69	4.5Prairie Region Labour Force:	Total	1,228	1,248	1.6N on-agricultural	955	1,007	5.4Employment:	Total	1,196	1,222	2.2N on-agricultural	925	982	6.2Age 14-19 years	128	132	3.1Unemployed	32	26	-18.8British Columbia Labour Force:	Total	666	710	6.6N on-agricultural	644	684	6.2Employment:	Total	639	678	6.1N on-agricultural	617	652	5.7Age 14-19 years	55	67	21.8Unemployed	27	32	18.5
Source: DBS The Labour Force.
June 1, 1967

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June 1, 1967

[Stage Direction]
1961	1962

[Stage Direction]
1961	1962	1963 1964	1965	1966

[Stage Direction]
1963	1964	1965
10
6
2
12
8
4
0
June 1, 1967	COMMONS DEBATES	913
Income Developments
Wages, salaries and supplementary labour income, which customarily make up around 70 per cent of net national income, rose by some 12§ per cent in 1966. This was the largest annual gain recorded in the 1961-66 period, and reflected both the further sharp increase in the number of paid workers and generally higher hourly earnings. Weekly hours also were a little longer in some industries (notably construction), adding further to income.
As in 1965, the construction industry recorded the largest increases both in employment and in average earnings per employee, reflecting the continued strong demand for construction skills. Sharply higher earnings attracted more workers into the industry. In manufacturing, the gains were more moderate. Average hourly earnings advanced more sharply in the non-durable goods industries than in the durable goods industries, partly as a result of reduced overtime work in some durable goods industries. In mining, there was a strong advance in average earnings, little change in hours worked and a small increase in employment. In trade and the service industries, very strong gains in employment together with more moderate advances in average earnings appear to relate to the increase in the number of part-time workers engaged in these industries. Average earnings in finance, insurance and real estate rose more rapidly than they did in 1965, while the number of employees rose more moderately.

[Stage Direction]
LABOUR INCOME AND PROFITS 1962 to 1966
-	1962	1963	1964	1965	1966
		(Millions of dollars)			
Wages, salaries and supplementary labour income..	20,233	21,547	23,433	26,033	29,324
Corporation profits before taxes and before divid-					
ends paid to non-residents		3,819	4,188	4,819	5,199	5,187
		Year to year change			
			(Per cent)		
Wages, salaries and supplementary labour income..		6.5	8.8	11.1	12.6
Corporation profits before taxes and before divi-					
dends paid to non-residents			9.7	15.1	7.9	-0.2
Source: DBS The National Accounts.
The picture that emerges from these statistics (which are set out in reference table 12) is one of continued strong demand for labour, with higher wage-rates reflecting the desire to attract additional workers into particular industries (as in construction), and also reflecting in some cases the sharper gains resulting from higher contract settlements. In the case of trade, finance and the service industries, the advance in average labour income per employee, although less than that in mining, manufacturing or construction, also indicates a continued high level of demand for labour. To the extent that they exceeded productivity growth, such wage-rate developments contributed to upward pressure on price levels, or cut into profit margins, or, more commonly, did both.
[Stage Direction]
June 1, 1967

[Stage Direction]
ALL INDUSTRIES	SERVICES
140
100
60
June 1. 1967	COMMONS DEBATES	915
Despite increased sales, corporation profits before taxes in 1966 were virtually unchanged from the 1965 total, while net income of non-farm unincorporated business advanced only very slightly. Improvements were recorded in the wood, printing, electrical products, petroleum and chemical products industries, while other industries had mixed experience.
As shown in reference table 13, profits in the non-manufacturing sector remained strong to the end of the year, but profits in the manufacturing industries as a whole reached a peak in the first quarter which was not subsequently passed. A moderate decline in the second quarter was followed by a sharper decline in the third, which was affected by a large number of industrial disputes. There was a marked recovery in the fourth quarter.
Output, Productivity and Production Costs
Real domestic product, excluding agriculture, rose by 6.3 per cent in 1966.(1) This advance, while larger than the average postwar experience, indicated a falling-off from the annual rates of change attained in recent years, as summarized in reference table 14, and reflected the using up of economic slack by the latter part of 1965. The important developments in the pattern of output can be seen in the context of quarterly figures, as presented in table 11. The rate of advance in total product was exceptionally high during the closing months of 1965 and in the first quarter of 1966, after which it showed more moderate gains.
WReal domestic product measures the volume of output of goods and services produced in Canada.
It differs from GNP in constant dollars in that it excludes interest and dividend receipts from abroad and includes interest and dividend payments to non-residents.

[Stage Direction]
QUARTERLY DATA SEASONALLY ADJUSTED IQ. 1961 = 100
[Stage Direction]
June 1, 1967

[Stage Direction]
CHANGES IN REAL DOMESTIC PRODUCT By quarters
	1965				1966			
	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q
		(Per cent change from previous quarter)						
Real domestic product less agri-								
culture	2.4	1.4	2.0	2.1	2.1	0.7	-	1.9Mining, total	3.3	-1.0	4.8	0.6	2.2	2.8	-2.7	4.6Manufacturing, total	3.1	1.6	2.7	2.8	2.4	0.4	0.1	1.5Non-durables	0.9	0.7	2.7	2.3	2.7	1.1	1.2Durables	5.8	2.5	2.7	3.3	2.2	-0.2	0.3	1.9Construction	2.4	1.8	2.1	3.6	4.1	0.1	-5.5	1.5Transportation, storage and com-	munication	1.5	1.7	2.8	2.2	1.5	3.8	-2.0	4.6Trade, total	3.0	2.3	2.0	2.1	1.8	-2.8	2.6	1.7Wholesale	6.8	1.1	2.2	3.0	-0.8	-0.5	1.5	2.9Retail	0.8	3.0	1.9	1.6	3.3	-4.1	3.2	0.9Finance, insurance and real estate..	0.8	1.6	0.9	0.4	2.1	1.0	1.7	1.3Services	1.0	1.7	1.1	1.2	1.2	0.6	1.3	0.5Commercial industries less agri-	culture	2.5	1.5	2.1	2.2	2.3	0.7	-0.2	2.0
Source: DBS Index of Industrial Production, monthly. Cat. 61-005.
The rapid advance in total output in late 1965 and early 1966 was in part a result of the high levels of construction activity during the second half of 1965. While this activity itself was a response to the desire for a rapid rise in the stock of business physical capital, the high rate of demand resulting from these sharp gains in output was such as to lead to plans for yet further rapid advances in investment spending. This situation contained the seeds of instability, which were multiplied by continued demand pressure throughout the first quarter. During the second quarter, however, demand levelled off at the high rate attained by then, and total real output moderated its rate of advance accordingly. Trade, after a brisk first quarter, in part due to special factors, recorded a decline. Manufacturing output rose by 0.4 per cent in the second quarter and, partly because of strikes, by only 0.1 per cent in the third. In the fourth quarter, the rate of output increased more rapidly.
Both durable and non-durable manufacturing output levelled off in the second and third quarters. Among the durables, all categories moved in line with the general trend except electrical apparatus and supplies, which rose by about 10 per cent between the first and third quarters. Among the non-durables, marked departures from the norm were also rare. Output of the community service industries, however, continued the steady quarter-to-quarter gains characteristic of these industries through the two years, showing little tendency either to accelerate or to level off.
On the whole, these quarterly changes in real output mirror the growth patterns and development of pressures in the economy as a whole since mid-1965. Continued expansion of output at very rapid rate® brought many industries
June 1. 1967	COMMONS DEBATES	917
close to full utilization of capacity in early 1966, and further advances of any magnitude may well not have been possible in many cases. It was probably due to these circumstances that capital investment intentions for the year were revised upward. However, the second-quarter moderation of demand pressures which became evident about mid-year, and the more moderate advances recorded thereafter, eased the pressure on supply resources as the year wore on, giving rise to an atmosphere of more moderate demand pressures by the beginning of 1967.

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CHANGES IN EMPLOYMENT BY INDUSTRIAL DIVISION By quarters 1965 and 1966
	1965				1966			
	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q
		(Per cent change from previous quarter)						
Mining	2.5	1.8	1.5	0.8	1.1	-	-3.5	2.9Manufacturing, total	1.6	1.0	1.6	2.3	1.6	0.7	0.3	1.0Non-durables	0.9	0.7	1.2	1.0	1.5	0.6	-	1.1Durables	2.3	1.4	1.8	3.8	1.8	0.7	0.7	1.0Construction	4.5	0.4	1.4	8.7	4.8	-1.0	-3.5	4.4Transportation, storage and com-	1.0	0.9	0.9munication	1.6	-0.2	0.7	0.7	0.1	Trade, total	1.7	1.8	0.8	1.2	3.2	2.4	-0.1	0.1Wholesale	1.4	1.6	1.0	1.8	2.7	1.3	-0.3	0.9Retail	2.1	1.6	0.6	1.3	3.6	2.6	-0.2Finance, insurance and real estate..	1.3	1.3	0.9	0.3	0.7	1.3	1.0	0.2Services	2.4	2.5	1.5	3.2	3.6	1.5	1.7	3.3Industrial Composite	2.0	1.2	1.1	1.9	2.1	1.3	-0.4	1.2
Source: DBS Employment, Average Weekly Wages and Salaries.
The employment picture associated with these developments, already examined in terms of total labour force and employment, was one of sustained demand in early 1966 and of diminishing strain in later months. Detail of employment by industry, while not currently available in the form of direct estimates of totals, may be approximated by reference to the employment indexes based on reports from firms employing 20 persons or more (published by DBS in Employment, Average Weekly Wages and Salaries, catalogue number 72-002)1. Changes in employment on this basis are summarized in reference table 15, on an annual basis, and in table 12 by quarters.
These tables reflect the pattern indicated by the trend in output. They show that, on an annual basis, 1966 employment rose at the same rate as in 1965. (It may be recalled that total employment rose more rapidly in 1966. However, the difference is attributable to the fact that many new entrants may have worked only very short hours, perhaps 8 to 10 hours a week, or they may have
<OOne important qualification to this analysis resides in the fact that the employment indexes are based on the 1960 standard industrial classification, while the output indexes still use the 1948 SIC. However, over a short period the trends revealed by use of the two series in juxtaposition should not be misleading.
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June 1, 1967
taken jobs in small establishments. Many may have been self-employed. People with these characteristics are included in The Labour Force employed total, but are generally excluded from the indexes.) On a quarterly basis, however, the expansion in employment was greatest in the two quarters, fourth quarter 1965 and first quarter 1966, when output was under greatest pressure. Manufacturing employment as a whole reflected the trend strongly, as did the durables sector. Construction employment recorded the largest quarterly changes, but the trade and service industries also moved substantially, and with some lag into the second quarter. The third quarter 1966 pattern in employment in large establishments was generally one of decline or relatively small advance; only the community services and the financial sector showed any tendency to sustained advance, and that at fairly low rates.

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By quarters 1965 and 1966
	1965				1966			
	IQ	2Q	3Q	4Q	IQ	2Q	a CO	4Q
		(Per cent change from previous quarter)						
Mining	0.8	-2.8	3.3	-0.2	l.i	2.8	0.8	1.7Manufacturing	1.5	0.6	1.1	0.5	0.8	-0.3	-0.2	0 5Non-durables	-	-	1.5	1.3	1.2	0.5	0.1Durables	3.4	1.1	0.9	-0.5	0.4	-0.9	-0.4	0.9Construction	-2.0	1.4	0.7	-4.7	-0.7	1.1	-2.1	-2.8Transportation, storage and com-	munication	-0.1	1.9	2.1	1.5	0.5	2.9	-2.1	3.7Trade, total	1.3	0.5	1.2	0.9	-1.4	-5.1	2.7	1.6Wholesale	5.3	-0.5	1.2	1.2	-3.4	-1.8	1.8	2.0Retail	-1.3	1.4	1.3	0.3	-0.3	-6.5	3.2	i.iFinance, insurance and real estate..	-0.5	0.3	-	0.1	1.4	-0.3	0.7	i.iServices	-1.4	-0.8	-0.4	-1.9	-2.3	-0.9	-0.4	-2.7Commercial industries less agri-	culture	0.5	0.3	1.0	0.3	0.2	-0.6	0.2	0.8
Source : Tables 11 and 12.
Changes in real output per worker, by industry, on the basis of the indexes used above, are summarized in reference table 16 and table 13. These tables indicate a progressive decline in the annual improvement of productivity per worker from the year 1964. Such a trend would be in keeping with the labour force developments discussed earlier, notably the marked increase in the number of young people and housewives in employment. The productivity of these new workers, being low during their earlier months of employment, brings down the average; moreover, many work less than a full week but more than only a few hours. In some industries, some hoarding of skilled labour may have been a factor. Also, a proportionately large share of the total increase in employment entered industries where productivity per worker is relatively low. These developments could reasonably be expected to have restricted productivity growth on a per-worker basis.
June 1, 1967

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June 1, 1967
Quarterly changes in productivity are shown in table 13. These data are preliminary and any conclusions need to be regarded as indicative of broad trends rather than precise measurements. This table suggests that the manufacturing sector managed to maintain a degree of productivity improvement even when demand and output were rising most rapidly in late 1965 and early 1966. In construction, however, the pace of advance and the already high level of activity appear to have been inimical to continued improvement in productivity during that period. The trade and service sectors also appear to have lost some ground. In subsequent months, as the economy endeavoured to adjust to the high levels of activity established at the beginning of the year, productivity change was on the whole disappointing. In manufacturing, some fractional decline is indicated, with productivity in durables industries being adversely affected by the lower operating rate recorded in some cases, and improvement in the non-durables industries being limited.

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By quarters 1965 and 1966
-	1965	1966	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q(Per cent change from previous quarter)	Wages and salaries per worker	Non-farm	1.8	1.3	1.7	1.9	1.4	1.0	2.3	2.1Manufacturing	1.9	1.4	0.7	1.9	1.5	1.0	2.2	0.8Output per worker	N on-farm	0.5	0.3	1.0	0.3	0.6	-0.6	0.2	0.8Manufacturing	1.5	0.6	1.1	0.5	0.8	-0.3	-0.2	0.5Wages and salaries per unit of output	Non-farm	1.3	1.0	0.7	1.6	1.2	1.6	2.1	1.3Manufacturing	0.4	0.8	-0.4	1.4	0.7	1.3	2.4	0.3Corporate profits per unit of output	Non-farm	-2.8	-0.1	2.4	-3.0	-2.2	-1.2	-7.0	5.9Manufacturing	8.8	-1.3	0.4	-5.7	2.6	-4.4	-11.2	7.5
Source: DBS Estimates of Labour Income.
DBS Index of Industrial Production.
DBS Corporation Profits.
DBS Employment and Average Weekly Wages and Salaries.
These developments in productivity per worker are of major importance in conjunction with movement of earnings per worker. The income developments discussed earlier are, from another viewpoint, the cost incurred in the production process and, in due course, these play their part in the process of price determination. Table 14 draws together the income, productivity and income costs per unit of output in the non-agricultural economy as a whole and in manufacturing. These data show a sharp annual rise in wage and salary costs per unit of output in the entire non-farm economy over recent years, although manufacturing unit labour costs did not begin to rise until 1965. On a quarterly basis, labour costs moved up more rapidly in the fourth quarter of 1965, and, after a more moderate movement in the first quarter of 1966, rose sharply in the second and third quarters. The fourth quarter advance was again more moderate. In the manufacturing sector, as illustrated in Chart 12, the quarterly increases were below those for the entire non-farm economy throughout 1965. More modest gains in
June
1, 1967

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(1956 = 100)	.
(RATIO SCALE)
140
120
100
150
130
110
90
140
120
no
90
140
120
no
90
150
130
no
90
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June 1, 1967
the first trvo quarters of 1966 were followed by a sharp increase in the third quarter, but there was little change in the fourth. The rise in unit wage costs was thus on average more rapid in the latter part of the year, partly reflecting the less favourable productivity trends of the period and partly the sharp rise in wages and salaries paid per worker.
Profits per unit of output in the entire non-farm economy, being the margin between unit costs and unit price, have been declining. From mid-1965 to the third quarter of 1966, unit profits declined steadily if irregularly, with a particularly sharp drop occurring in the third quarter of 1966 Avhich was greatly affected by strikes. A substantial recovery however occurred in the fourth quarter of 1966.
Price Developments
Price movements in the Canadian economy in 1966 reflected all of these factors. Buoyant demand, particularly at the consumer level, both caused and permitted prices to rise. Higher prices in the United States, notably food prices, were an important element in the pattern of price movements which emerged in Canada. Accompanying these trends was the record of rising wage-rates and smaller productivity gains, which raised production costs and added to price pressures as the year wore on. In addition to these developments, the introduction of the Canada and Quebec Pension Plans on January 1 (which added the employer's contribution to his production costs) and the addition of a further 2 percentage points to the Ontario sales tax at the retail level resulted in further upward movements in the price indexes.
The detail available in the Industry Selling Price Indexes (which are not combined into a composite index in order to avoid double-counting and other technical difficulties) presents a helpful indication of the industries which are experiencing cost pressures or exceptional demand conditions. Chart 14 shows the degree of pressure which Avas present during the year, revealing the percentage of industries changing their prices, in Avhat direction and by hoAv much; it indicates that increases Avere greater in the first half of the year.
There was some additional evidence of diminishing demand pressure during the later months, in the movement of the wholesale index of thirty industrial materials. This index, which includes many items traded on world commodity markets, in February 1966 reached its highest point since the period of the Korean War, but since that time has declined steadily if modestly. The index of non-residential building materials, in which increased wage-costs and other factors can more readily be moved fonvard into prices, continued to edge upward until the end of the year. The residential materials index, among these special groupings, continued to move upAvard throughout the entire tAvelve months and into the neAv year. The price index of finished manufactured goods, which incorporate material, labour and other costs, rose in every month of the year until September, when it was 2.5 per cent higher than it had been in January. Some deceleration appeared to develop toAvards year-end.
The price changes which attracted most attention during the year were those affecting the consumer price index. In particular, the sharp rise in food prices, which began in 1965 and became much more rapid in the first few months of 1966, became a source of grorving concern. This movement was due only in part to cyclical pressures. Rising prices of livestock products Avere fundamentally a response to the continued rise in consumer demand for meat in both the United States and Canada. While the uprvard trend in consumption was very largely a response to the rise in incomes which has been a feature of recent years, popula-
June 1, 1967	COMMONS DEBATES	923
tion growth also was an important factor. This increase in consumption has taken place against a background of relatively inelastic supply, as the number of animals available for slaughter could not quickly be expanded, and strong export markets for grains in recent years have maintained the relative attractiveness of grain growing as against livestock operations. The strong upward price movement was an eventual consequence of these developments.
Other food prices, however, also rose sharply in the early months of 1966. Many of these price changes were an attempt by processors, wholesalers and retailers to cover rising costs, both in retrospect and in prospect, at a time when circumstances appeared to permit such changes. These food price increases were most marked in the first quarter, when the atmosphere of buoyant demand and high incomes gave rise for a while to an inflationary psychology in which such
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June 1, 1967
June 1, 1967
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price changes appeared to offer only a limited threat to the competitive positions of sellers. These particular changes were thus in part independent of demand pressures and in part caused by rising costs. Rising wage costs, which are the most important element of service prices, were a major cause of the continued advance in prices of consumer services.
Consumer prices other than food, as recorded in the consumer price index, were affected by tax changes, particularly the higher rate of sales tax imposed in the most populous province in the spring, and also by the continued rise in property taxes in most municipalities. These tax changes, while raising prices to the consumer, are not themselves evidence of cyclical pressures. Higher interest rates on residential mortgages do, however, find their way into the index as part of the price paid for home ownership. This, as a cyclical phenomenon, occurred in the course of 1966.

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The slackening in the rate of price advance which occurred in the latter part of the year was both a reflection of, and a contributory factor to, the ebbing of the tide of inflationary psychology. This change of pace is most easily observed in'the movement of the implicit price indexes of gross national expenditure and its components, which rose sharply throughout the first half of the year but recorded smaller quarterly increases thereafter (reference table 20). Over the year as a whole, the GNE deflator advanced by 4.6 per cent, compared to 2.8 per cent in the previous year. It may be noted that the year-over-year fourth-quarter comparison was 4.9 per cent. The built-in wage increases in many industries, and the present unsatisfactory productivity record across the nonfarm economy as a whole, however, indicate a continued rise in unit wage costs in coming months, and hence a continued, though more moderate, increase in the general level of prices.
926
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June 1, 1967
Imports of Goods and Services
Although some of the elements of strength in Canada's exports in 1966 had their counterparts in the import accounts, the growth of 13.2 per cent in total imports of goods and services1 was little greater than in 1965 (12.3 per cert), and slightly less than in a period of markedly lower pressure on domestic resources in 1964, when it was nearly 14 per cent. Moreover, the rise in merchandise imports alone was virtually the same in each year, at 14.5 per cent in 1965 and 14.6 per cent in 1966. Outpayments on services increased by a little more than 10 per cent, as against rather less than 8 per cent in 1965.
This virtually straight-line trend in imports was not really commensurate with the sharply accelerated pace of the expansion in the domestic economy. Imports did not show the increase that might have been expected, on the basis of their behaviour in previous periods of very heavy pressure on domestic resources. Even with due allowance for problems of seasonal adjustment resulting from the new patterns of trade that have developed in recent years, merchandise imports in particular were on only a relatively gentle rising trend from October 1965 right through September 1966.
The reasons for this somewhat unexpected out-turn are simply not known in full at present. It may be that a significant margin of import demand remained unfulfilled, as productive capacity in the main supplying industries in the United States was pre-empted by the surge of demand in that country, and that it only began to be met as the U.S. economy cooled off towards the end of 1966. If so, some import orders may have been cancelled or switched; total merchandise imports continued very strong through February of 1967, but on the basis of shipments from the U.K. and other overseas countries, rather than the United States. In general, however, the suggestion that import shipments were delayed, rather than cancelled or switched, is borne out by the marked pause in imports in the first, second and third quarters of 1966, and subsequent increases into early 1967.
The greater part of the increase that did occur in merchandise imports was accounted for by imports of machinery and equipment, and particularly of motor vehicles and parts and of production equipment associated with implementation of the Canada-U.S. automotive agreement. Other specific items contributing substantially to the higher rate of imports in this category were electric generators and motors,, wheel tractors, ships and boats, aircraft and parts, electronic computers and other office machinery and equipment.
The automobile markets in both the United States and Canada weakened somewhat in the course of the year, although the bilateral trade in automobiles and parts was vastly expanded. Despite increased production of commercial vehicles, lower Canadian imports of iron and steel, particularly of plate, sheet and strip steel, can be partly attributed to a levelling-off in car production in the course of the year. Imports of structural shapes and steel piling similarly were affected by the trend in non-residential construction, but Canadian purchases of pipes and tubing and of some other iron and steel products were considerably higher, so that the net reduction in iron and steel imports was only moderate. Among fuels, imports of coal and other bituminous substances recorded substantial gains over 1965, but liftings of foreign crude petroleum declined for the third successive year, a fact which was reflected in the lower volume
(^Preliminary estimate on a balance of payments basis, which includes outpayments of inheritances and emigrants' funds; on a national accounts basis, excluding such funds, the increase was 13.6 per cent.
June 1, 1967
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of imports from Venezuela. Non-ferrous metals and ores, particularly aluminum and nickel, constituted another group of products to show large increases in imports.

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COMPOSITION OF IMPORTS™ (millions of dollars)
	1964	1965	1966	Change 1965 to 1966	
				millions of dollars	Per cent
					
Fruits and Vegetables	289	304	315	+11	+3.6Other agricultural and fishery products	636	596	635	+39	+6.9Fibres, fabrics and textiles	509	526	535	+g	+1.7Iron, steel and products	545	666	' ;629	-37	-5.6Coal, petroleum and products	547	622	635	+13	+2.1Other metals, minerals and products	417	479	584	+105	+21.9Forest products	157	172	169' .	>
i >
-8	-1.7Chemicals and products	463	524	550	. +26	+5.0Machinery	1,211	1,372	1,575	! +203	+14.8Motor vehicles and parts	818	1,125	1,581	1 +456	+40.5Other equipment	980	1,202	1,473	i +271	+22.5Miscellaneous products	915	1,046	1,187	+141	+13.5Total Imports	7,488	8,633	9,867	+1,234	+14.3
«Trade of Canada basis.
.	bw.rr * -[DOT]	;
The increase in imports of agricultural products was concentrated chiefly on meat and dairy products, eggs and honey, partly, offset by: a reduction in the value of imported raw sugar. Smaller purchases of cotton restrained the increase in imports of fibres, fabrics and textiles. Geographically, the U.S.A. accounted for the bulk of the increase in Canadian imports in 1966.
The growth of outpayments on most non-merchandise transactions ("imports" of services, including the use of foreign capital) was in general not much faster than in 1965, and a good deal less rapid than in 1964, a year which saw a particularly marked rise in payments associated with the servicing of capital. Payments of interest and dividends together rose by 10 per cent last year, the growth in interest payments being relatively much the greater. Reduced corporate profitability may have been a factor in the slower growth of dividend payments, but the extensive control of Canadian corporations by non-residents has long tended to over-ride any clear relationship between current profitability and distributions to non-resident shareholders. It is certainly the case that the trend of recent years has been considerably distorted by the erratic behaviour of dividend payments to the United States, which contributed to a rise of nearly 24 per cent in the outflow from Canada in respect of dividend payments in 1964, followed by increases of only 3| per cent in 1965 and 7§ per cent in 1966.
Payments on "all other" current transactions also rose by about 10 per cent, and advertising expenditures in connection with Expo '67 were one of the contributory factors. The increase in payments on travel account was a good deal stronger, at nearly 18 per cent; but the rise in payments on freight and shipping was little more than 2 per cent, despite the substantial increase in the total of Canada's external trade in merchandise.
27053-59a
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June 1, 1967
The major single factor in the acceleration that occurred in non-merchandise payments, however, was a near-doubling in official contributions, from $92 million in 1965 to $167 million in 1966. A major part of this increase is accounted for by the aid donation of some $60 million of wheat to India. Since this was a donation in kind, a similar increase was recorded in merchandise exports.

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This section deals with government transactions on a national accounts basis and for the calendar year, in order to make comparisons with other economic aggregates.

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$ BILLIONS	$ BILLIONS
Looking back to the period when the economy emerged from the trough of the cycle in early 1961, government revenues were rising appreciably less than expenditures. As a result, the deficit of the total government sector con-tinued^to grow, and for that year it was enlarged to a postwar near-record level
June 1, 1967
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of $1,005 million. With the gathering momentum of expansion, revenues outpaced expenditures in successive years, until in 1965 the fiscal position of the total government sector moved to a surplus of $246 million. The municipal sector continued to run deficits of around $400 million annually until 1964, when these increased to over $500 million. Burgeoning demands for schools, streets, sewers and other ancillary facilities generated by the expansion were met from the extra revenues made available to the municipalities from taxes and from larger transfers from the provincial governments.
The revenue and expenditure position by level of government is shown in the table below.

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(National accounts basis)
-	1961	1964	1965	1966
		(Millions of dollars)		
F ed eral- Rev enu e	6,668	8,187	8,973	9,721Expenditure	7,129	7,891	8,405	9,597Surplus (*+*) or deficit (-)	-461	+296	+568	+124Provincial-Revenue	3,709	5,417	6,336	7,293Expenditure	3,837	5,296	6,084	7,263Surplus (+) or deficit (-)	-128	+121	+252	+30Municipal-Revenue	2,707	3,642	3,945	4,427Expenditure	3,123	4,080	4,519	5,015Surplus (+) or deficit (-)	-416	-438	-574	-588Canada Pension Plan	-	-	-	531Quebec Pension Plan	-	-	. -	183Total*1*-Revenue	11,099	14,697	16,373	18,780Expenditure	12,104	14,718	16,127	18,500Surplus (+) or deficit (-)	-1,005	-21	+246	+280
^Excluding inter-governmental transfers.
Because of the nature of the revenue base, federal and (to a lesser extent) provincial revenues are cyclically sensitive. Over a quarter of federal revenues are derived from personal income taxes which, because of the structure of exemptions and rates, yield a larger percentage increment than the growth in the income base to which they are applied. On the other hand, corporation income tax accruals, which are also an important source of revenue, are affected by changes in profit margins and the level of profits as the economic expansion proceeds. Again, the federal government derives a considerable amount of revenues from sales and excise taxes and customs import duties levied on cyclically responsive purchases of durable goods for consumption and investment. It should be observed however that year-to-year changes in revenues throughout this period were also affected by the gradual application of sales taxes on construction materials and production machinery and equipment, and at the provincial-municipal level by increases in sales, gasoline and property tax rates.
The net result of these factors over the period was the change from a deficit position at the federal level of $461 million in 1961 to a surplus position of $296 million in 1964 (on a national accounts basis). By the second quarter of 1965,
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June 1. 1967
the federal surplus was running at a seasonally adjusted annual rate of some $680 million. Despite the reduction in personal income taxes as of July 1, 1965, by an equivalent of 10 per cent of the basic tax subject to a maximum reduction of $600 in a full year, the buoyancy of demand was such that gains in indirect tax revenues and revenue from other sources offset the reduction in personal income tax flows. On balance, the rate of federal surplus was relatively unchanged during the rest of the year.


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1961 - 1966


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From the fourth quarter of 1965, however, the federal surplus on the national accounts basis declined by $240 million to an annual rate of $416 million in the first quarter of 1966, to $280 million in the second and to $164 million in the third; a deficit of over $360 million was recorded in the fourth quarter1. A number of factors contributed to the drop in the first quarter of 1966. At the beginning of 1966, the flow of old age security payments increased appreciably with the first of the scheduled annual reductions to the eligible age limit from 70 to 69
OThis apparent change from surplus to deficit arises partly from the seasonal adjustment of interim payments to railways.
June 1, 1967
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years. In the same quarter higher defence expenditures reflected the lump sum re-engagement bonus paid to service personnel. On the revenue side the basic abatement of personal income taxes to the provinces was raised from 21 to 24 percentage points.
In the succeeding quarters of 19G6, the growth in revenues did not keep pace with the expansion of expenditures. A number of special factors contributed to this development. In the second quarter, for example, revenues from direct personal income taxes declined, due in part to a shift in tax refunds from the first to the second quarter. In the following quarter the flows of personal income taxes rebounded sharply as the higher tax rates came into effect, although this was offset to some extent by reduced corporate tax liabilities and reduced investment income. Increased expenditures in the third quarter reflected the larger payments for international assistance and grants to universities. Special factors in the fourth quarter included larger interim payments to the railways and pay increases to the armed forces personnel.
The government sector as a whole at the beginning of 1966 showed a rise in the government surplus (on a national accounts basis) from a rate of $400 million in the fourth quarter of 1965 to a rate of close to $544 million in the first quarter of 1966, as contributions from the Canada and Quebec pension plans began to flow in with no benefit payments to be made in the first year. By then, it was becoming evident that the demand pressures in the economy generally and the pace of the investment boom in particular were generating inflationary conditions in an economy already operating at or close to capacity. With this in mind, the Minister of Finance introduced a number of restraining measures in the spring budget.
After these and other changes had been taken into account a surplus of $455 million, exclusive of the refundable tax, was forecast on a national accounts basis for 1966-67 in the spring budget. By late 1966 the pressure of excessive demand had moderated. Mainly because expenditures were higher than had been expected in the spring budget, it appeared the surplus would be substantially lower than the amount forecast earlier. A supplementary budget was brought down on December 19 to introduce measures for financing the recently-legislated "guaranteed income supplement" programme for needy pensioners. In reviewing the situation at that time, it was decided that, taking account of the changes since March, the action taken should be economically neutral, balancing the expenditures on the guaranteed incomes supplement with increased revenues. Accordingly, taxes were raised by an amount of $290 million annually, to meet the forecast cost of the new programme.
Cash requirements of the federal government, which cover loans and investments as well as budgetary requirements, also proved to be greater than had been forecast in the budget of March 29, 1966. At that time the Minister had forecast for 1966-67 a budgetary requirement of $150 million, and a further $350 million for non-budgetary transactions such as loans, investments, advances, etc., exclusive of amounts collected from the refundable tax. By December, higher than anticipated expenditures had raised the budgetary deficit to $340 million. On the non-budgetary side, cash requirements were raised also by $150 million from those forecast earlier, mainly because of larger direct loans for housing.
In terms of statistical detail underlying recent federal revenue changes, three-quarters of the $748 million increase from 1965 to 1966 is represented by larger revenues from personal direct taxes and indirect sales taxes. Personal
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June 1, 1967
income tax flows strengthened with the growth in labour income and the restoration in June 1966 of most of the tax cut made a year earlier. Offsetting effects included the increase of the basic abatement to the provinces and, to some extent, the tax deductibility of contributions to the Canada and Quebec pension plans.
Federal sales and other indirect taxes rose by 10.2 per cent in 1966, a somewhat lower rate than in previous years. This was partly associated with a decline in the rate of growth of expenditure on durable goods and housing construction but also because the higher figures of the preceding years reflect the progressive application of the sales tax to building materials and production machinery and equipment.
On the expenditure side, total federal outlays rose by close to 14.2 per cent, slightly more than the rate of increase of the previous year. Of the total increase of $1,192 million, approximately one-half is accounted for by larger purchases of goods and services. Wages and salaries, the largest single factor contributing to this increase, rose by 13.1 per cent, largely as a result of higher wage and salary rates.
Other factors included increased international assistance, re-enlistment bonuses and higher pay and allowances to armed service personnel, and special contributions to superannuation accounts consequent upon the pay increases. It should be noted, however, that the latter is an actuarial adjustment and does not represent cash outlays in the current period.
Transfers to other levels of government rose by $232 million or 16.3 per cent, primarily because of larger payments to the provinces under federal-provincial fiscal arrangements and under the Technical and Vocational Training Assistance Act.
Transfers to persons rose by 7.0 per cent, with over two-thirds of the change arising from increased old age security payments associated in part with the reduction in the age limit at which these are paid. The balance of the increase was spread among a number of items, the largest being the payment to universities associated with the raising of the per capita grant from $2 to $5. Interest on the public debt rose by 9.4 per cent and transfers to business by 25.1 per cent, the latter reflecting mainly larger subsidies to railways.
The net position of the provincial-municipal governments on a national accounts basis also declined in 1966. Provincial-municipal expenditures rose by 15.4 per cent in 1966, compared to a 13.3 per cent increase in 1965, while the revenue increase was fractionally smaller in 1966 than in the previous year. As a result, the provincial-municipal government sector showed a deficit, on the national accounts basis, of $558 million in 1966 compared to deficits of $360, $317 and $322 millions in 1963, 1964 and 1965 respectively.
Provincial revenues rose by 15 per cent to $7,293 million in 1966. Personal direct taxes, which accounted for one-fifth of provincial revenues, increased by roughly one quarter, mainly due to a 36 per cent rise in personal income tax receipts following the transfer of an additional abatement of 3 percentage points from the Government of Canada to the provinces. Indirect taxes increased by almost 15 per cent, largely because of an 18 per cent rise in gasoline and retail sales tax receipts. This reflected a widening of the retail sales tax base in Quebec, as well as a 2 percentage points increase of this tax in Ontario and an increase in gasoline tax in both Ontario and Saskatchewan. Additional transfers from the Government of Canada raised the level of federal transfers to roughly 20 per cent of provincial government revenue.
June 1, 1967
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Expenditure on goods and services, which made up over a third of provincial government outlays, increased by almost one quarter, mainly because of a rapid rise in capital expenditures by provinces. This was particularly evident in the third quarter of the year, when there was a sharp upswing arising mainly from a spurt in capital spending on highways in some provinces. Transfers to persons rose by 16 per cent, reflecting a substantial increase in grants to non-commercial institutions, which for national accounts purposes are included in the personal sector. This again reflected the growing outlays of provincial governments for health and education. Finally, transfers from the provinces to municipalities increased by almost 18 per cent as grants to school corporations and for general purposes expanded sharply.
In 1966, municipal governments ran a deficit of $588 million on a national accounts basis, a somewhat larger deficit than in the previous year. Revenue increased by 12 per cent to $4,427 million and expenditure by 11 per cent to $5,015 million. Indirect taxes, which at the municipal level consist largely of real property taxes, increased by over 7 per cent.
Municipal expenditure on goods and services, which forms over nine-tenths of the total expenditure of municipalities, rose by over 11 per cent over the previous year. Outlays on wages and salaries rose by 9 per cent, and there was a 24 per cent rise in outlays for buildings, machinery and equipment by municipal governments, including school authorities.

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The Current Account
Historically, the Canadian deficit on current international transactions has acted as a barometer of the economy's need to call upon external resources, tending to rise during an economic expansion, and shrink when the rate of economic growth slackens. This is due largely to the elasticity of imports to changes in income and pressures on domestic resources. However, the effect of this on the total current account balance is moderated by the relatively steady increase in payments to service past capital inflows. With the beginning of the present business expansion, the balance on current account might have been expected to deteriorate in accordance with the historical trend. The fact is that this did not happen, and it is not possible to relate recent changes in the balance of payments closely to trends in domestic demand.
Several factors account for this development. During the period of high unemployment between 1957 and 1961, a substantial proportion of domestic productive capacity had become idle, and this allowed subsequent increases in demand for goods and services to be met from domestic sources rather than imports. During the early part of the current expansion as well, imports were affected by the devaluation of the Canadian dollar in 1962 and more briefly by the emergency import surcharges imposed in that year. Imports did not begin to accelerate until later in the expansion when there was less spare domestic capacity to draw upon and more resources were being put into investment, which has a heavy import content. Exports, on the other hand, received a special stimulus from the devaluation in 1962 and from the long-term wheat contracts with the U.S.S.R. and Mainland China, under which deliveries were heaviest in 1964. The merchandise trade surplus continued to rise to a peak of $701 million in 1964.
934
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June 1, 1967
Looking at non-merchandise transactions, receipts started to grow in 1960 more rapidly than payments, in particular those related to travel, freight and shipping and inheritances and migrants' funds. This served to reduce substantially the growth rate for the deficit on non-merchandise transactions and actually led to an absolute decline in 1962 and 1963. The net effect of these factors was to reduce the current account deficit from $928 million in 1961 to $424 million in 1964, although the economy had entered upon a period of vigorous expansion. The reversal in 1965 was due to a pause in wheat shipments, which reduced the growth in exports to 6.2 per cent, while imports rose by 14.5 per cent. The latter was partly a result of the growing pressure on resources and partly due to the effect of the Canada-U.S. automotive agreement, which led to an increase in both exports and imports of automotive products. The consequent contraction of the trade surplus was accompanied by an increase in the deficit on nonmerchandise transactions (although the growth rate for receipts continued to exceed that for payments), producing a current account deficit in excess of $1 billion for 1965.
Exports and imports of goods and services in 1966 have been discussed already as separate elements in demand and supply in the domestic economy. It will be recalled that in neither case were developments in 1966 fully in accordance with cyclical experience. Even apart from wheat and autos, exports showed considerable strength as a result of demand pressure in the United States and some of this pressure was thereby transferred to the Canadian economy. The growth of Canadian imports on the other hand was less than could have been expected in the light of heavy pressures of demand in Canada.
For 1966 as a whole merchandise exports increased by more than 17 per cent while merchandise imports rose by less than 15 per cent. The surplus on merchandise trade amounted to $380 million for the year compared with $118 million in 1965. It was noted earlier that the reasons for the relatively modest increase in imports in a year of exceptional demand pressures cannot be fully explained on the basis of present information. At the same time, merchandise exports benefited from the special circumstances affecting wheat and automotive trade. Apart from these special circumstances, merchandise trade on other items moved from near balance in 1965 to a deficit of about $100 million in 1966. It should be borne in mind, however, that a higher level of wheat exports generates income which is partly spent on imported items including agricultural machinery. By the same token, the much higher two-way trade in automotive parts has involved substantial increases in imports of capital equipment by the auto industry. Accordingly, one cannot regard the additional receipts from sales of wheat and trade in automotive products as being a net gain to the merchandise balance that was not offset by some additional imports.
The overall gain in the trade balance in 1966 was partly offset by the further increase in the deficit on non-merchandise transactions. As already suggested, however, not much of this deterioration can really be described as cyclical. The balance on inheritances and migrants' funds, which is not in any case an element in the national income and expenditure accounts, showed a further substantial improvement, owing to a steep rise in receipts and an actual decline in payments. The rate of emigration to the U.S.A. was sharply reduced in 1966, partly as a result of changes in immigration regulations and procedures in that country, while immigration into Canada reached the highest level since 1957. Payments for freight and shipping rose more moderately than in 1965, and the deficit for these transactions therefore declined again following a deterioration in the previous year. In total, there was a shift in the trend of the last few years,
June 1, 1967

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27053-60£
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June 1, 1967

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$ Billie
$ Billions 4.0
3.0
2.0
1.0
0.9
0.8
0.7
0.6
0.5
+ 0.2
►
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-0.2 ;r
-0.4
June 1, 1967	COMMONS DEBATES
in that payments for services now rose at a higher rate than receipts for the first time since 1959. Chiefly responsible for this change of trend and the deterioration of the deficit on non-merchandise transactions were an increase in official contributions and bigger deficits on interest and dividends and travel accounts. The larger outflow for official contributions was related to higher shipments of wheat under bilateral food aid programmes (particularly to India), and cash contributions under multilateral aid programmes. Receipts of interest and dividends declined for the second year in succession and thus added further to the rise in the deficit on this account. Expenditures by Canadian tourists abroad rose considerably faster than in the previous year, while Canadian receipts from tourism rose more slowly. As a result, the improvement which occurred in the travel balance in 1965 was more than reversed in 1966, contributing to the increase in the overall non-merchandise deficit. Gold production declined for the fifth consecutive year, and at about twice the 1965 rate. In all other non-merchandise transactions, receipts continued to rise more rapidly than payments, but not sufficiently to achieve a further reduction in the deficit for these items in 1966.
The growth in the deficit on non-merchandise transactions was incurred chiefly with the U.S.A., where it more than offset the improvement in the trade balance and produced a higher bilateral deficit on current account. Canada's current position with the U.K. also deteriorated, but the trade surplus earned in respect of other countries was sufficiently large to offset the increase in net payments on services and trade to the U.S. and U.K. and produce an aggregate deficit on current account some $100 million smaller than in 1965.

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CURRENT ACCOUNT OF THE CANADIAN BALANCE OF PAYMENTS (millions of dollars)
	1963	1964	1965	1966 (Preliminary- estimates)
Merchandise trade				
Exports	7,082	8,238	8,745	10,270Imports	6,579	7,537	8,627	9'890Balance	503	701	118	380-Non-merchandise trade Balances-	Gold production available for export	
Travel	+154 + 24	+145 - 50	+138 - 32	+125- 60 -884 74Interest and dividends	-630	-678	-761	Freight and shipping	- 85	- 35	- 82	Inheritances and migrants' funds	- 35	- 32	+ 60 167Official contributions	- 65	- 69	- 92	All other current transactions	-408	-406	-372	-363Total	-1,045	-1,125	-1,201	-1,363Current account balance	- 542	- 424	-1,083	- 983
Reference table 31 shows Canada's bilateral account with the United States. In 1966, the current account deficit with the U.S. increased to $2,107 million from $2,050 million in the preceding year. As in 1965, the greater part of the current account deficit with the United States was financed by means other than a net import of capital from the United States. The net inflow of long-term
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June 1* 1967
capital from the U.S. rose from $964 million to $1,146 million, and there was a somewhat smaller net outflow of short-term capital to the United States than in 1965. The net overall balance remaining to be financed fell from $1,594 million in 1965 to $1,308 million in 1966. But whereas the overall deficit with the United States in 1965 had been more than covered by the combination of current account earnings elsewhere and an inflow of over a billion dollars of shoit-terni capital from overseas, in 1966 the short-term capital account with overseas countries was virtually in balance. Current account earnings overseas rose from $829 million to $999 million, and the net outflow of long-term capital to the rest of the world was rather smaller; this left $484 million of the 1966 deficit with the U.S. to be covered out of Canadian reserves and domestic gold production. Gold output was in fact smaller, by $13 million in balance of payments terms, and about $360 million of the net payments to the United States was therefore met by a net drawing-down of reserve assets.
The Capital Account and the Reserves
While there was an improvement of $100 million in Canada's current account deficit in 1966, the financing of this deficit and associated matters of foreign exchange management led to a number of new developments and practices during the year.
On the one hand, long-term new borrowing in the United States market remained for the third full year the main means of such financing. This market continued open in practice to the Canadian borrower because an exemption from both the Interest Equalization Tax and quantitative guidelines was granted by U.S. authorities, while the Canadian government undertook not to use this exemption to increase the level of Canada's official reserves, the terms of this undertaking have tended over time towards a slightly lower level of such reserves.
The way in which credit conditions developed in Canada during 1966 in relation to credit market developments in the United States continued to have an important influence on the volume of new Canadian issues placed in the United States market and the need to maintain an adequate capital inflow m this form continued to be of concern in the conduct of Canadian monetary policy.
The undertaking with the U.S. respecting the level of exchange reserves was met in part by special repurchases of Government of Canada and IBRD securities from U.S. holders as a means of exporting capital. This new instrument of special repurchases gave additional flexibility to the monetary authorities in the carrying out of their policies.
Turning to the figures for the capital account, new issues of Canadian bonds abroad, net of ordinary retirements, rose by just about $250 million in 1966, to $1,053 million as against $805 million in 1965, in large part as a result of the postponement of deliveries requested in November 1965. The majority of this increase was offset by the special repurchases of Government securities and purchases of IBRD bonds, which together totalled $182 million, and which were carried out as a means of meeting the undertaking with the United States respecting the level of official reserves.
Direct investment in Canada by non-residents rose again, to Avell over double the level of 1964; much of the increase was associated with investment in the automobile industry, but there were also large increments in respect of electrical equipment, petroleum and other minerals, and pulp and paper capacity.
June 1. 1967
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Over the year as a whole, there was a small net disinvestment by Canadian residents in directly-owned enterprises abroad, leading to a capital inflow from this source of $10 million.
Portfolio transactions in Canadian stocks resulted in a net outflow in 1966 of about one-half of the 1965 total. A particularly heavy slate of repayments of export credits reduced net advances to only $43 million, against $187 million in 1965. Major offsets to these were a $99 million net outflow for the repurchase of outstanding Canadian bonds, apart from the special purchases by the government for balance of payments reasons (against a $62 million inflow in the previous year), and a quadrupling of the outflow for the acquisition of foreign securities: from $84 million in 1965, net purchases rose to $357 million last year.
In the first half of 1966, the net inflow of long-term capital into Canada, leaving aside the special repurchases, was $785 million, just $30 million more than the current account deficit incurred over the same period. The repurchases, combined with some outflow of short-term funds in the first quarter of the year, had brought the total of Canadian official reserve assets (here defined as holdings of gold and U.S. dollars and Canada's net creditor position with the International Monetary Fund) by the end of June to $2,595 million, close to the agreed level of about US $2,550 million.1
Over the year as a whole, however, and especially in the third quarter (at a time when further government bond repurchases were being undertaken in order to offset some of the normal seasonal strength of the current account), there was a pronounced movement in short-term capital flows by comparison with 1965. The Canadian chartered banks had complied with a request of the Minister of Finance in March 1965, that they not worsen their net asset position vis-a-vis U.S. residents, as compared with the position of December 1964. This was done in order to protect the U.S. balance of payments position and Canada's_ access to U.S. capital markets. Canadian banks took substantial short positions in the Eurodollar markets overseas; in fact they had moved from a net foreign currency asset position overseas of over half a billion dollars in January 1965 to a net liability position of similar magnitude by October of that year. In doing so, they not only strengthened their net asset position in the United States, but reduced their net foreign currency liabilities to Canadian residents as well. This constituted a net inflow of short-term capital into Canada amounting to $426 million, which lent more than incidental support to the Canadian balance of payments in that year. It was, however, a form of support which could not, by its nature, continue indefinitely; and in 1966 it ceased and was replaced by an outflow. This outflow was compounded of a continued rise in the banks' net asset position vis-a-vis U.S. residents, little change in their net liabilities overseas, and an increase in their net liabilities to Canadian residents. Although their own net foreign currency asset position vis-a-vis Canadian residents strengthened somewhat, most of the latter increase was reflected in an outflow to the United States, approaching half a billion dollars for the year as a whole, and more than accounting for the net outflow of $325 million for all forms of short-term capital.
The net effect of these diverse capital movements and the current account balance upon Canada's official reserve asset position was a reduction of $359 million in terms of Canadian dollars. Canada's net position with the IMF in
(1)In December 1965, Canada agreed to reduce its target figures for reserves from US $2,700 million fixed in 1963 to US $2,600 million by the end of 1966. This target has been adjusted to take into account Canada's payment of gold to the value of $47.5 million U.S. as part of its quota increase in the International Monetary Fund, since it was considered that a reduction in official holdings arising from this cause did not reflect a balance of payments requirement justifying the use of the United States capital market.
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June 1, 1967
fact improved by rather more than $100 million; roughly half of this represented the transfer of gold from Canada's official holdings as 25 per cent of an increase in IMF quota. The drop in official holdings of gold and foreign exchange (after this transfer, and including working balances of convertible currencies other than U.S. dollars), totalled $462 million in terms of the Canadian dollar equivalent.

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On a national accounts basis total national saving in 1966 amounted to some $11.8 billion, about $1.3 billion higher than the 1965 total. National saving thus has continued to supply by far the greater part of the resources needed by the business sector for investment. The extent to which Canada drew upon foreign saving was fractionally less in 1966 than it was in 1965. These developments are summarized in table 18.
In the personal sector, where saving is the difference between personal income after taxes and personal expenditure on goods and services, total saving amounted to $3.4 billion, some 17.5 per cent higher than the $2.9 billion recorded a year earlier. This was veiy largely a reflection of the exceptionally sharp advance in farm income which occurred during the year, arising both from larger crops and higher prices of farm products. Personal saving represented 9.0 per cent of personal disposable income in 1966, compared to 8.4 per cent in 1965, and while some part of this represents larger inventories and higher inventory values in the hands of farmers, saving by wage and salary earners and out of other forms of income also rose. This level of saving relative to personal disposable income was higher than that of any other year in the expansion which began in 1961.
Business saving in 1966 was affected by the levelling-off in growth of corporation profits. Along with a continued rise in dividends paid this resulted in a reduced level of undistributed profits. At the same time capital consumption allowances, also a component of business saving, increased by less than in 1965; this was largely a result of the budget measures of March 1966, when the regulations were changed to reduce the capital cost allowances which could be claimed against some classes of capital assets acquired during the subsequent eighteen months. The moderating effects of these trends was slightly offset by an addition to saving arising out of the operations of the Canadian Wheat Board. The inventory valuation adjustment, which removes that part of recorded business profits arising from the effect of changing prices on inventory values, was little changed from 1965.
In the government sector, as discussed in detail in other pages of this review, expenditures accelerated while revenues, excluding the revenues of the Canada and Quebec pension plans, increased less. On this basis, the momentum of the swing from deficit to surplus which had been occurring over the preceding five years was not maintained in 1966. Within the framework of the national saving account, however, the revenues of the government pension plans are added to the revenues of the government sector and the addition to total saving represented by the net revenues of these plans is regarded as arising in the government sector. Inclusion of pension plan revenues in the government sector resulted in a moderately larger surplus in 1966 than was recorded in 1965.
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(Millions of dollars)
Personal net saving	
Business gross saving, total-	
(a)	Undistributed corporation profits	
(b)	Capital consumption allowances and miscellaneous valua^
tion adjustment	
(c)	Adjustment on grain transactions	
(d)	Capital assistance from governments	
Inventory valuation adjustment	
Government surplus (+) or deficit (-)	
Federal	
Provincial and Municipal	
Canada and Quebec Pension Plans	
Deficit on current account with non-residents	
Residual error	
Total	
2,059	2,927	3,4387,182	7,594	8,0361,389	1,444	1,2305,600	6,110	6,591111	-44	15682	84	59-131	-325	-318- 21	+246	+280+296	+568	+124-317	-322	-558-	-	+714412	1,141	1,101- 6	8	3369,495	11,591	12,873

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-	1964	1965	1966(Mi 9,103 386 6	llions of dolls 10,651 948 - 8	ira) 12,214 995 -336
9,495	11,591	12,873
			
Soxjbce: DBS The National Accounts.
The investment expenditures of the business sector in 1966 exceeded the saving originating in the business sector by $4.9 billion. (The comparable figure in 1965 was $4.0 billion, and in 1964 $2.3 billion.) Within the framework of the national accounts, these figures indicate the magnitude of the transfer of claims on current production among sectors, and also give some indication of the speed of the growth of the transfer in recent years.
1964	1965	1966Business investment (including investment by government business enterprises)	9.5	(billions of dollars) 11.6	12.9Business saving	7.2	7.6	8.0Net use by business of saving in other sectors	2.3	4.0	4.9Foreign sector saving used	.4	1.1	1.1Saving supplied by non-business domestic sectors...	1.9	2.9	3.8
June 1, 1967
It is, of course, important to bear in mind that these figures show the net saying and investment of major sectors in the economy. They do not show how this net saving is transferred from savers to borrowers through the medium of financial instruments. Developments in the financial markets, where the financial institutions perform the function of facilitating these transfers, are discussed in detail below.

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Introduction
The process of transferring funds from savers to borrowers in the economy during 1966 encountered strains arising both from domestic and from external sources.
Corporate profits in 1966 were no larger than in 1965, while dividend payments increased. As a result, undistributed profits were reduced, and corporations, faced with plans for large increases in capital expenditures, found it necessary to run down their liquid positions and to seek funds in substantial volume in Canada and abroad. However, the funds actually raised in 1966 were substantially less than in 1965. This fact, combined with the impact of the federal budget, probably contributed to the shortfall of actual capital expenditures from the level anticipated in mid-year.
Governments as a whole more than doubled their 1966 borrowings, from the level reached in 1965. Provinces and municipalities raised by way of bank loans and securities issues almost $750 million more in 1966 than they had the previous year. However, some $630 million of this financing took the form of transfers through the Canada and Quebec Pension Plans. The federal government, which had retired a small amount of its total debt in 1965, borrowed over $400 million net in 1966.
The proportion of funds which was transferred from personal savers to borrowers through the medium of financial institutions was lower in 1966 than in 1965. Over the whole of 1966, total liabilities of deposit-accepting institutions increased at a rate of less than two-thirds that of 1965. The rate of growth of institutions which collect contractual savings was slightly less in 1966 than in
1965.	The mortgage market was particularly affected by this development.
Canada's net use of foreign savings, as measured by the current account deficit, was fractionally smaller in 1966 than it had been in 1965. However, demands for funds abroad, both in the United States and in Europe, were very high. Credit conditions in foreign financial markets became markedly more restrictive during the course of 1966 until almost the end of the year. Canadian financial markets were inevitably affected by these developments abroad.
As is explained in some detail in the Annual Report of the Governor of the Bank of Canada, monetary policy remained restrictive during the first half of
1966,	and the Bank Rate was raised in December 1965 and again in March 1966. However, "during the summer, when the upward pressure on interest rates in the United States became particularly severe, the Bank of Canada offered considerable resistance to a further tightening of credit conditions in Canada."1
Interest rates during the year reached levels which had not been seen since the 1920's. In August yields on Government of Canada bonds reached 6 per cent, and after some easing again reached this level in late November and early
(1) Bank of Canada Annual Report p. 40.
June 1, 1967
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December. Provincial, municipal and corporate long-term interest rates rose even more sharply. Shortly after mid-year municipal and corporate bonds reached levels of about 6.75 per cent on average, and provincial bonds yielded over 6.60 per cent, where they remained until the end of the year. By the fourth quarter of the year rates on prime conventional residential mortgages had reached 8 per cent.
However, by year end credit conditions both at home and abroad were easing and interest rates declining, dhis trend has continued into 196/.
Demand and Supply of Funds Through the Capital Markets
Private Financial Institutions
Changes in the magnitudes and composition of the assets and liabilities of all financial institutions taken together reflect trends in the amount and nature of savings made available by lenders to financial institutions and in the disposition of these funds to ultimate borrowers. While data are not available for all financial institutions, a consolidation of the assets and liabilities of deposit-accepting institutions, which account for a large proportion of the resources of financial institutions, is shown in reference tables 35 and 36, on a quarterly basis, for the period December 1964 to December 1966. The percentage distribution of these assets and liabilities for the same period is shown in reference tables 37 and 38. The institutions included are the chartered banks, Quebec savings banks, trust companies and loan companies; caisses populates and credit unions are excluded only because the data are not yet available.
During 1966 the total assets and liabilities of the deposit-accepting institutions rose by $2,259 million, or by 7.9 per cent, substantially less than that recorded in 1965.

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(Millions of dollars)
End of	Amount	Change	Percentage Change
	23,634				
25,371	1,737	7.3528,473	3,102	12.2330,732	2,259	7.93
This decline in the rate of growth occurred in the first half of 1966, particularly in the first quarter. During the second half of the year, as credit conditions became easier and the liquidity of deposit-accepting institutions improved, the growth rate strengthened and equalled that recorded during the same period in 1965. The Caisses Populates Desjardins du Quebec, on the other hand, sustained their 1965 rate of expansion throughout most of 1966.
Total chequable deposits increased by $1,092 million in 1966 and accounted for 48 per cent of the total increase in liabilities. Term and notice deposits, debentures and certificates, continuing a trend which was evident in 1964 and which accelerated in 1965 as the interest rates paid for these forms of savings increased, rose twice as fast as chequable deposits, by 12.8 per cent, and accounted for 33 per cent of the total increase in liabilities.
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June 1, 1967
Of the increased funds available to these institutions in 1966, approximately $890 million were channelled into new loans, mainly to businesses. Loans to instalment finance companies declined from the high level reached in the fourth quarter of 1965. Loans to individuals remained a relatively stable proportion of total assets. Investment in mortgages rose by $367 million in 1966, decreasing slightly the proportion of assets held in this form. Investments in government bonds rose by only $176 million during the year, leaving the proportion of assets held in this form approximately unchanged. A reduction in the proportion of assets held in provincial and municipal bonds was offset by an increase in Government of Canada securities. In the category of other securities, corporate bonds marked up a substantial increase but there was little change in the volume of funds invested in stocks.
The insurance conipanies and the trusteed pension plans are another important channel of saving. Their assets and liabilities have grown more uniformly than those of the deposit-accepting institutions, because the savings which they receive are contractual and respond in only a minor way to changes in credit conditions and interest rates. In 1966, the net flow of funds into sixteen Canadian life insurance companies, which together account for about 83 per cent of total premium income in Canada, amounted to $640 million. Of the funds available m 1966, about 96 per cent arose from insurance operations in Canada (net premium income); the remainder, $23.5 million, represents the amount transferred from abroad. The funds available for investment by these companies in 1966 were increased by a further $75 million as a result of a net disinvestment in their holdings of Government of Canada, provincial and municipal government securities, and from a small ^reduction in holdings of finance company short-term paper. Of the total of $715 million available for investment, $457 million were channelled into mortgage loans and sales agreements, bringing this category to more than 50 per cent of the total assets of insurance companies. Of the remaining funds, $136 million were invested in corporate bonds, $44 million in real estate, $34 million in preferred and common stocks, and about $30 million in policy loans which were up substantially from previous years.
Of the remaining financial institutions, the sales finance and consumer loan companies are the largest, with assets valued at over $4 billion. The mutual funds are also significant with assets approaching $2 billion in value. Data for these institutions are not yet available for the fourth quarter of 1966. During the first three quarters of 1966 the assets of these institutions expanded at a slower rate than they did during the same period of 1965.
Non-Financial Corporations
As in 1965, investment outlays made by businesses in 1966 exceeded by a substantial amount business retained cash flows generated during the year. As noted above, on the national accounts basis businesses in 1966 had to meet $4.9 billion of their requirements from sources other than 1966 retained cash flows, compared with a similar requirement of $4.0 billion in 1965.
During the first half of 1966 particularly, in the face of a buoyant demand tor funds from all sides and a very limited expansion of credit, many businesses experienced considerable difficulty in obtaining funds from outside sources.
I he cost of obtaining these funds, whether short-term or long-term, increased substantially through the year, as is shown in reference table 39. Since actual business investment outlays in 1966 did not in the event rise to the level predicted m the mid-year survey of investment intentions, it seems evident that both the high cost of funds and difficulties in getting them prevented many businesses from carrying out their revised intentions.
June 1, 1967

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Funds obtained by non-financial businesses through the issue of new securities, bonds, common stock and preferred shares totalled 11,434 million in 1966 compared with $1,706 million in 1965. Whereas in 1965 11,207 million was in the form of bonds, and $873 million of these bond issues were placed in Canada, in 1966 only $905 million was in the form of bonds and of these only $474 million were sold in Canada. Businesses seeking funds in the United States were faced during much of the year with severely strained market conditions, which restricted the amount of funds which could be made available to them. Canadian corporations managed to increase their sale of new issues in that market in 1966 as compared with 1965. However part of this reflected the postponements into 1966 of borrowings originally scheduled for delivery in late 1965. Direct investment from abroad, which plays an important role in providing funds for Canadian businesses, increased to $660 million in 1966 from $405 million in the previous year.
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June 1, 1967
Chartered bank Canadian dollar loans to businesses increased by about $400 million in 1966 compared with an increase of nearly $700 million in 1965. Another very important source of shorter-term financing for businesses, sales finance companies, actually ran down outstanding loans by about $150 million during the year.
Federal Government
The increase in Government of Canada outstanding securities during 1966 totalled $430 million, compared with a net retirement of $52 million in 1965. During 1966 the distribution shifted somewhat from the hands of the general public1 to government accounts and the chartered banks. The holdings by the general public of Canada Savings Bonds increased by $223 million, while their holdings of marketable government securities were reduced by $252 million. The chartered banks, on the other hand, increased holdings of marketable Government of Canada securities by $167 million. Holdings by government accounts of Treasury bills increased by $10 million while their holdings of other government securities rose by $282 million. The increases in government accounts' holdings of these securities included $129 million special non-marketable bonds purchased by the Unemployment Insurance Commission and $163 million Government of Canada U.S. dollar bonds purchased by the Securities Investment Account. $157 million of these U.S. dollar bonds were purchased in connection with the management of Canada's foreign exchange reserves. Bank of Canada holdings of Treasury bills declined during the year by $200 million while its holdings of other securities increased by $201 million, leaving total holdings of Government of Canada securities virtually unchanged at the end of the year.
Provincial and Municipal Governments
Major capital expenditure and lending programmes undertaken by provincial and municipal agencies and enterprises were largely responsible for a significant increase in provincial and municipal cash requirements during the past year. Also contributing to heavier demands for outside sources of funds was a 50 per cent increase in the combined provincial and municipal deficit on a national accounts basis, from $322 million in 1965 to an estimated $558 million in 1966.
The Canada Pension Plan and the Quebec Pension Plan provided the provincial governments with a new substantial source of funds during 1966. The total amount of funds received by provinces from the Canada Pension Plan in 1966 was about $462 million. Quebec Pension Plan receipts available for investment through the Quebec Deposit and Investment Fund amounted to about $170 million. A high proportion of these receipts was invested in direct and guaranteed marketable securities of the province and its municipalities.
Notwithstanding the funds made available to provinces and municipalities through the Canada and Quebec pension plans, net new borrowing from other sources was at a substantially higher level than in 1965. In particular, net new issues of provincial and municipal direct and guaranteed marketable securities totalled $1,265 million2 in 1966 compared with $944 million in 1965. Net new issues in currencies other than Canadian dollars amounted to $427 million of the total net new marketable issues of this sector in 1966 compared with $270 million in 1965.
(1) Institutions, corporations, and individuals (including non-residents).
<2>This figure overstates provincial borrowing to the extent that receipts of the Quebec Pension Plan were invested in these marketable securities. Net purchases of these marketable securities were also made by provincial accounts of other provinces.
June 1. 1967	COMMONS DEBATES	947

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PERCENT	PERCENT
1962	1963	1964	1965	1966
Mortgage Market
Mortgage market conditions in 1966 were dominated by the general tightening in credit conditions. From mid-1965 to mid-1966 the rate of growth of assets of deposit-taking mortgage-lending institutions and life insurance companies slackened. This process was reversed, however, in the second half of 1966. By the end of the year mortgage lending institutions had worked off their overcommitments with respect to mortgages, and had achieved a more liquid and flexible position than earlier in the year.
Interest rates on conventional mortgages rose sharply in Canada and the United States over the 18-month period ending December 1966-in Canada, from 6f per cent to 8 per cent on prime urban residential property. Loan-to-value ratios and other private mortgage loan criteria were toughened during this period of tightness in the mortgage markets.
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June 1, 1967
While new family formation, migration to urban areas and real income growth continued to provide an underlying strength in demand for housing, the supply of new housing continued to be dominated by the availability of mortgage funds, against a background of heavy competing demands for capital.
Mortgage approvals for the 18 months ending December 1966 were 27 per cent lower than in the preceding 18 months (reference table 40). Housing starts, which turned down in the latter part of 1965, continued to decline sharply until late 1966, then levelled out. The CMHC direct lending programme cushioned the impact on new single family housing starts, which continued their stable trend of recent years, while the bulk of the reduction in mortgage lending by private lenders fell on new apartment and row housing, non-residential property and used housing.
The Government late in 1966 and early in 1967 took a number of actions to stimulate housing construction. To encourage a larger and relatively more stable flow of private funds into the mortgage market, the maximum interest rate on National Housing Act insured mortgage loans, which had been raised to 6f per cent in January 1966, was fixed at 7\ per cent in November, and arrangements were made for future automatic adjustments in this rate at quarterly intervals. On April 1, 1967, the NHA rate was automatically readjusted from 7\ per cent to 7 per cent. Prime conventional residential mortgage rates have also declined from 8 per cent to 7f per cent early in 1967.
Amendments to the National Housing Act in 1966 raised the maximum permitted ratio of loan to lending value for NHA-financed rental accommodation. This change should encourage more borrowing from CMHC for the financing of rental construction in smaller communities where private mortgage money is not readily available. The legislation also permitted CMHC, for the first time, to provide mortgage funds for financing improvements to existing housing in urban renewal areas. A program of direct government loans to builders, similar to that used to promote winter building in recent years, was announced for the spring of 1967.
Chartered banks, which were authorized to enter the NHA mortgage-loan field in 1953 and were active in it until late 1959, have had their authority for mortgage lending significantly enlarged under the revision of the Bank Act passed in March 1967. The new Act allows the banks to make NHA mortgage loans at whatever interest rate is prescribed by the housing act and admits the banks to the conventional lending field for the first time.
Consumer Credit
The rate of growth in consumer credit slowed during late 1965, and continued at a slower pace through most of 1966. In the first nine months of 1966 consumer credit rose 5.6 per cent compared to 9.5 per cent in the corresponding period of the previous year. This occurred while personal incomes after taxes and personal spending on non-durable goods and services were increasing at substantial rates. However, the rate of growth of personal spending on automobiles and household durables, which are predominantly bought 'on time', slowed from 11.4 per cent in 1965 to 4.2 per cent in 1966. Individuals in Canada, as in the United States, appear to have reduced the rate at which they added to their financial assets during 1966.
June 1, 1967

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PER CENT	pER CENT
Federal Government Debt Management
Government of Canada direct and guaranteed marketable securities maturing in the fiscal year 1966-67, excluding regular issues of three-month and six-month Treasury bills, amounted to $1,275 million, or nearly $500 million less than in the previous fiscal year. On the other hand, the cash requirements of the federal government were substantial in fiscal 1966-67. The economic and financial situation has been described above. Debt management operations were designed as far as possible to support fiscal and monetary policies in their response to current developments at home and abroad.
There were three maturity dates for Government of Canada direct marketable bonds and one maturity date for guaranteed marketable bonds during fiscal 1966-67. As shown in reference table 42, $325 million 3J per cent bonds were due May 1,1966, $450 million 3 per cent and 3f per cent bonds were due September 1, 1966, $450 million 4 per cent and 4| per cent bonds were due December 15, 1966 and $50 million 2f per cent Canadian National Railways Company bonds
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June 1, 1967
were due January 2, 1967. While difficult market conditions and developments affecting the Government's future cash requirements influenced to some degree all of the refunding operations, each refunding took into account specific conditions at the time.
The $325 million bonds maturing on May 1, 1966 had been originally issued as money market bonds and were held predominantly by chartered banks and corporations. In view of prevailing monetary and fiscal policies and heavy demands for funds the extent to which current holders of these bonds would re-invest in new short-term bonds was uncertain, and it was difficult for the same reasons to assess potential demand in other sectors of the bond market. In order to give investors a wide choice, a $325 million refunding issue in three tranches was offered, details of which are shown in reference table 42, and the Bank of Canada announced that it would take a minimum of $50 million of the issue, open as to maturity. To provide additional flexibility, the Bank of Canada informed primary distributors that it was prepared to purchase the new issues in exchange for certain longer-term bonds from its portfolio. As a result of this offer $49 million of 5 per cent bonds due June 1, 1988 and 5| per cent bonds due May 1, 1990 were sold by the Bank of Canada, principally in exchange for the new issue of 5f per cent bonds due August 1, 1980. It was considered desirable that the May 1 refunding should have little impact on the prevailing rate structure and in this regard the issue was successful.
It was evident, when refunding operations in connection with the $450 million bonds maturing September 1, 1966 were being considered, that a serious cash shortage would develop if the high rate of Canada Savings Bond redemptions was not balanced by a successful CSB campaign in November. Cash requirements had already been revised upwards at this time, and deteriorating market conditions in the United States were being reflected in the Canadian market. Bond yields in the United States had risen to the highest level in 40 years, leading to widespread expectations in the Canadian market that Canadian interest rates would move to higher levels. Publication on August 2 of the mid-year review of the outlook for private and public investment in Canada for 1966, which showed an increase over the investment plans published in February despite the fiscal measures introduced in the March 29 budget, contributed to these expectations of higher interest rates. On the other hand, monetary policy was aimed at offering resistance to further tightening of credit conditions in Canada.
The new issue comprised $425 million short-term bonds in two maturities, of which the Bank of Canada agreed to purchase a minimum of $150 million, and $75 million new 5f per cent bonds due September 1, 1992, of which the Bank agreed to acquire $25 million. The Bank held $115 million of the maturing bonds. The new issues were priced close to the market in an effort to avoid disturbing prevailing yields. After the new issues had been priced a series of events in the U.S. bond market, including prime lending rate increases by major U.S. commercial banks and an increase in reserve requirements on time deposits, sparked a sharp deterioration in U.S. bond prices, which had an immediate impact upon bond prices in Canada. In these circumstances, the Bank of Canada, with the objective of resisting an excessive increase in Canadian interest rates, provided strong support to the bond market and bought substantially more of the new issues than the $175 million minimum undertaken at the time of issue. Despite these support operations interest rates in Canada rose significantly. The cash effects on the banking system of the Bank's support were largely offset by reversing temporary purchases of U.S. dollars from the Exchange Fund Account which had been bought by the Bank of Canada in earlier monetary operations.
June 1, 1967
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The Canada Savings Bond campaign was planned at a time of heavy CSB redemptions, rising interest rates and extremely competitive and difficult market conditions. In order to stem the pace of redemptions and raise net new cash, an attractive instrument coupled with an aggressive sales campaign was necessary. It was assumed in these circumstances that there would be a substantial increase in redemptions of past issues to take advantage of a more attractive instrument. The Centennial Series, the most attractive Canada Savings Bond ever offered, averaged 5.48 per cent in yield if held to maturity. The incorporation of a new compound interest feature allowed the investor to double his money over a period of 13 years if all the interest coupons were held until the maturity date of the bond. The issue was highly successful and about $2.25 billion gross sales were recorded by December 31, 1966. A net borrowing of about $286 million from the sale of Canada Savings Bonds is anticipated for the fiscal year as a whole. Falling interest rates and changing market conditions helped to improve the attractiveness of the new Canada Savings Bonds and gross sales are continuing at a high level.
Growing evidence of moderating demand pressures and easier monetary conditions brought about a significant change in interest rate expectations during the last quarter of 1966. Market conditions were particularly buoyant in October and the Bank of Canada in its open-market operations was able to offer longer-term securities from its portfolio in exchange for bonds due December 15, 1966. The improved market conditions and the size of Bank of Canada and chartered bank holdings of the maturing issues promised to facilitate December 15 refunding operations. Despite the successful savings bond campaign in November it was recognized that government cash requirements would be substantial in the coming year and that for this reason cash balances should be maintained at a relatively high level.
A new technique was introduced in connection with the December 15 refunding to permit greater flexibility in debt management operations. The amount of the new issue was stated to be $500 million "or thereabouts", on the understanding that the variation in the amount of the issue would be confined to competitive subscriptions and would not exceed 10 per cent of that part of the issue subject to competitive bids. The December 15 issue comprised $100 million 5f per cent September 1, 1992 bonds, offered firm, and $400 million or thereabouts, open as to maturity, of new 5§ per cent bonds due January 15, 1968 and new 5| per cent bonds due December 15, 1970. The Bank of Canada undertook in advance to acquire a minimum of $40 million long-term bonds, a minimum of $35 million thirteen-month bonds and a minimum of $175 million of the 4-year bonds. As shown in reference table 42, $425 million of the shortterm bonds and $100 million long-term bonds were issued, raising $25 million in new cash after allowing for repayment of the $50 million 2f per cent CNR bonds due January 2, 1967. In order to offer alternative maturities to corporate investors, the Bank of Canada offered to purchase up to $35 million of the new 5J per cent January 15, 1968 bonds in exchange for up to $15 million of its portfolio holdings of the 4j per cent bonds due June 1, 1967 and up to $20 million of the per cent bonds due January 15, 1968.
An appropriate opportunity to raise new cash was available on February 1, 1967, since the next maturity date for Government of Canada bonds was not until April 1, 1967. Conditions in the bond market, characterized by evidence of excellent institutional response to new bond issues and widespread expectations of a continuing decline in interest rates, were favourable to a new Government of Canada bond issue at that time. A three-pronged $150 million bond
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June 1. 1967
issue comprising 5§ per cent bonds due October 1, 1975, 5| per cent bonds due August 1, 1980 and 5f per cent bonds due September 1, 1992, open as to maturity, was floated. The Bank of Canada undertook to acquire a minimum of $50 million of the new issue. In addition, $100 million of 303-day Treasury bills, of particular interest to chartered banks, were auctioned on January 31, 1967. As a result of this financing $250 million new cash was raised. The new bonds quickly moved to premium over issue price reflecting market expectations of lower interest rates.
During the fiscal year as a whole, $715 million new cash was raised through the issue of new marketable securities and net sales of Canada Savings Bonds, and $1,275 million marketable bonds were refunded. The introduction of innovations and new techniques helped to achieve these objectives. Six of the twelve different maturities issued on May 1, 1966, September 1, 1966, December 15, 1966 and February 1, 1967, were additions to existing issues. The new 5f per cent September 1, 1992 bonds and additions to the 5| per cent August 1, 1980 bonds helped to maintain the average term to maturity of Government of Canada marketable securities in the hands of the public at about 10 years.
June 1, 1967	COMMONS DEBATES	953

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Reference
Table
Number	Title	Page
1	National Income and Gross National Product, quarterly,
1965	and 1966	 955
2	Gross National Expenditure, quarterly, 1965 and 1966... 956
3	Gross National Expenditure in Constant (1957) Dollars,
quarterly, 1965 and 1966	 957
4	Contribution of GNE components to total change-3 postwar
expansions	 958
5	Private and Public Investment-Reconciliation with National
Accounts, 1957 to 1967	 959
6	Investment as a percentage of GNE, annual, 1948 to 1966. ...	959
7	Changes in Manufacturers' Inventories, Shipments and
Orders, quarterly, 1965 and 1966	 959
8	Labour Force, Canada, annual, 1959 to 1966	 960
9	Employment, Canada, annual, 1959 to 1966, and year-to-year
percentage change	 960
10	Labour Force, Employment and Unemployment by Regions,
1966		 961
11	Unemployment Rates by Region, annual, 1959 to 1966	 961
12	Labour Income, Employment and Average Income, 1964
to 1966	 961
13	Corporation Profits before Taxes, by Industry, quarterly,
1965 and 1966	 962
14	Percentage changes in Real Domestic Product, annual, 1963
to 1966	 963
15	Percentage changes in Employment by Industrial Division,
annual, 1963 to 1966	 963
16	Percentage changes in Output per Employee, annual, 1963
to 1966	 964
17	Earnings and Output, annual, 1963 to 1966	
96418	Consumer Price Index, annual, 1961 to 1966	
96519	Percentage changes in Consumer Price Index, 1961 to 1966. .. 96520	Implicit Price Indexes, GNE and components, quarterly,1963 to 1966	
96621	Government Transactions on a National Accounts Basis, 1963to 1966	
967
23
25
27
29
31
33
35
37
39
41
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June 1, 1967
Federal Government Revenues and Expenditures,. Public Accounts and National Accounts Reconciliation, 1964 to 1966	 969
Summary of Balance of Payments, annual and quarterly,
1961 to 1966	 971
International Payments: Current Account, annual, 1958 to 1966	 972
Balance of Payments: Current Account, quarterly, 1965 and 1966	 973
Balance on Travel Account, All Countries, annual, 1953 to 1966	 974
Geographical Distribution of Merchandise Balances, 1965 and 1966	  974
Merchandise and Non-Merchandise Balances, annual, 1946 to 1966	 975
International Payments: Capital Movements, annual, 1961 to 1966	 976
New Issues of Canadian Bonds sold to United States Residents, quarterly, 1965 and 1966	 977
Financing of Canada's Bilateral Account with the United States, annual, 1962 to 1966	  977
Official Holdings of Gold and Foreign Exchange, monthly,
1965	to 1967	 978
International Monetary Fund Holdings of Canadian Dollars,
1966		 978
Net Changes in Securities and Bank Loans Outstanding, annual, 1963 to 1966	 979
Assets of Deposit-Accepting Institutions, quarterly, 1964 to 1966	      980
Liabilities of Deposit-Accepting Institutions, quarterly, 1964 to 1966	 981
Assets of Deposit-Accepting Institutions, Percentage Distribution	 982
Liabilities of Deposit-Accepting Institutions, Percentage Distribution	 983
Representative Interest	Rates,	quarterly, 1965 to 1967	
984Gross Mortgage Loan Commitments by CMHC and Private Institutions, annual, 1961 to	1966	
985
Consumer Credit Outstanding, quarterly, 1965 and 1966. ... 985
New Issues and Retirements of Marketable Bonds, Government of Canada, 1966 and	1967	 986

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(Seasonally adjusted at annual rates)
	1965				1966			
	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q
				(Millions of dollars)				
Wages, salaries, and supplementary labour income	25,008	25,600	26,344	27,180	28,332	28,960	29,592	30,412Military pay and allowances	596	592	600	560	684	568	588	644Corporation profits before taxes	5,040	5,112	5,344	5,300	5,292	5,272	4,896	5,288Deduct: Dividends paid to non-residents(1*	-700	-788	-772	-744	-760	-780	-780	-944Rent, interest, and miscellaneous investment income	3,384	3,516	3,516	3,800	3,772	3,932	3,828	4,080Accrued net income of farm operators from farm production^2*	1,564	1,496	1,780	1,740	2,184	2,244	2,252	2,136Net income of non-farm unincorporated business^	2,736	2,872	2,980	2,920	2,936	2,852	3,000	3,008Inventory valuation adjustment	-188	-308	-340	-464	-488	-232	-340	-212National Income	37,440	38,092	39,452	40,292	41,952	42,816	43,036	44,412Indirect taxes less subsidies	6,924	7,128	7,320	7,316	7,772	7,844	7,976	7,608Capital consumption allowances and miscellaneous valuation adjustments	5,944	6,092	6,128	6,276	6,428	6,644	6,536	6,756Residual error of estimate	-68	96	-36	40	240	316	420	368Gross National Product at Market Prices	50,240	51,408	52,864	53,924	56,392	57,620	57,968	59,144(Gross national product at market prices excluding accrued net income of farm	operators)	(48,676)	(49,912)	(51,084)	(52,184)	(54,208)	(55,376)	(55,716)	(57,008)
(^Includes the withholding tax applicable to this item.
<2)Includes an arbitrary smoothing of crop production and seasonal adjustments for withdrawals of grain from farm stocks and the change in livestock items. Because of the arbitrary elements, too precise an interpretation should not be given the seasonally adjusted figures of accrued net income of farm operators <3)Includes net income of independent professional practitioners.
Source: DBS The National Accounts, Income and Expenditure, Quarterly, Cat. 13-001.
June 1. 1987	COMMONS DEBATES	955
REFERENCE TABLE 2 GROSS NATIONAL EXPENDITURE (Seasonally adjusted at annual rates)
-	1965	1966	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q(Millions of dollars)	Personal expenditure on consumer goods and services	30,748	31,644	32,520	33,340	33,956	34,112	35,304	35,988Government expenditure on goods and services	9,248	9,540	9,660	9,936	10,592	10,872	11,648	11,564Business gross fixed capital formation d>	9,848	10,172	11,000	11,584	12,016	12,324	12,000	12,516New residential construction	2,052	2,136	2,144	2,164	2,220	2,336	2,096	2,060New non-residential construction	3,816	3,728	4,148	4,404	4,788	4,832	4,628	4,996New machinery and equipment	3,980	4,308	4,708	5,016	5,008	5,156	5,276	5,460Value of physical change in inventories-total12)	1,288	1,168	728	608	988	1,668	588	736Non-farm business inventories	1,108	980	836	696	792	1,392	564	580Farm inventories and grain in commercial channels	180	188	-108	-88	196	276	24	156Exports of goods and services	10,624	10,972	11,316	11,712	12,516	12,572	13,096	13,292Imports of goods and services	-11,588	-11,992	-12,392	-13,216	-13,436	-13,616	-14,248	-14,580Residual error of estimate	72	-96	32	-40	-240	-312	-420	-372Gross National Expenditure at Market Prices	50,240	51,408	52,864	53,924	56,392	57,620	57,968	59,144
d) Includes private businesses and institutions, and publicly owned business enterprises.
<*>
The book value of inventories is deflated to remove the effect of price changes and the derived "physical" change is then valued at average prices of the current period to obtain the value of physical change. The difference between this value of physical change and the change in book value is called the inventory valuation adjustment.
Source: DBS The National Accounts.
956	COMMONS DEBATES	June 1, 1967

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GROSS NATIONAL EXPENDITURE IN CONSTANT (1957) DOLLARS (Seasonally adjusted at annual rates)
-	1965	1966	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q(Millions of dollars)	Personal expenditure on consumer goods and services	27,564	28,144	28,808	29,332	29,484	29,292	30,240	30,552Government expenditure on goods and services	7,380	7,544	7,676	7,684	7,924	8,148	8,600	8,328Business gross fixed capital formation	7,956	8,156	8,828	9,196	9,416	9,560	9,248	9,496New residential construction	1,616	1,656	1,656	1,648	1,664	1,736	1,540	1,480New non-residential construction	3,096	2,968	3,284	3,436	3,684	3,604	3,472	3,692New machinery and equipment	3,244	3,532	3,888	4,112	4,068	4,160	4,236	4,324Value of physical change in inventories-total	1,252	1,156	720	624	1,004	1,564	528	672Non-farm business inventories	1,080	944	804	668	788	1,280	496	544172	212	-84	-44	216	284	32	128Exports of goods and services	9,644	9,908	10,112	10,428	11,052	11,008	11,232	11,424Imports of goods and services	-10,156	-10,540	-10,828	-11,476	-11,632	-11,744	-12,216	-12,372Residual error of estimate	64	-80	28	-32	-200	-252	-340	-296Gross National Expenditure in Constant (1957) Dollars	43,704	44,288	45,344	45,756	47,048	47,576	47,292	47,804
Source: DBS The National Accounts.
June 1. 1967	COMMONS DEBATES	957
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June 1, 1967

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-	2Q 1954 to 4Q 1956 (10 quarters ' after 2Q 1954 trough)	IQ 1958 to IQ 1960 (8 quarters after IQ 1958 trough)	IQ 1961 to 4Q 1966 (23 quarters after IQ 1961 trough)
		(Per cent)	
Personal expenditure on goods and services	43.6	48.9	52.2Non-durables	18.8	17.6	24.2Durables	7.0	4.8	7.4Services	17.8	26.5	20.6Government expenditure on goods and services	15.6	15.5	19.7Federal	4.7	-1.5	5.8Provincial-Municipal	10.9	17.0	13.9Business gross fixed capital formation	31.6	0.1	26.0New residential construction	3.7	-0.7	2.8New non-residential construction	16.1	-4.9	10.6New machinery and equipment	11.8	5.7	12.6Non-farm business inventories	15.1	33.8	1.2Farm inventories and grain in commercial channels	7.4	3.6	2.1Exports of goods and services	17.6	19.9	25.7Imports of goods and services (-)	-31.0	-21.8	-26.9Gross National Expenditure (ex. error)	100.0	100.0	100.0
Source: DBS The National Accounts.

[Stage Direction]
1957	1963	1964	1965	1966	1967Private and Public Capital Expenditure Table 1	8,717	9,393	(Millions 10,944	of dollars) 12,865	14,897	15,103Deduct: New residential construction by governments	21	6	7	9	3	2New non-residential construction by governments	1,251	1,609	1,618	1,958	2,356	2,533New machinery and equipment outlays by governments	110	187	216	247	324	308Business Gross Fixed Capital Formation-National Accounts definition, Reference table 2	7,335	7,591	9,103	10,651	12,214	12,260
Source: DBS and Department of Trade and Commerce.
June 1, 1967

[Stage Direction]
1948 to 1966
Total Private and Public Investment	Housing and Social Capital*1*	Business Investment Private and Public*2*1948	20.4	7.8	12.61949	21.7	8.7	13.01950	21.9	8.9	13.01951	22.4	8.6	13.81952	22.9	9.0	13.91953	23.9	9.4	14.51954	23.0	9.6	13.41955	23.0	9.8	13.21956	26.3	9.9	16.41957	27.3	9.6	17.71958	25.4	10.6	14.81959	24.1	10.4	13.71960	22.8	9.3	13.41961	21.8	9.1	12.71962	21.5	9.2	12.31963	21.6	9.1	12.61964	23.1	9.1	14.01965	24.7	9.5	15.21966	25.8	9.5	16.3
("Includes housing, outlays by government departments, institutions and municipal waterworks. 
Includes government business enterprises.

[Stage Direction]
(Seasonally adjusted)
	1965				1966			
	IQ	2Q	3Q	4Q	IQ 1	2Q	3Q	4Q<*
				(Per cent)				
Inventories held:								
Raw materials	1.6	2.1	2.8	2.8	2.7	1.5	2.7	1.1Goods in process	2.2	2.7	1.5	5.8	4.2	2.8	3.2	4.6Finished products	1.4	0.5	1.9	1.2	1.0	3.7	2.9	2.6Inventories owned	1.8	2.3	2.2	3.3	3.1	2.6	2.7	2.3Shipments	1.4	2.9	0.7	5.7	2.6	-0.8	-1.5	4.1Unfilled orders	4.5	4.9	3.2	6.7	1.4	4.8	2.7	2.2
<*>
Estimated.
Source: DBS Inventories, Shipments and Orders in Manufacturing Industries, Cat. 31-001. 27053-611
[Stage Direction]
June 1, 1967

[Stage Direction]
LABOUR FORCE, CANADA 1959 to 1966
-	1959	1960	1961	1962	1963	1964	1965	1966
			(Thousands of persons)					
Total labour force	6,242	6,411	6,521	6,615	6,748	6,933	7,141	7,420Agricultural	712	697	698	675	662	641	602	551N on-agricultural	5,530	5,714	5,823	5,940	6,086	6,292	6,540	6,869Men	4,687	4,754	4,782	4,819	4,879	4,961	5,065	5,193Women	1,554	1,657	1,739	1,797	1,870	1,972	2,076	2,227Age 14 to 19 years	603	627	630	648	672	700	738	778Y	'ear to year change	(Per cent)	Total labour force	2.7	1.7	1.4	2.0	2.7	3.0	3.9Agricultural	-2.1	0.1	-3.3	-1.9	-3.2	-6.1	-8.5Non-agricultural	3.3	1.9	2.0	2.5	3.4	3.9	5.0Men	1.4	0.6	0.8	1.2	1.7	2.1	2.5Women	6.6	4.9	3.3	4.1	5.5	5.3	7.3Age 14 to 19 years	4.0	0.5	2.9	3.7	4.2	5.4	5.4
Source: DBS The Labour Force, Cat. 71-001.

[Stage Direction]
EMPLOYMENT, CANADA 1959 to 1966
-	1959	1960	1961	1962	1963	1964	1965	1966
			(Thousands		of persons)			
Total employment	5,870	5,965	6,055	6,225	6,375	6,609	6,862	7,152Agricultural	700	683	681	660	649	630	594	543Non-agricultural	5,170	5,282	5,374	5,565	5,726	5,979	6,268	6,609Men	4,363	4,368	4,381	4,488	4,567	4,698	4,842	4,983Women	1,507	1,597	1,674	1,737	1,808	1,911	2,020	2,169Age 14 to 19 years	536	545	548	573	596	628	673	714Y	ear to year change	(Per	cent)	Total employment	1.6	1.5	2.8	2.4	3.7	3.8	4.2Agricultural	-2.4	-0.3	-3.1	-1.7	-2.9	-5.7	-8.6N on-agricultural	2.2	1.7	3.6	2.9	4.4	4.8	5.4Men	0.1	0.3	2.4	1.8	2.9	3.1	2.9Women	6.0	4.8	3.8	4.1	5.7	5.7	7.4Age 14 to 19 years	1.7	0.6	4.6	4.0	5.4	7.2	6.1
Source: DBS The Labour Force.
June 1. 1967	COMMONS DEBATES	961

[Stage Direction]
-	Atlantic	Quebec	Ontario	Prairie	British Columbia
		(Thousands of persons)			
Labour force	626	2,116	2,719	1,248	710Employed	586	2,016	2,651	1,222	678Unemployed	40	100	69	26	32(Per cent)	Unemployment rate	6.5	4.8	2.5	2.1	4.6Growth in labour force	2.5	4.6	4.0	1.6	6.6Growth in employment	3.5	5.4	4.0	2.2	6.1Growth in non-agricultural employment.	3.9	6.3	4.7	6.2	5.7
Source: DBS The Labour Force.
REFERENCE TABLE 11 UNEMPLOYMENT RATES BY REGION 1959 to 1966
(Unemployed as a per cent of the Labour Force)
Region	1959	1960	1961	1962	1963	1964	1965	1966
				(Per cent)				
Atlantic	10.9	10.7	11.2	10.7	9.5	7.8	7.5	6.5Quebec	7.8	9.1	9.2	7.5	7.5	6.4	5.5	4.8Ontario	4.5	5.4	5.5	4.3	3.8	3.2	2.6	2.5Prairie	3.2	4.2	4.6	3.9	3.7	3.1	2.6	2.1British Columbia	6.5	8.5	8.5	6.6	6.4	5.3	4.2	4.6Canada	6.0	7.0	7.1	5.9	5.5	4.7	3.9	3.6
Source: DBS The Labour Force.

[Stage Direction]
LABOUR INCOME, EMPLOYMENT AND AVERAGE INCOME 1964 to 1966 Selected Industries
	Per cent increase in					
-	Labour	income	Employment	Average income per employee	1965	1966	1965	1966	1965	19661964	1965	1964	1965	1964	1965Mining	13.0	8.7	6.4	1.8	6.2	6.8Manufacturing (total)	10.3	11.4	5.5	5.4	4.5	5.7Construction	24.0	24.7	13.1	10.8	9.6	12.5Transportation, communication and	water utilities(1)	8.7	8.4	2.4	2.7	6.2	5.6Trade	10.6	11.0	5.7	6.7	4.6	4.0Finance, insurance, etc	8.4	8.5	4.2	3.3	4.0	5.0Service	13.4	13.8	9.8	10.5	3.3	3.0Composite	11.3	12.2	5.6	5.6	5.4	6.3
(*'Includes storage, electric power, gas and water utilities.
Source: DBS Employment, Average Weekly Wages and Salaries, monthly, Cat. 72-002, and Estimates of Labour Income, monthly, Cat. 72-005.

[Stage Direction]
CORPORATION PROFITS BEFORE TAXES, BY INDUSTRY, 1965 and 1966
(Seasonally adjusted, quarterly)
			1965					1966		
IQ	2Q	3Q	4Q	Total	IQ	2Q	3Q	4Q	TotalMines, quarries and oil wells	142	153	155	152	(Millions 602	of dollars) 151	157	142	120	570Manufacturing industries:	Food and beverage industries	93	93	92	92	370	98	87	92	89	366Rubber industries	7	7	8	10	32	9	8	9	8	34Textile industries	22	21	23	20	86	24	14	15	12	65Wood industries	27	25	32	35	119	43	33	25	27	128Paper and allied industries	65	62	58	50	235	38	54	39	49	180Printing, publishing and allied industries	23	24	21	20	88	24	21	24	26	95Primary metal industries	
Metal fabricating industries	[ 194	189	203	Machinery industries	192	778	199	193	148	179	719Transportation equipment industries	J .	Electrical products industries	28	24	28	31	111	30	30	22	35	117Non-metallic mineral products industries	20	27	25	24	96	21	22	28	18	89Petroleum and coal products industries	31	35	35	30	131	37	39	43	164Chemical and chemical products industries	51	56	57	56	220	65	58	58	50	231Other manufacturing industries*1)	26	26	25	28	105	30	28	28	39	125Totals, manufacturing industries	587	589	607	588	2,371	618	593	527	575	2,313Transportation	}	Storage	1 121	127	132	156	536	120	145	133	186	584Communication	J	Electric power, gas and water utilities	22	21	24	25	92	23	23	23	25	94Wholesale trade	89	93	92	104	378	116	102	95	106	419Retail trade	72	77	86	77	312	77	66	82	72	297Finance, insurance and real estate	167	159	175	159	660	153	159	158	173	643Service industries	37	36	41	38	152	49	48	39	40	176Other non-manufacturing*2)	23	23	24	26	96	16	25	25	25	91Totals, all industries	1,260	1,278	1,336	1,325	5,199	1,323	1,318	1,224	1,322	5,187
(^Includes tobacco, leather and miscellaneous manufacturing industries. 
Includes agriculture, forestry, fishing and construction.
Source: DBS Corporation Profits, Quarterly, Cat. 61-003.
962	COMMONS DEBATES	June 1, 1967
June 1, 1967 COMMONS DEBATES REFERENCE TABLE 14 CHANGES IN REAL DOMESTIC PRODUCT Annual 1963 to 1966				963
	1963	1964	1965	1966
	(Per cent change from previous year)			
Real domestic product, less agriculture	5.3	7.2	6.9	6.3Mining, total	4.5	8.8	5.5	6.7Manufacturing, total	7.0	9.3	8.6	7.3Non-durables	6.2	8.4	6.1	7.2Durables	8.1	10.3	11.5	7.4Construction	1.6	9.7	10.9	7.0Transportation, storage and communication	7.1	9.0	7.4	8.1Trade, total	3.8	6.1	7.5	4.4Wholesale	3.8	8.6	10.1	3.7Retail	3.8	4.7	6.1	4.7Finance, insurance and real estate	6.3	4.4	4.4	5.3Services	4.3	3.6	4.6	4.3Commercial industries, less agriculture	5.6	7.6	7.4	6.7Source: DBS Index of Industrial Production, monthly, Cat. 61-005.	REFERENCE TABLE IS	CHANGES IN EMPLOYMENT BY INDUSTRIAL DIVISION	Annual	1963 to 1966	-	1963	1964	1965	1966(Per cent change from previous year)	Mining	-1.5	0.9	6.4	1.8Manufacturing, total	2.2	4.7	5.5	5.4Non-durables	1.3	3.1	3.3	3.8Durables	3.4	6.6	8.0	7.1Construction	-0.9	4.9	13.1	10.8Transportation, storage and communication	0.7	1.4	2.4	2.7Trade, total	2.3	4.4	5.7	6.7Wholesale	1.3	2.9	5.0	6.1Retail	2.7	5.0	6.0	7.3Finance, insurance and real estate	4.3	4.0	4.2	3.3Services	4.3	8.1	9.8	10.5Industrial composite	2.2	3.6	5.6	5.6Source: DBS Employment, Average Weekly Wages and Salaries.	
June 1, 1967
REFERENCE TABLE 16 CHANGES IN OUTPUT PER EMPLOYEE Annual 1963 to 1966
-	1963	1964	1965	1966
		(Per cent change)		
Mining, total	6.1	7.8	-0.8	4.8Manufacturing, total	4.7	4.4	2.9	l.SNon-durables	4.8	5.1	2.7	3.3Durables	4.5	3.5	3.2	0.3Construction	2.5	4.6	-1.9	-3.4Transportation, storage and communication	6.4	7.5	4.9	5.3Trade, total	1.5	1.6	1.7	-2.2Wholesale	2.5	5.5	4.9	-2.3Retail	1.1	-0.3	0.1	-2.4Finance, insurance and real estate	1.9	0.4	0.2	1.9Services	-	-4.2	-4.7	-5.6Commercial industries, less agriculture	3.3	3.9	1.7	1.0
Source: Reference tables 14 and 15.

[Stage Direction]
Annual 1963 to 1966
-	1963	1964	1965	1966
	(Per cent change from previous year)			
Wages and salaries per worker				
Non-farm	4.4	5.4	5.9	6.3Manufacturing	3.8	4.0	4.5	5.7Output per worker	Non-farm	3.3	3.9	1.7	1.0Manufacturing	4.7	4.4	2.9	1.8Wages and salaries per unit of output	Non-farm	1.0	1.5	4.1	5.2Manufacturing	-0.8	-0.4	1.6	3.8Corporate profits per unit of output	Non-farm	3.8	7.0	0.5	-6.5Manufacturing	5.2	-0.5	-1.8	-9.0
Source: DBS Estimates of Labour Income.
DBS Index of Industrial Production.
DBS Corporation Profits.
DBS Employment and Average Weekly Wages and Salaries.
June 1, 1967	COMMONS DEBATES	965
REFERENCE TABLE 18 CONSUMER PRICE INDEX 1961 to 1966 (1949=100)
-	1961	1962	1963	1964	1965	1966All items	129.2	130.7	133.0	135.4	138.7	143.9Food	124.0	126.2	130.3	132.4	135.9	144.5Housing	133.2	134.8	136.2	138.4	140.9	144.7Clothing	112.5	113.5	116.3	119.2	121.4	126.0T ran sport at ion	140.6	140.4	140.4	142.0	147.3	150.8Health and personal care	155.3	158.3	162.4	167.8	175.5	180.9Recreation and reading	146.1	147.3	149.3	151.8	154.3	158.7Tobacco and alcohol	116.3	117.8	118.1	120.2	122.3	125.1All commodities	120.0	121.0	123.1	124.7	126.7	131.5Durables	116.1	115.3	115.5	114.5	114.6	115.1Non-durables	120.7	122.1	124.6	126.7	129.2	134.9Non-durables excluding food	118.3	119.1	120.3	122.4	124.1	127.5Services	155.4	157.6	159.8	163.8	170.6	176.6
Source: DBS Prices and. Price Indexes.
REFERENCE TABLE 19 CONSUMER PRICE INDEX (1949 = 100)
(Year to year change)
-	1961 to 1962	1962 to 1963	1963 to 1964	1964 to 1965	1965 to 1966	Apr. 1966 to Apr. 1967
			(Per cent)			
Ail items	1.2	1.8	1.8	2.4	3.7	3.2Food	1.8	3.2	1.6	2.6	6.3	0.2Housing	1.2	1.0	1.6	1.8	2.7	4.4Clothing	0.9	2.5	2.5	1.8	3.8	5.3T ransportation	-0.1	-	1.1	3.7	2.4	4.2Health and personal care	1.9	2.6	3.3	4.6	3.1	6.0Recreation and reading	0.8	1.4	1.7	1.6	2.9	4.2Tobacco and alcohol	1.3	0.3	1.8	1.7	2.3	2.2All commodities	0.8	1.7	1.3	1.6	3.8	2.3Durables	-0.7	0.2	-0.9	0.1	0.4	2.4Non-durables	1.2	2.0	1.7	2.0	4.4	2.2Non-durables excluding food	0.7	1.0	1.7	1.4	2.7	4.1Services	1.4	1.4	2.5	4.2	3.5	5.4
Source: Reference table 18.
REFERENCE TABLE 20 IMPLICIT PRICE INDEXES Gross National Expenditure and Components (Seasonally adjusted)
(1957=100)
-	Personal expenditure on consumer goods and services	Non- durable goods	Durable goods	Services	Government expenditure on goods and services	Business gross fixed capital formation	New residential construc- tion	New non-residential construction	New machinery and equipment	Exports of goods and services	Imports of goods and services	Gross national expend- iture
1963-												
IQ	108.2	106.3	101.1	113.2	116.2	112.9	114.6	111.6	113.2	107.3	111.0	109.62Q	108.5	106.5	101.0	113.7	117.5	113.8	116.0	112.7	113.6	107.4	112.1	109.93Q	109.1	107.3	101.4	114.2	118.4	115.4	116.9	114.7	115.3	107.6	113.1	110.64Q	109.4	107.7	101.3	114.6	119.6	116.5	119.6	115.5	115.8	109.1	113.7	111.2Year. ..	108.8	106.9	101.2	113.9	117.9	114.7	116.8	113.7	114.5	107.9	112.5	110.31964-	IQ	109.8	108.2	100.4	115.3	118.2	117.4	120.7	115.8	117.0	109.4	114.5	111.52Q	110.3	108.5	100.2	116.1	120.8	119.5	122.1	118.3	119.3	109.7	114.4	112.63Q	110.7	109.2	99.7	116.9	123.8	120.5	124.1	119.7	119.2	110.6	113.0	114.14Q	111.2	109.0	100.5	117.7	123.9	121.3	125.6	120.7	119.5	110.3	113.6	114.4Year...	110.5	108.7	100.2	116.5	121.7	119.7	123.2	118.7	118.8	110.0	113.9	113.21965-	IQ	111.6	109.4	100.1	118.4	125.3	123.8	127.0	123.3	122.7	110.2	114.1	115.02Q	112.4	110.7	100.1	119.2	126.5	124.7	129.0	125.6	122.0	110.7	113.8	116.13Q	112.9	111.3	99.7	120.2	125.8	124.6	129.5	126.3	121.1	111.9	114.4	116.64Q	113.7	112.2	99.7	121.1	129.3	126.0	131.3	128.2	122.0	112.3	115.2	117.9Year...	112.7	110.9	99.9	119.8	126.7	124.8	129.2	125.9	121.9	111.3	114.4	116.41966-	IQ	115.2	114.3	99.2	122.6	133.7	127.6	133.4	130.0	123.1	113.2	115.5	119.92Q	116.5	115.3	100.2	123.6	133.4	128.9	134.6	131.9	123.9	114.2	115.9	121.13Q	116.7	115.8	99.4	124.7	135.4	129.8	136.1	133.3	124.6	116.6	116.6	122.64Q	117.8	116.4	100.9	126.0	138.9	131.8	139.2	135.3	126.3	116.4	117.8	123.7Year. . .	116.6	115.5	99.9	124.3	135.4	129.5	135.7	132.6	124.5	115.1	116.5	121.8
Source: DBS The National Accounts.
966	COMMONS DEBATES	June 1. 1967
27053-62j

[Stage Direction]
-	1963	1964	1965	1966	1966(*	IQ	2Q	3Q	4Q(Millions of dollars)	Government Revenue:	Direct taxes-persons	2,916	3,428	3,912	4,434	4,216	4,156	4,564	4,8002,193	2,558	2,715	2,955	2,832	2,744	3,048	3,196Provincial and municipal	723	870	1,197	1,479	1,384	1,412	1,516	1,004Direct taxes-corporations	1,827	1,996	2,164	2,190	2,128	2,248	2,188	2,1961,362	1,498	1,623	1,642	1,596	1,688	1,636	1,648Provincial	465	498	541	548	532	560	552	548Withholding taxes	Federal	127	140	168	203	176	204	200	2325,911	6,695	7,482	8,277	8,148	8,208	8,344	8,4082,451	2,847	3,247	3,577	3,524	3,556	3,596	3,632Provincial and municipal	3,460	3,848	4,235	4,700	4,624	4,652	4,748	4,776Investment income	1,395	1,526	1,688	1,860	1,796	1,912	1,804	1,928510	570	618	663	612	716	608	716Provincial and municipal	885	956	1,070	1,197	1,184	1,196	1,196	1,212Employer and employee contributions to social insurance	and government pension funds	852	912	959	1,816	1,504	1,852	1,928	1,980534	574	602	681	624	696	700	704Provincial and municipal	318	338	357	421	400	412	436	436Canada Pension Plan	531	360	552	584	628Quebec Pension Plan	183	120	192	208	212Transfers from federal government	Provincial and municipal	1,169	1,252	1,427	1,659	1,508	1,684	1,636	1,808Total Revenue	14,197	15,949	17,800	20,439	19,476	20,264	20,664	21,3527,177	8,187	8,973	9,721	9,364	9,604	9,788	10,128Provincial and municipal	7,020	7,762	8,827	10,004	9,632	9,916	10,084	10,384Canada Pension Plan	531	360	552	584	628Quebec Pension Plan	183	120	192	208	212
(^Seasonally adjusted at annual rates.
June 1, 1967	COMMONS DEBATES	967

[Stage Direction]
GOVERNMENT TRANSACTIONS ON A NATIONAL ACCOUNTS BASIS (concluded)
1964
	1966(1)	
IQ	2Q 1 3Q	4Q
(Millions of dollars)
Government Expenditure:
Goods and services	8,075	8,654	9,596	11,169	10,592	10,872	11,648	11,564Federal-Total	2,934	3,046	3,267	3,880	3,652	3,676	3,992	4,200-(Defence)	(1,572)	(1,584)	(1,562)	(1,713)	(1,664)	(1,612)	(1,720)	(1,856)Provincial and municipal	5,141	5,608	6,329	7,289	6,940	7,196	7,656	7,364Transfer payments to persons	3,848	4,133	4,502	5,006	4,692	4,904	5,084	5,344Federal	2,133	2,239	2,316	2,478	2,392	2,452	2,520	2,548Provincial and municipal	1,715	1,894	2,186	2,528	2,300	2,452	2,564	2,796Interest on the public debt	1,423	1,526	1,635	1,789	1,732	1,764	1,832	1,828Federal	935	995	1,052	1,151	1,124	1,128	1,168	1,184Provincial and municipal	488	531	583	638	008	636	664	644311	323	310	477	376	364	368	800Federal	275	277	259	370	240	296	252	692Provincial	36	46	51	107	136	68	116	108Capital Assistance:	Federal	61	82	84	59	32	88	56	60Transfers to provincial and municipal governments:	Federal	1,169	1,252	1,427	1,659	1,508	1,684	1,636	1,808Total Expenditure	14,887	15,970	17,554	20,159	18,932	19,676	20,624	21,404Federal	7,507	7,891	8,405	9,597	8,948	9,324	9,624	10,492Provincial and municipal	7,380	8,079	9,149	10,562	9,984	10,352	11,000	10,912Surplus (+) or deficit (-)	-690	- 21	+246	+280	+544	+588	+ 40	- 52Federal	-330	+296	+568	+ 124	+416	+280	+164	-364Provincial and municipal	-360	-317	-322	-558	-352	-436	-916	-528Canada Pension Plan	+531	360	552	584	628Quebec Pension Plan	+183	120	192	208	212
(^Seasonally adjusted at annual rates. Source: DBS The National Accounts.
963	COMMONS DEBATES	June 1. 1967

[Stage Direction]
Revenue:
Budgetary revenue	
Supplementary period adjustment* *1)	
Extra-budgetary revenues:
Old age security tax collections	
Prairie Farm Assistance Act levy	
Unemployment insurance-employer-employee contributions Government pension funds-employer-employee contributions	; [DOT]
Interest receipts of social insurance and government pension
funds	
Corporate income tax*2) excess (+) of accruals over collections.. Profits before taxes (net of losses) of government business enterprises	
Interest on loans, advances and investments	
Less: Budgetary return on investments	
Less: Postal revenue	
Budgetary revenue items offset against budgetary expenditures*3) All other adjustments to budgetary revenue*4)	
Total Revenue, National Accounts Basis	
1964-65	1965-66	1966-67	1965	1966	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q(Millions of dollars)	7,180	7,696	8,366	1,853	1,918	1,862	1,944	1,972	1,999	1,978	2,169- 42	56	7	-188	188	-	-	-132	132	-	-959	1,169	1,281	278	300	272	279	318	327	294	30110	10	11	2	1	5	2	2	2	5	2311	328	340	82	74	83	84	87	78	89	89273	301	363	68	76	77	77	71	89	89	89159	181	196	43	43	45	46	47	48	51	52-128	-128	-112	- 24	-131	12	51	- 60	- 73	- 3	48226	242	204	36	59	55	98	30	67	45	66190	222	270	46	55	56	55	56	63	55	83-382	-488	-522	-125	-138	-120	- 93	-137	-127	- 88	-164-231	-237	-256	- 59	- 57	- 49	- 73	- 58	- 59	- 51	- 81-123	-127	-140	- 31	- 32	- 31	- 32	- 32	- 34	- 34	- 37- 42	- 69	- 10	- 28	- 23	- 25	7	- 28	- 13	3	368,360	9,156	9,998	1,953	2,333	2,242	2,445	2,136	2,499	2,433	2,653
Win the National Accounts, revenues in the supplementary period are shifted to the following fiscal year.
WTaxes on government business enterprises are excluded from this item.
WSee also footnote 3, expenditure reconciliation.
*4)These adjustments are largely revenue items not relevant for the National Accounts, such as proceeds from sales of existing assets.
June 1. 1967	COMMONS DEBATES	969

[Stage Direction]
Public Accounts and National Accounts Reconciliation (concluded)
1964-65	1965-66	1966-67	1965	1966	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4QExpenditure: Budgetary expenditure	7,218	7,735	8,794	2,314	(Milli 1,492	ons of dc 1,785	liars) 1,915	2,543	1,667	2,072	2,264Supplementary period adjustment^	- 55	- 6	-116	-463	463	-469	469	Expenditures of extra-budgetary funds: Old age security fund payments	885	927	1,075	223	224	226	228	249	251	252	254Unemployment insurance benefits	335	298	307	141	92	36	44	126	82	38	49Government pension fund-payments	101	114	128	26	28	29	28	29	32	32	32Prairie Farm Assistance payments	11	7	6	9	2	1	4	1Transfers to extra-budgetary funds	- 63	- 66	- 69	- 16	-16	-17	-17	- 16	-16	-18	-18Adjustment to place other government funds and Crown agencies on a disbursement basis(2>	17	- 16	42	99	-94	39	13	26	-73	26	33Budgetary expenditures offset against income of government business enterprises: Post Office expenditures	-211	-242	-265	- 56	-54	-61	-63	- 64	-61	-60	-71Deficits of government business enterprises	- 92	-104	- 74	- 11	-84	- 8	- 3	- 9	-50	- 6	-10Reserves and write-offs	- 42	- 59	- 78	- 10	-32	-10	- 9	- 8	-52	-10	- 9Budgetary revenue items offset against budgetary expenditure^	-123	-127	-140	- 31	-32	-31	-32	- 32	-34	-34	-37All other adjustments to budgetary expenditure	65	119	247	- 42	75	64	1	- 21	98	98	48Total Expenditure, National Accounts Basis	8,046	8,580	9,857	2,183	2,064	2,052	2,106	2,358	2,313	2,390	2,536Surplus (+) or deficit (-), National Accounts basis	314	576	141	-230	269	190	339	-222	186	43	117Surplus (+) or deficit (-), budgetary basis	- 38	- 39	-428	-461	426	77	29	-571	332	-94	-95Total, National Accounts basis	8,360	9,156	9,998	1,953	2,333	2,242	2,445	2,136	2,499	2,433	2.653
(1)In the National Accounts, expenditures on goods and services in the supplementary period are split evenly between adjacent fiscal years. Most other expenditure items are shifted entirely to the next fiscal year.
(2>This adjustment replaces budgetary appropriations to various funds and agencies by the outlays actually made by these funds and agencies.
<3>The largest component of this item consists of revenue from sales of goods and services by the government. These sales appear as final expenditure of the private sector and are deducted to avoid double counting.
970	COMMONS DEBATES	June 1, 1967

[Stage Direction]
SUMMARY OF BALANCE OF PAYMENTS (not seasonally adjusted)
1961	1962	1963	1964	1965	1966	1965	1966	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q
(Millions of dollars)								
+ 173	+ 184	+ 503	+ 701	+ 118	+ 380	- 39	- 27	+161	+ 23	- 1	+ 7	+300	+ 74Deficit on non-merchandise trans-	-391	-367	-160	-421	-438	-366	-214	-470actions<*>	-1,263	-1,169	-1,178	-1,270	-1,339	-1,488	-1,090	-985	- 675	- 569	-1,221	-1,108	-430	-394	+ 1	-398	-439	-359	+ 86	-396Gold production available for export Capital movements (+ inflow)	+ 162	+ 155	+ 154	+ 145	+ 138	+ 125	+ 35	+ 34	+ 35	+ 34	+ 34	+ 29	+ 30	+ 32(- outflow)	+930	+688	+637	+820	+713	+949	+128	+134	+216	+235	+449	+214	+197	+ 89Short-term forms	+288	+297	+ 30	- 33	+527	-325	+195	+227	- 26	+131	-182	- 1	-398	+290	+155	+146	+363	+157	-359	- 72	+ 1	+226	+ 2	-138	-117	- 85	-19Change in official holdings of gold	and foreign exchange	+229	+537	+ 60	+ 86	- 11	-462	-118	- 92	+144	+ 55	-166	-181	-105	- 10(- decrease)	Net International Monetary Fund position	+ 61	-378	+ 86	+277	+168	+103	+ 46	+ 93	+ 82	- 53	+ 28	+ 64	+ 20	- 9+290	+159	+146	+363	+157	-359	- 72	+ 1	+226	+ 2	-138	-117	- 85	- 19
(*Excluding gold production available for export. Sotjbce: DBS.
June 1, 1967	COMMONS DEBATES	971
Current Receipts-
Merchandise exports (adjusted)...
Gold available for export	
Travel expenditures	
Interest and dividends	
Freight and shipping	
Inheritances and immigrants' funds Other current receipts	
Total Current Receipts	
Current Payments-
Merchandise imports (adjusted)..
Travel expenditures	
Interest and dividends	
Freight and shipping	
Inheritances and emigrants' funds
Official contributions	
Other current payments	
Total Current Payments	
Balance on merchandise trade	
Balance on other transactions	
Current Account Balance	
Sotjhce: DBS.

[Stage Direction]
INTERNATIONAL PAYMENTS: CURRENT ACCOUNT (Annual, 1958 to 1966)
1958	1959	1960	1961	1962	1963	1964	1965	1966
			(Millions of dollars)					
4,890	5,151	5,392	5,889	6,387	7,082	8,238	8,745	10,270157	148	162	162	155	154	145	138	125349	391	420	482	562	609	662	747	840167	180	171	213	202	230	332	310	294401	420	442	486	509	563	644	673	69997	109	102	104	124	151	169	211	256391	414	447	452	484	500	557	640	7386,452	6,813	7,136	7,788	8,423	9,289	10,747	11,464	13,2225,066	5,572	5,540	5,716	6,203	6,579	7,537	8,627	9,890542	598	627	642	605	585	712	779	900614	671	656	764	783	860	1,010	1,071	1,178460	525	533	568	595	648	679	755	773159	165	184	176	175	185	201	211	19653	72	61	56	36	65	69	92	167695	697	768	794	856	888	963	1,012	1,1017,589	8,300	8,369	8,716	9,253	9,810	11,171	12,547	14,205- 176	- 421	- 148	+ 173	+ 184	+ 503	+ 701	+ 118	+ 380- 961	-1,066	-1,085	-1,101	-1,014	-1,024	-1,125	-1,201	-1,363-1,137	-1,487	-1,233	- 928	- 830	- 521	- 424	-1,083	- 983972	COMMONS DEBATES	June 1, 1967

[Stage Direction]
(Seasonally adjusted at quarterly rates)
Goods	Services	Total Receipts	Total Payments	Current Account BalanceExports	Imports	Balance	Receipts	Payments	Balance	1965-	IQ	2,071	2,026	+ 45	666	936	-270	2,737	2,962	-2252Q	2,138	2,077	+ 61	680	981	-301	2,818	3,058	-2403Q	2,203	2,163	+ 40	705	1,002	-297	2,908	3,165	-2574Q	2,333	2,361	- 28	668	1,001	-333	3,001	3,362	-3611966-	IQ	2,492	2,383	+ 109	716	1,029	-313	3,208	3,412	-2042Q	2,499	2,421	+ 78	732	1,041	-309	3,231	3,462	-2313Q	2,617	2,498	+ 119	750	1,126	-376	3,367	3,624	-2574Q	2,662	2,588	+ 74	754	1,119	-365	3,416	3,707	-291
Source: DBS.
June 1, 1967	COMMONS DEBATES	973
[Stage Direction]
June 1, 1967

[Stage Direction]
-	Receipts	Payments	Balance	u.s.	Rest of World	Total	u.s.	Rest of World	Total	u.s.	Rest of World	Total(Millions of dollars)	1953	282	20	302	307	58	365	- 25	- 38	- 631954	283	22	305	320	69	389	- 37	- 47	- 841955	303	25	328	363	86	449	- 60	- 61	-1211956	309	28	337	391	107	498	- 82	- 79	-1611957	325	38	363	403	122	525	- 78	- 84	-1621958	309	40	349	413	129	542	-104	- 89	-1931959	351	40	391	448	150	598	- 97	-110	-2071960	375	45	420	462	165	627	- 87	-120	-2071961	435	47	482	459	183	642	- 24	-136	-1601962	512	50	562	419	186	605	+ 93	-136	- 431963	549	60	609	388	197	585	+161	-137	+ 241964	590	72	662	481	231	712	+109	-159	- 501965	660	87	747	531	248	779	+129	-161	- 321966	730	110	840	631	269	900	+ 99	-159	- 60
Source: DBS.

[Stage Direction]
-	United States	United Kingdom	Other Countries	All Countries	1965	1966	1965	1966	1965	1966	1965	1966(Millions of dollars)	Merchandise exports (adjusted)...	4,993	6,241	1,184	1,133	2,568	2,896	8,745	10,270Merchandise imports (adjusted)...	6,034	7,166	624	635	1,969	2,089	8,627	9,890Trade balance	-1,041	-925	+560	+498	+599	+807	+118	+380Non-merchandise receipts	1,813	1,903	371	391	535	658	2,719	2,952Non-merchandise payments	2,684	2,960	421	433	815	922	3,920	4,315Non-merchandise balance	-871	-1,057	- 50	- 42	-280	-264	-1,201	-1,363Total current receipts	6,806	8,144	1,555	1,524	3,103	3,554	11,464	13,222Total current payments	8,718	10,126	1,045	1,068	2,784	3,011	12,547	14,205Current account balance	-1,912	-1,982	+510	+456	+319	+543	-1,083	-983
Source: DBS.
June 1, 1967

[Stage Direction]
BALANCE OF PAYMENTS ON CURRENT ACCOUNT: MERCHANDISE AND NON-MERCHANDISE BALANCE 1946 to 1966
landise rade	Non- Merchandise Trade	Current Account Balance
(Millions of dollars)		
+571	-208	+363+188	-139	+ 49+432	+ 19	+451+293	-116	+177+ 7	-326	-319-151	-361	-512+485	-298	+187- 60	-388	-448+ 18	-442	-424-211	-476	-687-728	-644	-1,372-594	-857	-1,451-176	-961	-1,137-421	-1,066	-1,487-148	-1,085	-1,233+173	-1,101	-928+184	-1,014	-830+503	-1,024	-521+701	-1,125	-424+118	-1,201	-1,083+380	-1,363	-9831946	1947	1948	1949	1950	1951	1952	1953	1954	1955	1956	1957	1958	1959	1960	1961	1962	1963	1964	1965	1966	
Source: DBS.

[Stage Direction]
INTERNATIONAL PAYMENTS: CAPITAL MOVEMENTS
1961	1962	1963	1964	1965	1966	1966	IQ	2Q	3Q	4Q(Millions of dollars)	Direct investment in Canada	+560	+505	+280	+270	+405	+660	+120	+190	+145	+205Direct investment abroad	- 80	-105	-135	- 95	-125	+ 10	- 15	- 40	+ 90	- 25Canadian securities-	Trade in outstanding bonds and debentures	+ 61	+ 64	+ 39	+ 77	+ 62	- 99	- 11	- 24	- 50	- 14Trade in outstanding common and preference stocks	+ 39	-115	-170	- 98	-264	-131	- 13	- 42	- 33	- 43New issues	+548	+729	+984	+1,100	+1,209	+1,448	+583	+358	+291	+216Retirements	-301	-319	-404	-382	-382	-504	-112	-152	- 90	-150Foreign securities (total)	- 35	- 65	+ 22	- 52	- 84	-357	- 70	- 90	-114	- 83Loans and capital subscriptions by Government of Canada-	Advances, etc	- 8	- 22	- 18	- 10	- 14	- 20	- 6	- 3	- 9	- 2Repayments to Canada	+ 38	+129	+ 25	+ 10	+ 10	+ 24	+ 2	+ 2	+ 1	+ 19Columbia River Treaty, net	-	-	-	+ 54	+ 32	+ 32	-	-	-	+ 32Long-term capital transactions not included elsewhere	+108	-113	+ 14	- 54	-136	-114	- 29	+ 15	- 34	- 66Change in certain Canadian assets of foreigners-	Canadian dollar deposits	+ 33	- 10	+ 43	+ 28	+ 31	+ 11	- 15	- 7	+ 20	+ 13Government of Canada demand liabilities^1)	- 2	- 4	+ 1	-	+ 2	+ 5	- 6	- 2	+ 5	+ 8Canadian treasury bills	- 58	+ 4	- 27	- 16	+ 12	- 15	- 8	-	+ 2	- 9Canadian commercial paper	r	- 23	- 11	+ 10	- 2	- 12	- 5	+ 10	+ 5Canadian finance paper	+ 95	+119	+ 93	+196	-162	- 9	+ 23	- 5	- 55	+ 28Canadian finance company obligations not included elsewhere	l	+ 35	+ 52	+209	+153	+ 34	- 12	+ 44	+ 87Bank balances and other short-term funds abroad	+140	+ 93	-258	-528	+138	-587	-165	- 9	-299	-114All other transactions	+ 80	+ 95	+166	+246	+287	+119	- 33	+ 39	-125	+238Net Capital Movements excluding monetary items shown below	+1,218	+985	+067	+787	+1,240	+624	+267	+213	-201	+345Official monetary movements in the form of:	Change in official holdings of gold and foreign exchange	+229	+537	+ 60	+ 86	- 11	-462	-166	-181	-105	- 10Change in net International Monetary Fund position	+ 61	-378	+ 86	+277	+168	+103	+ 28	+ 64	+ 20	- 9Other special international financial assistance	-	- 4	-	-	"	
(*'Demand notes of international investment agencies other than the International Monetary Fund, Trust and Deposit Account of U.S. Government with Government of Canada.
Source: DBS.
976	COMMONS DEBATES	June 1. 1967June 1, 1967	COMMONS DEBATES	977

[Stage Direction]
Period	Offerings	Deliveries	Undelivered^
	(Millions of dollars)		
1965-			
IQ 	344	263	1322Q 	282	311	1033Q 	399	284	2184Q 	391	291	3181966-	IQ 	356	518	1562Q 	386	348	1943Q 	202	276	1204Q 	198	203	115
<*>At end of period. Source: DBS.

[Stage Direction]
1962	1963	1964	1965	1966Transactions with U.S. (excluding international financial agencies) Current account deficit (exc. gold)	-1	247	(Mil -1,310	ions of do! -1,780	.ars) -2,050	-2,107Capital inflow from U.S	+1,073	+	829	+1,639	+ 456	+ 799Net amount to be financed by other trans-	-1,308actions	-	174	-	481	- 141	-1,594	Other transactions	+ 999Current account surplus with rest of world	+	262	+	635	+1,211	+ 829	Net capital movement from (+) or to (-) rest of world	_	88	162	- 852	+ 784	- 175New gold production available for export	+	155	+	154	+ 145	+ 138	+ 125Increase (-) in Canadian holdings of gold and	+ 11	+ 462foreign exchange	
Change in Canada's position with the International Monetary Fund(1)	-	533	-	60	86	+	378	-	86	- 277	- 168	- 103Total financing	+	174	+	481	+ 141	+1,594	+1,308
^Improvement (-) in Canadian position represents net provision of resources by Canada to the IMF
Source: DBS.
[Stage Direction]
June 1, 1967

[Stage Direction]
End of Period	Gold	U.S. Dollars	Total
	(Millions of U.S. dollars)		
19G5-January	1,036.0	1,632.2	2,668.2February	1,040.6	1,608.1	2,648.7March	1,044.1	1,510.0	2,554.1April	1,044.7	1,521.8	2,566.5May	1,081.4	1,417.3	2,498.7June	1,089.1	1,391.0	2,480.1July	1,096.3	1,395.2	2,491.5August	1,104.0	1,494.0	2,598.0September	1,111.9	1,502.2	2,614.1October	1,123.7	1,520.1	2,643.8November	1,137.5	1,543.6	2,681.1December	1,150.8	1,513.7	2,664.51966-January	1,112.8	1,449.6	2,562.4February	1,076.5	1,471.1	2,547.6March	1,085.6	1,424.2	2,509.8April	1,096.0	1,373.1	2,469.1May	1,060.7	1,351.5	2,412.2June	1,024.2	1,317.6	2,341.8July	986.2	1,329.2	2,315.4August	996.7	1,284.3	2,281.0September	1,008.7	1,235.6	2,244.3October	1,020.5	1,202.7	2,223.2November	1,033.7	1,208.4	2,242.1December	1,045.6	1,190.3	2,235.91967-January	1,055.9	1,182.3	2,238.2February	1,069.6	1,124.6	2,194.2March	1,083.5	1,119.9	2,203.4April	1,042.3	1,145.9	2,188.2
Source: Department of Finance.

[Stage Direction]
U.S. $ Million
IMF holdings of Canadian dollars at the end of 1965_ 246.6
(minus) Repurchases by Canada (net)	 -
Drawings of Canadian dollars by other
countries (net)	 47.6	47.6
(plus)
Subscription of 75 per cent of quota increase 142.5 Borrowings from Canada under the General
Arrangements to Borrow	 -	142.5
Net change during 1966	 94.9
IMF holdings at the end of 1966	 341.5
Source: Department of Finance.

[Stage Direction]
NET CHANGES IN SECURITIES11* AND BANK LOANS15* OUTSTANDING FOR CALENDAR YEARS
					1965		1966	
1963	1964	1965	1966	1st half	2nd half	1st half	2nd half
(Millions of dollars)				
	827	457	- 52	430	-529	477	-387	817
								
901	947	728	1,016	460	269	612	404462	185	277Loans	19	-18	29	42	- 17	46	- 43	85Sub-total	920	929	757	1,520	443	315	754	766334	401	215	247	101	114	170	77Loans	57	62	158	93	42	116	24	69Sub-total	391	463	373	340	143	230	194	146Total Governments	2,138	1,849	1,078	2,290	57	1,022	561	1,729Private Canadian borrowers	922	642	556	681	241582	761	1,198	30	11	39	33	19	20	14	18-49	332	459	495	265	194	314	182123	305	-272	105	121	-393	227	-123Bank loans to business and instalment finance companies.	334	572	925	292	581	344	196 - 1	96 78-44	5	56	77	- 36	92	Other bank loans1'*	234	417	661	320	417	244	155	165Total Private	1,210	2,403	3,066	2,244	2,009	1,057	1,586	6573,348	4,252	4,144	4,534	2,066	2,079	2,147	2,386-
^Includes foreign pay issues.
(^Excludes foreign bank loans.
(*>Includes securities guaranteed by provinces.
(«>Non-marketable securities sold by provinces to the Canada Pension Plan Investment bund.	_	, .	.	,	.	...	, . , ,
Quebec Pension Plan receipts of about $170 million were made available to the Quebec Deposit and Investment Fund for investment primarily in marketable securities. A high proportion of these receipts was invested in provincial and municipal securities.	,
(6)Includes loans to grain dealers, personal loans, loans to farmers, loans to institutions, loans for insured mortgages and for Canada cavings Bonds.
June 1. 1967	COMMONS DEBATES	979

[Stage Direction]
ASSETS OF DEPOSIT-ACCEPTING INSTITUTIONS^1'
1964	1965	1966	31st December	31st March	30th June	30th September	31st December	31st March	30th June	30th September	31st DecemberLoans:	(Millions of dollars)	Canadian day to day loans	253	167	213	266	251	169	248	268	278(Jail and short loans	150	165	154	203	208	172	207	227	285To instalment finance companies	299	288	357	425	527	408	435	359	424To other businesses	5,757	6,051	6,469	6,618	6,609	6,770	7,032	7,141	7,106To individuals	2,665	2,725	2,875	2,928	3,153	3,128	3,170	3,165	3^382To non-profit institutions	262	246	268	269	285	283	299	297	'313To provinces	30	14	13	35	59	15	16	122	101To municipalities	363	465	405	446	521	642	545	562	6149,779	10,121	10,754	11,190	11,613	11,587	11,952	12,141	12,503Mortgages	3,941	4,127	4,383	4,641	4,748	4,842	4,954	5,049	5,115Government Bonds	Govt, of Canada treasury bills	1,755	1,797	1,747	1,825	1,984	1,917	1,936	1,922	1,980Govt, of Canada bonds	5,565	5,536	5,693	5,584	5,692	5,705	5,632	5,788	5^ 911Provincial bonds	660	684	686	642	637	624	598	593	611Municipal bonds	489	514	511	497	496	494	479	493	4838,469	8,531	8,637	8,548	8,809	8,740	8,645	8,796	8,985Other securities	Short term notes<3'	191	361	396	296	211	342	312	327	289Industrial Development Bank debentures and	stock	213	219	226	229	240	248	262	270	282Other corporate bonds	737	752	780	803	805	835	850	870	850Stocks	123	124	139	134	130	131	133	136	1381,264	1,456	1,541	1,462	1,386	1,556	1,557	1,603	1,559Assets abroad (net)	101	168	29	3	-58	-70	-21	69	251All other assets	1,817	1,734	1,784	1,740	1,975	1,808	2,179	2,099	2,319Total	>5,371	26,137	27,128	27,584	28,473	28,463	29,266	29,757	30.732
"'Included are the chartered banks, Quebec Savings Banks, trust companies and loan companies. Credit unions and eaisses populaires are excluded "'Estimated.
(3'Of sales finance and other companies. Source: DBS and Bank of Canada.
980	COMMONS DEBATES	June 1, 19G7

[Stage Direction]
LIABILITIES OF DEPOSIT-ACCEPTING INSTITUTIONS*1)
1964	1965	1966	31st December	31st March	30th June	30th September	31st December	31st March	30th June	30th September	31st December®2,026	1,938	2,053	(Mi 2,071	llions of doll 2,153	irs) 2,092	2,246	2,248	2,296Chequable deposits of:	773 204 125 14,919	683 267 120 14,940	674 360 143 15,377	518 344 157 15,770	920 344 225 15,985	607 366 153 16,000	537 381 151 16,510	485 351 162 16,823	969 303 180 17,114
Other financial institutions										
Total Chequable Deposits	
Other deposits and deposit-type liabilities: Non-chequable demand deposits	
Term deposits, G.I.C.'s, debentures and	16,021	16,010	16,554	16,789	17,474	17,126	17,579	17,821	18,566710 2,516 1,505	736 2,804 1,818	771 2,908 2,031	752 2,977 2,186	764 3,058 2,044	780 3,291 2,172	760 3,388 2,268	752 3,498 2,350	739 3,534 2,346Other notice deposits	
Total Non-Chequable and Time De-	4,731	5,358	5,710	5,915	5,866	6,243	6,416	6,600	6,619Deposits and deposit-type liabilities to non-	228	239	223	207	229	208	214	217	244Total deposits and deposit-type liabilities	20,980	21,607	22,487	22,911	23,569	23,577	24,209	24,638	25,4291,724 641	1,757 835	1,774 814	1,800 802	1,851 900	1,857 937	1,857 954	1,879 992	1,910 1,097
25,371	26,137	27,128	27,584	28,473	28,463	29,266	29,757	30,732
									
<15Included are the chartered banks, Quebec Savings Banks, trust companies and loan companies. Credit unions and caisses populaires are excluded. *2) Estimated.
(^Includes non-chequable deposits.
^Includes demand and savings deposits at chartered banks and chequable demand deposits at trust and loan companies.
*65 Includes Canadian dollar deposits by foreign banks in chartered banks and foreign currency liabilities of the Bank of Canada.
Source: DBS and Bank of Canada.
[Stage Direction]
oo
June 1. 1967	COMMONS DEBATES

[Stage Direction]
ASSETS OF DEPOSIT-ACCEPTING INSTITUTIONS'!)
-	1964	1965	1966	31st December	31st March	30th June	30th September	31st December	31st March	30th June	30th September	31st December(Percentage distribution)	Loans:	Canadian day to day loans	1.00	0.64	0.78	0.96	0.88	0.59	0.85	0.90	0.90Call and short loans	0.59	0.63	0.57	0.74	0.73	0.60	0.71	0.76	0.93To instalment finance companies	1.18	1.10	1.31	1.54	1.85	1.43	1.49	1.21	1.38To other businesses	22.69	23.15	23.85	23.99	23.21	23.79	24.03	24.00	23.12To individuals	10.51	10.43	10.60	10.61	11.07	10.99	10.83	10.63	11.00To non-profit institutions	1.03	0.94	0.99	0.98	1.00	1.00	1.02	1.00	1.02To provinces	0.12	0.05	0.05	0.13	0.21	0.05	0.05	0.41	0.33To municipalities	1.43	1.78	1.49	1.62	1.83	2.26	1.86	1.89	2.0038.55	38.72	39.64	40.57	40.78	40.71	40.84	40.80	40.68Mortgages	15.53	15.79	16.16	16.82	16.67	17.01	16.93	16.97	16.64Government Bonds	Govt, of Canada treasury bills	6.92	6.87	6.44	6.62	6.97	6.74	6.62	6.46	6.44Govt, of Canada bonds	21.93	21.18	20.99	20.24	19.99	20.04	19.24	19.45	19.24Provincial bonds	2.60	2.62	2.53	2.33	2.24	2.19	2.04	1.99	1.99Municipal bonds	1.93	1.97	1.88	1.80	1.74	1.74	1.64	1.66	1.5733.38	32.64	31.84	30.99	30.94	30.71	29.54	29.56	29.24Other securities	Short term notes	0.75	1.38	1.46	1.07	0.74	1.20	1.07	1.10	0.94Industrial Development Bank debentures	and stock	0.84	0.84	0.83	0.83	0.84	0.87	0.90	0.91	0.92Other corporate bonds	2.91	2.88	2.88	2.91	2.83	2.94	2.90	2.92	2.76Stocks	0.48	0.47	0.51	0.49	0.46	0.46	0.45	0.46	0.454.98	5.57	5.68	5.30	4.87	5.47	5.32	5.39	5.07Assets abroad (net)	0.40	0.64	0.10	0.01	-0.20	-0.25	-0.07	0.23	0.82All other assets	7.16	6.64	6.58	6.31	6.94	6.35	7.44	7.05	7.55Total	109.00	190.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00
"'Set: footnotes Table 35.
Source: DBS and Bank of Canada.
982	COMMONS DEBATES	June 1. 1987

[Stage Direction]
LIABILITIES OF DEPOSIT-ACCEPTING INSTITUTIONS*1)
-	1964	1965	1966	31st December	31st March	30th June	30th September	31st December	31st March	30th June	30th September	31st December(Percentage distribution)	Bank of Canada notes	7.99	7.42	7.57	7.51	7.56	7.35	7.67	7.55	7.47Chequable deposits of:	Government of Canada	3.05	2.61	2.48	1.88	3.23	2.13	1.84	1.63	3.15Provincial governments	0.80	1.02	1.32	1.25	1.21	1.28	1.30	1.18	0.99Other financial institutions	0.49	0.46	0.53	0.57	0.79	0.54	0.52	0.54	0.58Other Canadian residents	58.80	57.16	56.68	57.17	56.14	56.21	56.41	56.54	55.69Total Chequable Deposits	63.14	61.25	61.02	60.87	61.37	60.17	60.07	59.89	60.41Other deposits and deposit-type liabilities:	Non-chequable demand deposits	2.80	2.82	2.84	2.73	2.68	2.74	2.60	2.53	2.41Term deposits, G.I.C.'s, debentures and	instalment certificates	9.92	10.73	10.72	10.79	10.74	11.56	11.57	11.75	11.50Other notice deposits	5.93	6.96	7.49	7.92	7.18	7.63	7.75	7.90	7.63Total Non-Chequable and Time De-	posits	18.65	20.51	21.05	21.44	20.60	21.93	21.92	22.18	21.54Deposit and deposit-type liabilities to non-	residents	0.90	0.91	0.82	0.75	0.81	0.73	0.73	0.73	0.79Total deposits and deposit-type liabilities	82.69	82.67	82.89	83.06	82.78	82.83	82.72	82.80	82.74Shareholders' equity	6.79	6.72	6.54	6.52	6.50	6.53	6.35	6.32	6.22All other liabilities	2.53	3.19	3.00	2.91	3.16	3.29	3.26	3.33	3.57Total	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00
*1)See footnotes Table 36.
Source: DBS and Bank of Canada.
June 1, 1967	COMMONS DEBATES	983

[Stage Direction]
Issuing Agency	Type of Investment	Time to	1965	1966	1967Maturity	Dec.	Mar.	June	Sept.	Dec.	Mar.
Representative short-term									
money market rates	Chartered banks	Term deposits	30 days	5.25	5.37	5.50	5.85	6.36	5.0090 days	5.63	5.63	5.75	5.90	6.31	5.001 year	5.63	5.50	5.75	5.75	5.50	5.75Swap deposits	30 days	5.45	4.79	5.50	5.20	5.92	4.5790 days	5.75	5.36	5.62	5.81	6.26	5.06Trust companies	Term deposits	30 days	5.50	5.37	5.62	5.75	5.62	4.7590 days	5.75	5.62	5.87	5.87	6.00	5.001 year	5.75	5.75	6.00	6.00	6.00	5.75Guaranteed Investment	30 days	5.38	5.38	5.30	5.37	5.40	4.68Certificates (G.I.C.'s)	90 days	5.56	5.60	5.55	5.79	5.77	4.841 year	5.76	5.72	5.79	6.00	6.06	5.03Finance companies	Prime finance paper	30 days	5.87	5.90	6.03	6.08	5.20	5.1090 days	6.00	5.98	6.18	6.36	0.55	5.50Corporations	Prime commercial paper	30 days	6.00	5.75	5.87	5.93	6.18	5.0690 days	6.00	5.87	6.06	6.18	6.43	5.31Bankers' acceptances	30 days	4.95	5.10	5.35	5.65	6.05	4.8590 days	5.05	5.20	5.45	5.85	6.25	4.95Chartered banks	Day loans	Demand	3.63	5.10	4.73	4.68	4.42	4.16Govt, of Canada	Treasury bills	91 days	4.54	5.06	5.00	5.01	4.96	4.13Representative bond yields	Govt, of Canada	Short term bonds	0-3 years	4.95	5.17	5.09	5.40	5.31	4.28Long term bonds	over 10 years	5.40	5.58	5.66	5.75	5.76	5.48Provinces	Long term bonds	-	5.90	6.03	6.14	6.51	6.63	6.18Municipalities	Long term bonds	-	6.03	6.28	6.31	6.80	6.73	6.40Corporations	Long term bonds	-	6.05	6.22	6.30	6.83	6.83	6.65984	COMMONS DEBATES	June 1, 1967
June 1, 1967

[Stage Direction]
-	1961	1962	1963	1964	1965	1966
			(Millions of dollars)			
Mortgage loans approved under National Housing Act CMHC direct«>

Single detached	225	152	253	312	367	401Apartments and other	46	20	49	65	95	144Sub-total	271	172	302	377	462	545Approved lenders	178	129	71Single detached	321	316	281	Apartments and other	132	96	104	175	191	120Sub-total	453	412	385	353	320	191T otal	724	584	687	730	782	736Conventional mortgage approvals New residences	Single detached	174	187	250	294	354	290Apartments and other	158	264	402	518	548	284Existing residences	Single detached	215	250	306	443	540	373Apartments and other	85	102	124	197	209	98Commercial and other	298	311	373	507	581	382Total conventional	930	1,120	1,455	1,959	2,232	1,427Grand total	1,654	1,704	2,142	2,689	3,014	2,163of which:	Single residences new	720	655	784	784	850	762Apartment residences, etc., new....	336	380	555	758	834	548Total residential new	1,056	1,035	1,339	1,542	1,684	1,310
Win addition to direct CMHC loans for new housing, CMHC also made loans for $38 million for
existing housing in the period 1964-1966. Source: CMHC and Bank of Canada.

[Stage Direction]
Amount outstanding	1965	1966seasonally adjusted	March | June | Sept. | Dec.	March I June | Sept. | Dec.
(Millions of dollars)
Chartered banks	
Sales finance companies	
Consumer loan companies	
Quebec Savings Banks	
Life insurance companies	
Retail dealers(1>	1,899 1,057 938 17 401 679	2,003 1,071 976 18 403 692	2,118 1,101 1,003 17 407 710	2,207 1,139 1,032 16 412 727	2,291 1,165 1,069 15 416 746	2,264 1,167 1,100 16 425 751	2,335 1,199 1,133 17 434 759	Sub-total	4,991	5,163	5,356	5,533	5,702	5,722	5,877	Other retail(2)	447	449	454	462	477	477	n.a.	Credit unions and caisses	n.a.	n.a.	n.a.	7,058	n.a.	n.a.	n.a.	n.a.n.a. not available.	,	...
WIncludes department stores, furniture and appliance dealers and the instalment credit of motor vehicle dealers.
WIncludes oil companies credit cards.	_
Source: Bank of Canada, Department of Insurance, Department of Finance, DBS and Department of Agriculture.

[Stage Direction]
DETAILS OF NEW ISSUES AND RETIREMENTS OF GOVERNMENT OF CANADA DIRECT AND GUARANTEED MARKETABLE BONDS _________ January 1, 1966 to March 31, 1967
Date of issue or retirement	Maturing bonds		Amount ($ million par value)	New bonds		Amount ($ million par value)		Net change in amount outstanding ($ million par value)	Term of new bonds		Price at issue (%)	Yield at issue (%)
1966												
January 3		CNR 3%											
Jan.	3, 1966	35	-	-35	February 1	3J% Feb.	1, 1966	330	4% April	1, 1967	170	1 year	2 months	98.70	5.165% July	1, 1970	50	-30	4 year	5 months	98.50	5.385|% Aug.	1, 1980	80	14 year	6 months	100.00	5.50April 15	5% Oct.	15, 1987®	3	-	- 3	May 1	3J% May	1, 1966	325	41% April	1, 1967	155	11 months	98.90	5.495% July	1, 1970	40	0	4 year	2 months	98.00	5.545i% Aug.	1, 1980	130	14 year	3 months	98.00	5.71September 1	3% Sept.	1, 1966	245	41% Oct.	1, 1967	175)	1 year	1 month	98.60	5.603J% Sept.	1, 1966	205	5|% Oct.	1, 1969	250)	+ 50	3 year	1 month	99.63	5.8851% Sept.	1, 1992	75J	26 year	97.50	5.94October 15	5% Oct.	15, 1987®	3	-	- 3	December 15	4% Dec.	15, 1966	150	51% Jan.	15, 1968	125)	1 year	1 month	99.60	5.884}% Dec.	15, 1966	300	51% Dec.	15, 1970	300 \	+ 75	4 year	99.50	5.8951% Sept.	1, 1992	100J	25 year	8j months	97.50	5.94December 21	CNR 51%	Jan.	1, 1985®	1	- 1	CNR 5%	Oct.	1, 1987®	4	-	-	- 4	Totals	(Calendar 1966)	1,601	1,650	+ 49	1967	January 2	CNR 21%	Jan.	2, 1967	50	-	- 50	February 1	51% Sept.	1, 1975	70)	8 year	8 months	98.63	5.7051% Aug.	1, 1980	30	+150	13 year	6 months	98.00	5.7151% Sept.	1, 1992	50 J	25 year	7 months	100.75	5.69Totals	(Fiscal year 1966-67)	1,286	1,500	214	(1)	This issue was made in New York and bonds of this issue are subject to partial redemption at par for the sinking fund on each interest payment date in a principal amount equal to U.S. $2,500,000.(2)	Cancellation of securities held by Purchase Funds.986	COMMONS DEBATES	June 1. 1967June 1, 1967	COMMONS DEBATES	987
Part II

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Table of Contents
Page
Introduction	 988
Highlights of the government's financial operations during 1966-67. 989
Budgetary accounts	 992
Revenue	 993
Expenditure	 1001
Assets and liabilities as at March 31, 1967	 1033
Summary	 1034
Liability accounts	 1034
Asset accounts	 1044
Net debt	 1057
The cash position	 1057
The public debt	 1060
Supplementary detailed tables	 1066
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June 1, 1967
Part II

[Stage Direction]
This Part of the Budget Papers presents in summary form a review of the accounts of the Government of Canada for the fiscal year 1966-67. Although the government's fiscal year ended on March 31, the books must remain open for some time after that date to record various adjusting entries and to take into account section 35 of the Financial Administration Act which provides that for thirty days after the end of each fiscal year payments for the discharge of debts properly applicable to the old year may be made and charged to that year. Consequently the figures used in this report are preliminary and subject to revision and the final figures when they become available next July or August will vary to some extent from those given in the following pages.
In 1965-66, in order to improve the functioning of the government service, changes were made in the control and supervision of the duties and functions of a number of departments pursuant to the Public Service Rearrangement and Transfer of Duties Act. In 1966-67, to more truly define the new duties and functions, the names of certain departments were changed and new departments established pursuant to the Government Organization Act, 1966, which came into force on October 1, 1966 by proclamation of the Governor in Council. The Department of Citizenship and Immigration was renamed the Department of Manpower and Immigration, the Department of Forestry was renamed the Department of Forestry and Rural Development, the Department of Mines and Technical Surveys was renamed the Department of Energy, Mines and Resources and the Department of Northern Affairs and National Resources was renamed the Department of Indian Affairs and Northern Development. New departments established were: the Registrar General, responsible for certain duties transferred from the Privy Council; the Solicitor General, responsible for certain duties transferred from the Department of Justice and the Treasury Board responsible for certain duties transferred from the Department of Finance and the Public Service Commission.
Similarly, the name of the Civil Service Commission was changed to the Public Service Commission pursuant to the Public Service Employment Act which came into force on March 13, 1967 by proclamation of the Governor in Council, and a new department was established called the Public Service Staff Relations Board, to administer collective bargaining in the civil service, pursuant to the Public Service Staff Relations Act which also came into force on March 13, 1967 by proclamation of the Governor in Council.
In addition, the duties, powers and functions pertaining to the Canadian Citizenship Act, under the former Department of Citizenship and Immigration, were transferred to the Department of Secretary of State of Canada.
June 1, 1967

[Stage Direction]
This section outlines the financial operations of the government in 1966-67 giving a brief summary of the budgetary and non-budgetary transactions, the unmatured debt transactions and the changes in the cash position during the fiscal year and the cash and debt position as at the end of the fiscal year. More detailed explanations of these transactions are given in subsequent sections of this review.
The following table summarizes the budgetary and non-budgetary transactions for 1966-67 with comparative figures for 1965-66 and indicates how these transactions affected the government's cash balances:

[Stage Direction]
(in millions of dollars)
Summary of Budgetary and Non-Betdgetary Transactions and Changes in Cash Position	Fiscal year ended March 31	
	1967 (preliminary)	1966
Budgetary transactions-		
Revenue-		
	7,436	6,850
	930	'846
	[DOT] 8,S66	7,696
Expenditure-		
	1,696	1,595
Non-defence		7, 098	6; 140
	8,794	7,755
	-428	-39
Non-budgetary transactions (excluding unmatured debt trans-		
actions)-		
Receipts and credits-		
Repayment of temporary loan to old age security fund			25
Net annuity, insurance and pension accounts receipts		938	627
Repayment of advances to exchange fund		341	
Canada pension plan account		591	89
Investment in special United States of America securities-		
Columbia River Treaty		32	32
Increase in non-interest-bearing notes payable on demand		111	
	454	260
	9,467	1,055
Disbursements and charges-		
Advances to exchange fund			75
Canada pension plan investment fund	581	35Loans, investments and advances	1,594	853Decrease in non-interest-bearing notes payable on demand	113583	788,758	1,154Net amount required for non-budgetary transactions	-291	-121Overall cash requirements to be financed by increase in unmatured	debt or decrease in cash balances	-719	-169Net increase in unmaturcd debt outstanding in hands of the	public	711	113Net increase or decrease (-) in Receiver General bank balances....	-8	-47
Budgetary transactions
The budgetary revenue, expenditure and deficit as forecast in the budget speech of March 29, 1966 and revised on December 19, 1966 and the actual figures as now estimated are shown in the following table:
990
[Stage Direction]
June 1, 1967

[Stage Direction]
(in millions of dollars)
Budgetary Transactions for Fiscal Year 1966-67	Budget forecast March 29, 1966	Revised forecast December 19, 1966	Actual (preliminary)	Increase or decrease (-) compared with December 19, 1966 forecast	
				Amount	Per cent
8,300 8,450	8,260	8,366 8,794	106	1.288,580	214	2.49
150	320	428	108	
					
Revenue
Budgetary revenue of the government amounted to $8,366 million for 196667. This was $106 million or 1} per cent more than the revised figure of $8,260 million foiecast on December 19, 1966 and $670 million or 9 per cent more than the total collected in 1965-66.
Tax revenue accounted for $586 million of the increase and non-tax revenue accounted for $84 million of the increase over 1965-66 receipts.
The yield from the income taxes was $350 million higher, from sales tax $118 million higher and from customs import duties $92 million higher than in 1965-66.
Expenditure
Budgetary expenditure amounted to $8,794 million, $214 million or 2§ per cent more than the revised figure of $8,580 million forecast on December 19, 1966 and $1,059 million or 14 per cent higher than expenditure in 1965-66.
Defence expenditure of $1,696 million was 19 per cent of total budgetary expenditure compared with $1,595 million or 21 per cent in 1965-66 and was again the largest category.
Civil or non-defence expenditure was $7,098 million compared with $6,140 million in 1965-66, an increase of $958 million. The main changes were increases of $77 million in public debt charges, $78 million in the government's contributions to the provinces under the Hospital Insurance and Diagnostic Services Act, $70 million in payments to the provinces under the Technical and Vocational Training Assistance Act, $62 million in payments in respect of the international food aid program, $59 million in university grants and $50 million in fiscal, subsidy and other payments to provinces.
Deficit
On the basis of these preliminary figures, expenditure of $8,794 million exceeded revenue of $8,366 million resulting in a deficit of $428 million compared with a deficit of $320 million as forecast on December 19, 1966 and a deficit of $39 million in 1965-66.
June 1, 1967
[Stage Direction]
Non-budgetary transactions (excluding unmatured debt transactions)
Non-budgetary transactions are those which increase or decrease the government's asset and liability accounts and do not enter into the calculation of the annual budgetary surplus or deficit.
In 1966-67 net disbursements and charges of $2,758 million exceeded net receipts and credits of $2,467 million, resulting in a net requirement of $291 million. In 1965-66 net disbursements and charges totalled $1,154 million and net receipts and credits totalled $1,033 million, resulting in a net requirement of $121 million.
Old age security fund
Receipts by the fund during 1966-67 of $1,286 million exceeded payments of $1,073 million by $213 million. In 1965-66 receipts were $1,169 million and payments were $927 million.
The transactions in the fund during 1966-67 compared with those for 196566 were as follows:
Fiscal year ended March 31 1967	1966
(preliminary)
(in millions of dollars)
Balance in fund at beginning of year	
217	<i)-25Receipts	
1,286	1,169Pension payments	
-1,073	-927Balance in fund at end of	year	
430	217
^Covered by temporary loans from Minister of Finance which were repaid during 1965-66.
Canada 'pension plan account
Receipts by the account during 1966-67 were $600 million and disbursements were $9 million. In 1965-66 receipts were $95 million and disbursements were $6 million.
The transactions in the account during 1966-67 compared with those for 1965-66 were as follows:
Fiscal year ended March 31 1967	1966
(preliminary)
(in millions of dollars)
Balance in account at beginning	of year	
89Receipts	
600	95Disbursements	
-9	_gBalance in account at end of year	
680	89
At March 31, 1967 the balance in the account consisted of an operating balance of $65 million on deposit with the government and provincial securities, purchased on instructions from the provinces, in the amount of $613 million and Government of Canada securities in the amount of $2 million recorded in the Canada pension plan investment fund.
27053-63a
[Stage Direction]
June 1, 1967
Unmatured debt transactions
Unmatured debt transactions in 1966-67 reflected an increase of $711 million in unmatured debt outstanding in the hands of the public compared with an increase of $113 million in 1965-66.
Cash position
Receiver General bank balances in current deposits were $8 million less at March 31, 1967 than at March 31, 1966. The budgetary deficit of $428 million plus non-budgetary requirements of $291 million was financed by an increase of $711 million in outstanding unmatured debt and a draw-down of $8 million in Receiver General bank balances.
Debt position
As a result of budgetary and non-budgetary transactions the gross public debt increased by $2,867 million to $30,350 million at March 31, 1967, net recorded assets increased by $2,439 million to $14,379 million and net debt increased by $428 million to $15,971 million.

[Stage Direction]
Total revenue at $8,366 million for 1966-67 was $670 million more than the total for the previous fiscal year. Total expenditure of $8,794 million was $1,059 million more than the total for 1965-66. The deficit for the fiscal year 1966-67 was $428 million compared with $39 million for the previous year.

[Stage Direction]
Fiscal Years Ended March 31
Preliminary
June 1, 196/

[Stage Direction]
Budgetary Revenue, Expenditure and Deficit (in millions of dollars)
Fiscal Year Ended March 31	Budgetary revenue	Budgetary expenditure	Deficit1958	5,048.8	5,087.4	- 38.61959	4,754.7	5,364.0	-609.3I960	5,289.8	5,702.9	-413.11961	5,617.7	5,958.1	-340.41962	5,729.6	6,520.6	-791.01963	5,878.7	6,570.3	-691.01964 	6,253.2	6,872.4	-619.21965 	7,180.3	7,218.3	-38.01966 	7,695.8	7,734.8	-39.01967 (preliminary)	8,366.0	8,794.0	-428.0
Revenue
Budgetary revenue in 1966-67 was $8,366 million, $670 million or 9 per cent over the total of $7,696 million received in 1965-66. Tax revenue at $7,436 million accounted for 89 per cent of the total revenue for the fiscal year and non-tax revenue at $930 million accounted for 11 per cent.
The more important items were increases of $330 million in personal income tax collections, $118 million in sales tax receipts, $92 million in customs import duties and $79 million in return on investments.
BUDGETARY REVENUE	BUDGETARY EXPENDITURE
BY MAJOR SOURCE	BY MAJOR FUNCTION
For Fiscal Year Ended March 31, 1967 Preliminary
l Dots net Include poym.nlc out of old eSe tecurity fund.
2. Don not include Ihoto poymonti mod* lo provinciol and municipal povernmenH
lor specific purposes.
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June 1, 1967

[Stage Direction]
Budgetary Revenue by Major Sources (in millions of dollars)
	Fiscal year ended March 31				Increase	
Source	196/ (preliminary)	1966	or decrease (-)	Amount	Per cent	Amount	Per cent	Amount	Per centTax revenue- Income tax- Personal(1)	2,472.0	29.6	2,142.5	27.8	329.5	15.4Corporation(1)	1,593.0	19.0	1,606.6	20.9	-13.6	-0.8On dividends, interest, etc., going abroad	204.0	2.4	170.0	2.2	34.0	20.0Excise taxes- Sales(1)<2>	1,513.0	18.1	1,395.1	18.1	117.9	8.5Other	315.0	3.8	296.2	3.9	18.8	6.3Customs import duties	777.0	9.3	685.5	8.9	91.5	13.3Excise duties	461.0	5.5	445.9	5.8	15.1	3.4Estate tax<3>	100.8	1.2	108.3	1.4	-7.5	-6.9Other taxes	0.2 7,4^6.0	88.9	0.2 6,850.3	89.0	585.7	8.5Non-tax revenue- Return on investments	517.0	6.2	438.3	5.7	78.7	18.0Post office-net postal revenue	254.0	3.0	237.5	3.1	16.5	6.9Other non-tax revenue	159.0	1.9	169.7	2.2	-10.7	-6.39S0.0	11.1	846.5	11.0	84.5	10.0Total budgetary revenue	8,366.0	100.0	7,695.8	100.0	670.2	8.7
(preliminary)
(1>
Excluding credits to:
The old age security fund-
Personal income tax	  576.0
Corporation income tax	 150.0
Sales tax	 560.0
1,286.0
The Canada pension plan-
Personal income tax	 588.8
494.9
152.3
522.1
1,169.3
94.9
(2)Net after deduction of refunds and drawbacks.
t8) Includes duties levied under the Dominion Succession Duty Act.
June 1, 1967

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Federal-provincial fiscal arrangements
Under fiscal arrangements, that became operative in 1962, the federal government withdrew in part from the field of direct taxation and left the vacated area to the provinces. The federal government offered to collect the provincial income taxes without charge provided that provincial personal income tax was expressed as a percentage of federal personal income tax otherwise payable and provincial corporation income tax applied to taxable income calculated in the same way as for federal income tax purposes. To allow for the imposition of the provincial income taxes, the Income Tax Act was amended to abate the federal income tax otherwise payable by individuals in all provinces by 16 per cent in 1962, 17 per cent in 1963, 18 per cent in 1964, 21 per cent in 1965, 24 per cent in 1966 and 28 per cent in 1967. For 1965 and 1966 the abatements of federal income tax otherwise payable in the Province of Quebec were 44 per cent and 47 per cent respectively; for 1967, the corresponding figure was 50 per cent. These higher abatements for Quebec are in compensation of the fact that the payment of youth allowances and the full cost of certain programs which are supported jointly by federal and provincial governments in the other provinces have been assumed by that province. For the years 1962 to 1966 the federal corporation income tax rates were abated by 9 percentage points for taxable income earned in a province other than Quebec and by 10 percentage points for taxable income earned in Quebec. For 1967, the corresponding abatement was 10 per cent for all provinces. The federal government has entered into tax-collection agreements under which it collects the provincial personal income taxes for all provinces except Quebec and the provincial corporation income taxes for all provinces except Ontario and Quebec.
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June 1, 1967
Under these collection agreements, payments are made monthly to each province based on an estimate of that province's tax revenue. When the actual amounts of assessed returns are established, usually in the month of December following the end of the fiscal year, adjustments are made with the provinces.
Under the 1962-67 fiscal arrangements, the federal government agreed to abate its estate tax by 50 per cent in the fiscal years 1962-63 and 1963-64, and by 75 per cent in the fiscal years 1964-65, 1965-66 and 1966-67 in any province that imposed its own succession duties. To a province that did not wish to reenter the succession duty field the federal government agreed to pay 50 per cent of the federal estate tax revenue in 1962-63 and 1963-64 and 75 per cent in 196465, 1965-66 and 1966-67. During 1962-63, Quebec and Ontario collected their own succession duties while the other provinces received a payment in lieu of imposing duties. Starting in 1963-64 British Columbia joined Ontario and Quebec in imposing its own succession duties. When the abatement was raised to 75 per cent in 1964-65, British Columbia increased its rates accordingly but Quebec and Ontario accepted in lieu of the extra abatement a payment equivalent to 25 per cent of the federal estate tax in those provinces.
Tax on personal income
In 1966-67 the largest source of government revenue was again the personal income tax. The yield (excluding the old age security tax) was $2,472 million or 30 per cent of all budgetary revenue. The increase of $330 million or 15 per cent over 1965-66 collections was due principally to a higher level of personal incomes and to the termination of the tax reduction introduced in 1965 and its replacement by a smaller tax reduction for 1966 and subsequent years. This was partly offset by higher provincial abatements. In addition to the federal revenue, $696 million was allocated to the provincial tax collection agreements account under the terms of federal-provincial fiscal arrangements. In 1965-66 federal revenue from this source was $2,142 million and in addition $529 million was allocated to the provincial tax collection agreements account.
The tax on personal incomes levied under the Old Age Security Act and credited to the old age security fund was $576 million compared with $495 million in 1965-66. The maximum amount payable by an individual on account of the 4 per cent tax on personal income under the Old Age Security Act was raised from $120 per year to $240 per year with effect from January 1, 1967.
Corporation income tax
The corporation income tax was the second largest source of government revenue. The yield (excluding the old age security tax) was $1,593 million or 19 per cent of all budgetary revenue. The decrease of $14 million or 1 per cent less than the 1965-66 collections was attributable to a combination of a levelling off of corporation profits and to the absence from 1966-67 tax receipts of amounts similar to those collected in 1965-66 in respect of the movement forward of the payment period of corporation income tax that had been initiated in 1963. In addition to the federal revenue $132 million was allocated to the provincial tax collection agreements account under terms of federal-provincial fiscal arrangements. In 1965-66 federal revenue from this source was $1,607 million and in addition $132 million was allocated to the provincial tax collection agreements account.
June 1, 1967
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The tax on incomes of corporations levied under the Old Age Security Act and credited to the old age security fund was $150 million, $2 million less than in 1965-66.
Taxes on dividends, interest, etc., going abroad
Revenue in this category was derived from taxes withheld from payments of dividends, interest, rents, royalties, alimony and income from estates and trusts paid to non-residents. Collections for 1966-67 were $204 million, an increase of $34 million or 20 per cent over the 1965-66 total.
Excise taxes
Revenue under this heading was from the general sales tax and other excise taxes.
From a revenue standpoint the general sales tax was the most important tax levied under the Excise Tax Act. Receipts (excluding the old age security tax) were $1,513 million or 9 per cent higher than in the previous fiscal year. The rate of the general sales tax was raised from 11 per cent to 12 per cent with effect from January 1, 1967. The increase did not apply to production machinery and equipment and building materials that had been exempt from tax before the 1963 budget.
The tax on sales levied under the Old Age Security Act and credited to the old age security fund was $560 million.
The yield from excise taxes levied under the Excise Tax Act, other than the general sales tax, at $315 million was $19 million more than in 1965-66.

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Fiscal Years Ended March 31 Millions of Dollars
Pralininary
998
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June 1. 19G7
Customs import duties
Receipts from this source were 1777 million compared with $686 million in 1965-66. The increase of $92 million or 13 per cent reflected the greater volume and value of imports during 1966-67.
Excise duties
Excise duties were levied on alcoholic beverages (other than wines) and tobacco products. (Additional taxes on tobacco products were levied under the Excise Tax Act.) Net receipts in 1966-67 were $461 million compared writh $446 million in 1965-66.
Gross receipts of $271 million from duties on alcoholic beverages ($159 million in respect of spirits and $112 million in respect of beer) and $197 million from duties on tobacco products were reduced by refunds and drawbacks of $7 million. In 1965-66 gross receipts of $265 million from duties on alcoholic beverages ($157 million in respect of spirits and $108 million in respect of beer) and $187 million from duties on tobacco products were reduced by refunds and drawbacks of $6 million.
Estate tax
Revenue in this category was derived under the Estate Tax Act. Net receipts of $101 million were $7 million less than in 1965-66.
Other taxes
Revenue under this heading during the fiscal year was $200 thousand, the same as in the previous year.

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Non-tax revenue was $930 million, an increase of $85 million over the 1965-66 total.

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(in millions of dollars)
Non-Tax Revenue	Fiscal year ended March 31	Increase or decrease (-)	1967 (preliminary)	1966	Amount	Per centReturn on investments	517.0	438.3	78.7	18.0Post office-net postal revenue	254.0	237.5	16.5	6.9Services and service fees	04.0	63.1	0.9	1.4Privileges, licences and permits	37.0	39.0	-2.0	-5.1Proceeds from sales	21.0	22.9	-1.9	-8.3Refunds of previous years' expenditure	17.0	18.9	-1.9	-10.1Bullion and coinage	5.0	11.2	-6.2	-55.4Other	15.0	14.6	0.4	2.7930.0	845.5	84.5	10.0﻿June 1, 1967
Return on investments
These receipts, in an amount of $517 million, consisted of income derived from loans and advances made by the government and from investments by the government in productive or earning assets. In 1965-66 receipts were $438 million.
Receipts from Crown corporations at $371 million were $51 million more than in the previous year. The main changes were increases of $22 million in payments by the Central Mortgage and Housing Corporation, $8 million in the Bank of Canada profits paid to the government and $8 million in respect of the Farm Credit Corporation.
The yield from other loans and investments at $146 million was $28 million more than the 1965-66 total. This was mainly accounted for by the receipt of $20 million in interest on the loan to the United Kingdom and $6 million in interest on loans to the Municipal Development and Loan Board. In 1965-66 interest payable on the United Kingdom loan was deferred in accordance with special agreements.

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(in millions of dollars)
Return on Investments	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Loans to, and investments in, Crown corporations- Bank of Canada-profits	150.6	143.1	7.5Canadian Broadcasting Corporation	2.5	1.0	1.5Canadian Corporation for the 1907 World Exhibition....	3.5	0.2	3.3Canadian National Railways	16.2	12.0	4.2Canadian Overseas Telecommunication Corporation	2.5	2.7	-0.2Central Mortgage and Housing Corporation	129.8	107.8	22.0Eldorado Mining and Refining Limited	1.0	1.5	-0.5Export Credits Insurance Corporation	7.7	6.8	0.9Farm Credit Corporation	29.1	21.0	8.1National Capital Commission	3.9	3.3	0.6National Harbours Board	1.7	4.1	-2.4Northern Canada Power Commission	3.2	2.2	1.0Polymer Corporation Limited	5.0	4.5	0.5The St. Lawrence Seaway Authority	13.8	9.4	4.4Miscellaneous	0.5	0.4	0.1Other loans and investments- United Kingdom	371.0	320.0	51.021.6	2.0	19.6Other national governments	4.0	4.5	-0.5Provincial governments	0.8	0.9	-0.1Exchange fund account	63.0	62.9	0.1InteresCbearing deposits with chartered banks	21.0	21.7	-0.7Municipal Development and Loan Board	6.5	0.7	5.8Defence production revolving fund	2.5	2.5Securities investment account	3.5	1.3	2.2Soldier and general land settlement loans and veterans land act advances	9.4	9.1	0.3Special United States of America securities-Columbia River Treaty	7.9	9.2	-1.3Miscellaneous	5.8	6.0	-0.2146.0	118.3	27.7517.0	438.3	78.7
27053-64£
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June 1, 1967
Post Office revenue
Gross post office receipts were $295 million but authorized disbursements from revenue for salaries and rent allowances, other allowances and commissions at semi-staff and revenue offices, commissions at sub-offices, transit charges on Canadian mail forwarded through and delivered in foreign countries, etc. in the amount of $41 million brought net revenue to $254 million. In the previous fiscal year gross revenue was $276 million, authorized disbursements were $38 million and net revenue was $238 million.

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(in millions of dollars)
Post Office Revenue	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Postage- In Canada	277.3	257.8	19.5From foreign countries	4.2	5.0	-0.8Commission on money orders	9.1	9.1	Rental of post office boxes	2.3	2.4	-0.11.6	1.7	-0.129 J,. 5	276.0	18.5Less- Salaries and allowances to semi-staff and revenue offices	-35.7	-33.6	-2.1Transit charges to or through foreign countries	-3.4	-3.5	0.1Other	-1.4	-1.4	-1,0.5	-38.5	-2.0254.0	237.5	16.5
Net costs of operating the Post Office Department during 1966-67 (excluding the $41 million charged to revenue) of $269 million exceeded net revenue by $15 million. However, in making this comparison, it should be noted that the total shown for post office revenue does not reflect any payment for the franking privilege covering parliamentary and departmental mail or for certain miscellaneous services provided for other government departments and agencies, nor does the total shown for operating expenses reflect any charges for premises occupied by the Post Office Department or for accounting and miscellaneous services provided by other departments.
Services and service fees
Revenue at $64 million during 1966-67 was $1 million more than in the previous fiscal year.
The Department of Transport received $21 million including aircraft landing fees of $12 million, marine steamers earnings of $3 million and harbour dues and wharfage of $2 million; the Royal Canadian Mounted Police received $17 million for police services mainly to provinces and municipalities; the Department of Agriculture received $10 million of which $7 million was for services in connection with the inspection, weighing, storage and elevation of grain and $2 million for race track supervision; the Department of National Health and
June 1, 1967
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Welfare received $6 million including a $4 million reimbursement by the provinces for treatment of Indians in federal government hospitals and the Department of Trade and Commerce received $2 million, mainly from weights and measures and electricity and gas inspection fees.
Privileges, licences and permits
Revenue from this category totalled $37 million for 1966-67, $2 million less than for the previous fiscal year.
The Department of Transport received $16 million mainly from rentals, concessions and radio licence fees; the Department of Indian Affairs and Northern Development received $8 million of which $3 million was from fees, leases and royalties in respect of oil, gas and gold and $1 million from transient motor vehicle licences; the Department of the Registrar General received $4 million from patents, trade marks, charters, etc.; and the Department of Public Works received $3 million for rental of public buildings and sites.
Proceeds from sales
Receipts of $21 million were $2 million less than the total for 1965-66.
The Department of Defence Production received $5 million mainly from the sale of surplus Crown assets, Central Mortgage and Housing Corporation received $4 million from the sales of properties and the Department of Public Printing and Stationery received $2 million mainly from the sale of publications.
Refunds of previous years' expenditure
Refunds in 1966-67 of expenditures made in prior years were $17 million, a decrease of $2 million from the comparable total for 1965-66.
The Department of National Defence received $6 million of which $1 million was due to cost audits and the Department of Veterans Affairs received $3 million in refunds of veterans' pensions, allowances and re-establishment credits.
Bullion and coinage
Revenue of $5 million derived from the operation of the Royal Canadian Mint consisted mainly of a net gain on coinage. Small amounts were also obtained from gold refining charges, handling charges and gain on gold refining. In 196566 revenue from these sources was $11 million.
Other non-tax revenue
Other non-tax revenue in the amount of $15 million was the same as in
1965-66.
Expenditure
Budgetary expenditure amounted to $8,794 million for 1966-67, $1,059 million or 14 per cent higher than in 1965-66.
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June 1, 1967
1963	1964	1965	1966	1967*	1967*
1.	Ooti nol inclod* thot* pnymanlt mad* to provincial and mvnicipal gav*rnm*ntc far cpacifiad pvrpot**.
2.	Oo*t not Indvd* p*n*ion payment* ovl al lh* old op* rerun', fond nol charpad to budgetary *np*ndttur* in th* y.or in which lh«y tear* paid. [DOT]* Preliminary

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Fiscal Years Ended March 31


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PAYMENTS TO PROVINCIAL AND MUNICIPAL GOVERNMENTS * 1 2


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HEALTH, WELFARE AND SOCIAL SECURITY *

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8
4
0

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Fiscal Years Ended March 31
[DOT]t Preliminary
1.	The unshaded areas of the columns in the chart for health, welfare and social security represent pension payments Out of old age security fund not charged to budgetary expenditure in the year in which they were paid.
2.	Docs not include those payments made to provincial and municipal governments far specific purposes.
June 1, 1967

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Statement of Budgetary Expenditure by Departments and Major Classifications
(in millions of dollars)
	Fiscal year ended March 31				Increase or decrease (-)	
-	1967 (preliminary)	1966	Amount	Per cent	Amount	Per cent	Amount	Per centDefence expenditure- National Defence	1,642.2	18.7	1,548.4	20.0	93.8	6.1Defence Production^	33.0	0.4	23.0	0.3	10.0	43.5Industry <2>	21.3	0.2	23.9	0.3	-2.6	-10.91,696.5	19.3	1,595.3	20.6	101.2	6.3Non-defence expenditure- Agriculture	230.1	2.6	186.3	2.4	43.8	23.5Atomic Energy	60.2	0.7	54.4	0.7	5.8	10.7Canadian Broadcasting Corporation...	115.3	1.3	97.5	1.3	17.8	18.3Central Mortgage and Housing Corporation	20.1	0.2	21.6	0.3	-1.5	-6.9Dominion Bureau of Statistics	26.7	0.3	15.6	0.2	11.1	71.2Energy, Mines and Resources	128.4	1.5	107.3	1.4	21.1	19.7External Affairs	230.2	2.6	152.5	2.0	77.7	51.0Finance- Public debt charges	1,188.0	13.5	1,110.9	14.4	77.1	6.9Fiscal, subsidy and other payments to provinces	515.5	5.9	466.0	6.0	49.5	10.6Other	129.9	1.5	105.9	1.4	24.0	22.71,833.4	20.9	1,682.8	21.8	150.6	8.9Fisheries	41.2	0.5	34.5	0.4	6.7	19.4Forestry and Rural Development	66.5	0.8	57.1	0.7	9.4	16.5Indian Affairs and Northern Development- Indian affairs branch	104.3	1.2	81.7	1.0	22.6	27.7Northern development	93.7	1.1	74.7	1.0	19.0	25.4198.0	2.3	156.4	2.0	41.6	26.6Industry	13.4	0.2	5.4	0.1	8.0	148.1Justice	12.3	0.1	11.4	0.1	0.9	7.9Labour	25.7	0.3	24.0	0.3	1.7	7.1Legislation	17.6	0.2	14.7	0.2	2.9	19.7Manpower and Immigration	320.7	3.6	236.5	3.1	84.2	35.6National Health and Welfare- Family allowances	555.8	6.3	551.7	7.2	4.1	0.7Government's contributions under the Hospital Insurance and Diagnostic Services Act	397.5	4.5	319.6	4.1	77.9	24.4Other	362.7	4.2	303.8	3.9	58.9	19.41,316.0	16.0	1,175.1	15.2	140.9	12.0National Research Council including the Medical Research Council	96.1	1.1	74.4	1.0	21.7	29.2National Revenue	106.0	1.2	95.0	1.2	11.0	11.6268.7	3.1	240.2	3.1	28.5	11.9Public Works	294.4	3.3	275.1	3.5	19.3	7.0Secretary of State	133.9	1.5	54.1	0.7	79.8	147.5Solicitor General	159.8	1.8	138.9	1.8	20.9	15.0Trade and Commerce	72.9	0.8	68.0	0.9	4.9	7.2Transport	603.4	6.9	532.5	6.9	70.9	13.3Treasury Board	153.0	1.7	102.7	1.3	50.3	49.0Unemployment Insurance Commission	105.9	1.2	98.0	1.3	7.9	8.1Veterans Affairs	391.2	4.4	369.7	4.8	21.5	5.8All Other Departments	56.4	0.6	57.8	0.7	-1.4	-2.47,097.5	80.7	6,139.5	79.4	958.0	15.6Total budgetary expenditure	8,794.0	100.0	7,734.8	100.0	1,059.2	13.7
'*'Does not include non-defence expenditure of $9.4 million which is included in "All Other Departments".
<2>Does not include $13.4 million in non-defence expenditure.
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June 1, 1967

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Expenditures of the Department of National Defence and the defence expenditures of the Department of Defence Production and the Department of Industry were again the largest category of government expenditure. The total of $1,696 million for 1966-67 was 19 per cent of the aggregate budgetary expenditure of the government for the year and was $101 million more than the total for 1965-66 when it was 21 per cent of total expenditure.
National Defence
Expenditures of the Department of National Defence were $1,642 million compared with $1,548 million, an increase of $94 million.
Expenditures of $1,437 million for defence services included $1,162 million for operation and maintenance, $238 million for construction or acquisition of buildings, works, land and major equipment and $17 million for development. In 1965-66 expenditures of $1,401 million for defence services included $1,128 million for operation and maintenance, $220 million for construction or acquisition and $31 million for development.

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(in millions of dollars)
Defence Expenditure	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1966	
Department of National Defence- Defence services- Operation and maintenance	1,161.8	1,127.8	34.0Construction or acquisition of buildings, works, land and major equipment	237.6	220.1	17.5Development	17.0	30.9	-13.9Other	20.7	22.5	-1.81,437.1	1,401.3	35.8Canadian forces superannuation account-	Government's contribution	42.7	58.8	-16.1Amortization of deferred charges	72.6	16.8	55.8Defence research	44.2	41.6	2.6Mutual aid to NATO countries including contributions towards military costs of NATO	18.7	14.6	4.1Defence Construction (1951) Limited	2.2	2.0	0.2Administration and general	24.7	13.3	11.41,642.2	1,548.4	93.8Department of Industry^1*-	Technological capability	21.3	23.9	-2.6Department of Defence Production <2>- Canada Emergency Measures Organization	9.4	7.8	1.6Canadian Arsenals Limited	1.3	1.7	-0.4Production capacity and capital assistance	8.1	2.9	5.2Administration and general	14.2	10.6	3.633.0	23.0	10.01,696.5	1,595.3	101.2
WDoes not include $13.4 million in non-defence expenditure.
WDoes not include non-defence expenditure of $9.4 million which is included in "All Other Departments".
June 1, 1967
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The government's contribution to the Canadian forces superannuation account, of an amount equal to If times the contributions of the permanent services personnel, was $43 million compared with $59 million in 1965-66. An amount of $17 million equal to one fifth of the actuarial deficiency arising out of paj' increases in previous years plus an additional amount of $56 million for 1966-67 have been charged to budgetary expenditure in 1966-67.
Defence research costs at $44 million reflected an increase of $3 million over the 1965-66 total.
Mutual aid to NATO countries including contributions towards military costs of NATO at $19 million were $4 million more than in 1965-66.
Defence Production
Defence expenditures of the Department of Defence Production including those for the Canada Emergency Measures Organization and the Canadian Arsenals Limited totalled $33 million compared with $23 million in 1965-66.
Canada Emergency Measures Organization
Expenditures of the Canada Emergency Measures Organization at $9 million were $2 million more than in the previous fiscal year.
Industry
Defence expenditures of the Department of Industry were $21 million, a decrease of $3 million over the previous year. The decrease was due to lower outlays in connection with the government program instituted in 1959-60 of supporting selected defence development programs in order to sustain technological capability in Canadian industry.
Cash outlays for defence
In addition to these budgetary expenditures for defence, there were other cash outlays which must be considered in arriving at the cost of Canada's defence program.
Under authority of the Department of National Defence vote 48, Appropriation Act No. 2, 1966, an account which has been named surplus Crown assets is to be credited with: (a) all revenues received during the current and subsequent fiscal years from the sale of surplus materials, supplies and equipment; and (b) revenues received during the current and subsequent fiscal years from the sale during the current year of surplus buildings, works and land not exceeding an aggregate amount of $5 million. Expenditures are subject to the approval of Treasury Board for any purposes of the Department of National Defence. During
1966-67 proceeds from sales amounted to $15 million resulting in a balance in the account of $24 million.
The Department of Defence Production also makes cash disbursements for the procurement of materials for use in the manufacture of defence equipment which are not recorded as budgetary expenditures. For purposes of accounting and control, these amounts are charged to the defence production revolving fund and are treated as assets on the books of the government until they are charged to the Department of National Defence or sold to defence contractors for use in the manufacture of defence equipment. During 1966-67 purchases of $45 million exceeded proceeds from sales of $30 million, resulting in a balance of $37 million in the account as at March 31, 1967.
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June 1, 1967

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(in millions of dollars)
Cash Outlays for Defence	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Budgetary expenditures-	93.8Department of National Defence	1,642.2	1,548.4	Department of Industry <*>	21.3	23.9	-2.6Department of Defence Production	23.6	15.2	8.4Canada Emergency Measures Organization	9.4	7.8	1.61,896.5	1,595.3	101.2Disbursements for-	Surplus Crown assets	-15.2	-9.1	-6.1Defence production revolving fund (net)	14.6	-7.6	22.2-0.6	-16.7	16.1Net cash outlays for defence	1,695.9	1,578.6	117.3
(ODoes not include $13,4 million in non-defence expenditure.
<2>Does not include $9.4 million which is included in "All Other Departments".

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Agriculture
Expenditures of the Department of Agriculture amounted to $230 million, an increase of $44 million over the total for 1965-66.
TABLE 11 (in millions of dollars)
Agriculture	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1966	
Production and marketing- Agricultural stabilization board-net operating loss	90.0	39.4	50.6Plant and plant products	20.3	16.4	3.9Grants, contributions and subsidies to milk producers...	0.4	19.2	-18.8Animal and animal products	19.7	18.3	1.4Agricultural products board-net operating loss	5.7	1.6	4.1Administration and general	2.9	2.5	0.4139.0	97.4	41.6Research	35.4	32.6	2.8Land rehabilitation, irrigation and water storage projects...	24.9	28.4	-3.5Health of animals	16.2	15.0	1.2Board of grain commissioners	7.8	7.2	0.6Farm Credit Corporation-net operating loss	2.6	1.0	1.6Administration and general	4.2	4.7	-0.5230.1	186.3	43.8
Outlays for production and marketing were $139 million, an increase of $42 million over 1965-66 expenditures. This was due mainly to increases of $51 million in the net operating loss of the agricultural stabilization board principally
June 1, 1967
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in payments for stabilization of prices in respect of milk and milk products, $4 million in respect of plant and plant products and a decrease of $19 million in payments to eligible producers for manufacturing milk and cream delivered to plants in accordance with terms and conditions prescribed by the Governor in Council.
Research expenditures were $35 million compared with $32 million in the previous fiscal year.
Expenditures for land rehabilitation, irrigation and water storage projects totalled $25 million, $3 million less than in 1965-66.
Atomic Energy
Expenditures by the government in respect of Atomic Energy of Canada Limited and the Atomic Energy Control Board were $60 million compared with $54 million in 1965-66.
Atomic Energy of Canada Limited received $58 million in respect of its research program, of which $48 million was for operation and maintenance and $10 million for construction or acquisition of buildings, works, land and equipment. In 1965-66 the company received $52 million of which $39 million was for operation and maintenance and $13 million for construction or acquisition.
The Atomic Energy Control Board received $2 million, slightly more than in the previous fiscal year mainly for grants for researches and investigations.
In addition, loans in the amount of $29 million were made to Atomic Energy of Canada Limited.
TABLE 12 (in millions of dollars)
Atomic Energy	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1966	
Atomic Energy of Canada Limited- Research program- Current operation and maintenance	48.0	39.6	8.4Contruction or acquisition of buildings, works, land and equipment	10.0	13.0	-3.058.0	52.6	5.ItAtomic Energy Control Board- Grants for researches and investigations with respect to atomic energy	2.0	1.6	0.4Ad ministration	0.2	0.2	2.2	1.8	o.i60.2	54.4	5.8
Canadian Broadcasting Corporation
Payments of $115 million by the government to the Canadian Broadcasting Corporation and charged to budgetary expenditures were $18 million more than the total of $97 million in 1965-66.
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June 1, 1967
Grants for net operating requirements in respect of the national broadcasting service were $112 million, $17 million more than in 1965-66.
In addition loans to the corporation for capital expenditures amounted to $47 million in 1966-67.
TABLE 13 (in millions of dollars)
Canadian Broadcasting Corporation	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1906	
Grants in respect of the national broadcasting service- Net operating requirements	112.5	95.1	17.4International broadcasting service	2.8	2.4	0.4115.3	97.5	17.8
Central Mortgage and Housing Corporation
Budgetary expenditure of the government in respect of Central Mortgage and Housing Corporation at $20 million was $2 million less than in 1965-66.
Contributions of $8 million to provinces or municipalities for urban renewal were $1 million more than in 1965-66.
Loans in the amount of $8 million, originally made to municipalities and municipal sewerage corporations, were forgiven by Central Mortgage and Housing Corporation pursuant to section 36G of the National Housing Act and written off to budgetary expenditures and were $3 million less than in 1965-66.
In addition, loans in the amount of $607 million were made to the corporation.

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(in millions of dollars)
Central Mortgage and Housing Corporation	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Loans forgiven by the corporation	7.9	10.5	-2.6Contributions to provinces or municipalities for urban renewal Losses sustained-	7.9	6.9	1.0Federal-provincial projects	2.1	2.0	0.1Sale of mortgages	0.7	-0.7Housing research and community planning	2.2	1.5	0.720.1	21.6	-1.5
June 1, 19G7
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Dominion Bureau of Statistics
Expenditures of the Dominion Bureau of Statistics were $27 million compared with $16 million in 1965-66, an increase of $11 million due mainly to an increase of $8 million in outlays in respect of the 1966 Quinquennial Census of Canada over expenditures of $1 million in 1965-66.

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(in millions of dollars)
Dominion Bureau of Statistics	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1960	
Administration and operation	18.0	14.5	3.51966 Quinquennial Census of Canada	8.6	0.9	7.71961 Decennial Census of Canada	0.1	0.2	-0.126.7	15.6	11.1
Energy, Mines and Resources
Expenditures of the Department of Energy, Mines and Resources were $128 million compared with $107 million in the previous fiscal year.
The increase of $21 million was due mainly to outlays of $38 million in respect of the Dominion coal board compared with $23 million in 1965-66, $15 million in respect of water resources compared with $14 million, $17 million in respect of marine surveys and research compared with $12 million and $10 million in respect of geological research compared with $8 million in the previous fiscal year.

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(in millions of dollars)
Energy, Mines and Resources	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Dominion coal board	38.0	23.4	14.6Water resources	14.8	13.6	1.2Marine surveys and research	16.5	11.6	4.9Emergency gold mining assistance	15.0	14.8	0.2Geological research	9.9	7.8	2.1Field and air surveys, mapping and aeronautical charting. . .	7.6	8.0	-0.4Mining and metallurgical investigations and research	5.7	6.7	-1.0Research in astronomy and geophysics	5.3	4.9	0.4Contributions to provinces to assist in the development of	4.3	7.3	-3.0roads leading to resources	Subventions pursuant to the Atlantic Provinces Power Development Act in respect of electric power generated	3.0	2.5	0.5from eastern coal	Polar continental shelf	2.0	1.3	0.7National energy board	1.1	0.9	0.2Geographical surveys and research	1.1	0.9	0.2Administration and general	4.1	3.6	0.5128.4	107.3	21.1
June 1, 1967
External Affairs
Expenditures of the Department of External Affairs were $230 million for 1966-67, $78 million more than the total for the previous fiscal year.
TABLE 17 (in millions of dollars)
External Affairs	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)External aid office- Economic, technical, education and other assistance- International food aid program	96.4	34.5	61.9International development assistance	48.5	48.5	Contribution to the Indus Basin development fund..	3.0	1.8	1.2Other	0.6	0.1	0.5Forgiveness of payment of principal re purchase of wheat and flour by India	9.4	9.4Administration	1.8	1.1	0.7159.7	86.0	73.7Representation abroad	23.7	19.7	4.0Contributions to the United Nations and its agencies	12.5	13.5	-1.0Assessments for membership in the international (including commonwealth) organizations	12.3	11.0	1.3Contributions, grants and payments to other international and commonwealth organizations	6.5	7.5	-1.0Administration and general	15.5	14.8	0.7230.2	152.5	77.7
Outlays of $160 million by the external aid office were $74 million more than in 1965-66. This was due mainly to increases of $62 million in the international food aid program, $9 million in respect of forgiveness of a loan to India, for which there was no comparable amount in 1965-66, and $1 million in contributions to the Indus Basin development fund.
Costs of representation abroad at $24 million were $4 million higher than in 1965-66, contributions to the United Nations and its agencies at $13 million were $1 million less, assessments for membership in the international (including commonwealth) organizations at $12 million were $1 million higher and contributions, grants and payments to other international and commonwealth organizations at $7 million were $1 million less than in 1965-66.
Finance
Expenditures of the Department of Finance were $1,833 million for 1966-67, $151 million more than the previous year's total due mainly to increases of $77 million in public debt charges and $50 million in payments to provinces.
Certain expenditures which in 1965-66 were included in Department of Finance expenditures are now reported as follows: The Canadian Wheat Board under the Department of Trade and Commerce; grants to universities under the Department of Secretary of State; and the public service superannuation account (except administration expenses which are under the Office of the Comptroller of
June 1, 1967
[Stage Direction]
the Treasury), the government's share of surgical-medical insurance premiums, the government's contributions as an employer to the unemployment insurance fund and the Canada pension plan and the Quebec pension plan under the Treasury Board. Previous years' figures have been amended for comparative purposes.
TABLE 18 (in millions of dollars)
Finance	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Public debt charges	1,188.0	1,110.9	77.1Fiscal, subsidy and other payments to provinces	
Forgiveness of indebtedness-municipal development and	515.5	466.0	49.5loan board	41.8	33.9	7.9Grants to municipalities in lieu of taxes on federal property...	37.6	36.8	0.8Office of the Comptroller of the Treasury	
Contributions to the Government of Manitoba re Red River	29.2	25.4	3.8Flood in 1966	7.1	7.1Administration and general	14.2	9.8	4.41,833.4	1,682.8	150.6
Public debt charges
Public debt charges were again the third largest item of budgetary expenditure, exceeded only by those for defence and those for health, welfare and social security.
Public debt charges consisted of interest on the public debt, the annual amortization of bond discounts and commissions, the cost of issuing new loans and other costs incurred in servicing the public debt. These charges were $1,188 million for 1966-67 or 14 per cent of all budgetary expenditure compared with $1,111 million or 14 per cent for 1965-66.
Interest on public debt amounted to $1,154 million of which $899 million was in respect of unmatured debt and $255 million in respect of other liabilities. In 1965-66 total interest was $1,077 million of which $847 million was for unmatured debt and $230 million for other liabilities.
The increase of $52 million in interest on unmatured debt reflected higher interest rates and an increase in unmatured debt. The increase in interest on other liabilities was due mainly to increases of $9 million in respect of the public service superannuation account and $9 million in respect of the Canadian forces superannuation account.
Other public debt charges at $34 million were slightly less than in 1965-66.
When considering the magnitude of these public debt charges and the burden they place upon the public treasury, it must be borne in mind that a substantial portion of the debt is attributable to, or is invested in, productive or earning assets. Therefore, in calculating the net burden of the government's annual interest charges, the income derived from loans, investments and other productive assets must be taken into account. For 1966-67 this income totalled $517 million
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June 1, 1967
TABLE 19 (in millions of dollars)
Interest and Other Public Debt Charges	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Interest on public debt- Unmatured debt including treasury bills- Payable in Canada	883.0	830.8	52.2Payable in New York	16.0	16.2	-0.2899.0	847.0	52.0Other liabilities-	Annuity, insurance and pension accounts	252.0	226.9	25.1Deposit and trust accounts	3.5	3.4	0.1255. B	230.3	25.2Total interest on public debt	1,154.5	1,077.3	77.2Other public debt charges-	Annual amortization of bond discounts and commissions	30.0	30.8	-0.8Cost of issuing new loans	2.3	1.8	0.5Servicing of public debt	1.2	1.0	0.233.5	33.6	-0.11,188.0	1,110.9	77.1
as shown in the non-tax revenue section under the heading "return on investments". This amount deducted from the gross total of $1,154 million for interest as shown in the table leaves a net amount of $637 million compared with a net of $639 million in 1965-66. Measured as a percentage of the net debt the burden of the net annual interest charges was 3.99 per cent in 1966-67 compared with 4.11 per cent in 1965-66.
TABLE 20 (in millions of dollars)
Net Burden of Annual Interest Charges	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1966	
Total interest on public debt		1,154.5 -517.0	1,077.3 -438.3	77.2 -78.7
Less return on investments				
Net interest cost				
	637.5	639.0	-1.5
Net interest cost as a percentage of net debt				
	3.99	4.11	
			
Fiscal, subsidy and other payments to provinces
Payments to provinces in the amount of $516 million were $50 million more than in 1965-66.
June 1, 1967
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However, in addition to the above payments, $828 million in provincial income taxes collected by the federal government on behalf of the provinces has been allocated to the provincial tax collection agreements account under the terms of the Federal-Provincial Fiscal Arrangements Act. A more detailed explanation of these arrangements is given in the tax revenue section of this Part.

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(in millions of dollars)
Fiscal, Subsidy and Other Payments to Provinces	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Payments under the Federal-Provincial Fiscal Arrangements	h>423.2	d>356.1	67.1Payments under the Established Programs (Interim Arrange-	57.6	81.5	-23.923.7	23.6	0.1Payments under the Federal-Provincial Tax-Sharing Arrange-	9.1	3.3	5.86.0	6.4	-0.4Federal-Provincial Fiscal Revision Act (youth allowances).	<*>4.1 Cr.	<*4.9 Cr.	0.8515.5	466.0	49.5
d) Gross prior to recovery of an excess abatement under the Federal-Provincial Fiscal Revision Act (youth allowances) to the Province of Quebec.
(*)Payments made to the Province of Quebec in respect of opting out agreements.
<*>
Recovered from payments to the Province of Quebec under the Federal-Provincial Fiscal Arrangements Act.
A summary of payments, by provinces, during 1966-67 is given in the following table:
TABLE 22 (in millions of dollars)
Fiscal year ended March 31, 1967 (preliminary)
Fiscal, Subsidy and Other Payments to Provinces	Payments under fiscal arrange- ments	Payments under Interim Arrange- ments Act	Statutory subsidies	Payments under the Federal-Provincial Fiscal Revision Act (youth allowances)	Transfer of certain public utility tax receipts	Payments under Federal- Provincial Tax- Sharing Arrange- ments Act	TotalNewfoundland	48.5	1.7	0.3	0.2	50.7Prince Edward Island. . .	10.9	0.7	0.1	11.7Nova Scotia	54.1	2.1	0.6	0.3	57.1New Brunswick	47.9	1.8	(1)	0.2	49.9Quebec	<* 165.9	57.6	4.0	<*>
4.1 Cr.	0.6	1.9	225.9Ontario	19.7	4.6	1.1	25.4Manitoba	35.6	2.1	0.1	1.2	39.0Saskatchewan	36.5	2.1	(1)	0.2	38.8Alberta	4.1	2.9	3.0	0.5	10.5British Columbia	1.7	0.2	4.6	6.5423.2	57.6	23.7	4.1 Cr.	6.0	9.1	515.5
d>Less than $50,000.
<*>
Gross prior to recovery of the excess tax abatement of $4.1 million under the Federal-Provincial Fiscal Revision Act (youth allowances).
<3) Recovered from payments under the Federal-Provincial Fiscal Arrangements Act.
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June 1, 1967
Forgiveness of indebtedness, the municipal development and loan board
Under the Municipal Development and Loan Act, advances are made to the municipal development and loan board to provide financial assistance by way of loans to municipalities to augment or accelerate capital works programs. The act also provides that the board shall, under certain conditions, forgive payment by the municipality of 25 per cent of the principal amount of the loan. During 1966-67 payments forgiven amounted to $42 million compared with $34 million in the previous year.
Grants to municipalities
Payments to municipalities in lieu of taxes on federal property amounted to $38 million, $1 million more than in 1965-66.
Fisheries
Expenditures of the Department of Fisheries were $41 million, an increase of $7 million over the 1965-66 total, due mainly to increases of $4 million in respect of fisheries management and development and $2 million in respect of the fisheries research board.
TABLE 23 (in millions of dollars)
Fisheries	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Fisheries management and development- Conservation and development services	14.4	11.3	3.1Industrial development service	3.8	2.8	1.0Grants, contributions and subsidies	4.1	3.9	0.2Inspection service	2.5	2.5	Canadian share of the expenses of international commissions	1.4	1.3	0.1Other	2.3	2.3	28.5	n.i	4.4Fisheries Research Board of Canada	11.0	9.0	2.0Administration and general	1.7	1.4	0.341.2	34.5	6.7
Forestry and Rural Development
Expenditures of the Department of Forestry and Rural Development amounted to $66 million compared with $57 million in the previous fiscal year.
The increase was due mainly to higher expenditures of $20 million in respect of programs for rural development under the Agricultural Rehabilitation and Development Act and the Maritime Marshland Rehabilitation Act compared with $14 million in 1965-66.
Outlays for freight assistance and grain storage costs on western feed grains at $21 million were in the same amount as in 1965-66, outlays of $13 million for forestry research and research institutes were $2 million higher than in 1965-66 and contributions to provinces for assistance in forest inventory, reforestation, forest fire protection, forest stand improvement and forest access road construction at $11 million were $2 million higher.
June 1, 1967
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TABLE 24 (in millions of dollars)
Forestry and Rural Development	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)F orestry-	7.9	0.2Regional research and services	8.1	Research institutes	3.4	1.6	1.8Administration	1.5	1.4	0.1Contributions to the provinces- Assistance in forest inventory, reforestation, forest	1.4fire protection and forest stand improvement	8.0	6.6	Forest access road construction	2.5	2.0	0.528.5	19.5	4.0Freight assistance and grain storage costs on western feed	21.0	grains	21.0	Rural development-	4.9Agricultural Rehabilitation and Development Act	18.3	13.4	Maritime Marshland Rehabilitation Act	1.6	0.7	0.919.9	U.l	5.8Administration and general	2.1	2.5	-0.466.5	57.1	9.4
Indian Affairs and Northern Development
Expenditures of the Department of Indian Affairs and Northern Development were $198 million compared with $156 million in the previous fiscal year.
Indian affairs expenditures were $104 million, an increase of $22 million over the previous year's total. There were increases of $11 million in respect of development and maintenance of Indian communities and $11 million for education.

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(in millions of dollars)
Indian Affairs and Northern Development	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Indian affairs-	Education	53.0	41.7	11.3Development and maintenance of Indian communities..	45.6	34.7	10.9Administration and general	5.7	5.3	0.4104. S	81.7	22.6Northern administration-	Northwest Territories and other field services	21.7	16.5	5.2Education	12.0	10.2	1.8Welfare and industrial divisions	7.6	4.6	3.0Yukon Territory	7.0	5.2	1.8Payments to governments of Yukon Territory and	0.8Northwest Territories	6.3	5.5	Administration	1.4	1.2	0.256.0	4S.2	12.8Natural and historic resources	34.1	29.0	5.1Administration and general	3.6	2.5	1.1198.0	156.4	41.6
June 1, 1967
Outlays of $56 million in respect of northern administration were $13 million more than in 1965-66 and outlays of $34 million for natural and historic resources were $5 million more than in the previous fiscal year.
Industry
Non-defence expenditures of this department were $13 million in 1966-67 compared with $5 million in the previous year.
The increase was due mainly to expenditures of $3 million to provide incentives for the development of industrial employment opportunities in designated areas in Canada, for which there was no comparative expenditure in 196566, and an increase of $4 million for technological capability of Canadian manufacturing industry by supporting selected civil (non-defence) development projects.
TABLE 26 (in millions of dollars)
Industry*1)	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1966	
Technological capability of Canadian manufacturing industry	4.6	0.4	4.2
Incentives for the development of industrial employment			
opportunities in designated areas in Canada	2.5	2.5Administration and general	6.3	5.0	1.313.4	5.4	8.0
(l>
Additional expenditures of $21.3 million are included under "defence expenditure".
Justice
Expenditures of the Department of Justice at $12 million, of which $9 million was for judges salaries, travelling allowances and pensions and $3 million for administration, were $1 million more than in 1965-66.
TABLE 27 (in millions of dollars)
Justice	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1966	
Judges salaries, travelling allowances and pensions	9.4	9.0	0.4Administration and general	2.9	2.4	0.512.3	11.4	0.9
Labour
Expenditures of the Department of Labour totalled $26 million compared with $24 million in 1965-66.
June 1, 19G7
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Under the winter house building program payments are made, in accordance with terms and conditions approved by the Governor in Council, of $500 per dwelling unit substantially built during the period November 15, 1965 to April 15, 1966 and in respect of previous winter house building incentive programs. In 1966-67 payments amounted to $15 million, approximately the same as in the previous fiscal year.
Payments under the Government Employees Compensation Act totalled $3 million in 1966-67, slightly more than in 1965-66.

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(in millions of dollars)
Labour	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Winter house building incentive program	15.3	15.8	-0.5Payments under the Government Employees Compensation Act	3.1	2.8	0.3Administration and general	7.3	5.4	1.925.7	24.0	1.7
Legislation
Costs of Legislation were $18 million compared with $15 million in 1965-66.
TABLE 29 (in millions of dollars)
Legislation	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)13.9	11.5	2.43.1	2.7	0.40.6	0.5	0.1
17.6	14.7	2.9
Manpower and Immigration
Expenditures of the Department of Manpower and Immigration were $321 million, an increase of $84 million over the total of $237 million in the previous fiscal year.
Payments of $223 million to provinces under the Technical and Vocational Training Assistance Act were $70 million more than the 1965-66 total, payments of $37 million to provinces and in respect of Indian bands under the municipal winter works incentive program were $4 million less, outlays of $34 million in respect of the national employment service were $11 million more and immigration expenditures of $21 million were $7 million higher than in 1965-66.
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June 1, 1967
Expenditures in respect of citizenship, which were included previously under the Department of Citizenship and Immigration, are included now under expenditures of the Department of the Secretary of State.
TABLE 30 (in millions of dollars)
Manpower and Immigration	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1966	
Technical and Vocational Training Assistance Act- Payments to provinces	223.1	152.8	70.3Administration and general	1.0	1.1	-0.1224.1	153.9	70.2Municipal winter works incentive program	37.3	41.1	-3.8National employment service	33.8	22.7	11.1Immigration	21.0	14.3	6.7Administration and general	4.5	4.5	320.7	236.5	84.2
National Health and Welfare
Expenditures of the Department of National Health and Welfare at $1,316 million were $141 million more than the previous year's total of $1,175 million due mainly to increases of $78 million in the government's contributions under
TABLE 31 (in millions of dollars)
National Health and Welfare	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1966	
Welfare services- Family allowances	555.8	551.7	4.1Youth allowances	47.4	46.5	0.9Old age assistance	20.1	26.9	-6.8Blind persons allowances	3.4	3.6	-0.2Disabled persons allowances	14.6	15.0	-0.4Unemployment assistance	143.4	101.7	41.7Canada assistance plan	10.4	10.4Fitness and amateur sport	4.7	2.5	2.2Family assistance	5.0	2.8	2.2-Other	7.1	6.3	0.8.811.9	757.0	54.9*Health services- Government's contributions under the Hospital Insurance and Diagnostic Services Act	397.5	319.6	77.9Grants to provinces- General health	26.6	27.9	-1.3.Hospital construction	18.9	17.6	1.3Health resources fund	4.7	4.7Other	8.3	7.6	0.7456.0	S72.7	83.3Medical services	38.2	37.5	0.7Food and drug services	6.8	5.4	1.4Administration and general	3.1	2.5	0.61,316.0	1,175.1	140.9
June 1, 1967
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the Hospital Insurance and Diagnostic Services Act, $10 million under the Canada assistance plan for which there was no comparative expenditure in 196566 and $42 million under the Unemployment Assistance Act.
Welfare services accounted for $812 million, $55 million more than in 1965-66, health services accounted for $456 million compared with $373 million and medical services accounted for $38 million, $1 million more than in the previous fiscal year.
Family allowances
Family allowances are payable in respect of all children under sixteen years of age, resident in Canada, with minor exceptions such as in the case of children of immigrants who must reside in Canada one year before an allowance is payable. The monthly allowance is $6 if the child is under 10 years of age and $8 in the age group 10 to 15. Children of immigrants receive family assistance at the same rates during their first year of residence in Canada.
In 1966-67 payments of $556 million accounted for 6 per cent of all budgetary expenditure compared with $552 million and 7 per cent in 1965-66.
TABLE 32 (in millions of dollars)
Family Allowances Payments	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1966	
Newfoundland	17.0	16.9	0.1Nova Scotia	21.5	21.6	-0.1Prince Edward Island	3.2	3.2	New Brunswick	18.8	19.0	-0.2165.2	165 0	0 2Ontario	185.2	182.4	2.8Manitoba	25.6	25.9	-0.3Saskatchewan	26.9	27.0	-0.1Alberta	42.6	42.4	0.2British Columbia	48.5	47.0	1.5Northwest and Yukon Territories	1.3	1.3	555.8	551.7	4.1
Youth allowances
Under provision of the Youth Allowances Act allowances of $10 per month are payable in respect of persons resident in Canada, other than those resident in the Province of Quebec, who have attained the age of 16 years and have not attained the age of 18 years who are in full time attendance at a school or university or are by reason of mental or physical infirmity precluded from attending school or university. In 1966-67 payments totalled $47 million, $1 million more than in 1965-66.
No payments were made under this act in respect of persons resident in the Province of Quebec. However, under authority of the Federal-Provincial Fiscal Revision Act, 1964 abatements in federal income taxes otherwise payable by individuals resident in the Province of Quebec were allowed in compensation of the fact that the payment of youth allowances had been assumed by the province and to allow for the imposition of the required provincial income taxes.
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June 1, 19S7
TABLE 33 (in millions of dollars)
Youth Allowances Payments	Fiscal year ended March 31		Increase or decrease (-)
	.1967 (preliminary)	1966	
	1.7	1.6	0.1
	2.7	2.7	
	0.4	0.4	
	2.3	2.3	
	22.4	22.0	0.4
	3.3	3.3	
	3.4	3.4	
4.9	4.8	0.16.1	5.9	0.20.2	0.1	0.1
47.4	46.5	0.9
Old age assistance, blind persons allowances, disabled persons allowances and unemployment assistance
Under the Old Age Assistance Act, the federal government reimburses the provinces by paying 50 per cent of the lesser of $75 monthly or the amount of assistance given by the provinces in the form of monthly pensions to eligible persons in need who are in the age group 65 to 69. (Under the Old Age Security Act, all persons who satisfy the residence requirements of the act may receive a pension of $75 per month from the federal government out of the old age security fund provided that no pension is paid in any month before January 1966 in which the person had not attained 70 years of age, the age limit being reduced by one in each subsequent year until 1970.) An amendment to the Old Age Security Act authorizes the payment of a monthly guaranteed income supplement to eligible pensioners. The amount of the supplement that may be paid to a pensioner for a month is (a) in the year 1967, $30, and (b) in any year after 1967, 40 per cent of the amount of the pension that may be paid to him for that month, dependent upon the amount of his income for the preceding year. Similarly, the federal government reimburses the provinces under the Blind Persons Act for allowances of not more than $75 per month to blind persons in need 18 years of age or over by paying 75 per cent of the total payments, and under the Disabled Persons Act by paying 50 per cent of not more than $75 per month for allowances to disabled persons in need 18 years of age or over. In 1966-67 payments for old age assistance amounted to $20 million, for disabled persons allowances $15 million and for blind persons allowances $3 million. In 1965-66 payments were $27 million for old age assistance, $15 million for disabled persons allowances and $4 million for blind persons allowances. The decrease in the old age assistance payments was due to the lowering of the age limit for old age security benefits. The Province of Quebec has opted out of these programs under federal-provincial agreement.
Under the Unemployment Assistance Act, the Minister may, with the approval of the Governor in Council, enter into an agreement with any province for the payment by Canada to the province of contributions not exceeding 50 per cent of unemployment assistance costs in the province. Contributions in 1966-67 were $143 million compared with $102 million in 1965-66. Under federal-provincial agreement the Province of Quebec has opted out of a portion of this program.
June 1, 1967
[Stage Direction]
The following table presents a distribution of these payments to provinces for 1966-67:

[Stage Direction]
(in millions of dollars)
Federal Share op Old Age Assistance, Disabled Persons Allowances, Blind Persons Allowances and Unemployment Assistance	Fiscal year	ended March 31, 1967 (preliminary)	Old age assistance	Disabled persons allowances	Blind persons allowances	Unemploy- ment assistanceNewfoundland	1.6	0.6	0.3	8.7Nova Scotia	1.7	1.6	0.4	3.0Prince Edward Island	0.5	0.4	0.1	0.4New Brunswick	1.7	1.0	0.4	2.4Quebec	
Ontario	7.5	8.4	1.2	35.2 45.8Manitoba	1.5	0.6	0.2	6.8Saskatchewan	1.3	0.1	0.2	6.4Alberta	2.0	0.9	0.3	13.4British Columbia	2.2	1.0	0.3	21.2Northwest and Yukon Territories	0.1	(1)	(1)	0.120.1	14.6	3.4	143.4
Less than $50,000.
Canada assistance plan
The Canada assistance plan was enacted in 1966 authorizing the making ol contributions to provinces by Canada towards the cost of programs for the provision of assistance and welfare services to and in respect of persons in need.
Expenditures during 1966-67 amounted to $10 million. There were no comparative expenditures in 1965-66.
Government's contributions under the Hospital Insurance and Diagnostic Services Act Contributions of $398 million to the provinces under the Hospital Insurance and Diagnostic Services Act were $78 million more than the 1965-66 total. Under federal-provincial agreement, the Province of Quebec has opted out of this program.

[Stage Direction]
(in millions of dollars)
Government's Contributions under the Hospital Insurance and Diagnostic Services Act	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1966	
N ewfoundland	12.5	11.7	0.8Nova Scotia	19.9	18.1	1.8Prince Edward Island	2.7	2.4	0.3New Brunswick	16.2	14.9	1.30)4.0	0)26.9 Cr.	30.9Ontario	192.8	171.9	20.9Manitoba	25.4	23.1	2.3Saskatchewan	28.0	25.9	2.1Alberta	44.4	36.9	7.5British Columbia	50.5	40.5	10.0Northwest and Yukon Territories	1.1	1.1	397.5	319.6	77.9W Adjustment for 1964.	.
(*) Transferred as a charge to payments under the Established Programs (Interim Arrangements) Act by the Department of Finance.
1022
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June 1, 1967
General health grants and hospital construction grants to provinces
Grants to provinces for general health services totalled $27 million and for hospital construction grants $19 million compared with $28 million and $18 million respectively in 1965-66. Under federal-provincial agreement the Province of Quebec has opted out of a portion of this program.
TABLE 36 (in millions of dollars)
General Health Grants and Hospital Construction Grants
Fiscal year ended March 31, 1967 (preliminary)
General
health
grants
Hospital
construction
grants
Total
Newfoundland	
Nova Scotia	
Prince Edward Island	
New Brunswick	
Quebec	
Ontario	
Manitoba	
Saskatchewan	
Alberta	
British Columbia	
Northwest and Yukon Territories.
1.0
1.5
0.3
1.1
1.0
11.7
2.4
1.8
2.4 3.3 0.1
26.6
0.8
0.4
0.1
0.5
3.0
7.0
1.0 1.6
1.7
2.7
0.1
18.9
1.8
1.9
0.4
1.6
4.0 18.7
3.4
3.4
4.1 6.0 0.2
45.5
Health resources fund
The Health Resources Fund Act provides for the establishment of a health resources fund to assist provinces in the acquisition, construction and renovation of health training facilities and research institutions.
Expenditures during 1966-67 amounted to $5 million. There were no comparative expenditures in the previous fiscal year.
National Research Council, including the Medical Research Council
Expenditures of the National Research Council, including the Medical Research Council, were $96 million, an increase of $22 million over the previous year's total.
TABLE 37 (in millions of dollars)
National Research Council, including the Medical Research Council	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Scholarships and grants in aid of research	46.7	33.7	13.0Construction or acquisition of buildings, works, land and equipment	8.1	6.1	2 0Assistance towards research in industry	4.2	3.3	0 9Administration and general	37.1	31.3	5.896.1	74.4	21.7
June 1, 1967
[Stage Direction]
Outlays of $47 million in respect of scholarships and grants in aid of research accounted for $13 million of the increase and higher outlays of $37 million for administration accounted for $6 million.
National Revenue
Expenditures of the Department of National Revenue amounted to $106 million, an increase of $11 million over the 1965-66 total of $95 million.
TABLE 38 (in millions of dollars)
National Revenue	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1966	
Customs and excise	54.0	47.7	6.3Taxation	51.7	47.0	4.7Income tax appeal board	0.3	0.3	106.0	95.0	11.0
Post Office
Costs of the Post Office Department charged to budgetary expenditure at $269 million were $29 million more than in 1965-66 due mainly to normal staff growth and to salary increases.
Costs of operations at $183 million were $22 million more than in the previous fiscal year and costs of movement of mail at $78 million were $6 million more.
TABLE 39 (in millions of dollars)
Post Office	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Charged to budgetary expenditure- Operations-salaries and other expenses of staff post offices, district offices and railway mail services; and supplies and equipment and other items for revenue post offices	182.9	160.9	22.0Transportation-movement of mail by land, air and water	78.4	72.6	5.8Financial services	3.7	3.6	0.1Administration and general	3.7	3.1	0.6m.7	Uo.e	28.5Charged to revenue- Operations-salaries of postmasters and staffs at revenue and semi-staff offices, commissions paid at sub-offices and other disbursements	40.5	38.5	2.0309.2	278.7	30.5
1024
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June 1, 1967
Remuneration of postmasters and staffs at revenue and semi-staff offices and certain other authorized disbursements are paid from revenue. These payments at $40 million ($2 million more than in 1965-66) brought gross post office expenditures to $309 million in 1966-67.
Public Works
Expenditures of the Department of Public Works amounted to $294 million, $19 million more than in 1965-66.
Accommodation services
Expenditures for these services were $109 million, $7 million higher than the 1965-66 total.
TABLE 40 (in millions of dollars)
Public Wobks	Fiscal year ended March 31	Increaseim (preliminary)	1966	decrease (-)Accommodation services- Maintenance and operation of public buildings and grounds- Ottawa and Hull	28.2	24.4	3.8Other than Ottawa and Hull	41.6	38.0	3.6Office furniture and furnishings	5.0	4.1	0.9Acquisition of equipment and furnishings other than office furnishings	0.9	1.2	-0.3Construction, acquisition, major repairs, etc. of public buildings- Ottawa	14.7	17.0	-2.3Other than Ottawa	18.5	17.0	1.5108.9	101.7	7.2Harbours and rivers engineering services- Operation and maintenance	7.5	7.4	0.1Construction or acquisition of equipment	1.0	0.5	0.5Construction, acquisition, major repairs, etc. of harbour and river works	29.0	27.3	1.7Dry dock subsidies	0.2	0.2	37.7	35. A	2.3Roads, bridges and other engineering services- Operation and maintenance	6.0	5.5	0.5Construction, acquisition, major repairs and improvements of, and plans and sites for, roads, bridges and other engineering works	8.0	4.8	3.2Trans-Canada highway- Contributions to provinces under terms of the Trans-Canada Highway Act	81.1	83.4	-2.3Construction through national parks	0.5	0.3	0.295.6	9i.O	1.6National Capital Commission- Operation and maintenance	4.7	3.8	0.9Interest charges (net)	3.3	2.7	0.6Payment to the national capital fund	25.0	12.1	12.9SS.O	18.6	U-4Testing laboratories	1.2	1.1	0.1Federal share of an ice control structure	7.5	-7.5Administration and general	18.0	16.8	1.2294.4	275.1	19.3
June 1, 1967
[Stage Direction]
Maintenance and operation of public buildings and grounds at $75 million were $8 million higher and construction or acquisition of buildings, etc. at $33 million were $1 million less than in 1965-66.
Harbours and rivers engineering services
Expenditures for these services totalled $38 million, $2 million higher than in 1965-66 due mainly to an increase in outlays for construction or acquisition, etc. of harbour and river works which were $29 million compared with $27 million in the previous fiscal year.
Roads, bridges and other engineering services
Expenditures for these services totalled $96 million, $2 million more than in 1965-66. Contributions of $81 million to provinces in respect of the Trans-Canada highway were $2 million less than in 1965-66.
National Capital Commission
Expenditures of the National Capital Commission were $33 million, $14 million more than in 1965-66.
Payments into the national capital fund amounted to $25 million, an increase of $13 million over the previous year. Outlays for the operation and maintenance of parks, parkways, etc. at $5 million were $1 million more than in the previous fiscal year and interest charges of $3 million were $1 million more than in the previous year.
Secretary of State
Expenditures of the Department of the Secretary of State amounted to $134 million, an increase of $80 million over the previous fiscal year's total.
TABLE 41 (in millions of dollars)
Secretary of State	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)University grants	87.1	27.7	59.4Centennial Commission-	Programs and projects of national significance	12.7	3.8	8.9Payment to the centennial of confederation fund	13.0	9.0	4.0General administration	4.5	1.8	2.7National Arts Centre-	SO. 2	U.6	1B.6Construction or acquisition of buildings, works, land and	equipment	6.5	3.7	2.8Administration	0.1	0.1	e.e	3.8	2.8Translation bureau	3.5	2.7	0.8Citizenship	2.6	2.1	0.5National Museum of Canada	2.6	1.7	0.9Office of the Representation Commissioner	0.2	0.8	-0.6Administration and general	1.1	0.7	0.4133.9	54.1	79.8
June 1, 1967
Payments of $87 million to the association of universities and colleges of Canada for the purpose of making grants to universities of higher learning were $59 million higher than in 1965-66. These expenditures, in previous years, were included under the Department of Finance.
Centennial Commission expenditures of $30 million were $16 million higher than in 1965-66 due mainly to increases of $9 million in outlays for programs and projects of national significance and $4 million in payments to the centennial of confederation fund to enable grants to be made to the provinces for local projects of a lasting nature.
Expenditures of the National Arts Centre at $7 million were $3 million higher than in 1965-66. The previous year's expenditures were included in the expenditures of the Centennial Commission.
Outlays of $4 million in respect of the translation bureau, $3 million in respect of citizenship and $3 million in respect of the National Museum of Canada were each $1 million higher than in 1965-66.
Expenditures in respect of the companies and corporations branch, which in previous years were included under this department, are now included under expenditures of the Department of the Registrar General.
Solicitor General
Expenditures of the Department of the Solicitor General amounted to $160 million compared with $139 million in the previous fiscal year. The main change was an increase of $20 million in respect of the Royal Canadian Mounted Police.
TABLE 42 (in millions of dollars)
Solicitor General	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Royal Canadian Mounted Police-	72.4	59.5	12.9Land, air and training divisions	Headquarters administration and national police services Pensions and other benefits-	12.7	10.7	2.0Pensions	
Royal Canadian Mounted Police superannuation account-	4.9	4.5	0.4Government's contribution	4.5	3.9	0.6Amortization of deferred charges	3.3	1.0	2.3Other	1.0	0.2	0.8Marine services	2.8	2.2	0.6Correctional services-	101.6	82.0	19.6Administration of the Canadian penitentiaries service...	1.0	0.8	0.2Operation and maintenance of penitentiaries	36.7	26.6	10.1Parole Act administration	
Construction or acquisition of buildings, works, land and	1.3	0.9	0.4equipment	18.6	28.2	-9.657.6	56.5	1.1Office of the Solicitor General	0.6	0.4	0.2159.8	138.9	20.9
June 1, 1967
[Stage Direction]
Royal Canadian Mounted Police
Expenditures of the Royal Canadian Mounted Police were $102 million compared with $82 million in 1965-66. Receipts of $17 million, arising out of expenditures for policing certain provinces, territories and municipalities, were credited to revenue. In 1965-66 receipts of $16 million were credited to revenue.
Correctional services
Outlays_ of $58 million in respect of correctional services were $1 million higher than in^ 1965-66 due mainly to the cost of operation and maintenance of penitentiaries increasing to $37 million from $27 million being partly offset by construction or acquisition of buildings, etc. decreasing to $19 million from $28 million in the previous fiscal year.
Trade and Commerce
Expenditures of the Department of Trade and Commerce including the Canadian Wheat Board were $73 million, $5 million higher than in 1965-66.
Outlays of $10 million in respect of the Canadian government travel bureau were $4 million higher than in 1965-66, outlays of $9 million in respect of the Canadian corporation for the 1967 world exhibition were $4 million higher and outlays of $9 million in respect of the trade commissioner service were $1 million higher. There was also an increase of $1 million in respect of the exhibitions branch.
Expenditures of the Dominion Bureau of Statistics, which in previous years were included in expenditures of the Department of Trade and Commerce, are now shown under their own heading. Previous year's figures have been amended for purposes of comparison.
Canadian Wheat Board
Expenditures of the Canadian Wheat Board which were included under the Department of Finance in 1965-66 are now included under the Department of Trade and Commerce. Previous year's figures have been amended for purposes of comparison.
TABLE 43 (in millions of dollars)
Trade and Commerce
Canadian Wheat Board-
Carrying costs of temporary wheat reserves..
Prairie Grain Advance Payments Act	
Trade commissioner service	
Canadian government travel bureau	
Canadian corporation for the 1967 world exhibition-
Canadian government participation	
Exhibitions branch	
Standards branch	
Administration and general	
Fiscal year ended March 31		Increase or decrease (-)
1967 (preliminary)	1966	
29.9	36.8	-6.90.6	0.7	-0.1SO. 5	37.5	-7.08.6	7.8	0.89.9	6.3	3.68.9	4.6	4.34.3	2.8	1.53.9	3.5	0.46.8	5.5	1.372.9	68.0	4.9
June 1, 1967
Expenditures during 1966-67 amounted to $31 million compared with $38 million in the previous fiscal year and were mainly in respect of carrying costs of temporary wheat reserves.
Transport
Expenditures of the Department of Transport including the Atlantic Development Board were $603 million compared with $532 million in 1965-66.
Air services
Outlays for air services at $166 million were $23 million higher than the 1965-66 total due mainly to an increase of $12 million in respect of airports and other ground services.
Board of Transport Commissioners
Expenditures in respect of the board amounted to $138 million compared with $110 million in 1965-66.
Included are $116 million in payments to the railways for the maintenance of the rates of freight traffic compared with $88 million in 1965-66, $5 million
in payments to railways for maintenance of trackage in northern Ontario compared with $7 million and $15 million in contributions to the railway grade crossing fund compared with $14 million in the previous year. The increase in the maintenance of the rates of freight traffic was due to the payment in 1966 of amounts owing to the railways in the two previous calendar years in respect of the 1967 wage settlement.
Marine services
Expenditures of $100 million for marine services were $16 million more than in 1965-66. Included in these expenditures are $56 million in respect of the Canadian coast guard, $7 million higher than in 1965-66, and $19 million in respect of aids to navigation, $4 million more than in the previous year.
Railways and steamships
Expenditures for these services were $86 million compared with $100 million in the previous fiscal year.
Costs of construction or acquisition of buildings, works, land, etc. were $25 million, $2 million higher than in 1965-66 due mainly to construction of dock and terminal facilities in respect of North Sydney-Port aux Basques and Argentia, Nfld. ferrv services; payments under the Maritime Freight Rates Act at $15 million were slightly less than in 1965-66; and the subsidy of $1 million in respect of a railway to Great Slave Lake was $8 million less.
The charge of $25 million to budgetary expenditure in 1966-67 to cover the 1966 operating deficit of the Canadian National Railways was $9 million less than the charge of $34 million in 1965-66 to cover the railway's 1965 operating deficit.
Canadian Maritime Commission
Expenditures of the commission in the amount of $47 million were $3 million less than in 1965-66 due mainly to a decrease in outlays in respect of capital subsidies for the construction of commercial and fishing vessels.
June 1, 1967
[Stage Direction]
TABLE 44 (in millions of dollars)
Transport	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Air services-	51.2	12.4Airports and other ground services	63.6	Radio aids to air and marine navigation	38.1	39.3	1.2Meteorological services	26.6	23.7	2.9Air traffic control	12.5	9.7	2.8Control of civil aviation	7.8	6.3	1.5Radio Act and Regulations	4.9	4.1	0.8Administration and general	12.2	8.7	3.5Board of Transport Commissioners for Canada- Payments to the railways for the maintenance of the	165.7	HS.O	SS.7rates of freight traffic	115.9	87.6	28.3Maintenance of trackage	4.8	7.0	-2.2Contributions to the railway grade crossing fund	15.0	14.0	1.0Administration and general	2.0	1.6	0.4137.7	110.S	S7.5Marine services-	49.1	7.0Canadian coast guard	56.1	Aids to navigation	18.9	14.6	4.3Canals	
Marine hydraulics including the St. Lawrence and	8.7	8.5	0.2Saguenay Rivers ship channels	7.3	5.9	1.4Marine regulations	7.2	5.0	2.2Administration and general	1.8	1.4	0.4100.0	84.5	15.5Railways and steamships-	25.4	23.8	1.6Construction or acquisition	
Maritime Freight Rates Act-	Difference between tariffs and normal tolls	15.0	15.1	-0.1Railway to Great Slave Lake	1.3	9.7	-8.4Victoria Bridge	
Deficits-	0.8	0.8	-8.8Canadian National Railways	24.6	33.4	Newfoundland ferry and terminals	13.0	12.4	0.6Prince Edward Island car ferry and terminals	
Yarmouth, N.S.-Bar Harbour, Maine, U.S.A. ferry	4.6	4.2	0.4service	0.1	0.7	0.1Other	0.8	0.185.6	100.1	-14.5Canadian Maritime Commission	47.0	50.3	-3.3Atlantic Development Board-	20.9	8.7Payments to the Atlantic Development Board	29.6	Federal share of the cost of a trunk highway program...	8.6	2.1	6.5Administration and general	1.8	0.8	1.0Canals and works entrusted to The St. Lawrence Seaway Authority-	1,0.0	S3.8	16. SWelland Canal deficit	10.0	8.2	1.8Other operating deficit and capital requirements	2.9	1.9	1.0IS. 9	10.1	S.8National Harbours Board	7.0	4.8	2.2Administration and general	7.5	5.7	1.8603.4	532.5	70.9
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June 1, 1967
Atlantic Development Board
Expenditures of $40 million in respect of the Atlantic Development Board were $16 million more than the previous year's total.
The increase was due mainly to payments of $30 million to the board, which were credited to the Atlantic development fund to finance and assist in financing programs and projects as contemplated by the board, and outlays of $9 million for the federal share of the cost of a trunk highway program for the Atlantic provinces. Comparative amounts were $21 million and $2 million, respectively, in 1965-66.
Canals and works entrusted to The St. Lawrence Seaway Authority
Expenditures of $13 million were $3 million more than in 1965-66 due to increases of $2 million in the Welland Canal deficit for 1966 and $1 million for other operating deficit and capital requirements.
National Harbours Board
Non-active advances to the board which are charged to budgetary expenditure totalled $7 million in 1966-67, $2 million more than in 1965-66. The net increase reflected increases of $2 million and $1 million in respect of reconstruction and capital expenditures of the Halifax and Quebec harbours, respectively and $1 million in the operating deficit of the Jacques Cartier Bridge, Montreal, partly offset by a decrease of $3 million in expenditures in connection with the 1967 World Exhibition.
In addition, loans to the board amounted to $17 million in 1966-67. Treasury Board
Expenditures of the Treasury Board amounted to $153 million in 1966-67, an increase of $50 million over the total for 1965-66. In previous years, these expenditures were included under the Department of Finance. Previous year's figures have been amended for purposes of comparison.
TABLE 45 (in millions of dollars)
Treasury Board	Fiscal year ended March 31		Increase or decrease (~)
	11)67 (preliminary)	1966	
Public service superannuation account-			
Government's contribution	59.3	57.8	1.5Amortization of deferred charges	56.4	25.9	30.5115.7	8S.7	82.0Government's contributions as an employer-	Canada pension plan and the Quebec pension plan	14.5	4.1	10.4Unemployment insurance fund	1.2	1.1	0.115.7	5.2	10.5Government's share of surgical-medical insurance premiums.	15.2	9.7	5.5Administration and general	6.4	4.1	2.3153.0	102.7	50.3
June 1, 1967
[Stage Direction]
Public service superannuation account
The government's contribution to the public service superannuation account, in an amount equal to the estimated current and prior service payments of individuals in 1965-66, was $59 million compared with $58 million in 1965-66.
A further amount of $56 million, equal to one fifth of the actuarial deficiencies arising out of pay increases, was charged to budgetary expenditure in 1966-67, $30 million more than in the previous fiscal year.
Contribution to the Canada pension plan and the Quebec pension plan
The government's contribution as an employer to these pension plans amounted to approximately $15 million compared with $4 million in 1965-66. The increase was due to the fact that 1965-66 contributions covered only three months as the plan was effective from January 1, 1966.
Unemployment Insurance Commission
Expenditures for the commission amounted to $106 million including the government's contribution of $69 million to the fund. In 1965-66 expenditures were $98 million of which $66 million was the government's contribution.
Unemployment benefit payments are not charged to budgetary expenditure but are paid from the fund which is financed by equal contributions from employees and employers, by interest earned on investments and by the government's contribution of an amount equal to one fifth of the combined employee-employer contributions. Further information about the fund is given under the liability category "annuity, insurance and pension accounts".
TABLE 46 (in millions of dollars)
Unemployment Insurance Commission	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1966	
Government's contribution to the unemployment insurance fund	68.7	65.6	3.1Administration of the Unemployment Insurance Act	37.2	32.4	4.8105.9	98.0	7.9
Veterans Affairs
Expenditures of the Department of Veterans Affairs were $391 million, an increase of $21 million over the 1965-66 total.
War veterans allowances and civilian allowances at $104 million were $4 million higher, pensions for disability and death at $196 million were $10 million higher and costs of $55 million for treatment services were $5 million higher than in 1965-66.
1032
[Stage Direction]
June 1, 1967
TABLE 47 (in millions of dollars)
Veterans Affairs	Fiscal year ended March 31	Increase1967 (preliminary)	1966	decrease (-)Pensions- Disability and death	196.1	185.6	10.5Administration and general	3.2	2.8	0.4199. S	188.4	10.9Welfare services, allowances and other benefits-	War veterans allowances and civilian allowances	103.6	99.9	3.7Assistance under provisions of the Assistance Fund (War	Veterans Allowances) Regulations	5.9	5.7	0.2Veterans welfare services	4.6	4.0	0.6Treatment and related allowances	2.5	2.6	-0.1Administration and general	3.6	3.6	no. 2	115.8	4.4Treatment services	54.6	49.9	4.7Soldier settlement and veterans land act-	Provision for reserve for conditional benefits	3.5	3.2	0.3Administration and general	5.2	4.5	0.78.7	7.7	1.0Administration and general	8.4	7.9	0.5391.2	369.7	21.5
All Other Departments
Expenditures of the departments not dealt with individually amounted to $56 million, a decrease of $1 million from the total for 1965-66.

[Stage Direction]
(in millions of dollars)
All Other Departments	Fiscal year ended March 31		Increase or decrease (-)
	1967 (preliminary)	1966	
Auditor General's Office	2.1	1.7	0.4Board of Broadcast Governors	0.6	0.4	0.2Office of the Chief Electoral Officer	0.9	13.0	-12.1Defence Production	9.4	8.2	1.2Governor General and Lieutenant-Governors	0.8	0.7	0.1Insurance	1.7	1.5	0.2National Film Board	8.0	6.9	1.1National Gallery of Canada	1.9	1.8	0.1Privy Council	6.4	4.8	1.6Economic Council of Canada	1.4	1.1	0.3Public Archives and National Library	2.7	2.0	0.7Public Printing and Stationery	4.0	3.0	1.0Public Service Commission	10.9	8.0	2.9Public Service Staff Relations Board	(2)	(2)Registrar General	5.6	4.7	0.956.4	57.8	-1.4
(1)See also under defence expenditure at the beginning of this section. <*>Less than $50,000.
June 1, 1967
[Stage Direction]
Expenditures under the Combines Investigation Act in respect of the restrictive trade practices commission and the office of investigation and research and expenditures of the patent division, copyright and industrial designs division and the trade marks office, which were included previously under Privy Council expenditures in respect of the companies and corporations branch, which were included previously under the Department of the Secretary of State, and expenditures m respect of the Bankruptcy Act administration, which were included previously under expenditures of the Department of Justice, are now included under expenditures of the Department of the Registrar General.
., The main changes were a decrease of $12 million in respect of the Office of
* einilleLEIeC^°ral ?,ffi.cer' which incurred expenditures of a general election m Jo5-oo, and small increases m expenditures of other departments under this heading.

[Stage Direction]
,	assets and liabilities of the Government of Canada as at March 31,
1967 the comparable balance at March 31, 1966, and the changes in each category during 1966-67 are shown in condensed form in the following table:
TABLE 49 (in millions of dollars)
Liabilities
Current and demand liabilities	
Deposit and trust accounts	
Annuity, insurance and pension accounts. Undisbursed balances of appropriations t
Deferred credits	
Suspense accounts	
Unmatured debt	
Total liabilities.
Assets
Current assets	
Cash in blocked currency	
Advances to the exchange fund account	
Investments in United States dollar securities issi
other than the Government of Canada	
Investments held for retirement of unmatured debt.
Canada pension plan investment fund	
Loans to, and investments in, Crown corporations....
Loans to national governments	
Other loans and investments	
Securities held in trust	" ' '
Deferred charges	
Capital assets	
Inactive loans and investments	
Total recorded assets	
Less reserve for losses on realization of assets.
Net recorded assets.
Net debt, represented by excess of liabilities over net recorded assets	
(1)Shown at nominal value of SI.
<2) Reflecting the budgetary deficit of $428 million.
Balance at March 31		Increase or decrease (-)
1967 (preliminary)	1966	
1,682.0	1,398.8	283.2541.8	310.7	231.17,921.3	6,392.2	1,529.178.1	101.9	-23.8137.6	138.1	-0.549.0	31.4	17.619,940.2	19,109.8	830.430,350.0	27,482.9	2,867.11,395.5	1,016.0	379.51.0	1.0	2,355.0	2,696.0	-341.0180.0	187.2	-7.23.2	3.2615.5	34.9	580.66,727.8	5,659.1	1,068.71,201.6	1,225.2	-23.61,717.5	1,263.2	454.350.9	52.0	-1.1582.2	256.5	325.7(1)	(1)	94.8	94.8	14,925.0	12,485.9	2,439.1-546.4	-546.4	14,378.6	11,939.5	2,439.115,971.4	15,543.4	<s)428.0
June 1. 1967
Summary
The gross liabilities of the government totalled $30,350 million as at March 31, 1967 an increase of $2,867 million over the total at March 31, 1966. The main changes were increases of $283 million in current and demand liabilities, $231 million in deposit and trust accounts, $1,529 million in annuity, insurance and pension accounts and $830 million in unmatured debt.
Net recorded assets totalled $14,379 million as at March 31, 1967, an increase of $2,439 million over the total at March 31,1966. The main changes were increases of $1,069 million in loans to, and investments in, Crown corporations, $380 million in current assets, $454 million in other loans and investments, $581 million in the Canada pension plan investment fund and $326 million in deferi ed charges partly offset by a decrease of $341 million in advances to the exchange fund account.

[Stage Direction]
Fiscal Years Ended March 31
Liability Accounts Current and demand liabilities
These liabilities, which consist of obligations of the government payable currently or on demand, in the amount of $1,682 million were $283 million more than the total at March 31, 1966.
June 1, 1967
[Stage Direction]
The main changes during 1966-67 were increases of $111 million in noninterest-bearing notes payable on demand, $33 million in accrued interest, $50 million in outstanding treasury cheques and $77 million in accounts payable.
. Non-interest-bearing notes represent those portions of Canada's equities in the capital of certain international agencies which are not covered by cash or gold. Notes in respect of the international monetary fund in the amount of $339 million were $106 million more than at March 31, 1966 and notes in respect of the international development association in the amount of $26 million were $4 million more.

[Stage Direction]
(in millions of dollars)
Current and Demand Liabilities	Balance at March 31	Increase1967 (preliminary)	1966	decrease (-)Outstanding treasury cheques	382.8	332.9	49.9Accounts payable	457.0	380.3	76.7Non-interesLbearing notes payable to- The international development association ..	26.0	22.4	3.6The international monetary fund	339.0	233.0	106.0The asian development bank	1.4	1.4366.4	m.4	111.0Matured debt outstanding	30.7	27.3	3.4Interest due and outstanding	113.0	110.9	2.1Interest accrued	287.2	254.3	32.9Post office-outstanding money orders	36.7	27.5	9.2Outstanding letter of credit cheques	7.5	8.5	-1.0Other current liabilities	0.7	1.7	-1.01,682.0	1,398.8	283.2
Deposit and trust accounts
Sundry funds deposited with, or held in trust by, the Receiver General of Canada for various purposes are recorded in these accounts.
A net increase of $231 million during 1966-67 brought the total to $542 million as at March 31, 1967 due mainly to $196 million in refundable corporation tax and increases of $1 million in guarantee deposits, $8 million in the prairie farm emergency fund, $4 million in Royal Canadian Mint prepayments and $26 million in provincial tax collection agreements account partly offset by a decrease of $5 million in National Harbours Board-special accounts.
Refundable corporation tax is recorded as a contra in the asset category "current assets".
[Stage Direction]
June It 1967
TABLE 51 (in millions of dollars)
Deposit and Trust Accounts
Refundable corporation tax. Indian trust funds	
Guarantee deposits-
Energy, Mines and Resources	
Indian Affairs and Northern Development. National Revenue	
Balance at March 31
(preliminary)
Post office savings bank	
Crown corporations deposits-	_
Atomic Energy of Canada Limited	
Crown Assets Disposal Corporation	
Eldorado Mining and Refining Limited	
Export Credits Insurance Corporation	_
[Stage Direction]
Northern Ontario Pipe Line Crown Corporation.
Canadian Pension Commission-administration trust fund.
National Harbours Board-special accounts	
Instalment purchase of bonds, public service	
Contractors holdbacks	
Contractors securities-sundry departments-
Bonds	
Cash	
Certified cheques	
Army benevolent fund	
Canadian Arsenals Limited pension fund	
Canadian vessel construction assistance....
Common school funds-Ontario and Quebec. ... Emergency gold mining assistance-holdbacks.
Federal Republic of Germany	
Immigration guarantee fund	
National Research Council-special fund	
Northwest Territories revenue account	
Permanent services deferred pay	
Prairie farm emergency fund	
Provincial tax collection agreements account...
Roval Canadian Mint-prepayments	
Veterans land act trust account-general....
United States of America	
Veterans care trust fund	
Other	
196.2
34.1
9.8
25.0 5.4

[Stage Direction]
i-9
5.2
1.0
4.1
2.7
2.2 1.1
1.8 2.8 3.0
3.4 10.8 91.8
4.2
7.2
0.1
3.5
9.2
541.8
32.0
33.5 5.6 39.1
22.0
5.0 0.7 10.0 14.0 0.7 SO. If
15.2
21.6
13.6
10.4
3.5
1.5
0.2
5.2
5.4
1.0
7.0 2.7
2.3
2.5
1.6 2.2
3.4
3.5 3.3
66.3
0.5
7.0
0.6
3.0 8.9
Increase
or
decrease (-)
310.7
196.2
2.1
9.8
-8.5
-0.2
1.1
-1.9
-1.0
0.1
-0.9
0.8
-4.5
2.7
2.9
0.2
-0.5
-0.S
-0.2
-2.9
-0.1
-1.4
0.2
0.6
-0.4
-0.1
7.5
25.5
3.7
0.2
-0.5
0.5
0.3
231.1
Annuity, insurance and pension accounts
This category records the governments liability in respect of various annuity , insurance and pension accounts.
During 1966-67 an increase of $1,529 million brought the total to $7,921 million as at March 31, 1967. The main changes were increases of $308 million in the public service superannuation account, $393 million in the Canadian forces superannuation account, $213 million in the old age security fund and $591 million in the Canada pension plan account.
June 1, 1967

[Stage Direction]
(in millions of dollars)
Annuity, Insurance and Pension Accounts	Balance at March 31	Increase1967 (preliminary)	1966	decrease (-)Unemployment insurance fund	279.8	162.2	117.6Less investment in bonds and accrued interest	-266.6	- 148.6	-118.0Uninvested funds on deposit with the government	13.2	13.6	-0.4Superannuation accounts- Public service	2,698.0	2,390.4	307.6Canadian forces	2,577.0	2,184.2	392.8Royal Canadian Mounted Police	85.0 5,860.0	65.4 4,640.0	19.6 720.0Canada pension plan account	680.6	89.4	591.2Government annuities	1,323.5	1,317.1	6.4Old age security fund	429.6	217.0	212.6Other	114.4	115.1	-0.77,921.3	6,392.2	1,529.1
Unemployment insurance fund
The balance in the fund as at March 31, 1967 was $280 million (of which $21 million represented a liability for unredeemed warrants and deposits from employers) and consisted of $267 million invested in special government bonds (including accrued interest) and $13 million on deposit with the Receiver General
TABLE 53 (in millions of dollars)
Fiscal year ended March 31
Unemployment Insurance Fund	1963	1964	1965	1966	1967 (pre- liminary)Revenue-	328.3	352.9Employee and employer^	286.4	296.6	310.8	Government^	57.3	59.3	62.1	65.7	68.7Net income from investments	2.5	1.1	1.8	4.7	10.9Other income	0.1	0.1	0.1	0.1	0.1346.3	357.1	374.8	398.8	432.6Expenditure- Benefit payments	
Interest on loans	-403.2	-365.7 -0.2	-335.0 -0.2	-297.8	-315.6Excess of revenue over expenditure or expenditure	-8.8	39.6	101.0	117.0over revenue (-)	-56.9	Balance at credit of fund at fiscal year-end	9.7	0.9	40.5	141.5	258.5Unredeemed benefit warrants and deposits from	16.7	15.9	17.8	20.7	21.3employers	26.4	16.8	58.3	162.2	279.8Investment in bonds and accrued interest	-11.8	-44.0	-148.6	-266.6Balance on deposit with the government	14.6	16.8	14.3	13.6	13.2
h>
Contributions by employees and employers are on an equal basis.
<2) Government contribution is equal to 20 per cent of the combined employee-employer contributions.
[Stage Direction]
June 1, 1967
The balance in the fund at March 31, 1966 was $162 million (of which $21 million represented a liability for unredeemed warrants and deposits from employers) consisting of $149 million invested in special government bonds (including accrued interest) and $14 million on deposit with the government.
Receipts of $433 million during the fiscal year included employee and employer contributions of $353 million, the government's contribution of $69 million and $11 million in interest from investments. As benefit payments totalled $316 million, receipts exceeded payments from the fund by $117 million during 1966-67. Receipts during 1965-66 totalled $399 million and included employee and employer contributions of $328 million, the government's contribution of $66 million and $5 million in income from investments. Benefit payments during 1965-66 totalled $298 million.
Public service superannuation account
The balance of $2,698 million in this account as at March 31, 1967 was $308 million higher than the balance at the end of the previous fiscal year.
, Receipts of $382 million during the year consisted of credits of $152 million in respect of a salary revision made in 1966-67, contributions of $68 million by individuals, a contribution of $59 million by the government, contributions of $4 million by certain Crown corporations and interest of $99 million credited to the account by the government. Contributions by the government and Crown corporations are equal to the estimated current and prior service payments of individuals in 1965-66. Interest at 4 per cent per annum is credited to the account quarterly and is computed quarterly on the outstanding balance at the end of the previous quarter.
Disbursements totalled $75 million and included $63 million in annuities and $11 million in withdrawals of contributions.
In 1965-66 receipts totalled $299 million and disbursements totalled $70 million.

[Stage Direction]
(in millions of dollars)
Public Service Superannuation Account
Receipts-
Contributions-
Employees	
Crown corporations	
Government	
Interest	
Actuarial liability adjustment Other	
Disbursements-
Annuities	
Withdrawals of contributions, Other	
Excess of receipts over disbursements,
Balance in fund brought forward....
Balance at credit of fund	
Fiscal year ended March 31				
1963	1964	1965	1966	1967
				(preliminary)
57.0	59.2	61.1	66.7	67.72.9	3.0	3.4	3.7	3.751.1	54.0	55.6	57.8	59.366.4	71.8	78.7	89.5	98.7169.5	79.6	152.211.6	1.1	1.3	1.2	0.6189.0	189.1	369.6	298.5	382.243.6	47.8	52.6	57.7	62.87.6	8.4	10.8	11.3	10.80.6	0.6	0.8	0.9	1.051.8	56.8	64.2	69.9	74.6137.2	132.3	305.4	228.6	307.61,586.9	1,724.1	1,856.4	2,161.8	2,390.41,724.1	1,856.4	2,161.8	2,390.4	2,698.0
June 1, 1967
[Stage Direction]
Canadian forces superannuation account
The balance of $2,577 million as at March 31, 1967 reflected an increase of $393 million during the fiscal year.
Receipts of $438 million included a credit of $279 million in respect of additional liabilities resulting from the quinquennial actuarial valuation made as at December 31, 1965, $24 million in contributions by personnel, $43 million in regular government contributions and $92 million in interest credited by the government. Regular government contributions are made at the rate of one and two-thirds times the current and prior service contributions by personnel. Interest at 4 per cent per annum is credited to the account quarterly and is computed quarterly on the outstanding balance at the end of the previous quarter.
Disbursements of $45 million included $36 million in pensions and $9 million in cash termination allowances and return of contributions.
In 1965-66 receipts were $193 million and disbursements were $37 million.

[Stage Direction]
(in millions of dollars)
Canadian Forces Superannuation Account	Fiscal year ended March 31				
1963	1964	1965	1966	1967 (preliminary)Receipts- Contributions- Personnel	
Government	
Interest	
Actuarial liability	
Other	34.5 58.1 53.1 198.5 0.3	36.0 136.2 66.3 0.2	35.2 58.8 75.0 67.2 0.2	34.1 58.8 83.2 16.6 0.3	24.4 42.7 91.7 279.2 0.3Disbursements- Pensions and retiring allowances	
Cash termination allowances and return of contributions	
Other	344.5	238.7	236.4	193.0	438.39.9 8.0 0.1	13.4 9.5 0.1	18.6 11.0 0.2	26.7 10.1 0.1	36.5 8.8 0.2Excess of receipts over disbursements	
Balance in fund brought forward	
Balance at credit of fund	18.0	23.0	29.8	36.9	45.5326.5 1,279.3 1,605.8	215.7 1,605.8 1,821.5	206.6 1,821.5 2,028.1	156.1 2,028.1 2,184.2	392.8 2,184.2 2,577.0
Royal Canadian Mounted Police superannuation account
The balance of $85 million in this account as at March 31, 1967 was $20 million more than the previous fiscal year-end balance of $65 million.
Receipts during the year of $21 million consisted of a credit of $11 million to provide for additional liabilities resulting from pay increases, $2 million in contributions by personnel, $3 million in interest credited to the account and $5 million in contributions by the government.
Disbursements of $1 million consisted mainly of annuities and allowances, cash termination allowances and return of contributions.
In 1965-66 receipts were $8 million and disbursements were $1 million.
[Stage Direction]
June 1, 1967
Canada pension plan account
The balance of $680 million in this account as at March 31, 1967 was $591 million higher than the balance at March 31, 1966.
Credits to the account of $600 million consisted of $589 million in contributions under the act, $10 million in interest earned on securities of Canada or the provinces and $1 million in interest earned on the operating balance in the account on deposit with the Receiver General. Charges to the account were $9 million and consisted mainly of administrative costs.
During the year securities totalling $581 million were purchased and are recorded in the asset account ''Canada pension plan investment fund".
TABLE 56 (in millions of dollars)
Canada Pension Plan Account	Fiscal year ended March 31	
	1966	1967 (preliminary)
Receipts- Contributions		94.9 (l)	588.8 10.3 1.2 0.2
Interest on investments			
Interest on operating balance			
Other			
Payments- Administrative expenses			
	94.9	600.5
	-5.5	-9.2 -0.1
Benefit payments			
Excess of receipts over payments			
	-5.5	-9.3
	89.4	591.2 89.4
Balance in fund brought forward. .		
Balance at credit of fund			
	89.4 -34.8	680.6 -615.5
Less investment in securities held in the Canada pension plan investment fund			
Operating balance on deposit with the government ..		
	54.6	65.1
		
Less than $50,000.
Government annuities account
The balance in this account as at March 31, 1967 of $1,323 million was $6 million higher than the balance at March 31, 1966. Receipts of $71 million included $20 million from premiums and $51 million in interest from the government. Disbursements of $65 million consisted mainly of vested annuity and commuted value payments and refunds of premiums. In 1965-66 receipts amounted to $78 million and disbursements were $64 million.
Old age security fund
Under the Old Age Security Act, as amended, all persons who satisfy the residence requirements of the act may receive a pension of $75 per month from the federal government out of the old age security fund provided that no pension is paid in any month before January 1966 in which the person had not attained 70 years of age, the age limit being reduced by one in each subsequent year until
June 1, 1967
[Stage Direction]
Receipts of $1,286 million in 1966-67 exceeded pension payments of $1,073 million by $213 million leaving a balance in the fund of $430 million as at March 31, 1967.
In 1965-66 receipts of $1,169 million exceeded pension payments of $927 million by $242 million. Temporary loans of $25 million to the fund by the Minister of Finance as at March 31, 1965 were repaid leaving a balance of $217 million in the fund at March 31, 1966.
TABLE 57 (in millions of dollars)
Fiscal year ended March 31
Old Age Security Fund	1963	1964	1965	1966	1967 (prelim- inary)
Tax receipts-					
Sales tax	302.2	331.8	383.2	522.1	560.0Personal income tax	273.7	302.6	431.9	494.9	576.0Corporation income tax	115.2	115.7	145.2	152.3	150.0Total tax receipts	691.1	750.1	960.3	1,169.3	1,286.0Pension payments	-734.4	-808.4	-885.3	-927.3	-1,073.4Excess of receipts over payments	-43.3	-58.3	75.0	242.0	212.6Temporary loans brought forward	-41.7	-100.0	-25.0	Balance in fund brought forward	1.6	217.0Temporary loans by the Minister of Finance to cover	deficit in fund	41.7	100.0	25.0	Balance in fund	217.0	429.6
A distribution by provinces of pension payments from the old age security fund is shown in the following table:
TABLE 58 (in millions of dollars)
Old Age Security Payments
Fiscal year ended March 31
(preliminary)
Increase
Newfoundland	
Nova Scotia	
Prince Edward Island	
New Brunswick	
Quebec	
Ontario	
Manitoba	
Saskatchewan	
Alberta	
British Columbia	
Northwest and Yukon Territories
20.3 48.0
8.3
35.2
238.4
395.0
62.6
63.4 71.8
129.7
0.7
17.6
42.0 7.4
31.0 201.0
337.2 55.5
56.8
62.8
115.3 0.7
2.7
6.0
0.9
4.2
37.4 57.8
7.1
6.6
9.0
14.4
1,073.4
927.3
146.1
[Stage Direction]
June 1, 1967
Undisbursed balances of appropriations to special accounts
These special accounts record the undisbursed balances of appropriations for which moneys have been appropriated by parliament and from which disbursements may be made for authorized purposes in periods subsequent to that in which the appropriation was made. The balance of $78 million as at March 31, 1967 was $24 million less than the balance at March 31, 1966.
The balance of $62 million in the international assistance account was $17 million less than the balance at March 31, 1966. Disbursements of $66 million from the account were partly offset by a credit of $49 million, which amount was charged to budgetary expenditure of the Department of External Affairs.
The balance of $10 million in the railway grade crossing fund was $1 million less than the balance at the previous fiscal year-end. The decrease was due to an amount of $15 million credited to the fund and charged to budgetary expenditure and to disbursements of $16 million from the fund.
The balance of $5 million in the centennial of confederation fund was $6 million less than the balance at March 31, 1966. The amount of $13 million was credited to the fund and charged to budgetary expenditure and disbursements of $19 million from the fund were made during the year.
TABLE 59 (in millions of dollars)
Undisbursed Balances of Appropriations to Special Accounts	Balance at March 31	Increase1967 (preliminary)	1966	decrease (-)61.6	78.7	-17.110.3	11.0	-0.74.7	10.5	-5.81.6	-1.61.3	1.30.2	0.1	0.1
78.1	101.9	-23.8
						
Deferred credits
Recorded in these accounts are amounts due the government in respect of which payment is deferred. These are contra accounts to corresponding items under the following asset categories: "loans to, and investments in, Crown corporations", "loans to national governments" and "other loans and investments". The balance of $138 million as at March 31, 1967 was the same as at March 31, 1966.
Also included in this category are premiums, received on the issue of Government of Canada bonds, which are being credited to interest on public debt on a monthly amortization basis.
June 1, 1967
[Stage Direction]
TABLE 60 (in millions of dollars)
Deferred Credits	Balance at March 31	Increase1967 (preliminary)	1966	or decrease (-)Deferred interest-[DOT] Atomic Energy of Canada Limited	0.1	(1)	0.1Government of India	0.3	-0.3Northern Canada Power Commission	2.3	2.2	0.1The St. Lawrence Seaway Authority	47.8	45.2	2.6United Kingdom Financial Agreement Act, 1946	83.0	83.0	1SS.S	ISO.7	2.5Balances receivable under agreements of sale of Crown assets	0.3	1.3	-1.0Crown Assets Disposal Corporation-government equity...	3.0	5.0	-2.0Unamortized premium on loans	1.1	1.1	137.6	138.1	-0.5
(1'Less than $50,000.
Deferred interest in respect of The St. Lawrence Seaway Authority, which is a contra account to a corresponding item in "loans to, and investments in, Crown corporations" increased by $3 million during the year bringing the balance at March 31, 1967 to $48 million. See the asset account for an explanation of this increase.
Balances receivable under agreements of sale of Crown assets are contra accounts to corresponding items under the asset category "other loans and investments". During the year payments of $1 million left an outstanding balance of $300 thousand at March 31, 1967. There were no new agreements of sale during the year.
The government equity in the agency account of Crown assets disposal corporation is a contra account to a corresponding asset account under "other loans and investments". The balance in the account of $3 million was $2 million less than the total at the end of the previous fiscal year.
Suspense accounts
These consist of balances where some uncertainty as to disposition exists.
There was a net increase of $18 million during 1966-67 to bring the outstanding balances to $49 million as at March 31, 1967.
The surplus Crown assets account, established by vote 48 of the Department of National Defence, Appropriation Act No. 2, 1966, is credited with all revenue received during the current and subsequent fiscal years from the sale of surplus materials, supplies and equipment and from the sale during the current fiscal year of surplus buildings, works and land. The account is debited with expenditures, subject to the approval of Treasury Board, for any of the purposes of the Department of National Defence. Credits of $15 million during the year brought the balance in the account to $24 million. There were no disbursements.
[Stage Direction]
June 1, 1967
TABLE 61 (in millions of dollars)
	Balance at March 31		Increase
Suspense Accounts	1967 (preliminary)	1966	or decrease (-)Provision for estimated premium on redemption of bonds...	17.3 24.3	15.0 9.1	2.3 15.21.2	1.2	Replacement of materiel, sec. 11, National Defence Act	0.6 5.6	0.6 5.5	0.1
49.0	31.4	17.6
Unmatured debt
The unmatured debt of Canada in the amount of $19,940 million was $830 million more than the previous fiscal year-end total. Obligations payable in Canada were $19,574 million and those payable in New York were $366 million compared with $18,739 million and $371 million respectively at March 31, 1966.
TABLE 62 (in millions of dollars)
	Balance at March 31		Increase
Unmatured Debt	1967 (preliminary)	1966	or decrease (-)Payable in Canada- Marketable bonds	10,986.3	10,711.5	274.8Non-marketable bonds- Canada savings bonds	6,016.4	5,733.2	283.2Canada pension plan	1.9	0.1	1.8Unemployment Insurance Commission	260.0	144.0	116.0i7, m-6	16,588.8	675.8Treasury bills	2,310.0	2,150.0	160.019,574.6	18,738.8	835.8Payable in New York^1^2*	365.6	371.0	-5.419,940.2	19,109.8	830.4
("Marketable bonds.
("Converted at the official parity rate of $1 U.S. = SI .08108 Canadian.
Details of the various loan issues, maturities and redemptions resulting in the net increase are described more fully in the section "The Public Debt".
Asset Accounts
Current assets
These accounts consist of various cash accounts, working capital advances and the securities investment account.
June 1, 1967

[Stage Direction]
Fiscal Years Ended March 31
Total current assets at $1,396 million were $380 million more than in the previous fiscal year. The main changes were $188 million in refundable corporation tax and increases of $116 million in the securities investment account, $38 million in departmental working capital advances and $31 million in cash in hands of collectors and in transit.
The agricultural commodities stabilization account records the operations of the Agricultural Stabilization Board. Outstanding advances were $1 million at March 31, 1967, $5 million less than at March 31, 1966.
In the Budget Speech of March 29, 1966 the Minister of Finance announced a refundable tax on cash profits of businesses. It is payable by all corporations not exempt from tax under section 62 of the Income Tax Act and by certain types of trusts on specified types of income. During the year $196 million was collected from this source. A contra account is recorded under the liability category "deposit and trust accounts".
The defence production revolving fund records the cost of materials procur-red for use in the manufacture of defence equipment until such time as they are billed to the Department of National Defence or sold to defence contractors for use in the manufacture of defence equipment, as well as working capital loans and advances for their production. During 1966-67 purchases exceeded sales by $15 million bringing the balance in the account to $37 million at March 31,1967.
The stockpiling of uranium concentrates account records the acquisition of uranium concentrates in accordance with contracts entered into with the approval of the Governor in Council by the Eldorado Mining and Refining Limited on behalf of Her Majesty in right of Canada with certain mining companies. The balance as at March 31, 1967 at $57 million was $20 million higher than the balance at the previous fiscal year-end.
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June 1, 1967
TABLE 63 (in millions of dollars)
Cubhent Assets	Balance at March 31	Increase1967 (preliminary)	1966	or decrease (-)Cash accounts-	Cash in current deposits^1)	625.4	633.4	-8.0Refundable corporation tax	<2>187.9	187.9813.3	633.lt	179.9Cash in special deposits	3.5	1.6	1.9Cash in hands of collectors and in transit... Moneys received after March 31 but applicable to the	155.0	124.1	30.9current year	42.5	42.9	-0.4Post Office-cash on hand and in transit	24.5	11.9	12.61,038.8	813.9	224.9Departmental working capital advances-	Agricultural commodities stabilization account	0.9	5.4	-4.5Canadian government supply	3.0	3.0Defence production revolving fund	37.2	22.6	14.6Miscellaneous departmental imprest and advance ac-	counts	23.4	21.1	2.3Royal Canadian Mint	17.9	14.8	3.1Stockpiling of uranium concentrates	57.2	37.1	20.1Other	19.4	19.6	-0.2159.0	120.6	38.4Securities investment account	197.7	81.5	116.21,395.5	1,016.0	379.5
(1) Receiver General year-end balances in London, New York, Paris and Bonn are at the Canadian dollar equivalent of exchange rates at March 31.
f2! In addition, $8.3 million is included in "cash in hands of collectors and in transit".
Advances to the exchange fund account
Advances during the year to finance the purchase of gold and foreign exchange amounted to $1,098 million and repayments to $1,439 million, a decrease of $341 million bringing the outstanding advances to $2,355 million at March 31, 1967.
During 1965-66 advances of $1,121 million and repayments of $1,046 million resulted in a balance of $2,696 million at March 31, 1966.
Investments in United States dollar securities issued by other than the Government of Canada
This account records the special securities issued by the Government of the United States of America and purchased by Canada pursuant to agreements made to carry out the Columbia River Treaty between the Government of the United States and the Government of Canada. During 1966-67 securities in the amount of $32 million were redeemed leaving a balance of $155 million as at March 31, 1967. Also included is an investment of $25 million in bonds of the international bank for reconstruction and development made in 1966-67.
June 1, 1967
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Investments held for retirement of unmatured debt
Recorded herein is $3 million of the 5§ per cent loan issued August 1, 1962 and maturing August 1, 1980.
Canada pension plan investment fund
The Canada pension plan investment fund records securities purchased under the Canada Pension Plan Act and the sale of these securities. The amount by which the operating balance of the Canada pension plan account in any month exceeds the estimated amount required to meet all payments in the following three-month period is available for the purchase of securities of participating provinces. Securities of Canada shall be purchased with the excess remaining after purchasing securities of each province as required. The holdings in the account at March 31, 1967 totalled $615 million of which $2 million was in federal government securities.
Loans to, and investments in, Crown corporations
Loans and investments in this category totalled $6,728 million, an increase of $1,069 million over the total at March 31, 1966.
TABLE 64 (in millions of dollars)
	Balance at March 31		Increase
Loans to, and Investments in, Crown Corporations	1967 (preliminary)	1966	or decrease (-)Atomic Energy of Canada Limited	106.0	77.6	28.4Bank of Canada	5.9	5.9	Canadian Arsenals Limited	5.0	5.0	6.0Canadian Broadcasting Corporation	9.0	3.0	Canadian Commercial Corporation	10.0	5.5	4.5Canadian National Railways	1,610.6	1,489.7	120.9Air Canada	7.3	4.3	3.01,617.9	1,494.0	123.9Canadian Overseas Telecommunication Corporation	49.8	52.5	-2.7Central Mortgage and Housing Corporation	2,941.5	2,452.9	488.6Eldorado Mining and Refining Limited	8.2	8.2	36.2Export Credits Insurance Corporation	164.4	128.2	Farm Credit Corporation	752.5	588.4	164.1National Capital Commission	37.2	32.1	5.1National Harbours Board	222.3	202.8	19.5Northern Canada Power Commission	29.8	29.9	-0.1Polymer Corporation Limited	30.0	30.0	The St. Lawrence Seaway Authority-	326.7	326.7	Loans	2.6Deferred interest	47.8	45.2	Interest-free loans	90.5	64.0	26.5465.0	435.9	29.1Recovery likely to require parliamentary appropriations-	55.7	26.7	29.0Canadian Broadcasting Corporation	Canadian Corporation for the 1967 World Exhibition....	175.0	44.0	131.0National Capital Commission-greenbelt	37.2	35.2	2.0267.9	105.9	162.0Other Crown Corporations	5.4	1.3	4.16,727.8	5,659.1	1,068.7
June 1, 1967
Atomic Energy of Canada Limited
At March 31, 1967 there was a balance in this account of $106 million consisting of an investment of $15 million by the government in capital stock, and loans of $91 million of which $67 million was in respect of the Douglas Point generating station. Comparable amounts at March 31, 1966 were $78 million consisting of $15 million in capital stock and loans of $63 million of which $48 million was for the Douglas Point generating station.
Canadian Broadcasting Corporation
Advances for working capital during 1966-67 amounted to $6 million bringing the total to $9 million as at March 31, 1967. During the year net advances to the corporation for the purpose of capital expenditures amounted to $29 million, bringing the total of advances to $56 million at the fiscal year-end. Recovery of these advances is likely to require parliamentary appropriations in subsequent fiscal years.
Canadian Corporation for the 1967 World Exhibition
This account records the acquisition of securities issued by the corporation in accordance with the Canadian Corporation for the 1967 World Exhibition Act. The balance in the account at March 31, 1967 was $175 million compared with $44 million at March 31, 1966. Recovery of these advances is likely to require parliamentary appropriations in subsequent fiscal years.
Canadian National Railways (including Air Canada)
Outstanding advances to the Canadian National Railways at March 31, 1967 of $1,618 million were $124 million more than the balance of $1,494 million at the previous fiscal year-end.

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(in millions of dollars)
Advances to the Canadian National Railways	Balance at March 31	Increase1967 (preliminary)	1966	or decrease (-)Capital Revision Act, 1952- Preferred stock	1,075.2 100.0	1,044.3 100.0 27.0 28.4	Twenty-year obligation	Financing and Guarantee Act, 1960	27 0	Financing and Guarantee Act, 1961	28 4	Financing and Guarantee Act, 1965	40 0	40.0 50.0Refunding Act, 1955	323.0 17.0 7.3	273.0 17.0 4.3	Canadian Government Railways	Air Canada	
1,617.9	1,494.0	123.9
During 1966-67 the government made available $144 million to the company and received repayments of $20 million, resulting in a net increase of $124 million in outstanding advances. In 1965-66 advances were $99 million and repayments were $39 million.
June 1, 1967
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TABLE 66 (in millions of dollars)
Advances to, and Repayments by, the Canadian National Railways	Fiscal year ended March 31	Increase1967 (preliminary)	1966	or decrease (-)Advances- For the refunding of debt	50.0	35.0	15.0For the Financing and Guarantee Act, 1965	40.0	40.0For the financing of income deficits- Canadian National Railways	16.0	33.4	-17.4Air Canada	7.3	6.0	1.3Total advances	113.3	74.4	38.9Purchase of 4 per cent preferred stock (C. N. R. Capital Revision Act, 1952)	30.9	24.1	6.8144.2	98.5	45.7Repayments- Advances for interim financing of income deficits- Canadian National Railways	-16.0	-33.4	17.4Air Canada	-4.3	-5.3	1.0-20.8	-88.7	18.4Net increase or decrease (-) during fiscal year	123.9	59.8	64.1
In 1966-67 the government advanced to the company $90 million for capital purposes and the refunding of debt in the hands of the public.
To assist the company to finance further capital expenditure during the year, the government purchased $31 million of the 4 per cent preferred stock of the company. This stock is issued under the authority of the Canadian National Railways Capital Revision Act, 1952, in an amount equal to 3 per cent of the gross revenue of the company.
The government also provided the company with temporary loans of $16 million in respect of its 1966 deficit which were repaid when the company's income deficit of $25 million was charged to the 1966-67 budgetary expenditures.
At March 31, 1966 temporary loans of $4 million were outstanding to Air Canada in respect of its 1966 operations. These have been repaid by the company during 1966-67. However, additional loans of $7 million have been made during 1966-67 in respect of the company's 1967 operations.
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June 1, 1967
Central Mortgage and Housing Corporation
The balance of $2,942 million in this account at March 31, 1967 was $489 million higher than at March 31, 1966, and comprised the Crown's investment of $25 million in the capital of the corporation and $2,917 million in loans and advances.
Loans and advances to the corporation were $607 million in 1966-67 and repayments were $118 million. In 1965-66 advances were $514 million and repayments were $199 million.
TABLE 67 (in millions of dollars)
Advances to, and Repayments by Central Mortgage and Housing Corporation	Fiscal year ended March 31	Increase1967 (preliminary)	1966	or (decrease -)Advances-	497.7	403.8	93.921.5	4.5	17.016.5	30.0	-13.535.0	40.4	-5.436.0	35.0	1.0606.7	513.7	93.0Repayments-	-86.5	-156.3	69.8-4.0	-3.3	-0.7-14.5	-12.1	-2.4-9.6	-23.3	13.7-0.5	-0.3	-0.2-3.0	-3.3	0.3-118.1	-198.6	80.5488.6	315.1	173.5
Advances comprised $498 million for direct lending and limited dividend housing, $21 million for federal-provincial projects for housing, $17 million for the loan and mortgage purchase fund, $35 million in respect of municipal sewage treatment and $36 million for university housing.
Repayments of $118 million included $87 million for direct lending and limited dividend housing, $4 million for housing, $14 million for the loan and mortgage purchase fund, $10 million for municipal sewage treatment and $3 million in respect of acquisition or construction of real estate.
Export Credits Insurance Corporation
The outstanding balance of $164 million in this account at March 31, 1967 consisted of $5 million for capital stock, $5 million for working capital and $154 million for loans under section 21A of the Export Credits Insurance Act. This section of the act authorizes the making of loans, on security of a guaranteed
June 1, 1967
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instrument, to the corporation by the Minister of Finance. Comparable amounts in 1965-66 were $5 million for capital stock, $5 million for working capital and $118 million for loans.
Farm Credit Corporation
The government provides loans to the corporation which makes loans on farm property. The balance of $753 million in the account at March 31, 1967 consisted of the Crown's investment of $30 million in the capital of the corporation and $723 million in loans and advances. At March 31, 1966 the balance was $588 million consisting of capital investment of $23 million and loans and advances of $565 million.
The 1966-67 transactions in the account consisted of additional subscriptions by the government of $7 million to the capital of the corporation, loans and advances of $183 million and repayments by the corporation of $26 million. In 1965-66 additional subscriptions were $6 million, loans and advances were $162 million and repayments were $21 million.
National Capital Commission
Loans to acquire property in the "Greenbelt" area increased by $2 million during the year bringing the balance to $37 million. Recovery of these loans is likely to require parliamentary appropriations in subsequent fiscal years.
Loans to acquire property excluding the "Greenbelt" area increased by $5 million to $37 million at March 31, 1967.
The St. Lawrence Seaway Authority
^Outstanding obligations in this account at March 31, 1967 amounted to $465 million and comprised $327 million in interest-bearing loans, $90 million in interest-free loans and $48 million in deferred interest. At March 31, 1966 outstanding obligations were $436 million consisting of $327 million in interestbearing loans, $64 million in interest-free loans and $45 million in deferred interest.
Other Crown Corporations
Advances to the Canadian Commercial Corporation increased by $5 million during 1966-67 and advances to the National Harbours Board increased bv $20 million.
Loans to national governments
There was a net decrease of $24 million in this category bringing total balances to $1,202 million at March 31, 1967.
i The United Kingdom repaid $19 million of the $1,185 million loan made under the $1,250 million credit authorized by the United Kingdom Financial Agreement Act, 1946, reducing the principal to $976 million at March 31 1967.
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June 1, 1967
Advances under Part II of the Export Credits Insurance Act to Belgium, France and The Netherlands to assist them in the purchasing of goods in Canada were reduced by a repayment of $2 million, bringing the balance at March 31, 1967 to $122 million. The decrease of $2 million is the regular annual payment by the Government of Belgium.
Special loans by Canada to Colombo plan countries to finance the purchase of wheat and flour from Canada decreased by $10 million from the previous fiscal year-end balance due to the forgiveness by Canada of the payment by India of the total principal and interest accruing thereon under agreements related to the purchase of Canadian wheat and flour in the amount of $10 million.
Loans to India for the purchase in Canada of aircraft and associated parts at $4 million were $2 million less than at March 31, 1966.
Special loan assistance-developing countries account is an account which records loans, not to exceed $50 million, which are subject to terms and conditions as the Governor in Council may approve, for the purpose of undertaking agreed-upon economic, educational and technical projects. The balance in the account at March 31, 1967 was $15 million, an increase of $10 million.
TABLE 68 (in millions of dollars)
	Balance at March 31		Increase
Loans to National Governments	1967 (preliminary)	1966	or decrease (-)Loans to United Kingdom- The United Kingdom Financial Agreement Act, 1946...	976.2 83.0	995.1 83.0	-18.91,059.2	1,078.1	-18.9Loans under the Export Credits Insurance Act, Part II-	23.0	25.4	-2.467.0	67.0	32.1	32.1	122.1	124.5	-2.4Special loans to Colombo plan countries to finance the purchase of wheat and flour from Canada-	0.3	0.5	-0.29.7	-9.7o.s	10.2	-9.9Miscellaneous loans and advances- India-loan for purchase of aircraft and associated spare	3.7	6.4	-2.70.7	0.7	15.1	5.2	9.90.5	0.1	0.420.0	12.4	7.61,201.6	1,225.2	-23.6
Other loans and investments
Balances in these accounts totalled $1,718 million at March 31, 1967, $454 million more than at the end of the previous fiscal year.
June 1. 1967
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TABLE 69 (in millions of dollars)
Other Loans and Investments	Balance at March 31	Increase1967 (preliminary)	1966	or decrease (-)Subscriptions to capital of, and working capital advances and loans to, international organizations- Canada's subscriptions to capital of- Asian development bank	2.7	2.7International bank for reconstruction and development	85.0	80.5	4.5International development association	70.7	55.7	15.0International finance corporation	3.5	3.5	International monetary fund	782.7	577.3	205.4Working capital advances and loans to international organizations	7.6	7.7	-0.1952.2	724.7	227.5Loans to provincial governments- Alberta	5.4	5.9	-0.5British Columbia	10.3	11.2	-0.9Manitoba	9.2	10.0	-0.8New Brunswick	31.7	29.1	2.6Newfoundland	17.7	3.5	14.2Nova Scotia	22.5	7.0	15.5Saskatchewan	26.3	30.0	-3.7123.1	96.7	26.4Veterans land act fund	332.8	278.8	54.0Less reserve for conditional benefits	-22.4	-22.6	0.2310.4	256.2	54.2Municipal development and loan board advances	236.3	115.5	120.8Less reserve for forgiveness of indebtedness	-5.1	-6.6	1.5231.2	108.9	122.3M iscellaneous- Advances to employees re retirement fund and the Canada/Quebec pension plan	8.9	4.1	4.8Assisted passage scheme	11.0	6.4	4.6Balances receivable under agreements of sale of Crown assets	1.4	2.4	-1.0City of Montreal- Atwater tunnel	1.7	1.8	-0.1St. Re mi tunnel	1.0	1.0	City of Whitehorse	1.9	1.9	Construction of dock and rail facilities for Steep Rock Iron Mines Limited	0.7	0.9	-0.2Crown Assets Disposal Corporation- Government equity in agency account	2.4	5.0	-2.6Dominion Coal Company Limited	4.5	4.5	Fraser River Harbour Commission	1.2	1.3	-0.1Hamilton Harbour Commission	1.6	1.7	-0.1Housing project for Canadian forces	20.5	20.6	-0.1Loans to manufacturers of automotive products in Canada	12.7	0.1	12.6Municipal Improvements Assistance Act, 1938	0.7	0.8	-0.1Northwest Territories	8.3	6.4	1.9Ottawa Civil Service recreational association re W. Clifford Clark Memorial Recreational Centre	1.0	1.1	-0.1Toronto Harbour Commission	1.5	1.5Town of Oromocto Development Corporation	1.1	1.1	Yukon Territory	8.5	6.6	1.9Other	5.8	4.8	1.0Recovery likely to require parliamentary appropriations- Town of Oromocto, N.B	4.2	4.2	100.6	76.7	23.91,717.5	1,263.2	454.3
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June 1, 1967
Canada's subscriptions to the capital of international organizations were $228 million higher due mainly to additional subscriptions of $15 million to the international development association and $205 million to the international monetary fund. Working capital advances and loans to international organizations at $8 million were approximately the same as at the previous fiscal year-end.
Loans to provincial governments totalled $123 million at March 31, 1967, an increase of $26 million over the total at the previous fiscal year-end due mainly to increases of $16 million in loans to Nova Scotia and $14 million in loans to Newfoundland.
The veterans land act fund was established by An Act to amend the Veterans' Land Act, assented to June 30,1965, to record advances made under the Veterans' Land Act, not to exceed the amount of $380 million, for the acquisition, by the Director, of properties, buildings, materials, livestock, farm equipment and commercial fishing equipment for purposes of the act, for sale to qualified veterans of world war 2 and Korea under sales agreements which carry specified conditional benefits if the terms of such agreements are adhered to by the veterans, and for progress payments to veterans during construction of housing. The veterans land act advances and reserve for conditional benefits and the veterans land act housing account are combined in this account. Advances during the year of $83 million and repayments of $29 million brought outstanding advances at March 31, 1967 to $333 million. This was partly offset by a reserve for conditional benefits amounting to $23 million, resulting in a balance in this account of $310 million at the fiscal year-end.
Under the Municipal Development and Loan Act advances are made to the Municipal Development and Loan Board to provide financial assistance by way of loans to municipalities to augment or accelerate municipal capital works programs. Where the municipal project in respect of which a loan is made is completed on or before September 30, 1966, the board shall forgive payment by the municipality of 25 per cent of the principal amount of the loan. If a project is not completed as at September 30, 1966, the board shall forgive 25 per cent of that portion of the loan that has been advanced to the municipality as of September 30, 1966.
At March 31, 1967, advances totalled $236 million, an increase of $121 million over the total at March 31, 1966. These advances were partly offset by a reserve for forgiveness of indebtedness consisting of amounts charged to budgetary expenditure to cover 25 per cent of the amounts of the advances. At March 31, 1967, there was a reserve of $5 million compared with $7 million at March 31,
1966.
Miscellaneous loans and investments totalled $101 million at March 31,
1967,	an increase of $24 million over the balance at March 31, 1966, due mainly to loans of $13 million to manufacturers of automotive products in Canada.
Loans to manufacturers of automotive products in Canada were set up under authority of vote L27c, Appropriation Act No. 5, 1965, to record loans in the current and subsequent fiscal years, in accordance with terms and conditions prescribed by the Governor in Council, to assist manufacturers of automotive products in Canada affected by the Canada-United States Agreement on Automotive Products to adjust and expand their production; such loans to be made
June 1, 1967
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for the purpose of acquisition, construction, installation, modernization, development, conversion or expansion of land, buildings, equipment, facilities or machinery and for working capital. Loans to these manufacturers amounted to $13 million in 1966-67 compared with $125 thousand in 1965-66.
Securities held in trust
Recorded herein are the security holdings in connection with various deposit and trust accounts and annuity, insurance and pension accounts. Bonds and certified cheques held in connection with contractors' securities included in the deposit and trust category are also recorded under this heading. The balance at March 31, 1967, was $51 million, a decrease of $1 million from the previous fiscal year.
Deferred charges
The balance of $582 million in this account was $326 million more than at March 31, 1966, reflecting increases of $311 million in the unamortized portions of actuarial deficiencies in the superannuation accounts and $15 million in unamortized loan flotation costs.
TABLE 70 (in millions of dollars)
Deferred Charges	Balance at March 31	Increase1967 (preliminary)	1966	or decrease (-)Unamortized portions of actuarial deficiencies- Canadian forces superannuation account	260.2	53.6	206.6Public service superannuation account	189.4	93.6	95.8Koyal Canadian Mounted Police superannuation account.	11.0	3.1	7.9460.6	150.3	310.3Unamortized loan flotation costs	121.6	106.2	15.4582.2	256.5	325.7
Unamortized portions of actuarial deficiencies
At March 31, 1967 these totalled $461 million compared with $150 million at March 31, 1966, an increase of $311 million.
Any actuarial deficiencies revealed by quinquennial valuations are credited to the superannuation accounts and charged to this account and amortized to budgetary expenditure in five equal annual instalments commencing in the fiscal year in which the report is laid before parliament. Also, the cost of benefits payable under the superannuation acts as a result of the authorization of salary increases are credited to the superannuation accounts and charged to this account, and amortized to budgetary expenditure over a period of five years commencing in the year in which the increase is authorized.
The unamortized portion of the actuarial deficiency in the Canadian forces superannuation account was $260 million compared with $54 million at March 31, 1966. During the year $279 million was charged thereto as a result of the quinquennial actuarial valuation, made as at December 31, 1965, of the Canadian forces superannuation account and $73 million was amortized as a charge to budgetary expenditure.
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June 1, 1967
The unamortized portion of the public service superannuation account was $190 million compared with $94 million at March 31, I960. During the year $152 million was charged thereto as a result of salary increases and $56 million was amortized as a charge to budgetary expenditure.
The unamortized portion of the actuarial deficiency in the Royal Canadian Mounted Police superannuation account was $11 million compared with $3 million at March 31, 1966. During the year $11 million was charged thereto as a result of salary increases and $3 million was amortized as a charge to budgetary expenditure.
Unamortized loan flotation costs
This account records the residual balances of discounts, commissions, redemption bonuses and conversion premiums on loan flotations that have not been charged to budgetary expenditures. The balance of $122 million was $15 million more than the previous fiscal year-end balance.
TABLE 71 (in millions of dollars)
Unamortized Loan Flotation Costs	Fiscal year en 1967 (preliminary)	ded March 31 1966Balance of account at beginning of fiscal year	106.2	110.8New loan flotation costs to be amortized-	4\% loan May 1, 1966-April 1, 1967	1.8	5% loan May 1, 1966-July 1, 1970	0.9	5£% loan May 1, 1966-August 1, 1980	3.6	4|% loan September 1, 1966-October 1, 1967	2.6	5f% loan September 1, 1966-October 1, 1969	1.3	5f% loan September 1, 1966-September 1, 1992	2.2	5|% loan December 15, 1966-September 1, 1992	2.9	5l% loan December 15, 1966-January 15, 1968	0.6	5f% loan December 15, 1966-December 15, 1970	1.9	b\% loan February 1, 1967-October 1, 1975	1.2	5|% loan February 1, 1967-August 1, 1980	0.7	5f% loan February 1, 1967-September 1, 1982	0.2	Adjustments*1*	5.9Treasury bills discount	20.9	16.5Canada savings bonds-adjustment previous issues	0.5	0.8Canada savings bonds-new issue	20.6	7.44\% loan July 1, 1965-June 1, 1967	0.35% loan July 1, 1965-July 1, 1970	1.43|% loan September 1, 1965-September 1, 1966	2.25,% loan September 1, 1965-October 1, 1969	0.14% loan December 1, 1965-December 15, 1966	1.85|% loan December 1, 1965-April 1, 1969	0.15£% loan December 1, 1965-October 1, 1975	0.24% loan February 1, 1966-April 1, 1967	2.35j% loan February 1, 1966-August 1, 1980	0.461.9	39.4Less-	Amortization applicable to fiscal year-	Canada savings bonds and general loans	-30.0	-30.8Discount on treasury bills charged to interest on public debt...	-16.5	-13.2-46.6	-44.0Increase or decrease (-) during the year	15.4	-4.6Balance of account at end of fiscal year	121.6	106.2
h* Adjustments due to additional issues of existing loans.
June 1, 1967
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Cost of new loans issued during 1966-67 and charged to the account amounted to $62 million, of which $21 million is in respect of treasury bills discounts which will be charged to interest on public debt in 1967-68. Credits to the account are $46 million, of which $30 million is a charge to the budgetary item "annual amortization costs" and $16 million (representing discount applicable to 1966-67 on treasury bills sold in 1965-66) is a charge to the budgetary item "interest on public debt".
Treasury bills discounts applicable to the current fiscal year are charged to interest on public debt at time of sale. That portion of the discounts applicable to the subsequent fiscal year is charged to this account and transferred to interest on public debt in the following year.
Capital assets
Assets of the government such as land, buildings, works and equipment, etc., that are charged to budgetary expenditure at the time of acquisition or construction, are included in this category and are shown on the statement of assets and liabilities at a nominal value of $1.
Inactive loans and investments
Loans and investments which are not currently revenue-producing or realizable are recorded herein. Included are the loan of $49 million to China under the Export Credits Insurance Act, loans of $24 million and $7 million made to Roumania and Greece in 1919-20 and 1920-21 respectively and advances of $15 million in respect of the implementation of guarantees (Ming Sung Industrial Company Limited).
Reserve for losses on realization of assets
The balance of this account at March 31, 1967 was $546 million, unchanged from the end of the previous fiscal year.
Net Debt
The net debt of Canada, or the excess of liabilities over net recorded assets, was $15,971 million at March 31, 1967, $428 million higher than at March 31, 1966 reflecting the 1966-67 budgetary deficit of $428 million.

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The government's bank balances represent current deposits to the credit of the Receiver General of Canada in the Bank of Canada, chartered banks in Canada and certain banks in London, New York, Paris and Bonn. These balances totalled $625 million at March 31, 1967, a decrease of $8 million from the balance of $633 million at March 31, 1966.
The cash position of the government is affected not only by budgetary transactions but also by changes in the government's unmatured debt and other non-budgetary transactions. Non-budgetary transactions are those which affect the government's assets and liability accounts and must be taken into account when considering the full scope of the government's financial operations and their effect on the economy of the country.
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June 1. 1967
On the asset side, the non-budgetary transactions consist, for the most part, of loans and advances to, and repayments by, Crown corporations and other government agencies and funds (including the old age security fund), national, provincial and municipal governments, international organizations, veterans and other borrowers. On the liability side they relate mainly to receipts and payments in connection with the many deposit and trust accounts, and annuity, insurance and pension funds held or administered by the government.
The following statement summarizes both the budgetary and non-budgetary transactions for 1966-67 and indicates how they affected the government's cash position. For purposes of comparison the corresponding figures for 1965-66 are also shown.
TABLE 72 (in millions of dollars)
Changes in Cash Position	Fiscal year en 1967 (preliminary)	ded March 31 1966
Budgetary transactions-		
Revenue	8,366.0	7,695.8Expenditure	-8,794.0	-7,734.8Deficit	-428.0	-39.0Non-budgetary transactions (excluding unmatured debt	transactions)-	Receipts and credits (net)	2,466.9	710.1Disbursements and charges (net)	-2,757.9	-831.0Net amount required for non-budgetary transactions...	-291.0	-120.9Overall cash requirement to be financed by increase in	unmatured debt or decrease in cash balances..	-719.0	-159.9Net increase in unmatured debt outstanding in the	hands of the public-	Unmatured debt-	Canada savings bonds	283.2	180.8Marketable issues	269.4	-160.3Treasury bills	160.0	10.0Special issues-	Unemployment Insurance Commission	116.0	101.0Canada pension plan	1.8	0.1830.4	131.6Securities investment account	-116.2	-19.0Investments held for retirement of unmatured debt	-3.2	711.0	112.6Net increase or decrease (-) In Receiver General bank	-	balances	-8.0	-47.3
In 1966-67 a deficit of $428 million in budgetary transactions and net disbursements of $291 million for non-budgetary transactions (excluding unmatured debt transactions) resulted in a net cash requirement of $719 million for the fiscal year. As transactions in unmatured debt during the year resulted in an increase of $711 million in outstanding unmatured debt as at March 31, 1967,
June 1, 1967
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Receiver General bank balances were reduced by $8 million. In 1965-66 the budgetary deficit of $39 million and net disbursements of $121 million from nonbudgetary transactions resulted in a cash requirement of $160 million. As outstanding unmatured debt increased by $113 million, Receiver General bank balances were reduced by $47 million.
Non-budgetary receipts and credits (excluding unmatured debt transactions)
Non-budgetary receipts and credits of $2,467 million in 1966-67 included $1,529 million in respect of annuity, insurance and pension accounts, $404 million in repayments of loans, investments and advances and $534 million in sundry other accounts.
Further details are given in the following table:
TABLE 73 (in millions of dollars)
Non-Budgetary Receipts and Credits (Net)	Fiscal year ended March 31	
	1967 (preliminary)	1966
Repayments of loans, investments and advances-		
Agricultural commodities stabilization account	4.5	17.8Exchange fund account	341.0	-75.0Canadian Overseas Telecommunication Corporation	2.7	2.6Special United States of America securities (Columbia River Treaty)..	32.2	32.2National governments	23.6	-18.6m.o	-41.0Annuity, insurance and pension accounts-	Public service superannuation account	307.6	228.6Canadian forces superannuation account	392.8	156.1Royal Canadian Mounted Police superannuation account	19.6	7.7Canada pension plan account	591.2	89.4Old age security fund	212.6	217.05.3	17.51,529.1	716. SOther receipts and credits-	Outstanding treasury cheques	49.9	17.876.7	16.4Non-interest-bearing notes payable on demand	111.0	-112.53.4	8.2Interest due and outstanding	2.1	8.932.9	23.1Post office outstanding money orders	9.2	0.99.4	30.4Provincial tax-collection agreements account	25.5	17.5Surplus Crown assets (Department of National Defence)	15.2	9.1Provision for estimated premium on redemption of bonds	2.3	15.0Refundable corporation tax	196.2	6SS.8	S4.82,466.9	710.1
June 1, 1967
Non-budgetary disbursements and charges (excluding umnatured debt transactions)
Non-budgetary disbursements and charges of $2,758 million in 1966-67 included $1,594 million for loans, investments and advances and $1,164 million in other charges.
Further details are given in the following table:
TABLE 74 (in millions of dollars)
Non-Budgetary Disbursements and Charges (Net)	Fiscal year ended March 31	
	1967 (preliminary)	1966
Loans, investments and advances-		
Defence production revolving fund	14.6	-7.6Royal Canadian Mint working capital advance	3.1	-3.9Stockpiling of uranium concentrates	20.1	12.7Atomic Energy of Canada Limited	28.4	11.9Canadian Broadcasting Corporation	35.0	12.5Canadian Commercial Corporation	4.5	2.0Canadian Corporation for the 1967 World Exhibition	131.0	44.0Canadian National Railways (including Air Canada)	123.9	59.8Central Mortgage and Housing Corporation	488.6	315.1Export Credits Insurance Corporation	36.2	36.4Farm Credit Corporation	164.1	147.0National Capital Commission	7.1	7.4National Harbours Board	19.5	3.0The St. Lawrence Seaway Authority	29.1	26.7Subscriptions to capital of international organizations	227.5	Provincial governments	26.4	-1.7Veterans land act fund	54.2	24.1Municipal Development and Loan Board advances	122.3	101.3Loans to manufacturers of automotive products in Canada	12.6	0.1International bank for reconstruction and development (bonds)	25.0	20.4	2.61,593.6	793. J,Other disbursements and charges-	Refundable corporation tax	«>187.9	Cash in hands of collectors and in transit	30.9	-43.9Canada pension plan investment fund	580.6	34.9325.7	47.90.5	-24.9International assistance account	17.1	3.621.6	20.01,16^.3	37.62,757.9	831.0
(1>
In addition, $8.3 million is included in "cash in hands of collectors and in transit".

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Gross and net debt
The gross debt of Canada, or the total of liabilities as recorded on the statement of assets and liabilities, was $30,350 million at March 31, 1967, an increase of $2,867 million over the total at March 31, 1966. The main changes were increases of $1,529 million in annuity, insurance and pension accounts, $830 million in unmatured debt, $283 million in current and demand liabilities and $231 million in deposit and trust accounts. Unmatured debt at $19,940 million represented 66 per cent of the total and annuity, insurance and pension accounts
June 1, 1967
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at $7,921 million represented 26 per cent. At March 31, 1966 unmatured debt was $19,110 million or 70 per cent and annuity, insurance and pension accounts totalled $6,392 million or 23 per cent.
The government's net recorded assets were $14,379 million at March 31, 1967 an increase of $2,439 million over the total at March 31, 1966. The main changes were increases of $1,069 million in loans to, and investments in, Crown corporations, $581 million in the Canada pension plan investment fund, $454 million in other loans and investments, $380 million in current assets and $326 million in deferred charges partly offset by a decrease of $341 million in advances to the exchange fund account. Loans to, and investments in, Crown corporations

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Statement of Public Debt, Unmatured Debt, Net Recorded Assets and Net Debt of Canada
(in millions of dollars)
As at March 31	Gross Public Debt	Less net recorded assets	Net debt	Increase in net debt during fiscal yearUnmatured debt	Other liabilities	Total	1963	17,961.8	6,837.4	24,799.2	10,879.5	13,919.7	691.61964	18,740.1	7,183.3	25,923.4	10,853.3	15,070.1	1,150.41965	18,978.2	7,585.7	26,563.9	11,059.5	15,504.4	434.31966	19,109.8	8,373.1	27,482.9	11,939.5	15,543.4	39.01967 (preliminary)	19,940.2	10,409.8	30,350.0	14,378.6	15,971.4	428.0

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Billions of Dollars
1963	64	65	66	67*
* Preliminary

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Billions of Dollars
1062
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June 1. 1967
represented 47 per cent of the total and advances to the exchange fund represented 16 per cent. At March 31, 1966 loans to, and investments in, Crown corporations were $5,659 million or 47 per cent and advances to the exchange fund were $2,696 million or 23 per cent.
The net debt of Canada was $15,971 million at March 31, 1967 reflecting an increase of $428 million, equivalent to the 1966-67 budgetary deficit.
Unmatured debt
Total unmatured debt of $19,940 million was $830 million more than the balance at March 31, 1966.
The government's holdings of its own securities as at March 31, 1967 was comprised of $198 million in the securities investment account (of which $37 million was in respect of the employees instalment purchase plan) and $3 million in investments held for retirement of unmatured debt. This was an increase of $120 million over the previous fiscal year-end total when holdings were $82 million in the securities investment account (of which $32 million was in respect of the employees instalment purchase plan).
Of the total unmatured debt, $19,574 million is payable in Canada and $366 million in New York. Securities payable in New York have been valued at the official parity rate of $1 U.S. = $1.08108 Canadian.
TABLE 76 (in millions of dollars)
Unmatched Debt Transactions	Fiscal year e 1967 (preliminary)	nded March 31 1966Balance at beginning of year	19,110	18,978New issues-	For cash-	Canada savings bonds series 19	86Canada savings bonds series 20	50	868Canada savings bonds series 21	2,272	Marketable bonds	1,500	1,550Non-raarketable bonds (Unemployment Insurance Commis-	157	144Non-marketable bonds (Canada pension plan)	2	0)Treasury bills (net)	160	104,141	2,658Less-	Matured marketable bonds	-1,231	-1,710Redeemed non-marketable bonds (Unemployment Insurance	Commission)	-41	-43Canada savings bonds redeemed or matured	-2,039	-773-3,311	-2,526Increase in unmatured debt	830	132Balance at end of year	19,940	19,110
(*'There was an issue of $102,000 in 1965-66.
Summary of security issues, maturities and redemptions
Excluding the refunding of treasury bills which mature weekly, the government has issued securities of $4,141 million and redemptions and maturities totalled $3,311 million.
June 1, 1967
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Net sales of Canada savings bonds series 21 were 12,272 million and additional sales of series 20 were $50 million. Redemptions and maturities of series 9 to 20 totalled $2,039 million. The net increase for all series was $283 million bringing the total of outstanding Canada savings bonds to $6,016 million.
Treasury bills in the amount of $2,310 million consisted of $1,430 million in three-month bills, $780 million in six-month bills and $100 million in ten-month bills.

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Debt Matured or Redeemed During the Fiscal Year Ended March 31, 1967
(in millions of dollars)	-
' -I-	Matured	Redeemed	TotalMarketable bonds- 3|% 1965-66	CT16 3% 1964-66	P7 3J% 1965-66	CT20 4J% 1961-66	;	AT 8 44% 1963/64-66	CT 5 4% 1965-66	CT22 5% 1962-87 (N.Y. loan)	325.0 245.2 205.0 175.0 125.0 150.0 1,225.2 22.7	5.4 5.4 I 2,01610 41.0	325.0 245.2 205.0 175.0 125.0 150.0 5.4 1,230.6 22.7 2,016.0 41.0N on-marketable bonds-	
1,247.9	2,062.4	3,310.3

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New Securities Issued During Fiscal Year Ended March 31, 1967 (in millions of dollars)
-		Price to government	Yield at price to government	Total amount issued	Amount issued for cash
			per cent		
Marketable bonds-					
4i% 1966-67	. F1	98.90	5.49	155.0	155.05% 1966-70	. F 2	98.00	5.54	40.0	40.054% 1966/67-80	. F 3	98.00	5.71	160.0	160.044% 1966-67	. F 4	98.60	5.60	175.0	175.05i% 1966-69	. F 5	99.625	5.88	250.0	250.05f% 1966-92	. F 6	97.50	5.94	175.0	175.054% 1967-92	. F 6	100.75	5.69	50.0	50.05J% 1966-68	. F 7	99.60	5.88	125.0	125.05|% 1966-70	. F 8	99.50	5.89	300.0	300.05j% 1967-75	. F 9	98.625	5.70	70.0	70.01,600.0	1,500.0Non-marketable bonds-	Unemployment Insurance Commission-	51%	100.00	5.25	89.0	89.054%	100.00	5.50	68.0	68.0Canada savings bonds-	Nov. 1, 1965-Nov. 1, 1977,	44-54%	. S 20	100.00	5.03	50.4	50.4Nov. 1, 1966-Nov. 1, 1979,	5-6% (net)	. S 21	100.00	5.48	2,271.5	2,271.5Canada pension plan-	5.36-5.61%	100.00	1.8	1.8Weekly treasury bills (net)	160.0	160.04,140.7	4,140.7
1064
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June 1, 1967

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As At March 31
Interest rates
The average interest rate on the government's unmatured debt rose to 4.69 per cent during the fiscal year from 4.55 per cent at March 31, 1966.
The yield on three-month treasury bills which was 5.06 per cent at tender on March 31, 1966 was 4.13 per cent at tender on March 30, 1967.
The yield on six-month treasury bills which was 5.30 per cent at tender on March 31, 1966 was 4.11 per cent at tender on March 30, 1967.
The following table shows the high and low yields together with the yield on the latest issues for the fiscal years 1962-63 to 1966-67 inclusive:

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Treasury Bill Yields at Tender
Fiscal Year Ended March 31	High	Low	Last issueper cent	per cent	per centThree-month bills-	1963	5.51	3.04	3.621964	3.90	3.19	3.881965	3.87	3.53	3.621966	5.06	3.61	5.001967	5.20	4.10	4.13Six-month bills-	1963	5.74	3.19	3.741964	4.06	3.30	4.041965	4.06	3.69	3.731966	5.30	3.71	5.301967	5.33	4.04	4.11Ten-month bills	4.51	4.51	4.51
June 1, 1967
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Indirect debt or contingent liabilities
In addition to the direct debt as set out in the statement of assets and liabilities, the government has assumed certain indirect or contingent liabilities. These consist of securities of the Canadian National Railways, guaranteed as to principal and interest, the guarantees of insured loans made by chartered banks and other approved lending institutions under the National Housing Act, deposits maintained by the chartered banks in the Bank of Canada, advances under the Export Credits Insurance Act and bank loans under a number of Federal Statutes.

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Summary of Indirect Debt or Contingent Liabilities (preliminary)
Amount of
Amount
guarantee
outstanding
Railway securities guaranteed as to principal and interest")-
1.	Canadian National 4|% due April 1, 1967	
2.	Canadian National 5% due May 15, 1968	
3.	Canadian National 2|% due September 15, 1969	
4.	Canadian National 2J% due January 16, 1971	
5.	Canadian National 51% due December 15, 1971	
6.	Canadian National 3f% due February 1, 1974	
7.	Canadian National 2}% due June 15, 1975, U.S. $6,000,000")....
8.	Canadian National 5% due May 15, 1977	
9.	Canadian National 4% due February 1, 1981	
10.	Canadian National 5}% due January 1, 1985	
11.	Canadian National 5% due October 1, 1987	
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72.300.000
55.800.000
70.000.	000
40.000.	000 190,561,500 200,000,000
6,486,486
83.925.000 300,000,000
98.500.000 158,375,000
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72.300.000
55.800.000
70.000.	000
40.000.	000 190,561,500 200,000,000
6,486,486
83.925.000 300,000,000
98.500.000 158,375,000
Other outstanding guarantees and contingent liabilities-
12.	Deposits maintained by the chartered banks in the Bank of
Canada")	
13.	Loans made by lenders under Part IV of the National Housing
Act, 1954, for home extensions and improvements")	
14.	Insured loans made by approved lenders under the National
Housing Act, 1954")	
15.	Liability for insurance and guarantees and other commitments
with respect to long-term financing under sections 20 and 21a of the Exports Credits Insurance Act")	
16.	Loans made by chartered banks under the Farm Improvement
Loans Act")	
17.	Loans made by chartered banks under the Veterans' Business
1,275,947,986
Unstated
25,000,000
9.500.000.	000
1.100.000.	000
120,173,000
1,275,947,986
1,133,996,567
18.693.000 5,789,000,000
485,354,000
82.116.000
18.
19.
20.
21.
22.
23.
24.
and Professional Loans Act")	
Loans made by chartered banks and credit unions under the
Fisheries Improvement Loans Act")	
Loans made by chartered banks under the Small Businesses
Loans Act")	
Loans made by chartered banks and credit unions under the
Canada Student Loans Act")	
Notes issued by the Canadian Corporation for the 1967 World
Exhibition")	
Loans made by chartered banks to the Canadian Wheat Board ">
2,000
2,700,000
14,434,000
160.230.000
Unstated
565.698.000
2,000
525,000
14,434,000
115.600.000
166,000,000
321.482.000
Loans maintained by approved lending institutions under
National Housing Acts prior to 1954 Act	
Guarantees to owners of returns from moderate rental housing projects")	
Unstated
Unstated
8,127,202,567
Indeterminate
Indeterminate
">
As of March 15, 1967.
") Converted at SI.08108 Canadian official parity rate.
">
As of December 31, 1966.
">
As of December 31, 1966. Includes contingent liability in respect of alternative payments to nonparticipating province.
">
As of February 28, 1967.
">
As of December 31, 1966, funds totalling $4,135,376 were held by the Central Mortgage and Housing Corporation. In 1966 rental contracts totalled $13,112,000.
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June 1, 1967
SUPPLEMENTARY DETAILED TABLES Revenue Expenditure
Annual Changes in Loans and Investments Unmatured Debt
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June 1, 1967
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STATEMENT OF REVENUE FOR THE LAST FIVE FISCAL YEARS (in millions of dollars)
-	1962-63	1963-64	1964-65	1965-66	1966-67 (preliminary)
Tax Revenue-					
Income tax-					
Person al(1)	1,744.6	1,865.1	2,103.3	2,142.5	2,472.0Corporation^1*	1,182.8	1,259.0	1,523.8	1,606.6	1,593.0On dividends, interest, etc., going abroad..	129.2	124.5	143.7	170.0	204.03,056.6	3,348.6	3,770.8	3,919.1	4,269.0Excise taxes-	Sales tax(1*(2*	806.0	946.1	1,204.6	1,395.1	1,513.0Other taxes-	Automobiles	(3)	(3)	(3)	Cigarettes, tobacco and cigars	217.8	226.9	218.3	238.1	248.0Electric power export	0.5	0.1	(3)	Jewellery, watches, ornaments, etc	5.8	6.4	6.9	7.9	9.5Matches and lighters	1.2	1.3	1.2	1.2	1.2Television sets, radios and phonographs.	19.9	22.0	23.5	27.0	32.8Toilet preparations	10.2	11.1	12.8	14.1	16.0Wines	3.7	3.8	4.1	4.4	4.8Sundry commodities	1.2	1.3	1.4	2.2	1.4Interest and penalties	0.5	0.8	1.2	1.6	1.8Less refunds	-0.4	-0.3	-0.3	-0.3	-0.5260.4	37 3.4	269.1	396.3	315.0Customs import duties	645.0	581.4	622.1	685.5	777.0Excise duties-	Spirits	122.1	129.4	134.7	157.0	159.1Beer	98.2	102.9	105.4	107.9	112.1Cigarettes, tobacco and cigars	166.5	165.7	177.2	187.1	196.5Licences	(3)	(3)	(3)	(3)	(3)Less refunds	-4.9	-4.7	-5.9	-6.1	-6.7381.9	S9S.S	411.4	445.9	461.0Estate tax<4*	87.1	90.6	88.6	108.3	100.8Miscellaneous tax revenue	(3)	0.1	0.2	0.2	0.2Total tax revenue	5,237.0	5,533.5	6,366.8	6,850.3	7,436.0Non-Tax Revenue-	Return on investments	311.9	366.4	422.7	438.3	517.0Post office-net postal revenue	192.8	200.7	230.4	237.5	254.0Other	137.0	152.6	160.4	169.7	159.0Total non-tax revenue	641.7	719.7	813.5	845.5	930.0Total revenue	5,878.7	6,253.2	7,180.3	7,695.8	8,366.0
(^Excluding credits to:
1962-63	1963-64	1964-65	1965-66	(preliminary)Old age security fund- Personal income tax	273.7	302.6	431.9	494.9	576.0Corporation income tax	115.2	115.7	145.2	152.3	150.0Sales tax	302.2	331.8	383.2	522.1	560.0Canada pension plan account- Personal income tax	94.9	588.8
<2>Net after deduction of refunds and drawbacks as well as transfers to the old age security fund. WLess than $50,000.
^Includes duties levied under the Dominion Succession Duty Act.
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June 1. 1967

[Stage Direction]
(in millions of dollars)
1962-63	1963-64	1964-65	1965-66	1966-67 (preliminary)Agriculture- Administration and general	3.3	3.6	4.1	4.7	4.2Board of Grain Commissioners	6.2	6.7	6.6	7.2	7.8Farm Credit Corporation-net operating loss	1.1	0.5	1.0	2.6Health of animals	13.4	13.2	13.5	15.0	16.2Production and marketing, including grants and other assistance- Administration and general	9.9	3.2	3.0	21.7	3.3Agricultural commodities stabilization account-net operating loss	71.9	122.2	57.1	39.4	90.0Agricultural products board account-net operating loss	0.9	1.0	0.3	1.6	5.7Animal and animal products	14.3	16.3	17.7	18.3	19.7Plant and plant products	8.7	7.1	7.7	16.4	20.3Rehabilitation and reclamation projects	27.8	23.7	26.4	28.4	24.9Research	27.0	27.6	28.8	32.6	35.4183.4	225.7	165.7	186.3	230.1Atomic Energy	63.2	45.9	46.5	54.4	60.2Auditor General's Office	1.2	1.3	1.6	1.7	2.1Board of Broadcast Governors	0.4	0.3	0.4	0.4	0.6Canadian Broadcasting Corporation- Grants in respect of the net operating requirements of the national broadcasting service	79.0	85.7	85.9	95.1	112.5International broadcasting service..	1.8	1.9	2.1	2.4	2.880.8	87.6	88.0	97.5	115.3Central Mortgage and Housing Corporation	8.7	13.5	15.0	21.6	20.1Office of the Chief Electoral Officer	11.8	11.9	0.6	13.0	0.9Defence Production- Defence expenditure	24.2	25.0	27.4	23.0	33.0Non-defence expenditure	1.9	1.9	3.1	8.2	9.426.1	26.9	SO. 5	31.2	42.4Dominion Bureau of Statistics	11.9	12.3	13.5	15.6	26.7Energy, Mines and Resources- Administration and general	47.2	40.7	42.5	54.6	59.5Dominion Coal Board	20.4	20.6	23.2	23.4	38.0Emergency gold mining assistance..	15.2	15.0	15.7	14.8	15.0National Energy Board	0.5	0.6	0.7	0.9	1.1Water resources branch	5.5	10.3	12.2	13.6	14.888.8	87.2	94. S	107.3	128.4External Affairs- Administration and general	23.4	26.2	29.8	34.5	39.2Assessments, contributions and other payments to international organize tions and international multilateral economic and special aid programs.	15.3	22.4	20.0	32.0	31.3External aid	46.5	48.4	81.4	86.0	159.785.2	97.0	131.2	152.5	230.2Finance- Administration and general	18.3	7.7	7.2	9.8	21.3Office of the Comptroller of the Treasury	23.3	23.8	24.9	25.4	29.2Grants to municipalities in lieu of taxes	29.2	31.5	35.7	36.8	37.6
June 1, 19G7

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FOR THE LAST FIVE FISCAL YEARS-Continued
(in millions of dollars)
-	1962-63	1963-64	1964-65	1965-66	1966-67 (preliminary)Finance-Concluded Municipal Development and Loan Board	0.1	2.7	33.9	41.8Public debt charges including interest and amortization	917.8	993.7	1,051.3	1,110.9	1,188.0Subsidies and fiscal arrangements payments to provinces	275.3	254.3	358.4	466.0	515.51,263.9	1,311.1	1,480.2	1,682.8	1,833.4Fisheries	23.3	23.7	25.6	34.5	41.2Forestry and Rural Development- Administration and general	16.2	18.5	20.6	22.0	25.6Freight assistance and grain storage costs	14.4	18.7	19.1	21.0	21.0Rural development-rehabilitation and reclamation projects including payments to provinces	1.2	4.6	10.0	14.1	19.9SI. S	41.8	49.1	51.1	66.5Governor General and Lieutenant-Governors	0.5	0.5	0.7	0.7	0.8Indian Affairs and Northern Development- Indian affairs	51.0	55.6	64.8	81.7	104.3Northern development	69.2	58.6	62.5	74.7	93.7120.2	114-2	121.3	156.4	198.0Industry- Defence expenditure	8.0	19.0	20.5	23.9	21.3Non-defence expenditure	0.4	0.7	3.3	5.4	13.48.4	19.1	23.8	29.3	34.1Insurance	1.4	1.4	1.4	1.5	1.7Justice	8.4	9.9	10.7	11.4	12.3Labour	7.2	7.9	23.4	24.0	25.7Legislation- House of Commons	5.9	10.1	11.1	11.5	13.9Senate	1.8	2.5	2.7	2.7	3.1Library of Parliament	0.4	0.3	0.4	0.5	0.68.1	12.9	14.2	14.1	11.6Manpower and Immigration- Administration and general	1.8	2.4	5.3	5.6	5.5Immigration	10.8	11.4	12.2	14.3	21.0Municipal winter works incentive program	27.1	26.7	42.8	41.1	37.3National employment service	18.8	19.0	21.7	22.7	33.8Technical and vocational training assistance payments to provinces..	207.9	136.4	97.2	152.8	223.1266.4	195.9	179.2	236.5	320.1National Defence- Administration and general	14.7	14.3	14.4	15.3	26.9Defence services including development	1,445.6	1,473.1	1,387.0	1,401.3	1,437.1Defence research	30.9	33.6	36.7	41.6	44.2Canadian forces superannuation account- Government's contribution	58.1	59.6	58.8	58.8	42.7Special government contribution. . Amortization of deferred charges.. Mutual aid to NATO countries	25.0	76.5 28.9	13.4 27.5	16.8 14.6	72.6 18.71,514-3	1,686.0	1,531.8	1,548.4	1,642.2National Film Board	5.6	5.8	6.4	6.9	8.0National Gallery	1.0	1.1	1.3	1.8	1.9
June 1, 1967
STATEMENT OF EXPENDITURE BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Continued (in millions of dollars)
-	1962-63	1963-64	1964-65	1965-66	1966-67 (preliminary)
National Health and Welfare-					
Administration and general	1.9	2.0	2.3	2.5	3.1Food and drug services	2.8	3.4	4.3	5.4	6.8Health services-	General health and hospital con-	struction grants to provinces.. . .	50.3	53.0	56.7	45.5	45.5Government's contribution under	the Hospital Insurance and Diag-	nostic Services Act	336.7	392.2	433.9	319.6	397.5Health resources fund	4.7Other	6.6	6.9	7.7	7.6	8.3Medical services	28.9	30.6	32.5	37.5	38.2Welfare services-	Canada assistance plan	10.4Family allowances	531.6	538.3	545.8	551.7	555.8Youth allowances	26.9	46.5	47.4Fitness and amateur sports pay-	ments	1.1	1.6	2.0	2.5	4.7Old age assistance, blind persons	and disabled persons allowances	62.7	64.4	74.0	45.5	38.1Unemployment assistance	96.5	107.4	107.5	101.7	143.4Other	5.9	6.9	7.0	9.1	12.11,125.0	1,206.7	1,300.6	1,175.1	1,316.0National Research Council, includ-	ing the Medical Research Council	40.6	47.3	56.7	74.4	96.1National Revenue	78.7	83.0	86.9	95.0	106.0Post Office	189.4	206.9	210.5	240.2	268.7Prtvy Council	2.1	2.9	4.6	4.8	6.4Economic Council of Canada	0.2	0.8	1.1	1.42.1	8.1	5.4	5.9	7.8Public Archives and National	Library	1.1	i.i	1.5	2.0	2.7Public Printing and Stationery ....	2.0	2.2	2.7	3.0	4.0Public Service Commission	4.8	5.2	6.2	8.0	10.9Public Service Staff Relations	Board	(i)Public Works-	Administration and general	17.5	17.6	30.3	36.0	33.7Accommodation services	72.2	74.3	87.3	101.7	108.9Harbours and rivers engineering	services 	30.8	23.7	30.3	35.4	37.7National Capital Commission	13.0	12.2	10.3	18.6	33.0Trans-Canada highway-contribu-	tions to provinces	29.2	39.2	76.1	83.4	81.1162.7	167.0	234. S	275.1	294.4Registrar General	3.3	3.5	3.9	4.7	5.6Secretary of State-	Administration and general	5.0	5.1	16.1	11.0	16.4Centennial Commission	1.3	3.9	7.3	14.6	30.2Office of the Representation Com-	missioner	(1)	0.2	0.8	0.2University grants	26.3	26.8	27.3	27.7	87.132.6	35.8	50.9	54.1	138.9Solicitor General-	Administration and general	0.3	0.4	0.6Correctional services	25.5	27.9	39.0	56.5	57.6Royal Canadian Mounted Police....	65.4	66.9	76.2	82.0	101.690.9	94.8	115.5	138.9	159.8
June 1, 1967

[Stage Direction]
FOR THE LAST FIVE FISCAL YEARS-Concluded
(in millions of dollars)
-	1962-63	1963-64	1964-65	1965-66	1966-67 (preliminary)Trade and Commerce- Administration and general	13.9	14.8	16.9	19.6	23.6Assistance re storage costs of grain. .	35.7	40.5	34.6	37.5	30.5Canadian Corporation for the 1967 World Exhibition	0.3	1.2	19.5	4.6	8.9Canadian government travel bureau.	3.3	3.9	4.9	6.3	9.953.2	60.4	75.9	68.0	72.9Transport- Administration and general	8.0	4.5	7.1	5.7	7.5Air services	136.9	121.1	131.5	143.0	165.7Atlantic Development Board	(1)	0.2	4.3	23.8	40.0Board of Transport Commissioners for Canada	1.3	1.4	1.5	1.6	2.0Payments to railways for the maintenance of the rates of freight traffic	70.6	68.1	68.7	87.6	115.9Maintenance of trackage	7.0	7.0	7.0	7.0	4.8Contributions to the railway grade crossing fund	5.8	5.1	5.1	14.0	15.0Canadian Maritime Commission. ...	31.1	49.8	40.6	50.3	47.0Canals and works entrusted to The St. Lawrence Seaway Authority. .	2.9	3.0	29.0	10.1	12.9Marine services	57.8	64.1	64.5	84.5	100.0Non-active assets- National Harbours Board	5.2	0.3	7.6	4.8	7.0Railways and steamships	15.9	30.3	35.3	35.0	28.3Maritime Freight Rates Act	12.9	13.4	14.7	15.1	15.0Deficits- Canadian National Railways. . .	48.9	43.0	38.7	33.4	24.6Newfoundland ferry and terminals 	8.2	8.6	11.1	12.4	13.0Prince Edward Island car ferry and terminals	3.3	3.4	4.0	4.2	4.6Yarmouth-Bar Harbour ferry service	0.2	0.2	0.1	0.1416.0	428.5	470.8	582.5	608.4Treasury Board- Administration and general	13.5	14.5	15.0	19.0	37.3Public service superannuation account- Government's contribution	51.1	54.0	55.6	57.8	59.3Amortization of deferred charges..	64.6	68.5	10.0 80.6	25.9 102.7	56.4 158.0Unemployment Insurance Commission- Administration and general	29.3	29.8	32.7	32.4	37.2Government's contribution to the fund	57.3	59.3	62.1	65.6	68.786.6	89.1	94.8	98.0	105.9Veterans Affairs- Administration and general	10.3	10.0	10.5	10.7	11.6Pensions for disability and death -	175.9	173.2	180.3	185.6	196.1Provision for reserve for conditional benefits	3.2	3.2	3.1	3.2	3.5Soldier settlement and veterans land act	4.6	4.5	4.5	4.5	5.2Treatment services	45.3	45.5	46.8	49.9	54.6Welfare services, allowances and other benefits	95.4	96.4	106.9	115.8	120.2834.7	SS2.8	852.1	869.7	891.2Total Expenditure	6,570.3	6,872.4	7,218.3	7,734.8	8,794.0
Where transfers have taken place during the current fiscal year, pursuant to the Public Service Rearrangement and Transfer of Duties Act, necessitating the transfer of part votes, such changes as required have been made in 1965-66 and 1966-67, but not in prior years.
("Less than $50,000.
[Stage Direction]
June 1, 1967

[Stage Direction]
(in millions of dollars)
[Stage Direction]
-
[Stage Direction]
1962-63
[Stage Direction]
1963-64
[Stage Direction]
1964-65
[Stage Direction]
1965-66
[Stage Direction]
1966-67 (preliminary)
[Stage Direction]
Loans to, and investments in, Crown corporations- Air Canada
[Stage Direction]
-0.4
[Stage Direction]
0.4
[Stage Direction]
-1.4
[Stage Direction]
0.7
[Stage Direction]
3.0
[Stage Direction]
Atomic Energy of Canada Limited
[Stage Direction]
-12.5
[Stage Direction]
0.4
[Stage Direction]
12.0
[Stage Direction]
11.9
[Stage Direction]
28.4
[Stage Direction]
Canadian Arsenals Limited
[Stage Direction]
Canadian Broadcasting Corporation
[Stage Direction]
Canadian Commercial Corporation
[Stage Direction]
-0.5
[Stage Direction]
-4.0
[Stage Direction]
14.3 -2.0
[Stage Direction]
-2.5 12.5 2.0
[Stage Direction]
35.0 4.5
[Stage Direction]
Canadian Corporation for the 1967 World Exhibition
[Stage Direction]
Canadian National Railways
[Stage Direction]
274.7
[Stage Direction]
-28.8
[Stage Direction]
24.7
[Stage Direction]
44.0 59.1
[Stage Direction]
131.0 120.9
[Stage Direction]
Canadian Overseas Telecommunication Corporation
[Stage Direction]
11.4
[Stage Direction]
6.2
[Stage Direction]
-0.4
[Stage Direction]
-2.6
[Stage Direction]
-2.7
[Stage Direction]
Central Mortgage and Housing Corporation..
[Stage Direction]
101.8
[Stage Direction]
113.3
[Stage Direction]
221.7
[Stage Direction]
315.1
[Stage Direction]
488.6
[Stage Direction]
Export Credits Insurance Corporation
[Stage Direction]
19.6
[Stage Direction]
23.4
[Stage Direction]
33.4
[Stage Direction]
36.4
[Stage Direction]
36.2
[Stage Direction]
Farm Credit Corporation
[Stage Direction]
59.0
[Stage Direction]
69.9
[Stage Direction]
102.4
[Stage Direction]
147.0
[Stage Direction]
164.1
[Stage Direction]
National Capital Commission
[Stage Direction]
9.4
[Stage Direction]
12.1
[Stage Direction]
6.9
[Stage Direction]
7.4
[Stage Direction]
7.1
[Stage Direction]
National Harbours Board
[Stage Direction]
13.8
[Stage Direction]
5.5
[Stage Direction]
1.7
[Stage Direction]
3.0
[Stage Direction]
19.5
[Stage Direction]
Northern Canada Power Commission....
[Stage Direction]
-7.2
[Stage Direction]
3.4
[Stage Direction]
5.4
[Stage Direction]
2.1
[Stage Direction]
-0.1
[Stage Direction]
Northern Ontario Pipe Line Crown Corporation
[Stage Direction]
The St. Lawrence Seaway Authority
[Stage Direction]
-8.4 (D22.7
[Stage Direction]
-110.6 (024.9
[Stage Direction]
d>-6.5
[Stage Direction]
<026.7
[Stage Direction]
(029.1
[Stage Direction]
Other
[Stage Direction]
-0.6 m-s
[Stage Direction]
116.1
[Stage Direction]
-0.1 412.1
[Stage Direction]
662.8
[Stage Direction]
4.1 1,068.7
[Stage Direction]
Loans to national governments- United Kingdom
[Stage Direction]
-17.5
[Stage Direction]
-17.8
[Stage Direction]
(019.6
[Stage Direction]
<019.2
[Stage Direction]
-18.9
[Stage Direction]
Export Credits Insurance Act
[Stage Direction]
-105.9
[Stage Direction]
-2.3
[Stage Direction]
-2.3
[Stage Direction]
-2.3
[Stage Direction]
-2.4
[Stage Direction]
Special loans to Colombo plan countries to finance the purchase of wheat and flour from Canada
[Stage Direction]
-5.0
[Stage Direction]
-5.0
[Stage Direction]
-5.0
[Stage Direction]
-1.3
[Stage Direction]
-9.9
[Stage Direction]
Loans to India for the purchase in Canada of aircraft and associated spare parts and equipment
[Stage Direction]
10.0
[Stage Direction]
-1.4
[Stage Direction]
-2.2
[Stage Direction]
-2.7
[Stage Direction]
Special loan assistance-developing countries Other
[Stage Direction]
.
[Stage Direction]
-0.6 -129.0
[Stage Direction]
-15.1
[Stage Direction]
10.9
[Stage Direction]
5.2 18.6
[Stage Direction]
9.9 0.4 -23.6
[Stage Direction]
Other loans and investments- Subscriptions to capital of, and working capital advances and loans to, international organizations- Canada's subscription to capital of- Asian development bank
[Stage Direction]
International monetary fund
[Stage Direction]
International bank for reconstruction and development
[Stage Direction]
International development association...
[Stage Direction]
12.6 6.8 8.5
[Stage Direction]
7.9
[Stage Direction]
7.9
[Stage Direction]
15.0
[Stage Direction]
2.7 205.4 4.5 15.0
[Stage Direction]
Working capital advances and loans to international organizations
[Stage Direction]
6.2
[Stage Direction]
0.2
[Stage Direction]
-0.2
[Stage Direction]
-0.1
[Stage Direction]
-0.1
[Stage Direction]
Loans to provincial governments
[Stage Direction]
5.8
[Stage Direction]
-0.5
[Stage Direction]
-4.8
[Stage Direction]
-1.7
[Stage Direction]
26.4
[Stage Direction]
Municipal development and loan board.... Veterans land act advances
[Stage Direction]
18.6
[Stage Direction]
21.0
[Stage Direction]
7.6 14.3
[Stage Direction]
101.3 24.1
[Stage Direction]
122.3 54.2
[Stage Direction]
Provincial tax collection agreements- advances
[Stage Direction]
Balances receivable under agreements of sale of Crown assets
[Stage Direction]
13.1 -2.3
[Stage Direction]
-2.7 -2.3
[Stage Direction]
-10.4 -1.8
[Stage Direction]
-1.7
[Stage Direction]
-1.0
[Stage Direction]
Housing projects for Canadian forces
[Stage Direction]
6.1
[Stage Direction]
5.4
[Stage Direction]
2.5
[Stage Direction]
0.2
[Stage Direction]
-0.1
[Stage Direction]
Old age security fund
[Stage Direction]
41.7
[Stage Direction]
58.3
[Stage Direction]
-75.0
[Stage Direction]
-25.0
[Stage Direction]
Loans to manufacturers of automotive parts in Canada
[Stage Direction]
Other
[Stage Direction]
-0.3
[Stage Direction]
-0.2
[Stage Direction]
1.5
[Stage Direction]
0.1 10.9
[Stage Direction]
12.6 12.4
[Stage Direction]
116.8
[Stage Direction]
87.1
[Stage Direction]
-58.4
[Stage Direction]
12S.1
[Stage Direction]
454.3
[Stage Direction]
Net total of changes in loans and investments..
[Stage Direction]
470.6
[Stage Direction]
188.1
[Stage Direction]
364.6
[Stage Direction]
804.5
[Stage Direction]
1,499.4
[Stage Direction]
(OIncludes deferred interest. (ODeferred interest.
June 1, 1967
[Stage Direction]
UNMATURED DEBT INCLUDING TREASURY BILLS AS AT MARCH 31, 1967 AND THE ANNUAL INTEREST THEREON (preliminary)
[Stage Direction]
-
[Stage Direction]
Date of maturity
[Stage Direction]
Rate per cent
[Stage Direction]
Amount of loan
[Stage Direction]
Annual interest
[Stage Direction]
Payable in Canada-
[Stage Direction]
$
[Stage Direction]
$
[Stage Direction]
Loan of 1966
[Stage Direction]
...CT25
[Stage Direction]
1967 Apr.
[Stage Direction]
i
[Stage Direction]
4
[Stage Direction]
170,000,000
[Stage Direction]
6,800,000
[Stage Direction]
Loan of 1966
[Stage Direction]
...FI
[Stage Direction]
Apr.
[Stage Direction]
i
[Stage Direction]
155,000,000
[Stage Direction]
6,587,500
[Stage Direction]
Loan of 1961 and 1963
[Stage Direction]
...AT 9
[Stage Direction]
June
[Stage Direction]
i
[Stage Direction]
4*
[Stage Direction]
275,000,000
[Stage Direction]
11,687,500
[Stage Direction]
Loan of 1965
[Stage Direction]
...CT 18
[Stage Direction]
June
[Stage Direction]
i
[Stage Direction]
4 }
[Stage Direction]
50,000,000
[Stage Direction]
2,125,000
[Stage Direction]
Loan of 1962
[Stage Direction]
...AT 12
[Stage Direction]
Oct.
[Stage Direction]
i
[Stage Direction]
3i
[Stage Direction]
100,000,000
[Stage Direction]
3,750,000
[Stage Direction]
Loan of 1964 and 1965
[Stage Direction]
...CT 14
[Stage Direction]
Oct.
[Stage Direction]
i
[Stage Direction]
31
[Stage Direction]
250,000,000
[Stage Direction]
9,375,000
[Stage Direction]
F 4
[Stage Direction]
Oct.
[Stage Direction]
i
[Stage Direction]
41
[Stage Direction]
175,000,000
[Stage Direction]
7,437,500
[Stage Direction]
Canada savings bonds, 1965
[Stage Direction]
. ...S10
[Stage Direction]
Nov.
[Stage Direction]
i
[Stage Direction]
31
[Stage Direction]
<017,457,550
[Stage Direction]
567,370
[Stage Direction]
Loan of 1962
[Stage Direction]
....AT 11
[Stage Direction]
1968 Jan.
[Stage Direction]
15
[Stage Direction]
41
[Stage Direction]
250,000,000
[Stage Direction]
10,625,000
[Stage Direction]
Loan of 1964
[Stage Direction]
CT 8
[Stage Direction]
Jan.
[Stage Direction]
15
[Stage Direction]
41
[Stage Direction]
130,000,000
[Stage Direction]
5,525,000
[Stage Direction]
Loan of 1966
[Stage Direction]
. ...F7
[Stage Direction]
Jan.
[Stage Direction]
15
[Stage Direction]
51
[Stage Direction]
125,000,000
[Stage Direction]
6,875,000
[Stage Direction]
Refunding loan, 1950
[Stage Direction]
. .. . P 9
[Stage Direction]
June
[Stage Direction]
15
[Stage Direction]
21
[Stage Direction]
308,581,000
[Stage Direction]
8,485,978
[Stage Direction]
Loan of 1964
[Stage Direction]
CT 3
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
441,000,000
[Stage Direction]
22,050,000
[Stage Direction]
Canada savings bonds, 1959
[Stage Direction]
....S 14
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
(1)770,574,000
[Stage Direction]
38,528,700
[Stage Direction]
Loan of 1960
[Stage Direction]
. ...T 39
[Stage Direction]
1969 Apr.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
80,000,000
[Stage Direction]
4,400,000
[Stage Direction]
Loan of 1965
[Stage Direction]
. ...CT 23
[Stage Direction]
Apr.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
100,000,000
[Stage Direction]
5,500,000
[Stage Direction]
Loan of 1962
[Stage Direction]
... .AT 16
[Stage Direction]
Apr.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
100,000,000
[Stage Direction]
5,500,000
[Stage Direction]
Canada savings bonds, 1956
[Stage Direction]
. ...Sll
[Stage Direction]
May
[Stage Direction]
1
[Stage Direction]
4
[Stage Direction]
<>>32,084,850
[Stage Direction]
1,283,394
[Stage Direction]
Loan of 1964
[Stage Direction]
... .CT 11
[Stage Direction]
July
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
325,000,000
[Stage Direction]
16,250,000
[Stage Direction]
Loan of 1962
[Stage Direction]
....AT 13
[Stage Direction]
Oet.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
80,000,000
[Stage Direction]
4,400,000
[Stage Direction]
Loan of 1965
[Stage Direction]
....CT 21
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
145,000,000
[Stage Direction]
7,975,000
[Stage Direction]
Loan of 1966
[Stage Direction]
....F 5
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
250,000,000
[Stage Direction]
14,375,000
[Stage Direction]
Loan of 1958
[Stage Direction]
... ,T 24
[Stage Direction]
1970 May
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
200,000,000
[Stage Direction]
7,000,000
[Stage Direction]
Loan of 1965 and 1966
[Stage Direction]
....CT 19
[Stage Direction]
July
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
175,000,000
[Stage Direction]
8,750,000
[Stage Direction]
Loan of 1966
[Stage Direction]
... .F 2
[Stage Direction]
July
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
40,000,000
[Stage Direction]
2,000,000
[Stage Direction]
Canada savings bonds, 1957
[Stage Direction]
....S 12
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<>>185,669,300
[Stage Direction]
8,819,292
[Stage Direction]
Canada savings bonds, 1960
[Stage Direction]
....S 15
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
<>>251,179,450
[Stage Direction]
12,558,972
[Stage Direction]
Loan of 1966
[Stage Direction]
...,F8
[Stage Direction]
Dec.
[Stage Direction]
15
[Stage Direction]
51
[Stage Direction]
300,000,000
[Stage Direction]
17,250,000
[Stage Direction]
Loan of 1964
[Stage Direction]
.... CT 15
[Stage Direction]
1971 June
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
350,000,000
[Stage Direction]
17,500,000
[Stage Direction]
Canada savings bonds. 1961
[Stage Direction]
....S 16
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<>>187,994,750
[Stage Direction]
8,459,764
[Stage Direction]
Conversion loan, 1958
[Stage Direction]
... .T 28
[Stage Direction]
1972 Sept.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
1,267,203,100
[Stage Direction]
53,856,132
[Stage Direction]
Loan of 1965
[Stage Direction]
....CT 17
[Stage Direction]
1973 Oet.
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
275,000,000
[Stage Direction]
13,750,000
[Stage Direction]
Canada savings bonds, 1958
[Stage Direction]
,...S 13
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<>>64,377,850
[Stage Direction]
2,736,059
[Stage Direction]
Canada savings bonds, 1964
[Stage Direction]
....S 19
[Stage Direction]
1974 Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<>>466,015,450
[Stage Direction]
20,970,695
[Stage Direction]
Loan of 1959
[Stage Direction]
T 36
[Stage Direction]
1975 Oct.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
310,361,000
[Stage Direction]
17,069,855
[Stage Direction]
Loan of 1965
[Stage Direction]
. ...CT24
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
50,000,000
[Stage Direction]
2,750,000
[Stage Direction]
Loan of 1966
[Stage Direction]
.... F 9
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
70,000,000
[Stage Direction]
3,850,000
[Stage Direction]
Canada savings bonds, 1963
[Stage Direction]
. ...S18
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
<>>498,387,450
[Stage Direction]
24,919,372
[Stage Direction]
Loan of 1960
[Stage Direction]
.... T 38
[Stage Direction]
1976 Apr.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
436,198,000
[Stage Direction]
23,990,890
[Stage Direction]
Loan of 1954
[Stage Direction]
....Til
[Stage Direction]
June
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
247,046,500
[Stage Direction]
8,029,011
[Stage Direction]
Canada savings bonds, 1962
[Stage Direction]
....S 17
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
<>>870,682,450
[Stage Direction]
43,534,122
[Stage Direction]
Canada savings bonds, 1965
[Stage Direction]
....S 20
[Stage Direction]
1977 Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<>>400,569,864
[Stage Direction]
18,025,644
[Stage Direction]
Loan of 1953 and 1958
[Stage Direction]
... .T 5
[Stage Direction]
1978 Jan.
[Stage Direction]
15
[Stage Direction]
31
[Stage Direction]
207,911,500
[Stage Direction]
7,790,681
[Stage Direction]
Loan of 1954
[Stage Direction]
... T 13
[Stage Direction]
1979 Oct.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
343,246,500
[Stage Direction]
11,155,511
[Stage Direction]
Canada savings bonds, 1966
[Stage Direction]
....S 21
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
<>>2,271,476,936
[Stage Direction]
113,573,847
[Stage Direction]
Loan of 1962
[Stage Direction]
....AT 14
[Stage Direction]
1980 Aug.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
120,000,000
[Stage Direction]
6,000,000
[Stage Direction]
Loan of 1966
[Stage Direction]
... .CT 26
[Stage Direction]
Aug.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
80,000,000
[Stage Direction]
4,400,000
[Stage Direction]
Loan of 1966
[Stage Direction]
...,F3
[Stage Direction]
Aug.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
160,000,000
[Stage Direction]
8,800,000
[Stage Direction]
Conversion loan, 1958
[Stage Direction]
. .. ,T 29
[Stage Direction]
1983 Sept.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
1,992,679,450
[Stage Direction]
89,670,575
[Stage Direction]
Loan of 1963
[Stage Direction]
. .. .AT 21
[Stage Direction]
1988 June
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
100,000,000
[Stage Direction]
5,000,000
[Stage Direction]
Loan of 1964
[Stage Direction]
CT 9
[Stage Direction]
June
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
50,000,000
[Stage Direction]
2,500,000
[Stage Direction]
Loan of 1964
[Stage Direction]
....CT 12
[Stage Direction]
1990 May
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
225,000,000
[Stage Direction]
11,812,500
[Stage Direction]
Loan of 1966
[Stage Direction]
.... F 6
[Stage Direction]
1992 Sept.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
225,000,000
[Stage Direction]
12,937,500
[Stage Direction]
Conversion loan, 1956
[Stage Direction]
,...T 15
[Stage Direction]
1998 Mar.
[Stage Direction]
15
[Stage Direction]
31
[Stage Direction]
197,045,000
[Stage Direction]
7,389,188
[Stage Direction]
Loan of 1936
[Stage Direction]
...PI
[Stage Direction]
Perpetual
[Stage Direction]
3
[Stage Direction]
55,000,000
[Stage Direction]
1,650,000
[Stage Direction]
Three-month treasury bills
[Stage Direction]
<*4.13
[Stage Direction]
1,430,000,000
[Stage Direction]
64,955,000
[Stage Direction]
Six-month treasury bills
[Stage Direction]
<*4.11
[Stage Direction]
780,000,000
[Stage Direction]
38,079,000
[Stage Direction]
Ten-month treasury bills
[Stage Direction]
4.51
[Stage Direction]
100,000,000
[Stage Direction]
4,510,000
[Stage Direction]
Special non-marketable bonds-
[Stage Direction]
Unemployment Insurance Commission
[Stage Direction]
41
[Stage Direction]
39,500,000
[Stage Direction]
1,777,500
[Stage Direction]
41
[Stage Direction]
63,500,000
[Stage Direction]
3,095,625
[Stage Direction]
51
[Stage Direction]
89,000,000
[Stage Direction]
4,672,500
[Stage Direction]
51
[Stage Direction]
68,000,000
[Stage Direction]
3,740,000
[Stage Direction]
Canada pension plan investment fund
[Stage Direction]
<*>5.36
[Stage Direction]
1,894,000
[Stage Direction]
104,231
[Stage Direction]
19,574,635,950
[Stage Direction]
920,142,408
[Stage Direction]
June 1, 1967
UNMATURED DEBT INCLUDING TREASURY BILLS AS AT MARCH 31, 1967 AND THE ANNUAL INTEREST THEREON (preliminary)-Concluded
[Stage Direction]
-
[Stage Direction]
Date of maturity
[Stage Direction]
Rate per cent
[Stage Direction]
Amount of loan
[Stage Direction]
Annual interest
[Stage Direction]
Payable in New York-
[Stage Direction]
1974
[Stage Direction]
Sept. 1 1975
[Stage Direction]
Sept. 15 1987 Oct. 15
[Stage Direction]
2| 21 5
[Stage Direction]
$ <4>65,087,502 «41,047,527 <4>259,459,200
[Stage Direction]
% 1,789,906 1,128,807 12,972,960
[Stage Direction]
365,594,229	15,891,673
			19,940,230,179	936,034,081
The interest shown is a projection for one year at the annual rates on principal amounts outstanding at March 31, 1967. Where various rates of interest are applicable during the term of a loan the interest rate in effect at March 31, 1967 has been used.
Preliminary.
Rate of discount at tender on March 30, 1967.
Rate of interest on bonds issued March 2, 1967.
(4) Conversion rate $1 U.S. = $1.08108 Canadian.
[Stage Direction]
Friday, June 2, 1967