1967-01-19

[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, I should like to direct a question to the Prime Minister with regard to the two notes received from the United States in connection with the Mercantile Bank. Is the report in the Toronto Star correct when it states in effect that the state department has sent two notes of protest and that in the absence of any reply the new 90th United States congress will have legislation introduced either at the suggestion of the administration or at the suggestion of banking interests to give Washington power to retaliate against foreign banks whose countries do not give equal treatment to United States banks?


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, I have received no information regarding the legislative intention of the United States government in respect of this matter as indicated by my right hon. friend. The Minister of Finance might have a word to say concerning the first part of the question.


Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, as soon as these reports were read in the newspaper inquiries were made in Washington. There is no indication of specific plans by the United States government for legislation to control foreign banking in the United States. As the house knows, congressional committees have been making studies of United States banking in general, and in due course there might be legislation arising from these studies.


John George Diefenbaker: Mr. Speaker, has the government changed its mind and does it now intend to retreat in connection with the stand it has already taken in respect of the Mercantile Bank?


Lester Bowles Pearson: No, Mr. Speaker, we do not intend to retreat on this matter.


John George Diefenbaker: Mr. Speaker, I should like to ask a question supplementary to the one I originally asked. In view of the definite statement of policy in connection with the Mercantile Bank, may I ask the Prime Minister when the government expects to reply to the note from the United States of December 7 or December 8 regarding this bank?


Lester Bowles Pearson: We are working on the reply at the moment, Mr. Speaker, and I hope it will go forward very shortly.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquiilam):: Mr. Speaker, I would like to direct a question to the Minister of Finance. Has his attention been drawn to the threat which has been made to the Royal Bank of Canada by the United States treasury department foreign assets control office, regarding the refusal of the bank to discontinue the handling of cheques intended to finance medical aid from United States Quakers to North Viet Nam? If this information is correct I should like to ask the minister what action the government intends to take to protect the bank in carrying out its legitimate banking operations on behalf of highly respectable organizations, such as the Quakers, engaged in humanitarian undertakings?


Mitchell William Sharp: Mr. Speaker, the government has received no representations whatsoever from the United States government on this matter. I understand that when the Royal Bank of Canada receives a cheque drawn on a United States bank in favour of the Canadian Quakers, the cheque is taken on a collection basis and forwarded for payment to the bank on which it is drawn. It is the responsibility of the United States bank to decide whether under United States law the cheque should be paid. The practice being followed by the Royal Bank of Canada is in accordance with normal banking procedure under Canadian law.


Thomas Clement (Tommy) Douglas: Mr. Speaker, I should like to direct a related question to the Minister of

January 19, 1967
Inquiries of the Ministry Transport, asking him whether his attention has been drawn to a statement by Mr. Ross Flannigan, head of the Quakers' committee, who claims that Air Canada has refused to transport medical supplies shipped by the Quakers to North Viet Nam via Montreal to Moscow, and that these supplies are being sent instead by the Soviet air line. If that information is correct will the minister indicate whether this action was taken by Air Canada at the request of United States authorities and, if so, what justification there is for acceding to such a request?


Hon. J. W. Picksrsgill (Minister of Transport):: Mr. Speaker, I think the hon. gentleman has broken almost every rule in the rule book in asking his question but I have not seen the report and cannot give an answer anyway.


Thomas Clement (Tommy) Douglas: Mr. Speaker, I will rely on Your Honour to keep me within the rules rather than the Minister of Transport who is not an authority on that subject.


Mr. Knowles:: He is an authority on breaking them.


Thomas Clement (Tommy) Douglas: I should like to ask the minister whether he will inquire into this matter and make a report to the house as soon as possible.


John Whitney Pickersgill: I will inquire into the report if the hon. gentleman will be good enough to send it to me. I will do so by asking Air Canada whether there is any truth in it.


Mr. Eldon M. Woolliams (Bow River):: Mr. Speaker, I have a question supplementary to the last question. Is the Prime Minister in a position to indicate whether he is investigating or will investigate an association in British Columbia which has received thousands of dollars allegedly for medical supplies for North Viet Nam. This money is not going to the Red Cross, and it is believed that it may be or has been used for other purposes in North Viet Nam.


Lester Bowles Pearson: I will be glad to look into this if the hon. gentleman will give me more detailed evidence of what he has in mind.


Eldon Mattison Woolliams: Perhaps I may be allowed to follow this through. There was a report-


Mr. Speaker:: Order, please. The hon. member is now making a statement. He has asked a question, and I do not think this is the time to make a statement in respect of the matter he has raised.


Eldon Mattison Woolliams: Mr. Speaker, my supplementary question arises from the Prime Minister's answer. Has the Prime Minister read the report of one of the Vancouver newspapers in reference to this money, which likely has been used for the purchase of war equipment by the communists in North Viet Nam?


Lester Bowles Pearson: No, I have not, Mr. Speaker; but if my hon. friend will send me the report I will be glad to look into it.


Eldon Mattison Woolliams: Somebody groaned on my left. I wonder why.


Mr. David Lewis (York South):: Mr. Speaker, I should like to ask a question supplementary to the questions asked by the hon. member for Burnaby-Coquitlam. I address this question perhaps to the Minister of Trade and Commerce. I would like to ask the minister whether he has seen the report in today's Toronto Star that Mr. Somerfield, chief counsel of the treasury department, foreign assets control, of the United States has said that his department has forbidden Canadian subsidiaries of United States drug companies to sell drugs to Quakers for shipment to North Viet Nam. Has the minister's attention been drawn to this report? If so, has he taken any action on it, or what action does he intend taking on it?


Hon. Robert Winters (Minister of Trade and Commerce):: I have not seen the report, Mr. Speaker. When I do see it I will judge what action, if any, should be taken.


Mr. R. W. Prittie (Burnaby-Richmond):: Mr. Speaker, I have a question for the Prime Minister related to the one asked earlier by the hon. member for Bow River concerning a Vancouver based organization sending aid to Viet Nam. The question is in two parts. I ask the Prime Minister, first, is there any law preventing Canadian organizations from sending aid either to North or South Viet Nam? Second, why does the Prime Minister offer to investigate something, as requested by the hon. member for Bow River, when the hon. member's questions is based on speculation and rumour and may in fact be a smear?


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


Lester Bowles Pearson: I will keep that in mind.


Robert William Prittie: Mr. Speaker, I submit the first part of the question is in order. Is there any law preventing Canadian groups from giving aid either to North or South Viet Nam?
January 19, 1967


Eldon Mattison Woolliams: I rise on a point of privilege. The hon. member who has just asked a question of the Prime Minister about a report that thousands of dollars were being raised and sent to the Viet Cong in North Viet Nam says that report might have been based on rumours or smears. I saw the report in question, and I am prepared to send it to the Prime Minister. The hon. member is the man who groaned when I dared mention North Viet Nam. We know where his affections are.


Mr. Speaker:: Order, please. That is hardly a question of privilege.


[Stage Direction]
On the orders of the day:
Robert Henry Winters: Mr. Speaker, while I am at it I should like to reply to a question asked on January 12 by the hon. member for Cumberland in connection with the hiring policy of Expo '67. The hiring policy of the Canadian Corporation for the World Exhibition has always aimed and continues to aim at achieving a balance between English speaking and French speaking Canadians and at ensuring the greatest possible representation of Canadians from all parts of the country, having regard to the fact that Expo '67 is a national undertaking.
At the senior level, for example, the management of C.C.W.E. comprises four English speaking Canadians and five French speaking Canadians. There are 26 branch heads in the six departments of the corporation; 10 of these are English speaking Canadians and 16 are French speaking Canadians. It should be realized, however, that it is not always possible to achieve the balance throughout at more junior levels and in all individual units of staff. The labour market in the Montreal area is predominantly French Canadian, and while the C.C.W.E. has underwritten moving expenses for employees hired throughout Canada at senior levels, it did not seem appropriate to extend such practice to the junior levels. While the C.C.W.E. has recognized the need to achieve balance, it should be borne in mind that its hiring policies are based predominantly on qualifications. The C.C.W.E. is confident that it has brought together an effective group of qualified Canadians.
In the case of the youth pavilion-which was the particular unit to which the question applied-for which program staff is currently
Inquiries of the Ministry being hired, another factor is the short period of employment which makes it even less advisable to pay for moving expenditures and tends to limit the area from which certain classes of employees can be drawn. However, the production staff of the youth pavilion are bilingual and they continue to obtain guidance from the youth advisory committee made up of representatives of 32 organizations from all parts of the country. The youth program itself is to be fully bilingual and broadly international.
A few positions remain to be filled on the youth pavilion staff, and the C.C.W.E. will cont nue to aim at the best possible balance, all factors considered. If there are English speaking Canadians who feel themselves qualified and who wish to apply, they are invited by the C.C.W.E. to do so.


Mr. Robert C. Coates (Cumberland):: A supplementary question, Mr. Speaker. Is the minister satisfied that when 13 or 14 individuals employed on the executive staff of the pavilion are French speaking, Expo '67 is keeping faith with Canadians generally, who are being asked to contribute their tax dollars from all areas of Canada toward reducing whatever the deficit might be in the operation of this world exposition?


Robert Henry Winters: I spent some time yesterday in Montreal on this problem with Expo. I am satisfied that having regard to all the circumstances the employees retained for this particular unit are the only ones who could have been employed from the available pool of potential employees. But as I have said, there are still some vacancies on the staff and English speaking candidates are invited to apply. If there are any English speaking potential candidates who deem themselves to be qualified we would be glad to receive their applications.


Robert Carman Coates: On a supplementary, Mr. Speaker. Is the minister in agreement-


Mr. Speaker:: Order. Does the hon. member for Medicine Hat wish to rise on a point of order?


Mr. Olson:: Mr. Speaker, my point of order is that several minutes ago Your Honour recognized the hon. member for Chapleau. However, another hon. member attempted to gain priority on the pretence that he was asking a supplementary question. I think under the rules of the house a supplementary question must be asked immediately following the answer to which it pertains. Some of the
January 19, 1967

Inquiries of the Ministry supplementary questions which have been asked in the last few minutes have pertained to a question which had preceded the last question, and then other supplementary questions were asked based on a reply on a different subject. All this was done after Your Honour had recognized the hon. member for Chapleau.


Mr. Speaker:: Order, please. I am sure the hon. member for Chapleau will be given an opportunity to rise very soon. The difficulty arose from the fact that the Minister of Trade and Commerce, while he was at it, referred to a question which had been asked yesterday. To a certain extent this confused the general order of questions and answers. I will allow the hon. member for Cumberland to ask a supplementary question; then will recognize the hon. member for Chapleau.


Robert Carman Coates: Mr. Speaker, I wish to ask the minister whether he agrees with Mr. Shaw's statement as reported in yesterday's Montreal Gazette, to the effect that-


Mr. Speaker:: Order, please. The manner in which the hon. member has phrased his ques-t;on makes it inadmissible. Would he kindly zsume his seat? He cannot ask the minister whether he agrees with a statement made by Mr. Shaw or by an official of his department.


Robert Carman Coates: I will rephrase my question. Joes the minister agree that the proportion of employees at Expo '67 should be 60 per cent French speaking and 40 per cent English
sneaking?


Mr. Speaker:: Order, please. I recognize the jon. member for Chapleau.



AGRICULTURE


[Stage Direction]
On the orders of the day;
Mr. Gerard Laprise (Chapleau):: Mr. Speaker, I would like to direct a question to the Minister of Agriculture.
The minister is undoubtedly aware that the Quebec government has decided to increase the price of class I milk starting on February 1, 1967. Therefore, would he study the possibility of granting consumers a compensated discount of 10c. per quart of milk to allow Canadian families to consume the milk they need for their health, especially that of their children?


Mr. Speaker:: Order. The hon. member is making representations of a very general nature and I do not think that the question as put is in order.


Gérard Laprise: Mr. Speaker, I would like to discuss the matter after ten o'clock.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. Howard Johnston (Okanagan-Revel-stoke):: Mr. Speaker, it was my intention to direct my question to the Secretary of State for External Affairs, and I sent him notice of it. In his absence I will put my question to the Prime Minister. Has the attention of the Prime Minister been drawn to statements reportedly made by Dr. Mark Webster, secretary of health in Rhodesia, stating that the World Health Organization has imposed sanctions against Rhodesia which have resulted in the withholding of vital medical information and the abandonment of health projects of direct benefit to the African population?


Lester Bowles Pearson: Mr. Speaker, within the last hour or two I have seen the report mentioned by my hon. friend. I have not yet had a chance to inquire into it but will certainly do so. However, I should say that in the Canadian regulations prohibiting exports to Rhodesia an exception is made in the case of medical supplies and other goods used for humanitarian purposes.



FINANCE


[Stage Direction]
On the orders of the day:
Hon. E. D. Fulton (Kamloops):: Mr. Speaker, I should like to ask the Acting Registrar General whether he is in a position to report to the house on his examination of the situation in Montreal concerning the Depositors Mortgage Corporation, with particular reference to the extent of the liabilities that are involved on which the company has made a proposal.


Hon. John N. Turner (Acting Registrar General):: Yesterday afternoon while I was in Montreal I met with the regional officer of the bankruptcy branch and Mr. Peter Lawrence of the firm of chartered accountants of McDonald, Currie, the trustee under the
January 19, 1967

proposals. At this stage the debtors, Messrs. S. L. and N. H. Caplan and their company, Depositors Mortgage Corporation, have made two proposals to their creditors under section 27 of the Brankruptcy Act. Both proposals contemplate a payment to the creditors of one hundred cents on the dollar over a period of years. The preliminary statement of assests and liabilities indicates that there is a surplus of assets over liabilities in the case of Depositors Mortgage Corporation in the amount of $647,000-odd, and in the case of the two Caplans personally in the amount of $343,000-odd.
The superintendent of bankruptcy, who reports to the Registrar General, has a duty which is a supervisory one over the administration of any bankruptcy or proposal. The administration of a bankruptcy or proposal is primarily the responsibility under the Bankruptcy Act of the trustee who is acting on behalf of the creditors.
The trustee undertook to report to the superintendent of bankruptcy through the regional officer in Montreal all relevant information regarding the nature of the business carried on by the debtors or relating to the causes of any insolvency. He has also undertaken to advise the superintendent whether in his opinion there were any irregularities within the meaning of the Brankruptcy Act leading up to the proposal. The trustee gave it to me as his preliminary opinion that on the basis of the facts as he now knows them, there does not appear to have been any irregularity on the part of the debtors. The primary cause of the current situation would appear to be one of liquidity caused by the pressure of short term money invested on long term against the security of real estate.
A meeting of creditors to decide upon the proposal has been scheduled for February 20. The superintendent of bankruptcy will be in close touch with events in Montreal.


Edmund Davie Fulton: May I ask a supplementary question of the Minister of Finance. In view of this situation, will the Minister of Finance proceed with urgency on his deposit insurance legislation? Will the minister give consideration to making that scheme compulsory and extending the lender of last resort privileges to cover finance companies, such as the one that has just been under discussion, so as to protect depositors who are not the victims of dishonesty but of monetary conditions for which the government is also responsible?
Inquiries of the Ministry


Mitchell William Sharp: It is not the intention of the government to make deposit insurance compulsory. The government's policy is to make it compulsory for all federal companies, but voluntary with the approval of provincial governments for provincially incorporated companies. I think the events that have taken place in this country in the last few weeks are going to encourage all provinces and all companies to take advantage of this facility.
In reply to the second question, the government will give consideration to the suggestion of the hon. gentleman, whether in this legislation or otherwise I would hesitate to say at this moment. I do understand the seriousness of the matter, and I can assure the hon. gentleman that the federal government intends to give strong leadership to improve the financial safety of all companies, whether federally or provincially incorporated.


Mr. John Addison (York North):: May I ask
a supplementary question of the Minister of Finance in connection with this matter. I noted a Canadian Press report in which it is stated that Attorney General Robert Bonner of British Columbia said his government will insist that all financial institutions taking deposits from the public participate in the proposed federal insurance plan. Now that British Columbia has indicated it will make the plan compulsory, has any other province indicated it is thinking of making the plan compulsory?


Mitchell William Sharp: No, Mr. Speaker, we have not yet canvassed the other provinces to see what their reaction might be. I do hope the example of British Columbia is one that will be followed by many others.


Mr. Raymond Langlois (Meganlic):: May I
ask a question of the Acting Registrar General arising from the answer he gave a few minutes ago. In the event that any trustee or supervisor failed, either intentionally or unintentionally, to report to his superiors, has the government any means of controlling this situation?


Mr. Speaker:: This question does not appear to be in order. It appears to be hypothetical and perhaps argumentative. It seems to be out of order on a number of counts.


Raymond Langlois: It might be, but if
the answer clarified the situation the question might not be so hypothetical.

January 19, 1967
Inquiries of the Ministry REPORTED SPEECH BY EXTERNAL AFFAIRS MINISTER RESPECTING GUIDE LINES
On the orders of the day:


Hon. Michael Slarr (Ontario):: Mr. Speaker, I have a question for the Prime Minister. May I ask the Prime Minister whether the new guide lines laid down yesterday in Vancouver by the Secretary of State for External Affairs are intended to replace those already announced by the Minister of Trade and Commerce some months ago. Also, do they represent a further rejection by the government of the contradictory principles advocated by the former minister of finance?


Lester Bowles Pearson: Mr. Speaker, I have seen only a press report of what my hon. friend has said. From that report it appears that the guide lines he mentioned were within the framework of those previously indicated by the Minister of Trade and Commerce. However, he will be back later this afternoon and I will be glad to get confirmation of this.


Michael Starr: May I ask a supplementary question based on what was said by the Secretary of State for External Affairs. Is it the intention of the government to reject the Washington guide lines, as suggested by the minister when he said that Canada has fought the assumption that the law to which a corporation is subject at its headquarters also applies throughout the area of its operations?


Lester Bowles Pearson: Mr. Speaker, I have not read that particular part of the report, but I will discuss it with the minister as soon as he gets back.



COLUMBIA RIVER-PROPOSED FURTHER DEVELOPMENT BY U.S.

[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to address a question to the Prime Minister. I apologize for giving notice only just prior to coming into the house, but 1 was delayed by a series of telephone calls and visits from ladies.
My question is based on a Washington report which appeared in the Globe and Mail on January 14 dealing with the proposed increase of power on the Columbia river, and which concludes as follows:
Despite the U.S. contention, Canadian sources expected that officials in Ottawa would almost certainly scrutinize the complex formula laid down in the treaty with Washington to determine whether the addition of power-generating capacity would entitle Canada to claim increased compensation.
[Mr. Langlois (Megantic).j
My question is this, Mr. Speaker. In view of this recent announcement in Washington of proposals for the increase in the power to be produced at Grand Coulee dam from two million kilowatts to 9.2 million kilowatts in the 1990's, which increase was not provided for at the time of the negotiations with Canada on the Columbia river treaty-


Mr. Speaker:: Order, please. This is an oration rather than a question. Would the hon. member put his question.


Herbert Wilfred Herridge: Yes, Mr. Speaker. I should like to ask the Prime Minister this question. Is the Canadian government intending to make representations to the government of the United States that this increase in power generation should entitle Canada to further compensation under the treaty?


Lester Bowles Pearson: Not, Mr. Speaker, until we have made a very careful examination of the matter. The minister concerned will be able to answer the question later, or perhaps he may be able to say something about it now.


Hon. Jean-Luc Pepin (Minister of Energy, Mines and Resources):: Mr. Speaker, a rapid examination of this question by my officials leads me to make the following points, which you may allow me to put on record.
1.	Additional installation at Grand Coulee will be installed to meet very short term peak loads on the United States system.
2.	The limited amount of stored water required for such peaking operation will be, and in fact must be, provided from the reservoir of Grand Coulee itself. It is not practical to try to operate distant Canadian storages to provide this service and there is no treaty requirement for such operation. Canadian storages will be operated to provide a seasonal regulating service, not a daily or weekly peaking service.
3.	The increasing demand for short duration peaking power from hydro plants would no doubt have dictated the added installation at Grand Coulee whether or not the Columbia treaty had been ratified.
4.	The added installation at Grand Coulee will not result in any greater energy benefit from Canadian storage; therefore there will be no increase in the treaty benefits of either Canada or the United States.


Herbert Wilfred Herridge: A supplementary question. In view of the fact that the treaty provides for releases from Arrow lakes storage, at the
January 19, 1967

1198'.
Inquiries of the Ministry
request of the United States authorities, to left this country. We have not been successful maintain certain elevations for the Grand in determining the whereabouts of seven. As Coulee reservoir, does this not mean that this they are located and referred to my depart-storage in Canada actually produces the in- ment by the welfare authorities, arrangements creased power which is being proposed?	will be made to return them to their parents.


Mr. Speaker:: Order. This supplementary question is argumentative.



POLLUTION


[Stage Direction]
On the orders of the day:
Mr. G. H. Aiken (Parry Sound-Muskoka):: Mr. Speaker, I have a question for the Minister of Energy, Mines and Resources. In view of the fact that all major producers of household and commercial detergents in Canada have now completed the changeover to non sudsing or bio-degradable detergents, is the government supporting further research into this type of pollutant to further reduce the danger of pollution from this source?


Mr. Speaker:: Order. I suggest to the hon. member that this question should be placed on the order paper.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Hon. Jean Marchand (Minister of Manpower and Immigration):: Mr. Speaker, last Friday the hon. member for Skeena asked me a question about the admission to Canada of children coming to join a monastery at St. Jovite, Quebec, operated by a religious sect known as The Apostles of Infinite Love.
Immigration records indicate that a number of children have been admitted to Canada in past years to study at the monastery accompanied by, or with the consent of, their parents. In 1964, however, information was received indicating that educational and welfare authorities in the province of Quebec had some reservations about the monastery. Early in 1965, therefore, immigration officials directed their officers not to grant entry to any more students destined for this school until the doubts were resolved. This ban has remained in effect since that time, as immigration officials have not received any co-operation from the monastery in our attempts to clarify matters.
Most of the children who were admitted to Canada to attend this institution have now 23033-7581



CANADA ASSISTANCE PLAN


[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbiit (Oxford):: Mr. Speaker, I should like to direct a question to the Minister of National Health and Welfare. I was wondering whether the minister would give the house a report on how the regulations are progressing with respect to the Canada Assistance Act.


Hon. A. J. MacEachen (Minister of National Health and Welfare):: Mr. Speaker, final discussions are taking place with some of the provinces, including the province of Ontario. Some points have been raised by the department in that province which we are attempting to clarify before bringing the regulations to the governor in council.


Wallace Bickford (Wally) Nesbitt: A supplementary question. Could the minister give us some indication as to how soon these regulations might be promulgated by the governor in council?


Allan Joseph MacEachen: I would hope very soon, Mr. Speaker.


Mr. E. Nasserden (Rosthern):: Mr. Speaker, I have a related question. Could the minister of national health tell us whether he has received any representations from the Minister of Agriculture with regard to the effect of the Canada Pension Plan on the labour market-


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



OLD AGE SECURITY


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North
Centre): Mr. Speaker, may I direct a question to the Minister of National Health and Welfare. Can the minister now tell the house whether the forms that old age security recipients will use to apply for the pension supplement and the government's explanatory booklets will be sent out with the pension cheques which go out this month?
[Stage Direction]
January 19, 1967
Inquiries of the Ministry
Allan Joseph MacEachen: Mr. Speaker, the forms and the explanatory booklet are presently at the printer and it is not expected that it will be possible, because of the time required to complete the printing, to send out the forms and the booklets this month.


Stanley Howard Knowles: A supplementary question, Mr. Speaker. In that event will they be sent out early in February, or will they be delayed until the February cheques go out?


Allan Joseph MacEachen: Every appropriate step will be taken to get out the forms and the booklets as early as possible.



EDUCATION


[Stage Direction]
On the orders of the day:
Mr. J. M. Forresiall (Halifax):: Mr. Speaker, my question is for the minister of manpower. I should like to ask him whether he can answer today the question directed to him yesterday with regard to students attending the vocational training program in Nova Scotia. May I also ask him whether, indeed, in his investigation of these incidents he has uncovered any repetition of the situation in other provinces or centres of Canada.


Jean Marchand: In reply, Mr. Speaker, I wish to say that under program 5 of the technical and vocational training agreement and the training allowances agreement the federal government is committed to reimbursing the province for a part of their costs in training the unemployed. These agreements expire on March 31, 1967. New arrangements for the training of adults have been proposed to take effect on April 1, 1967.
Under the existing agreements with the provinces, persons under 20 years of age must have been out of the regular school system for at least one year, except in cases which have been referred to the director of manpower in the region for consideration. This ruling is included to keep high school students from dropping out of school in order to take more narrowly oriented occupational courses.
In August, 1966 the province of Nova Scotia requested that special consideration be given some individuals who had completed high school and who could not find suitable employment without specialized training. Since that date the manpower division, Atlantic region, has referred to the province of Nova

Scotia for possible training a number of persons who have been less than one year out of school.
All the cases in question were of unemployed persons; all had little or no prospect of employment; all had completed Nova Scotia grade XI, high school completion, and all are enrolled in courses which will lead to employment in occupations where there is a demand for the skills being taught. No person in training receives an allowance greater than $35 weekly, unless that person is living away from home or his usual place-


Mr. Speaker:: Order, please. I think this kind of answer is much too long for the type of question asked.


J. Michael Forrestall: A supplementary question, Mr. Speaker. I asked a question previously; this is a very serious matter. I know what the program is because we discussed it earlier. I want to know whether such abuses were confined to Halifax or whether there have been similar abuses in other parts of the country.


Mr. Speaker:: Order, please. The hon. member is making representations.


Raymond Langlois: I am
concerned, Mr. Speaker, because it has been said that the federal government pays for part of this scheme. Can the minister tell the house if this is a general percentage across the country or if it varies from province to province; that is the percentage paid by the federal government.


Mr. Speaker:: Order, please. The hon. gentleman is inviting debate, and I do not think this is the type of question that can be asked now.


Raymond Langlois: With all due respect, I am not looking for a debate; I am looking for information.


Mr. Speaker:: Order, please.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Michael Starr: I wish to direct a question to the Minister of Labour and ask him if the government has decided on the course it will follow in respect of the railway unions which did not accept the report of Mr. Goldenberg, the mediator?
January 19, 1967


Hon. J. R. Nicholson (Minister of Labour):: thought I had given this information to the house the other day, Mr. Speaker, but, at the risk of repeating myself, let me say that the resumption of work legislation passed last September provides for the appointment of an arbitrator and for the passing of regulations. Until we know what percentage of affected workers have accepted the proposals it is difficult to draft regulations. There is no provision for more than one arbitrator and we hope to have no more than one set of regulations, if arbitration prove to be necessary.
The vote of one of the two large groups of unions are due, I believe, on January 25 or 26. The vote of the other is due in early February. Since these union groups represents about 60 per cent of the total, until results of the votes are known it is difficult for the government to make an announcement about the two unions which so far have said they are not prepared to accept the mediator's proposals.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. Reynold Rapp (Humboldi-Melforl-Tis-dale):: Mr. Speaker, I direct my question to the Minister of National Health and Welfare. Can he inform the house whether his department has investigated the vaccine given to Donna Darlene Featherston. Was the vaccine ineffective, or did the child die because of other reasons? Has the department found anything in its investigation?


Allan Joseph MacEachen: Mr. Speaker, if my hon. friend refers to the vaccine in connection with the death from rabies, I have investigated the matter and have been advised that the vaccine is not fully effective in all cases. There are unusual instances, depending on the type of exposure, when the vaccine is not effective. As is normal, studies are under way to perfect this particular vaccine.


Reynold Rapp: A supplementary question, Mr. Speaker. Could the minister say why the vaccine was not effective in this particular case?


Mr. Speaker:: Order, please.



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: My question is for the Acting Registrar General. Let me say
Inquiries of the Ministry at the outset that from what I read in the Montreal Gazette about the speech the hon. gentleman made to the Dominion Marine Association, I think he should be commended for his remarks. Would he be prepared to table a copy or the text of his speech, that we might see it in detail?


Mr. Speaker:: Order, please.



REQUEST FOR TARIFF PROTECTION AGAINST SHOE IMPORTS

[Stage Direction]
On the orders of the day:
Mr. Roland Godin (Portneuf):: Mr. Speaker, I have a question for the hon. Minister of Trade and Commerce.
Has the minister read the last brief submitted by the Canadian Shoe Manufacturers Association, which contains a statement to the effect that there has been no expansion in this industry since 1962, and which shows that, for a given period, the importation of shoes has increased by 1084 per cent, as compared to a 42 per cent increase in the population of Canada.


Mr. Speaker:: Order. In its present form, the question is surely out of order.


Roland Godin: Mr. Speaker, in view of this alarming situation, could the minister tell the house if he intends to terminate consideration of this matter as mentioned last Monday and take action through a review of customs tariffs?


Mr. Speaker:: Order. The hon. member might wish to discuss the matter at ten o'clock.


Roland Godin: I will do that, Mr. Speaker.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, this being centennial year with every consideration being given to the preservation and maintenance of our fundamental freedoms, would the Prime Minister say whether the government intends placing before parliament for approval and ratification the international covenant on civil and political rights, and the international covenant on economic, social and cultural rights?
11984	COMMONS
Inquiries of the Ministry


Lester Bowles Pearson: I shall be glad to look into that, Mr. Speaker.
I am not as familiar as I perhaps should be with these particular international covenants.
I take it they are covenants adopted by the United Nations.


John George Diefenbaker: That is right.


Lester Bowles Pearson: My right hon. friend is suggesting that we confirm or ratify them in this parliament, and I shall be glad to look into that.


John George Diefenbaker: I might say that these covenants were adopted by resolution in the United Nations on December 16, and they cover such matters as laws against genocide, political freedom, self determination and the like, all principles which we accept; and I th nk it would be a wonderful move if the Prime Minister would agree that this would be an ideal occasion for the representatives of this nation to reassert their belief in these principles.


Lester Bowles Pearson: I shall be glad to look into that right away.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the orders of the day:
Mr. Speaker:: Orders of the day.


Mr. Robert McCleave (Halifax):: On a question of privilege, Mr. Speaker, I have risen about 20 times.


Mr. Speaker:: Order.


Robert Jardine McCleave: Mr. Speaker, my question is for the Prime Minister. Has the right hon. gentleman received a request from the mayor and the city council-


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


Robert Jardine McCleave: I was, Mr. Speaker, and my question of privilege was that I had not been seen by Your Honour. Your Honour having recognized me I thought the question of privilege was settled and that I could go on to pose my question, which I have been trying to do for half an hour.


Mr. Speaker:: It is a very novel way to catch the Speaker's eye, and I am sure I have no objection to recognizing the hon. member.

DEBATES	January 19. 1967


Robert Jardine McCleave: My question is for the right hon. Prime Minister. Has the Prime Minister received a request from the mayor and city council of Halifax that the Canadian National Railways be ordered to pay grants to municipalities based on full tax rates for the whole of 1967, and what action will be taken on this request?


Lester Bowles Pearson: Mr. Speaker, I am not sure whether I received such a communication or not. If I have it must have come in earlier in the day, and I shall look into it at once.


Mr. Speaker:: Order. If there is no further question of privilege I will call orders of the day.



TRANSPORTATION


[Stage Direction]
The house resumed, from Wednesday, January 18, consideration in committee of Bill No. C-231, to define and implement a national transportation policy for Canada, to amend the Railway Act and other acts in consequence thereof and to enact other consequential provisions-Mr. Pickersgill-Mr. Batten in the chair.
The Chairman:: When the committee rose last evening new section 335 in clause 53 of the bill was being considered.
On clause 53.


Mr. Nowlan:: Mr. Chairman, I have reconsidered some of the remarks that were exchanged between the minister and myself last night, but still find some difficulty in view of his answers where he said-


Herman Maxwell Batten: Order. I apologize for interrupting the hon. member for Digby-Anna-polis-Kings but there appears to be a little more noise in the chamber than usual and it is difficult for the Chair to hear what the hon. member is saying.


John Patrick (Pat) Nowlan: I had better raise my voice, Mr. Chairman. For several days the committee has been discussing what was referred to as the Magna Carta of the west, the Crowsnest pass rates, and I find it difficult to reconcile some of the minister's statements on that subject with the lack of any protection in this new section against action which the commission might take with respect to the Maritime Freight Rates Act which, so far as transportation is concerned, is the Magna Carta of the
January 19, 1967

east. It is rather an anomaly that the new transportation policy, which we all agree is proper and should be proceeded with, is being considered without regard to the interests of four of the ten provinces.
Undoubtedly the minister is aware from some reports he has received to date on the Atlantic transportation study that the Maritime Freight Rates Act will have to be examined very critically, and perhaps amended in terms of a more modern Canada; because even with the assistance of that act the position of the east has been eroded and is still being eroded. I go back to that act as the Magna Carta of the east and state that something should be said in legislative form about protection for the east under it. No doubt the minister is sincere in his expressed intent, but that intent is not the law of the land, and his expressions in that regard will not be read with too much interest two or three years from now when this bill is being enforced.
In 1927 the Duncan commission said the position of the east relative to the rest of the country had deteriorated from the time of the Intercolonial Railway. It stated that from 1876 to 1912 the position of the east had been easy and relatively constant with the rest of Canada, but since 1912 it had deteriorated. This was the reason for the introduction of the Maritime Freight Rates Act. We are now considering a brand new bill which is supposed to resolve all of Canada's transportation problems but there is no specific mention in it, particularly in new section 335, of protection for the rates structures in the east. I would like to know whether the minister has reconsidered the suggested amendment which I read into the record last night with respect to maintaining the rates freeze until the transportation commission's study has been completed and until the government moves to implement new legislation for the east.
Considering the way governments work I firmly believe that at the end of the two years freeze the government will be inclined to let the Maritime Freight Rates Act stand as it is. I believe there will not be the necessary catalyst and stimulus to bring it up to date.
I admit that the suggested amendment which I read into the record may not have been drafted in the best possible form, and lest there be any misunderstanding I wish to state I have no intention of doing away with the Maritime Freight Rates Act. But in view of the spirit of compromise which has existed and the constructive way in which consideration of this legislation has
Transportation
been proceeding, especially yesterday, I wonder if the minister would consider another suggestion with reference to new section 335 (3) I suggest that in new subsection 3 all the words after the word "thereof" be deleted and the following substituted for them:
-and thereafter shall be governed by the intent and purpose of the Maritime Freight Rates Act.
It would then read as follows:
(3) Subsections (1) and (2) shall be in force during the two years after the coming into force thereof and thereafter shall be governed by the intent and purpose of the Maritime Freight Rates Act.
The minister has intimated that at some stage, presumably after the maritime transportation study, the Maritime Freight Rates Act will have to be re-examined. I point out that the intent and purpose of that act remain the same today as they did following the Duncan commission report, namely to maintain the east in a relative position with the other parts of Canada. I wonder whether the minister will give consideration to my suggested amendment so that whatever rates are set at the end of two years will be set in accordance with the intent and purpose of the Maritime Freight Rates Act. If that cannot be considered, then I will have to decide whether or not I intend to move a formal amendment.
[DOT] (3:30 p.m.)
At the moment I am disposed to move a formal amendment in respect of the suggestion I put forward last night to the effect that the freeze be continued inasmuch as the government will be stimulated by the two railways to take action. Otherwise this would be left up to the initiative of the government and sometimes even when the government has had the best motives and principles it has been rather inert in this regard. There is no question in my mind concerning who will bring the greatest pressure to bear on the minister two or three years hence. I am sure the presidents of both railways will attempt to get the government to act. It has taken years to get this far. I do not think we should assume that after the freeze is over the government will on its own initiative take a critical look at the situation in the east. I think the danger is that it will drift along.
If the freeze continues for two years, I believe that after the two years the two railway presidents, who already have indicated that they do not like the freeze even for the two years, will be the catalyst which will cause the Minister of Transport to take some action.

January 19, 1967
Transportation
I should like to know whether the minister has reconsidered his position in respect of what he said last night. I would hope that there might be a spirit of compromise so that the east would get something.


John Whitney Pickersgill: Would the hon. member send me over the paper to which he was referring?


John Patrick (Pat) Nowlan: It has become obvious to those in the maritimes that the whole national transportation picture is somewhat invidious unless something is done. The west has fought and won a good fight. It is now high time that something be written into this bill to give some protection to the east.
What the minister has in his hand now is a compromise, I think, of both positions. It is not a suggestion that the freeze continue indefinitely or in perpetuity but rather that whatever rates are set after the two years be set having in mind the intent and purpose of the Maritime Freight Rates Act. I say this with the knowledge that the Maritime Freight Rates Act is a special act and can be changed in the future. The minister has indicated that it may be changed. However, whatever the changes are they should be made in such a way that they retain the intent and purpose which parliament had in mind when the legislation was first introduced. That intent and purpose are to ensure that the position of the east is relative to the position of the rest of Canada. The act even in its present form, although it is not doing the best job, at least is better than nothing. I should like to know what the minister's position is so that I will be able to decide what my position should be.


Mr. Bell (Saint John-Albert):: Mr. Chairman, may I ask that I be associated with the amendment of the hon. member for Digby-Annapolis-Kings. I think all of us are aware in varying degrees of the weaknesses in this section and the problems we shall have to deal with in the future as the result of the new study. In view of the success yesterday of the western members it now is evident that the maritimes also will have to make a stand. I should like to point out, as the minister knows, that the situation in respect of the Crowsnest pass rates is entirely different from the situation in respect of the Maritime Freight Rates Act. I hope that this is understood by all members of the committee. The western Crowsnest pass rates are statutory and are fixed at certain levels. There really is no comparison. We want to see the principle of the Maritime Freight Rates Act continued
[Mr. Nowlan.)
even though there may be some changes in the future.
In my opinion this amendment simply recognizes, as in clause 1, that the principle of the Maritime Freight Rates Act should be maintained. I appeal to the minister that he accept this amendment or one in similar words. I think this would settle the situation in respect of the maritimes. There are very just apprehensions in respect of this bill and the effect that it will have on the competitive position of the people of the maritimes.


John Whitney Pickersgill: Mr. Chairman, I would hate to think that any amendment I might accept would do to the Maritime Freight Rates Act, or any other protection which the Atlantic provinces have, what the amendment we accepted yesterday, if its effect is not corrected, will do in respect of the protection of western grain producers. The amendment for which hon. gentlemen voted yesterday removes the protected rates for barley screenings, barley meal, bran, buckwheat flour, chopped feed, crushed barley, crushed oats, feed grain, grits and groats, flaxseed screenings, linseed meal, linseed oil, cake meal and cake linseed oil.


Stanley Howard Knowles: Mr. Chairman, may I rise on a point of order. Frequently the minister tells us that he keeps to the rules, but now under the pretext of speaking to an amendment which has been moved today he is speaking on an amendment which was decided yesterday.


John Whitney Pickersgill: At this advancing age that the hon. gentleman and I are approaching, he appears to have missed one or two points. In the first place, no amendment has been moved today. In the second place, the hon. member for Digby-Annapolis-Kings and the hon. member for Saint John-Albert have said that they felt they must gain a victory similar to the one that western members achieved yesterday. Because this argument has been put in relation to the clauses before us and since it has been customary in this house to allow analogies, I was just indicating what the situation would be if the effect of the amendment they are suggesting is similar to that which took away the protection that the government was trying to give to nearly all grains with the exception of wheat and flour.


Mr. Horner (Acadia):: The minister is now attempting to prolong his own legislation by bringing about a lengthy argument which will not stand up in view of the fact that section 328 is still there and guarantees the Crowsnest pass rates. If the minister wishes to become involved in a legal battle in respect of the
January 19, 1967

definition of grain, then we are prepared to accommodate him. We are prepared to move another amendment. But the minister should not try to convince the committee that any damage was done in safeguarding the Crowsnest pass rates. If the minister and the government attempt in any way to remove, destroy or erode the Crowsnest pass rates, they certainly will not be treated very generously in the west. They will have fewer members than ever before-


Herman Maxwell Batten: Order. This might be a good time for the committee to get back to the discussion of clause 53.


John Whitney Pickersgill: Mr. Chairman, I do not in the least intend to prolong the discussion on this point because I am afraid the facts speak for themselves, but I hope to suggest a remedy to the house. In the meantime I will deal with the compromise suggestion put forward by the hon. member for Digby-Annapolis-Kings in place of the amendment which he suggested last night that he might be disposed to move. I confess to being a little puzzled as to what this phrase in effect will mean in law, because the hon. gentleman suggests that thereafter this shall be governed by the intent and purpose of the Maritime Freight Rates Act. If he means that the Maritime Freight Rates Act and its provisions shall apply, let me say they will apply all the time, not only for two years.
[DOT] (3:40 p.m.)


J. Michael Forrestall: There is no guarantee.


John Whitney Pickersgill: These provisions apply
right now. I suggest to the hon. member that he try to speak into the microphone because it is very difficult to hear him.


J. Michael Forrestall: All we are asking is that there be some form of guarantee. All we have now is the minister's word, and that is not enough. We would accept his word but not necessarily the word of his successor.


John Whitney Pickersgill: Of course my word is not enough and I have not suggested for one moment that it should be accepted as enough. If I were sitting on the other side of the house I would not accept it either.


J. Michael Forrestall: Why not write it into the bill?


John Whitney Pickersgill: Perhaps the hon. gentleman would allow me to finish my sentence, since I suspect in this particular instance I know a little bit more about what I am talking about
Transportation
than he appears to know. I hope the hon. gentleman, the junior member for Halifax, is doing what he is doing out of ignorance and not out of malice. I have said three or four times that this bill does not touch the Maritime Freight Rates Act. That act is in force; it is the law of Canada and it is not going to be changed by this bill. Therefore there is no need to accept my word. The act itself is on the statute books and it will be totally unchanged.


John Patrick (Pat) Nowlan: Perhaps I could interject at this point. I have worded my suggested amendment in this way because of what the minister said last night. I appreciate that the Maritime Freight Rates Act and the Crowsnest pass rates agreement are separate from this transport bill. As the minister has stated, there is no doubt that the Maritime Freight Rates Act will be considered and likely changed at some time.
When the transportation study has been made I am sure this act could be revised radically, depending on the recommendations emanating from that study. I admit I had difficulty in framing my amendment but my intent was to have the principle involved remain in existence for perhaps 20 years rather than two, or at least until the government does something about it.
I am sorry that we do not seem to have the same spirit of compromise which existed yesterday. In any event, whether the principle of the Maritime Freight Rates Act is revised or amended or thrown out completely in two or three years time, or whenever the government proposes, that principle should be the governing factor in the establishment of any rate structure. There is nothing in the bill now before us which guarantees the continuation of that principle in spite of the fact the bill is supposed to settle all the transportation problems we have encountered since confederation.
I think this measure represents a sincere attempt on the part of the minister to group certain things together. We all know there are many problems in the transportation field, and it will be five or ten years after the adoption of this measure before we can appreciate its full implications. Many things will have to be defined. Keeping that fact in mind we must take steps to make sure that the principle of the Maritime Freight Rates Act is continued. I believe it will be some time before the principle to which I have referred is changed, but whatever changes take place

January 19, 1967
Transportation
as a result of the adoption of this new transportation measure, which is supposed to be a transportation Magna Carta, we wish to ensure that at least the intent and purpose of the Maritime Freight Rates Act and the Crows-nest pass agreement are maintained.
One of the things which helped to advance the idea of confederation was the promise that there would be an intercolonial railway, and we need one in order to travel and transport our goods. It is even difficult today to travel and sh.p goods at the present rate structure, but the minister knows as well as I that the provisions of the Maritime Freight Rates Act helped to solve a great number of our problems. It can continue to do so today as it did when it was first adopted.
If there is no agreement to the suggestion I have made I am inclined to move the amendment which I suggested last night to continue this principle indefinitely. The premiers of the maritime provinces have made it clear that they cannot support a transportation policy without economic considerations written into it which take into account the size and geographic location of these provinces. We wish to go along with the suggestion regarding a national transportation policy in the interest of Canada, but we certainly must protect our own position. We all know from what we have heard at committee hearings and in this chamber that transportation costs represent the biggest cost of production in the east. No matter what course the government may follow in the future in respect of maintaining, changing or amending the Maritime Freight Rates Act, the original intent and purpose, to provide reasonable equity in transportation costs in the east and in the west, must be maintained, and that is in effect what we are suggesting here.


John Whitney Pickersgill: Mr. Chairman, I hope I can show the same spirit of conciliation that hon. members have been kind enough to say I have shown hitherto. I would not claim, however, anything like the extravagant attributes given to this bill by hon. gentlemen. This bill will not solve all our transportation problems. It does not purport to do so. It purports to do two basic th'ngs. First, it will establish a single transportation agency which will deal with all forms of transportation under federal jurisdiction. I am sure that everyone agrees that generally this bill seems to improve the situation. Second, by this bill we are attempting to get away from the general structure of railway freight rates we have had in the past, under which all rates were set by

the Board of Transport Commissioners, or had to be approved by that board which established maximum and minimum rates and allowed rates to fluctuate. In exchange for this greater freedom it is proposed that the huge subsidies now being paid to the railways will be phased out. I think one would say they are the two main objectives of the bill.
[DOT] (3:50 p.m.)
I said last night, and I repeat, that I think it is unfortunate that the MacPherson commission was not able to complete its study. As the commissioners said in their report, they did not have time to consider the effects of the Maritime Freight Rates Act and its adequacy at the present time. After consultation with the governments of the Atlantic provinces the present government set up the study that is now going on and is nearing completion, not just of the Maritime Freight Rates Act-that is one element of it-but of the whole problem of transportation within the Atlantic provinces and between the Atlantic provinces and the rest of Canada. What the government in office, whatever government it may be, may do when that study has been received and analysed is something that none of us here can predict at the moment.
Therefore in framing legislation I had really no option as Minister of Transport but to accept the facts as they are at the present time and to say that at the present time I was not prepared to advance my own policies to deal with this problem, because I thought we needed much more expertise to deal with it than I have or that my department has without outside help and without time to give he matter adequate consideration. I am sure every hon. member from the Atlantic provinces would agree with that view.
We then decided to do two novel things in this bill with respect to the Atlantic provinces. The so-called At and East grain rates would have expired and the grain rates to the ports of Halifax and Saint John would have gone up. They were simply kept down by a voluntary act on the part of the railways. A year ago I was able to persuade my colleagues that we should pay a subsidy to the railways to make sure that those rates did not go up, to make sure that they stayed at the level they were then in order to have rates that would encourage the flow of grain through the Atlantic ports. I have no apology to make for doing that. I think it was a good thing to do. I think it was a good use of the taxpayers' money and I would defend it anywhere. I put it in this bill; it is in new section 329A. We
January 19, 1967

made a further improvement in this respect in the amendment the committee was good enough to accept when I moved it the other day. I hope no one will call me to order at this point, Mr. Chairman.


Thomas Miller Bell: Was that with regard to flour?


John Whitney Pickersgill: Yes. In this bill we have really departed, so far as rates are concerned, from the status quo in two respects only. One is to underwrite the At and East grain rates and the other is to continue the freeze imposed in 1959, which is being abandoned in the rest of Canada, and to add coal and certain lumber rates to that freeze for two years. The reason that provision was put in the bill was that we were not able to deal with the particular problem of the Atlantic provinces in a constructive way at this time because we did not have the necessary suggestions, the necessary elements do deal with it.
Therefore I said we were not going to worsen the position of the Atlantic provinces but were going to see that it was safeguarded for a time long enough to give the government of the day, whatever government it may be, a chance to consider that study and propose legislation to parliament. We suggested in this b.ll that the freeze should be continued for two years. We could have suggested that it be continued indefinitely instead of for two years. It seems to me it is on this point, and on this point only, that the hon. member for Digby-Annapolis-Kings and I disagree.
It is my considered judgment, since the presidents of the C.P.R. and C.N.R. do not have votes in this house and all the members from the Atlantic provinces do, that if at the end of that two-year period the government has not acted it will be much more terrified by the loss of votes in this house-I may say that I felt this keenly when the bill was drafted and I feel it even more keenly today-than they would be by the barking of the heads of the railways. I think a government faced with the prospect of having this freeze disappear, and having taken no action, would be in a terrible situation vis-avis public opinion in the Atlantic provinces.
One of my reasons for not leaving the freeze indefinite was that I thought it would be too great a temptation, if it was indefinite, for other problems that seemed more urgent in a year or two to be substituted and dealt with. There would be a tendency to say: "Oh, well, they are protected by the freeze, anyway, down there. We can forget about them
Transportation
for another year or two." On the other hand, if under the law this freeze comes to an end the government cannot forget the problem. I have had a rather long experience of the way governments behave. This experience was acquired partly as a public servant before coming into this house and has been added to by participating in government when sitting on this side of the house and observing it when sitting on the other side. Therefore I have the conviction-that is all it can be; nobody can know whether it is a fact-that a government faced with the prospect of some advantage disappearing for the Atlantic provinces would be more apt to act, and act urgently, to resolve the problem than a government that could say: Those fellows down there have the freeze; we can forget about them for two or three more years.
It is because I believe that the transportation problems of the Atlantic provinces are urgent and that the improvement of transportation in the Atlantic provinces can contribute more than anything else to the improvement of the economy of that region that I want every possible incentive to exist for government to act and deal with this problem. It is in consideration of that position that I have taken the view I have. On this one very narrow point of tactics, and not on anything else, I do not see eye to eye with the hon. member for Digby-Annapolis-Kings.
I now come to the suggested amendment of the hon. member. I would have to say that when faced with this amendment and the one he offered last night, I prefer the one he offered last night because it seems that one would have some legislative effect and I do not think this one would have any. I do not know how the transportation commission, the railways or the courts could apply the intent and purpose of the Maritime Freight Rates Act to freight rates that had been frozen for two years and were thereafter unfrozen. If, instead, the amendment said that the provisions of the Maritime Freight Rates Act should apply to these rates, that would of course make legislative sense. But it would not add one iota to the law because they apply right now and will apply during the freeze and when the freeze comes off unless parliament sees fit to change the Maritime Freight Rates Act. For that reason I would advise the hon. gentleman not to move this amendment. I do not think it would have any effect whatever except to create confusion in the mind of anyone who tried to obey the law.
Transportation

January 19, 1967
[DOT] (4:00 p.m.)
With respect to the other amendment which the hon. member suggested last night, I think it is also open to very grave objection on two grounds, one of which is legislative and the other of which is political. I will deal with the legislative reason first, and perhaps I should look at the exact wording of the hon. gentleman's amendment because although he was good enough to send me a copy I seem to have mislaid it. The hon. member's amendment reads:
(3) Subsection (1) shall be in force during the two years after the coming into force of subsection (1) and shall continue in force after the said two years unless, and until, the Maritime Freight Rates Act is amended to retain the historic intent and purpose of providing Atlantic provinces industry access to the markets of Canada without the handicap of distance.
The only part of that amendment that would have any legislative effect would be the following wording "unless, and until, the Maritime Freight Rates Act is amended". As the hon. gentleman knows, that would not bind any future parliament because notwithstanding the fact that these words were there the subsection could be repealed in the next session of parliament. However, this wording would indicate a certain purpose and intent at the present time.
Nevertheless I would not be willing to support this purpose and intent because while the amendment would indicate that this parliament in passing this law, if such will be the case, wanted this freeze to continue until the Maritime Freight Rates Act is amended, it would have a political effect with which I would not want to be associated. Knowing how one's words can be twisted, I would fear that if I were associated with an amendment of that sort somebody might say about me: Why, that fellow Pickersgill had the nerve to suggest that parliament should amend the Maritimes Freight Rates Act, the charter of our liberties, the Magna Carta of the maritimes. I could not say in defence that I had not said it would be amended because in a bill of which I am the sponsor it would appear that the whole of parliament had said this act should be amended. If one were skilled enough at doing this sort of thing, which I am glad to say I am not, a lot of people might say that I intended to take that right away from them. I would advise the hon. member for Digby-Annapolis-Kings, who has only been elected once, not to jeopardize his chances of re-election by leaving himself open to that kind of misconstruction and imputation.

Therefore I do not think it would be a wise thing to do.
Although it would not make much difference legislatively, I do not think it would be a wise thing to do from the standpoint of a proper understanding in the Atlantic provinces of the intent of parliament. I think our intent is perfectly clear, that in freezing the rates in that area only as a temporary expedient, and associating that freeze with the facts which are known to everyone in the area, the problem is being dealt with urgently and there is a spur to get on with the job, whereas if the freeze was indefinite I fear that parliament would not have the same incentive. For that reason I really hope that the hon. gentleman will not press for the adoption of either of his suggested amendments.


Thomas Miller Bell: I am not sure that the minister is taking an attitude which will be conducive toward reaching a compromise on the matter that was brought up yesterday. With reference to what happened yesterday, let me compliment the government members on their attendance this afternoon and their new-found interest in this bill. I see eight cabinet ministers present today and many backbenchers milling around at the rear of the house. It was a hard, humiliating lesson but we are glad to see that the government is showing some interest in this measure which is so important both to the east and to the west.
A minute ago the minister said that he felt that public opinion in the maritimes was going to be a great factor in inducing certain persons, including himself, to act on matters which affect maritime freight rates. I was glad to hear him say that. I am not particularly worried about that but when I look at the Minister of National Defence and the Minister of Industry I wonder what kind of pressure is needed from the maritimes to get them to move.
The minister must surely recognize the fact that there is apprehension in the maritimes. If he wants to leave the house for a minute to have a talk with some of the members from the maritimes, we will bear his absence for a moment or two. I think they would tell him that there is apprehension in the maritimes regarding the matter of an indefinite freeze. I have expressed myself frankly but I fear nevertheless that the full story will not be understood in the maritimes when word of yesterday's and today's debate is carried to the people there by the press.
January 19, 19S7



I suggest to the minister that he should include a phrase in the bill to deal with the problem of the freeze. It would be quite simple to make some kind of an amendment, perhaps enlarging on what the hon. member for Digby-Annapolis-Kings has suggested, which would include certain statutory advantages embodied in the principle of the Maritime Freight Rates Act so that when changes are brought about we will all know that the principle is being recognized.
I give the hon. member for Digby-Annapolis-Kings credit for his persistence. He knows that it will be hard to explain the situation to the shippers in his constituency. If the minister is aware of public opinion in the maritimes, as he says he is, I think he should accept the challenge to him to come up with an appropriate phrase which will cover what he intends. I will not go into yesterday's debate until the matter is dealt with again in the correct way under our procedure, but I really think that the minister must have learned his lesson yesterday. However, if he wishes to provoke a horde of maritime members he will find out how angry maritimers can be. The noise which the western members of parliament made yesterday will be as nothing.


John Patrick (Pat) Nowlan: Mr. Chairman, I look with envy at the long record of the minister in this chamber and I hope that his long record of service both outside and inside this chamber can be an example for all members on this side as far as tenure and length of service are concerned, though not necessarily an example of the way in which service is performed, but obviously the minister has had a much longer span of experience with which to look at this legislation and at my suggestions. I certainly defer to him. I appreciate fully his remarks about the legislative problems connected with preparing a suitable amendment. I agree with what he said about my suggested compromise. Of course, the trouble is that when one starts to compromise to find a solution one is liable to compromise in all areas and thus compromise the legislative force of the suggestion. [DOT] (4:10 p.m.)
I fully appreciate the fact that the suggestion I put forward may be a little uncertain, but at least it is something. So far as deferring to the minister's political assessment of the situation in the maritimes is concerned, with respect, Mr. Chairman, I must part company with him there. There is some concern in the maritimes now about the uncertainty of the freeze for two years. At the end of the two years rates are obviously going to go up. The
Transportation
minister mentioned that there might be some new proposal on the basis of the Atlantic provinces transportation study, but that will be debated at another time. We are still going to have to debate the Maritime Freight Rates Act. If we could put something in the Maritime Freight Rates Act now, it might shorten that debate.
I fully appreciated the minister's remarks and for that reason I have restricted my remarks. If I were to move formally the amendment that the freeze continue for two years or until the Maritime Freight Rates Act is amended, then I would remove the uncertainty. This is the purpose I would hope to achieve. The people in the maritimes know that the freeze is going to end. The minister has said that the government is going to move. I find it difficult to reconcile the two views. How is the government going to be stimulated into action? The Maritime Freight Rates Act will continue but the new transportation commission will be able to adjust the rates and up the rates will go.
It was suggested by some witnesses before the transport committee that these rates would go up as much as 50 per cent. The president of the Canadian Pacific, Mr. Sinclair, admitted that in all probability the 20 per cent and 30 per cent preference within the select area would vanish if there were no restriction at all. Unless the minister is prepared to consider the suggestion put forward by the hon. member for Saint John-Albert, to bring the matter to a head perhaps I should move the amendment.
I appreciate the minister's remarks concerning the legislative imperfections in both amendments. I certainly defer to the minister's political assessment; I know the minister is only too capable of handling political affairs. While my experience in elections is relatively slight, I feel fairly certain where I stand on this point. I know the minister will be able to take care of himself in a like fashion. Therefore, unless the minister is prepared to consider some change in the proposed section and perhaps give an example of how the government will take the initiative two or three years hence, I am afraid I am going to have to move formally the amendment which I suggested last night.


Mr. Siewart:: I want to say a word or two, Mr. Chairman, about the proposition the hon. member for Digby-Annapolis-Kings put forward last night because he is now suggesting he may move it formally as an amendment to the bill. As all members of the committee know, we are not in a position now to go

January 19, 1967
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ahead and make some sort of new settlement in relation to transportation in the Atlantic provinces. The study has not been completed. Consequently, we have to leave this matter somewhat indefinite. We have to be indecisive at the moment. We have to leave a certain amount of uncertainty.
What the hon. member for Digby-Annapolis-Kings is trying to do, and I sympathize with his purpose, is to reduce that uncertainty. He is trying to build in a hedge against the possibility that at the end of the two year period when the freeze thaws the Maritime Freight Hates Act would simply continue. Now, the hon. gentleman has already admitted that the last part of his draft is legally meaningless.


John Patrick (Pat) Nowlan: I agree, but, Mr. Chairman-


John B. Stewart: Let me read his words again:
Subsection (1) shall be in force during the two years after the coming into force of subsection (1) and shall continue in force after the said two years unless, and until, the Maritime Freight Rates Act is amended to retain the historic intent and purpose of providing Atlantic provinces industry access to the markets of Canada without the handicap of distance.
I suggest, and I think the hon. member has agreed already, that all the words beginning with "to retain the historic intent and purpose" are meaningless. In other words, sir, the freeze would continue until amendments were made to the Maritime Freight Rates Act. These amendments might be ones which would bring no joy whatever to the hearts of shippers or the general population in the Atlantic provinces.
It seems to me that the motion the hon. member is making has a second very sharp edge. It is true that the provision of this amendment might bring about improvement of the Maritime Freight Rates Act. It is equally true, because susceptible of judgment based on opinion, that it might trigger an amendment that would work precisely the opposite way.
As evidence that this could be the case, I adduce the hon. member's own amendment. His amendment refers to retaining the historic intent and purpose of providing industry in the Atlantic provinces with access to the markets of Canada without the handicap of distance. I argue that the historic intent and purpose of the Maritime Freight Rates Act long since has been so badly eroded that the act which the hon. gentleman is now seeking to retain no longer performs the original intention of the enacting parliament. I am not at all zealous to see the act retained if it is not
improved in some way. I want to see an improvement. In other words, sir, I think that the purpose of the hon. gentleman is a good one. We all like to hedge in times of uncertainty. We like to put in a hedge that creates a presumption in our own favour.
But the amendment proposed here does not do that at all. In fact, it implies that the change could be a change against us. Any change in the terms of the Maritime Freight Rates Act could have the effect of thawing the freeze. We who come from the Atlantic provinces should recognize the actual situation. We should recognize that something is going to have to be done. But we do not now have the information upon which to base a scheme for the solution of our problem. Consequently, our best protection is to remain alert until the information is available. We must remain alert until we are ready to proceed to attempt the kind of solution to the problem of transportation in the Atlantic provinces that is desirable.
[DOT] (4:20 p.m.)
I urge the hon. member for Digby-Annapolis-Kings not to try to win the kind of superficial victory that throws out the baby with the bath water, the kind of victory his friends from the west won yesterday. We in the Atlantic provinces are much more sophisticated than to want that sort of victory, Mr. Chairman.


Robert Jardine McCleave: Mr. Chairman, there may be a great deal of uncertainty in the mind of the hon. member for Antigonish-Guysborough. He used that word a couple of times and it may be due to his environment, finding himself unfortunately located where he is. But I do not think there is uncertainty in the minds of the other maritime members in the house about what we hope to accomplish, which is to see that the rights that were given to us, by a much earlier parliament, admittedly, as the hon. member said, eroded away, are restored. Those rights include helping us to overcome the geographical disability under which the Atlantic provinces lie.
The suggestion of the hon. member for Digby-Annapolis-Kings has been under some criticism by the hon. member for Antigonish-Guysborough. The amendment of the hon. member for Digby-Annapolis-Kings simply projects a two year freeze. At that time, if we have faith, hope, charity and other "Pickers-gilliana" which may be lying around, we may expect that some other amendment will be brought in to incorporate the terms of the study that is now going on.

January 19, 1967

This legislation has been mooted for a long time. I am sure that in the past people have insisted that it should be brought in within a two-year period, but nothing like this has happened. The matter has been carried over from one parliament to another and now we are finally coming to grips with it.
The assurance that after the study is completed legislative action based on it will be brought before parliament is no certainty, sir. I will even join the hon. member for Anti-gonish-Guysborough, use the word "uncertainty" and say that probably this is a very great uncertainty. Once the two years have passed the freeze will be over and the rates on these important shipments will sprout unless parliament does an amending job and extends that particular provision on a year to year basis until legislative action is taken on that study. For this reason, Mr. Chairman, and based on the principle "better the evil you know than the evil you don't know". I am going to support the amendment which I anticipate the hon. member for Digby-Annapolis-Kings is now going to move.


John Patrick (Pat) Nowlan: Mr. Chairman, I think that will bring matters to a head. I appreciate some of the remarks of the hon. member for Antigonish-Guysborough, but if the purpose of the proposition is good I certainly think that outweighs the superficial aspect referred to by the hon. member. The purpose is good and sound but there is an honest difference of opinion between the minister and me as to how the government will move, when it does move, on the Maritime Freight Rates Act. In view of the known propensities of certain governments, and having regard to the delinquency of the government of the day in the matter of taking the initiative in this area, I at least feel that this amendment will clarify some of the uncertainty.
In view of what has been said both last night and today and in view of the stimulative action which will be taken by the railways, which are even against the two-year freeze the minister has proposed, as well as for other reasons, I move, seconded by the hon. member for Halifax:
That section 335 (3) be amended by deleting all the words after the word "and" and substituting therefor the following:
"continue in force after the said two years unless and until the Maritime Freight Rates Act is amended to retain the historic intent and purpose of providing Atlantic provinces industry access to the markets of Canada without the handicap of distance".
Transportation
I fully appreciate the comment about the drafting of the second half of the amendment but it is the first section which is the operative part here and should be embodied in the legislation.


John Whitney Pickersgill: Mr. Chairman, I think there is a technical imperfection in the amendment. If it is taken literally it does not strike out anything, it merely appears to add these words to the words already in the section, which of course would make utter nonsense. I am sure we would be very happy to rephrase the amendment, and perhaps I can help the hon. gentleman a little by saying that the existing words of subsection (3) should be struck out and that the words he suggested should then be substituted therefor. I think that this would overcome the technical problem, which is not a serious one. All of us experience this when moving amendments in committee.
However, Mr. Chairman, much as I dislike having to do so, particularly with a new member who has made a very good impression in this house already and for whom I think all of us have for a number of reasons a good deal of esteem, especially in view of his ancestry and background, I am afraid I must reject the amendment. Incidentally, if I might be permitted to reminisce for one moment, when I came into this house for the first time his father was already a respected member and was one of the people on the other side of the house who first welcomed me. He even kindly wrote me a note at the end of my first session suggesting, though I really did not think I had done very well, that I had not done too badly and encouraging me to continue.
Therefore I know that the hon. gentleman will not think it is out of any lack of good will that I say I do not feel in a position to accept his amendment. I reject it on two grounds: first of all, on the ground that I do not think intrinsically it would be a good amendment to adopt; second, I think it would be open to grave misunderstanding and create grave confusion if we were to adopt it. For that reason I hope that my friends-


Mr. Churchill:: -are in the house.


Some hon. Members:: Hear, hear.


John Whitney Pickersgill: The hon. member for
Winnipeg South Centre, with that instant perception we all admire so much, has anticipated my thoughts, Mr. Chairman. I hope that all my friends are in the house and I hope that

January 19, 1967
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all my friends, including those from the Atlantic provinces, will have no hesitation whatever in joining with me in rejecting, in a spirit of good will, the amendment offered by the hon. member.
[DOT] (4:30 p.m.)


Thomas Miller Bell: Mr. Chairman, the minister talks about friends. I hope he realizes he is losing important friends by the way he is putting this bill through. At the beginning he brought the Senate into his remarks. He has lost the support of that place. Yesterday it was evident he would lose the support of the west. Now he is in serious danger of losing the support of the maritimes.


Some hon. Members:: Hear, hear.


Thomas Miller Bell: We do not say
that the whole Maritime Freight Rates Act needs to be changed or reviewed. We gave the minister an opportunity to insert a few words to show his good intention with regard to the freeze. We explained in a straight-forward way what we wanted and the minister has refused to do so. I for one, coming from the maritimes, will not be accused of not standing up for the maritimes when an important measure such as this comes forward.


Some hon. Members:: Question.
Amendment (Mr. Nowlan) negatived; Yeas, 41; nays, 68.


Herman Maxwell Batten: I declare the amendment lost. Does this complete discussion of new section 335?


Some hon. Members:: Agreed.


Herman Maxwell Batten: The committee will consider new section 336. The hon. member for Winnipeg South.


Mr. Kindt:: Mr. Chairman, I wanted to speak on section 335.


Herman Maxwell Batten: Order, please. The committee has passed section 335.


Lawrence Elliott Kindt: I beg to differ. The chairman did not see me when 1 rose. He did not turn his head to see me.


Herman Maxwell Batten: Perhaps I should say to the hon. member that if the Chair does not see an hon. member standing when a clause or subsection is carried, it would help the Chair if the hon. member standing would indicate that he wishes to speak. I recognize the hon. member for Macleod on new section 335.
[Mr. Pickersgill.)


Lawrence Elliott Kindt: Thank you, Mr. Chairman. I shall be brief. This section has to do with the rate for coal and coke.


John Whitney Pickersgill: Does the hon. gentleman realize that it deals only with rates in the select area? It has nothing to do with rates for coal outside the Atlantic area.


Lawrence Elliott Kindt: Would the minister tell me on what subsection or section I could talk about the rates for coal going to Japan?


John Whitney Pickersgill: On section 336 when we come to it. The hon. gentleman could speak about the matter then.


Lawrence Elliott Kindt: That is the next section?


John Whitney Pickersgill: That is right.


Lawrence Elliott Kindt: This whole bill is extremely confusing. I have read section 336 and I do not see that I can talk on the subject I wish to raise. But if the minsiter says I can speak on that section I shall sit down until section 336 is called and then hope that I will be given the first chance to speak.


Herman Maxwell Batten: On section 336 the Chair has recognized the hon. member for Winnipeg South.


Mr. Sherman:: Mr. Chairman, new section 336 deals with a number of aspects to which some members on this side of the house have already made numerous references during consideration of clause 1 of the bill, particularly before the Christmas recess. I participated in that debate and devoted considerable time to the precise subject under examination specifically in clause 33. My feelings today with regard to the provisions in this section are well known to the minister and to other members of the committee. I beg your indulgence, Mr. Chairman, if for the next few minutes my comments seem a repetition of previous ones. It is necessary to repeat certain things and to press the arguments advanced particularly by my province of Manitoba in concert with the other prairie provinces in relation to the main considerations of section 336.
The two specific subjects covered in section 336 are the maximum rate formula and the machinery and procedure for its application, and the process whereby a captive shipper may be identified under the terms of the legislation. The west has been particularly unhappy with the maximum rate formula as prescribed in the new legislation, as you know,
January 19, 1967

sir, and with the mechanics by which it will be applied. It is to that aspect of this section that I address myself for the next few moments this afternoon.
As has been said by other members of the house, including myself, without the costing data from the railways that the western provinces have repeatedly asked for it has been extremely difficult, in fact well nigh impossible, to assess the impact of the maximum rate formula correctly. The west was unhappy with section 329. The west is not unhappy with the way section 329 was amended. But the west is unhappy with much of section 336.
As I have said, in the past few years my province has been in the vanguard of the fight to develop in this country a comprehensive, efficient and progressive transportation policy and a national transportation approach. I think the minister will concede that point.
[DOT] (4:40 p.m.)
Some of the most reasoned and articulate arguments advanced with respect to transportation before this house and before the standing committee on transportation during the past five or six years were prepared by the province of Manitoba which worked in concert principally with the other western provinces. No one would disagree that Manitoba has played a signal role in the vanguard of the fight for a better transportation system and policy, and nowhere has its role been better demonstrated than in the major brief which it submitted to our standing committee last fall.
That brief was probably two to three years in preparation and represented some seven to eight years of application and study on the part of the Manitoba transportation people and members of the provincial administration at the research level. I think it would be presumptuous of me, and highly wasteful of the time of hon. members, if I were to try to express my own opinions and attitudes about this question to the exclusion of the specific formal arguments already advanced by my province. Therefore I beg the indulgence of the Chair and the committee to permit me to read into the record specific statements, recommendations and conclusions contained in the Manitoba brief. That brief contains so much expertise and so much sound and valid judgment that I do not think it should be pigeonholed at the standing committee level. I could not improve on it and therefore will refer to specific passages in it.
Transportation
Two transportation consultants from the United States were retained by the province of Manitoba in the course of preparation of the brief. They were university professors, Professor D. H. Borts and Professor Ernest W. Williams Jr. Their expertise and experience were heavily relied upon during the course of the deliberations in which the Manitoba transportation people engaged and a good deal of their research and conclusions were imbedded in the arguments advanced in the Manitoba case.
There was complete compatibility among these two professors, the experts from the provincial administration, and the legal counsel retained by Manitoba who contributed to the drafting of the brief, in regard to the contention that new section 336 contains a great many flaws and weaknesses and is inequitable in its treatment of the maximum rate formula, the application of that formula, and its provisions relating to a captive shipper and the identification of a captive shipper.
On this point I would like to refer to the Manitoba brief:
Two aspects of section 336 require attention. First, the applicability of the maximum rate formula which involves the definition of a captive shipper and the determinability of a captive shipper. Second, that dealing with the formula itself.
The royal commission in dealing with this problem recommended that all shippers should have the right to declare themselves captive. At page 104 (page 52) volume II, the commission stated:
"The decision to seek captive status must rest with the shipper. His reasons for initiating the action will be dissatisfaction with the rate he is forced to pay "
The legislation, as presented, envisages that even shippers who are now manifestly captive must establish this fact by special application to the commission. It is difficult to understand why the legislation requires that those intended to benefit from the royal commission recommendation be subjected to this difficulty of establishing their right to a maximum rate. It should be remembered that the royal commission designed the formula as an alternative to the present class rate structure. All shippers in Canada have the right to a class rate on the movement of their own commodities and this right does not entail an obligation to ship a given portion of their goods.
The commission at page 110 (page 55) stated:
"...Our problem, as we see it, is to attempt to substitute a more realistic method of maximum rate control for the traditional class rate maximum, which will protect the captive shipper and not limit the operation of commercial principles in the growing competitive sector."
The royal commission on a number of occasions referred to the Freight Rates Reduction Act. This act in itself was evidence of the parliament of Canada's determination that class and non-competitive commodity shippers were at least shippers to whom the term "captive" could apply because

January 19, 1967
Transportation
it was these shippers that the parliament of Canada determined should be relieved of the excessive burden caused by the last general freight rate increase in 1958. We are now advised in the provisions of Bill C-231 that the only captive shipper is one in respect of whose goods there is no alternative, effective and competitive service by a common carrier other than a rail carrier...
We are now faced with the situation where it is suggested that the only likely recipients of protection under the legislation are class rated shippers who represent 1 per cent of the tonnage carried by Canadian railways.
This was a point stressed in a telegram sent to the Prime Minister by the premier of Manitoba, the Hon. Duff Roblin, in concert with at least one and possibly both of the premiers of the other prairie provinces, at the time that the standing committee on transportation was considering the Manitoba brief last fall.
The brief continued:
In the 1965 waybill analysis the class rated traffic represented 1.7 per cent of the tonnage and approximately 4.6 per cent of the total revenues of the railways. If we are to accept this position we must assume that the intent of the legislation is to leave, without any control mechanisms, approximately 98 per cent of the traffic. In addition, members of the committee must remember that the existing class rates are, in fact, the maximum which the railways are permitted to charge any shipper in Canada.
These are rates granted to the shippers not by the gratuitous act of the railways, not by contract, but by the regulatory authority. If the above definition of captivity is to be accepted, there would be introduced a most alarming concept into rate-making in this country. We would have a situation where the present class rates are done away with, where all rules and regulations relative to unjust discrimination and unreasonableness of rates are eliminated, where a new maximum rate formula is introduced, the impact of which is unknown since cost data has been denied.
[DOT] (4:50 p.m.)
Both United States experts to whom I have referred made similar comments with regard to the maximum rate formula and the difficulty a captive shipper has. They made submissions to both the province of Manitoba and the standing committee on transportation. I believe it is important that some of their arguments be read into the record now. The submission made by Professor Borts had this to say on the subject, under the heading "definition of captivity":
Under the section 336 of the Bill C-231, a shipper of goods may request the commission to determine the probable range within which a fixed rate would fall should the shipper choose to apply for captivity. After being informed by the commission of the probable rate, the shipper may apply to the commission for captivity and the commission, after investigation, may fix a rate which is determined by the rate formula. The weakness of this provision

is that there is only a vague criterion specified by which the commission may decide whether a shipper is worthy of captive treatment. This vague definition is provided in the opening words of the section, where it is said that:
"a shipper of goods for which in respect to those goods there is no alternative, effective and competitive service by a common carrier other than a rail carrier or carriers or combination of rail carriers may, etc."
There is no specific pinpointing of the definition or criteria to be used in respect of a captive shipper under that terminology.
It is very difficult to specify what is meant by the absence of alternative, effective and competitive service. From one point of view, there is very little competitive service in Canada, where there are only two railway systems to begin with, and where truck lines are also owned by these very same railway systems. While there may be a wide range of services which are technologically effective they may not be economically competitive. On the other hand, we know that the rails have lost traffic to the trucks so we know there are shippers with alternatives. The difficulty is how to define the absence of such alternatives. This opening section 336	(1) is faulty in not indicating what
constitutes the absence of alternative service.... The traffic which is truly captive in the economic sense consists of heavy loading commodities which find the railroads more advantageous than truck because of the present technology and cost of rail and truck operations. This represents such a broad category of traffic, however, that it is probably best not to tie up the time of a commission staff in deciding who is and who isn't economically captive. The best way to define captivity is through self-declaration by the shipper. Any shipper should be free to ask the commission to specify a rate which he would enjoy if he should declare himself captive.
Then the submission continues:
In determining the rate to be charged captive shippers, the commission is instructed to fix a rate equal to the variable cost of the carriage of the goods and an amount equal to 150 per cent of the variable cost.
I submit that this is a thoroughly charitable arrangement under which the railways are permitted to operate. It would be a fairly generous arrangement if any business or entrepreneur were in the position of being paid 150 per cent over and above his variable costs in a given competitive commercial situation. No satisfactory answer has been given to members of the standing committee or members of this house concerning the procedure that was followed in arriving at the figure of 150 per cent. No one has pinpointed the source of that figure, nor has anyone explained why it should be 150 per cent. Nevertheless, that happens to be the rate which now, presumably, is to be embedded in this legislation for all time to come.
Mr. Borts in his submission points out that the legislation sets out a very complicated cost
January 19, 1967

formula, the effect of which is to provide a mark-up of 150 per cent over variable cost for shipments of 30,000 pounds. For shipments of larger than 30,000 pounds the peculiar provisions of this formula pile mark-up upon mark-up, because the economies of heavy loading traffic are not reflected in the artificial variable cost concept to be calculated. In an earlier submission to the Department of Transport by eight provinces, an analysis of the cost formula revealed that the mark-up over variable cost varied from 150 per cent of variable cost on a 30,000-pound load to a mark-up of 600 per cent of variable cost for a shipment of 140,000 pounds. The percentage mark-up over variable cost rose continually as carload weight rose because of the failure of the rate formula to take account of the economies of heavier loads.
This, Mr. Chairman, is the nub or focal point of the whole argument of the west in respect of this section, that is, that the provisions of the maxium rate formula as presently envisaged by this legislation militate against economy and efficiency in a normal business sense from the point of view of both the railways and the shipper. No account is taken of the possible economies or benefits which might accrue from the heavier loadings. In fact a mockery is made of the heavier loadings and the economies possible from such practice. The maximum rate formula as proposed in this legislation destroys any incentive for rail efficiency in this regard.
At this point I should like to refer to a specific argument which is incorporated in the Manitoba brief. I should like to quote this directly in order to emphasize the point:
-the proposed formula in Bill C-231 would create a most inequitable situation. The formula includes a fixed percentage (150 per cent) above variable cost, which percentage is related to no known factor. If the costs of the railways increase by $1 the shipper's maximum rate will increase by $2.50 (150 per cent). It similarly would destroy any real incentive for improving rail efficiency since for each reduction in unit cost of $1 the railway would be subject to a $2.50 loss in revenue. This was not the decision of a commission directed to determine inequities in the railway freight rate structure- to relieve the burdens on captive shippers and to recommend policies for achieving more efficient operation of the transportation system of Canada.
There is extensive and intensive evidence and weight of argument contained in the submission by the province of Manitoba to which I have referred to buttress the argument I am attempting to advance on this occasion to the effect that section 336 with its provisions respecting the maximum rate formula and the captive shipper will militate against the best
Transportation
interests of the competitive economic system and the benefits which should accrue from that type of system to the shippers and the railroads of western Canada as a whole as well as to the economy of western Canada in general.
[DOT] (5:00 p.m.)
On the same subject the following is what Professor Ernest W. Williams had to say:
The concept of a formula based upon a 30,000 pound carload-
This is the basis for the maximum rate formula in the legislation.
-advanced by the royal commission is at variance with that commission's apparent objective to afford a measure of protection against the undue imposition of overhead burdens upon shippers where they lack an effective economic alternative to rail transport. It appears to me, also, as undesirable to incorporate in a statute a fixed percentage to be applied over variable costs. The relationship between variable and total cost in a railroad system is likely to change over time and it ought not to be necessary to amend a statute in order to recognize such a change. The origin of the 150 per cent is not adequately explained in the report of the royal commission but the mark-up over variable cost required by the railways ought to be related to their revenue requirements which will change over time. Bill C-231 is silent on this point.
Later Professor Williams submits:
Shippers have traditionally been entitled to just and reasonable rates from common carriers without regard to the presence or absence of competition.
The following is also stated later in his submission:
The proposition that competitive reductions in rail rates designed to meet competitive forces outside the control of the railways may be tied to an undertaking by shippers to forward traffic by rail is sound and is one of the important advantages of the Canadian agreed charge system. But it is far from equally clear that a shipper should be required to commit himself to the movement of his traffic by rail as a condition for securing a reasonable maximum rate in the place of one which exceeds the standard.
When I spoke on this and related subjects on December 21 I made the point that the maximum rate formula and its application were a source of considerable concern to a number of us on the standing committee because it seemed to us that under this particular clause of the proposed legislation the railways were being given carte blanche to charge whatever the traffic would bear in western Canada. It certainly seems to me and to those who worked on the preparation of the Manitoba brief that this is a situation and attitude which are hardly conducive to a healthy economy in western Canada.

January 19, 1987
Transportation
I have a chart here from which I should like to quote to illustrate some of the tremendous advantages of mark-ups and profits which accrue to the railway company where heavier car load shipments are involved. The legislation as it is presently worded provides that the maximum rate imposed on a captive shipper shall consist of the variable cost plus 150 per cent on 30,000-pound carload lots. As the lots increase in size the variable costs really go down from the point of view of percentage. The maximum rate a shipper must pay also goes down fractionally, but the mark-up over the variable cost and the profit to the railway go up by astronomical amounts.
As the Manitoba brief pointed out, the maximum rate formula in Bill C-231 does not give the shipper the benefit accruing from the reduction in unit cost because of heavier loading. The committee might be interested in some of the percentages and specific mathematics which illustrate that point. Based on 150 per cent of variable costs on 30,000 pounds the proposed formula results in a 6.6 per cent reduction in rate on 50,000 pounds, 9.9 per cent on 70,000 pounds, 11.5 per cent on 90,000 pounds and 12.6 per cent on 110,000 pounds. These data are taken from the Interstate Commerce Commission figures for the United States, based on a 500-mile haul.
Under the maximum rate formula provided by Bill C-231 the maximum rate for 30,000 pounds is 1.82 cents per 100 pounds and the maximum rate for 120,000 pounds is 1.59 cents for 100 pounds. The rail revenue per car is, therefore, $546 for a 30,000-pound movement and $1,908 for a 120,000-pound movement. What should be particularly noted is that a shipper of a 30,000-pound carload is required to contribute only $328.20 per car toward the railway overhead whereas the shipper of a 120,000-pound carload is compelled to contribute $1,615.20 per car.
The production of a more equitable maximum rate formula requires that one or more of the assumptions on which Bill C-231 is founded must be changed. That is suggested by the Manitoba brief and is an argument to which I entirely subscribe. The brief states that it is necessary and that the formula requires revision both to reflect the economics of the heavier loading and the percentage relationship of the contribution to total variable costs.
As further illustration of that particular point I should like to refer to a chart which I have in front of me, prepared by Professor Borts. It is an assessment of the development

of maximum rates and mark-ups over actual variable cost in Bill C-231 and is based on Canadian Pacific Railway costs in 1953, as derived from the royal commission report, on a 500-mile haul. It gives the following breakdown. On a 30,000-pound carload lot the variable cost, which includes the cost of money, is 50.2 cents; the mark-up over the actual variable cost in that case is 150 per cent. When the carload lot goes up to 50,000 pounds the variable cost goes down to 34.1 cents. The mark-up over the actual variable cost goes up to 246 per cent. At 70,000-pound carload lots the variable cost is reduced to 27.2 cents. One of the natural laws in business is that there is an economy to be derived from heavier loading, but the mark-up over actual variable cost and the profit to the railway goes up.
This chart pursues this argument through various levels of carload lots and finally demonstrates that a carload lot of 130,000 pounds has a variable cost of 19.4 cents-


The Deputy Chairman:: Order, please. I regret to interrupt the hon. member but his allotted time has expired.


John Whitney Pickersgill: Mr. Chairman, if the hon. gentleman does not propose to continue at great length perhaps it would be desirable to allow him to complete his remarks in order that his argument will be all in one piece.


Maurice Rinfret: Is there unanimous consent to allow the hon. member to continue?


Some hon. Members:: Agreed.


Louis Ralph (Bud) Sherman: I thank the minister and members of the committee for their kindness in permitting me to continue. I really am coming to a conclusion and I will take only two or three more minutes of the committee's time.
I was making the point that in respect of a 130,000-pound carload lot the variable cost comes down to 19.4 cents. This is a reduction in the variable cost from that for a 30,000-pound load of 30.8 cents. The variable cost has been constant through all these figures at $1.26. The maximum rate is based on the 150 per cent formula. The mark-up over the actual variable cost and profit to the railway is 467 per cent.
The conclusion one must inevitably draw from these figures is that it is not worth the railway companies' time and, therefore, not in their best interests to strive for efficiency in rail loadings.
January 19, 1967

[DOT] (5:10 p.m.)
If their variable cost is reduced, under the formula as it is presently constituted and composed their mark-up, their margin of profit is reduced by a far more substantial amount. The degree and speed with which the mark-up rises would reflect itself in the reverse; the mark-up would be reduced in equally dramatic fashion if the railway were to reduce its costs and bring the figure for variable costs down to a more reasonable level and practice these rail efficiencies which are vital to the improvement of the transportation system of this county. Therefore we argue that the formula as it is designed militates against those economies and prevents the shippers and the railways themselves taking advantage of the economies of heavier loadings. There are not economies of heavier loadings in the section as now written.
Finally, Mr. Chairman, I wish to return to the subject of the captive shipper and the definition of "captive shipper". It is a subject to which I referred in my initial remarks in this debate on December 21. The experts who prepared the Manitoba presentation and argument felt that the wording in new section 336 <1) is entirely unsatisfactory on the subject of the captive shipper and the definition of "captive shipper". They felt that it does not in fact properly define a captive shipper at all, and takes away and denies much of the protection that was supposed to be embedded in this legislation for various shippers in the country as a result of the studies undertaken by the MacPherson royal commission, which as we know really led to the developement of this legislation.
I would therefore propose, in line with the proposal that has already been made by the administration of Manitoba through its brief presented to the standing committee, that a new subsection be written into new section 336. I am not at this juncture proposing it as a formal amendment, but I suggest that while debate on this section continues it might be advantageous if hon. members on both sides of the house would give some thought to a subsection that would more clearly define a captive shipper. I request the continued good will of the minister in this respect and ask him to ponder the suggestion during the next few minutes while debate on this section continues. The amendment I suggest is that a new subsection be added as subsection (2) of section 336 as follows:
A shipper of goods in respect of which the rates in effect on the 1st day of January, 1965, were class and commodity rates subject to the Freight
Transportation
Rates Reduction Act, shall be deemed to have no alternative, effective and competitive service by a common carrier other than a rail carrier or carriers or combination of rail carriers.


Horace Andrew (Bud) Olson: Mr. Chairman, I was keenly interested in the remarks of the hon. member for Winnipeg South because I was wondering whether he had courage enough to try to alter new section 336 so it would serve some useful purpose in this bill. I have looked at this section very carefully and considered many ways and means of trying to improve it. I have considered moving amendments to the section which would provide some effective maximum rate control where it is needed. I am sorry to advise the commmittee that I do not believe the section can be repaired. Therefore I propose to move later that it be deleted from the bill. I say this knowing full well that there are shippers in Canada who are completely dependent on railway freight services for the operation of their business.
I suggest that there is no effective maximum rate control provided in section 336. I have reached this conclusion in view of the discussions we have had a number of times on this question. Fictitious loading factors are used, such as 30,000 pounds, and there is an allowance of 150 per cent above the unknown variable costs that goes into this formula. Therefore it seems to me we would be better off without it.
On December 20 I dealt with this matter very carefully and outlined what I thought to be the weaknesses in section 336. I gave those reasons to the house when the bill was first returned from the standing committee on transport and communications. I do not intend to repeat all those arguments because the minister and the members of that standing committee know that during the course of the debate in the committee I attempted to obtain certain cost date that I regarded as essential in order to calculate what would be the effect of the passage of this bill. I failed to convince the members of that committee that it was essential and that we had the power to send for it. I am sorry that happened but nevertheless that is the case.
Having considered this clause and compared it with clause 16, which has been dealt with during the course of this debate and was considered by the standing committee, I am convinced that if section 336 in clause 53 were deleted the entire reliance for maximum rate control would be placed in clause 16. In my opinion that would be far, far better than trying to make a shipper who thinks he may be captive prove captivity under the definition

January 19, 1967
Transportation
in this clause and, even if he did, to have this formula applied.
I believe this section is useless. If it were deleted the shippers of Canada would rely entirely on clause 16 if they wanted to appeal against a rate being demanded of or imposed on them. I think it would be well to draw the attention of hon. members of this committee to the wording of clause 16 so they will understand what I am arguing. I hope they will agree with me; I also hope the minister will agree with me. If it is proven that the public interest if affected there is, of course, authority under clause 16 given to the new transportation commission, first, to investigate the matter and then, under subclause (4) of clause 16, it has the power to make an order to remedy the situation. I would far, far rather rely on the wording in that clause than I would on the wording in section 336. Clause 16 (2) provides:
Where a person has reason to believe-
(b) that the effect of any rate established by a carrier or carriers pursuant to this act or the Railway Act after the commencement of this act, may prejudicially affect the public interest in respect of tolls for or conditions of the carriage of traffic-
And so on. In that event the shipper may make application to the transportation commission for leave to appeal the rate. If the commission is satisfied that a prima facie case has been made it is obliged to make an investigation of this matter. After that investigation is made the provisions of subclause (4) will apply. Subclause (4) reads as follows:
[DOT] (5:20 p.m.)
If the commission, after a hearing, finds that the act, omission or rate in respect of which the appeal is made is prejudicial to the public interest, the commission may, notwithstanding the fixing of any rate pursuant to section 336 of the Railway Act but having regard to section 334 of that act, make an order requiring the carrier to remove the prejudicial feature in the relevant tolls-
We argued long and hard with the minister to have something of this nature included in the act, and now it is here. However, what I fear is that if the provisions of section 336 are left in the act and a shipper feels he is paying an unreasonably high rate, a rate which may be discriminatory or, in other words, a rate higher than that paid by another shipper on the same commodity and under similar conditions, the commission may refer him to section 336 in which a remedy may be found. But there is no effective remedy to be found in it. As far as we can determine the maximum rate in applying the formula and the factors included in section 336 would be of absolutely

no benefit. We are unable to make any calculations because we have not been provided with data on the so-called variable costs so that we cannot establish what the rate might be on certain commodities in relation to the present rate.
As I said over and over again in the committee, I think that members of this house not only have the right but have the responsibility to ascertain what the effect of the legislation is likely to be. In other words, we should have sufficient information to enable us to anticipate what will be the various fluctuations in the rates, or at least some samples of the rates if the new law that we are being asked to pass is in fact applied. We cannot do that without all the factors used in the formula and the variable costs which were requested. There were some samples respecting sulphur, lumber, steel, dressed beef and so on, and I moved a motion in this regard. We were not asking for specific rates that were being charged by the railways to any specific shipper but we wanted to have samples so that we could use the 30,000-pound base, with changes in the loads to 50,000 pounds and 70,000 pounds, and add the 150 per cent provided under section 336 to see what the end result of these calculations would be. We cannot do this because we do not have the variable costs which are so essential in these calculations.
One other important reason in support of my argument is that the president of the C.P.R. and the chairman of the board of the C.P.R., as well as the minister himself, said before the standing committee that they could not think of anyone who would qualify as a captive shipper. The only point which the minister would concede was that someone who paid class rates might be considered a captive shipper. The minister knows very well that less than 5 per cent of the freight being moved at present is charged at class rates. He knows also that some of the other class rates in effect today are as much as five or six times the normal rate that is in effect. I can think of a few examples such as coal. I do not have the exact figures in front of me but it seems to me that the class rate on shipments of coal from Alberta to a point in Ontario is approximately $33 a ton and the rate that is being charged is around $8 a ton. This means that the class rate is 400 per cent higher than the normal rate being charged today. If only shippers who ship at class rates are able to qualify as captive shippers, whom is this clause going to protect? We know that less than 4 per cent of the traffic is being moved at class rates.
January 19, 1967

The section will not assist the western provinces and the maritimes in gaining access to the markets of central Canada. The minister and the senior officials of the railway companies have convinced me that section 336 will not be used. Therefore, as I said at the outset, I would far rather see maximum rate control vested under clause 16 than under section 336.
One of the problems regarding maximum rate control, in addition to those outlined by the hon. member for Winnipeg South, is that we are going to transfer to the rate-makers in the railway companies a far greater control over the economic expansion of Canada than they should have. I say that because this so-called complete freedom to set rates and to compete will be in the hands of these people. I can see nothing in this bill which will stop them from giving advantageous treatment to certain companies and certain areas to the disadvantage of other companies and areas, especially in light of the numerous investments they have.


John Whitney Pickersgill: I wonder whether I could pose a question to the hon. gentleman? Is the opinion he has just expressed based on the assumption that if this legislation is passed and the railways are free to set their rates they can keep those rates secret?


Horace Andrew (Bud) Olson: No, Mr. Chairman, I do not assume that although I would feel relieved if I knew that all the rates charged to shippers would in fact be public knowledge.


John Whitney Pickersgill: If the hon. gentleman does not mind this interruption let me say that I had a feeling, during the earlier debate on clause 16 when the hon. gentleman was not in the committee, that several hon. members seemed to have some doubts on this point. I did not rely on my own knowledge of the law, although it turned out that my impression was correct, but checked with the law officers, not merely in my department but also in the Department of Justice, and was assured that under the existing law agreed charges or any other freight rates of the railways have to be published so that all shippers know what they are. Therefore it would appear to me to be quite impossible for a railway company to give an undue advantage to some company in which it had a pecuniary interest without another company being able to take advantage of the same rate, and if it could not do so it could have recourse under clause 16. That is the precise reason that it is there. I think I can safely assure the hon. gentleman that no freight toll now, under the new legislation, or
Transportation
under the Transport Act where agreed charges are authorized, is valid unless it is published. They all have to be published.
[DOT] (5:30 p.m.)


Horace Andrew (Bud) Olson: I am very pleased to hear that because at least other shippers will know about these rates. I thank the minister for that information.
Let us take the next step. Suppose a sub-sid.ary of the Canadian Pacific Railway Company has a lower rate for a like commodity for a like distance. What do other shippers do about that? Do they have to prove public interest or will they apply to the new transport commission under proposed section 336 to have a maximum rate applied to them?


John Whitney Pickersgill: I think there would be no doubt that they would apply under clause 16. The hon. gentleman may not be aware that an amendment to clause 16 was adopted by the committee which, without attempting to define public interest in its totality, did define it to include the undue advantage provision that is in the latter part of the clause. Therefore all these shippers would need to allege-they would not need to prove it in order to get a hearing-would be that there was an undue advantage being given to some other shipper. Then they would have a case before the commission which would have to be heard.


Horace Andrew (Bud) Olson: This is very useful information. I am pleased to learn that clause 16 has been amended in such a way that it will restore, at least in part, the traditional and ancient claim of discrimination. The Board of Transport Commissioners has been dealing with these claims over the years. What the minister has just said with respect to the publishing of all rates, no matter to whom they are charged, and also the amendment to clause 16 under which shippers can make a plea on the basis of discrimination, as well as the fact the commission will have authority to make an order as to a remedy, add weight to my contention that proposed section 336 should not be in the bill.
Clause 16 has been amended in such a way as to restore some of the authority the Board of Transport Commissioners now has to deal with claims of discrimination but I think there should be other things included in that clause. For example, it should contain a provision that there shall be no rate higher for a shorter haul than for a longer haul for the same commodity in like circumstances. However, whether or not that is written into the

January 19, 1967
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law I hope this new commission, in its wisdom in deciding upon an order to remedy a situation, will take this factor into account. Perhaps in the initial stages we could rely on that.
I do not want to delay the committee any longer, Mr. Chairman. I have made the same argument in the standing committee. If hon. members would like to look at it they will find it in the proceedings for December 20. I argued that the provisions and formula contained in proposed section 336 afford no protection in so far ae effective maximum rate control is concerned. I hope, therefore, that the minister and his colleagues, as well as members on this side of the house, will support this argument and the amendment I now intend to move. It is a very simple one. I move:
That section 336 of clause 53 be deleted.
Finally, Mr. Chairman, I should like to repeat what I said earlier, that so far as effective maximum rate control is concerned it would be far more beneficial for shippers to rely exclusively on clause 16 than to have the new transport commission refer them to proposed section 336 and try to apply the formula there or use the calculations based on that formula.


John Whitney Pickersgill: I just want to say very briefly that I could not support this amendment, although I must say that the hon. gentleman has made a very ingenious and rather effective argument. I agree with him that clause 16 of the bill, in the form in which it now is after amendment by this committee, will be of more interest to many more shippers who may feel that their competitive position does not enable them to negotiate a fair rate than would the proposed section 336. However, I do not believe the proposed section 336 is open to the objections the hon. member suggested as his reason for taking it out.
I say quite frankly, as I did in committee, that I do not believe many shippers who are now shipping under commodity rates would be likely to find much relief or much benefit from the proposed section 336. Someone will no doubt correct me if I am wrong, but if I recall correctly about 5 per cent of the volume and 14 per cent of the value of railway revenue-it may be the reverse-is derived from class rates. Considering the enormous volume of goods carried on the railways of Canada, I do not believe we should even ignore this minority of shippers who are now

paying the real maximum rates under the present law, that is, the class rates. Some of these shippers might be left unprotected because they would not be in a position really to compare themselves with anyone else. The rates they would be paying would probably be exactly the same as their ne.ghbours would pay under like circumstances. I think it would be leaving a group of shippers with relatively small bargaining power without protection.
At the moment I am not going into the merits of the protection. However, the hon. member for Winnipeg South referred to the evidence given by Professor Borts. I am not going into that evidence at any length, but I suggest to hon. members who are particularly interested in this subject that they look at pages 2895, 2896 and 2897 of the proceedings of the committee for November 24. Professor Borts made a considerable analysis of the situation. It is true he did claim he did not have enough data to make his analysis, but he did make a considerable analysis. Perhaps I could just quote what he said:
Here we discovered that there were categories of high-rated traffic which might very well have an inducement to seek captivity under the bill. These consist of high-rated traffic in the tonnage category from 15 tons up to 35 tons.
[DOT] (5:40 p.m.)
These would be small shippers. I feel it would be a mistake, if there is some protection here, to take away that protection. I believe there is some protection in this section, though I agree with the hon. gentleman, not for shippers of bulk commodities. There might be in an isolated case but not in one that has been drawn to my attention. In areas where there are lines of railway but no roads and therefore no trucking service, a shipper would be at the mercy of the railways and the conditions under clause 16 might conceivably not be considered by the commission to apply.


Horace Andrew (Bud) Olson: May I ask a question? Clause 16 (4) says that the transportation commission shall have the authority to make an order removing the prejudicial feature in the relevant tolls or conditions which are specified. If the tolls were found to be over the 150 per cent of the variable cost, then under this provision does the commission not have authority to remedy the tolls and to move them below the 150 per cent?


John Whitney Pickersgill: Certainly that is my opinion. Therefore I think that if we took this section out and deleted the reference to 150 per cent there would be no direction of any kind. It does not appear to me-
January 19, 1967


Horace Andrew (Bud) Olson: I was referring to clause 16, not the proposed section 336.


John Whitney Pickersgill: I appreciate what the hon. gentleman says, but I do not think there is any conflict between the two clauses. I think they are both necessary to protect shippers. I do not think there would be any danger of the commission, in the case of someone who went before the board alleging, for example, that he was under an undue disadvantage, doing anything if it agreed with him, but insist that his rate be the same as the rate for the person who, in his opinion, had an undue advantage, if that was found to be the fact. This is now written into both parts of clause 16, the prima facie part and the second part. It might be that there would be some shippers who, because of their intrinsically captive shipper status and because they were small, could get a rate which in some cases would be even more favourable under section 336 than the rate they now pay under class rates. Professor Borts came to the conclusion that that was the probability in the case of some of these smaller shippers.
I should not like, by accepting the amendment to delete this clause, to take that potential advantage away when in fact I do not think it would prejudice anybody under clause 16. For that reason I would not care to support the amendment.


Mr. Schreyer:: Mr. Chairman, I think there are some good reasons for supporting the amendment. One of the most important reasons for supporting the amendment to delete this section is that the provisions of section 336 are such as to give little real protection to shippers of commodities that are heavy loading. I think it can be said that the proposed section 336 gives a very misleading impression. It gives the illusion of some kind of regulatory control and protection for certain classes and kinds of shippers when the fact of the matter is that it does not. The reason it does not has already been put before the committee by the two previous speakers, the hon. member for Winnipeg South and the hon. member for Medicine Hat.
When this clause was being considered by the standing committee it was regarded in many ways as the storm centre of the whole bill, as being the nub of the regulatory features of the bill, such as they are. The fact is that in certain parts of the country it is obvious that there is still need for adequate regulatory provisions in our transportation legislation and transportation policies. It may 23033-759
Transportation
be the case that in some parts of the country there has grown up in the past decade or two massive, pervasive, intermodal competition in transportation that enables the authorities, government, to relax or reduce their reliance on regulation. But in other parts of the country this so-called pervasive intermodal competition in transportation simply does not exist for many commodities.
We should certainly have more adequate regulatory provisions than those provided in section 336. In the final analysis I think it would be better to delete the section so that there would be no mistake, misunderstanding or self-deception, and the shippers who did seek some kind of protection would be able to fall back on clause 16. If there is any real, meaningful regulation in the bill at all in this regard it is to be found in clause 16, not in this clause. I think the hon. member for Medicine Hat was right in the main contention he put forward.
One of the main faults with section 336 is that it does not give an adequate definition of a captive shipper. The purpose of this section is to enable captive shippers to apply to the commission for a maximum rate or for rate control which will afford them some kind of protection against unduly high rate charges by the railway companies. If this is the purpose of this section it is deficient in that it does not go on to stipulate or adequately define just what a captive shipper shall be.
The minister has repeatedly refused to give any consideration to a more precise or adequate definition of the term "captive shipper". In the event that someone does succeed in demonstrating to the commission that he is a captive shipper and asks the commission to set a rate, the formula which the commission shall abide by in setting a rate is one which, I submit, this parliament is not in a position to evaluate. I have said that on at least two previous occasions during the debate on this bill, I think during the debate on clause 1, and I now repeat it.
The reason that this committee is not in a position to evaluate the effectiveness, fairness or justice of the formula is simply that the necessary costing data which the committee requested were refused. In the committee stage of the bill a formal motion was made asking that this data be made available by the railways but it was rejected. Who, therefore, is in a position to say that the formula, based as it is on the 30,000-pound carload standard and allowing for variables, can be computed on that arbitrary weight standard if you allow

January 19, 1967
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a 150 per cent mark-up on the variable cost? Who will say that is fair? Who will say that this will give us an effective formula and that it will protect shippers adequately with respect to railway rates?
[DOT] (5:50 p.m.)
It has been repeated many times that the railways are obtaining larger and larger equipment capable of hauling heavier loads. What justification is there for imposing a maximum rate formula based on a 30,000-pound carload standard? Often commodities are hauled by the railways in loads of 90,000, 120,000, 130,000 and 140,000 pounds. The tables the minister has seen show that. If we have a formula based on a 30,000-pound carload standard and if we allow variable costs plus 150 per cent, on that basis it will mean that the railways will make a 150 per cent mark-up on a shipment of 30,000 pounds, a 300 per cent mark-up on a shipment of 70,000 pounds and over 400 per cent on a shipment of 120,000 pounds.
Where is the realism? Where is the common sense in having in the bill a section with a maximum rate that will allow the railways, in some instances, a mark-up of over 400 per cent? I suggest that this section looked at in that light, and it must be looked at in that light, is absurd.
The minister heard practical suggestions in the briefs of counsel appearing for the three prairie provinces to the effect that the definition of captive shipper in section 336 be altered and redefined. The Manitoba and Alberta briefs recommended that the basis on which the formula shall be established shall not be an arbitrary 30,000-pound standard but the actual variable costs. It was suggested that the railways be allowed a mark-up consistent with a reasonable or permissible level of earnings. At this point in the committee hearings the minister made that famous remark, which on reflection I am sure he must regret, that the idea of a fair return being used as a basis for regulation is, and I quote his words, "a mediaeval notion".


John Whitney Pickersgill: Would the hon. gentleman mind quoting what I actually said?


Edward Richard Schreyer: Is the minister prepared to deny that he said that the notion of a fair return was mediaeval?


John Whitney Pickersgill: No, but I do not recall having said any such thing. What I said, I think, was that the notion of a fair price as opposed to a price established in the market was a

mediaeval notion. I am an old historian, sir, and when I used the term "mediaeval" I did not mean the nineteenth century. I was talking about the Thomist philosophy, the notion of a fair price. I said that it did not appear to me that you could determine a permissible earning in the competitive field, and I did not know how, when you allowed the railways to compete in a large sector and regulated them in a small sector, you could divide their profits, how you could segregate the profits from the market sector and the regulated sector to determine what would be permissible earnings in the regulated sector. That is a mathematical problem that is so complicated it would take at least until the year 2,000 to work it out.
You could determine that if the whole system were regulated, as with the Bell Telephone Company, for example. But how can you segregate earnings when you say that you will regulate in one sector and allow competition elsewhere? I do not know how you will achieve that. Permissible earnings would make nonsense of the concept of competition. How can you say that you will have competition but there must be only permissible earnings? You do not say that to the Aluminum Company; you do not say that to the western farmers. Surely the distinction is obvious.
I do not think the hon. gentleman should talk about two statements that I made on different occasions and put parts of them together, thereby representing them as though they were one statement.


Edward Richard Schreyer: I must confess that I did not hear the minister's reference to Thomist. The proper thing, I realize, is to accept the minister's word if he denies having made the statement.


John Whitney Pickersgill: I have said some silly things, and I do not remember them all. What I said, to protect myself, was that I had no recollection of making the statement, and I gave the hon. gentleman the gist of the statements I recall having made.


Edward Richard Schreyer: May I call it six o'clock?


John Whitney Pickersgill: Perhaps I could speak to you, sir, after you have taken the chair.


Herman Maxwell Batten: Order. It being six o'clock, pursuant to provisional standing order it is my duty to leave the chair so that the house may proceed with the consideration of private members' business.
January 19, 1967



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: It is my duty pursuant to standing order 39A to inform the house that the questions to be raised at ten o'clock this day are as follows: the hon. member for Lotbiniere (Mr. Choquette), Transport-steps to be taken by the government following the verdict returned about the tragedy at Dorion, Quebec; the hon. member for Timmins (Mr. Martin), Natural Gas-Trans-Canada Pipe Lines-suggested twinning of line in Canada; the hon. member for Parry Sound-Muskoka (Mr. Aiken), Pollution-request for further research into detergents.
[DOT] (6:00 p.m.)


John Whitney Pickersgill: Mr. Speaker, I have been informed by the whip on this side that there has been consultation among hon. members and it was understood we would forgo private members' hour and return to the business that was under consideration when Your Honour took the chair. It was also understood that before we went back into committee it would be ordered that the committee would rise from seven to eight o'clock and the house would suspend its sittings during that hour. If that is a correct interpretation, perhaps it could be so ordered.


Mr. Deputy Speaker:: Does the house agree, first, to suspend the private members' hour for today and, second, that the committee rise at seven o'clock until eight o'clock?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: The business in committee will now be resumed.



TRANSPORTATION


[Stage Direction]
The house resumed consideration in committee of Bill No. C-231, to define and implement a national transportation policy for Canada, to amend the Railway Act and other acts in consequence thereof and to enact other consequential provisions-Mr. Pickersgill- Mr. Batten in the chair.
On clause 53-
Edward Richard Schreyer: Mr. Chairman, the deficiencies in new section 336 are such that they
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simply outrage one's feeling of what is common sense, what is fair and what is reasonable. Unless the minister can give us some assurances, which until now he has not, that certain major changes and amendments will be made, I fail to see any other course but to support the amendment to delete it completely.
In this instance I think there is ample reason for being repetitious. Much of the controversy has been about maximum rate control, and I repeat that unless we can get a more precise and comprehensive definition of a captive shipper this new section really is deficient. Further, unless the minister is prepared to change the formula by which maximum rate control will be applied and abandon the fictitious basis of an arbitrary 30,000-pound carload standard, then the formula will be impossible to apply with any degree of justice or fairness.
Not only should we abandon the arbitrary and fictitious 30,000-pound carload standard but also the formula of variable costs plus 150 per cent. It should be variable costs plus a permissible level of earning relative to cost. This is not something I am proposing off the top of my head on the spur of the moment. It is a concrete proposal put to the minister by counsel for the three prairie provinces and compared with the minister's proposal it is clear that theirs is far better.
I am sure the minister has read volume 40 containing the minutes of the proceedings of the committee on transport and communications on November 24, 1966. On the last page there appears a table of maximum rates prepared by the two experts hired by the prairie provinces to deal with the subject of maximum rate control. In this table they have computed that on the basis of the formula for maximum rate control incorporated in the bill it will work out that the railways will enjoy a mark-up of 150 per cent on a shipment, for 500 miles, of a 30,000-pound carload lot if the shipment comes under the provision of captive as set forth in new section 336. If, however, the commodity is shipped in a 90,000-pound carload lot and the formula is applied, the railways will enjoy a mark-up of 319 per cent, and if the commodity is shipped in a 110,000-pound carload lot and the shipper is captive and applies under this formula, the railways will enjoy a mark-up of over 426 per cent.
Wherein lies the common sense, wherein lies the reason, wherein lies the justice of this kind of legislation? It is actually worse than
120G6

January 19. 1967
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nothing because it purports to provide protection when in fact the protection provided is more mirage than reality. It will simply confuse shippers and cause a lot of trouble for nothing.


John Whitney Pickersgill: Mr. Chairman, if the hon. gentleman wants to speak on the section and not on the amendment, would he agree to a vote being taken now on the amendment? We could then proceed in an orderly way, whereas we are apt to be rather embarrassed in the next hour if we have not disposed of the amendment.


Thomas Miller Bell: I think the embarrassment will be on the other side of the house. We appreciate the newfound interest in this bill. There are 14 cabinet ministers now present. That is the way it should be but it is a little late. We have agreed to sit for part of the supper hour. This is not convenient to some people but we wish to make as much progress as we can. Some hon. members on this side wish to speak on the amendment and on the new section. The minister has changed his opinion, but this is still the heart of the bill.


John Whitney Pickersgill: The amendment seeks to knock out the whole clause, and if it is the heart of the bill I am sure the hon. gentleman would not be that heartless. I was going to suggest that we vote on the amendment. Then we would have the section before us and I think the hon. member for Winnipeg South, if the amendment is defeated, would like to move another one. I just thought it might be convenient to have the vote now.


Thomas Miller Bell: It looks as though some of the members behind the minister are getting a little hungry.


Some hon. Members:: No.


Thomas Miller Bell: We feel sorry for them but we have to make just as much sacrifice on this side.


John Whitney Pickersgill: Well, you can't blame me for trying.


Lawrence Elliott Kindt: Mr. Chairman, I am waiting to get the minister's attention since there seems to be a sort of caucus going on around him. I should like him to decode this new section so that I may understand what it means.
[DOT] (6:10 p.m.)
New section 336 in part reads as follows:
-to fix a rate for the carriage of the goods, and the commission may after such investigation as it
[Mr. Schreyer.l
deems necessary fix a rate equal to the variable cost of the carriage of the goods and an amount equal to one hundred and fifty per cent of the variable cost as the fixed rate applicable to the carriage of the goods in respect of which the application was made-
Surely whoever wrote that could have made it plainer than that. Right from the beginning it is a stupid statement.


John Whitney Pickersgill: Well-


Lawrence Elliott Kindt: Let the minister tell me what variable cost means.


John Whitney Pickersgill: I think perhaps I can do that. Of course, I do not have the advantage the hon. gentleman has. I know the hon. gentleman is a trained economist. I am just a historian. So I am sure he will correct me if I am wrong. However, I have had some instruction from economists. I understand that in the railway business, as well as in most other forms of transport, there are two types of costs, one of which is fixed costs. Very briefly, fixed costs are costs which are fixed. That means that they go on whether or not any traffic is moved. I might give an example, and I will stick to the railways. It will be simpler and I do not wish to be stupid and incur the wrath of the hon. gentleman. In the case of a railway I would say that the fixed costs are the rails, the rights of way generally, the telegraph lines which are placed alongside the railway, the stations, the staff which is necessary whether there are any trains at all, and all those persons who are there in any case whether or not traffic is moving.
The variable cost is the cost of moving any particular thing. In the case of a car of coal, for example, it would be the cost of loading the coal, unloading the coal if the railways do that, the pulling of that car from place A to place B or from the Crowsnest pass, if I may dare mention that place, to Vancouver. It would be the depreciation on that car, because the railway would have to obtain a new car eventually. It would include all the costs which could be attributed directly to the actual movement of the goods. These are the things which are called variable costs because they are not fixed; they vary. They go up and down depending on how much traffic there is.
Some people make a good living by arguing about these things. There could be a very nice argument about whether this or that item really should be attributed to fixed or variable cost. I know the hon. gentleman would not want me to go into that. He knows that the field of economics is filled with margins. This perhaps is not so much a margin as it is a
January 19, 1967

potential overlap. Perhaps my explanation is more stupid than the one contained in the bill but I hope it will help the hon. gentleman.


Lawrence Elliott Kindt: I thank the minister. In speaking of variable costs, anyone who knows anything about accounting or economics will know that there are many of these twilight items which can be slipped over into the variable cost along with the fixed cost, or a fixed cost can go into variable cost and vice versa. Another point is that one can change the interest rate on depreciation. The minister mentioned depreciation. This could be called a fair cost in one case and not in another. The minister also mentioned the fixed cost in respect of management. If the salaries of management personnel went up, then the fixed cost would have to be changed, if this is considered to be a fixed cost. Is it fixed or variable?


John Whitney Pickersgill: I suppose a conductor would be variable and a sectionman would be fixed.


Lawrence Elliott Kindt: This, my dear man, is the jungle you are in; you are in the forest and cannot
see the trees.


John Whitney Pickersgill: But I can see the ties.


Lawrence Elliott Kindt: There is no doubt about it; we are writing an act which we will put into law and then we will expect somebody in the civil service to interpret what are variable costs. What does this mean? I have asked that they be defined. The minister mentioned fixed and variable costs, but there again this has not been nailed down. It is just as nebulous and inaccurate now as it was before he spoke. Yet we are being asked to approve of a section in which this is not defined. There is no definition in respect of these terms in the first part of this bill. There may be a time when someone in this assembly may wish to know what fixed, variable and other costs were taken into consideration in respect of the setting of these rates by the commission. How are they going to make a study and then multiply it by 150 per cent in order to arrive at a fixed rate?


John Whitney Pickersgill: It is just a matter of adding 150 per cent.


Lawrence Elliott Kindt: In other words, count the feet and divide by four. That is the statistical way to do it and that is what is in the bill. I have said sufficient to let the minister know that I am not alone in thinking that what I see here will cause no end of trouble. I am glad to see that the hon. member for Kootenay East is
Transportation
smiling. I do hope that he, who has the good ear, of the minister will fill that ear full of information concerning the trouble there will be in respect of moving coal from the Crowsnest pass to Vancouver and ports on the west coast for reshipment to Japan. I know that the hon. member for Kootenay East is very much concerned about this just as I am. There are some 8,000 people out there who depend on these shipments. The hon. member is a former miner. I know he would never hear the end of it if he went out there and said that something went through here and he did not raise his voice against it. These people out there depend on the shipment of this coal to Japan. The revenue which is coming into the country as a result of these shipments is helping in our balance of payments situation.
[DOT] (6:20 p.m.)
I had hoped that a clause would be included in this bill to give our coal shippers some assurance of protection against exorbitant rates, perhaps through determination of a method of defining a captive shipper. When arrangements were made to ship coal to Japan the railway companies gave the impression that when the volume increased to about one million tons per year they would lower the rates. About a year and a half ago the rates were increased by 15 cents and no explanation has been given for that increase. I suppose that when rates are increased following the passage of this measure there will be no explanation given either. The companies will state to the shippers that they must accept the increase. The government will then be asked to pay additional subsidies because the miners must live and to do so they must sell coal.
A great deal of trouble has been taken to obtain contracts in Japan for our coal. This industry is working fairly well under the present set-up, but these shippers must have some assurance that the cost of shipping coal to Japan will not be increased. They must know what the situation will be in order that they can make plans beforehand.
About a year ago I asked the minister to consult with the railway companies to see whether it would be possible to put on a commuter train to move coal from the Crowsnest pass area to the Pacific coast. We have facts and figures which prove that a commuter train could move the coal at a saving of approximately $1.50 per ton. The cost of shipping coal is $5.30 per ton, and the last time I checked a subsidy of $2.73 per ton was being paid. I hope, as do the coal companies, that we can do away with coal subsidies. This

January 19, 1967
Transportation
may be one step in accomplishing that. The C.P.R. has a monopoly in that area and has refused to make any concession or give any serious consideration to the establishment of a commuter train.
The minister has said nothing about whether he has made any progress with the C.P.R. in an effort to reduce costs and thereby reduce coal subsidies. The coal companies are interested in decreasing the cost of shipping coal to Japan but until they can do so nothing can be done to reduce subsidies. Perhaps the amount of the subsidies now being paid is considered to be the maximum. If the C.P.R. was anxious to obtain additional business it could do so by cutting the cost of coal $1.50 per ton by the operation of a commuter train.
Commuter systems have been operated in the United States to move coal from Pennsylvania and other parts of the United States to seaports, and it could be done from the Crowsnest pass to Vancouver. The coal operators have presented briefs in this regard to the C.P.R. but to no avail. The whole matter has been taken up with the Minister of Transport who said he would consult with the C.P.R., but apparently the whole idea has been shoved into the corner. In any event no action has been taken.
Those two hon. gentlemen opposite can smile if they like but if the hon. member for Kootenay East can tell me what has been accomplished in this regard I wish he would do so. Nothing has been done that I have heard in regard to lowering the cost of coal by instituting a commuter train operation. The people in these coal producing areas are worried because they feel they will be left holding the bag and not be able to do anything about the increasing costs. Something should be done to fix a maximum rate in respect of the cost of shipping coal.
The minister ought to take this bill back to his officials and have it decoded so that people can understand what it means. I do not understand this particular part and, in view of the explanation given by the minister, I venture to suggest that he does not understand it.


Edward Richard Schreyer: Would the hon. member permit a question?


Lawrence Elliott Kindt: Yes.


Edward Richard Schreyer: Is the hon. member aware that during committee hearings on this bill the committee voted nine to eight against a motion to require the railway companies to produce certain cost data in order that it

could ascertain what were variable and fixed costs? Had that information been produced perhaps we might understand the formula contained in new section 336. I wonder whether the minister is aware of that fact and what he thinks about it.


Lawrence Elliott Kindt: Were they government members who voted against that motion?


Some hon. Members:: Shame.


Lawrence Elliott Kindt: That tells another story.


Mr. Coie (Longueuil):: Where were you?


Lawrence Elliott Kindt: I was not a member of the committee. I tried to get on the committee but could not because of the limitation on the number of members. It was a popular committee but I had to rely for my information on its reports. I was in attendance at several meetings.


Desmond Morton Code: You should have put your experts on that committee.


Lawrence Elliott Kindt: We now know why the minister wanted to put a time limit on the consideration of this bill in order to get it through before Christmas. He is now anxious to get it through at this time. We should like to see this measure dealt with before very long but surely we should not be asked to pass it as it now reads.
Perhaps I have said enough at this time. Although I have not received any answers to my questions I will yield the floor to the minister.


Mr. Byrne:: Mr. Chairman, as an old silicotic hardrock miner speaking to a doctor of political science and economics, let me say that I believe we are better informed and understand better what is meant by fixed and variable costs than the hon. gentleman does. Let me remind the hon. member for Springfield that the subject matter of the motion to which he referred did not relate to variable of fixed costs but rather to how the railway companies arrived at the determination of costs in these areas. The minister has outlined what are considered fixed and variable costs and I do not think there is any difficulty in this regard. [DOT] (6:30 p.m.)
I must remind my hon. friend that the passing of this section would not in any way change the circumstance that prevails in respect of the Crowsnest pass coal rates. Hon. members will pardon me if I am a little hesitant to use the phrase "Crowsnest pass".
January 19, 1967


Thomas Miller Bell: That's all right; we have heard it before.


James Allen (Jim) Byrne: However, I have something of a commitment to some of my western colleagues not to give my impressions of what are known as the Crowsnest rates. 1 am referring specifically of course to the rates that apply to the movement of coal from the Crowsnest pass area and Canmore. Anything that is being done in this bill will not change the circumstance that prevails.
I am sure that if the hon. member were to reflect on the situation for a moment he would realize that this section could not possibly determine the final result of the negotiations between the coal companies and the railway in respect of the coal that is being shipped, and we hope will continue to be shipped, to Japan. The question of moving coal from the Crowsnest pass area to the seaboard is, and I am sure will have to remain, a matter for negotiation between the coal companies and the railway.
The hon. member indicated to the committee that the Japanese are reluctant to enter into long term contracts for coal from Canada because we are at the present time paying about $2.73 a ton in subsidy to the coal companies in order that they may market their coal in Japan. The hon. member has said it has been determined that with the use of integral unit trains coal may be transported for $1.50 per ton less then the going rate of $5.30 per ton. He has said the reduction could be brought about in this way. I would say that a reduction of $1.50 per ton is still not sufficient to make the coal marketable in Japan.
Were the government to determine that this was a freight figure that would make coal saleable, and were we in any way to direct the railways to undertake to carry the coal at a figure which they believe to be non-compensatory, it seems to me we would again be in the position of the government having provided a monetary vehicle upon which the coal would be moved to the seaboard and eventually to Japan. Therefore we would be back in relatively the same position.
In any event if the coal companies in the Crowsnest pass area are captive shippers, there is no relief for them in this section and would not be in any section we could write into the bill. It is a simple fact of economics that if the cost of transportation of coal to the coast, the bulk loading and water transportation, cannot be reduced to a very minimum figure, of course there will be no market. It is anticipated, or course, that an economic
Transportation
freight rate will be arrived at, and that the market will eventually reach 3 million to 5 million tons.
I believe we cannot dictate in this respect when the purpose of the bill is to relieve the railways and other modes of transportation from regulation, and provide for competition. I think the hon. member is aware of the proposal of Crowsnest Industries, which is one of the major shippers of coal to Japan. This company provides almost half of the coal exported from Canada to Japan. The proposal of Crowsnest Industries is to build a railway, which would remove them from the so-called captive shipper situation. They have asked permission of the provincial government to build 70 miles of line from Michel to the border near Eureka, Montana, where transportation would be carried out on the Great Northern Railway. This company has negotiated with the Great Northern Railway a rate which is substantially lower than the C.P.R. finds it possible to quote at this stage. But for the time being the alternative negotiations are being held up through lack of provincial authorization.
Last September during the period of a provincial general election, the government of British Columbia announced that they had brought the parties together, namely the Great Northern Railway, the C.P.R. and Crowsnest Industries, and had more or less settled the question. It was said that the coal would be carried on Canadian Pacific Railway lines to the coast and that everything had been agreed upon. But this was of course simply an election announcement; it just was not the fact. I understand there was some stipulation that seemed to amount to an understanding on the part of the provincial authorities that the federal government would pay a small direct subsidy to the railways. They had omitted to consult the very important fourth party in this undertaking.
The situation at the moment is that the Great Northern Railway Company have quoted Crowsnest Industries a rate for the carriage of coal. Crowsnest Industries have studied the economics of building a railway of their own and have worked out the actual tonnage cost in relation to the capitalization of that railway. They are prepared to go ahead on that basis, but the provincial government have not thus far given the authorization to do so. When the authorization is given, Canadian Pacific Railway may well decide on the rapid construction of integral or unit trains and the economic problem may be

January 19, 1967
Transportation
solved in that way. However, negotiations are progressing quite favourably at the moment and will be determined very quickly when the provincial government have decided whether they are prepared to issue a permit.
[DOT] (6:40 p.m.)


Lawrence Elliott Kindt: Mr. Chairman, I listened with a great deal of interest to the remarks of the parliamentary secretary. I am familiar with those things he mentioned because I was concerned in most of the initial negotiations in respect of the shipment of this coal to Japan. I talked to the coal operators who were down here in Ottawa and they told me what the hon. member for Kootenay East has said. May I say that the Canadian Pacific Railway has no competition; it is a monopoly. It is in facing that fact that we will find the answer to many of the difficulties of the coal shippers. Let me go one step further and tell you that when arrangements were made for coal to be sent to Japan, port facilities were set up to load and unload the coal and our thought was that these facilities would not only be used for the loading of coal but also for loading potash shipped from Saskatchewan, and a lot of other bulk products which would spread the cost over the various types of commodities and therefore reduce the cost of loading coal. We were quite willing to agree to a certain rate on bulk loading and we were quite willing to assume that when the volume increased the cost of loading should drop. We had statistics on the cost of moving this coal from the ports on the West coast to Japan. However, now that the Japanese are using their own ships, the rates on the hauling of coal have declined, but the saving is unknown.
The miners said they would not strike and agreed to the $16 or $18 a day which they were getting at that time. We thought that if a chip could be taken off the cost of loading at Vancouver, a chip taken off the profits of the operators when the volume was increased, and a chip taken here and there all along the line, together it would amount to the government subsidy.
The hon. member for Kootenay East said that a difference of $2.73 cannot be made up. Let me remind him that in the beginning it was $4.50. When the former government set the exchange rate on the dollar, that reduced the subsidy substantially. I think that if the government took the bull by the horns and really tried to get rid of the $2.73, they could do so. Let the hon. member for Kootenay East mark my words when I say that in less than a year's time the C.P.R. will be setting rates on

captive shippers, who in turn will be asking the commission to fix rates which will be much higher than the $5.30 which is being paid today. I think the hon. member for Kootenay East will agree with me that we are striving to increase our import trade.
Slightly under a billion tons of coal are being shipped to Japan, and a lot of thought, labour and effort has gone into arranging these shipments. We want to expand this trade. If the hon. member for Kootenay East were as successful in getting a commuter train so as to reduce the costs, and get the C.P.R. to put into effect more modern methods, then the people in the Crowsnest pass would be in clover. The only way in which he thinks it can be done is by threatening to establish a railway which would be hooked up to the Northern Pacific. More than once I have been at meetings where that has been discussed, and I agree that this proposal has some merit; but the feeling of everyone, including the government of British Columbia, is that the C.P.R. should put in a commuter train, if there was a clause in the bill which froze the rates. If the C.P.R. rates were frozen until such time as they put in a commuter train, they would have to do it, but until that is done no action will be taken by the C.P.R. For those who are not familiar with the situation let me explain that box cars are loaded with coal in the Crowsnest pass and then wait a few days until a train comes along. They are then hooked on to the train, which may take a week of bumping along before it arrives at its destination at a port on the west coast. The cost of moving coal in that way is very high.
Is the C.P.R. going to modernize and change this obsolete method of moving coal or do they intend to ask the commission to accept the rates and costs as they exist today? These are the problems that I see in the bill. These are the obstacles to doing what I think should be done, namely to facilitate our export trade. But no, embedded in the bill is the provision which enables the C.P.R. to go on refusing to improve their shipping facilities, and as a result we will disappoint those people who are relying upon us as their representatives to find a solution to this problem. We have not got to first base on it. I would be very pleased to hear the hon. member for Kootenay East say that we have.


James Allen (Jim) Byrne: I believe the negotiations have reached a point where they are very close to a settlement. Certainly the C.P.R. have in mind much more modern equipment than the 1903 gondolas which they are using at the present
January 19, 1967



time. Any such agreement must require more modern equipment, such as the unit trains suggested by the hon. member.


Mr. Cantelon:: Mr. Chairman, first of all I should preface my remarks by saying that I do not agree with the basic premise of the bill; otherwise it might be doubtful as to just why I disagree with section 336. I think that the MacPherson commission, in making its recommendations some years ago, completely misread the conditions existing in our country today. Perhaps I should not say that they misread the conditions, because the commission could not know what they would be today. I do not feel that competition in transportation-certainly in the west and on the Atlantic coast-is sufficient to warrant the conditions that we have set up in the bill, and here I am referring to section 336 in particular.
[DOT] (6:50 p.m.)
This afternoon the hon. member for Winnipeg South set forth very pertinent and concise information which I think gives conclusive proof that section 336 is not satisfactory to a great portion of this country.
The views of Manitoba, and those of Professors Borts and Williams, are very well set forth indeed. I must say that I agree with those gentlemen in their consideration of this particular problem. The difficulty with which they were faced was a matter of costing figures. They pointed out that it was impossible to get accurate cost figures because the committee and these gentlemen were unable to get up-to-date costing figures from the Canadian Pacific. The only figures that they could use were those the MacPherson commission had obtained. They then tried to bring those figures up to date as well as they could. They were able to get information from the United States on cost figures, and they tried to relate this information to the situation in Canada. This is one of the reasons we felt that the bill is ineffectual, and that proposed section 336 in particular will not do what it is intended to do.
In particular, I object to this section because it uses the basis of a carload of 30,000 pounds. Having sat in the committee for weeks on end, I know the explanation for the use of this 30,000 pounds. It was used, we were told, because it is a suitable truckload. In my opinion this is a fallacious argument because a railway is not going to use a 30,000-pound load just because the trucking people find it efficient to operate on that basis. I believe therefore the whole of the proposed
Transportation
section 336 is rendered ineffective because that 30,000 pound weight is established as the standard carload weight.
As I said a moment ago, the hon. member for Winnipeg South has pointed out the effect of this on loads of a greater weight, and it could be as much as 400 per cent. The hon. member was only using loads of up to 130,000 pounds, so what the effect would be on the potash shipper who now uses something like 200,000-pound cars beggars description. It certainly would allow the railroads, if they were using this as a basis on which to cost their potash shipments, to charge astronomical rates. I know that they do not do that because they negotiate with the potash shipper, who gets an agreed charge. The trouble there is that there is in effect only one thing that controls the cost to the potash shipper, and that is the law of charging all that the traffic can bear. I do not believe that that is good for the country. I do not believe this is a logical law to apply.
It could be argued that it is better for the railways to make large profits than for the potash shipper in our country, most of whom are financed by United States capital. Some people would argue it is better for the railways to make the profits than for United States capital to make money. I disagree, because if we are going to develop this country we must not have the profits going to the transportation means; they must go to those who are risking their money to develop the country. I am not one of those who feel it is wise for us to restrict the flow of capital to this country by allowing the railways to have the bulk of the profits as a result of charging all the traffic will bear. I would much prefer those profits to go to the potash mine, the iron mine, the copper developer and to the man who is boring the wildcat well. It is far better to have these people get the profits, so they will continue development.
I hope the Chairman does not believe I am away from the topic when I introduce these points, because I do not believe I am. The point I am trying to make is that this proposed section 336 is not a good section and that the 30,000-pounds stipulation should be eliminated. I will go so far as to support the hon. member for Medicine Hat who believes the best thing to do is to get rid of the whole section. I believe that this would be advisable. I agree with him that clause 16 does do everything that this proposed section would do. I do not agree, though, that the phrase "public interest" which is found in clause 16 should

January 19, 1967
Transportation
remain in that clause. I believe that phrase needs to be changed, and instead of public interest-


John Whitney Pickersgill: I wonder if the hon. gentleman will permit me to ask him a question? Has he had an opportunity, since he came back, to inform himself of the amendment that was made to clause 16 since we were considering it in committee? I believe it largely meets the point he has in mind.


Reginald (Reg) Cantelon: Is the minister saying that this phrase "public interest" has been removed from clause 16? .


John Whitney Pickersgill: No, but there has been some definition of it in the amendment agreed to last week.


Reginald (Reg) Cantelon: If my fears are groundless because of a definition which clarifies the meaning of "public interest", then this does not change the validity of my argument on clause 16. This clause could take over completely from proposed section 336. In fact the amendment would make it all the more certain that the clause would do what I suggest.
I listened to the minister with great interest as he tried to answer some of the objections of the hon. member for Medicine Hat. The first part of his explanation was, as his explanations usually are, crystal clear. I listened to it with enjoyment. Then the hon. member for Medicine Hat asked him a question which seemed to be contrary to what the minister was saying. I found that the minister did not seem to follow along with a clear explanation from that point. As he sometimes does, I think when his argument is weak, he became very obtuse and difficult to follow. I was not able to follow him at all. I consider the minister one of my better friends amongst the friendly enemies we have on the other side, and I always listen with a great deal of interest to his explanations. I usually find them clear, but this time he had me lost completely.


Thomas Miller Bell: Before the hon. gentleman resumes his seat, may I ask him whether, since his return, he has become aware of the fact that the minister, his good friend, tried to wipe out the Crowsnest pass rates yesterday?


Reginald (Reg) Cantelon: I do not believe I had better say anything about that or he may cease to be my friend. It is seven o'clock, Mr. Chairman.


Herman Maxwell Batten: Pursuant to the order passed earlier this day, I do now leave the

chair and the committee will resume at eight o'clock.



SITTING SUSPENDED


[Stage Direction]
The committee resumed at 8 p.m.
Maurice Rinfret: Order. House again in committee of the whole on Bill No. C-231. When the committee rose at seven o'clock it was considering clause 336 and an amendment moved by the hon. member for Medicine Hat.


Reginald (Reg) Cantelon: Mr. Chairman, I had probably made the main points in my argument, but there are a couple of subsidiary ones I should like to emphasize and to which I want to direct the attention of the committee.
As I said before, I feel it unnecessary to repeat the arguments that the hon. member for Winnipeg South so ably presented. It has never been my feeling that as a member of parliament I should just parrot ideas that have already been expressed. Unless I have something new to say, then I do not feel it is necessary for me to say anything at all. However, I believe that there could be a little time spent looking at this proposed section 336, particularly at subsection (2) in which 150 per cent of the variable cost figure is set as a fixed rate applicable to the carriage of goods.
I think it ought to be understood by everyone that this figure of 150 per cent is a pragmatic one arrived at in actual fact by the MacPherson commission. The commission merely took a large number of cases, considered what they thought would be the normal cost factor, and then added to this 150 per cent of the variable cost, feeling that this would set a rather fair rate on which to evaluate total costs. But as I say, it is a pragmatic figure and consequently is open to the usual complaint which may be levelled against such figures. That is to say, it is a judgment figure and depends on the people who make the judgment. Therefore there is no reason why we should arrive at the same judgment.
While I hesitate to set any figure, I do think that we should very much qualify this figure in our minds in view of the fact that it is pragmatic and today, some years after the recommendations made by the MacPherson commission, could well be a figure that is not suitable at all.
The other point I have already made, and which I want to re-emphasize before I sit down, is that in subsection 3(0 the "cost of
January 19, 1967

carriage of the goods concerned" is calculated on the basis of carloads of 30,000 pounds. Let me once more emphasize that I think that this is a completely fictitious figure, one that was arrived at in a manner that was not appropriate, and as a result I think it invalidates practically the whole of the section. For these reasons I find myself compelled to agree with the hon. member for Medicine Hat that this section should be eliminated; I also agree with him that clause 16 would discharge all of the functions described in this section, and I think would discharge them better and with less difficulty.


Mr, Bell (Saint John-Albert):: Mr. Chairman, I will be only a few minutes. I am going to re-emphasize some of the thoughts expressed by the hon. member for Kindersley, who has just taken his seat. In one of his frequent interventions this afternoon-we appreciate, of course, that after yesterday there is some excitement-the minister referred to the evidence of Professor George Borts and Professor Ernest Williams. These two experts were brought to the hearings by the provinces of Alberta and Manitoba, and the maritime provinces, They were said to be the main spokesmen on this proposed section 336; at least that was their billing. Mr. Frawley and others deferred most of their questions because they said that these two professors would provide the technical answers on this very important section.
[DOT] (8:10 p.m.)
I am not going to go through their evidence, Mr. Chairman, or to place anything but a very small paragraph on the record. Let me take, for example, the beginning of Mr. Williams' evidence. He talked of this new legislation eliminating control over the rate level, and he referred to the level of earnings not being provided for in the legislation. I am not quarreling with anything; I am mentioning this as one of the dangers that it was mentioned was contained in this legislation. Then he talked about the inadequate protection that section 336 gives the captive shippers, those who do not have competitive alternatives. He mentioned an old favourite of mine-it of course has reference to the maritimes-when he said that truck competition alone is not an effective competitive alternative for the large bulk shippers. That of course brings up the main topic of my brief intervention.
I have another matter about which I want to speak. The professor said that the railroads will not of their own volition adopt a policy that will impede economic growth, but where 23033-760J
Transportation
competition is increasing they are compelled to take action to look after their own interests.
Having paraphrased Professor Williams' remarks I want to state my objection to this section. I have already stated it before the committee, and it applies to the large, bulk, captive shipper. I had an opportunity during the last two weeks to speak at some length with two large, bulk shippers in Canada, and what they said reinforced my view. To start with, we know that the 30,000 pound level has been the basis of this legislation. It was evidently brought about because of some simliar figure in the trucking world. But, Mr. Chairman, we have gone above the 140,000 or
150.000	pound level.


An hon. Member:: It is 30,000.


Thomas Miller Bell: It is 30,000; but I know that large bulk shippers out west are up to 130,000 pounds or more in their shipments.


An hon. Member:: They are up to 200,000
pounds.


Thomas Miller Bell: As the hon.
member for Kindersley has said, they are up to 200,000 pounds. I want to put a table on the record. It is in minutes of proceedings No. 40, of November 24, 1966, of the committee on transport and communications. The table I refer to is a table of maximum rates that Professor Borts put on the record, with projections he was able to gather from previous evidence. He admitted it was not completely accurate but it was the basis of discussion. The professor got up to 130,000 pounds in his comparative weights, and he referred to the variable costs and the formula employed.
The fifth column is significant because in this he dealt with the percentage of mark-up over actual variable costs, and he went up to a mark-up of 467 per cent. I hope hon. members note that; this is the crux of the bill in my opinion. To this provision the province of Manitoba objected. I know that the hon. member for Winnipeg South dealt extensively and well with this.
If there is a mark-up of 467 per cent on
130.000	pounds, how great is the mark up on
200.000	pounds? Where is the saving from bulk shipments? The province of Manitoba claims that the bulk shippers-and I have verified this privately-will negotiate with the railways, the Canadian National or the Canadian Pacific in the competitive way the minister and the railways have said is desirable. Rates will be set and bulk products, of

January 19, 1967
Transportation
which we hold a near monopoly in world markets, will be shipped. That could continue successfully for two or three years. But supposing competition sets in from other sources, and the shippers look at their balance sheets at the end of the year; and supposing they see that they did not lose money, but that they did not make as much as they ought to have made: What will happen, Mr. Chairman? The shippers will not declare themselves captive or go through the other remedies of this legislation; they are in day-to-day communication with the railways. The shippers will attempt to pass their losses down through the line, and their losses will affect labour, the municipalities, and the economy of the west.
This is the big objection to this bill, and its great weakness. Hon. members may say, "Well, what can we do? We have provided the means for these bulk shippers; what can we do? They can declare themselves captive or go to clause 16, which is now available for captive shippers." Perhaps if they did that it would be enough for this committee. I say, however, that that will not take place, except in theory. That is why the province of Manitoba could not say it knew of shippers who will declare themselves captive and who will be aggrieved under the section. As I say, losses will filter through the economy of the west and this section will mean a false use being made of the resources in Canada.
To finish this argument, I asked a question of Professor Borts at the committee hearing -I am still referring to minutes of proceedings No. 40-which embodied the argument I am trying to advance tonight, and the professor said this at page 2871:
Well, this has been one of the major reasons that the railways have traditionally been able to charge certain high burdens for certain classes of shippers. In other words, that they have always been in a position where-depending on the nature of the regulatory environment, of course, they have always been in a position where they can bargain with a shipper over the rate, and try to bargain in a way where they do the best in terms of the revenue of the railway. Now, this is the traditional way in which railway overheads have been recovered. I think the difficulty with that-there are two difficulties with that; one I have already stated -is that it does lead to a degree of economic inefficiency in the economy in a sense that different shippers are paying different mark-ups. Secondly, it does not allow for the possibility that over time as the shippers markets get more competitive themselves, the shippers are less able to pass these rates on to their own customers.
That is the end of the quotation. He goes on to talk of how the railways collect a burden, and there is sympathy for the railway in this regard. The point is that the burden is passed

on to the general economy, perhaps more to western Canada than to eastern Canada.
[DOT] (8:20 p.m.)
This is the great evil caused by new section 336. The C.P.R. and the C.N.R. have made a great case about our misuse of Canadian resources and about the responsibility they have to develop resources to the best advantage of the country, some of these resources having been given to them in perpetuity during the early days of confederation. But if this new section is going to result in misuse of resources and an unhealthy competitive position for industry, it will affect the economy of the country both in the west and in the east.
The minister may talk as much as he likes, but the remedies we have are not going to deal with the situation. I shall support the amendment moved by the hon. member for Medicine Hat and I hope that further amendments will be offered to deal with this anomaly.


John (Jack) Henry Horner: Mr. Chairman, following our months of hard work to arrive at a new transportation policy it is regrettable that we have not been able to agree on changes to this clause. Many of the briefs presented to our standing committee dealt with this part of the bill, which is one of the most important portions of it.
The old legislation provided that there would be no discrimination caused by freight rates and provided for equalization of rates, but the brief presented by the Alberta government has shown how we are giving up that protection. As recorded in volume 23 of the standing committee proceedings, even the Minister of Transport himself said he had some doubt about the wisdom of allowing the railways to charge as much as they liked in those areas where they had a monopoly.
This clause, and clause 16, deal with the protection a shipper may receive. Under the Railway Act the onus was placed on the railways to prove that a freight rate increase was necessary, would not be discriminatory and would apply equally to all shippers. This clause now places that onus on the shippers. A shipper must prove that he is being charged an unfair, discriminatory rate, a rate unequal to that given his competitor. He must prove he is a captive shipper and that 100 per cent of his goods have to be transported by rail.
Until this bill is passed, whenever that may be, next week, next month or three months from now, the onus remains on the railways
January 19, 1967

to prove that rate increases will not be discriminatory. But as I say, when this bill becomes law, the shipper must prove he is being charged a discriminatory rate and one that is unequal to that which is charged his competitor. Instead of powerful corporations like the railways having to prove something, it will be an individual, or an individual company, which will have to prove he or it is a captive shipper, that the rate he or it is charged is discriminatory, and should be examined by the commission.


John Whitney Pickersgill: I wonder if the hon. gentleman is really right in his second assertion. If anyone is a captive shipper he is surely entitled to ask to have a maximum rate set, if he wants to, under this clause, regardless of whether there is any discrimination. Discrimination is covered in clause 16 but not in this clause.


John (Jack) Henry Horner: The minister is confusing the issue. Surely he is not arguing that under this clause one can apply to be a captive shipper. Does not a person have to prove he is a captive shipper?


John Whitney Pickersgill: He has to assert he is, that is all. He can say, "I live on a railway line. There is no other way of transporting my goods except by railway line". That, by definition, makes him a captive shipper. He does not have to prove anything else.
[DOT] (8:30 p.m.)


John (Jack) Henry Horner: The minister and I are disagreeing on the definitions of the words "assert" and "prove". There is not much variation between these two words when it comes to a matter that is reviewed in court, and this bill will be setting up one of the highest courts in the land. A shipper cannot apply and say, "I want to be a captive shipper".


John Whitney Pickersgill: He just says he is.


John (Jack) Henry Horner: To quote the minister's exact words, he has to assert that he is, and I said he has to prove he is, in the practical sense. I do not think there is so much difference between the two words. For example, if one did a poor job in proving oneself to be a captive shipper, he would fail in asserting that he was a captive shipper.
The Manitoba government presented a very detailed brief, over 200 pages long, attacking various clauses in this bill, and this particular one at length. I know some hon. members have referred to the brief prepared on behalf
Transportation
of the Alberta and maritime governments and presented by Dr. Borts and Dr. Ernest W. Williams, and I think it would be worth while putting on record why these two professors were accepted as experts by the standing committee. Dr. Ernest W. Williams was Professor of Transportation of the Graduate School of Business at Columbia University, New York, where he has been teaching transportation since 1947. He holds the degrees of B.S., M.S. and Ph.D. from Columbia University. His United States government employment has been principally as follows: 1940 to 1942, general editor of the study of transportation and national policy for the United States National Resources Planning Board; 1942 to 1944, program bureau, United States War Production Board in the matter of materiel requirements claimed by the office of defence transportation; 1945 to 1947, fiscal analyst, United States Bureau of the Budget, specializing in transportation matters; 1954 to 1955, member of the task force, cabinet committee on transportation policy and organization; 1959 to 1960, chief, transportation policy survey, United States Department of Commerce. Here is a man who can go anywhere and state categorically that he is a proven expert in the field of transportation.
What did Dr. Williams think of this particular clause? He thought, as the amendment suggests, that it should be thrown out. You do not have to take the word of the mover of the amendment or my word that this be thrown out. Here is an expert who says that this clause offers no protection to anyone who could assert or prove that he is a captive shipper. Perhaps in fairness to the other expert, Dr. Borts, I should read the statement in respect of his experience in this field. He is equally as distinguished. There is no doubt that he arrived at the same conclusion.
In his brief Dr. Williams outlined a number of reasons for his view that this particular part of the clause should not be accepted. It is interesting to note what the mining association had to say with regard to this particular clause. The minister said that this clause offers a protection to all concerned, even to those who find themselves in the position of what might be characterized as captive shipper. I should like to read briefly a series of questions and answers which appear at page 2483 of minutes of proceedings and evidence No. 37 of the standing committee on transport and communications when Mr. J. C. Coyne

January 19, 1967
Transportation
was appearing on behalf of the Mining Association of Canada. Certainly one would expect Mr. Coyne to give a fair and equitable appraisal of a bill to be passed by this government. Mr. Coyne was asked this question:
Mr. Coyne, your general brief deals with your concern about the mining industry and the captive position of the mining industry.
The railroads told the committee that the competition in the marketplace would take care of your mining, or industries like yours. What do you think of this competition at the marketplace? You suggest that competition is not present throughout the country, or something like that. You made that statement.
Mr. Coyne replied "yes" and then the questioning by Mr. Horner continued:
What about the competition at the marketplace using the railroad's expression?
Perhaps I should explain that both railways have pointed out at great length that it was unlikely that anyone really would qualify as a captive shipper. It is all well and good for the minister to say that anyone can apply for protection under this clause if he can assert that he is a captive shipper, but here we have the representatives of the railways saying they would be very surprised if there are any captive shippers or that anyone could be declared to be a captive shipper under this clause. The railways also said that if such a case arose and there were captive shippers, they could then exert their pressure in the marketplace and that by the volume of goods it could be deemed that there was competition in the marketplace. Mr. Coyne fully understood this and said:
I think I can make a comment on that, Mr. Homer, although you will appreciate that I, personally, am neither a miner nor a traffic man.
I think the members of this association understand and recognize the point which has been made, X believe, by the railways, and also, perhaps, by the minister-
The minister also referred a number of times to the marketplace. Mr. Coyne continued:
-to the effect that some of the large diversified mining companies, by virtue of what I think Mr. Gordon called market competition, have been, and will likely continue to be, able to negotiate with the railways and to receive rates under which they can ship their products to market.
If all companies were of this size, or had particular advantages of location, or were diversified to the extent of some of the enormous integrated companies, then I think one could say that the point had been made. But I think what we are emphasizing here is that the category of mining company which has been referred to in this context, does not by any means cover all of the mining companies, and particularly the members of this association.


John (Jack) Henry Horner: In other words, you are saying that your association is afraid that there may not be competition at the marketplace to take care of all the mining companies which may be wanting to start up or have already started?


Mr.   Coyne@: Precisely: and we also take the position that the formula as proposed provides a ceiling so far up in the sky that it would provide no protection.
This is what Mr. Coyne, a spokesman for the mining association, had to say. In recent years mining has become a major part of the economy of Canada. Mines have been opened up in the prairie provinces. A potash mine has opened up in Saskatchewan. We have the iron ore in Labrador and northern Quebec. New mines have opened up in northern Quebec and also in northern Manitoba. Today mining plays a very necessary part in the economy of Canada. Mining always has played an important part in our economy but today it is doing so in a bigger way.
I notice that the Minister of Energy, Mines and Resources is paying particular attention to this. I am pleased that he is here. He knows the worth of the minerals which are mined in Canada today. This industry to a certain extent must be protected because many mines are located in isolated areas. What protection does this offer? In the interpretation of Mr. Gordon and Mr. Sinclair it offers the protection that if a mine is as powerful and influential as a big major railway company, it can say to this railway company that it is going to ship a certain amount of goods over the railway line from its parent company. Therefore it can say, "Either you give the new mine we are opening up in northern Quebec a favourable rate, or we will find some other way of transporting the product of the parent company." This is what Mr. Gordon referred to as competition in the marketplace.
[DOT] (8:40 p.m.)
What about a new mine that does not have a parent company? The former minister of finance said that there should be new companies in this country and that they should be controlled by Canadians. What about a situation like that? What power could such new companies bring to bear in so far as competition in the marketplace is concerned? It would be very little. This is the question Mr. Coyne is answering in this committee as reported in proceedings No. 37. He is speaking on behalf of the Mining Association of Canada. At the bottom of page 2483 he is reported as saying:
Precisely: and we also take the position that the formula as proposed provides a ceiling so far up in the sky that it would provide no protection.
January 19, 1967

It is very clear that the ceiling is so far up in the sky it would provide no protection. Now, that is exactly the amount of protection this clause provides for our new-found mineral wealth in this country.
Let us look at this a little more closely. The onus has been shifted from the railway companies to the shippers. We have the protection of the marketplace provided for those mining companies which have huge parent companies. However we find there is no protection whatever for the new, budding mining companies. We find that the individual shipper has to prove he is a captive shipper and he must designate that 100 per cent of his commodity has to move by that railroad.
At this point I think it is worth while to emphasize what we are giving up in the old act, and what we are to receive under this new bill. I should like to refer to four points that are set out on page 12 of the Alberta government brief. The first point is:
That tolls shall always be charged equally to all persons if circumstances and conditions are substantially similar;
This was what was written into the old section 317 of the Railway Act. In other words, if two companies are manufacturing similar commodities and those commodities are hauled equal distances, then the rates would have to be the same. There could be no discrimination. The second point is:
That there be no discriminatory increase or reduction in tolls in favour of or against any user;
In other words, if you are going to give one company an agreed charge you must give the other company the same rate or that agreed charge is out. The third point is:
That tolls must not unjustly discriminate between different localities;
In other words, if you have a manufacturing company in southern Ontario and one in northern Ontario whose products are hauled over the same railroad for the same distance, those rates shall be the same. There shall not be a preferred rate for one company in one locality and a discriminatory rate for the other. The fourth point is:
That, unless the board is satisfied, no toll must be higher for a shorter than for a longer distance.
These four points which were contained in the old section 317 have been practically wiped out in clause 16 and this proposed section. I mentioned the fact that a shipper must prove that 100 per cent of his commodity is captive. Let us remember that under this particular formula, if one asserts that he is a
Transportation
captive shipper, the board may then set a rate which could be 150 per cent of the variable cost. What is the railway trying to prove when this rate is set as high as that? Dr. Borts and Mr. Williams both said that nowhere in the MacPherson report could they ascertain why the MacPherson commission established this 150 per cent formula. Why was it not 100 per cent? What was the purpose in setting it at 150 per cent? Well, Dr. Borts and Mr. Williams, who have made exhaustive studies in the transport field throughout the years, could not find anything in the MacPherson report to tell them why the 150 per cent figure was chosen.
Before I leave the subject of discriminatory rates being eliminated by this clause, perhaps I should read what Mr. Williams has said about a similar situation in the United States. We in this country must learn from those who have gone ahead and from those who have perhaps had more experience in this particular field in which we are trying to break new ground with this legislation. Mr. Williams said this, as reported in proceedings No. 40, page 2849, in answer to a question by the hon. member for Saint John-Albert:
Well, the situation in the United States is certainly very different because we have varieties of competition within the railroad orbit that you do not have in Canada, and could not have, with two railroads principally operating and serving transcontinentally and very largely the same territories. We have a great deal of competition between railroads, not necessarily in parallel traffic, but competition in which one railroad serving shippers in one area of the country seems to put them into competition with another railroad serving shippers elsewhere; and that has been a very forceful type of competition, which was part of the reason that we thought that perhaps we could dispense with exact rate control.
On the other hand, we have never had any confidence that we could dispense with control of discrimination, since discrimination is the kind of thing that is generated by differences in the force of competition, or by the absence of competition in one circumstance and its presence in others, and we still have a variety of circumstances of that kind.
What Mr. Williams was saying in that paragraph was that the United States has more railroads, so the competition is greater and they have done away with exact rate control. This bill does away with exact rate control. It also does away, to some extent, with the right to claim discrimination which was provided in the old act. Mr. Williams says that they have more competition and more railroads, that they have a greater variety of shipments from different localities, but in the United States they have not done away with any control over discrimination. There is no question

January 19, 1967
Transportation
about this man being an expert because he has spent practically his whole life in the field of transportation in that country.
[DOT] (8:50 p.m.)
This is what gives rise to a great deal of my concern about whether or not this legislation is moving in the right direction. The MacPherson commission studied the whole question and their report deals at some length with the fact the railroads need financial help. The railroads were in a serious financial position and needed to be helped out. Yesterday I said that without a doubt, on January 9 when the minister outlined this proposal an arrangement had been made with the railroads that if they would do this they would be given greater leeway with regard to freight rates, and would be allowed to improve their financial position. I think it is only right to bear these remarks in mind when one considers what the MacPherson report really had in mind in setting out its objectives in respect of maximum rate control. The summary of those objectives is to be found at page 98 of volume II of the report. The objectives of a maximum rate control formula were as follows:
1.	It must limit the Impact of railway monopoly upon shippers.
2.	It fails in its purpose if it is seriously detrimental to the revenue position of the railways.
That objective really needs no more emphasis. Perhaps that is why the government made the maximum rate formula very high and'set it at 150 per cent above variable costs. Perhaps they did not want to come near any position which would be detrimental to the revenue position of the railroads. The third objective is stated as follows:
It must be flexible enough to reflect at intervals the changes in railway costs which will occur with the rationalization of plant and services.
This formula is very, very flexible. It is so high in the sky, to quote Mr. Coyne, that it will have no effect whatsoever. Therefore it is flexible enough, and we can check that requisite off in this summary of objectives. The fourth objective is:
It should leave incentives for efficiency with the railways and offer incentives to the captive shippers to use transportation as economically as they would in a competitive environment.
This clause encourages captive shippers to do everything but seek the protection of the maximum rate control formula; that is what it means. In order for this formula to offer any protection, a shipper must assert and prove that he is captive. With the passage of this

clause the onus is on the shipper to apply, assert and prove that he is captive. This bill takes away a great deal of incentive in this area.


Maurice Rinfret: Order. I regret to interrupt the hon. member but the time allotted for his speech has expired.


Some hon. Members:: Carry on.


John Whitney Pickersgill: Mr. Chairman, I think the hon. gentleman has a few more observations to make, and we should like to hear them.


Maurice Rinfret: Is there unanimous consent to allow the hon. member to continue his speech?


Some hon. Members:: Agreed.


John (Jack) Henry Horner: Thank you, Mr. Chairman. I find the committee very co-operative tonight and I will try to limit my remarks. I know very well that I shall be making another speech on this clause anyway. The fifth objective in respect of the maximum rate control formula, which is to be found at page 99 of the report of the MacPherson royal commission, is as follows:
It must be in keeping with newer ratemaking practices.
The whole philosophy of this bill is competition. The root hogs that are big enough to live, will survive; those that are not big enough to do so will die. I suppose this is in keeping with the helter-skelter, come-hell-or-high-water philosophy of competition. Freight rates are going up and up. The only people who can survive are those who use air transport, can afford to buy a truck of their own or can make use of the intervention of a pipe line. The sixth objective in respect of this formula reads this way:
It must not be in conflict with the optimum allocation of resources in transportation.
This formula will not affect those people who are located in the right place. If you are not located in the right place, you are out of luck. That is the summary of the objectives of the MacPherson royal commission. I will not re-read them; I will just emphasize that the summary of the objectives of a maximum rate formula was, first, to remove all control that would seriously affect the revenue position of the railroads. This objective has been stated as plainly as possible. The purpose is that it should not be seriously detrimental to the revenue position of the railways. I say to the minister that after reading the whole of the
January 19, 1967

second volume of the report of the Mac-Pherson royal commission I could find nothing to substantiate the allowance of 150 per cent above variable costs that is set out in this formula.
The committee on transportation listened to the evidence of Dr. Borts and Dr. Williams, who said they had read the report of the MacPherson royal commission and they, too, could find nothing to substantiate why this formula was arrived at. In fact, I think Dr. Borts suggested that there should be another provision in this bill rather than the 150 per cent, some formula that would gauge the permissive level of earnings in respect of a person declared to be a captive shipper.
I do not want to continue at length with this question, Mr. Chairman, although I could do so. I do not want to engender any animosity in the house. I raise these matters because I am greatly concerned about this particular clause. I could find nothing to substantiate the inclusion of the 30,000 pounds figure in this clause, other than the fact that the trucking industry was accepted as the competitor of the railway industry. I notice that the Chairman is giving me some sceptical looks, so I shall be very brief.
In the economic swirl in which Canada finds itself today with regard to the transportation industry, the railroads set the rates and the trucking industry stays at a figure just below those rates. The trucking industry does not set the rates; the railways do. So the
30.000	pounds figure, related to trucking, was wrong and should never have been accepted. There should be competitive rate setting in the transportation field. We have made great strides forward in air transport in recent years. We have seen the intervention of DC-8 jets. We shall in the very near future see the intervention of DC-10 jets. The top half of these planes will be filled with passengers and the bottom half with air freight. These airplanes represent a large investment for the air line companies. Air lines are the only people who will bring any kind of honesty into the rate setting procedures of freight rates in this day and age.
We should not set a fictitious figure of 30,000 pounds in connection with this formula. The railways rarely have one box car hauling
30.000	pounds. If anyone doubts this statement he has only to look at the C.N.R. equipment catalogues and study the tonnage hauled by their cars. Thirty thousand pounds is 15 tons. These cars can carry up to a maximum of 170 tons. The smallest car of the C.N.R. hauls
Transportation
something like 45,000 pounds. Why accept a figure of 30,000 pounds and provide for an allowance of 150 per cent above the variable cost figure? The inclusion of these figures in a formula cannot be substantiated, as was suggested by Dr. Borts and Dr. Williams.
Why does the minister doggedly hold on and maintain this particular clause in the bill? No one in the committee who was involved in the examination of the witnesses who testified before it on this aspect of the matter can understand why the minister does not amend the clause.
The only conclusion I can reach is that the matter was so difficult and complicated that he did not know where to start to improve it, and did not like to lose face by wiping it out altogether. I am grateful to you, Mr. Chairman, and the committee for having allowed me to continue my remarks. Hon. members may rest assured that we are not prepared to accept this clause as it now stands. We will be speaking to it again. I will certainly be speaking further in this regard, because this is a very important part of the transportation legislation.
[DOT] (9:00 p.m.)


Herman Maxwell Batten: Is the committee ready for the question?
Amendment (Mr. Olson) negatived: yeas, 33; nays, 56.


Herman Maxwell Batten: I declare the amendment lost.


Louis Ralph (Bud) Sherman: Mr. Chairman, a good deal has already been said in the debate on this particular clause about captive shippers and the application of the maximum rate control formula. I was considerably interested in the proposed amendment that was just moved by the hon. member for Medicine Hat and in his presentation of the facts in support of that amendment. I was in favour of that amendment because I believe that on balance the legislation would have been improved. In view of the fact that the amendment has failed, it is my intention at this juncture to submit an amendment of my own. It pertains to the subject of the captive shipper and his identification. I think the hon. member for Acadia isolated the key issue contained in this particular clause of the proposed legislation when he said that Professors Borts and Williams, and other experts who contributed to the highly reasoned briefs submitted to the

January 19, 1967
Transportation
standing committee by officials of the provinces of Manitoba, Alberta and other provinces, could find no reason whatever for selecting either the 150 per cent formula or the arbitrary 30,000 pound carload lot figure. Both those elements in the proposed legislation are insupportable, and so is the nebulous, vague and indefinable way in which we are supposed to arrive at a conclusion as to the identity of the captive shipper under this legislation.
The Freight Rates Reduction Act, as was pointed out by officials of the province of Manitoba, was introduced after the last general freight rate increase to alleviate the burdens carried by class and non-competitive commodities shippers. As was pointed out by officials of my province, to exclude these shippers from the category of captive shipper would be a retrograde step. I submit that that is what the proposed legislation does. It excludes the class and non-competitive commodities shippers from the category of captive shippers. It makes it necessary for them to assert, as the hon. member for Acadia said, or to prove-if you prefer this word-that they are indeed captive shippers.
It is therefore my intention to move, seconded by the hon. member for Portage-Neepawa:
That the following new subsection be added, as subsection (1) (b), to section 336, as follows:
A shipper of goods in respect of which the rates in effect on the 1st day of January 1965, were class and commodity rates subject to the Freight Rates Reduction Act, shall be deemed to have no alternative, effective and competitive service by a common carrier other than a rail carrier or carriers or combination of rail carriers.
The minister was aware, from the remarks I made earlier this afternoon, that I intended to move this amendment unless advised otherwise. It was my contention at the time that perhaps I should give the minister time to ponder it. I have taken the liberty of acting now on the intention that I made known at that time. If the minister is in a position to speak on my amendment, I would appreciate hearing from him at this time.


John Whitney Pickersgill: I am not taking exception to the amendment being moved, so perhaps it should be put and then I would like to speak on it.


Herman Maxwell Batten: It is moved by Mr. Sherman that the following new subsection be added as subsection (1) (b) to section 336 of clause 53:
A shipper of goods in respect of which the rates in effect on the 1st day of January 1965, were class and commodity rates subject to the Freight Rates

Reduction Act, shall be deemed to have no alternative, effective and competitive service by a common carrier other than a rail carrier or carriers or combination of rail carriers.
May I point out to the committee that this would necessitate the renumbering of the present subclause 1 as subclause 1(a).


John Whitney Pickersgill: Mr. Chairman, I do not intend to speak at length on this proposed amendment. The government of Manitoba submitted a voluminous and interesting brief. As the hon. gentleman pointed out when he spoke this afternoon, the position it took was supported by at least two expert witnesses from the United States whose testimony is recorded in proceedings No. 40 of the committee, to which I myself alluded this afternoon.
[DOT] (9:10 p.m.)
I hope I will not be considered to be reflecting in any way upon the expertise of those two expert witnesses when I say they were fundamentally opposed to the whole principle of the bill. They both indicated very clearly they did not believe in competition, but rather in the United States system of regulation and setting of rates by regulatory bodies. Since they entirely rejected the very concept of the bill it is perhaps not very surprising that they found fault with individual features of it.
Notwithstanding that fact Professor Borts made some calculations, to which I referred before-and I do not want to be repetitive but I will likely refer to them again-by which he indicated that small shippers from 15 to 35 tons would be very apt under the maximum rate formula to pay a lower rate, even with the freight rate reduction principle in effect, than they are now paying. It would indicate they would be paying a much lower rate than they would be paying if the rollback had not taken place and higher rates were established.
I am very glad the committee did not see fit to accept the amendment to wipe out this clause altogether, because we should have some regard for these small shippers, even though this maximum rate formula will not give any particular advantage to bulk shippers. It was never designed or intended to do that, and I made that very clear at the time the committee was sitting. All the bulk commodity rates will be rates below present maximum rates, and for that reason one would not expect the new maximum rate formula to apply to shippers who are not paying the maximum rate now. Therefore I cannot see any logic or reason in the suggestion that we should have a maximum rate formula which
January 19, 19S7

would apply to a group of shippers who are not now paying maximum rates.
Perhaps I should also point out that by accepting the hon. gentleman's definition we would also make this bill meaningless, because anyone who wished to do so could become a captive shipper if his rate was now frozen, and that would take in about half the shippers. The other shippers whose rates are not frozen are now paying competitive rates.
The whole purpose of this bill, in so far as it extends competition and enables the railway companies to go out and look for business, would be lost if indeed anyone took advantage of the definition the hon. gentleman has offered. Of course this would depend upon whether the shipper thought that other parts of the bill, which someone probably intends to attempt to amend, were amended.
The hon. member for Acadia and the hon. member for Medicine Hat made it very clear earlier that the maximum rate formula envisaged here would not offer an alternative which would be more attractive to the bulk shippers than the rates they are now paying. Therefore I do not think any maximum rate formula we could possibly write into the legislation would meet the situation of bulk shippers. I recognize that there appears to be some strengthening required of the protection given to bulk shippers over and above that which was in the law as originally drafted and sent back by the committee. I did accept an amendment to clause 16 which I think generally met with the satisfaction of the committee.
I am in agreement with the hon. member for Medicine Hat, that far and away the greater number of those shippers whose rates are not frozen will, by the amendment to clause 16, be afforded the kind of protection which I think will be effective, and as a result of which they will have no recourse to this section. I might point out that there were more than 1,400,000 carload shipments in the year 1965 which moved under class and commodity rates. Many of those carloads would be duplicates and I am not suggesting for a minute there were 1,400,000 different applications to the commission. I am suggesting, however, that if the maximum rate formula itself was made attractive, and it looked more attractive than the rate which could be bargained for, the amount of rate fixing that would be required would be almost beyond the capacity of any commission.
The only conclusion that I can come to from all of this is that we might just as well scrap
Transportation
all the rate making provisions of the bill and leave the law as it is, and just allow horizontal increases, rather than attempt that bureaucratic task of an overwhelming magnitude that would be involved if the hon. gentleman's amendment were accepted. In other words, I believe it would provide no real protection for shippers at all, but rather would create a state of administrative delay which would be totally intolerable. For that reason I think it is very undesirable.


Thomas Miller Bell: I should like to ask a question on this general subject. I do so because the minister seems to be in an expensive mood. He probably had a turkey sandwich for supper.


John Whitney Pickersgill: I ate beef.


Thomas Miller Bell: Perhaps he is full of himself because he finally won a vote. I want to ask the minister whether he would answer the specific question I asked earlier, and about which I made a full speech. Supposing a large bulk shipper did not go captive or take advantage of the other remedy, what is the minister's answer to the high rate which would be set for western Canada? How are we going to justify that to Canadian people as parliamentarians?


John Whitney Pickersgill: I do not have much difficulty in that regard, because practically all shippers of bulk commodities in this country today have rates which are below the present maximum rates. They have obtained these rates at one time or another in one way or another from the railway companies, and I do not see why the railway companies would be apt to change that pattern. A great many of these shippers have agreed charges. If the hon. member will look at the transport act he will see that any agreed charge given to one shipper must be published and, in like circumstances, must be given to another shipper. Under the new section 16, if a shipper alleges and can make a prima facie case that an undue advantage has been given to a shipper in like circumstances, he can have his rate altered by the commission following a hearing.
As a result of those two provisions it is my view that there is adequate protection for shippers of bulk commodities, but I do not think without clause 16 there would be adequate protection. It may be that there will be very few shippers who actually apply for a rate as a captive shipper. The fact that they can apply and that that ceiling is known to be

January 19, 1967
Transportation
there will, I think, induce the railways in most cases to set rates rather below these maximum rates. 1 think in that way it will provide protection in isolated areas where there is a genuine state of captivity on the part of small shippers.
[DOT] (9:20 p.m.)


Louis Ralph (Bud) Sherman: The minister says that shippers can apply for captive status. My interpretation of this is that these shippers have to apply. It is not a case of their being able to apply; it is mandatory and they must apply.


John Whitney Pickersgill: Oh, no. If the hon. gentleman reads the clause carefully he will see that no shipper can apply until he has first gone to the railway and asked for a rate. If he is dissatisfied with the rate or thinks it is too high, and if he has no alternative way of shipping his goods, then he can apply. It could well be that a shipper is shipping two commodities, one of which is, say, packaged goods or something of that sort for which there is a trucking service he could use. He might also be shipping something else which was not economical to ship by truck and he could become captive in respect of one commodity and not in respect of the other.
All he would have to do to establish his captive status is to show that there is no other carrier to carry his goods at a reasonable rate. This would be an assertion of captivity. He would then furnish the rate which the railway company had offered him and say that it is too high and that he would like a rate established under the maximum rate formula. If his assertions are accurate

and they are not very complicated things to prove-then it is the duty of the commission to set a maximum rate for him.


Horace Andrew (Bud) Olson: Mr. Chairman, I will be very brief. I think the minister made an assertion which was a little unfair and perhaps he did not mean it. If I understood him correctly, he said that Professor Borts and Professor Williams, who I suggest were the chief cost accountant advisers to the provinces at the hearings, were in fact against the principle of the bill; that they were against having rates set by competition and in fact were in favour of having rates set by an authority that has control.
I do not think it is fair to say this. I think what they said was that section 336 did not provide any effective maximum rate control; that in areas where there was no economic competition in the transportation field it was
fMr. Pickersgill.]
desirable to have an authority that could impose this kind of control. As far as I am concerned they certainly did not say that they were against competition in the field of transportation.
Now, Mr. Chairman, my other point briefly is this. I am in a quandary about what to do with this amendment to section 336. I think the section should have been taken out completely and that all the shippers in Canada should rely on the provisions of clause 16. I say that for the reason given by the hon. member for Springfield, namely that as long as section 336 is in the bill we will be under some illusion that there is a formula for setting a maximum rate control. I am really worried about this. As long as it is in the bill the board may be tempted to use this formula rather than the old basis of fairness, being just, and so on. The figure of 150 per cent based on a carload weight of 30,000 pounds is a fictitious figure; the weight of 30,000 pounds may not be the weight used, and to this extent the figure is not fair. In view of this, Mr. Chairman, and having regard to the vote that was just taken, I suppose that the next best thing to do, if we are to have section 336 in the bill, is to try to repair it, amend it or modify it so that it does have some use.
The minister worries about the amendment moved by the hon. member for Winnipeg South, in that it may make the clause useless to a small group of shippers who are now shipping under class rates. I do not think that this is the case because, as I read the amendment-and I admit that I may not have understood the different shades of meaning of its interpretation-it does not appear to me that this is the only way in which a shipper can plead for captive status. It partly defines what is a captive shipper, but surely this is not the only basis on which a shipper may attempt to claim captivity and ask the board to invoke the provisions of the bill.
So far as commodity rates being included in the definition under the provisions of section 336 are concerned, I agree with the minister. I do not think this would have any practical value whatever, first of all because the formula, once you get up into 100,000 or 150,000 pound carloads, or in some cases up to 300,000 pound carloads, would simply be quite unrealistic and would have no practical effect.
I am not going to become involved in any further debate on this matter, Mr. Chairman, but I do believe that the core and heart of this bill has now been transferred to clause 16. When this bill was first introduced in the
January 19, 1967



house and debated in the standing committee, I believe that all of the maximum rate control which is so essential to bulk commodities moving into and out of western Canada, northern Quebec and the maritimes hinged on section 336. This is the case no longer. When we began our hearings in the standing committee there was no clause 16, at least in its present form; I am sure the minister agrees with that. Therefore, although we used to talk about the most essential part of the bill being section 336, I believe it is now clause 16, at least as far as bulk shipments or what are usually referred to as commodity rates are concerned.
Perhaps we ought to try to fix this thing up; but even if this section 336 is fixed up so as to provide a better definition of what is meant by captive status, as long as the figure of 150 per cent and the weights used in this section remain, I do not believe the section would have any practical value in respect to the heavier carload shipments in which we are primarily interested.


Thomas Miller Bell: Would the minister look at the last page of No. 40 of the minutes of proceedings of the committee, where he will see the projections put on the record by the professors. This has a bearing on the point I am trying to make. Would the minister look at the figure of 130,000 pounds. The mark-up over actual variable cost amounts to 467 per cent. The minister said that all of these special arrangements are always made at low levels, etc.
[DOT] (9:30 p.m.)
Going on the basis that there is validity to these mark-ups, considering that we are well above the 130,000 pound figure, with markups up to 700 per cent, where is the protection for the Canadian economy if the shipper does not declare himself captive? What will happen then? I admit perhaps that this instance is not fully our responsibility; we have provided a remedy, and I do not disagree with the hon. member for Medicine Hat. Let us hope the remedy works. Supposing the shipper does not declare himself captive, how shall we make certain that that does not completely disrupt the economy of the country, bringing about a corresponding misuse of our resources?


John Whitney Pickersgill: I should like to try to answer the hon. gentleman's question. I think
Transportation
the hon. member for Medicine Hat has already answered it. Once of the great advantages of having the proceedings in the standing committee was that all of us, I think, knew more about this subject when those proceedings were over than when they started. Certainly I knew more. I learned many things in that committee and much from the arguments of hon. gentleman opposite, and particularly the very persistent arguments on this clause by the hon. member for Medicine Hat, who persisted, I might say on one or two occasions in a way I thought exasperating- and I say that, as a former member of this house used to say, in a kindly way.


Thomas Miller Bell: I hope he gets the blame if this does not work.


John Whitney Pickersgill: The other evening in the committee the hon. member for Peace River raised some doubt about whether clause 16, as it came out of the committee, still was strong enough. We further strengthened that clause, here.
I believe the hon. member for Medicine Hat is perfectly right when he says that clause 16 protects commodity shippers. I have never pretended that this table is anything more significant than an arithmetic exercise. It is no more significant than an arithmetic exercise showing that 50 per cent of all savings effected by the larger shippers goes to the shippers and not the railway. I do not believe those things are relevant, because I do not think the shippers of bulk commodities will use section 336 at all. I do not think they will need to use it.


Thomas Miller Bell: Then why did the minister ask from the province of Manitoba the names of captive shippers, when he admits that no shippers will use the section?


John Whitney Pickersgill: I did not take the position, and I never have said that no one would use section 336. All I say is I do not know of any shipper who will use it. I think, had there been many shippers who were really worried about this legislation, we should have heard from them.


John (Jack) Henry Horner: Every brief presented has shouted this.


John Whitney Pickersgill: There were a few briefs from the mining association, and from the Wabush Company and one or two others who were captive shippers in the-


John (Jack) Henry Horner: I wish the minister-

January 19, 1967
Transportation


John Whitney Pickersgill: I wish the hon. member would allow me to be as consecutive as I allow him to be. Four or five shippers in the whole country asserted they were captive shippers, and they were, in the sense in which they asserted their claim-that they had no alternative to shipping by rail. I do not think any of them were the kinds of shippers for whom it would be possible to devise any realistic maximum under a formula. Instead of trying to And a maximum rate formula for shippers of huge quantities of bulk commodities, you would have to say that you were giving the commission the power to set such rates.


Thomas Miller Bell: That is the weakness of the philosophy.


John Whitney Pickersgill: It is the difference between those who believe in competition and those who believe in regulation. There are many people in this country and quite a few in this house who do not honestly believe that competition should be permitted in transport, in any commodity in which they are interested. They think competition is fine for somebody else, but not for themselves. I think, if we examine ourselves, we shall find that an awful lot of us really take that attitude.


Louis Ralph (Bud) Sherman: With the experience of bulk commodity shipments on the prairies, would the minister say what competition there is for the railroads?


John Whitney Pickersgill: I will tell the hon. gentleman. The railways, you know, do not want to haul empty trains back and forth across the country. And they do not want to stop hauling trains, because a large part of their costs are-if I dare say so with the hon. member for Macleod in the chamber-fixed costs. Unless the railways have something moving on their lines to pay part of the fixed costs they will be in a hopeless state, as they were during the depression.
They do not want to be in that state. They want the traffic. Often the only way to get traffic is to give shippers of bulk commodities, who are not exactly without bargaining power, favourable rates. It is not as though those shippers are individual farmers or small shopkeepers; some are among the biggest companies in the world, with far greater economic power than the Canadian railways have.


John (Jack) Henry Horner: Some of them.


John Whitney Pickersgill: A lot of them have that power. Unless the railways give them a rate

that it is worth the while of these shippers to ship, there will not be any traffic. That is why I believe the competitive position, or the bargaining position-I prefer to call it the bargaining position-of the shippers is not ill matched. But to make sure there is a back stop to the shippers bargaining position we have strengthened, I believe, clause 16. We have said that if any shipper alleges that another shipper under similar circumstances, with a similar commodity, is given undue preference, he can go before a board; and if he can convince the board that this has happened, his rate will be disallowed.
That is a protection for the shippers of bulk commodities and I believe it is a very effective protection indeed; and the committee seemed to be satisfied with that clause as amended, and supported that view.


Lawrence Elliott Kindt: I wish to bring to the attention of the minister and committee the situation now facing two captive shippers. I mention them because the minister thinks that this type of shipper presents competition, and that the competition will keep rates in line.
As he may know, Crowsnest Industries Limited of Fernie, British Columbia and Coleman Collieries Limited, of Coleman, Alberta, are expected to send representatives shortly, if they have not already done so, to Japan to negotiate for large coal shipments to Japan. Let me read to you a pamphlet I have in my hand issued in January, 1967. It is the Canada-Japan Trade Council Newsletter, and I quote as follows:
[DOT] (9:40 p.m.)
The Yawata firm indicated railway coal transportation costs to a port on the Pacific coast would become a major subject in the negotiations, as the Canadian government is expected to stop supplying subsidies to cover high railway freight costs for coal exports after 1969.
A deciding factor for these two industries in trying to increase exports to Japan is the freight rates now in existence for the shipment of coal from the Crowsnest pass to the Pacific coast. These are captive shippers. They must depend on the C.P.R., and one bad move by the government will place this arrangement with the Japanese in jeopardy and prevent these industries from making arrangements to export coal to the country. The minister should re-examine some of these proposed new sections.


John (Jack) Henry Horner: Mr. Chairman, I think we should try to ascertain who is being protected by this clause and what a captive shipper is. The clause attempts to be generous, to
January 19, 1967

broaden the term "captive shipper". It is all well and good for the minister to say that a captive shipper does not have to prove that he is a captive shipper. A little while ago the minister said such a person had only to assert that he was.
I have looked up the Oxford dictionary for the definitions of the two words "assert" and "prove" and it can be seen that there is not much difference between the two. The definition of assert is "insist upon one's rights," and proof is defined as "evidence sufficing or helping to establish a fact." They are very similar. New section 317 in clause 44 says that a captive shipper is one who in a sense has "no alternative, effective and competitive service by a common carrier". To understand this one can look up the definition of the word "alternative" and place the word "no" in front of it. Everyone knows the meaning of the word no.


An hon. Member:: Explain.


John (Jack) Henry Horner: Alternative means "an interchange, alternating with another, succeeding each other by turns, consisting of alternating things." Effective is the key word in this phrase. We know that the key word in the Restrictive Trade Practices Commission legislation is "unduly," and under that legislation proof must be given that something is affecting the economy of the country unduly. In this phrase the key word is "effective," and its definition is, "having an effect, powerful in effect," and so on. One may have an alternative, but if that alternative has no effect then it does not have much use. The amendment sets out to remedy this deficiency, and states:
A shipper of goods in respect of which the rates in effect on the 1st day of January, 1965, were class and commodity rates subject to the Freight Rates Reduction Act, shall be deemed to have no alternative, effective and competitive service by a common carrier other than a rail carrier or carriers or combination of rail carriers.
The Freight Rates Reduction Act which came into effect in 1959 placed a freeze on freight rate increases on class and non-competitive rates. Anyone benefiting from that legislation could logically be expected to receive some protection in this clause of the amending bill, and should be accepted as a captive shipper. This is the whole essence of the argument.
The minister may declare that he is not particularly concerned about these things and that very few people will qualify as captive shippers. He can lecture us a great deal on the essence of competition, but I do not think
Transportation
anyone in Canada will say that the railways are 100 per cent public utilities. Surely the government must accept the fact that the railways have a duty to perform in those areas in which they have a monopoly, in which there is no effective alternative service. Shippers in those areas should be able to receive some protection under this clause.
A very noted transportation economist hired by the Manitoba government, Mr. Morrow, dealt at great length with the history of the Canadian transportation system. Our early governments aided the establishment of a railway system in order that it might provide a public service. I do not want to go into the history at length, but it is a fact that back in the early 1900's a public service was established. We set up the Board of Transport Commissioners to regulate and rule in respect of the public service provided by the railways. [DOT] (9:50 p.m.)
We have seen competition grow. We have seen Canada grow. There no longer is the same need for some of the protection which was given. No longer do we accept the fact that the railways are 100 per cent public utilities. Also we will not accept the fact that the railways are absolutely free corporate entities, because there still are areas in which they operate within a monopoly. In this area they still must be declared to be public utilities. There is a regulatory board which has some control over the Bell Telephone Company. Every other similar company generally is ruled by a public utilities board. The National Energy Board regulates the pipe line companies, because we give the pipe line companies a monopoly in respect of their operations within a given area. At one time these monopolies were in effect across Canada. Now we accept the fact that they are not monopolies in respect of the whole of Canada, but are monopolies in some areas.
The people who are producing goods, providing for the welfare of their families and contributing to the economy of Canada should be able to look to the government for protection, because the railroads were built with the intention that they would provide a public service. The railways accepted this obligation. This amendment says in effect that if there were non-competitive areas in 1959 there now may be non-competitive areas today, that these areas should be accepted as captive areas, and that they should come under the definition which relates to a captive shipper. It is all very well for the minister to tell us

January 19, 1967
Transportation
that they do not have to prove they are captive shippers, that they merely have to assert it. This is not good enough, because in many areas of Canada goods are being shipped at rates which are 150 per cent above the variable costs. In committee we heard evidence to the effect that in some cases the railways were charging 400 per cent above the variable costs.
If one takes the general definition of the word "assert", he would think that the people merely would have to apply for the maximum formula; but that is not the case. They must assert and prove under the definition as set out by the minister and as accepted by the railways that they have no alternative rate and are prepared to move 100 per cent of their goods by this one mode of transportation. This is the point I wish to make. I believe this is the crux of the problem in respect of the bill. It is all well and good for the hon. member for Medicine Hat and the minister to be willing to allow this bill to pass hurriedly, but I think there is a great deal at stake in respect of this clause and clause 16.


John Whitney Pickersgill: Mr. Chairman, I wonder whether the hon. member would permit a question. If he thinks there is a great deal at stake in respect of this clause, then why did he vote a while ago to knock it out of the bill?


John (Jack) Henry Horner: Because I hope that there will be an alternative amendment to place some protection in the bill for shippers in what I would consider to be captive areas, so that they could apply for captive status under this legislation. I have found this particular formula nonsensical. I found it so nonsensical that I did not consider it was any good at all. Therefore it is my belief that it should be deleted in the hope that something else which would have some meat in it would be accepted by the minister.
I should like to explain the reason I believe there is a necessity for this amendment. One has only to go back a bit to realize what we are talking about. Something like 4 per cent of the goods moved by the railways are moved under class rates and therefore in respect of this amendment we are referring only to 4 per cent of the goods moved. We are asking the minister to accept the fact that in many isolated areas in Canada something like 34 per cent of the revenue of the railways is derived from areas where in effect there is no effective alternative to the railways, and that the goods must move under non-competitive or class rates, which are the highest possible rates.


An hon. Member:: Ten o'clock.


John (Jack) Henry Horner: May I call it ten o'clock, Mr. Chairman.


John Whitney Pickersgill: Mr. Chairman, I wonder whether we might continue long enough to dispose of the amendment.


John (Jack) Henry Horner: I should like to call it ten o'clock. Although I have only a few more minutes left to speak, I would rather complete my speech tomorrow morning when the house resumes, because at that time I might have a more attentive audience, a more agreeable minister, and then perhaps the house would accept the amendment to this clause.


Thomas Miller Bell: Mr. Chairman, I do not think the government has all its members in line, and it would have plenty of time to get them in line by tomorrow.
Progress reported.
[DOT] (10:00 p.m.)



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Auguste Choqueite (Lotbiniere):: Mr. Speaker, I am deeply grateful to the Minister of Transport (Mr. Pickersgill), for his kindness in accepting to remain in the house a little while longer, to consider a matter with which he is very familiar, but to which I would again like to draw his attention, since this is a very urgent question and one of deep concern, from the standpoint of public safety.
Every day we are faced with an increasing number of highway tragedies. In addition to these, we have accidents occurring at grade crossings and, among others, we note the tragedy which occurred at St. Clair, in Dorchester county. Not too long ago, two similar calamities occurred within a few days: one at Montmagny and another at St-Francois-de-Bellechasse. The people are getting more and more alarmed.
That is why, Mr. Speaker, I am renewing my efforts and asking the minister if something even more specific could be done, so as to eliminate what I would call deadly road hazards.
January 19, 1967	COMMONS
If that is not possible, I would like to suggest, in the first place, that we should seek additional' funds. In 1954, we had $5 million in the Railway Grade Crossing Fund. If I remember right, this amount was increased to $15 million in 1958, which represents quite a short lapse of time. Why? Because it was realized that traffic was increasing at a frightening rate and additional funds were required to satisfy the newly created needs of ever-increasing traffic.
We are now in the year 1967 and nothing has been added to the Railway Grade Crossing Fund since 1958. In order to even begin solving the problem, our Railway Grade Crossing Fund desperately needs replenishing.
I feel it is imperative that the Railway Grade Crossing Fund should be increased: $15 million is no longer enough.
Second, Mr. Speaker, I should like to refer to an editorial by Mr. Maurice Cham-poux, correspondent for La Presse. Mr. Cham-poux is an excellent newspaperman and I always enjoy reading his articles, because he has a very rich vocabulary and exceptional writing ability. However, upon reading his comments about one of my recent statements,
I noted that he had not quite grasped the full meaning of my observations. I said, amongst other things, that the municipalities cannot afford to apply for safety devices for their grade crossings because, as everyone knows, and above all the minister, the fund contributes 80 per cent of the cost in the case of a new safety device, the railway, 7J per cent, and the municipality or the local authority to which the road belongs, 12J per cent.
Many municipalities do not have the means to do so. I discussed the matter, not long ago, with the former president of the Union of Municipalities, the member for Riviere-du-Loup-Temiscouata (Mr. Gendron), who is well known as an authority on the matter. He confirmed the fact by saying that, out of the 1,700 municipalities in the province of Quebec, at least 1,200 are poor. The municipalities cannot afford to make the application.
Consequently, the act should be amended in this regard.
Third, Mr. Speaker, the procedure is too long before grade crossings can be obtained. In fact, the report of the Board of Transport Commissioners for the year ending December 31, 1965 says:
During 1965, the board received 2,584 applications under the various legal provisions related to the jurisdiction of the said board.
Proceedings on Adjournment Motion
The Board of Transport Commissioners lacks the time to deal with such problems, because it is too slow in answering these applications. I am asking the minister whether there is a way to change this jurisdiction and, when grade crossings are being sought, to make it possible to seek them from somebody other than the Board of Transport Commissioners which is unable to reply rapidly to applications in accordance with safety requirements.
This procedure should be changed, as I said, Mr. Speaker, to expedite matters. How do we proceed now? Municipalities make an application and the Board of Transport Commissioners consult with the railway company concerned. An inspection is made. Time is lost. Efforts are made to find money, and when it is found that no money is left, the application is finally held in abeyance. That is why many cases could have been settled if the procedure had been amended or changed to expedite things. I am appealing to the minister to improve the situation and I understand that he is sincere and well disposed toward me, because he knows that we must fight unmercifully against-I repeat-those deadly road hazards.


John Whitney Pickersgill: Mr. Speaker, if there are any delays in dealing with inquiries of the kind the hon. gentleman suggested there might be, in the procedures of the Board of Transport Commissioners, I will ask them to make every effort to eliminate such delays. I think everyone realizes how desirable and important it is to eliminate really dangerous level crossings and to protect other level crossings. I do not think we adequately appreciate yet how much has been accomplished in this country in the last 15 years. The progress has been absolutely extraordinary. I was given some figures today that astonished me, though I probably ought to have known them; but one does not keep all these figures in one's head all the time.
As of September last year-these are the latest figures available-Ontario had 8,603 railway-highway crossings, and Quebec had 3,598. In Ontario 12.2 per cent of the crossings were grade separated, that is to say they were not level crossings at all, and in Quebec the figure was 12.3 per cent. In Ontario 22.9 per cent of the level crossings were protected; in Quebec, 30.5 per cent. If you add the two

January 19, 1967
Proceedings on Adjournment Motion together you find that the percentage in Ontario that we protected either by grade separation or other protection was 35.1 per cent; in Quebec, 42.8 per cent. This means it is getting very close to half for those in Quebec that are already protected. In Canada as a whole, unfortunately, the record is not so good. The only province better than Quebec in this regard is Nova Scotia; that happens to be the best province in the whole country.
[DOT] (10:10 p.m.)
I do not believe this parliament would hesitate to vote any funds needed in order to eliminate these hazards. I gave some figures the other evening, which I have not with me at the moment, but I think we should realize that while the rate of fatalities and serious accidents on the highways is going up steadily in Canada, in recent years, it has gone down steadily in respect of level crossings. The percentage has gone down very markedly, as have the absolute numbers in recent years. This means that in view of the fact that motor traffic is increasing constantly, this is perhaps the area-the area of avoiding accidents-in which most progress has been made. However that does not mean that we should not go on doing everything we can to get more protection.



NATURAL, GAS-TRANS-CANADA PIPE LINES- SUGGESTED TWINNING OF LINE IN CANADA

Mr. M. W. Martin (Timmins):: Mr. Speaker, the matter that I raised yesterday is not a new one to be raised in the house, but it throws some new information on the matter I had occasion to raise before. I am referring to the proposal of Trans-Canada Pipe Lines to build a trans Canada pipe line through the United States, a proposal which unfortunately has received the blessing of this government. My objections, the objections of my party and of many other Canadians to this proposal are no secret. We are opposed to it for three major reasons: first, because it will starve and blight the north country; second, because it will place the necks of the Canadian customers in the noose, in that the decisions, rules and regulations concerning a resource as vital as natural gas and upon which Canadian industry will depend will be subject to rules, regulations and decisions made in a foreign country, and we do not think this is any favour to Canadian customers. Our third objection is to the fact that we will be accepting a very-bad precedent-pipe lines being the transportation of the future-and setting a very bad

example by building our transcontinental pipe lines through a foreign country.
I was very surprised this week to hear officials of the ministers' department claim that there is no objection, particularly in the north country, to this proposal of the government. I have here partial returns of a questionnaire which we sent out across the country to see what the people felt about this proposal. I can make it available to the minister and to any of his officials, if they wish to have it. I would like to list a few of these returns. From the riding of Cochrane, out of 377 returns only two were in favour. In Timmins out of 488 there was only one in favour. In Fort William out of 456, three were in favour. In Port Arthur out of 674, two were in favour. In Kenora Rainy River, out of 366, one was in favour. In Algoma East-the riding of the Prime Minister-out of 205 replies, three were in support of the government stand. In Algoma West, out of 355 replies, 15 were in favour. I discovered that this was due to the fact that they had been misinformed to the extent that they were told that the only hope of getting Canadian gas was through the American line, and yet for the last five years Canadian gas was only 80 miles away, at Blind River. In Sudbury and Nickel Belt, out of 542 replies there were three favouring the government stand, and while the returns are not compiled completely from Timiskaming and Nipissing, out of approximately 1,000 replies, four favoured the government. This means that out of 4,500 replies less than three-quarters of 1 per cent backed the government stand on this particular proposal.
I think it would be of benefit to the minister and to hon. members if I put on the record an excerpt from a letter which was sent to the Sault Star on December 7 dealing with this proposal. It is somewhat of a fantasy, but it shows what would have happened if the same kind of thinking that goes on today had been in effect 100 years ago. This is the story:
It is the year 1878 and Prime Minister Sir John A. Macdonald has just announced that instead of building the proposed Canadian Pacific Railway over the frozen wasteland and rocks of Canada as originally proposed, it would be built through the United States at a great saving. The railway will now be called the Atchison, Topeka and the C.P.R.
It is the year 1937 and Prime Minister Mackenzie King has announced that a coast to coast airline has been founded. Terminals will be built in the United States at a great saving on heating costs. He stated that it was a wonderful achievement for a country with a population of a hundred thousand people. The new airline will be known as the Minnesota, Michigan and Air Canada Ltd. Passengers may transfer from Detroit by dog team to the unspoiled, uninhabited area known as Sault Ste. Marie.
January 19, 1967

News Bulletin. Dateline has stated that since Canada has refused to accede to his demand that they (Canada) cease sending wheat to Lower Slobovia, action will immediately be taken.
President Silverwater reaches for a button in his office which controls the pump for the Trans-Canada Pipe Lines...
Maybe this is somewhat fantastic but this is exactly what would have happened 100 years ago if the thinking of the present government had been adopted at that time. However, Mr. Speaker, it would appear we are going to be saved by the bell from our own foolishness. If we look at the Globe and Mail of yesterday we find it reports that the holding of additional hearings will result in postponement of the final decision by the United States Federal Power Commission until late this year. Then the article says that when the commission finally disposes of the issue, first taken up more than two years ago, there is a possibility any ruling it would make would be challenged in the United States courts, causing still further long delays.
This means of course that we can confidently expect to wait two years before any decision is made. Trans-Canada has committed itself to this government to the effect that by 1970, three years from now, they are prepared to start looping the northern line. We say that they should start this now. We say that this government should urge and insist that they start it now. There is no denying the fact that this government has made out a case, and the energy board has given proof, of the desperate need that is growing in southern Ontario and Quebec for gas. It is well known that the north is short of it now. You can ask any industry from Kenora, to Dryden, to Kapus-kasing or Sudbury, and they will all say they are short of gas.
The energy board has been telling Trans-Canada for the last three years that they should increase the gas supply. There is no excuse for any postponement. There is no excuse for waiting another two years, only to be turned down by the United States power commission and then try to repair the damage. This article in yesterday's Globe and Mail asserts again what we have been saying before the energy board, that Trans-Canada officials have said they would never join Northern Gas in any gas exchange scheme, insisting that they would enlarge their line in Canada rather than accept this alternative.
I should like to impress upon the minister that the responsibility toward Canadian customers in the north and south is not the responsibility of Trans-Canada. Their
Proceedings on Adjournment Motion responsibility is only to their own company and their own shareholders. It is only the government of Canada that has responsibility to the Canadian people and responsibility for our resources. Let us accept that responsibility. Let us start now. Let this government tell Trans-Canada to get on with the job. If they are short of money, we will lend them money. We did it before, and they paid it back.


Jean-Luc Pepin: I am not going to argue the substance of the Great Lakes case. I have done this before, and the hon. member is aware of it as are other members of this house. In a number of speeches and letters to unions and associations of all kinds, I have explained the position of the government. I am rather amused, though, by the fact that the hon. member took great pains to give the detailed results of the questionnaire his party circulated. He only forgot to mention the number of copies of the questionnaire that were sent out. I presume this is not too favourable to his case and he preferred not to mention it. I am sure that if the hon. member had been asked about the value of the questionnaire sent out by the hon. member for Lapointe to his constituents, asking whether or not he should remain in the house as a separatist, he would have said it was not worth the paper on which it was written.
I have read the article to which the hon. member referred. The last part is a historical review, while the first part describes the attack made by Northern Natural Gas Company, a United States company on the Great Lakes project. The reason for this attack is obvious; Northern also has a project in opposition to the Trans-Canada project. You would not expect anything else from them, would you? I have the impression that the headline of the article is quite a bit wider than the article itself, as is often the case.
We could not start twinning the existing Canadian line now because that would be illegal. The authorization of the National Energy Board would have to be obtained first, and no request has been made for such authorization. I am sure the hon. member is the first one who would want us to respect the law.
[DOT] (10:20 p.m.)
There is, however, something worth while in what the hon. member says. It has to do with the responsibility of the government to make sure-I think this is what he really meant -that the necessary precautions are taken by
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Proceedings on Adjournment Motion Trans-Canada Pipe Lines, in case the Great Lakes project is not accepted by the Federal Power Commission. I can guarantee the hon. member that we are taking these precautions. We have asked the company to keep us informed on alternative planning-which it is doing now-in case the Federal Power Commission refuses to accept the Great Lakes project in its present form. This is our duty, and I am quite as responsible, I believe, as the hon. member would be if he were sitting in my chair.
The company has in fact kept the National Energy Board informed on discussions with its customers on what could be done in case the project is refused. This does not imply on our part a lack of approval of the project. I have said a number of times that this was the best project available at the moment. Neither does it imply on our part lack of hope that the U.S. Federal Power Commission will recognize that this project is in the interest of Canada and the United States. Ours are simply normal precautions taken by prudent men, which in such instances are necessary.



POLLUTION-REQUEST FOR FURTHER RESEARCH INTO DETERGENTS

Gordon Harvey Aiken: Mr. Speaker, one of the first conditions which drew the attention of the public to water pollution was the appearance of foam or suds on the surface of the water. While this was not the most dangerous type, it was the most noticeable. Much of it was caused by detergents used in the home for washing, and in industry in the manufacture of textiles, paints and other products.
In Canada a campaign was put on by the manufacturers of detergents to reduce the sudsing effect. A completely new ingredient known as LAS, or linear alkylate sulfonate, was substituted for the sudsing component. This new chemical is bio-degradable; in other words, it decomposes in sewage plants to a degree of about 95 per cent and eliminates foaming to all intents and purposes. The Canadian Manufacturers of Chemical Specialties have confirmed that the Canadian manufacturers of detergents have now completely converted to this new product. A word of commendation is due to them for their effort in this regard, effected at considerable
DEBATES	January 19, 1967
expense. The appearance of Canadian waters should noticeably improve in 1967.
My question to the minister related to the continuation of research in this field. Although the appearance of waters may improve, the nutrient component is still there. Detergents have not been made pure, because they will still provide the nutrients which induce algae growth. In a way the situation may be more dangerous because public fears may subside when the foaming is no longer visible. Furthermore, there are other sources of water pollution than detergents. I am asking for confirmation from the minister that research in this very important area will be pressed forward even more strongly in 1967.


Jean-Luc Pepin: Mr. Speaker, I am quite willing to agree with my hon. friend on the progress that industry has made in this field, but I am very eager to agree with him that the changeover to non-frothing detergent soaps by the manufacturers merely corrects the ugly formation of foam in the receiving waters. This change has, unfortunately, as the hon. member said, no effect on the phosphate content of detergents or on the removal of this constituent in waste water treatment. The government, through the co-operation of several departments and the International Joint Commission, is continuing to conduct research on the phosphate problem through the programs of investigations on the great lakes. The hon. member is aware of that. He is also aware that I consider the research presently done by the federal government on the great lakes, where the federal government has clear jurisdiction, a symbol of the government's willingness to contribute to the solution of the pollution problem. In the coming years the great lakes will be our great federal laboratory-if you put it this way-the laboratory in which we shall find the answer to pollution problems.
Requests for research grants totalling about $40,000 to universities and research institutes relating to phosphates are currently being considered by one government department. I can assure my hon. friend that we shall do our best. I am grateful, as usual, for his constant prompting.
Motion agreed to and the house adjourned at 10.29 p.m.

Friday, January 20, 1967