1967-03-17

COMMITTEES OF THE HOUSE

[Stage Direction]
Second report of special joint committee of the Senate and the House of Commons on Mr. Justice Landreville-Mr. Laflamme.
[Note: Text of the foregoing report appears in today's Votes and Proceedings.]


[Stage Direction]
On the orders of the day:
Hon. Gordon Churchill (Winnipeg South Centre):: Mr. Speaker, I have a question for the peripatetic Acting Prime Minister. In view of General Allard's public statement that the integration of Canadian forces will take five years and their unification another five years, making a total of ten, will the Acting Prime Minister give full scope to his obvious leadership qualities and arrange to have the disruptive unification bill withdrawn for reconsideration?


Hon. Paul  Marlin@Acting Prime Minister: Mr. Speaker, I do not think that kind of question can properly be dealt with on orders of the day. However, I would like to say to my hon. friend "top o' the mornin'


Right Hon. J. G. Diefenbaker (Leader of the Opposition):: This having been raised in a fashion typical of the Secretary of State for External Affairs, may I extend to him and to all those of Irish origin, in part or in whole, the good wishes of all of us in this house who are not privileged to be of Irish origin. At the same time I ask him, if he is in communication with the Prime Minister, to convey to him the "top o' the mornin' " from all of us in this house.


Mr. Martin (Essex East):: I am only one quarter Irish, but I am sure that in this capacity I can say for those who are fully Irish, those who are part Irish and those who
aspire to be Irish, that we accept the greetings and good wishes of the Leader of the Opposition. I am sure that when I talk to the Prime Minister later today he will say not only "top o' the mornin' " but "top o' the day".



FINANCE


[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquitlam):: May I ask the Acting Prime Minister a question with regard to the report of Mr. Louis Rasminsky, the governor of the Bank of Canada, in which he states that Canada needs a better performance of its income determining machinery. I want to ask the Acting Prime Minister whether the government consequently is changing its position in respect of the need for economic guide lines to bring about a more equitable relationship among profits, wages and consumer prices.


Hon. Paul  Marlin@Acting Prime Minister: I will take this question as notice. I believe it is really difficult, on orders of the day, to deal comprehensively with a matter like this.


Thomas Clement (Tommy) Douglas: May I direct a supplementary question to the Minister of Finance following the question to the Acting Prime Minister. In view of the fact that the Minister of Finance has stated on previous occasions that the government did not think economic guide lines would serve any useful purpose, in the light of the report just received from the governor of the Bank of Canada would he now consider setting up economic guide lines to bring about some more equitable relationship among wages, profits and consumer prices?


Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, in the statements I have made on this subject I have been very careful to say that although I did not think the measures that had been taken in other countries were such as to inspire emulation, I did think we should be continuing to search for some means of mobilizing public opinion on behalf of stability of prices and indeed in support of the general proposition that we all support in

March 17, 1967
Inquiries of the Ministry this house, namely a steady expansion without inflation. I am not quite sure, and none of my advisers is either, as to exactly the form these measures should take, but I am inclined to agree with Mr. Rasminsky that we cannot depend entirely on traditional means.



U.S. ORDER RESPECTING INSPECTION OF BANKS IN FOREIGN COUNTRIES

[Stage Direction]
On the orders of the day:
Hon. Paul  Marlin@Acting Prime Minister: I should like to answer a question put to me on March 13 by the Leader of the Opposition. On February 13 I informed the house that the government had made representations to the United States concerning what appeared to be extraterritorial provisions in the proposed revision of certain United States banking regulations issued by the federal reserve board governing the foreign operations of United States controlled banks. Earlier this week, in response to a question from the right hon. Leader of the Opposition, I informed the house that at that time no reply had been received from the United States with regard to the representations made.
I can now inform the house that the United States authorities have now acted in response to these representations. Yesterday the federal reserve board announced regulations which do not contain the extra-territorial implications which Canada felt had been present in the earlier drafts. The federal reserve board expects that the foreign branches and affiliates of their member banks will conduct their affairs in accordance with the laws of countries in which they carry on their activities. This is a satisfactory outcome of our representations.



DISCUSSIONS WITH PROVINCES RESPECTING DEPOSIT INSURANCE

[Stage Direction]
On the orders of the day:
Hon. George Hees (Northumberland):: Mr. Speaker, I should like to address a question to the Minister of Finance. While he was preparing his federal plan for deposit insurance did he discuss this important matter with provincial premiers or provincial ministers of finance?


Mitchell William Sharp: Mr. Speaker, during the whole course of the preparation of this legislation my officials were in contact with the officials of all provinces, including the province of Quebec.


George Harris Hees: A supplementary question. Did the Minister of Finance take the trouble to

speak directly to the provincial premiers or the provincial ministers of finance?


Mitchell William Sharp: The only minister I contacted personally, and he was not a minister of finance, he was the minister of financial institutions, I believe it is, for the province of Ontario, who was urging the federal government to proceed as quickly as possible with deposit insurance.
May I add, Mr. Speaker, that as the house will recall it had been my original intention simply to introduce a bill so that the question could be looked at carefully by all provincial governments before asking this house to proceed. However, because of the great urgency of the matter and the great pressure that was being put upon the government by other provinces, particularly by the province of Ontario, with the support of all members of the house we went ahead with deposit insurance somewhat earlier than we had originally intended.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Gordon Minto Churchill: Mr. Speaker, I have a question for the Minister of National Defence relating to a speech he made recently to a Liberal gathering in Hamilton. Will the minister cease casting aspersions on former distinguished combat officers whose knowledge of the requirements of Canadian defence far exceeds the limited experience of the minister?


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



PENHOLD, ALTA.-POSSIBLE REOPENING OF TRAINING SCHOOL

[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of
the Opposition): Mr. Speaker, I should like to ask the minister whether a decision has been made or is being considered to reopen Pen-hold in the province of Alberta for the training of pilots or for air exercises.
Hon. Paul Hellyer (Minister of National
Defence): Mr. Speaker, I do not know that a decision has been taken, certainly not at the ministerial level. I do know that the question of the future use of that base has been under investigation by training command, and that
March 17, 1967
[Stage Direction]
they will probably be forwarding their recommendations shortly to headquarters, if they have not done so already.
If I may, Mr. Speaker, on a question of privilege I should like to say to my genial friend from Winnipeg South Centre-
Mr. Speaker:: Order, please. Is the minister rising on a question of privilege?


Mr. Hellyer:: Yes, Mr. Speaker. I cast no aspersions on former senior officers while I was in Hamilton; and the meeting was in fact not a Liberal meeting but one in a lecture series attached to the university.


John George Diefenbaker: Mr. Speaker, in connection with the question I have just asked the minister, is it not a fact that some R.C.A.F. personnel who were first at Centralia before it was closed down and who then went to Camp Borden, are now being advised that air training activities at Camp Borden are going to be transferred to Penhold, which incidentally is in the constituency of the hon. member for Red Deer?


Mr. Speaker:: Order, please.



RETURN OF &quot;BONA VENTURE&quot; TO ANTI-SUBMARINE ROLE FOLLOWING REFIT

[Stage Direction]
On the orders of the day:
Mr. Eric A. Winkler (Grey-Bruce):: Mr. Speaker, I have a question for the minister of defence. I should like to ask the minister whether the Bonaventure will return to an a/s/w role following the present refit program.


Paul Theodore Hellyer: Yes, Mr. Speaker.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to transport a question to the Minister of Transport which is of national significance, let me tell you. Has the minister received a resolution approved by the annual meeting of the Kootenay-Boundary chambers of commerce calling for the restoration of passenger service on the Kettle Valley railway from Vancouver to Medicine Hat? If so, what consideration has been given to these representations which are supported by 150,000 people of all parties in British Columbia?
Inquiries of the Ministry


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



CANADA ASSISTANCE PLAN


[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: I had intended directing a question to the Minister of National Health and Welfare, but in his absence I shall direct it to his parliamentary secretary. My question is this, Mr. Speaker. Have any agreements as yet been signed with any of the provinces concerning the regulations under the Canada Assistance Plan.


Mrs. Margaret Rideout (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, I shall bring this question to the minister's attention.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. Albert Bechard (Parliamentary Secretary to Secretary of State):: Mr. Speaker, I would like to put a question to the hon. Minister of Agriculture.
When he announces, in the near future, the new dairy policy which, I trust, will set the price of manufacturing milk at $5.10 per hundredweight, would the minister set strict standards of application in order to enable milk producers of Gaspe peninsula to take full advantage of the new policy because, in spite of the excellent dairy policy in 1966, the farmers of the Gaspe peninsula never received more than $3.50 per hundredweight.


Mr. Speaker:: Order. This, to my mind, is not a question but a representation concerning which the minister does not seem to have said anything.


Wallace Bickford (Wally) Nesbitt: A question for the Minister of Agriculture. Could the minister indicate whether he will be making his announcement of next year's dairy policy in this house prior to the Easter adjournment?


Mr. Speaker:: Order. The question is the same as others which have been put in a different form during the last few days.

March 17, 1967
Inquiries of the Ministry


Eric Alfred Winkler: Mr. Speaker, may I direct a question to the Minister of Agriculture. Because of the characteristics of good will that typify all good Irishmen I should like to ask the minister does he intend announcing that there will be an increase of 67 cents per hundredweight for producers of manufacturing milk?


Mr. Speaker:: Order, please. I believe on this day I should ask the minister not to reply to this question at this time.


DOMINION-PROVINCIAL RELATIONS QUEBEC-DISCUSSIONS RESPECTING JURISDICTION IN EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. Howard Graffiey (Brome-Missisquoi):: Mr. Speaker, following the statement made this week by Hon. Marcel Masse, minister in the Quebec government, about the powers of the province in the field of external affairs, I would like to direct a question to the Secretary of State for External Affairs.
Can the minister tell us if, in the spirit of co-operative federalism, he will in the near future initiate talks to settle the matter as quickly as possible?


Paul Joseph James Martin: Mr. Speaker, I do not know that we have an obligation to initiate talks with a jurisdiction in this country for the only reason that, through the voice of a minister it deals with something which does not concern that provincial government, because there is no doubt that the federal government is solely responsible for the administration of our country's external affairs.



INCOME TAX


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, my question is directed to the Minister of National Revenue. It is asked because of the number of income taxpayers, who have read the statement of Pierre Bourgault, head of the Ralliement pour l'lndependance Nationale, who says he has not filed any income tax return since 1963, that he refuses to pay income tax, and the government is afraid to go ahead against him; that it has in no way asked him to pay

income tax since he told the government three years ago that he did not recognize the laws of Canada.


Mr. Speaker:: Order, please. Since this is a matter, as indicated in the question of the right hon. Leader of the Opposition, which seems to have been extant for some years I am not sure whether it is in order now.


John George Diefenbaker: This is something which has just come out in the press. Canadian taxpayers want to know if there is one law for the separatists and another law for the rest of us.


Hon. E. J. Benson (Minister of National Revenue and President of the Treasury Board):: Mr. Speaker, I wish to assure the right hon. gentleman that if the situation as outlined by him is correct, my department, which is not afraid to collect taxes, will make every effort to collect taxes from this individual as it would from every other Canadian. We treat all Canadians in the same way, whether they are separatists or not.


John George Diefenbaker: Then go ahead.


George Harris Hees: supplementary question to the Minister of National Revenue. Considering that this matter appears to have been going on for some four years, with this man claiming he has not paid taxes for that period, would the minister report on this matter on Monday?


Edgar John Benson: Mr. Speaker, I must obey the practice of this house and not report to the house on the tax affairs of individual taxpayers. I wish to assure the hon. gentleman, however, that the department will make every effort to collect every dollar of tax that is owing to the government of Canada.


John George Diefenbaker: He says you have been asleep for the last three years.


Mr. Lawrence E. Kindt (Macleod):: Will the minister in the administration of this matter adhere to the principle of applying the appropriate penalties?


Edgar John Benson: Yes.


Mr. Speaker:: Order, please.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. D. V. Pugh (Okanagan Boundary):: My
question is directed to the Minister of Labour
March 17, 1967

and has to do with national housing. I wonder if the minister has received representations from the Ontario Association of Real Estate Boards asking for the removal of the 11 per cent sales tax on building materials.


Hon. J. R. Nicholson (Minister of Labour):: Yes, Mr. Speaker.


David Vaughan Pugh: Has the minister given consideration to these representations for the tax removal?


John Robert (Jack) Nicholson: Consideration has been given. No change is contemplated.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. Barry Mather (New Westminster):: have a question for the Acting Prime Minister. A few days ago the hon. gentleman said an investigation was under way into the activities of Cuban nationalists in connection with bombings in Canada, and told us that discussions between Canada and the United States were taking place on this situation. Does he intend to add to this information today?


Paul Joseph James Martin: I cannot report further at the moment.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, I should like to put a question to the Minister of Manpower and Immigration.
Since the minister promised yesterday to study the latest report on unemployment in Canada, could he tell us whether he actually did so and whether he intends to take special measures with a view to checking the tremendous increase in unemployment in Quebec which has reached a very high level?


Hon. Jean Marchand (Minister of Manpower and Immigration):: I had the opportunity since yesterday to look more closely at the unemployment statistics. Compared to last year, unemployment has increased by .4 per cent, that is, it reached 5 per cent last year, while it now stands at 5.4 per cent for the whole country. There are 40,000 more jobless
Inquiries of the Ministry than at the same date last year and it must be kept in mind that 28,000 of those 40,000 have been out of work for less than a month.
It should also be realized that the Canadian labour force has increased by more than 200,000 during the year. It is interesting to note that those 200,000 workers, or 214,000 to be more precise, include 142,000 women and 72,000 men, which means that women enter the labour market much more rapidly than men and explains why the percentage of unemployed women is higher than that of men.


Gilles Grégoire: A supplementary question, Mr. Speaker. Now that the minister has found all possible excuses, could he tell us what measures he intends to take in order to check this increase in unemployment?


Thomas Clement (Tommy) Douglas: May I ask the Minister of Manpower and Immigration whether his analysis of these unemployment figures to which he has just referred indicated that the increase of 40,000 in the number of unemployed is related in any way to the decline in housing and construction starts in January and February?


Jean Marchand: I can say that specific factors are responsible for these figures rather than any major change in the economy. Among these factors is a decline in automobile purchases; some decline in house building in many parts of the country, and an unusually severe winter. This may answer part of the question put to me by the hon. member for Lapointe.


Mr. A. D. Hales (Wellington South):: Mr. Speaker, may I direct a supplementary question. In the minister's analysis he did not make any reference to the number of people laid off due to displacement in the car industry. Has he any figures on that?


Jean Marchand: Yes-


Mr. Speaker:: Order, please. I think we are getting into details of debate and I suggest to the hon. member that his question should not be asked now.



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Mr. Ed. Schreyer (Springfield!: Mr. Speaker, I should like to direct a question to the
[Stage Direction]
March 17, 1967
Bank Act
Minister of Forestry and Rural Development. Is he aware that some of the many studies being conducted under the aegis of his department are showing a preoccupation with measuring fertility differentials between women in rural and urban parts of the country, and some relating to fertility differentials among cohorts of mothers-
Mr. Speaker:: Order, please. I cannot see that this question is so urgent that it should be asked immediately.


Mr. Schreyer:: I was coming to my question, Mr. Speaker. I was going to ask the minister whether he felt this sort of analysis served any useful purpose.


Mr. Speaker:: Order, please.



BANK ACT


[Stage Direction]
The house resumed, from Thursday, March 16, consideration in committee of Bill C-222, respecting banks and banking-Mr. Sharp- Mr. Batten in the chair.
On clause 2-Definitions.
Mr. Gauthier:: Mr. Chairman, I shall not be too long, although up to now a single member of our group has participated in the discussion on this act respecting banks and banking, so as to give others the opportunity to express their point of view.
So I am pleased to rise at last to speak on Bill No. C-222 dealing specifically with the chartered banks. I note that more speakers from the old parties have spoken on this bill than on Bill No. C-190 respecting the Bank of Canada, where the members of the old parties were noticeable by their absence.
In fact, we, of the Ralliement Creditiste, were the only ones, with the representatives of the Social Credit and a few independent members, to supply the people at large with information. Yet, the population of Canada has delegated every member of the house to suggest ideas likely to improve our monetary system, the key to our economic success.
In the course of this debate, representatives of the two old parties have exchanged all possible amenities, trying to prove that each had accomplished more than the other and was more concerned than the other about understanding more or less the various briefs presented either by banking concerns or by owners of banks or near-banks.

In the long run, who will benefit from all the time spent in such consideration? First of all, high finance, lurking behind the chartered banks and the Bank of Canada itself; secondly, the people or those who will find the patience to read through the brief contained in the report of the standing committee on finance, trade and economic affairs, because they will find therein the proof that we are right.
Nevertheless, we are somewhat gratified in the realization that, in the end, the clash of ideas begets enlightenment. In fact, when we hear speakers, Tories as well as Grits wondering about the definition or the meaning which can be given today to their "banking", I think this makes up for the sarcastic laughter of past years and gives us some hope for the next revisions.
I want to mention here, to be fair, the very timely remarks made by a few independent members inviting the followers of the old-line parties to remove their blinkers sometimes.
Personally, considering that I have been studying for some 30 years a more rational and more humanitarian financial system, like the one proposed under the Social Credit philosophy, I have never stopped trying to understand fully the present system which, up to now, seemed to be only understood by a very small group. Having been chairman of school boards for 15 consecutive years, I have never understood why no government had ever thought about introducing the elements of our monetary system into schoolbooks.
[DOT] (11:40 a.m.)
Even today, when we pride ourselves on evolution in the field of education, we have not yet ventured to make known to our children the well-kept secrets of the principles at the origin of our monetary system.
I thought at the time that science was perhaps too advanced for pupils to whom we were nevertheless teaching the mysteries of our religion. But I was quite astonished when I heard the hon. member for Edmonton West (Mr. Lambert), former Speaker of the house and brilliant lawyer, deplore the fact that we had not yet succeeded in defining the business of banking.
Let me quote the exact words of the hon. member as can be seen on page 14071 of Hansard for March 16:
It has always been my belief that with an appropriate definition of the business of banking we could have a great deal more control.
March 17, 1967

March 17, 1967
Bank Act
standing committee. I will not go over them again but I would like to say a few things to the Minister of Finance and Receiver General (Mr. Sharp) and a few others. I acknowledge the minister's real talents but I regret that he cannot put them to work to benefit the whole population. One feels that he is bound, willingly or not, by an occult power which prevents him from doing what he wants to do and even from saying what he really thinks. It might be an impression, but each time I hear him answer controversial questions, I think he is not the sharp debater one has known. Almost every time, he tries to evade the issue by voicing fears that he knows are unwarranted. Or he says that he finds it very difficult to answer.
Here, without malice, I should like to draw the attention of the house to three scarecrows which always come up in the minister's evasive replies: inflation, printing of bank-notes and interest.
You will understand that when watching wrestlers the most attentive spectators are in the best position to note the repetition of the same mistakes by the wrestlers. And precisely these are the minister's three weaknesses.
Indeed, when we ask him why the Bank of Canada does not issue each year's new credits, which amounted to approximately $1,588,000 in 1964-65, and $1,669,000 in 1965-66, for instance, instead of leaving this responsibility to chartered banks, for the benefit of public sectors, the minister's answer is unavoidably the same: threat of inflation; but he knows very well that if the Bank of Canada issued those amounts, under the same conditions and at the same rate as chartered banks now do it, it would not affect inflation any more than the action of the present chartered banks.
It is nothing but a scarecrow, like those our grandfathers used in their gardens to scare the crows away.
Similarly, when you suggest to the minister that the Bank of Canada should create new credits, based on the surpluses already mentioned, and put them at the service of the provinces, the municipalities, the school boards and the federal government itself, without any interest, the minister can only answer that it would be difficult. Yet, when he authorizes the Bank of Canada to purchase federal government bonds, so that the said bank can deposit them into the accounts of chartered banks, without charging them a single cent in interest, we wonder why that operation could not be logically made for the

benefit of a municipal, school or provincial bank, for instance. And the minister himself admitted that chartered banks could multiply by twelve and a half these amounts which cost them nothing. And then, the members of the committee heard bank owners talk about the high cost of money.
The minister is always pestering us with the threat of inflation. But where does inflation really lie, if not within chartered banks, due to the favours which are granted them by this parliament? And the minister dared maintain, in one of his replies, that all this was done to protect the interests of Canadians. There is a limit to window-dressing, after all.
I want to make this point clear, so that the people may know the truth. On March 13 last, the member for Lapointe (Mr. Gregoire), put this question to the minister:
Does the minister see any serious objection to the fact that the yearly credit increase would be loaned without interest, to the public, by the Bank of Canada?
This is exactly, Mr. Chairman, the minister's answer, as recorded on page 13946 of Hansard of March 13:
-I consider that such action would be very detrimental to the interest of the people of Canada because it would be very inflationary, and all those arguments being presented by the hon. member for Lapointe are simply a camouflage for one of the oldest practices in the world, which is the practice governments have indulged in in the past and I hope will not indulge in in the future:
Mr. Chairman, after having brought out the scarecrow of inflation, the minister turns to the printing of bank-notes. He goes on to say:
-and that is the printing money for the purposes of meeting government expenditures.
This is the first-rate argument. The minister does not even realize that the oldest tactics to camouflage the truth are his own. We have even known some of his Liberal friends who brought their political career to an end for having printed bank-notes and making them pour down on their heads. I am wondering today whether this trick did not come out of the minister's brain.
Sir, the people are better informed today than they were in the thirties, 30 or 40 years ago. They know very well that when we are talking about monetary creation, it means precisely the one carried out by chartered banks, just book entries, and I do not think chartered banks have ever accumulated enough dollars in cities to block the streets. The minister is bringing forward a 1925 argument, that no longer holds in 1967.
March 17, 1967

I have always known the minister to be an outspoken man who could fight for his ideas fairly; he should not disappoint us on the financial level. Let him show that he is playing fair and not stooping to the level of a common cheat. We will keep on trusting him provided he proceeds seriously with the taxation reforms the people are expecting from his department.
Mr. Chairman, I say to the minister that now is the time for him and his department to get out of the field set apart for the magnates of high finance and to question themselves as regards today's needs. His victory or his defeat will depend on whether or not his answer is favourable for the economic life of all Canadians.
I trust the minister will champion the cause of the people.
[DOT] (12 noon)


Mr. Gilbert:: Mr. Chairman, my remarks will be very brief. I should like to preface them by adding to the congratulations and compliments paid to the chairman and the vice chairman of the finance, trade and economic affairs committee for the excellent job they did in the performance of their duties. The hon. member for Essex West showed his masterful control of the French and English languages, a deep knowledge of banking and financial institutions and an infinite patience with witnesses who appeared before the committee and with members of the committee.
I should also like to thank the many witnesses who appeared before the committee, because their contributions were appreciated in the study of the Bank Act and related acts. I think they have added to the improved Bank Act that we have before us today. I think we were greatly helped by the former inspector of banks, Mr. Elderkin and we would like to thank him.
The Bank Act and other related acts are reviewed every ten years, but in this case it has spilled over to 12 or 13 years. One of the things that struck me is that by reason of the changing times and circumstances a decennial review may be too long a period before amendments are brought in to these important acts. The government should have no hesitation in referring special studies to the standing committee on finance and in bringing forth amendments at any time before the ten year period has lapsed.
The main financial institutions of Canada can be divided into four categories: one,
Bank Act
chartered banks; two, trust and loan companies, which are commonly referred to as near banks; three, finance companies; and four, credit unions and caisses populaires.
The main objectives of our monetary policy should be a sustained economic growth, price stability, full employment and a sound external financial position. In order to attain these objectives and at the same time maintain supervisory control over the monetary system it is necessary that we should have a national approach to banking legislation. In the past the different classes of financial institutions operated within specific fields. The chartered banks dealt in short and medium term lending. Now they are dealing in consumer loans, and after the passage of this Bank Act they will be dealing in long term lending by way of mortgages.
The near banks, such as the trust and loan companies, in the past dealt with trust and executors' services, long term lending by way of mortgages, and corporate services. With the present intended amendments to the Bank Act the trust and loan companies will be facing direct competition by the chartered banks in their long term lending, and are asking for the right to participate in consumer loans to balance this benefit given to the banks.
This is why I was impressed with Professor Neufeld's approach of granting special charters to trust and loan companies for a ten year period, and granting to them the right of access to the credit facilities of the central bank and full access to the cheque clearing system. It is obvious that the different financial institutions are becoming multi-functional, and it is therefore necessary that federal legislation enable these institutions to grow and compete on the same footing.
This is the reason so many members of the finance committee requested that the government take the initiative in the definition of banking. We had before us the definition of the Porter commission which states that banking institutions were defined to include all financial institutions which issue transferable demand and short term claims with an original term up to 100 days.
Dr. David W. Slater stated that the test or criteria to be applied is to determine whether some of the debts of the institution are part of the money supply of the country, and whether some of the operations of the institutions result in changes in the money supply of the nation. The governor of the Bank of Canada, Mr. Rasminsky, stated it was his own

March 17, 1967
Bank Act
view that as a practical matter the distinctive feature of the "business of banking" is primarily borrowing by incurring obligations that are repayable on demand or on short notice.
These three definitions could have provided a basis for a definition of banking, and with the federal powers set forth in the B.N.A. Act the government could have taken the leadership in defining this very important subject. However, the Minister of Finance gave no indication of an attempt to define banking, but rather leaned heavily on a deposit insurance scheme on a federal-provincial basis and gave some assurance of a study in the near future of financial institutions with legislation resulting when clearer lines are drawn.
This is not sufficient. The need today is for assertion and leadership in this field rather than for hesitation and delay. Some of the junior trust companies that appeared before the committee indicated that they were not interested in the banking business, and possibly the same could be related to credit unions and caisses populaires. It therefore may be necessary to have a two tier system in banking consisting of chartered banks possessing full powers and savings banks with limited powers.
Mr. Chairman, the formula for interest rates set forth in section 91 of the act is not acceptable to the members of the New Democratic Party. It is obvious that in all probability at the end of December 1967 or in the early part of 1968 the formula will no longer apply, thereby giving the chartered banks full control in the determination of interest rates. We recommend that a regulatory body be set up by the government to set interest rates and determine the allocation of the different types of loans that are required in the country.
We have experienced a very wide fluctuation in interest rates in the past two years. At the time of the passage of the Bank Act in June of last year there was an upward trend in interest rates. Today we find a downward trend which indicates the instability in the field of interest rates. During this unstable period the least that we can do is apply the formula that was set forth in the first bill that was presented to the house, in which 4.5 per cent was the base for short term loans before the removal of the ceiling. If we keep in mind the right of parliament to make amendments to the Bank Act at any time and not wait for a decennial review, this formula

could prevail for the next two years during which time it could be constantly reviewed and amended if necessary.
Dr. Slater, in his brief to the committee, indicated the desirability of loan classification into two or three broad classes such as business loans, consumer loans and mortgage loans, with different ceilings applicable to each. Our experience with the fixed rate of 6 per cent indicated that it was not adhered to either in business loans or consumer loans, and we are attempting to apply the same formula by pretending to impose a fixed rate to all classes of loans and excusing ourselves by permitting the banks to add on service charges, thereby making up for the difference in the rates. I feel that the classification of loans suggested by Dr. Slater with the ceilings being adjusted by some formula as credit conditions is preferable to our present method.
I was also very impressed by the suggestion of Professor Ziegel that there should be a fixed ceiling of 12 per cent on consumer loans. It is almost obvious what is going to happen when the present formula goes into operation. Consumer loan rates will jump from the present 10 per cent to 11 per cent to 13 per cent or 14 per cent, and the banks will justify this increase by claiming they are now attracting a larger group of loans which formerly went to the finance companies. The best method to control the finance companies is to increase the amount to which the Small Loans Act applies from $1,500 to at least $4,000 or $5,000.
[DOT] (12:10 p.m.)
Now, Mr. Chairman, the claim of the chartered banks for the lifting of the ceiling rate was that they should be in a more competitive position regarding the different types of loans to borrowers, and they were apprehensive of the rate of expansion of the near banks. We must remember that according to the evidence the chartered banks still attract 73 per cent of all deposit liabilities, and with their credit expansion power are in a very strong competitive position. All chartered banks have shown excellent growth and profits in the last few years, and the profit trend has been upward rather than downward. There is no evidence of any meaningful differences in interest rates amongst chartered banks, and they tend to stress competition in terms of attracting deposits and performing services to customers rather than in differences of interest rates. I rather suspect that the rates of interest are on a follow the
March 17, 1967

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leader basis rather than a true competitive basis.
This is why my colleague the hon. member for Nanaimo-Cowichan-The Islands has strongly suggested that the government should retain the powers set forth in section 53 of the act, so it may enter the field of banking and provide a more competitive basis. This suggestion has been followed in countries like Australia, New Zealand and France, and is certainly worthy of acceptance in Canada. In the committee we heard representations for permission of foreign agencies to operate in Canada, and Dr. Neufeld suggested that these agencies should be given a licence for a ten year period. This is in contrast to Canadian agencies in other countries where they are only given a one year licence to operate, such as the United States. However, if foreign agencies provide competitive conditions in respect of interest rates and services, and if competition is a good thing, then we should not hesitate to have foreign agencies operating in Canada.
I have already pointed out the difficulties that trust and loan companies are going to experience if the powers of chartered banks are extended to long term lending by way of mortgages, and the necessity of granting these institutions the right to enter the consumer loan field. Their entry into the consumer loan field would add to the competitive basis of the financial economy.
We in the New Democratic Party, Mr. Chairman, were greatly persuaded by the representation of the Canadian Credit Men's Association concerning the statutory prohibition on charges for the negotiation of out of town cheques. Their recommendation is in keeping with the Porter commission report, which makes the same recommendation and goes on to say that the actual handling of out of town cheques does not involve any significant extra cost to the institutions concerned.
In his brief Professor Ziegel indicated that the boards of directors of the chartered banks were made up of representatives of business, and not of other groups within the community such as trade unions, consumer groups and the like. I also remember Mr. Sinclair Stevens indicating to the committee that more than 30 per cent of bank loans are made to companies which have directors on the boards of chartered banks in the country. Professor Ziegel suggested that the Minister of Finance have power to appoint representatives from different groups within the community to the
boards of directors of the chartered banks who would possess supervisory powers. We agree with this suggestion, which would increase public confidence in the operations of banks, which have now reached the stage of being semi-public institutions.
The evidence before the committee, more especially by the junior trust companies, indicated discrimination within the cheque carrying system which is under the control of the Canadian Bankers' Association. We recommend that the Canadian Bankers' Association act of incorporation be amended to permit all financial institutions to participate directly in the system on a fair and equitable basis.
These are the general observations that I would like to make at this time, Mr. Chairman.


Mr. Olson:: There is only one aspect of this Bill No. C-222, Mr. Chairman, that I want to discuss, and that is the lifting of the statutory interest limit on bank loans. I was not a member of the committee, but I know this matter was discussed in the committee and I know some of the reasons advanced for authorizing the banks to go above the 6 per cent. It was suggested that all chartered banks in the country would then be able to provide a far wider range of credit requirements to Canadian citizens. I do not accept that contention, because I believe that for many years the banks have shown a reluctance to get into the consumer credit field, and this is not wholly related to the rate of interest they have been able to charge.
We know also, Mr. Chairman, that to a very great extent the banks have circumvented the statutory interest limits imposed, by various types of discounts and the imposition of certain other charges which in fact have raised the effective return substantially above the 6 per cent. If the banks had been really serious about getting into consumer financing and personal loans, then I think they could have and should have done it several years ago. I believe they missed the opportunity of providing the kind of credit requirements that Canadians were demanding seven or ten years ago. This has been the main reason for the proliferation and growth of the consumer financing companies in Canada and, as many people believe, in the world as well.
Even if this statutory limit were raised I believe all the banks would continue to lend money in large blocks to the finance companies that are now in existence, and let these


Mitchell William Sharp: Mr. Chairman, I wonder whether I could ask the hon. gentleman a question. Could he explain to the committee why the Economic Council of Canada, which is so broadly representative of all sections of the population and is just as concerned as any group in the country about the cost of living, and so on, should have recommended that the government give serious consideration to removing the ceiling on interest rates on loans?


Horace Andrew (Bud) Olson: Mr. Chairman, it is not for me to try to explain the reason for the Economic Council's recommendation, though I would agree with it if we had along with it an assurance from the chartered banks of the country that they would make use of this additional interest to meet the requirements of certain sections of the Canadian people who are compelled to go to finance companies. If the minister can give this committee some assurance that the banks intend to greatly expand their facilities for personal and consumer credit, then it would at least give us some good reason for passing this legislation. But if this provision is only going to allow them to collect more interest on the kind of loans and credit facilities which are now in operation, then all this is just going to add to the cost and will ultimately find its way into the price structure of this country.
If the minister has had such assurance from the banks, then I suggest that he tell this committee, li ne has done so then I have missed the announcement. The minister may have expressed the hope that the banks would do this, but I have yet to hear the banking fraternity suggest that they are going to provide a better service in this particular sector of the consumer field.
It may also be well to note that if the finance companies, which rely on the chartered banks to supply a lot of their capital, are required to pay the banks an additional 1J per cent interest, which is something like an increase of 20 per cent in the rate, I suppose it follows that the finance companies will have to raise their charges instead of lowering them. Our hope was that if the banks were to be more competitive then the finance companies would have to lower some of their
March 17, 1967

rates, which can go as high as 18 per cent, 24 per cent and even higher, but so far we do not have this sort of assurance.
As I say, until we have the assurance that the chartered banks will expand and intensify their lending facilities so as to be more competitive in the financing field, we are going to do the country a disservice by simply increasing the whole price structure of the country, which of course will ultimately mean an increase in the cost of living.
I said I would be brief, Mr. Chairman. I have stated my main objections to the amendments to the Bank Act. There are a number of other clauses on which we will have a word or two to say when we reach them. The party I represent does not believe there is any valid reason or justification for this increase in the interest rate because the banks have not been suffering in the profit picture.
I am a little confused as to the stand taken by the New Democratic Party on this question. The hon. member who preceded me suggested that his party was not in favour of raising the maximum interest limit on bank loans, but at the same time the hon. member for Nanaimo-Cowichan-The Islands, as reported at page 14043 of Hansard for March 15, said:
I came to the conclusion that there was not too much to be said for the maintenance of the 6 per cent ceiling because it could be evaded so easily-
-and so on. So it looks to me, Mr. Chairman, as if the hon. member for Nanaimo-Cowichan-The Islands is in favour of removing the 6 per cent interest ceiling, while the hon. member who has just taken his seat said it was against the policy of his party to do so.


Mr. Cameron (Nanaimo-Cowichan-The Islands):: Would the hon. member permit a question?


Horace Andrew (Bud) Olson: Yes.


Colin Cameron: If the hon. member would read the rest of my speech he would find I said that in default of any other sort of control, even this ineffective control which is contained in the original formula, the ceiling should be adhered to.


Horace Andrew (Bud) Olson: Mr. Chairman, what the hon. member is now trying to do is explain away what he said. I read his exact words, and he said:
I came to the conclusion that there was not too much to be said for the maintenance of the 6 per cent ceiling because it could be evaded so
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easily and because there seemed to be a fair
amount of evidence, to the extent that it was not evaded, that the 6 per cent ceiling was giving rise to the growth of near banks and various financial institutions which have been causing cold shivers to run up and down our national spine for some time.
That is the complete text of that paragraph, Mr. Chairman. The interpretation to be placed upon it must be that the hon. member cannot see very much justification for maintaining the 6 per cent statutory limit. Certainly that is what he said.


Colin Cameron: But I went on to say I had grave doubts about its efficacy. If the hon. member would read the rest of my speech he would find I said that if the government were not prepared to accept the only sensible solution to the problem, which I outlined at some length, then we would have to rely on this inadequate protection.


Horace Andrew (Bud) Olson: Well, Mr. Chairman, this is one of the problems that arises when you try to be on both sides of the fence at the same time.


Mr. Lambert:: You should know all about that.


Horace Andrew (Bud) Olson: You just have to try to do what the hon. member is trying to do now, and that is place a new definition upon your words. Haying said something the hon. member is trying to explain it away hoping that we will forget the words he used. But in this chamber what we say is written down, and what was written down was what I quoted.
Mr. Cameron (Nanaimo-Cowichan-The
Islands): The hon. member is adopting the usual practice of people who want to misrepresent what somebody else has said, and that is to give only part of the quotation.
[DOT] (12:30 p.m.)


Horace Andrew (Bud) Olson: Mr. Chairman, I read the entire paragraph. Perhaps the hon. member should have corrected his speech. Recorded here is what the hon. member said. I do not know whether he intended to say those words, but they are here. The operative words to be found on page 14043 are:
I came to the conclusion that there was not too much to be said for the maintenance of the 6 per cent-
Well, Mr. Chairman, those words are hard to reconcile with the words spoken by the hon. member who just preceded me, who said, I believe, "Our party is not in favour of

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raising the limit on the interest rate," or words to that effect.


John Gilbert: Mr. Chairman, that is precisely what I did not say.


Horace Andrew (Bud) Olson: Then I apologize; I must have misunderstood the hon. gentleman. Perhaps when I read the speech of the hon. member for Broadview I shall also find statements he did not mean to make.


John Gilbert: I said we are not in favour of the formula presented at the moment by the government.


The Acting Chairman (Mr. Asselin, Rich-mond-Wolfe):: One speech at a time, please.


Horace Andrew (Bud) Olson: That is a good idea, Mr. Chairman. Perhaps when I read the speech of the hon. member for Broadview I shall find certain statements he did not intend to make. The hon. member may be surprised that often there are words one does not intend to say, as happened with the hon. member-


Colin Cameron: If the hon. member is referring to me, I fully intended to say what I did say. I was under the impression that I had an audience capable of understanding my words.


Joseph Patrick Tobin Asselin: Order, please. The hon. member for Medicine Hat has the floor.


Horace Andrew (Bud) Olson: Thank you, Mr. Chairman. In conclusion I want to say that as far as our party is concerned the end result of raising the statutory limit will be the intolerable one of raising the whole cost of production and distribution in Canada, thereby raising the limits of the price structure and ultimately increasing the cost of living. I do not think this is a good time to raise the statutory limit.


Mitchell William Sharp: Before the hon. member sits down may I ask him how it is that he finds this action we are taking so reprehensible when the general rate of interest in Canada is coming down so rapidly today.


Horace Andrew (Bud) Olson: I hope the minister is not trying to suggest that there is any connection between the debate in this house on Bill C-222 and the rate of interest going up or down. If the Minister of Finance wants to take credit for the interest rate coming down in Canada today he should also be prepared to take the responsibility when the interest rates go up. When interest rates go up he says they have

gone up in Europe, in England, in the United
States and so on.
If my memory serves me correctly, and I think it does, there have been two announcements from the United Kingdom, one yesterday and another several days ago, that their interest rate has declined by one half of one per cent. That is a decline in the prime interest rate. The Minister of Finance will have great difficulty in giving the government of Canada credit for the decline in our interest rates. This is a world wide situation, happening in many countries of Europe, caused I presume by the easing all over the world in the demand for credit.


Mitchell William Sharp: That was exactly the point I wanted to make. This action will not raise the rate of interest around the world or in Canada.


Horace Andrew (Bud) Olson: No. It may not raise the rate of interest around the world; it may not raise the prime interest rate in Canada, but I am concerned with the consumers, the customers of the banks. If the minister says this action will not raise interest rates to manufacturers, wholesalers, retailers, transportation companies, and all those other entities in our economic community, what is the point of increasing the rate? I suggest that many people seeking loans will pay more than 6 per cent on them after this bill becomes law. The minister means that will not necessarily happen. I am not naive enough to think that loans to entities of the kinds I have mentioned will remain at 6 per cent after this bill becomes law. I think we must assume that the interest rate will be raised by 1J per cent, to 7J per cent.
What is more, I believe we shall be amazed at the consistency with which all chartered banks raise the interest rates on their loans at the same time. Provisions in the act, I know, provide fines and other penalties for collusion, combining or conspiring to set interest rates. But with the very few chartered banks we have in the country I am prepared at this date to expect them consistently and with great uniformity to raise their interest rates as soon as this bill becomes law.


Mr. Klein:: Mr. Chairman, I want to deal with two areas of the Bank Act, one of which deals with loans to certain borrowers and the security taken for the loans. This part appears in the Bank Act as section 88. That section provides that if loans are made, for example, to a manufacturer the manufacturer transfers his right in the manufactured article
March 17, 1967

to the bank by signing an intention to give such security. Not only is the ownership of the product already manufactured vested in the bank, but the product not yet manufactured and to be manufactured is also so vested.
When Mr. Elderkin testified before the finance, trade and economic affairs committee he said this as found in minutes of proceedings and evidence No. 52 on page 3524:
In most cases-
-and this provision still exists under the act-
-where security is taken under clause 88 on a moving inventory the bank gives consent to the manufacturer for the sale of inventory in the normal course of trade.
To illustrate what is meant let me give a specific example. Supposing a person manufactures television sets. He transfers to the bank the ownership of the television sets he has manufactured as well as the ones he will manufacture. When he sends out his statement of account for the sale of a television set the sales tax chargeable to it is included in the price and is deposited in the bank. Do not forget that once a person comes under section 88 to all intents and purposes he is a captive customer of the bank.
This means that the bank has received the tax owing to the government. In the event of the bankruptcy of the individual, or if it is a limited company this would apply to the directors of the company, he is personally responsible, as are the directors, for the payment of this sales tax. Things such as income tax are deductible at the source. But what happens in the event of bankruptcy is this. Prior to bankruptcy this manufacturer, as has happened in the past, would issue a cheque payable to the Receiver General of Canada for the sales tax involved on the sales which have taken place, in respect of which the banks have already received payment. The manufacturer will send out this cheque, and the bank on occasions has refused to honour it.
If the company or the individual subsequently goes into bankruptcy, under the sales tax legislation that individual-and this includes a director of a company-is personally responsible to the government for the payment of the tax which the bank has received. The regulations under the sales tax legislation are so stringent that an individual who has no money to pay and who has failed to get his bank to pay the sales tax under these circumstances can even go to jail.
Bank Act
[DOT] (12:40 p.m.)
I say this is an abuse. The government is being deprived of money to which it is legally entitled. It is an abuse which has been going on ever since section 88 was introduced into our law. I strongly recommend to the minister that he look into this problem, because on occasion it works great hardship on people who do not have the money to pay the sales tax because all that money has gone into the bank account. The effect of this practice is that the bank is using the sales tax receipts, which clearly belong to the government, to reduce the liability of the customer to the bank. I think this situation should not be allowed to continue.
In my view, when the banks receive sales tax they should open a new ledger account of some kind in which the amount of the net sale to the credit of the customer and the amount of the sales tax would be separately listed. The bank would be responsible for seeing that the tax was paid to the government. The same considerations apply to income tax deducted at the source where the deductions are also retained by the bank. Again the directors or owners of the company are responsible for its payment. I strongly suggest that this abuse be corrected.
The second matter I should like to discuss concerns the Mercantile Bank, particularly the time limit allowed to the bank in which to adjust its affairs in keeping with the proposed legislation. What bothers me is the period of time which has been allotted. I was struck by a statement which was made by the hon. member for Verdun as reported on page 3493 of the minutes of proceedings and evidence of the committee on finance, trade and economic affairs which dealt with this matter. The hon. member said:
The point I am trying to make is that Mr. Cameron at that time suggested to Mr. Rockefeller that we are not anti-American but that we had the right to draw up our own Canadian rules for the next 10 years. Mr. Cameron suggested to Mr. Rockefeller that a period of up to 10 years should be given for the Mercantile to conform to the rules and regulations, so long as we did nothing to depart from the principle that this is the pro-Canadian legislation that we want it to be.
The period of five years was decided on as the period of adjustment, but the decision was not made on a scientific basis. It was not made because it would take five years to do the things which the legislation requires the bank to do. It was an arbitrary figure, one which the committee felt was a reasonable length of time within which the bank could

March 17. 1967
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carry on its affairs in Canada in order to bring its shares into an attractive position. If this period had been calculated on a scientific basis as a result of which it was thought that five years would be the right length of time, I would go along with it, but this is not the case. As I have just pointed out, one of the members of the committee thought perhaps 10 years was the proper period. I do not know whether 10 years is the proper period or not. I do not know whether five years is the proper period or not.
As reported at page 3484 of the same minutes of proceedings and evidence, No. 51, the hon. member for Edmonton West had this to say:
There is the point, too, which I think would be even more salutary, that in the event that they did not so feel, the investing public would certainly sense that there was going to be action taken- and very drastic action-with negative results on their profit position, and down would go their shares.
In my judgment this is a sound statement. As the law is drafted now, we are saying in effect to the Mercantile Bank "You have a charter to do business in Canada for five years, but at the end of that period your rights under the charter cease and you must comply with the conditions laid down in the new act". Perhaps when we are considering the bill clause by clause I shall have something else to say on this matter. I can visualize many things which might occur within this arbitrary period of five years. The penalty provided in the event of the failure of the Mercantile Bank to comply with the terms of the Bank Act at the end of the five year period is $1,000 for every day the bank is in default. I am not saying this will happen, but conceivably the Mercantile Bank could be so successful, and work up such an astronomical surplus, that it would be profitable to pay the $1,000 a day or $365,000 a year.


Mr. Alkenbrack:: Does that include Sundays?


Milton L. Klein: 
Mr. Horner (Acadia):: Mr. Chairman, in effect this bill is necessary because we have to extend the bank charters for an additional ten years, but other than that I firmly believe this country would be better off if this legislation were not passed because it does nothing to meet the problems confronting Canada.
There is an interesting coincidence in our having this debate at this time in view of financial conditions during the past year and a half and the government's estimated spending in the year ahead. Just this week the estimates for the coming year were tabled, showing a 20 per cent increase in government spending and an increase of about 8 per cent in government revenues. Also the governor of the Bank of Canada has just tabled his annual report for 1966 in which he issued grave warnings to the government.
During 1966 inflation increased rapidly, to the detriment of Canada. The consumer price index went up to an extent that alarmed many Canadians. The increase in the index also alarmed the government to the extent that it appointed a consumer prices committee which held meetings across Canada, trying to ascertain the reasons for the increase. Without a doubt one of the reasons was the cost of money. I sat on that committee, which
March 17, 1967

received briefs from contractors, home builders and manufacturers, all saying that the cost of money was one of the factors which helped create inflation.
Faced with all these problems the government now presents this major finance bill. Does it attempt in any way to answer the problems confronting Canada? It should, but the only conclusion I can come to is that it does not, and Canada would be better off without it if it were not for the fact that the bank charters have to be extended for an additional ten years, following the policy which has been in effect since the establishment of the Bank of Canada in 1934.
Last September 6 the Globe and Mail carried an article saying "The next four months' pay goes for taxes." In other words Canadian taxpayers will be working the last four months of this year to pay the taxes necessary to maintain the society in which we live. The only fault I find with that article is that in my business the taxes are paid first, and what comes after is all one has to live on. In maintaining a farm, a house or a business the taxes must be paid first, and I say to Canadian taxpayers that we are working the first four months of every year to pay our taxes in order to be allowed to live in this country for the remaining eight months.
What does this bill do to solve that problem? It does very little if anything. It makes no attempt to analyse the reasons for the continual overloading of demands on the Canadian taxpayer, demands which have been stepped up by the government.
We saw inflation run rampant in Canada last year. Who really benefits from inflation? If anybody benefits it is the Minister of Finance in balancing his books. To be polite, it is a less than honest way to balance the books. When the Conservative party were in office we heard a great deal of discussion about deficit budgeting, but at least deficit budgeting was honest budgeting. The Minister of Finance can disagree with me if he likes. Had we printed money as this government has done and caused inflation, prices would have gone up but the government, under its tax regulations, would have automatically received far more money.
The government has borrowed money, good honest dollars, and is repaying its borrowings with dollars of lower value than when the borrowings were made. The cost of living went up by more than 6 points last year. The government now is receiving $1.06 for every 23033-893
Bank Act
$1 it got last year, but is paying off its borrowings at a lower value dollar.
The only person who got the benefit of inflation was the Minister of Finance. He did not benefit as a consumer, but he benefited in balancing his books. In other words, if a government wanted to it could spend money wholesale, so long as it printed it and balanced its books, to the detriment of the country. That is exactly what happened last year. The government could have taken steps to achieve greater control with respect to this problem, but it has not done so.
Do we adjourn for lunch, Mr. Chairman?


The Chairman:: Order. It being one o'clock, pursuant to the order of the house made on Friday, March 3, this sitting is adjourned for one hour.



SITTING SUSPENDED


[Stage Direction]
The committee resumed at 2 p.m.
John (Jack) Henry Horner: Mr. Chairman, in my remarks before the luncheon hour I said that this bill as presented to parliament really would do nothing to alleviate the conditions which have existed in the Canadian society in the past year. I listed those conditions. The first was the great increase in the cost of consumer goods; in other words, inflation was one of Canada's basic problems in 1966. This inflation was brought about by poor handling on the part of the Minister of Finance and his whole department and by a rapid increase in our money supply through mismanagement on the part of the Minister of Finance. High interest rates prevailed in 1966 and in addition we had inflation and labour unrest. The government has brought in the estimates for the next fiscal year and we see by these estimates that government spending will be up 20 per cent.
We have these huge increases. I wonder how they will help the situation. We have the annual report of the governor of the Bank of Canada who gives very clear warnings to the government with regard to the grave dangers in which our society finds itself. I intend to quote some of these warnings. In the face of these warnings this legislation should really do something more than renew the bank charters for another ten years. It does not come to grips with the problems facing Canada. As I said before lunch, inflation aids only one person in Canada, and that is the Minister of Finance. It aids him in only a

Under the bill to amend the Bank Act we are doing very little to bring the near-banks under the provisions of the act. We are giving the chartered banks the right eventually to set whatever interest rate is designated by competition. Arguments can be made on both sides of this question, but without doubt this measure will mean that the consumer will pay a higher price for the money he borrows, which will eventually cause an increase in inflation. Whether we like it or not, the cost of money is one of the key, basic factors in the production of goods. An article which appeared in the Toronto Daily Star of June 21, 1966, dealt quite extensively with the question of giving the chartered banks the right to set their own interest rates on loans. The article said:
The chartered banks claim to be losing business to the near banks-the trust, mortgage loan and finance companies and credit unions-and it's true that their percentage share of total lending has dropped since the war. But in dollar terms, their growth has surpassed that of the other institutions in the past decade. And the net profits of the big five chartered banks rose from $35 million in 1955 to $85.5 million last year.
The article goes on to say:
No hardship case there.
The main argument for a higher interest rate is that it would bring a fresh surge of competition among lending institutions and enable many businesses to borrow at lower rates than they can now. No doubt some businessmen now paying 10 or 11 per cent to finance companies would be able to get bank credit at 7 or 8 per cent.
But a more general effect would probably be higher interest rates in most categories of loans, raising production costs and consumer prices. The other institutions could raise their rates along with the banks and still expect to hold their share of the business.
[DOT] (2:20 p.m.)
The words I have read from this newspaper article support my thinking that what will happen is that big borrowing institutions will be able to get money 1 per cent, 2 per cent or 3 per cent cheaper than they are now paying for high risk venture capital, but the average consumer will be paying more for money if these amendments to the Bank Act go through. The average borrower will therefore have to charge more for the goods he produces, no matter what business he is in. This will cause another increase in inflation and the costs of production.
We in Canada need not be confident in thinking that inflation was running rampant last July and September but is perhaps slowing up a little now. Inflation was running rampant last July and September and perhaps it has slowed down to a certain extent at 23033-8931
Bank Act
the present time, but we need not be confident that this trend has stopped because wage negotiations take place at the expiration of contracts and contracts are expiring every year. The cycle started by the government last year has created inflation and working men have realized that they have to demand higher wages to meet the increased cost of living. As a result there has been an increase in the demands made in labour negotiations, and this situation is still facing us because the cycle of wage negotiations has not ended.
It was quite clearly demonstrated to us last year that once the government had recommended that in the case of three unions the increase in wages should be 34 per cent and maybe as high as 37 per cent, what is now commonly called the Pearson formula in wage negotiations was established. Today a labour leader is not worth his salt unless he argues for a 34 per cent increase. If I were working for a union and my leader did not attempt to obtain a 34 per cent increase I would not vote for him. In fact I would vote against him because everybody else is getting the increase so why shouldn't I? This is what people are saying all across Canada.
If we as legislators could say that inflation is over and if we could revert to what is commonly considered by economists to be a normal amount of inflation, 1.2 per cent or 1.4 per cent, as was the case in the years when the Conservative party was in power-anyone who wishes to check the statistics for those years will find that the average was between 1 and 2 per cent a year from 1958 until 1963-all would be well and good. But what is the situation at present? We cannot say that inflation has stopped and that the upward trend evident last year has been reversed because, according to the statistics, housing costs and interest rates are going up.
A while ago the minister said, in answer to a question put to him by the hon. member for Medicine Hat, that interest rates are coming down. I suppose he was referring to a statement he made in the house that interest rates on treasury bills were down to 4.5 per cent. But who is affected by treasury bills? We as legislators are mainly concerned about the consumer, and a long time will elapse before he is affected by the low interest rates to which the Minister of Finance referred.
If one had a suspicious mind one could say that the interest rate on these treasury bills has been brought down by the manipulations of the government through securities and the buying of government bonds by the Bank of

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Canada at a time when this legislation is before the house and we are asked to remove the ceiling because interest rates are coming down. But I say that inflation is not over and interest rates are going up. There is labour unrest all across Canada. The real cause of the labour unrest is to be found in the Pearson formula with which we now have to live.
The Calgary Herald of March 13, 1967 quoted Mr. Rasminsky as saying that the central bank and the government should have recognized the dangers sooner and adjusted their credit and tax policies to suit. He said that statistics on past performance and economic forecasting are insufficient. He went on to say:
The average Increase In wage and salary rates last year was "far in excess of any reasonable estimate of the average annual increase of output per worker in the economy, and even farther above the disappointingly small gain that, according to the figures available, we appear to have had in non-farm productivity in 1966."
In other words, non-farm productivity increased far more rapidly than farm productivity. Mr. Rasminsky also said that we must realize that labour unions will continue to seek higher wages in the contracts they will be negotiating this year, and he warns the government to recognize this fact and to act on it so as to stop the inflationary trend. What has happened is that the government first created inflation and then brought about a tight money policy in order to halt it. This has caused the near bankruptcy of many financial institutions. In fact, two of them did go bankrupt and the collapse of many more would have occurred if the government had not lent them money and thus kept them in business.
I think one can safely say that in recent years we have witnessed the worst handling of government finances in Canada's history. I agree with the economists who say that perhaps we should take away from the government the power to make decisions with regard to the increase in money supply and set a fixed amount in accordance with the gross national product and the population, thus removing periods of high inflation and high increase in money supply followed by tight money and fluctuations in the economy. As Mr. Rasminsky said:
Inflation in its early stages is popular, it creates a feeling of ebullience and well-being which does not tempt the community to ask too many questions about the future.

The tight money situation brought about by the government has caused many hardships to financial institutions, as we saw last year, as well as to industry and to individuals operating smaller businesses or working for wages.
The Minister of Finance has shown a complete lack of responsibility. His only concern is to rob the Canadian taxpayer. The Bank Act does nothing to arrest the rampant inflation which has existed in Canada in the last few years. Not only has it not arrested it but it is moving in the wrong direction. I am not saying that we should never remove the interest ceiling on bank loans but now is not the time to do it when we still have inflation. This measure can only worsen the situation.
Let me say first of all that one of the things the bill to amend the Bank Act is attempting to do is to create more competition among banks. I am all in favour of that but I do not think it will succeed in doing it. Until there is more competition, perhaps the interest ceiling on bank loans should not be removed.
Members of the New Democratic Party have made statements with regard to the interest rate. Although I listened to the statement made by the financial expert of that party I still do not know whether he is in favour of this legislation. I thought I was the only one who did not understand him but I have found out since that the hon. member for Medicine Hat also has doubts as to the position which the N.D.P. took.
We in the opposition urge the Minister of Finance to become more aware of his responsibilities and to realize the effect which this legislation will have on every segment of the Canadian economy and on every person in Canada. We consider that he has done a poor job in handling the finances of Canada and he alone must accept the full responsibility for the inflation which exists in our country. It is all well and good for the government to set up a committee which has travelled all across Canada and heard all kinds of evidence. I have been a member of that committee and I heard the governor of the Bank of Canada explain his position with regard to the increase in money supply. He admitted in the committee that too rapid an increase in the money supply could cause inflation and he said, rightly or wrongly, that as a result of the financial collapse of certain institutions people have invested in the banks which has resulted in a greater supply of money. But basically the Minister of Finance should be made aware of his position and his responsibilities. I hope that in the proposed
March 17. 1967

cabinet shuffle he is either shuffled right out of that department or made aware of his responsibilities and told to take them more seriously in the years ahead.
[DOT] (2:30 p.m.)


Mr. Baldwin:: I have a very few observations to make, Mr. Chairman, in connection with this measure and this clause. I do so because I think it should be emphasized over and over again at this time that there are many people in this country and many hon. members in this house who are not satisfied with the failure of the government to throw wide the net which it could cast under this new legislation to include other institutions than the chartered banks. I am tempted to make this comparison because I am sure it would appeal to the hon. member for Acadia. Within the corral now there are seven or eight thoroughbred banks but ranging beyond the corral are a number of mavericks, scrubs and standard breeds. Nevertheless, if all of them are not brought within the scope of some restricting, supervisory legislation the government will not be capable of exercising, at times when it should, supervision of monetary or fiscal policies, which is very important in the kind of society in which we now live.
For that reason I am supporting the very strong argument advanced by the hon. member for Edmonton West when he spoke in the house yesterday. It was a logical argument, an argument based on legal precedents. I have used the same argument myself. I spoke at the resolution stage of this bill and I spoke when the subject was brought up by the minister's predecessor. I find it essential to advance the argument again at this time despite the fact the government does not seem to be moved by it. The argument is supported by the views of the Porter royal commission. There is no doubt at all that the constitutional cases especially have established beyond any shadow of doubt that the word "banking" has that widest and most comprehensive meaning which would be required if the government were to prepare legislation to cover many of the institutions we now know as near banks.
The Quebec case which went to the Privy Council in 1947 and the Alberta cases which were decided in 1938 and 1947 make it quite plain that if the government should see fit to exercise the right, it has every authority to do so. I believe that the very sensible, logical and orderly arguments of the hon. member for Edmonton West have pointed this out. I
Bank Act
have read some of the transcripts of the proceedings of the committee and note that this point was brought up time and time again by the members of Her Majesty's loyal opposition. The minister, on behalf of the government, has said no. He has advanced various reasons. It has been suggested that it is difficult to obtain a comprehensive and adequate description and definition of a bank which would meet the situation. It has been suggested that other countries have found the same difficulty. These are not acceptable answers having in mind the dangers inherent in a situation which could come about where it would be essential or desirable to deal with monetary policy and, because of the fact all these institutions were not covered by the legislative authority of the federal government, the government would be unable to act.
I should like to deal for a moment with a situation which has been referred to in connection with an announcement by the premier of Quebec that it is the intention of his government to introduce a measure imposing taxation on institutions in that province. I suggest that we should be very cautious in our approach to this issue. It was significant that this subject was raised in the house yesterday by the hon. member for Medicine Hat because it was a government composed of the party of which he is a supporter which in 1938 attempted, by introducing a measure dealing with financial institutions and particularly banks in the province of Alberta, to use the weapon of taxation as a means of compelling the banks to follow the views of the government of the day.
There is no doubt at all that provincial governments have every right to impose taxation for revenue purposes within the scope of section 92 if they so wish. If the proposal set out by Mr. Johnson is limited purely to the raising of taxation for the purposes of the revenue of the province, none of us can or should take any exception to it. This was the basis of the reasoning in the Alberta cases. At that time the Alberta government imposed taxation of such a punitive nature and so confiscatory in its effect that it was held to be taxation not imposed for the purpose of gathering revenue but aimed at compelling the chartered banks of Alberta to conform to Social Credit policy. I suggest to the minister, therefore, that we in this house have a responsibility to watch carefully to see what legislation is introduced. If it should be such that it has the effect of imposing sanctions of a punitive nature upon the type of chartered

March 17, 1967
Bank Act
bank which is dealt with in this legislation, then it will be the duty of the government to intervene actively and immediately. If the legislation is not of such a nature, then there is no necessity for us to do anything at all. I hope the minister will bear this in mind.
Before I sit down, Mr. Chairman, I wish to take exception to the failure of the government to deal in this bill with what are known as near banks. I do not accept, nor should any hon. member who has given any close study to the matter, the excuses being found for the minister. There are ways and means by which this could be done if the government and the minister would bend their energies to them. I want to make one suggestion about the way in which it can be done without in any way involving the government, the minister or his department in the supervision of these near banks, which apparently they do not wish to undertake.
The business of banking can be carefully delineated and defined at any particular peri, od of time in our history. This is the effect of the decision of the Privy Council. Banking is not a static term; banking grows and expands with current economic conditions. Banking now includes a number of activities never contemplated by those who framed the British North America Act in 1867, and I have no doubt that 20, 30 or 40 years from now there will be other activities of banks which are not now contemplated but which will be included within the definition of banking. Banking is a term capable of precise and accurate definition.
[DOT] (2:40 p.m.)
It may be that the minister and the government do not wish to include in this legislation a definition of banks. But, sir, there is no reason at all that the government should not introduce into the legislation a section to provide that no person or corporation shall engage in the business of banking without first having secured a certificate from a suitable official of the government to be named. This would not involve a definition of the term "bank". It need not necessarily involve a definition of the term "banking", because the courts have defined banking and we know precisely what is included within that term.
However, Mr. Chairman, I can see some of the practical difficulties involved. It may well be that the government does not wish to prohibit the activities of individuals and corporations now engaged in certain aspects of banking, who may feel they are entitled to do so, in that they have no opportunity to change

and to alter the economic picture of this country. Therefore I suggest that we include within the legislative enactment a section to the effect that no punitive steps should be taken by the government either to prosecute or to enjoin an institution of this kind from carrying on the business of banking without first obtaining a fiat from the government to do so. This is a practice well known in the country and is applied in the case of many other enactments. For example, prosecutions under the Lord's Day Act cannot be launched without first securing a fiat from the attorney general of the province. Therefore, I suggest to the minister that he take a look at the suggestion that there be a blanket prohibition in respect of corporations. It may well be that the minister might feel inclined to qualify the type of corporation in question by appending to the prohibition some description as to the permitted amount of capital of a corporation or business activity in which it can engage. But there should be no difficulty at all about the government enjoining a corporation from carrying on the business of banking without first obtaining a certificate and attaching a supplementary provision that no proceedings be taken at any time, either to prohibit or to punish, without a fiat first being secured from the government to do so.
The difficulty is, that if nothing is done more and more corporations are going to involve themselves in some of the characteristic activities of banks, and they are securing vested rights to do so. It may well be that four years, six years or ten years from now another government may come to the conclusion that it is essential to bring in under the umbrella all institutions engaging in such business in this country. But this will be very difficult to do having in mind the interests that these institutions have acquired and which new institutions will continue to acquire between now and the expiration of ten years when the next decennial revision will take place.
I suggest to the minister that by Em enactment of this kin$ he would be making it quite plain that the government is not abdicating or abandoning its legislative responsibility, a responsibility which is given to it by the British North America Act. The government would in effect be saying that it recognizes this, and by such an enactment it would be providing that we could if we saw fit, step into the picture if we came to the conclusion that any institution, though not a chartered bank but being one of those described in the
March 17. 1967

schedule, was so conducting its activities that in our opinion limitations should be placed upon it.


Mitchell William Sharp: Would the hon. gentleman permit a question?


Gerald William Baldwin: Of course.


Mitchell William Sharp: I have listened with great interest to his comments upon what is unquestionably a very difficult problem, one with respect to which, I would remind the hon. member, I have made it clear the government has not made any decision in the negative. However, would the hon. gentleman not agree that it would be much more suitable to have separate legislation dealing with what he has called the near banks rather than attempt to apply to those institutions the provisions of the present Bank Act?


Gerald William Baldwin: Let me make this comment, Mr. Chairman. This might be equally as good a method of dealing with the question if I were assured and felt reasonably certain that the matter would not be pigeonholed and left for another ten years. If the minister is in a position to give an undertaking that steps to deal with this problem are in fact in the contemplation of the government and that the matter might be better handled by separate legislation, I would accept that undertaking. This is a suggestion which I offer to the minister for his consideration. It deals with what I agree with him is a difficult and knotty problem, one which will not yield easily to solution at the present time but which will be even more difficult to solve ten years from now. I give the minister full credit for his intentions, Mr. Chairman. Unfortunately ministers change, governments change and advisers change, and I would hate to see this situation continue for a further period of ten years because it might then result in a solidifying by limitation of time, say, of the position of the near banks. The longer the situation is perpetuated the more difficult it will be to deal with.
It is for this reason that I make this suggestion. I believe it is one that is quite feasible. I am sure the minister will make further contributions when intervening in this debate and I shall be glad to hear his comments, not with respect to the amendments to this act but with respect to what are his intentions for the future. I would be quite happy if I were to hear him concede, on behalf of the government that this is a difficult problem but that the government intends to deal with it by
Bank Act
introducing legislation. If the minister will do this I will give him full credit for it.


Herbert Wilfred Herridge: Mr. Chairman, it was not my intention to speak further on this clause, though I may have a few remarks to make on some amendments which this party will introduce. However, as a simple old farmer I want to make a few comments with respect to the work of the committee and to make some reference to another matter that was brought to the attention of the house by a question asked by the minister.


Mitchell William Sharp: You may be a farmer but you are not old or simple.


Herbert Wilfred Herridge: I wish to join with the hon. member for Nanaimo-Cowichan-The Islands in his congratulations to the committee for their work, and to agree with his comment that he considered that this house owed the chairman a debt of gratitude for his activities in connection with the committee. I have been a member of this house for nearly 22 years but never have I heard a member of our party pay such a tribute, deliver such a eulogy and speak in such glowing terms of a chairman of a committee who sits on the government side of the house. All I can say is that this clearly indicates that the hon. gentleman earned those well deserved congratulations from the hon. member for Nanaimo-Cowichan-The Islands.
[DOT] (2:50 p.m.)
With all the work one has to do it is almost impossible to keep up with the reading of the reports of the standing committees. All one can do really is to glance through them and get the highlights. But there is no doubt about it that this committee as a whole has laboured long and hard in attending its 79 sessions and preparing its report. I notice, Mr. Chairman, and I have gone through the names of the members of the committee, that not one of them has a degree in economics. Nevertheless their work and their report are evidence that ordinary laymen of this house, when dealing with this most complicated topic, are capable of dealing with it competently. I am bound to recognize their industry and ability in coping with these complex questions, regardless of how simple on occasion one thinks those questions are. Going through the list of members I noticed that on the committee there were 11 lawyers, eight businessmen, one professional engineer, one chartered accountant, one teacher, one druggist and one industrial worker. For a short period I think two farmers were on the committee in connection

March 17, 1967
Sank Act
with some problems brought to the committee's attention.
My only criticism of the committee, and I hope the minister will recognize this as a well meant suggestion, is that unfortunately only one of its members actually represented the working class of Canada. Only one member of the committee was an industrial worker. The chairman of the committee was a member of the legal profession and I pay tribute to his work.


Mr. Gray:: Mr. Chairman, perhaps if I ask the hon. member a question I could clear this matter up. I thank the hon. member for his kind comments. I ask him if he does not agree that because of my professional background I represent to the best of my ability tens of thousands of industrial workers?


Herbert Wilfred Herridge: I fully recognize that, Mr. Chairman, but the hon. member represents industrial workers with his head. He does not expend physical effort in the production of goods, and that is the difference.
In passing I want to make reference to the 1964 report of the royal commission on banking and finance to which the government apparently gave no consideration prior to the reference of this bill to the committee. In common with other members of this party who have spoken I can support some recommendations contained in the report; others I would question very vigorously. I have gone through the report fairly thoroughly, though not as thoroughly as I would wish, and I see it is the work of some very competent people who held many hearings. It is based on evidence presented by a wide variety of witnesses representing various segments of the community. I consider that was an appropriate time for the government, when the act was being referred to the committee, to give some lead with respect to policy in relation to finance.
I do not wish to take up the time of the committee to speak at any length. I do wish, however, to make reference to a question asked by the Minister of Finance of the hon. member for Nanaimo-Cowichan-The Islands during the time the hon. member was speaking on the bill. I mention this because I am of the opinion that the hon. member somewhat misunderstood my approach to the question of banking. On page 14044 of Hansard for March 15 we find these words:


Mitchell William Sharp: Mr. Chairman, may I ask the hon. gentleman a question? I am wondering whether he is joining his colleague from Kootenay West in

supporting the views of the members of the Social Credit party about the expansion of money through the ownership of a government bank?
The hon. member for Nanaimo-Cowichan-The Islands replied as follows:


Colin Cameron: No, Mr. Chairman, I am not doing so at all because I do not suffer from this other form of doctri-nairianism which is only slightly to be distinguished from that of the minister. Both are equally unreasoning, equally based on religious faith and equally lacking in any logical foundation.
I must say that as an Anglican that rather raised my eyebrows. I repeat again that I am quite sure the hon. member misunderstood some of my remarks. Possibly they were not phrased in as polished English as he is accustomed to using in this house, but I have to do the best I can with what talents the Almighty has given me. I must emphasize that I was placing before the house policies that have been endorsed by this party over a long period of years which we consider sound for the provision of the capital for social investment required by federal, provincial, and municipal governments. Those efforts are recognized by the minister to the extent that the Bank of Canada now practises to a limited degree what members of our party have urged throughout the years should be the policy of the government.
I also wish to refer to the suggestion that those who advocate certain financial policies always do so with religious faith and fervour. At this point I must emphasize that hundreds of thousands of people in Canada, with logical, religious fervour, have joined or supported our movement in the belief that it offered the best opportunity in a democratic society to give expression to the principles of the Christian ethic through parliamentary action. I want to emphasize that, and I want to recognize the work and faith of those people who have joined our movement because, fundamentally, they were Christian socialists. I am confident that the reverend gentleman who is the leader of our group and the reverend member for Winnipeg North Centre will bear witness to that fact. They have had long experience in our movement and with the motives of many people for joining it and supporting it in various elections.
I have risen to pay my tribute to the chairman of the committee and to its members, to make certain that my position is fully understood in this house, and to correct the record. I must explain that I rose to speak more in sorrow than in anger. I trust the matter is concluded at this point. We may have a few
March 17, 1967

words to say later when various amendments to certain clauses are moved by members of our party.


Mr. Pascoe:: Mr. Chairman, I wish to make a few remarks on clause 2. I shall deal specifically with definitions in clause 2, I shall not repeat statements of other speakers about possible defects or shortcomings in the bill. I wish to deal with the definitions contained in paragraph (a), "agricultural equipment", paragraph (b) "agricultural implements", paragraph (g), "crops growing or produced upon the farm", paragraph (h), "farm" and paragraph (j), the definition of "farmer". As other speakers have said, Bill C-222 will make it possible for banks to expand their lending program with respect to farm property and chattel mortgages.
[DOT] (3:00 p.m.)
In speaking on these definitions I want to express my concern about the danger that perhaps the government may end its lending under the Farm Improvement Loans Act. This act has been a great help to the farmers by providing government guaranteed bank loans at a maximum interest rate of 5 per cent. To emphasize the importance of this scheme, generally called the F.I.L.A. program, I would refer to the latest statement issued by the Department of Finance with regard to lending operations under this scheme. Between July 1 and September 30, 1966, no fewer than 27,233 loans were made for a total of $71,415,392. As I say, the government guarantees these loans by the chartered banks and a farmer can receive up to $15,000 for farm improvements and the purchase of implements at a maximum interest rate of 5 per cent. Since the act came into effect, 1,325,464 loans have been made to farmers representing a total of $1,905,085,785. In Saskatchewan alone during the same period from July 1 to September 30, 1966, loans amounting to $23,377,000 were made for the purchase of agricultural implements, more than $1.5 million for the construction of farm buildings, half a million dollars for other construction and so on, bringing the total to $25,205,047 in this brief period. During the same period last year the total was roughly $24,842,000.
All hon. members are interested in these farm improvement loans but members who represent farming areas are particularly interested and we want to make certain that the expansion of lending by the banks to farmers under this bill will not result in the government withdrawing from this program 23033-894
Bank Act
of guaranteed loans at 5 per cent. I am speaking very briefly because I think we all want to get on with this bill.
Paragraph (g) in the definitions refers to crops growing or produced upon the farm. If I am correct, this would apply to farm-stored grain and it appears that Bill C-222 would allow the banks to make loans on grain in the farmers' bins. The Diefenbaker government brought in legislation-


Mr. Roxburgh:: What government was that?


James Ernest Pascoe: It was a good government, the very best. It was the best that ever was as I will show in a minute. The Diefenbaker government introduced legislation making available interest free cash advances against farm stored grain. It did this when it came to office and found that under Liberal policies a huge supply of wheat had been stored on the farms. The Liberals had given no indication of ability to get rid of the wheat so one of the new government's first moves was to bring in a measure providing for interest free cash advances on grain stored on the farms.


John Maxwell Roxburgh: I thought that government was known as the Progressive Conservative government. I did not know it was known as the Diefenbaker government.


James Ernest Pascoe: Mr. Diefenbaker was the prime minister. We are very proud he was prime minister and we hope that he will again be prime minister.


An hon. Member:: No applause at all.


James Ernest Pascoe: The Liberal government of those days was, as I say, either unable to take action to market this wheat or did not see fit to do so. I will admit that under our policies the present government has been able to move this wheat in the last few years. Wheat has been moving fairly well in the past few years. But there could be a period-let us hope it will not come about-when under a Liberal government wheat would again pile up on the farms, and we want to make sure that the legislation to provide interest free cash loans on farm stored grain is still effective.
These are the main questions which concern me. I wish to emphasize my hope that in Bill C-222-some call it bill "two-twenty-two" because there may be headaches in it-the government is not providing itself with an escape hatch whereby it can drop or curtail the two programs I have mentioned, the Farm Improvement Loans Act with interest at 5 per

March 17, 1967
Bank Act
cent and the provision for interest free cash advances to farmers who are not able to sell their grain and must let it pile up on their farms. I shall probably refer to these matters again when they come up for discussion later.

Mr. Dionnei Mr. Chairman, I am of the opinion that the bill now under study, which includes clauses on the whole Canadian banking system, deserves serious attention. I do not deny that it was studied at length by the committee. Still, because of the effects of the Canadian monetary system on the life of the people, I feel it is quite in order to dwell specifically, while studying that system, on practical suggestions intended to improve that system, in view of the part it plays in the Canadian population.
[DOT] (3:10 p.m.)
We often hear this: in the final analysis, money rules. As we are now discussing a bill on the Canadian banking system, as the debate deals with our monetary system, I shall mention certain causes of the difficulties we now experience in Canada due to the disastrous effects of the present system. I shall then submit, with the best of intentions, suggestions which I think are practical and which, at least in my opinion, are based on common sense and logic.
Any serious observer will admit that the present financial system does not ensure to each and every one a large enough share of the goods of nature and industry. Consequently, it behoves the government responsible for the commonweal to make the necessary changes or corrections, for the simple reason that systems are made for man and not man for the systems.
One realizes that modem production capacity is practically unlimited, both with regard to volume and variety. Our main concern stems from the difficulties involved in distribution methods. Since nowadays the easiest way to exchange commodities is money, inasmuch as a person has enough money, the causes of the money shortage must necessarily be sought, if we really want to solve the problem of poverty.
It is useless to accumulate studies and conferences on poverty; one would have to be blind in order not to see that a great many people live on a scant income and lack the bare minimum and especially the money required to buy the commodities displayed everywhere in stores, but that they are unable to buy for want of money.

Therefore, the true war against poverty must be directed against the money controlling system. Is there anything more obvious?
Since when can a war be won by directing the attack .off the target? In 1914-18, as well as in 1939-45, the Allies wanted to win the war, and they took the necessary means. First, they needed money: they ordered the money system to supply the necessary amounts and there was no lack of money. Furthermore, they organized the army and had the necessary equipment made. Had they been satisfied to consider the situation and to call conferences, they would have certainly lost the war.
The war on poverty will not be won by studies and conferences. And the poor will still be faced with hardship through such means. Therefore, other means are required.
The amendments which will have to be brought to the Canadian banking system, will have to be flexible enough in their terms so that the necessary funds may be used at the appropriate time in order to reduce if not suppress poverty in Canada.
If the income of those who are already short of money is taxed, the problem of poverty, will not be solved, it will become more acute. One does not have to be an economist to understand that.
An article entitled:
Will Ottawa start taxing dedication?
-appeared in the newspaper L'Action of Quebec on March 7, 1967.
That suggestion was made with regard to the part played by Caisses populaires Desjardins and the new Quebec co-operative movement.
As far as the poverty situation in Canada is concerned, the Creditistes are not the ones who describe it. May I quote an article published in the newspaper he Droit, on November 10, 1964, under the heading "The plague of indigence". It said:
Robert Louis Stevenson once wrote: "The greatest shortcoming of our civilization and the best proof of its failure is that a man able and willing to *work should find it impossible to do so."
At the recent convention of the Ontario Labour Federation, Le Droit expressed to this body its concern over the extent readied by the cancer of poverty. The question must be brought up again following the report just published by this association, a document that gives a living and finely detailed picture of the sorry situation of human misery in Ontario and in Canada.
The want of necessities of life is classified under three categories: 1. Deprivation; 2. Poverty; 3. Indigence. In Canada, nearly 2,500,000 people-more
March 17. 1967

than 13 per cent of the population-live in indigence; more than four million citizens or 22 per cent are acquainted with poverty or indigence and finally, 6,500,000-35 per cent-suffer deprivation, poverty or indigence. In Ontario, 700,000 people-[DOT] 11 per cent-live in indigence; 1,000,000-19 per cent-live in poverty or indigence; and 2,000,000- 32 per cent-live in one of the three categories.
At this time, the Minister of Finance is seeking by all possible means to extract money from the pockets of the taxpayers in order to pay the interest and the debts which the present financial system requires him to assume, and yet he dares to claim that he can win the war his government claims to have declared on poverty. I am quite willing to recognize the people's right to be imaginative, but when this happens to the man who is supposed to manage the finances of the country, I think this is something to worry about and the population is suffering as a result.
I do not believe that advising people to read the book written by the predecessor of the present Minister of Finance is the answer to Canada's financial problem, for both of them contributed to bringing about the situation I described a while ago.
The effects of this debt-making system are being felt at all levels of government: provincial, municipal and school. Everywhere debts are getting larger and larger. The representatives of those four levels of government seek by all the means available to get as much as possible out of the taxpayer's pockets, and the supreme leader of that colossal taxation mechanism says: We make war against poverty. I am sure this is a type of war to increase the number of the poor; it is impossible to arrive at practical results with an upside-down system.
Yet, there are means to envisage a logical solution, with simpler methods. Unfortunately, our politicians seek complications; with lots of means at their disposal, they multiply difficulties, to show how flexible an imagination they have, undoubtedly. However, we find ourselves with all kinds of problems: hardships, poverty, strikes, bankruptcies, robberies, crimes, unemployment. And our governments keep kneeling down before financiers, the masters of this inconceivable situation where we have a rich country and poor people.
By observing this state of affairs and the disastrous consequences thereof, we could give an honest try at finding, first of all, one of the causes of the economic confusion in which we are struggling, and I suggest that we would find at least some partial solution to many problems.
23033-894*
Bank Act
I refer to the difference there must be between public capital and private capital. Here, most of the problems related to school, municipal, provincial and federal taxes come up, because they represent a very large proportion of the public funds.
[DOT] (3:20 p.m.)
In our modern society, one realizes that our governments, of various shades but of the same basic colour, seem unaware of the difference between private and public capital.
Yet it is easy to understand that private capital like labour should bring its own reward and that that reward is called interest as a salary is the reward of labour.
Labour produces things, goods or services which earn a salary that allows the worker who produces those things or services to live from the product of his work.
It is obvious that the worker who produces things or services is entitled to a salary. Governments even have the responsibility to keep an eye on labour legislation to make sure that workers get a just salary for the work they do.
As for capital, the money owned by an individual is private capital and if that capital is loaned to an individual or a business, its owner is entitled to get interest for the very good reason that by lending that money he has enabled someone to do business, to produce things or services and he has allowed that business to make a profit on its goods or services. It is with that profit that a business can and must pay interest, out of the profit resulting from the production of goods and services.
Therefore, private capital can and must get its salary, just like labour.
But public capital is something else again. Public capital is, for instance, the capital used to build sidewalks, streets, schools, roads, bridges, waterworks, sewers, etc.. In short, all that which can serve the general public and does not bring any profit to anyone in particular.
Under a sensible system, private capital would not be invested in public works nor would public capital be invested in private enterprises. A well balanced economy would ensure that private capital is invested in private enterprises and, on the other hand, that the public capital needed for various public developments is put at the service of public bodies.
Now, why must our governments borrow money and pay interest for capital serving public projects which bring a profit to no one?


Mr. Lalulippe:: No inflation.


Mr. Dionne:: Mr. Chairman, those who are used to repeat what they hear instead of seeking a practical solution will probably see inflation in this. One has to put money into circulation in order to construct sidewalks, roads, bridges or public buildings, and one must draw money out of circulation according to the extent of the depreciation. So, what is physically feasible will be financially possible.
The building of sidewalks or all expenditures as public capital do not bring profit to anybody, inasmuch as they do not benefit anybody in particular. Since everybody benefits from public works, why is it that the public has no financing system to avoid stealing from itself, or to prevent itself from being robbed; in other words, a system under which the public will not have to pay three or four times the actual value. Thus, a mile long sewage system built in 1964 does not grow to three miles in a period of 20 years, that is, by 1984. Then why should we disburse on finance three times as much as we actually received, 20 years from now? Why should we, in 20 years, pay $1 million for a school which only cost $300,000 when it was built? Is it because financiers want us to spend 75 per cent of our lives working for
March 17. 1967

them? We build a school worth $300,000 and pay the financing agents for more than two schools, one for us, two for them; one mile of sidewalk for us, and two for them; one waterworks system for us, and two for them. Municipalities spend 40 to 70 per cent of their budget on the interests to the financing companies. They are growing fatter every day, and the people are growing skinnier every day. The cancer of finance is consuming the people.


Henry P. Latulippe: That is why we are being taxed by the Minister of Finance and Receiver General (Mr. Sharp).


Charles-Eugène Dionne: We paid $28 million as interest for the Jacques-Cartier bridge, even though the construction only amounted to $21 million. We have already spent more that the actual cost of the bridge on finance and we are still in debt. But we only built a bridge for ourselves. How many Jacques-Cartier bridges will we pay to them? Only the future will tell.
Our financial system at present is the cancer of our public bodies, because we failed to draw a distinction between private investments, which are productive, and must bring a profit, and public investments, which are non productive and do not bring any profits, but remain a public service.
Social Credit would use credit for the benefit of society by giving money to public bodies so as to allow them to carry out public works. In this way, public organizations would not have to charge our citizens interests two, three or four times the cost of public works.
Debts and taxes are increasing continuously. This is only the result of our financial cancer.
At present, municipalities and school boards are struggling with constantly increasing loads of debts. Canadian citizens have to pay taxes of all kinds to maintain the three governments, federal, provincial and municipal, and the school boards besides. How do you expect them to free themselves from their poverty? The federal government must direct its war on poverty towards the real target. In this way, every Canadian citizen will be able to see that it really takes measures to get out of this ridiculous social order under which our people suffer great hardships amidst plenty.
Bank Act
[DOT] (3:30 pjn.)


Herbert Eser (Herb) Gray: Mr. Chairman, it had not originally been my intention to speak at length at this stage of the debate. I thought I might make some remarks on various clauses as they came before the committee. But I have concluded that I certainly would be remiss if I did not respond, at least in a limited way, to the very kind comments that have come from both sides of the house with respect to my efforts as chairman of the standing committee on finance. I wish to say to the committee of the whole that, to whatever extent my efforts may have been considered successful, this was due entirely to the courtesy and co-operation I received from members of the committee representing all parties in the house and others who participated in the work of the committee as well. I should add that the success of our work was due also in large part to the co-operation of our expert staff, the officials of the government and the staff of the committee itself.
I think the efforts of the finance committee have helped demonstrate the value to parliament of an effective system of permanent standing committees, and I hope that the efforts of the members of that committee with respect to this piece of legislation and other matters on which we have had the opportunity to work will provide some inspiration for further development of the committee system in the very near future, a development which I am sure will be to the benefit of this wonderful institution of parliament and therefore to the entire country.

Mr. Chairman, I should also point out that in the committee on finance, trade and economic affairs, the contribution of the French speaking members was important. I wish to insist on this because it is interesting, I believe, to witness the part played by the members of the province of Quebec, by the French speaking members, in the study of a question not only of interest for the province of Quebec itself, but also of vital importance for the country as a whole. Mr. Chairman, I think that the work carried on by French speaking and English speaking members is a valuable example, for parliament and the country as well, of what can be accomplished to serve national interest through such co-operation.
Bank Act

March 17, 1967

As I said, Mr. Chairman, it had not been my intention to comment at length at this stage on the contents of the bill now before the committee of the whole for study. Certain other hon. members, in particular the hon. member for Labelle, have put before us the contents of the bill, the changes made in committee and in general the details of the bill which we are to study at this stage and on third reading. However, I think I should say that in my opinion at least the bill makes important strides toward providing the Canadian people with a better banking system, a better financial system aimed at providing a wider range of services at a reasonable cost. To a large extent this is done by providing opportunities for an extended range of services to the existing and newly chartered banks which are soon to begin operation. I think we should not hesitate, as has been recommended by the standing committee, to examine possibilities for change or improvement before the next ten-year revision if the operation of the provisions we are now considering seems to indicate the need for further modification, addition or change in the interests of the Canadian people.
I would also say that in my opinion at least the work of the committee and its hearings have demonstrated the importance of making sure that the control of this vital segment of the economy remains in Canadian hands so that in this open, highly competitive, interdependent, western, technological world Canada will be able to bargain and negotiate from a position of strength, a position which in my opinion can come only when a sector of the economy such as the banking and financial segment, with which we are concerned at this time, remains as far as possible basically within Canadian hands and under Canadian control. In this way decisions with respect to our economy can continue to be made to the maximum extent and can be made increasingly by people whose lives are linked, as are the lives of the members of this house, with the present and future destiny of our country. This is not an inward-looking approach but rather one designed to permit Canada to obtain the best possible deal for its people today and in the future in the competitive world around us.
In conclusion let me once again thank the members of this house and of the committee who have had certain kind words to say with regard to my work as chairman of the committee. I would again say that to the extent

that these words are justified they reflect the co-operation and courtesy I received at all times from the members of the committee and others who participated in its work.


Some hon. Members:: Hear, hear.
[DOT] (3:40 p.m.)


Mr. Godin:: Mr. Chairman, I am happy to avail myself of the consideration of Bill C-222 to second the hon. member who emphasized yesterday the great ability of the Minister of Finance (Mr. Sharp).
Once again, yesterday, the minister showed that he was worthy of his office in remaining silent when a question was put to him by my neighbour the hon. member for Lotbiniere (Mr. Choquette). That silence proved that the minister is always better at taking than giving.
The public is not always aware of the ability of its public men but high finance can size a man in no time. Big financiers know what to expect of certain politicians, and to make sure they lead by a length in a race such as an election, they are not afraid of staking large amounts of money on those from whom they can expect gratitude and unlimited devotion.
If we analyse the expenses during the election held in the fall of 1965, it is obvious that the Minister of Finance was one of the financiers' favourites. For the benefit of the Canadian people, I take the liberty of quoting a few figures from the report on campa;gn expenses handed to us by the chief electoral officer.
In the case of the hon. member for Cochrane (Mr. Habel), for example, an honest and experienced member who sat for 13 years in the Ontario legislature and who is now in his 13th year here, the financiers spent $4,400.
For that genial man with the perpetual smile, for the diplomat, the Nobel prize winner, for I refer to the Prime Minister (Mr. Pearson), the financiers spent $12,300.
For the election of the member who was to introduce Bill No. C-222, the report shows the unbelievable amount of $32,200. That amount of $32,200, for one month of electoral campaigning, represents $1,000 a day and is equal to the income of the majority of Quebec farmers during 25 years.
Such figures are not only meaningful but alarming and it is such amounts which, in binding key men to the administration, will turn them into public collectors.
March 17, 1967

One must recognize that the champion of Canadian collectors is before us today; he is none other than the Minister of Finance. I can imagine that the financiers will take advantage of centennary year to stress the event. Will the presentation of the trophy take place in private or will the public be invited? Such are the questions that the taxpayers may ask themselves, such are the questions that remain unanswered.
For the banks' benefit, all levels of government have become all-powerful collecting agencies.
Unfortunately, the mayors of our small municipalities and the heads of our school boards are carrying out their duties reluctantly, but the machinery is compelling them to do so. But as concerns the federal and provincial governments, collection has become the most interesting subject, the reward being an annual picnic called a federal-provincial conference on taxation.
For the banks' benefit, there is a summit conference taking place every year, where nobody ever talks about getting capital at a cheap rate.
There is never any talk of asking bankers to lower their interest rates. The guests at this meeting ponder over which of the two governments, federal or provincial, will be the first to take the most out of the taxpayers' pockets.
And every year the ritual is the same. The situation is never settled because a reason is needed to levy new taxes. And, rather than say that interest rates are too high, that credit has become too expensive, the federal government tells us: We are giving the provinces too much; that is why we have new taxes.
At the same time, or a few days later, the morning paper reports for instance that a Quebec government minister has said: Too bad but, as you know, the federal government did not grant us what I asked for; I am therefore forced to levy a new tax.
Mr. Chairman, the interests being charged by the creators of money and credit are too high. In my opinion, lure policies are being used to have this situation accepted by the public. To force the worker who wants to build a house to borrow at unreasonable rates, they give him a bonus which he must repay later through new taxes.
A bonus is also granted to the farmer to force him to borrow and tax increases make up for that bonus.
Bank Act
To promote industrial borrowing for the purchase of new machinery or for any business development, a bonus is offered the manufacturer, but this type of bonus is soon eaten up by the 50 per cent taxes on his profits.
Mr. Chairman, interest rates which are too high cause many bankruptcies. An excessive rate of interest is one of the reasons for the closing-down of many Canadian plants.
The capital created to serve has become a source of worry for the country, the provinces and all our public bodies and they all are doing poorly.
If one examines the financial statements of our Canadian cities, one will see that the interest on the public debt has become the main problem. The interest eats up 25 to 50 per cent, sometimes 60 per cent of their budgets.
And here I wish to support a statement made last December 20, 1966, in the newspaper "Le Nouvelliste" by a Trois-Rivieres journalist, Mr. Sylvio St.-Amant. He said:
The taxpayers of Trois-Rivieres, just like their neighbours outside the St. Maurice region, will probably get a present after New Year's. In fact, our municipal legislators and administrators are juggling dangerously with figures these days and everything seems to indicate that to make ends meet they will have to increase taxes.
Our administrators would no doubt like to put a stop to those runaway increases in expenditures. But there is not much they can do.
The interest on the public debt alone, which will exceed $2 million this year, will eat up a quarter of the total budget.
And Mr. St-Amant said in closing:
In any case, John Public has no choice. He must open his pocketbook which incidentally is beginning to look awfully thin. The lemon has been squeezed to the full; if one tries to get more out of it, it might burst.
Furthermore, in a city which will remain nameless 48 per cent of the budget is used for the interest on the debt, which means that the citizens will go without that much in services or the city will have to increase again its tax rates.
In the field of education, it is the same thing. School boards are forced to change their names to obtain capital. Because local school boards are overburdened with debts, regional school boards are being set up; they borrow under that new front but they send the bill to the local school boards.
The budget of the government is tangible evidence of the fact that interest is too high. A study of the recently tabled estimates reveals that an amount of $1,274,000,000 is

March 17, 1967
Bank Act
required for the servicing of the debt, out of which $295 million approximately which will go back into the pockets of the Canadian citizens who hold saving bonds. But nearly $1 billion will be kicked back to a group of financiers. One billion for a few men, while, in the fields of family allowances, millions of young Canadians, who represent tomorrow's labour force, have to share among themselves an amount as low as $614 million. And the government does not consider for one moment to free itself from that heavy burden.
[DOT] (3:50 p.m.)
In the Speech from the Throne which was read at the opening of 1966-67 session, which is written for our whole history, there is a statement which I take the liberty of quoting once more:
Our country Is enjoying an unprecedented period of prosperity and growth.
Then why bleed the economy with further taxation? Why did we not use our years of prosperity to get rid of the national debt? Not only is it out of the question but the interest bill is submitted to the public, which is not even in a position to know in which year it will get the last bills for that item.
The Minister of Finance and Receiver General, who should know how to count, does not even know where he is going with the administration of Canada. The minister, who is the first to exercise an influence on the salary of every Canadian, told us that he had no idea of the year in which debts will be fully paid.
Let me quote here an answer he gave me, as recorded in Hansard for March 13, 1967, to question No. 2485 I had put on the order paper:
How many years will it take the government of Canada to reimburse the debts it has been accumulating since 1067?
There is the answer the Minister of Finance gave me:
It is not possible to predict when economic circumstances would make it appropriate for fiscal policy to aim at achieving cash surpluses. It is, therefore, not possible to forecast whether or to what extent the government would consider it appropriate to reduce or eliminate all its outstanding debt.


Henry P. Latulippe: Quite true.


Roland Godin: At one end, our citizens are caught up with the municipalities and the school boards, and at the other, with the provincial and federal governments. They end up being hogtied, like sausages.

When money is involved, even the impartiality of our courts can be questioned. I was reading the other day in a newspaper that a bandit who had the pleasure of robbing a bank of $10,000 was sent to jail for five years while another individual of the same character was condemned to two years in jail for the murder of the father of three children.
Another striking example is the R.C.M.P. Let us suppose a municipality requires the services of that police force to ensure its protection for a given period of time. In such a case, the federal government will send a bill to the village authorities, after an agreement with them. But when the financial system is involved, the whole federal police may work day and night to discover the counterfeiters, but the banks, which are the first to be protected, are never called upon to foot the bill. There again, the people pay.
In this Bill No. C-222, the question of removing the present ceiling of 10 per cent on the interest rate is brought up. Hon. members do not seem concerned because they are under the impression that the banks are not making any profits. But considering the annual reports of the banks, it will be noted that they have made enough profits to pay dividends of between 20 and 30 per cent on their shares.
If such profit were not sufficient with the present 10 per cent ceiling and if the ceiling is removed, where will the bankers' ambition stop? Those men who already enjoy privileges granted to them by previous governments, feel required to support their supporters. It is also true that gratitude has always been recognized as an important factor in the relationship between governments and financiers.
Nevertheless, I hope the Minister of Finance and Receiver General of Canada will admit that his supporters have had their share and that the time has come for the government to preserve the share of the Canadian voters.


Gilles Grégoire: Mr. Chairman, I do not intend to make a long speech on second reading of this bill. I expressed most of my views when the committee of the whole was considering the Bank of Canada Act. However, there have been new developments since then which, I think, further support what I said then.
Among other things, last night, the Quebec government brought down its budget for the 1967-68 fiscal year. It is to be noted that many taxes have been increased, namely the sales tax, which went up from 6 to 8 per cent, the meal tax and the hotel room tax. In short,
March 17, 1967

the wheel continues to turn and taxes go up. It was only about a month ago that the federal government increased its sales tax from 11 to 12 per cent. Yesterday, the Quebec government introduced a bill increasing the provincial sales tax from 6 to 8 per cent. Now-and this is how the matter is related to the act before us-the Quebec Finance Minister stated that "if we have to raise taxes, Ottawa is to blame, because it failed to understand the priority needs, the urgent needs of Quebec, and Ottawa refused to return to Quebec part of the taxation field". Now, we know that Quebec was asking for 100 per cent in the case of the corporation tax, the estate tax and the income tax. So we have reached a point today, in Canada, with these complicated monetary and taxation systems, beyond which we can hardly go.
I did a little figuring, Mr. Chairman, to find out just how burdensome were our taxes. I figured out how much an individual would have to pay for a new car the net cost of which would be $2,000. As soon as the car comes out of the production line, the 7 per cent federal excise tax on automobiles is slapped on, raising the price of the car by $340 to $2,340. Then, there are commissions and percentages going to retailers or middlemen amounting to about 5 per cent, which adds another $595 to bring the price of the car to $2,935. There is also the 12 per cent federal sales tax, in this case an amount of $352.20, hiking the price to $3,287.20. Then the 8 per cent provincial sales tax accounts for another $263.98, bringing the total price of the car from $2,000 to $3,550.
And then, the buyer might make a down payment of $550 on the car and finance the balance of $3,000 over a three-year period at a cost of $600. In other words, it will cost this individual $4,150 for a car which cost $2,000 when it came out of the plant. It is more than double its original cost.
The federal government collected $340 in taxes once and, another time, $352. The provincial government collected $264 in taxes, and the finance companies topped it off by collecting $600. That means that the car costs more than twice its original cost price.
Well, Mr. Chairman, when you see such examples as this, you realize there is something wrong with our banking system, with our monetary system, which should exist to serve the people and not to strangle them continually as is the case at the present time. And there is something wrong with our whole Canadian system, not only with our monetary system.
Bank Act
Yesterday, we saw in the Quebec speech from the throne that Quebec will have a supplementary family plan. The Quebec government has just decided to have its own family plan. I am not against that, far from it. But, in this case, it is wrong, because there already are family allowances coming from Ottawa, and now there will be other family allowances in Quebec. And then, you must organize a whole service of bureaucrats here in Ottawa, complete with data, filing cabinets, files, to prepare family allowance cheques; and you have to have a second service of bureaucrats, with filing cabinets and red tape, to prepare a second administrative service in the field of family allowances.
[DOT] (4:00 p.m.)
The cost of administration of the personnel required for sending out family allowance cheques to our young people is doubled. You have to pay once in Ottawa, and once in Quebec. Taxes will be levied by both governments. Ottawa will collect taxes for family allowances and Quebec will do the same. And we are going to pay taxes to Ottawa and Quebec, for that, we will have to pay the cost of a service to administer taxes in Ottawa, and another in Quebec.
We pay twice and when the time comes to redistribute the money through family allowances, for instance, then it will cost twice as much because there will be an administrative service in Quebec and another in Ottawa to compile all essential data to send family allowance cheques, when we could save a lot with one service only.
How much does it cost? Well, according to the estimates for the fiscal year ending on March 31, 1968, the Department of Finance pays $2,566,000 for stamps only to forward family allowance cheques. It costs Ottawa, $2,566,000 only for the stamps to send family allowance cheques. On the basis of the principle that costs would be about a third of that amount for Quebec, there will be another $850,000 pair only for stamps to send family allowance cheques there. Now, if there were only one service, stamps would be paid for only once. That is a huge amount of money for stamps only, but how much more does it cost for envelopes, paper, the cheques themselves, the staff needed to write those cheques, the records and all the rest, and the inquiries that have to be made? Government expenditures are enormous for a country like Canada where everything is done in duplicate, where we always pay twice. Let me tell

March 17, 1967
Bank Act
you that we are the only country in the world that can afford administrative expenses of that kind; the only country in the world where two administrative services are necessary to send family allowance cheques to the young.
Two groups of bureaucrats. Twice as many stamps, stationery and the rest. This costs much more, and we are the only country in the world that allows itself such a system.
Mr. Chairman, I say to the minister that it would be much simpler, in that case, to leave all taxation rights to the province of Quebec and to let Quebec deal with such fields as family allowances, old age security, etc.
And that is not all. Even yesterday, when he spoke about the estimates, the Quebec minister of finance declared that he would create a Quebec housing corporation. Inevitably, that new corporation will duplicate Central Mortgage and Housing Corporation, and we shall, once again, pay for two administrative services, two sets of bureaucrats. Our administration costs us much more than that of any country in the world because we have two levels of government.
Well, Mr. Chairman, because we indulge in the luxury of such an overheated administration, a much larger bureaucracy than that of any other country, for that very reason, we have to increase our taxes. The Quebec government did it only yesterday, by increasing its sales tax from 6 to 8 per cent; last month the federal government raised its own sales tax from 11 to 12 per cent. This means that during the year, or at least since the beginning of the year, the total sales tax increased from 17 per cent to 20 per cent, so that Quebec residents will have to pay an extra 3 per cent from now on.
And where is this going to be reflected? In a higher cost of living. A 3 per cent increase in the cost of living. And yet, some complain because Quebec workers ask for wage increases. They have no other choice, for the cost of living is increasing very fast because of taxes and as a result of taxes-the sales tax being now set at 20 per cent while two months ago the two together amounted to 17 per cent.
Mr. Chairman, in view of the situation I do not hesitate to say that there is one administration too many and that should Quebec have all its taxes, all its sources of income, there would only be one set of bureaucrats in this field.
If the rest of Canada wants a single taxation system set up by Ottawa, it is quite free

to do so, but this shows once again with what is going on in Quebec, that the Canadian political system is far from being adequate and that to save the money being wasted at this time because of duplication and to give the citizens more for their tax money, there is only one solution: Quebec has to get rid of one of the two administrations, that is, unavoidably, the administration of Canada.
The day Quebec is the only one to collect and spend its revenues, the day Quebec is the only government charged with the administration of Quebec, having nothing to do with the government in Ottawa, then we in Quebec will save fantastic amounts of money which at present are spent uselessly for duplication.
A typical example of that is the supplementary family allowances which will be distributed by the province of Quebec and which will involve operation expenses already existing in Ottawa. We have another typical example of that with the Quebec housing corporation that the Quebec government intends to create. Well, since I have noticed that the province of Quebec is undertaking such duplication, I have reflected that there is only one solution left, that is, that the Quebec government get rid of the Ottawa government in order to save very considerable amounts of money.
Mr. Chairman, the system under which we are living requires, if we really want to act as qualified administrators, that we come to the conclusion I have reached and in which my faith has been steadily increasing, and the more so after the speech that was made in Quebec yesterday.


[Stage Direction]
Clause agreed to.
Clause 4 agreed to.
On clause 6-Duration of authority to carry on business.
Henry P. Latulippe: You are on clause 6, are you not? I have an amendment to move to clause 6. Things went so fast that perhaps I did not have time to rise. But I would like to move an amendment to clause 6, if we could revert to it.
[DOT] (4:10 p.m.)
Mr. Chairman, clause 6 reads as follows;
Subject to this Act,
(a)	if parliament sits on at least twenty days during the month of June, 1976, the bank may carry on the business of banking until the first day of July, 1976, and no longer, and
March 17. 1967

(b)	if parliament does not sit on at least twenty days during the month of June, 1976, the bank may carry on the business of banking until the sixtieth sitting day of parliament thereafter, and no longer.
Therefore, Mr. Chairman, we note that a period of ten years for the chartered banks as well as for that of the state is very long. We feel that in ten years a lot of things may happen. We feel that this period might be too long and we feel also that it would be to the advantage of the banks as well as the governments to shorten that ten-year period.
It is the duty of the government to take action at the proper time and according to circumstances to set up a better balance between factors, between the private banks and the government. It is obvious that, in times such as these, the two parties should have the opportunity to make the necessary changes and improvements, according to the times, the facts and the circumstances.
Now, Mr. Chairman, in ten years, many circumstances may intervene and this parliament does not have the right to amend the bank charters and the banks do not have the right to ask for improvements which would be helpful to them, while allowing them at the same time to render service to the population. This works both ways, and I believe we should shorten this period to five years.
So I wish to move an amendment to this effect, as it seems to me that a fixed period of five years would be a reasonable length of time during which none of the parties would have a right to bring about changes. Ten years is an extremely long time, things Change rapidly nowadays, in this modern world of ours and people not only have to live at a neck-breaking pace, but they also must face new obligations, new ideas, new organizations or new problems. Therefore, the government should have a right to interfere and to carry out a revision of the Bank Act at least every fifth year, as I believe that five years from now, there will surely be improvements to bring about, in banking as well as in the government's regulations. This would help the government as well as the chartered banks, as banks must find it burdensome to abide by a ten-year agreement, to be tied down to regulations ten years running. In fact, if there are things that do not suit them, they have to overlook them, to accept them. Thus, we are depriving the people as well as the institutions of their rights. The government also should have certain rights even if financial institutions have rights and privileges to assert.
Bank Act
And now, Mr. Chairman, I shall move my amendment.


Herman Maxwell Batten: Is the committee ready for the question?
Amendment negatived: yeas, 2; nays, 45.


Herman Maxwell Batten: I declare the amendment lost.


Henry P. Latulippe: On division, Mr. Chairman. There are only two of us, but we are not ashamed to do so, because we know we are doing our duty.
If we have arrived at clause 9, I have another amendment to move.


Some hon. Members:: Hear, hear.


Mr. MacDonald (Prince):: I rise on a point of order, Mr. Chairman. I have attempted to obtain a copy of the bill to follow this debate and no copies are available. I do not see how members of the house can discuss a bill when they do not have a copy to follow.


Mr. Pickersgill:: Is there not a copy in the hon. gentleman's desk?


David Samuel Horne MacDonald: There is not. Could not more copies be found that we might follow this debate.


An hon. Member:: Look in somebody else's desk.


Herman Maxwell Batten: It is my understanding that reprinted copies of this bill were distributed.


David Samuel Horne MacDonald: Normally copies of the bill are available from the table. At the
present time I see no copies there.
Thank you. I have received a copy of the bill-in fact I have two copies now. I shall not hold up debate for the remaining 40 minutes, but I do hope that those responsible will make sure that extra copies are available on Monday.


Herman Maxwell Batten: Shall clause 6 carry?


Some hon. Members:: Agreed.
On clause 9-Capital stock and shares.


Henry P. Latulippe: Regarding clause 9, I shall
quote it now. It reads as follows:
Subject to this act, the authorized capital stock of the bank shall not be less than $1 million and

March 17, 1967
Bank Act
shall be divided into shares each having a par value of $1 or any multiple thereof not exceeding $10.
Mr. Chairman, there are many, main arguments to that amendment, because the par value of $1 or a multiple thereof will not exceed $10. Mr. Chairman, it seems to me that in the interest of Canada and also of the banks concerned, we should maintain the status quo with regard to the par value of the shares of the chartered banks. That policy was implemented during the consideration of the Bank Act, in 1944; it has been maintained for 23 years, I claim it should continue to apply. The arguments put forward to give it a par value of one dollar are nonsense. I say they are trivial, illogical.
[DOT] (4:20 p.m.)
The ten dollar par value of bank shares should be kept; there should be uniformity amongst the banks; a statisfactory established order should be maintained. Reducing the par value to enable the small wage-earners, the small investor to buy them is defeated by the mere fact that no one buys shares on the market worth one cent, ten cents or even a dollar. When one bothers calling an investment broker, it is not for a few cents or even a dollar.
There is even an agreement between all investment brokers according to which shares of less than $25 each must be bought and sold in minimum lots of one hundred. This is stated on page 39 of the December 1966 issue of the monthly publication of the Montreal Stock Market.
At any rate, the commission asked by the brokers for any transaction cannot be less than $2. Only by accident are transactions made for less than $10, and there is no commission; special arrangements have been made for unusual circumstances.
And so, the argument whereby the par value should be reduced to $1 or $2 to help the small shareholder is ridiculous and covers other less commendable reasons.
If we want to avoid arguments in the house, or having to rectify situations which stem from more or less commendable reasons, in short if we want to avoid those changes, and even long arguments in the future, let us put an end to the suggestion that the par value of bank shares should be reduced.
Banks are not like the other companies listed on the stock market. They have always obtained special and exclusive privileges which the other companies could not get.
[Mr. Latulippe.l
There are well-founded reasons for that and they are still valid. That is why banks must always be treated in a more responsible way and protected from petty schemes at stock exchanges where it is easier to humbug people by multiplying shares, through the watering of capital by any means and to conceal the real corporate profits from a public that is not always able to understand the details.
Then, Mr. Chairman, it seems to me that hon. members should look into this clause with the seriousness it deserves. As a matter of fact, this advantage extended to the banks is not for the benefit of the people. Mr. Chairman, I think it is my duty to move another amendment to clause 9.

Amendment (Mr. Latulippe) negatived: yeas, 2; nays, 51.


Herman Maxwell Batten: Shall clause 9 carry?


Some hon. Members:: On division.
Clause agreed to on division.
Clauses 10 to 12 inclusive agreed to.
On clause 13-Commencing business.


Marcel Joseph Aimé Lambert: I wish to make a few comments on clause 13. Subclause 2 illustrates the point I was making about the interpretation clause, clause 2, inasmuch as there is nothing to indicate what the business of banking is. Notwithstanding all his expertise and knowledge, the inspector general could not say when a bank commences business, except that it began when he had issued a certificate. That I think is placing the cart before the horse. This draws attention to the necessity for establishing what the business of banking is, in order that a clause such as clause 13 may become meaningful.
I am merely calling attention now to the arguments that I made in the committee and to those put forward in this chamber not only by myself but by some of my hon. friends. I will limit my comments at this time to these few words, but I think it is nonsense to have a clause of this nature when the interpretation clause does not tell us what is the business of banking which one is not supposed to commence.


[Stage Direction]
Clause agreed to.
Clause 14 agreed to.
Clause 17 agreed to.
March 17, 1967
[Stage Direction]
On clause 18-Management.
Marcel Joseph Aimé Lambert: Clause 18 deals with the qualifications and other characteristics oi directors. I am particularly concerned about the introduction of the new subclause 7 and the limitation that no one who is a director of a banking corporation may, along with another director of a banking corporation represent more than 20 per cent of the directorate of any other corporation after July 1, 1971.
This matter was discussed during the committee hearings when it was explained that an attempt was being made to remove controls. I put it to the minister that this would impose a serious hardship on certain small corporations which might be closely held by a small group of shareholders. There might only be three directors. This forces two men who are on the board of one bank, and who may have a very successful and legitimate business operation going in a closely controlled private company, possibly of modest size, to divest themselves of their holdings because they would have to abandon their directorships. If there are only three directors in a corporation, even one bank director is too many if there is to be a limitation of 20 per cent. The only way one can get around it is to increase the number of directors in the corporation to five.
[DOT] (4:30 p.m.)
What can be done if there are only three shareholders? Does one go through the sham of setting up dummy shareholdings in order to qualify? I feel it is wrong that there should be very stringent general restriction on the participation by the directors of any corporate body in the board of directors of any bank. I have been told by a number of people that as matters stand now a number of directors of banks will have to divest themselves of holdings in certain organizations.


Mr. Lewis:: Hear, hear.


Marcel Joseph Aimé Lambert: I have not got the sort of phobia that the hon. member for York South seems to have about the mere fact that there is corporate existence. Two directors of a bank could have a small operation in which there are only three shareholders, yet this particular provision would force them to divest themselves of that interest. It is quite legitimate, and there is no power play.
Although the date of July, 1971, is specified, I think the provision is quite wrong and I would ask the minister to find something much more equitable. I do not share his views
Bank Act
on this matter and I am wondering whether this clause in part can trace its parentage to some of the views of the hon. member for Davenport. After all, the minister has indicated that a good deal of the thinking in connection with, and the preparation of, this bill were an expression of the philosophies of the hon. member for Davenport. If this clause is part of that philosophy then I part company with the minister even more, because I think it is totally wrong and quite unnecessary. I am quite opposed to it.


Mitchell William Sharp: Mr. Chairman, I can at least give one assurance and that is that the original idea, which we might have developed ourselves, was recommended by the Porter commission, but we did not follow that recommendation exactly because it seemed a little unworkable to us. Generally speaking, the Porter commission and the government are agreed it is desirable not only that our banking institutions should be competitive and independent from one another, but that so far as possible there should be an independent banking system, and also a banking system that does not dominate or have an undue influence on the affairs of other corporations. It is in that spirit that these amendments are made, and while there may be some difficulties involved I do not think they are of such a character as to interfere in any way with the development of a sound business system in this country.


Marcel Joseph Aimé Lambert: I am sure the minister will agree that if two or three men decide they are going to have a small investment company among themselves, and they control it as a completely private venture, this provision will force them to dispose of their interests or disband. Can the minister justify that?


Mitchell William Sharp: I doubt very much whether they would be required to disband. There might have to be a rather different board of directors, but their common interests could be represented by one director.


Herman Maxwell Batten: Shall clause 18 carry?


Marcel Joseph Aimé Lambert: On division.


[Stage Direction]
Clause agreed to.
Clause 19 agreed to.
Clauses 25 and 26 agreed to.
Clause 28 agreed to.
On clause 29-Report to directors.
Marcel Joseph Aimé Lambert: Mr. Chairman I will admit that this has some reference to the original

March 17, 1967
Bank Act
section 60(1), but in essence it is a new clause. There is a point I did not note during the committee hearings, but I wonder how it can be ascertained under subclause (2)(b) that a borrower has committed an act of bankruptcy, because the commission of an act of bankruptcy has a retroactive effect.
If one looks at the Bankruptcy Act and the legal definition of an act of bankruptcy, how can a bank manager or any bank official determine that a customer has committed an act of bankruptcy? Legally under the act, an act of bankruptcy can be an undue preference for one creditor and can only be ascertained and identified within the terms of the Bankruptcy Act. If the borrower has committed bankruptcy or has been adjudged in bankruptcy, then I would agree with the minister; but I do not think a bank manager should be under a responsibility to make this report on a noncurrent loan on the basis of a borrower having committed an act of bankruptcy. I will admit it is an identifiable point if a customer has made an assignment for the benefit of his creditors, but the actual confirmation of the act of bankruptcy within the terms of the Bankruptcy Act is something that no bank official could identify.


Mitchell William Sharp: I am sure the hon. member realizes this clause is only for purposes of reporting. It does not have any other consequential effect. Moreover, the same provision has been in the law for some years and the inspector general of banks has not had any difficulty in this respect.


Marcel Joseph Aimé Lambert: What concerns me is that there is a mandatory or statutory requirement imposed upon the general manager to report on a non-current loan, and a non-current loan shall be one if a borrower has committed an act of bankruptcy. Perhaps I am being overly strict in the legal sense, but it is a legal imposition placed upon the general manager consequent upon a certain act. It is not for him to decide whether the loan is non-current, because the act says a loan is non-current if a certain event takes place. The general manager is not in a position to determine if that act has taken place. Perhaps the committee would agree to stand this clause until Monday to allow the inspector general to verify this particular point and to give the minister an opportunity to bring in an appropriate amendment to clear it up.


Mitchell William Sharp: Mr. Chairman, I hope the hon. gentleman would agree that if this were the only thing that held up the passage of the bill

today he would not press his point, but if it is not, then I am willing to have the clause stand for the time being.
Clause 29 stands.
Clause 31 agreed to.
On clause 32-Increase of capital.


Herbert Eser (Herb) Gray: Mr. Chairman, I would ask that this clause stand. An amendment to it will be offered later, when we come to another clause to which it is related.


David Lewis: Could we have an idea of what the hon. member has in mind so that we may be able to think about it?


Herbert Eser (Herb) Gray: I have no objection to that. It will be recalled that the hon. member for Verdun yesterday gave the committee his views, and I quote him as follows as recorded at page 14107 of Hansard:
What bothers me, and I say this directly to the minister, is that X am not certain in reading the bill that the governor in council necessarily has that right.
This was referring to the preceding part of his remarks.
I suggest to the minister, and this might be implemented on the appropriate clause .. . that we ensure that whenever a bank receives permission to increase its share capital, no individual, as defined in the act, be permitted to add to his shares so long as he or his group owns more than 10 per cent of a bank.
[DOT] (4:40 p.m.)
I am not talking of a specific bank; I am talking of any bank; and more than one bank is in that particular situation. This would guarantee the carrying out of the minister's intention, as he has stated it on several occasions in the committee.
The hon. member for Verdun was referring to the standing committee. He is not present at this time, but I might say that if we should reach clause 53 subclause 4 today I would suggest an amendment. Perhaps the simplest thing would be to read it:
That Bill C-222, An Act respecting Banks and Banking, be amended
(a)	by striking out lines 9 to 11, inclusive, on page 32 of the bill, as reprinted, and by substituting therefor the following; "thereof,
(b)	by any person if, at the time the share is subscribed for, the total number of shares of the capital stock of the bank held by such person and by other shareholders associated with him, if any, exceeds 10 per cent of the total number of the issued and outstanding shares of such stock; or
(c)	except as otherwise provided in subsection (5), in other circumstances where if the subscription";
March 17. 1967

(b) by striking out line 19 on page 32 of the bill, as reprinted, and by substituting therefor the following:
"(5) Subject to paragraphs (a) and (b! of subsection"
Of course, it is not easy to follow this just by listening to it. One would have to have the bill in front of him. The reason I ask that clause 33 stand is that if the suggested amendment to clause 53 should be adopted by the house it would be necessary to have an amendment to clause 33 (1) (d) which I might bring to the attention of the house at this time. The amendment will be as follows:
That Bill C-222, An Act respecting Banks and Banking, be amended by striking out line 44 on page 20 of the bill, as reprinted, and by substituting therefor the following:
"reason of paragraph (a) or (b) of subsection (4) of".
The effect of this would be to bring into clause 33 the necessary reference to clause 53 to which I have just referred. I realize it is not easy to explain clearly a complicated insertion of this type, but perhaps to some extent I have succeeded in getting the point across. As I have mentioned, the reason I have proposed that this clause stand is so that the committee would have an opportunity to consider the amendment to clause 53 which I have read. If I am present at the time we reach this clause I would be prepared to move the amendment. The amendment arises out of a suggestion put forward by the hon. member for Verdun, with which I associate myself.
Clause 33 stands.
Clauses 35, 36, and 39 and clauses 44 to 51 inclusive agreed to.
On clause 52-Definitions. "Agent".


Marcel Joseph Aimé Lambert: Mr. Chairman, we are starting a series of clauses which we should consider very carefully because they deal with the question of the limitations on non-residents, the definition of non-resident and the restrictions on any crown holdings of bank shares. I believe we should go slowly in order to understand precisely what we are doing. Actually I have some reservations about the pseudo-Canadianizing of banks by imposing restrictions on shareholders based on residence. On previous occasions when the hon. member for Davenport, the Minister without Portfolio, was perpetually putting forward propositions based upon residence and was talking about Canadianizing, I said I thought he should have the courage of his convictions.
Bank Act
It is so easy to defeat any idea of Canadianizing or any idea of being Canadian when the requirement if merely one of residence, because we know there are very many people who establish residence in this country without their citizenship in any way being affected.
The fact that persons merely establish residence in this country means nothing, because they might be officials in charge of branch plants; there may be trust arrangements behind the holdings or any number of things whereby the actual fact that there is Canadian residence is completely meaningless. I would have thought that at this time if it were thought necessary that there be a requirement of Canadianizing-in other words, that they were going to institute this selfsame nationalistic philosophy-the government would have stated that the requirement should be on the basis of citizenship rather than residence.
I do not honestly advocate that. I do not think it is necessary. I do say however that if the government has such convictions, then let them show they have them. To me it is spurious to say that we are guaranteeing the Canadian nature of our banks as though there were a requirement with regard to the board of directors that at least three quarters shall be Canadian citizens ordinarily resident in Canada. If that is the philosophy of the government, then let it say so. That is the point I wished to make.
I agree that the directors of a bank should be Canadian citizens. I much prefer that to their being resident in Canada. Concerning ownership, if residence has to be established, there will be very great administrative problems for the banks themselves in administering the responsibility which is imposed upon them. I think there would be a tough shakedown in respect of the requirement; but I do not think it would be any more difficult for the banks to ascertain the citizenship of a shareholder than it would be to ascertain his residence. It is a question of providing the passport, if there is to be a requirement that someone be a Canadian. If this is the intention, then I believe the government should go all the way. It is meaningless merely to insist upon residence. Naturally this involves complicated requirements about associated shareholders, corporations and the corporate relationships so that individuals may not be able to defeat these requirements concerning residence by their participation in corporations. Anyone who reads pages 28, 29 and 30 in

March 17, 1967
Bank Act
clause 52 will certainly see that it is necessary to engage in extremely tortuous descriptions. It will be extremely difficult to determine how this is to be interpreted.
If the government really means what it says, then let it say that 75 per cent of the shareholders of Canadian banks shall be Canadians ordinarily resident in Canada-
[DOT] (4.50 p.m.)


Herbert Wilfred Herridge: Well said.


Marcel Joseph Aimé Lambert: -if that is the government's philosophy in Canadianizing the banks. To come down to what I call this really spurious qualification of residence is, I think, going through an exercise in semantics which really is quite meaningless. The clause is there. I do not like it in so far as residence is concerned. When it comes to the question of any government agency owning shares in a bank, I am with the minister. I do not believe that any provincial government should directly own any of the voting stock of any bank. There is to my mind a case for, shall we say, certain investment funds on behalf of university foundations. I refer to universities which may be state operated, as we have in most of western Canada. There is a case there for certain funds to be invested in limited numbers of bank stocks, but the government agency or emanation should not have any voting privileges. That is as far I would be prepared to allow the participation of any right of Her Majesty in the commercial banks of the country. If it is the desire of the crown to participate in some form of banking or near banking, we have the example of the emanations of the treasury of the province of Alberta. I am not supporting that idea. There is the Industrial Development Bank, which really has become a senior partner in many operations. We will have an opportunity to discuss this aspect of the question on some other occasion. We are told that some of the banks have been charging high rates of interest. I can tell hon. members in private of some of the deals that have been insisted upon by the I.D.B., and we wonder who is getting that pound of flesh. However, Mr. Chairman, with these reservations as to clause 52 I think we can start the discussion on clauses 53, 57 and 58.


Colin Cameron: Mr. Chairman, I should like to ask the indulgence of the committee to stand clauses 52 and 53. I had prepared an amendment to clause 53, but I realize that to effect my purpose it will be necessary to have an

antecedent amendment to clause 52 and a subsequent amendment to clause 53. Therefore I would ask clauses 52 and 53 be allowed to stand.


Herman Maxwell Batten: Shall clause 52 stand?


Some hon. Members:: Agreed.


Herman Maxwell Batten: Shall clause 53 stand?


Some hon. Members:: Agreed.


Marcel Joseph Aimé Lambert: Mr. Chairman, I think it would be helpful if we stood clauses 52 to 57. They are part of a group, and we have immediately following clauses 58 and 59, which have already been accepted. We could deal with clause 60. We are only about three or four minutes away from the time when we shall be dealing with other business, in any event.


Herman Maxwell Batten: Is it agreed that clauses 52 to 57 inclusive stand?


Some hon. Members:: Agreed.
Clauses 52 to 57 inclusive stand.
Clause 60 agreed to.
Clauses 63, 64 and 65 agreed to.
Clause 69 agreed to.
On clause 72-Cash reserve.


Marcel Joseph Aimé Lambert: Mr. Chairman, frankly, in connection with this clause I find myself at some inconvenience in that I would like to have proposed an amendment to clause 72. We have made such good progress that I do not have the amendment with me. However, I can give hon. members an indication of it. I have not, notwithstanding all the evidence that was put before the committee, seen the need demonstrated of increasing to 12 per cent the ratio of reserves against demand deposit liabilities. There was clear evidence given to the committee that the banks themselves feel that about 5 per cent is a very safe figure, and this is what they would normally carry. I refer to reserves against demand deposits.
I appreciate that the minister has established a distinction in this revision between demand deposits and deposits payable on notice, so that there is a proposed rate of 12 per cent against demand deposits and only 4 per cent against those payable after notice. There is, in addition, being included a statutory secondary reserve which will be at the disposal of the governor of the Bank of Canada for further action if he deems fit. At the present
March 17, 1967


Herman Maxwell Batten: It being five o'clock, shall I rise, report progress and request leave to sit again later this day or at the next sitting of the house?


Some hon. Members:: Later today.
Progress reported.



BUSINESS OF THE HOUSE

Mitchell William Sharp: Mr. Speaker, I wonder whether the house would be willing to set aside the private members hour and proceed with the business that was interrupted at five o'clock? There is a good deal of urgency about this bill, as the house knows, and in view of the progress we are making I hope that favourable consideration will be given to my request.


Marcel Joseph Aimé Lambert: I am sorry, Mr. Speaker, but I think there is equal urgency in considering certain private members bills. We did not have a private members hour last Thursday and lately the time allotted to private members bills has been disregarded. We have made very good progress with the bank bill and I think we should leave it at that.


Mr. Mcllraiih:: There seems to be some misunderstanding. There has been extensive consultation, and I think the hon. member is biased when he implies that this is not so. I wonder whether the proposal to continue could be considered.


Marcel Joseph Aimé Lambert: No, Mr. Speaker.


George James McIlraith: I hope this will not cause embarrassment to the hon. member, but hon. members who wished to take part in the debate on private members bills have been consulted and appeared to be quite satisfied with the request that we continue the consideration of the bank bill.


Marcel Joseph Aimé Lambert: In view of the fact that the Minister of Public Works knew that the conduct of business, so far as this bill was concerned, was in my hands this afternoon he could have consulted me in this regard. We have made very good progress, and after having offered last night to pass some 70 odd clauses en bloc we have now reached the core of the bill. I cannot agree to the suggestion that we continue debate on the bill after five o'clock on a Friday afternoon when many hon. members are absent.


George James McIlraith: Mr. Speaker, I should like to correct an impression which may be left on the record from what the hon. member from

March 17. 1967
Business of the House
Edmonton West has said. I think it is quite unfair to leave in Hansard the inference that there has been a lack of care from this side of the house in the consultation carried out. I think the hon. member will agree with me that we encounter certain difficulties in knowing who represents their party and we try our very best to meet them in an obliging and fair manner so as to carry out such consultations as thoroughly as possible. However, it is impossible to consult each member of the party and to reach a unanimous decision. I think the hon. member would agree that this is true in any party.


Marcel Joseph Aimé Lambert: Mr. Speaker, I cannot take this sort of nonsense from the Minister of Public Works. There was plenty of opportunity for consultation both yesterday and the day before. The minister knew where to find me, particularly when he thought I was going to offer some assistance in passing certain clauses of the bill. I have been here without interruption since we have started consideration of this bill, and the minister knew where to find me.


George James McIlraith: I am sorry, but I did not feel obliged to consult with individual members of the party. I tried to do my best to consult with those concerned, and they were agreeable. In any event, would the hon. member consider taking item 140 on the order paper, the second reading of the income tax bill?


Mitchell William Sharp: No, Mr. Speaker, we are not ready to deal with it now.


David Lewis: Mr. Speaker, this is an important bill. If I remember correctly it deals with the removal of the 5 per cent refundable tax. I hope the minister is not trying to slip it in at this time.


George James McIlraith: In any event I understand the Minister of Finance is not ready to deal with it now.


David Lewis: Nor are we.


Mr. Deputy Speaker:: During the consideration of Bill No. C-222 a question was raised with regard to additional copies of the reprinted bill. Is there agreement to the printing of an additional 200 copies in English and 100 copies in French?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: The house will now proceed to consideration of private members
IMr. Mcllraith.]
business as listed on today's order paper, namely public bills and private bills.


Mr. McNulty:: Mr. Speaker, may we have the consent of the house to stand orders Nos. 1 to 8 inclusive and to go ahead with No. 9 on the order paper which is Bill No. C-37 under the name of the hon. member for Winnipeg North Centre (Mr. Knowles).


Mr. Deputy Speaker:: Does the house agree to standing orders Nos. 1 to 8 inclusive and proceeding with the consideration of No. 9?


Some hon. Members:: Agreed.
[DOT] (5:10 p.m.)



CANADA LABOUR (STANDARDS) CODE AMENDMENT PROVISION FOR THREE WEEKS ANNUAL VACATION

[Stage Direction]
Mr. Stanley Knowles (Winnipeg North
Centre) moved the second reading of Bill No. C-37, to amend the Canada Labour (Standards) Code (three weeks annual vacation after three years).
He said: Mr. Speaker, I suppose my first word should be one of appreciation to the hon. member for Edmonton West (Mr. Lambert) for making it possible for me to present this bill for second reading at this time. We were prepared to stay with the government item for the remainder of the day, but now that we are in private members hour, I have this privilege of presenting for second reading Bill No. C-37 entitled, an act to amend the Canada Labour (Standards) Code (three weeks annual vacation after three years).
Sometimes, Mr. Speaker, bills are presented to this house the titles of which create a certain amount of mystery, but that is not the case with this bill. So far as this bill is concerned, the whole principle is set out in the title itself.
We now have the Canada Labour (Standards) Code in which there is provision for two weeks annual vacation with pay after one year for all workers who come under federal labour jurisdiction. This includes persons who work in banking, transportation, communications and various other kinds of occupations set out in the British North America Act. It took a long while to get the labour code. It took a long while to get the provision for annual vacations with pay; but I suggest that already the length of the vacation in the course of a year that is granted by the
March 17, 1967	COMMONS
Canada Labour (Standards) Code is much shorter than it should be.
This is often referred to as an age of progress, affluence and a few other things. We believe that one of the ways in which this age should express itself is by providing more leisure time for our workers. During the course of this week we have been spending most of our time on the banking legislation. In many of the speeches that have been made during this debate it has been suggested that there are various indirect ways, such as control of the monetary and fiscal policies of this country, in which to bring benefits to our people. This is fine; but there are also direct ways of bringing benefits. One of those direct ways is to provide legislation setting out clearly the rights to which our workers are entitled. This bill seeks to do something directly.
We are glad that at long last we have the principle established that workers are entitled in each year to annual vacations with pay. We think the time has come, in the case at least of employees who have spent three years with the same employer, for this to be not less than three weeks each year. When we get this bill into committee of the whole, as I hope we will do, one slight change will be necessary. The reason the change has to be made is similar to the reason changes have had to be made in a number of bills this session, namely, that it has been on the order paper a long time. First reading of Bill No. C-37 was given on January 24, 1966, early in the present session. Therefore because the bill was introduced and given first reading last January, the effective date of the legislation as set out in clause 3 of the bill is indicated as January 1, 1967. This date having passed, obviously it will be necessary, when we get into committee of the whole, to change the effective date, probably to January 1, 1968.
However, I hope that the house generally will accept the principle of this bill, and that we will be able to go into committee of the whole on it very shortly and proceed with this useful piece of legislation under which we would guarantee to all workers who come under the jurisdiction of the federal parliament and who have worked for three years for the same employer at least three weeks vacation each year with pay. I commend this bill to the house.
Mr. Guy LeBlanc (Rimouski):: Mr. Speaker, I am pleased to be able to express my humble opinion in this house on this Bill No. C-37
Canada Labour (Standards) Code Amendment calling for three weeks annual vacation after three years with the same employer.
May I congratulate the hon. member for Winnipeg North Centre (Mr. Knowles) for his initiative. He also shows perseverance, for this is not the first time he brings a bill setting forth a similar principle.
My personal reaction to a three-week leave with pay after three years for employees in industries under federal jurisdiction was to welcome that proposal. It is obvious that, with technological developments and automation affecting us more and more in this twentieth century, it will be necessary to give more thought to organizing the leisure time of all Canadian citizens.
It is obvious that a prolonged vacation is always useful; in fact, it is increasingly useful, considering the rapid changes affecting us. It is useful for the health of our employees, for the preservation of family spirit; it permits our fellow-citizens to have more spare time to look after their training, so as to reach a level of education higher than the ordinary labour skill required in the industrial field, in arts and other similar activities.
However, when I thought of expressing my views on this bill, I believe at first, I had to study a little more thoroughly the question of an annual vacation for our labour force. I also thought that by referring to the principles of the Canada Labour Code, the labour standards, to the principle of determining acceptable standards and minimums for our average industries, throughout Canada, that the time had probably not come yet for the necessary efforts to be made in order to determine through legislation, a minimum period of three weeks vacation with pay.
I can see, as the hon. member for Winnipeg North Centre pointed out a while ago, that the principle of this bill is very clear and very easily understandable. Mention is made in the title itself of a three weeks annual vacation with pay after three years in the service of the same employer.
All the same, the Canada Labour Code that has just been enacted by the house represents a great step forward with respect to this bill, as far as holidays are concerned. Before its adoption, holidays lasted a week only. Then, we got two weeks with pay after one year employment with the same employer.
Moreover, I think it is worth noting that in addition to those two weeks, the labour code states that employers must give their employees seven holidays with pay, seven legal holidays a year.
14158	COMMONS
Canada Labour (Standards) Code Amendment
I read seven days in the speech of the then Minister of Labour, but in another report, I found that it is now eight days.


Mr. Knowles:: I should like to ask the hon.
member a question.


Louis Guy LeBlanc: Could I have a minute please?
[DOT] (5:20 p.m.)


Stanley Howard Knowles: Perhaps the hon. member would not mind my reminding him that in committee on that bill the figure was amended to provide for eight. It was seven when the bill was brought in but it ended up at eight.


Mr. Cote (Longueuil):: That is what he said.


Louis Guy LeBlanc: That is quite all right. Mr. Speaker, I thank the hon. member for his remark and I confess that I noticed today, in a report, that eight days were mentioned. Then, let us say two weeks of leave, plus eight days of paid holidays, eight legal holidays.
I noted, as I said earlier, that the hon. member introduced a similar bill in 1965; in fact, first reading of it took place in April 1965.
In 1964, the same hon. member moved a bill in which he suggested that three weeks of annual leave be granted after five years of employment with the same employer.
I noticed, on reading the debate of that time, that those who objected to the bill, such as, for instance, the hon. member for Halifax, mentioned that the government was about to introduce its Labour Code which was since passed since 1965. He stressed also the principle which I put forward earlier, that the Labour Code must set minimum standards, and he emphasized the necessity of studying that question in greater detail because it is quite complicated and in view of the effects that such legislation might have on the industry.
On the other hand, the hon. member for Villeneuve (Mr. Caouette) did mention at the time that the consumer would again have to foot the bill, because when businessmen merchants are compelled to raise salaries and provide facilities for their staff, it is a known fact that, in the last instance, it is always the

DEBATES	March 17. 1967
consumer who pays the bill. He also mentioned the financial difficulties that would result from the immediate setting up of such holidays, as well as those this measure would bring to bear on the small industries and businessmen.
Therefore, I think that the standards introduced in Bill C-37 in respect of three-week holidays after three years of employment, is much in advance of the current practice carried out in industries under the jurisdiction of the federal government and in the industry on the whole.
In 1964, a review appearing in a publication of the Labour Department on the labour conditions in Canadian industries under the jurisdiction of the federal government, among office employees, showed that 12 per cent of them only had a vacation of three weeks within ten years of employment, that is, that they worked for concerns who granted a three-week vacation to employees with less than 10 years of service.
And for all the employees, including the office workers as well as the others, a study was conducted on a total of over 2J million employees, with the result that 15 per cent only of these employees were granted a three-week holiday when they had less than 10 years of service.
A three-week vacation after relatively short periods of service is more frequent among office workers. It is quite obvious that most enterprises which grant three weeks or more to senior employees after several years of service, after a long period of service, require that the duration of the service exceeds considerably the period of three years.
I think that these facts should be taken into consideration. Only specific data about the present industrial policy can serve as a sound basis for legislation.
As regards the vacations allowed by the provinces, we can see that in Saskatchewan the policy is to give two weeks after one year of employment, and three weeks after five years.
In three provinces, that is Manitoba, Alberta and British Columbia, it is two weeks after one year of employment. In four other provinces-Nova Scotia, Quebec, Ontario and New Brunswick-the minimum is one week. Two provinces, Newfoundland and Prince Edward Island, have no legislation in this respect.
As I said a moment ago, the Canada Labour Code has improved the situation that existed at the time, when it was a one-week vacation;
March 17, 1967	COMMONS
now it is two weeks, in addition to the legal holidays that must be granted and paid to the employees.
In my opinion, this is a substantial improvement for a great number of workers.
A proposal like the one put forward by the hon. member for Winnipeg North Centre in Bill C-37 and which would bring an important increase in the standards pertaining to annual vacations could hardly be seriously considered at this moment. The Labour Code having been passed by the government just some time ago, so to speak, it does not seem to me that things have changed fast enough in industry as a whole to justify such a proposal at this time.
The survey that the International Labour Organization sponsored in 1964, in industry as a whole shows a trend toward extending the vacation period in quite a number of industries.
In my view, an annual vacation of three weeks is an objective for the future but could not be realized now. Meanwhile, it would be normal to leave to collective bargaining, to private enterprises, the task of extending the annual vacation according to the period of continuous employment, because the philosophy of the legislation, I repeat, is to provide for minimum standards in order to protect the small employees who cannot benefit from the unions or collective bargaining. We must see to it that, in the industries under federal jurisdiction in Canada, no one has less than a two-week vacation each year. As to the other industries, the matter must be decided by way of negotiations between the employees and the employers; in certain cases, consequently, longer holidays-even more than three weeks a year, could be granted.
We ought to ask ourselves to what extent legislators should go when establishing minimum standards concerning working conditions, without interfering with collective bargaining. I also think that it has always been the policy of the government-at least when the Liberal party is in power-to protect and encourage as much as possible private initiative and to respect our standing within private enterprise.
Where the labour market is sufficiently stable to allow an employee to accumulate many years of service with the same employer, it seems that there is nothing to prevent a union organization from being effective and having a strong collective agreement.
Besides, I took the opportunity to get in touch with some of my constituents who look
Canada Labour (Standards) Code Amendment after labour relations within the trade unions, to give them my views on this subject and ask them their own opinions. According to my little inquiry, it is better, after the act has set minimums, to let the unions act as they see fit and to give collective baragining a chance to play its part.
This does not mean that we do not keep an eye on working conditions. On the contrary, I think that if we look at the policies of this government during the last few years or even during the last session, to begin with, the program it outlined in the Speech from the Throne which set forth many plans to improve the working conditions and the status of all Canadian workers, we find that the present government takes an interest in the welfare of the Canadian worker. Moreover, since then, various measures were introduced by the government, several of which were passed, and always in order to improve the standing of our labour force. And I am especially referring here to the different pieces of legislation that were passed concerning the labour force; indirectly or directly, they are all measures intended to help the people constituting the labour market in this country.
[DOT] (5:30 p.m.)
And, if I consider my area, the people I am most acquainted with, I think we should rather try, for the time being, to provide for sound economic health and, in order to do this, provide work for the labour force by developing new industries and reorganizing the structure of our economy.
In closing, I insist on this principle: To legislate in such a way as to set down minimum standards. I feel that if we consider the whole of the methods applied generally in Canadian industry, two weeks is quite an acceptable minimum since hardly two years ago the minimum was one week; so it has doubled.
I believe the government is acting wisely in this legislation for the time being, and when the need is felt and the general attitude of industry indicates that two weeks are, in fact, below a reasonable minimum, we can then set another minimum longer than the two week period.
Respect of private enterprise. The government must preserve the rights of man, of the individual, of the worker, through minimums, at the proper time. On the other hand the initiative of private industry must also be preserved, for when longer holidays are really necessary, private industry, the employers by agreement with the employees through the

March 17. 1967
Canada Labour (Standards) Code Amendment unions and labour agreements, can extend the two-week period according to requirements.
Such are some of the reasons why I felt, while taking into consideration the necessity of watching over the leasure time of our industrial workers that such a measure should be left to private industry, to labour agreements and not become at this point, the subject matter of an act of parliament.


Stanley Howard Knowles: Would the hon. member permit a question? Do I understand this to be the position, that the law requiring two weeks holidays with pay does not interfere with free collective bargaining, but that a law requiring three weeks would interfere?


Louis Guy LeBlanc: Mr. Speaker, I do not know if I made myself clear but what I meant to say once again is that the government provides a minimum of two weeks to protect the small employee who cannot join a labour union and is thus unprotected. The government sets up a minimum so as not to unbalance its economy and leaves private enterprise free. When I speak of private enterprise, I mean the employer as well as the employees who can discuss things together. I mean that through collective agreements, they can provide for the vacation periods which they feel can be granted to the employees. The initiative is left to the employers and the employees and I think that that is in the spirit of the labour code. I think it was in that spirit that the labour code was passed by the house not very long ago.


David Samuel Horne MacDonald: Mr. Speaker, I rise to speak with the intention of taking only a minute or two, realizing that other members wish to express themselves on this worth-while legislation before us. I must admit that in the first instance I hoped this legislation would also apply to members of parliament. It would be nice if we could be assured of at least a three-week holiday in which to recuperate from the vicissitudes and involvements in this place and others.
I must say also that I cannot go along with the comments of the hon. member for Rimouski, who suggested that the time is not yet ripe for making an advance with this kind of legislation, and that we ought to ensure that there are minimum standards for vacation time, particularly for those people in the labouring sector who very likely need holidays more than any other people.

All of us, whether we sit in this place or not, are aware that there are increasing pressures today on family life, that society is developing to a state in which it is not possible much of the time for members of families to be together because of vocational commitments and commitments beyond one's vocational life. If is almost true to say that in many instances members of families do not know each other well. They do not enjoy the day to day contact which is needed for a strong family life.
[DOT] (5:40 p.m.)
It is also true that the pressures of the business world are such that it is often impossible for people to get the kind of recreation which is needed week by week to allow them to restore themselves and carry on their chosen endeavours. I think it is necessary today for people to have much longer than the two weeks normally accepted as the minimum standard. I think it is true to say also that those who belong to the professional classes and who have reached some degree of independence in the business world no longer worry about these things. It is common enough for professional people in many walks of life to take vacations extending as long as two months. They feel they need this and that it is justified. I know of doctors, I know of lawyers, and I even know of some of my colleagues in the ministry who make sure they spend two months each year on vacation.
Here we are talking about people who are not self-employed, people who are often not members of a professional group, and who are allowed, in most cases, two weeks as a minimum. I think it is important that amendments be made to the labour code setting the minimum standard so as to provide for at least three weeks. While it may not be possible to take action this afternoon in this regard, I do hope this question will be given serious consideration by the government.
In confirming my support for this bill I wish, however, to put forward a word of caution. I believe that increasingly we shall be facing a problem of which this bill gives only an inkling

the redefinition of the meaning of work and of leisure. I have heard social scientists make confident predictions that by the end of this century the normal vacation period will be eight weeks. Some of us will relish the thought of reaching that date, if indeed we do. As the affluent society becomes more and more productive it will no longer be necessary for people to continue to work as hard as they have done in previous years.
March 17. 1967

Indeed it might be harmful to the economy were they to do so. This means longer periods of leisure for all of us, and greater opportunities for vacations.
One might think that everyone would be pleased with such a prospect, but in a number of instances such is not the case. Indeed many people today who have found themselves with increasing leisure have reacted by seeking other employment. The word moonlighting has come into our vocabulary to describe this activity. It seems to me we have schooled ourselves so well to work that we have not yet learned how to use leisure creatively. We have developed people with neuroses about the fact that they are not allowed to work as hard or as long as they once were.
I hope that in the next generation or so serious thought will be given by social scientists, people concerned with labour codes and so on, to the effects on man of having his work load diminished and replaced by longer periods of leisure. Surely our leisure time must not be spent huddled in front of a television set with a can of beer. Yet this is the picture which will increasingly be true of many Canadians if we cannot adduce other possibilities which are more interesting in terms of human development and interaction.
In asking for a minimum standard of three weeks we are asking for opportunity; but we are also endangering the sanity of many who have not yet learned how to handle leisure creatively. Our problem stems from the fact that the notion of work, according to our concepts, is primarily tied to the making of money and not to participating in some creative act. If we can make the transition in our generation from work being related to money to work being related to creative output, something exciting will happen in our society. If not, I am afraid we shall become a very depressing, work-orientated, unhappy society which has little hope before it, even if this period is extended to three weeks.


Mr. J. A. Byrne (Parliamentary Secretary to Minister of Transport):: The hon. member for Winnipeg North Centre (Mr. Knowles) and I are two of the members of this house who have spoken most frequently on measures such as this over the years during which we have faced one another across this chamber. I wish to congratulate the hon. member for Rimouski (Mr. LeBlanc) for his sincere and forthright contribution, and the hon. member for Prince (Mr. MacDonald) for the new element which he has introduced into the debate.
Canada Labour (Standards) Code Amendment
I suppose I should congratulate the hon. member for Winnipeg North Centre (Mr. Knowles) for introducing this bill, or at any rate for reintroducing it; but he would hardly expect me to congratulate him on his address this afternoon since I have probably heard it so many times before that congratulations would really be superfluous.
The hon. member has told us it will be necessary for him to introduce an amendment which would have the effect of changing the date of application referred to in the bill. Since he so regularly introduces bills of this nature, and since a year has already gone by, I presume there would have to be two amendments, and that the second amendment would seek to extend this period to four weeks instead of three, thus carrying on a progression for which the hon. member is noted.


Stanley Howard Knowles: Would the parliamentary secretary like to move that as an amendment? If he would, I would support it.


James Allen (Jim) Byrne: I had not actually intended moving such an amendment this afternoon. Realizing that the hon. gentleman has lost an opportunity this year; I would not wish to deprive him of the right to introduce an amendment next session when I expect we shall be debating this measure again.
[DOT] (5:50 p.m.)
As the hon. member has told us, this is a simple bill and the title explains its purpose. However, he has not explained to us that the implementation of measures such as this is not quite as simple when it comes to the various industries concerned. We have only to recall that the Canada Labour (Standards) Code cannot yet be completely effective because of certain regulations brought in that were inconsistent with practice, and it was just impossible to implement them when the bill was declared operative. The hon. member for Prince (Mr. MacDonald) has said that professionals find it necessary to have a month or two holiday every year and that those of us who work with our hands are entitled to more than two weeks holiday each year. I am familiar with a group of small businessmen in my own riding who have not had a vacation in several years. The pressure of meeting labour costs and providing holidays with pay to their employees have made it impractical for them to take a holiday.
Having regard to the chill in the House of Commons, or at least in the centre block, for the past two days, it is possible that the entire
14162	COMMONS
Canada Labour (Standards) Code Amendment staff of the heating plant is on vacation. I only hope that in the future their time off will be scheduled a little better, so that members sitting in their offices and in this chamber will not catch colds, which require some sick benefit time. This is one of the difficulties that arise from bringing in legislation without too much thought. The same applies to speeches made without too much thought.


Stanley Howard Knowles: Such as the one we are getting now.


James Allen (Jim) Byrne: I was not referring to any other speech maker. The hon. member always does an excellent job tearing mine apart. If we are to assess legislation of this nature we should review what has been done in the past by the federal government and the provinces. By law, annual vacations with pay in industries subject to federal jurisdiction have been provided since 1958. The first federal statute required employers falling within its scope to grant employees a paid week's vacation after one year of employment, and two weeks after two years of service. Hon. members will recall that act was replaced by Part III of the celebrated Canada Labour (Standards) Code.
The Labour (Standards) Code provides for vacations with pay of at least two weeks after every completed year of employment, and vacation pay is 4 per cent of wages for the year in which an employee establishes his claim to vacation. Under the federal law a year of employment must be continuous with one employer, and may be a 12 month period commencing with the day the employee began to work or any subsequent anniversary of that date. It may be a calendar year or any other year approved by the Minister of Labour.
All the provinces, with the exception of Newfoundland and Prince Edward Island, have annual vacation laws. We can appreciate why P.E.I. does not have such law because it is predominantly an agricultural province, while in Newfoundland the labour unions have not been as well organized and have not
DEBATES	March 17. 1967
had the time in which to mature that they have had in other provinces. Provisions for annual vacations with pay are contained in the Alberta labour act and in orders under the Ontario hours of work act, and in Quebec under minimum wage orders Nos. 3, 7 and 39. They are also governed by the Quebec collective agreements act.
The Canada Labour (Standards) Code applies to industries within federal jurisdiction, and the only employees excluded are engineers, superintendents and others who exercise management functions, as well as members of the medical, dental, architectural and legal professions. The provincial laws govern employees in employment within the jurisdiction of the provinces, with the exception of certain classes of employees who are otherwise noted.
In all provinces farm workers are excluded. Horticultural workers are excluded in British Columbia, and workers employed in the growing of flowers, fruit and vegetables in Ontario. Market garden workers are excluded in Manitoba and Saskatchewan. Employees of municipal and school corporations in Quebec are excluded, and members of family undertakings in Saskatchewan. Salesmen are excluded in Alberta, Ontario and Saskatchewan, but in Quebec their exclusion is limited to those with less than the three months work, and those who work for two or more employers at the same time.
Exemptions are necessary in all provinces, and if this house were to provide blanket legislation it would create a problem for industry, particularly industries operating on a very close margin.


Stanley Howard Knowles: Question.


Mr. Deputy Speaker:: Order. The hour for the consideration of private members business has expired.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Monday, March 20, 1367