1967-12-07

[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I have a question for the Secretary of State for External Affairs, but in his absence at the moment perhaps I may direct it to the right hon. Prime Minister. In view of the announcement by the French government this morning that that government intended to remove its ban on arms shipments to the Arab countries, and the further announcement that it will be shipping aircraft and other arms to the Arab states while still maintaining the ban on arms shipments to Israel, is the government of Canada planning any protest to the government of France?


Right Hon. L. B. Pearson (Prime Minister):: Not to my knowledge, Mr. Speaker. I should like to consult the Secretary of State for External Affairs to see whether they have considered this matter in his department. He will be here later this afternoon.


NIGERIA-POSSIBLE MEDIATION BY CANADA IN CIVIL DISPUTE
[Stage Direction]
On the orders of the day:
Mr. Howard Johnston (Okanagan-Revel-sioke):: In the absence of the Secretary of State for External Affairs I should like to direct my question to the Prime Minister. In view of the impending visit to Canada of the Nigerian foreign minister, and the continued reports of appalling casualties in that country's internal struggle, will he be offering his good services toward mediating that dispute in a commonwealth country?


Lester Bowles Pearson: I am not sure that mediation of this particular matter is required at this time by Canada. Naturally we want to do anything we can to help bring this civil strife to an end. I will be seeing the Nigerian foreign minister tomorrow. No doubt he will bring this matter up if he wishes to have this kind of mediation.
27053-324*



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquiflam):: Mr. Speaker, I should like to ask the Prime Minister a question regarding the NATO council conference which will be taking place in a few days. I ask whether the Canadian government is proposing to reassess Canada's military role in NATO. If so, does Canada intend to suggest the phasing out of the CF-104 squadrons; does it propose any replacement of these by another type of aircraft; and finally, does Canada intend to suggest the transfer of the infantry brigade or any part of it to a reserve position?


Lester Bowles Pearson: Mr. Speaker, at each annual meeting of the NATO council it is customary to review not only the force plans of the member governments but the policies of NATO countries themselves and the direction in which the alliance should be moving.
That will happen in Brussels next week. I believe there will be a report before the counail, called the Harmel report after the foreign minister of Belgium who has been working on it with others, on the goals of the alliance. That will be considered as well as the force plans of member governments. So far as I know there is no proposal before the council which will change radically the force goals or the objectives of NATO. I do not think there is any reason to expect radical changes in Canada's contribution to NATO at this time.


Thomas Clement (Tommy) Douglas: I have a supplementary question, Mr. Speaker. I should like to ask the Prime Minister whether the Secretary of State for External Affairs will be making a statement to the house on his return from the ministerial NATO conference, in view of the importance which this conference has for financial considerations as well as to keep the house fully informed on the government's policy vis-a-vis NATO.


Lester Bowles Pearson: Yes, Mr. Speaker, I expect he will be back in time to make a statement to

December 7, 1967
Inquiries of the Ministry the house before we recess for Christmas. It might even be possible to have a joint meeting of the external affairs and national defence committees, to which reference has been made, and to which he could make a more extensive report.


Hon. E. D. Fulton (Kamloops):: I have a supplementary question for the right hon. Prime Minister. Is it the position of the government of Canada, and will it be reflected in the discussions with regard to the composition of the NATO forces in Europe, that decisions with regard to the continuation or the withdrawal of any components of the force will be taken unilaterally?


Lester Bowles Pearson: No, Mr. Speaker. The decisions we take as a member of the coalition should be discussed and if possible agreed to by the other members of the coalition, as we would expect other members of the alliance to do.



REQUEST FOR STATEMENT ON CHRISTMAS RECESS

[Stage Direction]
On the orders of the day:
Mr. Real Caouette (Villeneuve):: Mr. Speaker, I should like to put a question to the Prime Minister. Has he set the date of the Christmas recess and that of the resumption of the session after the holiday season? Could he inform the house of those dates?


Lester Bowles Pearson: Mr. Speaker, I know hon. members would like to know as soon as possible what the plans are so they can make their travel arrangements. Perhaps my hon. friend will permit me to delay my answer until tomorrow morning at eleven o'clock.



POLLUTION


[Stage Direction]
On the orders of the day:
Mr. R. K. Andras (Port Arthur):: My question is for the Minister of Finance. Is it the intention of the government to extend beyond the present effective expiry date of January 1, 1968 the income tax regulation permitting industry an accelerated depreciation rate on equipment installed to prevent, reduce or eliminate water pollution? If so,

will the government consider similar encouragement to industry to take action regarding air and soil pollution?


Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, this question has been asked previously by the hon. member for Essex South and by other hon. members, I believe. The government is giving consideration to the extension of the regulations affecting water pollution after January 1, 1968. I hope I will be able to make a definite announcement before the consideration of the budget is concluded.
With regard to the second part of the question, I have received many representations with regard to similar treatment in connection with air and soil pollution. The matter is under consideration, but I should say that it is of a different character. The regulations permitting an accelerated depreciation on water pollution devices and systems are in the law now and we have to make a decision about their extension. With regard to expenditures on air and soil pollution control, this is a new matter which requires very careful consideration before new action is taken.


Hon. Michael Starr (Ontario):: I have a supplementary question, Mr. Speaker. In view of the fact that, as the minister said, the government has to make a decision now on whether to extend this concession to industry, will he not say whether the government intends to make it on a permanent basis rather than on the ad hoc basis which is the case at present?


Mitchell William Sharp: One of the reasons I hesitate to make more than just an announcement is that the point raised by the hon. member is being given consideration. I will make a definite announcement on it before the budget debate is over. The purpose of putting in a date was to induce industry to take action as quickly as possible. If you make this a permanent feature it changes the nature of the incentive. Therefore I agree with the hon. member that we have to decide one way or the other, whether it is for an interim period or indefinitely.


Hon. R. A. Bell (Carleton):: May I ask a
supplementary question. Is the Minister of Finance saying that during the course of the budget debate there will be new budgetary arrangements made and announced to the house which have not yet been indicated?


Mitchell William Sharp: No, Mr. Speaker, this is a matter of regulation.
December 7, 1967


Mr. Stanley Haidasz (Parkdale):: May I ask
a supplementary question. I should like to ask the Minister of Finance if there is any hope that in 1968 not only industry but private citizens will be able to benefit from tax incentives to encourage them to instal government approved anti-pollution devices and the use of cleaner fuels?


Mitchell William Sharp: Yes, this matter is under consideration in connection with air pollution write-offs.


Mr. P. B. Rynard (Simcoe East):: I should like to address a supplementary question to the Minister of Finance. Has he had consultations with the provincial governments on the question of incentives, and was there a federal representative at the recent meeting in Toronto?


Hon. Jean-Lue Pepin (Minister of Energy, Mines and Resources):: I might answer this question. This is a subject that was talked about with the provinces, and they are generally grateful for what exists in terms of tax deductions for anti-water pollution equipment.


Mr. G. H. Aiken (Parry Sound-Muskoka):: should like to direct a question to the Minister of Finance. In view of the fact that the question concerning pollution was addressed to him by one of the members on his side of the house, may we now ask whether he has become the minister of pollution instead of the Prime Minister, and whether we may now address our questions on pollution to him?


Mitchell William Sharp: I don't think the Minister of Energy, Mines and Resources would welcome questions being put to him about the income tax.


Jean-Luc Pepin: Mr. Speaker, I realize I did not fully answer the question of the member for Simcoe East. He also asked whether the government was represented at the conference on pollution which was held recently in Toronto. Yes, my department sent Mr. Davidson who is head of the hydraulics section.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Mr. Gaston Isabelle (Gatineau):: Mr. Speaker, I should like to put a question to the
Inquiries of the Ministry Prime Minister. Can he tell the house whether he intends to uphold the decision requiring civil servants to work on Boxing day and the day after New Year's?


Lester Bowles Pearson: I think the Minister of National Revenue dealt with this matter yesterday.


Mr.   J.-T. Richard@Ottawa East: I should like to direct a question to the Minister of National Revenue. Will the minister offer immediately for the consideration of this house an amendment to the Public Service Act to include among the legal holidays the days following Christmas and New Year's when such happen to fall on a Monday; or will he enter into immediate negotiations to reach agreement on this matter?


An hon. Member:: A planted question.


Mr. Maclnnis (Cape Brelon Soulh):: The
question was answered yesterday.


Hon. E. J. Benson (Minister of National Revenue and President of the Treasury Board):: Mr. Speaker, I have no intention of introducing any proposed changes in the legislation in this regard. Of course the question of statutory holidays, along with other fringe benefits, will be a subject for collective bargaining in the public service which this government has introduced.


Mr. D. V. Pugh (Okanagan Boundary):: supplementary question to the Minister of National Revenue. When the minister is considering all these holidays will he also consider giving the people of Canada a holiday on April 30?


Edgar John Benson: Mr. Speaker, from time to time when April 30 has fallen on a Sunday we have allowed people to file their tax returns on the Monday following.



FINANCE


[Stage Direction]
On the orders of the day:
Hon. D. S. Harkness (Calgary North):: Mr. Speaker, I have a question for the Minister of Finance. I wonder whether the minister could now answer the question I asked first on November 10 and which he said he would answer in his budget speech, and which when that was not done I repeated last Friday, in connection with how successful the

December 7, 19G7
Inquiries of the Ministry Canadian savings bond campaign had been in comparison with former years, and particularly how much new money the minister estimated would come in from this source.


Mitchell William Sharp: Mr. Speaker, I have had this reply on my desk for two or three days, and I was hoping the hon. member would ask his question again. In my budget speech last Thursday I mentioned that the Canada savings bond campaign had succeeded in raising a substantial amount of new cash during November despite the very adverse circumstances under which it had to be carried on. The latest weekly and monthly published statistics of the Bank of Canada indicate that the net increase in Canada savings bonds from November 1 to November 29 totalled $635 million. This compares to an average of $698 million for November in the past ten years.
As hon. members know, the government cannot count on all this as a permanent net addition to our cash, as redemptions traditionally exceed sales from late November on. In general the sale of Canada savings bonds lived up to our sober expectations. We could not, under the circumstances that prevail, have expected that this would be a resounding success; in fact it has been a comparative success.


Mr. Knowles:: How sober were you?



PARLIAMENT HILL


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I should like to direct a question to the Prime Minister at the request of a number of persons who have discussed this matter with me.
In view of the sustained interest in the centennial flame on parliament hill, would the government give consideration to continuing this flame on a perpetual basis as a symbol of national unity, if interested persons or companies donated the capital required to provide sufficient interest to pay for its maintenance in perpetuity?


Mr. Deputy Speaker:: Order. I suggest to the hon. member for Kootenay West that this would be a very good question for the adjournment debate.
[Mr. Hsrkness.)



MANPOWER


[Stage Direction]
On the orders of the day:
Mr. J. E. Pascoe (Moose Jaw-Lake Centre):: Mr. Speaker, I have a question for the Minister of Manpower and Immigration, but in his absence and because of the urgency of the question may I address it to the acting minister. In his reply to a question I asked yesterday the minister indicated that those who will be cut oft for two weeks at Christmas and New Year's from the living allowance paid to those attending adult occupational training courses at technical institutes might be eligible for unemployment insurance during this period. My question is, will the two week waiting period for unemployment insurance benefits be waived in regard to these trainees?


Hon. J. R. Nicholson (Minister of Labour):: Mr. Speaker, I will have to take the question as notice, and I hope to be able to answer it tomorrow or Monday.



ATLANTIC DEVELOPMENT BOARD


[Stage Direction]
On the orders of the day:
Mr. Lloyd R. Crouse (Queens-Lunenburg):: Mr. Speaker, I should like to direct a question to the minister of health and welfare arising out of the previous questions on water pollution. Water geologists have been expressing grave concern about water supplies in all three maritime provinces. Is the Atlantic Development Board giving any consideration to carrying out studies on desalinization, as well as water demands in such fields as the preservation and development of wildlife, recreation and electric power?


Hon. Allan J. MacEachen (Minister of National Health and Welfare):: Mr. Speaker, I will be glad to look into the details of the question and provide an answer later.


[Stage Direction]
On the orders of the day:
Edgar John Benson: Mr. Speaker, in answer to a question raised yesterday by the hon. member for
December 7, 1967

Wellington South regarding alleged importations of certain footwear at dump prices, I would like to report that the Department of National Revenue has carried out investigations abroad, and on the basis of their report I have authorized the officers of the department to determine a fair market value of such imports.
The officials are now in the process of determining these values and it should be possible to advise the exporters of these determinations in the near future.


Philip Bernard Rynard: A supplementary question, Mr. Speaker. I wish to ask the Minister of National Revenue whether his answer is to apply to the textile industry and other industries that are in trouble?


Edgar John Benson: Mr. Speaker, this is not a matter of being in trouble; it is a matter of determining whether goods are being dumped in Canada. I can assure my hon. friend that once we determine that dumping is taking place, we take every action we are permitted to take under the law.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. Andrew Brewin (Greenwood):: I wanted to direct my question to the Secretary of State, but I shall direct it, instead, to the Prime Minister. If the international service of the C.B.C. is to be spared the axe, will that service be fully integrated with the C.B.C., as the government white paper on broadcasting suggested it ought to be?


Lester Bowles Pearson: Mr. Speaker, that is one way of dealing with this matter. Perhaps my hon. friend would await the statement of the Minister of National Revenue tonight when, I suspect, this matter will be dealt with.


Michael Starr: A supplementary question, Mr. Speaker. Will the Prime Minister consider looking into the possibility of having the C.B.C. absorb the cost of the international service and carry on that service?


Lester Bowles Pearson: Yes. That is one way of dealing with the matter, Mr. Speaker.


Mr. Jack Roxburgh (Norfolk):: I should like to direct a question to the Minister of Nation-
Inquiries of the Ministry al Revenue and ask him whether any consideration has been given to retaining the international overseas broadcasting program.


Edgar John Benson: This is the same question that was addressed to the Prime Minister a few minutes ago. I shall be saying something in this regard this evening.



BILINGUALISM AND BICULTURALISM


[Stage Direction]
On the orders of the day:
Mr. Roland Godin (Portneuf):: Mr. Speaker, I should like to put a question to the right hon. Prime Minister.
Might the austerity program of the present government explain the very limited distribution of the report of the Laurendeau-Dun-ton royal commission of inquiry on bilingualism and biculturalism?


Lester Bowles Pearson: No, Mr. Speaker. There is no desire on the part of the government to hold up that distribution in any way, shape or form.


Roland Godin: I should like to put a supplementary question, Mr. Speaker.
Would the right hon. Prime Minister tell us why each member cannot have an English copy and a French copy of this document?


David Réal Caouette: Mr. Speaker, further to the question put by the member for Portneuf (Mr. Godin) to the Prime Minister on the report of the Laurendeau-Dunton commission, I realize that English copies are now being distributed to English speaking members and copies in French to French speaking members. Now, as some members would like to have two copies, one English and one French, how is it that they are being refused these two copies?


Mr. Deputy Speaker:: Order. I think this question should be placed on the order paper.


Mr. Henri Lafulippe (Compfon-Frontenac):: Mr. Speaker, I would like to direct a question

December 7, 1967
Inquiries of the Ministry to the Prime Minister. Does he consider the price charged by the Laurendeau-Dunton commission for its report on biculturalism, namely $7 million, as normal?


Mr. Deputy Speaker:: Order. Maybe that question should be placed on the order paper.



NATIONAL SECURITY


[Stage Direction]
On the orders of the day:
Hon. L. T. Pennell (Solicitor General):: Mr. Speaker, yesterday I took notice of a question which was posed by the hon. member for Chapleau and which related to the theft of guns at Cap de la Madeleine. This is an offence against the provisions of the Criminal Code and the investigation is being conducted by the appropriate municipal and provincial police authorities. The R.C.M.P. is cooperating in the matter of identification by means of the national police service facilities.



ROYAL CANADIAN MOUNTED POLICE


[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and Victoria):: My question is for the Solicitor General, Mr. Speaker, and is distantly related to the subject matter of the question the hon. member for Oxford asked yesterday. Would the minister give consideration to removing members of the R.C.M.P., of which I am sure we are all very proud, from traffic and ornamental duties at airports? Is the minister not aware that the force has lost some excellent men because they have had prolonged postings to these boring and frustrating duties?


Lawrence T. Pennell: Mr. Speaker, members of the R.C.M.P. at international airports are carrying out important criminal investigation duties. Certain newly recruited members are temporarily posted for traffic duty, as part of their training, before being posted to other municipalities across the country.


Robert Muir: A supplementary question, Mr. Speaker. I am fully aware that the R.C.M.P. deals with regulations concerning dope and that sort of thing, but is the minister not aware
[Mr. LatuUppe.l
that members of the R.C.M.P. who have been posted for prolonged periods at airports have asked for and obtained their release?


Mr. Deputy Speaker:: Order, please. Perhaps this question might be placed on the order paper.



PRIVILEGES AND ELECTIONS


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Prime Minister. Now that the committee on privileges and elections has had referred to it the subject matter of a number of bills and resolutions which deal with the lowering of the voting age, and since the assurance has been given that the committee will meet, will the government now refer to that committee the report of the committee on election expenses, as it promised to do in the speech from the throne on May 8?


Lester Bowles Pearson: That seems to me to be a very good idea, Mr. Speaker.


Stanley Howard Knowles: May I ask when this good idea will be implemented?


Lester Bowles Pearson: Shortly, I hope, Mr. Speaker, when the committee is in a position to look into this report. Perhaps that should come later, after the committee deals with the matter to which the hon. member has just referred.


Mr. Heath Macquarrie (Queens):: Mr. Speaker, I wish to direct a question to the house leader. It is prompted by yesterday's house decision to refer private members' bills and resolutions dealing with the voting age to the standing committee on privileges and elections. Is the government planning to take the appropriate steps to have the Canada Elections Act also referred, so that matters other than the voting age could be studied by the committee?


Allan Joseph MacEachen: Mr. Speaker, the Prime Minister dealt with this particular matter earlier.


Heath Nelson Macquarrie: Mr. Speaker, I believe the house leader did not correctly hear my question. I referred not to the commission on
December 7, 1967

Inquiries of the Ministry
election expenditures but to the Canada Elec- [English]
tions Act.	FISHERIES


Allan Joseph MacEachen: Mr. Speaker, I heard the hon. member correctly.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. J. M. Forrestall (Halifax):: My question is for the Minister of Transport. Has the minister yet had an opportunity to consider the advisability of referring the special study on maritime transportation to the standing committee on transport prior to its trip east?


Hon. Paul Hellyer (Minisier of Transport):: Not yet, Mr. Speaker. I had hoped to have the opportunity of doing so this morning but due to circumstances beyond my control that was not possible. Perhaps early next week I shall have an opportunity to discuss this matter.



RURAL DEVELOPMENT


[Stage Direction]
On the orders of the day:
Mr. H. Russell MacEwan (Pictou):: I have a question for the Minister of Forestry and Rural Development. Can the minister advise us whether he intends to meet with the provinces within a short period of time to hold talks on the changing of the ARDA agreements, placing a different emphasis on the present agreements with the provinces?


Hon. Maurice Sauve (Minisier of Forestry and Rural Development):: Mr. Speaker, the present ARDA agreements will terminate on March 31, 1970 and consultations between federal and provincial governments will start next year.


Howard Russell MacEwan: May I ask the minister whether there will be any cut-backs in the funds available under the ARDA agreements during the next fiscal year?


Maurice Sauvé: There will be no reductions in the ARDA budget next year, Mr. Speaker. 27053-325



POSSIBLE EFFECTS OF RUSSIAN UNDERWATER EXPLOSIONS IN NORTH PACIFIC

[Stage Direction]
On the orders of the day:
Mr. T. S. Barneit (Comox-Alberni):: I
should like to ask the Minister of Fisheries whether he is now in a position to give the house any information in connection with underwater explosions in the north Pacific set off by the Soviet union. This refers to the question I asked the hon. gentleman on Monday.


Hon.   H.-J. Robichaud@Minisier of Fisheries: I have inquired of the international
Pacific fisheries commission, and the commission is not aware of such explosions taking place affecting the fisheries of the north Pacific.



BRITISH COLUMBIA-PROVISION OF EMPLOYMENT FOR HERRING FISHERMEN

[Stage Direction]
On the orders of the day:
['I shall be glad to look into that, Mr. Speaker.']
Thomas Speakman Barnett: Perhaps the Minister of Fisheries would like to take this opportunity to deal with the reply he got from his colleague the Minister of Labour in connection with the problems of the unemployed herring fishermen.


Hon.   H.-J. Robichaud@Minister of Fisheries: Yes, Mr. Speaker. My colleague, the Minister of Labour, brought to my attention representations which were made to him on the occasion of his recent visit to the west coast, and I was pleased to advise him that we have decided to extend for another year the program of assistance for dogfish production and processing.



[Stage Direction]
On the orders of the day:
Mr. Georges Valade (Sainle-Marie):: Mr. Speaker, I wanted to direct a question to the hon. Secretary of State for External Affairs, but since he is absent I will direct it to the Prime Minister and ask him to take it as notice.
Some time ago my friend, the hon. member for Kamloops (Mr. Fulton) and I asked the government to intervene with authorities in Burma about two young Canadians who

December 7, 1367
Inquiries of the Ministry have been imprisoned in Rangoon for almost seven months.
I am told that the parents here fear for the lives of their children who suffer from dysentery. The authorities do not permit them to correspond with their parents.
Since the Secretary of State for External Affairs has been unable to obtain any results since that time, I wonder if the Prime Minister would not want to contact U Thant, secretary general of the United Nations, or the authorities in Burma, to secure the release and repatriation of those two Canadians?


Mr. Deputy Speaker:: Order. I am sure the representation made by the hon. member has been noted.


Georges-J. Valade: Mr. Speaker, on a point of order. In view of the urgency of the matter and the fact that those two people are right now in a quite desperate situation and their lives may be endangered, I think the Prime Minister should give some reassurance to the parents and to other Canadians that are in identical circumstances.
lEnglish]


Lester Bowles Pearson: I shall be glad to look into that, Mr. Speaker.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Mr. William Dean Howe (Hamilton South):: I have a question for the Minister of National Revenue. In view of the fact that the minister made disparaging use of the word "servants" with reference to public service employees-which is the proper designation-and in view of the fact that I have received telephone calls from the president of the postal workers union objecting to the use of this word over a local radio station, will the minister withdraw this word and refrain from using it in the future?


Edgar John Benson: I suppose one could even object to calling members of parliament servants of the people, but I believe that people who are employed and paid by the public of Canada are servants of that public.


Some hon. Members:: Hear, hear.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. L. R. Sherman (Winnipeg South):: My
question is directed to the Minister of Transport. Earlier this week I asked the minister whether the Canadian delegation to the meeting of the International Air Transport Association in Manila was undertaking any initiative toward obtaining a revision of transAtlantic air passenger rates, and the hon. gentleman told me he would take the question as notice. Can he tell us now whether the Canadian delegation has undertaken any such initiative at the Manila meeting?


Paul Theodore Hellyer: I do not have a report on that as yet, Mr. Speaker.



SEARCH AND RESCUE


[Stage Direction]
On the orders of the day:
Mr. J. R. Tucker (Trinity-Conception):: wish to direct a question to the Minister of Transport. Will the minister please inform the house whether any trace has been found of the missing "Widgeon" plane -owned by Air Transit Limited, which left St. John's, Newfoundland, on Wednesday, November 29, en route to St. Anthony, Newfoundland, with two engineers from the federal Department of Public Works St. John's office as passengers?


Paul Theodore Hellyer: Regrettably, Mr. Speaker, there is no trace of the missing aircraft at the present time. The aircraft left St. John's on Wednesday, November 29 and there was no further radio communication with the aircraft. Three hours after its departure the R.C.A.F. search and rescue organization was alerted that the aircraft had not reported and was presumed missing. Search and Rescue have conducted a search of 43,000 square miles, logging 215 hours of flying, but have so far been unable to find a trace of the aircraft. Both defence and civil aircraft have participated in this search.


James Roy Tucker: Is the search still being carried on, Mr. Speaker?


Paul Theodore Hellyer: I think it has been terminated, but I would have to check on that in order to be sure.
December 7, 1967


Paul Theodore Hellyer: Mr. Speaker, if I may I wish to say I have now received advice that the search for the missing plane is continuing. I thought this should be put on the record.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Hon. W. G. Dinsdale (Brandon-Souris):: have a question for the Minister of National Defence. As part of the armed forces unification plan is the Department of National Defence setting up a Canadian armed forces exchange service and, if so, will this Canex organization compete directly with private business?


Hon. Leo Cadieux (Minister of National Defence):: Mr. Speaker, the state of this matter is that we have made a study of the problems of the operation of non-public funds. There was a recommendation to defence council that we organize a board which would be called Canex, but that recommendation has not yet been implemented. A study group is going around the country to investigate the practicability of the plan.


Walter Gilbert Dinsdale: The minister answered the second part of the question. Is it contemplated that this organization would compete directly with private businesses in the vicinity of armed forces establishments?


Léo Alphonse Joseph Cadieux: If it does compete, Mr. Speaker, it will not compete unfairly.



COLUMBIA RIVER-PAYMENT TO B.C. OF AMOUNT RECEIVED FROM U.S.

[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, I wish to address a question to the Minister of Energy, Mines and Resources. When can we expect the next report of the Canada-U.S. joint engineering board on the Columbia?


Jean-Luc Pepin: I do not know, Mr. Speaker; I will inquire. However, since my hon. friend is always interested in the Columbia I have some figures here which might be of interest to him. The sum of $11,100,000 27053-325J
The Budget-Mr. Lewis for Duncan dam flood control was paid by the United States on November 22, 1967. The exchange rate applicable on the day on which this was deposited in the Bank of Canada's account in New York was 7i%2 per cent premium on United States funds^ and the amount of money transferred to the British Columbia government on November 23, 1967, was $11,929,031.25.



BUDGETARY PROPOSALS


[Stage Direction]
The house resumed, from Wednesday, December 6, consideration of the motion of Hon. Mitchell Sharp (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Monteith (p. 5118), and the amendment to the amendment of Mr. Lewis (p. 5128).
Mr. David Lewis (York South):: Mr. Speaker,-


Mr. Deputy Speaker:: Order. Maybe there could be a little less conversation in the house so we can hear the remarks of the hon. member for York South.


David Lewis: Mr. Speaker, I have only a few minutes left. I argued yesterday that the budget before the house was inequitable in the taxes which it imposed as well as in the taxes which it failed to impose if the minister was convinced that he required added revenue at this time and that he could not wait until the regular budget next spring. Second, Mr. Speaker, I argued that the budget will not accomplish even the purposes which the minister said he wanted to accomplish. Third, and I suggested that this was the most iniquitous part of the budget, I argued that it is likely to slow down the economy and to create additional unemployment. Indeed, I suggested that this was one of the explicit and implicit objectives of the budget.
Today, Mr. Speaker, I want to suggest that another significant key to the thinking of the government is the cavalier way in which the Carter recommendations have been thrown into the ash can. The Carter report, I remind you, sir, makes a ringing indictment of our present tax system. To use its own words, it finds that system "inequitable in many important respects." It goes on to say that the combined effect of the various taxes, and again I use its words, is "such that low income individuals and families pay higher

December 7, 1967
The Budget-Mr. Lewis taxes than is equitable when compared to middle and upper income individuals and families." Members of our party have been saying this for many years, and now it has been confirmed by an unassailable authority.
The point I want to make is that the government has before it a report made after years of study and analysis of many aspects of our economic life. Its conclusion is that our present tax system is unjust and inequitable. It makes very specific proposals for new fields of taxations and for the shifting of the burden from the low income to the higher income groups in the community. The Carter commission, in our view, is right when it said that the objective of equity in taxation should have a higher priority than most or all other objectives.
I think that the chairman of that commission and his colleagues must be admired and congratulated for making an equitable tax system their major consideration and guide. I appreciate that the recommendations of the report are radical and that some of them are complex, but I say that when we have a system which men of intelligence and integrity have found to be unjust and inequitable then it is surely time to change the system instead of trying to patch it up here and there.
I saw Mr. Carter on television on budget night. I was impressed by his thoughtful manner. If I remember correctly, in very measured tones he bluntly accused the government of having yielded to the lobbies and pressures of the special interests, and he named them:	oil, mining, insurance, and
similar interests.
So far as I have knowledge of the matter, and of course I do not have all knowledge, it is significant that the organizations representing the ordinary people of Canada, such as labour unions and the like, have all supported the basic philosophy of the Carter report, even though they may have expressed reservations on one or two details. They asked the government to implement the report but apparently their voice was not heard. The voice of the powerful prevailed, as usual, with this government. This, I suggest, is a great pity and a great injustice.
I want to conclude by making one final point as forcefully as I can. During the current year we have had a resurgence of pride in our country, justifiable pride. Unfortunately we have also had disturbing signs of continuing division. All of us in Canada, of all political parties and faiths, are determined to

make every effort to overcome divisive influences in our country and to strengthen the unity and the purposefulness of our nation and our people in every part and in every province.
I venture to warn the government that economic policies such as are represented in this budget may do harm not only to the economy but to the great effort toward national unity and understanding, for I suggest it is clear that any reduction in economic activity, any increase in unemployment, any curtailment of government economic participation will have a larger and deeper adverse effect in those parts of the country which are already at a disadvantage compared with other parts. Such policies, in my submission, cannot but aggravate the regional inequalities in economic and social opportunities. This can do more to harm progress toward an integrated and meaningful Canadian unity than most other factors. It is for all these reasons that I moved the amendment which is in your hands, Mr. Speaker.


David Réal Caouette: 
Mr. Gregoire:: That is without taking into account the municipal taxes.


David Réal Caouette: Yes, yes. We are talking about federal taxes right now; municipal, provincial and school taxes have to be added.
I will give you an example, based on my personal experience. I have a house in Hull, financed by the Mutual Life Company of Canada, and at the end of the year, I was given a balance sheet or statement of account, indicating I had remitted $1,536. Out of this amount, over $800 went for interests, and over $600 for taxes, so that, at the end of the year, I had repaid only $206, I think, of the capital on my house.


Mr. Matte:: Why did you not buy it cash?


David Réal Caouette: The hon. member for Champlain is asking me why I did not buy it cash? For the same reason as all other Canadians, because cash purchase of a house is beyond our means. That is why we take financing plans, why all Canadians are more or less in the same boat.
December 7, 1967

The Budget-Mr. Caouette
Mr. Speaker, I said a while ago that the government was bringing in some projects designed to impoverish Canadians rather than help them. One of the highlights of the mini-budget, according to the press release of the Department of Finance, is the following and I quote:
Anti-inflationary measures will be taken under the form of a drastic reduction of expenses and an increase of tax revenues, in order to make up almost entirely any budget deficit in 1968-69.
The minister states that they are anti-inflationary measures. In my opinion, a reduction of expenses and an increase of tax revenues can only mean a tax increase.
Now, when Canadians are deprived of their purchasing power and prices remain unchanged or tend to go up, are we fighting against inflation, or are we not rather promoting inflation? In the same press release, we also read:
The government will reduce expenses concerning many items of the budget and it will reduce its loans within the program aimed at controlling inflation, lessening pressures on the capital market and minimizing tax increases.
Mr. Speaker, while it is stated that tax increases will be minimized, for the second consecutive time, a tax increase has been announced. And does the government believe that by doing so it is fighting inflation? If the works in progress are stopped, if projects are left in abeyance, it is obvious that the number of unemployed will increase in Canada. If the number of unemployed increases, those people will be unable to pay taxes as they are doing at the present time.
The tax system will have to be adjusted once again by increasing taxes for those who are still earning something. This means that we are living under an absurd system that does not take realities into consideration.
The Minister of Finance knows-as we have been saying time and again in the house-that instead of adjusting the monetary system to the physical potential of Canada, an attempt is being made to adjust the economic system to the financial possibilities, that is, the opposite of common sense. In private industry, in trade, in business, it is normal to adjust one's budget to one's financial resources. But, for a sovereign

government, responsible for the monetary policy of a country like ours, to bow to the demand of such a system is a paradox, and quite inconceivable.
The minister is willing to reduce all sorts of things to fight inflation, but does he reduce the interest we are paying this year on the national debt, namely $1,300 million? He does not say anything about the interest we pay financiers, not one word. But the little man pays a surtax of 5 per cent on his income tax, and that is logical. Increasing federal tax on alchohol and tobacco again is normal. Reducing or slowing down the public works of the federal government is also logical, but we still continue to pay our tribute to the financial system.
According to the news release, the minister also said:
A special surtax is proposed: 5 per cent on the basic income tax as from January 1, 1968; this will not apply to the low income taxpayer, because an exemption is provided for on the first $100 of basic income tax.
The average Canadian must pay about $300 or $350 in income tax a year, which means that there will be an increase of about $20 a year. Some might say that it is not so much, but $20 for someone who already does not have enough, who actually is short, it is already a lot, and the minister does not take that into consideration.
Federal taxes on spirits and tobacco are raised by 10 per cent. In this case, we get this answer: Well, those who do not want to pay such a tax simply do not have to buy liquor and they can stop smoking. It is an answer as good as any, but personally it is not a tax which worries me a lot.
Now, when the hon. member for York South (Mr. Lewis) said that it was again an attack against the small wage-earner, I feel that it is not so much the little man as the companies which will be the most affected, because they are the ones which make a lot of money and which, as a rule, buy most often from the liquor boards of the various provinces of Canada. They will help pay a share of that tax.
But I think that the tax restraints which are apparently essential to avoid a possibly
December 7, 19S7

serious recession represent the main point in the budget. However, when the minister said:
[DOT] (3:40 p.m.)
After parliament has taken the necessary fiscal measures, the government intends to implement a program aimed at mobilizing public opinion-
It is to be expected that thousands of dollars will be spent on radio, television and newspaper advertising.
-in favour of voluntary, concerted restraints in respect to prices, costs and wage increases.
All Canadians will be invited to limit their activities, not to build right away; instead of "Do it now", it will be: "Do it later", wait till our financial situation is stabilized, wait till people slow down their way of life, then, we will be able to launch again the feverish rush of prices toward wages, of wages toward prices, as is the case since this government has been in power and, furthermore, as it was under the previous administration.
Another point is that fiscal reform will consist mostly in altering the present system instead of adopting completely different methods. What does this mean?
Instead of taxing on the one hand, they will be taxing on the other. But what about compression, restriction in the area of government expenses? The expenditures of the Department of National Defence may possibly be restrained to transfer or lend the amount saved to another department, but another department is asked to reduce its expenditures to the utmost in order to help another department or ministry. These are alterations and not new methods. One point remains nevertheless: we are still fooling around with a vitiated and vicious system and the Minister of Finance will not take a single step to get us out of such a system. Efforts are still being made to adjust the economic potential to the financial assets instead of adjusting the finances to the economic needs of the people, and that is where the fault lies in the whole system.
A former president of the United States used to say and I quote:
If the American people ever allow the private banks to control the issue of money, first through inflation then through deflation, the banks and the companies growing around them will despoil the citizens of their properties until their children wake up without a home on the continent their forefathers conquered.
The Budget-Mr. Caouette
Mr. Speaker, what Thomas Jefferson said in the United States 160 years ago we can repeat today in Canada, because we are truly being completely robbed of what our Canadian ancestors have helped to build and have left us as a common heritage, as a cultural heritage, as a material heritage, in short as a heritage from all points of view.
Mr. Speaker, the Minister of Finance mentioned three urgent and closely related objectives:	first, to restrain the inflationary
increases in prices, costs and cost of living that are undermining our prosperity; to ease the disturbing strains in the capital market that threaten our continued economic growth; and to meet in a non-inflationary way the costs of continuing public programs essential to social security and long-run national development.
The first objective suggests restraining the inflationary increases that are undermining our prosperity. At this point, we must pay the piper, a situation the minister himself had foreseen in his June 1967 budget. But the measures he proposed then have proved to be most inadequate.
The second objective is aimed at easing the disturbing strains in the capital market that threaten our continued economic growth. Here again, the same problem as in June 1967 is being faced. The solutions then applied by the minister have proved ineffective and ill-advised.
The third objective asks us to meet the costs of social security measures. But, in his present budget, the minister tells us that the implementation of medicare will require further tax increases or the imposition of a new tax to enable the Canadian people to afford medicare, and it is on that point that I found the speech made yesterday by the hon. member for York South completely inconsistent. He blamed the government for imposing taxes, but he felt it should change its fiscal methods, while retaining the present financial system.
He added that we needed a medicare system, better pensions for veterans, eflftcient economic planning and a system of priorities, all that thanks to increased taxes. But the hon. member for York South did not say who or where to tax, except, of course, large companies which, in turn, would increase
December 7, 1967

The Budget-Mr. Caouette prices and, finally, the taxes would again be paid by the Canadian people, the Canadian worker.
The third objective is to foot the bill for welfare measures, like the Canada Pension Plan, but through non-inflationary measures. That is unacceptable, in my opinion.
First, Canada's economic situation does not allow us, as legislators, to promote a full and adequate program of social security. It allows us only to give with one hand and take back with the other, and in the end, that is taxation. According to the Minister of Finance, taxation is one thing only: the right to levy taxes, to empty the pockets of the Canadian taxpayers. That is taxation.
And when the provincial premiers meet in Toronto or Ottawa, as they did in Toronto recently, the first question that arises is that of taxation. As far as a new Canadian constitution is concerned, it is not so much a matter of deciding if French or English is to be spoken, but rather of deciding if the provincial governments or the federal government will continue to dig deeper in the pockets of the Canadian citizens. Here is what the new confederation, the new constitution is all about: taxation.
In fact, as soon as the representatives of the provinces parted in Toronto, the Minister of Finance introduced his budget in which he told us that he needed more money and that he was going to take it out of the pockets of the Canadian taxpayers.
The day before yesterday, the Quebec premier stated about the same thing. Word for word he said that we could not spend any more and that the people of Quebec must be resigned to accept tax increases soon.
The municipalities and school boards are in the same situation. Instead of going to the monetary source, where money is made, the minister goes where there is none and he says: everyone must reduce his expenses. In fact, he tells the school boards: stop building schools; to the municipalities: stop expanding; to the provinces: try to cut down your expenses to the strict minimum, and to us in Ottawa, we shall do the same thing.
But, when everyone is tightening his belt, the financial system continues to rob everyone, as it has done since confederation. That is the ailment of this confederation.

What will they do with the unemployed? They do not know. There is not a single program put forward by this government to take care of those who, this winter, will become unemployed as a direct result of the budget. The unemployed will simply have time to make more unemployed.
[DOT] (3:50 p.m.)
Mr. Speaker, we all remember, besides, December 16, 1966-almost a year ago- when the Minister of Finance said he had a wonderful Christmas present for the elderly of Canada. He forgot to add, however, that all Canadians would have to contribute to that gift. As a matter of fact, the increase in the old age pension was adopted and implemented, but it is not the government that paid for it; the Canadian taxpayers did, and the Bank of Canada did not intervene at all.
Let us briefly examine the situation prevailing at present for a Canadian taxpayer. He is faced with increased prices in every field: clothing, food, transportation, automobile, maintenance costs, insurance, municipal taxes, school taxes, provincial taxes and levies, and to top it all, a 10 per cent federal tax on tobacco and spirits, as well as a 5 per cent increase in the basic personal income tax.
Each one of those increases leads to a decrease in the purchasing power of the small wage-earner. Everyone must admit it, because that is due to the system. And so, the higher the cost of living, the lower the purchasing power of the individual, and while the Minister of Finance does his best to reduce the purchasing power, the more stocks accumulate in Canada. Industries, stores, warehouses are brimming over with goods. One needs only go down Rideau Street in Ottawa, for instance, or down Bank Street, or in any city in Canada, Montreal, Sherbrooke, Lac Megantic, Rouyn-Noranda, to see how stores are splitting at the seams with goods. Special Christmas sales are being advertised even before Christmas. They no longer wait till after New Year's day. Before Christmas? Why? Because they have astounding quantities of goods. And, in the face of this production, this real state of affairs, the Minister of Finance does his utmost to reduce the purchasing power of Canadian citizens.
December 7, 1967

What logic, from the economic viewpoint. To reduce purchasing power, when the production is there, unsold, before the eyes of people who need it. Each increase brings a reduction of purchasing power. So, the more the cost of living increases, the less a person can buy.
Let us never forget that what counts is not what the taxpayer earns, but what he can buy. That is what gives the dollar, the monetary unit of a country, its value. I should think that the Minister of Finance is smart enough to understand that the buyer, if his dollar is taken away from him, can no longer buy.
Today, with all that organization, all this tax system, with federal, provincial, municipal and school taxes, what about the Canadian worker, the Canadian farmer, the white collar worker, the professional, the businessman. The businessman now has to contend with the system, and the government gives the example.
The Economic Council of Canada, in its latest annual report, anticipates a rise of 7 per cent in unemployment this winter. In the face of these facts, which nobody in this house can deny, let us put the following question to ourselves: Do we seriously think that the Canadian taxpayer is now in a position to face such measures?
Anyhow, the ostensible purpose of those measures is to take the purchasing power out of the Canadian taxpayers' pockets, in order to meet the excessive government expenditures. Such is the result of election promises; the people, the humble folk always end up by footing the bill. It is easy to make promises to the people; the difficulty is to administer according to their expectations and aspirations.
The present economic system does not reach its objective because it allows this criminal anomaly: misery in the midst of affluence. As I said earlier, instead of waging war on poverty, budgets which will increase even more the number of poor people in Canada are brought down.
Our financial system, one of the tools available to distribute our products and services, is based on a false theory. That system is responsible for the economic crises which regularly and periodically shake the Canadian people.
Social Credit, under its three basic proposals, wants first of all a national currency and not a currency borrowed in the United States which forces us to beg for permission in New
The Budget-Mr. Caouette York to develop our country, Canada. In my opinion, a national currency is a currency suited to our economic needs and our physical possibilities to ensure the development of our country.
In the second place, Social Credit asks for a two-price policy instead of a tax so to facilitate the normal marketing of production for Canadians who need that production.
In the third place, the Creditistes advocate the payment of a national dividend. This makes a lot of people laugh, because it is so much the opposite to taxes.


The Acting Speaker (Mr. Binfret):: Order. I regret to interrupt the hon. member, but the time allotted to him has expired.


Some hon. Members:: Go on.


The Acting Speaker (Mr. Rinfret):: Does the house give its unanimous consent to allow the hon. member to complete his speech?


Some hon. Members:: Agreed.


David Réal Caouette: Thank you, Mr. Speaker, I thank my colleagues for having given me the opportunity to continue, during two or three minutes, so that I may state my feelings about the budget of the Minister of Finance.
I was talking about the national dividend, that is just the opposite of taxes and the taxation system. Some argue that the national dividend would promote inflation, but we maintain that it is the opposite, the antithesis of inflation and deflation, as it is the only means of maintaining a perpetual balance between purchasing power and national production, between production and services provided to the Canadian people. Taxes are the opposite of good judgment, when the dividend, which would not come from anybody's pocket, which would not increase prices and which would be paid directly by the Bank of Canada, according to Canada's economic status and the Canadian economic situation, would restore economic order, while we are now living in economic chaos.
We are going now through a period of inflation. However, we do not accept a national dividend and even less Social Credit. But we sure have inflation. Why? Because inflation results precisely from taxes and from the debt-money with which the government is administering Canada, somewhat like the example I gave a moment ago of the construction of a small $15,000 house which will cost $46,000 after 35 years. In fact, the government is at that point or, rather,
5152	COMMONS
The Budget-Mr. Caouette beyond that point since we will be paying this $1,300 million in interest only on the national debt or the same as the national defence budget. However, such a national debt or the interest we pay on it cannot put bread on the tables of the Canadian people.
Social Credit favours a dividend which would not be included in the prices and which would be paid directly by the Bank of Canada, according to the economic data on Canada. This dividend would restore economic order and increase the purchasing power without increasing the prices. Instead of hitting everybody with taxes while everybody has to live on credit today, the dividend would restore order, not overnight but gradually, until people would have the money required to buy the things they need.
This is, I think, the logic of an economic system which would guarantee the security and freedom of every citizen. It is for this security and freedom that the Creditistes offer their solution.
I know that some economists do not accept these solutions; they do not accept the dividend. In fact, some of them suggest that economic planning would solve the problem, where others advocate socialism as a panacea for all the economic problems of Canada.
Just yesterday, I heard the hon. member for York South (Mr. Lewis) say: If the government would nationalize the industries, it would solve the problem. In my opinion, this would not solve anything.
Before concluding my remarks, Mr. Speaker, I should like to read the statement made by an economist from Czechoslovakia, a socialist country, as you know. I quote:
On June 7 last, during a conference delivered in Montreal, the most prominent economist of Czechoslovakia stated that, from now on, the public enterprises of his country should be economical or close their doors. Dr. Vladimir Kadlec, dean of the economics faculty at the University of Prague, added that his country was forced to introduce capitalist incentives to increase national productivity. Like Russia, Yugoslavia and other Communist countries, Czechoslovakia now recognizes that publicity, competition, personal initiative, individual ambition are tokens of prosperity. In the last five years, the national revenue has not increased a fraction of a point in Czechoslovakia and productivity has declined constantly. Moreover, the standard of living has never been so low and the cost of living so high.
Moreover, fed up with a harassing bureaucracy, disappointed by an illusory social and economic planning, the Czech workers have lost the desire to work. Those are the reasons which drove the Communist government of Czechoslovakia to borrow certain methods and economic principles from

DEBATES	December 7, 1967
the capitalist system. In spite of repeated and disastrous failures in the Communist countries, we find in our federal and provincial governments politicians who persist in leading our economy toward socialism. Under the guise of social progress, they never tire of putting to us the socialist alternative.
Mr. Speaker, we believe that private enterprise is the system which gives the best results in planning a nation's economy, because is there another one which can produce more and give a better output at the production level? So, it is up to a responsible Minister of Finance and government to organize a distribution system through a healthy Canadian money, so that all Canadian citizens will have their share of the national production, of the wealth of our country, Canada.
[DOT] (4:00 p.m.)


Mr. R. N. Thompson (Red Deer):: Mr. Speaker, it is a privilege to take part in this budget debate. It has been called a mini budget, though I believe the Canadian people understand better than at any time in recent years that mini-budget though it may be, it affects not only them personally but the whole of the Canadian economy.
I do not want to add to the statements which have already been made in one form or another about the seriousness of the situation in which we find ourselves at the present time, but I think it is imperative that it be emphasized to the government, to the Minister of Finance (Mr. Sharp) and, yes, to the Canadian people as well who may have some questions to ask concerning the financial situation at the present time, that we do in fact face very serious economic trouble. As I see the handwriting on the wall and listen to the remarks of the Minister of Finance as he rationalizes the situation in which we find ourselves and at the same time attempts to suggest the reason things are what they are and how they may be corrected. I find a great deal of similarity between the situation today toward the end of 1967 and that which existed in the closing days of 1962. The situation that developed in the early weeks of 1963 could well be a forerunner of what is going to happen in the early weeks of 1968. Certainly we do have reason for concern.
I share the concern expressed by the Minister of Finance, even though we cannot agree with the policies he is adopting or the justification for the tax increases that he has brought in. It was only last fall, if I recall correctly during the early days of September, that the economic council spoke very firmly in no uncertain terms about what it regarded
December 7, 1967

as the developing crisis. The bombshell report issued by the Economic Council stated very clearly that there was growing fear, which every day was becoming more noticeable, about what is happening in the Canadian economy. I am sure the government was not pleased at the time with what the Economic Council said, but what they said has come true and is becoming more evident day by day. Therefore the debate on this mini budget involving these tax increases and government policy, and also the statement that we expect to hear the President of the Treasury Board (Mr. Benson) make tonight, are very important and are tragic evidence that all is not well.
I was interested to see a couple of articles in the London Free Press on December 2 which evidently are what we can expect when the screws are tightened as they are being tightened now. For example, one company in the London area has closed down its production of heavy road equipment in Canada altogether. The company is a subsidiary of a United States company and all production has been shifted to the parent factory in that country. Another major company in the London area hints that there will be a shutdown at some future date. Some 68 persons have been idled by cut-backs as of December 2 and perhaps more people will be laid off in a few days at a second company. This too is evidence that all is not well.
Let me bring again to the attention of the house, Mr. Speaker, those things about which I believe Canadians are most concerned. First of all, interest rates have never been so high. Just today I received a letter from my own banker indicating that interest rates have been raised on ordinary bank loans by half of 1 per cent. Only a few weeks ago we were told that the interest rate on national housing loans had reached an all-time high level of 8i per cent. The cost of money for the normal carrying on of industry and commerce and for vital and necessary construction, such as home construction, is such that it has placed an additional, very severe burden on Canadians who are facing a cost of living that is spiralling upward as never before.
Second, Mr. Speaker, this year's budgetary deficit will be the biggest in the nation's history. The Minister of Finance has talked about the increase in government income as a result of the increase in taxes, but the amount the minister can expect to gain from these taxes between now and the end of the fiscal year will not have very much effect in reducing the over-all amount of the deficit which in a year of prosperity, as our centen-
The Budget-Mr. Thompson nial year has been, is higher than at any other time in the nation's history, either in war or in peace.
This situation, Mr. Speaker, just cannot continue, and obviously something is radically wrong with our approach to the financial problems facing the country. For example, look at the housing crisis. Housing starts this year so far as unit construction is concerned are far behind. There is no hope of catching up on the lag last year. As already mentioned in this debate, the cost of housing for the people who need housing and want to own a house has increased many times as a result of the increased cost of interest. How long can we continue in this way, Mr. Speaker? We all know very well that housing is important to the well-being of our nation, not only just to the economy but to many other aspects.
I am particularly concerned about the increasing prices facing our farmers. This is creating an extremely difficult situation. Prices for farm products are not even holding their own but are tending to go down. Yet the cost of production goes up. In western Canada in particular there is a crisis because the cash crop, which the farmers normally expect to dispose of in the early months following the harvest, has no market this year. The wheat quotas are just not there. Moreover, the price of wheat has gone down and the prices for hogs and cattle are hardly holding their own. As I say, the farmers are not able to sell their cash crop to pay for their harvesting operations or even their seeding last spring. This affects the entire economy, but the western agricultural economy perhaps more than the eastern economy is finding itself in extreme difficulty.
What is the prospect, Mr. Speaker, of even maintaining our grain exports? The devaluation of the British pound has certainly cast a shadow across the prospect of maintaining wheat prices at an economic level. The devaluation of the pound will not only affect Britain and the other countries which likewise devalued because they found themselves in difficult economic circumstances but will cause these countries to lower their demand for Canadian wheat. As a result of the devaluation of the British pound Japan is finding herself facing a very critical situation, though as yet she has not devalued her own currency.


Lloyd Roseville Crouse: Wait a moment. The lights have gone out.
5154	COMMONS
The Budget-Mr. Thompson [DOT] (4:10 p.m.)


Mr. Ricard:: Don't talk. The Hansard
reporter cannot see to work.


An hon. Member:: Black Thursday.


Robert Norman Thompson: We are grateful to the Minister without Portfolio for restoring light.


Mr. Chretien:: I represent a riding which has one of the oldest power generating stations in the province of Quebec.


Robert Norman Thompson: Before darkness descended on the house I was saying something about the difficulty that western agriculture finds itself in. Not only do we face the prospect that lower prices will be obtained for the products of western farms, and I am referring particularly to lower wheat prices, but since western grain is most important to the Canadian economy and since our western farmers face the prospect of losing markets, the entire country will suffer. Also, what is happening in China does not lead us to hope that we shall be able to continue to enjoy our grain markets in that country.
Another area which is of great concern to the economy of this country is that area of activity which relates to wages. Certain of our workers have demanded wage parity with workers in the United States. I am sure that no one in the house will begrudge any of our workers a living wage, especially in these times of rising prices. But it must be remembered that the Canadian worker is competing, so far as productivity is concerned, with the worker who lives in a nation that is more than ten times economically greater than our nation. This demand for parity will drive our cost of living ever higher and will increase the upward momentum of the inflationary spiral.
One of the greatest causes for this so-called inflation has been the unprecedented amount of government spending during recent years. The greatest factor in the inflationary problem is one which the Minister of Finance himself is responsible for creating. That factor is the enormous increase in government spending that we have witnessed during the last several years. Whether the Minister of Finance accepts the blame or not, statistics reveal that the rate of government spending at the federal level exceeds by far the rate of economic growth as well as the rate of increase in wages and the rate at which living costs are rising.
Some interesting statistics were released last week by the Canadian Economic Foun-

DEBATES	December 7, 1967
dation. They show that the 3.5 million taxpayers who earn less than $5,000 per year pay nearly 50 per cent of their income in aggregate taxes yearly to governments at one level or another.


Mitchell William Sharp: May I ask the hon. member a question? Is he directing his criticisms also at provincial and municipal governments?


Robert Norman Thompson: Yes, I am, but now I am
specifically directing it to the Minister of Finance. My criticism applies to governments at all levels. In his last two budget speeches at least the Minister of Finance has asked governments at provincial and municipal levels to exercise restraint. Yet he has permitted federal spending to run wild. The rate of increase in costs of government at all levels has been greater than the rate of productivity increase in this country. I venture to say that federal spending has grown at a greater rate than provincial and municipal spending.
The statistic released by the Canadian Economic Foundation reveal that the 1.6 million taxpayers who earn between $5,000 and $10,000 a year pay more than 50 per cent of their income in taxes. The average tax payment for that group amounts to $5,300. That amount is paid in aggregate taxes to governments at all levels.
The taxpayers' union reports that today the average taxpayer pays about half his income in taxes which include personal income tax, sales tax, property tax, automobile licences and all forms of hidden tax which pay for the cost of government. I have some statistics for 1965 which support the contentions of the Canadian Economic Foundation and the taxpayers' union. I could not get detailed statistics for 1966 but unfortunately government spending for that year reached an even higher level than in previous years. The figures for 1965 relate to net national income.
As at December 31, 1965, the gross national product of Canada was $52,056 million. As at December 31, 1965, our net national income was $38,940 million. This figure includes wages, salaries, commissions, income from the sale of products and from all other sources. In the fiscal year ended March 31, 1966, the interest that we paid on our debt amounted to $1,051.3 million. Also, in the fiscal year ended March 31, 1966, our direct national debt was $27,617 million, an increase over 1964-65 of $1,044 million. Bringing these figures down to a daily basis, I point out that the daily interest cost of our national debt
December 7, 1967

amounted to $2,881,121.30. The hourly cost was more than $120,000, and the cost per minute was approximately $2,000.
The truly alarming statistic is that which shows that federal, provincial and municipal expenditures in 1965 reached the astronomical total of $22,500 million. Of this amount the federal government spent $7,633 million or 34 per cent, the provincial governments spent $5,220 million or 23.3 per cent, and the municipal governments spent $9,596 million or 42.7 per cent.
Taking these costs and applying them to the net national income of the Canadian people we find that 57 cents out of every dollar that is earned by Canadians is taken back by governments at one level or another. If we include the net cost of government, that cost which is financed through taxes and not through other sources of income, we find that nearly 50 per cent of every dollar that is earned by Canadians is taken back by government in the form of taxes to pay for the cost of government. The taxes which I speak are taxes which are levied on net income; they are not paid out of the gross national product. They are paid out of the net earnings of the Canadian people.
It is easy to see that we face a crisis in government spending at this time. How any government can justify an increase in spending to the extent that has taken place during the last several years is something that escapes me. The unprecedented costs of government are driving our taxes and the cost of living ever higher. By increasing taxes the Minister of Finance is attempting in some small way to control the situation.
Another factor that must be considered when talking about increased government costs is the increase in welfare costs in Canada. I am thinking particularly of the prospect that medicare will be implemented in the near future. In so many words, the Minister of Finance-and his meaning is not hard to follow-says that it is not possible, considering the economy of Canada, for this country to bear the extra weight of medicare. At the same time he says that, politically, it is not possible to drop the program. I do not understand his logic. Only three of the ten provinces had shown any willingness to go ahead with medicare. Seven provinces say they do not have enough money to pay for their share of the medicare program. They imply that they would willingly see this program postponed for a long time.
Just in case the Minister of Finance thinks that I am away out in right field somewhere, may I refer to an editorial which appeared
The Budget-Mr. Thompson in the Montreal Gazette on November 30. It sums up the matter effectively in these words:
All this has been dramatically illustrated in the case of the government's medicare proposals. The government has persisted with this plan, and is persisting with it still. But there is no evidence such a plan has any overwhelming public support. The evidence, on the contrary, is that this plan, in its present form, is beyond what the country wants, as it is beyond what it can afford.
* (4:20 p.m.)
The fact is that the federal Liberals, though making medicare one of their chief promises in the last general election, came dismally to office without an over-all majority in the house. A medicare plan did not save the C.C.F. government in Saskatchewan from being voted out of office, nor did it bring it back to power in the recent election. In Quebec the provincial Liberals emphatically supported medicare, but they lost their election to a party that did not conceal its reservations about it.
All this might have given cause for the government to reconsider whether it was really being precipitated into medicare by popular propulsion. But the evidence has continued to run against the plan. When the premiers of the provinces held their own annual conference at Fredericton this summer, they exchanged many doubts and criticisms of the plan. And the federal-provincial meeting last week showed most of the provinces (including Ontario and Quebec) quite unwilling and even unable to assume at this time the burden of paying half the cost of so expensive a scheme.
How the government got started on this billion dollar spending proposition is something not yet fully explained. At last week's conference, Mr. Sharp said that the plan's cost would be equal to an increase in the personal income tax of about 12 per cent.
And we have had a 5 per cent increase in income tax in the meantime. The article continues:
This would come about at the time when Mr. Sharp is talking of raising taxes to diminish spending deficits. How many taxes can people pay? How many are they willing to pay?
Nor can it be said that the government entered into this proposition at a time when it seemed financially feasible. The warning signals were already flying when the plan was first advanced. All governments in the country were in financial trouble, and sinking deep into deficits. The need, even then, was to come to an understanding on priorities and capacities-to see what was needed most and what there was to pay for it.
The editorial states in conclusion:
It is not possible for Mr. Sharp to go before the public with two propositions: one to clamp on more taxes to cover more of its overspending, and another to launch one of the most gigantic spending schemes, involving money-finding by the provinces, as well as by Ottawa.
This is the situation in which we find ourselves at the present time, a situation which
December 7, 1967

The Budget-Mr. Thompson affects not only the poor people who pay taxes they cannot afford to pay but even bank presidents. I am sure that the reactions of the public to a speech made in Montreal by the president of the Canadian Imperial Bank of Commerce just three days before that editorial appeared on November 30 must have caused concern to the Minister of Finance. Referring to the taxation and financial policies of the government, Mr. Neil J. McKinnon told a conference of financial executives that a swindle had been perpetrated on the great majority of the populace who were least able to protect themselves against the consequences. Let me give an illustration of this. A man who bought a $1,000 government bond paying 4.5 per cent interest nine years ago could sell it now for no more than $790. Why? Because the price of money has been inflated, along with the price of everything else. And the $790 would not buy as much today as $600 would have done when the bond was issued to mature in 25 years. So the man who trusted his government with his life's savings has taken about a 40 per cent loss.
This is an illustration of the "massive swindle", to use Mr. McKinnon's words, which involves those least able to protect themselves.
The New Democratic party in its amendment has condemned the government for its financial policies. However, their spokesman, the hon. member for York South (Mr. Lewis), went on to expound the policies which he and his hon. friends believe the government should implement. What seems strange to me is that these policies are basically the same as those which have been implemented by a labour government in Britain as a result of which Britain has been brought to her knees financially, even to the point where she has been obliged to devalue the pound. And despite this drastic action her financial future for the next two or three years is far from being assured. Can hon. members not see that these financial policies being advanced as alternatives to what the government is doing are no better than those which the Minister of Finance is advocating? Surely the time has come when something different must be tried so far as economic policies are concerned.
We have wealth untold in this country, enough to meet the needs of every Canadian and more, without difficulty. It is not a problem of production; it is a problem of distribution. Money was designed and intended to be a means of distribution between producers

and consumers. After all, there is no reason to produce anything except that somebody, somewhere, wishes to consume or use it. Yet the financial policies being applied by the present government and by the government which preceded it have, along with those suggested by the New Democratic party, proved incapable of coping with the problems which face us.
The time has come when Canadians themselves have lost confidence in their economy. Some people in this country complain in anti-American tones about the effect of United States investment in Canada. I will say again, as I have on other occasions, that Americans have more confidence in Canada than have Canadians themselves when it comes to investing capital. I say this because on a per capita basis Canadians are investing $3 in the United States for every $1 which Americans are investing here.
I came across an article the other day describing the way in which business had increased on the Chicago stock exchange. The writer stated that the sharp rise in this year's trading volume was attributed largely to increased trading by Canadians. It was Canadians who had pushed up the volume of business. Our own brokerage houses confirm that Canadians are move confident in the United States economy than in their own and more willing to invest their money in United States stocks and bonds than in Canadian development. I believe this is because the policies of our governments in Canada destroy the confidence of the Canadians people in their own economy.
It is true we are comparatively few, just 20 million people. Neverthelesss, if we could only use our own credit, if we could only use our own know-how in the development of our resources, if we could only evolve our own financial policies to meet our needs, I do not think the financial situation we now face would turn out to be difficult in any way.
[DOT] (4:30 p.m.)
I should like to refer briefly to an editorial which appeared in the Edmonton Journal of March 15 because it supports the argument I am making. It quotes Mr. George Rogers, chairman of the Canadian Economic Foundation, as saying:
Right now we are on a roller coaster, and we cannot get off. To keep prices from increasing we would have immediately to clamp a ceiling on government spending; and to reduce prices we would have to reduce total government spending by 5 per cent a year for several years.
December 7, 1967

The article continues:
No realistic person expects a reduction in government spending, but who was prepared for the almost incredible budgetary estimates tabled in the Commons Monday? They forecast a staggering increase in federal spending.
So we have a staggering deficit now facing us which has resulted in the increase in taxes that is before us at this time.
Payments to the provinces will increase by $340,000,000. Will provincial levies on the same taxpayers' pockets from which Ottawa extracts its money be reduced accordingly?
Farther on the article states:
-Mr. Louis Rasminsky, governor of the Bank of Canada, directs attention to the fact that the expenditures of provincial and municipal governments last year rose more rapidly than their revenues.
This is the pattern at all government levels, but it is the example of the federal government through its policies which is leading the provincial governments to increase their expenditures. That is why there is so much fear at the present time about the implementation of medicare. It is going to involve the expenditure of half a billion dollars on the part of the federal government and an almost similar amount on the part of the provinces. Thus we go on and on increasing the costs of government.
This article also refers to the increase in the cost of old age universal pensions and the increase in the budget of the C.B.C. It refers to other expenditures and then closes with these words:
The bill will be paid in higher taxes or higher prices through inflation-or both. Where will it all end? How many taxpayers would like the increases in total government expenditures to be not more than half the year to year increases in the gross national product?
I think most Canadians would say yes to that. This is the challenge that faces the government. Yet in the face of this challenge we find it advancing policies that do not lead to the solution of the problem. In fact they just increase the problem. This is the situation we face.
Having said this, Mr. Speaker, it would be wrong not to say something about the alternatives which I think could be implemented. For a long time Social Credit has been talking about policies, some of which have been adopted but all of which I believe one day will have to be implemented by governments in Canada.
If we are going to face up to the crisis caused by increasing government expenditures and increasing government deficits-I
The Budget-Mr. Thompson have said nothing about the increase in personal credit buying by Canadians, which has risen faster this year than in recent years-it will become imperative that money reform be implemented in a way that it is not being implemented at the present time. When governments believe that by increasing taxes they can correct inflationary trends in an economy that they describe as too hot, something is wrong with the logic of this stand because if increased taxes were the answer to the inflationary trends, in the economy today we would not have inflation inasmuch as there has been a rising pattern of increases in taxes over the years. There must be another alternative.
I believe that one of the alternatives that can be implemented is to bring in fiscal policies which will encourage Canadians to invest in their own economy. We have heard a great deal about the recommendations of the Carter report and about the necessity to introduce a capital gains tax. If succession duties were eliminated-these are forms of double taxation in themselves-it might be well to talk about the implementation of a limited capital gains tax, but we cannot have it both ways and expect to attain the objective that is our goal. Therefore rather than discouraging investment in Canadian resources, such investment must be encouraged. It is in this regard that tax reform is most necessary.
Beyond this it is necessary that we begin to use our own credit, particularly in those areas that relate to expansion of the capital development programs that are required for the services that governments must give to the Canadian economy. This again is a matter of encouragement. There is no more important need in this regard than housing. There is no reason why we cannot build houses today with money having a special category or classification which would not command the high rates of interest that commercial loans involve.


The Acting Speaker (Mr. Rinfrel):: Order. The time allotted to the hon. member has expired.


Robert Norman Thompson: I shall be very brief in finishing, Mr. Speaker.


The Acting Speaker (Mr. Rinfret):: Is there unanimous consent to enable the hon. member to continue his speech?


Some hon. Members:: Agreed.

December 7, 1967
The Budget-Mr. Davis


Robert Norman Thompson: Mr. Speaker, I have mentioned housing as one of those areas where I believe capital must be provided at lower rates of interest than the rate on commercial loans. If we can provide capital in the form of soft loans to underdeveloped countries at an interest cost of three quarters of one per cent, then we should be able to provide money at 2 per cent or 3 per cent as an incentive to home production which would help expand our economy and develop our productivity.
[DOT] (4:40 p.m.)
We must not only hold steady on government spending but we must also give an example to our economy, to our workers, to hold steady as well. It seems to me that increases in wages and prices must follow closely in line with increases in national productivity. Moreover, in an automated society wage increases must be spread beyond the narrow corridor of workers represented by trade unions in special sectors where strikes can cause a national crisis. A country cannot stand a 30 per cent increase in wages in one year without massive effects on productivity and exports. The federal government must take the lead and keep its rate of spending down to something below the rate of increase in the productivity of the nation. Wage increases must likewise be kept down to that level. Beyond that we may have some hope of maintaining a cost of living increase which will bear some relationship to the increase in the productivity of the country. If we do not do that and support it with a different financial and monetary policy in areas of public development, then we are going to go from one crisis to another.
What concerns me and those in this party at this time is simply that we are on the verge of a crisis which is going to envelop us in such a way that we will not be able to control it in the way that the minister suggests we can control it now by these limited policies. Surely we must give something better than we are giving to the people of Canada in respect of the economy of this country.


Mr. Jack Davis (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, listening to the official spokesman for the official opposition one would think that running a budget deficit was a crime, that increased government spending should be outlawed, that inflation was an indictable offence and that devaluation of a nation's currency should be punishable by death. If this was true the hon.
[The Acting Speaker (Mr. Rinfret).]
member for Perth (Mr. Monteith) would not be in the house today, nor would many of the former cabinet ministers of the Conservative party. The former leader of the official opposition, once the prime minister of this country, the hon. member for Prince Albert (Mr. Diefenbaker), would not be here. They would all have been hanged, drawn and quartered long ago. They would have been imprisoned in the late 1950's put into solitary confinement in the early 1960's, and would all have passed on to their last reward when the devaluation of the Canadian dollar took place in those good old, bad old days of 1962.
The present leader of the Conservative party does not escape this indictment. The hon. member for Perth talked about the present Liberal government as though it was the last of the big spenders. We on this side of the house are pikers by comparison with the record of the Stanfield government of Nova Scotia. If one is talking of expenditures his record is an impressive one, indeed. Over the past decade the spending of the Conservative government of Nova Scotia, led by the present member for Colchester-Hants (Mr. Stanfield), has gone up threefold. According to the Dominion Bureau of Statistics the net government expenditures of that province rose from $58 million in 1956 to an estimated $183 million in 1967.


Lloyd Roseville Crouse: You might also say that Nova Scotia has had a balanced budget. Their budget has been balanced, and you should put that on the record.


John (Jack) Davis: We here in Ottawa have been dragging our feet by comparison. The federal government admittedly spends a good deal more money today than it did in 1956.


Mitchell William Sharp: Nova Scotia taxes and spends.


Lloyd Roseville Crouse: You keep quiet and listen to this.
The Aciing Speaker (Mr. Tardif): Order, please. I would appreciate it if hon. members on both sides would allow the hon. member to make his speech.


John (Jack) Davis: The federal increase in 1967 over 1956 is 70 per cent. But compare this with the 200 per cent plus record of Nova Scotia and one can see how government spending can really get out of hand. The quiet member from Nova Scotia may not have had much to say yet in the House of Commons, but he is like a man with a time bomb in his suitcase. The Halifax explosion
December 7, 1967

will have been nothing compared with the explosion which would take place in Ottawa if this country were ever unfortunate enough to have him as prime minister.


An hon. Member:: It won't be long.


John (Jack) Davis: Former premier Stanfield was not alone in his big spending habits. Conservative premiers everywhere in Canada have been heaping one government expenditure on top of another. In Ontario, for instance, provincial expenditures since the mid-1950's up to the present time have gone up four times. In premier Roblin's Manitoba they have gone up four and a half times. This only goes to show that Conservative premiers are lavish spenders. Not only that, it also shows that these provincial governments have been mainly responsible for the increase in taxes which has taken place in this country in recent years.
What do the over-all statistics show? They show, as I said before, that federal government expenditure on federal account has gone up by roughly two thirds, or 70 per cent, over the past decade. Outlays by all of the provinces taken together, meanwhile, have gone up nearly fourfold.
The provinces, it is true, have had to deal with such top priority items as education, health and municipal services, but they have dealt with them in a lavish manner. And they have frequently turned to Ottawa for help in this regard. Witness the fact that Ottawa has been turning over increasing amounts of money directly to the provinces. In the mid-1950's it was turning money over to the provinces at an annual rate of $500 million. Now five times as much money is being turned over to the provincial premiers. Some $2.5 billion will be turned over to the provincial governments in the coming year. It is more than 20 per cent of our current federal budget and it shows why it has been increasingly difficult for the federal government to budget for a surplus, in the light of these payments to the provinces, at a time when the really big spenders are the provincial premiers who have been spending money as though it were really going out of style.
Perhaps for clarification I should deal in percentages. Ten years ago Ottawa spent about 16 per cent of our gross national product on federal projects and programs of one kind of another. The corresponding figure today is down from 16 per cent. It is more like 13 per cent. The federal government, in
The Budget-Mr. Davis other words, has been taking less money proportionately out of the pockets of the Canadian taxpayers. The provinces, meanwhile have been much more ambitious. Together with the local municipalities, creatures of the provinces, they have accounted for the fact that governments collectively now spend about one third or roughly 33 per cent of our gross national product on government activities of one kind or another. Think of it. Federal expenditures on federal projects now add up to 13 per cent of our gross national product. But these are far outpaced by the spending programs of provinces, 16 per cent, and municipalities, 4 per cent. Together they make up the remaining 20 per cent. In other words, 13 per cent is spent by the federal government and 20 per cent by the provinces and their creatures, the municipalities.
Hon. members talk about deficits. Ottawa has been running a big surplus for years if we leave out the transfers to the provinces. It has been running a surplus in the order of 20 per cent. We would have a $2 billion surplus this year were it not for these payments to the provinces. It would be roughly 20 per cent of the federal government account alone.
Let me refer briefly to a comparison of the performance of the government of this country and the economy in the last ten years. Most of us know that the great depression occurred in the early 1930's when prime minister R. B. Bennett was in office. He was a Conservative so it should come as no surprise to learn that our late depression, the depression of 1957 to 1962, also occurred when a Conservative government was in power. This was the regime headed by the present hon. member for Prince Albert. It distinguished itself by running budget deficits which in absolute current dollars as well as in relative terms were the largest that this country has ever known.


Mr. Bell (Carleion):: Get up to date.


John (Jack) Davis: A comparison between this fateful five year period and the last five years of the current Liberal administration might well be left to an independent authority, the Economic Council of Canada. Its latest annual report on current expansion since 1962 had this to say:
-this represents probably the longest, uninterrupted expansion-and certainly the longest peacetime expansion-in Canadian history.
It also had this to say:
It also constitutes the largest expansion in terms of the absolute rise in the volume of total

December 7, 1967
The Budget-Mr. Davis output and total employment. Even in terms of percentage change, the rise in industrial output was exceeded only by that occurring as the economy climbed out of the pit of the great depression.
Since the early 1960's "Canada has in fact experienced what could appropriately be described as a great expansion". Those are the words of the Economic Council of Canada. This certainly underlines the old saying that Liberal times are good times.
[DOT] (4:50 p.m.)
I should also like to draw attention to other figures and comparisons which appear on page 12 of the latest report of the Economic Council of Canada. The report shows that our national output has grown three times as fast in the last five years as it did in the years when the hon. member for Prince Albert was in power. It shows that productivity, that is, output per man hour in industry or industrial efficiency, if you like, has grown five times as fast. It shows that unemployment has been cut in half, from 7 per cent on the average in 1962 to around 3J per cent today.
To those who are crying havoc I would also point out that our record of the last five years compares favourably even with that of the United States. The Economic Council of Canada said on page 13 of their report:
Although this great expansion was common to both Canada and the United States, its vigour was considerably more pronounced in Canada.
The opposite, unfortunately, was true in the late 1950's and early 1960's when the Conservative party was in power. So far I have been talking about big figures and round aggregates. I would like to be more specific. Annual investment in new plant and equipment fell between 1956 and 1961. Since then it has grown by more than 50 per cent. Exports have grown considerably. The hon. member for Northumberland (Mr. Hees) likes to take credit for his great export drive in those fateful years leading up to 1962, but the fact is that since he left office the rate of increase in our export sales has been stepped up fourfold. The amount of foreign exchange, in other words, that we are earning from selling our goods and services to other countries has increased immensely since the Liberals came to power.
So much for the past, Mr. Speaker. Things have improved a great deal, but we have current problems. Our biggest single problem is inflation, with which we have to deal now. Granted, it is not confined to Canada alone; it is a world wide phenomenon. But we have

to learn, and learn quickly, to keep prices and wages under control. If we do not we will undermine the willingness of Canadians to save, we will hurt those people who have to live on fixed incomes and we will make the management process all the more difficult in industry and government alike.
Perhaps I should describe the situation in this way, that our economy is delicately balanced. It is balanced on a sort of knife edge, a knife edge with the abyss of unemployment on one side and the hazards of inflation on the other. Increased government spending may put more people to work but it will also add to the fires of inflation. Money wisely spent can make our economy more productive. Tax dollars spent merely to perpetuate the life of dying industries or of inefficiently operated crown corporations will cause inflation, and you can be sure of that.
The Minister of Finance, trying to operate in a free enterprise system, has several big levers which he can pull. He can expand our money supply and he can cut government expenditure. He cannot really tell business and labour what to do. From what I said earlier, the fact that federal income and expenditures now amount to only about 13 per cent of our national income illustrates that the leverage of the Minister of Finance in respect of the government's spending is less than at any time in our post-war history.
He can draw certain guide lines. If I have any criticism to make of the present government I would say it has not drawn and certainly has not published these guide lines to the extent I would like to have seen. I would like the government to indicate quite clearly what the order of magnitude of increase in prices and wages can be, what is the maximum that is tolerable in this country and what is the maximum that is consistent with a modest degree of inflation in Canada.
I would like to think that a guide line would be drawn tolerating an increase, if you like, a maximum increase, in prices and wages of the order of 5 per cent per year. We have had in recent years an increase in productivity of the order of 3 per cent. It has been slipping toward 2 per cent. If we have increases in wages and prices in excess of 2 or 3 per cent a year we have some degree of inflation. If we have wage and price increases of the order of 7 per cent or 8 per cent a year, as recent wage agreements, particularly in the larger industries and negotiated by the more powerful unions would indicate, then we are in for a substantial
December 7, 1967

December 7, 1967
The Budget-Mr. Davis number of miles flown, the number of passengers carried and the amount of freight carried were almost identical in the case of both companies in 1966. It is interesting to note that Air Canada, which is more of a monopoly than is Northwest Orient Airlines, had a higher load factor. It has a load factor of 65 per cent while Northwest Orient Airlines had only 55 per cent. Each aircraft had more seats filled in Air Canada's case.
I think we will all admit that Air Canada is excellent in the air. It has first class equipment and its safety record is second to none. This is borne out by the financial statistics. Both of these corporations spend about 20 per cent of their total revenue on what might loosely be called their flying operations. But there the similarity ends. Air Canada's traffic servicing, most of the Canadian travelling public will agree, leaves something to be desired. Still, Air Canada spent 14.3 per cent of its income on air traffic servicing while Northwest Orient Airlines spent only 9.4 per cent. Air Canada is a virtual monopoly. Northwest Orient Airlines, on the other hand, has to compete flat out with a number of other carriers in the United States. Nevertheless Air Canada spent 15.4 per cent of its revenue into sales promotion, exactly double Northwest Orient's 7.7 per cent in 1966. When it comes to general administration we see much the same thing. The figure for Air Canada last year was 3.9 per cent while that for Northwest Orient Airlines was 2.4 per cent.
There is another item in respect of Air Canada which bears careful examination. I note that the maintenance figure for Air Canada was 19.5 per cent, more than double Northwest Orient Airlines figure of 9.5 per cent. Why is this? I am told this is due to the servicing of a number of older Viscount aircraft, many of which will be taken out of service by 1970 or 1971. But the real answer is that Air Canada insists on carrying on a number of regional operations in this country. It is ont only in the big jet business but also in the smaller, regional carrier business as well. If Air Canada were to back out of this latter field and leave it to private enterprise I am sure that the subsidies required from the federal government would be much smaller than the losses incurred by Air Canada in carrying on this particular type of activity.
The real clincher, I think, is employment. Air Canada employs far more people than does Northwest Orient Airlines. In 1966 it had 13,718 employees. Northwest Orient Air-

lines, flying roughly the same number of people over roughly the same number of miles and carrying a similar volume of air traffic, employed 8,875 people. Our crown owned corporation, in other words, employed roughly 50 per cent more people to do a similar job in the air for Canadians.
Now I will refer to taxation. Air Canada paid to the federal government taxes of the order of $3 million in 1956. Northwest Orient Airlines, on the other hand, shouldered a tax burden of more than $46 million. In other words, last year the private company was yielding a tax payment to the United States economy of $46 million.
Last Thursday night when the Minister of Finance submitted his budget, I was glad to hear that Air Canada would be forced to go out into the money market in order to raise funds of its own. It will at least have to show how it expects to be able to pay interest on its bonds and have something to spare. In this way it will be brought into much closer contact with the business community. It will have to compete with other well managed industries for its funds. This is all to the good.
I should like to turn very briefly to another corporation, namely, the Canadian Broadcasting Corporation. This year the C.B.C. will be receiving $140 million from the federal treasury. In addition it will be earning, over and above that figure, at least $25 million in the form of revenue for advertisements shown on its television system or broadcast by radio. Let us compare this with the $14 million budget of the privately owned C.T.V. One is more than ten times the other. I understand that C.T.V. now reaches approximately 70 per cent of the Canadian viewing public. If I were to double its $14 million expenditure to allow for the fact that it does not reach into many homes in Quebec and other French speaking areas, and double it again to allow for it to reach into a number of outlying areas in the rest of the country which are not commercially attractive to private enterprise, the figure would still only be $56 million. Even this does not bear a favourable comparison with the very large figure for the C.B.C.


The Acting Speaker (Mr. Tardif):: I regret to interrupt the hon. member but the time allotted to him has expired.


Mr. A. D. Hales (Wellington South):: Mr. Speaker, in speaking in support of the amendment my remarks will centre around two words which appear in it, namely, the
December 7, 1967

"vacillation" and "extravagance" of the government. Within the committee framework of parliament we have had for many years a public accounts committee which has been charged with the responsibility of dealing with the Auditor General's report and with other financial matters which come to the attention of the house and are referred to this committee. I do not think that any committee of the house has been more diligent in bringing to the attention of the ministers and the house the waste and the extravagance which they have uncovered in the course of their work.
Last year the committee met very regularly. Unfortunately this has not been the case this year. Let me point out the government's vacillation in this regard. Last January 9 the report of the Auditor General for 1966 was tabled in the house and, mark you, Mr. Speaker, on April 5, three months later, this committee received its terms of reference from the house. Three months were wasted there. Immediately after the committee received its terms of reference it met, on April 13, and continued to meet until the house closed on April 26.
[DOT] (5:10 p.m.)
The house opened again on May 8. On May 19, under standing order 65, the committees of the house were set up. However, an organization meeting of the public accounts committee has not been called by the government. I believe there is no justification for this delay, no justification for the lack of interest in grappling with the nation's economic situation and dealing with matters that this servant of parliament, the Auditor General, has brought before it by means of his report. The government has ignored this committee and has not set it up.
Over the years this committee has dealt with various forms of waste and extravagance in government operations. The other day I read an editorial and it led me to think how wonderful it would be if we could have the Minister of Agriculture (Mr. Greene) as a member of the public accounts committee. The minister was attending an FAO meeting in Rome at which the representatives were discussing the operating costs of FAO. Of the total of $60 million contributed to this organization Canada contributes 4.1 per cent. There was a discussion of staff increases which since 1957 have amounted to 300 per cent. The minister had this to say:
If they lose faith-
The Budget-Mr. Hales
He was referring to the countries contributing to this organization.
-these Canadian taxpayers, in the efficiency of our endeavours, if they come to believe that their taxes are but adding to the bureaucracy or to the pile of papers in some mirky vault, they will lose the will to participate.
This is what our minister said in Rome, and if he would just bring those words back to Canada they would make an excellent prescription for Ottawa. During his remarks in Rome he also said:
New funds are hard to come by and a dollar saved is a dollar earned.
Wouldn't he make a wonderful member of the public accounts committee? I hope he will instil some of these principles of thrift and saving into the cabinet of which he is a member. There was an editorial by Fraser Robertson in the Globe and Mail for December 1 headed "M.P.'s Also Responsible For Final Decision". He was referring to this terrible budget. I resent that statement because I feel that members of parliament have been sincere in bringing to the attention of the Minister of Finance (Mr. Sharp) the great perils and troubles of our economic situation. The public accounts committee, which represents parliament as a whole on public spending, when called into session, has been very diligent in its work.
Let us look for a few minutes at some of the recommendations made by the public accounts committee and what has been done about them. In the fourth report for 1963 the committee pointed out that the Unemployment Assistance Act was inadequate and that there were certain deficiencies in the shareable costs. However, there has been no action taken and there has been vacillation in this regard. The government introduced the Canada Assistance Plan, but it was not incorporated into the unemployment assistance scheme.
In the fourth report of the committee for 1964 there is a reference to the findings of the Glassco commission. At that time, out of the original 276 recommendations the committee found that there were 151 recommendations which had not been acted upon. If all these recommendations had been put into operation they certainly would have yielded substantial savings. I will give the government its due by saying they have implemented some recommendations since that committee report, but there are still many Glassco commission recommendations left outstanding.

December 7, 1967
The Budget-Mr. Hales
The Auditor General had this to say concerning the Glassco commission, and I quote from page 3 of his report for 1966:
Meanwhile, administrative overhead in departments and agencies continues to rise substantially in terms of staff needs and office costs. I advised the house last year that when this royal commission concluded its work in 1962-63, administrative overhead in terms of staff needs and office costs was to the order of $1,000 million. The comparable figure presently estimated for 1966-67 is $1,325 million, an increase of over 30 per cent during the past four years.
The Auditor General's report was presented to the government but we have seen no action and, if anything, there has been an increase in the above figures.
In so far as crown corporations are concerned, the public accounts committee made some recommendations. The crown corporations spend billions of dollars of the taxpayers' money, but no member of their boards of directors reports directly to parliament on their operations. We do not even have the Auditor General as the auditor for seven of these large corporations. I think we should at least have a representative when we realize how much money these corporations spend.
The crown corporations whose books the Auditor General does not audit are Air Canada, the Bank of Canada, Canadian National Railways, C.N. Security Trust, Canadian Wheat Board, the C.B.C. and the Industrial Development Bank. If the government does not feel the Auditor General should be the auditor, as the committee suggested, perhaps he could be co-auditor. Perhaps, on the other hand, the government would adopt the suggestion of the hon. member for York Centre (Mr. Walker) who had a private bill that was of great interest which would provide for one member of parliament being on the board of each crown corporation.
I should like to turn to some other recommendations the committee made which it was believed would at least prevent government extravagance and waste. There was a suggestion concerning the form of the estimates. The committee asked for a brief note to be included setting out the increases in the size of staffs of departments and crown corporations. In this way members would know which departments had increased in size. The Glassco commission made a very thorough study of the C.B.C. but the officials of that organization have ignored that report. It has been brought to the attention of this house but nothing has been done. Reference was made also to Governor General's warrants which are used when money is required and
[Mr. Hales.l
parliament is not in session. It is hardly necessary to list examples; they are all in the Auditor General's report.
[DOT] (5:20 p.m.)
Another recommendation that was made in 1964 was the institution of an accounts receivable system. Imagine a business as large as the government operating without an accounts receivable system, Mr. Speaker. What happens under such a system is that departments of government have a control figure to which is added the amount they have charged. The moneys then paid on account are deducted and the balance should correspond to the control figure. But during the course of our studies we discovered many departments had no accounts receivable control. Though some improvements have been made in this direction there are still many departments without any accounts receivable control system.
In its seventh report in 1964 the committee expressed great concern over the way inventories were being kept in the Department of National Defence. This department kept only a physical inventory, not one that itemized cost as well. The department knew how many items it had but not their cost. Imagine running a business in this way, Mr. Speaker, where the inventory consists of a physical count with no disclosure of cost or what it costs to carry the inventory. When equipment is turned over to Crown Assets for disposal a cost figure is required so as to set a resale figure. The recommendation of the committee would have prevented waste and extravagance but to my knowledge no action has yet been taken.
In our eighth report in 1964 we dealt with the subject of general election expenses. We asked the government to amend the Canada Elections Act so that any advance poll which had had 15 or less voters could be crossed off the list and would not have to be set up at the next election. But they did not do so. The result was that during the last election the chief electoral officer had to continue to operate these advance polls. It is startling to note that in the 1965 election there were 371 such polls with less than 15 votes, 16 polls with no votes, 20 with less than one vote and 20 polls with less than 2 votes. In all there were 427 polls which could have been struck off the list and taken out of operation. I inquired from the chief electoral officer what was the average cost of a poll and was informed that it was $136. This means that Canada wasted $58,072 simply because the government failed
December 7. 19G7

51G5
to pass an order in council to correct a situation that was brought to their attention by the public accounts committee. This is the sort of thing that indicates a lack of interest or sincerity and in addition costs the taxpayers a lot of money.


Mr. Stewart:: Would the hon. member permit a question at this point?


Alfred Dryden Hales: Surely.


John B. Stewart: I should like to be a little more clear about whether this was a provision that was not included in the statute or a regulation which had previously been in effect but had been repealed. If it was a defect in the statute, when was the statute enacted? The hon. gentleman referred to "they", and I do not know against which group he is directing his criticism.


Alfred Dryden Hales: I think what the hon. member wants to know is when the act was last considered. When the Conservative party was in office it brought in the new act, but this is no excuse for the present government not passing an order in council to change the regulations. I understand it is possible under the act to pass an order in council to change the regulations, but this has never been done. Therefore, during the last election all of these advance polls to which I have referred were put into operation even though they were useless, unnecessary and costly. I hope that such an order in council will be put into effect before the next election.
Another waste of the taxpayers money occurred in the Department of Trade and Commerce. The Department of Trade and Commerce administers the Gas Inspection Act, the Electricity Inspection Act and the Weights and Measures Act, and these statutes provide for the imposition of fees to meet the cost of operation. In 1965 the committee reported that the department was losing money and for the year ended March, 1966 the cost of administration exceeded revenue by $735,000. This loss included salaries and expenses of district offices, but, Mr. Speaker, if we add to that the cost of labs, branch administration and services from other departments the loss jumps to $1,710,000. Nothing has been done to correct this situation. It is a question of raising rates for these services that are rendered by the Department of Trade and Commerce. There is much talk of the shortage of houses. The government contends that it has insufficient money to lend so that the houses that are needed in Canada may be built. This sum of $1,710,000
The Budget-Mr. Hales could build 120 homes each costing $15,000. I suggest this is an area where savings should be made.
The committee also made some recommendations in connection with revenues of the St. Lawrence seaway meeting expenses, but no action has been taken on them.
In the fourth report of the committee in 1966 the savings bank division of the Post Office Department was dealt with. There are about 300,000 accounts in this division, 200,000 of which are classified as dormant or unclaimed. The interest on these accounts amounted to $67,000 for the year ended March 31, 1966. The committee recommended that these unclaimed balances should be dealt with in the same way as the chartered banks handle them, but nothing has been done. This $67,000 lies dormant. These amounts should revert to the crown. Another five homes could have been built with the interest alone.
I could give all sorts of examples, Mr. Speaker, of the money that is wasted by the Department of Transport, particularly in the matter of ship repair. There was one case where the tender amounted to $43,346 but by the time the ship was finished the cost had risen to $130,851. The committee recommended that when extras were involved they should be handled on a cost plus basis, the profit to be limited to the percentage of profit realized on the original contract price. The entire contract should be subject to cost audit by government auditors.
Take the case of the Bonaventure, Mr. Speaker. We all know how much it cost to put that vessel in order, some $12 million. The committee also reported on the cost of abandoned design plans for a ferry vessel. Some $120,000 was paid to the architects although the Department of Transport and the C.N.R. never got together to discuss the plans. Before calling on the architects to draw plans they could not make up their minds whether the vessel was to be a full icebreaker or an ice-strengthened ship. As the result a loss of $120,000 was incurred. With that amount of money the government could have built eight homes at $15,000 each.
[DOT] (5:30 p.m.)
Another $55,000 went down the drain because the architects were told, after plans had been drawn for a ferry, that the Canadian National wanted provisions for extra rail car weights. Apparently this had not been included in the original plans. We recommended that basic data be completely verified before placing any request in the

December 7, 1967
The Budget-Mr. Hales hands of an architect. This is another example of how the government has brought about waste through its extravagances and failures. I could cite many other instances but I shall not take the time of the house to do so.
I spoke about crown corporations. The report of the Auditor General to parliament speaks of the many wastes and extravagances through which the taxpayers' money dwindles away.
I wish to say something briefly about the travelling expenses which this government has incurred. I have compared the travelling expenses of all departments of government for the year 1966-67 with those for 1967-68. In one year-mark this, Mr. Speaker-there has been an increase of over $18 million in travelling expenses for all departments of government. Yes, in one year. If we look at the various departments we see that travelling expenses for the Department of External Affairs increased by $833,000, the Department of National Health and Welfare showed an increase in travelling expenses of $830,000, the Department of Transport showed an increase of $965,000, and the Department of National Defence showed an increase of $9,439,000 in one year. If we average the total figure out among all the civil servants in all departments-one should include here every person, from the man who sweeps the floor to the deputy minister at the top-we find that approximately $400 per person was spent for travelling expenses in 1967-68.
What control have we over such travelling expenses? Is this government to go on permitting this sort of thing? Are we to have civil servants flitting all over the country, with one here, one there and two turning up in the same place where only one is needed to do a job? Is there to be no control over travelling expenses? Apparently all that civil servants must do is to put in a requisition and it will be paid. It is high time that the government looked into the travelling expenses that are being incurred especially when in one year they increased by approximately $18 million. I wanted to speak about increases incurred by other departments, but I see that I do not have enough time to do so.
I wish to spend some time talking about government surplus materials which are sold by Crown Assets Disposal Corporation. The worst offender in this regard is the Department of National Defence which divides the materials that are to be sold by Crown Assets into two categories. One category is "surplus but serviceable". In other words, this is

another way of saying that the government bought too much of such material. The loss in 1966, in round figures, for such materials was $52 million. That figure is the difference between what the government paid for such materials and what it sold them for. The second category is "obsolete but serviceable". In that category the government incurred a $48 million loss. In round figures, for both categories the government incurred a loss of about $100 million. That amount of money could have built about 6,700 homes at $15,000 each, which are so badly needed.
I wanted to deal with some other government departments, such as the Department of Justice, the Department of Manpower and Immigration, the Department of Labour and the Department of Industry. I shall have time to deal only with the Department of Industry.
We all recall the debate on the bill which set up the Department of Industry. We in the opposition argued that the Department of Trade and Commerce could do anything that the Department of Industry was set up to do. But, oh no. We were told that by taking staff from the Departments of Trade and Commerce and Defence Production and putting them into the Department of Industry there would be hardly any increase in staff requirements. Consequently, when the Department of Industry was set up in 1963-64 it employed 274 people. The estimates for 196768 show that 783 people will be required for that department, an increase of 509 people or roughly 200 per cent. The Department of Defence Production in 1963-64 employed 1,699 people. The estimate for 1967-68 is that 3,684 people are to be employed. That is an increase of 1,985 people, or more than 100 per cent. The same picture holds true for the Department of Trade and Commerce. That department has added 298 persons to its staff, which is a 60 per cent increase. I could run through most of the departments this way and show that this government has been wasteful and extravagant all along the line.
In conclusion, Mr. Speaker, the illustrations such as I have given have been given by others over a considerable period of time. What I have said is not new; it has been said by every reputable financial writer and newspaperman in Canada for the past six months. People have lost confidence in this government. We have an outflow of millions of dollars from this country on the part of Canadians who are selling Canadian securities and purchasing United States securities. This
December 7, 1967

is shocking but it has been going on for some time. People have done this because they say that at least they lose their money through inflation in the United States only half as fast as they are currently losing it in Canada, and there are some other advantages.
I wish to conclude, Mr. Speaker, by quoting again the remarks of the Minister of Agriculture. He said:
If they lose faith, these Canadian taxpayers, in the efficiency of our endeavors, if they come to believe that their taxes are but adding to the bureaucracy, or to the pile of papers in some murky vault, they will lose the will to participate.
I have not lost my confidence in Canada, Mr. Speaker, but I have lost confidence completely in this government and I propose to vote for the amendment.
[DOT] (5:40 p.m.)


Mr. H. R. Ballard (Calgary South):: Mr. Speaker, I rise to speak in support of the amendment moved by the hon. member for Perth (Mr. Monteith) in the hope that I may be able to assist in convincing hon. members that it is their patriotic duty to defeat this government and rid the country of an administration which has been notably inept in its handling of Canadian affairs.
Listening to the budget speech of the Minister of Finance (Mr. Sharp) I came to the conclusion that one of the most revealing statements contained in it, the statement which has the most far reaching effect, was the admission that it is almost impossible for the government to make any sizeable reduction in its budget. The minister explained how difficult it is to cut back federal spending. He had this to say as reported on page 4903 of Hansard:
We make a large number of substantial transfer payments to the provinces and municipalities such as equalization payments, hospital insurance, aid for education and the Canada assistance social welfare plan, most of which increase automatically under statute or agreement with the province.
We have in addition . . . major programs consisting of transfer payments to persons, including family and youth allowances, veterans' pensions and adult training allowances. All of these are also fixed mainly by population factors and by statute.
In other words, this government is not the captain of its own ship. It is bound by statutes and arrangements which have been made in the past to continue to budget at a very high level.


Mitchell William Sharp: Would the hon. member permit a question? Is he saying he is opposed to these arrangements or arguing that they 27053-326
The Budget-Mr. Ballard should be fixed arbitrarily rather than by statute or on the basis of population?


Harold Raymond Ballard: I think the Minister of Finance had ample opportunity to put forward his point of view and I would appreciate being able to put forward my point of view without getting into a lighthearted debate with the minister. I know he is very glib when it comes to putting forward questions but I would appreciate being able to continue my own remarks at this time.
Is it any wonder people think that the government's ship is floundering on the sea of ministerial irresponsibility? The minister went on to say that more than half of the anticipated increase in the budget was attributable to the type of uncontrollable expenditure he had described.
The point I am trying to make is that the government has lost control over a very large proportion of its budget, the portion which involves items which are fixed by statute or which represent programs of a continuing nature. This and future governments are committed to continue making expenditures on at least the present scale simply because hon. gentlemen opposite have bound themselves and all future governments to continue existing expenditures permanently.


Mitchell William Sharp: So did the Diefenbaker
government.


Harold Raymond Ballard: The government must bear responsibility for the unwarranted increase in the budget during its term of office. The argument put forward by the minister that federal expenditures accounted for only 16.8 per cent of the gross national product compared with 19.2 per cent in the fiscal year 1961-62 is entirely unacceptable. Similarly, there is no justification for rationalizing the federal budget by indications that provincial governments and municipalities spend more than Ottawa does. This is a facetious argument and it should not have been put forward.
I read an interesting article in the Financial Post of December 2, written by J. Harvey Perry, the executive director of the Canadian Bankers' Association who, incidentally, was a member of the Carter commission on taxation. He wrote:
One of the recommendations which the Carter Commission nearly made, but didn't, is that one of the very earliest exercises in reviewing existing programs should be in the area of social welfare.
I believe that in one of our drafts we had included such a recommendation but later we decided it was none of our business. However, if any part
5168	COMMONS
The Budget-Mr. Ballard of our present governmental financial structure comes even close to competing with the tax system for being unplanned, ramshackle and jerry-built, it is social welfare. Welfare is the No. 1 subject, following taxation, requiring an immediate and complete overhaul.
I must say in all honesty that I believe the Minister of Finance has exerted pressure in an effort to have the government take a new look at social welfare. This is long overdue, and Canadians outside the party which forms the government are placing a great deal of reliance on the minister in this connection.
The hon. gentleman brags, as reported at page 4902 of Hansard, that since this government came to office it has been "putting into place the major reforms required to complete Canada's social security system." I am pleased the minister acknowledges that the government has accepted responsibility for increasing Canada's budget from some $7 billion in 1963 to $11 billion in 1967. It will surely go down in history as being Canada's most spendthrift government.


Mitchell William Sharp: Oh, no. Nova Scotia is better.


Harold Raymond Ballard: In addition to the huge
expenditures already reported, and even in the face of the dire financial and economic situation with which this country is confronted, the government is committed to add yet another welfare scheme to the list, medicare, which it is estimated will add a minimum of $600 million a year to the federal budget and a similar amount to the budgets of the provinces. This is a glaring example of irresponsibility. Faced with a future fraught with economic uncertainty, hon. members opposite are adding another welfare scheme costing well over a billion dollars a year to what Mr. Perry calls an unplanned, ramshackle and jerry-built social welfare system.
The prospect of piling more taxes on the shoulders of already overburdened taxpayers in order to finance the proposed medicare scheme has brought protests from a large number of people and on their behalf I beseech the minister to use his influence on the government to postpone the implementation of medicare. I might say I have received letters on this subject from a number of people and organizations, including the Calgary chamber of commerce, protesting vehemently against the implementation of this scheme. In a letter to the Prime Minister (Mr. Pearson) from the Canadian Chamber of

DEBATES	December 7, 1967
Commerce, dated November 17, the following paragraph appears:
The delegates at the Canadian Chamber's recent annual meeting voted in favour of a policy statement supporting the provision of finacnial assistance for medical care for those who need it, and, at the same time, unanimously opposed the introduction of the universal compulsory medical care program.
The Calgary chamber of commerce also wrote a letter to the Prime Minister under date of December 4, 1967, part of which reads as follows:
The executive council of the Calgary Chamber of Commerce has unanimously endorsed the stand taken by the Canadian Chamber of Commerce in urging the federal government to arrange for an indefinite moratorium on the introduction of a universal compulsory medical care program.
[DOT] (5:50 p.m.)
I could quote from numerous letters and editorials in support of this plea for postponement of medicare, but surely the minister is aware of the disillusionment among the public over the prospect of yet another increase in taxes. I think it must be evident to the minister and to the other members of the government that there is great concern, not only in the ranks of provincial leaders but among the general public as well, over the implementation of medicare at this time. A postponement, I suggest, would be the most prudent step for the government, considering the present economic situation in the country.
Glancing through the Montreal Gazette of November 30 I noticed that the column written by Mr. John Meyer had this headline, "Never a Federal Budget Less Fortuitous In Timing." I planned to read that column but before doing so my attention was drawn to the headline over the column next to it, "New Plan Would Cut United States Deficit $11 Bln." It revealed an unusual situation. The most prosperous country in the world is planning to cut its budget by $11 billion through two different methods. One is to increase taxes and the other, surprisingly enough, and this should commend itself to the Minister of Finance (Mr. Sharp), is to cut $4 billion from its spending in the current fiscal year.
This could be the theme for a comic opera, with the richest country in the world intending to cut its spending estimates while its next door neighbour, faced with inflation, gives no thought to cutting expenses in the current year but can only suggest an increase in taxes as a solution to its problems.
December 7, 1967	COMMONS
I think it is worth while to quote a portion of Mr. Meyer's column because it is indicative of the feeling across Canada in connection with this budget. It reads in part as follows:
It's difficult to imagine the timing for the budget being less fortuitous than it is. The economy has lost way and is wallowing in the cross-currents of indecision.
I do not know whether he meant the economy or the government when he wrote about indecision.
The public mood is one of weary resentment of government fumbling. The budget itself can offer nothing to inspire. It is, after all, hardly more than the belated correction of a gross miscalculation, or rather a series of gross miscalculations, over the past two years.
Farther on he wrote:
If Mr. Sharp is to be criticized, it should be for failing to have persuaded his colleagues in cabinet before now to the dangers of excessive spending.
This is why we on this side of the house are critical of the actions taken by the Minister of Finance. He is not fulfilling his responsibilities as the minister charged with jurisdiction over the Department of Finance.
Now I want to say just a word in connection with the planning of future expenditures by this or, in fact, by any government. I believe that in government circles it is just as necessary to plan future expenditures as it is in private industry. The government should set up a committee of the house to study the different problems and the necessity of spending for the future, for 10, 25 or 50 years ahead. This committee should assign an order of priorities to the different areas of spending. It should also be charged with the determination of the source of funds to finance future spending. It is not good enough for the government to work out a theory of spending on something it considers necessary, such as medicare, without giving any thought to how much it is going to cost and where the money is to come from.
Medicare is a good example. The minister in charge has said it will cost $600 million in the first year, but I contend members of the government do not know whether it is going to cost $600 million or a much higher figure. At the time the legislation was introduced they had no idea whence the money would come to pay the bill. That is one of the reasons we are in a mess today. It is one of the reasons we are going to be faced with increased income taxes six months from now to cover this unplanned increase in government expenditure.
27053-326J
DEBATES	5169
The Budget-Mr. Ballard
The committee of which I speak should also be charged with the responsibility of allocating tax revenues between the various levels of government in order to undertake the priorities that are determined by the proper level of government. Priorities are necessary to cover such items as housing, public housing, assistance to the home owner through N.H.A. mortgages, government participation in urban transportation, social welfare plans, and government assistance from the various levels toward the control of pollution-air pollution, water and soil pollution. The committee should also assign a priority to water supplies and to the problem of waste disposal, both domestic and industrial.
One of the things I have mentioned in this list of priorities is urban transportation. It is entirely unacceptable for the government to sit idly by, realizing that 80 per cent of the people of Canada will live in urban areas by 1980. At the present time over 70 per cent live in urban areas.
The Canadian Federation of Mayors and Municipalities has made representations to the federal government in this connection. In their report in January this year on urban transportation they said:
The requirements of the multiplying numbers of the urban population for educational services, welfare services, hospitals, roads, water and sanitary facilities, etc., have placed a severe financial strain upon the principal source of municipal revenues- the tax on real property.
I might say that the government appeared to give some credence to the plea of the municipalities for help from senior levels of government, because when the Prime Minister was speaking in Calgary on March 29 of this year he said that "there is also a growing body of opinion that federal aid can no longer most effectively play its role in community development" without providing "transportation corridors in future environmental development."
The chairman of the Winnipeg committee on streets and transit has said:
There has to be a review and a realignment of the priorities by all levels of government,... that money should be spent on problems where people are, and certainly one of the basic necessities in urban growth and development is a healthy, efficient, public transportation system.
[DOT] (6:00 p.m.)
I am not only suggesting that the government needs to set up some body to study the future necessities of this country and of the people of this country, and to assign priorities to them. It must also plan for raising
5170	COMMONS
The Budget-Mr. Benson money so that we do not again get into the terrible financial and fiscal mess we are in today under this irresponsible government.


Mr. Deputy Speaker:: Order, please. It being six o'clock I do now leave the chair.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.
Edgar John Benson: Mr. Speaker, in commencing my speech I should like to request from the house a little extra time in order to complete the speech. I do not think it will be unduly long, but since hon. members have asked for details, and there are a great many details in my speech, I would request permission from hon. members to continue slightly beyond the normal limit of time.


The Acting Speaker (Mr. Rinfret):: Is it so
agreed?


Some hon. Members:: Agreed.


Edgar John Benson: Mr. Speaker, we in Canada are living in a dynamic society, a prosperous society and a society in which the lot of the underprivileged, the oppressed, the sick and disabled within our country and the lot of the less fortunate throughout the world bears on the conscience of each and every one of us. All members of this house regardless of their political affiliation share a deep concern for the welfare of the Canadian people and our fellow men throughout the world. During the past five years, Mr. Speaker, while I have had the good fortune to be a member of this house what has impressed me most has been the enthusiasm of all of us to do our best to better the lot and provide security for the necessities of life and hope to the underprivileged. I think back on legislation such as the Canada Pension Plan, the Canada assistance plan, supplementary old age pensions, youth allowances, student loans, increased aid to universities, area development, manu-power mobility, manpower retraining, industrial incentives, incentives for control of water pollution, and a myriad of other beneficial legislation that has been passed.


Stanley Howard Knowles: Did you forget medicare?

DEBATES	December 7. 1967


Edgar John Benson: I think also of the emergence of a national purpose out of these parliaments-a national flag, centennial celebrations, the greatest international exposition in the history of the world-


Some hon. Members:: Hear, hear.


Edgar John Benson: -the recognition of the old and yet new problems of two founding peoples who have lived and must continue to live in peace and harmony to develop and exploit for the sake of their children, this the richest country in the world. We in parliament are often maligned as overpaid, underworked imbeciles who try to govern this vast country.


Stanley Howard Knowles: Speak for yourself.


Mr. Monieith:: What a line.


Edgar John Benson: I would challenge our detractors to indicate how more could have been done in a democracy for the good of all the people of our country than has been done through the efforts of members on all sides of this house in the past five years.
I must not be completely non-political and before moving on to the more mundane matters of finance I would point out that all that has been accomplished in these years has been accomplished at least through the leadership of a Liberal government under a prime minister who will, I am sure, be judged as one of the greatest of all those eminent Canadians who have contributed so much to our great country.


Some hon. Members:: Hear, hear.


Mr. Churchill:: Don't spoil your speech.


Mr. Korchinski:: You will have to explain that.


Edgar John Benson: Now, Mr. Speaker, I must move on to the difficult but necessary task which it is my lot to have to perform tonight. Over the past five years we have enjoyed unprecedented prosperity in Canada. That is why you and I as members of parliament have been able to do so many of the, I believe, farsighted things which have been done for the average Canadian whom we try so hard to represent.
When I first entered politics I looked on government as a great morass of inefficiency. I have since found that this is not the case.


Some hon. Members:: Oh, oh.
December 7, 1967	COMMONS


Edgar John Benson: Government in Canada is a vast organization but it is much more efficient than I as a layman or most people think it is. We have, contrary to some public opinion, in our civil service a great many men and women, and I could name hundreds of them that I have come to know, whose main purpose-


Gilles Grégoire: Name them.


Edgar John Benson: -in life is to assure that the wishes of this parliament, and we represent the views of the people of Canada-other than the hon. member for Lapointe (Mr. Gregoire)-are carried out as efficiently and economically as possible.


Some hon. Members:: Hear, hear.


Edgar John Benson: In this connection, I would cite the great changes in the administration of our affairs which were not only facilitated but actually pressed on the government by the public service and in this regard I refer you to my speech to the house on October 10 last. No greater revolution in administration anywhere in,the world has taken place than in our public service in the past five years.
We in Canada are the most fortunate people in the world. Let us realize this and look upon my remarks which follow in a vein similar to that of a large business which must from time to time reflect and review its prospects. As anyone in business knows, we must from time to time review our priorities and readjust our spending plans to live within our revenue. We must make hard decisions in order that in the long run our business may prosper. We must not give up the great opportunities we have in the future but rather invest more in these by cutting and trimming things which appear less important to us at the present time.
When the Minister of Finance (Mr. Sharp) introduced his supplementary budget proposals last week, he indicated that I would follow up on his remarks relating to expenditures and provide the house with further details as to the efforts the government has been making to restrain its planned expenditures for 1968-69 within a prescribed ceiling.
I am happy to honour that commitment tonight and to provide the house at the same time with information as to the steps which the government is taking to effect a substantial reduction in the rate of growth of the public service of Canada.
The Minister of Finance has already stated the specific goal which the government has
DEBATES	5171
The Budget-Mr. Benson set for itself in the fiscal year 1968-69 which is to contain over-all budgetary expenditures in 1968-69 within a ceiling of $10.3 billion, exclusive of expenditures for medicare, and for the writing-off of the Expo deficit.
With reference to this objective, the Minister of Finance has forecast an expenditure level, on budgetary account, of $9.9 billion in the current year. This means that the year to year increase in budgetary expenditures from 1967-68 to 1968-69 will have to be held to an amount of $400 million, which, in percentage terms, is barely 4 per cent above the expenditure level of the current year and 3.3 per cent on variable expenditures.
[DOT] (8:10 p.m.)
With reference to the civil service restraints, the growth rate for the federal public service will be drastically cut, under the plans which the government intends to implement. The reduction here, despite the increase in the number and size of tasks which the public service will be asked to undertake, is of the order of 50 per cent or more. In recent years, as a result of the great expansion of existing governmental programs, and the addition of important new ones established by this parliament, some of which I mentioned earlier, the public service has been growing at the rate of 10,000 to 15,000 annually, depending on whether or not the employees of a number of crown corporations are included in the public service for purposes of the calculation.


David Lewis: Mr. Speaker, I apologize to the minister but I wish to rise on a point of order. One cannot help but notice that members on the other side of the house appear to have copies of the minister's speech. I do not begrudge it to them but I think it should have been made available to all members of the house.


Jay Waldo Monteith: Hear, hear.


Edgar John Benson: Mr. Speaker, the Leader of the Opposition (Mr. Stanfield) has a copy of my speech before him, and all hon. members may have copies if they so wish. 1 believe copies are available in the lobbies. If not, hon. members can go to our lobby to get them.
For the public service, exclusive of crown corporations, the growth in the size of the approved establishment for 1968-69, that is to say the number of positions authorized which is larger than the number actually filled at any one time, will not be allowed to rise by more than 5,000 above the numbers now
5172	COMMONS
The Budget-Mr. Benson authorized for the current fiscal year. This amounts to a growth rate for the public service proper of approximately 2 per cent in fiscal year 1968-69, compared to a rate of 4 per cent or more in recent years.
I might mention, in passing, that the annual increase in the post office alone, in order to keep pace with population growth and work load, is inevitably 2,000 or more annually as shown by the actual experience of recent years. I mention this fact so that hon. members may see more clearly the significance of the limitations on growth that are now proposed for 1968-69. The 5,000 limit to which I have made reference will have to include the increased numbers required for the maintenance of adequate postal services, as well as the requirements of all other departments and agencies. This means that, if the added staff requirements of the Post Office Department alone in 1968-69 are 2,000 or more, and this is a fact, then 2,000 of the additional 5,000 positions to be made available will have to be reserved for the Post Office Department leaving 3,000 positions to provide for the growth requirements of the other 25 departments and the 40 or more agencies, boards, bureaus, commissions and offices which together make up what we call the public service of Canada charged with administering the activities that parliament has assigned to them.
I should also mention that, in addition to limiting the growth of the public service in 1968-69 to 5,000 additional positions, it is also the government's intention to set a limit of 95 per cent on the number of positions within the approved establishment which can be occupied at any one time. This limitation will provide an additional salutary restraint on growth, and will, in particular, highlight those individual departments and agencies in which the pressures against the 95 per cent limitation suggest the need for a re-examination of the staff requirement and work load, well in advance of the point in time when the approved establishment is completely filled and the agency or department clamouring for additional positions.
A third element in the government's plan for limitations on staff growth is, I think, also worthy of mention. Examination of a representative number of departmental establishments has revealed that, in a significant number of instances, departments have had additions approved to their establishment and have subsequently experienced inordinate delays in filling these approved positions. Whenever positions which have

DEBATES	December 7, 1967
been authorized as necessary at a given point in time remain unfilled for six months after they have been authorized, the question is bound to arise as to how the departments have managed to get along in the interval, and whether the authorized positions continue to be necessary or even whether they were necessary in the first place. Without endeavouring to pre-judge the issue, I believe that there is justification for saying that in many instances where positions remain unfilled continuously for six months or more after they have been created they should be cancelled.
Mr. Speaker, I believe that the three steps which I have outlined for controlling the future growth of the public service will serve to demonstrate that the government seriously intends to contain within reasonable and prudent limits this important element of expenditure within its total budget for 196869. The civil payroll, exclusive of the uniformed forces and the R.C.M.P. amounts to about $1.5 billion in a total budget of $10 billion, approximately 15 per cent of the total expenditure budget. It goes without saying, therefore, that success in controlling total budgetary expenditure, depends in a very important degree on success in controlling civil payroll costs, and this in turn depends in large part on success in controlling the size of, and the growth rate in the civil establishment. I can assure the house that the government has every intention of achieving in this regard the objectives which it has set for itself. If, in the course of the year, a department or agency finds it necessary for any reason to request an increase In its establishment, it will be required to undertake a full review of its present position and to satisfy the Treasury Board that it has exhausted all possibilities of meeting the added requirement from the resources already available to it. Only when that condition has been satisfied will the Treasury Board consider a request for any additional positions. I do not think, however, that we should go so far as to impose an arbitrary absolute "freeze" on present establishments. We have examined this suggestion which has been put forward from a number of quarters. Governments in the past, both federal and provincial, have attempted to "freeze" establishments. Such efforts have never been successful. They have produced inequities, distortions, frustrations, and even waste, as senior officials have been obliged to get along without the supporting staff which they require in order to
December 7, 1967	COMMONS
function effectively. The adverse consequences of an absolute freeze persist long after the freeze itself has been abolished or has been eroded away. At the very best, a freeze succeeds only in buying time until a proper policy for restraining staff growth can be devised. A freeze is not in itself a policy: instead it is evidence that no policy exists and that the authority imposing the freeze has proven to be incapable of devising a policy. We have a policy and we are going to apply it.
[DOT] (8:20 p.ra.)
Before leaving the subject of staff growth and the size of the public service, let me emphasize again a point to which the Minister of Finance referred in his speech last week, when he opened this debate. Contrary to the beliefs of many who think that the federal public service has grown abnormally over the years, statistics show that the growth of the service has remained remarkably constant in relation to population growth over the period of the last 15 years. Federal departmental employment as a percentage of the total population of Canada-the public it serves-has varied only between the extremes of 1.06 per cent and 1.17 per cent over the years 1952 and 1966 inclusive. When viewed in relation to population growth, to growth in the total labour force, and to growth in the employed labour force, the federal public service has either remained constant or has actually declined slightly, percentage wise, over the 15 year period.
I do not wish to dwell on this point in too great detail this evening, Mr. Speaker, but in
DEBATES	5173
The Budget-Mr. Benson view of the desirability of ensuring that there is a proper understanding of this important aspect of the problem, I should like to have permission to insert at this point in my remarks, a table and three charts, the purpose of which is to demonstrate, in some detail, the relationship between the growth in the size of the federal public service 1952-1966, and the growth during the same period in the size of our Canadian labour force, our paid-employed-labour force and our total population. These tables and charts will serve, I believe, to explode the myth that over recent years the federal service has been growing at an incordinately fast rate in relation to the growth of the nation as a whole.
May I have permission, Mr. Speaker, to have these tables and charts inserted at this point?


@Acting Speaker: Is it
agreed that the minister may table these charts?


Some hon. Members:: Agreed.


Edgar John Benson: I am asking that these be printed in Hansard at this particular point in my address.


The Acting Speaker (Mr. Rinfret):: I forgot to ask for permission to have them printed in Hansard. Is it agreed?


Some hon. Members:: Agreed.
[Editor's note: The tables and charts referred to above are as follows:]

December 7, 1967
The Budget-Mr. Benson
Chort 1 M



GROWTH OF FEDERAL EMPLOYMENT AND NATIONAL MANPOWER

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1952-66 'logarithmic scale'
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December 7, 1967
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FEDERAL GOVERNMENT AND PUBLIC SERVICE MANPOWER IN RELATION TO NATIONAL TOTALS OF PAID WORKERS 8	LABOUR FORCE AND POPULATION
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Calendar Years	Total Federal Government Employment	Departmental Employment Public Service)	Canada Paid Workers	(1) as a % of (3)	(2) as a % of (3)	Canada Labour Force	(1) as a % of (6)	(2) as a % of (6)	Canada Population at June 1 each year	(1) as a % Of (9)	(2) as a % of (9)(1)	(2)	(3) (Thousands)	W	(5)	(6) (Thousands)	(7)	(8)	(9) (Thousands)	(10)	(11)1966	361,645	219,453	6,096	5.93	3.60	7,420	4.87	2.96	19,919	1.82	1.101965	345,688	207,437	5,759	6.00	3.60	7,141	4.84	2.90	19,571	1.77	1.061964	340,934	204,782	5,466	6.24	3.75	6,933	4.92	2.95	19,235	1.77	1.061963	337,689	202,495	5,241	6.44	3.86	6,748	5.00	3.00	18,896	1.79	1.071962	342,158	204,582	5,089	6.72	4.02	6,615	5.17	3.09	18,570	1.84	1.101961	343,352	204,613	4,911	6.99	4.17	6,521	5.27	3.14	18,238	1.88	1.121960	340,452	198,047	4,843	7.03	4.09	6,411	5.31	3.09	17,870	1.90	1.111959	338,618	198,496	4,735	7.15	4.19	6,242	5.42	3.18	17,483	1.94	1.141958	336,910	196,852	4,560	7.39	4.32	6,137	5.49	3.21	17,080	1.97	1.151957	339,475	189,706	4,540	7.48	4.18	6,008	5.65	3.16	16,610	2.04	1.141956	336,436	184,983	4,389	7.66	4.21	5,782	5.82	3.20	16,081	2.09	1.151955	326,289	183,497	4,133	7.89	4.44	5,610	5.82	3.27	15,698	2.08	1.171954	323,026	178,664	3,961	8.16	4.51	5,493	5.88	3.25	15,287	2.11	1.171953	318,304	169,274	3,955	8.05	4.28	5,397	5.90	3.14	14,845	2.14	1.141952	302,078	157,078	3,866	7.82	4.06	5,324	5.67	2.95	14,459	2.09	1.09
Sources: DBS publications-The Labour Force (Cat. 71-001), Federal Government Employment (Cat. 72-004), Estimated Population of Canada (Cat.
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The Budget-Mr. Benson
5178	COMMONS
The Budget-Mr. Benson
Edgar John Benson: I turn now, Mr. Speaker, to the undertaking given by the Minister of Finance -that we will contain the budgetary expenditures for 1968-69, apart from medicare and Expo deficit, within the ceiling of $10.3 billion. There have been many demands from the opposition side of the house and from other quarters during recent weeks and months that the government reveal full details as to what cuts it is making and how it intends to achieve the containment of its over-all budgetary expenditures within this $10.3 billion ceiling.
It would not, of course, be appropriate for me at this juncture, in advance of the tabling of the main estimates for 1968-69 early in the next session of parliament, to launch a debate on the government's expenditure plans for the next fiscal year. This debate cannot be properly joined until the estimates for 196869 have been tabled and the details are available for all to examine.
Despite the foregoing, I think I can give to the house sufficient details as to the over-all dimensions of the problem that we have faced in recent weeks, and as to the expenditure cuts already decided in departmental proposals and plans for 1968-69 to satisfy hon. members that we have tackled this difficult undertaking resolutely and successfully.
As hon. members know, the estimates procedure for 1968-69 really got under way in April of this year when departments and agencies were asked to submit, by the end of May, their program reviews and forecasts of probable financial requirements, not only for the balance of the current fiscal year, but also, for 1968-69, and for the three years following. When these forecasts were received and analyzed in June of this year, they showed a prospective requirement for 1968-69, if all forecast departmental requirements were to be met, of $11,500 million. This was some $1,800 million higher than the total expenditure forecast in the budget speech of the Minister of Finance of June 1, 1967, for the current fiscal year.
In August, a decision was made to establish an over-all expenditure target of $10.3 billion apart from medicare and the Expo deficit which, it was felt, should both be dealt with outside the normal budgetary target, based on year to year comparisons of normally continuing programs.
The decision as to the over-all target of $10.3 billion led in turn to the establishment of individual departmental targets of expenditure. Each department and agency was
[The Acting Speaker (Mr. Rinfret).]
DEBATES	December 7, 19G7
asked in September to accept a stated target, and to submit its detailed estimates for 196869 by the end of October, within the limits of the suggested target. Not all of the departments or agencies have, in fact, found it possible to do so.


Jay Waldo Monteith: That has always been done.


Edgar John Benson: In some instances new commitments, entered into by or imposed on departments since the target was established made it impossible-or at least extemely difficult, in the view of the department-to achieve the target set for it. In other instances, the department or agency affected found that it could not contain the programs that it considered essential within the target suggested in September by the Treasury Board. In all such cases-and even in those cases where departmental estimates have been submitted within the targets originally suggested-examination of the estimates details has taken place. Establishment proposals are being combed for possible reductions in the extra numbers of staff requested. Approximately 9,000 additional positions were "combed out" in the first-round review of program forecasts conducted during July and August. A further 2,000 or more are being deleted in the Course of the final estimates examination now being undertaken-the objective being to contain the growth of staff, during 1968-69 fiscal year to the 5,000 limit mentioned earlier.
We are now approaching the final stages of the 1968-69 Estimates exercise. We expect to have the final decisions for each departmental agency, and for the over-all totals, made later this month, or at the latest, early in January.


Jay Waldo Monteith: That is done every year.


Edgar John Benson: It never has been done before.


Jay Waldo Monteith: That has always been done.


Edgar John Benson: Perhaps my hon. friend would like to tell me the targets that were set by his government.
Following that, the printing of the blue book, the main estimates, will proceed and be ready for tabling-I hope some time in February, 1968-well in advance of the commencement of the new fiscal year. The present indications are that main estimates as printed and presented will run somewhat in excess of $10 billion but less than the $10.3 billion mentioned by the Minister of Finance. Later, there will of course, be unavoidable
December 7, 1967	COMMONS
supplementary estimates to reckon with, throughout the course of fiscal year 1968-69. These may well run the gross total of estimates, together with statutory appropriations, as high as $10.5 billion; but, as past experience shows, not less than 2 per cent of this authority will be destined to lapse unspent because of circumstances beyond the control of the departments concerned. The deduction of this lapse of 2 per cent or $200 million will bring the actual budgetary expenditure, we expect, for 1968-69 within the projected target figure, announced by the Minister of Finance, of $10.3 billion.
[DOT] (8:30 p.m.)
Reductions in expenditure plans of the magnitude that I have mentioned cannot, of course, be accomplished without causing severe pain and anguish to the departments and agencies affected. I can assure you that my problem with the ministers has been even greater than the terrible problem that I have in convincing my wife not to buy a new hat.
I refer again to the fact that before the estimates review has been completed, approximately 11,000 positions will have been cut from the 16,000 additional positions requested at program review time or subsequently by the various departments and agencies. A rough valuation can be placed on each of these positions of $10,000-one half for salary, and an equal amount for office accommodation, equipment, supplies and all accompanying costs of pension provisions, fringe benefits of various kinds, and so on. On this basis, the staff reductions effected through program and estimates review represent not less than a $100 million reduction from the original requirements for 1968-69 as presented in July by departments and agencies.
Construction projects will also be affected by the efforts the government is making to contain its expenditure plans within the $10.3 billion ceiling. In my own constituency in Kingston, the plans for construction of an engineering building at Royal Military College will have to be deferred, at least for 1968-69. Public buildings in Ottawa, such as the new National Defence Headquarters-


Mr. Fairweaiher:: Hear, hear.


Edgar John Benson: Mr. Speaker, I only hope that hon. members opposite will applaud all the reductions I will mention as I proceed-the new headquarters buildings for external affairs and transport, will have to be further delayed. It has already been announced that the parking garage planned for under
DEBATES	5179
The Budget-Mr. Benson parliament hill will not be proceeded with in 1968-69. A great deal was accomplished in 1967 in the way of construction and completion of National Capital Commission driveways in the national capital area and this added greatly to the charm and attractiveness of the nation's capital in centennial year. The year 1968-69 by contrast will be a year of pause for driveway construction plans in the national capital area. We all want to make Ottawa a great national capital for a united Canada and we intend to do so. Unfortunately, Mr. Speaker, we must do so at a somewhat slower rate.
I could, if time permitted, Mr. Speaker, cite a great many other specific examples of projects that will have to be set aside, deferred or phased at a slower pace as a result of the reduction in expenditure levels we have undertaken to achieve for 1968-69. Perhaps it will be best if at this point, I give some indication of the nature and variety of these various reductions-and of their widespread and even distribution, generally speaking, across departments-by listing a number of the programs that will be cut, of the staff increases that will not be granted, and of the construction or other projects that will be cut out or cut back.
Here is a list that will give a partial indication of the programs and the projects that will be affected. I may, Mr. Speaker, repeat some of the matters, I mentioned earlier, but I do so in the belief that members will want a consolidated list of all the items I am speaking about this evening.
1.	With the establishment of the Cape Breton Development Corporation, the functions formerly carried by the Dominion Coal Board can now, with certain exceptions, be transferred to this new agency. The board's remaining functions will be taken over by the Department of Energy, Mines and Resources and the Dominion Coal Board will then be abolished.
2.	The active promotion of the sale of Canadian government annuities by the Department of Labour will be discontinued and the sales staff disbanded. Staff will of course be retained in sufficient numbers to service existing contracts and to honour all existing commitments.
3.	The special planning secretariat within the Privy Council office will be disbanded: henceforth its essential functions in the field of co-ordination of social development programs will be carried as part of the normal operations of the cabinet secretariat.
December 7, 1967

The Budget-Mr. Benson
4.	Financial provision for the Company of Young Canadians will be reduced by 20 per cent from the $2.4 million budgeted for the current year.
5.	Funds provided in a number of departmental and agency budgets for energency measures planning and organization will be scaled down substantially below current year's levels. This decision will affect not only the Energency Measures Organization itself but also emergency health, welfare, supply and communications planning activities in such departments as National Health and Welfare, Defence Production, National Defence and C.B.C. Reductions in EMO's budget will also make necessary reductions in the level of grants to provinces and municipalities for emergency measures purposes.


Thomas Miller Bell: How much will that save?


Edgar John Benson: Before members start asking how much will this save and how much will that save, may I tell my hon. friends that the estimates which were brought in amounted to $11.5 billion and we are going to keep them to $10.3 billion.


Jay Waldo Monteith: How do we know that?


Edgar John Benson: 6.	The government has decided to discontinue the arrangement hitherto in effect whereby the Canadian Broadcasting Corporation international service was budgeted separately from the C.B.C.'s regular budget. Henceforth, beginning in 1968-69, the budget for the C.B.C. international service will be merged with the C.B.C. regular budget. C.B.C. will then be responsible for budgeting for an overseas service as well as the shortwave and other services to the Canadian north and armed forces overseas, out of its regular operating budget.
7.	The operating budget for the C.B.C. in the 1968-69 fiscal year, reflecting the new arrangement just mentioned, will be set at a level of $11 million less than requested.


Richard Albert Bell: Would the minister indicate exactly how much less that will be in relation to this year's actual vote for the C.B.C.?


Some hon. Members:: Sit down.


Richard Albert Bell: I intend to get an answer. I should like to ask the minister-


Some hon. Members:: Oh, oh.


The Acting Speaker (Mr. Rinfrei):: Order. The hon. member for Carleton will now ask a question.


Thomas Miller Bell: The minister has given me the floor to ask a question, and I would ask him how much less there will be for next year's operating budget for the C.B.C. compared with the present year.


Edgar John Benson: Mr. Speaker, I have another statement to make with regard to the C.B.C. and if my hon. friend will take his pencil and do a little calculating he can probably figure out what will be the C.B.C. budget. In any case, the C.B.C. budget will be listed in the blue book of estimates presented to the house, and the normal time to consider them is when we debate those estimates.


Thomas Miller Bell: That shows how phony the whole operation is.


Edgar John Benson: All it is really showing is how phony the hon. member is.
8.	The capital budget of the C.B.C. will be cut back from the $57 million requested for 1968-69 to $25 million, $5 million below the level for the current year.
[DOT] (8:40 p.m.)


Jay Waldo Monteith: How about operating expenses?


Edgar John Benson: Mr. Speaker, 9. Further expansion of colour T.V. facilities of the C.B.C. will be deferred.
10.	The size of the Canadian Armed Forces will be reduced from the level of 107,000 reached earlier this year to an average level of 100,000 man-years in 1968-69. This will be accomplished through normal attrition and a scaling down, but not elimination, of the recruiting program.
11.	To repeat something that I said earlier, Mr. Speaker, the growth rate in the public service generally, through 1968-9, will be limited to approximately 2 per cent or 5,000 additional positions. This is about half the growth rate allowed in the past three or four years. In addition, staff on strength in each department and agency at any time will be held to 95 per cent of approved establishments, and continuous review will be maintained of all approved positions remaining unfilled for periods longer than six months.
12.	Provision for staff travel throughout the public service is being cut by a full 10 per cent from department requirements as submitted in estimates for the year 1968-9.
December 7, 1967


Jay Waldo Monteith: What was the submission?


Edgar John Benson: Mr. Speaker, I know how phony my hon. friend is.
The next item is not at all phony, and I deeply regret having to make the announcement which I am about to make, because everyone in this house knows my personal feelings about this matter.
13.	Since we have made a commitment to the Canadian people that we will retain expenditures within the limit of $10.3 billion, the government has decided that it will not be possible in 1968-9 to proceed with plans for increasing supplementary pension benefits for retired civil servants.


Stanley Howard Knowles: Would the minister permit a question?


Edgar John Benson: I should like to say how difficult it has been for me to make that statement.


Stanley Howard Knowles: Would the minister permit a question?


Edgar John Benson: Mr. Speaker-


The Acting Speaker (Mr. Rinfret):: Order, please. The minister wishes to continue his speech. At the end of the speech the hon. member will be able to ask his question.


Stanley Howard Knowles: I thank the minister for his courtesy in indicating that he will permit me to ask him a question. Will he tell me how the government squares the decision he has just announced with the assurances that he and the Prime Minister have been giving us week after week that this matter was still under consideration by the government?


Edgar John Benson: Mr. Speaker, this matter has been and is being considered by the government. We must weigh these cuts against all the cuts which have been necessary. I shall only list some 50 or 52 cuts here, but there are many hundreds more. I would ask my hon. friend to weigh this matter against the next item, which will take income away from the farmers of this country.
14.	Under this next item, Mr. Speaker, quality cheese premium payments, introduced during world war II, will be discontinued, effective April 1, 1968.


Some hon. Members:: Shame.


Edgar John Benson: 15.	Effective immediately, no further applications will be received for subsidies in

The Budget-Mr. Benson aid of cheese factory amalgamation and improvement. Applications already in the hands of the Department of Agriculture will be processed in the usual way.
16.	Hog and lamb premium payments will be reduced by $1 per carcass, effective April 1, 1968.


An hon. Member:: There goes Joe.


Some hon. Members:: Oh, oh.


Edgar John Benson: May we have some order in the house, Mr. Speaker.
17.	This next item is most important to many of my hon. friends from the maritime provinces. The government has decided to defer the placing of any further new contracts for the Northumberland causeway, pending a thorough review of the situation by Col. Edward Churchill, whose services have been retained as a co-ordinator of the project. This review, made necessary by the drastic escalation in the estimated cost of the project as originally conceived, will include the examination of alternative ways of meeting, on a more economically justifiable basis the commitment of the federal government to the government and the people of Prince Edward Island.


J.-H.-Théogène Ricard: Narrow minded.


Edgar John Benson: That commitment this government will keep.


An hon. Member:: Explain.


Edgar John Benson: 18.	Atomic Energy of Canada Limited will be asked to delete from its budget for 1968-9 provision for the acquisition of a new computer facility and building at Chalk River, as well as a number of other extensions and additions to existing plant at Whiteshell, Manitoba and at Chalk River.
19.	The Department of Energy, Mines and Resources is being asked to defer starts on a number of projects originally scheduled for 1968-9 including the West Coast Hydrographic Institute; a floating laboratory and two smaller research laboratories in the Ottawa area; and two new vessels replacing older ones in the department's fleet of research vessels. In addition work on the Queen Elizabeth telescope in British Columbia is to be slowed down, pending a further review of this and related activities.
20.	External Affairs had planned to open ;wo new diplomatic missions abroad in 196869: Trade and Commerce had planned to open
5182	COMMONS
The Budget-Mr. Benson three new posts. These departments are being asked to defer their plans to open these five posts.
21.	The Department of Forestry and Rural Development has been asked to defer its plans for starting construction on a number of forestry research laboratories in Winnipeg, Victoria, Fredericton, Quebec and Newfoundland.


Some hon. Members:: Shame.


Edgar John Benson: 22.	The Department of Manpower and Immigration has been asked to cut back its expenditure plans on pilot projects for manpower retraining in 1968-9.


Some hon. Members:: Shame.


Edgar John Benson: 23.	The Department of National Health and Welfare has been asked to set a limit of $40 million on the pay-out from the health resources fund in fiscal year 1968-9.


Some hon. Members:: Shame.


Edgar John Benson: 24.	The national health grants program, in effect since 1948, provides considerable sums of money for the support of medical care and treatment projects of various kinds in the provinces. It is intended to phase out expenditures on these medical care and treatment projects as medicare takes over in the provinces.
25.	The program developed jointly by the Post Office and the Public Works Department for the construction of small winter works post offices will be cut in half for the year 1968-9.


An hon. Member:: Mounting unemployment.


Edgar John Benson: 26.	There will be a slow-down in plans for the headquarters buildings of three departments in Ottawa-External Affairs, Transport and National Defence. It was hoped that actual construction on the first two of these three buildings could have been started in 1968-9, but this will not now be possible.
27.	I mentioned earlier that the National Capital Commission will be asked to defer its plans for further driveway construction in the national capital area during 1968-69. Existing contracts will, of course, be carried forward to completion.

DEBATES	December 7. 1967
28.	The Department of Manpower and Immigration will be asked to establish a limit of $80 million on the pay-out to the provinces for new construction of vocational training schools in 1968-69.


Some hon. Members:: Shame.


Edgar John Benson: This coupled with the current year's provision of $120 million makes available $200 million for such construction in the two year period.
29.	The 50 per cent subsidy now provided for the construction of steel hull fishing trawlers will be reduced to 35 per cent, effective tonight. The reduction will not apply, however, to applications now in the hands of the officers in the Department of Industry which administers this program.


Some hon. Members:: Shame.


Edgar John Benson: 30.	The Department of Indian Affairs and Northern Development has been asked to phase over a longer period its five-year program for construction of roads and schools in the Northwest Territories as well as its companion program for the physical development of Indian communities through programs of housing, road construction, electrification, water supply, sewerage facilities, and industrial development.


Some hon. Members:: Shame.


Robert Muir: That is a disgrace.


Edgar John Benson: This latter program, approved in a total amount of $112 million to be spent over a five year period will now be rephased over a seven year period. But the money will still be spent.
[DOT] (8:50 p.m.)
31.	The Department of Indian Affairs and Northern Development will likewise be asked to phase out over a longer period of years the expansion of staff and services, land acquisition costs, etc., connected with its wildlife, parks and conservation programs.
32.	The Department of Public Works has already been asked to defer its plans for the construction of a parking garage under parliament hill.
33.	The Royal Canadian Mounted Police have been asked to defer their capital construction plans at Montreal, Toronto and Regina and to eliminate for 1968-69 proposed
December 7, 1967

starts on the Fort Smith subdivision headquarters and three additional detachment headquarters and warehouses in other locations.
34.	The corrections branch of the Solicitor General's Department will limit its capital expansion program in 1968-69 to six new starts on units not yet under construction, in addition to complet;ng projects now under way. This means the deferral of construction starts on a substantial number of other units included in the original program of the branch.
35.	The Department of Agriculture has agreed to postpone the intended start of construction on a new headquarters building for the Board of Grain Commissioners in Winnipeg.
36.	Work will not proceed in 1968-69 on emergency measures training college at Arn-prior, or on the emergency government relocation centres planned for Prince Edward Island and New Brunswick.
37.	No further contracts for large search and rescue cutters will be placed in 1968-69 by the Department of Transport marine services branch.
38.	The Transport Department has also been asked to defer all reconstruction and improvement work on the Rideau and Trent canal systems other than that which is absolutely necessary to maintain the systems in proper operating condition.
39.	The Transport Department will not proceed with its plans for the construction of a new stores and adm;nistration building to serve as headquarters for the Rideau canal system at Smith's Falls, Ontario.
40.	Plans of the air services branch of the Department of Transport for commencing work on the construction of a third runway at the Montreal international airport will be deferred.
41.	The Fisheries Department will limit its further assistance in the construction of community fishing stages to commitments already made and will delay construction on a new Newfoundland pilot vessel, a marine haul-out scheduled for Newcastle, N.B., and starts on laboratories or laboratory extensions at Halifax, Bonavista, Newfoundland, and Grindstone, Quebec.
42.	The Fisheries Research Board will defer the replacement of its motor vessel Parr as well as new laboratories, buildings and other facilities scheduled for Winnipeg, Newfoundland and West Vancouver.
The Budget-Mr. Benson
43.	The National Research Council has been asked to delay its plans for a start on construction of the National Science Library, a new structures and materials laboratory, and an extension to its administration building to house additional computer facilities.
44.	The government intends to introduce legislation to provide for transfer of the preaudit responsibility from the office of the comptroller of the treasury to individual departments and agencies. Substantial staff savings are anticipated when this process is completed.
45.	The Department of Veterans Affairs has been asked to defer its plans for the construction of additional facilities at the Victoria Veterans hospital, Victoria and at Camp Hill hospital, Halifax.
46.	The Department of National Defence has deleted from its construction program planned for 1968-69 the sum required for land clearance at Gagetown, N.B., as well as funds for a start on the Canadian Forces hospital planned for Halifax, the science and engineering building planned for Royal Miliary College, Kingston, and added medical facilities at Petawawa.
47.	The Department of National Revenue (Taxation) and the Unemployment Insurance Commission are now engaged in a study of the feasibility of instituting a combined audit of employer payrolls, replacing the two separate audits now carried out'. Such a combined audit, together with other changes now being implemented by the Unemployment Insurance Commission, as procedures for the centralization of payment of unemployment benefits are completed, will result in significant reduction of the U.I.C.'s approved establishment below the 1967-68 approved level.
48.	The Department of Transport has decided to defer for one year the replacement of one of the Viscount aircraft in the fleet of aircraft required by the department to carry out its operational responsibilities.
49.	The Department of External Affairs has been asked to defer its plans for the acquisition of a number of diplomatic properties abroad.
50.	The National Harbours Board has been asked to reduce its capital construction program for 1968-69 by several million dollars, including the deferral of plans for the construction of a wharf at the grain elevator at Prescott, Ontario.
51.	A study of officer training facilities in the Department of National Defence, including the National Defence College, and other
5184	COMMONS
The Budget-Mr. Benson institutions, has been undertaken with a view to consolidating reducing overlapping facilities wherever possible.


Mr. Graffley:: You sound like a computer.


Edgar John Benson: The hon. member, like other hon. members opposite, has been asking for details for weeks and months. I provide him with detail and now he and his friends opposite are so upset by details that they can do nothing except interrupt.


Some hon. Members:: Hear, hear.


Edgar John Benson: I am already running over the time available to me. I will admit to all hon. members that this is a long list. However, I assure you, Mr. Speaker, that when the main estimates are tabled other economies will be revealed. It would have been impossible for me to go through every government account and indicate the reductions or postponements we have made. However, I think it is sufficient for me to say that we can and will live within our expenditure targets for 1968-69 as outlined by the Minister of Finance (Mr. Sharp) last week.


Some hon. Members:: Hear, hear.


Edgar John Benson: Let me close with a few salient points:
We as a parliament should be proud of what has been accomplished in the past five years.
The future of Canada is bright and prosperous and all of us should be proud to be Canadians.
We have had to establish priorities and in my opinion those we have established are well justified in our interest, as parliamentarians, and for all the people of Canada.
We are not cutting back, indeed we are increasing expenditures, in such important areas as research, where we have increased expenditure by 334 Per cent per annum since we took office. We intend to continue doing this-and it is the largest annual percentage increase made by any government in the world.


Some hon. Members:: Hear, hear.


Stanley Howard Knowles: What base did you start from?


Edgar John Benson: We started from a Tory base.
We intend to proceed with our aid to education. We intend to proceed with our program for manpower retraining, which is essential in an automated society.
(Mr. Benson.]
DEBATES	December 7, 1967
We intend to spend more money on pollution control. We intend to continue our aid to the disabled, to the ill and to the less fortunate in our country. We intend to continue area development, including industrial incentives and rural development. We intend to continue our social services to the people of Canada. We are not imposing, and will not impose, unbearable taxes on anyone in Canada.
I wish I had time to point out the lie in the statement made by the leader of the New Democratic party on television last night.


Some hon. Members:: Hear, hear.
[DOT] (9:00 p.m.)


Edgar John Benson: We will continue to be a party, and I am sure a parliament primarily concerned with our people, their well-being and that of their children.
We as Canadians have a great future, great opportunities and a good democratic system of government. Let us use them for the benefit of all our people.


Some hon. Members:: Hear, hear.


Edmund Davie Fulton: Mr. Speaker, we were all glad to give the minister extended time to complete his remarks, and I am sure he will return the courtesy by answering a question. Before he yields the floor, could he answer one simple but important question? Will the minister say one single word-one word- about real savings, which he has not yet mentioned-the only place where real savings could be made: that is, reductions in the spending programs for this current fiscal year, a statement which was promised by the Minister of Finance (Mr. Sharp)? Are there any reductions in reality, instead of this exercise in futility dealing only with future fantasies?


Edgar John Benson: Mr. Speaker, the best reply I can make to this question, and it is a question that is very important to all of us Canadians, is a quotation from a very eminent Canadian who said:
Mr. Speaker, I think anybody who suggests that you can cut down on government spending or offer a substantial reduction in taxes is not being very realistic; but any government can control the rate In the increase in expenditures.
That eminent Canadian is the Leader of the Opposition (Mr. Stanfield), and we are going to control the rate of increase in government expenditures.


Some hon. Members:: Hear, hear.
December 7, 1967


Mr. Max Salisman (Waterloo South):: Mr. Speaker, the Minister of National Revenue (Mr. Benson) has made his speech a few months too late. Had he made that speech a short while ago he might now be leader of the Conservative party.


Some hon. Members:: Hear, hear.


Max Saltsman: Tonight the minister has done that great thing-he has thrown out the baby with the bath water. This was one of the most shameful, hair shirt performances this house has ever seen. No one will argue that there are not some things he mentioned that we could have deferred, but when he takes out of the government program those things which are essential to our national unity, those things which are distinctly Canadian, those things which we need more than ever today, then he has a lot of answering to do to the country.
He mentioned the national capital area. We are trying to build up this area, to make every Canadian proud of Ottawa, and there has even been talk of enlarging the scope of the work. Now one of the first things done is to jettison this kind of program.
The C.B.C., with all its faults, is still an agency that binds this nation together. Now the international service, by some sleight of hand, is to come into the C.B.C. This is one service of which Canadians have been enormously proud. There is not anyone in this country who will argue that the money spent on this service has not been well spent. Now it is going to be thrown in with the C.B.C., with the effect that its programs will suffer, or the C.B.C.'s national programs will suffer.
He mentioned the Company of Young Canadians. How picayune can the government get with respect to the small sums of money it is spending on this group? This group has come under much criticism. It has done things that many people do not approve of, but it is trying to do something about poverty. Whatever its failures may be, the few millions of dollars invested in its program indicated new approaches to the problems of poverty. Those problems have certainly not been solved with the old, orthodox approach.
The Company of Young Canadians was the great pet project of the Prime Minister (Mr. Pearson). He felt we should experiment with it, that we should give young people their heads, to show them there is freedom for some kind of experimentation in Canada. But now that goes out, although it involved
The Budget-Mr. Saltsman an insignificant amount in the total budget of the nation. It is thrown to the dogs because the government is going to economize. I say it has picked the wrong things on which to economize.
The minister mentioned a computer for the atomic energy corporation. That corporation has been an outstanding success. Now it needs to be modernized; it needs a computer. Industry cannot do without computers. Some of the smallest firms in this country have computers, but the great Atomic Energy of Canada cannot afford to computerize its operations.


Jean-Luc Pepin: They have one. This is a new one.


An hon. Member:: What would you do?


Max Saltsman: Give them the computer they need. Give them a new one, the best one you can get. Give them the best facilities, because they have made a real contribution to the development of this nation and they need these things to increase their contribution to that development.
The research program of the Department of Energy, Mines and Resources is also going to be cut back; yet in committee hearings testimony was given that that department does not have enough people to map all the areas of Canada, to check on our water resources, and to make an inventory of the resources which are so vital to our future. Now this program is sacrificed. Forestry research falls into the same category. Much of the prosperity of the nation depends on how well we handle our forest resources; yet this program is being cut.
After all the great talk about manpower retraining and about the great job the government was going to do in that field, now it is one of the first casualties. Everyone knows that the manpower retraining program is an investment in the future. However the government apparently does not believe in investing in the future, and parts of that program are being sacrificed.
The minister mentioned health resources. There are not enough doctors in this country now, and not enough medical colleges and hospitals. The meagre program the government introduced to develop health resources was clearly inadequate at the time of its introduction, but now even it is going to be cut back. Where are we going to get the doctors we require when the health resources program is cut?
5186	COMMONS
The Budget-Mr. Saltsman
The minister mentioned our Indian population. Have we not done little enough for the Indians? Should not this nation be ashamed of itself tonight, when we are told that in the interests of economy the ancillary program for Indians is being cut? If only as a moral gesture, no part of this program should have been cut.
The minister mentioned a national services library. Does not the government understand the importance of things of this type to a country that is trying to find itself, that is trying to resolve the differences between its peoples? Does it not understand the importance of national institutions? Apparently it does not.
The promise made to retired civil servants, that their pensions would be looked into, has gone by the board, and veterans are going to have to make sacrifices. It is always the weak and the poor who make these sacrifices on behalf of the strong.
[DOT] (9:10 p.m.)
When we hear the minister say that we as a parliament should be proud of what has been accomplished in the past five years, I can only say that the minister has had his eyes closed throughout those last five years. The economy of this country has been bad, in spite of the distorted figures that have been given to us. Let me point out a number of significant factors. From 1955 to 1965 Canada has had the lowest rate of productivity increase among 15 nations, including Great Britain, which has experienced serious difficulty. Our productivity has grown at the rate of only 2 per cent per capita per annum. The inflated figures the government uses are related to the birth rate, and surely the minister of revenue (Mr. Benson) is not by himself going to take credit for that, as well.
Let me quote from the first report of the economic council which in part states:
For the last two decades, the level o{ real Income per capita has been consistently in the range of 25 to 30 per cent lower in Canada than in the United States. It would appear that the difference between the two countries was significantly less, about 15 to 20 per cent... at the start of the present century, but the gap widened between the start of the century and the 1920's.
We have not been going forward in respect of productivity; we have been going backwards. Tonight the minister has chosen from two alternatives, namely increasing the productivity of this nation so we can afford to do those things that are right, just and necessary, or going along with a slothful attitude, such as his government has been displaying

DEBATES	December 7, 1967
in cutting its expenses to suit productivity. I suggest that the choice of increasing the productivity is the one that should have been made. I am sure an increase of at least 25 per cent in the productivity of this country is possible. Such an increase would mean a gross national product increase of $10 billion to $15 billion per year, from which the government could easily derive another $3 billion in taxes. How much more desirable would it be for this approach to be taken than the picayune approach the government has taken tonight?
Our society requires that we have priorities. We do not argue that a nation can have everything it wants, all at once. It should also be obvious that priorities should not only be set in respect of the public sector, but should be set also in respect of the private sector. No one can do everyting he wishes, but why should it always be the public sector which pays for the foolishness of the private sector -and there is foolishness.
Let us look at some of the so-called priorities the market system has imposed upon the Canadian public. Let me use the latest figures at my disposal on capital expenditure from the Canada Year Book of 1964. In that year the economy spent $328 million in capital expenditures for banks and financial institutions in this country, a country which has more banks per capita than anywhere else in the world. It is significant that we spent half that amount, or $164 million, on universities. In that year we spent $351 million to build stores, shopping centres and service stations. We spent almost half of that, $188 millions, on hospitals. This is a fine sense of priorities, when we find that the construction of stores, supermarkets, bank buildings and service stations is more important than the construction of hospitals and universities. How does the government expect this nation to progress and advance with this kind of a policy?


Lloyd Roseville Crouse: Would the hon. gentleman permit a question? Is he not aware that it is the profit from the private sector of industry which provides the means whereby the hospitals in the public sector are developed?


Max Saltsman: I appreciate the hon. member's concern with the development of this country, but let me point out that if we did not build roads, schools and provide fire and police protection there would be no industry.


Lloyd Roseville Crouse: Whom do you mean by "we"?
December 7, 1967	COMMONS


Max Saltsman: Industry depends upon
those who are being educated in our schools, and industry does not provide cures for sickness.


Lloyd Roseville Crouse: Whom does the hon. gentleman mean by "we"?


Max Saltsman: I mean Canadians; you and I and everyone in this room and this country. We collectively are providing the means and the instruments by which private industry prospers?


Lloyd Roseville Crouse: That brings us right back to the question I put to you. Are you not aware that it is the profits from the private sector of the economy which provides the means for doing all these things?


Max Saltsman: Mr. Speaker, all I know is one thing-


An hon. Member:: And that's the truth.


Max Saltsman: That the source of profits is hard to pinpoint; but without the labour of people in this country, like the fishermen who live in the riding of the hon. member who has just spoken, and the lumbermen, this country would not be going anywhere. This country has been built by the work and energy of its citizens. I do not know how you relate that to profits, but I relate it to the skills and the drive of Canadians.
Let us look at the relationship between industry and other things. It is very important to build factories, and no one realizes that more than I, because I live in a riding which is heavily industrialized. In the year 1963 we spent $399 million on industrial construction. In that same year we spent $616 million on commercial construction. Let me ask the hon. member who has just spoken which is more important, and how these priorities stack up in his view as to what is needed in this country?
Let me quote some statistics in respect of reducing government spending. These statistics are from the Economic Council of Canada. From 1961 to 1966 the total volume of final demand increased by 33 per cent; new machinery and equipment increased by four fifths and new residential construction increased by almost one half. In that same period the number of houses constructed increased by only one fifth, yet the volume of government expenditures on goods and services increased by one quarter. No one can say that housing, or services the government has provided, have increased at a faster rate
DEBATES	5187
The Budget-Mr. Saltsman than other expenditures in our economy. The contrary is true. We have spent much less for public services and housing than the wealth of our society would indicate was possible.
The central issue facing us today does not involve a question of priorities alone, but rather who it is that sets these priorities. Does the government of Canada set the priorities, or does it bow to the few financiers of this nation who demand sacrifices from the government in the way of cutting expenditures, whether they are necessary or not? Is the government helpless in the face of this type of demand? Perhaps the government's response to the old phrase "Put your house in order" means, when translated, "We do not want public expenditure"
Much of the present inflationary pressure is psychological. The financiers in this country are doing all they can to persuade Canadians that the only way to restore confidence is by cutting public expenditures. There is no consideration of the curtailment of our own demands. This is a delightful arrangement from their standpoint, and the tune has not varied over the years. During depressions these people argue in favour of government cuts, to enable the private sector to save more, and therefore to spend more. In the 1930's we saved ourselves right into ten years of misery. Government reductions in expenditures are supposed to stimulate the economy, but these people argue today that government cuts are a means of restraining the economy.
[DOT] (9:20 p.m.)
It looks as though the ordinary people of this country never win. The impression is clearly that those who hold money want the government to abdicate the management of the nation to them, and leave the setting of priorities only to those who hold the money. George Bain put it very well in a recent article in the Globe and Mail when he said this about the Minister of Finance:
And, yet, when the finance minister speaks of its being necessary to restrain our collective demands on the capital market, the emphasis clearly is on the public sector. There is no corresponding pressure to restrain the demands of the builders of shopping centres, office buildings, hotels and motels, and the like. Private spending is good spending; public spending is, if not bad spending, at least suspect spending.
Most budgets that come before this house are pretty murky documents. The one introduced by the Minister of Finance last week is painfully clear, however, because it indicates that the government is clearly in a state
5188	COMMONS
The Budget-Mr. Saltsman of crisis. If only the Liberal party were in this position perhaps we would not be terribly concerned, because there seem to be others on that side of the house and on this who are only too anxious to take over. The members of the official opposition have had a hand in bringing us to the brink of national suicide. This may be harsh criticism, even in a house where punches are not pulled, but we have only to read the budget to get a feeling of despair for the future.
Of all the problems facing the Minister of Finance, the most urgent is obviously money. He needs money, and he needs it badly. It is not difficult to see why. If we look at the refunding program for next year we find it is about twice as great as it has been in recent years. We have a strange situation. In 1950 the Liberals issued bonds due in 1968 in the amount of $308 million. The Conservatives when in office were aware that this amount of money would have to be paid out in 1968, but added $1.2 billion.
When I hear members of the official opposition call for fiscal responsibility, I wonder how responsible that kind of action was. It meant that at that time $1.3 billion would have to be refunded in one year. Then the Liberals came back into office. In 1964 and 1966 they added another $696 million to be refunded in the year 1968. So we have a situation lacing the Minister of Finance next year in which he must find over $2 billion in the marketplace to refund the issues that will then become due.
I have no way of knowing for certain how much money the Minister of Finance has to find in the way of three month, six month and ten month treasury bills, but the indication is that it might be an equivalent amount. We must recognize that the government has its problems. It has problems in terms of controlling its own expenditures. We see what happens when it starts making massive cuts; the good goes out with the bad, because it seems that when the government tries to satisfy everyone they have to satisfy them that all the sacred cows or all the priorities will not be touched.
The government has limited control over the actions of the provinces. It refuses to set up, or cannot for one reason or another set up private spending priorities. It does not seem able or willing to do anything about productivity in this country. Much more than that, the greatest liability of the government is its own dogma that does not permit it to move from the nineteenth century into the

DEBATES	December 7, 1967
twentieth century. Can we manage this nation with outworn ideas? Can we continue to count on over-all fiscal and monetary policy alone to cure the difficulties facing us today? I do not think we can. I suggest that the government will have to move into new types of programs, into more selective programs in order to cure these problems. If we look at the euphemisms in the speech of the Minister of Finance we get a clear indication of why his ideas will not solve the difficulties facing us today. Let me quote from the minister's speech, where he said:
We expect to see a better performance In overall productivity, partly as a consequence of better training and deployment of our labour force and partly because there Is usually an increase in productivity at this stage of the business cycle.
If you translate that into ordinary words, it means that the minister is going to create unemployment in order to try and hold prices down. When the minister says there has been a rapid economic expansion in recent years, he is not giving the full information that is necessary, because Canada has fared very badly compared with other nations in the world. When he says, "This would require the exercise of restraint on increases in prices, wages, other money incomes such as rent and dividends, and government expenditures", he seems to have control, and is willing to exercise that control, only over government expenditures.
How does he propose to exercise restraint on prices? The minister has no mechanism for restraint on prices. I suggest to him that he needs such mechanism. We have been urging the government to establish a prices review board for this purpose. How does the minister intend to exercise restraint over rents and dividends? What mechanism does he have to do this? He has tried to force interest rates down. Up until now he has not been very successful, and most people who have been predicting the future in this respect do not think he will be successful in the future.
The minister may pray. He figures that if nothing else works, he can pray. Prayer is a very powerful weapon, but I do not think it is powerful enough to cure the problems which face the minister. He will have to do more than just pray. It seems to me that in this respect there is the saying that help comes to those who help themselves.


Stanley Howard Knowles: Most of the Liberals only pray.
December 7, 1967	COMMONS DEBATES	5189


Max Saltsman: The minister made a statement a while ago which I think most Canadians would applaud. He said we will have to find a Canadian solution. This is the very thing he has not put into practice, namely finding a Canadian solution to these problems. His budget does not indicate this; it indicates that he has meshed our economy, or permitted our economy to be meshed with that of the United States. We obtain very few benefits from this meshing, and many disadvantages.
[DOT] (9:30 p.m.)
His budget speech was interspersed throughout with references to the problem he is facing and to the fact that he really does not control the economy of this nation, but that the decisions regarding our economy are made outside our borders. Let me quote some of the minister's words. He said:
The current international situation is one in which there are potential dangers for Canada, in view of our considerable dependence both on world trade and on international capital markets.
He wept on to say that it is vital, therefore, that our capital markets continue to work effectively and in proper relationship with the central capital market of the world, which is the United States. He said:
We cannot isolate ourselves from international price pressures, particularly from the United States, but we must do what we can to contain the inflationary pressures operating in Canada. In the current international circumstances, our policies must reflect the need for strong action to protect our underlying position and for flexibility in adapting to changing circumstances.
What really hurt, however, is when he commented on the Carter commission report. His reasons for rejecting the Carter commission report were very clear when he said:
-the commissioners have suggested for Canada a tax system quite different from that of other countries, and in particular quite different from that of the United States with whom we have an integrated capital market. This could give rise to economic difficulties, as well as to technical problems in drafting an effective law.... It is that Canada will need to generate and invest a large volume of savings over the next decade in order to carry out the economic growth and development we want, and we shall need to attract substantial amounts of foreign capital to supplement our own savings.
I think it is time the minister explored the possibility that perhaps we do not require this vast amount of foreign capital from the United States and that a great deal of the necessary capital is generated here in Canada. The economic council has pointed out
The Budget-Mr. Mackasey that we have one of the highest levels of savings in the world. If that level of savings is used wisely and if priorities are established in the private sector for the adequate and best use of that capital, then I think we would find ourselves in a far more independent position and a better position to manage our economy in the future.


Mr. B. S. Mackasey (Parliamentary Secretary to Minister of Labour):: Mr. Speaker, in view of the fact that only ten minutes are left to me in which to make my points, I hope the house will forgive me for a lack of continuity in my remarks. However, there are three areas which have impressed me particularly, and I wish to refer to the following points in the speech made by the hon. member for York South (Mr. Lewis).
I would refer, first, to his comments with regard to the Carter commission report; second, his accusation that we have planned increased unemployment; and third, that we have treated the corporations of this country with kid gloves. Having analysed his speech very carefully, the only part with which I agree totally was contained in his concluding remarks this afternoon. I say this in all sincerity because the hon. member has frequently placed on the record his own personal views about the problems which tend to divide this country.
His words are worth repeating because I know they were spoken with a great deal of sincerity when he said the following:
All of us in Canada, of all political parties and faiths, are determined to make every effort to overcome divisive influences in our country, and to strengthen the unity and the purposefulness of our nation and our people in every part and in every province.
I suggest to the hon. member that he should use this eloquence, tact and command of the English language to convert the leader of the New Democratic party in British Columbia who rejected the B and B report and who further rejected the principle that French should be taught in the schools in British Columbia.


David Lewis: The hon. member's party does the same to the hon. member for York-Humber (Mr. Cowan).


Bryce Stuart Mackasey: Mr. Speaker, I have only ten minutes in which to make my remarks. If the hon. member missed the speech of Mr. Strachan he can refer to the remarks of Mr. Lloyd who led the New Democratic party in
5190	COMMONS
The Budget-Mr. Mackasey Saskatchewan and who seems intent on following the "do nothing" attitude toward the minorities in Saskatchewan, an attitude which exemplifies the 17 years of socialist rule in that province.
In his subamendment the hon. member pointed out that we have failed to implement the recommendations in the Carter report. We have thus strengthered his efforts to divide the country into big business and little business. This is the type of speech which is indicative of ninteenth century thinking when countries and populations were divided into areas, sections and classes. He asked why we did not impose taxes on insurance companies in accordance with the recommendations of the Carter report. The hon. gentleman knows that the basic philosophy behind the report of the Carter commission, as outlined by the chairman, is that we should either bring in the full report or nothing at all.
I wish to ask the hon. gentleman, who allegedly listens to the voice of the little man, why, if he accepts the recommendations in the Carter report as he and the hon. member for Waterloo South (Mr. Saltsman) just pointed out, he did not urge the implementation of the Carter recommendation that we tax the unemployment insurance benefits in this country. Is this not what the New Democratic party endorses in its blanket acceptance of the Carter report? When the hon. member's party was castigating the oil companies, why did they not accept at the same time the other recommendation of the Carter commission that credit unions and co-operatives in this country be taxed? This is another valid recommendation of the Carter report to which he did not refer. Why did he not mention the recommendation of the Carter report that the investments of non-profit organizations including trade unions be taxed? We did not hear anything about that. What about the recommendation which suggests that benefits such as university tuition paid by an employer for an employee be considered as income to the employee and be taxed?
It is obvious that the only parts of the Carter commission report which appeal to the New Democratic party are those which they feel will appeal to the emotions and prejudices of people who have little or no understanding of what corporations are all about. He said we are soft on corporations. Today I looked up figures relating to the rate at which corporations are taxed in this country and I found that the rate of taxation of

DEBATES	December 7, 1967
corporations in this country is the highest in the western world. It amounts to 52 per cent as opposed to 48 per cent in the United States, 40 per cent in Great Britain and 42 per cent in Australia.
The hon. member accused the Minister of Finance of planning intentional unemployment. There is only one leader in the western world who has done that deliberately, namely Harold Wilson who, when he introduced the austerity program two years ago bluntly said to the trade unions: "We will keep the increased level of unemployment to under 500,000 people". This is the labour government which the hon. member's party holds up as an example to us. The leader of the New Democratic party, who went to Great Britain tonight, will probably come back with some of these lame-brained ideas. No doubt Mr. Wilson and the leader of the New Democratic party will discuss late into the evening why the socialist concept practised in Great Britain has failed, and has no part or place in a country which believes in democracy and in the freedom of the individual.
The hon. member for Queens-Lunenburg (Mr. Crouse), in a quiet and honest way suggested to the hon. member for Waterloo South that the very crux of the matter is that socialism is outdated. Socialism may have its application in developing countries, and in communist countries, but it has no place in the Canadian economy. It is significant that when the hon. member for Waterloo South and the hon. member for York South spouted socialist propaganda tonight they did not refer to a freeze in salaries. They know it is impossible and they know it is not palatable to labour. They know that it is against the spirit of the British North America Act, and yet time after time they get up in this House of Commons with sanctimonious arguments that are against the interests of the people of this country. Canadians know, Mr. Speaker, that the economy of Canada has never been in greater shape.
[DOT] (9:40 p.m.)
I wish I had more time because I really want to talk about my Tory friends, who dissipated the greatest majority in Canadian history in 1958 and bankrupted the unemployment insurance fund in 1962.


Jay Waldo Monteith: Take us on tomorrow.


Bryce Stuart Mackasey: I have a weak spot for the opposition, because they are the same old
December 7, 1967

Division
++NAYS
Messrs:
gang we have seen in the House of Commons for too long. Now, Mr. Speaker, the kindest thing I can say about my hon. friend, the hon. member for Perth (Mr. Monteith), is that he accused the government of adding to the inflationary pressures by increasing taxes. The corollary of that would be that if we reduced taxation we would decrease inflationary pressures. I have been trying to figure this out all day and I say that the hon. member's ghost writer should do his homework, or get fired.
Now, Mr. Speaker, I did not refer to the hon. Leader-he will never be right hon.-of the Opposition (Mr. Stanfield) because he is not in his seat. I should like to make a few comments about his remarks but I will do so when he is present. However, the hon. member has been saying one thing which has surprised me. On two occasions he has given his endorsation to the Estates General of the province of Quebec as being a body of serious men discussing serious subjects. This is the same Estates General which refused to fly the Canadian flag at their week end conference. The only conclusion to which I can come-


Edmund Davie Fulton: My hon. friend cannot get away with that.


Some hon. Members:: Oh, oh.


Mr. Deputy Speaker:: Will both hon. gentlemen sit down, please? It being 9.45 p.m. it is my duty pursuant to standing order 58(4) to forthwith put the amendment to the amendment.


Mr. Deputy Speaker:: I declare the amendment to the amendment lost.


Mr. Groos:: 1 was paired with the hon. member tor Edmonton East (Mr. Skoreyko). Had I voted I would have voted against the subamendment.


Mr. Nasserden:: May I adjourn the debate?


[Stage Direction]
It being twelve minutes after ten o'clock the house adjourned, without question put, pursuant to standing order.

[Stage Direction]
Friday, December 8, 1967