1967-03-02

[Stage Direction]
Fourteenth report of standing committee on public accounts-Mr. Hales.
[Note: Text of the foregoing report appears in today's Votes and Proceedings.]
[DOT] (2:40 p.m.)


Hon. L. T. Pennell (for the Registrar General) moved: for leave to introduce Bill No. C-275, to amend the Canada Corporations Act.


Some hon. Members:: Explain.


Lawrence T. Pennell: I ask for the indulgence of the house. I understand that the Acting Registrar General will be with us in just a moment.


Mr. Speaker:: Is it the desire of the house that this motion be allowed to stand for a moment and does the house agree to revert to this item of business in due course?


Some hon. Members:: Agreed.


Lawrence T. Pennell: Mr. Speaker, may I ask leave of the house to revert to introduction of bills so the Acting Registrar General may give the explanation requested by hon. members?


Mr. Speaker:: Does the house agree to revert to introduction of bills?


Some hon. Members:: Agreed.


Hon. John N. Turner (Acting Registrar General) moved: for leave to introduce Bill No. C-275, to amend the Canada Corporations Act.
He said: Mr. Speaker, I thank the house for its courtesy in reverting to this item, and I apologize for not being here when it was called. This bill is merely a series of technical amendments to the Canada Corporations Act. It does not involve any major policy changes, and is only of a housekeeping nature.
Motion agreed and bill read the first time.



PARLIAMENTARY SECRETARIES ACT


Right Hon. L. B. Pearson (Prime Minister) moved: that the house go into committee at the next sitting to consider the following resolution, which has been recommended to the house by His Excellency:
That it is expedient to introduce a measure to amend the Parliamentary Secretaries Act to provide for an increase in the number of parliamentary secretaries who may be appointed under the act.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Hon. Michael Starr (Ontario):: Mr. Speaker, I wish to address a question to the Secretary of State for External Affairs, better known as the hon. member for Essex East (Mr. Martin). Did he receive a telegram yesterday from Mr. Burt regarding the statement made by his colleague the Minister of Industry, and can he tell us whether he replied to this telegram? If so, what was the gist of his reply?


Hon. Paul Martin (Secretary of Slate for External Affairs):: My hon. friend, of course, must know that I receive many communications from the United Automobile Workers. We work together a great deal.


Some hon. Members:: Oh, oh.


Paul Joseph James Martin: With regard to the particular question asked, I did receive a telegram concerning a report I had seen in the newspapers of a speech by my colleague the Minister of Industry. I replied that my views have been well known and continue to be well known on this subject, namely, that the collective bargaining process is one that must not, in normal circumstances, be interfered with by government.
I have since had an opportunity of looking at the speech of my colleague the Minister of Industry, and I find no reference whatever in that speech to the automobile industry. The same applies to what my hon. friend sought to attribute to the Prime Minister yesterday.
March 2. 1967

Inquiries of the Ministry The Prime Minister clearly denied the implication in the last observation on this point made yesterday by the hon. member tor Ontario, who was at one time minister of labour and who I think should show greater sympathy for the labour unions of this country.


Michael Starr: May I ask a supplementary question of the Prime Minister in view of his statement yesterday in connection with the statement by the Minister of Industry that the government's feeling was that it would be inadvisable to try to bring about general wage parity with the United States at this time, and the reply of the hon. member for Essex East to Mr. George Burt, which reads in part:
I must say unreservedly that I am not in accord with what my colleague Is reported to have said.
And in view of the telegram sent by the hon. member for Essex South (Mr. Whelan) which reads:
Mr. Drury's statement is his own as far as I am concerned. I disagree 100 per cent with him-[DOT]
Can the Prime Minister say whether the only member who is supporting the policy of the government is the hon. member for Essex West (Mr. Gray), and whether there is a great disparity and disagreement in the cabinet on this matter?


Lester Bowles Pearson: I am glad the hon. gentleman's question has given me an opportunity to point out to him that the policy of the government on this matter of the relation of wages to income and productivity is that which was laid down on page 11 in the speech of my hon. friend the Minister of Industry, at which time he was quoting from the third annual report of the Economic Council of Canada on wages, income and productivity. The quotation is:
Given the fundamental nature of the factors accounting for the income gap, it should be clear that a great deal remains to be done, on a variety of fronts, before the Canadian economy as a whole can be expected to enjoy effective parity of average per capita income with the United States.
This report, Mr. Speaker, was signed by, among others Claude Jodoin, W. Ladyman, William Mahoney, Marcel Pepin and A. R. Gibbons.


Michael Starr: May I put a supplementary question to the Secretary of State for External Affairs. Will he stand by the statement he made in his telegram to Mr. Burt in which he said he must unreservedly state that he is


not in accord with what his colleague is reported to have said?


Mr. Speaker:: Order. I think we have had a debate which perhaps has gone beyond the usual confines of question and answer at this time. I think we might move on to another subject.


Michael Starr: Then may I put another question.


Mr. Speaker:: Order, please. I beseech the hon. member's co-operation; perhaps I can return to him later if he wishes to ask further questions.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquitlam):: Mr. Speaker, I should like to direct a question to the Prime Minister. May I ask whether the government has decided to introduce an amendment to the Bank Act to reduce from 25 per cent to 10 per cent the number of shares which Citibank may own in the Mercantile bank?


Lester Bowles Pearson: Mr. Speaker, the hon. gentleman should show a little patience. This bill will be reintroduced very shortly, I hope, at which time his curiosity will be satisfied, though perhaps not in a way which will suit him.


Thomas Clement (Tommy) Douglas: A supplementary question. In view of the reported division in the cabinet with respect to this matter-


Some hon. Members:: Oh, oh.


Thomas Clement (Tommy) Douglas: -and the controversy which is alleged to be going on between the Minister of Finance and the senior Minister without Portfolio, the hon. member for Davenport, I want to ask the Prime Minister whether the senior Minister without Portfolio has been shipped to Jamaica to keep him warm or to keep him quiet.


Mr. Speaker:: Order, please.


Lester Bowles Pearson: Mr. Speaker, the problem of division in the federal cabinet-


Mr. Speaker:: Order, please.


Lester Bowles Pearson: -is not one which need face my hon. friend.


Mr. Speaker:: Order, please.
March 2, 1967


Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, I have a supplementary question in connection with this Mercantile bank business and the apparent precipitous retreat from the stand taken by the Prime Minister a few weeks ago, when he said there was not going to be a retreat but the government would stand firm. When did the Prime Minister and the cabinet take the decision to turn a complete somersault in the matter, giving the Mercantile bank five years in which to reduce its share ownership?


Lester Bowles Pearson: Mr. Speaker, my right hon. friend is, of course, an expert on standing firm. He is also an expert on cabinet divisions.


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: We on this side, of course, are experts on unification.


Michael Starr: At what price?


Lester Bowles Pearson: I assure the right hon. gentleman that there is no division on this matter and that we will be standing firm, as my right hon. friend will find out if he is here when the bill is introduced.


John George Diefenbaker: I do not know how many years that will be, Mr. Speaker.


Some hon. Members:: Hear, hear.


John George Diefenbaker: However, I would remind the Prime Minister never to take any advice from the Secretary of State for External Affairs, unless, of course, he intends to be entirely at sea.
I ask the Prime Minister this. Speaking of divisions and the patching over of divisions by wallpaper, and breaks that can not be covered up, is it a fact that there is this division? Why is the Minister without Portfolio abroad? Is it for his health or that he may cool off?


Lester Bowles Pearson: Mr. Speaker, my right hon. friend was down south a little while ago, fishing.


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: I understand he had more success down there than he has had since he came back.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order, please.


John George Diefenbaker: I have been more successful fishing here than down there.
Inquiries of the Ministry [Translation]



AIRPORTS


[Stage Direction]
On the orders of the day:
Mr. Gerard Laprise (Chapleau):: Mr. Speaker, I wanted to put a question to the Minister of Transport but, in his absence, I shall put it to his parliamentary secretary.
Could the hon. member tell the house whether the department intends to ask the house for an increased appropriation in order to build local airports in 1967-68?


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



MARKETING OF FROZEN GROUNDFISH FROM ATLANTIC PROVINCES

[Stage Direction]
On the orders of the day:
Hon. George Hees (Northumberland):: Mr. Speaker, I wish to direct a question to the Minister of Trade and Commerce.


Some hon. Members:: Hear, hear.


George Harris Hees: Is the minister aware of the problem existing at present with respect to the marketing of frozen groundfish from the Atlantic provinces?


Some hon. Members:: Oh, oh.


George Harris Hees: Can the minister advise the house what steps are being taken to overcome this very serious problem.


Lester Bowles Pearson: Mr. Speaker, it is refreshing to have a serious question addressed to the Chair.


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: I can tell my hon. friend-and I hope he will not misunderstand me-that if he keeps on in this way one day he may be able to enjoy free colour television.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order, please. The Chair recognizes the hon. member for Kent (N.B.).


George Harris Hees: On a point of order, Mr. Speaker, though I was pleased to receive the Prime Minister's most encouraging answer I had addressed my question to the Minister of Trade and Commerce. I think he would like to answer.


Mr. Speaker:: I would rather he did not.


Some hon. Members:: Oh, oh.

March 2. 1967
Inquiries of the Ministry UNEMPLOYMENT INSURANCE



KENT COUNTY, N.B.-SUSPENSION OF PAYMENTS TO WOODS WORKERS

[Stage Direction]
On the orders of the day:
Mr. Guy Crossman (Kent (N.B.)):: Mr. Speaker, is the Minister of Labour now in a position to answer my question of Tuesday, February 28, concerning the urgent matter of unemployment insurance for the woodsmen in Kent county, New Brunswick?


Hon. J. R. Nicholson (Minister of Labour):: shall be glad to do so, Mr. Speaker, based on the preliminary report that I have received. Actually, in accordance with the normal procedures this matter has come before the Unemployment Insurance Commission. With respect to the 200-odd employees mentioned the other day, some qualified for benefits, some were disqualified and some have been reinstated. Others, not reinstated, have appealed to the board of referees. This matter is being dealt with in the normal way. I hope that when it has been disposed of my hon. friend's constituents will have nothing to complain about.



HIGHWAY SAFETY


[Stage Direction]
On the orders of the day:
Mr. Heward Grafffey (Brome-Missisquoi):: Mr. Speaker-


Some hon. Members:: Hear, hear.


William Heward Grafftey: I am afraid there is serious doubt whether Canada is ready for me yet.


Some hon. Members:: Oh, oh.


William Heward Grafftey: In view of the startling revolution-


Some hon. Members:: Oh, oh.


William Heward Grafftey: In view of the startling revelations yesterday-


Mr. Speaker:: Order, please.


William Heward Grafftey: In view of the startling revelations yesterday by auto union workers relating to safety inspection cutbacks and the production of unsafe cars, and in view of the deplorable rise in highway deaths and injuries reported for 1966 as compared with 1965, could the Minister of Industry report progress in his consultations with the provinces with

regard to bringing the building of motor vehicles within the scope of federal law?


Hon. C. M. Drury (Minister of Industry):: Our discussions with the provinces are continuing toward a useful end. I do not wish to try to deal with them in detail at this time. I may say I do not share the hon. gentleman's doubt as to Canada's readiness for him.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Mr. Eric A. Winkler (Grey-Bruce):: Now
that all the herring fleets have left for open water I should like to ask the Prime Minister whether he can inform the house how many more items of business we can expect to be placed on the order paper in the current session.


Lester Bowles Pearson: It is hard to say how many there may be in addition to those now on the order paper. I think if we manage to dispose of those on the order paper we shall have done a good job, and then perhaps we can consider prorogation. This includes, of course, the defence bill.


Hon. E. D. Fulton (Kamloops):: Is the Prime Minister able to tell us whether the government has decided to introduce legislation setting up a department of consumer affairs? If so, may this legislation be expected during the present session?


Lester Bowles Pearson: This matter is under consideration at the present time, and as soon as a decision has been reached I shall be glad to make an announcement in the house.



FINANCE


[Stage Direction]
On the orders of the day:
John George Diefenbaker: I would direct a question to the Minister of Forestry and Rural Development, having before me the speech he delivered yesterday in rebuttal of the economic theories regarding foreign ownership held by the former minister of finance. In view of the fact that the former minister of finance, now Minister without Portfolio, is head of the economic task force or flying squad set up in this connection, do the views expressed yesterday by the hon. gentleman indicate a
March 2, 1967

prejudging of the task assigned to this task force or, indeed, that this body may now be dispensed with?


Mr. Speaker:: Order, please. Such a question is not acceptable at this point. I am sure the Leader of the Opposition knows that in connection with speeches made by cabinet ministers outside the house, questions can only be asked of the Prime Minister to determine whether such speeches represent government policy.


John George Diefenbaker: Surely it is not intended by the rules that ministers can make irresponsible statements which have no rhyme or reason as far as cabinet policy is concerned, and not expect to be examined on them in this house. If, however, Your Honour holds that there must be a protective wall for these ministers-


An hon. Member:: Shame.


John George Diefenbaker: -then I will reword my question and ask the minister whether the economic task force which was to determine the question of Canada's position relative to foreign investment and the like is no longer effective, and whether he was speaking for the government.


Hon. Maurice Sauve (Minister of Forestry and Rural Development):: I mentioned the task force twice in my speech. I said the formation of the task force would be very helpful in enabling the government to determine its policy.


John George Diefenbaker: You prejudged it.


Mr. Speaker:: Order. I think I should bring to the attention of hon. members citation 171 (z) in Beauchesne's fourth edition, which states that a question must not-
-refer to speeches made outside the house; but in the case of a cabinet minister, it is permissible to ask Prime Minister whether such speech represents policy of government.
This, of course, is the citation to which I referred. It is part of the rules of the house.



SHIPPING


[Stage Direction]
On the orders of the day:
Mr. Lloyd R. Crouse (Queens-Lunenburg):: Mr. Speaker, I wish to address a question to the Prime Minister. In view of the tragedies that occurred last week off the coast of Nova Scotia when 35 men lost their lives after a

Inquiries of the Ministry series of bitter storms in the Atlantic, will the government give consideration to making a contribution to the survivors of the men lost on the Polly and Robbie, the Iceland II and the Cape Bonnie?


Lester Bowles Pearson: Mr. Speaker, this is a situation which very much touched the hearts of all of us. It was a terrible tragedy, and we should look into the possibility of anything we can do to make it less terrible for the survivors.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and Victoria):: Mr. Speaker, I wished to direct a question to the Minister of Manpower and Immigration but in his absence may I direct it to the right hon. Prime Minister. In view of the serious, tragic and distressing unemployment situation, finally acknowledged by the minister of manpower in his statement yesterday, regarding unemployed steel workers at Sydney, may I ask the right hon. gentleman would he recommend to the cabinet, at a special meeting which I think should be called immediately for that purpose, that a massive crash training program for the unemployed should be instituted as quickly as possible on Cape Breton Island?


Lester Bowles Pearson: Mr. Speaker, I shall be glad to discuss this with the Minister of Manpower and Immigration.



SUGGESTED VISIT TO EXPO '67 BY PROTECTIVE STAFF

[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to do by indirection something the rules would not permit me to do directly, but strictly in order I wish to address a question to the Minister of Trade and Commerce. In view of the fact that there will be at least a half million visitors touring these parliament buildings during this centennial year and that many will be asking questions of the protective staff about Expo '67, would the minister mind whispering in the ear of the appropriate authority that it might be a good idea for members of the protective staff to visit Expo in groups, so they can answer all questions accurately as a result of their personal experience?
March 2. 1967

Inquiries of the Ministry


Mr. Speaker:: The hon. member set out to accomplish an impossible task, but he succeeded.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbiti (Oxford):: Mr. Speaker, in the absence of the hon. member for Res-tigouche-Madawaska I would like to direct a question to the Secretary of State for External Affairs as acting chairman of the standing committee on external affairs. Would the minister use his good offices to arrange a joint meeting of the defence and external affairs committee so that a number of matters affecting armed services unification can be more properly and more carefully examined?


Hon. Paul  Marlin@Secretary of Slate for External Affairs: I think I dealt effectively with that matter yesterday, Mr. Speaker.


Wallace Bickford (Wally) Nesbitt: In view of that answer I would like to direct a supplementary question to the Prime Minister. In view of the fact that a few moments ago the Prime Minister indicated he was an expert on unification, I wonder if he might use his good offices to try to arrange such a joint meeting.


Lester Bowles Pearson: I could not possibly be more effective than my hon. friend the minister.



INDUSTRY


[Stage Direction]
On the orders of the day:
Mr. Donald Maclnnis (Cape Breton South):: Mr. Speaker, I wish to direct a question to the Prime Minister. In view of the remarks made by the Secretary of State for External Affairs in dealing with the auto pact and the problems in the automobile industry, will he advise his ministers that when they make statements outside the house, respecting matters not concerning their own departments, they will be expected to give me the same privilege they have been allowed here in this house with respect to answers.


Paul Joseph James Martin: On a point of privilege-


Malcolm MacInnis: On a
point of order-


Mr. Speaker:: Order, please.
[Mr. Herridge.l


Paul Joseph James Martin: On a point of privilege-


Michael Starr: Can't you see the Speaker is on
his feet?


Mr. Speaker:: I believe the Secretary of State for External Affairs rose first on a question of privilege, and I think I should hear him first.


Paul Joseph James Martin: My point of privilege is this, Mr. Speaker. A member of the government also has obligations to his constituents, and I want my hon. friend to know that I regard the interests of the automobile workers in my constituency as part of my obligations as a member of this house. What I have said in no way conflicts with my obligations as a minister of the crown, notwithstanding the observation understandably and so willingly made by the Leader of the Opposition just now.


John George Diefenbaker: Better turn around and
correct the Minister of Industry.


Malcolm MacInnis: I would direct the attention of the Secretary of State for External Affairs to the fact that when similar questions were asked of the Minister of National Health and Welfare dealing with coal miners in Nova Scotia, of whom there are some in his own constituency, answers were absolutely refused by that minister, and there is a definite contradiction between what the Secretary of State for External Affairs says now and what his colleague the Minister of National Health and Welfare did and what this house has ruled in the past. The Secretary of State for External Affairs is not only contradicting his colleague but he is contradicting the Chair.


Mr. Speaker:: Order.


Malcolm MacInnis: I have a question of privilege too. Why is the minister rising on a question directed to the Prime Minister?


Mr. Speaker:: Order, please. Will the hon. member resume his seat? The hon. member asked a question. That was not a question of privilege and, having asked his question, the Secretary of State for External Affairs rose on a question of privilege-


Malcolm MacInnis: On a
point of order, what right has he to rise and answer a question I directed to the Prime Minister?
March 2, 1967


Mr. Speaker:: Order. I assume the minister was not rising for that purpose, in view of the fact that he indicated he was rising on a question of privilege.


Michael Starr: Mr. Speaker, may I put a supplementary-


Mr. Speaker:: Order, please. Could I be allowed to recognize the hon. member for Sherbrooke?


Malcolm MacInnis: On a
point of order-


Michael Starr: I wish to ask a supplementary question-


Mr. Speaker:: Order. The hon. member for Cape Breton South is rising on a point of order.


Malcolm MacInnis: On a
point of order, I feel that having directed a question to the Prime Minister I am at least entitled to an answer dealing with this particular question.


Mr. Speaker:: According to the rules the hon. member is entitled to ask a question but, as he knows, I have expressed the view previously, which I believe is supported by ample authority, that no member is entitled to an answer. He may be dissatisfied with the answer he receives or he may be dissatisfied with the fact that he receives no answer at all, but it has been the practice for many years that no member can insist on either receiving an answer or on receiving the answer which he would like to receive.


Malcolm MacInnis: Mr. Speaker, I direct a supplementary question to the Prime Minister. I take it from his silence that he is in agreement with the Minister of National Health and Welfare that they can do nothing other than ignore the miners of Cape Breton island.


Mr. Speaker:: Order, please. The hon. member for Sherbrooke.



HARBOURS


[Stage Direction]
On the orders of the day:
Mr. Maurice Allard (Sherbrooke):: Mr. Speaker, in the absence of the Minister of Transport, my question is addressed to the acting minister, the Member of the Administration.
Inquiries of the Ministry
In view of the thefts and pilfering which have been occurring with regularity in the harbour of Montreal recently, is the Department of Transport or the government taking the appropriate measures to check such depredations and damages to ensure a greater degree of success for Expo and avoid harming the international repute of Canada?


Mr. Speaker:: The question of the hon. member should be put on the order paper.


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



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
Mr. Reynold Rapp (Humboldi-Melforl-Tisdale):: Mr. Speaker, I would like to direct a question to the Minister of Labour. I have received some letters from farmers who complain that no information is available as to when or how they can apply for unemployment insurance for their farm labourers. Has the minister sent out circulars or letters giving this information?


John Robert (Jack) Nicholson: Mr. Speaker, the hon. member shares my concern about this matter, which I have anticipated, and I have suggested to the commission that they should give wider publicity to their activities in this field. I believe they are doing so now.



POTATOES-INQUIRY AS TO STEPS TO INCREASE EXPORTS

[Stage Direction]
On the orders of the day:
Mr. Heath Macquarrie (Queens):: Mr. Speaker, I wish to direct a question to the Minister of Trade and Commerce of which I have given him notice. Has the minister received any representations from the Prince Edward Island government for special measures to assist in obtaining new or larger markets for the large quantity of potatoes still in storage, and could he advise what helpful steps are being taken to meet the very serious situation facing thousands of eastern Canadian potato growers?


Hon. Robert Winters (Minister of Trade and Commerce):: Mr. Speaker, I have received no direct representations from the government of Prince Edward Island, but I am aware of the
March 2, 1967

Inquiries of the Ministry situation and we have been trying to alleviate it.
The good results in this crop year have been noted in the departmental promotion programs for seed potato exports, and these exports are 45 per cent above those to the same date in 1966. Table potato exports are currently much higher than for the same period last year. The United States is the largest market for potatoes, but the low duty quota there has been filled and smaller quantities are now moving to the United States over a substantial tariff barrier. In other markets the industry and our trade commissioners have been making a special effort to move Canadian potatoes.
European suppliers also have surpluses and world market prices are low, but despite these problems a record movement of Canadian potatoes into foreign markets is expected.


Mr. Frank Howard (Skeena):: Mr. Speaker, I rise on a matter of privilege which affects members of this house. It concerns the recognition which Your Honour extends to representatives of different parties. The hon. member for Nanaimo-Cowichan-The Islands has been attempting to catch Your Honour's eye since the inception of the question period. While only two members of this party have been recognized, innumerable Conservative members have been recognized ad nauseam. I can appreciate, Mr. Speaker, that with all the contenders for a future office there is a desire on their part to be recognized interminably, but I do wish you would glance this way occasionally in order to balance the representation.


Hon. Hugh John Flemming (Vicioria-Carleton):: Mr. Speaker, my question is for the Minister of Agriculture. Has he received any representations from New Brunswick concerning the surplus of potatoes which exists in that province, and if so could he inform the house whether action is being considered to deal with the problem?


Hon. J. J. Greene (Minister of Agriculture):: Mr. Speaker, I do not recall any specific representations on that matter, but my colleague the Minister of Trade and Commerce instructs me that he has been advised of it, and I think he gave a rather lengthy answer a few moments ago in respect of the action taken by the Department of Trade and Commerce.


Hugh John Flemming: I have a supplementary question, Mr. Speaker. May I direct the attention of the minister to the fact that possibly the request from the provincial government of New Brunswick concerning the potato surplus !may come to him before it reaches the Minister of Trade and Commerce. If it does, would he give it his prompt attention, if at all possible?


John James Greene: I will be glad to do so, Mr. Speaker.


Robert Henry Winters: Mr. Speaker, lest there be any misunderstanding I think perhaps I should say that the minister of agriculture of the province of New Brunswick has been in touch with me on that problem.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Michael Starr: Mr. Speaker, I should like to direct a question to the Secretary of State for External Affairs in view of the fact that he is so conscious of his obligations. I should like to ask him whether his obligations have directed his attention and the attention of the government to the fact that 180 production line workers will be laid off tomorrow by Walker Metal Products Ltd. in Windsor, a subsidiary of Chrysler Canada Ltd. I should also like to ask him whether his obligations were sufficient to prompt him to ask that some action be taken with a view to looking into this whole situation.


Paul Joseph James Martin: Yes, Mr. Speaker, I was aware of that fact. The Minister of Industry also told me that as a result of the Canada-United States auto pact there has been increased production in Canada, and that more workers are now employed in the automobile industry than at any other time in Canadian history.


Michael Starr: I have a supplementary question, Mr. Speaker. Then can the minister explain why the lay-offs are now starting in Windsor?


John George Diefenbaker: What about the 380,000 unemployed?

March 2, 1967



FINANCE


[Stage Direction]
On the orders of the day:
Mr. Colin Cameron (Nanaimo-Cowichan-The Islands):: My question is directed to the Minister of Finance, Mr. Speaker. In view of speculation in the press today that the minister may be considering recommending to his colleagues Treasury Board action to increase the authorized capital of the Mercantile bank, can the minister assure us that if such a course of action is taken he will notify the house at once?


Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, this is a hypothetical question. There has been no application by any bank recently for an increase in capital.



HIGHWAYS


[Stage Direction]
On the orders of the day:
Gérard Laprise: Mr. Speaker, I should like to put a question to the hon. Minister of Finance. Could he tell us if he met recently with officials of the Quebec government, with respect to a 1966-67 roads to resources program and could he also inform the house as to whether the Quebec government has requested the assistance of federal government for this roads to resources program?


Mitchell William Sharp: Mr. Speaker, this is not within my ministerial responsibility; therefore I do not have any information. Perhaps it should be directed to another of my colleagues.



BRITISH COLUMBIA-REQUEST FOR HUNDRED MILLION DOLLAR FEDERAL LOAN

[Stage Direction]
On the orders of the day:
Mr. Jack Davis (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, my question is addressed to the Minister of Finance. Has he replied to the urgent request of the premier of British Columbia for a loan of $100 million and, if so, what is the nature of his reply?


Mitchell William Sharp: Mr. Speaker, the answer to the first part of the question is yes. I do not know whether
Inquiries of the Ministry you would permit me to read my reply or wish that I table it.


Mr. Speaker:: Certainly I would prefer that the hon. minister did not read the reply. Perhaps there might be agreement that the reply should be placed on the table.


Some hon. Members:: Agreed.


Some hon. Members:: Read it.


Thomas Clement (Tommy) Douglas: Mr. Speaker, I think there is general consent that the minister be allowed to read the telegram. I think he should do so.


Mr. Speaker:: It has been agreed that the telegram should be tabled.



CANADIAN CENTENNIAL


[Stage Direction]
On the orders of the day:
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, I have a question of great and growing urgency for the Secretary of State. Could the Secretary of State now inform the house when the ad hoc committee that was charged with the responsibility for making plans for a parliamentary youth seminar will be called together to deal with this important matter?


Hon. Judy V. LaMarsh (Secretary of State):: Mr. Speaker, at the request of the young people we have waded through three or four different submissions. I now have a submission which has not yet been dealt with by the centennial people. I think it will be shortly and then I shall have an opportunity to call a meeting. I think the seminar will be on a much smaller scale than that suggested in the proposals previously submitted.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Hon. Gordon Churchill (Winnipeg South Centre):: Mr. Speaker, I have a question for the Secretary of State for External Affairs. I should like to ask him whether the transformation of Canada's role in foreign affairs is intended to place the Secretary of State for External Affairs in the position of sponsoring a heavily armoured mobile force ready for punitive action anywhere in the world.


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

March 2, 1967
Inquiries oj the Ministry


Gordon Minto Churchill: Mr. Speaker, I am asking for information on a very important matter. If you will permit me to do so, I will phrase the question in a somewhat different way. I am searching for information. May I ask the minister this question. Is the Canadian mobile force, equipped with guns, tanks and close support aircraft for instant punitive action, the minister's proposed substitute for the antiquated method of gunboat diplomacy?


Mr. Speaker:: Order, please. Perhaps the second question is no more acceptable than the first. I am sure the hon. member for Winnipeg South Centre realizes that this type of question is much too general, concerns a general statement of policy, and to my mind is not the type of question that should be answered at this time.


Gordon Minto Churchill: On a point of order, there has been a public declaration that there has been a complete change in Canada's foreign policy. I am seriously searching for information from the only person who can supply it, the Secretary of State for External Affairs.


Paul Joseph James Martin: Mr. Speaker, I should like to help the hon. member. I suggest that perhaps he would be able to better appreciate the procedures of the house if he would place that question on the order paper, where it will be answered in due course.



PILOTAGE


[Stage Direction]
On the orders of the day:
Mr. Barry Mather (New Westminster):: Mr. Speaker, I have a question I should like to ask the Acting Minister of Transport. Could the minister give us any news concerning the whereabouts of the report of the pilotage commission? I think it has been under way for four years. Perhaps he could send a pilot to pilot it back.



INDUSTRY


[Stage Direction]
On the orders of the day:
Mr. A. D. Hales (Wellington South):: Mr. Speaker, my question is for the Minister of Industry. Is the minister giving consideration to changing the criteria now in use for the selection or designation of areas of low economic growth?


Mr. Speaker:: Order. It seems to me that
this question is of a general nature, and I wonder whether it should be asked at this time.


Alfred Dryden Hales: Mr. Speaker, this is a matter of very urgent importance to those in my particular part of the country who are waiting for a decision on this matter.


Charles Mills (Bud) Drury: Mr. Speaker, as I have indicated before, a continuing review is being carried out with a view to establishing the appropriateness of the criteria.



NICKEL-REPORTED DEVELOPMENT OF BLACK MARKET

[Stage Direction]
On the orders of the day:
Mr. R. R. Souiham (Moose Mountain):: Mr. Speaker, I have a question I should like to direct to the Minister of Energy, Mines and Resources. In view of the serious situation in respect of a black market which has developed in the sale of nickel on the Canadian market in the past few weeks, what action is the minister or the government taking to see that Canadian users of this important metal do not have to pay these inflated prices and as a consequence find themselves in a more non-competitive position in the world markets?


Mr. Speaker:: Order. I believe this question should be placed on the order paper. If the hon. member feels there is an urgency, which I fail to see, I would be pleased to give the hon. member an opportunity to debate the question on the adjournment motion.



WHEAT-REQUEST FOR ANNOUNCEMENT OF PRICE UNDER INTERNATIONAL AGREEMENT

[Stage Direction]
On the orders of the day:
Mr. George Muir (Lisgar):: Mr. Speaker, my question is for the Minister of Trade and Commerce. Now that western farmers are in the process of planning their spring seeding operations, could the minister inform us when he expects to be able to announce the new price schedule under the international wheat agreement?


Robert Henry Winters: Mr. Speaker, we will do that at the very earliest opportunity. We are still in the process of negotiating a new international wheat agreement.
March 2, ia67



OLD AGE SECURITY


[Stage Direction]
On the orders of the day:
Mr. Robert Simpson (Churchill):: Mr. Speaker, some time ago I asked the Minister of Indian Affairs and Northern Development whether he could assure the house that steps would be taken by officials in the Indian affairs branch to assist the recipients of old age pensions among our Indian people to fill out the necessary application forms for the $30 a month old age pension supplement. Can the minister say now whether a directive has gone out to the field men to do this and, if so, when was this done?


Hon. Arthur Laing (Minister of Indian Affairs and Northern Development):: Mr. Speaker, I am informed that this has been done everywhere.


Robert Simpson: I have a supplementary question, Mr. Speaker. I should like to ask the minister whether he could give particular attention to the situation in northern Manitoba, because, having just returned from there I find that nothing has been done there so far.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. R. W. Priffie (Burnaby-Richmond):: Mr. Speaker, I wonder whether the Secretary of State can answer today the question which I asked yesterday concerning the T.V. sets?


Julia Verlyn (Judy) LaMarsh: Mr. Speaker, I have ascertained that my predecessors who were responsible for the C.B.C._


Mr. Speaker:: Order, please. My recollection is that the question asked yesterday by the hon. member, if it is the question I have in mind, had either been ruled out of order or I had suggested to the hon. member that he should place it on the order paper.


Robert William Prittie: Mr. Speaker, may I say with respect that you have allowed a number of questions on the same line, and the Secretary of State has made replies.


Mr. Speaker:: 
Mitchell William Sharp: the third reading of Bill No. C-268, to amend the Excise Tax Act and the Old Age Security Act.


Eric Alfred Winkler: Mr. Speaker, for a considerable period of time it was felt that possibly we should permit third reading of the bill, until we realized that the Minister of Finance himself indicated to the house that the measure before the house with regard to the Excise Tax Act did not provide that the moneys which would accrue from its application would in fact be placed in the old age security fund. Our position on this question has been very clear and firm throughout the debate, and I recognize that at this time I am not allowed to reiterate some of the points that have been made already in order to indicate to the house and to the country that our position has been the correct one.
When we were made aware initially-and as I recall we did so from answers to questions which I myself placed on the order paper-of the amount of money that was to be made available to the government for this purpose, I think we had the support of some of our friends to the left in the proposals we put forward from time to time, and we were certainly supported in the program that we laid before the house and before the country. When the measure was first introduced in the house we knew that sufficient money was already available and that the minister would not be required to present his budget or to apply the tax that is proposed in the bill before us. Indeed, many people throughout the country would have been quite satisfied with the proposal which was so ardently put forward by my party as well as by almost all members on this side of the house.
At one stage of the debate the Minister of National Health and Welfare indicated that I advocated that course for the sake of publicity. Nothing could be further from the truth, as is well known by everyone in this country! After what has transpired, namely the way in which this government has seen fit to spend money in other fields and the way they have established the division of the Department of National Health and Welfare to administer the payments for which the money is being collected, it is obvious that the Minister of Finance could have shown a greater degree of responsibility and effciency in preparing and presenting this bill. It is very clear that this money was not needed at the time because it
13654	COMMONS
Excise Tax Act and Old Age Security Act will not go into the old age security fund. Therefore there was no need to collect it for this purpose. Consequently I move the following amendment:
[DOT] (3:30 p.m.)
That Bill No. C-268 be not now read a third time but be referred back to the committee of the whole with instructions to the committee to amend the said bill to provide that all moneys raised by the increase in the levy of the Excise Tax Act as provided by the said bill shall be paid into the old age security fund for the purposes of meeting supplementary old age security payments authorized by this parliament and not into the consolidated revenue fund.
While you are giving consideration to the amendment I have placed before you, Mr. Speaker, I want to say a word about what has happened to the taxpayers' money which has made this supplementary payment possible with a means test. Let no one deny this. Many years ago the means test was thrown out by parliament as outmoded and useless. It was regarded as an old fashioned way of giving to deserving people a little bit of charity. Now the present government is reinstituting the means test. I suggest that the amount of money it is costing the taxpayers to institute this plan is substantial. For instance, forms have been printed, pamphlets have been printed and a bureaucracy organized, and the cost of all this to the taxpayer is one thing this government should endeavour to change.
As I indicated in a previous speech, in the area of social justice the government now has three divisions, with goodness knows how many people to administer these policies. All these measures could be brought under one division and administered by the same people. We suggested that a flat rate payment of $25 a month be made across the board to all recipients of old age security. The Minister of National Health and Welfare (Mr. Mac-Eachen) suggested this was the easy method, the old method of solving this problem and the government wanted to try something new. However, the new method is going to cost the country an additional amount in taxes.
If we read the Auditor General's report we find that the government implemented its program without authorization to spend the money. They had to come back later and get approval. Although I suppose at this juncture it does not matter any more, this fact is indicative of the inefficient way in which this government functions in almost every area.
When I have returned to the constituency of Grey-Bruce during the last two or more weeks I have found that the whole program

DEBATES	March 2, 1967
has been a confusing one. I tried to find out how an applicant could determine what amount of money he was allowed to have or what amount of money he was allowed to deduct from income. I found that even the government did not know the answers to some of these questions, particularly with regard to capital cost allowance. The other evening we found that the Minister of Finance (Mr. Sharp) was not sure whether the recipients of these supplements were going to be forced to acquire a social security number, as the measure under consideration at that time required other people to do. This all proves to me that our program would have been the correct one, and we had a considerable degree of support from the hon. member for Winnipeg North Centre (Mr. Knowles). Our program would not have necessitated the employment of another group of civil servants for administrative purposes. Indeed, it could have been instituted without any increase in taxes, and certainly without the introduction of the recent mini-budget.
The government took the view that our program was going to be too costly, and yet if we knew the total cost of the government's program in so far as advertising, the printing of brochures and other papers is concerned, I am quite sure our program would have been less expensive. I feel certain the fund would have lasted well beyond the current fiscal year and perhaps the next one as well. When one reads the report concerning the proliferation of positions in the civil service and the amount of money this is costing the taxpayer, I can assure you that a $25 payment across the board would have resulted in a considerably lower expenditure than that which the government is now making.
So, Mr. Speaker, in view of the increase in taxes the minister is proposing in this measure I am suggesting, on behalf of my colleagues, that we keep the government honest and that we put forth every effort on behalf of the senior citizens and the taxpayers of Canada toward having the money that will accrue from this measure placed where it rightfully belongs, in the old age security fund. I do not believe the minister expects for one moment that in putting this money into the consolidated revenue fund it will be used only if necessary. The minister will find some other way of spending it and if he cannot he has a lot of colleagues who will. The position we are taking is that we want the government to remain honest with the taxpayers and with the senior citizens of Canada, so in
March 2, 1967	COMMONS DEBATES	13655
accordance with the terms of my amendment we want the money placed in the old age security fund.


Mr. Deputy Speaker:: The Chair has read the amendment proposed by the hon. member for Grey-Bruce and is prepared to listen to arguments on its validity.


Lawrence T. Pennell: It is my respectful submission, Mr. Speaker, that the amendment proposed by the hon. member is outside the prerogatives granted to private members. This amendment will affect the balance of ways and means. During the course of his argument the hon. member clearly indicated that the Minister of Finance (Mr. Sharp) will find some way of spending this money. If I may use his words, he wanted to keep the government honest. Clearly, in his mind, this money was going to be spent by the Treasury Board. On his own explanation the amendment is clearly going to affect the balance of ways and means. It is my respectful submission, therefore, that the amendment is out of order. This amendment is moved by one who is not accountable for items of public expenditure, and I would ask you to so rule.
[DOT] (3:40 p.m.)


Eric Alfred Winkler: In that regard, Mr. Speaker, if my words were not correct or if we have misinterpreted the purpose of the introduction of this measure, I am willing to apologize. However, we know what is the purpose of the measure; that has been made clear. What we want is to see the minister put the money in the proper fund. That was the purpose of the mini-budget and it is the reason this measure is before us. That was the statement of the minister himself. Yet he now informs us that the money will not go into that fund. I have stated our position.


John George Diefenbaker: Mr. Speaker, I can see no
reason that this amendment is not a proper one. It in no way interferes with ways and means. The amendment reads:
That Bill C-268 be not now read a third time but be referred back to the committee of the whole with instructions to the committee to amend the said bill to provide that all moneys raised by the increase in the levy of the Excise Tax Act as provided by the said bill shall be paid into the old age security fund for the purposes of meeting supplementary old age security payments-
I submit there is no interference whatever with the balance of ways and means. This is the reason the tax was imposed. The excuse given was that the moneys that were to be raised were to provide for the extra old age
Excise Tax Act and Old Age Security Act security payment. Surely the government is not going to impose a tax for one purpose and then use the revenue for another purpose. This is what the amendment is designed to prevent.
We have placed our arguments before the house over and over again. We pointed to the danger of the action that was being taken and to the snooper's paradise that was being created as a result of the action of the government. Everywhere across the nation there will be snoopers snooping. The old age pensioners are being harried by an avalanche of documents, forms, brochures and advertising. And this all because of the fact that the government has stubbornly refused to permit the payment of an extra $25 a month to the old age pensioners of Canada, a measure which we in this party advocated.
Having brought in a tax which the minister stated was for the purpose of showing the people of Canada that they cannot get something for nothing, the government now wishes to use the money for other purposes. They extract money under one pretence and are going to use the money for another purpose. Surely, Mr. Speaker, this can in no way be justified.
I suggest to Your Honour that there is no interference with ways and means and that this amendment is a proper one. We know the waste that is taking place. The amount of advertising being placed across the country is unbelievable. Hundreds of thousands of dollars are being wasted by a government that is using this measure for the sole purpose of pretending that those who pay this extra tax are providing the amount required for the supplementary payment to the old age pensioners when in point of fact the money is going to be placed in the general consolidated revenue fund.
If the people were of the opinion that money devoted to a certain purpose should go into the old age security fund, what possible objection could the government have? There is no interference at all with ways and means because the money would be paid. There is no direction in any way of the manner in which ways and means shall be applied. The government has said that the money derived from these extra taxes that are being mulcted out of the Canadian people will be used for the purpose of making the supplementary payment to the pensioners. Now, Mr. Speaker, having led the way clothed in the garments of political righteousness which they assumed in this connection and appealed to the people,
13B56	COMMONS
Excise Tax Act and Old Age Security Act they are going to use the money they have secured for another purpose.
All that this amendment says in effect is: Carry out your promise. You said that social security has to be paid for-and I am one who believes that. Therefore, use this money for the purpose for which it was extracted, rather than choose another method for the expenditure which you told the people of Canada was being levied for specific purpose.
I say, Mr. Speaker, that this amendment is the only way in which the members of this house can impress upon the government the necessity for keeping their word.


Mitchell William Sharp: Mr. Speaker, I should like to support my colleague the Solicitor General in his position that this amendment is out of order and beyond the competence of private members. In so doing I should like to draw attention to what I said on December 19 when I introduced these proposed measures. It has been suggested by the Leader of the Opposition and by other speakers that somehow I misled the house or misled the public. At the same time as I am speaking on the validity of the amendment I should like to reply to the other point since both are related.
On December 19 I said that I had to meet immediate cash needs arising out of the increase in payments to old age pensioners. I proposed to meet these cash needs in two ways. The first way was by increasing the ceiling under the Old Age Security Act with relation to the 4 per cent tax on personal incomes. I did that because there was a duty laid upon me by parliament to keep the old age security fund reasonably in balance. As I have said on previous occasions, Mr. Speaker, this has been honoured as often in the breach as in the performance. Nevertheless, as Minister of Finance I have the responsibility of proposing measures when I have reason to believe that the fund is out of balance. For that purpose I proposed to raise the ceiling on the old age security tax on personal incomes.
Then, as reported at page 11336 of Hansard for December 19,1 had this to say:
The second tax change I am recommending is intended to add to our general revenues to provide the remaining cash required to pay the guaranteed income supplement.
For that purpose, Mr. Speaker, I proposed that there should be an addition of 1 per cent made to the general sales tax, with certain exceptions that are familiar to the house.

DEBATES	March 2, 1967
I thereupon proposed two resolutions, Mr. Speaker, to which I should like to draw your particular attention. The first read as follows:
That it is expedient to amend the Old Age Security Act to provide that for the 1967 and subsequent taxation years the maximum amount of old age security tax payable on the taxable income of an individual be increased from $120 to $240.
The second resolution read:
That it is expedient to amend the Excise Tax Act to provide that, effective January 1, 1967, the rate of the consumption or sales tax imposed under section 30 of the said act be increased from 8 per cent to 9 per cent-
And so on. There, Mr. Speaker, it is quite clear 1 was not relating this to the Old Age Security Act; otherwise I would have proposed an increase in the particular excise tax that is imposed under the Old Age Security Act. For these reasons I support the Solicitor General in saying that this proposal does affect the balance of ways and means.
[DOT] (3:50 p.m.)


Mr. Monleith:: Mr. Speaker, regardless of what the minister may have said on December 19-


John George Diefenbaker: It is not clear.


Jay Waldo Monteith: The matter is not clear. The minister implied that his reason for introducing the mini-budget was that he wished to raise money for the old age supplementary payments. That this was his purpose was accepted by citizens across Canada, by the press and by all news media. It was said that the purpose of the mini-budget was to provide the funds necessary for the supplementary payment.
We did not wish to do it the way the government had proposed doing it. We should have preferred to give old age pensioners a flat increase of $25 per month. Nevertheless, everybody understood that the purpose of the extra taxes was to pay for the supplement. All editorials on the mini-budget commented on this situation. If the people are to be misled in this way and if the amendment is not allowed, I can see no alternative open to us other than to vote against the bill on third reading.


Mr. Olson:: Mr. Speaker, the question to be considered is whether the amendment is in order. Having looked at the precedents and citations in Beauchesne I suggest that the matter is not clear. I say that because I find contradictions. Do the precedents establish the competence of a member of the house to
March 2, 1967
move adjustments to a money bill? Citation 263 reads:
(2) The principle that the sanction of the Crown must be given to every grant of money drawn from the public revenue, applies equally to the taxation levied to provide that revenue.
Citation 265 says:
(1) No member other than a minister of the Crown may introduce a bill for the reduction of duties.
Of course the underlying principle is contained in citation 249 which reads:
(1) No cases can be found of any private member in the Canadian Commons receiving the authority of the Crown, through a minister, to propose a motion involving the expenditure of public money.
I submit there is authority showing that no amendment involving public expenditure can be moved by anybody but a minister of the crown. Even then the proposal must be preceded by a money resolution.
Turning to citation 270 of Beauchesne we find these words:
(1) A private member may move that certain specified taxes be readjusted-


Jay Waldo Monteith: Hear, hear.


Horace Andrew (Bud) Olson: The citation goes on to say:
-and that the scope of tax exemptions be enlarged.
What must be decided, Mr. Speaker, is whether there will in fact be an additional expenditure involving the public treasury which was not provided for in the resolution. I say that because if the money collected under Bill C-268 is to be transferred in some way other than provided for in the resolution preceding the bill, the amendment is out of order. On the other hand, if there is to be no additional charge on the public treasury it is difficult to see why the amendment would upset the balance of ways and means. Upsetting the balance of ways and means was the reason advanced by the Solicitor General.
Citation 278, the fourth paragraph, reads,
(4) The committee is not bound by the terms of the provisions which the ministers have inserted in the bill-
The bill does not say where this money is to be put. The money is to be found and the tax is to be an additional charge on the taxpayers of Canada. It is to be paid into the consolidated revenue fund of Canada.


Mitchell William Sharp: That is the point.
Excise Tax Act and Old Age Security Act


Horace Andrew (Bud) Olson: Certainly, that is one of the points. Citation 270 says:
A private member may move that certain specified taxes be readjusted-
I take it that that means that the matter may be readjusted without upsetting the balance of ways and means. Referring again to citation 278, paragraph 4, we find these words:
(4) The committee is not bound by the terms of the provisions which the ministers have inserted in the Bill-
I suggest to Your Honour that if you invoke this citation-the authority for it is not given -and if the committee is not bound by the terms of the provision in the bill, the amendment does not change the balance of ways and means. It does not change what was encompassed in the resolution preceding the bill. Therefore the amendment ought to be in order.
The last part of citation 278 reads as follows:
-whatever may be the cost resulting therefrom, so long as the power conferred by the royal recommendation is not exceeded.
I submit that there is authority supporting the hon. member for Grey-Bruce in his attempt to adjust the allocation of certain taxes, so long as the hon. member's amendment does not involve changing the amount of the taxes. I should add, Mr. Speaker, that the amendment ought not to increase taxes, but many citations show that a private member has competence to move motions to reduce taxes. The hon. member's amendment does not attempt to increase taxes. It simply seeks to restrict these taxes to a specified purpose.
The bill does not specify where the money is to go, and that troubles me. One must assume that the money raised through the bill is to go into the consolidated revenue fund. Relying on citation 270, I think there is authority to support acceptance of the hon. member's amendment.


Eric Alfred Winkler: Would the hon. member permit a question which is germane to the final part of his presentation? The Minister of Finance told the house that he is collecting money for the old age supplement. Because the money collected often exceeds the forecast of need, would it not follow as a matter of common sense that the honest and correct thing to do would be to pay the money into an old age supplement account? The minister already has the old age security fund. The budget was introduced to raise money for the

13658	COMMONS
Excise Tax Act and Old Age Security Act supplement. I ask the hon. member if it would not be the fair and honest thing to do to pay the money into an old age supplement account?


Horace Andrew (Bud) Olson: I am not prepared to argue about what is fair or honest or what the hon. member for Grey-Bruce or any other member thinks should be done.


Eric Alfred Winkler: One has to be honest once in a while.
[DOT] (4:00 p.m.)


Horace Andrew (Bud) Olson: All we have before us is Bill C-268 and an attempt to move an amendment which would refer the bill back to committee for the inclusion of a provision that all these moneys be paid directly into the old age security fund. To answer the hon. member's question, as far as I know there is no provision made in the bill for a supplementary old age pension fund. Whether he thinks it would be a good idea to have one or whether I do is irrelevant to the point of order before the house at the moment.


Mr. Deputy Speaker:: I thank hon. members for the contributions they have made in helping the Chair to decide whether or not the amendment moved by the hon. member for Grey-Bruce is in order.
First I should point out that the amendment deals with the disposition or the rerouting of moneys. As such, it is a financial proposal which would have to be contained in the resolution preceding a money bill. Further, I should like to read to the house citation 418 of Beauchesne's fourth edition which reads as follows:
The question for the third reading is put immediately after the report from the committee of the whole. All amendments which may be moved on the second reading of a bill may be moved on the third reading with the restriction that they cannot deal with any matter which is not contained in the bill.
In the opinion of the Chair the amendment proposed by the hon. member for Grey-Bruce introduces a new principle. It deals with something which is not contained in the bill and therefore it is not admissible as an amendment on third reading. I regret I shall have to rule the amendment out of order.


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I agree with the hon. member for Grey-Bruce (Mr. Winkler) as well as with other members of the house that if there is to be an increase in the sales tax the proceeds from that increase ought to go into

DEBATES	March 2, 1967
the old age security fund. However, it appears that a vote on that issue will not be possible. This leaves us again on the main motion for the third reading of Bill C-268.
I wish to state categorically on behalf of this party that we are still opposed to any increase at all in the sales tax. I intend to propose an amendment to the motion for third reading which, if passed, would give the committee of the whole an opportunity to reconsider clause 1 of the bill. Clause 1 of Bill C-268 is the clause in this legislation which raises the sales tax by 1 per cent. What it does, of course, is to raise the general sales tax from 8 per cent to 9 per cent, and with the addition of the 3 per cent old age security tax this gives us the 12 per cent federal sales tax which is now in effect.
Our point is simple, direct and clear. We think this 1 per cent should not be added to the sales tax. My amendment, the only one which can be moved at this stage to give the house a chance to consider this matter, will be to this effect.
Let me indicate two or three reasons for believing that the sales tax should not be increased at this time. First, if I may do so without provoking some wry humour of the part of the Minister of Finance (Mr. Sharp) I should like to mention the Carter report. It seems that when one of us on this side of the house mentions the Carter report the hon. gentleman is amazed that we have somehow understood at least parts of it during the short time in which it has been available. I confess that I too have not read it all yet, and no doubt when we read it in all its detail we will find things in it with which we do not agree. But it is fairly clear that the Carter commission is against a federal sales tax at the level which now prevails. It is also clear that the commission is against a federal sales tax applied at the manufacturers' level which facilitates the escalation of that tax so that it becomes a much higher percentage by the time it reaches the consumer.
Even though it may take time to deal with all the recommendations in the Carter report, even though there is a case for those recommendations being considered as a package, I think it is an insult to this house to ask us to fly in the face of the opposition expressed by the commission to this kind of sales tax by inviting us to vote for a bill which increases the federal sales tax at the manufacturers' level to 12 per cent.
March 2, 1967	COMMONS


Mitchell William Sharp: May I ask the hon. gentlemen a question? Is the Carter commission not also opposed to the income tax in its present form?


Stanley Howard Knowles: Yes, that is perfectly correct. But the Minister of Finance is not by this bill proposing any changes or extensions in the income tax other than the provision raising the limit on the old age security tax.


Mitchell William Sharp: Would the hon. member permit another question? The reason I ask it is this. If we refrain from imposing this 1 per cent tax, I gather he would prefer raising the money through some other form of taxation. He does not disagree that we need the money, does he?


Stanley Howard Knowles: Is the minister inviting me to remind him of the recommendation in the Carter commission report that a capital gains tax be imposed? If that is his intention I will certainly do so, with pleasure.


Mitchell William Sharp: And that a reduction be made in the top limits of personal income tax?


Stanley Howard Knowles: Most of what I see in the Carter commission report, I like.


Mitchell William Sharp: That is not what the hon. gentleman was suggesting.


Stanley Howard Knowles: Let me enter a caveat against the taxation of co-operatives and credit unions and a few things of that sort.


Some hon. Members:: Hear, hear.


Stanley Howard Knowles: I am pleased to have provoked a few "hear, hears".
Let us consider this question straightforwardly. What is before the house now is not legislation amending the income tax structure generally. What is before us is a simple, narrow proposition in two parts. One has to do with the ceiling on the old age security tax that people pay. The other, the more significant one, is an increase in the federal sales tax. The Carter commission having stated its view that a federal sales tax even at its present level is undesirable, I submit it is an insult to hon. members of this house to ask us to fly in the face of that opinion by passing a bill which would raise that tax by another percentage point. As a matter of fact the sales tax increase that is provided in this bill represents, I believe, $155 million a year out of the $290 million a year that the minister expects to raise by way of extra revenue as a result of this bill.
Excise Tax Act and Old Age Security Act [DOT] (4:10 p.m.)
I have asked the minister two or three times by means of questions on orders of the day if he would consider postponing third reading of this bill in view of the recommendations of the Carter report. He told me no the first time, but then he did postpone it a week. When I asked him once more he told me no again, but once again he postponed it. I only hope he keeps on postponing it. However, the house will decide on that question when it votes on the amendment which I will be moving in a few minutes.
The second reason for our opposing the increase in the sales tax is in line with what was argued by the hon. member for Grey-Bruce and those who spoke on the point of order a few moments ago, namely, that this sales tax revenue is not going into the old age security fund. We have been over this argument back and forth, around and about and home again, several times. The minister talks at one point about balancing funds and at another point about cash inflow and cash outflow, and so on. But in my view the hon. member for Perth (Mr. Monteith) was perfectly correct when he said a few minutes ago that the general public's understanding was, and is, that the whole purpose of the taxes being raised by the mini-budget was to meet the increased cost of old age security pensions.


Mitchell William Sharp: To raise the cash.


Stanley Howard Knowles: The minister returns to cash when we talk to him about the fund. If that is the case I suggest to him that he pick up the Carter report again and read what it says about these funds for social security purposes. I am glad to see him nodding his head. Apparently he has read that part of the report and apparently he agrees with the report's recommendation that these funds for social security purposes are really just political devices.


Mitchell William Sharp: Hear, hear.


Stanley Howard Knowles: Mr. Speaker, it is a red letter day when we get a comment from the Minister of Finance on the Carter report. He agrees with what the Carter commission says about funded social security funds.


Thomas Clement (Tommy) Douglas: Without a three year period of contemplation either.


Mitchell William Sharp: I would have agreed with that before they published the report.
13660	COMMONS
Excise Tax Act and Old Age Security Act


Stanley Howard Knowles: As a matter of fact, the minister has made statements like that two or three times during the course of this debate. I suggest that if he agrees with that he should not be so concerned about what he calls his responsibility as Minister of Finance to put taxes into a fund which he now admits is just a political device after all. So, Mr. Speaker, because the money is not going to be used for the fund which in the public mind is the fund that is used to pay pensions, we suggest it is not necessary.
May I also point out that there is still plenty of money in the old age security fund, if we accord any sanctity at all to these funds, to pay old age security pensions for quite a while into the future. I know the minister asks, "Where is the cash"? But as I say, at one moment he says, "I have to find the cash," and at another moment he says, I have to keep the fund reasonably in balance." Why does he have to keep the fund reason-xbly in balance? Is it just an accountancy exercise, or does it mean that fund has to be kept reasonably in balance so that payments can be made out of it?
The government publishes its own figures <vith respect to the fund. In this connection I am looking at page 632 of the Canada Gazette, part 1, for Saturday, February 25, 1967, which is fairly recent. In fact I think it is the nost recent issue, and on that page we are given figures about old age security fund transactions. We are given them by years for quite a number of years and for the last three years we are given them by months.
I find that in the most recent month for which there are figures, January, 1967, the surplus of collections from taxes for old age security purposes over payments made out was the largest it has ever been in any month in the history of that fund. This, I repeat, was in the month of January following passage of the pension increase in December and before the money from these extra taxes has started to go into the fund. In the month of January the government collected by way of its 3-3-4 taxes-per cent on corporations, 3 per cent on sales tax and 4 per cent on income-$50.2 million more than it paid out. Yet the minister talks about the problem of finding the cash. He picked up a lot more cash in January than he needed to pay these pensions.
He has also told us that the old age security fund, with the money that is going to be put into it by raising the ceiling on the income tax people pay for old age security, will remain in reasonable balance, to use his own

DEBATES	March 2, 1967
words, until 1971. He says that will be the case even though there will be extra payments out of it for the guaranteed income supplement and even though the eligible age will be brought down to 65 years.
What is the point of having a fund that seems to be reasonably solvent, since there was $50 million worth of gravy added to it in January, 1967, if with all that money around and that surplus coming in the minister comes along and says, "We need this extra cash and we are going to get the extra cash by imposing a sales tax, but we are going to put the money into the consolidated revenue fund"? We think it is all wrong, Mr. Speaker, on all counts.
As I have already said, Mr. Speaker, Bill No. C-268, while it has several clauses, has but two main propositions. On the one hand it raises the sales tax about which I have been talking. On the other hand it raises the ceiling on the amount of income on which one pays the 4 per cent social security income tax. We are in agreement with the latter proposition.
If you go right back to 1950 when we discussed this matter in the committee on old age security you will see that we advocated that there be no ceiling on this tax. We advocated that the tax people paid for old age security should be on all income, no matter how high those incomes might be. We opposed the $60 ceiling, then the $90 ceiling, and following that the $120 ceiling. Therefore we do not quarrel with raising the ceiling now from $120 a year to $240 a year.
The minister has certainly not demonstrated that he needs it. He certainly does not need it, but he says that with this increase he will be able to keep the fund reasonably in balance until 1971. Therefore, Mr. Speaker, we are not going to criticize this second proposition. We are not going to criticize or seek to vote against the proposal that the ceiling on income taxes for old age security purposes be increased, but we do register our strong objection to the increase in the sales tax. We think it is not needed at all in terms of budgetary arrangements, and despite what the minister says we think the whole proposition is misleading to the country. We think the Carter report's pronouncements on this issue should be taken note of, and therefore we think the house should send the bill back to the committee of the whole and give it the chance to reconsider clause 1. Clause 1 is the clause which raises the sales tax by 1 per cent. We hope the result of the reconsideration that would follow the passing of our
March 2, 1967	COMMONS
amendment at this time would be to wipe out that increase in the sales tax.
[DOT] (4:20 p.m.)
Therefore, Mr. Speaker, I move, seconded by the hon. member for York South (Mr. Lewis):
That Bill No. C-268 he not now read a third time, but that it be referred back to the committee of the whole house for the purpose of reconsidering clause 1 thereof.


Horace Andrew (Bud) Olson: Mr. Speaker, this amendment, of course, is worded in such a way that the hon. member for Winnipeg North Centre (Mr. Knowles) knows very well it is in order. It simply refers to a reconsideration of clause 1. There is no doubt that many hon. members, including the members of this party, are in some measure of agreement with the arguments advanced by the hon. member for Winnipeg North Centre. The statement was made by the minister when he introduced the mini-budget in December that there are sufficient moneys in the old age security fund to pay not only the present requirement of $75 a month under the Old Age Security Act but also the anticipated expenditures for the supplement to the old age security pension until, I believe, somewhere in 1968 or 1969. So there is no question that for the immediate cash requirements for this particular purpose there is sufficient money coming in now. There is a surplus in the old age security fund and if the supplement is paid out of that same fund there is no immediate need with receipts coming in at the present rate.
I suggest there is something that can be said for the government in fact levying taxes only when they are needed for a particular purpose provided they can show that they are needed for that purpose. The Minister of Finance (Mr. Sharp), of course, on at least one or more occasions has suggested that the increase provided for in clause 1 of Bill No. C-268 is for the purpose of taking care of the additional expenditures involved in the supplement to the old age security payments.
But, Mr. Speaker, it seems to me that all the arguments the hon. member for Winnipeg North Centre has advanced this afternoon in moving this amendment have been placed before the house not only once but on a number of occasions. The fact is that the majority of hon. members did not choose to acquiesce in those arguments or amendments.
I recognize that perhaps there can be some admiration of the perseverance exhibited in presenting exactly the same case and the
Excise Tax Act and Old Age Security Act same argument over and over again, but there comes a point when one must accept the fact that the government must bring in the amendments so far as old age security or any other expenditure is concerned, and that the majority rules.
I suggest to you, Mr. Speaker, that we reached that point some time ago. While many members of the house, including the hon. member for Winnipeg North Centre, might like to go on repeating exactly the same arguments and have another vote on exactly the same issue, because of course it is permissible under the rules to refer a bill back which has already been through the committee, I think this is a waste of time.
Mr. Cameron (Nanaimo-Cowichan-The
Islands): Are you suggesting that we abolish
the third reading stage of bills?


Horace Andrew (Bud) Olson: If because of third reading we are to be continually faced with a repetition of having exactly the same proposition put before the house which we have just gone through on second reading, then I suggest that we are engaging in a useless and frustrating exercise. If members of the New Democratic Party continue to do what they have been doing recently, waste the time that is needed by parliament to deal with other matters which have not yet been considered by the house, then perhaps we might give some consideration to amending the provision for third reading so that we do not have to have this useless repetition.
I am sure the hon. member for Winnipeg North Centre knows in his own mind that he has about as much chance to succeed in getting this bill amended, if it is referred back to the committee now, as he had when the same arguments were advanced on second reading. Therefore he has not acted in a sincere belief that changes will be made. He has taken this action simply for the purpose that his party may get some mention in the press of their perseverance in attempting to do some of these things. We in this party are interested in getting on with the business of the house so that we can provide as much of an increase as possible to the senior citizens who need it as quickly as possible. The way we can achieve this is by passing third reading now and getting this legislation into effect. We know, as does the hon. member who moved this amendment, that absolutely nothing will be achieved by it except to waste time. If this amendment is passed we will be in exactly the same position when we get back to third reading again.
13662	COMMONS
Excise Tax Act and Old Age Security Act


Stanley Howard Knowles: Is the hon. member satisfied in advance that there is no purpose? Does he not believe that if he voted with us there might be a chance to win the vote?


Horace Andrew (Bud) Olson: We know the consequences which would result if the hon. member had his way. The result would not be to the advantage of the senior citizens of this country who need this additional money in the form of the supplement as quickly as it can be delivered to them. One way to achieve this purpose is by passing the legislation.


Stanley Howard Knowles: Has not the amendment to the Old Age Security Act already been passed? Is it not in effect whether or not this bill passes?


An hon. Member:: Of course it is.


Jay Waldo Monteith: Of course it is.


Mr. Lewis:: The hon. member knows it.


Horace Andrew (Bud) Olson: The hon. member for Winnipeg North Centre, as well as his colleagues sitting around him who are smiling at this point, know that while we do some pleasant things we have to do the unpleasant job of collecting the money as well. If they think they can avoid this they are going to have a rude awakening if they ever form a government, and so will the people who have been accepting this kind of garbage over the years.


Thomas Clement (Tommy) Douglas: Did the hon. member not say that there is now sufficient money to last until 1969? Even if the amendment of the hon. member for Winnipeg North Centre were accepted there would still be enough money to last until the end of March, 1971. Therefore, how could this amendment delay payment of the supplement to the old age pension?
[DOT] (4:30 p.m.)


Horace Andrew (Bud) Olson: That is correct, but the leader of the New Democratic Party has completely misunderstood the argument I was trying to advance. He knows very well that this will not be done anyway. All we are doing is wasting more time because all the arguments that are now being advanced in support of sending this bill back to the committee have already been advanced previously and were not accepted at that time. All that is being asked in this amendment is that the bill go back to the committee for reconsideration of clause 1. What is more, that reconsideration will be undertaken on the basis of arguments that have already been advanced.

DEBATES	March 2, 1967


Frank Howard: Mr. Speaker, I rise on a point of order with respect to the hon. gentleman. I should like to ask that you cease to recognize him because obviously he should be in the Senate and the Liberals should appoint him to that body.


Horace Andrew (Bud) Olson: If the suggestion of the hon. member for Skeena brings the same results as his other suggestions have, then I would propose that the Liberal party disregard it completely.
The main point of my argument is simply to plead that the house be sufficiently realistic and practical to realize that the best way to proceed to dispose of this amendment and to go on to the other business with which members of parliament are charged. We have heard all the valid arguments that can be advanced. To continue this discussion will mean a repetition of arguments we have heard before and on which the house has already decided.
May I point out, Mr. Speaker, that according to the rules there should only be one session of this assembly a year. This session, which has been under way since January 18, 1966, has already lasted 13 months. We are not moving ahead with the business that is before the house and the reason is that hon. members are continually invoking the rules so as to waste more time. I suggest, therefore, that the most expeditious way in which we can dispatch the business before the house is to pass third reading of the bill. I do not think the bill is perfect but we should proceed to other matters which demand the attention of the house.


Jay Waldo Monteith: Mr. Speaker, I would like to clarify one point which the hon. member for Medicine Hat raised. He suggested that the recipients of old age security might not receive these payments retroactive to January 1 if we did not pass this bill. He knows very well that this is utter nonsense.


Horace Andrew (Bud) Olson: I never said that.


Jay Waldo Monteith: That was the implication of what was said. He also said that third reading of the bill was a useless and fruitless exercise. Surely to goodness he has sufficient respect for the rules of the house to realize that we have to go through various procedures and that a bill cannot become law until the last step has been taken. We are still considering Bill C-268, and there is certainly nothing wrong with anything that has been said thus
March 2, 1967

far on third reading. I think that his statements have been utterly ridiculous.


Mr. E. Nasserden (Rosihern):: Mr. Speaker, may I say with regard to some of the statements made by the hon. member for Medicine Hat (Mr. Olson) concerning the passage of business of the house that we could save a great deal of time if the members of his party would vote in accordance with what they say on matters that are before the house. They have supported the government on every occasion even after having criticized the legislation before the house.


The Deputy Speaker:: Is the house ready for the question?


Mr. Speaker:: I declare the amendment lost.


Mr. Tucker:: I was paired, Mr. Speaker. Had I voted I would have voted against the amendment.


Heath Nelson Macquarrie: I was paired with the hon. member for Essex East (Mr. Martin). Had I voted I would have voted for the amendment.


Mr. Rynard:: I was paired with the hon. member for Brantford (Mr. Brown). Had I voted I would have voted for the amendment.


Mr. Smith:: I was paired with the Minister of Forestry and Rural Development (Mr. Sauve). Had I voted I would have voted in favour of the amendment.

March 2. 1967
Division


Mr. More:: I was paired. Had I voted I would have voted for the amendment.


Mr. Speaker:: Is the house ready for the question on the main motion?


Some hon. Members:: Agreed.


Mr. Speaker:: Call in the members.
[DOT] (6:10 p.m.)
During the calling of the members:
Prud'homme
Richard
Rideout (Mrs.)
Robichaud
Rochon
Rock
Roxburgh
Ryan
Sharp
Stanbury
Stewart
Tardif
Teillet
Thomas (Maisonneuve-Rosemont)
Tolmie
Turner
Wahn
Walker
Watson (Chateauguay-Huntingdon-Laprairie) Whelan
Winters-84.
++NAYS


John George Diefenbaker: Is the house in session?


Mr. Speaker:: The bells are still ringing. I am afraid the house is still not in session.


John George Diefenbaker: This is the most scandalous thing that has happened in all the years I have been here. The bells have been ringing for one hour and 17 minutes.


Michael Starr: For one hour and 17 minutes.


John George Diefenbaker: It is a scandalous contempt of parliament.


An hon. Member:: The hold-up is for a plane from Montreal.
Following the calling of the members:


Mr. Speaker:: I declare the motion carried.


Mr, Martin (Essex East):: I was paired with the hon. member for Queens (Mr. Macquar-rie). Had I voted I would have voted for third
reading.


Lawrence T. Pennell: I was paired. Had I voted I
would have voted for the motion.


Philip Bernard Rynard: I was paired with the hon. member for Brantford (Mr. Brown). Had I voted I would have voted for the motion.


Some hon. Members:: Hear, hear.

March 2, 1967


Philip Bernard Rynard: That was a slip of the tongue, Mr. Speaker. I would have voted against the motion.


Kenneth Hamill (Ken) More: I was paired. Had I voted I would have voted against the motion.


Mr. MacDonald (Prince):: I was paired. Had I voted I would have voted against third reading.


Mr. Bower:: I was paired with the hon. member for Restigouche-Madawaska (Mr. Dube). Had I voted I would have voted against the bill.


John George Diefenbaker: Mr. Speaker, I rise on a question of privilege affecting the rights of members of this house. Both the Prime Minister and the Leader of the Opposition have a responsibility to parliament and it is in my capacity as Leader of the Opposition that I say this exhibition today, involving a delay of 77 minutes in the taking of a vote, is a gross perversion of the rights of members of this house and deserves the severest condemnation.


Some hon. Members:: Hear, hear.


John George Diefenbaker: We hear unctuous references to the reform of parliament. What happened here today made a puppet show of this House of Commons and 1 protest with all the force at my command. There is no parliament in the British parliamentary system which would countenance a delay of this extent, wasting the time of members of parliament for the benefit of a government which was frightened.


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: Mr. Speaker, the right hon. gentleman has a very convenient memory. He seems to have forgotten the days when he was on this side of the house and we were on that side. Very often we waited minute after minute, 10, 20, 30 and sometimes 40 minutes after the bell had begun to ring.


John George Diefenbaker: That is false, completely false, and the Prime Minister knows it is false.


Lester Bowles Pearson: It is not false. There is no rule against ringing the bell. I would point out that we were in our places after the previous vote had been taken, and if the chief opposition whip had not left the chamber a vote could have been taken right then.


Some hon. Members:: Hear, hear.
Private Bills


John George Diefenbaker: That statement is false, and the Prime Minister knows it.


Some hon. Members:: Oh, oh.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Speaker:: Order. It is my duty to inform hon. members that under provisional standing order 39A the following matters will be discussed on the adjournment debate: The hon. member for Norfolk (Mr. Roxburgh), National Health and Welfare-Smoking-reported C.B.C. statement by Stanley Burke; the hon. member for Greenwood (Mr. Brewin), National Defence-NATO-Possible change in Canadian military contribution; the hon. member for Sherbrooke (Mr. Allard), Ports-request for bringing thefts and pillage to an end in the port of Montreal.
It being after six o'clock the house will now proceed to the consideration of private members' business as listed on today's order paper, namely, private bills, notices of motions and public bills. Order. I suggest to hon. members that conversations, discussions and other meetings be held behind the curtains or in the lobbies.



PRIVATE BILLS


Mr. S. Perry Ryan (Spadina):: Mr. Speaker, I am substituting for my friend, the hon. member for Vancouver-Burrard (Mr. Bas-ford), and at his request and with his authority I would ask that Bill No. S-25 be proceeded with.


Sylvester Perry Ryan: that the house go into committee to consider Bill No. S-25, to incorporate the North West Life Assurance Company of Canada.
Motion agreed to and the house went into committee thereon, Mr. Batten in the chair.
On clause 1-Incorporation.


Mr. Peters:: Mr. Chairman, many of us in the house have been interested in the rash of insurance companies coming to parliament for incorporation. We have been interested in the distinction which is drawn between the operations of insurance companies and those of the banking institutions of this nation. We have re-assessed our position on banking institutions and decided the interests of Canada

March 2, 1967
Private Bills
can best be served by having them operated by persons who are responsible to the Canadian public. We have not taken such care with insurance companies, although such companies provide large sums of money used in our economic development, particularly mortgage money for housing.
[DOT] (6:30 p.ra.)
It is interesting to note that this bill meets the criteria we are trying to establish with respect to ownership for all companies engaged in the insurance and assurance business. This is a Canadian company which was initially provincially incorporated in British Columbia, under provincial statute, in 1956. Most of the directors have served on the executive at the provincial level.
I believe it is necessary to have competition between insurance companies and insurance agents. It is nice to have two or three agents in a town with whom one can discuss insurance problems, but since we already have 3,000 to 4,000 insurance companies in existence I do not see the necessity for additional competition by increasing their number. Members of this party have been unable to find out from any reliable source whether there is any necessity for creating new insurance companies.
One problem which has arisen in connection with this bill was discussed in committee today, when the answer was given that incorporation was arrived at by the use of the legal term "deemed to be a company." In this case we are establishing a company Which has previously operated under provincial jurisdiction. We can ascertain from the bill who the directors will be, what type of company they want to incorporate, what type of insurance they want to underwrite, and how much money they must raise before incorporation. Because it is a company that has been under the supervision of the inspector of insurance, that official has been able to tell us that its previous operations were proper and that it is the type of company that should receive incorporation.
This company will assume the responsibilities of the provincially incorporated company, and in effect will be transferred from provincial to federal jurisdiction. I am sure many other companies will follow this path.
All hon. members have had the experience of going into an insurance agent's office and seeing the agent draw a form from a drawer containing 20 or 30 forms for various companies-possibly a hundred or, if he is fortunate enough, 3,000 forms representing all companies. It does not seem to make any

difference which form he picks up. One agent told me he took the forms in rotation. Is this really competitive? Is there any difference if he picks out the first one or the seventh one so far as the cost of insuring property is concerned?
If you are seeking life insurance, does it make any difference whether you go to one agent or another and ask about the cost of term insurance, of endowment policies, or of sickness and accident insurance? I think there is no difference and no competition. There may be competition in other forms of insurance but the number of companies does not have much effect.
From checking with some of my colleagues from British Columbia I have discovered that the three major shareholders in this company are important members of a political party. They also have connections in a number of other operations. They were involved in setting up a sickness and accident insurance company which could have administered the federal health plan in that province, and considering the amount of money which such companies can provide for long-term mortgages I think this is worth investigating, because there might be a danger that such companies would decide to halt their normal investment in such an important part of our economy.
The other night I discussed with a number of people the problems raised by the needs test connected with the old age pension supplement, and the difficulties that arise in securing widows and veterans allowances. If a person has savings it is difficult to obtain these benefits. I told the people I met that it was becoming less and less advantageous to take out life insurance policies of the endowment nature, and that it would be very foolish for a young person today to take out a government annuity. For a person in the low income level to acquire sizeable savings may result in his eliminating himself from various social and welfare benefits.
[DOT] (6:40 p.m.)
I think there are many facets of the insurance business which warrant consideration. The major consideration should be the desire of the Canadian people not to incorporate insurance companies just for fun, but rather to incorporate insurance companies which will have in mind the welfare of the nation, because the large assets these companies have should be used for the public good. In my opinion, in a few years these assets will be transferred into an additional section of the Canada Pension Plan which will allow us to
March 2, 1367

Private Bills
insure for many things not now contemplated, and which will make it possible for the companies to provide the type of insurance money which is necessary for social capital in our nation.
The Toronto Daily Star discusses the report of the Carter royal commission report in relation to this matter. Although in my opinion this company does meet the criteria we have demanded, I think the Carter commission report in respect of insurance companies is something all members of parliament should give consideration to. I should like to quote from the editorial in the Toronto Daily Star of February 28, 1967:
The life insurance industry is a sluggish giant.
It consumes 30 per cent of the personal savings of Canadians, but is chronically reluctant to invest in the country's industrial growth. And the Carter royal commission has found that it is taking a virtually free ride on the backs of Canadian taxpayers.
The commission's figures on life insurance companies are eye-popping. Here is an industry with $12 billion worth of assets which in 1964 took in $1.3 billion in premiums and $600 million net in investment income. It paid out $800 million in dividends and benefits-and just $2,000,000 in corporation income taxes.
Foreign life insurance companies operating in Canada pay no taxes on their business income, since they are considered to have no shareholders' accounts in this country. But the favour is not reciprocated to Canadian life insurance firms operating abroad, which-on a comparable amount of business-paid foreign governments nearly $14 million in income taxes in 1964.
Canadian mutual life insurance companies likewise get a free ride. They have no shareholders' accounts, since the policyholders have bought out the shareholders.
The others managed to get their taxable income down to $5,000,000 in 1964, although the revenues of Canadian life companies exceeded expenditures by $90 million after increasing reserves to meet future claims. Hence that paltry $2,000,000 tax.
The commission found that life insurance companies are being too generous with themselves in calculating actuarial reserves-the funds needed to pay policyholders' claims.
They typically assume that their long-term investments will yield only 3 to 3.5 per cent, although their actual average yield has not dropped below 4 per cent in any 20-year period since 1900-and was almost 5.5 per cent in 1964.
The Carter report favours setting a new, arbitrary rate for their investment yield-something over 4 per cent at present, although the precise rate would be worked out in discussions between the government and the industry.
Well, Mr. Chairman, I raise this only as an indication to members that the Carter commission which investigated the insurance companies operations in Canada was very concerned with the lack of what the Minister
of Industry calls good Canadian corporate citizenship.
If they have a citizenship-and those which are controlled by Canadians ought to have-then obviously they are not meeting the criteria which I think even the Minister of Industry would indicate constitutes good corporate citizenship. It is interesting to note that a company of this nature will start out by amassing $600,000 and will build from that into an agency. I would think, if one would look down the list of names of the directors of this insurance company, he would find that any one of them could bring in $600,000. There are at least three millionaires on the executive. I do not think they would have any difficulty in transferring a few assets from one place to another in order to raise this amount of money.
This company will be worth some hundreds of millions of dollars in assets. How much of that will be used for the benefit of Canada and for the national good; how much of it will be used to establish competition, and how much of it will be used to see that some other company gives us insurance at rates cheaper than this company will? I think I can suggest that the answer is, not one red cent. There will be absolutely no competition in this field. All of this leads us to question whether there is any real difference in the company being owned by Canadians or by foreign investors. The answer is not yet known to me, although I think it is something to which I shall have to pay some attention, and to which I think other members of parliament will have to give some consideration.
I believe we will be guided to some extent by the remarks which have been made by persons such as the present Minister of Finance who has said in relation to banks that this large accumulation of money in the banking industry must be under the control of the Canadian people, because it is such an important factor in the economic development of our nation. These millions and billions of dollars-and the indication is that in 1964 it will amount to about $1.3 billion in premiums alone-would be available through the interlocking of insurance companies which are so important in the development of some facets of our economy. I do not think it is possible for us any longer to look the other way in respect of the chartering of these new companies under federal control when really in effect they do what they like with my money, and collectively with everyone else's, quite

March 2, 1967
Private Bills
often to the detriment of our national economy.
Several important aspects of this bill are a credit to the company, and while we see nothing particularly wrong with the bill I believe we should be looking at the over-all picture as it affects insurance companies. I believe if collectively we looked at the insurance industry we would see that we do not need more insurance companies, but that we need fewer, so that there would be some guarantee of competition in the industry, which I am sure is not going to result from the passage of this particular bill.


[Stage Direction]
Clause agreed to.
Clauses 2 and 3 agreed to.
[DOT] (6:50 p.m.)
On clause 4-Subscription and payment before general meeting.
Frank Howard: Mr. Chairman, in respect of clause 4 I agree with the hon. member for Timiskaming regarding the inadequacy of the $2,250. I do not believe the provisional directors should be allowed to call an annual general meeting after the subscription of $2,250. In this regard let me refer to another bill, S-28, the next one on the order paper.


Herman Maxwell Batten: Order, please. We are now considering clause 4. The hon. member's remarks relate to the subject matter of another bill. I suggest he confine his remarks to clause 4 of the bill now before us.


Frank Howard: That is precisely what I was attempting to do, but I wanted to preface my amendment by a few explanatory remarks.
This bill refers to a $1 million capitalization and has a provision which allows the provisional directors to hold an annual general meeting after the subscription of $2,250. In this respect it is similar to Bill No. S-28. The difference between the two bills is the amount of the required subscription. In the one before us only $2,250 is required, whereas in Bill No. S-28 $500,000 is required. I suggest that there should be a subscription requirement of more than what this bill requires. Therefore I move:
That clause 4 be amended by deleting in lines 3 and 4 thereof the words "two thousand two hundred and fifty dollars" and by substituting therefor the words "five hundred thousand dollars".


Sylvester Perry Ryan: Mr. Chairman, I did not anticipate an amendment of this kind and I have no authority to accept it. Let me suggest to the committee that a provision requiring a 
$500,000 subscription before a general meeting could be held would be too restrictive. I suggest the amount is too high, and if we desire to continue with the free enterprise system a company would have great difficulty in getting started, if it were faced with such a requirement. The first general meeting is held mainly for the purpose of ratifying the bylaws and acts of the provisional directors and deciding upon the make-up of its policies. There should be sufficient money put up to show that they are in earnest, but the requirement of $500,000 is altogether inordinate. I ask hon. members of this committee to defeat the amendment on that basis.
Amendment (Mr. Howard) negatived: Yeas, 3; nays, 15.


[Stage Direction]
Clause agreed to.
Clauses 5 to 9 inclusive agreed to.
Preamble agreed to.
Title agreed to.
Bill reported.
Mr. Deputy Speaker:: When shall the bill be read a third time?


William Arnold Peters: By leave, now.


Sylvester Perry Ryan: the third reading of the bill.


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


William Arnold Peters: On division.
Motion agreed to and bill read the third time on division.



ANNIVERSARY LIFE INSURANCE COMPANY

Eric Alfred Winkler: the second reading of Bill No. S-28, to incorporate Anniversary Life Insurance Company.
[DOT] (7:00 p.m.)
Motion agreed to and bill read the second time.


Mr. Deputy Speaker:: Pursuant to standing order 105, the said bill is referred to the standing committee on finance, trade and economic affairs.


Eric Alfred Winkler: Mr. Speaker, I ask that we proceed with the bill through all the stages.


Mr. Deputy Speaker:: I am advised by the Clerk of the House that it is not possible to proceed with the bill in committee of the whole. It would either have to be referred to
March 2, 1967

the standing committee on finance, trade and economic affairs or be allowed to stand at this stage of the proceedings.


Frank Howard: Mr. Speaker, would you reconsider your view on this procedure? I recall distinctly that the house made a similar decision to the one requested by the hon. member for Grey-Bruce with respect to another bill, by giving unanimous consent to waiving the rule, after which it proceeded to consider the bill in committee of the whole and then proceeded, again by unanimous consent, to third reading of the bill.
I submit the fundamental rule is that the house is master of its rules, and if it decides by unanimous consent to waive the rules it should be able to do so. In fact it has done so on other occasions.


Mr. Deputy Speaker:: Perhaps I should point out to the hon. member for Skeena that the difficulty with which we are faced here is not only a procedural matter but also a matter of finances. If the hon. member who is sponsoring the bill is prepared to declare to the house that the financial implications involved have been met, then perhaps the Chair will be able to withdraw its objection.


Eric Alfred Winkler: Mr. Speaker, we agree to let it stand.


Mr. Deputy Speaker:: Does the house agree to let the bill stand at this stage of proceedings?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: I am advised that there may be some difficulty in allowing the bill to stand at this stage. Since the second reading has been completed, there is no way in which the bill can be referred to on the order paper.


Eric Alfred Winkler: Can we not allow it to remain on the order paper by unanimous consent?


Mr. Deputy Speaker:: Since second reading of the bill has been completed it cannot remain on the order paper.


Frank Howard: I suggest that it remain on the order paper at the head of the list under "special order-stand for reconsideration of the disposal of the committee stage of the bill". I think the house can proceed in this manner if it wishes to. This should not transgress the financial position of the company.

Income Tax Act Amendment


Mr. Deputy Speaker:: I am advised that there is no procedure which would allow the bill to stand at this stage, as the bill must go to some committee after it has had second reading.


Eric Alfred Winkler: I suggest that we should refer it to the committee on finance, trade and economic affairs.


Mr. Deputy Speaker:: Pursuant to standing order 105, the said bill stands referred to the standing committee on finance, trade and economic affairs.
The hour for the consideration of private members business has now expired.



INCOME TAX ACT AMENDMENT


[Stage Direction]
The house resumed consideration in committee of Bill No. C-259, to amend the Income Tax Act and to repeal the Canadian Vessel Construction Assistance Act-Mr. Sharp-Mr. Batten in the chair.
Herman Maxwell Batten: Pursuant to an order passed on Tuesday, February 28, I now leave the chair. The committee will resume at eight o'clock.



SITTING SUSPENDED


[Stage Direction]
The committee resumed at 8 p.m.
Herman Maxwell Batten: When the committee rose, clause 21 of the bill was under consideration and clause 6 was allowed to stand.


Lawrence T. Pennell: Mr. Chairman, I understand that Mr. Speaker may wish to make a very short announcement. I therefore move that the committee rise and report progress.


Herman Maxwell Batten: Shall I rise, report progress and ask leave to sit again later this day?


Some hon. Members:: Agreed.
Progress reported.
[DOT] (8:10 p.m.)



MOTION TO RELEASE FROM CUSTODY PERSON WHO THREW LEAFLETS FROM GALLERY

Mr. Speaker:: As hon. members know, during the question period earlier today leaflets
March 2, 1967

Income Tax Act Amendment
were thrown from the general gallery to the floor of the chamber. Thanks to the alertness of the House of Commons protective staff, the offender was partially frustrated in his attempts and he was forthwith taken into custody. The individual identified himself as one John Richard Campbell of no fixed address.
Standing order 14 reads in part as follows:
Any stranger admitted into any part of the house or gallery, who misconducts himself... shall be taken into custody by the Sergeant-at-Arms; and no person so taken into custody shall be discharged without the special order of the house.
I should now like to obtain directions from the house before proceeding further.


Lawrence T. Pennell: Mr. Speaker, first of all perhaps I might be permitted to commend the protective staff for their vigilance in this matter.
Then, I should like to move:
That without prejudice to any later action that may be taken elsewhere, the person who identified himself as John Richard Campbell be forthwith discharged from the custody of the Sergeant-at-Arms.


Mr. Speaker:: Does the house so order?


Some hon. Members:: Agreed.


Mr. Speaker:: It is so ordered.
The house will now resume the business interrupted a moment ago.



INCOME TAX ACT AMENDMENT


[Stage Direction]
The house resumed consideration in committee of Bill No. C-259, to amend the Income Tax Act and to repeal the Canadian Vessel Construction Assistance Act-Mr. Sharp -Mr. Batten in the chair.
On clause 21-Application for assignment of social insurance number.
Horace Andrew (Bud) Olson: Mr. Chairman, when the committee was considering clause 21 of this bill last Tuesday I raised a question of the Minister of Finance concerning the manner in which these records would be handled by the computing system, so as to make certain that all of the information filed, such as the income tax returns that I presume will be stored by these electronic devices, is kept confidential in conformity with the law.

There are a number of problems involved here, Mr. Chairman. I am advised that there are a number of ways in which these electronic devices store this information which is fed to them. For example, I am told that these memory banks or storage devices are controlled by tapes, or by discs, or by drums. There are also other data cells which can store information. I am also advised, Mr. Chairman, that codes or labels are attached to the various files containing the information that goes into this data storage centre. I am advised that these data cells can in fact produce a formula in the form of a label, number, code, or whatever you want to call it, and this activates a device which by means of a track or a channel leads to what is called an address at which the records are located.
So far, Mr. Chairman, we have had no indication from the Minister of Finance whether this is the kind of system which will be used to make certain that the confidential information contained in the income tax files does not get into exactly the same place as, for example, information filed under the Canada Pension Plan, the Old Age Security Act, or other measures which require the use of these numbers for computing purposes.
For example, Mr. Chairman, we are aware that the number which the minister is insisting under clause 21 be attached to an individual's income tax return is exactly the same number as that used for his social security account. I have learned from talking to some university people who are knowledgeable in programming techniques and computing devices that if these files are not going to be used for comparison with files used for other purposes, then there is no advantage in retaining the same number for each file. Therefore I have to assume that the minister does intend that there be some advantage in retaining the same number.
I want to dissociate myself completely from the remarks made in this chamber the other evening by the hon. member for Battle Riv-er-Camrose, who suggested that there may be some socialist, communist or other sinister plot involved in the use of a social security number on income tax files. I accept the minister's statement wherein he said that this is done for administrative convenience. However, Mr. Chairman, the fact remains that under our income tax law, which I think is good law, information contained in income tax returns is confidential and cannot be revealed unless a court order is obtained. Even then, I suggest, it is very difficult for anyone
March 2, 1967

in the government or anybody else to get information from income tax files.
We now understand computers or electronic devices are going to store these files. If it is true that there is no advantage in having the same number on a person's income tax file as on his social security file, unless it is for purposes of comparison, then I would ask the minister why the same number is retained.
The hon. member for Winnipeg North Centre went on to make a great case that we have numbers attached to us for all sorts of purposes-drivers' licences, marriage certificates, and he even included the numbers on the various credit cards hon. members have. I am not opposed to a number being attached to income tax files. What I am concerned about is that we keep the same number, and therefore presumably the same file, for income tax purposes as for all other accounts in respect to social security.
Therefore, Mr. Chairman, I should like the minister to give the assurance that there is absolutely no intention of using information contained in these files for purposes of comparison with other files. If this is the intention, Mr. Chairman, the minister is violating the income tax law of this country, and I hope that he is not.
Along with this, Mr. Chairman, we must also be given the assurance-I think this we must demand-that the filing system is such that people seeking information by means of the social security number for purposes of old age security, the Canada Pension Plan and for other purposes, will not be able to gain access to information filed in income tax returns. As I say, the problem bothering me is the insistence of the minister on retaining the same number.
An other matter I want to raise is this. I understand a definite pattern is emerging in the assignation of social security numbers at the present time. In other words, by using various combinations of these nine numbers which form your social security number a great deal of information about a particular individual can be gleaned from the way the number is put together. That is what I have been told and I am prepared to verify that statement. This is why I should like to ask the minister whether there is some code or pattern which has been worked out in assigning numbers to various individuals.
[DOT] (8:20 p.m.)
Will there be any sequence to things when the applications arrive? Will these nine digits,

Income Tax Act Amendment these three groups of three numbers that have been assigned to individuals, be arranged in such a way that much information can be gleaned from their arrangement by computing devices? The people of Canada ought to know about this.
I do not suggest that there is anything wrong or sinister about this arrangement; but I do think the minister should answer questions which have been raised. Will these numbers be used in such a way that income tax files will no longer be confidential. Will that confidence be broken?


Mitchell William Sharp: Mr. Chairman, the hon. member for Medicine Hat has raised a legitimate question, one that I think the committee has every reason to seek reassurance about.
In the interval, since we were last discussing this bill, I have been in touch with officials of the Department of National Revenue and have asked them to assure me that the records of income of taxpayers are maintained as confidentially as they are required to be maintained, and that they are not available through any electronic devices or otherwise to people other than those concerned with the administration of the tax laws. I have this assurance; I will read what the deputy minister of national revenue has advised me. I then propose to discuss one or two questions raised by the hon. member.
The deputy minister of taxation for the Department of National Revenue advises me as follows:
All of a taxpayer's data on the records and files of the taxation division are protected by the secrecy provisions of the Income Tax Act. Any requirement on taxpayers to obtain a social insurance number does not affect the confidentiality of his affairs or the secrecy rules which protect them.
It is untrue to say that tax or other information obtained from any taxpayer would be passed to other departments of government for other purposes if that taxpayer obtains a social insurance number.
My understanding of the reason for having the same number is that it enables one to identify the taxpayer much more accurately than he otherwise might be identified, and that it saves a great deal of administrative trouble.
The social insurance number gives a continuity that is not otherwise available as to the identity of individuals. The hon. member has said he is concerned that, because the same department polices the Canada Pension Plan provisions and the Income Tax Act, and because the same number might be used, say, for the Canada Pension Plan as for income
13672	COMMONS
Income Tax Act Amendment tax purposes, persons other than authorized collectors may have access to income tax information. I can assure the hon. member that the fact that the same number is used has nothing to do with access to information. In other words an employee of the Department of National Revenue not concerned with the administration of income tax could not obtain information about a taxpayer's income simply because the taxpayer used with respect to his income tax the same number he used for the Canada Pension Plan.
I am afraid a sort of mythology has grown up around this subject. There would be no difference if instead of using numbers we could use names. If there is any concern about numbers, that concern ought to extend to names also. After all, we use identical names on different forms; why not use identical numbers, if it is the same person. The fact that information is now kept in machines does not, I am assured by officials to whom I have written and to whom I have talked, affect the availability of income tax information to anyone other than authorized persons.


Horace Andrew (Bud) Olson: I appreciate what the minister says, but he has not really answered the question. When these discs, drums, tapes or whatever they are, are used, will there be any cross-reference with respect to information. In other words, will the income tax information and other Department of National Revenue information be kept completely separate? Will the information to do with identical numbers be compared? If the information is not to be compared, identical numbers need not be used.
I am told that using identical numbers would mean a great deal of administrative convenience. Will the information to do with income tax be compared with other information? Will there be any cross-comparison of information on file? If not, I see no great advantage to having identical numbers.
Will the numbers be kept on the same discs, film, or tape, or will they be kept separately? Frankly I cannot accept the analogy the minister drew with respect to electronic files and other files. Surely information entering the Department of National Revenue, and being filed on its files, is not made available to other branches of the department. Information is kept physically separate. The question is, will information be separated in the department if income tax information and other information is listed under the same number and kept on the same tape.

DEBATES	March 2, 1967


Mitchell William Sharp: Mr. Chairman, I am no greater expert on these machines than is the hon. member for Medicine Hat, but I am assured that the files are kept quite separate and are not available to any officials other than those engaged in the collection of taxes. Indeed, the problem that he is concerned with would have arisen if the machines had been more ingenious and could read names as well as numbers. Unfortunately they cannot read names; as a result we have had to assign numbers. If names were capable of being distinguished by the machines we should not have had to resort to a numbers method. Some day perhaps machines will be able to distinguish groups of letters in such a way that we can do away altogether with numbers. We shall then have exactly the same problem that we now have. I can assure the hon. member that if this government is in office it will be as scrupulous as it has been in the past in maintaining inviolable the secrecy of the income tax return.


Horace Andrew (Bud) Olson: I have another question, Mr. Chairman. I understand that there will be a central data processing centre in which there will be stored computer memory banks. Can the minister assure me that none of these files will be compared by the machine, that the machines will not be programmed to compare, say, income tax files and other files that may be brought to some data processing centre?
[DOT] (8:30 p.m.)


Mitchell William Sharp: Even if all this data were to be processed on the same machines I could give an assurance that the information would not be available to any unauthorized persons. But it is my understanding that not even the same machines would be used. Special computers are being used by the Department of National Revenue and the department does not depend upon central computing devices.


Malcolm MacInnis: The
minister has told us why numbers are necessary. He told us that these machines can read only numbers, and that he wants to keep up to date. It is not the case that these machines can read only numbers. Is the minister aware that electronic computers are available which can work from the written word as well as from numbers? Only last night an authority from the Post Office Department stated that the department would avail itself of electronic computers capable of operating from the written word.
March 2, 1967


Mitchell William Sharp: I am very glad to have this information. The treasury is not sufficiently flush to afford one of these machines. Perhaps in due course we shall buy one, and then we can get rid of these numbers. In the meantime we have to rely on the equipment which is available and which operates on the basis of numbers only.


Mr. Ballard:: I should like to add my protest to that of the hon. member for Medicine Hat about the use of computer numbers, the SIN numbers, as they have been called, in connection with income tax returns. One of the points the hon. member makes is that government income tax files will no longer be secret. But there is no confidentiality left in the revenue department. When the Income Tax Act was amended last July the traditional secrecy which existed between taxpayers and the department was removed.
I refer to section 133(4)(c) of that act which reads follows:
An official or authorized person may communicate or allow to be communicated information obtained under this act, or allow inspection of or access to any book, record, writing, return or other document obtained by or on behalf of the Minister for the purposes of this Act, to or by any person otherwise legally entitled thereto.
The other day when the house was in committee I pointed out to the minister that income tax files had actually been taken from the department and used in a civil law case for the first time in Canada. This was made possible by the section of the act to which I have just referred. It is all very well for the minister to say that there is confidentiality within the department. But it no longer exists. As proof, we need only recall what took place a few weeks ago when we passed the old age security amending legislation. The officials administering that act can now call upon the director of taxation for information to be used to verify the returns filed by applicants for supplementary old age pensions.
These are two examples of opening the doors to the files of the income tax department. I suggest that if the doors can be opened for such reasons it will not be long before the records of the Department of National Revenue become an open book not only to other departments of government but to all the courts of the land.
In the case of Bazos v. Bazos which I cited the other night, the issue before the court concerned a will. I suggest that the type of court case into which income tax files can be injected will gradually broaden until we see
Income Tax Act Amendment these files brought into court in connection with divorce applications, and a whole variety of civil cases. I believe the hon. member for Medicine Hat has put forward a valid argument against the use of numbers. I will go further. He has based his argument upon the possibility that the records in the Department of National Revenue may no longer be secret. Unhappily, in my opinion, at this point of time they are no longer secret, despite the tradition of the past. I know this is a protest made in vain but I should nevertheless like to protest very strongly against the erosion of our traditional concept of confidentiality between the taxpayer and the department.
I believe the use of numbers opens the door to making this information which the government gathers available over a wide spectrum. As individual citizens of Canada we will find our affairs becoming an open book to the bureaucrats in the government. The minister should put his foot down at this point. It is not that we do not trust the present Minister of Finance; we often pass legislation in this house because we know that the Minister of Finance is a fine fellow. I think the present minister would do nothing to jeopardize the rights of the individual. But another minister of finance 20 or 30 years from now might dispose of this information in a far different way from that in which the present minister intends it to be used. We are just reaching the point where the lives of all the people of Canada will be laid bare for examination by every department of government, in fact by all the people in the land.


An hon. Member:: Like "1984".


Mr. Kindt:: There are parts of this clause which do not appeal to me. Only a year or two ago the subject of social security numbers was raised in the house. Questions were asked on the floor of the house. Ministers were pressed to say who would be required to obtain such numbers, and whether members of parliament would be required to obtain them. Hon. members were told at that time that no social security numbers were to be obtained by members of parliament or by certain other groups of people covered by the questions asked. Now all that is out the window. Under the provisions of clause 21 we have to obtain a social security number. Some bureaucrat, with the aid of the minister, is having this written into law. The explanatory notes state that such a number is necessary
13674	COMMONS
Income Tax Act Amendment "to facilitate the carrying out of the administrative responsibilities of the Department of National Revenue." Would the minister delineate these responsibilities?
[DOT] (8:40 p.m.)
I sympathize fully with the questions asked by the hon. member for Medicine Hat. They have not been completely answered. 1 also sympathize with the questions asked by the hon. member for Calgary South. The Department of National Revenue has always prided itself on the confidence with which it treats information given on income tax returns. The average citizen who fills out such a return is honest, but if he feels that due to the Minister of Finance and this bill the information he gives on his return will go here, there, and the other place, his loss of confidence will not be in the best interests of the minister, of the Department of National Revenue or of the country as a whole. It will certainly not be in the individual's own interests.
The minister has indicated that a number is not necessary to tie the Canada Pension Plan in with the Department of National Revenue. He has said that these are separate departments, but that only makes some of us wonder what are the functions of the Department of National Revenue which make it necessary for everybody in this dominion who fills out an income tax return to obtain a number and be known as a number.


Mitchell William Sharp: Mr. Chairman, I do not want to bore the committee by reading what I said on Tuesday as recorded at page 13597 of Hansard when I gave a fairly elaborate description of the reasons for this amendment. The hon. member will find that in Hansard, but may I say to him that the Department of National Revenue has two alternatives, either to assign a number to every taxpayer so that we can keep our income tax forms more efficiently and use computing devices, and to have a separate number for the Canada Pension Plan and other purposes, or to have only one number.
I would like to assure the hon. member that we are all going to have numbers. This is the essence of the modem world and the essence of the use of computers, other than those referred to by the hon. member for Cape Breton South, who spoke about some new developments that may come in due course. As a result of these developments he suggests we will not need to have numbers because machines will be able to read our names and
DEBATES	March 2, 1967
identify us by our handwriting or by other methods. I can understand the hon. member's objection to numbers, but they are almost universal.
I gather that pretty soon we will all carry a number around with us. When we go in to shop we will order our groceries and put our numbers down, and the stores will debit our bank accounts. As a matter of fact, the hon. member for Winnipeg North Centre gave us a dozen examples of the way we are numbered today, and we are going to continue to be numbered in this way. It may not be a very desirable social phenomenon but it goes along with the use of machines.
I find it difficult to give any further explanation to the hon. member who has just spoken, other than the explanation I gave as recorded at pages 13597 and 13598 of Hansard. Perhaps I could remind him of that by reading one paragraph, or perhaps two, from what I said at that time.


Mr.   Kindi@: I wish you would.


Mitchell William Sharp: Shortly after the Department of National Revenue developed its numbers system-
Not its numbers game.
-its numbers system the requirements of the Unemployment Insurance Commission and the advent of the Canada Pension Plan dictated the need for the design and implementation of a new and universal system of permanent unique numbers suitable for massive record keeping operations by electronic computers. The social insurance numbers system was the result. It now embraces over nine million members of the population.
To carry out its responsibilities for collecting Canada Pension Plan contributions and to ensure that contributors' records are accurately maintained, the Department of National Revenue must use these social security numbers and require that all contributors use them on the reporting forms required to administer the plan. Thus the department is now using one system of numbers for the identification of taxpayers and another for Canada Pension Plan contributors, most of whom are the same.
Indeed, Mr. Chairman, if one looks at last year's income tax returns, or perhaps the income tax returns that are being used now, it will be seen that the use of SIN numbers had been voluntary. You could include them or not, and most taxpayers did. There was no problem about it. They did not feel they were jeopardizing their civil rights or anything like that by filling in the social insurance number on the income tax return. They had no desire to conceal anything, and a very high proportion of taxpayers agreed that it made for administrative convenience if instead of the

March 2, 1987

Department of National Revenue having to give them another number they just used the number they already had for social insurance purposes. The purpose of this bill is to carry the matter a step forward by requiring everyone to put that number on the form.
As I have said, it is not going to give unauthorized people access to information about incomes. I have given that assurance and I give it without any qualifications whatever. I do believe, however, that it is more efficient, and I do not believe it in any way jeopardizes our freedoms or causes us to become more undifferentiated if we have numbers as well as names.


Mr.   Kindi@: The minister says it is a convenience to the department which handles income tax returns. Does it cut costs?


Mitchell William Sharp: Very substantially, Mr. Chairman, because instead of having two sets of numbers attached to the same people there is only one, and it makes for closer identification of the taxpayer as he moves about. One of the problems that the tax collection department has is that taxpayers move about the country, not only within the area in which they were formerly located but elsewhere. Now they carry their number with them and it is therefore possible to link the returns from year to year much more readily.


Mr.   Kindi@: Does the housewife of a husband who is a taxpayer need a social security number if she is not paying taxes and, second does she need such a number if she is paying taxes?
[DOT] (8:50 p.m.)


Mitchell William Sharp: Well, Mr. Chairman, I think the simple answer to this is that the only requirement in this bill is that which requires taxpayers to have numbers. We are concerned only about them.


Jay Waldo Monteith: Mr. Chairman, the minister did not answer the question very distinctly. I think the simple answer is that if the wife is not earning and is not a taxpayer, then she does not have a number; but if she is working and is a taxpayer, then she has a number.


Mitchell William Sharp: Yes.


Jay Waldo Monteith: There is a system of numbers now. I know that on my own tax return I am labelled "M-o-n-t-e", plus some number. Is that system to be done away with; will it be discarded?
Income Tax Act Amendment


Mitchell William Sharp: Yes. I also have a number like that. The intention will be to replace that linkage with the social insurance number.


Jay Waldo Monteith: May I accuse the government of being somewhat wasteful in having gone through this system of numbering some years ago and now changing it again. A year or two ago, when we were talking about this system in respect, first of all, of unemployment insurance and then the Canada Pension Plan, we were against the numbering system. I think the hon. member for Winnipeg North Centre raised the point that it is the insidious way in which this has been done which disturbs us. Two years ago the answer was that there would not be anything like this, and here we are again.
I should like to ask a question which probably might not be considered relevant. However, I am interested in an answer. What is the legal position of a taxpayer who does not apply for a number and when he files his income tax return remits the stipulated fine with his income tax return?


Mitchell William Sharp: Mr. Chairman, the proposed new section provides that a person who files a return and has failed to show a social insurance number shall be deemed to have failed to complete the information as required by section 44 of the act. Section 44 of the act is the section which requires individuals to file returns in prescribed form and containing prescribed information. Section 55(3) of the act imposes a penalty for failure to complete the information required on a return. The subsection reads as follows:
Every person who has failed to complete the information on a prescribed form as required by or pursuant to section 44 is, unless in the case of an individual the minister has waived it, liable to a penalty
(a)	of 1% of the tax payable under this part but, whether he is taxable or not, not less than $25 or more than $100, or
(b)	in the case of an individual, of such lesser amount as the minister may have fixed in respect of the specific failure.


Jay Waldo Monteith: The minister has not quite answered my question. If the person should be subject to a $50 or $100 fine, according to the section and so on, and pays it when he files his income tax return, what is his situation? Some people have standards in this regard. They have certain rules by which they like to live; one of these is not to be a number. If they are willing in successive years to pay the fine when they file their tax return, what is their situation?
13676	COMMONS
Income Tax Act Amendment


Mitchell William Sharp: One of my officials advises me that he can pay for his pride every year. I might point out one thing in this regard which I think is important. Since the new proposed section 103A invokes a civil penalty under the act, no criminal penalty can be invoked:


Jay Waldo Monteith: He can stay out of jail.


Mitchell William Sharp: Yes. If he objects to having a number as well as a name, he can pay the fine every year and feel virtuous.


Lawrence Elliott Kindt: If an individual-perhaps even myself or the minister-fails to file his income tax form until the last two or three days in April and for some reason or other forgets to inscribe his social security number, he would then be in default because his form was not complete and he would have to pay a penalty. What are the rules in this regard? I should like a specific answer to that question. While I am on my feet let me say that now we have this number business in addition to all the other detail that is on these income tax forms. They are so involved that one must hire a consultant to fill out the form, and pay this person a large sum of money. This is no laughing matter; it is a serious matter.


Jay Waldo Monteith: I agree that it is not a laughing matter. That is the way in which I once earned my living.


Mr.   Kindi@: Yes; I did too. I used to earn a lot of money by filling out income tax returns, until I found that I could not make any more money out of it. People do not want to pay for that. They object to paying for anything of this kind, and strongly object to filling out forms. It is no laughing matter if you are going to be penalized because you did not put your security number on the form. I do not know what the minister is laughing about, but he would find out how these people feel if he would go out and listen to the opinions of some of those who are going to be asked to fill out these income tax forms. He thinks he is doing something here that the people will sanction, and he is making a joke of it.


Mitchell William Sharp: Mr. Chairman, I was not smiling at the remarks of the hon. gentleman. I was thinking about a story concerning a form filled out by an applicant in the civil service. The question on the form was, "Sex?", and the reply was "Yes". However, perhaps I can answer the question asked by the hon. member in this way: For example, if a taxpayer
[Mr. Monteith.l
DEBATES	March 2, 1967
fails to sign his name on the form as taxpayers sometimes do, it is sent back with a polite request that the form be signed. No penalty is involved. If a taxpayer should forget to fill in his social insurance number, I am quite sure the officials would send the form back and ask him to fill it in. If he refused to do so, this would be the only circumstance in which there would be any penalty.


Malcolm MacInnis: Mr. Chairman, a moment ago I brought to the attention of the minister the fact that the Post Office Department expect soon to have electronic computers that will read the name as well as the number. The minister seemed to have accepted this because he referred to the special cost of this type of equipment. I do not know how he could have any knowledge that it would cost more money to have a computer that can remember a name rather than a series of numbers. However, immediately thereafter the minister went back to his theme about why it was necessary to have numbers. He seemed to disregard the fact that the Post Office Department expects to have these electronic computers that will read the name. It appears, Mr. Chairman, that the minister apparently is not listening. I may be wasting my time.


Lawrence Elliott Kindt: He never listens to anything; he laughs.


Malcolm MacInnis: The fact remains, however, that if there are these electronic computers which can read the name, then the argument the minister uses about a computer, and the numbers, is not necessarily a proper argument. I should like to call attention to the fact that when he apparently accepted my argument in the first place, he seemed to refer to the cost of these machines. Let me again emphasize how much it would cost to instal electronic computers. The Department of National Revenue has indicated that this equipment can be made available, and I suggest that the minister responsible should look into the possibility of installing this type of a computer system, but such a system should not be installed until it is found to be of economic advantage.
[DOT] (9:00 p.m.)


Mitchell William Sharp: Mr. Chairman, the government is always interested in finding ways of cutting down on expenses. If machines are developed that can distinguish between names and numbers I am sure the government will take advantage of them.
March 2, 1967


Malcolm MacInnis: Mr. Chairman, I should like to ask the minister another question. Apparently he has some doubt about the suggestion that this type of equipment is available. Perhaps he will refer to the national news of Tuesday evening. Information was given to the effect that computers no longer depend on numbers but can now distinguish between names and numbers. Perhaps the minister would check on this information.


Herbert Wilfred Herridge: Mr. Chairman, I should like to support the minister's contention that we in Canada have an objection to regimentation. I have had some experience in this regard in relation to applications for pension. I am inclined to agree with the minister when he suggests that it would be difficult to deal with numerous applications of this type, because of the number of names involved. Many people in this country have the same name, and as a result a great deal of confusion may exist with the use of computers.


Malcolm MacInnis: Mr. Chairman, I agree with the hon. member who has just spoken in that names present a problem, but according to the latest information available computers no longer depend on names only, but can distinguish between names and addresses. Surely this could apply in respect of the Post Office Department just as it does in respect of Veterans Affairs.


Lawrence Elliott Kindt: Mr. Chairman, there has been a great deal of criticism about the computerized income tax form. These complaints have been of a very general nature and undoubtedly the Minister of Finance is aware of them. If a mistake occurred in the income tax branch computer system, perhaps my pension would be tremendously increased and the minister's pension would be substantially decreased. Will the minister give us some indication of the situation which now exists in respect of the use of computers in departments concerned with finances?


Mitchell William Sharp: Mr. Chairman, a number of different types of computers is now available, but so far as income tax information is concerned taxpayers file returns and indicate their social insurance numbers. Sometimes these taxpayers inadvertently give the wrong number. This results in some confusion, and this confusion must be straightened out. However, no problem would exist in this regard because the accounts would be handled separately.
Income Tax Act Amendment


Mr.   Kindi@: Under those circumstances the error must be related to the taxpayer. For this reason some check of an internal nature in the Department of National Revenue must be made before any disposition is made of the funds collected.


Julia Verlyn (Judy) LaMarsh: Mr. Chairman, perhaps I can be of some help to the committee in this regard. This whole matter was one of the main subjects considered during our discussions. I think it was resolved by the fact that every two or three years all the documentation is copied and sent out.


Herman Maxwell Batten: Shall clause 21 carry?


Jay Waldo Monteith: On division.


[Stage Direction]
Clause agreed to.
On clause 22-Appeal from order of direction.
Harold Raymond Ballard: Mr. Chairman, I should like again to raise the question with the minister in respect of the traditional concept of confidentiality in respect of income tax returns. There has always been an accepted principle that information passing from taxpayers to the Department of National Revenue shall be considered as confidential. While I realize that under certain circumstances some information must be circulated between departments the income taxpayer must be protected.
Recently our attention has been directed to security, and it has become apparent that certain information has been made available to the income tax department. It is obvious that this type of information must be circulated for the purposes of administrating the Canada Pension Plan and other government social security measures, but information collected by the income tax department should not be made available indiscriminantly. There is some valid apprehension about the exchange of information as a result of our present state of cybernetics. Very often, because of our methods of assessing taxes, we have allowed this traditional right to slip through our fingers.
[DOT] (9:10 p.m.)
It has always been the case that information on file with the director of taxation could be used in the case of a criminal court case but never in the case of a civil court case. Last year the door was opened when an amendment was made to section 133 of the Income Tax Act which allowed this information to be passed on to any authorized person or to
March 2, 1967

Income Tax Act Amendment a person legally entitled to this information, without defining who were the persons legally entitled to receive the information. Last year we had the case of an Ontario court which called for an income tax file and had it read into the evidence in a civil court case. The amendment that we are considering tonight does nothing more than protect the civil servants involved in passing this file from the department to the court. I suggest to the minister that while it may be all well and good to protect the position of the civil servants involved, I think the minister should take this matter up with the Minister of National Revenue, who has had much experience with income tax matters, and should be aware of the concern that this developing situation is causing in the professions of law and accountancy.
While I cannot object strongly to the protection that this clause is affording civil servants, I do protest the fact that amendments were made last summer which opened the files in the taxation department to all and sundry. I urge the minister to confer with his colleague, the Minister of National Revenue, to bring in in the very near future an amendment to the Income Tax Act which would close this gap once again.


Mitchell William Sharp: Mr. Chairman, it was because of this case that the present clause 22 which we are considering is being brought forward. This amendment provides that the Minister of National Revenue or an official or authorized person, as defined in section 133 of the act, may appeal an order or direction made by a court to require the minister or official to give evidence or produce information relating to information received under the Income Tax Act. This amendment is considered necessary, due to a recent case in Ontario where, in the opinion of the Department of Justice, a judge was in error in requiring the Department of National Revenue to produce certain income tax returns.
It is of interest to note that in similar circumstances a judge in British Columbia held that the returns could not be produced in a civil case. I do not know what more we can do in parliament than to provide for an appeal, nor how we could define any more clearly than is defined in the law who is legally entitled to the information. If a judge says that somebody is legally entitled to it in a civil court case, then I think the best way to deal with that is to provide for an appeal from the ruling.


Jay Waldo Monteith: May I ask the minister, with respect to the Ontario case to which he referred, whether the judge's decision was based on an amendment which was brought in last year?


Mitchell William Sharp: I am so informed, Mr. Chairman. I do not think that this is good law and I would like to think that if that decision had been appealed at that time the judgment would have been reversed.


Jay Waldo Monteith: In that case, Mr. Chairman, may I offer a word of warning? The minister has agreed that this was not a good move at the time and he is suggesting that there should be an appeal by the Minister of National Revenue against such information being brought forward.
It seems to me this is an indication to us all that some of these laws are brought in by the bureaucratic service with a view to making things easier for them, without respect for the rights of private citizens. I think the minister has admitted it by bringing forth this amendment. I think it is a good lesson for all of us to watch what is happening in these amendments that come before us from time to time.


Mr. Bell (Carleton):: The fault is with the minister and not the civil service.


Harold Raymond Ballard: I thought the minister was going to reply, but failing that I will ask him a direct question. He will recall that, in the case to which both he and I referred, the court ruled that the civil servant involved would be absolved from any penalty under section 133 (4) (c). If this was the case, then why was this amendment necessary?


Mitchell William Sharp: As I understand the question of the hon. member, he asked why section 133 was amended. I myself was not personally involved in this and I depend upon the advice of my officials.
They believe it was amended for two reasons: first of all to tighten the law so as to make it quite clear that the information was only available to legally authorized persons. There was some doubt previously as to whether a former civil servant might not have had access to this information, so the amendment to section 133 removed that doubt. I gather it was also meant to enable the Department of National Revenue to provide the information to its own agents to be used in court cases.
I submit that the amendments to section 133 did not have any effect upon the availability of this information, and certainly that
March 2, 1967	COMMONS
was not the intention. That is why I believe that the ruling given by the judge was bad law. I do not know what more this parliament can do than authorize the Minister of National Revenue to intervene in cases, which formally he did not have an opportunity of doing, and appeal any ruling that requires the production of this information contrary to the intent of parliament.


Jay Waldo Monteith: Mr. Chairman, I am certainly not opposed to the passing of this clause. All I am suggesting is that when the amendment was brought forward a year ago, greater regard should have been given to the general public, and this amending clause should have been brought in in conjunction with it at that time.


Mitchell William Sharp: May I suggest that at that time we did not have an adverse case and we never anticipated one. Since that time such a case has arisen and therefore we feel that this new procedure should be available to the government.


[Stage Direction]
Clause agreed to.
Clause 23 agreed to.
On clause 24-Amount paid in lieu of taxes.
Mr. Bell (Saint John-Albert):: Mr. Chairman, clause 24 repeals the old Canadian Vessel Construction Assistance Act and I want to say a few words about it. The minister has given us a brief history with respect to this act. Hon. members will remember that I was interested in this matter on a previous occasion. The minister undertook to consult the industry about some proposals that he had in mind at that time. This has been done. He did not say exactly what the attitude of the industry was, but he did say he had consulted them as he promised. To this extent, therefore some credit should be given to the minister.
[DOT] (9:20 p.m.)
I want the minister and his officials to listen to me, if they will, as I try to comprehend exactly what is taking place here, and so I can be certain there is a full understanding on the record. As I understand what the minister said, the old act to which I have just referred is being repealed. This is being done because of changes that the Minister of Transport mentioned on another occasion. We do not have, in my opinion, anything on the record to indicate why these changes are taking place. I do not believe the Minister of Transport gave any detailed explanation as to whether the old act is not working or what
Income Tax Act Amendment the reasons were. Perhaps the Minister of Transport is the one who should indicate this; but if the Minister of Finance has any idea as to why he is being given responsibility for this matter under the Income Tax Act, I would appreciate his explanation.
According to the minister, we are omitting certain provisions in the old act with respect to exemption from the recapture of capital cost allowances. I take it there has not been any substantial objection to this from the industry. We are incorporating now, under the provisions of this act in clauses 2, 3 and 5, the rapid depreciation provision. According to my interpretation, the major assistance that can be given to the industry will remain in the Income Tax Act and a great deal of the regulatory authority contained therein. I am no expert on the Income Tax Act, but I understand that under its regulations the minister would have considerable authority to regulate the so-called rapid depreciation provision. I think the minister should give some assurance to the house that if my interpretation is correct, if there were substantial changes of any nature in the regulations under the Income Tax Act, he would consult the industry again. So far as I know, the old act was quite successful and we did not receive any substantial criticism from the industry.
Neither the Minister of Transport nor the Minister of Finance has said why the old act was not working or why the changes are being made. However, the industry was consulted. We do not know that they are fully in favour of the change. The industry is now brought under these sweeping regulatory powers contained in the Income Tax Act. So I should like to have, and I think the house is entitled to it, an assurance from the minister that, first of all, my brief interpretation of what is taking place is substantially correct and, second, the minister's assurance that if any great changes are to take place under these regulatory powers the industry would be consulted again.


Mitchell William Sharp: Mr. Chairman, I think I can give the assurances the hon. member is requesting. Certainly I can give the assurance that if there are to be any changes in the regulations under the Income Tax Act, or anything of that kind, representations from the shipbuilding industry will be welcomed. I do not believe we should go out and seek them, but I am sure they will be forthcoming. In any event, since we are interested and I believe have a better method now of providing the kind of assistance that is desirable,
March 2, 1967

Income Tax Act Amendment we will be in constant communication with the industry about the administration of the new shipbuilding program announced by the Minister of Transport.
Perhaps it would interest the hon. member to know that the principal change between the bill I introduced at the time of the budget in 1966 and the present bill is a provision concerning the time allowed for a taxpayer to take advantage of the exemption from taxable income now allowed for the recapture of capital cost allowance. We received representations on this, and as a result a modification will change the time limit for disposal of the vessel and disposal of the funds, which in Bill C-216 were 1970 and 1972 respectively, to the end of 1973 in both cases. This was one of the representations made to us and this was the modification made.
I do not believe it matters very much whether those provisions that were formerly in the special act, along with other provisions, are now being transferred into the Income Tax Act. I can assure him that whatever special allowances were made, they will be carried forward in that way, but the main part of the program now is to be found in a different form of assistance.


Thomas Miller Bell: In other
words, the minister gave the industry at least part of what they desired so far as the first proposal was concerned. Without going into a great deal of income tax law, what are these regulatory powers that might be used under the Income Tax Act that did not exist under the old vessel construction act? I suppose it would be within the power of the minister to vary this depreciation?


Mitchell William Sharp: Yes, I can confirm what the hon. gentleman has said, the power to vary the rate of depreciation.


Thomas Miller Bell: I guess that is all I want to know. I do not apologize for taking time on this matter because, as hon. members know, I am one who feels there is not enough attention paid here or in country generally to anything related to the sea or shipbuilding. We need lots of measures to help build ships. We need lots of attention to a merchant fleet and to encouraging our young people to go to sea.
In another committee of this house, which is probably sitting tonight, the government is wiping out one of the great heritages of this country. They are wiping out the navy and all that it stands for. The results of this action will bulge out in other ways. No matter how


powerful this government is, they still have to-face up to the fact we are a seafaring nation with the largest coastline in the world. Although landlubbers exist in central Canada, there has to be some attention paid to the sea, not only because of our heritage but because of the food that comes from the sea, and for the protection of our great country. I only hope, and it is a fervent hope, that now the minister has authority for this measure that will assist shipbuilding in the country, he will forget his central Canada, landlubber background and show a little discretion and leniency to the shipbuilding industry by giving them tax exemptions and the like.
[DOT] (9:30 p.m.)


Mr. Guay:: Mr. Chairman, following the question or the intervention of the hon. member for Saint John-Albert (Mr. Bell), I understand that this change will not affect the shipbuilding industry and that the government will make every effort to maintain the situation now existing in Canadian shipyards.


Mitchell William Sharp: Mr. Chairman, I can assure the hon. gentleman that the changes we are now approving do not alter in any way the government's policy toward the encouragment of shipbuilding.


[Stage Direction]
Clause agreed to.
Herman Maxwell Batten: The committee will now revert to clause 6.
On clause 6-


Herman Maxwell Batten: When this clause was stood the hon. member for Medicine Hat had moved an amendment. The amendment was not read by the chair, and if the hon. member wishes to proceed with his amendment I shall do so now.


Horace Andrew (Bud) Olson: Yes, Mr. Chairman.


Herman Maxwell Batten: Moved by the hon. member for Medicine Hat:
That Bill C-259 be amended as follows:
"That the word 'complete' be deleted from clause 6, subclause (1), section (viii) where it appears in lines 4, 8 and 9 on page 9".


Horace Andrew (Bud) Olson: Mr. Chairman, I moved this amendment because it seemed to me that under the present wording a person was authorized to deduct under the terms of the Income Tax Act the cost of a denture constructed or provided by a dental mechanic or technician, only if it were a complete upper or complete lower denture. I believe that the Minister of Finance is ready to accept this amendment, so
March 2, 1967	COMMONS
I will not repeat the arguments I advanced the other day.


Mitchell William Sharp: Mr. Chairman, I can confirm that the government is ready to accept this amendment.


[Stage Direction]
Amendment agreed to.
Clause as amended agreed to.
Title agreed to.
Herman Maxwell Batten: Shall I report the bill?


Some hon. Members:: On division.
Bill reported.


Mr. Deputy Speaker:: When shall the bill be read the third time?


Jay Waldo Monteith: Next sitting o 1 this house.


David Lewis: By leave, now.


Mr. Deputy Speaker:: Perhaps I should point out to the house that the order for third reading of the bill does not carry with it the order to reprint the bill. If it is the wish of the house to have the bill reprinted, an order of the house can be made now. Is it agreed that the bill be reprinted?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: It is so ordered.



FINANCE


Mitchell William Sharp: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to provide for the payment to provinces out of the Consolidated Revenue Fund, for each fiscal year in the period commencing on the first day of April, 1967 and ending on the 31st day of March, 1972, of provincial revenue equalization payments and post-secondary education adjustment payments, and for each fiscal year commencing on or after the first day of April, 1967, of provincial revenue stabilization payments and succession duty payments; to authorize tax collection agreements with provinces and to amend the Established Programs (Interim Arrangements) Act to extend for an additional three years the interim period relating to the health grants program.
Motion agreed to and the house went into committee, Mr. Batten in the chair.


Mitchell William Sharp: Mr. Chairman, this resolution and the bill which it seeks permission to introduce are the outcome of extensive discussions with the provinces. These discussions took place in the tax structure committee, on
Equalization Payments to Provinces which the federal and provincial governments were represented by their ministers of finance or provincial treasurers, and culminated in the federal-provincial conference of October last.
I reported to the house on October 31 on the several proposals made to the provinces by the federal government at that conference. Major changes were proposed in the following fields: the occupancy of tax fields or tax sharing; provincial revenue equalization arrangements; provincial revenue stabilization arrangements; federal financial assistance in respect of post-secondary education; a new form of federal compensation to the provinces in respect of well established shared cost programs in the health and welfare field; and finally, a new federal program for the occupational training of adults in lieu of the technical and vocational training agreements which expire on March 31 this year.
My colleague the Minister of Manpower and Immigration has given notice that he will shortly be asking permission of this committee to introduce legislation to carry out the federal government's undertaking in respect of adult occupational training. The resolution now being considered seeks permission to introduce legislation to give effect to a new set of fiscal arrangements between Canada and the provinces in accordance with the government's undertakings at the October conference.
In presenting the federal proposals to the tax structure committee last September I suggested certain principles by which I believed that committee should be guided in the development of federal-provincial fiscal arrangements, consistent with the federalism of the future. For the information of this committee I should like to read these principles from my remarks to the tax structure committee:
First, the fiscal arrangements should give both the federal and provincial governments access to fiscal resources sufficient to discharge their responsibilities under the constitution.
Second, they should provide that each government should be accountable to its own electors for its taxing and spending decisions and should make these decisions with due regard for their effect on other governments.
Third, the fiscal arrangements should, through a system of equalization grants, enable each province to provide an adequate level of public services without resort to rates of taxation substantially higher than those of other provinces.

March 2, 1967
Equalization Payments to Provinces
Fourth, they should give to the federal government sufficient fiscal power to discharge its economic and monetary responsibilities, as well as to pay its bills. In particular, they should retain for the federal government a sufficient part of the income tax field in all provinces-both personal and corporate-to enable it to use variations in the weight and form of that tax for economic purposes and to achieve a reasonable degree of equity in the incidence of taxation across Canada.
Fifth, they should lead to uniform intergovernmental arrangements and the uniform application of federal laws in all provinces.
Sixth, the fiscal arrangements should seek to provide machinery for harmonizing the policies and the priorities of the federal and provincial governments.
These principles underlie the proposals contained in the legislation which the resolution now under consideration seeks permission to introduce. Before proceeding to a discussion of the terms of the resolution, I would like to review very briefly the major fiscal proposals put forward by the federal government at the federal-provincial conference of last October.
[DOT] (9:40 p.m.)
On tax sharing or, more accurately, the use of tax fields by the federal, provincial and municipal governments, we maintained that so long as provincial governments had access to sufficient tax fields and so long as provincial revenues were equalized fairly, the provinces should impose their own taxes to finance their own programs. Only when parliament was prepared to acknowledge the exceptional priority of some provincial programs of expenditures should the federal government recommend that taxes should be imposed or federal expenditures reduced for the purpose of financing a federal contribution toward provincial expenditures. Since the priority of expenditures for higher education is now well recognized the federal government undertook to ask parliament to abate or reduce the federal income by four additional percentage points of personal income tax and one additional percentage point of corporate profits. This would enable the provincial governments to take up the extra tax room by making corresponding increases in their income taxes to help meet the rising costs of higher education.
An amendment to the Income Tax Act authorizing these tax abatements is now before the house. Thus the general abatement of the

federal individual income tax will be increased from 24 to 28 percentage points and the abatement of the federal corporation income tax will be increased from 9 to 10 per cent of corporate profits.


Thomas Clement (Tommy) Douglas: I do not like to interrupt the minister, but at some point will he tell us what the net gain or loss will be to the provinces by virtue of the government's discontinuing these payments to the universities? What is the net figure that the government has been paying out, and what will the abatement mean to the provinces with respect to higher education? If the minister has not that information now, perhaps he could give it to the committee at some later time?


Mitchell William Sharp: I do not think that in my relatively short presentation on this occasion I can give this information. I shall be happy to let the hon. member have it when the bill is before us.
The federal offer to the provinces to help them finance the rising costs of post-secondary education goes beyond this tax transfer. It includes equalization payments associated with the revenue derived from these additional tax points, together with special adjustment payments to each province which will bring the total value of the fiscal transfer to $15 per capita or 50 per cent of post-secondary education operating expenditures. My colleague, the Secretary of State, will speak to this aspect of the proposed fiscal arrangements with the provinces.
As to the equalization of provincial revenues, a central feature of federal-provincial fiscal arrangements since 1956, a fundamental reform was proposed. The plan put to the provinces-and which is provided for in the bill to be introduced upon the passage of this resolution-is designed to ensure that all provinces, regardless of their fiscal circumstances, will be able through a redistribution of Canada's wealth to provide their citizens a reasonably comparable level of basic services without having to resort to unduly burdensome levels of taxation. Instead of selecting certain taxes at given or standard rates and equalizing their yield to the level of the top two provinces, the proposed formula will take into account all provincial revenues, at average provincial rates, and will bring the revenue yield in all provinces up to the national average yield. Thus any province in which average provincial tax rates would yield less revenue per capita than the yield of provincial tax rates in Canada as a whole will be
March 2, 1967	COMMONS
entitled to an equalization payment equal to this per capita deficiency.
I do not propose to take the time of the committee to provide a detailed explanation of the mechanics of determining the amount of equalization payable to a province under this formula. This might best be left to the clause by clause committee discussion which will follow second reading of the bill. However, to assist the hon. members to understand the formula, I would like the permission of this committee to place two tables in Hansard. The first table shows the provincial revenues in 16 classes which are to be taken into account; the revenue base associated with each revenue class and, the amount of each revenue base by province and for all
Equalization Payments to Provinces provinces as a whole. The second table illustrates the manner of determining the equalization payable. The mechanics of the determination are shown in detail for four provincial revenue sources and in summary for the other 12.
May I have permission to have these tables inserted in Hansardl


Some hon. Members:: Agreed.


Herman Maxwell Batten: Does the committee agree to have these tables printed in Hansard?


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



TABLE I


[Stage Direction]
1964 Revenue Base by Province
Revenue Source	Revenue Base	Units	Nfld.	P.E.I.	N.S.	N.B.	Que.	Ont.	Man.	Sask.	Alta.	B.C.	Total3 Personal Income Tax ...	Assessed Federal Individual Income Tax (Excluding OAS)	(*[DOT]000)	19,238	3,808	43,426	29,954	515,140	930,876	83,494	73,462	133,558	226,510	2,059,4662. Corporation Income Tax	Allocated Corporation Taxable Income (excluding nonresident-owned investment corporations and schedule D Crown corporations)	(*'000)	82,668	7,935	74.900	66,942	1,114,861	1,843,213	186,856	126,967	281,423	467,069	4,252,8343. Succession Duty or Share of Federal Estate Tax	Gross Federal Succession Duty and Estate Tax Assessments on Domiciled Estates; (three year average)	($'000)	996	202	2,338	2,832	39,644	59,491	3,741	2,383	5,822	13,344	130,7934. General Sales Tax	Total Retail Sales less $350 per capita plus value of construction materials	(*'000)	237,051	71,030	507,038	389,609	4,197,983	6,238,415	777,564	839,124	1,419,347	1,807,252	16.484,413!')5. Motor Fuel Tax	Total "Net Sales" of gasoline ('000 gals.) and diesel fuel	48,168	21,171	117,094	85,831	980,276	1,515,739	194,393	227,405	334,625	372,616	3,897,3186. Motor Vehicle Revenues	Total "Net Sales" of gasoline ('000 gals.) and diesel fuel	48,168	21,171	117,094	85,831	980,276	1,515,739	194,393	227,405	334,625	372,616	3,897,3187. Alcoholic Beverage	Gallons of Spirits and Beer ('000 gals.)	10,493	4,621	32,100	25,571	218,167	387,721	46,267	42,517	70,004	114,131	951,592Revenues	Sold (Spirits -weighted by
25; beer by one)
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Natural Resources Revenues
8.	Forestry	Gross Volume of Production	('000 cu. ft.)	89,027	6,045 84,176 198,252	913,542	535,082	36,836	38,319	133,472	1,621,649	3,656,4000)9.	Oil Royalties	Gross Value of Production..	($'000)	-	7	-	4,014	10,297	186,172	450,187	23,262	673,93910.	Natural Gas Royalties	Gross Value of Production..	($'000)	-	- - 112	-	5,760	-	4,161	149.595	13,325	172,953
Equalization Payments to Provinces
23033-865J
i3 "[DOT] o CO	Sales of Crown leases, etc. on oil and gas lands	Revenues (5 yr. average)...	(*'000)	-	-	-	-	-	7,372	83,652	9,547	100,4711 12* Ul	Other Oil and Gas Revenues	Revenues	(t'000)	-	-	-	-	-	-	139	7,724	52,886	11,618	72,36713.	Metallic and Non-Metallic Mineral Revenues	Net Value Added	($ 000)	59,142	10,138	2,425	281,397	342,728	21,251	49,855	1,267	93,032	861,235<*>14.	Water Power Rentals.	Kilowatt hours generated by hydro-electric plants	(millions k.w.h.)	2,295	-	722	1,024	66,362	30,186	4,801	1,369	896	15,480	113,135IS.	Other Provincial Taxes.	Personal plus Business Income	($ millions)	837	170	1,367	1.054	13,154	20,913	2,459	2,122	3,676	5,422	51,174IB.	Miscellaneous Provincial Revenues	Personal plus Business Income	($ millions)	837	170	1,367	1.054	13,154	20,913	2,459	2,122	3.676	5.422	51,174
MRetail sales data for 1964 have been adjusted to take into account recent changes in the D.B.S. concept of retail sales. <*>1963 is the latest year for which data is available.
(*>1962 is the latest year for which data is available.
Sources: Dept, of Finance and D.B.S.
[Stage Direction]


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Equalization Payments to Provinces
[The Chairman.]

[Stage Direction]
Estimated Genebal Equalization 1966-67 Illustrating for Selected Revenue Sources the Manner of Determining the Entitlement of the Provinces to General Equalization
Nfld.	P.E.I.	N.S.	N.B.	Que.	Ont.	Man.	Sask.	Alta.	B.C.	Total1. Population	(000)	503	108	759	626	5,733	6,868	959	953	1,459	1,850	19,8182. Personal Income Tax (а)	Provincial Revenue	
(б)	Revenue Base	(I'OOO) ($'000)	19,238	3,808	43,426	29,954	515,140	930,876	83,494	73,462	133,558	226,510	846,154 2,059,466(c)	National Average Provincial Revenue Rate (d)	Yield at Nat. Avg. Prov. Revenue	$ ($'000)	7,904	1,565	17,842	12,307	211,651	382,460	34,304	30,183	54,874	93,064	.410861 846,154Rate 3. Corporation Income Tax (а)	Provincial Revenue*1*	
(б)	Revenue Base	($'000)	82,668	7,935	74,900	66,942	1,114,861	1,843,213	186,856	126,967	281,423	467,069	545,936 4,252,834(c)	National Average Provincial Revenue Rate (d)	Yield at Nat. Avg. Prov. Revenue	$ ($'000)	10,612	1,019	9,615	8,593	143,115	236,612	23,987	16,299	36,126	59,958	.128370 545,936Rate 4. Alcoholic Beverage Revenues (c) Provincial Revenue*1*	
(6) Revenue Base	($'000) ('000 gals.)	10,493	4,621	32,100	25,571	218,167	387,721	46,267	42,517	70,004	114,131	362,989 951,592(c)	National Average Provincial Revenue Rate (d)	Yield at Nat. Avg. Prov. Revenue	($ per gal.) ($'000)	5,003	1,763	12,245	9,754	83,221	147,897	17,649	16,218	26,703	43,536	.38145 362,989Rate 5. Oil Royalties (а)	Provincial Revenue*1*	
(б)	Revenue Base	($'000) ($'000)	7	4,014	10,297	186,172	450,187	23,262	76,319 673,939(c)	National Average Provincial Revenue Rate (d)	Yield at Nat. Avg. Prov. Revenue	$ ($'000)	1	455	1,166	21,083	50,980	2,634	.113243 76,319
Rate
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Equalization Payments to Provinces
TABLE II (Concluded)
Estimated General Equalization 1966-67 Illustrating for Selected Revenue Sources the Manner of Determining the Entitlement of the Provinces to General Equalization
		Nfld.	P.E.I.	N.S.	N.B.	Que.	Ont.	Man.	Sask.	Alta.	B.C.	Total
6. Yield at National Average Province Revenue Rate for the other 12 revenue sources												
(a) Succession Duties and Shares of Estate Tax	(I'OOO)	1,108	225	2,602	3,152	44,120	66,210	4,163	2,652	6,479	14,851	145,562(6) General Sales Tax	($'000)	15,546	4,658	33,252	25,551	275,311	409,130	50,994	55,031	93,083	118,523	1,081,079(c) Motor Fuel Tax	($'000)	9,017	3,963	21,921	16,068	183,512	283,755	36,391	42,571	62,643	69,755	729,596(d) Motor Vehicle Revenues	(*'000)	2,879	1,265	6,998	5,129	58,581	90,580	11,617	13,590	19,997	22,267	232,903(e) Forestry Revenues	($'000)	2,406	163	2,275	5,358	24,689	14,461	996	1,036	3,607	43,826	98,817(f) Natural Gas Rojralties	($'000)	-	-	-	13	-	681	-	492	17,686	1,576	20,448(g) Sales of Crown Leases and Reservations on oil and natural gas lands	($'000)	7,372	83,552	9,547	100,471(h) Other Oil and Gas Revenues	($'000)	-	-	-	-	-	-	139	7,724	52,886	11,618	72,367(i) Metallic and Non-Metallic Minerals	($'000)	3,923	-	672	161	18,664	22,731	1,410	3,307	84	6,171	57,123O') Water power rentals	($'000)	765	-	241	341	18,785	10,060	1,600	456	299	5,159	37,706(k) Other Provincial Taxes	($'000)	7,122	1,446	11,631	8,968	111,923	177,941	20,923	18,055	31,278	46,134	435,421(0 Miscellaneous Provincial Revenues 7. Total Yield at National Average Provincial Revenue Rates:	($'000)	3,999	812	6,531	5,036	62,848	99,920	11,749	10,139	17,563	25,906	244,503(a) For all revenue sources	($'000)	69,284	16,879	125,825	100,432	1,236,420	1,942,893	217,088	246,208	557,840	574,525	5,087,394(b) Per capita	
8. General Equalization	$	137.74	156.29	165.78	160.43	215.67	282.89	226.37	258.35	382.34	310.55	256.71(a) Deficiency per capita from per capita average for all provinces ($256.71)	$	118.97	100.42	90.93	96.28	41.04	30.34	464,352(6) General Equalization Applicable.. 9. Guaranteed Equalization	($'000)	59,842	10,845	69,016	60,271	235,282	29,096	Atlantic Provinces and Saskatchewan.	(I'OOO)	48,159	14,071	60,672	55,228	-	-	-	26,438	"	204,56810. Equalization Payment (higher of 8(6) or 9).	($'000)	59,842	14,071	69,016	60,271	235,282	-	29,096	26,438	-	-	494,01611. Equalization and Atlantic Provinces Adjustment Grants payable in 1966-67 under present legislation	($'000)	37,659	10,571	50,172	44,728	150,378	27,657	33,047	354,212
(^Sources: Provincial Budget Estimates and Department of Finance.

[Stage Direction]
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Equalization Payments to Provinces
13688	COMMONS
Equalization Payments to Provinces
Mitchell William Sharp: Another important element in the proposed fiscal arrangements with the provinces is the undertaking to place a floor under provincial revenues. The provinces have, from time to time, expressed concern over the vulnerability of their revenues to changes in the economic climate. The provinces have argued that in periods of recession when revenues are falling, the costs of provincial responsibilities continue to rise. To the relentless rise in education, health and welfare costs would be added the additional financial burdens occasioned by the recession. The federal government, in the past, has gone part way to alleviate this provincial anxiety for certain provinces, by undertaking to stabilize the equalization payments and standard taxes. Thus the federal government, in the present fiscal arrangements act, undertook for the five-year duration of the arrangements to pay a provincial revenue stabilization payment to a province whenever the amount of that province's three standard taxes and equalization payment fell below 95 per cent of the average of the same taxes and payment for the preceding two fiscal years. The federal government now proposes to extend this stabilization to all provincial revenues and it proposes to remove the five-year limit which has applied to the stabilization provision as well as to the equalization provisions. Stabilization is to be provided on a continuing basis as a protection to the provinces against sharp declines in revenues.


Thomas Clement (Tommy) Douglas: At what percentage?


Mitchell William Sharp: At 95 per cent. A province will be entitled to stabilization payments when its net general revenues for a fiscal year fall below 95 per cent of the province's net general revenues for the immediately preceding year. In order that the years shall be comparable, the net general revenues for the fiscal year will have to be adjusted to eliminate the effects of changes in provincial taxes and tax rates between years. It will also be necessary to adjust for the effect of revenue windfalls that are characteristic of such revenue sources as succession duties and oil and gas lease sales, as well as for tax revenues accruing to a province because of arrangements between Canada and a province which are not of general application. An example is the federal tax abatements to Quebec under the *"contracting-out" arrangements.
Finally, a major proposal was also made to the provinces in respect of the continuing and well-established programs in the field of
[The Chairman.]
DEBATES	March 2, 1967
health and welfare. This offer was designed to enable the provinces ultimately to assume full responsibility for such programs thus bringing to an end the cumulative and continuing influence on provincial decision-making resulting from these major established programs. In return for the assumption of full financial responsibility for hospital insurance, the Canada Assistance Plan and the continuing portion of the health grants, the provinces were offered 17 points of the individual income tax with associated equalization and an adjustment payment or special program equalization grant which would bring each province's annual compensation up to the amount to which it was entitled under the shared-cost agreements involved. From 1970 the provinces would, if they chose, be relieved of the conditions attached to these shared-cost programs, and the adjustment payment or program equalization grant would from then on be escalated independently of program costs.
This was the federal offer in respect of shared-cost programs. It was not, of course, obligatory and because the main change of substance would not occur until 1970 I did not expect the provinces to accept the offer immediately. This in fact turned out to be the case. Consequently the arrangements with the province of Quebec covering these same programs, under the Established Programs (Interim Arrangements) Act, are to be continued, and it is necessary to extend the interim period applicable to the health grants program to March 31, 1970. The other programs are already covered to that date under the act.
That, Mr. Chairman, completes my brief review of the major changes proposed in the fiscal arrangements between the federal government and the provinces. The final element of the proposed arrangements contained no change: the federal government offered to extend for a further two years the tax collection agreements we have with nine of the ten provinces. Also the government proposes to continue the present arrangements for sharing the yield of the federal estate tax with the provinces.
My colleague, the Secretary of State, will speak to the proposed arrangements to help the provinces meet the rising costs of postsecondary education.


Thomas Clement (Tommy) Douglas: Before the minister sits down may I ask him a couple of questions to help us study his statement and deal with the legislation when it is brought down? When
March 2. 1967	COMMONS
the minister's predecessor brought down legislation relating to federal-provincial financing some two years ago he provided the house with tables showing comparative statistics, what provinces were getting under the existing agreement and what they could anticipate receiving under the new proposals. That made it easy to compare the relative advantages or disadvantages of the proposed legislation. Has the minister such tables? Could he undertake to obtain such tables before we deal with the bill on second reading?


Mitchell William Sharp: I had prepared such comparisons for the meetings of the tax structure committee. I shall have to see whether those must be brought up to date. I shall be happy to provide this kind of information to the house or to the committee.
[DOT] (9:50 p.m.)


Thomas Clement (Tommy) Douglas: I should like to ask the minister whether he could give us some statistical data which would help us to understand the new proposal with respect to the financing of post-secondary education. First, what are the estimates of operating expenditures of institutions of post-secondary education on which the government has based its estimates of the costs of the fiscal transfer, categorized as follows: (i) total by provinces, and (ii) operating expenses of degree-granting universities, by provinces? The second question I should like to ask the minister is this: What are the estimates of population, by provinces, on which the government has based its estimates of the costs of the fiscal transfer? If we could get this information it would be useful to us in trying to make a proper assessment of the legislation.


Mitchell William Sharp: I understand that my colleague the Secretary of State is prepared to put her statement on the record now. It might help to answer some of these questions and so facilitate the work of the committee.


Julia Verlyn (Judy) LaMarsh: Mr. Chairman, I am pleased to have this opportunity to associate myself with the Minister of Finance in introducing this resolution relating the new federal-provincial fiscal arrangements. I should like to refer in particular to the measure which will be introduced under this resolution to provide for post-secondary education adjustment payments.
As indicated at the October federal-provincial conference, the federal government proposes to co-ordinate its general financial
Equalization Payments to Provinces support of the two main sectors of post-secondary education-technical training and university education-under one program, and to make fiscal transfers to the provinces to assist them in meeting the fast rising costs of postsecondary education.
A word about the origin of these new proposals may be helpful to the committee.
Following publication of the Bladen report in 1965, the federal government acted immediately to increase the rate of the per capita university grants as an interim measure, pending a detailed review of policy and discussions with the provinces. The grants were increased for 1966-67 from $2 to $5 per capita, involving an increase in total allocations under the program from $40 million to $100 million.
The policy review subsequently undertaken was designed to take into account the fiscal needs of the provinces not only in relation to university financing, but the whole area of post-secondary education. Community college developments and the fast growth of technical training facilities called for such a comprehensive approach by the federal government, especially in view of the March 1967, termination date of those technical and vocational training agreements relating to training at the post-secondary level.
The government's desire in co-ordinating its future assistance to post-secondary education is to facilitate comprehensive planning on the part of the provinces, and of course to assist them financially in carrying their appropriate share of the extremely heavy cost burden created by the rapid expansion of all forms of post-secondary education.
The government proposes that the calculation of the amounts to be transferred be tied to the rising costs, so that its future contributions may be adequate and its future commitments known. In particular, the federal government proposes to transfer in total amounts the equivalent of whichever is greater in a given province: 50 per cent of its post-secondary operating costs, or $15 per head of population in 1967-68. These latter amounts will be increased in future years at the rate of increase in post-secondary education operating expenditures in all provinces in Canada.
The central concept in this plan is that the fiscal transfers will be calculated in relation to post-secondary operating expenditures only. The federal government considers this the only satisfactory measuring stick of rising education costs, and is prepared to increase its future transfers by the rate of increase in
Equalization Payments to Provinces these costs. I must stress, however, that it is the province which determines upon the allocation of these funds, and it will have to do so in the light of both the operating and capital requirements of post-secondary institutions. The funds transferred are calculated in relation to operating expenditures, but are intended for use in both the operating and capital areas.
In addition to the percentage formula, the government is advancing an alternative formula for calculation

a per capita calculation-for the simple reason that in some provinces the expenditures on post-secondary education have not grown at the same rate, and if the 50 per cent formula were to be applied these provinces would lose substantially, compared with what they had previously been receiving. Additional help was provided to these provinces, then, through a per capita payment.
These points highlight the essentials of the proposal. Reference made in the resolution now before the committee to "adjustment payments" relates to one aspect of the total transfers under this plan.
The first transfers will be effected in three ways. First, the government is proposing to abate four personal income tax points and one corporate income tax point to allow provinces to secure additional revenues without a corresponding increase in the burden of taxation on provincial taxpayers. A bill to amend the Income Tax Act has just been passed by this house and will provide for these abatements.
Second, an increase in the equalization payment is proposed, as the Minister of Finance has just indicated. The increase will relate to the increases in provincial income tax revenue attributable to the tax abatement.
Third, a cash transfer termed the "postsecondary education adjustment payment" will be made to make up the difference between the value of the tax abatement and equalization transfers and the greater of, in each province, 50 per cent of operating expenditures, or $15 per capita.
In detailing how the adjustment payment is to be calculated and on what conditions it may be paid to the provinces it has been necessary, of course, to formulate certain definitions of what, for the purposes of the plan, constitutes post-secondary education and what may comprise admissible operating expenditures.

March 2, 1967
Perhaps a few words on these two difficult questions may be helpful, Mr. Chairman.
In connection with the definition of postsecondary education, it was necessary to indicate the academic level in each province we shall take as marking the transition from secondary to post-secondary education. Our solution to this problem, which is made so difficult through the considerable variances in practice from one province to another, is to stipulate that post-secondary educational programs are those requiring for entrance at least the equivalent of the academic level of junior matriculation. This has been discussed with the provinces, and agreement has been reached on the equity of the proposal.
With regard to operating expenditure, perhaps I need only explain that we have made every effort to follow in our definition those terms of expenditures which are regarded as operating by educational institutions, and we have attempted to secure a definition which so far as possible takes account of practices current in institutions across the country. The guiding principle in drawing the necessary definitions was the need to propose arrangements that would be equitable among all provinces, and this, we feel, has been achieved.
Mr. Chairman, I am sure I need not impress on the house either the crucial importance of this matter to the future of our country or the very difficult and complex problems posed in trying to deal with it. Having regard to these various factors, the government believes firmly that the proposals I have outlined meet the situation in the fairest and fullest way possible.
May I in conclusion, Mr. Chairman, call it ten o'clock?


Thomas Clement (Tommy) Douglas: Do I take it the minister has concluded her remarks? Or does she intend to continue tomorrow?


Julia Verlyn (Judy) LaMarsh: I was concluding, unless there is something I think of overnight.


Thomas Clement (Tommy) Douglas: I wanted to ask the minister whether we could have some comparative figures, in the form of a table if possible, setting out a comparison of the revenues paid to provinces under the present plan, $5 per head of the population, and the payments which will be made under the new proposal of tax abatement in each province, in lieu of the adjustment grant.

March 2, 1967	COMMONS
[DOT] (10:00 p.m.)
There is also the question I asked of the Minister of Finance a few moments ago. Has she some figures as to the basis on which the government is estimating the operating costs of the post-secondary educational institutions by provinces?


Herman Maxwell Batten: Shall the resolution carry?


Michael Starr: Ten o'clock was called.
Progress reported.



BUSINESS OF THE HOUSE

Lawrence T. Pennell: Mr. Speaker, for tomorrow's business it is proposed to call item 135 on tomorrow's order paper, continuing discussion of the resolution respecting federal-provincial fiscal arrangements; item 134 concerning occupational training for adults; item 63, Bill No. C-190, to amend the Bank of Canada Act; item 136, amendments to the Canada Corporation Act; item 74, the Bank Act, followed by item 75, the act respecting savings banks in the province of Quebec.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Jack Roxburgh (Norfolk):: Mr. Speaker, one night last week at the finish of the C.B.C. national news Mr. Stanley Burke made this announcement:
The average Canadian smoked 14 cigarettes today; 32 died from respiratory diseases.
The inference was that these people who died from respiratory diseases died because they smoked cigarettes. As I understand it, Mr. Speaker, all news services in this country are supposed to promote factual news only and not unfounded insinuations.
Talking about unfounded insinuations brings to my mind a previous case in connection with the C.B.C. when it carried the program "This Hour Has Seven Days". The information given on that occasion was not only misleading and insinuating but was absolutely 100 per cent false. It was about the Italian government prohibiting the television advertising of foreign cigarettes. They did not do this because of the health aspect of it, or anything like that. The Italian government 23033-866
Proceedings on Adjournment Motion controls the tobacco industry in that country. Foreign cigarettes were beginning to have an influence on their tobacco industry. So, for three years, the televising of foreign cigarette advertising was prohibited. The information given over the C.B.C. on the program "This Hour Has Seven Days" was difficult to believe. They stated that cigarette smoking had dropped 30 per cent. Nothing could be further from the truth. The actual fact is that over this three-year period from 1961 to 1964 the consumption did not decrease but actually increased 13 per cent. This is up to date information I have been able to obtain from the foreign agricultural service of the United States Department of Agriculture.
In all fairness to the industry and to individual companies, I should like to say that if such innuendoes and suggestions are to be made on the national news, or any other program in our national broadcasting system, then this cannot help but affect not only the companies and the industry but also individuals as well.
I should like to remind hon. members that this same industry gave to the government this year in taxes $495 million, practically half a billion dollars. I feel very strongly that it is time that such innuendoes and statements should not be allowed on any C.B.C. program, let alone on the national news. Believe me, it is absolutely degrading to hear such innuendoes on our national news program. I cannot help repeating that it is on our national news program that we hear this and it certainly brings the C.B.C. down to a low level.
I was greatly surprised and, if I may say so, disappointed that a person of Mr. Burke's standing would allow such poppycock to be part of his national news programming. In all fairness to Mr. Burke I should say that I now understand he just reads the news. Perhaps that is the reason why, when he came to this quotation which he read over the national news, I noticed that his eye moved a little. Perhaps he was as surprised as some of the rest of us. I only hope that is a fact.
Before I conclude, I should like to say that at the present time the C.B.C. is like a ship without a rudder. We need some factual, solid businessman to run the C.B.C., not someone who is interested in shows or anything else. We did have the possibility of securing a terrific man. Whether or not he would have been foolish enought to accept the job, I do not know, but we lost that good man to private business. I am referring to Mr. Donald

March 2, 1967
Proceedings on Adjournment Motion Gordon-the type of man the C.B.C. needs. He would lay down the law. We need a businessman and a factual man.
In completing my remarks I just wish to say that no one blames the Secretary of State for these things. It is only through that department, under her jurisdiction, that we as backbenchers can bring these matters to the attention of the C.B.C. I hope the minister is sincere enough to make a special effort to see that this does not happen again. If it does happen again, I can assure hon. members of this house that Jack Roxburgh will be up on his feet every day in this house, protesting.
[DOT] (10:10 p.m.)


Mr. Albert Bechard (Parliamentary Secretary to Secretary of State):: Mr. Speaker, I appreciate the concern and feelings of the hon. member for Norfolk. The last sentence spoken by Stanley Burke on the television newscast on Wednesday, February 22, 1967, was a little bit confusing. According to the information I have Mr. Burke's actual words were:	"and finally the average Canadian
smoker had 14 cigarettes today and across the nation 32 people died of respiratory diseases."
The figures in respect of deaths were taken from the Dominion Bureau of Statistics for the year ending December 31, 1965. The statistics relating to the average cigarette smoker were also taken from the Dominion Bureau of Statistics information respecting the estimated number of smokers. The breakdown is 26 deaths from respiratory diseases and six from cancer in relation to respiratory diseases. However, deaths from respiratory diseases are not necessarily related to the smoking of tobacco. However, as I said at the beginning of my remarks, the remarks televised by the C.B.C. gave that indication.



NATIONAL DEFENCE-NATO-POSSIBLE CHANGE IN CANADIAN MILITARY CONTRIBUTION

Mr. Andrew Brewin (Greenwood):: Mr. Speaker, the United Kingdom white paper, which is more officially known as the statement on defence estimates, 1967, was issued recently and contained at page 5, paragraph 18, the following statement:
The government hopes-
That is the United Kingdom government.
The government hopes, that by the end of June, 1967, allied discussions on the revision of NATO strategy will have produced broad agreement on the size, composition, deployment and

military role of the forces required and on a fairer sharing of the economic burdens they impose.
This statement has very important implications for the whole of Canadian defence and international policy. On Wednesday last I addressed a question to the Secretary of State for External Affairs or the Minister of National Defence as to whether the government of Canada had made any proposals to the other NATO governments with regard to the size, composition and military role of the Canadian contribution to NATO forces in the future.
Members of the house will know that Canadian defence efforts at the present time, and for a good many years past, have been concentrated on certain roles in NATO and NORAD. We are maintaining as a brigade group in Germany an air division, and the major task of our navy is an anti-submarine role in NATO. The brigade group and the air division are a relatively small but doubtless efficient contribution to the current NATO strategy of reliance on a massive tactical nuclear response to any active aggression in central Europe.
On January 13, 1963 the Prime Minister, in a famous speech at Scarborough, before his administration was elected to office and when he was leader of the opposition, said the following:
The government should re-examine at once the whole basis of Canadian defence policy. In particular it should discuss with the United States and with NATO a role for Canada in continental and collective defence which would be more realistic and effective than the present one. Our financial resources are limited. Therefore we should be careful to see that our defence dollars are spent sensibly and economically avoiding commitments which require expensive equipment that is or soon will be obsolete, and the activities that are or soon will be meaningless.
Notwithstanding these words, more than four years later with the Liberal administration headed by the present Prime Minister in office for nearly all of these four years, there has been no change in the role. Despite diligent inquiry it has been impossible to discover whether the government has made any suggestions whatsoever as to a change in the role. Indeed if anything has emerged from the mist of obscurity in which these vital matters are generally enshrouded in this country, it would seem to have been Canadian policy to hold fast to the continuation of precisely these same roles. This indeed has been indicated by the famous defence white paper of 1964 which seems to be the sheet anchor of government defence policy. The policy was
March 2, 1967
reiterated recently by the Minister of National Defence (Mr. Hellyer) as the basis for his whole unification solution.
Nevertheless the whole military and political picture has changed in Europe. The roles now carried out by the Canadian forces are obviously obsolete. The British white paper reveals that in a few short months, indeed by the end of June, allied discussion on the revision of NATO strategy will have produced broad agreement on the size, composition and military roles of various nations. The British white paper clearly discussed the rationality of any threat of aggression in Europe and opted for a reduction in the forces of NATO to promote the detente in Europe.
We in this house and the Canadian public are entitled to know if the Canadian government has made any suggestions for a change or a reduction of its military role in NATO. What is the revised NATO strategy? Is it our policy to stick indefinitely to a policy and strategy which are now outworn? Does the government propose or does it not propose any changes? I seek a clear and definitive statement on the crucial issues that have apparently now been discussed by our allies, and I presume, by ourselves. Unless we are playing a role of passive acquiescence in decisions in which we have played no part, our whole discussion in the house on the issue of unification is quite meaningless if we are to be kept in the dark as to the crucial background to the whole problem of our defence, and our role in defence.


Mr. D. S. Macdonald (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, may I point out, in response to the hon. member, that he has in effect answered his own question. He asked for a clear statement as to our future role and at the same time acknowledged that the NATO allies are in the middle of a discussion of that very question.
As he has pointed out, the passage in the U.K. white paper which he quoted indicates that the NATO countries are in the midst of a major review of the evolving nature of any threat to their security, the appropriate strategy in changing international conditions, and the appropriate force levels to carry out the strategy. The Canadian government has been participating actively in this review. When the review has been completed we shall be in a better position to consider whether changes in our contribution are warranted. A statement on this should at least await the conclusion of the review.
13693
Proceedings on Adjournment Motion
(10:20 p.m.)
The nature of the future Canadian military commitment to NATO defence will also have to take into account the relevance of that commitment to collective defence and to the major political objectives of a peaceful settlement in Europe. Along with our allies we are watching carefully to see whether there are any prospects for achieving mutual reductions of forces of NATO and Warsaw pact countries. This is an approach which the Secretary of State for External Affairs (Mr. Martin) advocated before the NATO council last December.



HARBOURS-MONTREAL-STEPS TO DEAL WITH ALLEGED VANDALISM AND THEFT

Maurice Allard: Mr. Speaker, this afternoon, in the absence of the Minister of Transport (Mr. Pickersgill), I asked the Member of the Administration (Mr. Turner) the following question: "In view of the thefts and pilfering regularly occurring in the port of Montreal lately, is the minister in a position to check such depredations and damages, so as to ensure the success of Expo and avoid harming the international repute of Canada.
Mr. Speaker, my question is based more particularly on a report published in La Presse, of Montreal, on February 28 and entitled:
An importer has had enough of piracy and will no longer use the harbour of Montreal.
And the article began with these words:
At least one importing company has had enough of the piracy occurring in the port of Montreal and has made known his decision to henceforth use Canadian ports other than that of the metropolis.
And the article continues:
The manager, Mr. Georges Dupuis, wants to alert public opinion as concerns the plague affecting the port of Montreal.
He advised the mayor of Montreal, Mr. Jean Drapeau, in writing of the disastrous situation in which the shipping trade finds itself in Montreal. He also stated his grievances to the harbourmaster, Mr. Guy Beaudet, and he finally sent letters to the press.
The article goes on to say:
-goods, in this case, electric tools, are stolen from this firm every time shipments are sent by boat. Since those losses drain the profits, the firm now must have its shipments delivered through other Canadian ports and has instructed its suppliers in 80 different countries to forward the goods in the future via Toronto or Halifax, if not by air.

13694	COMMONS
Proceedings on Adjournment Motion
These are serious facts, Mr. Speaker, very serious protests indeed, indicating that an alarming situation exists. This is not the first time such complaints are voiced with respect to Montreal and other harbours. In view of the fact that these misdeeds are widespread and have been occurring more frequently, I suggest that the Department of Transport should investigate immediately.
This is the eve of World Fair celebrations, and a very great number of visitors to Expo will be entering Montreal harbour. A great many business concerns, not only Montreal firms but also those in the eastern townships and Sherbrooke, as well as in the immediate area, use Montreal harbour. Members of the Association du camionnage de l'Estrie told me recently that they had gone to Montreal harbour to pick up goods and found, when the got there, that they had been stolen, crates had been opened and others damaged. This had happened more than once.
I feel this is prejudicial to trade and could have an adverse effect on our international repute, in view of the World Fair held in Montreal. I wish to take advantage of this opportunity, Mr. Speaker, to point out very briefly to the hon. minister that the central government should take immediate action; this is important. In spite of the request of many hon. members during the present session, the government has either procrastinated or refused to appoint a royal commission of inquiry on organized crime. We know that several countries have launched such national investigations on organized crime and especially in the United States and in Italy, it has been discovered that the source of gangsterism could be found in the ports of those countries. In fact, it is through seaports that smuggling is done and this is why those networks of gangsters have connections and facilities there, either by bribing the port guards or by using any other methods liable to encourage such pilfering and misdeeds.
This is the reason why I would greatly appreciate it if the minister, by using his great persuasiveness, could convince his colleagues in the cabinet to consider seriously the possibility of establishing a royal commission to inquire into organized crime, which commission would also include investigations on seaports and also on fraudulent bankruptcies which continue to occur in Canada.
In closing, Mr. Speaker, if we say that to govern is to anticipate, then to manage is to

DEBATES	March 2, 1967
act. This government cannot afford to stand by and witness such crimes and damages, and remain unmoved in holy meditation. Indeed not. We must act, and if to govern is to anticipate, I submit that unless the present government undertakes such inquiries immediately we may well have to face, in a matter of weeks or in a few months, calamities which could be without remedy.
For this reason, I am relying upon the initiative and good faith of the minister in urging him to take immediate steps with respect to this matter, c (10:30 p.m.)


John Napier Turner: Mr. Speaker, I listened with great interest to the remarks of my friend the hon. member for Sherbrooke (Mr. Allard) who raised a very important matter so far as the Montreal harbour and all other Canadian harbours are concerned. First of all, I must thank him for giving me notice of it this afternoon. However, in view of the ruling of the Chair, I had to wait until tonight to answer him, although I was ready to do so this afternoon.
The question gives me the opportunity to make a few comments on pilfering. That problem exists in all large harbours throughout the world, and not only in Canada, where a large volume of freight is handled I wish to point out to the hon. member that this situation is not peculiar to the Montreal harbour and I think he will readily agree.
The National Harbours Board is very conscious of the need to take the necessary steps to limit the pilfering going on in the Montreal harbour. Some of them, such as vehicle checks, are already in force and others will soon be spelled out. The closing of certain port entrances, the revision of procedure and documents with respect to the shipping of merchandise and, finally, an improved cargo guard service are planned.
I can assure the hon. member that the National Harbours Board is keeping a close watch on this matter and that the board will take all appropriate measures within the limits of its powers to eliminate as much of the pilfering as it possibly can.
Of course, the city of Montreal must share this responsibility with the National Harbours Board. I must say that, in certain cases, shippers believe that thefts occur at Montreal. But after all, a ship arriving in Montreal has been in many other parts of the world; so the thefts might have occurred elsewhere. When
March 2. 1967	COMMONS
a ship leaves Hamburg with stopovers in Le Havre or London or elsewhere before reaching Montreal, it is difficult to pinpoint where the theft occurred. I must frankly say that information in such cases is not very reliable. As a Montreal citizen, I object to the Montreal dockworkers always getting the blame, since they are not the only ones who could have committed these thefts.
In fact, many vehicles driven by tourists, truckers, in short by several categories of persons have access to the port; therefore, it is very difficult to determine who is responsible. But the National Harbours Board is very conscious of the problem, and I can assure the hon. member that a comparison of figures on a tonnage basis, between the port of Mont-
Proceedings on Adjournment Motion real and other ports in Canada, in North America and elsewhere in the world, will show that Montreal's record is not that bad.
Anyway, as I said at the beginning of my remarks, we are going to make sure that all possible measures are taken to control, to try and fight this problem which costs millions of dollars to shippers and to Montreal merchants.
The question raised tonight by the hon. member will be brought to the attention of the proper authorities, in order to arouse public opinion in this connection.

Motion agreed to and the house adjourned at 10.45 p.m.

Friday, March 3, 1967