1967-12-08

Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, I should like to table in English and in French the report of the commissioner general for state visits during the centennial year 1967.



THE LATE HON. A. J. BROOKS EXPRESSIONS OF SYMPATHY ON DEATH OF FORMER MINISTER

Hon. Roger Teillel (Minister of Veterans Affairs):: Mr. Speaker, I am sure it would be the wish of all hon. members to record in Hansard, the sincere regret of this house on the news of the sudden passing last night of the late Colonel the Hon. Alfred Brooks. Colonel Brooks, a minister of veterans affairs from 1957 to 1960 and a distinguished veteran of both world wars, was regarded by veterans, by his colleagues on all sides of the house and by the staff of the department as one of the staunchest advocates of veterans rights ever to hold the office of minister of that department.
He was also a veteran in another sense, a veteran of public service outside the armed forces. Colonel Brooks was a teacher and a lawyer, skilled in both professions. He served with distinction as an elected representative in the New Brunswick legislature, in this house and in the other place continuously from 1925 until his death.
I am certain all hon. members will wish to join me and the government in extending our most sincere sympathy to Mrs. Brooks and her two sons in their time of sorrow.


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, may I have the attention of the house for a few minutes to say a few words about the late Senator Brooks. His career was almost unique in the range and variety of service rendered to Canada. As the minister has already indicated, Senator Brooks had a long career of service as a lawyer, teacher and soldier and was
responsible for the interests of his fellow veterans as a member of the federal government. He had a distinguished career in the legislature of New Brunswick and in both houses of the federal parliament. His political career started in the New Brunswick legislature back in 1925. He was elected seven times in succession to the House of Commons and for three years was minister of veterans affairs.
Colonel Brooks held his political views strongly and advanced them forcefully. He was a partisan in the best sense of the term, and over 40 years of political service served only to enhance his reputation as a gentleman, a true patriot who was inspired always by the highest aspects of public duty. It may sound easy to speak in terms of 40 years of public service, but a man who gives it makes great sacrifices in his personal and family life. In the federal parliament, from the time of his election to the day of his retirement, he was a loyal and devoted spokesman for the interests of the Atlantic provinces, and he was always a patriot. There have been few men in public life from that region who deserve to receive unanimous respect and affection. Like many of you I have lost an old friend. On behalf of my colleagues and myself I wish to extend sympathy to Mrs. Brooks and the two sons.
[DOT] (11:10 a.m.)


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, all of us in this group were shocked indeed when we heard of the passing of Colonel the Hon. Alfred Brooks. Regardless of our differences in political opinion we had a high regard for him as a man who had served his country faithfully in peace and in war. I had a very close association with him personally since our appointment to the committee on veterans affairs in 1945. I knew his great interest in veterans affairs, his great interest in the welfare of veterans and their dependants across this country. We extend to his widow and to the family our most sincere sympathy on their loss.


Mr. R6al Caoueile (Villeneuve):: Mr. Speaker, I join with the Minister of Veterans Affairs (Mr. Teillet), with the Leader of the
December 8. 1967
5194	COMMONS
Expression of Sympathy for Former Minister Opposition (Mr. Stanfield) and with the member tor Kootenay West (Mr. Herridge) to express to the family of Colonel Brooks our most sincere condolences on this sudden passing.


Mr. A. B. Patterson (Fraser Valley):: Mr. Speaker, the members of this group would like to join in the expression of sympathy on the death of Senator Brooks. Many members of this house remember him mainly because of his gentlemanly attitude, both in and out of this house, and his obvious sincerity in fulfilling his responsibilities as minister of veterans affairs. We should like to join in expressing sympathy to Mrs. Brooks and to the members of the family at this time.


Hon. D. S. Harkness (Calgary North):: should like very briefly to pay my personal tribute to Colonel Alf Brooks, and to express my very deep sorrow at his passing. During the more than 22 years I have been here Alf. Brooks was one of my very closest friends, and the contribution he made to the public life of' this country during that period and previously is almost without parallel. I should like to express my very deep sympathy to Mrs. Brooks and the two boys.
Mr. R. Gordon L. Fair weather (Royal): As
the successor to Senator Brooks in representing the constituency of Royal in this parliament I should like to thank the Minister of Veterans Affairs, my own leader and others who have spoken so touchingly about the late Senator A. J. Brooks. He served his province and his country in war and peace, both in the legislature of New Brunswick and in both houses of parliament as well as the armed forces. Mr. Brooks, of course, loved Canada, but he had a special place in his heart for the very lovely Saint John river valley where he was bom and whose people he served for so long.



HOUSING


Hon. J. R. Nicholson (Minister of Labour):: Mr. Speaker, I wish to table two copies in English and in French of two working papers that have been distributed for use at the housing conference opening on Monday. One has to do with building materials and new building techniques; the other has to do with the studies that have been made in connection with pollution control.
(Mr. Caouette.l


Hon. R. A. Bell (Carleton):: I should like to ask that copies be made available for members of the house.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Richard Albert Bell: Mr. Speaker, I should like to ask the Prime Minister a question about the position of superannuated civil servants. In view of the statement made last night by the President of the Treasury Board that deferments in proposed spending programs would be made in such a manner as not to hurt the needy or the disabled, will the Prime Minister reconsider the decision to refuse any increase in pensions to this group which includes many needy Canadians?


Lester Bowles Pearson: Mr. Speaker, I hope the time will soon arrive when it will be possible to reconsider this matter.


Richard Albert Bell: A supplementary question, Mr. Speaker. Does the Prime Minister realize that this refusal makes a mockery of the committee system-


Some hon. Members:: Oh, oh.


Mr. Deputy Speaker:: Order.


Richard Albert Bell: -and is a betrayal of the needy men and women who have devoted the best years of their lives to the service of Canada?


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I have a supplementary question for the Prime Minister. When the President of the Treasury Board answered a question of mine on this matter last night he said this matter has been and is being considered by the government. Does this mean that the matter is closed or that it is still under consideration?


Lester Bowles Pearson: Certainly not closed, Mr. Speaker. I have just said that I hope the time will come when the decision can be reconsidered.


Stanley Howard Knowles: A further supplementary question, Mr. Speaker. Was this decision really taken as an economy measure or was there some other reason for it?


Lester Bowles Pearson: This decision was taken
purely on the ground of the economic situation in the country, and on no other ground.
December 8, 1967



DOMINION OBSERVATORY


[Stage Direction]
On the orders of the day:
David Réal Caouette: Mr. Speaker, I do not know which department is responsible for the Dominion Observatory, so I shall put my question to the Prime Minister.
When we call 994-5852 to have the official Canadian time, we always get an answer in English. I tried personally just half an hour ago with the same results. Why can we not be answered in French as well as in English by the Dominion Observatory?


Lester Bowles Pearson: Mr. Speaker, I should like to deal with this question by saying I will be glad to look into it.



CANADIAN BROADCASTING CORPORATION

[Stage Direction]
INQUIRY AS TO APPOINTMENT OF PRESIDENT On the orders of the day:
Alexander Bell Patterson: Mr. Speaker, I should like to direct my question to the Prime Minister. In view of the resignation of Mr. Ouimet, which is to take effect next Friday, is it the Prime Minister's intention to announce the name of the new president of the Canadian Broadcasting Corporation immediately?


Lester Bowles Pearson: Mr. Speaker, I would hope the broadcasting bill would receive the approval of parliament very shortly and that at that time the announcement can be made.


Mr.  R. Gordon L. Fairweather@Royal: supplementary question, Mr. Speaker. In view of the fact there is no president or vice president at the moment I wonder who will be running the corporation pending the passage of the new broadcasting act?


Lester Bowles Pearson: Mr. Speaker, if I am not mistaken there are six vice presidents, and the senior will be the acting president.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Mr. David Lewis (York South):: I wish to address a question to the Secretary of State
Inquiries of the Ministry for External Affairs, Mr. Speaker. Did the Canadian government or its representative at the United Nations receive any communication from the Secretary General regarding the proposed visit of two representatives of the National Liberation Front of Viet Nam to the United Nations? If so, was the Canadian government informed of the intended purpose of that visit?


Hon. Paul Martin (Secretary of State for External Affairs):: Mr. Speaker, I am not aware that the Secretary General has communicated with anyone on that subject, but the United States ambassador made a statement this morning. Several days ago there was some discussion about this matter among various delegations, in which Canada was a participant.


David Lewis: A supplementary question, Mr. Speaker. May I ask the Secretary of State for External Affairs to make representations to United States authorities to allow the entry of these two representatives in the hope that this might open doors to talks about peace negotiations.


Paul Joseph James Martin: This is primarily, of course, a United Nations matter. The United States ambassador indicated this morning the willingness of the government which he represents to give visas to permit attendance at the United Nations to those who would have responsibility for this particular group that has been mentioned.



FINANCE


[Stage Direction]
On the orders of the day:
Hon. J. W. Monteith (Perth):: My question is directed to the Minister of Finance. In view of the failure of the Minister of National Revenue during his remarks last evening to detail any savings for the next four months of this fiscal year, will the Minister of Finance tell this house if he expects government spending to March 31, 1968 to continue at the present level, which is 15 per cent above last year's level?


Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, in the very excellent and far ranging statement which was made by my colleague the President of the Treasury Board, there was detailed the general policy of the government to control expenditures. As the Leader of the Opposition knows, in the operation of a modern government one

December 8, 1967
Inquiries of the Ministry can only control expenditures, and many oi the measures that were announced by the President of the Treasury Board have an effect on this year's expenditures. I can confirm the figures I have put forward about the deficit we shall have this year and the general controls that we are placing on expenditures during the present year.


Hon. Michael Starr (Ontario):: A supplementary question to the Minister of Finance, Mr. Speaker. In the national interest I wish to ask him whether expenditures for the fiscal year 1968-69 will be greater than those for the fiscal year 1967-68?


Mitchell William Sharp: Mr. Speaker, the estimated increase is of the order of $400 million.


Some hon. Members:: Oh, oh.


Mitchell William Sharp: This was set out clearly and is in line with our responsible attitude to government spending. I believe it is necessary in order to fulfil the commitments that have been undertaken by this parliament. As the minister who is responsible for the Treasury Board has said, we are continuing to spend in accordance with our statutory obligation and to meet what we consider to be the priorities of the Canadian people.


Michael Starr: A further supplementary question, Mr. Speaker. Will the spending in the fiscal year 1968-69 be greater than the spending in the preceding fiscal year. May I have a yes or no answer?


Mitchell William Sharp: I gave my answer, Mr. Speaker. I do not think I could be any clearer.


Mr. G. W. Baldwin (Peace River):: I wish to ask the Minister of Finance a supplementary question. Possibly the Prime Minister will take note of it, as it might interest him. Can the minister indicate if the rather startling procedure of the Minister of National Revenue last evening in revealing Treasury Board dealings with .respect to next year's estimates, before the blue book has been filed, will be an annual practice from now on? In particular, will it be possible for the minister to come back and give us the same gory and harrowing details to show that departmental requests for this fiscal year have been pared down in the customary manner?


Lester Bowles Pearson: Mr. Speaker, this seems to have been the procedure that was insisted on by the hon. gentlemen of the opposition.


Michael Starr: Nonsense. That is government propaganda.


Herbert Wilfred Herridge: have a question to direct to the Minister of National Revenue. It is a bit urgent, Mr. Speaker. My question is prompted by a certain linguistic ambiguity contained in a statement made by the minister in the course of his address last evening, when he said "We are not cutting back but, indeed, expanding expenditures in such important areas for our future as aid for the disabled, the ill, or the less fortunate in our country." Is it possible for the minister-


Mr. Deputy Speaker:: Order. Perhaps the hon. member should now put his question. Before he does so may I say to the house that we appear to be entering upon a budget debate. Will the hon. member put his question now?


Herbert Wilfred Herridge: Do you wish me to repeat the question, Mr. Speaker?


Mr. Deputy Speaker:: Perhaps the hon.
member could put his question in the briefest manner, without details.


Herbert Wilfred Herridge: I will just give the last sentence. Is it possible for the minister to make the implicit explicit at this time?


Hon. E. J. Benson (Minister of National Revenue and President of the Treasury Board):: When I made the statement that we are continuing our aid to the disabled, the ill and the less fortunate in this country I was talking about such wonderful legislation as we have brought in with regard to the Canada Assistance Plan, supplementary old age pensions and so on; and when I mentioned the disabled I had in mind a statement which will be made very soon by my colleague the Minister of Veterans Affairs.


Mr. W. B. Nesbitt (Oxford):: In the light of that reply can the minister elucidate why he is cutting down school and education grants for Indian children?


Edgar John Benson: Not so.


David Réal Caouette: Mr. Speaker, I should like to put a supplementary question to the Minister of National Revenue.
Will the restrictions he announced yesterday delay the construction of a federal building in Hull to house the forestry department?
December 8, 1967


Mr. Deputy Speaker:: Order. Again 1 must advise the house that we are getting into a budget debate. It will only be a few minutes until the house will be able to discuss these matters, and I suggest we move to another topic.
TTranslation]


Mr, Caouetle:: On a point of order, Mr. Speaker. I think my question is quite in order and that it is not controversial. Since Hull has been promised a public building for two or three years, I should like to know whether the restrictions will prevent or delay its construction. That is all I am asking the minister.


Edgar John Benson: The answer is no; it has not been delayed.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Douglas Scott Harkness: should like to address a question to the Secretary of State for External Affairs. Did the minister state at his press conference this morning that the government intends to reduce the number of CF-104 squadrons and the strength of the army brigade group now serving with NATO forces in Europe.


Paul Joseph James Martin: No, I did not, Mr. Speaker. What I said, after consulting my colleague the minister of defence, was that no decision has been taken to phase out the CF-104's in the next four years.



COMPANY OF YOUNG CANADIANS


[Stage Direction]
On the orders of the day:
Mr. P. V. Noble (Grey North):: I wish to direct this question to the Prime Minister. Does the right hon. gentleman intend to condone the offence of the member of the Company of Young Canadians who in Toronto on December 6 was fined $100 with the alternative of 14 days in jail; or will the person concerned be expelled from the organization?


Mr. Deputy Speaker:: Order.
Inquiries of the Ministry PUBLIC SERVICE



REPRESENTATIONS AS TO SALARY INCREASES FOR SCIENTIFIC PERSONNEL

[Stage Direction]
On the orders of the day:
Mr. David Orlikow (Winnipeg North):: wish to direct a question to the President of the Treasury Board and ask him what consideration the government is giving to the representations of the Professional Institute that failure to grant promised pay increases to scientific personnel employed by the government will mean large scale resignations of these highly trained and irreplaceable staff members.


Edgar John Benson: With the hon. member's permission I should like to take this question as notice, as I presently have it under investigation and I am expecting a report.



SHIPPING


[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: My
question is addressed to the Minister of Transport. Is the hon. gentleman in a position to announce his plans with respect to proposed changes in the administrative arrangements for small vessel harbours arising out of a report from Mr. Tom How concerning conditions on the west coast? The minister told us he had received this report some time ago.


Hon. Paul Hellyer (Minister of Transport):: Mr. Speaker, the situation has not changed since the last time this question was asked, except to this extent; that the report has been under consideration and study by the department during the intervening period. I would hope the department would have their comments and recommendations available to me for decision some time early in the new year.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Douglas Scott Harkness: Mr. Speaker, I wish to direct a question to the Minister of National Defence. Is the reduction of the armed forces to 100,000 personnel to be accomplished by reducing the strength of or eliminating fighting units, for example

December 8, 1967
Inquiries of the Ministry by taking further naval ships out of commission-


Mr. Deputy Speaker:: Order.


Douglas Scott Harkness: -and further reducing the strength of infantry battalions ana other army units?


Mr. Deputy Speaker:: Order. Would the hon. member put his question briefly?


Douglas Scott Harkness: That is my question, Mr. Speaker. Further, if the reduction is not to be accomplished in that way how is it to be achieved?


Hon. Leo Cadieux (Minister of National Defence):: Mr. Speaker, first of all I wish to mention that those cuts were planned after serious and extensive consideration by headquarters, and that we trust we can see them through as indicated without affecting in any way our operational efficiency or modifying at all our present commitments.
Mr. Speaker, it must also be said that this is possible also as a result of the savings made through the unification of the forces.


Some hon. Members:: Hear, hear.


Douglas Scott Harkness: As a supplementary question, could the minister now answer the direct question as to whether there is to be a reduction in or elimination of actual fighting units?


Léo Alphonse Joseph Cadieux: No, Mr. Speaker.


David Réal Caouette: Mr. Speaker, I have a supplementary question.
It was announced that 7,000 soldiers on active duty will be discharged, since the establishment will be reduced from 107,000 to 100,000. That is the announcement which was made last night and, if such is the case, is the Minister of Manpower and Immigration going to look after the retraining of the soldiers who will be discharged or retired?


Hon. Jean Marchand (Minister of Manpower and Immigration):: Mr. Speaker, I think that the Minister of National Defence indicated that it was not true the Canadian armed forces would be reduced by 7,000 men.


Léo Alphonse Joseph Cadieux: Mr. Speaker, I rise on a point of order. I think it is impor-

tant to indicate to the hon. member for Villeneuve that the reduction, as was clearly explained by the President of the Treasury Board (Mr. Benson) would be accomplished through normal attrition. That does not mean, therefore, that 7,000 men will be discharged. We are going to scale down the recruiting and, since a good number of Canadian forces personnel are now nearing retirement age, this reduction will be accomplished in that way.
Therefore, the problem of referring 7,000 people to the department of manpower in order to obtain employment does not arise.


Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, I wish to direct a supplementary question to the Minister of National Defence. He has referred to the reduction resulting from attrition of recruiting. Is the drop off in the level of recruitment due to the declining morale of the armed forces arising from unification?


Léo Alphonse Joseph Cadieux: Mr. Speaker, I think it is important for me to say that our problem is that if we let recruiting continue as at present we would have too many people.


Some hon. Members:: Hear, hear.


Léo Alphonse Joseph Cadieux: We have to restrict recruiting and this, coupled with the natural attrition of the forces, will achieve the 100,000 level of personnel.


Hon. J. A. MacLean (Queens):: Mr. Speaker, I would like to ask the minister if he can assure the house that this cut back in total strength will not be accompanied by a similar cut back in the number of operating defence bases.


Léo Alphonse Joseph Cadieux: The question of bases is another problem, Mr. Speaker. As the hon. member knows, for a number of months we have been studying a project called base consolidation. Conclusions on it have not yet been reached, and I cannot give any assurance that all the bases operated in Canada will be maintained.


Mr. E. Nasserden (Roslhern):: As a further supplementary to the minister, Mr. Speaker, is it not true that total armed services personnel has not reached the figure of
107,000?


Léo Alphonse Joseph Cadieux: The actual operating figure has been a little over 107,000.


Some hon. Members:: 
Edward Nasserden: Would the minister tell us when this figure was reached?


Léo Alphonse Joseph Cadieux: September last.


Some hon. Members:: Hear, hear.

Mr. Jack McIntosh (Swift Current-Maple
Creek): Mr. Speaker, my question is for the Minister of National Defence. I should like to ask whether the cut-back referred to this morning in personnel and bases is the first step, or the first thin edge of the wedge, in a new policy of the government doing away with defence and assuming a new position of neutrality.


Mr. Deputy Speaker:: Order, please.


Mr. Harold E. Winch (Vancouver East):: Mr. Speaker, may I direct a question to the Minister of National Defence. Will the reduction of personnel in the armed forces from 107,000 to 100,000 be followed by a reduction in Canada's armed units in NATO, or is it to be effected strictly in Canada's establishment of nationally based forces?


Léo Alphonse Joseph Cadieux: Mr. Speaker, these cut-backs will apply to all Canadian forces but the operational units overseas will not be reduced.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. Robert C. Coates (Cumberland):: Mr. Speaker, 1 wish to direct a question to the Minister of Transport. Did the minister receive a delegation from the Maritime Motor Transport Association yesterday? If so can he report to the house what action he intends to take on their representation relating to the Maritime Freight Rates Act?


Paul Theodore Hellyer: Mr. Speaker, I did receive the delegation yesterday afternoon, and I must admit that I am very sympathetic to their problem, which is basically that they do not receive the same treatment as other forms of transportation under the Maritime Freight Rates Act. I could not at this time commit the government in respect of what action it may take, but I did say I would give the matter prompt
Inquiries of the Ministry attention in the hope that some time early in the new year there would be a possibility of working out a system which would provide equality for all forms of transportation in the maritime provinces.



STATEMENT AS TO CHRISTMAS RECESS

[Stage Direction]
On the orders of the day:
Hon. L. T. Pennell (Solicitor General):: Mr. Speaker, yesterday the hon. member for Vil-leneuve put a question respecting the date of the Christmas recess. I wish to inform the house that, assuming normal progress with legislation and no unforeseen circumstances, adjournment will take place on Thursday, December 21, and the house will reassemble after mid-January. The date on which the house will reassemble will be announced later by the government house leader.



MANPOWER


[Stage Direction]
On the orders of the day:
John Robert (Jack) Nicholson: Mr. Speaker, yesterday the hon. member for Moose Jaw-Lake Centre addressed a question to me as acting minister of manpower and immigration. I think with respect, that the question should have come to me as Minister of Labour since it relates to eligibility for unemployment insurance benefits.
The hon. member inquired whether trainees who may be cut off for the two week period at Christmas and New Year's from their living allowances would be eligible for unemployment insurance. I might say that there is no requirement for a two week waiting period; it is only one week. Some of these trainees have already served this waiting period; therefore they would be entitled to their earned benefits. As regards others who have not served the one week waiting period they will be obliged to wait one week before becoming entitled to any unemployment benefits.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, I wish to direct a question to the Minister of Agriculture. Can the minister allay the fears of the staff of P.F.R.A. who, contrary to some reports, have been doing a

December 8, 1967
Inquiries of the Ministry tremendous job for farmers, that they will be disbanded or placed under some other ministry, later to be released and their worthwhile services terminated?


Hon. J. J. Greene (Minister of Agriculture):: Mr. Speaker, I am not quite sure I heard all the hon. member's question, but if he was asking as to the disbandment of P.F.R.A. there is certainly no thought of that. At the opening of the South Saskatchewan dam the Prime Minister announced that no thought was being given to stopping the work of P.F.R.A. In fact he very clearly stated that this was a very important government agency, in whose work the government of Canada took great pride, and that it would continue in its important duties.


Some hon. Members:: Hear, hear.


Stanley James Korchinski: As a supplementary question, is the staff being transferred at present to another department?


John James Greene: No, Mr. Speaker.



HIGHWAY SAFETY


[Stage Direction]
On the orders of the day:
Mr. Barry Mather (New Westminster):: Mr. Speaker, I have a question I would like to ask the Minister of Transport. Having in mind the continual increase in car accidents and the fatalities therefrom, would the minister consider making a report on the status of his department's motor vehicle safety program?


Paul Theodore Hellyer: Mr. Speaker, we are proceeding with the organization within the department of this new responsibility. We have now defined those areas that we intend to tackle first. Perhaps some time in the new year or in the next session of parliament on an appropriate occasion we could give the house an indication concerning what we hope to accomplish next year.



INDUSTRY


[Stage Direction]
On the orders of the day:
Mr. Bud Germa (Sudbury):: Mr. Speaker, I should like to ask the Minister of Finance whether he is in a position to report to the house any results of his negotiations with the

Hudson Bay Mining and Smelting company and the Noranda Copper company regarding their increase in copper prices.


Mitchell William Sharp: Mr. Speaker, I have been awaiting the return of the Minister of Trade and Commerce, who has a responsibility and interest just as great as mine. I feel I should consult with him before reaching any final decision.



FINANCE


[Stage Direction]
On the orders of the day:
Hon. E. D. Fulton (Kamloops):: Mr. Speaker, I should like to ask the President of the Treasury Board for information which I think we should have before we resume the budget debate. With regard to the reductions made by Treasury Board in departmental spending proposals for the next fiscal year, what proportion represents cuts in existing programs and what proportion represents deferment of projects not yet started?


Edgar John Benson: Mr. Speaker, I believe this question was answered earlier by the Minister of Finance. We are going to live within the figure he stated. If my hon. friend was looking for some drastic action such as was taken by the Tory government in the thirties when they cut civil servants' salaries across the board, we have no intention of doing this.


Edmund Davie Fulton: On the contrary, Mr. Speaker, I was asking a plain and important question. I should have known better than to expect a plain answer.


Edgar John Benson: Mr. Speaker, my hon. friend should know that he cannot ask a plain and important question.


Edward Nasserden: Mr. Speaker, I have a supplementary question for the President of the Treasury Board. Does his reference to the thirties indicate that the crisis now facing Canada is of the same proportion?


Mr. Deputy Speaker:: Order, please. This is not the type of question which should be asked at this time.


Stanley Howard Knowles: Pourquoi pas?
December 8, 19G7



INQUIRY AS TO RESERVES SUPPORTING CANADIAN DOLLAR

[Stage Direction]
On the orders of the day:
['Mr. Speaker, there is no conclusion as yet on the question of the joint national defence and veterans affairs hospital in Victoria. This is a problem which has not yet been solved.']
Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, I have a question for the Minister of Finance.
In view of the fact that the president of the First National City Bank in the United States has just stated that the American dollar is hard pressed, can the Minister of Finance tell us whether the gold reserves guaranteeing the Canadian dollar are adequate at this time and whether there is a risk of this international crisis affecting the Canadian dollar?


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


Gilles Grégoire: Mr. Speaker, I rise on a point of order. If this question is put on the order paper it will mean a delay of several days. The president of the American bank has just made a statement saying that the American dollar is in a bad way, and I am asking the Minister of Finance and Receiver General for information concerning this situation. I wonder, therefore, whether the question is not urgent enough to warrant an answer from the minister, since he seems ready to give it.


Mitchell William Sharp: Mr. Speaker, I have very great confidence in the stability of the Canadian dollar, and hope the house will support the measures the government is taking to ensure the continued stability of the Canadian dollar.


Gilles Grégoire: Mr. Speaker, I should like to put a supplementary question to the hon. minister. Could he tell us what gold reserves are backing the Canadian dollar at this time?


Mitchell William Sharp: Mr. Speaker, these are all a matter of record. They are published every month or so. May I direct my hon. friend's attention to that. A certain proportion of these are in gold and a certain proportion are in United States dollars. I believe they are quite adequate to support the Canadian dollar at the present time.
27053-328}

Inquiries of the Ministry [Translation]


Gilles Grégoire: Mr. Speaker, on a point of order.
The Minister of Finance just said that the figures are published in a report. Now, if we refer to the weekly report of the Bank of Canada, more precisely under the heading "gold reserve" we find there is nothing entered, not even a zero, a one or a two. That is why I am putting the question to the minister.


Mr. Deputy Speaker:: Order, please. The hon. member is now arguing the question. Again I suggest that he put it on the order paper.



[Stage Direction]
On the orders of the day:
Wallace Bickford (Wally) Nesbitt: Mr. Speaker, I have a question for the Secretary of State for External Affairs. Yesterday in his temporary absence I asked a question of the Prime Minister. At that time the Prime Minister indicated that the Secretary of State for External Affairs would answer the question either later yesterday or today, concerning French shipments of arms to the Arab countries.


Paul Joseph James Martin: Mr. Speaker, I am sorry I was engaged this morning and did not have an opportunity to deal with this question. I will deal with it on Monday.


[Stage Direction]
On the orders of the day:
Alexander Bell Patterson: Mr. Speaker, I should like to direct my question to the Secretary of State for External Affairs. Can he advise the house what if any progress has been made in the last several days with regard to settlement of the situation in Cyprus?


Paul Joseph James Martin: Mr. Speaker, there will be,
I think some time next week, a meeting of the security council when the results of current consultations will be made known. Consideration will then be given to the renewal of the mandate of UNFICYP under certain conditions which are still a matter of discussion among the parties involved.

December 8, 1967
Inquiries of the Ministry VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
Hon. Gordon Churchill (Winnipeg South Centre):: Mr. Speaker, my question is for the Minister of Veterans Affairs. Last night we were informed that additional facilities at the veterans hospital in Victoria and Camp Hill hospital in Halifax were to be deferred. What facilities will not be proceeded with, thus placing a further burden on the veterans of this country?


Roger-Joseph Teillet: Mr. Speaker, so far as Victoria is concerned we are still talking to the Jubilee hospital people. The actual deferment of capital works will not affect the service to the veterans during the course of the year. Any capital expenditures which are required to maintain services are being carried out.


Mr. G. L. Chatterton (Esquimall-Saanich):: Mr. Speaker, I have a supplementary question. Can the minister say quite frankly whether what he has referred to is the plan for a joint hospital to serve the armed forces and the veterans affairs department in Victoria?


Roger-Joseph Teillet: Mr. Speaker, there is no conclusion as yet on the question of the joint national defence and veterans affairs hospital in Victoria. This is a problem which has not yet been solved.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. Lloyd R. Crouse (Queens-Lunenburg):: 
Hon. C. M. Drury (Minister of Industry):: The assumption that the 15 per cent reduction will almost immediately terminate all
[Mr. Martin (Essex East).)
work for those who are engaged in the production of steel trawlers in Canada I do not think can be accepted.


Mr. H. Russell MacEwan (Pictou):: I have a supplementary question, Mr. Speaker. In view of the importance of the matter and in view of the statement that there would not be any cut-back so far as the Atlantic area is concerned, will the minister use his influence with the personable President of the Treasury Board to see whether this cut can be restored?


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



HOUSING


[Stage Direction]
On the orders of the day:
Mr. John Gilbert (Broadview):: Mr. Speaker, this question is directed to the Minister of Labour, who is in charge of housing. Could he give members of the house a general outline of the agenda for the forthcoming conference on housing and urban development?


John Robert (Jack) Nicholson: Mr. Speaker, I should like to refer the hon. member to Hansard. I think the proposed agenda was tabled a week or so ago.



FISHERIES


[Stage Direction]
On the orders of the day:
Percy Verner Noble: Mr. Speaker, my question is for the Minister of Fisheries. Does the minister support the great lakes fisheries commission in respect of the introduction of cohoe salmon to lake Huron?


Hon.   H.-J. Robichaud@Minisier of Fisheries: Mr. Speaker, I believe the recommendations of the commission have been received by the Department of Fisheries. We are prepared to do what we can to implement any recommendation we receive, provided it is feasible and within the financial position of the department.
December 8, 1967	COMMONS DEBATES



HARBOURS


[Stage Direction]
On the orders of the day:
Mr. Robert McCleave (Halifax):: Mr. Speaker, my question is for the Minister of Transport. Because the modernization of Halifax port facilities is important to reverse the trend toward loss of business, would he assure us that there will be no hold-up in the National Harbours Board capital program for that area?


Paul Theodore Hellyer: This is a very general question, Mr. Speaker. I would either have to have it more specifically or take it as notice and obtain any details that my hon. friend may require. Many improvements are going ahead in the maritime ports. I cannot say offhand whether all of them are proceeding, but I know that many of them are.


Robert Jardine McCleave: May I ask a supplementary question, Mr. Speaker. My specific reference is to the containerization program in that area.


Paul Theodore Hellyer: I strongly believe this is going forward, but I will take the question as notice and confirm this to my hon. friend.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Paul Theodore Hellyer: Mr. Speaker, yesterday the hon. member for Winnipeg South asked a question with respect to Canadian initiative toward revision of transatlantic air fares. I have now received advice from my officials as follows. No initiative was taken by Air Canada at the Manila meeting of the International Air Transport Association because of an earlier agreement this year to extend existing rates for another year. For this reason the question of rates was not up for discussion at this recent conference.



BROADCASTING


[Stage Direction]
On the orders of the day:
Mr. Ralph Cowan (York-Humber):: Mr. Speaker, I have a question for the Minister of Transport. In the annual report of the
Inquiries of the Ministry Board of Broadcast Governors for the year ending March 31, 1967 it is reported that the Minister of Transport okayed 84 applications for CATV licences as they were not inimical to the interests of broadcasting stations. There were 91 applications made. Would the minister tell us which seven applications were considered inimical to the financial operations of what television stations?


Paul Theodore Hellyer: Mr. Speaker, I will be glad to inquire of the Board of Broadcast Governors, determine the names of the seven applicants and send them to my hon. friend.



FINANCE


[Stage Direction]
On the orders of the day:
Walter Gilbert Dinsdale: Mr. Speaker, I have a question for the President of the Treasury Board by way of clarification. In the process of preparing to participate in the budget debate I have been looking for a copy of the blue book of estimates' upon which the so-called savings announced last night are based. I wonder whether the minister could tell me where I may obtain a copy of this blue book.


Edgar John Benson: Mr. Speaker, I announced last night that the blue book of estimates will not be completed until January, and it will be tabled at that time. But it will be within the $10.3 billion target set by the government, an increase, incidentally, of only 3.3 per cent in variable expenses next year.



BUDGETARY PROPOSALS


[Stage Direction]
The house resumed, from Thursday, December 7, consideration of the motion of Hon. Mitchell Sharp (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Monteith (p. 5118).
Robert Lorne Stanfield: Mr. Speaker, I must apologize first of all if my voice is not too clear today.
I hope hon. members will be able to hear and understand me. I am, of course, very flattered by the interest the Liberal caucus is taking
December 8, 19G7

The Budget-Mr. Stanfield in me and in my welfare. Twice within the last two weeks I have received the attention of the official hatchetman of the caucus in this direction.


Some hon. Members:: Hear, hear.


Robert Lorne Stanfield: I want to assure my hon. friends that generally speaking I find this very flattering. Long ago old Disraeli said there is nothing more flattering than an insult. Of course I recognize that it is up to me to defend myself if I think I need to be defended. I just want to say that from anything I have seen so far I do not think there should be too much difficulty in this connection.


Some hon. Members:: Hear, hear.


Robert Lorne Stanfield: Last night, as I see from Hansard because I was not in the house, the hon. member for Verdun (Mr. Mackasey) undertook to misrepresent the position I have taken with regard to national unity in connection with the Estates General. I do not worry much about my hon. friend from Verdun except in so far as he is obviously the official agent of the Liberal machine and caucus in this regard.
I raise this matter now to suggest quite seriously to my hon. friends opposite that they have a responsibility to exercise in this regard. I spoke the other day in the house in response to what the Prime Minister said in connection with the B and B report. I said we were not going to try to derive any partisan advantage from the difficult questions raised in this regard. I had considered saying that of course I expected this to work in reverse.


Some hon. Members:: Hear, hear.


Robert Lorne Stanfield: But I did not consider it necessary to say this, because I know a number of my hon. friends opposite are very seriously concerned about national unity and other problems in the country, and perhaps naively I have assumed this to be the general feeling throughout the benches opposite. I suggest very earnestly to my hon. friends that they should have another caucus and deal with these politically irresponsible people in their ranks-


Some hon. Members:: Hear, hear.


Robert Lorne Stanfield: -and explain to them the seriousness of the matters being discussed which are of concern to us all. I just want to

say, Mr. Speaker, that I doubt whether anything so poisonous has been said in this house for quite a long time. The statement was not justified, and I do not think one can get very much lower than to try to distort statements on this subject for political advantage, in view of the circumstances in which our country now finds itself.


Some hon. Members:: Hear, hear.


Robert Lorne Stanfield: I want to say also that while this kind of statement is very provocative, I am asking my associates in my party not to retaliate because I think this is far too serious a subject for that. But I do suggest to my hon. friends opposite-


Mr. Mackasey:: Mr. Speaker-


Some hon. Members:: Sit down.


An hon. Member:: You have said enough already.


Mr. Depuiy Speaker:: Order. Is the hon. member rising to ask a question?


Bryce Stuart Mackasey: No, Mr. Speaker; I am rising on a question of privilege.


Mr. Nowlan:: He hasn't the intelligence to ask a question.


Bryce Stuart Mackasey: I will say at the very outset that I did not hear the opening remarks of the Leader of the Opposition-


Some hon. Members:: Sit down.


Mr.   Hicard@: State your question of
privilege.
9 (12 noon)


Bryce Stuart Mackasey: I have no intention of sitting down until I have stated my point of privilege or until Your Honour tells me to sit down. I did not hear the opening remarks of the Leader of the Opposition who did not hear my speech last evening. However, I did hear the Leader of the Opposition refer to my remarks as being poisonous. I agree fully with the hon. gentleman that the unity of Canada should not be a subject of partisan debate but. Mr. Speaker-


Mr. Deputy Speaker:: Order, please.


Gilles Grégoire: This is not a question of privilege.


Some hon. Members:: Sit down.


Mr. Deputy Speaker:: Order, please. The hon. member for Verdun will have to state his point of privilege.
December 8, 1967	COMMONS DEBATES	5205


Bryce Stuart Mackasey: Mr. Speaker, the Leader of the Opposition has distorted my remarks of last evening. In no way did I imply that the Leader of the Opposition endorses the separatist tendency of the Estates General. My point of privilege is-


Mr. Deputy Speaker:: I must advise the hon. member for Verdun that he has no point of privilege.


Gordon Minto Churchill: Go back and sharpen your hatchet.


Robert Lorne Stanfield: Mr. Speaker, I repeat again that I am not concerned about my hon. friend from Verdun. I am urging my hon. friends opposite quite earnestly to take the situation in hand and ensure we do not have any more of this. I do not think I need say anything more about it.
I wish to say, however, that as I indicated I welcome criticism. Generally speaking it is unfair, but unless it is made with regard to an issue such as this one I do not mind it very much. Some people contend there is nothing worse than unfair criticism. I have long believed that fair criticism is a great deal worse, and I intend to extend it now to my hon. friends opposite in connection with the budget.
What is the purpose of this budget message? Last spring the Minister of Finance presented a budget to the house in which he forecast a deficit of some $750 million. This was described by him as intending to provide a moderate and sustaining influence upon the economy. Why is he presenting an additional message now? Surely the need to sustain the economy in this way has not changed. Indeed, it is more apparent than ever that the economy requires support now. Apparently the deficit is a little larger now than the minister forecast, but so far as inflation is concerned it was as rampant then as it is now.
The stated purpose of the Minister of Finance was to meet growing expenditures and reduce the capital requirements of the market. I was a little surprised to hear that a budget message is required to meet growing expenditures because I thought the minister was working hard to curb expenditures. Of course there has been a failure to control expenditures in the current year, which have been significantly higher than the minister forecast. However, the point I want to make is that on the revenue side the minister's proposals make very little difference in the current fiscal year ending March 31, 1968. Of
The Budget-Mr. Stanfield course for the next year commencing on April 1, 1968 a budget will be presented in the spring.
The minister's proposals, as I understand them, are intended to increase the revenues of the government in the current fiscal year by some $45 million in relation to a total expenditure of nearly $10 billion. These new taxes are very heavy for those who are affected, but obviously they do not change the budgetary picture for this year very much in relation to the total picture.
Why has the minister delivered his budget message now? So far as the expenditure side is concerned, my hon. friends opposite have been dropping hints for a long time about cuts which would be made in the current fiscal year's expenditures. It is very clear from the statement made by the Minister of Finance that the expenditures in this fiscal year, far from being cut, will be higher than he had forecast. So why is this budget message being delivered now? Nothing significant is being done either on the revenue or the expenditure sides in this fiscal year. So despite all the talk opposite, this message has virtually nothing to do with the present year. Also, it imposes significant additional burdens on the Canadian taxpayers. Obviously the government is concerned about the deterioration in the confidence of Canadians in the government. It is so seriously concerned that it is determined to make at least a show that it will do better in the future.
This is the only reason for the budget message now. There is such an alarming drop in confidence in this government that it considered a budget message necessary to assist it in its borrowing operations. It tried to reestablish some confidence in the government among investors and tried to do something about the deteriorating psychological attitude in the country. So what do we get? We get an expurgated version of the budget for next year. This year has been such a mess that the government recognizes it must try to show the people it is determined to do better in the future.
The Minister of Finance reminds me of one of the fans of the old Brooklyn Dodgers. Usually they wound up in the cellar. At the end of each season they said: "Don't worry, wait until next year".


Mitchell William Sharp: The Dodgers won the pennant many times.


Robert Lorne Stanfield: They did so once in a while, but usually these fellows said, "Wait until
December 8, 1967

The Budget-Mr. Stanfield next year", but next year they were in the cellar again.
The purpose of this budget message is not to give the Canadian people, Canadian business, Canadian home owners or anyone else an advance picture of what they may expect next year to facilitate them in their planning. There is no assurance that new taxes will not be imposed and that there will not be substantial expenditures over and above what the minister in charge of the Treasury Board disclosed last night. Indeed, the Minister of Finance and others have indicated that in all probability there will be additional taxation and substantial additional expenditures. So the budget message does not give Canadian business or anyone else a picture of what will happen next year, and it cannot be justified on that ground. It is nothing but an exercise in public relations at the expense of the people of Canada.
[DOT] (12:10 p.m.)
There is such a widespread impression of irresponsibility on the part of the government that the government considered it necessary to try to convince bond purchasers, for example, that it is no longer always going to be wrong, that there is no longer always going to be vacillation. This effort to reestablish confidence in the government, if it had been done properly, would have served some purpose because it is important to the country that there be general confidence in the government. The program cannot succeed because the government is not talking frankly. It is not talking about what next year's expenditures are going to be or what revenues are going to be. It does not know what they are going to be. The Minister of Finance has said there is going to be a 4.5 per cent increase in expenditures, excluding certain items such as Expo and medicare. If the Minister of Finance had been prepared to exclude the expenditures on national defence I am sure he could have shown that expenditures would be lower next year than this year. How absurd this is, Mr. Speaker.


Michael Starr: It is a new method of financing-leave things out.


Robert Lorne Stanfield: I do not know whether the Minister of Finance realizes how absurd this kind of statement seems to other people. He was purporting to give the house and the country a picture of something that the government itself does not know. Obviously this was a waste of our time and a waste of everybody else's time. You cannot restore
[Mr. Stanfield.1

confidence, Mr. Speaker, by talking about next year's budget if you are neither prepared nor able to talk about what next year's budget is going to be. This is just about as pointless an exercise as one could imagine.
I should like to refer now to the speech last night by the minister in charge of the Treasury Board. He said, of course, that it was not proper to talk about next year's estimates until we have them in front of us and then he spent the rest of the night talking about them. I know I am a newcomer here, Mr. Speaker, but I have never seen anything to parallel this. I have never heard anything to equal it. I am happy to have been able to enter this house in order to see this great new development in parliamentary practice. I doubt that there has ever been anything like it in the 700-year history of parliament.
We all know the procedures followed in connection with estimates. Departments submit their estimates and generally add something to them because they know they are going to be cut. This has been my experience and I think it is the general experience. The estimates come in, somebody totals them and the Minister of Finance almost has a heart attack. At least, that is true of provincial treasurers. Then they set to work to reduce the estimates to some sort of order and they are always cut. Every government in Canada goes through this experience every year. The departments expect this. Sometimes departmental estimates are cut a little more than is expected but they are always cut substantially.
I venture to state that this is the first time in history a democratic government has ever felt itself so desperate that it had to boast about cuts it was making in the requests for expenditures being made by departments. I have known governments to make silly claims, Mr. Speaker, but I have never seen or heard anything to equal this. The relevant figure, of course, in connection with expenditures is the amount of increase compared with other years, not the amount of cuts made in requests for expenditures.
My hon. friends opposite either will not or cannot give us figures as to what the increases are going to be. They are in the position of coming before this house and purporting to give a frank explanation of the financial picture next year, but they give us an expurgated edition. The $11.5 billion to which the minister referred was the total of departmental requests, and then he spent the evening telling us that the government had
December 8, 1967	COMMONS
cut these requests by 10 per cent. Just as an aside, I was intrigued to hear him talk about the limitation being placed upon the number of government employees. Does this figure exclude the number of employees associated with the implementation of medicare? Is this a rabbit in a hat? I do not know, but it is very relevant. These figures with regard to the number of employees are not significant unless the government is prepared to disclose to the house what their total program is. They should not talk to us about part of their program or the number of employees concerned with part of their program. How can they expect anybody to take them seriously when they stand here and pretend to be hard, ruthless, determined men in dealing with these estimates?
The government has given us a picture that excludes a very substantial program. I wonder what opinion these gentlemen have, Mr. Speaker, of the intelligence of their fellow Canadians? In fact, we have a 4.5 per cent increase plus an amount that the government is not disclosing. If the Minister of Finance and his associates had come before this house and said that in the public interest we should not hold the increase below the 4.5 per cent figure that it is not in the public interest to do so, we might have said you are wrong, but at least we could have respected their honesty. However, when the government comes here with all this fanfare about cutting down requests made by departments it is a hoax and any small respect we had for these gentlemen disappeared last night.
Of course there are difficulties in reducing expenditures. I said, and I do not withdraw that the amount you can save in total expenditures as a result of a reduction in existing programs is not likely to make possible any significant tax reductions. This is what I said, and this is what my hon. friends have been throwing back at me. The difference between what I said and what the government is doing next year is all the difference in the world.
When the hon. member for Kamloops (Mr. Fulton) asked the minister last night a perfectly sensible question for enlightenment, whether the government proposed to make any reduction in this year's expenditures, the minister gave a smart answer. I hope he will not be offended if I say he gave a smart-alec answer.


An hon. Member:: He quoted your words.
DEBATES	5207
The Budget-Mr. Stanfield


Robert Lorne Stanfield: He knows what my words were. Certainly it is possible to reduce expenditures in particular programs. I thought my hon. friends were being serious when they were talking about this. Certainly it is possible, but I say again I do not think you can talk about reducing taxes substantially by reducing existing programs. I never said anything to the effect that you cannot reduce to some extent particular existing programs.


Mitchell William Sharp: That is not what you said.
Quote your words.


Robert Lorne Stanfield: I said, Mr. Speaker, that you cannot-


Mitchell William Sharp: I will send those words over to my hon. friend.
[DOT] (12:20 p.m.)


Robert Lorne Stanfield: I know the interview quite well. I say again that it is not realistic to expect to cut existing programs sufficiently to bring about a tax decrease. I said you can only hope to accomplish this through control of new programs. Of course it is possible to reduce particular programs.


Mitchell William Sharp: You must have been misquoted then.


Robert Lorne Stanfield: No, I was not misquoted. What I said was that it is practical enough in total to effect a reduction in taxes, but that this could only be accomplished through control of new commitments.
There are two sides to this question. My hon. friend suggested making cuts in the current year. Hon. members opposite are the ones who are talking about making cuts. If they had made up their minds to do this and if they gave up their efforts out of deference to me and any opinions they thought I had, or any authority my opinions may have in the world of economics, and consequently decided to quit, then I can assure them that they have not understood what I said. And I hasten to add: Do not let anything I may say deter you from any effort you may be making in this regard.
The minister referred last night to what I said about the control of new commitments and then stated that this was what the government was doing. That was a far from frank statement in a far from frank speech. Last night he discussed only the programs that he was cutting back. He was not prepared to discuss the substantial new commitments that his government was entering into.
5208	COMMONS
The Budget-Mr. Stanfield
The minister rather reminded me, Mr. Speaker, of a debtor, confronted by his creditors, trying to persuade them of the great effort he was making to get his affairs in order. He was telling his creditors how his wife had asked him for a fur coat and he had refused it, and how his son had asked him for a new car and he had refused it also. Then on the way out the creditors happened to hear something about a totally new commitment that the debtor had made and the debtor said: "It is not fair for you to pay any attention to that. Look how hard I have worked to control my expenditures. This other matter does not count; you are not supposed to notice it. Look how much I have saved by not doing these other things".
I do not mind, Mr. Speaker, the Minister of Finance and the minister in charge of Treasury Board making themselves look ridiculous, but I do mind when in their official positions they make this country look ridiculous. What is anybody likely to think of a country whose ministers charged with these responsibilities discuss financial matters in terms of rabbits in a hat? For example, there is medicare: now you see it, now you don't. Let us have some frankness, Mr. Speaker. When ministers discuss budgeting in terms not of comparisons with previous years but of requests that they have turned down, what respect are the people of the country likely to have for the government? I said the other day that believeability is important for a government, that confidence is important. This government has become just incredible in the literal meaning of that word. It is unbelievable.
The government brings in a total budget of $10.5 billion by cutting several existing programs, some of which, of course, are very questionable. I do not propose to go into them now; I expect a good deal will be said about them. What I should like to know-and this of course is the difficulty when you are discussing this question with only an expurgated edition of next year's estimates in front of you-is how much public works have been cut next year compared with the current year. I suspect, judging from the list of the minister's projects, that in order to stay within the $10.5 billion there has been a very drastic cutting in public works projects.
I want to say, Mr. Speaker, that if these cuts are made they will have a very profound effect upon the construction industry. There will be this business of start again, stop again that the government has been

DEBATES	December 8, 1967
indulging in all along, though it may not be as acute as it seems to be at the moment.
Second, Mr. Speaker, the effect of these cuts on unemployment is likely to be very pronounced. As one of my hon. friends to my left reminded us the other day, there is, of course, a very pronounced multiplier effect in connection with construction expenditure which in turn has a very pronounced effect, both directly and indirectly, on unemployment. Although I am prepared to reserve judgment on this, in view of what the minister said last night it does not look to me as if the government is living up to its assurances that the particular needs in areas of slow growth will be given consideration.
So we are faced with this misfortune, Mr. Speaker, that the government apparently regards itself in such a box financially that it considers it necessary to increase unemployment because of its own mismanagement. If the economy looked soft before the budget speech and the speech made last night by the President of the Treasury Board, it certainly looks a lot softer now for the reasons I have mentioned. It is unfortunate that the government is in a position, or seems to think it is in a position, where it cannot respond to apparently worsening economic conditions but seems to feel that it has to take measures to increase the difficulties. One wonders what the government will do or how it will respond should the economy for one reason or another get into serious difficulty.
However, Mr. Speaker, clearly these are measures which will substantially increase the rate of unemployment, which is already rising. As an anti-inflationary measure this budget is obviously of very little effect. Indeed, it is probably inflationary and will tend to increase the upward pressure on wages as well as add to the psychology of inflation about which the Minister of Finance talked. It is not a budget which relates very much to this year. It is a very incomplete budgetary statement regarding next year. It is not anti-inflationary. It is not related to the needs of the economy. It is an admission of bad judgment and fiscal irresponsibility, and apart from the burden it places upon our people it does not amount to very much more than that.
The government certainly has been and still is very complacent about inflation. I think the Minister of Finance is now prepared to agree that he and his associates have been complacent about inflation in the past. I do not want to be unfair to them in
December 8, 1967

this regard, but this is the impression I get from this sentence in his budget speech, which is to be found on page 4900 of Hansard:
Canada is now finding it harder to achieve price stability and full employment at the same time than earlier thinking had led us to suppose.
I do not know why the government should have any difficulty in recognizing the problem. Inflation has been rampant in this country for at least three years. Instead of examining their own responsibilities they have been preening themselves enthusiastically about what they have done. It is clear, I think, that our long period of growth came about from the competitive advantage which devaluation of our dollar gave us, as well as from other external factors such as those which brought about the great expansion in the economy of the United States. But my hon. friends in the government allowed this country, within a period of three years, to lose the competitive advantage that devaluation brought. We have had excessive inflation for three years and my hon. friends in the government have done nothing but talk about it. That is not fair; actually, they have encouraged it.
[DOT] (12:30 p.m.)


Some hon. Members:: Oh, oh.


Robert Lorne Stanfield: The government should
begin to recognize the disservice it has done to the economy of the country. It talks about an inflationary psychology. Why should there not be an inflationary psychology in a country that has suffered the rate of inflation that we have suffered for the past several years. Now the government introduces a program to restrain spending. If it can do that sort of thing now, why did it not do it long ago?


Mr. Graffley:: Hear, hear.


Robert Lorne Stanfield: This government has no budgetary policy. This is made clear when one looks at budget speeches and at what has happened recently. This government's budgets have little relation to the requirements of the economy. The government has a good deal to answer for and it will be called on to answer for what it has done.


Walter Gilbert Dinsdale: Back to the truth squad.


Robert Lorne Stanfield: Mr. Speaker, I am not against expenditures, that is, I am not against expenditures per se.


Miss LaMarsh:: The hon. member was not against expenditures in Nova Scotia.
27053-329J
The Budget-Mr. Stanfield


Robert Lorne Stanfield: About a week ago I said that I was not opposed to government expenditures which were of basic importance to the people and to the development of the country. I said that many government services are desirable at any given time. Obviously that is so but obviously, also, the government must have some test, beyond mere desirability, before it introduces a program. The government cannot do everything that is desirable-and here I differ from my hon. friends to my left in the chamber-any more than an individual can do everything that is desirable. Clearly, the amount of money that the government undertakes to spend must in some way be related to the circumstances of the country and the effect that such expenditure will have on the economy and on individual taxpayers. Admittedly, this involves a matter of judgment at any given time.
Personally, I rate the importance of government expenditures more highly than others in this chamber might rate them and I may be inclined to draw the line at a higher level of expenditure than others would. But, Mr. Speaker, there must be a line. We must pay attention to the physical factors that affect productive capacity in the country and to the psychology of the country. It must be agreed that government expenditures during recent years have been rising more rapidly than revenues and the gross national product have been rising. In due course such rising expenditures must have their effect on enterprises in the country and on individuals. If the load which the country has to bear becomes too heavy it will undermine economic growth. For the future welfare of our people there must be expansion in the future of certain government services. I realize that. But it is not enough to say that a program is desirable; we must also decide what expenditures we may take on at any one time. I am sure the Minister of Finance will agree that today this is the relevant question.
It is proper for an opposition to concentrate its attention at any time on the level of government expenditures. The Minister of Finance must admit, after all his talk about restraint, that the level of government expenditure has become the relevant and crucial question today. The opposition is not obligated to prepare the government's estimates but the government is obligated to allocate its resources to its various programs and purposes. So, Mr. Speaker, it is nonsense to ask the opposition, in today's circumstances,
5210	COMMONS
The Budget-Mr. Stanfield where restraint ought to be imposed. That is the responsibility of the government. If the government is not prepared to exercise that responsibility, our people will make certain that somebody else does exercise it.


Julia Verlyn (Judy) LaMarsh: They may want a credible alternative.


Robert Lorne Stanfield: It is not difficult to provide a credible alternative to a most incredible government.


Some hon. Members:: Oh, oh.


Robert Lorne Stanfield: We are confronted with a serious situation and I do not for a moment minimize it.


An hon. Member:: I thought that was what you were doing.


Robert Lorne Stanfield: My hon. friend should listen with an open mind. Hon. members on the government side have commented about some of my suggestions. If they will listen to what I have to say perhaps they will comment about other suggestions.
I wanted to say something about the Minister of Manpower and Immigration but since he is not here perhaps I can defer my remarks to another occasion.
As I said previously, government services are desirable if they are to bring about improvements and developments in the country. But at the present time government services are rapidly rising in cost. These costs are growing more rapidly than provincial and federal revenues are growing, and this fact was clearly demonstrated in the study which the tax structure committee undertook. That body was established by this government in conjunction with the provinces and it forecast projected expenditures for existing programs. It also forecast the growth of revenue from existing sources. The conclusion of the federal and provincial officials who were involved in the study was that on the basis of existing programs and existing sources of revenue the provinces would move into a position of increasing deficit and, on the basis of federal programs which were in effect when the study was made, that the federal government would move into a position of surplus. The committee's remarks related to programs such as education. They indicate clearly that with existing sources of revenue an increasing deficit position lies ahead of us. When I say that I am talking about federal and provincial governments together.

DEBATES	December 8, 1967
Clearly, this country ought to have some new programs from time to time. Governments should be in a position to respond to new developments which are of advantage to the country and which help the country to respond to new developments.


An hon. Member:: Medicare.


Robert Lorne Stanfield: Considering our circumstances as they relate to existing programs, we cannot think of introducing any new programs, Mr. Speaker. I agree in all earnestness with those who say that we are confronted with serious problems. The provinces and this government are bound to come under growing pressure because of programs that exist at the present time. There will be growing financial pressure on government income derived from existing sources. Obviously many of the expenditure programs which are now in effect in the country have built into them provisions that will escalate expenditures. As a result expenditures are growing faster than revenues. This is true even though during recent years there has been an increase in the growth of revenue from existing sources.
[DOT] (12:40 p.m.)
So it seems to me that in a confederated country such as Canada, where there is a division of responsibility, it is essential to improve the forms of consultation. I refer to the financial pressures. Obviously consultation is desirable. It is desirable if we are to tackle the problems of inflation in so far as government expenditures contribute to inflation. Obviously we have to encourage consultation if we are to pay any attention to priorities in the country as a whole. This, of course, is not an original suggestion of mine. I have heard it stressed by Mr. Roblin, Mr. Manning and others. Somehow or other we have to avoid excessive taxation, we have to avoid unnecessary inflationary pressures and we have to see that services of basic importance in the country as a whole have sufficient funds allocated to them.
The difficulties involved in effective consultation are great. I suggest, however, that they need not be impossible. I believe we may be entering upon a phase in which the chances of effective consultation are increasing. I say this because obviously the crunch is on this government; the financial crunch is on the provinces. In recent years revenues have been increasing fairly rapidly and perhaps the provinces have not felt the same pressure, but I think there is a chance now to
December 8, 1967

establish an effective form of consultation between the federal government and the provinces with a view to achieving an appropriate fiscal policy for the country as a whole in connection with inflation and in connection with priorities of expenditure.
I suggest, however, that the consultation has to be genuine. The consultation has to be sincere, not the kind in which the Minister of Finance engaged a week or two ago when he invited the provinces in to urge them to restrain expenditures while the government as a whole was inviting them to embark on a substantial expansion in their expenditures. If there is to be effective consultation between the government of Canada and the provinces there has to be confidence, there has to be sincerity on both sides.
I suggest that we need continuing consultation. The minister may tell me that there is more consultation now than there was a few years ago. I think this is true. But I believe there should be still more. I should like to see an effort made to establish a secretariat of some sort associated with continuing consultation. This government has respect for provincial jurisdiction, certainly, and all those engaged in consultation must preserve some degree of flexibility. But I think the need is so urgent that this issue must be tackled sincerely. It must be tackled with determination and it must be tackled properly.


Some hon. Members:: Hear, hear.


Robert Lorne Stanfield: I say to the government: the country requires some leadership in the fight against inflation, leadership involving real encouragement of restraint and some method of providing effective consultation with the provinces. I say that the deliberate creation of unemployment about which we heard last night is totally unacceptable.


Some hon. Members:: Hear, hear.


Robert Lorne Stanfield: I say that the complacency which, by its actions, this government continues to show with regard to inflation is unacceptable. I say that the pretence of making cuts in expenditure by denying some request for additional expenditure is unacceptable. I say in all sincerity that confidence in the government, confidence in the country, is of basic importance. Confidence is very delicate. It is taken for granted when it exists but when it is destroyed it is difficult to restore. It is clear that the confidence of the Canadian people, of financial institutions,
The Budget-Mr. Sharp of anybody you like, including, I think, the backbenchers opposite, in this government is completely gone, and I simply say: Beware lest antics of the sort we saw last night destroy confidence in Canada.
This government is imposing further hardships on the Canadian people through additional taxation and the deliberate creation of unemployment. It has impaired and is continuing to impair the economic future of our country through inflation. I simply say: Please, by trying to be clever politically, do not destroy confidence in Canada.


Some hon. Members:: Hear, hear.


Mitchell William Sharp: Mr. Speaker, I am tempted to begin my reply to the Leader of the Opposition (Mr. Stanfield) by repeating words with which he himself concluded his speech. I hope the Leader of the Opposition will not indulge in political cleverness to the detriment of the people of this country.
Before I talk about the substance of what the hon. gentleman said, may I refer to the hon. member for Verdun (Mr. Mackasey). I do not intend to enter into the discussion which has taken place between him and the Leader of the Opposition, but I do want to say this about the hon. member for Verdun. I know no one in this house who has worked harder or been more effective in the cause of national unity than the hon. member for Verdun.
The Leader of the Opposition has not been in this house very long and if he had been here as long as I have, which is not very long either he would have heard the speeches made by the hon. member for Verdun seeking to conciliate the views of French speaking and English speaking Canadians. And he would have applauded, just as hon. members on this side and hon. members opposite applauded. I will not stand here and hear the hon. member being castigated and accused of trying to disturb the relationships between French and English speaking Canadians. It is an unfounded charge and I am sure, whatever the hon. member said, that was the last thing he would have desired to do.
[DOT] (12:50 p.m.)


John Patrick (Pat) Nowlan: Did you applaud last night?


Mitchell William Sharp: Mr. Speaker, the hon. gentleman has given a very interesting and in some respects quite constructive speech. I was particularly interested in his concluding remarks when he began to talk about the

December 8, 1967
The Budget-Mr. Sharp real problems facing the country and abandoned the rather political approach he took at the beginning when he tried to be on both sides of the question. We do face in this country some serious problems. We face serious problems in our political relationships and we face some serious economic and financial problems. We also face some problems in the field of federal-provincial relations that he recognizes, since at one time he had the position of premier of a province. I hope that as a result of the initiatives that have been taken in recent years we can bring about better understanding and establish the kind of priorities this country needs.
But, Mr. Speaker, when I am criticized in this house for having brought down two budgets this year I am reminded of the time when a Conservative administration brought down no budget. I have no apologies for bringing down two budgets. I brought down two budgets because in the interval circumstances changed, and if we are not ready in this government and in this country to reconsider our policies in the light of changing conditions we should not be in office and the members opposite should not be in parliament.
But may I just say that in so far as the hon. member talked about the question of consultation between provincial and federal governments, I am reminded of the position taken by one of his opponents for the leadership of the Conservative party. I can recall how Mr. Roblin, when he was premier of Manitoba, urged the federal government to give up 20 points, I think it was, of the income tax in favour of the provinces. At the time I thought as Minister of Finance this was a rather strange position to take.


Michael Starr: You are starting to think that way.


Mitchell William Sharp: But when Mr. Roblin became a candidate for the leadership of the Conservative party he was asked whether he would still advocate those policies. "No," he said, "I changed my mind." I hope the Leader of the Opposition will recognize that he is now a leader of one of our great political parties, and I hope he is beginning to understand his responsibilities as the leader of that party-


Jay Waldo Monteith: He does not need any lessons from you.


Mitchell William Sharp: -inasmuch as the circumstances are somewhat different when he is a member of this parliament concerned about the welfare of the whole of Canada.

The hon. gentleman talked about the role of the opposition. The only inference I could draw from those remarks was that the Leader of the Opposition was defending the irresponsibility of the opposition.


Some hon. Members:: Hear, hear.


Mitchell William Sharp: He said it was not for the
opposition to show restraint-


Robert Lorne Stanfield: No, no, I did not.


Mitchell William Sharp: -it was not for the opposition to support the government in its policies of restraint. He said in effect, "That isn't our function. Our function is to be as irresponsible as possible, to embarrass the government as much as possible." This is the only inference I can draw from the remarks made by the Leader of the Opposition.


Some hon. Members:: Hear, hear.


Mr. Ricard:: Be honest and quote him properly.


Mitchell William Sharp: The Leader of the Opposition has said that he should be regarded as a credible alternative. I find this a very strange attitude on the part of the Leader of the Opposition. Surely if he is going to have the confidence of the people at some time, he should be responsible in his views. He should be a credible alternative. But in the remarks he made today, he did not show himself as being a credible alternative. All he showed was that he was going to continue the same sort of policies, the same sort of attitudes in this house as were followed by his distinguished predecessor. I am sorry about this.
I had expected that when the Leader of the Opposition assumed his present role we would see the opposition measuring up to its responsibilities, measuring up to the expectations of the people of Canada. Perhaps, we have misread that great convention in Toronto when the present Leader of the Opposition was elected. We had thought there was going to be a change. But, I have seen no evidence of change, either in the speech the Leader of the Opposition has made this morning or in the speech he made when he charged this government with mismanagement.
It was the same speech that could have been made by anyone on his side of the house at any time in the past. It was a thoroughly traditional speech of the kind that was made by the leader of the opposition who preceded my hon. friend. The only difference was not in the content but in the manner and the manner, I must say, was
December 8, 1967

very different indeed. My hon. friend, the Leader of the Opposition, has a very persuasive manner-


Robert Lorne Stanfield: Thank you.


Mitchell William Sharp: -and therefore I listened to him with greater care than I would have listened to the former leader of the opposition, but I am afraid I was just as disappointed in the content.


Some hon. Members:: Hear, hear.


Mitchell William Sharp: My hon. friend was the leader and the premier of a province so that we are not talking here about a man who has not had the responsibility of power. From time to time, as I listened to his speech, I began to see how he would have defended his government if it had been met by the sort of attacks he made on us today. But just occasionally did I see that. For the rest of the time he was trying to fit himself into the new role of irresponsible critic, and may I say to him it does not fit him well. I suggest to him, if he wants to have an effect upon this house and upon the country, that he should live up to the expectations that we have anticipated. This is what this country is looking for. It is looking for an opposition which is in the great tradition of the Conservative party.


Some hon. Members:: One o'clock.


Mitchell William Sharp: Mr. Speaker, I would like to continue these remarks after one o'clock.


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


[Stage Direction]
AFTER RECESS

The house resumed at 2.30 p.m.
Mitchell William Sharp: Mr. Speaker, during the course of the remarks made by the Leader of the Opposition he commented on a statement that he had made as reported in the magazine, Executive, for November, 1967. For the record I should like to repeat what it was the Leader of the Opposition said, because in the main I agree with it and I think he does, notwithstanding his denial this morning. In response to a question he is quoted as having said:
I think that anybody who suggests that you can cut down on government spending or offer a substantial reduction in taxes isn't being very realistic. But any government can control the rate of the increase in expenditure.
The Budget-Mr. Sharp
That seemed to me to be the Leader of the Opposition speaking as a responsible politician and as one with long experience in the government of a province concerned about what are really the facts and reflecting his very great experience. Today we heard him, unfortunately it seemed to me, abandon the role of the reasonable man which becomes him very well and resort to a kind of political gamesmanship in which he is singularly unconvincing. He began by attacking the government, particularly my colleague the President of the Treasury Board (Mr. Benson), for revealing at this time some of the cut-backs that had been made in proposed spending. He said that this was unprecedented. As I recall his remarks he said something to the effect that this was the first time in 700 years of British parliamentary history that there had ever been a performance like this.
Why did the government resort to this unusual procedure? The Leader of the Opposition knows very well why, and so do the hon. member for Carleton (Mr. Bell), the hon. member for Perth (Mr. Monteith), the hon. member for Northumberland (Mr. Hees) and the hon. member for Kamloops (Mr. Fulton). We were urged by the opposition not to talk in general terms but to give the substance of the government's cut-backs which they said they did not believe. That, fundamentally, is the reason the government put forward at this time evidence of its intention to keep within the ceiling of $10,300 million that I had announced both on motions one day and later in my budget speech. But the most flagrant inconsistency, it seemed to me, in the speech of the Leader of the Opposition lay in his attitude toward government spending. At one time he was for it; the next time he was against it. It was really quite a remarkable display of agility.
Usually we hear from an individual member of the opposition that he is in favour of some expenditure and then hear from another member that he is opposed. But there we have the Leader of the Opposition in the same speech appearing to be both for reduced government spending and in favour of more government spending. This a tribute to the skill he displayed, but I really do not believe it is a very great tribute to the intelligence of members of this house who listened most carefully to his very careful statement of the position of the Leader of the Opposition. There was a United States senator who once found himself in a similar spot. He told me what happened. He said that in

December 8, 1967
The Budget-Mr. Sharp his state there was a law about killing squirrels and that this was a very contentious matter. He was in a terrible spot because some of his friends were in favour of the law and some were opposed to it. He got up on the speaker's platform and said, "Ladies and gentlemen, I would like to speak to you about the squirrel law. Some of my friends are in favour of it and some are opposed to it. I have no hesitation whatever in stating my position. I am in favour of my friends."
It seems to me, Mr. Speaker, that the Leader of the Opposition in his speech was trying to appease his friends behind him whether they were in favour of greater government spending or opposed to greater government spending.


Robert Lorne Stanfield: What was the name of your senatorial friend?


Mitchell William Sharp: I agree with the Leader of the Opposition that the government has a responsibility for decision making. That is what governments are for. In this connection, then, I find great difficulty in understanding why the Leader of the Opposition should have complained because the government made and announces some decisions. This is another kind of inconsistency that I detected in the hon. gentleman's speech.
[DOT] (2:40 p.m.)
But the opposition has a responsibility, too. That responsibility is to provide constructive opposition. That is what the opposition, in our parliamentary system, is supposed to do. There is a particular responsibility, of course, laid upon the Leader of the Opposition because he occupies a position of even greater responsibility than other members of the opposition. If he genuinely believes that the government is overspending, his party should at least not advocate large, additional expenditures and should applaud the government when it does that for which the opposition presses.
I listened last night when my colleague the President of the Treasury Board (Mr. Benson) was speaking and announcing some economy measures. He announced the cut-backs the government was proposing. What did I hear from the opposition benches? Was it applause? No. I heard cries of "Shame" after almost each item. Let me ask the Leader of the Opposition some questions.


Mr. Rapp:: You will not get answers to them.


Mitchell William Sharp: That is right; I know I will not
get any answers'-


Reynold Rapp: Well, you will.


Mitchell William Sharp: -but I would like to pose the questions nevertheless. Let me ask the Leader of the Opposition whether his party is now advocating an old age pension, across the board, of $100 a month.


Some hon. Members:: Hear, hear.


Mitchell William Sharp: Let me ask him whether the opposition have been advocating increased pensions for retired civil servants.


An hon. Member:: With proper management in government we could do it.


Mitchell William Sharp: Let me ask him whether they are in favour of an increase in the Atlantic provinces adjustment grants. This is one area about which my hon. friend must be very sensitive because he was premier of Nova Scotia and he, quite properly, made representations to the government that they should spend more money in the maritime provinces.


Richard Albert Bell: The opposition is advocating selectivity.


Mitchell William Sharp: The Leader of the Opposition made representations to the government when he was premier of that province that it should spend more money, in large quantities, in the maritime provinces. Is the Leader of the Opposition in favour of reinstating the shipping subsidies? Is he in favour of the government spending large amounts of money on public works and new railways? Is he in favour of more aid to education? Is he in favour of enlarging the designated areas? Is he in favour of the federal government spending more money to solve the problems of water and air pollution? Have members of his party been advocating that there should be no abandonment of railway lines in the west? Have they been advocating that the federal government should provide no aid to western farmers, no subsidies in respect of wheat, and so on?
I ask these questions really to illustrate the point that these are projects which I think would receive wide support in the house, but the opposition cannot at one and the same time advocate that we make large cuts in our spending and advocate expenditures running into hundreds of millions of dollars.


An hon. Member:: They can.
(Mr. Sharp.]
December 8, 1967


Mitchell William Sharp: I know they can advocate it, but it is an example of the inconsistency illustrated by the remarks of the Leader of the Opposition. Let me deal with some of the other things that have been advocated by the opposition parties in connection with revenue. They have advocated-I do not blame them but this shows the inconsistency of the opposition-that the 11 per cent sales tax on building materials be withdrawn to a very large extent, at the cost of the treasury. They have advocated cutting taxes in general. Indeed, I recall the position taken by the opposition parties in the debate on the main budget. It was directed against the fact that we had not reduced taxes, although we did to a minor extent. I would be more convinced by the arguments put forward by the Leader of the Opposition if they were not so inherently inconsistent. We have in this party and in this government tried to be reasonably consistent.


Some hon. Members:: Oh, oh.


Mitchell William Sharp: I think the Leader of the Opposition ought to try to reconcile some of his priorities before he lectures the house and the government.


John Patrick (Pat) Nowlan: He is not in government yet, but he soon will be.


Mitchell William Sharp: I understand the hon. gentleman's dilemma. He is in a difficult spot. He is criticizing a government that in large part is doing what the Leader of the Opposition would do if he were in office. This is the position in which he finds himself. At one and the same time he is criticizing the actions of the government, which he really agrees are necessary, and is suggesting that they are inappropriate to economic circumstances. This is a very difficult position for the Leader of the Opposition.
The Leader of the Opposition revealed his dilemma when he moved an amendment to the last supply motion. It was exactly the same dilemma as he faces today in making his criticism of the budget. He cannot be expected to solve this dilemma by the sort of double-talk in which he indulged today. He knows the problem because of his experience as premier of Nova Scotia. I am not criticizing what he did in that position. I recognize he was more familiar with the problems in Nova Scotia than I am. But he has stood in his place today and lectured this government on its spending. Therefore I should like to draw to the attention of the house the record of the government of Nova Scotia in some of
The Budget-Mr. Sharp the fields where there has been particular criticism from the Leader of the Opposition and the opposition parties.
The Leader of the Opposition pretends to be a model of fiscal and financial responsibility, interested in keeping down government expenditures and trying to keep civil servants under control. Therefore I think some comparisons with Nova Scotia are relevant. Let me give the figures. I have a great many here but I shall give only one. These figures relate to the public service in Nova Scotia. Between the years 1956 and 1966, a period when my hon. friend occupied the position of premier of that province, the public service of Nova Scotia, those in government employment, rose from approximately 10,300 to 14,419. This is an increase of just under 40 per cent. In the same period the number of civil servants in Canada rose from 336,000 to 361,000 approximately. This is an increase of just about 7 per cent. These are comparisons that I think should be brought to the attention of the house, because I believe that in discharging our responsibilities we are doing at least as well as did the government of Nova Scotia when the Leader of the Opposition was premier of that province.
The hon. gentleman in his speech made these broad, sweeping statements, namely, that the government of Canada had been irresponsible in its spending, that our spending has been too great, that we had employed too many civil servants. I suggest that his criticism of us is certainly not justified by the record of his administration in this field.
I recognize that he has special responsibilities, but I suggest to the Leader of the Opposition that so has the government of Canada on behalf of the people of Canada.


Some hon. Members:: Hear, hear.


Mr. Muir (Lisgar):: It is time you lived up
to them.


Mitchell William Sharp: There was one notable gap in the speech of the Leader of the Opposition. He talked about our Canadian problems as if somehow we were alone in the world. He made virtually no reference-I certainly did not hear it-to the sort of problems that are besetting the whole of the western world of which we form a part. I do not say this because I wish to blame external factors for all our problems. We have a responsibility and we intend to discharge it. I have been frank to say, perhaps more frank than most ministers of finance have been in the past, that we have some special problems which

December 8, 1967
The Budget-Mr. Sharp demand action from Canada and from Canadians. But the common problem that faces all of us, that faces the United States, Great Britain and many of our friends in Europe just as it faces us here in Canada, is a different kind of inflationary problem from any that we have ever seen before. In the main it is not brought about by an excess of demand.
[DOT] (2:50 p.m.)
The Leader of the Opposition spoke as though the kind of problem that I had been talking about in my budget speech was a traditional form of inflation brought about by excessive demand. But he knows, I am sure, that there are other factors at work, notably a kind of inflation psychology which finds its reflection in prices, wages and interest rates. This is what prompted the government to bring in another budget at this time. This inflation psychology, this tendency for wages and prices to go on rising, is jeopardizing the future growth and expansion not only of this country but of the western world in general.


John Patrick (Pat) Nowlan: And of Nova Scotia.


Mitchell William Sharp: Yes, exactly, and of Nova Scotia. This is the problem with which we are dealing at this time, and it is difficult to cope with this new kind of inflation both here and abroad. Read the speeches of the secretary of the treasury in the United States, of the chancellor of the exchequer in Great Britain and of any other minister of finance in the world today, and you might be reading the speeches of the Minister of Einance of Canada.


John Patrick (Pat) Nowlan: And of Nova Scotia.


Mitchell William Sharp: Yes, exactly, and of Nova Scotia. This problem is common throughout the world and we are trying to face it and deal with it in the proposals which I have put forward in my budget speech supplemented by the speech of the President of the Treasury Board.
When the Leader of the Opposition ran out of substantive arguments, when he found it difficult to square the circle any more, he resorted to the usual gambit of a leader of the opposition. He said that the government has lost the confidence of the people.


Some hon. Members:: Hear, hear.


Mitchell William Sharp: This is not the first time that he has said this because once before he moved a motion of a similar kind. At the

time, however, he felt he was saying something new and different.


John Patrick (Pat) Nowlan: Canadians have been saying it for months.


Mitchell William Sharp: But I can assure him that on every occasion I have heard any leader of the opposition speak in the house he has always made the same sort of speech. I suggest to you, Mr. Speaker, that he failed to make a case. All he made was as an assertion that the government has lost the confidence of the people and therefore the people should put his party in office to do the same thing better. I suggest that this is a lame argument and that we expect more from the opposition.


Edward Nasserden: Mr. Speaker, it is indeed a pleasure to have the opportunity to follow the Minister of Finance (Mr. Sharp). When he first came into the House of Commons and in the years that have followed he has tried to sneer his way through successive budgets and debates rather than deal with the substance of the matters which he has brought forward from time to time. Today we heard him say that the reason for bringing in another budget was the fact that conditions had changed in Canada since he brought down the budget less than a year ago. Well, he can certainly say that again, because the forecast he made at that time was certainly not borne out by the circumstances that developed in the months that followed, and his budget at that time was a failure as was the one before it.
Today he spoke about the irresponsibility of the opposition and said he knew they would try to embarrass the government. I say to you, sir, that we do not have to try to embarrass the government because they are far better at embarrassing themselves. He spoke about the Conservative convention in Toronto and about the expectations of the Canadian people. I suggest that the government is afraid to assess the expectations of the people of Canada at this particular time. That has been very evident from what the Prime Minister has said on more thas one occasion. I suggest that when the time comes for the government to assess the expectations of the Canadian people they will find another disappointment on their doorstep.
However, the most interesting thing he said, in my view, was that certain factors in events which have taken place outside Canada have defeated the aims and objectives of the government. I say to you, sir, that what has happened externally has helped this
December 8, 1967

country in many respects. I refer to the Rhodesian problem and its effect on Canada's trade, and to the Middle East problem and its effect on Canada's oil sales and the boom that is taking place in the province of Alberta at the present time in oil exploration and the sales of oil. These events have helped to sustain the revenues of this country above those that the minister forecast in his last budget speech. Were it not for these events the situation in this country would be much grimmer than it is at the present time.
I am sorry to see that the hon. member for Verdun (Mr. Mackasey) is not in the house at present. If he is behind the curtains I wish he would come into the house because I should like to refer to his speech last night. He said then that Saskatchewan had a particular attitude with regard to minorities. I throw that charge back at him and I say that the province of Saskatchewan treats all its people on an equal basis. There was no justification for the charge he levelled against the New Democratic party which at one time formed the government of that province but which in all likelihood will not have the chance to do so again. In speaking about the stand taken by one of the New Democratic party members in the house he said:
The hon. gentleman knows that the basic philosophy behind the report of the Carter commission, as outlined by the chairman, is that we should either bring in the full report or nothing at all.
I take it this means that the government will, as usual, do nothing with regard to the taxation problems of this country. Then he went on to say:
I have a weak spot for the opposition, because they are the same old gang we have seen in the House of Commons for too long.
The hon. member has not been too long himself. There are many members on this side of the house who have been here much longer than he, and after the speech he made last night they will be here a whole lot longer.
Never before in the history of Canada has a government sought to attempt a deception so arrogant and so transparent as the one now encompassed by the mini-budget and the announcements made by the Minister of National Revenue last night. Last night we witnessed a refinement of arrogance and carelessness unequalled in parliamentary history. Parliament and the Canadian people were subjected to another of these diversionary facades which have become the trade
The Budget-Mr. Nasserden mark of the government, portraying the utter carelessness and unconcern of the Prime Minister and his government for the real problems which have developed in this nation. These problems were outlined in the first paragraph of the minister's address on November 30. As found on page 4899 of Hansard he said:
[DOT] (3:00 p.m.)
The purpose of this statement is to present to the house the fiscal measures which the government considers necessary at this time to achieve three urgent and closely related objectives: first, to restrain the inflationary increases in prices, costs and the cost of living that are undermining our prosperity;-
This is an admission by the minister that his policies during the last two years have been wrong.
-second, to ease the disturbing strains in the capital market that threaten our continued growth; and third, to meet in a non-inflationary way the costs of continuing public programs essential to social security and long run national development.
When we take a look at the budget we do not see those things contained in it, even in light of the remainder of the minister's statement. We see here corroboration of what we knew well before. This government is bankrupt for the second time within a year and for the third time within two years. This is a record that cannot be laid at the door of any other administration in Canadian history. The desperation of the government and the extent to which the financial position of this country has declined can be measured by the fact that once again, so soon after the last tax increases, the unsatisfied appetite of the government for cash could be no longer delayed.
Yesterday, in answer to a question from this side of the house, the Minister of Finance stated that the sale of Canada savings bonds had lived up to the government's sober expectation. This statement by the minister responsible for the fiscal integrity of this nation can best be described as the kind of action one would expect from a drunken sailor on a spending spree. This is why we have this hang-over budget. This is why we have this bankrupt government reaching a greedy hand into the pockets of those who carry a dinner pail. This is why this budget cannot be described as anything but anti-labour.
This is why the Minister of National Revenue (Mr. Benson) came before us last night wringing his hands and trying with agility
5218	COMMONS
The Budget-Mr. Nasserden and futility to maintain the fagade presented by the Minister of Finance earlier. Last night in his opening remarks he said that the less fortunate throughout the world, and Canada, bear on the consciences of each and every one of us. I think they should bear on the consciences of hon. gentlemen opposite in view of the regard they have shown in this respect. There is nothing in the budget to deal with the housing crisis in Canada. I have here a few clippings that I have been able to get together from time to time. I should like to refer to them this afternoon. The first one is from the Saskatoon Star-Phoenix and it refers to the National Housing Act interest rate. The article reads in part as follows:
If raising the ceiling on National Housing Act interest rates to 81 per cent is the only way to save Canada's housing problems, there may be little room for argument against it. But this new rate is so high as to be frightening to most buyers.
Hitherto, under various lower N.H.A. interest rates, people have complained that, by the time they have finished an ordinary 20 year mortgage, their interest payments have been as big as the cost of the house itself. At 81 per cent they will now pay more than twice the price of their property in 20 years.
I have another clipping from the Star-Phoenix of September 20, 1967. The headline reads, "Councillors Irked By Interest Rate". The reference is to the municipal council of the city of Saskatoon. The article reads:
A gloomy picture of the bond market was described at city council Monday night as aldermen debated whether to accept a purchase offer for $1,593,000 of civic debentures when the city is forced to offer 7.65 per cent interest.
Mayor S. L. Buckwold said the interest rate is the highest the city has ever been forced to pay in its history and council must be careful with expenditures or it will overburden the taxpayers.
It is interesting to note that Mayor Buckwold is an outstanding Liberal in Saskatchewan. Farther along the article reads:
He recommended acceptance of the Toronto company's offer which he termed "well in line" with the trend of the Canadian market.
Council decided to accept the offer.
Alderman C. A. Wheaton said he was very surprised that the city had received a firm offer to buy the debentures as many cities were experiencing great trouble.
"This speaks well for the city's credit rating", he said, "but we must watch our spending until the interest rate situation gets in hand."
I believe it was this government that brought into being these higher interest rates when they removed the ceiling on interest rates that banks could charge. I recall that in the dying days of the debate on that measure

DEBATES	December 8. 1967
I described the interest rate as a fluctuating one. This is exactly what it has been.
Here is another clipping from the Ottawa Citizen which refers to the housing crisis. The Globe and Mail for December 7 has a headline dealing with housing which reads, "Saskatchewan Builders Blame Mortgage Lack, High Interest For Housing Crisis". The article reads:
Saskatchewan builders are pointing to 1967 building figures to back up their claim that the shortage of mortgage money and rising interest rates are pricing families in the middle and lower income brackets out of the housing market...
The Saskatoon and Regina House Builders Associations claim 1967 starts are slightly lower than half of Saskatchewan's minimum new housing requirements of about 6,000 units annually...
They predict an acute housing shortage is likely to develop in early 1968.
The article refers to increases in the National Housing Act interest rate, which also affected the situation in Calgary and in Alberta generally. I will not take the time to read from this article the various points I was going to outline. The government was warned time after time by members of the opposition about the effect of the 11 per cent sales tax. Reference was made to this by the Minister of Finance (Mr. Sharp). In addition, there has been a discussion of the interest rate and the effect it would have on the construction industry in this country. There has been talk about parliament and about the effectiveness of parliamentary committees. This government never listens to what members of the House of Commons or the members of committees recommend. In any event, the government has ended up bankrupt three times in less than two years, even though they contended they knew it all and they were part of the establishment.
The government talks about containing the growth in the civil service. Even the minister had to admit that they have added 10,000 to 15,000 additional civil servants per year since this government came to office. It is estimated that in four years 50,000 additional civil servants have been hired by the government. This is the number of people the government needed to help govern because of the inadequacy of the representation they have here in the House of Commons. Then they talk about containing this growth at the present time and they try to call that efficiency. This is getting things done. The Minister of Finance admitted it costs more than twice as much today to govern as it did four years ago when the Conservatives were in office.
December 8, 1967
[DOT] (3:10 p.m.)
Last night the President of the Treasury Board outlined 51 items which constituted a mirage that the government had seen and had decided to eliminate. He said that many more items fell into this category. I think he compared the situation to his wife asking for a new hat and his denying her the privilege of buying it. What the minister put before the house last night was an empty sieve with the marbles rolling on to the floor beyond the reach of anybody. Talk about Alice in Wonderland.
The government speaks about being realistic and coming to grips with the real problems facing the nation. Never before in parliamentary history were so many straw horses put up to be knocked down as the Minister of National Revenue put up last night. We should remember this when we discuss the mini-budget that is now before us for consideration.
What has this government done to reduce inflationary pressure at the present time? Not a single item in the budget speech or in the statement last night will end the inflationary spiral that has been occurring since this government took office. In announcing his tax increases the minister used a trick that he used a year or two ago when he stole corporation taxes from the future. Compared with the record of the former administration, the present administration has always been reaching into the future, taking money from the next year to use in the current year.
With regard to the agricultural situation since this government came into office, when the minister was minister of trade and commerce he disclaimed any responsibility for grain sales which, he said, were a matter for the Canadian Wheat Board. The minister not only convinced his colleagues but he also convinced his counterpart in Washington that the United States would not have to deal with Canadian ministers over the matter of wheat sales. As a consequence, competition has resulted of a kind which has put grain sales by this country in jeopardy in recent months. The farmers of western Canada are concerned about this and they know that the Minister of Finance has had a great deal to do with this situation.
Other problems which have been brought up during the course of this debate concerned turkeys, oil and pollution. The minister has indicated that there is a pollution problem. We on this side of the house thought there was a pollution problem across
The Budget-Mr. Nasserden the way. I say that kindly because not too many years ago hon. gentlemen opposite sat on this side of the house. When today I hear the call for constructive opposition I recall the type of opposition that came from this side of the house a few years ago. In this connection I also recall that the suggestions made by members of all political parties in respect of the successive budgets that were presented to the House of Commons fell on the deaf ears of the government.
One can draw only one conclusion from the economic situation in Canada today, namely, that it is the result of deliberate action taken by the government, first of all in proposing the 11 per cent sales tax on production machinery which will have repercussions on the economy long after the tax has been removed and, second, in removing the ceiling on interest rates charged by the banks.
When the Minister of Finance brought forward the legislation to remove the ceiling on interest rates charged by the banks, I remember he stated that this would provide the supply of money that was essential for the housing industry of this country. That statement was made just a few months ago. The government has now had to admit that once again it was wrong in this forecast. Indeed, the record of this government has been that of one budget forecast after another, each of which has failed to deal with the economic situation in this country.


John Patrick (Pat) Nowlan: Just like the weather
forecasts.


Mr. Foy:: What about the Alamo of 1962?


John Patrick (Pat) Nowlan: I am worrying about the future, not the past.


Edward Nasserden: The hon. member opposite wants to recall 1962. In 1961 and 1962 the foundations were laid for the greatest period of prosperity that this country has ever enjoyed. In the intervening four years this government has dissipated the effect of the devaluation at that time of the Canadian dollar, which today is not worth as much as it was then. This is one reason for the budget today. The only time we hear from the Minister of Finance is when the government has once again gone bankrupt. This is not the way to budget for the development of this nation. Without making any further remarks-


Mr. Byrne:: Without reading any further, you mean.

5220	COMMONS
The Budget-Mr. Gregoire


John Patrick (Pat) Nowlan: You cannot even read.


Edward Nasserden: Some people cannot even write, and they have a problem as well. I contend that the government has lost the confidence of the people of Canada. The government has lost confidence in itself. This can be seen in the house every day. It is illustrated by the empty benches when ministers of the crown are speaking.


James Allen (Jim) Byrne: What about the empty benches on your side now?


Gordon Minto Churchill: There is only one minister in the house.


Edward Nasserden: What astounds me is the lack of support for the ministers of the government.


James Allen (Jim) Byrne: What about the vote last night?


Edward Nasserden: What astounds me is the referred to by the Minister of Finance in his remarks in connection with the leadership of our party. The minister has been forecasting what is going to happen to the leadership of the Liberal party for some time, but he has been no more accurate in this direction than he has been in his budget forecasts. That is an interesting fact to remember.
[DOT] (3:20 p.m.)
I conclude by saying that this budget does nothing for the ordinary people of this country. It does not attack the problems of inflation and high prices. It does not provide for new homes to be built in Canada and does not assure us of continuing employment. It does nothing to promote trade or activities that are essential for the welfare of the nation. For these reasons I shall vote for the amendment.


Gilles Grégoire: Mr. Speaker, I listened a moment ago to the Minister of Finance (Mr. Sharp) replying to the Conservative leader and I must say, Mr. Speaker, that I found his arguments-hardly worth the name, to my mind-so unconvincing that I have reached the point where I am wondering if it is not a precise indication of the financial and economic situation of the country at the present time. In fact I wonder if the lack of argument of the minister is not an indication that the situation is even worse than he gave us to understand.
Now, Mr. Speaker, the minister could have cut various government expenditures without any Canadian citizen being hurt by it. To my

DEBATES	December 8, 1967
mind, he would have been justified in cutting House of Commons expenditures by lowering the number of hon. members. Right at this moment, for instance, in the row where I am seated, there are but two members out of a possible number of 28. In the first row, there is just the minister and someone who is going to speak to him, which is again a total of 2 members out of a possible 28. In the third row, still on the Liberal side, I can see only 2 members out of 28 who should be in the house. In the fourth row, I do not see any, out a possible number of 28, and finally, in the fifth row, I see two members behind the curtain, and a third coming in.
Mr. Speaker, when it is realized there are not even ten Liberal members present to consider the budget speech, I wonder if a sizeable cut-back of expenditures-


Mr. Clermont:: Mr. Speaker, the members of the house went out when the member for Lapointe rose.


Gilles Grégoire: Mr. Speaker, I wonder if a good way to reduce expenditures would not be precisely to cut-back on the emoluments given the members who are not present, in the house now.
I see in the galleries people who can judge by themselves that all those absent Liberal members are far from doing their duty.
As a matter of fact, why have unnecessary expenditures not been reduced, why have the expenses of those absent not been cut, those who usually occupy those empty seats? Why have some of those expenses not been cut?


Gaston Clermont: Mr. Speaker, the members left when the hon. member for Lapointe rose to speak.


Gilles Grégoire: If those expenses were cut, Mr. Speaker, it would help a great deal to reduce the estimates.
When one examines the budget, one finds that it clearly reflects the situation in Canada at present. The federal government is now increasing the tax on tobacco and spirits, apart from imposing a special surtax on the basic personal income tax.
Hardly a year ago, the Quebec government did exactly the same thing. Within a year, as a matter of fact, ten of eleven months later, the federal government increases the tax on spirits and cigarettes. In addition, it increases the personal income tax, which means that we, Canadian citizens, are the only ones in the world to have two governments entitled to levy taxes from us.
December 8, 1967

In the last two years, the Quebec government has increased the sales tax by 2 per cent; the federal government has increased it by 1 per cent. The Quebec government increased the personal income tax; the government in Ottawa did the same. The Quebec government increased the tax on certain goods, and so did Ottawa. We are the only people in the world who accept and tolerate that two different governments should have the right to tax us, very often, for the same purposes.
Our money is being grabbed from both sides. When two governments levy taxes, this entails expenditures that could be avoided if one government only managed our affairs. Let me give you a few examples, Mr. Speaker.
The federal government pays family allowances to children under 16 years of age; so does the Quebec government. Has anyone considered for a moment that this means that civil servants in Ottawa make a survey of all the children under 16, others keep the records up to date, prepare the family allowance cheques, stamp and mail them?
All this is happening in Ottawa, while other civil servants in Quebec do exactly the same thing in respect to family allowance cheques for children in Quebec. This duplicates the expenditures, since both Ottawa and Quebec have to set up a classification system, with a list of names of all children with respect to family allowances. Both governments have to have their own personnel____
which makes it twice as large-to send out family allowance cheques. In addition, two series of cheques and envelopes have to be used; Ottawa pays the postage once, and Quebec a second time. For postage costs only, the federal government expenditure for family allowances amounts to $2.2 million per year. Then, postage has to be paid again in Quebec to mail other family allowance cheques concerning the same children.
Can you imagine, Mr. Speaker, how stupid it is to have a system under which citizens are governed by two separate administrations both doing the same thing at twice the cost, when one expense would be sufficient, just to send out family allowance cheques? Would it not be better to have only one administrative service, using only one envelope for both cheques?
The same thing goes for the Department of National Revenue.


Mr. Latulippe:: How much does it cost to
collect taxes?
The Budget-Mr. Gregoire


Gilles Grégoire: Is the hon. member for Compton-Frontenac asking me how much it costs to collect taxes? We are the only people in the world with the luxury of two income tax collecting agencies, one in Ottawa and one in Quebec city.
[DOT] (3:30 p.m.)
In both places, there are inspectors, auditors, office workers, secretaries and the citizen himself is obliged to fill out two different tax returns: one in Ottawa, and one in Quebec, using exactly the same forms. He sends one return with one amount to Ottawa, and another amount to Quebec with another return. In Ottawa, auditors check to see if the tax return-Mr. Speaker, I hear some muffled noises coming from outside-


Gordon Minto Churchill: Is it a coup d'etat?


Gilles Grégoire: Mr. Speaker, I see that
objections against the situation I put forward, are raised, and rightly so-


An hon. Member:: Gregoire has come.


Gilles Grégoire: Then, Mr. Speaker-


Mr. Chretien:: It is the voice of God-


Gilles Grégoire: I should perhaps move the adjournment, Mr. Speaker.
Therefore, I said that in Ottawa-


An hon. Member:: We are going to adjourn-


Gilles Grégoire: Should I move the adjournment of the house, Mr. Speaker, or carry on? In fact, with such a small number of members in the house-


Some hon. Members:: It is the children, perhaps the balloons-


David Lewis: It is the only thing that can keep him quiet.


Gilles Grégoire: The snow perhaps! Ah, the hon. Minister of Finance is paying for the fireworks on parliament hill in an attempt to make the people forget about his disastrous budget.


Some hon. Members:: Oh, oh.


Gilles Grégoire: It is somewhat the same method which was used by the Roman emperor Nero who, in an attempt to make his people forget about the great fire of Rome, gave them bread and circuses.
5222	COMMONS
The Budget-Mr. Gregoire
Mr. Speaker, I was saying that in Ottawa and in Quebec there are two income tax collection systems-


David Lewis: Louder.


Gilles Grégoire: And that-do you want me to move the adjournment-we are the only ones in the world to accept such a situation.


Joseph Jacques Jean Chrétien: It is the voice of God, you had better keep quiet.


Gilles Grégoire: Administrative duplication, duplication of funds to do exactly the same thing can be found also in other fields. For instance, the administration of the winter work program. The Quebec government has set up that department to check and see if the works have been carried out, if the men have been paid at least those who are sup-psed to work-and when Quebec has finished its inspection, the file for each municipality is sent to Ottawa where exactly the same inspection starts all over again for the same purposes. Therefore, we always pay twice. We pay twice more taxes because we have to pay for two administrative services which overlap.
Mr. Speaker, our country is the only one in the world with two ministers of health, one in Quebec and one in Ottawa; two ministers of justice, one in Quebec and one in Ottawa, who get in each other's way. In fact when Quebec citizens make representations to the federal Minister of Justice (Mr. Trudeau) requesting an investigation into fraudulent bankruptcies for instance, the minister replies: That does not come under my jurisdiction only, it is partly the responsibility of the Quebec minister of justice. On the other hand, when Quebec citizens make representations to the provincial minister of justice, he also replies that he cannot do anything because that comes also under the jurisdiction of the federal Minister of Justice. Because there are two of them, they get in each other's way, and we are paying twice.
We are also the only ones to have two ministers of finance, two ministers of national revenue and to always have to pay in two places for exactly the same thing. We are the only country in the world to have two different civil services to do exactly the same thing. Hospital insurance is shared fifty-fifty by Ottawa and Quebec. On account of that, the government in Ottawa must provide a whole staff to operate this service and Quebec has to hire a different one to do

DEBATES	December 8. 1987
exactly the same work on behalf of the Quebec government. We are always paying twice.
The Minister of Finance finds that the civil service is increasing. How is he going to solve the problem? Well, the best way to do it, and without disturbing in any way the services, is to put an immediate stop to the dual administration and to give back to Quebec what comes under provincial jurisdiction, under the British North America Act. We have two administration levels which cost us twice the amount required, two levels of government which cause delays precisely because they do not agree all the time and are working at odds with one another.
That is why many here have come to the conclusion that we are two nations.
Since decisions are taken in two different places, responsibilities overlap and that doubles the administration costs.
Some people say that we are two nations. So we adopt two flags, the maple leaf flag and the Union Jack. We also adopt two national anthems: O Canada and God Save the Queen, because it is said we are two nations and, in that case, two national anthems are called for.
Last Saturday at the beginning of the Grey cup game, I heard on the C.B.C. French network the announcer say: And now here is our national anthem. And what did I hear? God Save the Queen, our national anthem? That was one nation's anthem. This was happening in Ottawa, in an English-speaking province. It was said that our national anthem was God Save the Queen, right on television in the presence of the Prime Minister of Canada (Mr. Pearson). That was said to be the national anthem of one of the two founding peoples. They talk about two peoples and they talk of national unity. How can they speak of national unity while claiming, in one and the same breath, that there are two founding nations? When there are two nations it is not a question of national unity but of international unity. If it is international unity, there are perforce two states. It is high time to recognize these facts Mr. Speaker.
Since we are on the budget, I should like to raise a point because I think that there are unnecessary expenditures in that area which the government could cut back slightly to achieve better results.
I should like to speak of the economic aspect of winter navigation on the St. Lawrence river which the government could
December 8, 1937

make possible. A pamphlet has just been published in Montreal, the author teaches at the Ecole des Hautes Etudes Commerciales in Montreal; he is Mr. Michel Brochu, a geographer holding doctorates in literature and natural sciences from the University of Paris. Professor Michel Brochu has studied this problem and, I believe, it is time for the Canadian government, which is supposed to have jurisdiction over the St. Lawrence to accept its responsibilities and do something on that score.
In his pamphlet on winter navigation on the St. Lawrence Professor Brochu mentions that the methods now being used by the icebreakers on the St. Lawrence, on the orders of the Minister of Transport (Mr. Hellyer) are preposterous and unrealistic.
Professor Brochu says this in his booklet:
In fact, the captains of the ships can reach Montreal against their better judgment and at their own risk without the guaranteed assistance of the icebreakers. The port of Montreal remains open with guaranteed services to the ships who succeed in crossing the blockade.
As far as the government of Canada is concerned, its attitude is the following: let the St. Lawrence freeze completely between Montreal and Lake St. Peter and wait for those strange winter floods to happen and effect the southern suburbs of Montreal and which are precisely brought on by the ice cover which is allowed to form and deepen and under which millions of crystals of ice under pressure following the Lachine rapids accumulate and block the flow of water.
That is when the icebreakers, which are supposed to help prevent and control floods in the Montreal area, are dispatched from far away, from their winter quarters in Sorel or Trois-Rivieres, to fight this disaster. However, before they can get near Montreal, they have to make their way through thick ice, tens of miles long; more often than not, when they arrive in Montreal, the floods have already ebbed and the damage has been done.
[DOT] (3:40 p.m.)
However, what Department of Transport officials are very careful not to divulge-and those experts cannot fail to know it-is that a radical solution to the flood problem in the communities south of Montreal would be, in fact, to tackle the problem, right from the start and all winter long, that is to handle the cause of the floods, the ice which covers the St. Lawrence right across, between Montreal and Trois-Rivieres. The means to do it is self-evident, given a single moment's thought: Ice must simply be prevented from forming in the navigable channel by having an ice-breaker go upstream and downstream every day as soon as the ice starts to form.
The cause being eliminated, there would no longer be any flood, but the implacable and ineluctable consequence of such a logical step would be that ocean-going vessels could go through the seaway all through the winter.
The Budget-Mr. Gregoire The most astonishing thing is that the people and the main newspapers of Montreal could have believed such a tale (the flood story). None of them saw through that subterfuge which costs Montreal millions of dollars every year.
The situation, Mr. Speaker, is well described. Ice is allowed to accumulate and when the floods begin, the icebreakers docked in Trois-Rivieres or Sorel are told: Go and do your job. More icebreakers must then be sent out because the ice is thicker; it takes them more time to reach the flooded areas and, by the time they get there, millions of dollars of damage have been caused. If the icebreakers were allowed to circulate before the ice thickens or before a layer of ice forms, the channel would always be open and there would never be any danger of flood.
Moreover, the government would spend less money because, even if the icebreakers are moored at Sorel or at Trois-Rivieres, even if they remain in their home port, the engines must be kept running to keep the ships warm. The personnel and the sailors who work on them are paid just the same; they must still be provided with room and board. Therefore the expenses are the same as if the icebreakers were making regular trips between Montreal and Trois-Rivieres.
Just a month ago, that is on November 7 last, the newspaper La Presse published an editorial in which Mr. Guy Cormier had the following to say and I quote:
Even if the government refuses to recognize officially that icebreakers have another mission apart from flood control, a realistic attitude would still require a logical organization of that control, that is by ordering ice-breakers to prevent the piling up of a heavy sheet of ice, the remote cause of destructive floods. It would be sufficient for an ice-breaker to sail downstream as soon as: the ice is set.
As Mr. Brochu wrote:	"The implacable and
inescapable consequence of that action would be that the way would be clear to ocean liners throughout winter".
How long will the government persist in keeping up appearances that fool no one, after all?
Mr. Speaker, that is taken from an editorial in La Presse. There was also an item on the editorial page of Le Devoir of November 6, 1967, practically along the same lines.
Winter navigation on the St. Lawrence would cost less than the present method of preventing flooding, because 5 or 7 ice-breakers would not be needed then to break the ice in case of flooding. In fact, three or four in constant use would be enough to prevent the ice from setting. It would cost less to the
5224	COMMONS
The Budget-Mr. Gregoire government and would allow all-year navigation up to the port of Montreal. It would also mean tremendous economic development all year long to the Montreal, Sorel, Trois-Rivieres and Quebec city areas.
I wonder why people do not react to the facts Professor Brochu of the feole des hautes etudes commerciales explains. In his book, he seems to find an explanation for all this, and I quote a paragraph to prove it:
To say the least, it is surprising that none of the members of the Montreal area has taken up the cudgels for the cause of winter navigation up to the Montreal harbour.
None of the members for the Montreal region have done so; that is astonishing. For instance, the Postmaster General (Mr. Cote) who comes from that area could become one of the champions of that cause. He could study the problem and ask the government to go into it deeply. Then, the-
The government would realize that the opening of the St. Lawrence to winter shipping is no problem, that the whole thing is settled, and that all that is needed is good will from the Department of Transport authorities.
Another member from the Montreal area who should take this matter at heart is the hon. member for Outremont-Saint-Jean (Mr. Noel). The hon. member for Joliette-L'As-somption-Montcalm (Mr. Comtois), whose riding is quite close to Montreal should take interest in this also. The members from the Montreal area should raise the matter in caucus, as this is where they are supposed to do their work, and submit the question to the Minister of Transport and the proper authorities. But there is no reaction on this subject, and this is what bewilders me. Why do they not do something? Why is there not more insistence from the Montreal area members in favour of opening the seaway to winter traffic as far as Montreal?
This would allow the icebreakers to be used instead of being left at the dock. One of these at least could be freed. It could then be used to open navigation on the Saguenay.
This is what professor Brochu has to say on the subject:
The problem is as simple as the solution. We need only remember that ice forms on the Saguenay fjord from the island of St. Louis, 10 miles from the mouth of the river, to the first rapids upstream.
In other words, up to about Arvida.
Three vital ports for the economy of the province of Quebec are thus paralysed by ice: Port
[Mr. Gregoire.)
DEBATES	December 8, 1967
Alfred (which imports bauxite and exports aluminum) , Grande-Baie (export point for pulp and paper) and Chicoutimi (coastal shipping point). Therefore, in order to open the Saguenay to winter navigation, it would be enough, as for the section between Trois-Rivieres and Montreal, to break the new ice that is forming and coming from the Saguenay at the beginning of winter, and repeat the operation about once a week; this fjord would then be easily navigable all winter.
The ice would be carried away very easily by the strong tides which occur twice daily, with the help of the west and northwest winds which blow most of the winter. Another asset is the. almost complete absence of ice at the mouth of the Saguenay and off-shore during most of the winter.
Opening the mouth of the Saguenay to 1967 winter shipping is not a reckless nor a daring project.
It is purely a question of wanting to and of using very simple techniques, and it is surprising that the very active elite in the Lac St. Jean area has not yet tackled this question which could be solved immediately, and without doubt successfully, and which will bring in tens of millions of dollars in annual income.
Today, Mr. Speaker, the people of the Saguenay-Lac Saint Jean area have taken an interest in this problem and are asking for winter shipping on the Saguenay all the more because, according to Professor Brochu, it is not a reckless nor a daring project. It is simply a question of wanting to and of using very simple techniques.
The government could do two things: it could save by reducing our present needless spending and then, make rational use of the icebreakers which are idle between Trois-Rivieres and Montreal, so that one of them could be free to go up the Saguenay. It would not cost more and the whole economy of the area would develop.
[DOT] (3:50 p.m.)
But why is it not done? Why refuse Quebec something that would not cost a cent more, since the men are there, paid and fed? The icebreakers are there, their motors running, in short everything is ready. The only thing we lack is the decision on the part of the Department of Transport to really allow for that winter navigation in the St. Lawrence.
I admit there may well be other areas in this country that would be unhappy, but then, let us make other plans in order to assist them in case they should suffer from winter navigation in the St. Lawrence. But the disadvantages would be quite trivial compared with the advantages for the economy of the entire central area of the country.
December 8, 1967

Once the winter navigation is made possible up to Montreal, Mr. Speaker, progress would not stop there. There would always be some technicians and scientists who would continue to try to find a method in order to extend winter navigation on the St. Lawrence and that is progress.
Therefore, I submit that point to the Minister of Finance and I hope that the Minister of Transport will take it under serious consideration. Unfortunately, there is not so many members from the Montreal area on whom I can rely for support in connection with that cause. I see the Postmaster General (Mr. Cote) and the hon. member for Outremont-Saint-Jean (Mr. Noel) and I ask them to exert pressure to make possible winter navigation on the St. Lawrence. Unfortunately, the others are not here; I also see the hon. member for Verdun (Mr. Mackasey), who could do his share in this respect.
So, Mr. Speaker, I hope I have outlined the problem clearly and that everybody will understand now that as regards technology, finance, feasibility, nothing stands in the way of such an endeavour. All that remains now is the decision on the part of the Department of Transport, which will entail no extra expenditures.


Mr. D. W. Groos (Victoria (B.C.)):: Mr. Speaker, may I begin by paying my personal tribute to my colleague the hon. member for Verdun (Mr. Mackasey) who spoke last night in this house and who, in my experience has been the strongest proponent of national unity both inside and outside the house, ever since I have had the honour to know him. I admire him for it and I believe every Canadian who has at heart one Canada can, in sincerity, honour him and those like him for their work in this direction.
As I believe hon. members know, I am not very politically oriented in this house, but I cannot let go unchallenged the remarks of the last speaker from the opposition who made reference to the support given by the members of my party to our leaders in this house. I should merely like to draw his attention to the fact that when his own leader spoke, upon introducing his motion of non-confidence in the government the other day, the first time he had made a major speech in this house, I took a personal count.
I will not trust my figures, but will merely point out that the newspapers drew attention to the fact that there were never more than 45 of his own members sitting in the house at
The Budget-Mr. Groos the time he made this speech. I think these figures speak for themselves, and I will not dwell on this any longer.


Mr. Alkenbrack:: How many are there over on your side now?


David Walter Groos: There are not very many over here while I am speaking, but it is pretty hard to compete with Santa Claus, who is arriving outside for the children's party.
I should like to refer to the speech made last night by the President of the Treasury Board (Mr. Benson) when he outlined in general terms the cut-backs and delays the government is proposing for the next financial year. I believe we all know that these will have to be made for the good of the country, because of the difficult financial conditions which exist in the country and in the world today, not all of which are of our own Canadian making. I accept that, although my riding will be affected as much as any other. I feel sure our people in Victoria will generally accept the cut-backs in the national interest and I will support the government in the measures they are taking.
There is one cut-back, however, which I simply deplore. It positively sickens me personally, at heart, to think that no money can be found for any federal superannuants, no matter how dire their circumstances may be. I must say here and now that I implore the minister and the government to take another look at their decision not to make any increase in the payments to superannuants next year. Surely there must be some way to help, if not all, at least those in most dire need. Let us at least do something for this group.
Last night I went to the parliamentary library to look up the steps which had been taken during the days when another government was having difficulty making its financial ends meet. You will notice, Mr. Speaker the mixture of books I have before me. In reading through the parliamentary debates of 1932 I noticed what steps had been taken.
So far as I can make out the civil servants of those days-and they comprise most of the superannuants of today-were not given a salary cut in those terms but, by the Salary Reduction Act, were required to make what was called at that time "a contribution to the welfare of Canada" of 10 per cent of their salaries across the board. It was reduced to 5 per cent for those who earned less than $1,200 a year. At the same time satutory increases were frozen. When this legislation

December 8, 1967
The Budget-Mr. Groos was brought forward in 1932 the government of the day called that a year of self denial. This was the way they handled the situation.
I found that the so-called year of self denial was extended from 1932 to 1933 and then to 1934. It was not until the Liberal government returned to office that the full pay cuts were restored.
Now, Mr. Speaker, a civil servant in those days whose pay was, for example, $1,200 a year and who had a $60 statutory increase coming to him in the normal course of events took a cut of $180 a year during these years. In other words the cut was 15 per cent and he accepted it. This little gimmick produced just over $8 million for the federal treasury, at the expense of the members of the civil service. I should like to remind hon. members that at that time, 1932, the income tax for a person earning $10,000 a year in Canada was $232.
In 1931, which is the closest year for which I can obtain this sort of statistic, the figures show there were 11,000 people in this country earning between $5,000 and $10,000, for a total of $76.75 million earnings, and a further 3,000 earning more than $10,000 for an additional total of $38 million earnings.
I should have thought that a more equitable method of raising an additional $8 million would have been to put a 10 per cent surcharge on those salaries. This would have hurt far less and would have produced almost $11.25 million, over $3 million more than was raised from the poor civil servants. I should like to go further and point out that the federal superannuants of today, after having suffered three years of cut-backs which most assuredly left them with no opportunity to save for their old age, were then faced during world war II with the freezing of their salaries. It is those persons who retired shortly after world war II for whom I plead today, with all the energy I possess. They should not have to beg and I am begging for them now.
I should like to make some positive contribution to this debate so, Mr. Speaker, if you will permit me I shall continue to speak about the federal superannuants of today.


Mr. Bell (Carlelon):: The hon. member has not done so up to this point, Mr. Speaker. He has been fighting the 1935 election. I think he should get up to date and be contemporary.


David Walter Groos: As I continue, I believe the hon. member for Carleton will be able to understand that what I am trying to point

out is that these people who have suffered, as they did, are entitled to our sympathy today in this house. I am very conscious of and sympathetic to the income problems of persons retired from the federal civil service and from the armed forces of Canada. I believe most members of this house know that I and others have been seeking by every means within our power to alleviate their distress. I am attempting again to explain my position and perhaps help the government come to grips with the problem by providing one possible solution.
In general, to run over the background, of course the pensioners' problem arises from the undoubted fact that over the years inflation has gnawed away at the real value of pension dollars earned and paid for while in the government service, and the pensioner in every case now faces the fact that his pension purchases less than it did when he first retired. In addition to this, he has the aggravating knowledge that his former position in the government service now pays a very considerably higher wage than it did while he held the position. Then, too, because of his age, there is a diminishing probability of his being able to obtain another position in today's labour market. Then there is the added possibility that all three conditions I have mentioned will continue.
[DOT] (4:00 p.m.)
On the other side of the ledger, the government pensioner does have the prospect of receiving, along with all other Canadians, the old age security pension, now slowly dropping in age limit to 65 and payable at the rate of $75 a month. He knows however that he has paid his share of the cost of his pension. At the personal level, generally the government pensioner firmly believes that the government superannuation fund is growing at a rate faster than it is being used up, and therefore it would cost the country nothing if his pension were to be increased, since it could be paid for out of the growing amount in the superannuation fund.
He knows, too, that the British government has recognized its obligation to its retired civil servants and pensioners and has instituted a method of granting them increases at regular intervals as the purchasing power of the pound falls and as the cost of living goes up. Similar arrangements are in effect in the United States, and in addition I understand that retired members of their armed forces have pensions based on
December 8, 1967

the up to date pay of the rank they held when they retired. In Canada, in 1958, the government granted increases to certain federal superannuates who retired before December, 1952.
As I have said before, I have every sympathy with Canadian government pensioners and I support their cause wholeheartedly. My investigations, however, have shown me that things are not quite as they seem. First of all, while it is true that the federal superannuation fund is in fact growing, since its annual income is greater than its annual expenditures this can be quickly explained. The pension fund must grow, with the ever-increasing number of contributors, if it is to be self-supporting and be able to pay out pensions when they eventually become due. To deal with this right away, I should like to point out that I have introduced a measure in the house suggesting that the government set up a special commission to inquire into the status of the federal superannuation fund, and that on the commission there should be at least two full-time representatives of the federal superannuates national association.
I have suggested this commission because I think we should get at the truth of the matter. It should be proved or disproved once and for all, impartially, whether or not the government is making money out of the federal superannuation fund, and all persons concerned should be informed and convinced of the true state of affairs. This includes the government. Furthermore-and this is equally important to my mind-I have asked that this commission be empowered to make recommendations as to possible improvements in the organization and administration of the federal superannuation fund.
I have asked this because it is my firm belief that the federal superannuation fund as it is presently set up is not capable of coping with the problems of the twentieth century and, in particular, with the problems of inflation which are world wide these days. I think the fund could be set up in such a way that it could better deal with this state of affairs, and latter I will explain one alternative that occurs to me.
Looking at the situation from the government's point of view, I appreciate the fact that they have been earnestly seeking a solution. I discover first of all, on investigation, that some departments of the government are responsible for their own pensioners and the cost of any increases in pensions must come
The Budget-Mr. Groos from that department's annual vote. This is a complication. Second, having pursued this matter in some detail I have the unshakeable feeling that the government is somewhat reluctant to tie itself down to what I think is one fair solution-and the one recommended most frequently by the pensioners-namely a regular schedule of periodically reviewing pensions. The reluctance, if I can call it that, is perhaps because the government feels it would be stepping into an area the cost dimensions of which would be almost impossible to delineate and there would be, furthermore, built-in inflationary overtones. In simple terms the government may be of the opinion that it would be faced with future costs of unknown and possibly unmanageable proportions. In fairness to the government, I think it should be pointed out here that they have recently instituted the Canada Pension Plan, which will at least grant pensions to almost all wage earners. This plan does have built-in cost of living factor, but this does not help the present federal superannuate.
I have a plan which I believe the government should study. I believe it has merit, and it could be adopted very quickly both by the government and other employers if they feel so inclined. Over a fairly short number of years it would delineate the problem and employers, whether they be the government or others, would then be faced with costs both easy to calculate and, I think, perfectly manageable.
My plan, very roughly, calls first of all for the establishment of what I will call a government mutual investment fund, operated perhaps by a consortium of investment companies. Under my plan, the employee still in the government service would have far more control over his pension fund than he does at the moment. He now has none at all. He would then be entitled to decide for himself, at regular intervals, in what proportion his pension fund contributions are to be divided between the pension fund as it now operates-where his contributions and the matching government contributions grow at a fixed percentage rate-and the government mutual investment fund. In this computer age it should be a comparatively simple matter, say at the end of every month, to give the government employee a statement as to the value of his pension account. Then, as I have said before, he should be able to adjust the proportions almost at will to suit his needs or even his whims.

December 8, 1967
The Budget-Mr. Groos
The purpose of the government mutual investment fund would be to permit the government employee to share in the growth of the country through our industries and the development of our natural resources. The possibilities of growth in such a government mutual investment fund should go a long way toward keeping in step with inflation and the rise in the cost of living. It might even surpass it. In fact, the history of the growth of well-managed investment funds shows this to be likely. The cautious federal employee will keep all or most of his pension fund invested as at present. If he does this, he should know it will be at the risk of finding himself in exactly the same position as the federal superannuate does at the moment. The more venturesome federal employee will invest his funds more in the government mutual investment fund, and he should reap any benefits. As a result, he may well find his pension capital considerably greater than it would otherwise have been when he comes to retirement.
To pause for a moment in developing my proposition, I would point out that what happens today is that the government employee going to pension has, in effect, a government annuity purchased for him on the day of his retirement. It is a fixed amount, based in the main on his contributions and his age, and there are certain provisions for survivor benefits. Then, too, from time to time the government has to inject extra money into the fund to take care of salary increases beyond those due to normal promotion. I know this is an oversimplification and I apologize to the house for it, but I think it best describes the true situation. It is inflexible, and that is another fault I find with the present system.
Having said this, I will now proceed to my next suggestion. I believe that when a person retires from the federal civil service, the way these pension moneys are paid out should be more flexible than is now the case. I suggest that not everyone needs or wants to draw his full pension right away. If not, I do not think he should be forced to do so. Furthermore, I believe some persons may require a certain amount of capital when they retire. If so, I think they should be entitled to get it out of their pension fund. Why not? It's their money.
I believe the federal superannuate should, if he so desires, be permitted to leave all or a part of his money invested in the superannuation funds, fixed or mutual, just as long as he wants to, and if he dies while it is still

so invested it should then form a part of his estate.
I can see the plan I have outlined will not be an easy one for the government to accept, for a number of reasons. To begin with, it is still in the idea form, but in addition I can see that the Minister of Finance will be reluctant to allow the federal superannuation fund, which now contributes fairly large amounts to the government coffers, to slip from his grasp, since if this happened he would have to borrow equivalent moneys elsewhere to replace those amounts put into the government mutual investment fund. Furthermore the administration of the superannuation and the government mutual investment funds in the way I have suggested would be complicated and would require special equipment and personnel.
I feel sure, however, that none of these difficulties is insurmountable. The idea could be developed by persons with more expertise in these matters than I posses. The funds lost to the Minister of Finance can be raised for the government by other means over a suitable period of time, and the increased cost of administration can be calculated and perhaps allowed for as an operating cost chargeable to the fund.
[DOT] (4:10 p.m.)
I think the benefits from such a scheme as I have outlined would be several. First of all, most of these federal employees now "in the stream" would be able very quickly to establish control over their own pension funds. Once this is done, they would have little cause for complaint in the future if they found themselves in the income cost squeeze. Their pension income, quite largely, would have been determined by themselves. Of equal importance, however, is the fact that the government will equally quickly face a problem of known and manageable proportions in that, having removed from their direct responsibility most of the federal employees now in the government employment and those in the future, they would be left, in the main, only with those already retired. I think this is the point at which we want to arrive. The government can calculate exactly the cost of improving the financial position of this group. I feel most strongly that the government has a moral obligation to do this, at least to the point of re-establishing the pensioners' real purchasing power to the level where it was when they retired.
The government should give the lead to other employers in this respect. In fact some
December 8, 1967

companies have already surpassed the government in accepting a continuing responsibility for their retired employees.
There are unquestionably other methods by which the federal superannuation fund could be improved. If the special committee which I have suggested is set up, it should be able to consider them all and choose the best one.
My plan is not entirely new, but I have been espousing it in various ways for some time and this is the first time that I have spoken fully on it in the house. However, I see signs of similar schemes in the United States of America. I notice that in the Wall Street Journal of November 28, at page 32, there is an article written by W. M. Carley which I should like to quote in part. It reads as follows:
Major insurance companies are getting set to invade the multi-billion dollar mutual fund business.
The big insurers already have dipped into common stock investments by offering variable annuity plans in which the payments to pensioners rise and fall with the market value of the common stocks in the plan's portfolio. Most of these plans, however, are available only on a group basis.
Now, the insurers are preparing to plunge full tilt into selling mutual funds outright.
Further on, the article continues:
Conventional life insurance premums are currently invested mainly in bonds and mortgages, giving the insurance company only a fixed dollar return, the value of which can be eaten away over the years by inflation. Investments in common stocks, in contrast, provide a hedge against inflation by giving the insurance companies a chance to benefit from rising market values.
Then it goes on to say:
"Practically every major insurance company will be in the mutual fund business soon", a senior vice president for one company says. "When one goes in, the others are forced by competitive pressures to follow."
Many insurance companies already have started to sell variable annuity policies, a middle road between conventional life policies and mutual funds. Like the funds, payouts from variable annuities may fluctuate because part of their value is based on investment in common stocks. But, as with insurance policies, the payout can be guaranteed to the holder's death.
I see my time is nearly up. I put forward my suggestion in all sincerity and earnestness. I know there are many others on both sides of the house who share the same concern for the plight of the federal superannuation pensioners. I ask the minister to look into my suggestion. I do not claim it has any particular merit, nor is it particularly original, but I put it forward as one means whereby the government may be able to
The Budget-Mr. Colin Cameron resolve the present unhappy situation, and I urge the minister most sincerely to consider it.


Mr. Colin Cameron (Nanaimo-Cowichan-The Islands):: Mr. Speaker, I have almost begun to regret that I have altered my usual procedure in the budget debate, and have asked two of my colleagues to lead off, after which I would follow them. I knew of course that Friday afternoon would not be a very good time in which to speak, but I thought I was only going to deal with Mr. Scrooge. Now I find I will also have to compete with Santa Claus outside, so it is all rather difficult.
I listened with great interest both to the speech of the Leader of the Opposition (Mr. Stanfield) and to the reply of the Minister of Finance (Mr. Sharp), and I realized that these two gentlemen were in a very difficult position because traditionally they are supposed to be on opposite sides but it became very obvious they are on the same side.
The only positive statement of the Leader of the Opposition which struck my ear forcibly was when, toward the end of his speech, he very skilfully cut the ground from under his own feet and that of his whole party when he, quite rightly, accused the government of deliberately creating unemployment by following the policies which he and his colleagues have been insisting on almost ever since word of the budget came out.
There was another thing that I noticed in the speech of the Leader of the Opposition, and this was an omission. There was no mention whatever in his speech of his attitude toward the now famous report of the Carter commission on taxation. I can only assume from this that he has the same attitude as the government in this regard, as he seems to have in all other policies, and that he is prepared to attend the funeral of the Carter report which has been organized by the government at this time.
Speaking in a more serious vein, however,
I think this is an appropriate time for me to pay a tribute to Mr. Kenneth Carter, a man who over the years has worked with his commission to produce what is acknowledged by taxation experts all over the world as the most comprehensive survey and the most equitable proposals for taxation that have yet appeared. I think it is regrettable that the only area from which Mr. Carter seems to get any commendation is the vast mass of the Canadian people who would benefit by the adoption of his proposals. The loud chorus of opposition which has been voiced by special
5230	COMMONS
The Budget-Mr. Colin Cameron business interests in the country, whose toes would be trodden upon, is in itself a commendation of that report. It was Professor Musgrave of Harvard who concluded his analysis of the report in the following words, which I paraphrase. He said that this is the most forward looking and equitable taxation program that has yet been produced in the world. He said that, as one who has been desperately trying for years to inch his own government in the same direction, he wishes Mr. Carter luck. Unfortunately his wish will not be fulfilled.
When I listened to the two ministers who presented the budget-


Mitchell William Sharp: Before the hon. member
*moves on to another subject, may I ask him whether he advocates all sections of the *Carter commission report, or whether he does so in a qualified way?


Colin Cameron: I am an advocate of all sections of the Carter commission report. There may be some that will tread on the toes of those who we think are especially associated with me, but by and large I think it is an excellent program which would be of benefit to the country.


Mitchell William Sharp: I have one more question. Is the hon. member in favour of taxing veterans disability pensions as income?


Colin Cameron: Yes, certainly, if the recipient is within the taxation level at which he would be taxed. Of course he is not likely to reach it. I think the minister could count on one hand all the ones who would be in that position, because the government has not been as generous as all that.
When I listened to the two ministers presenting the budget-and I think that is a fair way of expressing it because it was presented in two parts, first the Minister of Finance presenting his side of the budget and then his alter ego, the Minister of National Revenue, presenting his	side-the thought
occurred to me that these two gentlemen presenting their plans for the economic direction of Canada were rather like two badly trained plumbers who have only been taught to turn on the main valve on one side and turn it off on the other side. So we have the Minister of Finance fiddling with the inflow valve while his alter ego gave a tremendous wrench to the outflow valve.

DEBATES	December 8, 1967
It struck me that these two gentlemen should have had a more sophisticated method of approaching our economic problem. It made me wonder just what were the economic textbooks by which they guide their actions.
[DOT] (4:20 p.m.)
I found considerable entertainment in the performance of these two ministers. However, I think we have to face the fact that the Minister of Finance (Mr. Sharp) is in a very serious jam today; there is no question about it. For the moment, I am not going to deal with the question of whether he is there as a result of his own sins of omission or commission. In this situation in which he finds himself, he has two problems before him; one is the immediate problem of finding the money with which to finance the operations of the government and the other is, of course, the developments in the economy which have caused the immediate problem.
The first problem, Mr. Speaker, gave him two choices, theoretically at least; one of increasing revenues or the other of curtailing expenditures. It is interesting to see that, in fact, the minister opted for the second. No serious attempt was made by him to increase government revenues. We found out last night what was the inevitable result of having opted in this direction.
The minister has succeeded in raising, I think, just about $280 million more with the 5 per cent surtax, and $95 million in hoped for revenue as a result of the increase in the liquor and tobacco taxes. This is not going to solve the problem-will not come anywhere near solving the problem. On the other hand, he let us know quite plainly that he was not interested in examining or implementing any of the features of the report of Mr. Kenneth Carter. The Carter report goes into some detail as to the possibilities for revenue as a result of the adoption of even certain of its recommendations. It was estimated for instance that the imposition of a capital gains tax at the rate the commission advocated would have given some 10 per cent of the present revenue. That would have been the revenue for 1964. I presume that, pro-rata, it would have the same ratio in 1967. As I say, the yield would have been 10 per cent of the revenue from personal income taxes. If my arithmetic is right, that amounts to the sum of $214 milllion.


Mitchell William Sharp: For what year?
December 8, 1987


Colin Cameron: That was in 1964, and I presume it would be much more for 1967. Then, the estimate for the loss in revenue caused by the elimination of depletion allowances for oil companies and tax concessions for mining companies were estimed at $150 million in 1964. I think the minister will agree that the commission has the services of some expert research economists. If these depletion allowances and special tax concessions were done away with and the Carter commission's write-off provisions were included there would probably be about $124 million more income in 1967 from that source.


Mitchell William Sharp: For what year?


Colin Cameron: I beg your pardon?


Mitchell William Sharp: The hon. member usually will answer questions and I put this question to him knowing that he wants to be serious. I say, for what year, because we have examined these figures and there would be no early revenue from any of these sources.
Mr.	Cameron	(Nanaimo-Cowichan-The
Islands): I stand corrected by the minister, but I find it difficult to accept that there would not be any revenue this year.


Mitchell William Sharp: Or next year.
Mr.	Cameron	(Nanaimo-Cowichan-The
Islands): I find that	difficult to believe. The
minister would have to produce a more convincing argument before he could convince me of that.


Mitchell William Sharp: I shall do so.
Mr.	Cameron	(Nanaimo-Cowichan-The
Islands): The Carter commission has also suggested that insurance companies should be taxed at the same level as other companies in the country. I think in 1964 this would have yielded some $75 million. Here we have a total of rather more than $400 million based on figures for 1964. The minister thinks that in 1968 he will have to go into the market for $750 million. I suggest his task would be made so much easier if that were reduced to the sum of $350 million.
I should like now to turn to the question of the minister's long range troubles, because they really are far more important to us than the troubles he is having at the present time. One of his troubles is compounded by the circumstances drawn to the attention of the house last night by my colleague the hon.
5231
The Budget-Mr. Colin Cameron member for Waterloo South (Mr. Saltsman), that is the unbelievably large volume of debt that has to be redeemed in 1968. I am astounded that two successive governments should have committed themselves to the economic imbicility of having such vast amounts come due in the same year. This is the situation the minister has to face, so he has been receiving some opposition, or perhaps I should say experiencing some difficulties in selling his bonds. The result has been that the chartered banks this year, up to November 29, 1967, took an unprecedented volume of these bonds, some $800 million. I hope I am not too cynical when I suggest there might perhaps be some connection between that action on the part of the chartered banks and their action in raising their prime rate.
I drew this action to the minister's attention, and he promised me he was going to investigate. If the investigation proved my allegations were right, he was going to take action with regard to one little racket on exchange charges. I feel there must perhaps be some connection between the silence of the minister and the fact that the other day I asked him if he was asking the chartered banks to exercise the sort of restraint he was asking other factors in the economy to exercise. He told me yes. Later, however, I heard him suggest during an interview that what he had reference to was the action of the Bank of Canada in persuading banks to exercise restraint in the amount they would pay for deposits. He has not yet answered whether or not he pointed out to the chartered banks that really this increase in the prime rate was totally unjustified, particularly since it took place at the very time the banks were reporting high dividends. The profits are very handsome. The Toronto-Dominion Bank makes a handsome profit and says that their profits rose to a record of $12,284,720 from $10,892,000 the year before. There seems to be some connection between there not being any reply by the minister or the Bank of Canada, and the fact the government is obliged to the chartered banks for helping them to recover from their own lack of care by having so many bonds mature in the same year.
The minister has I think a more fundamental problem in coping with this situation in the economy than trying to cope with the particular financial jam in which he finds himself. This problem is outlined in a general way by referring to the continuing rise in prices, the continuing rising unemployment

December 8, 1967

The Budget-Mr. Colin Cameron figures and high interest rates. As I said, we have dealt with the matching of government revenues and government expenditures. I think he has something much more fundamental to deal with than merely trying to find enough money to carry on the operations of government. He has perhaps a very difficult situation to face because almost every way he turns he finds a lion in his path. He finds his hands tied wherever he wants to move.
One of the most glaring examples of this is the fact he has committed the government of Canada to two different policies, to be carried out simultaneously, that are in fact contradictory. Not long ago we saw the Bank of Canada attempting to cope with this problem of a fixed exchange rate plus an agreement with the United States to maintain reserves below a certain maximum level.
[DOT] (4:30 p.m.)
As you will recall, Mr. Speaker,-and I am sure the minister does,-it was necessary for the Bank of Canada to move ihto the market to keep the Canadian dollar down to the pegged level, and in the process they were bound to add to their holding of United States dollars, bringing that holding very close to the ceiling.
I think these two contradictory policies are the result of a curious preoccupation which the government of Canada and many others in Canada seem to have had for some years past, and that is the provision of capital for the development of our country. We are told-to my mind told ad nauseam-about the necessity for continually attracting new capital into Canada in order to proceed with the development of this country.
When the minister was in New York-this was the time you remember, Mr. Speaker, when he took time off to pray for stability in the United States economy-the minister also did something that was a little more practical; he tried to persuade the owners of United States capital that Canada was a very safe and sane place in which to invest, and the minister hoped that the United States would invest.
What I am interested in, Mr. Speaker, is why we go to New York in the person of our minister to ask the United States to keep the tap turned on, but at the same time to keep the plug out of the tub at the other end. I have before me figures which appear in the quarterly review of the Canadian balance of international payments, produced by the


Dominion Bureau of Statistics, and in which this is reported:
Canada's current account deficit with the United States in the second quarter of 1967 (excluding gold production available for export which is conventionally attributed to the United States account) was $544 million. Net capital movements between the two countries produced an inflow of $58 million as an influx of $239 million of long-term capital was in part offset by an outflow on short-term account of $181 million. In sum these transactions with the United States gave rise to net payments by Canada of $486 million, over twice the corresponding figure for the first quarter.
This seems to me to raise some doubts in one's mind as to whether or not the inflow of capital from the United States is really required for the financing of our development-indeed, whether it is playing any part in the financing of our development-or if it is in effect merely coping with the results of past inflows of capital from abroad.
In the Dominion Bureau of Statistics report there are figures showing that in 1966 the receipts in the form of interest and dividends, gold available for export, and all other transactions but not merchandise transactions, amounted to $1,151 million. I find that for the first two quarters of 1967 there are receipts of about $510 million, and apparently they are fairly evenly distributed through the year. I think it is not too rash to suggest that our total in 1967 will be not much over $1 billion.
On the other hand, the interest and dividend payments we have made in 1966 amount to $1,135 million, and all other transactions except merchandise transactions amount to $13,15 million. In 1967 for the first two quarters some $543 million was paid on interest and dividends, and all other transactions amounted to $847 million. Again to make a projection, one would assume that for the year very close to $1,700 million will be going out of the country in the form of capital, to which I suggest the report refers. An outflow on short term account of $181 million is mentioned in one place.
It seems to me, Mr. Speaker, that this is the problem faced by the government. We keep our interest rates higher than those of the United States in order to attract the inflow of capital. We are repeatedly told that is why we have to keep our rates higher, while our bank rate has to be raised above that of the United States. Admittedly the bank rate has only a slight connection perhaps with the general level of interest rates. I notice that Mr. Coleman of the Royal Bank suggested that the reason they raised their
December 8, 1967

The Budget-Mr. Colin Cameron
prime rates resulted primarily from the boost in the Bank of Canada discount rate two weeks ago to 6 per cent from 5 per cent.
I also find, Mr. Speaker, that many of the world bank rates as at November 21, 1967 were very much lower than ours, and ours are very much lower than those in the United States. On November 19, 1967 the United States rate was set at 4.5 per cent, 1J per cent below ours, which seems to me a very wide margin for the attraction of capital into this country, and for which I have some grave doubts about the degree of necessity the minister is forever presenting to us.
The other part of the minister's problem is to be found in the rising price index and rising unemployment levels. Although he told us today that he understood that this particular inflationary situation was not a demand inflationary situation-


Mitchell William Sharp: I said that consistently.


Colin Cameron: The Budget-Mr. Colin Cameron words about something that is much more dangerous to our economy than the much touted danger of United States ownership of certain Canadian enterprises; I am speaking of the manner in which Canadian governments-this government and past governments-have tied us to the United States market, with respect to raw materials and semi-manufactured goods. That has obviously been done through a deliberate policy, because special concessions have been granted to enterprises which operate in the extractive industrial field.
I had this confirmed not long ago at a committee meeting when I asked the minister's colleague, the Minister of Trade and Commerce (Mr. Winters), some questions about the export of nickel. At that time I had been getting complaints, since domestic users of nickel had had their supplies cut back to the level of the previous year or had had their supplies held at the previous year's level. At the same time, our nickel exports to the United States were climbing steadily. I asked the Minister of Trade and Commerce if he had ever considered taking steps to ensure that domestic requirements were met first; he could do that perhaps by setting export quotas or by having the government stockpile sufficient nickel to meet domestic needs.
I was told that, no, the government would not do that; but it would consider the drastic, revolutionary and dangerous step of possibly putting controls on the export of scrap nickel. As a matter of fact, I have not heard that that step has been taken so far.
I asked the minister another question. I asked him if he did not consider that the first responsibility of the government of Canada should be the development of the Canadian economy. I drew an equivocal answer from the minister. He said that that was one of the government's responsibilities, but that we had to pay attention to our export trade.


Mitchell William Sharp: That is correct.


Colin Cameron: Apparently, we have to pay more attention to our export trade than to our domestic economy. Let us ask ourselves some basic questions. What is the purpose of export trade, if it is not to build up the economy of the exporting country?


Mitchell William Sharp: Exactly.


Colin Cameron: And when we have, as we have had in the past, vast allocations of imported capital developing raw materials and semi-

manufactured materials for shipment to the United States industrial economy, I suggest that we are doing very little in the way of building our own economy and establishing Canada as a viable, national economic unit.
I was interested to hear the Minister of Finance compare the situation that Canada finds itself in with the situations that face Great Britain and the United States. Indeed his comparison struck me as strange. Here we have a country which lacks the desperate problems of Great Britain. I am sure he will agree with me that, potentially, we are in a much more fortunate position than the people of Great Britain. Great Britain has no resources and has an inflated population. We have a small but adequate population, and we have probably a greater amount of natural resources per capita than any country of the world.


Mitchell William Sharp: And a Liberal government.


Colin Cameron: Yes, that's the trouble; that's the one liability that we have. We have all this on the credit side, but on the debit side we have a Liberal government.


Stanley Howard Knowles: He put us into the red.


Colin Cameron: The United States is fighting a desperate war in Asia, and it has internal turmoil. They have problems that this government need not face and it is impudent for the minister to suggest that the problems which this government faces are commensurate with the difficulties of Great Britain or the United States.
What sort of policy ought to be followed if we are to build Canada into the viable national economic unit that we all wish it to develop into? My first suggestion is this: The minister should free the exchange rate. He will find, and I can give him a long list of eminent economists in Canada who support this proposition-


The Acting Speaker (Mr. Tardif):: Order, please. I must advise the hon. member that his allotted time has expired.


An hon. Member:: Let him finish.


William Heward Grafftey: Mr. Speaker, at this stage of the budget debate it is my lot, first, to examine the budget record of this government since it came to power and, second, to discuss the
December 8, 1967	COMMONS
effects of this government's budgets on Canada and its people. Finally, while 1 recognize that the primary task of a responsible opposition is to oppose, I wish to outline some remedies that I think will in future prevent the mess that our country finds itself in today.
When members of this government sat on the opposition side they advanced economic argument after economic argument. Literally, they ground out speeches from their offices on the fourth floor. They said: When we come to power, we shall have all kinds of planning-indicative planning and classical planning. They also said: We shall introduce a kind of master, five year budget, the sort that we see in France. And we were told there would be interim, annual budgets to straighten out minor problems. But the five year budget would be introduced to gain the confidence of all segments of the Canadian population.
The fact is that we have no stability in this country; we have not had any budgetary planning; in fact, we have not had planning of any kind. Not only members of the N.D.P., who are enthusiastic about the mystique of planning, advocate planning. I say that the economic mess this country is in today has been brought about through lack of planning.


David Réal Caouette: Two budgets a year.


William Heward Grafftey: I think it is three.


David Réal Caouette: There will be one every week, next year.


William Heward Grafftey: The Prime Minister has lunged from one extreme to the other in his approaches to the problem. Let us consider the first minister of finance of this administration, Mr. Speaker. He was the daring innovator, the experimenter par excellence. He rushed in where angels feared to tread. In many ways one had to admire the guts of this emancipated gladiator in flight, who was often emancipated from any consideration of the lessons of the past.
What did that minister of finance do? He advanced; he withdrew; the rule book was thrown into the grandstand and he became the first of many promising rookies to be benched by a dumbfounded and confused coach. The coach finally lost confidence in this kind of "be damned with the past" philosophy, only to adopt an equally invalid approach.
DEBATES	5235
The Budget-Mr. Grafftey
[DOT] (4:50 p.m.)
At a time when modern economic, monetary and fiscal problems demanded imaginative and daring leadership he opted for an approach perhaps suited the problems of the 'fifties but woefully inadequate to meet the challenge of the 'sixties and 'seventies; he opted for the darling of the mandarin establishment, the present stand pat status technician, who likes nothing better than to keep the pot boiling with three budgets per annum.
As Alice in Wonderland observed: "It is dreadfully confusing to play croquet when there are no rules." To quote again from Lewis Carroll:
The players all played at once without waiting for turns, quarrelling all the while and fighting for the hedgehogs, and in a very short time the queen was in a furious passion.
There is no doubt about the confusion and the furious passion created by this budget, and there is no doubt that this is a wonderland. We have sat here on the opposition benches in great wonderment, watching first of all the hedgehog activity of the government when it first took office, bringing out a budget and then withdrawing it. Now, we watch while another player wants to take three turns in a row and bring down three budgets in one year. While it may be wonderful, it is still dreadfully confusing and there are still no rules-and there will not be any rules until we have a change of government. Three factors have helped to create the mess this country is in today-the lack of short term or long term planning on the part of the government; its refusal as mentioned by our leader, to plan federal priorities and priorities with the provinces, and its appalling record of confusion in bringing down budgets.
What about the effect on Canada and on the Canadian people? What is the situation in our country today? By its ill-conceived fiscal economic and monetary management the government has destroyed its options of manoeuvre-options which are necessary if we are to face the present economic situation. This has been said before, but it must be said time and time again, because it is of the essence in the decision making functions of cabinet government.
Second, we are faced with rampant inflation involving an unprecedented increase in the cost of living. Interest rates are at record heights. Exports are dwindling. Though the Dominion Bureau of Statistics reports that
5236	COMMONS
The Budget-Mr. Grafftey employment figures are remaining stable, the increase in unemployment is entirely unacceptable. Let no ministers of the crown quote statistics to those Canadians who are looking for work. Statistics never took the place of a job or filled a lunch pail. Though the d.b.s. figures show employment as stable, unemployment is rising steadily. The present Secretary of State for External Affairs (Mr. Martin) used to remind us of this when we were in office, and as long as this government lasts we intend to make it live up to its responsibilities in this key area.
This is not all. We are facing a national housing crisis which would be considered a disgrace in any civilized nation state; especially is it a disgrace in a nation state such as Canada which claims to have the second highest standard of living in the world.


Mr. Deachman:: The angels are against you. That is a sneaky way to win a debate.


Mr. Deputy Speaker:: The Chair recognizes the force of the competition but perhaps the hon. member will continue.


William Heward Grafftey: I am not bothered by the noise. It is not nearly as confusing as the cackles I hear from time to time from hon. members opposite. I am perfectly at ease and I am willing to go on until five o'clock.
While this country is facing an unprecedented housing crisis as a result of which so many people are unable to find a decent home or keep a roof over the heads of their families, the minister is still on the point of calling another conference. Mr. Speaker, Canadians are recognizing that conferences never have taken the place of concrete action to bring about results, and never will.
Whether the government is talking about current estimates or projected estimates, when we are confronted with a sudden cut in those estimates of $1 billion I can only say: "What a way to run a country." Maybe that is a common, vernacular expression. But all I can say is: "What a way to run a country."-finding all of a sudden that one has to do this sort of thing.
I know that governments cannot always be rim like business concerns, but can we not expect a modicum of business management in the day to day affairs of administration? What a disgrace. No wonder people are losing confidence in this government and public institutions, when they see such a spectacle, one which makes us the laughing-stock not only of our own people but of nations abroad.

DEBATES	December 8, 1967


Thomas Speakman Barnett: You sound like a Liberal, talking as you would have talked when you were parliamentary secretary to the minister of finance.


William Heward Grafftey: I realize that the hon. member, who has no real expectancy of gaining power, can be very free in his statements.
Budgets are intended to create stability and are expected to do so. The two ministers of finance who have spoken for the administration on the floor of the House of Commons have succeeded only in creating an atmosphere of confusion and havoc.
Mr. Speaker, may I call it five o'clock and adjourn the debate?


Gordon Minto Churchill: May I rise on a point of order and draw the attention of the Chair to the fact that during the debate this afternoon some of the speakers taking part have been interrupted by noises off-stage. There have been comments about noise. The noise was not in the chamber itself. It was due, and I think Hansard should record this, to the centenary Christmas celebration outside on behalf of the children.


Grant Deachman: I concur with the remarks of the hon. gentleman who has just spoken. The noise is from the concluding celebration of the greatest year in Canada's history.


Some hon. Members:: Hear, hear.


Gordon Minto Churchill: Under the poorest government that we have known.
[DOT] (5:00 p.m.)



BUSINESS OF THE HOUSE

Jay Waldo Monteith: Before we go into private members hour, Mr. Speaker, may I ask the Minister of Finance if he proposes to continue with the budget debate next week, until its completion?


Mitchell William Sharp: Yes, Mr. Speaker, that is my understanding.


An hon. Member:: Throughout the whole week?


Mitchell William Sharp: Just until the termination of the legal time.


The Acting Speaker (Mr. Tardif):: Order. It being five o'clock the house will now proceed to the consideration of private members business as listed on today's order paper, namely public bills and private bills.
December 8, 19G7



DIVORCE


[Stage Direction]
On the order:
Second reading of Bill No. C-6, an act to provide in Canada for the dissolution and annulment of marriage-Mr. Peters.
Mr. Peters:: Mr. Speaker, the government now has a bill on the order paper which in my opinion is broader than this one, and I would like to ask for unanimous consent of the house to withdraw this bill.


The Acting Speaker (Mr. Tardif):: Has the
hon. member unanimous consent so that the order be discharged and the bill withdrawn?


Some hon. Members:: Agreed.
Order discharged and bill withdrawn.



NATURAL RESOURCES


William Arnold Peters: the second reading of Bill No. C-10, concerning the exportation of the growth and produce of Canada.
He said: Mr. Speaker, the purpose of this bill is to limit, license and regulate the exportation of our basic and primary resources. I am not going to argue that this bill is the answer to all our problems respecting the controlling of our natural resources, but it is an attempt to decide from a national point of view how best those natural resources can serve the Canadian public before we allow those resources to be exported prior to their use in secondary industry.
I am sure hon. members are aware of the arguments in Ontario years ago when it was decided, by an act of the provincial legislature, to limit the export of pulp products from Ontario. The result was the building of pulp and paper mills throughout the area in which pulp is produced. Many new communities were built and employment provided in secondary industry connected with pulp and paper. Wages in these areas are now higher than in many other primary product industries. This is an indication that, given a little direction, secondary industry can be developed. Obviously books cannot be printed in these areas. It is not possible to have all our newspapers printed in them, but it is possible to develop other secondary industry in these areas, and these secondary industries will support new towns in perpetuity.
Natural Resources
For years I have been interested in discussions that have taken place concerning the export of our oil and petroleum products, which hold a great potential for secondary industry. No other basic resource has such potential for secondary industry as petroleum has. The number of things that can be produced from it is almost unlimited. It has been said that eventually the world's population could depend on petroleum products for all its clothing, food and other necessities of life. Under the provisions of this bill these byproducts could be developed in Canada.
I have a particular interest in Timiskaming and other northern communities where a new industry has recently developed following upon the gold and silver mining industry. These areas contain a number of iron ore deposits, and the mines operating them are fairly large. There is one just south of Kirkland Lake, owned by the Jones and Loughlin Company, which is producing pellets that are exported to the United States. It is to be joined shortly with another large venture in the Timagami area, and this company will be selling its iron to the Stelco plant at Hamilton. In addition there are six or seven other areas that contain large iron ore deposits, and eventually the Belcher island deposits will also become economic to work.
The Canadian people really own these natural resources and they are the ones who should get the benefit from this great wealth and its great potential. They should be able to develop secondary industry from these resources, and these secondary industries could provide more employment than the actual mines provide.
If it were decided that this ore could not leave northern Ontario in its natural state, this would mean the establishment of facilities to produce pig iron. It is generally conceded by people in the iron industry that the expenditure involved in producing pig iron is so great that it is economic to go further and produce steel. If that were to happen, secondary industry producing fabricated products would become inevitable, and this in turn would lead to ancillary industries. This would mean that instead of a mine providing employment for 300 people, some 3,000 people could be employed in secondary industry developed by use of the mine resources.
The purpose of this bill is to restrict the sale abroad of our primary products, and to license and regulate the export of those products, having in mind their potential value to

December 8, 1967
Natural Resources
Canada through the development of secondary industry.
Exploitation is becoming a common word in the Canadian vocabulary, but I believe that regulations such as are proposed in this bill would assist not only northern Ontario but also northern Quebec and all other northern areas where primary products are produced. Such regulation would be in the interests of everyone.
[DOT] (5:10 p.m.)
I have been interested in this word "exploitation". When I went to school I always had the opinion that if reference were made to the exploitation of someone or something it meant that advantage was being taken of someone or something. "Exploitation" was always a dirty word. Yet, in our northern area we find people using the word "exploitation" as an exchange word for "exploration". There seems to be no particular adverse connotation in the word "exploitation". It seems to be a way of life so far as the Canadian public is concerned.
I believe most members who are concerned with this matter will agree that we should limit the exploitation of our natural resources, keeping in mind the potential each of these resources has in secondary industry, and that they will support this bill. I would be the first to admit that there are fields in which the secondary development of the primary product will be difficult and will take some period of time. I am sure that the regulations which would surround such a bill would take this into consideration. This bill was not presented in the expectation that it would pass. However, I think it will allow the members of the house and the people in the country at large an opportunity to consider a matter which has been of great concern to all who live in the primary producing areas, who see their natural resources being taken out of the area and in some cases taken out of the country as a whole before any manufacturing takes place or before any secondary industrial development is undertaken.
I believe that if a bill in this or in another form should receive the support of the house the transition which would take place in the newly developing areas of Canada would provide many Canadians with an opportunity to reverse the trend which now takes place, where a person has to move to the major cities in order to participate in the secondary industries of our nation. It would have the effect of pushing secondary development into

the areas which are so greatly in need of such development, namely the primary producing areas.
I would appreciate support and criticism of this bill, so that Canadians will be able to get secondary development in those areas where at present no secondary industry is contemplated or anticipated.


Mr. Guy LeBlanc (Rimouski):: Mr. Speaker in theory, the purposes of Bill No. C-10, are to limit, prohibit or regulate the exportation of primary resources, therefore we can only be in favour in principle of the passing of this bill.
If in a country as rich as Canada, with regard to natural resources, we could process completely our primary products and export them abroad, once we have met our domestic needs, obviously, it would be the ideal solution.
I think that everybody agrees with me that Canada is a great country. But a distinction must be made. It is a country of a tremendous size, very rich in natural resources, but if we compare the small density of its population, still growing over the years, with that of several European countries, smaller in size we can only come to the conclusion that Canada is a small country, which cannot use its primary resources due to its limited population.
Whence the need to satisfy our foreign customers and often to supply them with raw materials which we are unable to use or process ourselves, due to the lack of facilities.
The sponsor of this bill has forgotten, I think, that in a practical sense and under present circumstances, the aims of his bill are achieved.
In the province of Quebec, at least, the law contains specific prohibitions designed to protect our natural products and resources, especially in the case of wood products, in that it is forbidden to export unfinished products.
Unfortunately, the law has not always been adhered to but, nevertheless, I think that all in all, it is being observed and we all insist on that point.
I think also that the sponsor of the bill forgot that administration and development of our natural resources come under the jurisdiction of the provinces. If we consider the facts, the purposes and the measures advocated by this bill are, in practice, already a reality in Canada.
December 8, 1967

If this bill were passed, I feel that there would be many complications detrimental to the national interest, to the interest of our fellow-citizens.
First, there is a detail which might seem of little importance, but in the bill, there is no definition of "primary porducts". There is no list, not even a brief one, of the main commodities to be considered as primary for export purpose.
In my opinion, the passing of the bill would lead to a very strict control, too strict in fact, of our farm, forest, mining and other products. That could also have detrimental effects at the primary level or, at least, at some levels of our manufacturing and production industry.
Another aspect of the bill must also be considered. Let us not forget the complications that could arise within the public service, the bureaucracy, which we sometimes criticize. I believe with reason that very harmful complications could arise with regard to the administration of the commissions and some government agencies.
Steps should be taken to make sure that the legislation as well as the provisions concerning prices and equity are complied with fully, in the interest of the country. If each case had to be studied closely, it would take a real army of civil servants and experts and that would be going too far.
I think that we must think of raising such groups, such armies in time of national emergency. It is said that comparisons are always unfair but one is needed. It happened when Canada had to raise groups of very competent and learned men during the second world war, for instance, and also when disasters struck some areas and cities in Canada.
[DOT] (5:20 p.m.)
I think that to justify the recruiting of such a group of competent civil servants, to whom rather high salaries would have to be paid, we would have to be in an emergency. Considering the present state of our economy, in spite of what some of our opponents claim, and as compared with the world economy, we can say that we have problems but that we are at a normal point on the curve.
We know that our government will take the necessary steps, as it has done to date, so that we may go up another point on the chart of our economy.
Before introducing this bill which is very short and very simple, it might have been 27053-331
Natural Resources
appropriate to consider first the present legislation which provides for the existing functions which are very important for our economy, not only on the economy as a whole but in areas the hon. member for Timiskaming (Mr. Peters) has emphasized.
I note, for instance, that section 3 of the Export and Import Permits Act provides for the establishment of control lists. I quote:
The governor in council may establish a list of goods, to be called an export control list, including therein any article, the export of which he deems it necessary to control for any of the following purposes, namely,
(a)	to ensure that arms, ammunition, implements or munitions of war, naval, army or air stores or any articles deemed capable of being converted therein to or made useful in the production thereof or otherwise have a strategic nature or value, will not be made available to any destination wherein their use might be detrimental to the security of Canada;
(b)	to implement an intergovernmental arrangement or commitment; or
(c)	to ensure that there is an adequate supply and distribution of such articles in Canada for defence or other needs.
As you can see, our legislation, at a certain level, already provides, to a certain point, measures to ensure our market, our home market as well as the world market in the field of primary resources but always taking into account our economic progress within the framework of normal commercial activity in our country and in the world.
With regard to fair and reasonable prices for exports and raw materials, I wish to quote subsection 2 of section 17 of the Income Tax Act:
Where a taxpayer carrying on business in Canada has purchased anything from a person with whom he was not dealing at arm's length at a price in excess of the fair market value, the fair market value thereof shall, for the purpose of computing the taxpayer's income from the business, be deemed to have been paid or to be payable therefor.
It is obvious that the legislators have provided for economic stability not only with regard to our primary resources, but with regard to any revenue concerning the whole Canadian people.
Referring to the various duties, to the various functions which should be assigned to the group of civil servants or special agency entrusted with the application of that act, I read, under Section 4 (1) of the Tariff Board Act, as follows:
(l)In respect of goods produced in or imported into Canada the board shall, at the request of the minister, make inquiry as to

the world other sources of primary products, if our policy is too inflexible, large international companies, large international financial corporations and other countries will buy somewhere else. Admittedly, Canada needs foreign capital. I think that if our policy is not flexible enough, the same thing will happen with regard to those useful exchanges of capital with Canada.
I shall say in conclusion that this policy, which on the whole is a policy of restraint on the exports of our primary products, is a negative policy. In my opinion, Canada has followed in this field a positive policy to which we should continue to adhere. It is with a positive policy that we can develop our industrial methods as well as our engineering potential, while increasing the capital which will help us compete with foreign countries. That same policy will also make our development possible so that we might increase our delivery of finished products on foreign markets. That is what I call a positive policy.


David Réal Caouette: Mr. Speaker, the member who just resumed his seat said, at the beginning of his remarks, that he approved the principle of Bill No. C-10 and then spoke at length about the economic consequences which this bill could have on our international trade, on Canada's exports.
The hon. member for Rimouski (Mr. LeBlane) said that the present situation and the economy in general are getting the necessary attention. However, I wonder whether the creation of secondary industries in Canada would not help, for instance, to solve the difficult problem of unemployment. The recent fiscal legislation brought that home clearly; the number of unemployed will increase further.
If our primary products were processed by the secondary industry, it seems to me that would create jobs; it would also increase our exports considerably.
That is certainly a worthwhile bill because it would ask the government or the tariff board to consider our needs. First of all it wants our primary products to be used as much as possible by the creation of secondary industries, and thus to develop our potential to the full.
That is more or less an invitation to the companies, the investors to set up or create secondary industries in Canada.
The hon. member for Timiskaming (Mr. Peters) talks about the huge potential of northeastern Ontario, but I must tell him
27053-331J
Natural Resources
that the same potential is still to be found in northwestern Quebec.
For instance, we have great quantities of iron in Canada. There is also iron in northern Ontario. These mines could produce enough to supply the steel mills in Ontario, Quebec or even in other Canadian provinces. But instead of using these primary products, of developing and processing them in Canada, we prefer to export them in other countries which make them into finished products before they return them to us.
For instance, I remember that during the 1956 provincial election, Mr. Speaker. I was a Liberal candidate and that Mr. Georges Lapalme was precisely talking of these primary products and of operating iron mines in northern Quebec, in the district of Ungava. He stated publicly then: When we are in office, the Iron Ore Company, Jules Timmins and others will come and beg us to renew their charter or their purchase contract for Ungava primary products. Mr. Lapalme said that in 1956.
[DOT] (5:40 p.m.)
Four years later, in 1960, Mr. Lesage-a friend of the member for Rimouski-and his government came to power and that was when the government renewed the sales contract with the United States or the Iron Ore Co. on the same terms, for a 40-year period. This agreement was signed in 1961 by the Liberal government of Quebec.
Our natural resources are squandered and then we are told that we must accept restrictions and legislation which make us weaker instead of making us grow and develop. The development of our natural resources demands first that we produce raw material; and if we export these primary products to other countries so that they can finish them before they send them back to us, we are bound to be the losers.
We could insure maximum processing of our primary products in order to export finished goods abroad. For instance, in respect to the forest industry, which was mentioned a few moments ago, we could quite easily export large quantities of our pulp and its by-products, our veneers and plywoods, and all kinds of manufactured articles to the United States. However, we still export these commodities as primary products, and in return we receive finished goods from the United States.
In respect to the steel industry, the situation is worse. We export our steel as raw material to the United States, where it is

December 8, 1967
Natural Resources
processed in their steel plants and sent back here as end products. Thus, American workers benefit from this situation, while we, Canadians, remain hewers of wood and carriers of water. We do not process our products, and we are led to believe that our population is not large enough, that our country is too small, that we lack, perhaps, the required skills to develop our primary products or convert them into finished products.
Mr. Speaker, in my opinion this bill, even if it is not passed by the house, is a reasonable and logical measure which invites the present or any future government to put Canadian interests before those of foreign countries.
This does not mean that we object to exports, far from it. It means that we could export finished products instead of raw materials.
In my opinion, this could apply to many raw materials. I mentioned iron, but there is also copper, nickel, and even oil. Indeed, oil can be transformed into thousands of secondary products. Canada has all these raw materials, Mr. Speaker. Processing plants are what we lack. Those who are ready to invest and who invest now in certain areas in the United States or elsewhere in the world, whether in Japan, or in Europe, could, if invited by an aggressive government, invest here in Canada to create secondary industries and improve our employment level and the standard of living of our Canadian people.
It seems to me that it is perfectly consistent. The bill states clearly that there is no question of stopping exports of primary products completely, but to make maximum use of our primary products to process them, to treat them here and to finish them. If we have a surplus, nothing prevents us from exporting. Quite the opposite, we are ready to export.
Today, we are flying in the face of common sense: first we export, then we realize that we might run out of primary products to create secondary industries.
Mr. Speaker, I do not intend to take any more time of the house. The bill will probably be buried; it does not alter the fact that my principles are right, well founded and likely to help the establishment by Canadians of secondary industries in our country, from coast to coast.
I believe that bills like this one should be examined objectively, seriously and applied in the fullest possible measure.

I know the bill is not perfect. No bill is ever perfect regardless of the subject it deals with. There will always be flaws because bills are prepared by men and not by angels. But, goodwill should always be present, the willingness to consider such bills that will enable us to develop our resources and serve the best interests of the Canadian nation.


Mr. Blouin:: Would the hon. member permit a question?


David Réal Caouette: Of course.


Gustave Blouin: A moment ago, I refrained from interrupting the hon. member, whose speech I followed carefully, but I should like to know what he means by "finished products", since he mentioned the iron ore from the north shore. Is he aware that nowadays iron ore is treated in the form of concentrates and pellets?


David Réal Caouette: With regard to iron smelting, I think of rolling mill sheets and panels which could be sold on the United States market, for instance, to the automobile industry. As concerns pellets, of which I am well aware, since some are made out of scrap metal in Rouyn, I know that we sell them to the Noranda mine, for its own use.
In other fields, instead of exporting iron in its original state to the United States, we could first transform it into steel. Once turned into steel, they could use it for the manufacture of electrical devices, etc. That is what I mean when I am talking of finished or improved products at least compared to those we presently have.


Gustave Blouin: I believe there is already some improvement in that respect. The iron ore is being turned into ingots and then into pellets. It is at least half transformed.


David Réal Caouette: But it is not steel yet. It must be made into pig iron.


Gustave Blouin: I agree there could be further improvement in that respect, e (5:50 p.m.)


Mr. John M. Reid (Kenora-Rainy River):: Mr. Speaker, first of all I should like to express my congratulations on the return of the hon. member for Timiskaming (Mr. Peters). I understand he had a severe illness for some time and it is a pleasure to see him once more in the house.
I also appreciate his bringing this bill forward at this time. Perhaps those of us who
December 8, 1967

come from the northern parts of Canada have somewhat dominated the debate today, but there is ample reason for this. As the hon. member for Timiskaming pointed out in his opening statement, the meaning of the word "exploitation" has changed. He gave the proper definition of the word in a dictionary sense.
It does not matter who exploits you in the north, Mr. Speaker: It still hurts. United States capital is as bad in its own way as capital emanating from Montreal and Toronto. It still means that we in the north have insufficient control over what is going on in the area and we, the population in that area, feel just as exploited as do the natural resources-if they could be said to have feeling-that are being extracted from the north by various companies.
The problem is that we feel to some extent isolated from the mainstream of Canadian society and without the proper assistance of various provincial governments we do not see any great opportunity for an improvement in this condition. One of the difficulties that we in northern Ontario and northern Quebec face is that most of the members in the two legislatures now come from urban areas. When our legislatures were controlled by rural legislators they had very little interest in a progressive or active form of government. Now we have moved into the second half of the twentieth century and the emphasis is the other way. The problems to be solved by the provincial legislatures, and by this one too I may say, are those based on urban development, and we in the northern areas, the exploited areas, if I may use that term, still have no feeling of properly belonging to Canadian society.
In many cases, Mr. Speaker, what we have to do when we discuss problems of this type at constitutional conferences-and these are things we shall have to take into consideration-is to break up the large sized empires that now pass for provinces. I think the time has now come when the problems involved in governing society, which are based on rural enterprises and on urban enterprises, can no longer be reconciled in the same cabinet or legislature. We have to split them apart. It might be necessary to look at the United States model and split areas that have something in common with each other into smaller parts, instead of attempting to combine them into wholes.
To carry the idea further, the new provinces which might be formed, to deal with
Natural Resources
the problems outlined by the hon. member for Timiskaming, should be regionally based. For example one would not consider throwing the whole of northern and northwestern Ontario into one gigantic province. This would leave us in the same position we are in now. Perhaps what we should consider doing is to chop off northwestern Ontario as one separate unit, with the northeastern part and perhaps part of the northern Quebec section abutting being considered another province. In any case, problems in the north are reaching the point where the people are seething with a great deal of unrest because their needs are not being met. It is not so much a question of representation as one of limited resources, because the two large empires that pass for provinces insist on spending money on urban development. God knows how much we here see the problems of the urban areas, and recognize them, but we are also here to fight for our own areas. Our provincial colleagues are faced with the same problem. Attention is not given to the north because of the framework of political power in a particular province.
The bill introduced by the hon. member for Timiskaming is an indication of the type of problem that exists. He dealt almost exclusively with the difficulties in the north, the feeling of exploitation that we in the north have, and the lack of opportunity to make our contribution as we see it to Canadian society as a whole.
The programs that have been developed both by the federal government and the provincial governments to assist the north are not adequate. It is quite true, as the hon. member for Nanaimo-Cowichan the Islands (Mr. Cameron) has complained, that the mining companies and oil companies have been specially protected by the federal government. And indeed they were, Mr. Speaker, because that was the design of the particular subsidies when they were first introduced. It may be quite right to remove the special subsidies paid to these companies.
On the other hand, Mr. Speaker, coming as I do from the north, and mining being one of our few native industries, probably the only major one, I suggest this question should be looked at very carefully. Because capital of this type is very nervous and other mineral deposits are awaiting exploitation in other parts. We would not mind giving up this subsidy if there was something to take its place, but it is a question of our fighting for

December 8, 1967
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the survival of the area in the best way we can. Until the federal government and the province of Ontario look at the problems of the northern areas in a more sympathetic light, we will have to take the position of blocking what otherwise might be desirable legislative moves on the part of governments.


Mr. Deputy Speaker:: Order. The hour for the consideration of private members' business has expired. It being six o'clock, this house stands adjourned until 2.30 o'clock on the afternoon of Monday next.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Monday, December 11, 1967