1967-02-03

PUBLIC SERVICE

[Stage Direction]
Sixth, seventh and eighth reports of special joint committee on the public service of Canada-Mr. Richard.
[Note: Text of the foregoing reports appears in today's Votes and Proceedings.]

['Mr. Speaker, the North Vietnamese government has not sent any protest to the international commission because the matter referred to, the alleged export of arms, is not a matter that comes within the ambit of the Geneva agreement. What was received by our commissioner was a communication addressed', 'by the chief of the North Vietnamese liaison mission in charge of relations with the international commission, commenting upon and requesting clarification of Canadian policy as enunciated by me in this house on January 18 with respect to our relations with the United States on this matter. We are considering that communication, which was forwarded to us by the commissioner, and we hope to reply to it as soon as possible.']
Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, I should like to inform the house that the government has decided to establish a royal commission on the status of women. The chairman of the commission will be Mrs. John Bird. Other members of the commission will be announced when their appointments have been completed, which I hope will be over the week end.
The royal commission will be asked to inquire into and report on the status of women in Canada and to recommend what steps might be taken by the federal government to ensure their equality with men in all aspects of Canadian society. Its findings will, of course, have to take into account the division of legislative powers between the federal and provincial governments under the constitution.
The commissioners will be free to look into such matters as they feel are relevant, and in particular the following areas:	Laws and
practices under federal jurisdiction concerning the political rights of women; the present and potential role of women in the Canadian labour force, including the special problems of married women in employment and measures that might be taken under federal jurisdiction to help in meeting them; measures that rftight be taken under federal jurisdiction to permit the better use of the skills and education of women, including the special retraining requirements of married women who wish to re-enter professional or skilled employment; federal labour laws and regulations in their application to women; laws,
practices and policies concerning the employment and promotion of women in the federal civil service, by federal crown corporations and by federal agencies; federal taxation pertaining to women; marriage and divorce; the position of women under the criminal law; and immigration and citizenship laws, policies and practices with respect to women.


Mr. T. C. Douglas (Burnaby-Coquitlam):: Mr. Speaker, I should like to congratulate the right hon. Prime Minister on this announcement. I am extremely sorry that the hon. member for Vancouver-Kingsway (Mrs. Maclnnis) is unavoidably absent today; I am sure she would have liked to offer her congratulations, because this is a subject which she has been pursuing for some time.
I think the government's decision to appoint this commission is most commendable. I am very glad to see that the influence of the Secretary of State has prevailed upon her male colleagues to take this very progressive step. We have not had an opportunity to examine the commission's terms of reference, but judging from the remarks the Prime Minister made they seemed to be fairly comprehensive.
I hope the terms of reference will spell out in particular the problems of working women and working mothers; the whole problem of nursery schools; the problem of women who have to hire baby sitters and housekeepers, and the enactment of laws enabling them to charge this as an income tax deduction. There are a great many problems in our modern society which women have to face today which were not common 10 or 20 years ago. I hope the terms of reference will be wide enough to allow a full investigation into the problems which confront modern working women in order that they may have fair treatment, equal to that of men in our society.
May I say to the Prime Minister that the selection of the personnel of this commission is extremely important, and I hope the government will keep in mind not only the professional women and the business executives but also membership on that commission of women who understand the point of view of women in the labour force and the particular problems which confront them at this time.
February 3, 1967

Inquiries of the Ministry
I am sure nothing but good can come from the investigation the Prime Minister has announced. I hope it will result in some legislation being presented to the house which will help to give women a status equal to that of men in our society.


Mr. R. N. Thompson (Red Deer):: Mr. Speaker, I find it a very pleasant task indeed to comment on the announcement the Prime Minister just made. I want to make my remarks very brief, but I do not wish to let the hon. member for Burnaby-Coquitlam have the credit for being the only member on this side of the house interested in the rights of women.
I believe the announcement made by the Prime Minister will be welcomed not only by the women of Canada but by all Canadians, because I think it covers an area which has been neglected so far, namely the task of ensuring that the rights of mothers and of working women in this country are equitable in every respect.
I wish to say to the Prime Minister that I believe it is particularly necessary that this commission investigate both the federal and provincial laws to make sure they are applicable equally to men and women; and this applies also to the taxation laws which the hon. member for Burnaby-Coquitlam has already mentioned. I will just add that I think it is a good thing this action has been taken, and I believe nothing but good can come out of it. I commend the Prime Minister for making this decision.



[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I have a question for the Secretary of State for External Affairs but in his absence I will direct it to the Prime Minister. Has the government of Canada as yet made any reply to the accusations of North Viet Nam concerning the sale of arms to the United States by this country?


Lester Bowles Pearson: Mr. Speaker, the North Vietnamese government has not sent any protest to the international commission because the matter referred to, the alleged export of arms, is not a matter that comes within the ambit of the Geneva agreement. What was received by our commissioner was a communication addressed

by the chief of the North Vietnamese liaison mission in charge of relations with the international commission, commenting upon and requesting clarification of Canadian policy as enunciated by me in this house on January 18 with respect to our relations with the United States on this matter. We are considering that communication, which was forwarded to us by the commissioner, and we hope to reply to it as soon as possible.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: May I direct a question to the Minister of Industry. Yesterday he made reference to the fact that a meeting had been proposed by the United Auto Workers with the government regarding the Canada-United States auto agreement. In the absence of the Minister of Labour I want to ask him if there has been a protest from the United Automobile Workers because the meeting which is to take place among representatives of the union, the Minister of Labour, the Minister of Industry and the Minister of Manpower has been set for February 8 from 12.30 to 1 p.m. I believe the union is somewhat concerned about the short space of time which is being allotted for the discussion of this matter. I want to ask the minister if he does not consider that a matter of such great significance, affecting thousands of auto workers, ought to be given a greater length of time for discussion?


Hon. C. M. Drury (Minister of Industry):: Mr. Speaker, representations were made by the United Automobile Workers to the Minister of Labour suggesting that perhaps rather than having the meeting from 12.30 to 1 p.m., it might start earlier following the presentation of the Congress brief to cabinet. I have not been able to communicate with the Minister of Labour in this regard, but I have every expectation the matter will be satisfactorily resolved.


Thomas Clement (Tommy) Douglas: May I ask the minister if he can assure the house that some attempt will be made either to have a much longer ^meeting or to set aside another day next week when this matter can be gone into thoroughly because of the effect it has on the workers concerned?


Charles Mills (Bud) Drury: I think the government is as interested as anyone in making sure that
[Mr. Douglas.)
February 3, 1967	COMMONS
adequate time is provided for an appropriate hearing of representations.


Thomas Clement (Tommy) Douglas: Does the minister consider that to be half an hour?


Hon. Michael Slarr (Ontario):: In view of
the headline in yesterday's Toronto Daily Star which reads "More Lay-offs Face General Motors Workers in Oshawa", will the minister not take this matter seriously and refer the auto pact to a standing committee of the house for consideration?


Mr. Speaker:: I think the question is argumentative. When the hon. member asks if the matter will be considered seriously and referred to a committee, I suggest the question becomes argumentative.


Michael Starr: He does not take it seriously; he will not even reply.



RESEARCH


[Stage Direction]
On the orders of the day:
Mr. K. A. Olson (Medicine Hat):: I should like to ask the Minister of National Health and Welfare if his department has been advised by the Association of Canadian Medical Colleges that four or any other number of these colleges may lose their accreditation as the result of a lack of research facilities.


Hon. A. J. MacEachen (Minister of National Health and Welfare):: No, Mr. Speaker, we have received no such information. The report upon which I believe this question is based is, in general terms, an inaccurate report.
[Later:] '


Mr. Eric A. Winkler (Grey-Bruce):: I have a
question for the Prime Minister. I should like to ask the right hon. gentleman whether as part of the arrangements for centennial year a program will be announced or instituted for the support of medical research, particularly in the areas of heart disease and cancer research. I ask this question bearing in mind that the government came under fire from some of those attending the meeting which was held in the Chateau Laurier a couple of weeks ago.


Lester Bowles Pearson: I think when the hon. gentleman is in a position to look at the expenditures of the government which will be announced for the
Inquiries of the Ministry forthcoming year he will find that there is a considerable increase in the fund to be devoted to research generally, including medical research.



FARM MACHINERY


[Stage Direction]
On the orders of the day:
Mr. H. W. Danforih (Kent (Ont.)):: I should like to direct a question to the Minister of Agriculture. A short while ago, in answer to a question concerning a rise in the prices of farm machinery, the minister indicated quite rightly that he would not be in a position to answer until he had communicated with the major farm machinery companies. Is the minister in a position this morning to indicate to the house the average amount of the rise in machinery prices and the reasons given for this increase?


Hon. J. J. Greene (Minisier of Agriculture):: Mr. Speaker, I have seen all the main companies involved in the business and I hope very shortly to have a report to give to the house in this regard, which will include an answer to the question asked by the hon. member.


Mr. Lawrence Watson (Assiniboia):: A supplementary question. Could the minister table the replies he received to his inquiry about this increase from some of the machinery companies, and would he tell the house what he intends to do to hold down these price increases?


John James Greene: Mr. Speaker, I hope to embody an answer to the hon. member's question and to deal with the advisability of tabling the reports, if such is deemed to be the case, in my reply to the house.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. Lloyd R. Crouse (Queens-Lunenburg):: Mr. Speaker, I wish to direct a question to the Minister of Fisheries. In view of the efforts of the government of Newfoundland to save an 80-ton fin whale from starvation by paying up to $1,000 for herring to feed it, is it the intention of the federal Minister of Fisheries or his department to make any financial contribution toward feeding the whale and author Farley Mowat while he is looking after it?


Mr. Speaker:: Order. I would not think this was a question of national urgency.
February 3, 1967

Inquiries of the Ministry FINANCE



CANADIAN OWNERSHIP OF INDUSTRY-STATEMENT BY STUART KEATE

[Stage Direction]
On the orders of the day:
Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, my question is directed to the Prime Minister and arises out of the subject discussed here yesterday, namely the Prime Minister's speech concerning Canadian ownership of Canadian industry.
I was wondering whether the right hon. gentleman would care to comment on the statement made by or attributed to his good friend Mr. Stuart Keate, who has acted as adviser to the government, to the effect that Canada provides the best proof of United States integrity in international affairs and, in so saying, asserted that "it is true we have some economic nationalists but any country that can survive three wars, floods, rock slides and other natural disasters can survive Walter Gordon."


Lester Bowles Pearson: Mr. Keate is well known for his sense of humour, Mr. Speaker.



DIVORCE


[Stage Direction]
On the orders of the day:
Mr. R. W. Prittie (Burnaby-Richmond):: Mr. Speaker, I have a question for the Prime Minister following his announcement about the royal commission on the status of women, and that the commission will study the question of marriage and divorce. Does this mean that any legislation concerning divorce will be put off until that commission reports?


Lester Bowles Pearson: No, Mr. Speaker. I think it would be quite undesirable to have terms of reference for a commission of this kind which did not include these matters. However, this does not mean that action cannot be taken before the commission completes its work.



NATURAL RESOURCES


[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, I have a question for the Minister of Justice. I should like to ask the minister whether he can inform the house when the 
supreme court will commence hearing argument on the reference of the constitutional jurisdiction over the resources of the continental shelf.


Hon. Lucien Cardin (Minister of Justice):: Mr. Speaker, I have been informed that the supreme court will hear argument on that question around March 6.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. David MacDonald (Prince):: Mr. Speaker, my question is directed to the Minister of Agriculture and arises out of the recent meeting of the dairy farmers of Canada and a recommendation they made. I wonder whether the minister could tell the house when some action might be taken toward the implementation of a national school milk policy for this country.


John James Greene: Mr. Speaker, as the hon. member knows, any question with respect to a national school milk policy would be a constitutional one. Schools and their operation are matters which come under provincial jurisdiction; hence the development of a national school milk policy would require provincial co-operation.


David Samuel Horne MacDonald: A supplementary question, Mr. Speaker. I do realize that but I am wondering whether the minister, his department or his officials have given consideration to the possibility of having some federal-provincial consultations to effect a badly needed program of this type.


John James Greene: Mr. Speaker, I would be very happy to consider the hon. member's suggestion in this regard.


Mr. E. Nasserden (Roslhern):: A supplementary question, Mr. Speaker. May I ask the Minister of Agriculture how many provinces he will discuss this matter with?


Mr. Speaker:: Order. I wonder whether this question is urgent. I do not think a question asking how many provinces the Minister of Agriculture will discuss a certain problem with is urgent.


Edward Nasserden: the Canadian people during election campaigns regarding this matter.


Mr. Speaker:: Order, please.


Edward Nasserden: I have a supplementary question for the Minister of National Health and Welfare. Has he discussed with the provincial ministers of health a national school milk policy?


Allan Joseph MacEachen: No, Mr. Speaker.



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Mr. S. J. Enns (Portage-Neepawa):: Mr. Speaker, my question is directed to the Postmaster General. On January 11, Sir John A. Macdonald's birthday, the department issued a commemorative postage stamp which did not refer to the first prime minister. In response to my question the Postmaster General said the suggestion to issue a commemorative stamp for Canada's first prime minister would be taken under consideration. We now notice that a new series of centennial regular issue postage stamps will go on sale on February 8. On them I find no reference to Sir John A. Macdonald, and I am rather surprised that Canada should advertise the Alaska highway in this way. I still would have some satisfaction in advertising Sir John A. Macdonald.


Mr. Speaker:: I am still waiting for the question.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, my question is directed to the Solicitor General and relates to the coming visit of Her Majesty and Prince Philip. I ask the Solicitor General whether the government intends to grant amnesty, to remit time of inmates of federal penitentiaries, as has been done in past years.


Hon. L. T. Pennell (Soliciior General):: Mr. Speaker, yesterday the hon. member for Trois-Rivieres raised the same question and I advised the house I would take notice of it. I must reply in the same way to the hon. member for Skeena.
Inquiries of the Ministry


Frank Howard: A supplementary question, Mr. Speaker. Does the minister not recall that long before the Christmas recess he gave us the same answer?



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
['I will be very glad to look into that question, Mr. Speaker.']
Hon. Gordon Churchill (Winnipeg South Cenire):: My question is for the Prime Minister. During centennial year, when we shall appropriately emphasize Canada's history and traditions, including heroism and sacrifice in wartime, has the Prime Minister arranged for a suitable ceremony to commemorate his approval of the plan to destroy the identity of the Royal Canadian Navy?


Mr. Speaker:: Order, please.



[Stage Direction]
On the orders of the day:
Robert William Prittie: Mr. Speaker, I wonder if the Prime Minister has a reply today to my question of yesterday about the Quakers and their request for financial assistance.


Lester Bowles Pearson: Mr. Speaker, I looked into the question after I left the house yesterday. I believe the reply will be completed over the week end and I hope to make it available on Monday, or at the latest on Tuesday.


[Stage Direction]
On the orders of the day:
Michael Starr: At the beginning of the week I asked the Prime Minister about the position the fruit growers find themselves in. I asked whether action was being taken, based on the Prime Minister's promise last fall in Hamilton, whether higher tariffs were being considered to protect the fruit industry in Canada. Has the Prime Minister an answer?


Lester Bowles Pearson: Mr. Speaker, I referred that matter to the minister concerned but not in the context of anything I said last autumn. I will check with him about the reply.
February 3, 1967

Inquiries of the Ministry AIR POLLUTION


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, my question is for the Prime Minister. Considering that President Johnson has asked the United States congress to pass an "Air Quality Act of 1967", and considering that the atmosphere of our two countries is indivisible, is the government considering bringing in legislation this year, in order that Canada might participate in the campaign to eliminate air pollution?


Lester Bowles Pearson: I will be very glad to look into that question, Mr. Speaker.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Robert Norman Thompson: I have a question for the Minister of Agriculture. A short time ago the minister said he hoped to announce by February, the support price for sugar beets for the 1967 year. May I ask the minister whether he has an announcement to make in this regard and, if not, when he will be in a position to make this announcement?


John James Greene: We hope to make this announcement soon.



RECOMMENDATION RESPECTING PERMANENT MORTGAGE PLAN FOR DAIRY FARMS

[Stage Direction]
On the orders of the day:
Mr. R. R. Souiham (Moose Mountain):: have a question for the Minister of Agriculture. At a recent meeting of the Canadian Federation of Agriculture held in Winnipeg it was brought to the attention of the minister that Canada might soon face a serious shortage of dairy products. Has the minister given consideration to the suggestion by the dairy farmers that a permanent mortgage plan be established to perpetuate the dairy farm operation by enabling it to be handed down from father to son?


John James Greene: All recommendations from the Dairy Farmers of Canada will certainly be given serious consideration by the government in formulating dairy policy for the ensuing year.


Edward Nasserden: Is it not true that the government's present dairy policy

represents a permanent mortgage plan as far as dairy farmers are concerned?


Mr. Speaker:: Order, please.



CANADIAN CENTENNIAL


[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: wish to address a question to the Secretary of State with reference to the youth parliament project for centennial year. Since an ad hoc committee of the house strongly recommended such a project, and since time is getting along, may I ask whether the hon. lady has received the expected report from the youth council and whether, if there is to be a long delay, the government intends to proceed with a youth project this year?


Hon. Judy V. LaMarsh (Secretary of State):: promised members of the house that I would call the ad hoc committee together. My parliamentary secretary has been engaged in the broadcasting committee somewhat intensively, but I expect a meeting will take place some time next week.


Thomas Clement (Tommy) Douglas: Has the minister a report from the youth council to put before the ad hoc committee or some further recommendation with reference to a youth parliament or some other youth project?


Julia Verlyn (Judy) LaMarsh: No. We have had an application from a youth group and this will be considered by the ad hoc committee; it has not yet been considered by the government.



PILOTAGE


[Stage Direction]
On the orders of the day:
Frank Howard: Apropos of today's announcement that there is to be a royal commission on the rights and status of women, I wonder if I may ask the Minister of Transport what has happened to the long lost report of the royal commission on pilotage.
Hon J. W. Pickersgill (Minisier of Transport): One of the hon, member's colleagues, the hon. member for New Westminster, asked that question yesterday and the answer is the same today as it was yesterday. The hon. member may not have noticed.
February 3, 1967

Inquiries of the Ministry POWER



EXPO '67 REQUEST FOR MORTGAGE ASSISTANCE FOR MOTEL CONSTRUCTION

[Stage Direction]
On the orders of the day:
Mr. R.-E, Regimbal (Argenfeuil-Deux-Montagnes): In the absence of the Minister of Labour who is responsible for C.M.H.C., and of the Minister of Trade and Commerce who is responsible for Expo, I should like to address my question to the Prime Minister. In view of the fact that several projects for the building of motels on the south shore of the St. Lawrence opposite Montreal cannot be completed because of lack of mortgage funds, thereby depriving visitors to Expo of millions of bed nights of accommodation, does the government intend to take any action to relieve the situation?
Mr. Speaker:: Order. I think this would be a very interesting topic for discussion at ten o'clock.



FINANCE


[Stage Direction]
On the orders of the day:
Michael Starr: I should like to address a question to the Minister of Finance and ask him whether the government is contemplating any change in the restrictive legislation relating to the Mercantile Bank as a result of the changed attitude referred to by the minister in evidence before the committee yesterday. May I also ask in what circumstances the government would consider changing the present restrictive clauses in the Bank Act.


Hon. Mitchell Sharp (Minister of Finance):: I have been engaged in an interesting discussion-


Mr. Speaker:: Order. I am sure the hon. gentleman will recognize that this matter is now before the committee. I do not think this question should be accepted.


Michael Starr: Then I will ask another question. Would the minister recommend the purchase of Mercantile shares to prospective speculators?


Some hon. Members:: Oh, oh.



PROPOSED TEST CONNECTING U.S. AND CANADIAN SYSTEMS

[Stage Direction]
On the orders of the day:
Lloyd Roseville Crouse: My question is also addressed to the Minister of Finance. In the event that the test to be held on February 7, interconnecting the major power systems in the eastern and western United States and in Canada, is successful, does the government intend to make this massive grid permanent?


Mr. Speaker:: Order. The question is obviously hypothetical.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Gordon Minto Churchill: My question is for the Minister of National Defence. During his term of office has there been a deliberately planned coup by the senior officers of the armed services or by any one of those officers to supersede civilian control?


Mr. Speaker:: Order. Even if the minister is anxious to reply to the question I doubt whether it is acceptable. It is certainly not an urgent question, if the hon. gentleman is referring to things which have happened; and for that reason at least I do not see that it can be accepted.


Hon. Paul Hellyer (Minister of National Defence):: On a question of privilege-


Mr. Speaker:: The question has been ruled out of order but if the minister wishes to rise on a question of privilege he has the right to do so.


Paul Theodore Hellyer: The only coup I know of is the one which was so well planned and executed by the hon. gentleman last night.


Mr. Speaker:: Obviously the answer given by the minister by way of the question of privilege indicates that I was right in the first instance.


Gordon Minto Churchill: I should like to raise a point of order, Mr. Speaker. You ruled my question out of order as not being urgent, or not being serious. I cannot think of anything more serious. I was referring to a statement which was
February 3, 1967

Inquiries of the Ministry made by the minister on January 31; and it there is any question in this country of any attempted coup by the military, in the past or in the present, to supersede civilian control, it would warrant not only investigation by this house but perhaps investigation by a royal commission. I wonder whether on reflection Your Honour would not permit my question to be considered.


Mr. Speaker:: I certainly could not prevent the hon. gentleman from asking the question, but I can still say it is out of order.



INQUIRY AS TO PERSONNEL OF ROYAL COMMISSION

[Stage Direction]
On the orders of the day:
Eric Alfred Winkler: A brief question to the Prime Minister arising from my continuing interest in the fair sex. I should like to ask whether there will be any male appointments to the royal commission he mentioned earlier.


Lester Bowles Pearson: Yes, Mr. Speaker, we would like this to be a mixed commission and if the hon. gentleman would like to give up his seat and participate he would be an admirable commissioner.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. R. K. Andras (Port Arthur):: Mr. Speaker, I wish to direct a question to the Minister of Manpower and Immigration. So there may be no doubt arising from the exchange between him and another hon. member as recorded at page 12556 of yesterday's Hansard, will the minister confirm that the four month waiting period for mobility grants will be waived for employees laid off as a result of the gold mine closing in Geraldton, Ontario?


Hon. Jean Marchand (Minister of Manpower and Immigration):: Mr. Speaker, the general policy remains the same. That means that normally workers have to wait for a four month period before obtaining these grants, but in the case of the mine at Geraldton it was decided that this period would be waived.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, in view of the number of times we have been told that certain questions will be answered when we learn about next year's expenditures, could the Minister of Finance or the President of the Treasury Board tell us when the estimates for 1967-68 will be tabled?


Hon. E. J. Benson (Minister of National Revenue and President of the Treasury Board):: If the present session is completed by March 10, as is hoped, I will table the estimates immediately the new session opens. If not, I am aiming for a date around March 13.



COMMITTEE CONSIDERATION OF ARMED FORCES UNIFICATION BILL

[Stage Direction]
On the orders of the day:
Mr. J. M. Forreslall (Halifax):: I wish to direct a question to the Minister of National Defence and ask him whether he can tell the house when he intends bringing before the standing committee on defence the measure which received second reading last evening?


Paul Theodore Hellyer: This is a matter which is entirely within the purview of the chairman of the committee and the committee itself. It was referred to the committee last night immediately after second reading, as the hon. member knows, and I hope the committee can begin meeting early next week.



PROVISION FOR CONSIDERATION OF PRIVATE MEMBERS' BILLS

[Stage Direction]
On the orders of the day:
Mr. Georges Valade (Sainle-Marie):: Mr. Speaker, my question to all intents and purposes is a point of order and can be addressed to the Prime Minister. In view of the large number of public bills sponsored by private members now on the order paper, some 164 in all, and in view of the fact that some of them have been on the order paper since the opening of the session last year, may I ask if the government is interested in finding a way to provide time for discussions of these bills, or will it tell members that the procedure of putting private bills on the order paper is no longer of use? I might mention that I have a bill on the order paper which was No. 18 or No. 24 on the list when first introduced, and now stands at No. 13.
February 3, 1967	COMMONS
Righl Hon. L. B. Pearson (Prime Minister):
Mr. Speaker, the house rules are in existence and cannot be changed except by agreement in parliament. However, I would hope that when the committee to deal with the rules and procedures is set up next week this is one matter that will be high on its agenda.



CANADA DEPOSIT INSURANCE CORPORATION


Mitchell William Sharp: the second reading of Bill No. C-261, to establish the Canada Deposit Insurance Corporation.
He said: Mr. Speaker, as I mentioned when moving the resolution preceding this bill, events have made it desirable to move more quickly than was originally intended. The government now feels that it is most desirable to proceed with this legislation at once and, after approval, to proclaim the Canada Deposit Insurance Act with the least possible delay.
It would be undesirable for federal institutions to be insured earlier than insurance would be available to provincial institutions. To expedite making insurance available to provincial institutions it is contemplated that the deposit insurance corporation would be prepared to cover all the existing deposit accepting trust and loan companies of a province if the province concerned so requested, even before the corporation has made an examination into the affairs of the individual companies and ascertained if they were eligible for insurance.
The provinces will be expected in return to enter into appropriate financial arrangements to ensure that any losses which occur as a result of the deposit insurance scheme having become effective prior to inspection will not become the obligation of those institutions which are in a sound position and are contributing to the deposit insurance fund. This would simply be a recognition by the provinces of their responsibility for provincially incorporated institutions prior to the applicability of federal deposit insurance.
It is not our intention in any event, Mr. Speaker, to insist on uniform national standards as a prerequisite to entry into the insurance plan, but to work toward higher minimum standards over a reasonable period of time with institutions which have the desire and capacity to improve their financial standing.
Canada Deposit Insurance Corp.
I realize that by going ahead at once on this proposal we will not have as full consultation with the provinces before the legislation comes into effect as we had originally hoped to have. It is not intended that passage of the legislation will close the door to further discussion with the provinces, and I will continue to give serious consideration to any suggestions that may be made. However, in the light of the views that have been expressed in the house and in the committee which is considering the bank bills, the government has reached the conclusion that we should not delay the availability of deposit insurance while further discussions with the provinces proceed.
There are three major objectives for the proposed system of deposit insurance. The primary objective, of course, is to ensure the safety of the deposits of small investors who are usually not in a position to judge for themselves the financial soundness of the constitutions to which they entrust their savings.
Second, the Canada Deposit Insurance Corporation will also have power to function as a lender of last resort for deposit accepting institutions, providing needed liquidity at times of crisis when such institutions may not have access to their normal sources of liquidity.
Third, member institutions will be subject to inspection. It will be an objective to bring about a gradual improvement in the minimum financial standards of deposit acceptance institutions across the country. There will be a genuinely sympathetic and helpful attitude toward institutions which wish to cooperate in this objective.
Membership in the deposit insurance plan will be obligatory for chartered banks, Quebec savings banks and those federal trust and loan companies which accept deposits from the public. Provincially incorporated trust and loan companies which accept deposits from the public will be eligible to apply for membership if they have the consent of the province concerned.
It is not proposed that deposit insurance be available to credit unions and Caisses Popu-laires, which are co-operative institutions dealing with their members rather than public deposit accepting institutions. To a considerable extent mutual insurance schemes have already been established for the local credit unions. At the federal level there is the Cooperative Credit Associations Act, which provides for the incorporation by special act of the parliament of Canada of co-operative credit societies.
12622	COMMONS
Canada Deposit Insurance Corp.
Amendments to the Co-operative Credit Associations Act are presently under consideration. Among the matters that will be reviewed is whether a lender o i last resort facility is needed in connection with the operation of these societies. As I have already mentioned in the house, I have asked my departmental officials to look at the more general questions surrounding the adequacy of the control that now exists in the field of finance companies, and I have indicated that we are willing to confer with the provinces on this matter if they so wish.
Except in the matter of the maximum size of deposit to be insured, namely $20,000, it has been thought best to leave some room for flexibility in the definition of insurable deposits. It is proposed, therefore, to define the kinds of deposits eligible for insurance under the by-laws of the corporation which will require the approval of the governor in council. All the usual kinds of savings and current deposit accounts will be insured. In addition, it is the intention to include special forms of term and notice deposits and deposit-like instruments which are issued by some institutions.
It may be desirable to ensure a clear, public understanding of what is insured and what is not insured by bringing about some clarification in the names used to describe certain deposit instruments. But so far as the existing situation is concerned, the intention is to go as far as possible to make insurance available for all types of deposits and deposit-like instruments provided only that they are not instruments clearly in the category of securities rather than deposits.
[DOT] (11:50 a.m.)
It is expected that the greatest need for the lender of last resort function of the deposit insurance corporation is likely to arise in relation to the demand or quite short term deposits of insured institutions. To the extent to which the liabilities of financial institutions are of a long term character, given good management they should be able to protect themselves by holding an appropriate distribution of assets. However, in the case of institutions with very short term liabilities, it is difficult for them both to make any profit on their operations and to keep enough short term assets to protect themselves against all emergencies. Even if they maintain high standards of financial management, events taking place elsewhere in the financial system, perhaps

DEBATES	February 3, 1967
outside Canada, can have repercussions that produce serious liquidity problems for them.
Turning now to specific measures involved in the proposal to establish the Canada Deposit Insurance Corporation, I shall just mention the major features.
First, it is proposed to establish a new crown corporation to be called the Canada Deposit Insurance Corporation. It will be under the management of a board of five directors, including a chairman of proven financial experience from outside the public service to be appointed by governor in council. The other four directors will be the governor of the Bank of Canada, the deputy minister of finance, the superintendent of insurance and the inspector general of banks.
Second, parliament is asked to provide the $10 million share capital of the corporation, and a deposit insurance fund will be built up out of premiums of one thirtieth of one per cent per annum on the insured deposits of member institutions. When the fund has reached adequate proportions it is provided that the rate of premiums may be reduced under certain circumstances.
Third, the corporation will invest its share capital and the deposit insurance fund in securities of the government of Canada. Earnings on these investments will be available to meet operating expenses and, if there is sufficient net income, to pay dividends on its share capital.
Fourth, to enable the corporation to act as lender of last resort to its members in case of need, either by lending on the security of members' assets or purchasing such assets when that is appropriate, the government will be authorized to make advances to the corporation up to a total of $500 million. Any such advances would be expected to be repaid by the corporation from recoveries of the assistance provided to its members or from the deposit insurance fund.


Marcel Joseph Aimé Lambert: Mr. Speaker, several days ago we had a relatively short debate at the resolution stage of this legislative measure which concluded with a lot of pushing and prodding of the government by the opposition. The government had not made up its mind, as it indicates it has now, that this bill should be brought on at this stage and referred to a committee. As a matter of fact the original idea was that following the resolution stage the bill would be introduced so the people concerned and the public would have an opportunity to study
February 3, 1967

Canada Deposit Insurance Corp. insurance was established in conditions of extreme crisis in the banking and financial system as a whole. There can be no doubt that in this situation the system helped restore a public confidence that had been buffeted and was confused. That system was also designed to provide a longer run answer to the problems of successive bank failures and of the destructive runs on banks that had afflicted the decentralized unit-banking system of the United States for most of its previous history.
Again, Mr. Speaker, I would point out that there is a difference between the United States and its decentralized unit system of banking and Canada's more centralized and concentrated branch banking system. The Americans had to bring some degree of uniformity to different classes of banks, some of them members of the federal reserve system but most of them non-member banks. An examination of the United States experience will reveal that the crucial element in the operation of the insurance system over the past three decades has been the effective enforcement of standard supervision and inspection over the thousands of deposit taking institutions of all types and sizes that operate in that country.
In Canada no one can assert with any justification that the federally supervised institutions are under a deficient system of supervision. Rather it is those institutions which have been provincially incorporated and operate in a vacuum. I can say nothing better for them than that they operate in a vacuum, because the standards of supervision vary so much.
Under those circumstances, in the government's desire to provide for insurance I find it somewhat strange, as I did at the resolution stage, that there should be an insistence that it be mandatory that the federally supervised institutions shall have deposit insurance. There is no question about it in the bill. But in respect of those who require the insurance, those whose supervision it is essential be upgraded, their participation will be voluntary; and worst of all-and this is where this bill is absolutely incomprehensible-it shall be with the consent of the province that incorporated the institution. This to me is a negation of the constitutional obligation of the government of Canada to have exclusive jurisdiction over banking, currency and interest.
All I can say is that the government is endeavouring to buy some political peace at the expense of enshrining in a statute in the most permanent form some theory of the


right of a province to have a say with regard to banking. This provision is in the bill -"with the consent of the province". In the matter of banking, currency and interest it is clear in the constitution that the exclusive jurisdiction lies with the government of Canada. It is up to those who assert the contrary to show that this jurisdiction is not exclusive. They must assert their own jurisdiction, because jurisdiction in banking cannot exist in a vacuum. Therefore I cannot see why this feature has been introduced into the bill.
Yesterday during discussion in the committee the minister expressed the opinion that it was difficult to define the business of banking. But in this particular bill we have bumped up against much the same sort of thing. We will have the problem of deciding which are deposit taking institutions. There are many ways of defining banking without inhibiting the growth and evolution of that system, and I hope on the appropriate occasion to put forward such a definition.
We will have the problem of defining a deposit taking institution. Why it could not have been assumed in the Bank Act is something about which one must speculate. The bill proposes that this insurance shall be at a flat rate, and therefore denies one of the fundamental principles of insurance; there is no question of risk being a determinant of the rate of insurance.
[DOT] (12:10 p.m.)
Therefore I can flatly state that I think our chartered banks and the major near banks will be made to serve as the milk cows for this scheme. For some of the banks this may mean an expenditure of about $4.5 to $5 million a year. Who will pay for that? It can be said that they have customers and that this charge will be passed on. I do not think one can legitimately insist that the banks should assume this charge. The service is being provided to the customers; therefore it is they who should assume the charge.
In so far as the small institutions are concerned, the requirement that a minimum of $500 or one thirtieth of one per cent of a deposit within a limit of $20,000 per account be assessed each member institution-and it is not per depositor but per account-means that this institution will have to have minimum deposits of $1.5 million or the rate of one thirtieth of one per cent will not be applicable.
February 3, 1967

During the resolution stage I made representations to the effect that those institutions wishing to become insured members of the corporation should be given the privilege of working up to the required standing. In other words, if they met the minimum standards now they should be allowed to apply and be granted interim certificates, which are of course renewable each year, until they reached the required standing. From the remarks made by the minister I am not too sure whether the Trust Companies Act or the Loan Companies Act will apply to the standard of investment which will be required of these institutions, and what degree of liquidity will be sought.
When the minister makes his statement at the completion of the debate I hope he will give us a much fuller explanation with regard to his statement that all the institutions would be accepted into the scheme if the provincial governments asked for it. There is some confusion in my mind regarding this matter, but let me say that it may be in my mind only and not in the minister's statement. In any event I hope to be given a clearer picture of the interim steps, because I think they are very important. It will be interesting, when this bill is considered in the committee, to get some idea of the regulations which are envisaged; because the bill only marks out the four corners of this scheme, and as a matter of fact a good deal of the law will be embodied in the regulations.
I should like to reiterate the plea I have made on many occasions, that these regulations should be subject to review by this house and by a standing committee of the house, because this corporation is a classic example of delegated powers. It will have very extensive powers, and they must be subject to review by parliament. It is not good enough to say that the regulations are made by order in council and tabled and that hon. members can go and find them. No means is given whereby these regulations may be examined. I urge the minister to assist the house to amend our rules to provide for a standing committee on delegated legislation, so that hon. members may be given a chance to see what is being done and examine it themselves.
The last point I should like to make, and which I should like clarified by the minister either now or in the committee when the bill is sent there, concerns the powers of the deposit corporation. I should like to know whether the corporation will have the right of
Canada Deposit Insurance Corp. sale or merger of an institution which has not been able to meet its obligations.
The power of sale or merger is not specifically dealt with in clauses 11 or 3(1) of the bill. It is said in clause 3(1):
There is hereby established a corporation, to be known as the Canada Deposit Insurance Corporation, having power to acquire, hold and alienate real and personal property.
I doubt that the wording of this clause is sufficiently wide. I apologize for making specific reference to a clause in the bill; however, I did want to state that this bill should provide for power to be given to the corporation to dispose of the assets of a defaulting institution. It is said in clause 11(c) that the corporation may act as a liquidator. Nevertheless I think it should have the power of sale and of merger.
There are a number of other remarks which could be made with regard to this government proposal, but in view of the remarks which have already been made both by myself and by my colleagues, our main concern now is to see this bill goes to the committee as soon as possible. I will say at this time that we in this party are prepared, with some reluctance, to support this bill on second reading. At this time and under the circumstances the principle of deposit insurance is only second best.
We think the provision with regard to the lender of last resort is good. We have some very serious reservations about the provincial rights which are being established in this regard. As a matter of fact if it were not for some other good features of the bill I would be opposed to it because of that provision. However, in the light of all the circumstances we are prepared to support the bill on second reading.


Mr. Clermont:: Mr. Speaker, would the hon. member for Edmonton West allow me a question?


Marcel Joseph Aimé Lambert: Certainly, Mr. Speaker.


Gaston Clermont: Did I misunderstand the hon. member or did he really say that the expenditures of some banks could amount to $4 or $5 million for each bank for the deposit insurance premium?


Marcel Joseph Aimé Lambert: Yes, Mr. Speaker.


Gaston Clermont: Mr. Speaker, I have here the replies given us by the president of the Canadian Bankers Association, Mr. Patton, to
February 3, 1967

Canada Deposit Insurance Corp. the effect that for the eight banks now in operation the total expenditures could amount to $4.5 million for the first six years and that the premium would then drop to $2.5 million.


Marcel Joseph Aimé Lambert: I have information to the contrary, Mr. Speaker.
9 (12:20 p.m.)


Mr. John Gilbert (Broadview):: The members of the New Democratic Party support the principle of deposit insurance and are prepared to facilitate the speedy passage of this bill. The hon. member for Greenwood set forth our support during the debate on the resolution. We look upon our large financial institutions as forming part of the whole of our financial system, and deem it necessary that they be under federal direction, supervision and control. These financial institutions include banks, trust and loan companies, finance companies, credit unions and caisses populaires.
The recent display of waffling in determining jurisdiction, authority and responsibility by the federal government and the government of Ontario with regard to Prudential Finance indicates the necessity for the direct assertion of authority over the financial institutions of our country. We appreciate the jurisdictional problems involved, but we place the security and safety of Canadian depositors and investors in priority to petty jurisdictional problems.
The principle of deposit insurance is twofold; first, to assure the safety of deposits and, second, the supervision and control of our financial institutions. I would prefer to place the second purpose first because the safety of deposits is almost entirely dependent on supervision, inspection and control. I noted an article in the Globe and Mail of Monday, January 30 in which Fraser Robertson reports a statement to the shareholders of Guaranty Trust Company at a recent annual meeting. The president, J. Wilson Berry, pointed with pride to the record of Canadian trust companies, noting that the record of no casualties in the industry has been maintained during a severe time of testing in the past year. He also said that the essential purpose of deposit insurance is the protection of depositors. Mr. Berry then indicated that he did not believe deposit insurance would be of any value to customers of some large, well established trust and loan companies or even the chartered banks.


Surely, Mr. Speaker, the objective of deposit insurance is to prevent losses, not protect against them. What may be safe today in a bank, trust or loan company may be insecure tomorrow. Prevention comes before, and as a necessary and vital step to protection. Mr. Robertson pointed out in his article:
There is no guarantee that I know of that the
management of any company will not deteriorate, that control will not change hands, that the nature of the business will not alter. Governments may force such changes, for instance, by requiring banks to divest themselves of substantial interests in trust companies or by limiting the availability of directors. Again, governments may themselves bring about a change in the nature of a business, as by permitting banks to enter substantially into the mortgage business and to issue debentures, while trust companies are asking for permission to make consumer and personal loans.
The activities of financial institutions in Canada have changed remarkably in recent years in response to the requirements of a vastly changed economy. Thus much of the experience of an old established company will be no greater than that of a relatively young one, and the temptation to believe it cannot err may be a very real danger to the institution and to the public.
There are a few criticisms, Mr. Speaker, which I hope are constructive and which we would like to present to the minister. First, the legislation indicates an almost tacit approval of provincial jurisdiction in the monetary and financial affairs of our country. The provision in the bill which requires consent both by the applicant company and the province with regard to provincial trust and loan companies should not prevail. The voluntary aspect is lost by requiring the consent of the province. The province should require companies to participate in deposit insurance, and should make it a requirement of their licence to do business in the province.
We were very much encouraged by the statement of the premier of British Columbia to the effect that he would compel such companies to take out this insurance as a requirement of doing business in the province. Other provinces should follow this lead. When one knows that most of the large trust and loan companies are provincially incorporated, it indicates the necessity of full participation by all these financial institutions in deposit insurance.
The second criticism we have is that the term "deposit" is not defined in the bill but is left to the governor general in council to determine. We appreciate the difficulties in defining the term "deposit", as to whether it is a deposit or an investment with the institution involved. I note that in the United States the Federal Savings and Loans Insurance
February 3, 1967	COMMONS
Corporation insures the accounts of all forms of savings in insured savings and loan associations, including share and investment certificates, while the Federal Deposit Insurance Corporation insures demand savings and time deposits in commercial and mutual savings institutions. This would be a good starting point, Mr. Speaker, toward defining the word "deposit".
I would ask also that all financial institutions be required to notify depositors as to whether the "deposits" were deposits covered by the deposit insurance scheme or were just investments in the shares of the company. This problem was underlined by the recent Prudential fiasco, when people rightly thought deposits in the form of guaranteed investment certificates were the same as cash deposits in our chartered banks. We in the New Democratic Party feel that in those circumstances some form of compensation should be given to those people who invested their money in Prudential. When you have people who are not aware of the difference between a deposit and an investment, the onus is on the financial institution not only to make them aware of it but to compensate them if losses occur.
The third point, Mr. Speaker, is with regard to coverage. We of the New Democratic Party would like to see coverage not only of chartered banks, federal loan and trust companies, but also of provincial trust and loan companies and finance companies. We appreciate the insurance protection that people have with regard to credit unions and the Caisses Populaires. The attraction of the lender of last resort provision in the bill would act as an encouragement and attraction to companies which would otherwise be reluctant to enter into a scheme of deposit insurance. In so permitting these companies to enter the field, we feel some standard should be adopted. Again, I point out information received with regard to deposit insurance in the United States. Before insuring any bank the Federal Deposit Insurance Corporation considers the following factors: (1) the financial history and condition of the bank; (2) the adequacy of its capital structure; (3) its future earnings prospects; (4) the general character of its management; (5) the convenience and needs of the community to be served by the bank; (6) the [DOT]consistency of its corporate powers with the purposes of the Federal Deposit Insurance Act. These factors should be given full consideration when companies are making application for deposit insurance.
Canada Deposit Insurance Corp.
[DOT] (12:30 p.m.)
May I say again that we agree in principle with deposit insurance, Mr. Speaker. We should like to see its coverage extended, and will co-operate fully in the passage of this bill.


Mr. Deputy Speaker:: Shall the motion
carry?


Some hon. Members:: Carried.


Mr. Colin Cameron (Nanaimo-Cowichan-The Islands):: No, Mr. Speaker. I had understood that another member of the official opposition was going to speak, but apparently that is not so.
I have a few things I should like to add to the remarks of my colleagues from Broadview (Mr. Gilbert). In the first place, I think we should have it clearly in our minds that the measure now before us should not be considered solely in the light of its aspect as a deposit insurance scheme. It is in effect the government's attempt to cope with a situation that has been causing more and more concern throughout the country; that is, the development of a conglomeration of various financial institutions which are beyond the scope of federal legislation and control. That is to say, Mr. Speaker, they are unless the federal government is prepared to face a head-on confrontation with the provinces and to exert its authority over all institutions that could by any reasonable definition be called banking institutions. In fact I think this is a rather typical example of this government's efforts to do things by the back door method.
I regret that the minister did not heed the suggestion I made to him some while ago before this measure was introduced, at a time when there was a rather notorious collapse of a financial institution and we had in Ottawa representatives of the provincial governments. It seemed to me that was a golden opportunity for the federal government to speak bluntly and plainly to the provincial governments and suggest to them that it would be the part of wisdom on their part if they were to refuse to licence any other financial institutions unless they were prepared to come under federal inspection; in fact, to go further than that and cancel any existing licenses unless those institutions were prepared to submit themselves to federal inspection and control.
As I remarked to the minister at the time, Mr. Speaker, I could not really conceive of any provincial premier in his right mind not
February 3, 1967

Canada Deposit Insurance Corp. seizing the opportunity to dump this problem on the lap of the federal Minister of Finance. The fact that two of our largest provinces have decided to make compulsory the acceptance of this particular scheme indicates that I was on the right track, that they do know the problems they may face, and that to bring these concerns under federal control is one way of avoiding serious difficulties in the future.
However, Mr. Speaker, I should like to reinforce what the hon. member for Edmonton West had to say about the danger of one of the features of this bill, that which calls for the consent of provincial governments before a provincially chartered institution may apply for deposit insurance under this scheme.
This seems to me, Mr. Speaker, to be a very dangerous enshrining in federal legislation of an admission, shall I say, that the provinces have some right in this field of the control of finance and banking operations, or what would normally be called banking operations. I am not a lawyer, but I cannot imagine any more useful club for provincial governments to wield in the future when asserting their right to a position that they have achieved merely by means of squatter's rights at the present time. As I say, Mr. Speaker, I think the minister would have been much better advised to have gone openly to the provinces and offered them a way out of their present difficulties in the future, and by that means to firmly establish federal government control and inspection of all financial institutions.
I am also interested in the definition of a deposit, or rather in the lack of a definition of a deposit. A deposit is merely referred to as something that is going to be defined by the by-laws of this corporation.
This raises a rather interesting point, and I hope the minister will think of this. It occurred to me yesterday before the committee when we were discussing the question of the relevant deposit taking institutions, and I asked the inspector general of banking by means of a note I had passed to him whether he would consider the province of British Columbia as a deposit taking institution since Mr. Bennett has issued parity bonds which are cashable at any time at par. It appears to me that these are deposits which are in no way different from the deposits that I make when I go to a bank. I wonder whether Mr. Bennett will come to the minister and suggest that he has to insure all the operations of the government of British Columbia.
[Mr. Cameron (Nanalmo-Cowichan-The Islands) .1


Mitchell William Sharp: In that case I would have to insure the federal government, too, because we have issued the same kind of bonds.


Colin Cameron: You will be in the same spot.


Stanley Howard Knowles: What about Canadian government perpetuals?


Colin Cameron: They are not redeemable at any time.


Mitchell William Sharp: The Canada savings bonds are.


Stanley Howard Knowles: What about the perpetual
bonds?


Mitchell William Sharp: No, the Canada savings bonds.


Colin Cameron: The Canada savings bonds are, but not the perpetual bonds.
However, to come back more seriously to this question of what this measure is all about, it is really a measure to start the process of bringing near banks under federal control. We had before the committee a number of witnesses, some of them leading professional authorities on the monetary and banking system, who dealt quite fully with the problem of this conglomeration of financial institutions to which I have referred.
One witness presented a paper which outlined the history of deposit insurance in the United States. One of the interesting things about his brief is that it points out that deposit insurance in the United States was introduced precisely because there is no constitutional federal authority in that country over banking and finance. They had to have some means of controlling and supervising the operations of an enormous conglomeration of institutions under a multiplicity of legislative authorities. It seems to me that this outline of the history of deposit insurance in the States actually points out that we are in a better position to undertake some really far reaching controls over all financial institutions than are our United States friends.
Another witness before the committee, Dr. Richard Neufeld, had another idea with regard to near banks. His idea was that they should be granted some type of interim charter under the Bank Act, under, as he said, very stringent regulations, and with the aim in mind that after the lapse of ten years, when the Bank Act will come before the committee again, by that time the development of the financial system of this country
February 3, 1967	COMMONS
would be such that the banks and the trust and loan companies would be carrying on functions which would be virtually indistinguishable from each other, and they might all be tidied up under the Bank Act.
I am not sure whether this is practicable, Mr. Speaker, but it seems to me to be the direction in which we should be moving rather than, as I say, trying to do something by the back door method and risking the danger of having some chickens in our dominion-provincial relations coming home to roost at a later date.
[DOT] (12:40 p.m.)
I believe now is the time for the federal government to act boldly with the provinces in this regard. Not even the province toward which the federal government looks nervously over its shoulder all the time would dare to hold out from the scheme or from the proposition I made, that they cancel their provincial licences and refuse to issue any more except to those institutions coming under federal authority and inspection. Any provincial government that refused to do this would find itself in an extremely difficult position, even without another bank failure, because it would be exposed to its electorate as being careless of the welfare of its own citizens.
There are tremendously powerful levers in the hands of the federal government. One might say that the regrettable financial collapses we have had are an ill wind that has blown good, if the federal government is prepared to set its sails to that wind and exert its authority over financial institutions in the country.
I presume the scope of the inspection and regulation will be fairly severe, fairly critical, and that the club to be used to make institutions conform to what the inspector general and his staff deem to be reliable business operations will be threat of expulsion from the scheme. We should examine that. It is inevitable that there must be some sort of club, and that is the club I can see. This may raise problems in two provinces, my own province of British Columbia and Ontario, which have already announced they will make membership in the scheme compulsory.
This may raise some problem if the federal authority decides to expel an institution in one of the provinces from the scheme. Then, by virtue of the provincial legislation making it compulsory to belong to the scheme, it will put that institution out of business. I am not sure that that will not be good, but let us see
Canada Deposit Insurance Corp. exactly what the results of this can be. We should examine that closely.
In conclusion, I repeat, I am disappointed that the minister has not done by more direct means what he seeks to do by indirect means, but that he has enshrined in legislation an admission which he as federal Minister of Finance should never be prepared to make, that there is split authority in Canada over banks, finance and money affairs. His successors, whoever they may be, may regret his excessive caution here, and his not doing by the front door what he has tried to do by the back door.


Hon. E. D. Fulion (Kamloops):: Mr. Speaker, the hon. member for Edmonton West on behalf of Her Majesty's loyal opposition has expressed our feelings about this bill, that we intend to support it with some reluctance. Speaking for myself, I intend to support it with a great deal of reluctance because I think it incorporates one or two thoroughly objectionable principles. For my part, while it has a desirable objective, to bring about a system of deposit insurance, with the additional attraction that thereby there will be some extension of the umbrella of federal regulation and inspection-those two aspects are desirable-it incorporates features to my mind so undesirable that my reluctance to support it is extreme indeed. It is only, I can assure you, because I appreciate the necessity of something being done in this field now, that I bring myself to support the bill on second reading.
I have already summarized my view about what I think should be the approach of the government with respect to this matter of banks, banking and banking legislation. 1 have stated that in my view there is no question about the sole jurisdiction of the federal parliament and government in this field. I have also stated my view about the absolute necessity of maintaining that control, undivided, whole, in all its integrity, and the necessity of using legislative and administrative control to maintain the monetary system, the system of financial institutions built around the banking system in all its integrity as being the inescapable responsibility and indispensable strong right arm of government in its control over fiscal and monetary policy.
I regret exceedingly that in the Bank Act amendments before us, and in this deposit insurance legislation, the minister has shied away from that approach. Not only has he shied away from it, but in my submission he
February 3, 1967

Canada Deposit Insurance Corp. has opened crevasses in it which he and future federal authorities will regret exceedingly-
Referring to the matter of maintaining the integrity of federal control over the entire financial and monetary system of Canada, it is unfortunately true that at the moment we do not have that effective federal inspection and regulation over the entire monetary and credit system that its stability and integrity requires. There is adequate control over banks and federally incorporated trust companies. No one would question their stability and integrity. But large segments of the system, many trust companies, finance and loan companies, operate completely outside the sphere of that federal inspection and control, many such companies not being federally incorporated. Yet these institutions carry on many of the aspects of banking business. They accept deposits and create demand and term liabilities; they accept cash and exchange cheques, and their activities in the field of credit buying have an important bearing on the effective level of consumer demand in this country. The Porter commission recommended a wide extension of federal legislation to cover all of the types of institutions I refer to.
The failure to accept the Porter commission recommendation is the first serious omission in the legislative program the government has presented to us in this field. The program almost completely rejects the Porter commission recommendations.
It is obvious that the government is unprepared to extend its jurisdiction in any direct way. Its amendments to the Bank Act contain no new definition of banking, which would be one way of accomplishing that result.
It is interesting to note, Mr. Speaker, that traditionally our Bank Act contains no definition of banking at all. Though this may be traditional, I think it is incredible, indeed inconceivable, that it should be allowed to continue. With the multiplicity of institutions entering the field in one or another of its aspects, the situation is new and serious and requires new and serious measures to meet it. If adequate measures are not taken there will be a serious erosion of federal authority in this whole field, and serious dangers to the stability and credibility of the entire system.
Indeed, Mr. Speaker, while not being a panic-monger, one can ask very seriously how many more impacts like those of Atlantic


Acceptance and Prudential Finance the system can withstand. It is not only the amount of loss involved at the moment, terribly serious though that be, especially to the unfortunate creditors of the companies involved, it is the loss of confidence in the entire system and the ramifications of the calling and tightening of obligations throughout that cause ever-widening and extremely serious consequences throughout the entire financial system. So, although no system can ever guarantee complete protection against deliberate fraud or dishonesty, an adequate and uniform system of federal inspection and regulation could certainly reduce the dangers, not only in individual instances but throughout the system as a whole. And in my view such a possible system lies almost entirely within the scope of the authority of the federal parliament. o (12:50 p.m.)
I regret exceedingly, therefore, that notwithstanding the urgency the government has refused to follow the course of direct legislative authority. The minister tells us that he doubts his jurisdiction and fears it would be challenged. So he has resorted to a device, a sort of carrot, to entice the near banks in on a voluntary basis, because he is concerned with the difficulty if he is challenged. I do not know why he does not follow the simple course suggested in this house not long ago by the hon. member for York South by bringing in even now, in this legislation or in the banking bills before us, a definition of banks and banking so as to cover the field we think should be covered. If the minister really has serious doubts about jurisdiction he could do this and refer that particular section to the Supreme Court of Canada for a ruling.
I do not have these doubts. I think it extremely unlikely that the minister would be challenged provided a workmanlike definition was produced. Why does he not follow the course I have outlined so that financial institutions across this country will know the intention is to protect the public by means of a legislative umbrella under which regulation, control and inspection would be carried out throughout the entire system.
But the minister will not do this. Instead, he has adopted a device. His theory is that by establishing a federal deposit insurance scheme the provincially incorporated trust companies and the near banks to which it is available will be enticed or compelled to join in the scheme because their customers will demand the security of the federal insurance coverage, and would go elsewhere if they do
February 3, 1967	COMMONS
not join. Once in, they will be compelled to submit to federal inspection as a condition of coverage. Even in this connection I have reservations to make in the light of what the minister said while moving second reading. I will return to this a little later on.
With regard to the scheme as a whole, based on the bill the minister has introduced,
I submit that it makes clear the weaknesses inherent in the hon. gentleman's whole approach. In the first place, while it is only voluntary to the provincially incorporated institutions, membership in the scheme will be compulsory to the chartered banks. Yet these latter are the very institutions about which there is no concern as to the safety of their deposits. So you compel those who do not need it and whom you already control, to come in and contribute substantially to the cost of the scheme, while having only a vague hope that those whom you do want in, and whom the public interest requires in, will come in on their own. This seems both unsafe and unfair.
In the second place, the bill goes beyond a merely voluntary association in the scheme on the part of the provincially incorporated companies, and provides that even if they decide to join they must obtain the consent of their provincial governments. This surely is saying to parliament that not only do we doubt our own primary jurisdiction in this field, but we recognize a primary jurisdiction on the part of the provinces; because we give them in effect a veto over the extent and operation of a federal initiative in a field which is certainly part of banking; that is, the taking of deposits.
This is the view of the bill which I take and, as I said before, it is with extreme reluctance that I will vote for this measure on second reading. Were it not for the feeling of urgency which attaches to it I would never vote for a bill which contained so little confidence in federal jurisdiction.
In brief, on this aspect of the subject I do not question the right of provinces to incorporate companies and require that they conform to provincial laws and regulations; but I certainly assert and defend the right of the federal government to regulate all those companies wherever incorporated which engage in the business of banking in Canada. I think the minister will have reason to regret he has taken his present position and written legislation which will carry it into effect.
This is my main objection to the bill. I have some other, more detailed objections to which I should like to make reference, not for 23033-799
Canada Deposit Insurance Corp. the purpose of protracting the debate but because I wish to lay a basis upon which I shall later ask the minister to give consideration to these matters and accept some modifications when the legislation is considered in detail in committee.
I was much disturbed by the minister's words this morning to the effect, if I interpreted them correctly, that he did not intend to insist on uniform national standards. Those were the words I took down; I may have misunderstood what was meant.


Mitchell William Sharp: Perhaps I might say a word on that point. I said we were not going to insist upon uniform federal standards as a condition for bringing the companies into the scheme, and that we would gradually improve the standards as we went along.


Edmund Davie Fulton: With that modification I am satisfied and greatly assured. I take it the minister is saying we want to bring this scheme into operation quickly in the immediate future; it is obviously impossible to insist on uniform standards, but that will be the objective. I am glad to have this assurance.
There are other features which cause me concern. The bill as I read it does not provide for the compulsory inspection of provincially incorporated institutions which may come within its jurisdiction. One of the sections provides for the compulsory inspection of federally incorporated institutions, but section 22 states:
Where the corporation enters into a contract of deposit insurance with a provincial institution, the policy shall provide that a person designated by the corporation shall be permitted to examine the affairs of the company at least once in each year and at such other times as the corporation may require.
The provision is only that an inspection shall be permitted. I think the bill should be much more direct and provide that as a condition of entry or continued participation there shall be regular inspection of all member institutions. As to the requirement in section 16 that provincial consent is necessary, I have referred to that already. I think it is a provision which this parliament should resist and which should be deleted from the bill in committee.
Finally, I regret that although in the event that an irregularity is discovered in the operations of a federal institution it must be reported at once to the chairman and board of directors of the company, there appears to be
February 3, 1967

Canada Deposit Insurance Corp. no such requirement in the case of provincially incorporated member institutions. I am certain that it would be done as a matter of administration; however, I think precisely the same regulations and terms, in this aspect of inspection and control, should be applied to provincially incorporated loan institutions as are applied to federally incorporated institutions. These and other reservations which I have about the bill will be taken up in the committee on finance, trade and economic affairs.
[DOT] (1:00 p.m.)
In the meantime I hope the minister will seriously consider the fundamental weakness that he is opening up by the position he is taking, not only by expressing doubts as to the extent and efficacy of federal jurisdiction but also by explicitly recognizing a primary provincial jurisdiction which nowhere exists under the constitution and can only arise if this bill is passed in its present form.
There is one other matter which I would like to touch on briefly. The minister has said he is going to give consideration to it, and I hope his consideration will lead him to introduce what may be a substantial amendment or addition to the bill, one which I think is urgently necessary. I think he should extend the field of federal inspection and regulation to finance and loan companies which are not federally incorporated. These are precisely the types concerning which very extensive and disturbing difficulties have arisen in recent history. Yet as I see it, unless one goes through a rather tortured process of definition to say that they are deposit taking institutions-and I have doubts about the efficacy of such an interpretation-they will not be covered by this bill.
The minister again indicates that he is in agreement with my reservation on this point; therefore one could assume that as things stand these companies likely are not covered.
In this case where you have provincially incorporated institutions and they are not directly deposit taking institutions, then the right of federal jurisdiction is certainly much less than it is with respect to deposit taking institutions. In the case of these institutions, finance and loan companies, I would be prepared to say we can only use a carrot because we do not have any other device. Therefore I urge the minister to use this bill as a carrot to bring these companies under it, probably by making the corporation a lender of last resort

available to finance and loan companies as well as to deposit taking institutions.
I am satisfied that this type of company would take advantage of the lender of last resort facility, and would therefore be prepared to submit to the umbrella of federal inspection, regulation and control. In that way there would be achieved that complete extension of federal control which the integrity of the financial system of this country requires. It is true that we have not had it before, but then neither have we had the kind of development which has been taking place so rapidly within the last five or six years.
I submit in all seriousness, and with a sense of urgency, that unless we take these developments into account, the rapid entry into the monetary and financial business by this type of company, and extend our legislation to bring those companies under control, we are inviting a serious undermining of that which has hitherto been unquestioned, namely federal jurisdiction and responsibility for this entire field.
I know there is urgency about this bill now, Mr. Speaker; nevertheless, I urge upon the minister that he should improve his bill along these lines because I think a very unhappy situation would be created if, after we put this legislation through, we find there is that type of gap and omission which I am satisfied exists at the present time.


Mr. Deputy Speaker:: Order. I understand there is a disposition on the part of hon. members to suspend our sitting for approximately one hour. Is that agreed?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: Then this sitting
stands suspended from now until 2 o'clock, and at that time I shall recognize the hon. member for Compton-Frontenac.



SITTING SUSPENDED


Mr. Henri Laiulippe (Compton-Frontenac):: Canada Deposit Insurance Corp. something; the government could direct its activities on that side to ensure stability in every field of our economy and later go down to the level of the family, in order to ensure the houses and the assets of the citizens and prevent their bankruptcy. We want to provide an insurance to prevent the bankruptcy of high finance while it murders our Canadian citizens. Large companies which produce goods useful to the nation are going bankrupt because they do not enjoy the protection of the state, because financial interests take an unfair advantage of them. Nothing is being done for the people and I say to the Minister of Finance that the people have to be protected first. If we are unable to protect them, there is nothing else to protect, because everything else is of secondary importance.
Mr. Speaker, if these regulations and this deposit insurance is established to protect high finance and if the caisses populaires are excluded, I want the minister to tell us why. Is it because the caisses populaires are more solvent than others? Is it because Caisses Populaires are required to keep 50 per cent of their reserves on deposit to provide for bad debts and for the refund of deposits or is it because the financial institutions which create credit only maintain $3 in reserve for $21 on the books?
[DOT] (2:10 p.m.)
Are we establishing insurance on the book figures? The book entries in the large financial companies are the best protected in the world, because they are not only kept in fireproof safes but in fire-proof buildings. It is the best protected capital to be found in the country while the human capital cannot find a place to live in. In fact, some citizens live in hovels and too often, five, six or seven members of a single family are lost in a fire. That is all we are doing: There is no insurance on human beings, no insurance on the house, no insurance to protect man from capital transfers and what have you.
Everything is to be given to high finance, to high society, to those who enjoy the wealth belonging to others. The privileged who rule the country and control its assets are to be protected, so that they may also take over the assets of the individuals and turn private assets into liabilities. Mr; Speaker, they have the advantage of controlling everything, they control all sectors of the economy of the nation and, without their permission, a man cannot breathe.
Again that insurance will protect high finance or those financial institutions which

fully control the economy. The government did not want and is not even able to keep a degree of control over those institutions. The government gives up its sovereignty and hands it over to those high institutions which exploit the people in all kinds of ways. They exploit them legally, because the government gives them its sovereignty, its rights, in short gives up its privileges.
That is what the government is doing and that is the reason why no one protests against increases in the interest rate, reduction in the bank reserves, secret reserves, hidden reserves. That is what the Minister of Finance said and he added that for the first time banks will have to reveal their undisclosed reserves or their secondary reserves and will also have to pay income tax on them. I studied all the clauses in the bill and I did not find a single one that says what the minister said or sets out the minister's suggestions. That means that the minister's statements will not have any value, that they are not included in the bill.
I would therefore ask the minister, if he is sincere, to amend the bill and to include therein the improvements he mentioned when he said that the hidden reserves would be brought to light and the citizens would pay income tax on those reserves. Otherwise, there is no reason to have deposit insurance, since the purpose of deposit insurance is to protect against the insolvency of those banks. They have hidden reserves, indiscreet reserves, comprising millions of dollars that are not declared; in fact, the minister does not even know how much there may be in those reserves. They are not declared and the minister is forbidden from looking into them.
Therefore, the hon. minister should take the necessary steps not only to prevent those large institutions from going bankrupt but also to permit them to live. There sire many ways to enable them to live, but we must also enable the people to live, to develop normally, to develop their natural or individual resources, in short, to be masters of their own homes. That is what I call a country, that is what I call the administration of a country, that is what I consider the responsibility of the Minister of Finance.
The Minister of Finance holds the highest responsibility in this parliament, for he is the one who has control over all the highest institutions, and if he does nothing, if he merely passes regulations and laws to protect those institutions, he is not carrying out his duties. In so doing, he is not responsible to the people, but he is responsible to finance.
[Mr. Latulippe.l
February 3, 1S67	COMMONS


Robert Norman Thompson: Mr. Speaker, my remarks in regard to Bill No. C-261 will be brief. In principle we give our support to the bill because we believe it is necessary to have some form of deposit insurance available to protect depositors who place their savings in the hands of various deposit receiving institutions in the country which are not specifically chartered banks.
[DOT] (2:20 p.m.)
One point in this bill about which we are particularly concerned relates to those deposit receiving institutions classified as near banks which do not come under federal jurisdiction. According to my understanding of clause 16 and subclause 1 of clause 17 it would seem that adequate provision has been made to permit these provincially incorporated institutions to come under the cover of deposit insurance, provided the provincial governments concerned adjust their legislation either to require or permit this to be done. It seems to me that, when this legislation comes into effect, the near banks that do not hold federal charters will be forced into taking action along one of two lines. Either they will have to seek federal charters in order to receive this coverage or they will have to prevail upon their provincial governments to pass legislation enabling them as provincially chartered companies to come under the coverage of deposit insurance. The reason for the present concern is the failure of the Prudential Finance Company and the great deal of public talk that this event has caused. The failure of the Atlantic Finance Corporation also caused a great deal of concern, and perhaps justly so, among the Canadian people about whether or not they are adequately protected by these smaller institutions.
I think that the real work on this bill will have to be done in committee and I hope that the debate on second reading will be kept to a minimum so that we can proceed to consideration of the technical aspects of the bill in committee. I am not sure whether the various clauses of the bill contain the provisions which are necessary, and therefore it is all the more important that we hear the opinions and advice of experts and that we deal with this bill in more detail than we can in general debate.
It seems to me that the comparison of our deposit insurance policy with that of the United States is legitimate because the real purpose of this bill is to achieve something that has been in practice for many years in
Canada Deposit Insurance Corp. the United States and has proved very useful and beneficial in that country. It has been mentioned in this debate that the United States government does not have control and jurisdiction over the banking policy and the function of the banks in the same way as we have in Canada. Nevertheless, as long as there are provincially incorporated institutions able to accept deposits and carry on the generally accepted services of banking, the Canadian federal government does not have the proper control that will provide the protection to the people of Canada which I believe it is the responsibility of the government to provide. I believe that even though the comparison of the two countries in this field may not be exact, there is certainly much common ground as far as the need for such legislation is concerned. I believe we can learn a lesson from the manner in which deposit insurance now operates in the United States.
I trust that the Minister of Finance (Mr. Sharp), in considering the various ramifications of the bill as the debate continues, will make sure that the legislation does leave an adequate door open to make the benefits of deposit insurance available to the provincial governments and the provincially incorporated near banks. I do not accept the argument that giving recognition to the provincial governments with relation to near banks is a general admission of weakness and an abrogation of responsibility so far as the federal government is concerned because in respect of the operations of the near banks the responsibility of the provincial governments has been a legitimate one. However, whether or not this should continue is another matter.
In the committee where we have been considering revisions to the Bank Act, we have heard the governor of the Bank of Canada, Mr. Rasminsky, and the minister state very clearly that they do not feel it is necessary to bring the near banks under the coverage of the banking legislation at the present time because the total volume of banking and financial business carried on by these institutions only amounts to about 1 per cent of the total banking services provided in the country. Therefore it is the apparent policy of the government, in the revisions to the Bank Act which are being proposed at the present time, not to bring these near banks, many of which are operating under provincial charters, under the umbrella of federal legislation. I believe that part of the urgency for this bill -perhaps this is the reason for the minister's
12636	COMMONS
Canada Deposit Insurance Corp. motivation in moving so quickly on this particular piece of legislation-would have been avoided if the federal government, in drafting its proposed banking legislation which we are considering at the present time had expanded it to include all of the near banks operating in the country, not only to protect Canadian depositors but also to keep financial and banking policies in the hands of the federal government and the central bank, in order to guarantee effective operation of the economy.
Without making any further comments we would hope that Bill C-261 will be sent to the committee as soon as possible. There we will consider the various points that have been raised in the debate and hear testimony by those who are technically qualified and responsible for the operations of the banking system, whether it be the operations of the banks or of the near banks.
I wish to say in closing that, as the previous speaker has mentioned, whether or not the chartered banks themselves should be included in this legislation is questionable because, as has been stated, the deposits held by chartered banks are in no real danger, and if the banks are required to come under the proposed deposit insurance arrangements they will in effect be subsidizing their very competitors.
This argument may be valid from the point of view of the record of stability of the chartered banks but it seems to me that a basic principle is involved, namely, the responsibility of the government to provide the insurance and the protection that such insurance will give to the people of Canada who entrust their savings and their day to day financial operations to those who are authorized to receive deposits and by receiving deposits are able to lend money to those at the other end of the banking operation who need it. It has been stated in the committee that not only are the banks operating on the basis of reserve expansion. In other words, it is not only those who are legally required to operate under a specific reserve requirement according to the Bank Act who are able to expand the money that they use in making loans. It applies also to the near banks which do not have these restrictions nor the inspection of the federal banking service performed by the inspector of banks.
For this reason it is all the more urgent that this legislation or similar legislation be passed as quickly as possible. I therefore state

DEBATES	February 3. 1967
again that we give our support to the principle of the bill and look forward to the consideration of its various clauses when it comes before the committee.
[DOT] (2:30 p.m.)


Hon. R. A. Bell (Carleton):: Mr. Speaker, this bill, I believe, is a vivid illustration of the unique propensity of the government for doing everything backwards, of its affinity for half measures and compromise and of its incredible aptitude for vacillation and irresolution. The bill is compulsory for those who need it least. It is voluntary as well as dependent upon the provinces and least effective for those who need it most. It will protect the public where the least protection is needed. It may well leave the public exposed and imperilled where protection is imperative.
Sir, the basic weakness of the government's approach was stated precisely in another context in the report of the Porter royal commission at page 363:
An alternative, therefore, would be to make the federal regulation voluntary while offering inducements to institutions to submit themselves. Unfortunately, however, those few institutions which are now clearly unregulated are precisely the ones which are likely to remain outside the regulatory framework.
This, sir, is what is likely to happen as a result of this legislation. Those provinces which may need it most are the ones which will not make it imperative upon the institutions within their jurisdiction. But what I find most objectionable in the bill is its admission, both by explicit provision and by inference, that the provinces have a role in the field of banking. This I dispute vigorously and it will be the theme of what I want to say this afternoon, for I object to the abdication and surrender of jurisdiction of this parliament.
I do not believe that the provinces want to intrude in the field of banking. The failure of this parliament in the past to occupy fully the field of banking has enabled the provinces to purport to confer on provincially incorporated institutions of the type now colloquially known as near banks, powers in the field of banking. Do the provinces really want to retain that usurpation of authority achieved by default? I think not.
As an example, sir, I point to an exchange which occurred in the legislature of Ontario as recently as January 26 of this year. At page 25 of the Ontario Hansard the following appears during a speech by Hon. H. Leslie
February 3, 1967

Rowntree, Minister of Financial and Commercial Affairs of Ontario, dealing with the question of deposit insurance:
-it is the intention of this government to introduce legislation to cover the entire field and to occupy that position in the jurisdictional aspect or nature of the British North America Act which has been abdicated by the federal government.
Our intention is to see that legislation is made available by this government, to see that the people of this province are covered in this field and in this area, regardless of any technical detail of where jurisdiction lies.


Mr.   Sopha@: We should get out of the near banks field-


Hon.   Mr. Robarts@: Who is going to get in it?


Mr.   Sopha@: -and give it to the federal government.


Hon.   Mr. Robarts@: Will they take it?


Mr.   Sopha@: Certainly, they will.


Hon.   Mr. Robarts@: They could do it now if they wanted to.
I underline and emphasize that comment by the Premier of Ontario:


Hon.   Mr. Robarts@: They could do it now if they wanted to.


Hon.   Mr. Rowntree@: This is the point. Are they going to exercise their jurisdiction under the British North America Act or are they not? That is the question.
Indeed, Mr. Speaker, that is the question. Is this parliament going to exercise its jurisdiction under the British North America Act or is it not? In my submission the future health and development of our banking and commercial institutions is directly dependent upon this parliament occupying fully and occupying now its constitutional jurisdiction.
Where the government has gone wrong in this matter has been, in my view, in its virtual pigeonholing of the whole report of the Porter royal commission. In my view that report is one of the most distinguished state papers ever produced in Canada. It is original and provocative; it blazes new trails while upholding tried concepts. It is a cohesive, packaged document, each part of which is dependent upon the other for its purposeful rationale.
If the government had adopted the recommendations of the Porter commission, had acted boldly and wisely to bring the so-called near banks under the jurisdiction of this parliament, we would not have had this halfhearted, faltering bill before us today. We would have had the package deal which was contemplated by the Porter royal commission, a realistic, cohesive and workable charter for Canada's financial institutions in the ensuing ten years. Instead, in the Bank Act and in this allegedly complementary legislation
Canada Deposit Insurance Corp. which is to create the Canada Deposit Insurance Corporation, we have a hodgepodge of political compromise, a medley of economic expediency and political contrivance.
Even at this late date I want to plead this afternoon with the Minister of Finance (Mr. Sharp) to change his course and to ask parliament to occupy to the limit the federal jurisdiction in banking, financial and commercial matters. It is because I feel so keenly and so deeply that such a course is imperative at this stage of our development in Canada's centennial year that I propose to discuss with some precision, based upon judicial and other authorities, the constitutional problems involved.
In the second edition of his authoritative and scholarly work "Canadian Constitutional Law", Mr. Justice Laskin has this to say at page 590 about the jurisdiction of this parliament:
The B.N.A. Act contains overwhelming internal evidence of the conviction that money, banking and credit (in its public aspect) should be exclusively of federal concern. Among the enumerated classes of subjects in section 91 are (1), currency and coinage (head 14); (2) banking, incorporation of banks and issue of paper money (head 15); (3) savings banks (head 16); (4) bills of exchange and promissory notes (head 18); (5) interest (head 19); and (6) legal tender (head 20): these are in addition to federal power in relation to bankruptcy and insolvency (head 21). From the outset the courts took a broad view of the federal banking power. In Tennant v. Union Bank of Canada (1894) A.C. 31, the Privy Council declared that "banking" was "wide enough to embrace every transaction coming within the legitimate business of a banker"; and see also Merchants Bank v. Smith (1884) 8 S.C.R. 512. Its opinion did not vary over the years as is indicated in Reference re Alberta Bill of Rights Act, A.G. Alta v. A.G. Canada (1947) A.C. 503, where it reaffirmed a consistent course of decision that what is fairly included within the conception of "banking" is a matter reserved exclusively for parliament and this without any limitation to the extent and kind of business that was carried on by banks in Canada in 1867.
The basic issue is, what is "banking"? I have reviewed all the authorities in the courts, in the texts and in so far as I could find them in state papers and I propose to make reference to a number of these authorities. Without hesitation I submit, indeed I assert, that all authorities, with the exception of one court of first instance in British Columbia and one basically irrelevant decision in the Manitoba Court of Appeal, have given to the word "banking" the widest connotation, certainly wide enough to bring in the near banks and wide enough to make the legislation which is before us compulsory and imperative. I put it to the minister, does he
February 3, 1967

Canada Deposit Insurance Corp. think for a moment the learned and distinguished Chief Justice of Ontario, a man with such experience both in the political and legal fields as well as the constitutional field, made his recommendation that near banks should be brought under federal jurisdiction without thought of the constitutional problem?
[DOT] (2.40 p.m.)
Sir, the most recent and authoritative discussion on the word "banking" was in the English Court of Appeal before a very strong court consisting of the Master of the Rolls, Lord Denning, and Lords Justices Harman and Diplock, in the case of United Dominion Trust v. Kirkwood, reported in 1966-you see this is up to date, Mr. Speaker-All England Reports at page 968. The issue there was whether United Dominion Trust was a money lender or a banker, and at page 974 Lord Denning pointed out that the parliament of Westminster-indeed like this parliament-had never defined the word "bank". He said:
So one sees that parliament has conferred many privileges on "banks" and "bankers", but it has never defined what is a "bank" and who is a "banker". It has said many times that a banker is a person who carries on "the business of banking", but it has never told us what is the business of banking. It has imposed penalties on persons who describe themselves as a "bank" or "bankers" when they are not, but it has never told us how to decide whether or not they are bankers.
Lord Denning himself undertook to try to do that and at page 975, after considering all tire earlier authorities, which incidentally are collected immediately after the headnote of the case and are very helpful to any student in this field, Lord Denning went on to say:
There are, therefore, two characteristics usually found in bankers today: (i) they accept money from, and collect cheques for, their customers and place them to their credit; (ii) they honour cheques or orders drawn on them by their customers when presented for payment and debit their customers accordingly. These two characteristics carry with them also a third, namely, (iii) they keep current accounts, or something of that nature, in their books in which the credits and debits are entered.
These characteristics, I submit, Mr. Speaker, are exactly the characteristics of the deposit-taking business conducted by all the so-called near banks in Canada, however, these near banks may in fact be incorporated.
Lord Justice Diplock added these remarks which are to be found at page 986 of the report, and while I apologize for quoting at such length, I believe these statements are of sufficient significance to be put on the record:
What I think is common to all modern definitions and essential to the carrying on of the business of

banking is that the banker should accept from his customers loans of money on "deposit", that is to say, loans for an indefinite period on running account, repayable as to the whole or any part thereof on demand by the customer either without notice or on an agreed period of notice. Some verbal confusion and perhaps some misunderstanding of the less recent judgments may arise from the fact that an account kept by a banker of his customer's loans made without interest and repayable on demand, is nowadays generally called a "current account", while the account kept of his customer's loans made at interest and repayable only on notice is generally known as a "deposit account". Accounts of both these types, however, possess the essential characteristics of running accounts of "deposits" of money by the customer.
Accordingly it is, in my view, essential to the business of banking that a banker should accept money from his customers on a running account into which sums of money are from time to time paid by the customer and from time to time withdrawn by him by cheque, draft or order. I am inclined to agree with Lord Denning, M.R., and the author of the current edition of Paget on Banking (6th Edn.) that to constitute the business of banking today the banker must also undertake to pay cheques drawn on himself (the banker) by his customers in favour of third parties up to the amount standing to their credit in their "current accounts" and to collect cheques for his customers and credit the proceeds to their current accounts. This view of the essential characteristics of the business of banking today is supported by the evidence of the witnesses who were unquestionably bankers who gave expert evidence in the present case.
That long definition of banking is one which I believe our Supreme Court, which pays the very highest respect to the English Court of Appeal, on this basis could not fail to hold that near banks in their deposit business are carrying on the business of banking, the regulation of which under section 91 belongs exclusively to this parliament.
I point out to the minister that Canadian governments in the past have not been so fearful and reluctant as the minister now is to assert federal authority. In 1906 the then minister of justice, Sir Allan Aylesworth, took specific exception to a Quebec act amending the charter of Imperial Trust Company authorizing that company to receive money on deposit and allow interest, and to purchase bills of exchange. In his report to cabinet Sir Allan said:
The undersigned does not admit that these powers may be conferred by the legislature.
Similar objections were raised by Sir Allan Aylesworth in 1910 to a Quebec act incorporating The General Trust, and in a report of January 12, 1911 he expressed the opinion that the powers "infringed upon the subject of banking under any fair interpretation of the word". I emphasize Sir Allan's statement "under any fair interpretation of the word".
February 3, 1967	COMMONS
Since the provincial government of that day in Quebec refused to amend the act, Sir Allan in a further report dated May 23, 1911 recommended disallowance. At that time he said this, and I think this is a statement of some significance:
The nature of the business of banking is part of the law merchant, and is judicially noticed. If from this business, as so recognized, be excluded the authority to receive money on deposit, to lend money to individuals, except upon the security of bills of exchange, and generally to do an exchange business, the undersigned-
That is Sir Allan.
-apprehends that the peculiar business of banking would not only be affected, but very considerably diminished. The expression "banking" as used in section 91 of the British North America Act, 1867, is, in the opinion of the undersigned, intended to describe not only such powers as are inherently banking powers, but, also, those which were, under the laws of the provinces at the time of the Union, exercised by the banks in the carrying on of their business, and it includes everything within legitimate banking business as it is practised, or has been developed. It may be seen by reference to pre-Union legislation that the deposit of money at interest, and dealing in exchange were expressly authorized banking transactions in the province. Leading decisions in the United States, also, show that such powers are attributed to the banks in that country. In fact it seems impossible to suppose that these powers are not necessarily common to all well-ordered banking systems.
This opinion of an earlier minister of justice is, I think, of real significance and I wish that the present Minister of Justice (Mr. Cardin) would take as strong a position in advising the Minister of Finance.


Mitchell William Sharp: Mr. Speaker, would the hon. gentleman permit a question? I am very interested in his learned and well prepared discourse but I am a little curious how it was that these trust companies provincially incorporated came to exercise these powers to accept deposits.


Richard Albert Bell: Mr. Speaker, I think the answer to that is very clear. It was solely by default of this parliament, a default which I think ought to be rectified. I am going to submit that if this parliament is prepared to move in-the minister will hear my argument as I develop it-then in the future under this legislation there will be no problem. I would point out to the minister, if I may-


Mitchell William Sharp: I should like to get the point clear, if I may. I gather that the act passed by the Quebec legislature was disallowed at that time. At what point was legislation introduced that was not disallowed?
Canada Deposit Insurance Corp.


Richard Albert Bell: The minister has greater access to research facilities in that respect than I have and I would commend that particular research to him. I think the position is simply this, that it was due to default on the part of this parliament and on the part of the government. In this argument I care not which party may have been in office. I am talking about the fault of this parliament in not exercising what I believe are rights which properly and legitimately belong to it.
[DOT] (2:50 p.m.)
I point out to the minister that the question of whether Montreal Trust Company was a banking institution within the meaning of that term in an agreement to subscribe for shares that "this underwriting may be pledged or hypothecated with any banking institution" was discussed in Montreal Trust Company v. Richardson, (1921) 62 S.C.R. 617. The trial judge, Mr. Justice Rose, who subsequently became a great and distinguished chief justice of the Supreme Court of Ontario, and on appeal the Chief Justice of Canada, Sir Louis H. Davies, a former minister of justice, held that the trust company was a "banking institution" within the meaning of that agreement.
Further, sir, I think that the 1938 and 1947 decisions of the Judicial Committee of the Privy Council in the references regarding the various Alberta statutes indicate how wide is the federal jurisdiction under banking. In 1947 the Judicial Committee declared a statute of Quebec ultra vires which would have forfeited to the Crown in the right of the province as bona vacantia, deposits in "credit institutions and all other establishments which receive funds or securities on deposits," upon which no claim had been made for 30 years. The case is Attorney General for Canada v. Attorney General for Quebec, (1947) A.C. 33.
The reasons given by Lord Porter make it clear that the deposit contract is the heart of banking. The argument of counsel for the Attorney General of Canada, Mr. H. E. O'Donnell, K.C., a distinguished counsel and son in law of Right Hon. Louis St. Laurent, and W. R. Jackett, now the distinguished President of the Exchequer Court is, I think, most interesting. On page 35 I note this sentence from their argument:
The Quebec statute strikes at the very heart and core of banking as used in section 91-the deposit contract and the rights and obligations flowing therefrom being a most essential part of banking.
February 3, 1967

Canada Deposit Insurance Corp.
There, in one sentence, is the pith and substance of my argument. The heart and core of banking is the deposit contract. That is why I assert that these deposit-taking institutions are under federal jurisdiction, and we in this parliament should assert our authority without equivocating.
Earlier in my remarks I said that there are two troublesome Canadian	cases-troublesome to my argument. I believe in mentioning anything that is troublesome. The first case is in re Dominion Trust Company and United States Fidelity Claim, (1918) 3 W.W.R. 1023. The headnote reads:
A provincial legislature has power to incorporate a company with the object of carrying on that branch of banking which consists of accepting money on deposits, paying interest thereon and allowing the customer to issue cheques against such deposit.
Personally I deny that and I submit that the parliament of Canada can intervene to stop this practice. This was a case before a single judge, Mr. Justice Murphy at trial, and the issue was never presented as to what would happen if parliament fully occupied the field. It is clear that grave injustice would have resulted in this case if Mr. Justice Murphy had held otherwise. The old maxim "hard cases make bad law" is especially applicable. In any event it is clear that Murphy J. had grave doubts about his decision because he said:
In the absence of authority, I decline as a judge of first instance, to place a construction on that statute which would have disastrous results on the business of numerous provincial companies.
The other case is in the Manitoba Court of Appeal, re Bergethaler Waiseman-a corporation apparently from the constituency of the hon. member for Provencher (Mr. Jorgenson). The case is reported in (1948) 1 D.L.R. 761.
The company was incorporated by special act of the Manitoba legislature, with the usual powers of a trust company. For some 23 years it carried on business in the Mennonite community (1) as an administrator of estates and (2) as a deposit business, that is, receiving money on deposit, repayable on demand, and dealing with the money as its own. It went into liquidation and it was claimed that the actions of the company were ultra vires its powers under provincial legislation.
I point out that in this case, there are clear distinctions, of which two are most important. First, in this institution in Manitoba, no cheques could be drawn by customers on their own account; second, withdrawals were not in cash but by cheques issued by the

company to its customers drawn upon a chartered bank. It was held that this company was not in the banking business, and I personally believe it was not. It is clear that it was not carrying on a true deposit business. This case has been referred to me on different occasions as the authority for the reluctance of the minister. I submit that it is no authority at all. I submit that neither of these cases is in any way an authority for weakening the exclusive legislative authority of this parliament over the business of banking coming within the normal and natural meaning of that word. I submit that meaning is clear and unequivocal and includes the deposit business of the near banks.
Sir, it may probably be said that I am making a lawyer's case this afternoon; perhaps I am, and I do not apologize for that. Perhaps that is needed from time to time in this chamber. In other days men trained at the bar were prepared to argue legal and constitutional issues in this chamber, and personally I believe we slough off such problems much too readily upon the vague and undetermined group yclept "the law officers of the crown".
I return to my original submission, and I advance it in all earnestness to the Minister of Finance, that the business of the near banks is banking within the meaning of section 91 of the British North America Act and as a result all such deposit business should be brought under the control of parliament.
I have shown that the Premier and the Minister of Financial and Commercial Affairs of Ontario apparently agree with my argument this afternoon. I say that this legislation should be made universal and compulsory for all institutions accepting deposits from the public. Unless it is, I submit this bill is defective and indeed may be mischievous. The legislation may result in a hodgepodge of deposit-taking institutions, with fantastic, dangerous variations across the country. There may be insured institutions in Ottawa and non-insured institutions in Hull, insured institutions in Sackville and non-insured institutions in Amherst. The provincial boundaries, I hope, are invisible in this country. In my opinion such a hodgepodge inevitably would lead to confusion. It might be mischievous and dangerous.
I say to the Minister of Finance this afternoon that there is still time for boldness and for wisdom on his part. Let him move in and occupy the full jurisdiction of this parliament. If he fails to do so he will cause irreparable harm to our financial institutions which have
February 3, 1967	COMMONS
been, traditionally, among the soundest and most progressive in the world. Their integrity, their future development, are imperative to our national development. Let not the hon. member for Eglinton fail them today.
[DOT] (3:00 p.m.)


Horace Andrew (Bud) Olson: Mr. Speaker, I want to ask the minister one or two questions before he closes the debate. I note that the corporation may declare a dividend from time to time at an annual rate. Is this to be paid only on the amount of authorized capital, the ten shares, and will the Minister of Finance (Mr. Sharp) receive all the dividends declared by this corporation from time to time or can an interpretation be placed on this section that would allow the corporation to pay dividends to some of the companies, banks and so on which pay funds into it by way of insurance premiums?


Gaston Clermont: Mr. Speaker, I would like to say a few words on Bill No. C-261, particularly about the definition of the word "deposit". The bill says that the board of directors of the corporation will be able to set up regulations about the definition of the word "deposit". Are we going to be guided by the experience of other countries and say that there is a demand deposit, a time deposit or a savings deposit.
I know that the role of the opposition is to criticize all bills introduced by the government, but I feel that in introducing Bill No. C-261 the government has taken a step in the right direction. In fact, clause 14 stipulates that when this legislation is implemented all federally chartered business institutions must take part in that program and that all the provincial institutions will be able to take part in it if they so desire. I think, Mr. Speaker, that the public will be able to force the provinces to participate when a federal organisation has announced that deposits up to $20,000 are insured. I do not agree with the hon. member for Compton-Frontenac (Mr. Latulippe) when he tells the house that deposit insurance will be adopted to protect financial institutions. To my mind, that theory is far remote from this bill, because if the Canadian parliament passes deposit insurance, it will do so to protect the savings of the public.
Clause 13 of the bill stipulates that when the corporation is called upon to reimburse deposits, it will do so to the depositor and not
23033-800*
Canada Deposit Insurance Corp. the financial institution. I feel that the maximum of $20,000 is adequate when compared with the $10,000 maximum provided for by deposit insurance in the United States. The plan of the Federal Insurance Deposit Corporation in the U.S.A. covers 97.2 per cent of the accounts of the finance companies belonging to that corporation, and provides a maximum coverage of $10,000.
With regard to the premium mentioned in Bill No. C-261, namely $500, that is 1/30 per cent, it proves most reasonable when compared with the one provided for by deposit insurance in the United States, their premium being 1/12 per cent, and because of the discount, it really amounts to 1/27.
In Canada, as I have already said, we would start with a minimum premium of $500 or 1/30 per cent, and the bill states that, after a few years, it could be reduced. The minister will recall that in my opening remarks, I mentioned the definition of "deposit". When he comes before the committee on finance, trade and economic affairs, I trust he can give more information to the members of the committee and, at the same time, to the Canadian parliament. I shall ask certain questions and request certain details, as some members have already said they would do, when the bill is referred to the committee for study.


Edmund Davie Fulton: Before the minister closes the debate perhaps I may be allowed to put a question to him. I regret having omitted it from my remarks this morning. I pointed out earlier that institutions already under federal control, about whose integrity and ability to meet the demands of depositors there was never any question, namely, the chartered banks, were among those institutions whose membership under this system is to be compulsory. On the other hand, the membership of companies with whose affairs the legislation might be thought to be most directly concerned is left as a matter of voluntary association on the part of those institutions.
Admitting the minister's view that the membership of the chartered banks is necessary in order to make this scheme workable-I understand this is one of the premises of his position-would he not consider the possibility of a differential in the amount of the premium required? On the one hand the scheme includes institutions which are sound and which from the standpoint of security need not be members of this institution, and on the other it includes institutions about whose position there may be some question.
February 3, 1967

Canada Deposit Insurance Corp. Membership on their part is voluntary. Would not the minister consider that a lesser percentage should be extracted from the chartered banks than from these other institutions? Chartered banks have larger deposits and a smaller percentage would still produce substantial revenues to the fund. It seems to me that to take this course would be an equitable way of relieving the burden of support placed on companies which are not those for whom this scheme was designed.


The Acting Speaker (Mr. Richard):: If the
Minister of Finance speaks at this time he will close the debate.


Mitchell William Sharp: Mr. Speaker, may I first thank the house for the way in which it has proceeded to debate this bill and to give it careful but not too prolonged attention. I am grateful for this because I believe it is important to proceed with this legislation as soon as possible.
First, may I comment on the remarks made by my learned friend the hon. member for Carleton (Mr. Bell) who gave us a most interesting and erudite discourse on the meaning of banking within the British North America Act. I hope his view of the ambit of the banking clause is justified. As he admitted, however, there are some doubts. There are some learned people who even disagree with my learned friend from Carleton. Perhaps if he had spoken first they would not have had the temerity to do so. At any rate he does agree there are some who do not share his views or the views of the other authorities he quoted.
[DOT] (3:10 p.m.)
I am inclined to agree with him that the powers of parliament over banking are very extensive. Why then have I hesitated so far to proceed with legislation? I have felt that even though it might have been possible to go further in extending our legislative jurisdiction over banking it was important, first of all, to deal with urgent problems, and one of the urgent problems is the insurance of deposits, something upon which there has been widespread agreement in the house. I believe it is important, at this stage of the development of our financial institutions, that the ordinary citizen, who is not in much of a position to tell the difference between the financial worth of the institutions that are competing for his deposits, should have some assurance that his savings are not going to be

destroyed by depositing them with an institution that founders either because of lack of liquidity or because of bad management.
If we had proceeded otherwise, if we had proceeded on the assumption that our legislation extending jurisdiction in the field of banking would be valid, we would nevertheless risk the possibility that, notwithstanding the confidence which we might have in all the authorities, including the hon. member for Carleton (Mr. Bell), about the scope of federal jurisdiction, someone would have the temerity to challenge it, in which case there would have been long delays while our legislation was being tested in the courts before it could become effective. Therefore I felt it was important that we should proceed along lines that I believed would not arouse such a challenge.
Moreover this is the reason why, in the legislation that is before us, we are requiring that the provinces should agree before any provincial institution accepts deposit insurance. We do not want to risk the possibility of a challenge which would interfere with the extension of deposit insurance as quickly as possible to as many depositors and as many institutions as possible.
From the discussions I have had personally with provincial ministers and that my officials have had with provincial officials, I know that in practically all of the provinces of this country there is a desire that this legislation come into effect immediately. The Attorney General of the province of British Columbia has said that he will recommend that institutions which accept deposits in that province should be compelled to take out federal insurance. I am hopeful that other provinces will do likewise because nothing will serve better to make this system universal throughout the country than declarations like that by various provincial governments.
I say that because a provincial deposit-taking institution may be able to get some insurance for its deposits within the province of its incorporation, but I do not think that any province would have the power to insure deposits taken by its institution in another province. Therefore if the province of British Columbia, for example, were to compel all deposit-taking institutions, whether British Columbian, federal or provincial, to be federally insured, then a trust company incorporated, say, in the province of Quebec would be unable to accept deposits in the province of British Columbia unless it were federally insured. This is the argument for federal jurisdiction in this field.
February 3, 1967	COMMONS
It is important that we should have uniform financial regulations, uniform banking regulations and uniform laws in relation to banking generally. I do not dispute this point at all. However, Mr. Speaker, I do suggest to the house that this is the practical thing to do under existing circumstances in order to extend the kind of protection and inspection that is so much needed across the country.
There are one or two other points upon which I should comment. First, I should add a word or two to what I said in my opening speech with respect to the interim arrangements. I have made two proposals, one of which is in the bill and the other in my speech. In the bill it is provided that provincial institutions may be insured with the approval of the provincial authorities, the provincial governments.
I also said in my opening speech today that in order to expedite the extension of insurance to provincial institutions it was contemplated that the Canada Deposit Insurance Corporation would be prepared to cover all the deposit-accepting trust and loan companies of a province if the province concerned so requests even before the corporation has made an examination into the affairs of the individual companies and ascertained if they are eligible to pay for insurance.
I went on say that the provinces will be expected to accept some share of financial responsibility during the period while these institutions have not been examined to see whether they comply with the requirements of the corporation itself. I think this is a proper step to take because I feel it is most important the scheme should come into effect as soon as possible and that it should come into effect uniformly.
I do not believe it would be adequate to bring institutions in as we find the time and the men to do the inspections. I believe we will have to take some chances and bring in the provincial institutions even before there has been adequate time for this work. If a province agrees to this and makes some arrangements about sharing the financial costs or losses, then we can accomplish our major objective.
Some question was raised about the definition of deposits. It is a very technical question. I hope we can defer it until we get the bill before the committee on finance, to which I intend to refer it after second reading.
The hon. member for Medicine Hat (Mr. Olson) asked me who will receive the dividends of the corporation. The answer is that I
Canada Deposit Insurance Corp. will as Minister of Finance. These accrue only to the federal government; there are no other shareholders of the corporation.
The hon. member for Kamloops (Mr. Fulton) asked if I would consider the possibility of a differential in premiums because of the difference in risks. We gave some consideration to that possibility but we discarded it because, even though we are confident our federal institutions are sound and are adequately supervised, there may be other provincial institutions that are equally sound, and the problem of trying to differentiate between the financial integrity of institutions would be beyond the capacity of the corporation. Therefore we have decided that it would be better to have a uniform premium.
I thought that in the course of his remarks the hon. member for Kamloops suggested that the only pressures were coming from the, shall I say, less viable institutions, from those institutions whose standards are not as high as the banks and federal trust and loan companies. This is not altogether true. Perhaps the best example is what happened the other day with the Montreal City and District Bank, which is probably one of the soundest and most conservatively managed banks in the country, and yet there was a run on it. That run was based on ignorance but these things can happen in the best regulated institutions. The existence of deposit insurance would have prevented that run. The depositors would have known that their money was safe. This is an argument altogether apart from the question of improving the financial standards of institutions for deposit insurance on a universal basis.
I think that is enough for me to say at this time, Mr. Speaker. When the bill is before the standing committee on finance I shall have a few minor amendments to propose to it.
[DOT] (3:20 p.m.)


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on finance, trade and economic affairs.


[Stage Direction]
The house resumed, from Friday, January 27, consideration in committee of Bill No. C-204, to provide for the establishment of a Canadian Film Development Corporation- Miss LaMarsh-Mr. Richard in the chair.
12644	COMMONS
Development of Film Industry
The Acling Chairman (Mr. Richard): When the committee rose on Friday, January 27, clause 2 of the bill was under consideration.
On clause 2-Definitions.
David Samuel Horne MacDonald: Mr. Chairman, before we pass clause 2 I should like to make one or two comments. On Friday last we were discussing this matter, and I should not like to accuse the minister of misleading the house but when hon. members on this side requested that an opportunity be provided for individuals interested directly in this legislation and its specifics to comment and make their representations to the appropriate committee of the house the minister said, as reported at page 12375 of Hansard:
Mr. Speaker, I have received absolutely no representations from any source asking for such a matter to be referred to committee.
Obviously if one takes the literal meaning of that sentence, as I am sure the minister does, that would be correct. What is misleading is that in the past few months a number of requests for interviews with the minister have been made, particularly by the Directors' Guild, in order that they could discuss the specifics of this measure. For some reason or another the minister was not able to meet with representatives of that guild. This is not only an unfortunate situation but one that is rather odd.
The bill now under discussion will establish a feature film industry in this country. Surely no one is unaware of the difficulties involved in establishing a feature film industry in a country such as ours with such a small population. There are not that many people here who have any concern in this matter and, what is perhaps more important, there are few who have the ability to make a feature film industry a reality.
The majority of people interested in this measure are directly involved or connected with associations such as the Directors' Guild, and it seems very strange and disappointing that the minister should adopt what I can only term as a cavalier attitude toward these people who are trying to work within the framework of this particular legislative measure. To my knowledge there has been no real attempt on the part of the minister in the last six months to meet with these people and hear their representations in respect of the bill. It is my hope that what I can only refer to as bad faith on the part of the minister will become good faith as we move toward the implementation of this program. On behalf of
[The Acting Chairman (Mr. Richard).]
DEBATES	February 3, 1967
the members of this house I sincerely request the minister to adopt a more sensible and purposeful attitude in respect of representations which have and will be made. I hope she will show some positive reaction in this regard.
Subclauses (d) and (f) refer to a film-maker and film technician as individuals creatively engaged in film production or engaged in the technical or administrative aspects of film production. I should like to know whether or not this definition would include what might be classified as film writers, those people who actually write the script upon which a film is based. This is important inasmuch as script writers create the starting point of any feature film. For that reason I hope this definition does include these people, and I seek some clarification of this matter.


Julia Verlyn (Judy) LaMarsh: I am informed it does, yes.


Michael Starr: Mr. Chairman, I should like to ask the minister for some clarification about eligibility for assistance. A few years ago a group of Canadians of Ukrainian origin in the city of Oshawa and district organized a Ukrainian film club. They undertook to produce a film of feature length on a voluntary basis. They used their own technicians, directors and photographers. This group produced a feature film entitled "The Cruel Dawn", which depicted the Ukraine immediately after communist domination and the activities of the partisans, nationalists by nature, who resented this occupation. The film was made in and around Oshawa. I had the pleasure of viewing it. Its running time is about three hours and ten minutes and it is in colour.
This group worked on a purely voluntary basis and substantial expenditures were made out of their own pockets. It was a very wonderful and worth-while achievement and it highlights the efforts of Canadian groups who have an interest in projects of this kind.
My particular concern is whether or not such groups may receive assistance under the provisions of clause 10. This particular group is so enthusiastic about its first success it is considering another feature length film project. Perhaps the minister can indicate whether a group of this type will be eligible for financial assistance under the terms of this measure.


Julia Verlyn (Judy) LaMarsh: Mr. Chairman, I am sure the hon. member will see in looking at clause 10 that the terms are wide enough to include that type of project. However, as other hon.
February 3, 1967	COMMONS
members have mentioned at earlier stages of this bill, the real crux of getting any kind of film business going in this country is the question of distribution.
[DOT] (3:30 p.m.)
Whoever is the person appointed to act on behalf of the board to be appointed and hand out public moneys by way of loan, grant or purchase of a share will have to be certain that the product will be seen somewhere. I do not know what the Canadians mentioned by my hon. friend may have done in the way of distribution, whether it was done through libraries, Ukrainian societies or something of that kind, but I do not think it has been considered that that kind of distribution would be sufficient. I suppose that distribution would have to be related to the amount of money being sought. Where the amount of money was small and perhaps 200 film societies were involved, it might be something the board would accept, but if a large amount of money were involved and perhaps only half a dozen people were involved that might be another matter. Each package would have to be looked at by the board.
I would hope, as I said before, that they will look at these matters with a pretty cold eye without being completely bankers, because if we wanted ordinary bankers we would not be setting up this board. The board will have to take a chance on something; otherwise films like "Tom Jones" would not be produced. In other words, it is not a matter of just getting rid of $10 million of tax money.
If I might answer the first speaker, I have not seen the Directors' Guild. I have not had very much time of late to see people, particularly since the beginning of centennial year. But yesterday or the day before I sent a telegram to the president of the Directors' Guild inviting him to see me at the beginning of next week. In any event, I undertake to see him before I appoint the officers who will deal with this program and before the regulations are set up. After telling the house last week that no one had asked to have this matter taken before a committee I checked again with every member of my staff who is concerned and ascertained that this is correct. No one has asked to appear before a committee. The burden of the representations we have received has amounted to: Get on with it, pass the bill, set up the board, and let us get into business.


Mr. Brand:: Mr. Chairman, I should like to make a few remarks on clause 2 of the bill. In
Development of Film Industry doing so, at the outset I would say that I thoroughly agree with the motives of the minister and of this legislation in attempting to set up a truly Canadian feature film industry. As I look at clause 2 I can see its many advantages to film-makers in this country. It will give an opportunity to our creative artists, writers, producers, technicians, and what have you, to produce feature films.
Over the past few months on the few occasions this matter has been before the house in resolution and bill form many eloquent speeches have been made. I have no desire to be repetitious in this regard, but would point out that while Canada would rate only a footnote, I suppose, in any book on the world's best motion pictures, films have been made in this country since before 1900. That is a long time ago. So we already have a good basis in this country on which to build a feature film industry.
It may be of interest to hon. members to know that from 1917 to 1930 feature motion films were made in Canada. They were filmed in Ottawa, Montreal, Trenton, Cobourg, Toronto, Calgary, Fort William, Saint John, Banff, Vancouver and Victoria-in fact, all across the country. These were not shorts and productions of that nature, they were feature films. Admittedly, many of them were failures and did not make much money but some of them did make money. It is an interesting sidelight to note that the most expensive and ambitious of these was a film called "Carry on Sergeant", filmed in Trenton, Ontario. It cost $500,000, which was at that time, and is still, a considerable amount of money. At that time it was a very large sum indeed. Unfortunately in the United States, at exactly the time this silent film was to be distributed, a film called "The Jazz Singer", starring A1 Jolson, appeared and opened the era of talking pictures. That was, of course, the first talking motion picture. As a result the Canadian production "Carry on Sergeant" was not able to carry on at all and fell flat on its financial face.
We are all aware of the success of the National Film Board, Crawley Films and other private companies. I will not go into that matter further. So we do have an honoured tradition in film making in this country. It is possible, and I emphasize the word "possible", to make Canadian films with Canadian people involved. It will probably come as a surprise to the minister to realize that in my home constituency of Saskatoon, the garden city of the prairies, if I may speak with pardonable pride, even there in the vast expanses of
February 3, 1967

Development of Film Industry western Canada we have a budding film industry. We have there, under the very capable direction of Mr. Richard Savage, a theatrical company known as the Circle in the Centre. Incidentally, it is a professional theatrical company and is in better financial condition than any other such company in Canada, including the Neptune in Halifax and certainly the Crest in Toronto. Our professional theatrical company is in the black and has already produced one talking picture. Admittedly it is only half an hour in length, but nevertheless it is of excellent quality. This is a beginning of what can be achieved in this part of the world. This illustrates the fact that we have a very useful motion picture industry in western Canada.
I should now like to return to my earlier statement that it is possible to make Canadian films with Canadian personnel involved. I say it is possible, but is it probable? If we pass this bill, as I am sure we shall, will we be providing loans or backing for Canadian filmmakers, producers, technicians and what have you? Frankly, Mr. Chairman, in the present situation I do not believe this is probable. What we will be doing is providing money to film-makers and technicians in Canada, but the choice of who is to be involved in these productions will be strictly under the control of a union in the United States of America.
Clause 2 of the bill defines film activity, film-maker, film production and film technician. When one considers this matter one finds that these people are controlled from New York. Are we going to give money collected through taxes on our people to a Canadian film industry and then have no say or have our say interfered with by an international union with regard to who shall be involved in production? This is a problem about which I am sure the minister is more than aware. I have grave doubts about voting for a bill that will provide money for a Canadian film industry which, as I have said, will actually be controlled from New York, Chicago or Hollywood.
Until that matter is settled this bill will be just another example of subsidizing the United States by tax dollars from Canadian citizens, and I think this is deplorable. Anything which militates against Canadian sovereignty I must in all conscience oppose. I see the minister is nodding her head. I know she knows the union to which I am referring, the International Alliance of Theatrical Stage Employees and Moving Picture Machine Operators of the United States and Canada,


known shortly as IATSE. When you listen to the word IATSE you realize it has a certain connotation which will be obvious in a moment.
[DOT] (3:40 p.m.)
As I have mentioned, its headquarters are in New York, Chicago and Hollywood. Admittedly the union of electricians and stage hands based in Toronto does have some Canadian autonomy and is able to make some decisions based on Canadian problems. However, I would defy anyone to produce a film without cameramen. It is very difficult indeed. Local 644 in Toronto is merely a branch. The headquarters of this union are in New York and all the executive officers reside there. Its interests are United States interests, not Canadian. For example, the contract which the producers of a film in this country sign must be dictated by New York. This is certainly true in the eastern part of Canada. I believe it is true that one of the sections of the contract states that there shall be no use of British cameramen or other technical personnel in the production of a film unless specifically agreed to by the New York headquarters. Of course in most instances they will not agree. In other words they say: Do as we say or we will throw a picket line around you and put you out of business. This is what has happened.
I have before me a brief presented by the Canadian film cameramen's local to IATSE. I should like to read into the record part of what the Canadian film cameramen say about this problem. It appears on page 3 of the brief which was presented in 1964. May I say to the house once again that the problems I am delineating today will be brought before the executive officers of IATSE this evening in Toronto. The brief reads in part as follows:
Canadian cameramen are getting no professional recognition because when a producer wishes to use a union crew in Canada he must contact the New York or Hollywood local and these locals would give preference to their own American members. In fact, they have done little for the film cameramen employed in Canada, and as far as that goes, in the Canadian film industry generally. It is understandably so if you consider that their own organizers and business agents are concerned mainly with the affairs in the United States which are vastly greater than the problems in Canada.
Then the brief goes on to describe the problem which they had in Toronto with a local business agent from New York who came to Canada and created such a terrible impression that they got together and threw him out.
February 3, 1967	COMMONS
At the top of page 4 the brief goes on to say:
Moreover, the interest of the United States locals 644 and 659 are diametrically opposed to the interest of their Canadian members. To the American cameramen's locals, films for T.V. and features made anywhere outside of New York or Hollywood are second rate, and an encroachment of their security and they would be quite happy to see Canada without any film industry whatever.
What a formidable obstacle to place before the best intentioned bill of the minister which we are discussing now. With such an obstacle it will be very difficult to establish a truly Canadian feature film industry. Unfortunately, as the minister knows only too well, the problem is still before us even as we discuss this bill. This group has asked, and is asking again tonight, that local 644 allow the Canadian cameramen to form an autonomous Canadian union so that Canadian problems can be decided here and not in New York. The brief continues:
Moreover, we feel that if the charter was granted to those in Canada that the International would, in fact, make a real contribution to the development of the Canadian film industry.
It can be asked: why do they not join another union or form their own? As the minister knows, it has been tried. They have not been able to get local autonomy. They went to Claude Jodoin of the Canadian Labour Congress but he refused to interfere. He said it was a local problem. After all, we must recognize that the C.L.C. is also affiliated with some United States unions. Perhaps this is understandable. Some employees of the Canadian Broadcasting Corporation and of the National Film Board have formed a local union with the C.N.T.U. However, I will not go into details on that. The whole matter is in a state of flux right now. In looking at this bill one might say that it is a wonderful idea to have film-makers, film technicians and film producers creating Canadian films. Yet this will not actually happen until something is done to overcome the problem of United States domination of the Canadian film industry. Our Canadian sovereignty is a matter of paramount importance which must be settled before this bill goes into effect. I would certainly like to hear the minister's view on how she intends to do this before money is allotted to Canadian film-makers.
In Saturday Night of September, 1966 there was an excellent article describing the situation. The headline reads: "Thanks, Yanks, For All That You've Done, or Why There Isn't A Canadian Feature Film Industry". The article is written by Harold Arthur. The subheading
Development of Film Industry reads: "Unless A big American Union Called IATSE Is Forced To Re-assess Its Role, The Industry Is Doomed". I have spoken to film cameramen in this country, as I know the minister has, and they agree with this assessment.
Of course the matter of distribution is very important. The minister knows only too well that every feature film that is produced must be 99.441 per cent IATSE-like the soap-and must have a IATSE seal before the distributors will touch it. What can this union do if we do not go along with them? As is stated on page 1 of this article:
In effect, what IATSE demands is that Canadians should play by American rules, but with none of the Americans' advantages.. .In other words, as far as IATSE is concerned, we are not supposed to make features at all.
Farther down it reads:
Whether they admit it or not, IATSE in Canada owe first allegiance to headquarters in the U.S.A.
There is one pungent comment here regarding what some of the members of the local would not do without first getting permission from the United States, but in the interests of parliamentary usage I will refrain from quoting that portion of the article. However, I would like to read an example of what a big United States union can do to a Canadian production. The article reads as follows:
As an example of what the cameramen can do when they have the help of the 873 members-
That is local 873, composed of electricians, etc.
-there was the incident last summer when a crew from Labrinthe (the National Flm Board's contribution to Expo) arrived in Toronto to film a circus sequence at Maple Leaf Gardens. Telling the story, Cole, the Toronto business agent-
I understand the minister knows him very well.
-comes on as the unhyphenated Canadian. "This was supposed to be a Canadian project for all the world to see," he says, "and we thought they should have a Canadian cameraman". What happened was that IATSE objected to the presence of Walter Lassaly, internationally renowned British cameraman (Tom Jones, Zorba the Greek), who had been hired by the Film Board specially for the project. "We have Canadians right here who could have done the job as well," said Cole, "so we threw them (the National Film Board) out of the Gardens. I'd do it again if I had to."
[DOT] (3:50 p.m.)
Since Cole had the support of IATSE electricians at the Gardens there was nothing the Labrinthe people could do. Had they tried to start filming, IATSE could have pulled the switch and put Gardens, circus, and spectators in darkness. The Film Board retreated.
February 3, 1967

Development of Film Industry
The author of the article goes on to wonder if they would have objected as strongly if Lassaly had been from the United States. I continue the quotation:
To Canadian film workers, that's a wonderful straight line. What puts a final, baffling seal to it all is that the circus sequence was eventually filmed successfully in Milwaukee, in the good old U.S. of A.
This is a classic example of what can be done. You may perhaps wonder, Mr. Chairman, why with the tremendous power this union exerts on Canadian cameramen they would want to join that union or have a local here. Why would they not be happier with their own organization in this country, because the distributors undoubtedly would distribute film as long as there was a union label on it? I think the answer is an honest one, and it comes from these cameramen. They need the help and the experience of the cameramen and others in the IATSE organization in the United States. They need their help. If they get an autonomous local here, they need to be able to go back and forth and ask for help. They need to have this type of experienced help in order to build up a reasonable film industry.
In addition they need the right, and it is in the bill, if they want to make a contract with British film-makers to be able to do so without IATSE excluding the British film-makers. I think this is a serious problem of Canadian autonomy and it relates to what we are going to do with the $10 million and whether it is going to be controlled from the good old United States.
I am sorry the Minister of Manpower and Immigration is not in the house because with his vast experience with unions he could perhaps shed some light on what could be done about urging the union, with its headquarters in New York, to allow an autonomous union here. Perhaps something could be done through the Department of External Affairs with the Secretary of State of the United States to urge upon the union the necessity for allowing a totally autonomous Canadian branch. I feel this is a very difficult question with which to deal. I should like to hear what the minister has to say on this important question. I, of course, support the principle of the bill the minister has introduced because I believe in the idea. I believe it is a marvellous idea. However, I feel we must be able to make these films without any United States strings attached. fMr. Brand.]


Robert William Prittie: Will the hon. member permit a question? Without deprecating any of the points he has brought out in his speech, I may say it sounded very much like a speech the new Minister without Portfolio might make. Would the hon. member suggest to the federal government and to the ten provincial governments that they pass laws declaring that all unions and businesses within Canada must immediately become autonomous? Is this what he wants?


Lewis Mackenzie Brand: I do not think that has anything to do with the problem here. I believe the fact of the matter is, that we are providing public money to set up a business. If we are going to attempt to have a completely Canadian film industry, how can we have it if the decisions as to how that film industry is going to be run come from New York, Chicago or Hollywood? I think that is the key. I am not attacking the unions or anything else. What I am attacking is the concept of one union in another country having complete control of the actions of an industry which will be supported by public funds. I think that is a very important concept. As you know, local 873 is autonomous but local 644 is merely a branch of the New York union. When the executive is referring to this union they go so far as to delineate the area of the branch as extending to the northern boundaries of Canada. This is the way it is put now. This may sound like a choice for Canada but I think it sounds more like a choice for the House of Commons at the moment.


Robert William Prittie: I do not dispute the points the hon. member makes. They are valid. However, there are many aspects of Canadian life such as unions, businesses and so on, so how is the hon. member going to solve the problem? Is it going to be solved for this industry only or does he suggest this action for all industries?


Lewis Mackenzie Brand: Quite frankly, being a Canadian I should like to see all unions in this country have autonomy over their own affairs in cooperation with unions in other countries. However, I do not agree and I would never agree that any group in this country can or should be controlled from another country. I think it should be totally Canadian. We have sovereign rights over the whole of the country.


The Deputy Chairman:: Shall clause 2 carry?


[Stage Direction]
Clause agreed to.
February 3, 1967	COMMONS
On clause 3-Corporation established.
Robert William Prittie: Clause 3, Mr. Chairman, deals with the establishment of the corporation. If I may, I should like to refer to clause 4, the appointment of the members and chairman of the board. Is it the intention that the chairman shall be the government film commissioner?


Julia Verlyn (Judy) LaMarsh: No.


Robert William Prittie: Is it the intention that the chairman of the board shall receive any payment other than ordinary expenses?


Julia Verlyn (Judy) LaMarsh: No.


Robert William Prittie: In that case, Mr. Chairman, I suggest that this might be changed. It seems to me that the person who will be chairman will be quite active in consultation from time to time with the executive director of the organization. I thought of this yesterday when we were questioning the director general of the British Broadcasting Corporation. They too have a chairman, a layman, in addition to the executive. Their chairman is required to do a great deal of work for the corporation in dealing with the executive staff. He does receive an indemnity in addition to his expenses. I wondered about this because if a person is coming to Ottawa, or wherever the headquarters will be, and spending a great deal of time away from his ordinary occupation, then some type of indemnity ought to be considered.


Julia Verlyn (Judy) LaMarsh: I can only draw an analogy with the current situation in the film board. There is no film commissioner at the moment but the two acting commissioners and the chairman of the board, designated by the board in the absence of the film commissioner, do not receive any additional fees. It is expected that the film development board will, of course, have to meet fairly frequently at the beginning to set out its regulations and procedures, but thereafter it is expected the chairman will be like the chairman of many other boards such as the Canada Council, and will be someone who is sufficiently interested in it that he will serve with energy and enthusiasm but without a stipend.


David Samuel Horne MacDonald: I was glad to hear the minister say that the government film commissioner would not be chairman of the Canadian Film Development Corporation. However, I think it is somewhat strange that the film commissioner is a member of the board. Clause 5 states quite clearly that no
Development of Film Industry person is eligible to hold office as a member of the corporation who has, directly or indirectly or as a shareholder, partner or otherwise, any pecuniary interest in commercial film activity. What we will have on the board will be people with some experience in the arts generally or in some aspect of business other than one directly related to the production of films. Yet one member of this board will not only be knowledgeable in this field but will be responsible for one of the largest film companies in this country, the National Film Board.
[DOT] (4:00 p.m.)
I would say that this makes for a very difficult situation at best. I remember when some years ago the government of another day set up two positions, one being the chairman of the National Film Board and the other the government film commissioner. It was clearly defined that these were two separate positions, each with its own responsibilities; but through the years there came to be a kind of melding and finally the person who was chairman of the film board was also the government film commissioner. I think this has created some little difficulty from time to time.
I am very much afraid that on a board of this type, where one person would have experience and I would say an advantage in certain aspects, there might be very great pressure on the government film commissioner to take over as chairman. If he did not take over as the legal chairman he might become a kind of de facto chairman.
There is also the increased danger-and I think it is a danger-that it would then open up the way for the National Film Board to become a producer of feature length films, and there is nothing in the present films act passed some four or five years ago to prevent this. It has been doing this in the past and there is no reason to believe that it might not want to do feature films in the future, as it does seem one of the major sources of exposition.
Frankly, Mr. Chairman, I find it difficult to justify in my own mind, when we are establishing a feature Film Development Corporation-which is basically a business enterprise and I think must be regarded as such- the proposition that it should be tied to a crown corporation which is in the business of making movies for various government departments and various cultural agencies of the government, and is committed to a certain
12650	COMMONS DEBATES	February 3, 1967
Development of Film Industry task, yet is in a very restricted field of activity. To give the National Film Board a privileged relationship I am afraid will impede, in fact inter, the development of what must become a businesslike proposition.
Frankly, Mr. Chairman, the minister has not yet justified to my mind this afternoon the necessity for having a government film commissioner at all as a member of this board and giving him this particular advantage over the others who, as it is stated very clearly in the bill, have no direct interest in or relationship to the motion picture industry.


Julia Verlyn (Judy) LaMarsh: Mr. Chairman, I have not discussed this particular point with the officials who were advising us in the drafting of this legislation, but I think that the purpose of the presence of the film commissioner is a fairly clear-cut one.
As the hon. member probably knows, countries may sign cultural agreements. Canada has already signed a cultural agreement with the Republic of France. Such an agreement has been under negotiation for some time with the United Kingdom and with Italy; and I discussed this with the appropriate minister and officials while I was in Italy in the fall.
The signing of such agreements will also permit the signing of co-production agreements between countries. Once those agreements are in force the individual agreements between individual companies may be made. The co-production agreements are, we feel, particularly important because again they are the key to distribution abroad, particularly in countries like Italy where the actual movie houses themselves are owned or influenced by the state. Such agreements can guarantee that Canadian movies at once have entree to all of the hundreds and hundreds of movie houses throughout Italy.
So the film commissioner, Mr. Chairman, as the managing head of the film board is the person responsible for advising my office and the government generally on co-production agreements and cultural agreements which may involve film work. Fie is the adviser to the government apropos of films, and it was thought most appropriate that he be there.
However, there is no suggestion-though I think from time to time this may have been raised-that the film board would attempt to strangle this industry to preserve itself. Indeed we think that what may very well happen is that some of the film makers on the film board themselves may, in a sort of moonlighting or part time way, go out and make

their own films and apply for a grant or a loan of one kind or another.
We hope that the two corporations will provide two different slices of the needed pie to produce films for various purposes within and without the country. I really cannot suggest any reason for thinking that there will be any kind of conflict or that the commissioner would have a weighted position on the board. He will simply be there to liaise-and liaison is very important-in the matter of information and expertise between the film board and this new board with respect to eventual agreement.


David Samuel Horne MacDonald: If I may, Mr. Chairman, this is the very thing I was afraid of, and the minister has spelled it out very clearly. The government film commissioner, who will be a member of the board, will in fact be involved in very serious negotiations. The minister mentioned co-production rights, which will become more and more important to a country which seeks to enhance and develop its own feature film industry; but in saying this she indicated the very source of what I think will be a major problem.
I think it would be acceptable-at least, at first glance it is acceptable-if the government film commissioner were put into an independent position. But, in effect, the government film commissioner is the managing operator of the National Film Board and thus is, at one, both going to carry on very consequential negotiations for this feature film corporation and also run a motion picture company of his own.


Julia Verlyn (Judy) LaMarsh: Mr. Chairman, may I just
correct that. He is not going to be carrying on negotiations for this new board. These negotiations are conducted between this country and another country, and he is the adviser to the government when it is dealing with other governments in executing these agreements. The agreements are over-all agreements. As far as the individual agreements are concerned, a person may come along who wants to produce a film, and he will have to make his own agreement with somebody else in another country in the over-all framework. These co-production agreements are pretty general; but the commissioner will have nothing to do with the specific agreements which will have to be engaged in.


Robert William Prittie: Mr. Chairman, I am not worried about the point that the government film commissioner will be on the board of the corporation; I think he should be, though I do
February 3, 1967	COMMONS
not think he should be chairman. I did ask the minister about this and she gave me the assurance that this was not the intention.
One of the points the hon. member for Prince made was that the government film commissioner is the representative of an agency which will be a competitor in the feature film industry. I brought this point up two weeks ago in a question to the minister. I stated that there had been some complaint about a current production of the National Film Board, which is co-operating with the C.B.C. in the making of a film in Quebec and in Vancouver called "Waiting for Caroline". This is a feature and entertainment film and there had been some complaint about it.
I have not asked for a legal opinion whether or not this is within the mandate of the National Film Board, but I suggest that the problem will probably be self-correcting. As a feature film industry develops in this country those in the private film industry will probably ask the government to restrict the feature film industry to the private companies and the National Film Board to the documentary, educational, information type of film.
As I said last week, the thought of the National Film Board making feature films in co-operation with the C.B.C. does not bother me; but I am sure that, once we do have a private feature film industry, that industry will insist that that particular field be reserved to them.
[DOT] (4:10 p.m.)


Lewis Mackenzie Brand: I wish to ask the minister a question, as she mentioned co-production and the film commissioner. Will he be the one to advise on union problems which will arise? I ask this question because I did not hear her comments on this very serious problem I outlined a few minutes ago.


Julia Verlyn (Judy) LaMarsh: I would not expect that any one member of the board would be advising on this. Problems such as this which may occur may not be problems to be dealt with on a production by production basis. Some of the threats made are that there might be no distribution if union members are not used, because of agreements between the union in New York and a major distribution company. My response to such a threat was that I felt the public was getting a bit fed up with this kind of highway robbery, that Canadian cameramen were quite able to stand on their own feet, capable of being hired on merit, and they did not need somebody trying to beat potential employers into hiring them because they happened to live in a particular area.
Development of Film Industry
I answered a question of my hon. friend in the house, that the members of the film board were the persons against whom the threats were made in the first place. In making this feature film in the Toronto area without IATSE performers, it would not be distributed but it might be shown on C.B.C. The implication was that either IATSE members outside the film board be used, or members of the film board be required to become IATSE members. The acting commissioner, independently, shared my view and took my position, that is, that I do not think it is the government's responsibility to tell people what union to join. We do not intend to tell them. In fact, members of the film board, anticipating the passage of bills referring to agencies of government, as well as to the public service, are joining a rival union. They have not much interest in this IATSE union. I do not know if Mr. Cole, since the interview I had with him, is attempting to pursue his threat. One group from which we might expect an approach is distributors of Canadian made films. We did not find much alarm in these cases, and we have the assurance that we have nothing to worry about.
It seems to me that we should put this problem squarely before the public, to let public opinion clear it up before it becomes a bruise on an infant industry. I am happy to know that any member I have on my staff shares my view that the new industry will not be strangled by any kinds of irresponsible action.


[Stage Direction]
Clause agreed to.
On clause 4-Appointment of members.
David Samuel Horne MacDonald: Mr. Chairman, returning to the matter raised by the hon. member for Burnaby-Richmond, I feel that throughout this bill there is a tendency to show what is contemplated as a very lighthearted occasional occupation. Surely the minister's remark that no consideration has been given to providing some form of subsidization for the person to be the chairman of the board means that this will be a very casual endeavour indeed. Even the appointment of an executive director, if there is one, is not suggested specifically. The bill says "may on recommendation of the committee appoint an executive director".
If the executive may be appointed, if all the board members will be occasional people receiving a travel allowance and some form of daily indemnity, and if the only full time person will be the government film commissioner who has a full time job and who will
February 3, 1967

Development of Film Industry be there because of his particular responsibility, who will be spending time on this matter -because it will take time?
I appreciate the willingness of the minister to enter into this responsibility; I do not know whether that means she is resigning and planning to take up the appointment of chairman or executive director-


An hon. Member:: She wants a C.B.C. job.


David Samuel Horne MacDonald: There is no provision for sending anybody from the C.B.C.


Mr. Pepin:: She will be the star of the films.


David Samuel Horne MacDonald: I have a picture of the minister, and she looks a possible star in some future epic.


Julia Verlyn (Judy) LaMarsh: Yukon Eric.


David Samuel Horne MacDonald: I am concerned that the chairman is not more specifically dealt with in this bill. For the minister's consideration I suggest adding this phrase-what I suggest might allow somebody with some stature, with some willingness to be approached, for him to give his time. This will take time. Over the next four or five years it will demand a great amount of energy from the people specifically charged with this responsibility. Returning to the point, I suggest therefore in clause 4(2) after the words "during pleasure" adding, "who shall receive a yearly honorarium to be determined by the Governor in Council". This would give us a start, and we could ask for a chairman who could bear responsibility. This matter will take from 50 to 75 per cent of his time, and I think in the first critical years the chairman will have to spend from 50 to 75 per cent of his working time in developing the full aims of this board. This leaves the government free, in consultation with this board, to determine what support will be necessary. Would the minister be willing to accept that phrase, to allow for greater flexibility?


Julia Verlyn (Judy) LaMarsh: I see no harm in accepting such a phrase, but it depends on what the chairman says. I do not know, constitutionally, whether my hon. friend can move the amendment.


David Samuel Horne MacDonald: I am not moving; I am suggesting.


Julia Verlyn (Judy) LaMarsh: If it meets with the approval of the committee I do not object. If the remuneration is as little as $1 a year-and I would certainly undertake that we would try

to get this service free-it would still be a charge on the treasury. It may be that we shall have to pay something to get the right person. I think there is no objection to the phrase. Is it written?


David Samuel Horne MacDonald: I will write it.


Julia Verlyn (Judy) LaMarsh: While the chairman is considering the matter, I suggest, even if the payment is $1 a year it could become a charge on the treasury, and it might not be appropriate to receive this amendment without a resolution. We are long past the resolution stage and I hope we do not hold this measure up. If the chairman is prepared to accept the amendment without a resolution, I have no objection. Perhaps it might be better to say "may" instead of "shall".
[DOT] (4:20 p.m.)


Herman Maxwell Batten: The question before the Chair at the moment is whether or not the amendment suggested by the hon. member for Prince is in order. It is necessary to determine whether there is a charge imposed on the treasury, which is not provided for in the resolution. The resolution says, in part-
-to make grants to film makers and film technicians, to otherwise advise and assist the producers of Canadian feature films; to provide for the administration of the said corporation

In view of the fact that the resolution provides for the administration of the corporation, I would rule the amendment to be in order.


Julia Verlyn (Judy) LaMarsh: Did Your Honour say you ruled it to be in order?


Herman Maxwell Batten: Yes. In order.


Julia Verlyn (Judy) LaMarsh: Are you suggesting that the hon. member may move it himself?


Herman Maxwell Batten: I understood that the hon. member had moved the amendment.


David Samuel Horne MacDonald: That was not my
understanding. I do know that it is possible for the minister to make this motion if she is willing to accept this suggestion.


An hon. Member:: No, she cannot.


Paul Theodore Hellyer: If it would help regularize the proceedings I would be glad to move the amendment on behalf of the hon. lady.


Herman Maxwell Batten: I do not know whether that is necessary, but if it is satisfactory to the
February 3, 1967	COMMONS
hon. member for Prince I will accept his suggested wording to be treated as an amendment, and it will be presented as having been moved by the Minister of National Defence.
Amendment (Mr. Hellyer) agreed to.
Clause as amended agreed to.
Clauses 5 to 9 inclusive agreed to.
On clause 10-Objects.


Robert William Prittie: One question occurs to me on clause 10. Would films of an entertainment type on short subjects be regarded as films in which investments could be made? Or would it be feature films exclusively?


Julia Verlyn (Judy) LaMarsh: It is my understanding that this is intended to cover feature films. Subclause (1) of clause 10 says the objects of the corporation are to "foster and promote the development of a feature film industry in Canada." I think the purpose of this is to help create commercial feature films.


Mr. MacLean (Queens):: I should like to say a word on this clause. I was hoping the minister would go into more detail as to what is envisaged by the government by the policy put forward in the bill before us, and particularly in this clause. Paragraph (a) of 10(1) says the corporation may-
-invest in individual Canadian feature film productions in return for a share in the proceeds from any such production; .. .
What is the position of the taxpayers in cases where there are little or no proceeds from productions-in cases where a picture is a complete flop, as can happen on occasions? What happens in a case of this sort? Could the loan be recovered from the company out of the proceeds of some other feature film which might turn out to be successful? Or is the minister suggesting that the possibility of recovery is limited to the proceeds of any particular feature film in which an investment is made?


Julia Verlyn (Judy) LaMarsh: It is not my understanding that there is any intention to mortgage any asset owned by a film maker, apart from the film whose production is assisted. This is why we need a board which is careful and businesslike in its approach, investing in films which it believes to have a commercial chance. Without question there will be some mistakes. I have talked to dozens of film makers since we began to draft this bill. No one can tell which Broadway show will be a hit when it opens, and no one can tell what film will be accepted. For example, the film "Tom
Development of Film Industry Jones" which was so well received in most parts of the world had a very shaky beginning. I am told that many experienced film makers would have absolutely nothing to do with the idea of a film on the subject, and investors were hard to find. They did not think the public would accept such a film.
Without question we shall lose some of this money but it is our hope that we shall pick up more on the swings than we lose on the roundabouts, though that remains to be seen.


John Angus MacLean: That is the question in my mind. It seems that when films are successful the government is only in a position to recover the investment it has made, if you can call it that, together with additional profits. But is it not the case that when a feature film is likely to be successful the company concerned would probably proceed with it in the absence of any assistance from the corporation, whereas in circumstances where doubt arises it would go to the government for support. There may be long shots which would pay off, but unless the minister can say something to reassure me, I believe there is a danger of the government being made the fall guy, to use a slang expression, in the interest of projects which may have doubtful prospects of financial success.
[DOT] (4:30 p.m.)


Julia Verlyn (Judy) LaMarsh: To go back to the case of "Tom Jones", this was a production which the British agency was afraid to touch. They considered it for a while, but all of a sudden other funds were found. Philip Terry, who is the executive director of the British corporation, just wishes they had invested in that film because of the returns it would have brought to the corporation. I have read of another film, "Never on Sunday", produced at a cost of $100,000 and which has grossed millions of dollars. I hope we will be lucky to get an investment in something like that. Far from being a fall guy, this is the purpose of the legislation,-to provide that extra boost to our Canadian industry which it has not had up until now. Bankers have feared the risk and there are just not enough angels in this country. This legislation will provide 20 million new angels and we hope that as good angels they will get a pat on the head from time to time.


Mr. Pelletier:: Mr. Chairman, with regard to the remarks just made, I only want to observe that the Canadian government is not setting any precedents in this connection. The
February 3, 1967

Development of Film Industry European film industry has long set the example of state assistance, and several European countries have subsidized their film industry, because they felt that, in our day and age, that industry is extremely important for the prestige of any country. As a matter of fact, those countries thought it worth while to take risks, not only the risk of profit, but the opposite, the risk of loss.
But I am rising especially to make a few brief remarks and put a question to the minister concerning clause 10 (1) (e) which reads as follows:
advise and assist the producers of Canadian feature films in the distribution of such films and in the administrative functions of feature film production.
At the resolution stage, discussion largely centred on the distribution problem and anyone even slightly acquainted with the question must recognize that it is basic, because no film	industry-except possibly the
Canadian film industry to date-produces films to let them lie on the shelves. Assuredly, the Canadian government intervention in the film industry is justified inasmuch as it is likely to ensure the development of this industry.
I do not have the slightest intention of advocating for instance the restriction, of foreign films circulation or distribution in Canada for even if we were to take the ridiculous decision of excluding foreign films from our theatres and of admitting only Canadian films, assuming that Canadian filmgoers would attend the showings in these conditions, we would not be able to pay for the production of such films from the Canadian box office returns.
Obviously, the only way we can have a Canadian feature film industry is by securing foreign distribution for them, at a profit.
Recently, an American, or rather international, film periodical stated that only American films could pay their way on the domestic market and that countries with a film industry much more important than that of Canada such as Italy, for instance, had to depend upon foreign distribution to pay much of the cost of their films, not to mention profits, of course. Therefore, I am inclined to be a little sceptical of the benefits of the legislation in this regard, because the question of distribution is not dealt with.
I also realize that several steps have to be taken, the first of these being the establishment of the corporation. In my opinion, this is


the bill we needed to establish the corporation, but I would like the hon. minister to explain, if she can, what is meant in the paragraph dealing with assistance in the field of film distribution.


David Samuel Horne MacDonald: Section 10(l)(d) provides for the making of grants to film makers and film technicians. Does this include film writers?


Julia Verlyn (Judy) LaMarsh: I am informed that it does.


David Samuel Horne MacDonald: Section 10(l)(e) provides for the corporation to-
-advise and assist the producers of Canadian feature films in the distribution of such films and in the administrative functions of feature film production.
The minister has talked about the board arranging for films to be distributed on what seems to be an ad hoc basis. This is one area in which we are going to have the most difficulty when the board is established. We have a movie exhibition industry in this country which has relied almost completely on films from other countries, and for the exhibitors suddenly to dislocate their consumption of foreign films so that they can start showing Canadian films will demand considerable expertise, not only at the federal level but at the provincial level as well. Has any consideration been given to holding some kind of federal-provincial consultation on distribution? Has the minister any idea what reception will be given to feature films produced in this country? The experience to date is a pretty unhappy one.


Julia Verlyn (Judy) LaMarsh: The interdepartmental committee has had some dealings with the owners of movie houses, particularly in Canada, and other agencies have had some dealings with distribution houses outside the country. I had a talk some ten days ago with the Canadian producer, Mr. Crawley, and asked how he got a distribution contract for "The Luck of Ginger Coffey". He replied that one experience can be pretty harrowing, but having once received it one knows what to look for after that.
With respect to clause 10(l)(e) I expect that the corporation will employ a specialist on distribution, a man who knows all the outlets. The government is not going to attempt to make distribution deals. The applicant will have a package effort to present to the board. He will have a story line, with his actors ready, his production agreement ready, and
February 3, 1967

probably the completion bond ready. So far we have heard nothing which would indicate that we are going to have resistance.
But if we try to pass off a lot of second rate films, or art films, and wave a nationalist flag and say, "You fellows who show films in this country are going to have to show ours," we may find resistance. We have not taken that attitude. We have said. "Look at Canada's past record",-because we have produced some first rate films, but there is not much value in them because they have not been the subject of an effective distribution agreement. Through this measure individuals with a good story will not only get good distribution, but probably will be able to make deals with various markets-British, Swedish, Italian and others-who may be paying part of the cost. The agreements may be made with the governments of those countries or others who own movie houses. In those agreements there would be a provision for financial assistance and a guarantee as to distribution. There will also be included in respect of distribution some guarantee as to publicity. There is no point in putting on a good show and letting it die like a dog without any kind of publicity. We have all seen what happened to "Festival Canada". Money was spent in promoting it, and people came out to see it instead of just saying that because it is Canadian it could not be good.
[DOT] (4:40 p.m.)
Every individual project will have to be considered on the basis of its artistic and commercial quality, and if we think it is satisfactory and we should invest, there will be no problem. But there will have to be some kind of distribution agreement. There are not enough good movies made in this world at this time.


David Samuel Horne MacDonald: Perhaps this is a matter we should pursue, but it would serve no useful purpose during this debate to deal with the subject at length. We have now indicated that there is a critical problem which will have to be faced after we have had some experience, and when similar legislation is placed before us.
The third point I should like to refer to here relates to clause 10(2)(a).


Robert William Prittie: We are considering clause one, are we not?

Development of Film Industry


David Samuel Horne MacDonald: I think we are considering clause 10 (2) (a), or perhaps the whole clause 10. That clause states in part:
(a) that the completed film will, in the judgment of the corporation, have a significant Canadian creative, artistic and technical content-
This is fundamentally important to this infant film industry. The paragraph then states:
-arrangements have been made to ensure that the copyright in the completed film will be benefically owned by an individual resident in Canada, by a corporation incorporated under the laws of Canada or a province or by any combination of such persons.
I am wondering whether or not this means that the individual who owns the corporation must be a resident of Canada or whether there are two separate categories, either an individual resident in Canada or a corporation incorporated in Canada.


Julia Verlyn (Judy) LaMarsh: It means either.


David Samuel Horne MacDonald: In that event we run into the same situation referred to by the hon. member for Burnaby-Richmond. We may well be establishing an industry here which will benefit the interests of some other country, perhaps that country to the south. I can envisage a situation in which a film is made in this country and is Canadian in terms of its creative, artistic and technical aspects, but made by a corporation not necessarily resident but incorporated here. We might find companies such as M.G.M., Paramount or Twentieth Century Fox incorporating under provincial or federal statutes for the purpose of making a picture here. They would then take the profits back to the United States. In this way we would not improve the situation, although perhaps additional employment would be provided for local talent.
It is strange that the government did not spell out the provisions of this bill in the same way provisions are spelled out in respect of broadcasting. In that respect 75 per cent of the facilities must be Canadian owned. We made provisions in regard to broadcasting which seemingly we are not making in respect of the film industry. Some safeguard should be provided to protect the Canadian film industry.


Robert William Prittie: Before the minister answers the hon. member, perhaps I could pose another related question which she could deal with at the same time. I am concerned with the point
February 3, 1967

Development of Film Industry raised by the hon. member for Prince regarding incorporation in Canada and substantia] Canadian ownership.
In clause 10 (2) (a) appear the words:
-have a significant Canadian creative, artistic and technical content-
At this time a film entitled "The Trap" is being shown in theatres across Canada and elsewhere. This is a British production, most of which was filmed in British Columbia. Several Canadian actors were employed during its production, as well as certain Canadian technicians. The stars were British, and some British technical crew were brought over and employed. The processing of the film was done in the United Kingdom. Although some Canadian artists and technicians were employed in the production of this film, it would seem to me that it would not meet the requirements of clause 10 (2) (a).
Perhaps the minister could give some explanation as to what is meant by "significant Canadian creative, artistic and technical content". Percentages are laid down in the United Kingdom in respect of technical and artistic staff which must be used, as well as in respect of processing. Will there be any guide lines at all in Canada to make sure that there must be a percentage of Canadian content before a company can qualify for the benefits available under this measure?


Julia Verlyn (Judy) LaMarsh: We did not think we could stipulate by legislation that one must have so much ownership in a Canadian company before being eligible. Canadian tax laws will apply to those companies incorporated in Canada under provincial or federal statutes, but any company that is so incorporated is a Canadian corporation.
Each corporation will be considered by the board as to whether or not it is able to guarantee completion, and we do not expect such a guarantee will be provided in respect of a feature film by a fly-by-night company set up as a shell company for certain purposes. These companies will have to provide a completion guarantee and prove or show an ability before they will be eligible.
We feel we have gone as far as we can to make sure that not only does Canadian talent get an opportunity but that these films will in fact be Canadian productions. I agree with my hon. friend that the film "The Trap", while most enjoyable, using Canadian talent, scenery and facilities, is not the kind of film which would qualify under this act. In order to qualify it would have to be put together

under a co-production agreement. There are no co-production agreements between the United States and Canada. One reason there are no agreements of that kind between the United States, Italy, the United Kingdom or other countries and Canada is that they are awaiting with interest the results of this proposed legislation. They now feel there is no point in signing a co-production agreement until we provide some kind of assistance. An astonishing number of people in this country and other countries of the world are waiting for the adoption of this measure.


Siegfried John Enns: I have the distinct impression that the National Film Board would be an agency, as a film producer, which might qualify under the provisions of this measure. Am I correct in that impression?


Julia Verlyn (Judy) LaMarsh: No, it could never qualify.


Lewis Mackenzie Brand: Is the minister aware of any arrangements to set up a 35 millimetre colour processing establishment in Canada? My understanding is that there is no such service available at this time and that this type of film is sent to the United States for processing. Have there been any discussions at all in this regard? Such a service would provide an inducement to the production or processing of such films in this country.
[DOT] (4:50 p.m.)


Julia Verlyn (Judy) LaMarsh: I am sorry, Mr. Chairman, but I do not happen to know the answer to that question. I will be happy to get it. I notice that my officials sitting in the gallery are nodding their heads, indicating yes.


David Samuel Horne MacDonald: Mr. Chairman, I should like to return to this matter of ownership. I am indeed surprised that the minister says, very easily, that we felt we went about as far as we could go in this respect. I wonder whether she has in mind the cabinet of which she is a member, and a number of her associates who seemingly have no reserve about how things should be spelled out clearly in terms of Canadian ownership. I wonder whether the minister remembers her good friend to her left, whom she welcomed back to the cabinet a few weeks ago. Certainly what she has said seems to refute that warm welcome, in a sense at least.
The other thing that concerns me about ownership is this. The minister said that the possibility of fly-by-night companies getting involved in and being accepted by the feature
February 3, 1967

film industry was very remote. I am not worried about fly-by-night companies; I am worried about the large companies, the million dollar, and I suppose approaching the billion dollar enterprises south of the border who would like to find some kind of loophole whereby they could establish themselves here.
I think there is a loophole in this legislation big enough to push a whole movie studio through, and to permit not only ownership and maintaining a considerable amount of profit, which is one thing, but it will even adversely affect our whole balance of payments problem. We are dealing here with a million or billion dollar industry. There is even the more fearsome ogre, if you like, of control; for if control is not with Canadians, what will happen with respect to what in the end result we will be watching as so-called significant Canadian films?
I have no desire of arresting the development of a feature film industry which will present Canadian movies which will in fact be Canadian owned in terms of some kind of significant content spelled out in this bill. However, I am concerned that these movies will obviously not be Canadian when we ultimately see them. I believe it is imperative that we include in the bill at this point a phrase that will make it very clear to the officers of the corporation, and those who seek to produce feature films in this country, that we are interested in developing a genuine Canadian industry. I would suggest again, for the minister's consideration, that after the word "province" a phrase something like this be inserted: "and the shares of which shall be at least 51 per cent owned by Canadian residents." I think this would ensure the very real desire that lies behind this clause, namely that the ownership of our film industry should not be in the hands of those outside our country.


Julia Verlyn (Judy) LaMarsh: Mr. Chairman, I think we must have a sense of proportion here. My hon. friend talks about these great big million or billion dollar corporations that will come into this country. Remember that this fund is a miserable $10 million. These billion dollar corporations will not be coming into Canada and trying to invade this country for the purpose of taking advantage of the fund. I went to see the studios of Di Laurentis in Cinecitta outside Rome. He had just finished making "The Bible", which cost well over $10 million. He had just sold the distribution rights for $10 million. He will not try to take over Canadian film-making, because if he

Development of Film Industry wanted to produce a film in Canada he would do it right now. He does not need to make application to this corporation. We will not set up some sort of electronic boundary at the border to prevent any of these large sized moguls coming in and making their films. The purpose of this legislation is to help those people who need help to make films, not the very large corporations.
If it were not for the co-production agreements I would hope everybody employed in the industry would be Canadian and all the materials used would be Canadian. This is obviously the group to which this fund will appeal more than anyone else. I can tell hon. members that they are practically standing in line outside the House of Commons to get their stories and packages dealt with. When the legislation is passed, the board is set up and the regulations are established, there will be a real rush to take advantage of this measure.
I do not think we need concern ourselves that $10 million will fatten people in Hollywood, Nice, the Ealing studios, or anything of that kind. I suggest to my hon. friend that we should leave the matter as it is and give the program a while to operate. Let us gain a little experience in this field. As hon. members will see, the last clause of the bill deals with the matter of an annual report. One of the matters particularly to be dealt with will be the amount of assistance provided by the corporation and the kind of distribution involved. After the program has been operating a while parliament will be in a position to make amendments as we feel our way in this infant industry.
I would say to the hon. member for Saskatoon that the nodding wizards in the gallery inform me that there are three laboratories in Toronto which will be processing 35 millimetre colour films within the next three months.


Mr. Baldwin:: Mr. Chairman, perhaps the minister would suggest to her colleague the Minister without Portfolio that his task force keep a close and paternal eye on this particular clause.


Richard Albert Bell: Mr. Chairman, I wonder whether the minister would like to change the expression she used "a miserable $10 million". It seems to me there was at one time another outspoken minister who got into trouble for using the expression, "What's a million?"
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Development of Film Industry


Julia Verlyn (Judy) LaMarsh: Mr. Chairman, as soon as I used the expression I could see the significant glances of some hon. members on the other side of the chamber. I would point out that everything is relative. Ten million dollars is the biggest sum in the world to me and so is a million. We must remember that hundreds of millions of dollars are involved in the production of some films. Therefore I hope that when hon. members opposite quote me as saying "a miserable $10 million" they will keep it relative to the very large sums which are concerned in this industry.


David Samuel Horne MacDonald: Is the minister saying that when this $10 million is exhausted, that is the end of the road as far as feature film development in this country is concerned?


Julia Verlyn (Judy) LaMarsh: It is a question whether it will be exhausted first, or whether I will be. That is all this bill provides, $10 million. If we are very fortunate, this will be a rotating fund and we will have more money coming in than we will have spent. The committee will notice that administrative costs and things of that nature are taken out of the $10 million and are not renewable as such. When this money is spent, if it ever is, or is reduced to a very small sum, as is the case at the present time in England, the house will have to assess the situation on the experience that has been gained. This is exactly what is happening in England now. Their program lasted for quite a long period, so they could see what would happen when the industry was assisted. They are now in the process of deciding whether to renew the fund or take the corporation out of existence.


John Angus MacLean: Mr. Chairman, I wish to ask the minister a question or two along this line. Could she give us some information about the experience of similar corporations in other countries? I suspect, as has been proven by the experience in the United Kingdom, according to the minister, that in the long run this program will be a losing proposition. With regard to the $10 million fund to which the minister has referred, will this amount, for the present at least, be a fairly firm ceiling? Will this money be invested, or is this to be just an interim measure to gain $10 million worth of experience, and not much more; or is the idea to come back to the house later to amend the bill and increase the fund?


Julia Verlyn (Judy) LaMarsh: There is no question about what has happened in England. This program has sparked a major industry in that country.

DEBATES	February 3, 1967
Everyone knows the number of films being produced in England and how very successful the whole industry has been. The English fund was one of the prime reasons for the success of the industry. We all know how many films are made in the United Kingdom by American, German and other film studios. It is true that the funds set aside have now been spun down to a point where they are really too small to be of much effect.
I am not suggesting that the $10 million will be all. I hope that by the time $10 million has been used and repaid 100 times over our feature film industry will be in full blast and will not need any further assistance. However I am not in the position now to guarantee that.
[DOT] (5:00 p.m.)
I wonder whether hon. members opposite would be disposed to not seeing the clock and perhaps continuing, in the hope that we may conclude the committee stage of the bill?


Some hon. Members:: Agreed.


David Samuel Horne MacDonald: I must admit that the whole discussion sounds a bit like the saying about the chicken and the egg: Which comes first? Are we setting aside $10 million and then dreaming up a board which will decide how to spend this money, or are we setting up a board and saying to it that we will make $10 million available to assist it in getting a feature film industry off the ground? I would like to think that what the minister has just said will become a reality, but I have great doubts about it. She said that $10 million, in terms of the loans that will be repaid, will in the course of time produce a fullblown feature film industry in this country.
If such were to be the case we should be able to find the same situation existing in Great Britain today. But that is just not the case. We know that it is not enough to have an institution like the B.F.C. available to provide funds or loans for the production of worth-while feature films. The British have had to instal a very complex system known as the Eady plan to subsidize the distribution of their own feature films. Great Britain is a much more heavily populated country than Canada and obviously they have a much larger audience, and yet they are threatened by the same kind of foreign exposure as we are, being so close to the United States, an influence which plays such a large role in our cultural milieu.
February 3, 1967	COMMONS
I think that what will happen is that once we have launched this particular board we will find that additional steps will have to be taken. We will either have to introduce tariffs or establish a levy of some kind whereby the revenue collected from the production of foreign films can be used to subsidize Canadian production. This may prove to be a very acceptable system.
In this case my question about the ownership and the control of feature films becomes of paramount importance-and no pun is intended-because if it is possible to subsidize and produce films of "significant Canadian content", then it will be very profitable for any large film producers in the United States to come here and incorporate federally or provincially so as to benefit from our subsidization.
The minister knows from her own study of the British industry that attempts have been made by foreign film producers to benefit to a large extent from the Eady levy. I think this is something we must guard against in the establishment of this corporation.
This is why the good will expressed by the minister does not convince me at all, nor her assurances that it is not necessary to ensure that these corporations will not benefit from the production of Canadian films by including in the bill a stipulation that the majority ownership should be Canadian.
This is why I should like to ask again whether the minister would be willing to include the words: "and the shares of which shall be at least 51 per cent owned by Canadian residents". I think this is fundamental to guarantee a Canadian feature film industry.


Julia Verlyn (Judy) LaMarsh: Mr. Chairman, I would prefer to leave the wording as it is. As my hon. friend knows I have tried to be co-operative, and I agreed to the last amendment. I must point out, however, that we are trying to get an industry started. We are not speaking about an industry that is well established and flourishing. I welcome, as do all my colleagues in the cabinet, the right kind of investment in this country. My hon. friend is very young and I am sure he has almost 100 years left as a member of parliament. Unlike myself he will be here in a few years to make an assessment of the situation, at which time we will be in a much stronger position to say whether or not this sort of thing is needed. I would ask him to consider the situation and to let it remain as it is. Let us get some more experience.
Development of Film Industry


David Samuel Horne MacDonald: I do not know why my age always comes up-


Herman Maxwell Batten: Order, please. It being five o'clock and in order that the house may proceed to consideration of private members business shall I rise, report progress and ask leave to sit at the next sitting of the house?


Julia Verlyn (Judy) LaMarsh: Mr. Chairman, I did ask hon. members whether they were disposed not to see the clock and to continue so as to complete the business. I thought there was unanimous agreement to my suggestion.


Herman Maxwell Batten: Is it agreed to continue with the discussion?


Some hon. Members:: Agreed.


David Samuel Horne MacDonald: I do not know why my age seems to come up from time to time. I find that it seems to come up when I am on the winning side of the argument. Perhaps it is also strange that I should be arguing for what I think happens to be the policy of the government of which the minister is a member. She should be sitting over here and perhaps I should be sitting in her place, and then we would each be arguing for the proper side of the case. I think this is a critical issue. It is absolutely unbelievable that the minister should be willing to admit that under the terms of this bill it should be permissible and acceptable that the ownership of feature films produced in this country should not be in the hands of Canadians, but of foreign film producers. I find it impossible to believe that the minister is willing to allow this to happen.
This seems to contradict and contravene the spirit of the bill. It makes very little sense to me that we should go through the exercise of establishing a feature film industry in this country, something which has been neglected for far too long, and then at the very point when we could specify clearly that this is to be a Canadian industry, to be operated by Canadians and to serve Canadians, we would leave this tremendous loophole which would allow people outside this country who wish to invest in it and gain profits from our feature film industry, to do so without any fear of reprisal or any difficulty. This certainly seems like a strange exercise.
I suppose all I can do is to express my sentiments very strongly with regard to the faulty apparatus which is implanted in the bill in a clause which does not provide in very clear cut terms for at least 51 per cent
February 3, 1967

Development of Film Industry Canadian ownership and Canadian control of the feature film industry.


Julia Verlyn (Judy) LaMarsh: I am afraid my hon. friend is assuming something which I suggest he should not assume, namely that all sorts of minions will be running across the border forming corporations and taking great shovelfuls of money out of our coffers. The board which we are proposing to set up will deal with each film proposal. It can consider each individual proposal and will not need to accept any proposal it does not wish to accept. As I suggested earlier, I believe that initially at least there will be so many Canadians coming up with proposals that they will clog the halls, and anyone who has to come from a greater distance will not be able to get anywhere near this board for a considerable length of time.
We have done everything we can. The copyright has to be held here either by individuals or by corporations. Under the subsection concerned there has to be a significant Canadian creative, artistic and technical content, and we were careful not to tie that down to a percentage at the suggestion of those in England who said that it is better to leave it flexible. We have done everything we can to make sure that we will be fostering a Canadian industry. It may well be that a corporation which is formed in Canada and gets its script and everything else here will then go and sell it to a U.S. or a British firm. It can sell the distribution rights and then obtain financial support, which would mean that it would turn over more than 51 per cent of its ownership. If he does not get that kind of financial support, that kind of distribution, then he is not going to make it.
[DOT] (5:10 p.m.)
I am informed by Mr. Crawley and others who have been successful that the most important thing is to get a track record, to be able to produce a first rate film, and if that is done, thereafter the doors are open, agreements are assured and the film industry is on the way. I suggest to the house we should not throw this roadblock up now because if we do not insert a provision concerning this 51 per cent that may be the very thing which will permit young people to start out and make films in this country in co-operation with others who have been in the business, and who can give distribution rights as well.


David Samuel Horne MacDonald: Mr. Chairman, I feel the minister-


Herman Maxwell Batten: Order. The Chair feels that standing order 15 must be invoked at this time. If there is any disposition on the part of the committee to proceed with the bill, I think that decision should be made with the Speaker in the chair. Shall I rise now, report progress and request leave to sit later this day or next sitting as the case may be?
Progress reported.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I think we are dealing with a very interesting bill, and perhaps we will be able to complete consideration of this bill if we continue with it. I am sure other members would agree. I think, looking over at the minister, this suggestion is quite acceptable to her.


Mr. Deputy Speaker:: Is it the pleasure of the house that the private members hour be suspended and the committee proceed with its work on the bill it was considering?


Frank Howard: Mr. Speaker, if I may say so, I do not believe you should suspend private members hour because there was a certain understanding reached which has now been circumvented by the proposal just made. I think the best we could do, if it were agreeable, would be to carry on with this bill, and if it is completed before six o'clock see if we could not make progress with the particular item of private members business on which there was an agreement.


Mr. Deputy Speaker:: Is it agreed that we return to the committee and proceed with this bill, then if the bill has been completed before six o'clock we make progress on private members business?


Some hon. Members:: Agreed.




[Stage Direction]
The house resumed consideration in committee of Bill No. C-204, for the establishment of a Canadian Film Development Corporation-Miss LaMarsh-Mr. Batten in the chair.
On clause 10-Objects.
David Samuel Horne MacDonald: Mr. Chairman, while I appreciate the minister's good faith and her willingness to ensure that as many
February 3, 1967	COMMONS
aspects as possible of this feature film industry will be Canadian, I think in being adamant about ownership and control she is sowing the seeds of her own destruction on this matter. I was just thinking a few minutes ago of the implications of what she said before we resumed in committee. It seems to me,she is saying that in order to establish a feature film industry in this country we are going to have to rely on those from other countries who have both the experience and the contacts. I agree with what she says to a degree. She is saying also that in order for us to assure the exhibition of these films we will have to be in touch with these people because they will be able to arrange for the distribution.
What strikes me as so devilish about this whole arrangement is that if we are to follow the suppositions the minister has enunciated, then we are going to encourage outside film producers to come to this country. They will come here, and I assume they would employ enough people in the various aspects of film making to establish themselves as credible in terms of Canadian content. What will they be doing? They will be, foremost, producing motion pictures that will fall in line with the kind of films that are currently acceptable for distribution in the United States, the United Kingdom or some other market.
It would be folly of course for any film producer, particularly in the English speaking world today, to produce films purely and simply for the domestic market. However, it is quite another matter to invite in film producers who will not be, first and foremost, producing films for the country in which the film is produced. This is the thing that scares me. We would not be establishing a film industry in Canada which could be called Canadian; we would be setting up certain facilities and encouraging those facilities to be used in terms of motion picture production, and the resultant films would be directed to other countries. A film of this kind may say much more about the culture and life of someone who lives in Great Britain or the United States than someone who lives in Canada. It has been true from time immemorial that he who pays the piper calls the tune. It is my conviction that he who puts money into this film is going to determine the kind of script, and what the script says about the cultural and political aspects of life. While the film may be made here, it is not going to be a Canadian film.


Jean-Luc Pepin: Would you say that about the National Film Board?
Development of Film Industry


David Samuel Horne MacDonald: No, there is no comparison with the National Film Board. Why does the minister introduce that element?


Julia Verlyn (Judy) LaMarsh: The film "The Luck of Ginger Coffey" was made in exactly that way by a Canadian film producer who got the story and put it together. However, he did not have the money to put the whole thing together. He went to a United States film producing company which had distribution facilities, and made a deal with them for distribution and for money. They put up money, and that was the only reason this film came into being. This company in the United States had no control over the production of the film; they bought a package. This is the only way it can happen.
All he has to sell, of course, is a share in the corporation which produced the film. He may have to give the stars 10 per cent interest in it. He may have to give away a 20 per cent interest that way. He may have to give the distribution people another 10 per cent or 15 per cent. He may have to give the person who has written the book or the script another 10 per cent. This is the way these people are in it, without getting dollars except out of the final result of the show. We do not know what will happen because in each case it will be different. I could suggest to the hon. member that he is only seeing ghosts. If he gives this bill a chance to work, I am sure he will find this is not going to happen.


David Samuel Horne MacDonald: I have some friends on the front-benches who are seeing ghosts, too. Who owned the film "The Luck of Ginger Coffey"?


Julia Verlyn (Judy) LaMarsh: The distribution company and Crawley Films, as well as some other people.


David Samuel Horne MacDonald: Who owned control?


Julia Verlyn (Judy) LaMarsh: A whole bunch of people.


David Samuel Horne MacDonald: Surely the whole point of this discussion is whether or not we intend to develop a Canadian feature film industry. You start off with somebody who writes a script and who wants 10 per cent. Surely we would expect that person to be a Canadian, otherwise-


Some hon. Members:: Oh, no.


David Samuel Horne MacDonald: Not in every case, perhaps, but surely in some cases we would.
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Development of Film Industry You say he is going to be given 10 per cent or 15 per cent, and surely in some cases he should be a Canadian.


Julia Verlyn (Judy) LaMarsh: Sure.


David Samuel Horne MacDonald: The minister
seems to be inferring that a good many of these people connected with the film will not be Canadians. If they are not Canadians, then what is the sense of trying to establish a feature film industry in Canada?


Julia Verlyn (Judy) LaMarsh: Because my hon. friend has agreed that the real bugbear is distribution, and this is where the big piece of ownership can go. This does not mean there is any kind of control over the film. The film may be virtually in the can by that time. If Mr. Crawley or any other person produces a film, no matter how good it is, it is not going to be a success unless it can be distributed. He is not going to sink a lot of money into it unless he knows it can be shown. He may not even have enough money to finance it. Most people like Budge Crawley insist on control of the product. They produce it and that is what they sell.
[DOT] (5:20 p.m.)
All that the distributing firm cares about is that the film will make money at the box office. They are not going to put Zazu Pitts in the film, or Mr. MacDonald from Prince or Miss LaMarsh from Niagara Falls. All they care about is they get something in the can so they can make money. In exchange for that they may be helping with the financing and may take shares. This is why I am afraid of trying to make any restrictions at this time until we see what happens.


Robert William Prittie: May I ask a question, Mr. Chairman. In general I share the sentiments of the hon. member for Prince. I am surprised that the 25 per cent figure talked about in the past by the hon. member for Davenport in relation to Canadian corporations is not mentioned in the bill. I wonder whether there is some ignorance here about the film industry on my part, and perhaps on the part of the hon. member for Prince and others.
The minister has mentioned Mr. Crawley's film "The Luck of Ginger Coffey". When he made that picture did he form a separate corporation both for making and for marketing the film? Does the minister know the answer to that question?


Julia Verlyn (Judy) LaMarsh: I think he did in that particular case but I am not absolutely certain.

DEBATES	February 3, 1967
We did discuss that but I have forgotten what he said.


Robert William Prittie: If that is the case, I can see variations coming up, but I would suspect that what happens is that a corporation will be set up to produce and market a particular production. In the case referred to by the minister the foreign distributors may ask, in return for distribution rights, for a larger percentage of the corporation. However, 1 wish we knew more about the techniques of the film industry.


Julia Verlyn (Judy) LaMarsh: There are not many people in the country who do know. I should really publicly apologize to Mr. Crawley, because when he came to give me some advice I am sure he did not expect me to peddle his personal views to this house at large.


David Samuel Horne MacDonald: Mr. Chairman, the minister has continually referred in the course of debate to something very significant. She said that the prime concern on the part of the film producer is to arrange for international distribution. It will be difficult for anyone to disagree with that; but it strikes me that she has become so concerned about international distribution that perhaps she is indicating her willingness to accept the fact that the most difficult distribution will be domestically.
In the first instance, it seems to me that if a feature film industry is to be established in this country we must be assured that there will be Canadian distribution of films. It will be almost pointless-not quite but almost-if feature films are produced in Canada in great numbers and are shown for the most part in the United States and parts of Africa, Europe and Great Britain, but only occasionally in Canada. It strikes me that this is one of the reasons the minister is so concerned to put in any limitation in this bill. She appears to think that as long as we can guarantee some kind of international distribution we will have assured the survival of a feature film industry in this country.
Surely this will not serve the end we envision for this measure in terms of providing feature films made by Canadians for Canadians. This does concern me greatly. If we cannot achieve this end, we have bought only a very small piece of this business.


Julia Verlyn (Judy) LaMarsh: Mr. Chairman, it goes without saying that we hope distribution in Canada will be one of the first considerations. As a matter of fact, our movie houses are
February 3, 1967

owned by United States movie companies and by British movie companies. When you distribute your films you enter into distribution agreements with respect to Canadian rights, United States rights, European rights and sometimes world rights. This is not a matter for the government but for the person who is selling the package.


Herbert Wilfred Herridge: Mr. Chairman, I want to deal
with subclause (4) of this clause, which reads:
The corporation shall, to the greatest possible extent consistent with the performance of its duties under this act, consult and co-operate with departments, branches and agencies of the government of Canada and of the government of the provinces having duties related to, or having aims or objects related to those of the corporation.
I think this is a most interesting clause. Could the minister explain to the house how this clause will function? How will the corporation collaborate with these various departments and branches? Can she give us some idea how this clause will be implemented?


Julia Verlyn (Judy) LaMarsh: I am informed that both the province of Ontario and the province of Quebec have expressed interest in feature film production, the former through the Ontario Development Agency and the latter through the minister of cultural affairs. In the latter case the minister of cultural affairs for Quebec has already made one direct grant to a feature film maker. We expect to be working quite closely with them. They may be one of the people who apply. I do not think that an agency which will itself produce a film will apply, except for assistance in distribution and matters of that kind.


Mr. Peters:: I ask the minister whether there have been any requests by the Ontario department of lands and forests to assist in their film production as well?


Julia Verlyn (Judy) LaMarsh: Not that I am aware of, Mr. Chairman.


David Samuel Horne MacDonald: Mr. Chairman, may I once more refer to the film "The Luck of Ginger Coffey", since it has been mentioned. I do not think the minister would want it to go on record that this was in any way, shape or form a typical Canadian movie. I have been reminded that the stars were not Canadians. The director was not a Canadian, the director of photography was not a Canadian and the editor was not a Canadian. If I remember my conversation with Mr. Crawley, he told me that he would not have regarded this film as falling within the criteria envisaged by this legislation.
Development of Film Industry
Before we dispose of this particular clause may I once more raise the objection I made and put forward a suggestion to the minister by way of compromise. Since the minister seems to be unwilling to accept the proposal I made, then by way of compromise, and as a very tangible reminder to the corporation, would she accept such words as "owned by an individual resident in Canada, by a corporation incorporated under the laws of Canada or a province, with significant Canadian ownership"? Would the words "with significant Canadian ownership" be acceptable? It seems to me, Mr. Chairman, that if we do not include some words like that we have left the door as wide open as it could possibly be.


Julia Verlyn (Judy) LaMarsh: I do not think it is necessary to include those words, Mr. Chairman.


David Samuel Horne MacDonald: Then I, as one economic and cultural nationalist, will let it go on record at this point that I think the minister has in this legislation opted for allowing a very sizable chunk of what might have been a Canadian feature film industry to drift away from us. I hope that I do not have the opportunity at some future date of standing in this place and saying very loudly and clearly "I told you so".


[Stage Direction]
Clause agreed to.
Clause 11 agreed to.
On clause 12-Executive Director and Secretary.
David Samuel Horne MacDonald: Mr. Chairman, it is suggested in this particular clause that on the recommendation of the corporation an executive director may be appointed. For purposes of clarification I should like to know whether this means that if the corporation did recommend that such an appointment be made the governor in council would in fact make the appointment? The word "may" seems very ineffectual in this context.


Julia Verlyn (Judy) LaMarsh: Mr. Chairman, we hope that we will have a small staff to begin with, which will be paid for out of the $10 million, so I do not want to fritter it away in this regard. Without question we have to have legal experts, a treasurer and a comptroller. We have included a secretary in order that there may be the opportunity for language balance. That is the reason we have used permissive language rather than mandatory.


[Stage Direction]
Clause agreed to.
Clause 13 agreed to.
12E64
February 3, 1967
[Stage Direction]
Development of Film Industry
On clause 14-Advisory group.
Herbert Wilfred Herridge: Mr. Chairman, clause 14 reads:
The minister may, on the recommendation of the corporation, appoint an advisory group broadly representative of the professional associations, exhibitors, distributors and unions in the Canadian film industry and including other qualified persons, to advise the corporation on matters which the minister or the corporation may refer to it.
[DOT] (5:30 p.m.)
Would the minister explain how this section will work, what is actually intended, and what groups are likely to he included?


Julia Verlyn (Judy) LaMarsh: I shall be glad to. This again is a permissive section modelled on the type of advisory committee existing in the United Kingdom. The purpose of the committee is to give the film industry an opportunity, on a formal basis, to advise the government. We expect that the various associations will, as in England, nominate three or four people, and we shall select one from each. This may be open to people outside the film industry, and can include film critics or economists specializing in film matters, or other people who specialize in the industry who, from time to time, may be required to give advice.


Robert William Prittie: Is it the intention to pay the expenses of this advisory group when they meet? As the bill now stands you cannot pay their expenses. It seems to me that if the advisory group is called to a central place from time to time to aid the corporation, their expenses at least should be paid.


Julia Verlyn (Judy) LaMarsh: I am not certain whether they will come together at one point. Members of the industry have been extraordinarily helpful, as has been the interdepartmental committee, in dealing with the problems over the past two or three years. We find that people in all parts of the industry have offered assistance to that committee, and I do not think it will be necessary at this time, since that again would be a charge on the fund, to give them financial reimbursement. If it proves necessary to give that reimbursement in future, we shall ask parliament for that right.


Robert William Prittie: Does the minister mean, as the bill now stands, that there is no express authority to pay the advisory group's expenses?


Julia Verlyn (Judy) LaMarsh: It is not my intention to pay them, no.


Herbert Wilfred Herridge: Mr. Chairman, following my previous question, the clause says:
-appoint an advisory group broadly representative of the professional associations-
Does this mean professional associations within the film industry, or other professional associations that may want to make some contribution?


Julia Verlyn (Judy) LaMarsh: They may be in or out.


David Samuel Horne MacDonald: Again, I find this clause is not enough to deal with the situation. Earlier this afternoon we said that the only person with any expertise to be directly associated with the board will be the government film commissioner. At a later date it will be the person who will be executive director of this particular board. If the new federal Film Development Corporation is to get the amount of advice it will need, this clause is not sufficient. The clause could not have been written in a more vague fashion. It says:
The minister may, on the recommendation of the corporation, appoint-
And it lists a number of groups:
-to advise the corporation on matters which the minister or the corporation may refer to it.
I find the use of the word "may" wrong, particularly in the first part where it says "may appoint". If the federal film development board determines that it will need this expertise, and I am 100 per cent sure that it will, why could the committee not change this clause to read "will on the recommendation of the corporation"?
I am also disappointed because the minister has said there is to be no remuneration. If we are thinking of using people receiving at times much remuneration, how will it be possible to ask them to give up their time, so that they may give advice, unless there is some definite responsiblity to pay their travelling expenses at least, and some kind of daily indemnity. It seems that where an advisory group is set up, this sort of thing normally is available.


Julia Verlyn (Judy) LaMarsh: Mr. Chairman, there is no indication that it has to be mandatory. This is intended to be permissive. I am not sure, at first blush, that we shall set up an advisory committee. It will be hard enough to find the people, the right people who have no connection with the business, to put them on the board-to say nothing of people who from time to time on an ad hoc basis will serve as
February 3, 19G7	COMMONS
part of the advisory group. I do not anticipate thay any board of management or advisory group sitting in another part of the country will have any difficulty because of the situation my hon. friend has described. From time to time experts will be required to give assistance, and we shall call on them.
Perhaps I should make myself clear. We do not want two boards. The government would have to appoint them to give advice on the one hand and management on the other.


David Samuel Horne MacDonald: I am sorry, but I had difficulty following the minister. I am still not clear. Is the minister saying that there will be a specific group known as an advisory group? I see advisory group in the clause spelled with a capital "A" and capital "G". It seems to me that the clause makes provision to set up a specific entity-


Julia Verlyn (Judy) LaMarsh: No, no. There is no capital "A" or capital "G".


David Samuel Horne MacDonald: There is in my copy.


Julia Verlyn (Judy) LaMarsh: That is the Queen's Printer.


David Samuel Horne MacDonald: I think the Queen's Printer must have had a hand in this.


Julia Verlyn (Judy) LaMarsh: There are no capitals in the French version.


David Samuel Horne MacDonald: There is discrimination somewhere. We ought not to have capitals in English, either.
Coming back to my point, there are those who will be needed to provide continuing expertise. By and large membership of bodies providing assistance will not be on a full-time basis. Most people will be occasional members, not necessarily from the film production world. The corporation will need to get advice somewhere, and if we are to use the $10 million intelligently in initial stages, that advisory group with a capital "A" and a capital "G" will be necessary.


Julia Verlyn (Judy) LaMarsh: It may be that people with experience in labour relations may be called in to advise us on the IATSE question, and the whole idea of labour unions in the film industry. On the other hand a board will be set up, and as I have said it may be composed of lawyers, secretary-treasurers and people like that, who are also experts in the film business. Only from time to time will things have to be addressd to an advisory group.
Development of Film Industry
We are happy in this country to have enthusiastic members of the public offering unpaid assistance to the public, through government, when requested. I do not know why this should not continue. We could pay them expenses, give them an aeroplane ticket and a meal. But any corporation can do that without legislation. We do not expect them to spend their own money; but we do not want to pay them as such. We do not want to make them consultants.
[DOT] (5:40 p.m.)


Herbert Wilfred Herridge: I wholeheartedly support the minister in this respect. I believe the hon. member for Prince is underestimating the willingness of Canadians to do something on a voluntary basis when it comes to making a contribution to their country, their province or the community in which they live. I think we shall be able to find people willing to do this, as long as they are allowed their out-ofpocket expenses as far as travelling is concerned.


[Stage Direction]
Clause agreed to.
On clause 15-Staff and Special Advisers.
Robert William Prittie: Has any projection been made as to what the size of the full-time staff of the corporation will be? Will it be five, ten, or 20 people?


Julia Verlyn (Judy) LaMarsh: We think the staff will be small, to begin with. For one thing, there is not a very great pool of suitable people to tap. We have to pay their salaries and everything else out of the $10 millions; we do not wish to dissipate that amount.


Robert William Prittie: So the staff will be small.


Julia Verlyn (Judy) LaMarsh: Small in numbers; I am not talking about stature or weight. It will be the minimum we can get along with to enable the corporation to perform its functions.


[Stage Direction]
Clause agreed to.
On clause 16-Application of Public Service Superannuation Act.
William Arnold Peters: I should like to know why the benefits of the Public Service Superannuation Act have been withheld from the members of the corporation. This is a Crown agency and some of the other agencies of the Crown, or rather their employees, receive the benefits of this act. I think it would be to our advantage to bring more people within the act than to leave people out. Their inclusion established equality among the employees of the various Crown corporations.
February 3, 1967

Development of Film Industry


Julia Verlyn (Judy) LaMarsh: There are a number of agencies, the National Film Board for instance, whose employees do not come under the act. They stand on their own feet.


William Arnold Peters: Is it not the case that if we do not place these people in a class comparable with that of regular civil servants we shall find it necessary to establish conditions of wages and benefits strictly comparable to those outside, so that the corporation will have to be run strictly on a commercial basis. There is an obvious advantage in giving people who work for Crown agencies the benefit of the security which comes from employment in the public service in some fields. In wage negotiations these things are taken into account.


Julia Verlyn (Judy) LaMarsh: I am sorry. I have misled the hon. member. The phrase in clause 16 is "members of the corporation as such". If the hon. member turns to clause 4 he will find that the members referred to are members of the board. It does not mean the staff.


William Arnold Peters: In other words, the staff would be covered as civil servants. Thank you.


[Stage Direction]
Clause agreed to.
On clause 17-Corporation Agent of Her Majesty.
Lloyd Roseville Crouse: Subclause (3) of clause 17 talks about the corporation acquiring property in the name of Her Majesty. Is it intended that this board should set up in Ottawa? Where will the physical headquarters be located?


Julia Verlyn (Judy) LaMarsh: We have not yet decided. I have had lots of importuning from hon. members in constituencies from the west coast to the east coast.


Herbert Wilfred Herridge: I am illiterate about legal matters and I should like to ask the minister a question in connection with the same subclause. It says:
Property acquired by the corporation is the property of Her Majesty and title thereto may be vested in the name of Her Majesty or in the name of the corporation.
Can the hon. lady explain the difference between these two types of ownership?


Julia Verlyn (Judy) LaMarsh: The difference is not really significant; it does not mean anything. A piece of property, real or personal, can be owned by the Film Development Corporation or it can be owned by the Queen in right of Canada.


Herbert Wilfred Herridge: The minister is really telling us that this is superfluous.


Julia Verlyn (Judy) LaMarsh: No. A contractual agreement might be drawn up in England or in the United States, or in some other place. This provision ensures that either form will be appropriate.


David Samuel Horne MacDonald: As the minister said earlier, I am new at this game and I am not sure whether I am correct, but it would seem to me that legislation of this kind should indicate the location of the head office. I refer to this because I am concerned that it should not be located in one or two places which might be detrimental to the basic purpose of the corporation.
For instance, I think it would be a bad thing to have the office space of this corporation located in Montreal, in the same building as the National Film Board. I have nothing against the National Film Board, but if this new agency is to function as a separate entity it is important that it does not become an appendage of another which is connected with the production of motion pictures. This is why I think we should have a specific statement from the minister as to where the headquarters of the corporation will be.


Julia Verlyn (Judy) LaMarsh: I do not know. I doubt whether the acts setting up the C.B.C. or the National Film Board indicated where the head offices would be. In one case the head office was moved from Ottawa to Montreal. In another, the Fowler report wanted the office moved and there was no suggestion the legislation would have to be amended so that this might be done.
If I were asked to make a personal choice, I would say Niagara Falls, but no doubt there would be 264 objections from other parts of this chamber if I v/ere to do that. The same would probably be true if I chose Summer-side. So it might very well be located in some larger centre.


David Samuel Horne MacDonald: I would like to be assured that it is not to be located where it is likely to become part of a larger entity connected with motion picture films. This could easily extend to the C.B.C., which is the biggest government producer of films in our country today. I think it is important that this new corporation should have a life and purpose of its own.


Robert William Prittie: The motion picture industry in the United States flourishes in that part of the
February 3, 1967	COMMONS
country where the climate is best suited, namely the west coast, and I should like to suggest that this is where the headquarters of the corporation should be.


Edward Nasserden: When considering all these claims I hope the minister will not forget the city of Yorkton in Saskatchewan, which is host to Canada's most famous film festival.


[Stage Direction]
Clause agreed to.
Clauses 18, 19 and 20 agreed to.
Clause 1 agreed to.
Title agreed to.
Preamble agreed to.
Bill reported.
[DOT] (5:50 p.m.)
Mr. Deputy Speaker:: When shall the said bill be read a third time? By leave now?


John Angus MacLean: Mr. Speaker, I do not particularly want to raise an objection, but I think we should follow the regular practice that when there are amendments to a bill it should not be read the third time the same day. Under the circumstances, however,
I would be agreeable to having third reading now.


Mr. Deputy Speaker:: Is it agreed that the bill be read a third time, by leave, now?


Some hon. Members:: Agreed.


Julia Verlyn (Judy) LaMarsh: the third reading of the bill.
Motion agreed to and bill read the third time and passed.


Mr. Deputy Speaker:: Earlier this day there was agreement that when the bill which has just been passed had been completed the house would proceed to the consideration of private members business.


Frank Howard: Mr. Speaker, in the light of the request to proceed over this hour with government business I wonder if the house might wish to make an order putting into effect the result of the discussion that some hon. members had, representatives of all parties, namely that item No. 9 under the heading private bills be renumbered as item No. 1, so that it could be dealt with as the first item of business the next time private bills are called.
Business of the House


Mr. Deputy Speaker:: Is it agreed that item No. 9, namely, second reading of Bill No. C-239, on today's order paper, be renumbered as No. 1 under the heading of private bills?


Some hon. Members:: Agreed.



MOTION TO AMEND PROVISIONAL STANDING


Hon. G. J. Mcllraiih (Minister of Public Works):: Mr. Speaker, I take it that in the few moments which are left we shall not proceed to consideration of private members business. Therefore I would like to state that I believe there has been unanimous agreement that during the two week period beginning February 6, 1967, the sittings of the house shall be suspended from 7 o'clock p.m. to 8 o'clock p.m. on Mondays, Tuesdays, and Thursdays, and from 1 o'clock p.m. until 2 o'clock p.m. on Fridays.


Mr. Deputy Speaker:: Order. I should point out to the thouse that this is the type of motion which requires notice; but if there is unanimous consent of the house for me to put the motion now I shall do so. Is there unanimous consent?


Some hon. Members:: Agreed.


George James McIlraith: That during the two week period beginning February 6, 1967, the sittings of the house shall be suspended from seven o'clock p.m. to eight o'clock p.m. on Mondays, Tuesdays, and Thursdays, and from one o'clock p.m. until two o'clock p.m. on Fridays.


[Stage Direction]
Motion agreed to.
Mr. Deputy Speaker:: It is so ordered.



BUSINESS OF THE HOUSE

George James McIlraith: On Monday the house will be asked to resume the budget debate, and it is our present intention that at the conclusion of the budget debate we would immediately proceed with the budget resolutions and the bills.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Monday, February 6, 1967