1967-02-16

Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, I rise on a question of privilege that affects the rights and prerogatives of the House of Commons. I hope the Prime Minister, as the custodian of those rights under your direction, sir, will join with me in what I am about to say. I refer to an answer in Hansard as reported at page 13065. The material portion of the question I asked was this:
What are the names and addresses of the chosen officials and/or employees of the C.B.C. who are to be the recipients of and have free use of the coloured T.V. sets recently purchased by the C.B.C.
You will recall, sir, that the hon. member for Swift Current-Maple Creek first brought this matter to the light of day. Yesterday the answer was given by the minister and, of course, she only transmits that which is given to her by the corporation. The answer to that question which was worded in such a way that there would be no ambiguity, was:
Colour television receivers are assigned according to requirements of senior positions and remain with these positions in the event of the departure of present incumbents. They are used by those whose duties require program viewing.
Sir, that answer took several weeks in incubation. It was delayed for days on end until I rose on a question of privilege. That answer indicates a cavalier contempt of parliament. The C.B.C. secures the major portion of its income from the people of Canada, and parliament is not secondary to the C.B.C. The question was allowed, it was on the order paper, and parliament's right to obtain this information has not been challenged.
[DOT] (2:40 p.m.)
I rise at this time simply to ask for an answer. The answer may be embarrassing to some who have become voluntary recipients of the public benevolence at the expense of the people of Canada, but whatever may be the embarrassment the answer must be given. Unless the answer is given in a satisfactory
way early next week it will become necessary in the interests of preserving the rights of parliament to take such action as the traditions and prerogatives of parliament permit. I hope that will not be necessary.


Mr. Speaker:: Order, please. The right hon. Leader of the Opposition has not chosen to make a motion, so for the time being the matter will be allowed to rest.


John George Diefenbaker: Mr. Speaker, may I say, so there will be no misunderstanding, that whatever rights I have are held in abeyance at the moment without prejudice to any further action.



CRIMINAL CODE


Mr. Barry Mather (New Westminster) moved: for leave to introduce Bill No. C-269, to amend the Criminal Code (invasion of privacy).


Some hon. Members:: Explain.


Barry Mather: Mr. Speaker, the purpose of the bill is to amend the Criminal Code to render criminal the invasion of privacy by instruments such as the telephone, the telegram, television and films. It is felt that in the interests of all and for the protection and dignity of the individual some limitation should be placed on the use of these devices. It is in effect an anti-bugging bill.
Motion agreed to and bill read the first time.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, I should like to address my question to the Secretary of State for External Affairs. I regret that I have not given him notice, but it arose in my mind as the result of certain press references to the situation in Rhodesia. It is approximately two months since the imposition of mandatory sanctions against Rhodesia. I should like to ask the hon. gentleman whether he is in a
February 18, 1987

Inquiries of the Ministry position to advise us now as to their effectiveness. A year ago the prediction was made that they would be successful within about 60 days. What is the anticipation with regard to success or failure of the imposition of sanctions by the United Nations?


Hon. Paul  Marlin@Secretary of Stale for External Affairs: Mr. Speaker, when sanctions were first imposed within the context of the commonwealth alone it was possible to give an appreciation of the effectiveness of the totality of those sanctions. Since that time, of course, the security council has imposed selective mandatory sanctions. I do not have any information which would show the combined result of compliance with the security council resolution. The security council will be meeting in about three weeks, at which time the secretary general will report to the members of that council on the effectiveness of the sanctions up to that time. Until then I am not in a position to give more details. I can say that the commonwealth sanctions, in themselves, revealed an improvement but not to the point where one could say they would have full effectiveness within a foreseeable period.


John George Diefenbaker: Canada is a member of the security council. Has Canada not yet received any word from the secretary general regarding the effectiveness or ineffectiveness of the action taken?


Mr. Martin (Essex East):: No, sir. The representative of Canada on the security council did make some inquiries a week ago, and he was informed by the secretariat that a report would be made pursuant to the security council resolution within about three weeks' time.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquillam):: May I ask the right hon. Prime Minister if he has received a telegram from the western Canadian regional council of the International Woodworkers of America indicating that in addition to the 15 per cent surcharge which is to come into effect on March 1, imposed by the trans-Pacific freight conference of Japan, a second group, the Pacific westbound conference, has announced its intention of imposing a similar surcharge on ships entering Vancouver?

In view of the harmful effect this will have on the economy of British Columbia, and in view of the fact that the government's commissioner, Mr. Justice Smith, found there was no undue delay in loading and unloading ships by reason of labour disputes, might I ask the Prime Minister what action the government proposes to take to try to prevent the imposition of this surcharge?


Right Hon. L. B. Pearson (Prime Minister):: I received a telegram this morning and I took up the matter with the Minister of Transport, who I believe has already replied to it.


Thomas Clement (Tommy) Douglas: May I ask the Minister of Transport if he would give the house some idea of what action is being taken to prevent the imposition of these surcharges by the two groups who have made these announcements?


Hon. J. W. Pickersgill (Minister of Transport):: Well, exactly the same kind of protest and representation is being made with respect to this proposal as was made with respect to the other proposal which, as the hon. gentleman knows, has been postponed. Most urgent protests are being made by the harbours board.


Thomas Clement (Tommy) Douglas: May I ask the minister whether he has received any reply to the protest he made to the Japanese shipping federation?


John Whitney Pickersgill: Well, as the hon. gentleman knows, the most effective reply was that the date for the imposition of this surcharge was postponed so there would be an opportunity for representations to be made. Representations are being made in the most urgent possible manner.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. Raymond Langlois (Meganlic):: My
question is directed to the Secretary of State. I should like to ask whether she received a telegram from Mr. Daniel Johnson containing very strong protests about the program "Tirez au Clair" last night, which dealt with educational affairs. Evidently one of Mr. Johnson's ministers was refused participation in the program and the entire 45 minutes was given to the former minister of education, Mr. Gerin-Lajoie. Has the minister received any explanation for such behaviour from the C.B.C.?
February 16, 1967


Hon. Judy V. LaMarsh (Secretary of Slate):: No, 1 did not receive any message from the Quebec premier.


Raymond Langlois: I have a supplementary question, Mr. Speaker. Would the hon. minister tell the house that she will look into the matter and give the house an answer on the attitude of the C.B.C., or might it be that the problem should be taken up now by the committee on broadcasting, films and assistance to the arts?


Lester Bowles Pearson: If I may supplement the answer, just at lunch time I received a telegram from Mr. Johnson protesting strongly about this matter. I had already acknowledged the telegram before coming into the house, to the effect that I would take up the matter with the C.B.C. through the Secretary of State. I sent a copy to the Secretary of State, who probably has not received it yet.



NATURAL GAS


[Stage Direction]
On the orders of the day:
Mr. R. N. Thompson (Red Deer):: Mr. Speaker, my question is directed to the Minister of Energy, Mines and Resources. Is the government taking any steps to answer charges made before the federal power commission in Washington by competing gas line transmission companies that the changes required by the Canadian government in the proposed pipe line to come through northern Minnesota would make it uneconomic and that the plan is not practical to meet the market needs of the United States and eastern Canada?


Hon. Jean-Luc Pepin (Minister of Energy, Mines and Resources):: Mr. Speaker, I do not think the members of the federal power commission will be surprised to hear these opinions from competing companies.



ARRANGEMENTS FOR IMPORTS FROM CARIBBEAN COUNTRIES

[Stage Direction]
On the orders of the day:
Mr. Speaker:: The hon. member for Northumberland.


Some hon. Members:: Hear, hear.
Inquiries of the Ministry


Hon. George Hees (Northumberland):: Mr. Speaker, for the first time in a long time I am caught without anything to say.
I should like to address a question to the Minister of Trade and Commerce, of which I sent him notice. Were arrangements completed at the recent meeting of officials in St. Lucia to assist the sugar industry in the Commonwealth Caribbean countries? If so, what are the basic features of the arrangement?


Hon. Robert Winters (Minister of Trade and Commerce):: Mr. Speaker, this gives me an opportunity to express not only my approval but, as evident from the applause from behind me, the general approval of the announcement made this morning by the hon. member. I wish to add my personal congratulations.


Mr. Bell (Saint John-Albert):: We will do the same for you.


Robert Henry Winters: Thank you very much. The problem faced by the sugar producers in the Commonwealth Caribbean countries has been of considerable concern to us, as of course it has to them, for some time. At the Prime Ministers' conference last year we decided that in the absence of a world sugar agreement, toward which we are working, we would undertake some temporary measures to help assure access to the Canadian Market of a reasonable level of sugar imports from that area at a price which was made somewhat better than the world price by the remission of the 29 cents tariff per hundredweight.
At a recent meeting of officials in St. Lucia further progress was made in working out the details, and we expect a final decision will be made shortly.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. Eric A. Winkler (Grey-Bruce):: Mr. Speaker, I have a question for the Minister of National Defence which deals with an important matter, as expressed to me during the last few days. Can the minister inform the house which system of retail outlets as a result of the reorganization of the minister's thoughts will be retained for the services, the P.X. which is used for the air force or the M.L.S. as used by the army?


Hon. Paul Hellyer (Minister of National Defence):: Mr. Speaker, it was explained to
February 16, 1967

Inquiries of the Ministry the committee the other night that this question is now under active consideration. Once all systems have been examined and the wishes and needs of servicemen, both in Canada and overseas, have been taken into account, a recommendation will be made to the defence council, and following that some decision will be made.



HIGHWAY SAFETY


[Stage Direction]
On the orders of the day:
Mr. P. V. Noble (Grey North):: Mr. Speaker, I should like to direct this question to the Minister of Industry. Since only 1 per cent of highway accidents can be attributed to defective automobiles, will the minister give some indication as to what progress is being made by way of legislation to reduce the heavy toll being suffered through other causes over which the government does have jurisdiction? On January 25 I put a similar question to the Prime Minister, at which time he promised a statement would be made by the minister responsible.


Hon. C. M. Drury (Minister of Industry):: Mr. Speaker, this is quite a lengthy question and I would be glad to take it as notice.



NATIONAL HARBOURS BOARD


[Stage Direction]
On the orders of the day:
Thomas Miller Bell: My question is for the Minister of Transport. Has the minister now the information available about the new National Harbours Board taxation arrangements for the municipalities, mentioned last Friday?


John Whitney Pickersgill: 

FINANCE


[Stage Direction]
On the orders of the day:
Mr. David Lewis (York South):: Mr. Speaker, I have a question for the Minister

without Portfolio from Toronto-so I may be sure the minister knows I am speaking to him-in his capacity as chairman of the committee of ministers to study foreign control in the economy. May I ask him-


Mr. Speaker:: Order, please. I suggest to the hon. member he cannot ask a question of the minister in the capacity in which the hon. member has referred to him.


David Lewis: May I rephrase my question, Mr. Speaker. May I ask the Minister without Portfolio whether he can announce to the house the names of the task force which will assist the committee of cabinet ministers in its study of foreign control in the Canadian economy?


Hon. Waller L. Gordon (Minisler wiihoui Porlfolio):: Not at the present time, Mr. Speaker.



AIRPORTS


[Stage Direction]
On the orders of the day:
Hon. E. D. Fulton (Kamloops):: I wish to direct a question to the Prime Minister about-


Some hon. Members:: Hear, hear.


Edmund Davie Fulton: Mr. Speaker, it is very gratifying to receive a welcome like this. I only wonder whether it will continue every time I return from a visit to my constituency.
I want to ask the Prime Minister about a matter of great concern to the people of Vancouver and district concerning access to the international airport on Sea island. Did the Prime Minister and some of his colleagues receive a brief from the Richmond Chamber of Commerce recently requesting immediate action on the improvement of access facilities, particularly in the light of the construction of the new terminal building there? If so, has the government made any decision on that submission?


Lester Bowles Pearson: Mr. Speaker, before I try to answer that question, on a question of privilege I wonder if you could inform me what is all the applause about that seems to be caused by two hon. members of the house today.


Some hon. Members:: Oh, oh.


An hon. Member:: A poor joke.
February 16, 1967


Lester Bowles Pearson: "Tis a poor one but mine own."


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: Replying to the question, Mr. Speaker, the matter is under consideration.



SHIPPING


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, could I direct a question to the Minister without Portfolio, the hon. member for St. Lawrence-St. George, and ask him if he will soon be in a position to make detailed announcements about the matters of safety at sea and the manning scales of ships.


Mr. Speaker:: The hon. member for Queens-Lunenburg.
[Later:}


Frank Howard: Some time ago I addressed a question to the Minister without Portfolio concerning safety at sea and the manning of ships. Perhaps I did not transport the question to the right minister. I wonder if I can ask somebody else to reply.


John Whitney Pickersgill: If the hon. gentleman would ask his question tomorrow when the Minister without Portfolio will be the acting minister, I am sure he will get an excellent reply.


Frank Howard: I will get a more precise reply; I am sure of that.



DEFENCE PRODUCTION


[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 Industry in his capacity as Minister of Defence Production. Has a change been made in the tariff on military equipment purchased abroad by the Canadian government? If so, what is the amount of the purchase required for full remission of customs duties and why was the change made?


Mr. Speaker:: This question should be
placed on the order paper.


Lloyd Roseville Crouse: Mr. Speaker, I placed this question because I am informed that a change
Inquiries of the Ministry was made and it is not applicable to components purchased by Canadian defence companies.


Mr. Speaker:: Order, please. The hon. member is explaining why he asked his question. That does not change the situation; the question should still be on the order paper.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Mr. G. L. Chatierlon (Esquimalt-Saanich):: Mr. Speaker, my question is for the Minister of National Revenue. I wish to ask when will the terms of reference to the public service committee be broadened so they may consider the matter of pensions of ex-armed forces personnel and ex-R.C.M.P. personnel?


Hon. E. J. Benson (Minister of National Revenue and President of the Treasury Board):: Mr. Speaker, this question was raised by my colleague the Minister of National Defence. I wrote a letter to the chairman of the committee saying that in our opinion it would be proper for them to consider this matter at the same time they are considering the other. If a formal reference is required from the house, however, or should the committee deem this necessary, we would be glad to make such a reference.



QUEBEC-INQUIRY AS TO TENDERS FOR SALE OF ELEVATORS

[Stage Direction]
On the orders of the day:
Hon. Theogene Ricard (Saint-Hyacinihe-Bagot):: Mr. Speaker, I should like to put a question to the hon. Minister of Transport.
Can the minister tell us what decision has been taken with regard to the possibility of selling or renting grain elevators in Quebec City?


John Whitney Pickersgill: I do not believe any propositions have been received for the purchase; therefore there has been no occasion up to now for any decision.


J.-H.-Théogène Ricard: A supplementary question, Mr. Speaker-I was also inquiring about the renting of the premises.
February 16, 1967

Inquiries of the Ministry Has the minister received any proposals in accelerating conflict in southwest Arabia and this connection?	Yemen?


John Whitney Pickersgill: I think the same reply applies to both.



PENITENTIARIES


[Stage Direction]
On the orders of the day:
Mr. Eldon M. Woolliams (Bow River):: should like to direct a question to the Solicitor General; it affects the national penitentiary service. Would he check into conditions in the new institution at Drumheller, where I suggest he will find that it cannot be opened because accommodation is not available to house 175 employees, so it is impossible to relieve the overcrowding in other institutions.


Mr. Speaker:: Perhaps this question should be placed on the order paper.



VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
Raymond Langlois: Mr. Speaker, I wish to direct a question to the hon. Minister of Veterans Affairs.
What action is the government considering with regard to the veterans hospital at Ste Foy? Has the possibility of a transfer to Laval University been discussed?


Mr. Speaker:: The question does not appear to be very urgent and I would suggest that it be put on the order paper.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. Howard Johnston (Okanagan-Revel-sioke):: My question is directed to the Secretary of State for External Affairs. In the light of the minister's moving defence of quiet diplomacy earlier this week, a policy with which I largely agree, can the hon. gentleman tell us whether the Canadian government has made any representations to the governments of Egypt or Saudi Arabia with regard to the [Mr. Ricard.I


Paul Joseph James Martin: I will take notice of that question, Mr. Speaker.



FINANCE


[Stage Direction]
On the orders of the day:
George Louis Chatterton: 1 wish to address a question to the Minister of Finance, but if the Minister of National Revenue thinks he would be better able to reply, perhaps he would do so. Has the minister been advised about the confusion existing in the building supply industry because of the fact that in some cases the present tax applies at the rate of 11 per cent, while in others it applies at the rate of 12 per cent? If so, does the government intend to take any action to simplify this situation?


Edgar John Benson: In the implementation of the new tax, that is the increase in sales tax from 11 per cent to 12 per cent, the government decided to proceed as simply as possible by using as the schedule for construction materials the schedule which was used prior to the imposition of the sales tax on construction materials in 1963. Most people in the business of manufacturing construction materials are familiar with this schedule.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. S. J. Korchinski (Mackenzie):: I should like to direct my question to the Secretary of State. May I first thank her for the announcement she made yesterday concerning the intention of the C.B.C. to extend service to northern Manitoba where 7 per cent of the people are without service. Is the hon. lady aware of any plan on the part of the C.B.C. to use satellites to provide service to other remote areas in Canada such as parts of Saskatchewan, where 17 per cent of the people are without service?


Mr. Speaker:: Order. A question of the same type was asked yesterday, and I suggested then that it be placed on the order paper.
February 18, 1967


Stanley James Korchinski: With all due respect, I am asking whether satellites are to be used; that is the point of my question.


Mr. Speaker:: I am sure the hon. member will get a reply if he places the question on the order paper.



CANADA PENSION PLAN


[Stage Direction]
On the orders of the day:
Mr. A. D. Hales (Wellington South):: I have a question for the Minister of National Revenue, the minister responsible for Canada Pension Plan contributions. Is it the intention of the minister to appoint auditors to visit employers to find out whether these contributions are being made and remitted?


Edgar John Benson: This matter is being handled within the Department of National Revenue. People representing my department have to visit a great many employers in Canada and intend, of course, to audit the records in this regard as well as in other areas which fall within our responsibility.


Alfred Dryden Hales: If the minister has any notion of appointing auditors for this purpose, will he consult with his colleague the Minister of Labour, who is responsible for unemployment insurance, so that one auditor can do both jobs?


Mr. Speaker:: Order. The hon. member has made his representations, and I am sure the minister will take notice of the question.



AIRPORTS


[Stage Direction]
On the orders of the day:
Mr. Paul Beaulieu (Saint-Jean-Iberville-Napierville):: My question is for the Minister of Transport, Mr. Speaker.
I should like to know whether the government intends to subsidize the development of the St. Jean airport, as was done recently for the St. Hubert airport.
In view of the fact that the site of Expo in Montreal is a mere 15 miles away from St. Jean, this municipality is very interested in the development of its airport.


Mr. Speaker:: Perhaps the hon. member might wish to place his question on the order paper.
Inquiries of the Ministry



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: I have a question for the Minister of National Defence arising out of the recent unfortunate crash of a Tutor jet being flown by a member of the golden centennaires aerobatic team near the Comox armed forces base. I should like to ask the minister whether any review is being made of the program and the training procedures in connection with this aerobatic team as a consequence of this unfortunate accident.


Paul Theodore Hellyer: Since returning to the capital I have not had the opportunity to obtain a report with respect to this accident which occurred yesterday. I know all members of the house share with the hon. gentleman and myself sorrow at this tragedy, and we extend our condolences to the family.



NATURAL RESOURCES


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: As a
former parliamentary leader in this house I wish to direct a question to the minister responsible for wildlife. Has the minister received any response from the government of British Columbia to the proposal made by him and his department with respect to the joint development of Duck lake at the end of Kootenay lake as a wildfowl sanctuary?


Mr. Speaker:: I should think the minister responsible for wildlife would suggest that the question be placed on the order paper.



HOCKEY GAME BETWEEN MEMBERS AND PRESS GALLERY

[Stage Direction]
On the orders of the day:
Mr. L. R. Sherman (Winnipeg South):: My
question is addressed to the Prime Minister. Has the attention of the right hon. gentleman been directed to the distinction of a non-partisan nature which was brought to this institution last night by members of the house in their hockey game against members of the parliamentary press gallery?
13108	COMMONS
Inquiries of the Ministry Right Hon. L. B. Pearson (Prime Minister):
Yes, Mr. Speaker. I feel hurt that I was not asked to take part.


An hon. Member:: You would be more hurt if you had.


Mr. L. M. Brand (Saskatoon):: In view of what happened at the hockey game last night, and in view of the report on hockey tabled recently in this house, may I ask whether the Prime Minister has taken any measures to protect the House of Commons stars of last night's game? Will he see that any N.H.L. contract signed as a result of their sterling performances will at least contain a provision that they play only on Canadian ice?


Lester Bowles Pearson: I did not think there were any stars, Mr. Speaker.


Mr. Gregoire:: On a question of privilege, Mr. Speaker. I believe there were stars in yesterday's game and I would ask the Prime Minister to recognize the ability as hockey players of members of this house.



INQUIRY AS TO ESTABLISHMENT OF COMMITTEE ON PROCEDURE

[Stage Direction]
On the orders of the day:
Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I should like to direct a question to the government house leader. Can he advise us when it is likely the committee on procedure will be established so far as personnel are concerned, in view of the fact there is some doubt as to the wisdom of retaining some of the temporary rules without first making a thorough examination of how effective they have been?


Hon. G. J. Mcllraiih (Minister of Public Works):: Mr. Speaker, I hope the committee can be set up soon.


Gerald William Baldwin: I have a supplementary question. Will the minister give some thought to whether there is any legal or constitutional basis for the committee on procedure to continue during the next session without having to be reconstituted?



DISCUSSIONS RESPECTING U.K. ENTRY INTO EUROPEAN COMMON MARKET

[Stage Direction]
On the orders of the day:
Hon. Martial Asselin (Charlevoix):: Mr. Speaker, in a more serious vein, I have a 
DEBATES	February 16, 1967
question for the Minister of Trade and Commerce. Can he tell the house whether Great Britain is keeping Canada informed of her initiatives and conversations at present with a view to her entry into the Common Market?


Robert Henry Winters: Mr. Speaker, they keep us very well informed. One could not say they keep us informed about all conversations, but we are pretty well up to date on what is taking place there.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. Ralph Cowan (York-Humber):: Mr. Speaker, I have a question for the Solicitor General, of which I have given him due notice. On Tuesday of this week he informed the house that clemency was being exercised in the cases of two trade unionists in Vancouver. I should like to know what progress is being made in the study regarding the granting of amnesty to the trade unionists who took part in a mass demonstration in the city of Peterborough before Christmas.


Hon. L. T. Pennell (Solicitor General):: Mr. Speaker, if I understood the hon. member correctly he is referring to relief in respect of criminal records, because the sentences have been served by the people in question. As I advised the house earlier, this matter has just recently been taken under consideration.



ORDER IN COUNCIL RESPECTING TERMS OF REFERENCE AND PERSONNEL

Lester Bowles Pearson: Mr. Speaker, if I have the unanimous consent of the house to revert to motions I should like to table an order in council setting out the personnel and terms of reference of the royal commission on the status of women.


Mr. Speaker:: Is it agreed that we revert to motions?


Some hon. Members:: Agreed.


Mr. Speaker:: Does the right hon. Prime Minister have leave to table this document?


Some hon. Members:: Agreed.
February 16, 1967	COMMONS



EXCISE TAX ACT AND OLD AGE SECURITY ACT

[Stage Direction]
The house resumed from Wednesday, February 15, consideration of the motion of Mr. Sharp for the second reading of Bill No. C-268, to amend the Excise Tax Act and the Old Age Security Act, and the amendment thereto of Mr. Knowles.
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, this afternoon I should like to take a few minutes to complete the remarks I was making yesterday when we adjourned.
It seems to me that in introducing this bill the Minister of Finance, is doing precisely, in respect of people in lower income brackets and on fixed incomes such as pension allowances of various kinds, that which he warned us about some months ago. He has been warning us since last spring that we are facing a spiralling inflation and an ever increasing and alarming cost of living.
Some time ago the minister suggested that we must exercise care in order to stop or slow down this increasing cost of living, yet what he is proposing by this bill will inevitably have the result of increasing the cost of living for those people who can least afford it, the people on fixed incomes and in the low income brackets, whether they work for wages or derive their livelihood from farming. As was pointed out yesterday, the 1 per cent increase in sales tax applied at the manufacturers' level will increase as it is passed on from the manufacturer to the wholesaler, then to the retailer and finally to the consumer. It has been estimated that this increase will amount to about another 1 per cent, making the total increase to the consumer 2 per cent.
We have heard evidence to the effect that the cost of prescription drugs has gone up by not 1 per cent but 10 per cent or 15 per cent. It must be remembered that this has placed an extra burden on the older people. This has a disastrous effect so far as they are concerned, because generally speaking they need prescription drugs more than others.
Yesterday the parliamentary secretary to the Minister of Finance and another parliamentary secretary invited us to suggest an alternative way of raising funds to cover the increases in old age pensions. I suggested an alternative yesterday. I do not have the facilities to work out whether my alternative would provide as much money as the 1 per cent increase in sales tax.
Excise Tax and Old Age Security Act
For many years we have followed the principle of a graduated and progressive income tax policy under which people who earn the most money pay the highest income taxes, and pay them at higher percentage rates. I think most members of this house and most people in this country believe in this principle. That being so, it is completely wrong for this government to suggest that taxpayers should pay 4 per cent of their income with a limit of $240 per year toward the old age security fund. As I said yesterday in answer to the parliamentary secretary, it is much easier for every member of parliament and every businessman in this country who has a taxable income of $10,000, $15,000 or $20,000 to pay the 4 per cent increase than it is for those on fixed or low incomes to pay the 1 per cent increase in sales tax.
Because I believe this proposal is inherently unjust, and because I believe those in the upper income brackets are not being asked to pay their fair share, I have no hesitation in supporting the amendment moved by my colleague the hon. member for Winnipeg North Centre and in effect voting against the proposal incorporated in this bill which will impose a substantial increase in the taxes of the people of this country.


Raymond Langlois: Mr. Speaker,-


Mr. Speaker:: I recognize the hon. Minister of Finance.


Raymond Langlois: If he speaks will he close the debate?
[DOT] (3:20 p.m.)


Hon. Milchell Sharp (Minister of Finance):: Mr. Speaker, nothing would have pleased the Minister of Finance more than to have avoided increasing taxes to meet the costs of the guaranteed income plan for old age pensioners, and it might even have made the Minister of Finance much more popular. But as Minister of Finance I have a responsibility to be, not popular but, in so far as possible, wise. Sometimes I may succeed, sometimes I may not, but at any rate it is incumbent upon me as Minister of Finance to be concerned about the interests of all Canadians, and particularly to ensure that steady kind of economic progress that is vital to everyone in this country and particularly to the workers and farmers.
13110	COMMONS
Excise Tax and Old Age Security Act
If one looks at the history of governments in the world over the centuries I think one is forced to conclude that it is because governments from time to time have not been prepared to face up to their responsibilities that in the world at large over the centuries we have had too much inflation. The problem we face in the world today in relation to economic expansion is to try to create conditions in which we have steady economic expansion without inflation. No country in the world has ever succeeded in this. Too often in the past we have had a boom and bust type of economy. If one wanted to look around the world for an example of the serious problems that arise when not enough attention is given to this situation, one has only to look at the United Kingdom today, where because of the failure to deal adequately with the problem of ensuring steady expansion without inflation the government of that country is forced to the kind of measures that I sometimes think our friends in the N.D.P. are now advocating.
Mr. Speaker, if there had been any prospect whatever that there would be surplus revenues either during this fiscal year or during any subsequent fiscal year out of which we could have met these large additions to our expenditures, which I hope everyone in this house supports fully, I might have made different recommendations on this occasion. The government, looking at prospects, came to the conclusion that there was no prospect whatever that out of existing revenues we could meet the costs of the guaranteed income plan plus the other obligations the government faces and that have been supported on all sides of this house, as we have introduced legislation and as we have introduced estimates. The government therefore considered it wise on this occasion to avoid adding to any prospective deficit by raising immediately the large sums required for the supplement to old age pensions.
Much has been made of the fact that part of the revenues has been put into the old age security fund and part has gone into general revenues. In my address to the house on December 19 when I introduced these proposals I made quite clear what we were doing and why we were doing it, and I certainly resent any of the suggestions that have been made that at any time I misled the house or the public as to what we were doing.
May I, for the benefit of the hon. member for Winnipeg North Centre (Mr. Knowles), who I am sure will continue to make these

DEBATES	February 16, 1967
points regardless of what I say, and for the record refer again to what I said about the old age security fund. I said on December 19, as reported at page 11334 of Hansard:
When we consider the economic and financial effects of old age security payments, however, we must look not to the position in a single account but to total cash flows. In introducing the guaranteed income supplement we are adding $280 million a year to our cash outflow, and this must somehow be matched by increased cash revenues if we are to avoid increasing our cash deficit with all its financial and economic consequences. The accumulated surplus of the old age security account is not held in a separate cash balance. The cash received and credited to this account is and always has been pooled in the consolidated revenue fund into which parliament requires all revenues to be paid and from which the payments authorized by parliament are made.
This is the situation, Mr. Speaker. It has always been this way. If I thought I had some cash or some revenue that I could substitute for moneys borrowed or moneys raised by taxation, I would certainly have taken a different course. But in fact our expenditures are going up by $280 million, and I feel it wise under these circumstances to raise $280 million, approximately, for this purpose.


Thomas Clement (Tommy) Douglas: Mr. Speaker, could I ask the minister a question? Why is it that in the past he has taken 3 percentage points of the sales tax and included it in the old age security fund computation? He is not doing so in this case. Granted, it would make no difference to his cash position, but why is he making this distinction this time?


Mitchell William Sharp: Mr. Speaker, I am very happy to answer that question. I answered in part the other day. There is laid upon me as Minister of Finance, upon the government and upon this parliament a responsibility to keep that fund approximately in balance. For that purpose, what we felt should go into the fund was the result of an increase in the ceiling on the tax that was imposed on personal incomes. That, we believe, will keep the fund in balance up to about 1970 or 1971. That was a responsibility upon the government, and that is how we discharged it.
However, that would not provide the cash needed to pay the extra expenditures of the government; it would be $155 million short. We might, of course, have taken the other course, but I am sure hon. gentlemen would have taken even more exception if, instead of raising the ceiling on personal income tax, I had raised the sales tax for this purpose.


Thomas Clement (Tommy) Douglas: Of course.
February 16, 1967	COMMONS


Mitchell William Sharp: Yes, of course. The government's judgment was that it was better in these circumstances to use the personal income tax and raise the ceiling there, rather than alter the rates and then get the rest of the money for this expenditure-that is all I have ever said-by raising the sales tax by 1 per cent to obtain $155 million.


Thomas Clement (Tommy) Douglas: Why didn't the minister put the revenue from the sales tax increase into the old age security fund?


Mitchell William Sharp: It was not necessary for the purpose. The hon. member for Winnipeg North Centre has laid before the house a motion to hoist this bill for six months. In other words, as far as he is concerned there is no need for any more revenues; that is the effect of the six months hoist. I consider this action about as irresponsible as any that could be taken in this house.


Some hon. Members:: Hear hear.


Mitchell William Sharp: I would like to recall to the house some of the proposals that have been made by the party of which the hon. member for Winnipeg North Centre is such a distinguished member. I am proposing, in these tax increases, to raise approximately $290 million of revenue to meet the costs of the supplement to the old age pension, which will amount to about $280 million. If instead of following this policy we had adopted the proposals of the N.D.P. and had established a flat rate pension of $105 a month payable to everyone the cost would have been approximately $400 million. In other words, the additional cost would have been $120 million.
[DOT] (3:30 p.m.)
I will refer to a few of the suggestions for immediate action which have been made by the N.D.P. in the house and I want to stress the point that these proposals have been made for immediate action, not for action in the future. Indeed, on many occasions they have gone out of their way to castigate the government for not embarking immediately upon these expenditure programs, the most important of which is the one that I first mentioned. They have criticized the government for not paying $105 a month to all recipients of old age security. They have also proposed the abolition of university fees. I think all of us in the house want to make university education available to everyone in the country as soon as possible, but the N.D.P. has proposed that we provide free tuition immediately.
Excise Tax and Old Age Security Act
The N.D.P. proposed that $130 million should be provided which, according to my calculations, would approximately cover the payment of fees but not of course the cost of university education. The N.D.P. has criticized the government also for not increasing its external aid as rapidly as it would like. Here again everyone in the house would like to increase foreign aid as quickly as possible. I am sure this wish is universally shared in the house. The cost of our present aid amounts to $225 million per year. If we were to increase our aid now to 1 per cent of the gross national product, which is eventually our aim, it would cost another $350 million right away. If we had proceeded with the implementation of medicare this year rather than next year, as we had hoped we could do-


David Orlikow: You promised it.


Mitchell William Sharp: I was just as disappointed as the N.D.P. that this proved to be financially unwise. However, if this had been done it would have added another $300 million to our immediate expenditures.
I have picked out only a few of the proposals for additional expenditures. I find it difficult to keep up with the proposals that are made by the N.D.P. I am sure that if I were to add them all up the cost would be even more appalling. However, the total amount of additional expenditures and additional taxation which the N.D.P. would impose immediately would come to another $900 million approximately, in addition to the $290 million which the government is proposing under these taxation measures, or a total of $1,200 million of immediate increases in government expenditures. This is the party that proposes that we should hoist these modest tax increases for six months. As my colleague the Postmaster General (Mr. Cote) has said, this is the sort of program that one might expect the Social Credit party to propose since they believe in a different form of financing, one that would be very inflationary and under which they would simply print money.


David Orlikow: Who voted for debt free
money?


Mr. Speaker:: Order, please.


Mitchell William Sharp: Fortunately I can dissociate myself from past actions. I would certainly not be one of those who would advocate at any time that sort of philosophy of government finance. However, the total of $1,200 million, which would be the cost of implementing only
13112	COMMONS
Excise Tax and Old Age Security Act some of the measures that the N.D.P. would wish to implement immediately, would be equivalent to about 8 percentage points in the sales tax and would amount to about half of the revenues of our existing personal income taxes. These are the sort of tax changes which the N.D.P. is advocating immediately, I understand, and yet they are proposing that we should hoist for six months a bill which advocates an increase in tax not of $1,200 million but of $280 million.
I should like to speak now about the sales tax increase which is the point that led the hon. member for Winnipeg North Centre (Mr. Knowles) to propose the six months hoist. In supporting this amendment the hon. member for Vancouver-Kingsway (Mrs. Mac-Innis) said the following yesterday, as reported on page 13094 of Hansard:
We feel very strongly that this type of tax should not be imposed as a means of helping people in the old age pension group because at the same time we say we are helping them we are making things more difficult for them by increasing the sales tax.
The hon. member for Comox-Alberni (Mr. Barnett), however, took a rather different line and under some pressure from this side of the house admitted that he felt there might be some virtue in a sales tax but he thought it should be in the form of a retail sales tax rather than a manufacturers' sales tax. This is a problem in taxation which has concerned tax experts for a long time and there are arguments on both sides. As I see it, the position taken by the N.D.P. on this question is partly represented by the view taken by the hon. member for Winnipeg North Centre who does not like this tax at all because somehow he feels it is not right for us to impose taxes to cover the full amount of the cost. The hon. member for Vancouver-Kingsway does not like it either because it has certain economic effects and the hon. member for Comox-Alberni does not like the manufacturers' tax and would prefer a retail sales tax. Perhaps the reason why members of that party are prepared to support this amendment is that they managed to find some common ground upon which they can agree.
However, as I was listening to the debate I asked one of the hon. members who was speaking whether he was equally opposed to provincial sales taxes, to which he said yes. I asked him whether he was also opposed to the sales tax in Saskatchewan and he said yes. I then took a good look at the history of the sales tax in Saskatchewan and

DEBATES	February 16, 1967
I would like to give a brief recital of the facts. In 1937, following a recommendation of a royal commission headed by Mr. Neil Jacoby, a retail sales tax was introduced at 2 per cent and it was called an education tax. The proceeds from this tax were used exclusively for educational purposes. In 1944 the C.C.F. government came to office under the premiership of the hon. member for Burnaby-Coquitlam (Mr. Douglas) and in 1950 the tax was renamed the education and hospitalization tax and was increased to 3 per cent. In 1962 the tax was given another name which related more closely to the purpose for which it was to be raised and was called the education and health tax. At that time it was increased to 5 per cent and 50 per cent of the revenues were to be used for education, 30 per cent for hospitalization and 20 per cent for medical care.
Here we have the leader of a party in this house, who as premier of a province at one time imposed a 5 per cent sales tax for education, hospitalization and medical care, now supporting an amendment in the house implying that a 1 per cent increase in the manufacturers' sales tax is iniquitous and is somehow working to the detriment of those whom we are trying to help. Perhaps the hon. member has a convenient memory and will argue that at that time special circumstances prevailed. I suggest that those decisions were taken because he believed that this was a reasonable way of raising the revenues he needed.
[DOT] (3:40 p.m.)
Following that, indeed, in confirmation of it, Mr. Speaker, a royal commission on taxation in the province of Saskatchewan was appointed in 1963. I should like to read a paragraph or two of that report about the economics of such a tax. At page 162 of the report of the royal commission on taxation, province of Saskatchewan, 1965, there appears this paragraph:
The views which we express concerning the retail sales tax are not based only upon its current apparent acceptability-although acceptability or lack of it is certainly a matter of considerable importance in determining the usefulness of any tax form. We have concluded that a properly structured retail sales tax is a "fair" mode of taxation in that it does distribute its burdens according to at least one reasonably adequate measure of income-actual expenditures on consumption. Moreover, to the extent that expenditures on certain basic necessities of life-for example, food and shelter-are exempted from the operations of the tax, then low income groups are relieved of its most burdensome aspects, and it may be levied in accordance with reasonable concepts of ability to pay.
February 16, 1967	COMMONS
That is a judgment rendered upon the tax structure of Saskatchewan in which the retail sales tax is very substantial. I believe that it does support the reasonableness under modem conditions, of raising part of the needed revenues by a tax on consumption. The report also points out and reinforces the argument I made in my address on December 19, that if one does impose a manufacturers' or sales tax and exempts food, fuel and shelter one arrives at a tax that bears at least some relationship to ability to pay and is certainly not regressive.
As I said at the outset I wish it could have been possible for the government to have avoided any increase in tax. 1 wish, too, that we could have found other sources of revenue that would have been fairer. If I could have found them, I would have done so. However,
I was limited, as I said in my budget address, by the facts of the present position. I should like to remind the house again of what I said in that connection, as reported on page 11336 of Hansard:
The choice of the tax to increase for this purpose-*
That is to increase our general revenues.
-is a difficult one. Normally one would look to our regular personal income tax because, being progressive, it is one of our fairest taxes. However, we share this tax field with the provinces. We have emphasized to them in recent months that they have access to this field of taxation just as we do and must share responsibility for its use. We are proposing, as I have said, to abate our income tax for 1967 to make it easier for the provinces to raise theirs in order to help finance the rapidly growing burden of higher education. We will want to discuss with the provinces in the coming year or two various ideas proposed to reform the income tax so that we may achieve as much harmony as possible in our use of this most important tax field.
It was for this reason we did not at that time employ the personal income tax. It has been suggested that we could have removed the ceiling altogether from the social security tax on personal incomes. However, I would remind the house that these social security taxes were established for the purpose of having some sort of relationship between benefits and payments. Personally, looking back I wish we had not engaged in this bookkeeping. The hon. member for Winnipeg North Centre (Mr. Knowles) was a member of the committee and I happened at that time to have been an official adviser to the minister of finance. In addition, I was advising Mr. Jean Lesage, who was chairman of the committee at that time. If the house will pardon a
Excise Tax and Old Age Security Act little personal history I may say I was somewhat of a devil's advocate in that I suggested to the committee-


Mr. Knowles:: I did not think you were the advocate.


Mitchell William Sharp: I was the devil's advocate in the sense that I suggested to the committee they should consider a two-tiered system of pensions, one a flat rate pension and the other a contributory pension. We have arrived at that stage today but it has taken a great many years. I suggested at that time we should begin with a two-tiered system. However, members of parliament quite rightly were concerned mainly with getting rid of the iniquitous means test. They did the right thing.


An hon. Member:: We have got back to it.


Mitchell William Sharp: No, we have not got back to any means test, and the hon. gentleman knows that. At that time there seemed to be a curious mixture of philosophies. It was somehow felt that if you established a fund, you would limit the demands for increase in the flat rate pension. People would see a relationship between contributions to the fund and the amount of the pension. It did not work that way. As I said in the house yesterday in commenting upon a speech made by another hon. gentleman, the fund has been in a deficit position very substantially ever since it was established.
I believe the old age security fund has outlived its usefulness and I am in a mood to consider a change. A good deal, of course, depends upon the sort of recommendations we get for revision of our tax system as a whole. In the meantime, however, I believe we ought to maintain the principle of the old age security fund, that is, that there should be some relationship between the amount of contributions from personal income and the amount of benefit. If one looks back in history one will find that when the tax was first imposed in 1952 there was a 2 per cent tax on incomes with a maximum of $60, in 1959 a 3 per cent with the maximum raised to $90, and in 1964 the rate on personal income was raised to 4 per cent and the maximum to $120. We believe that on this occasion, because of the greatly increased benefits which have risen under this act to their highest level, we were justified in raising the ceiling and, indeed, we were justified in doubling it. I do not believe it would have been in accordance with the principle upon which the fund
13114	COMMONS
Excise Tax and Old Age Security Act was established that we should, as hon. gentlemen have suggested, have removed the ceiling. If we were going to deal with it in that way, then it should have been done through the income tax in full consultation with the provinces and not surreptitiously by a method that would be regarded as breaking faith with the provinces.


Stanley Howard Knowles: Just as a matter of interest, since the minister has been recounting a bit of history, does he not recall that some of us discouraged this procedure in 1950 and said there should not be any ceiling and that the tax for old age security should be built into the general income tax structure?


Mitchell William Sharp: I have forgotten the proposals my hon. friend made in that committee. I know they were considerable. If he says that was one of them, then I accept his statement because I know he would not mislead us.


Stanley Howard Knowles: As an official of the Department of Finance, the minister worked this out for me in a table which was very useful, but it was not implemented.
[DOT] (3:50 p.m.)


Mitchell William Sharp: I recall now that was so, Mr. Speaker. However, as I say this has been the principle that has been followed on each occasion the ceiling has been revised. I believe in this case we should not depart from that principle. I believe we have put before the house a bill designed to meet the costs. I am a little sensitive sometimes about suggestions that I am taking some philosophical position and that I believe an increase in social security should always be met immediately by an increase in revenues. When the time comes that our revenues are rising rapidly enough to meet such costs without increases in the burden of taxation, Mr. Speaker, if I am still Minister of Finance then I shall be the first to rejoice.


Raymond Langlois: There is one thing that always surprises me about the Minister of Finance and Receiver General, it is the nice disposition he seems to have and his capacity to keep it at all times. He is about the only minister capable of doing an unpleasant job-taxing-with a smile. He does it-I hardly know whether to say in an ironic, satirical, cynical or happy way- but in any case, he is the minister who can tighten the screws until Canadians turn blue with rage and misery and still ask them with a smile: Does it hurt?

DEBATES	February 16, 1967
At a time when the poor get poorer in greater numbers and the rich grow richer and fewer, we can ask how it is that the minister can fail to react more violently against such a state of affairs. People are afraid, they are worried about inflation, about the cost of living which is much too high today.
A little earlier, the parliamentary secretary to the minister, the hon. member for Saint-Maurice-Lafleche (Mr. Chretien), seemed to be lost in a brown study-he had some food container in front of him and I wondered if he was just waiting a little before tasting the food or if he was pondering over the price thereof today as compared to what it was five years ago. But now he is sending it back. Either he finds it too expensive or he has decided to wait before having a bite. In any case, I am sure that the price is not what it was last year or the year before that, because as time goes on the cost of living goes up, the people are so short of money that they are not only threatened with want but with abject poverty.
Mr. Speaker, the stub of the cheque is getting longer and the cheque itself smaller, and if we do not put a stop to it somewhere, one day soon we will be given the stub and told simply: That is how your money was spent.
Mr. Speaker, under the circumstances, I do not understand the minister's arguments. I readily agree that our older people needed that $30 supplement. Not only the elderly are in need of assistance, but also veterans and mothers throughout the country at present. I ask the Minister of Finance and Receiver General what the situation will be after Expo '67? What will be the financial situation of the country early in 1968? I would be most surprised if we did not have a revolution in Canada because of the intolerable economic conditions. I hope the minister will then have something other than a sweet smile to offer the Canadian people, that he will have an adequate solution for the people who hope the government, the Canadian parliament will introduce more concrete measures than those he just proposed to them. These are practical but negative.
A solution is being sought through taxes and restrictions. An effort is being made to help one by tightening the belt of another. It is a plaster on a scratch, a poultice on a wooden leg. But the problem is not solved.
I cannot understand the argument of the minister that to limit the effects of inflation, another 1 per cent must be added to the 11 per cent tax. I will admit that it will be
February 16, 1967	COMMONS
added on the price of the product at the manufacturing level, but it will nevertheless be included in the actual sales price. And that is not the only tax the Canadian people cannot see, although they can feel the effects.
On some products, there is an extra excise tax of 10 per cent. And now, over and above that, we have a 12 per cent tax which amounts to 24 per cent, or a little more, because we have to figure 12 per cent of the previous 10 per cent, and there is, besides, the 6 per cent sales tax, in fact, 10, 12, 22, plus 6 per cent, that is 28 per cent. This is complicated. And this gives close to 30, 32 per cent. Those are taxes which the manufacturers can see and which the Canadian people may discover if they look far enough. Moreover, there are other taxes which the Canadian people do not see but have to pay.
Mr. Speaker, why always pick on the eternal taxpayer, the low wage-earner, the one who is the very foundation of our country and our economy? How can we hope to have a stronger and sounder economy if we keep on strangling those who make up the very structure and basis of that economy, the Canadian people?
Sometimes, I cannot understand the way the Minister of Finance and Receiver General goes about doing things. Recently, he brought down a bill covering all deposits made in banks or, at least, comparable institutions, etc. I, for one, always thought, Mr. Speaker, that banks were just about the strongest financial institutions in the country; I realize now that insurance companies may be in a better financial position than banks. Canadians might open their eyes if, tomorrow morning, they all went to the bank asking to withdraw their money and found our that their bank was short of funds. They would be greatly surprised to see that there was not near enough money in bank vaults. I think that if this were to happen the Minister of Finance and Receiver General would surely lose his smile. This might be a very good lesson for our Canadian government with regard to financial structures. By taxing people, by taxing a son in order to give a pension to his father who spent many years of his life working like a slave, so that he may spend the few years he has left living in decency, we choose to put salt on the wounds of the younger generation.
[DOT] (4:00 p.m.)
At the present time children have to pay for their parents' survival. Who will pay for
Excise Tax and Old Age Security Act those children later on? Who will pay for those who are paying now?
We are getting into a bottleneck where we will be stuck before long. The minister and the government will have to get us out of that mess. They should do it before we get to that point, because then there will no longer be any way out.
Mr. Speaker, in the committee on finance, trade and economic affairs, we were told that 30 per cent of the loans granted by chartered banks were made to directors of chartered banks. Have you ever figured out the fantastic amount that represents for 170 chartered bank directors? If there were less people directly interested in our financial system, it might be to the advantage of the Canadian people. Perhaps if the minister were holding the reins more firmly, had more grip and less give-financiers, of course, would get at him, that is true-he would have the Canadian people behind him. At the present time he has the support of the financiers, which is fine, but they are beside him, not with him, and the Canadian people are on the other side, and not with him either. He is in an extremely dangerous position. You and your predecessors have placed yourselves in a very difficult situation. Of course, you are not alone in the government, and you want to do your very best. But are you doing it?


Mr. Cote (Longueuil):: Address yourself to the Chair.


Raymond Langlois: I put the question to Mr. Speaker and I know the hon. Minister of Finance understands it, as does also the hon. Postmaster General.
At this point, Mr. Speaker, I am addressing directly the minister concerned.


Joseph Julien Jean-Pierre Côté: You may not do so
here.


Raymond Langlois: That is precisely it: here, one often has to go about it in a roundabout way. I can assure you that, at times, one has to grit one's teeth.
The ministers are all nice boys, including the Postmaster General, but the Canadian people are caught in a vicious circle and only he and his colleagues, and nobody else, can get them out of it. The Canadian people place their confidence in you, and you do nothing to get them out of it. And that is why, sometimes, you find yourselves in desperate and exasperating situations. There is talk about inflation. Tighten your belts.
13116	COMMONS
Excise Tax and Old Age Security Act Our governments have always been harping on the same string: tighten your belts when in similar situations.
Mr. Speaker, how come we can afford, at this time, when inflation was feared as well as the rise in the cost of living-which has become frightening-to provide external aid while we are in a financial situation such as the one described by the minister? How can we afford to contribute $1,259,360 to external aid in one year? How can we afford to grant ia loan, as we did, to stabilize the pound sterling in England at the cost of $268 million? How can we afford to grant loans to Jamaica or other foreign countries practically interest free, when our domestic situation calls for the same remedies and we fail to apply them?
. Why supply foreigners with a remedy and let our own people suffer? Your good will might have been quite appreciated across the border, but not so much here. The hon. Minister of Finance and Receiver General knows it. There are 10,000 approved federal loans to Canadian students, which are held back for lack of sufficient funds. However, we take the liberty of giving $5,467.29 per year to foreign students in Canada. I am not opposed to that, but let us give as much to our Canadian students. Furthermore, let us stop taxing the parents of those students who will make up tomorrow's society. In fact, they are the hope of our nation. We are quite shortsighted in that respect.
Let the hon. Minister of Finance hold the purse strings and let him use the means available to him.
The leader of the New Democratic Party (Mr. Douglas) suggested to buy the shares of the Mercantile Bank which are offered for sale at the present time to the Canadian people. The president of the bank, Mr. Rockefeller, asked us, the members of the committee, the following question: Who, in Canada, is going to buy them? Who has the money to buy 80 or 90 per cent of the shares offered for sale?
. It is the government, on the suggestion of the hon. member for Burnaby-Coquitlam. It has been suggested here that the government should control its finances. The government should buy that bank; thus, it would at least control one bank in this country and it would hot put the financial interests and the economy of this country into the hands of a small circle of financiers that we call chartered banks and which are a private enterprise.
How can the minister accept this answer from a chartered bank president who says:

DEBATES	February 16, 1967
"We are operating in the interests of the bank; we are interested in making profits". You will note that he did not say: "We are interested in the Canadian people or the Canadian government making profits". No. The bank is making the profits. Why is he not buying that bank? He would thus control on what is left, what belongs to him. It would give him an opportunity to take over at least one sector of the financial world. In order to finance what? A reasonable rate of interest at an administration cost. I aim not asking the government to finance production, because that is not its field. It should stop interfering in the production field and start taking care, for example, of the distribution field. It should also finance our municipalities in order to relieve them of their tax burden.
Our senior citizen might be in a better financial position today if they had not been sucked dry by direct and indirect taxes, school, municipal, provincial and federal taxes.
Why not use, now, the central Bank of Canada, with provincial branches, to grant the same loans, the same privileges without changing the whole financial system? We could give the other levels of government privileges similar to those granted to Jamaica, to the Dominican Republic, as well as to Britain to stabilize the pound sterling. Why not use the same means to steady the financial situation of our provincial governments and, especially, our school boards, which are burdened by such a heavy load of taxes and debts that they do not know what to do?
If that was good for Jamaica, if it did not bring about or require any changes in the constitution, why should it require any change for the provinces, the municipalities or the school boards? I am not asking to make loans to Peter and Paul so as to develop private production. That is not the role of the government and it should not interfere with production or try to control it. That is why I am, to a certain extent, against government control of private corporations.
Private enterprise has done its duty in this country, but it is the Canadian government that has always allowed private enterprise, or any other body, to realize its fondest dreams.
Mr. Speaker, I submit we can use the Bank of Canada for the purpose of financing public undertakings and we need not upset anything in doing so. Public schemes are not what they were 100 years ago; neither can we compare
February 16, 1967	COMMONS
the present responsibilities of our governments, at various levels, with those prevailing a century ago. The situation is different from what it was at the beginning of confederation, where everyone worried and lost sleep trying to solve the problems involved in laying a railroad track from one end of the country to the other. Now, the problems are much more complicated, much more numerous and much more urgent than they were at that time.
I would urge the Minister of Finance to streamline his monetary and fiscal policy; this is 1967, he should keep up with the times and drop those policies which were used some 250 or 300 years ago in the old countries. Let us leave the banks free to operate-they are private enterprises-but I feel we should limit their prerogatives. They should not be granted powers great enough to place a government in an embarrassing situation, to bring a people down to its knees, to keep this people in a state of submission through an economic crisis or a period of inflation or depression.
[DOT] (4:10 p.m.)
A certain professor at the University of Texas once said that only one economy may be allowed to fluctuate from one extreme to the other. However, this is quite contrary to its very constitution. Our economy is subject to fluctuations and I am anxious to see what will happen early in 1968.
Mr. Speaker, if the government resorted to the means at its disposal, it would spare us from this 12 per cent tax. It is the small consumer who will have to pay it. The main duty of the government is to ensure a decent living to the people. Has this been done up to now? Everybody has the right to live.
There is not a single financier who is not empowered to tighten the screws to the point where someone will suffer or be maintained in the most abject misery. I am asking the minister to tell me what is the present financial position of the federal government unemployment insurance fund?
The government has already been forced to inject $5 million into this fund, not so long ago. Is that situation being repeated? We shall see whether, by the end of 1967, the same situation does not recur.
Mr. Speaker, I think the minister is intelligent enough to understand my remarks. Are his hands tied? Is he not authorized by the cabinet to act in accordance with the wishes of the Canadian people? If, morally, it is good for the people, why does the government not
Excise Tax and Old Age Security Act act accordingly? That is the question I am asking myself and that many people ask. I hope they will find an answer before the next federal election. The minister may have found a solution before then. But, in the meantime, people are taxed and taxed and overtaxed.
Why not take the initiative, for once, and separate the private sector from the public sector. Interest should be charged, of course, but on production, and not on things that are unproductive. Schools? Because of the ridiculous interest charged, the cost of building a school is doubled and the cost of building a road is doubled or tripled, and after twenty-five years, the road is still not paid for and we are still deep in debt. The same principle applies to bridges and to everything coming under public authority-schools are unproductive, they serve education. However, they depreciate in value, but why?
Why is it finally worth nothing? Why is twice the cost of the school still owing? It is because of the interest.
This is illogical; this is nonsense. Public funds should be used to finance public enterprise; the private sector should be left alone and public funds should not be used to finance private enterprise. Many problems will be solved and the minister will avoid many a headache when he decides to take action; he no longer will have to put a poultice on wooden legs, like he has to now.
Our senior citizens are surely not numbskulls, they have been around; they have had a rough time, but you cannot fool them too easily. They are very much aware of the fact that they must depend on their children for their bread and butter today because of a misconceived and badly administered financial system.
Who will provide for the future generation now paying for this scheme? I ask this of the minister. I hope he is a true statesman and not a financier's puppet. I hope he will find an answer to the present problem in order to avoid the catastrophes of tomorrow.


Thomas Clement (Tommy) Douglas: Mr. Speaker, it was not my intention to take part in this debate but I think I should make some comment about the speech just made by the Minister of Finance (Mr. Sharp).
The minister made a very spirited defence of his budget and told the house why it should reject the amendment proposed by the hon. member for Winnipeg North Centre (Mr. 13118	COMMONS
Excise Tax and Old Age Security Act Knowles), an amendment which would have the effect of giving this bill a six months hoist. The minister began by saying that he liked to avoid imposing taxes, that he would be much more popular if he did not have to be a tax gatherer but that he is desirous of ensuring steady progress for the workers and farmers of this country. No doubt this is why he intends to add to their costs of production by increasing the sales tax. He told us he would be failing to live up to his responsibilities if he failed to act, because this country needs expansion without inflation.
Surely, however, the minister is not asking us to believe that the reason he is imposing this tax is that he wants to prevent inflation. The minister himself told us in the course of his budget speech on December 19 that whereas the budget of last spring had anticipated a deficit of $150 million the anticipated budgetary deficit today is $340 million. This is not because of the increased expenditure on old age pensioners. The minister says the anticipated increase in expenditure for old age pensioners will be some $280 million a year, and he has made provision for raising $290 million to meet that cost. The reason there will be a larger deficit than anticipated last spring is that the minister has decided to spend more money on Expo and has put back on the list certain public works which had been removed. I am not quarreling with that. But let him not try to kid the troops that he is imposing this tax because he wants to prevent inflation. The minister himself has increased his deficit, which means he will be spending considerably more in relation to revenue than he anticipated only last spring.
The position which we in this party take is, first of all, that the minister did not need to increase taxes in order to meet the cost of the old age supplementary payments at this time. According to the hon. gentleman's own statement we could have absorbed this increase out of the surplus in the old age security fund up until the middle of 1969. There are sufficient surpluses there, according to the tables the minister placed on Hansard, to meet this increase until the middle of 1969.


Mitchell William Sharp: Would the hon. gentleman clarify the word "surpluses"?


Thomas Clement (Tommy) Douglas: I will take the minister's own statement as recorded at page 11334. He said:
It would use up the accounting surplus in the fund by mid-1969 and produce an annual deficit of nearly $400 million in the fund by the time the age reduction already in the law takes full effect.

DEBATES	February 16, 1967
I am not suggesting that the minister should wait until the middle of 1969. Certainly some increase in taxation would be warranted in the budget for 1967-68 or 196869. But no increase is required at this time.
There is no doubt in my mind that the sole reason the minister brought in these tax increases was to associate them in the public mind with the old age supplementary payments in order that the people of this country would be made aware that if they insisted on improving social security they could automatically expect taxes to be increased. A phrase in the Bible says "Ask, and ye shall receive." The minister has a new version: "Ask, and you shall pay for it." He wants to drive home this lesson. Despite the fact that according to his own statement on December 19 the old age security fund had a surplus at the end of October of $235 million-


Mitchell William Sharp: But no cash.


Thomas Clement (Tommy) Douglas: If the minister is not keeping the cash there he is taking it out for something else and he ought to put the cash back into the fund. The minister has been playing ducks and drakes with the country for too long. He cannot say on the one hand, that there is no cash and at the same time keep bookkeeping accounts on the basis of which he can say: "You have used up all the surplus; I must now raise taxes." This is what he is doing when he imposes the taxes set out in this bill.
One of these taxes, the minister tells us, will bring in $155 million a year, but that is not going into the fund. He says this if for cash purposes. But mark my words, at the end of 1971 the minister, if he is still Minister of Finance and if this country is still solvent, two things which taken together are difficult to comprehend-


Some hon. Members:: 
Thomas Clement (Tommy) Douglas: -the minister will trot out the accounts for the old age security fund and say, look, we have used up all the surplus and it is time we raised taxes again. He will say nothing about the $155 million a year that has been collected through the sales tax to meet the cash demands to pay the old age supplementary income but which has not been recorded in the fund account.
The minister cannot have it both ways. He must put the money which he alleges is going to be used to pay old age supplementary pensions and general pensions into the fund and
February 16. 1967	COMMONS
keep the fund solvent. If he is going to put some into general revenue and some into the fund he might just as well drop the bookkeeping item entirely and pay both the general and supplementary old age pensions out of the general fund.


Mitchell William Sharp: A lot can be said for that idea.


Thomas Clement (Tommy) Douglas: Of course it can, but the minister should not now try to befuddle the picture still further and confuse people's minds by giving the impression, as his speech of December 19 undoubtedly did, that these two taxes which take $290 million per year out of the pockets of the Canadian people are necessary in order to pay a $30 per month supplementary pension to those old people who can pass an income test. That is just not true. It was not necessary then and it is not necessary now.
By the minister's own statement, even with the increase in income tax, the fund will be solvent to the end of the 1970-71 fiscal year without the increase in the sales tax. The minister does not need the sales tax increase in terms of this fund. The minister says he has to have money. There is no argument about that. The minister needs more revenue for general purposes but the old age security fund as a result of this income tax increase will take care of itself, according to the minister's own statement, until the end of the fiscal year 1970-71.
The minister says he needs other revenue, but we say that if he does, this is the worst possible way to get it, by increasing the sales tax from 11 per cent to 12 per cent. This is a regressive tax and because it is levied at the manufacturers' level it will probably mean that the consumer will pay some 16 per cent or 17 per cent in mark-up on commodities which are taxable.
The minister twitted me with the fact that in the province of Saskatchewan there is a provincial sales tax, that when we took office there was a sales tax, if I remember correctly, of 2 per cent which was later raised to 3 per cent when hospitalization came in and to 5 per cent when medicare came in. There are always degrees of equity which any government has to assess. What sources of revenue does a provincial government have?


Mitchell William Sharp: All of them.


Thomas Clement (Tommy) Douglas: The minister says "all of them", but he knows better than that. He knows in the first place that under the British North America Act the provinces only have 23033-830
Excise Tax and Old Age Security Act the right to direct taxation, not indirect taxation.


Mitchell William Sharp: You used direct taxation in a way that at one time was thought impossible.


Thomas Clement (Tommy) Douglas: The minister first said there was no restriction, but provincial governments are limited to direct taxation; they cannot levy indirect taxes.


Mitchell William Sharp: That is why they have sales taxes.


Thomas Clement (Tommy) Douglas: Perhaps the minister will keep himself calm and in his general good humour while I develop my argument.
Provincial governments have no access to indirect fields of taxation. While they have access to income and corporation tax fields it is virtually impossible to go beyond or very far beyond the amount which is agreed upon under tax sharing arrangements; otherwise there would be double taxation. This leaves provincial governments with several choices.
Provincial governments must acquire their revenue from licences and royalties on the development of raw materials and resources, through direct retail sales taxes or through per capita taxes, which is the most regressive of all forms of taxation. Finally, they can raise taxes through taxation of property, but in practically all provinces this has been turned over to the municipalities as their exclusive field. What the provincial governments have to do is decide within the sources they have which is the least onerous and which is likely to be the most equitable form of taxation.
When the province of Saskatchewan had to raise money for hospital care, and you will remember that Saskatchewan instituted its hospitalization plan 11 years before such plans became general across Canada and financed the entire burden itself, it collected the money in three ways, by a small per capita tax which every family paid, by a sales tax and from general revenue.
When medicare came in the same thing had to be done. Some of the money had to be raised by sales tax, some by a small per capita tax, and some of it came out of general revenue. That does not mean that a sales tax is the most equitable form of raising revenue, but it is more equitable than taxing property and it is more equitable than a per capita tax on every family. Certainly it is not by any stretch of the imagination a tax which is best calculated to obtain revenue on the basis of an individual's ability to pay.
13120	COMMONS
Excise Tax and Old Age Security Act
Our quarrel about the bill the minister has put before us is that of the $290 million he requires he will collect $135 million from people who are well able to pay by raising the ceiling on the 4 per cent income tax surcharge from the first $3,000 of taxable income to the first $6,000, but $155 million, more than half the money he wants-


An hon. Member:: Which he does not need.


Thomas Clement (Tommy) Douglas: -and which he does not need so far as the old age security fund is concerned, is going to come from the people who have to buy the ordinary everyday commodities of life. This money will be collected with no relationship whatsoever to ability to pay. It has some relationship, perhaps more than a per capita tax, in that people who buy expensive cars, jewelry and other goods like steam yachts, if anybody buys steam yachts any more, will pay a considerable amount into this fund. The thing that is wrong is that no matter how hard up people are, including the old age pensioners the minister suggests he is trying to help by this tax, they will be paying the increased sales tax. This increase in sales tax will increase the price of nearly everything these people buy. Only a few items are excluded.


Mitchell William Sharp: Like food, fuel and shelter.


Thomas Clement (Tommy) Douglas: If the minister will take a look at some supermarkets he will find out what is happening to costs there. The Montreal Gazette of February 14 reported on investigations made in stores in the city of Montreal in respect of prices. It was found that prices are up on drugs, gasoline, lubricating oils and products such as detergents and margarine. It has now been announced that the cost of cigarettes and clothing is to go up. But the most iniquitous thing is that not only is the 1 per cent increase in the sales tax levied on the manufacturer being passed on but a good deal more is being passed on. This report says:
[DOT] (4:30 p.m.)
Dealers obviously are passing many on-and then some. The federal tax was raised to 12 per cent from 11, but many retail prices are up anywhere from 2 to 10 per cent, and sometimes more.
"Everything's going up," says the girl in the drugstore. "Toothpaste that used to be 69 cents is 75 cents. Some face tissue is 25 cents where it was 22. And a roll of black and white film costs 66 cents now, a cent more than on Dec. 31."
One brand of mouthwash, which has sold for 70 cents for years, now is 75 cents in some outlets.

DEBATES	February 16, 1967
They go on to speak of drugs particularly having gone up. Then the report says:
A. J. McKichan, manager of the Retail Council of Canada, predicts the end result of the increase will be what he calls psychological pricing.
"Some increases are acceptable to the public, others not," he says.
"Retailers will try to recover costs by raising prices on items that can stand it, and keeping them steady on others which couldn't become more expensive without markedly reducing sales."
He forecasts that clothing will probably cost more soon, because generally it still is priced below the "psychological limit."
That is a nice way of saying that it is below what the traffic will bear.


Mitchell William Sharp: That must have been true of the 5 per cent tax in Saskatchewan too.


Thomas Clement (Tommy) Douglas: No. The minister knows, because he is an economist, the difference between a retail tax and a tax at the manufacturer's level. The tax in Saskatchewan, and in all other provinces now but one, is on the retail price that people pay. If you buy a $1 article you know you will pay an additional 5 cents. Even the minister knows that. That is very different from imposing 12 per cent on the manufacturer's price. Heaven only knows what happens to the retail price then because when you buy an article in the store you do not know how much of the price you pay is federal sales tax and how much you are actually paying for the commodity. The fact is that the minister had to raise $290 million. He is raising the minor part of it on the basis of ability to pay, and well o\ er 50 per cent of it from the people who can least afford to pay it, the people who have to buy ordinary goods in the stores.
The minister says that we in this party are always talking about the things we would like to see done. He made an inventory, and I wish to thank him for it, of the things we have been advocating. He says these would cost some $900 million.


Mitchell William Sharp: More.


Thomas Clement (Tommy) Douglas: Or more. He wants to know how we would propose to raise the money and suggested that we might have decided to join the Social Credit party and print the money. I would remind the minister, of course, that it was not the members of this party who voted for debt free money in 1962; it was the members sitting across the way who voted for a Social Credit amendment. The Secretary of State for External Affairs (Mr. Martin) stood just down here on this side
February 16, 1967

of the chamber and made an impassioned speech to save Canada by issuing debt free money.


Mr. Starr:: He led them in the vote.


Thomas Clement (Tommy) Douglas: Apparently the Secretary of State for External Affairs has not had much effect on the Minister of Finance.


An hon. Member:: Thank God.


Thomas Clement (Tommy) Douglas: The former minister of
finance also voted for debt free money. Apparently he has not had any effect on the present Minister of Finance. If the minister wants to talk about printing money, I say to him that he and the members of the Liberal party are the last people who ought to talk about panaceas for solving financial problems, because they showed on the day they voted for that amendment that they were either being completely cynical and hypocritical or actually believed that was how they could solve the financial problems of this country.


Thomas Speakman Barnett: It was the first.


Thomas Clement (Tommy) Douglas: I am sure it was the first. Undoubtedly money has to be raised. First of all, the minister assumes that there is a sort of fixed amount of money when as a matter of fact the amount of money available can be increased as we increase our productivity. The theme the Economic Council of Canada has been driving home again and again is that our productivity is lagging some 25 per cent behind the productivity of the United States and that by economic planning, by direction of investment, by allocation of resources in this country we can tremendously increase our productivity. This is one of the ways in which we can get this money. Does the minister tell us for a moment that this country cannot increase its productive capacity by $900 million?


Mitchell William Sharp: Yes, it can.


Thomas Clement (Tommy) Douglas: If we went to war tomorrow the Minister of Finance would find a great deal more than $900 million, and the people of this country would mobilize their financial, economic and physical resources to produce a great deal more than $900 million additional wealth.


Mitchell William Sharp: And impose taxes for the purpose.


Thomas Clement (Tommy) Douglas: The other point is that when we require to impose taxes, as we do, we have to decide what is the most equitable 23033-830J
Excise Tax and Old Age Security Act way to allocate the burden of those taxes. This is where our quarrel is with the minister. If the minister needs an extra $155 mil-; lion-he did not need it for the old age security fund, he needs it for cash-where is the best place to get it? The hon. member for Antigonish-Guysborough (Mr. Stewart) was running interference for the minister yesterday. I suppose that is how one gets to be a parliamentary secretary. The hon. member was jumping up periodically and saying:; "Where are you going to get the money?" The minister knows there are better ways of getting $155 million than raising the cost of living by 2 per cent for the great mass of the Canadian people.
First of all, the minister could, if he needed that extra money, have completely taken the ceiling off the income tax surcharge for old age pensions. There is no reason why the 4 per cent should stop at the first $6,000 of taxable income. The minister said today that he Wanted to keep it in some relationship to the benefits. There is no relationship to the benefits now; it is up to $6,000 of taxable income. If the minister would study the social security plans in many countries of the world he would see that there is no ceiling. They pay security tax on their entire income. Certainly people receiving substantial incomes can well afford to pay that 4 per cent on all their taxable income. There is no reason why their income above $6,000 should be exempt. There is no reason why a man who has $30,000 of taxable income should pay the same amount of tax as a man who has $6,000 of taxable income. He can afford to pay more.


Mitchell William Sharp: That man pays higher taxes now.	!


Thomas Clement (Tommy) Douglas: There is no reason why he should not pay more into the old age security fund. If the min'ster is really anxious to get money I suggest he look at some of the speeches made by the present Minister of National Revenue (Mr. Benson); when he was on this side of the house! about the wholesale highjacking of the federal treasury by depreciation allowances and depletion allowances. The minister should read the speeches of the Minister of National Revenue who, when on this side of the house, quivered with indignation at what was being allowed then, and it is still going on. He also referred to the high living on expense allowances which goes on in the upper strata of Canadian society.	1
13122	COMMONS
Excise Tax and Old Age Security Act
[DOT] (4:40 p.m.)
If the minister wants more taxes he should take a look at a capital gains tax. Canada is one of the few countries left in the western world which does not impose a capital gains tax. I have never been able to understand Why a man who can make $30,000 playing the stock market, $30,000 as a capital gain as a result of good fortune or a turn of the market, should be exempted from paying taxes on that money while some other person earning $5,000 by the sweat of his brow is expected to pay tax on that. This is incomprehensible to me. Certainly most countries have now recognized the fairness of the view that all income, whether it comes from manual labour or executive services or from speculating in the stock market or in property, is a legitimate taxable item on which a person should pay his share of helping to maintain the services of his country.
We in this party make no apology for suggesting to the house that this bill should be postponed for six months. Both the old age pension and the supplement can be paid until the middle of 1969 without any increase in taxes. The minister can bring in income tax changes at the next session of parliament which will supply him with sufficient money to pay old age pensions until the end of the 1970-71 fiscal year. The increase in the sales tax is not necessary at all. I suggest that if he needs the money he should go into a state of quiet contemplation with himself and come back to us in his next budget and ask for the authority to collect the $155 million or whatever amount he needs by means of taxes which are based on ability to pay. I object to this measure proposed by the minister which puts the tax on the poor and the needy. I think it was Lincoln who said that the Lord must have loved the common people because he made so many of them. The Minister of Finance seems to love the common people because it is so much easier to get the taxes out of them. I suggest that in this case the minister should look to other sources in which there are those better able to pay their share of financing this country.


Mr. Roland Godin (Portneuf):: Mr. Speaker, we are now considering a bill entitled: "An Act to amend the Excise Tax Act and the Old Age Security Act".
In my opinion, that measure is nothing but the third act of a play staged in December 1966 when Bill No. 251 to amend the Old
DEBATES	February 16, 1967
Age Security Act was introduced. To get the older Canadians to swallow a bill granting them only 60 per cent of what they had been promised throughout the 1965 election campaign, a good parliamentarian was needed and the Minister of National Health and Welfare (Mr. MacEachen) was the obvious choice.
It is obvious that the minister's long discussions at that time, selected excerpts of which were reported by the press gang, were meant to call the attention of the Canadian public to the cost of such a project. And when it was felt that public opinion had been sufficiently awakened to the cause, the Minister of Finance (Mr. Sharp) appeared on December 19, for the second act, with the mini-budget.
Times have changed and certain words have changed too with the years. We all remember the word used by our forbears when they needed money and had to go to a more favoured friend to get financing. At that time, that operation was considered a loan; nowadays the word "loan" has almost disappeared in the public service.
When a municipality, a province or a country is in need of money, bonds are offered for sale; the party with empty coffers has become a vendor. With this approach, it is not surprising if certain newspapers have referred to the tax increase then presented by the government as a gift.
The creation of new taxes to get more money from Canadian citizens has become an act of generosity, and it is a smiling Minister of Finance that we have seen reading the speech accompanying that offering. The minister has shown himself very generous by keeping the sales tax on building supplies at the low level of 11 per cent.
Hon. members will remember that, in order to promote the acceptance of this 11 per cent tax, a $500 bonus had been given to those who dared to build a house in winter. Is it generous to deprive of $500 those who, during the present season, are still paying the 11 per cent building tax on the home their family needs? Are there people unenlightened enough to believe that a tax increase was necessary to stop inflation? Are we witnessing a gift or a theft, considering that invalids, needy mothers, people on relief, the unemployed, and badly paid civil servants both in the federal and in the provincial governments will now have to pay a 12 per cent federal sales tax on all clothing and shoes for men, women and children?

February 16, 1967
A 12 per cent tax is being charged on all clothing which is indispensable in a climate like ours and on all electrical appliances which makes life a little easier for Canadian housekeepers. Are we witnessing a gift or a theft, when we see that a 12 per cent tax will be charged on all household furnishings as well as on linoleum and all other types of carpet for covering floors?
A 12 per cent tax will also be charged on the tools of all Canadian workmen, whether lumberjacks, electricians, plumbers, carpenters, or welders; in fact, this tax will hit workmen in all professions. But when the time comes for those self-same workers to pay income tax, the Department of National Revenue does not allow depreciation on their tools. The car which the majority of those workers need for work, seeing they have to travel to the job, is also hit by this 12 per cent tax.
[DOT] (4:50 p.m.)
There again, there is no question of claiming travelling expenses when these workers file their income tax return. The government refuses to grant them that right which, nevertheless, several other groups of society enjoy. The minister, who lives but a block away, can claim exemptions on two scores for travelling, namely an allowance of $6,000 as a member of parliament, and another of $2,000 for the upkeep of his car, as a minister.
A few minutes ago the minister told us how he wants to help farmers. Does the minister have a press release to advise the farmers that from here on they will have to pay a 12 per cent tax on the materials needed for the construction and maintenance offences that are absolutely indispensable for keeping their livestock? Would the minister also take this opportunity to notify farmers that when they purchase an electric fence control-in general, these devices are imported from the United States-in the future, they shall have to pay customs duty and taxes totalling 34J per cent?
This is so hard to believe that I shall quote a passage from Hansard of April 4, 1966, to corroborate my statement. I had put question No. 1,190 on the order paper; the question reads as follows:
Are the following items subject to the 11 per cent sales tax (a) galvanized trade wire (b) annealed trade wire (c) oiled and annealed trade wire (d) hay baling wire (e) electrical fence wire (f) barbed wire (g) welded mesh fencing (h) farm fencing (i) chain link netting (j) steel fence posts (k) steel farm gates?
Excise Tax and Old Age Security Act
The hon. Minister of National Revenue (Mr. Benson) answered the first part of my question in the affirmative. Until now, this fact has been well hidden. This tax torments and disturbs the farmers who try to make farming a prosperous undertaking, particularly the Quebec farmers, most of whom earn a mere $1,250.
The 12 per cent tax also applies to farm trucks; even the tractors are not entirely exempt, since the manufacturer has to pay tax on the hydraulic system, the electric system, including lights, wiring, batteries, in short he has to pay tax on the complete system controlling other farm implements. The salesman's complete bill always contains these hidden taxes.
Initially, there is only a 1 per cent increase, but this is another step toward dispossessing Canadian citizens. Most of our manufacturers are already faced with serious financial difficulties and cannot absorb this new tax. Therefore, they will have to recuperate it, which means that they will have to change their price lists. How much will this cost? Every wholesaler and retailer will also have to put out new price lists and the cost of this operation will be borne by the consumers, rich or poor.
The minister can take pride in the fact that he warned the taxpayers, saying: "True, you will pay more, but this is for our many senior citizens."
What would we not do for our aging parents under normal circumstances? Sure, we will pay for our senior citizens, but at this point I would like to tell the minister we also know of another class of Canadians who cost us much more. I am referring here to the minister's friends, those who control money and credit. We, members of this house, know that the pension fund is well provided for and that a further tax was not urgent. But if we take a look at the estimates of the last four years, we note that there is a priority for the debt interest.
In my opinion, the increase of that interest is the first reason for the introduction of the bill before us.
I take the liberty, once again, to quote extracts of previous estimates.
The debt interest for 1963-64 amounted to $881 miHion. It was $1,035 minion in 1964-65. In 1965-66, it amounted to $1,100 million and in 1966-67, to $1,185,488,000.
When the estimates for the Centennial year 1967-68 will be known, aU Canadians will


Mr. Guay:: That is horrible.


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


Edmund Davie Fulton: Mr. Speaker, I was paired. Had I voted I would have voted for the amendment.


Mr. McLean (Charlotte):: Mr. Speaker, I was paired. Had I voted I would have voted against the amendment.


Mr. Speaker:: I declare the amendment lost.	
Messrs:
Alimand	1 .averdiere
Andras	Leblanc (Laurier)
Asselin	LeBlanc (Rimouski)
(Richmond-Wolf)	Leboe
Badanai	Lefebvre
Basford	Legault
Batten	Lessard
Benson	Loiselle
Berger	Macaluso
Boulanger	Macdonald (Rosedale)
Byrne	MacEachen
Cadieux (Terrebonne)	Mackasey
Cameron (High Park)	Mcllraith
Cantin	McNulty
Cardin	McWilliam
Chatwood	Marchand
Choquette	Matte
Chretien	Mongrain
Clermont	Morison
Comtois	Neveu
Cdte (Dorchester)	Nixon
C6te (Longueuil)	Otto
Crossman	Pelletier
Deachman	Pennell
Drury	Pepin
Dube	Pilon
Emard	Reid
Ethier	Richard
Faulkner	Rinfret
Forest	Robichaud
Foy	Rochon
Gendron	Rock
Gray	Sharp
Greene	Stafford
Groos	Stanbury
Guay	Stewart
Habel	Tardif
Hellyer	Teillet
Honey	Thomas (Maisonneuve-
Hopkins	Rosemont)
Hymmen	Tolmie
Isabelle	Tremblay
J amieson	Tucker
Lachance	Turner
Laflamme	Wahn
Laing	Walker
LaMarsh (Miss)	Watson (Chateauguay-
Langlois (Chicoutimi)	Huntingdon-Laprairli
Langlois (Meganticl Laniel	Whelan-96.

February 16, 1967
Division	
NAYS	
Messrs:	
Allard	MacEwan
Ballard	Maclnnis
Barnett	(Cape Breton South)
Bell (Carleton)	Maclnnis (Mrs.)
Bigg	(Vancouver-Kingswa
Brand	MacLean (Queens)
Cadieu (Meadow Lake)	MacRae
Chatterton	McCutcheon
Churchill	McIntosh
Clancy	McLelland
Code	McQuaid
Crouse	Martin (Timmins)
Danforth	Mather
Diefenbaker	Moore
Dinsdale	Muir (Lisgar)
Douglas	Noble
Fane	Nowlan
Fawcett	Nugent
Flemming	Orlikow
Forbes	Ormiston
Forrestall	Pascoe
Gauthier	Patterson
Gilbert	Peters
Godin	Pugh
Gregoire	Rapp
Hales	Ricard
Harkness	Saltsman
Herridge	Schreyer
Horner (The Battlefords)	Scott (Victoria (Ont.)
Howe (Hamilton South)	Sherman
Howe (Wellington-Huron	Simard
Johnston	Skoreyko
Jorgenson	Smallwood
Keays	Southam
Kennedy	Starr
Kindt	Thompson
Knowles	Watson (Assiniboia)
Korchinski	Webb
Latulippe	Winch
Lewis	Winkler
Loney MacDonald (Prince)	Woolliams-81.


James Elisha Brown: Mr. Speaker, I was paired. Had I voted I would have voted for the motion.


Edmund Davie Fulton: Mr. Speaker, I was paired. Had I voted I would have voted against the motion.


Mr. Macquarrie:: Mr. Speaker, I was paired with the hon. member for Essex East. Had I voted I would have voted against the motion.


Allan Marcus Atkinson McLean: Mr. Speaker, I was paired. Had I voted I would have voted for the motion.
Bill read the second time and the house went into committee thereon, Mr. Batten in the chair.
On clause 1-


Mr. Saltsman:: Mr. Chairman, I was very interested in the remarks of the Minister of Finance this afternoon. I was rather impressed by the sweet reasonableness of his approach in examining the proposals of the

New Democratic Party. He seemed to indicate that he agreed in principle with many of our objectives and that he and other members of his party were in favour of increasing foreign aid and believe in research, education and the need to make university education available to those who could benefit, and medicare, but that it was with profound regret he had to step in and tell the government that his judgment indicated that the government could not afford these things. He also expressed his deep sympathy that the aspirations of the older people of this country who need increased pensions could not be met.
The minister mentioned an estimated cost of $900 million in respect of these programs. It is not my intention to quarrel with that figure because it is not particularly important now. No one questions the fact that these programs would require substantial expenditures. No one will argue that these programs could be carried out without incurring expenditures. However, the minister seems to ignore a number of aspects involved in this kind of situation. He seems to ignore the fact that many of these programs can be considered as investments in Canada's future. When people spend to increase the potential and the productivity of the nation the whole situation takes on a different light. One cannot believe that these programs involve merely an outflow without any return. There has been evidence in respect of foreign aid that frequently the aid giving nation over a period of time obtains very substantial benefits in increased trade, good will and access to markets. Research and investment are important to a nation attempting to achieve growth.
[DOT] (5:50 p.m.)
If we consider the remarks of the Economic Council pointing out the lower level of expenditure on education in Canada and the lower attainment of education at the post-secondary level, we have to question whether we can really defer programs of this kind on the argument that we cannot afford them. It seems to many of us that the one thing we cannot afford to do is to ignore the important aspects of these expenditures vis-a-vis the long-run future of the country.
The minister, as I said, was being reasonable in his approach. He was almost professorial, indicating that he had considerable regret in coming before the house and pointing out that the money just was not there for these purposes and therefore we had to accept the proposition he was putting forward. The difficulty in accepting what the minister says
February 16. 1967	COMMONS
in this regard is that he gave us no indication that there are other ways of increasing government revenues without necessarily increasing tax rates.
We all know there is a limit on the amount of taxation people are prepared to accept. But there is an important way of increasing government revenues that the minister has not touched upon that is, the outstanding requirement in this country to increase our level of productivity and the wealth base from which the costs of the social service, scientific and foreign aid programs can be met. We have had a rather dismal record in this country in terms of increasing our productivity. If we refer to a table on page 16 of the third annual review of the Economic Council of Canada which shows the growth of productivity from 1955 to 1965, we see that Canada is 14th in the list of industrialized nations. We have had one of the lowest rates of productivity increase of almost any of the industrialized countries of the world. When we look at these figures and recognize that many of these countries which have a much higher productivity growth rate than Canada spend considerably more than this country in the fields of social welfare, research and foreign aid, we realize that for the minister to come before this house and say "I would love to do all these things but we simply cannot afford it" is to beg the question completely.
Surely the real problem facing the minister is to see that his government brings in programs that will enable this nation to fulfil its obligations and find its proper place in the sun, instead of wringing his hands at the prospect of programs which even he admits are desirable but says we cannot afford. Canada, according to the Economic Council and according to almost any observer who has looked at our economy, is potentially the wealthiest nation in the world. We have in this country almost everything that any nation could hope to have if it is looking for wealth. I think there is general agreement about that. Despite the enormous potentiality in this country our productivity is approximately 25 per cent lower than that of other industrialized nations. The figures vary between 20 per cent and 30 per cent. We have to ask ourselves the question: Why should this be? If we talk about capital investment in this country and say that we urgently need tremendous quantities of capital in order to improve our productivity, this is very true.


Mitchell William Sharp: Mr. Chairman, may I ask the hon. gentleman a question? Does he not agree
Excise Tax and Old Age Security Act that the rate of capital formation in Canada is higher, I think, than anywhere else in the world?


Max Saltsman: Yes. I was coming to that, Mr. Chairman. I believe the Economic Council points out that on a per capita basis more capital is invested per Canadian worker than is the case even in the United States. We have the highest capital investment per employee of any nation in the world. But we still have the problem of an approximately 25 per cent lower productivity than other industrialized nations. This is really the major question to which the Minister of Finance must address himself. He has to come up with an answer to this problem. The minister may argue that it is a long-range problem, that we will not increase productivity as a result of one budget, whether it be a mini-budget or a major budget, and I would agree with him to a point. But after all, the party that the minister represents has been in office in this country for a long time. There has been some interruption in its term of office over several years but by and large it has been in power as long as I can remember. Yet today we are faced with a budget that deplores the fact that the government does not have the funds for the kind of things that almost all of us agree are necessary for this country. Why is this? Why should the minister have to come before us with apologies and excuses, not arguing against programs but saying that his government with its policies has not been able to find an answer to the needs of the Canadian people?
To rub salt into the wound or to add insult to injury, instead of apologizing for this failure to bring our nation to the level of its potentiality, he turns on the party for which I have the honour to speak and says, "You fellows are asking for all kinds of things that are not possible." That is only one side of the equation. Certainly we have asked for a great many things, and we do not underestimate their cost. But we have time and time again pointed out to the government that unless there is a stronger degree of government involvement in the economy, unless the government takes a look at our capital expenditures to ensure that we get the maximum use out of our resources, unless we develop manpower policies to get the best use of human resources, we will never find the money to meet the objectives about which we agree.
May I call it six o'clock, Mr. Chairman.

February 18, 1987
Private Bills


The Chairman:: Order. It being six o'clock, pursuant to provisional standing order 15 and in order that the house may proceed to the consideration of private members' business I do now leave the chair.
[DOT] (6:00 p.m.)



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: It is my duty, pursuant to provisional standing order 3 9A, to inform the house that the questions to be raised at ten o'clock this day are as follows: The hon. member for Hamilton South (Mr. Howe), research-request for increased grants for medical research; the hon. member for Sherbrooke (Mr. Allard), External Affairs -exchanges between Canada and France; the hon. member for Humboldt-Melfort-Tisdale (Mr. Rapp), Agriculture-eggs-reported recent drop in prices.



PRIVATE BILLS


Mr. Russell C. Honey (Durham) moved: the second reading of Bill No. C-239, respecting the Bell Telephone Company of Canada.
He said: Mr. Speaker, I shall speak briefly and deal in broad terms with the provisions of this bill. I am hopeful hon. members will feel at the conclusion of this hour that the bill be given second reading, after which it will be referred to the standing committee on transport and communications. I would be surprised if hon. members did not wish to deal in more detail with certain portions of the bill and to hear the officials of the Bell Telephone Company and other witnesses. I hope hon. members will agree with me that this can be done best in the committee on transport and communications.
In moving second reading of the bill I might mention that its objectives may be classified under four separate heads: First, an amendment affecting the corporate name of the company; second, amendments affecting the capital structure of the company; third, an updating of the corporate powers and, fourth and last, procedural and mechanical amendments.
Over the years the company has become known as Bell Canada. In February, 1956 it obtained permission to use Bell Canada as a trade name. Bell Canada has been used extensively in advertising and other material.

The second group of amendments deals with the capital structure of the company. The company's original act of incorporation dates back to 1880. Over the years, as and when new capital was required, the company applied for increased capital authorizations, and this is a further application before parliament at this time.
During the last decade the Bell Telephone Company of Canada has embarked on a construction program which has required the investment of substantial amounts of both equity and debt money. According to the company's estimate the authorized capital will be virtually exhausted by 1968. If this were to happen before the company receives additional authority to increase its capital, a slow down of the construction program would immediately occur with an instant impact on the Canadian economy. It must be borne in mind that the company currently spends $300 million a year on its construction program which is designed to meet growth and to give its customers improved services such as automatic dialing and so on.
If service is to be maintained, the company needs the authority to issue additional stock. At present 40 million shares of a par value of $25 each have been authorized. Over 34 million shares, of which 94.6 per cent are held in Canada, have already been issued and the employees of the company subscribe from year to year more than $22 million a year.
The increase of $750 million for which approval is now being sought is consistent with the pattern which has developed over the last decade. The company comes before parliament every 9 or 10 years to obtain additional capital authorizations. According to present forecasts the sum of $750 million sought at this time should last approximately ten years.
The company also seeks an amendment to have the power to issue preferred stock whenever conditions warrant such a decision. At present the financing of the company is done exclusively by means of common shares and bonds. There are periods when market conditions could make the issue of preferred stock less burdensome upon the subscribers. In order to have more flexibility and thereby finance the company at reduced cost the company requests an amendment authorizing it to issue preferred shares as and when it might be advantageous for the company to do so. The creation and issue of preferred stock would be subject to the procedure outlined in clause 3 of the bill, which is similar in terms to previous authorizations given by this house to
February 16, 1967

other corporations incorporated by special act.
The company further requests an amendment to its charter allowing it to issue its capital stock without the approval of the Board of Transport Commissioners for Canada. I might mention that any issue of the capital stock of the company is presently subject to the approval of the Board of Transport Commissioners. The board allowed until May, 1966 a permissive level of earnings in terms of dollars per share. In May, 1966 the board changed the basis of the regulation and stated that rates generating a rate of return not exceeding 6.6 per cent on the total invested capital were just and reasonable.
The third group of amendments deals with the updating of the corporate powers of the company. It was recognized by this house when it amended the Criminal Code that the expression "telephone communications" was much too narrow to describe adequately the field of communications. Everyone is now referring to telecommunications, which is a broader term than telephone communications. This is the purpose of clause 7 of the bill.
The company has the corporate power to own, maintain and operate a telephone company and to manufacture electrical equipment. It also has the power to invest in any company possessing as proprietor any line of telephonic or telegraphic communications or in any company possessing the power or right to use communications by means of the telephone. These powers are specified in clauses 2 and 4 of the incorporating statute as amended.
Section 14 (e) of the Canada Corporation Act gives to letters patent companies the ancillary power to invest in companies having objects in whole or in part similar to those of the company. The purpose of clause 8 of the bill is to give Bell Canada similar powers. Clause 8 also seeks to authorize Bell Canada to invest in companies engaged in research and development work. The need for Canadian research is important to our economic progress.
The company also wishes to introduce two social measures to help its employees. Permission to lend money to employees who are in financial difficulties, even if they are shareholders of the company, is requested under clause 12 of the bill. Clause 13 seeks authority to establish a housing plan to assist employees who are transferred in the course of their employment from one area to another.
Private Bills
The other provisions of the bill are procedural or mechanical in character and can be considered as housekeeping matters. I have in mind the clarification of the power of the company to sell shares for cash and to its shareholders, clause 5, the clarification of the number of authorities to be given by the shareholders for borrowing money, clause 6, or other matters dealing with indemnification given to the directors in suits respecting execution of office, clause 10. The record date for meetings, dealt with in clause 15, also falls in this category of housekeeping provisions.
The company also requests authority to create an executive committee to deal with matters delegated to it by the board of directors. In view of the size of the board of directors and the importance of the matters to be transacted at board meetings, the formation of an executive committee with executive powers becomes more and more important for the smooth operation of the business.
[DOT] (6:10 p.m.)
That is all the time I want to take, Mr. Speaker, because I want to give ample time to representatives of the other groups. May I reiterate that I hope we may give the bill second reading today so that we may deal with it in detail in the standing committee.


David Lewis: Mr. Speaker, as the brief summary of the bill's provisions given by the hon. member for Durham (Mr. Honey) indicated, the bill before the house, even though it is a private member's bill, is in our opinion an extremely important one and should not be passed without very thorough study by the appropriate committee. Indeed, as far as we are concerned we could not possibly support the bill in its present form.
What this bill does, if I may summarize it in my own way, is to seek to extend the field of the Bell Telephone Company almost without limit into the entire area of telecommunications. It seeks to extend its field into the broadcasting area. It seeks to give the Bell Telephone Company powers for very widespread vertical integration by giving it authority to acquire companies without limiting it any longer to those which have or use telephone lines, as was the case formerly. Clause 8 of the bill provides that the company can extend its operations, its purchases and acquisitions very widely, so it is obvious the company can use that power to build an empire of satellite activities, industrial and commercial, almost without limit. Under the bill

February 16, 1967
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the Bell Telephone Company seeks to get away in part from the regulations to which it is now subject under the Board of Transport Commissioners. Its rates would still be subject to regulation but the issuance of shares would no longer be subject to any investigation or inquiry by the board. The bill seeks to increase the capitalization of the company from $1 billion to $lf billion, which would give it a tremendous base for financial development of a huge size.
Before we do that, Mr. Speaker, we ought to know a great many things about the intentions of the company. I am sure we ought to investigate rather carefully how the company has so far used the powers it has had. If any company has enjoyed a monopoly in its services, this company has. It has almost a complete monopoly in Canada or in the major parts of this country.
The company has had tremendous earnings, Mr. Speaker, and I think some information in this regard ought to be put on the record to show what the company has enjoyed as a result of the incorporation it received in 1880 and the various amendments which have been made since. Since the end of the last war the operating revenues of the company increased from $77 million in 1946 to about $593 million in 1965. The 1965 report of the company, which I have before me, gives the first nine months of 1966 and if you project those nine months to a full 12 month period the gross operating revenue of the company amounted to $638 million last year. The operating revenues, therefore, have increased nine times in the 20 years from 1946 to 1966.
So far as net income is concerned, it was $8 million in 1946 and increased to $861,- million in 1965. A projection on the same basis I have mentioned indicates that the net income for 1966 probably was around $88 million or an increase of 11 times in 20 years.
It is interesting in these statistics to note the effect of automation and how these huge increases in operating revenues and net earnings took place in relation to the work force. I have the figures only from 1959 on in the report which, as I have said before, is in front of me. From 1959 to 1965 operating revenues increased by 57J per cent and net income increased by over 71 per cent. The work force, however, increased by only 3 per cent in those seven years. An increase of 3 per cent in the number of employees enabled the company to increase its operating revenues by 57i per cent and its net income by over 71 per cent.

We ought to make a careful study to see what the company has done for the people of Canada to deserve this tremendous growth in revenues and profits. How has it treated its Canadian subscribers? According to some of the evidence given before the Board of Transport Commissioners-I cannot say whether the evidence is accurate but so far as I have been able to find out it has not been contradicted-the company has increased rates over the years to Canadian subscribers by making earnings which for a number of years exceeded the level of earnings the Board of Transport Commissioners permitted. During those years when the permissive level of earnings was based on so many dollars on a certain value of shares. For years, therefore, the company, so far as I have been able to find out, deliberately violated the instructions given by the body set up by this parliament with authority to give those orders, and the company increased the rates to subscribers in order to help it violate those instructions. We ought to know about that. We ought to know whether the consumers of telephone services in Canada have been treated shabbily by this company before we give it these extra powers.
As a result of my study of this material, Mr. Speaker, I would say the company has not taken the national interest into account or the interest of the subscribers to its service. We ought to know, exactly what is the relationship of this company to its subsidiaries. This report tells me there are 16 subsidiaries of the Bell Telephone Company, some of them wholly owned and some of them subsidiaries of subsidiaries. When I see that I am concerned about the additional powers the company wants under clause 8 of the bill which would enable it to go still further afield.
We have the usual consolidated statements, the usual refusal of the parent company to give information, even to the Board of Transport Commissioners, about the precise relationship between Northern Electric and the Bell Telephone Company. There are the usual suspicions, usually well grounded, that the Northern Electric Company sells its products to the parent company at a price which is unnecessarily high for intercompany reasons that have nothing to do with the national interest. There is the usual secrecy about precisely what Northern Electric is doing, how much it is making, and a lot of other relevant information is also denied us.
[DOT] (6:20 p.m.)
I was interested to find that this matter has concerned governments over the years, Mr. February 16, 1967

Speaker, and I should like to put on record, because I think it is both relevant and illuminating, an extract taken from a brief which was presented to the Board of Transport Commissioners in 1926, when the Bell Company asked for a rate increase, by the Conservative government of Premier Ferguson of the province of Ontario. This is what the brief says in part:
Reference in this connection might also be made to the covering up and the scurrying-to-cover tactics in connection with the disclosure of all relations and dealings of the Bell Telephone Company of Canada and its subsidiary the Northern Electric Manufacturing Company-
As it was then called.
-which latter company is merely the directors of the Bell Telephone Company of Canada, and the Bell Telephone Company itself manufacturing apparatus and selling it to themselves under another name at high monopoly prices, fixed and agreed upon between each company and its directors thereby making it possible to empty the Bell treasury and create a deficit when a rate case is coming, or at any time it sees fit to do so.
That is the statement that was made by the government of Ontario in 1926. I cannot say whether that statement would still apply in its entirety, but I have no hesitation in expressing the opinion, based on some years of trying to understand operations of this sort, that the prices which the Northern Electric Company charges Bell do not necessarily have any relationship to the market price or cost of the products allegedly sold to Bell. Indeed, they have a relationship to the financial arrangements between these two companies and the eventual financial statement of the Bell Telephone Company itself.
The Ferguson government brief to which I have just referred contains a statement couched in stronger language than I would use but which is perhaps perfectly legitimate language. It stated:
This is the most barefaced piece of villainy and imposition ever attempted upon a free people ... and its exposure before this honourable board will not be the last this corporate monopoly will hear about it.
I do not want it to be the last, Mr. Speaker. I think that all these matters should be carefully inquired into by the appropriate committee of this house. I want to know what is the exact effect of the relationship between Bell and the American Telephone and Telegraph Company. I know that the Bell Company boasts of the fact that 94 per cent of its shares, or some such percentage, are owned in Canada by some 240,000 shareholders. I think that is the number published in their report and prospectus. If they say so then I have no
Private Bills
doubt that their share books will show it. But there has been more than one occasion in our kind of economy when a company which has owned as A.T.&T. does, 2.2 per cent of shares has been in a position to exercise control.
I should like to know, and I am sure the house would, to what extent Bell is at the service of A.T.&T. I want to know whether the service contract between Bell and the American Company, which enables Bell to use certain of A.T.&T. developments in Canada but gives the American company the top 1 per cent of the earnings of Bell amounting to many millions of dollars each year, is a fair arrangement for the people of Canada and the users of the Bell Telephone services.
All of these matters which concern the national interest ought to be gone into by the committee with the greatest possible care. We should be satisfied that Bell is prepared to undertake to make its operations consonant with the national interest before this tremendous extension of power and financial base is given to the company by this parliament.
As a result of its incorporation almost 90 years ago the Bell Telephone Company is able to use and enjoy a natural monopoly, as I have said, over the major part of this country. Even now, if I may say so, in my view as a lawyer it has exceeded the powers given it in 1880 and in every amendment I have seen to its initial act of incorporation. It has carried on activities which are beyond the powers it has had until now. In my opinion it has not had the power under its act of incorporation and the amendments to that act to go into the field of telecommunications, a field it has entered without the authority that it ought to have sought from this parliament.
To a large extent, Mr. Speaker, this bill is now asking parliament to rubberstamp and to give the company authority to carry on activities which it has to date carried on without such authority. This is one of the reasons that it no longer wants to go to the Board of Transport Commissioners over the question of issuing shares. It wants to have more and more freedom. This parliament, and I suggest the people of Canada as well, must be assured that that freedom will be used to the benefit of this country, not merely to increase the net income and earnings of this company.
As a matter of fact, Mr. Speaker, I was struck by words used in one of the clauses of this bill. I am not going to refer to the actual provision as such but merely to the phrase which caught my attention. In clause 7 of the

February 16, 1967
Private Bills
bill certain things are proposed, namely, the extension of the activities of this company in the entire field of telecommunications. At the end of the clause it is stated that things may be done which in the opinion of the board of directors are "deemed to be in the interest of the company".
I am not concerned, Mr. Speaker, about the interest of this company. I want to make sure, and this parliament ought to make sure, that the extension of this company's activities into the various aspects of telecommunications is in the interest of Canada, not merely in the interest of Bell. Under this bill the board of directors is empowered to take steps to make extensions which they deem to be in the interest of Bell. The things Bell has done up to now have been in its own interest and frequently against the interest of the Canadian people, and it is time the situation was reversed.
This company seeks power to extend its monopoly into various fields. I submit we cannot approve this kind of extension of monopolistic power on the part of such a giant without certain safeguards, Mr. Speaker, and I will mention only a few.
It is our firm belief and conviction that a company like Bell, performing the kind of service it performs, ought to have on its board of directors public representatives appointed by parliament or the government. They should be members of the board who represent the public and are prohibited from having any financial interest in the company or in any of its subsidiaries. This will ensure that on the board of directors of the Bell Telephone Company there are men and women who represent the people of Canada and who have no personal interest in the financial and earnings arrangements of the company or its subsidiaries.
[DOT] (6:30 p.m.)
We ought to have a guarantee in this act that Bell will not enter the field of broadcasting, even though it may have facilities that may be used for broadcasting. We now have the Canadian Broadcasting Corporation, private television, radio stations and networks; we do not want a giant like Bell to enter that field as well and start new difficulties and new conflicts in this country. We should have provision in the act incorporating this company for Bell to disclose in detail the operations and earnings of all its subsidiaries. Let us have no more of these unrevealing, consolidated statements that hide everything which should be known by parliament and

the people of Canada. We ought to have a provision to give us all the information about Northern Electric and all the other companies that Bell now owns, or is likely to acquire under the proposed clause 8 of the bill. We should have a guarantee from Bell respecting the added capitalization it seeks, that any research work it will do will be research work done in Canada, that the powers we give the company may be used for the development of technological research and knowhow for the service of the Canadian people.
We ought to be sure that it will not use that money to buy the results of research elsewhere by making another service contract with American Telephone & Telegraph, or some other company in the United States, Britain, or elsewhere in the world. When it boasts about its intention to do research work, we ought to be certain that that research work will be done in this country, and that the results of the work are available to this country. We ought to have many other, similar safeguards before this already too big giant is made bigger still.


Mr. Deputy Speaker:: Order, please. I must interrupt the hon. member to advise him the time allotted to him has expired.


An hon. Member:: Go on.


David Lewis: Could I have a final minute to complete my remarks.


Mr. Deputy Speaker:: Has the hon. member unanimous consent to continue?


An hon. Member:: For one minute.


David Lewis: I merely want to conclude by saying that the only reason we in this party agree that the matter go to the appropriate committee is that we want an opportunity to study these things, to make sure that there are public hearings, evidence and submissions by representatives of subscribers competitors, provincial governments and municipal governments, so that we may delve into the way the company has used its power to date and into its intentions for the future.
One minute it was.


An hon. Member:: Half a minute.


Mr. B. S. Mackasey (Parliamentary Secretary to Minister of Labour):: Mr. Speaker, my contribution will be brief, particularly as I follow the hon. member for York South, (Mr. Lewis) who again has shown his eloquence as a debater. He is thorough when tackling any subject. I agree with the hon. member
February 18, 1967

that this bill is too wide in scope to be passed without first being referred to an appropriate committee of the House of Commons. I have little to argue with in the hon. member's remarks.


An hon. Member:: That is a change.


Bryce Stuart Mackasey: I do not argue with his appraisal of the problem. He was fair. He did not make unsubstantiated charges but posed many pertinent questions to which he felt the
House of Commons and the Canadian people should know the answers. Nobody in the house who is the least bit objective can argue that Canada and Canadians, through the medium of parliament, should not be fully protected, and should not have the right to know the answers to many of the questions asked by the hon. member for York South.
When the matter comes before the committee I think the hon. member will be pleased to know that, in all probability, many of the questions he has asked today are already on public record. The answers to many other questions will do much to allay his fears about giant corporations.
My philosophy about corporations is different from that of the hon. member; but, we respect each other's views on this matter. I am particularly concerned about and interested in the relationship between Northern Electric and other subsidiaries. I was surprised to learn from the hon. member's speech-and I know this must be accurate or he would not have said it-that Bell has financial interests in 15 or 16 subsidiaries.


David Lewis: Sixteen.


Bryce Stuart Mackasey: I hope that Bell treats all its subsidiaries with the same consideration and respect it shows to Northern Electric and its employees. If Bell's relationship with its many subsidiaries is as fruitful, objective and fair as its relationship with Northern Electric, or at least with the employees of Northern Electric, I shall be pleased. If this information is brought out in committee, then the suggestion of the hon. member to refer this to a committee will have been valuable.
It might be good to know that the request in the bill that Bell be permitted to lend money to its employees and to help in the field of housing is not a new departure for that company. It has had similar relations with its employees, and the committee might be glad to know that.
Private Bills
I do not intend to answer the hon. member's questions because I do not know the answers. I know that the questions were asked in a spirit of objectivity. I know that the development of Northern Electric came about through a need. Companies such as Bell Telephone, which operate as a monopoly but which are regulated by government boards, such as the Department of Transport and other boards, do not justify their existence for any reason except that they are in business to make money. In a free enterprise system this is a logical reason for any company, big or small, to be in business. Bell's rate of profit is regulated to protect the Canadian people, because the company has a monopolistic position. Northern Electric was created essentially to fulfil a need, to make available to the Bell Telephone Company from sources within Canada parts, pieces, components and knowhow that could not be obtained here when Northern Electric was formed. This may not be the situation today. It is conceivable, had Bell Telephone been formed today, that with our increased population, more developed economy and increased technological knowledge it would not have been necessary to form this close alliance with a company such as Northern Electric.
The hon. member mentioned research. When this matter is aired in committee I know that we shall be pleased to find that as the result of research in Canada and inventions coming from that research, the Bell Telephone Company and Northern Electric account for a very substantial export business, when measured in dollars and cents.
[DOT] (6:40 p.m.)
As the hon. member for York South mentioned, the shares of Bell Telephone are widely dispersed. It is good to think we have a corporation in Canada 94 per cent of whose shares are owned by Canadians and in the hands of 240,000 Canadians, among an investing population probably no greater than half a million. To me, this indicates the high regard felt by the people of Canada for Bell Telephone. Of course most members of parliament, including myself, gripe occasionally at the service they receive, and get letters from constituents occasionally raising particular problems; but in general I believe the relationship between this country and the Bell Telephone Company is a good one.
As was pointed out during the course of a similar discussion last year, if the Bell

February 16, 1967
Private Bills
Telephone Company were ever to be nationalized

and I do not think anyone in the house would suggest such a thing-it is highly doubtful whether the Canadian people would be half as well served as they are today under this private enterprise system of ours. I invite hon. members to compare the record of the company from this point of view-remembering that it shows a profit ratio of 6.6 per cent-with that of the Canadian Broadcasting Corporation or any other Crown corporation.
I am as anxious as is the hon. member for York South to see this matter referred to the appropriate committee so that these questions can be cleared up once and for all. If I am a member of that committee-and I want to make this clear-I will take a dim view of any action which would in any way adversely affect Northern Electric and the employees of that company. I say this regardless of whether its relationship to the Bell Telephone Company is improper in the eyes of some people. I must admit my bias. Living close to Northern Electric I am fully aware of the contribution the company has made to the social and economic development of my city and of the area directly concerned. The relationship of the company with its employees has been laudable and one which other corporations might well seek to emulate. Participation by the company in the social activities of the community has been most beneficial. Its willingness to take part in the activities of the 19 communities on Montreal Island, and I am sure, in other regions, has always been evident; the company has acted unselfishly and with the minimum of publicity for the good of the community. As far as I am concerned, Northern Electric have been good corporate citizens.
I would urge the house to take advantage of the remaining few moments by recommending that the bill be sent to the appropriate committee, so that we can seek out answers to many of the questions which were so objectively and eloquently asked by the hon. member for York South.


Lewis Mackenzie Brand: When I look at the bill before us I find myself concerned by the reference in some of its clauses to telecommunications. Some hon. members have already drawn attention to the implications of the changes proposed. It appears to me that on the basis of these provisions the company can now go into broadcasting. This is an aspect which should be examined by the committee on broadcasting.

The bill speaks of the power to transmit, which includes the emission or reception of signs, signals, writing, images, sounds, and so on, whether visual or auditory. This does seem perilously close to transmissions of the sort we have already heard about in the broadcasting committee-community antenna television and educational television, for example. Since, in the near future educational television and community antenna television may be brought under the Broadcasting Act, I am inclined to support those hon. members who advocate a close look at clauses 7 and 8 to see exactly what their implications are.
When dealing with this field of telecommunications we must not forget that a network of telecommunications belonging to the Canadian National already exists in this country. I will leave the implications of monopoly to be discussed by others; some hon. members have already spoken very well on this subject. Generally, I would support the observations the hon. member for Verdun (Mr. Mackasey) has made in connection with Northern Electric, but I would point out that if the bill before us allows a virtual monopoly in the field of coaxial cables, other firms who produce coaxial cables in this country, such as Industrial Wire and Cable, will find great difficulty in breaking into the market now that a wholly owned subsidiary is able to supply all the needs of this large corporation.
In closing, I return to this question of transmission lines. I would remind hon. members that in Britain transmission lines and microwave systems used by the B.B.C. are publicly owned; it is only those operated by private stations which are owned by I.T.V. the private organization. We should look closely at anything which might place one company in control of educational television, or even for that matter of community antenna television systems.
[DOT] (6:50 p.m.)


Frank Howard: Mr. Speaker, I regret that I do not see the parliamentary, secretary to the Minister of Labour (Mr. Mackasey) here at the moment, because I should like to make a comment or two about his speech and I should like to do so in his presence. Not having any control over the parliamentary secretary to the Minister of Labour, however, I expect I will have to go ahead in his absence. I listened with a great deal of interest to what he had to say about the bill. I should like to commend him, inasmuch as he was speaking from a position of semi-government, for his endorsation of the views expressed by the hon. member for
February 16, 1967

York South (Mr. Lewis). It is gratifying to have a man who is half way into the cabinet endorse the concept of public representatives on the board of directors of this particular company. We look forward to having the support of the parliamentary secretary and others of his party for these proposals when the bill is considered in the committee.
I think the parliamentary secretary's tangent-like comment with regard to state ownership, when he compared public ownership of a corporation such as the Bell Telephone Company with the ownership of the C.B.C., is an impossible equation. I am sure he knew it and just tossed it out in order to fill in some space. I do not believe he was really sincere in suggesting that it would be possible to make any such comparison, and thus try to play down the great benefits which can come from ownership of certain utilities.
I was also quite struck by his love affair with the Northern Electric Company. As he said, he is a bit prejudiced and biased in this regard. I should think that would be sufficient to disclose his real interest in the Northern Electric Company. I think, as he said, that he threw this in because of his own prejudice and I do not believe it in any way detracts from the substance of his remarks at the outset when he endorsed the views of the hon. member for York South, which views were exceptionally well expressed.
After listening to the hon. member for York South, I feel somewhat the way I feel after my wife has finished speaking to me-there is not much left to say. There is a matter here, however, which I think should concern us, and that is the size of the company and the implications it has in respect of our economy, especially the economy in sections of our country in which the Bell Telephone Company operates. We must remember that this company does not operate directly in the four western provinces. At home, in my own province, we have a privately owned corporation, the B.C. Telephone Company. In the other provinces there are publicly owned telephone systems. When one considers that the operations of the Bell Telephone Company are confined to only a section of our economy and a geographical section of Canada, their request for an increase in capitalization to $lf billion is made even more important. This is especially true when we realize that $1| billion, being the requested capitalization of Bell Telephone Company, represents just about one quarter of the total budget of the government and the parliament
Private Bills
of Canada. When we think in terms of that capitalization being a quarter of the total budget of Canada, and when we remember that Bell Telephone carries on its activities in only a portion of Canada, this carries with it that much more significance and that much more impact and should, I think, lead us more definitely to an understanding that what really exists here, and what has developed since 1880 when I believe the company was first incorporated by a private act, is not only a monopoly but a structure within which private and not public law is involved.
I believe we are giving, and over the years have given, to Bell Telephone Company authority which equals in all respects the authority of the government. This has been done by giving to this company practically the right to initiate its own system of law making, in so far as the bounds of the statutes relating to the Bell Telephone Company permit this. That, coupled with the size of this company and the revolution which has taken place in the telecommunications, electronics, television and other fields, should convince us that a company of this magnitude and with this much power and authority in its grasp ought to have on its board of directors representatives who would protect the interests of the public. This theory and idea was advanced by my friend from Comox-Alberni (Mr. Barnett) and others in this party during an earlier parliament and gained a great deal of support in the house.
For reasons which I do not have to go into at this moment, because it is nearly seven o'clock and I do not wish to impede the progress of the bill at this stage, it was felt at that time that it was desirable to withdraw the proposal for including public representatives on the board of directors of Bell Telephone Company. This attitude was adopted partly because there was very little warning. Inasmuch as that warning was given in an earlier parliament I am sure the Bell Telephone Company will not be surprised when they are asked at the time the bill reaches the committee to endorse this proposal, that the government appoint public representatives to the board of directors.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on transport and communications.
Mr. Wahn:: Mr. Speaker, may I have the indulgence of the house for a moment. The time allotted to private members bills in this session is rapidly expiring. I should like to
13136	COMMONS
Excise Tax and Old Age Security Act suggest that, as in the case of the Bell Telephone Company bill, the other private bills on the order paper be given second reading en bloc and referred to the respective committees where they can be examined. Those bills which have merit could come back to the house and be given third reading before the session expires. The Bell Telephone Company bill has been by unanimous consent permitted to go to the committee. May I suggest that the same consideration be shown the sponsors of the other bills, even though these other companies may be somewhat smaller.


Mr. Speaker:: Order, please. I suggest to the hon. member that at this point we should not engage in a procedural debate on the point he has raised. The hour appointed for the consideration of private members business has expired.


Ian Grant Wahn: It could be done by unanimous consent.


Mr. Speaker:: Order, please. The hour appointed for private members business has expired.



SITTING SUSPENDED


[Stage Direction]
The house resumed at 8 p.m.
Mr. Deputy Speaker:: Order. The house will now resume the business interrupted at six o'clock.



EXCISE TAX ACT AND OLD AGE SECURITY ACT

[Stage Direction]
The house resumed consideration in committee of Bill No. C-268, to amend the Excise Tax Act and the Old Age Security Act-Mr. Sharp-Mr. Batten in the chair.
On clause 1-
[DOT] (8:10 p.m.)
Max Saltsman: Mr. Chairman, before the hour for private bills intervened I was bringing to the minister's attention the fact that he had not exploited the opportunities offered by the increasing productivity in Canada, to the extent that we on this side of the house feel he should have.
Had such emphasis been placed we would not have received the lecture which was given to us tonight, in which the minister indicated the sums of money that would be

DEBATES	February 16, 1967
required for the kinds of programs which everyone in this country agrees are necessary for the nation. I should like to indicate to the minister that since our productivity is about 25 per cent lower than that of the United States-and there is very little reason for this-an increase in that productivity to bring it up to a level comparable to that in the United States, not only at the federal level but at all levels, would bring in an increase of about $4 billion in taxes, using approximately the same rates, because an increase in our gross national product without changing the level of rates in this country would certainly give us a tremendous increase in tax revenues at all levels-municipal, provincial and federal.
It seems to me that the inflation which we are experiencing in Canada would have provided an excellent opportunity for the minister to have introduced measures for increasing our productivity, measures which under circumstances of unemployment are very difficult to implement but under situations of excess demand could have been carried out. However, he did not take that opportunity to bring in those measures and I think he should be taken to task somewhat for that omission. I hope that in the future when he runs into a similar problem, instead of either slamming down on the brakes he will take a more positive approach, forget about the brake completely and use the accelerator on the supply side of the economy to increase the efficiency of its operation.
At the present time there seems to be a great concern on the government side about the effects of U.S. ownership. I think it is a concern that all of us have. However, I suggest that the government has not really examined this problem in the way they should, that just to express concern about U.S. ownership without examining its effects is to start off on the wrong track. It seems to me that the effect of U.S. ownership and the branch plant economy has been to inhibit our productivity and exaggerate the historic difficulties of a nation one-tenth the size of its neighbour, patterning itself on somebody else's experience. If the United States felt it was a suitable policy for them to impose tariffs, we tended to do the same. If the U.S. passed combines and anti-trust legislation, we tended to ape them and do the same. If the U.S. allowed unlimited advertising expenses and gimmicks, so did we. If capital in the U.S. could do practically as it pleased, we adopted the same position.
February 16, 1967	COMMONS


Mr. Macdonald (Rosedale):: Would the hon. member permit a question? Does he know that the Canadian legislation preceded the Sherman Act by several years?


Max Saltsman: I am aware of that, Mr. Chairman, but I suggest that we knew what was going on in the United States and we tended to pattern our experience on the experience in the U.S. Because the United States developed into the most efficient industrial nation in the world, we concluded that all that had to be done was to play tag, adopt the same rules and receive the same rewards. Canada, however, is a different country-and this is something that our governments have not recognized in the past-with distinct problems requiring answers suitable to its own circumstances.
If the U.S. economy could afford 10 firms of a particular size necessary for mass production, it should be obvious that anything more than one of these in Canada would not achieve the possible efficiencies. Even when we acknowledge the need for such giants, our reluctance to supervise monopoly led us to encourage pygmies. The kind of competition that developed behind our tariff walls was a strange fish: It spawned factories which produced almost every range and variety of product that was being produced in the U.S., but in miniature replica. Every major U.S. manufacturer, especially in consumer goods, rushed to put his brand in the Canadian market, ensuring his share of the second most affluent consumers in the world.
To reinforce this pattern came advertising. It ensured that Canadian consumers would be told that they must live exactly like the Americans, accepting all the products and values of American ingenuity. We are on a permanent treadmill, U.S. ownership or not, unless we can change this topsy-like pattern to one of a planned structure.
I suggest that what this country, and what the Minister of Finance in particular, has to do is to take a second look at the Canadian economy and develop a special approach to the problems that we face. This will require considerable ingenuity and courage. This should be his task. We would be much better served if he were to devote his considerable talents toward that purpose, instead of giving us lectures about economy and what we cannot afford. There is a great deal we could afford, provided we had a government that was prepared to plan the economy and to use the influence and authority which it possesses for the benefit of the nation.
Excise Tax and Old Age Security Act


Herman Maxwell Batten: Shall clause 1 carry?


Stanley Howard Knowles: On division.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
On clause 3.
Mr. Keays:: Mr. Chairman, since lumber and building materials are both incorporated in this part of the bill, I wonder what is the justification for a different procedure in imposing sales tax on building materials and on lumber. The sales tax on building materials is applied to the manufacturer's cost and in the case of lumber it is applied to the retailer's price. It seems to me that this part of the bill favours the sale of building materials over the sale of lumber because in the case of fibre board, plywoods, laminated woods and imported woods such as redwoods etc., the tax is imposed on the manufacturer's selling price and not on the retailer's, while in the case of lumber the reverse is true. This seems to me to be discriminatory and I have received some letters to this effect. I wonder whether some clarification could be given with regard to the difference in the imposition of the tax.


Edgar John Benson: Mr. Chairman, first of all I should explain that this question does not really arise under the particular clause with which we are dealing.
[DOT] (8:20 p.m.)
The section with which we are dealing really implies that the additional tax of 1 per cent will not be applied to the building materials which were exempted prior to June 13, 1963, and the same schedule is being used. The particular problem with regard to lumber goes back a long way, really to the imposition of the sales tax on building materials. The problem with regard to lumber is one my department has been looking at very carefully since the sales tax was imposed on building materials in 1963. At first we had a great many problems with respect to the lumber industry. However, my department has been working very closely with the lumber industry and the number of complaints that I am getting today concerning discrimination with regard to the lumber industry is minimal indeed.
I should like to point out to my hon. friend that this particular problem does not arise under the clause we are discussing. The problem he has is a problem on which my department has been working since 1963. It is a problem that I believe is soluble, and will
13138	COMMONS DEBATES	February 1G, 1967
Excise Tax and Old Age Security Act
ultimately be worked out to the satisfaction was. At any rate, there are not many of us of everyone involved.	left-


James Russell Keays: I am fully aware, Mr. Chairman, of the fact that possibly I went beyond the scope of the bill. However, since lumber and building materials were mentioned in connection with this 1 per cent tax, I thought I would bring it up. The minister has referred to certain studies being made by the department in consultation with the lumber industry. This industry has been offered three or four different options in connection with the computation of the sales tax. So long as the problem is under study by the department, I am satisfied that at least it has not been forgotten.


Mr. Bell (Carleton):: May I ask the minister to confirm that the phraseology of the schedule which is now being inserted is identical to the former schedule when building materials were fully exempt?


Edgar John Benson: Yes, this is the information I am given, that when it was decided to exempt building materials from the additional 1 per cent we adopted the schedule which was drawn up under the government of which my hon. friend was a member.


[Stage Direction]
Clause agreed to.
Clause 4 agreed to.
On clause 5-Old Age Security Act-Tax payable by individuals.
Stanley Howard Knowles: If I may, Mr. Chairman, I should like to say a few words on clause 5 which implements the proposal that the ceiling on the amount of taxable income that is subject to the old age security tax is to be raised. During the course of this debate, we have made it clear that our only quarrel with this provision is that the minister did not go far enough. However, we have stated our respective views in connection with this point. I noticed that the Minister of Finance was getting some support for our position from his left. Hansard may not indicate just who was at his left at that point, but he was well supported in any case.
I rise particularly because I am interested in the bit of history in which the Minister of Finance indulged for a few minutes this afternoon. He referred to the sessions of the special joint committee on old age security which met back in 1950, when he was a very valuable witness before that committee. As he said this afternoon, he was also the devil's advocate. I have a notion what he thought I


Mitchell William Sharp: My colleague says, the devil.


Stanley Howard Knowles: I thought that was obvious and did not need to be put on the record. In my younger days I was a printer's devil, so I suppose at least I had graduated.
During the course of the sessions of that committee, if I recall correctly, there were a couple of points concerning which the present Minister of Finance, then in his capacity as an official of the Department of Finance, and I had differences of opinion. Those were recounted this afternoon. He indicated that back in 1950 he supported the idea of a separate old age security fund, and I opposed it. The other difference of opinion between us was that he supported the idea of a special flat rate tax that would apply only to a certain portion of taxable income, whereas I favoured both a graduated tax and a tax that would apply on all taxable income. I was interested in learning this afternoon that in these 17 years the minister has come around to my point of view with respect to one of these matters. I think it is fair to say that he indicated he now has doubts about the idea of the special old age security fund. I wish to express the hope that he will pursue those doubts and that before long he will recommend the abolition of the fund and the acceptance of the fact that old age security is on a pay as you go basis.
We have had differences during the course of this debate, some of them perhaps differences of interpretation. However I believe they have underlined the fact that the fund is really a bit of fiction. When it is in deficit, the minister acts as though that deficit were real and wants taxes to make up the deficit. When the fund is in surplus and we want some of that surplus to be used, he tells us it is not there.


Edgar John Benson: In the long run, it is there.


Stanley Howard Knowles: In the long run, it is there. He admits there might be an accounting surplus, but he says it is not a cash surplus. Even the discussion we are having back and forth right now proves my point, I think, that the fund is a fiction which, in fact, was set up so that there could be arguments used as to whether or not pensions could be increased without increasing taxation. I welcome this conversion after these 17 years. The minister confessed this afternoon that the idea of the
February 16, 1967	COMMONS
fund is not as sacrosanct as it was when this fimd was set up. I hope he will pursue this so we can get the old age security on a basis that is factual, that is, pay as you go.
I hope it will not take another 17 years to win the minister as a convert to the other point on which we differed in 1950, namely, that the taxes for old age security would be better if they were built into the income tax structure. My colleague says, and graduated; of course, and he will recognize immediately that when they are built into the income tax structure, ipso facto, they are graduated because the income tax structure itself is graduated.
[DOT] (8:30 p.m.)
Surely there is no more reason that the moneys we pay out in pensions should be given an earmarked tax than should the moneys we pay out in family allowances or in national defence or in services to agriculture or labour or what have you. Surely what we as a civilized society decide to spend is part of a total package and should, in effect, be financed according to ability to pay; and contributions should be made according to need or to the decision that society makes through its elected representatives.
I think it is unfair, and a form of discrimination against one group of our people, to put our old age pensioners in the position where there is a tax earmarked for them. If it were a fund such as the Canada Pension Plan fund on the basis of which people receive a pension which is directly related to what they put in, then there is a different case. For example we have found with regard to the unemployment insurance fund that it too is fictitious; when unemployment insurance benefits have to be paid, they have to be paid whether or not the money is in the fund. Again the same story holds true as to whether or not the money is there. I know that there are some differences in that securities are bought outside by the unemployment insurance commission; but in the main these funds, if I may repeat myself, are really a piece of fiction.
I would think, Mr. Chairman, that we would portray the picture more accurately than at present and we would be treating our old age pensioners much more fairly, as well as the other groups in our society who share in the benefits of civilization, if we were to do away with these fictitious funds. As I say, I welcome the minister's announced conversion this afternoon on the one point, and I hope it
Small Businesses Loans Act Amendment will not take him long to become converted on the other as well.


Mitchell William Sharp: Mr. Chairman, I just want to make three brief points. First of all, I would remind the committee that the result of the increase in the ceiling is to affect only taxpayers who are in the upper third group of taxpayers.
My second point is that I agree with a great deal of what the hon. member for Winnipeg North Centre has said. When the old age security fund was first established it was established as a means of relating directly pension cost to the amounts that were being collected. I believe at that time there were some misunderstandings about this. Indeed, if my hon. friend recalls, at one time this was thought to have been a contributory pension plan; but we now recognize-indeed, I think many of us did at the time-that it is only contributory in a very indirect way: It relates the total expenditures to the total revenues from these taxes. I agree with the hon. member that we have got beyond this point and that the existence of this fund ought to be examined in relationship to the revisions in the tax structure we may be considering shortly.
Finally I would say to the hon. member that if in fact a fund had not existed I do not think we would have had the same argument here, because it would have been clear to the hon. gentleman, as it is to me, that I would have had to raise another $280 million to pay out additional benefits.


Stanley Howard Knowles: Does the minister think that would have made it any easier to vote for these increased taxes? It would not.


[Stage Direction]
Clause agreed to.
Title agreed to.
Bill reported.


Mitchell William Sharp: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to amend the Small Businesses Loans Act to extend until December 31, 1969 the time during which guaranteed improvement loans may be made under the act; to extend the guaranteed loan provisions of the act to cover loans made to small businesses engaged in construction, transportation or communications; to remove the restriction that now applies in the case of loans made under the act
13140	COMMONS
Small Businesses Loans Act Amendment
for the purpose of constructing or purchasing premises; to increase the maximum limit that now applies with respect to the annual gross revenue of a small business enterprise from $250,000 to $500,000; to provide that the aggregate principal amount of all guaranteed business improvement loans made by banks during the new lending period shall not exceed $300,000,000; and to provide further for certain changes in connection with the administration of the act.
Motion agreed to and the house went into committee, Mr. Batten in the chair.
[DOT] (8:40 p.m.)


Mr. Chretien:: Mr. Chairman, the purpose of the measure before the house is to add a further three year period during which loans made by chartered banks under this act may be guaranteed by the government and to extend the scope of the act in order to make its benefits available to a large number of small businesses.
I am sure hon. members will recall that this act was passed in 1961 to empower the government to guarantee loans made by chartered banks to small businesses engaged in manufacturing, trade or services for purchasing equipment and improving or enlarging the premises in which they operate. An amendment in 1962 extended the purposes for which loans may be made to include the purchase or building of premises, where existing premises cease to be available, or where a new site is necessary for the normal development of the business.
Under the terms of the act, a small business enterprise is that with an estimated annual gross revenue not exceeding $250,000. The maximum amount that can be borrowed at any time is $25,000 and loans are payable over a period of at most ten years. The maximum interest rate that can be charged on those loans is set by the regulations. It has been at 5J per cent since the beginning of this program.
The act became effective on January 19, 1961 for an initial period of about three years ending on December 31, 1964. It authorized the Minister of Finance (Mr. Sharp) to guarantee any bank against loss of an amount not exceeding 10 per cent of all the business improvement loans granted by the bank over the lending period. Provision was made for a total of $300 million for all loans that chartered banks could grant under the act during the lending period. The act was amended in 1963 so as to provide an additional three year lending period during which guaranteed loans could be made under the

DEBATES	February 16. 1967
same conditions as during the original lending period. The legislation now before the house will provide for another lending period which will extend from January 1, 1967 to January 31, 1969. During this further period, the same guarantee provisions will continue to apply just as during each of the two previous guarantee periods.
Due to the pressure of current business in the house, it was not possible to introduce the resolution preceding this bill before the middle of December 1966 and the schedule of legislation precluded discussion before the Christmas and New Year adjournment. In order to prevent stoppage of the operations being conducted under this legislation, the bill carries a clause making the application of this legislation retroactive to January 1, 1967. Meanwhile, the Minister of Finance has asked the chartered banks to continue lending under the act, pending the passage of the present bill and the minister has been assured by the banks that they would.
The other provisions of the bill concern the scope of lending operations under the Small Businesses Loans Act. They deal with points which may have contributed to the little use made of that act until now.
Every year from the implementation of the act until 1965, chartered banks have granted some 3,000 loans to small businesses, totalling $26 million. Although the final figures for 1966 are not yet available, it seems at first glance that loans in 1966 totalled $21 million. Therefore, during the six first years the act has been in operation an approximate total of $150 million has been granted in loans. Of course, it is not an unimportant amount and it has probably been quite beneficial to borrowers. But it might be possible that it is not a valid sign of the entire potential demand which could exist for such loans.
The rather moderate application of this act is mostly due to a few characteristics of its provisions and the purpose of this legislation is to amend those main features, in order to extend the application of the act to a greater number of small businesses.
A rather secondary factor, which explains the relatively limited use of this act, is the fact that the purposes for which loans could normally be granted included improvement or extension of premises. As I said earlier, the act admitted only the purchase or the building of replacement premises, when the premises used up to then were no longer available. Unusual situations arose from that. For example, the owner of a retail store
February 16, 1967	COMMONS
operating in rented space was not able, under the act, to finance the purchase of the building in which he had settled down, although he could, under the same act, finance the purchase of a building across the street if he was to evacuate the premises he was occupying. The new bill aims at extending the present grounds for loans, in order to allow the purchase and the construction of premises in every case and not only under the circumstances I just mentioned.
Another more significant factor is that the loans at present can only be granted to the small businesses engaged in manufacturing, wholesale, retail, and service. There are several other small businesses engaged in construction, transportation and communications that are not at present eligible for loans, under the act, but the nature of which would permit them to avail themselves of such loans, as well as the retailer or the small manufacturer. The bill provides eligibility to guaranted loans for the small business enterprises falling into these three classes.
A third factor is the present limitation on the size of the small business for eligibility. Such enterprise was defined as having an annual gross revenue not exceeding $250,000. Sometimes, particularly in the case of some retailers and wholesalers, this led to an arbitrary exclusion of businesses which, in other respects, could have qualified for loans under this act. The legislation before us changes the definition of the small business eligible in determining that its estimated annual gross revenue shall not exceed $500,000.
However, I wish to point to hon. members that there is at present no provision for increasing the maximum amount of a loan permissible under the act. In deciding to leave the amount unchanged, the government has taken into consideration other financing sources available to companies needing more than $25,000, one of these being, of course, the Industrial Development Bank. The Small Businesses Loans Act is designed particularly for very small business concerns, where the owner ordinarily deals with the local bank branch for all his financial needs. All the more reason why we must expect businesses needing over $25,000 and those having a turnover exceeding $500,000 to have plans that require financing beyond the scope of the Small Businesses Loans Act. Such projects can be financed either by individual lenders or by the Industrial Development Bank. Of course, borrowers at the intermediate level will prefer loans governed by the Small
Small Businesses Loans Act Amendment Businesses Loans Act, since banks cannot charge more than 5J per cent on loans granted under this act, as compared to higher rates charged by individual lenders and the Industrial Development Bank.
This brings me to another point which, I think, is important. The purpose of the government guarantee, as authorized by the act, is to encourage the banks to earmark, for a given period, a portion of their funds for loans intended for business improvement. However, that provision gives less and less incentive, at a time when the level of interest has substantially increased, while the interest rate on guaranteed loans to small businesses remains at 5J, per cent.
That rate, of course, was set initially on the basis of the 6 per cent ceiling of the interest rate provided by the Bank Act, at a time when the interest rates were generally substantially below the present level. It is unquestionable that the bank rate, under the act, must take into account the guarantee granted to those loans by the government. However, if the act must still benefit truly the small borrowing businesses, the rate must be sensibly determined in proportion to the rates charged by the banks without government guarantee, after the ceiling on interest charges has been modified by the bank legislation which is before the house. Once that measure has been passed and new interest rates have been set, the minister proposes to review the interest rate provided by the act and to recommend to the governor in council, if necessary, a change in the administration rule in order to set a new maximum rate under the Small Businesses Loans Act.
I believe that the average businessmen will welcome this initiative even if it involves a higher interest rate. At the present time, several business men find that they cannot get all, or part of the funds they need, at an interest rate of 5| per cent and they have no other alternative than to turn toward other means of financing which are considerably more costly. Such an initiative will evidently reduce the difference between the rates imposed on loans granted under the Small Businesses Loans Act and those demanded by the private lenders or by the Industrial Development Bank. The cost of a loan granted under the Small Businesses Loans Act will become a little less advantageous, but the funds available under that act will be increased.
Mr. Chairman, this brings me to the conclusion of the remarks I wanted to make at this stage.
13142	COMMONS
Small Businesses Loans Act Amendment
[DOT] (8:50 p.m.)
In conclusion, may I be allowed to say that in introducing this resolution in the house and describing the future financing methods thereby provided, I express my full confidence in the basic soundness of small businesses in our country and in the good judgment of those who own and administer them. I expect them to make a greater use of this piece of legislation, on account of the proposed changes, and that the banks will be better able to meet reasonable loan applications under this act.


James Russell Keays: Mr. Chairman, we are very happy to see the parliamentary secretary to the Minister of Finance and Receiver General (Mr. Chretien) introduce this resolution. We, on this side of the house, wish him well but we shall nevertheless have some comments to make. However, I know I cannot criticize this resolution, as mentioned by the parliamentary secretary, since in 1961 we approved such a legislation through our vote.

However, we welcome this proposal for legislation to extend the act to December 31, 1969. We are happy to see that the measure will now cover certain categories of businesses which were not previously eligible for loans under this legislation. It is true that if money could be made available by chartered banks in circumstances in which repayment was guaranteed by the government, small firms or individually-owned firms going into the trucking industry, which has contributed so greatly to the strength of the Canadian economy, would derive valuable assistance in their financial affairs, particularly during the early stages of their existence. And, as I say, transportation and communication play a most important part in determining the cost of all our products today. So everyone would benefit by improvements in efficiency brought about by better equipment and facilities for the transportation of goods. By helping these companies we would be helping to reduce the price of the products we use.
Parliament is here making use of its power to ease the financial burden which our small business people bear. It is also offering an incentive to these people to play their part in the general economy of our country by improving their facilities; it is encouraging them toward greater productivity and, last but not least, to contributing to the employment of our citizens.
[Mr. ChrStien.l
DEBATES	February 16, 1967
I am confident that the small businessman is an essential spoke in the wheel of industry. The larger corporations with their greater investment capital have of course contributed substantially toward the maintenance of a competitive position in world markets. But the smaller businesses, too, whether engaged in manufacturing or in transportation, in the communications field or the service industries, have made a tremendous contribution to the supply of products necessary to the large corporations I have mentioned. They fill a gap which the large corporations cannot fill. In brief, they are one of the fibres in Canada's network of enterprise which makes this country's financial position strong.
It is perhaps unfortunate that this legislation could not have been brought in before the end of the calendar year 1966. I say this because I am under the impression that some of the potential borrowers have been deprived of the means of borrowing, though I recognize the parliamentary secretary told us that the minister had made arrangements with the chartered banks to continue to lend under this act. Nevertheless I suspect that some people did not receive the money they might have received under the act, possibly because of fear that the legislation would not be renewed or extended. So they may have suffered for a period of 50 days.
Looking over the last available report of the transactions under the Small Businesses Loans Act, I find that in 1965 the total amount lent was of the order of $26 million. The parliamentary secretary tells us now that in 1966 the total was in the order of $21 million. This leads me to wonder whether those wishing to borrow have been finding it as easy to do so as they did previously. It is possible that in 1966, due to the tight money situation, some of those who wished to get loans under the act were denied them by the banks.
This reduction in the amount lent was caused, I suggest, partly by the tight money situation and partly by our failure to amend the Bank Act and bring it forward in 1964. The parliamentary secretary indicates that he does not know. I do not know either, though I have my suspicions that this may be the case.


Joseph Jacques Jean Chrétien: I did not say I did not know.
As to the Bank Act, I wanted to suggest that responsibility for the delay was much more on your side of the house than on ours.


James Russell Keays: I do not think we held up the Bank Act. I know that according to the act the
February 16. 1967	COMMONS
rate of interest a bank can charge is set at 5J per cent. I find myself wondering if this will have the same effect in the future as in the past. I wonder whether the banks are interested when a businessman goes to a chartered bank and offers them 5-J per cent interest. We know that the government will guarantee 10 per cent of the total amount of $300 million made available. I am not at all sure that the banks will be interested in making loans at that rate of interest. This might mean the end of the Small Businesses Loans Act.
[DOT] (9:00 p.m.)
We know that the banks are to be given the right to take mortgages. Because of this, in some way they will be competing with the Industrial Development Bank. The rate of interest they will be receiving will be 6 per cent; that is the present rate. They hope the rate will be larger. Once the banks have the power to take mortgages I cannot see them making loans at 5J per cent. When the small businessman approaches a bank it is quite evident, with the powers the bank will have, the rate he will be charged will be 6 per cent or such other rate as might be established. Under the present system, however, it would be 6 per cent. I am a little concerned about whether this legislation will be of much benefit to the small businessmen of our country.
I referred to the total number of loans made in 1966. I would be interested to know how many applications were made in 1966 compared to 1965. Perhaps this would tell us the story, so that we would know exactly what reaction the banks will have when the applications are received. I would also be interested to know the amount of the loans made in the rural areas compared to the urban areas of our country.
When I look at these tables for the year 1965 and see that some banks are lower in volumes of loans than some of the others -although possibly their assets are equal-I ask myself whether all the banks are interested in making these loans. Most of the small business people in our country will be found in the rural areas. If this legislation will be of no help to the people in the rural areas, then there is something missing. I wonder whether perhaps the Department of Finance has continued to keep in touch with the chartered banks to encourage them to see that more money is available in these rural areas. I think this would be one of the most important things the department could do. They should keep in constant contact with the chartered
Small Businesses Loans Act Amendment banks to see that they are playing their part in respect of this legislation.
I would be very happy to know whether or not the department is receiving full co-operation from all the chartered banks. I also wonder whether we should publicize this legislation more, or perhaps have further contact with the provinces in order to be sure that they are increasing the activity in this domain. Again when I look at this table I see the total number of loans made with this 10 per cent guarantee. I should like to know from the parliamentary secretary whether the extension of the term in respect of the $300 million is for a further three years and for an amount of $300 million, or does it take into account the millions which have been lent previously. In other words, if $100 million has been lent so far, will this new legislation cover a guarantee of 10 per cent of the $400 million or simply 10 per cent of the $300 million as at the first of January because, as is said, the bill will be retroactive.
I think there possibly are a few other important industries in this country which do not seem to be affected by this new legislation. I am thinking of the agricultural societies which have come into existence throughout the country. These societies have exhibitions, agricultural shows, stampedes, horse shows, and so on. These are found throughout Canada from the east coast to the west coast. It seems that unless these societies in some of the smaller areas are consolidated into larger units they will not be able to exist. I believe that if this type of loan could be made available to some of these societies they would be encouraged to consolidate, grow, and bring additional benefits to their communities. These agricultural societies have provincial charters and if they do not receive aid under this legislation they will disappear. I hope in the near future, by means of this or other legislation, we will be able to assist them.
I am informed that the former minister of agriculture had intended to introduce a program to set up loan facilities for these societies. This has not been done. Perhaps it could be done by means of this legislation. I will have more to say later concerning this new legislation, but this will conclude my remarks at this time.


Max Saltsman: Mr. Chairman, in opening my remarks I would first of all like to congratulate the parliamentary secretary upon his lucid explanation of this legislation. It has been most helpful. I also wish to indicate the
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Small Businesses Loans Act Amendment general approval of this resolution by the members of this party. We believe it is a most worth-while piece of legislation. It has proven Its value in the past and I am sure it will assume increasing importance in the future. It is particularly important that the government has recognized the changing role of the small businessman by moving the ceiling from $250,000 to $500,000 because, although we speak of the small businessman and think of his business in terms of infinitesimal sales, the truth is that in many cases today the amount of capital required by even the smaller businesses in our society has expanded enormously, and this resolution takes this into account.
[DOT] (9:10 p.m.)
I am also pleased to note that the restrictions in respect of the use of this money have been removed, so far as the construction and communication industries are concerned. The government should have gone further and included other industries, and I intend to discuss this aspect a little later this evening. Small businesses today form an important part of our society and I am sure they will continue to play an important role in our industrial and commercial system.
Statistics indicate that small businesses today make up more than 94 to 100 per cent of the number of industries in most fields of business activity. Although we have witnessed tremendous growth of giant corporations, prospects and needs for small businesses apparently have not diminished. If we consider small businesses with assets of less than $1 million, we find there are some 440,000 small businesses in Canada, most of them unincorporated, with assets under $100,000. A great many of them are engaged in the retail trade, service or construction industries.
I said earlier that it was important to remove the restriction in the application of this measure in respect of the construction industry. There are many efficient contractors in business who will benefit from this measure, and will be able to play an important role in alleviating the serious shortage of houses that exists in this country.
There is a particular need today for special legislation to help small businesses. As the government learns to use and apply monetary and fiscal tools to manage the economy the tendency will exist to tighten the screws on small businesses more so than on larger corporate organizations. The government should go further than it has in terms of laying down guide lines to the banks, which are charged

DEBATES	February 16, 1967
with the responsibility of carrying out the provisions of this legislation so that under the special circumstances of monetary or fiscal tightness the small businessman does not bear the greatest load.
Anyone who has observed what has happened in the markets when money is tightened to control difficulties of an economic nature must recognize that the small businessman is worse off than others. For that reason special consideration must be given. Small businessmen frequently lack alternate sources of credit. The royal commission which studied this problem pointed that out. Larger corporations can float bonds and go to special organizations for money. They can also increase their stock offerings and take advantage of many other sources of money. In many cases they can use their retained earnings. These sources of money are not always available to small businesses, therefore the function of the bank is of paramount importance.
The government has indicated to the chartered banks of Canada its desire to help small businesses. They must be aware of the government's concern in this regard. Following the changes to the Bank Act the situation will become more difficult for the small operator. His bargaining position will not be as great vis-a-vis banks.
In the long run this kind of legislation will be very helpful to the government in obtaining support for its broader proposals under the Bank Act. One thing which has disturbed many of us about the changes to that act is the problem of how small businesses are going to exert sufficient influence under the flexible arrangement proposed by the government to ensure that they have adequate access to funds at reasonable rates. We all realize that money is available at extremely high rates. Small businesses cannot afford to pay these high costs. This act will help to satisfy those of us who have been concerned about difficulties which may be created by the provisions of the new banking legislation.
Let me make two suggestions at this time. I have indicated my general support for the measure before us. There are, however, omissions of an important nature in terms of the future of small businesses. Funds should be made available to small companies for the purchase of other like companies in order that they may enlarge their operations. There is nothing in this bill which would permit such activities. Anyone who is familiar with the operations of small businesses knows that
February 16, 1967
they represent the largest untapped reservoir of managerial talent that exists in this country. Anyone who has tried to operate a small business will appreciate that it is more difficult to operate a small business than a large one.
With advances in technology there is an increased need to enlarge operations. What might have been efficient at one time becomes less efficient with changing technological requirements. Small businesses require more capital and a great deal more management. I think we should allow the small companies in our business community to take advantage of opportunities, and provide funds in order that they may expand. The omission of such a provision in this measure is something that should be corrected. Surely this would be valuable to our economic future. This would allow able and talented managers to develop their operations and provide increased efficiency in some areas. It would certainly enable them to act with a greater degree of knowledge and technology.
[DOT] (9:20 p.m.)
The other suggestion I should like to make is this. Since this program provides a great deal of assistance to small businessmen, two things should be done. First it should be given increased publicity. I do not think enough business operators in this country are aware of the provisions of this act and the fact that the parliament of Canada has already passed legislation of this type and will probably pass similar legislation in future. I believe they should be made aware of this fact. This may be one of the reasons that the amounts authorized by the legislation have never been fully taken up.
The other suggestion I should like to make in this regard is that these loans carry an insurance charge. At the present time a loss is sustained from the operation of this fund. This loss is met out of unappropriated moneys in the consolidated revenue fund. I refer to the loss sustained in the lending of money under the conditions prescribed in the act. Last year, if I am correct, the amount of loss was $76,785. This is not a large amount; it is not an amount that perhaps should arouse an excessive degree of concern. But I believe there is a principle involved here. Those of us in parliament are looking at this legislation from the viewpoint of providing every possible assistance to the small businessman, and there should not be any subsidy feature in the program as far as the government or the taxpayers of this country are concerned.
23033-831J
Small Businesses Loans Act Amendment
Although the loss experienced is rather small and is, I would think, a very good indication of the healthy state of our business community generally, and the considered use of this fund by our banks, I believe that loans made under the act should be insured. The premium charged should be sufficient to cover this kind of loss, so as to make the entire program self-sustaining. We adopt this principle in connection with other government programs. We do it with home improvements and N.H.A. loans, and I believe it would be a logical extension of that principle to apply it also to this legislation.
Looking at the loss experience, according to the report of 1965, of 14,050 loans made, 25 were in default. If you figure out the actual amount of default, it works out to one tenth of one per cent, as close as I can get it. I quote these figures as an indication of the small amount of the loss and the small premium that would be necessary to ensure that the loans are fully covered and represent no charge on general revenues. This program would then be completely self-sufficient. I believe most businessmen would view this proposal with favour. They would consider that a small charge of this type to insure loans would be acceptable. And it would go a long way toward improving the conception of this kind of program.
In conclusion, Mr. Chairman, I should like again to voice our support of this most valuable piece of legislation. I would urge the government to consider the suggestions we have made for the purpose of improving the provisions of this act, and hope the government will bring in recommendations in the future to implement these suggestions.


Mr. Gauthier:: Mr. Chairman, as usual, I will not take too much time at the resolution stage precisely because we do not yet have the bill. This time, however, the terms of the proposed legislation are clear enough to indicate what will be provided for in the bill, and I should like to congratulate the parliamentary secretary to the Minister of Finance (Mr. Chretien) in particular for his work.
Naturally, this legislation is simply a broadening of the act passed in 1961 under the Conservative government; it was amended in 1963 and this year it will be extended to December 31, 1969. Mr. Chairman, I believe the parliamentary secretary will certainly be happy, since the bill will receive unanimous: approval, and it is always pleasant when one

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Small Businesses Loans Act Amendment makes a proposal with the assurance that *discussions will not be too lengthy. That is understandable, when we are presented with legislation favouring our interests, the interests of Canadian citizens; it is not at all like being asked to pass a measure causing hardship. We prefer to support this proposal rather than pass a bill resulting in increased taxes, because an increase in taxes is always hard on the people. I therefore wish to congratulate the parliamentary secretary to the Minister of Finance.
This gesture on the part of the government will surely help small businesses, which daily need more help because, on the whole, the government is not assuming an extraordinary responsibility, since its liability is only 10 per cent. In my opinion, this is not excessive. [DOT] (9:30 p.m.)
Even if the government had wanted, while introducing its amendment, to give greater satisfaction to the small businessmen in increasing a little the government's endorsing responsibilities, it would not have taken a great risk as far as money is concerned, because a businessman who makes a loan of $25,000, while he is worth $200,000, $250,000 or $300,000, is not a great financial risk.
I feel that the difficulty will lie in fixing the bank interest rate. It is understood that if the present rate provided by the law, that is 5J per cent, is maintained, I do not think a single bank would be interested in making loans. In fact, I have discussed the matter several times with some of my electors. They had visited me to obtain a loan, and I can assure you, sir, that at the rate of 5J per cent, the banks became more and more disinterested, for it should not be forgotten that today the bank lends at rates of 8 and 8J per cent. People say that the interest rate is 7 per cent, but there are also the administrative costs. The banks are entitled to charge for administration, and they will do it quite willingly.
To my knowledge, most small manufacturers-perhaps 80 per cent of them-having obtained loans applied directly to the banks, since the banks could not make up their minds and accept the government's requirements. Even though the government was the endorser, the banks would rather run the risk, which, in my opinion, was rather non-existent. They preferred running the risk, if any, and lend at 8 and 84 per cent.
That is why I am reminding the minister he must consider which interest rate will be more acceptable to the banks, because it is useless to pass a piece of legislation while

DEBATES	February 16, 1967
knowing beforehand that it will be impossible to implement it through lack of interest on the part of the banks.
Anyone in their place would not reason otherwise, because the real purpose of banks is to administer their business; their purpose is to make money rather than to suffer losses, even though the government itself advises them to that effect.
If I were a bank manager and the government advised me to lend money at 5| per cent, I can assure you that if I had the chance to charge an 8 per cent interest, I would certainly do so.
Since nothing is decided yet, in this bill, I suggest that the minister be very careful so as to avoid making this legislation ineffective. These loans are surely more advantageous than those of the Industrial Development Bank, because I think that an enterprise must be in a very difficult position to borrow from the Industrial Development Bank under the conditions offered these days.
Nowadays, if you borrow from the Industrial Development Bank, they will first try to retain a reserve of $2,500 which will be remitted after ten years, if you will, but such $2,500 will be kept in reserve and interest charged on the balance. The borrower will get only $23,500 and the $2,500 will be loaned for ten years.
Now, our bill must prevent tricks of that kind. Banks should not be forced to accept profits on the side. If our legislation is very clear, well defined and if the interests are very obvious and do not cause banks to lose money, I believe the tricks like the ones we see in the Industrial Development Bank will not be repeated. I have known some of the things certain industrialists were asking for. They finally obtained the amounts they were looking for. Now, when an industrialist needs $25,000 more and sees $2,500 of that amount held back, that is not satisfactory at all.
Mr. Chairman, I would also like to draw the attention of the government on the small businesses in our areas. This is a good piece of legislation, but I think that something more should be done in order to save private enterprise in the province of Quebec; I do not know how it fares in the other provinces, but as far as Quebec is concerned, there are serious problems with respect to private enterprise, tremendous difficulties when it comes to securing capital at a reasonable rate. I hope that the government will not merely extend the effects of the legislation already passed, but that it will try to find new ways
February 16, 1967	COMMONS
of expanding our private enterprises a little more.


Mr. Howe (Wellingion-Huron):: Mr. Chairman, 1 would like to say a few words on this resolution, which makes provision for amendment to the Small Businesses Loans Act. For many years the small businessman, who has been a very important part of our economy, has been forgotten. There was no legislation on the order paper and no legislation was passed through the house to make loans available to him. And yet, Mr. Chairman, the small businessman, as has been said so many times during this debate, is an important part of our national economy. He is the one who goes to the newly developed areas and brings the goods and services that are so necessary to the development of these areas. He is the man who takes the lead in the municipalities, does work in his church, his schoolboard and commissions. He is the man who throughout the years, as great corporations, chain stores and big manufacturers grew and developed in this country, found it more and more difficult to be competitive. There was no government assistance available to him. Farmers had their farm credit corporations, big manufacturers, and the industrialists had the Industrial Development Bank, but the small businessman had nowhere to go for loans except to his local bank.
Those of us who are small businessmen and who have tried to get loans from chartered banks without having too much collateral have found it pretty difficult. However, the government of which I was a supporter and which came into power in 1958 realized that this was an area which needed assistance. So, in 1958, a branch of the Department of Trade and Commerce, called the small businesses branch, was set up. This was the branch where the problems of small business were discussed, and to which small businessmen could send in their requests and have them answered. I might say that this function is being performed in the Province of Ontario by the department of planning and development. This department has provided assistance to communities all across Ontario by analysing the businesses of small businessmen and providing helpful suggestions in their operations. This has been very valuable assistance in the last two or three years in the Province of Ontario.
Small Businesses Loans Act Amendment
As I said, the Conservative party realized in 1958 the importance of the small businessman in our national economy and did something about it. In fact, four days after the opening of parliament in November of 1966 the Speech from the Throne was postponed so as to bring in Bill C-40 which initiated the Small Businesses Loans Act, This was a very important piece of legislation particularly in view of the high rise of unemployment in 1957 and 1958 which we inherited from the previous government. In this connection I should like to read the statement made by Hon. Donald Fleming when Bill C-40 was first introduced in the house. It indicates that the Conservative party of that day was ready and willing to do all that it could to overcome some of the problems with which it was faced. He said the following:
My ministers are convinced that additional medium-term credit facilities for small businesses would enable many private projects to go forward this winter all across Canada, providing substantial additional employment. Moreover, this addition to our credit legislation will constitute a continuing stimulus to the growth of Canadian private enterprises.
[DOT] (9:40 p.m.)
Now, Mr. Chairman, this is a very important piece of legislation which provides assistance to a group of people who never had any provision made for them before by way of government loans. This act made it possible for them to go to chartered banks and get assistance it they wanted to remodel their store facilities or, if they were in a service industry, to buy a new piece of equipment. These business people would thereby be enabled to meet the competition of larger, more powerful chain stores or bigger service industries.
However, Mr. Chairman, as is the case with a lot of new legislation there had to be a trial period and, as the parliamentary secretary indicated, this bill had to be amended in 1962 to make it possible for people who were in small businesses to move to new premises. This Small Businesses Loans Act has not been as useful or as comprehensive an act as it should be. This fact is indicated by an article in the Ottawa Citizen of June 25 which is headed, "Small Loans to Business off $359,048". This same situation is reflected in an article in Men's Wear magazine which indicates that in the first nine months of this year, small business operators borrowed only $15.1 million compared with $19.8 million in the same period of 1965.
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Small Businesses Loans Act Amendment
There are several reasons for this situation.
I believe one was indicated here tonight, namely the fact that the interest rate is only 5.5 per cent. Probably the banks were not as happy lending money at 5.5 per cent when they could get more for it from other areas. There has been some feeling amongst people who applied for these loans that the regulations were a little too stringent. In addition, as someone said tonight, there was a feeling not enough publicity had been given to this act and there were not enough small businessmen in Canada who knew about this particular piece of legislation.
However, Mr. Chairman, we are very happy tonight to learn there is going to be an extension of this act to make it possible for people engaged in the construction, transportation and communication businesses to participate in these loans. These people will be allowed now to purchase or construct new premises. I believe the lack of this provision has been a detriment to this piece of legislation. I remember many cases in which people wanted to start up in business but were not able to get a loan of this type, because they had not been in business before. I feel that the extension of this act is going to be of great help to many small businessmen in Canada by increasing the number of people who can participate.
However, Mr. Chairman, I believe there is still room for improvement in this legislation. One of these is the need for working capital for some types of service industries. For instance, a man who goes into furniture manufacturing in a small way may use most of his own capital to buy his equipment and purchase his first order or raw material. He has to give credit to his furniture dealers for 60 or 90 days, and during that period he may have to pay for his raw material and equipment, as well as meet his payroll. He often finds himself pinched for funds. Here is a business which, if a few thousand dollars of working capital were provided during this period, may prove successful. I believe the local banker would not have any compunction about helping an industry of that type because in a good many of these small communities the banker has an intimate knowledge of the operator.
I have knowledge of an example of this type of thing. There was a chap who started a furniture business and who knew what he was doing. He came to this particular period in the initial development of the operation when he was pinched for capital. The bank, because of regulations, could not give him

DEBATES	February 16, 1967
any working capital and he was going to have to go to the money markets and probably pay 10 per cent or 15 per cent interest. If working capital were made available during this initial period, it would mean the difference between success and failure for this business.
There is one other area in which I should like to suggest there is room for improvement. When this act was first introduced the maximum amount of loans was $25,000. This might have been realistic in 1960 when the scope of the act was limited to small manufacturers, wholesalers, retailers or service industries. Now, however, the act is being extended to construction, transportation and communications industries. I have not had too much experience with this type of business, but a $25,000 loan to a man in the construction business who wants to buy a bulldozer, for instance, is not of much use. How far will a loan of that amount go for a man in the transportation business who wants to buy a diesel truck? Of how much assistance is it?
I feel there is room for improvement in these two particular areas. I hope the parliamentary secretary will bring these two cases to the attention of the minister and that the minister will give them consideration. Then, this bill will not be too stringent but will make it possible for small businessmen to participate in these loans. This legislation should look after a group of people who have been forgotten for many years. We will support the resolution as it is. As I say, it is our job as an opposition to indicate the areas in which legislation that is being introduced could be improved. I do feel, Mr. Chairman, that with the addition of these two areas I have suggested, this particular resolution which has to do with the amendment of the Small Businesses Loans Act will be more effective.


Alfred Dryden Hales: Mr. Chairman, I should like to make one or two brief observations. First I should like to congratulate the parliamentary secretary upon his statement introducing the resolution this evening, and also my colleague who has just spoken, the hon. member for Welhngton-Huron who drew to the attention of the house the steps the Conservative government took in 1961 to introduce this most worth-while piece of legislation. I think each of us in this house who comes from a community in which there are many small businessmen has seen the usefulness of this act demonstrated. I think of family businesses that have been handed down from father to
February 16, 1967
son, and this act has enabled them to carry on. I think of some of the new Canadians who came to Canada without capital but brought with them their skills and trades and who, as a result of loans obtained under this act, have been able to start up small businesses or manufacturing concerns. Corner grocery stores and confectionery stores, and so on, have derived great advantage under this act. I can recall main streets in small communities whose appearance has been greatly improved by the erection of new store fronts financed by loans under this act. Therefore I congratulate the government upon broadening its terms to include assistance in construction, transportation and communications. A small business operator can borrow under this act now to purchase or construct a building.
[DOT] (9:50 p.m.)
All in all, Mr. Chairman, this has been a good piece of legislation. But it should be better; it still does not have the potential it should have. I am not sure where the trouble lies. Maybe, part of the problem has been that the act is applicable only to those businesses with up to $250,000 gross sales per year. The government is now stepping this figure up to $500,000 and more businesses will become eligible for the benefits of the act.
However, Mr. Chairman, this is still not enough. The government must sell this legislation and must ask the bank managers why more people are not taking advantage of it. Is it because the bank managers themselves are not telling the small businessmen that this assistance is available? The legislation needs a push along the line somewhere.
This government has to do even more than just amend the legislation. There used to be a department of government dealing with small businesses, but to my knowledge this department has been dissolved. If it is still functioning we certainly do not hear anything about it.
There is one other factor mentioned by the hon. member who has just resumed his seat. The amount of the loan available is $25,000. That was the amount prescribed by the act when it was passed in 1961, but this is not nearly enough today. If a grocer wants to modernize his store and to instal modern refrigerating equipment to keep pace with large sales of frozen foods and other products requiring refrigeration today it will cost him $75,000, in order to compete and keep in line with his competitors. So that this amount of $25,000 is inadequate, and I am only sorry that the government did not see fit to raise
Small Businesses Loans Act Amendment the amount and include this provision in its amendments to the act.
Many service businesses come within the act, but there is one that does not, one which is very important to the welfare of the country and to society as a whole. I am referring to professional men such as doctors and physiotherapists, osteopaths, dentists, etc. who want to start a practice, or a group of doctors who want to acquire a clinic and buy some of the very expensive equipment on the market today. This should be regarded as constituting a service business. These professional people need this help and should come within the ambit of the act, along with the other service businesses. If we were to look into this question further I am sure we would enlarge the terms of the act to include medical men, dentists, and so on, who could use a loan to great advantage. For example, I think of the young man who has just graduated and is starting up in practice. The provisions of this legislation would be a great help to him and would enable him to render services so badly needed in many of our communities.
In conclusion, Mr. Chairman, I congratulate the government on broadening the scope of this excellent piece of legislation which we had the honour of introducing in 1961.


Herbert Wilfred Herridge: Mr. Chairman, I just want to take a moment or two to express my support for the broadening of the terms of this legislation. I think this is a good illustration of the government's having listened to the advice given by the opposition throughout the years since the bill was first adopted and accepting suggested amendments as a result of the experience of hon. members in their own constituencies.
I know that this amendment which provides assistance for the construction of buildings will be very useful to a number of small businessmen whom I have the honour to represent. In some of our smaller communities particularly there are many business buildings which were erected 50 to 60 years ago, and I have heard businessmen say that they would like the opportunity of reconstructing their premises. Under the terms of this legislation, when it is adopted, I think they will have the opportunity to do this.
I also presume, Mr. Chairman, that the government has been listening to the experiences of bank managers. The previous speaker made the point that the bank managers should make an effort to "sell" this type of

13150	COMMONS
Small Businesses Loans Act Amendment legislation. As a matter of fact, I have discussed this legislation with the managers of practically every bank in my constituency, and they have brought the legislation to the attention of many small businessmen. In the great majority of cases they have done all they could to see that these small businessmen are able to take advantage of the terms of the act, because they had security and opportunities ahead of them.
I will have something more to say on second reading of the bill, Mr. Chairman.


Howard Earl Johnston: Mr. Chairman, I realize the wish of the committee to complete this resolution stage this evening. However, I wanted on behalf of this group to express our approval of the resolution, and to do so in a brief space of time.
I am well aware that small businesses provide two things which are becoming increasingly rare-personal service and neighbourhood convenience, two important items in today's world. We approve of the broadening of this act so as to extend its usefulness, but I should like to say that unless this parliament and the government do a few other things at the same time we may find, as often happens when small businesses are developed, that we are laying the groundwork for a national chain of some kind or other to take over. Often small businesses are sold rather swiftly, not because they do not make enough money but because of the frustrations of their owners as a result of government intervention.
I recall very vividly sitting down with a group of small businessmen at one time and asking them what was their main problem in this regard. There was a short pause, and then came the answer "Well, the government". I can think of a couple of examples. One is the requirement of making quarterly payments of income tax. When a small businessman just starting up business is asked to make quarterly payments of tax prior to the end of the year, with refusal to pay or tardiness in payment involving him in the payment of interest on money which I do not see how he can owe the government anyway, this puts him to some hardship. Another problem has been mentioned over and over again in this house and is created by the Canada Pension Plan, overpayments to which being not returnable to small businessmen. This is the kind of thing we should take care of at the same time as we take this forward step in broadening the terms of the act.
Resolution reported and concurred in.

DEBATES	February 16, 1967
[DOT] (10:00 p.m.)
Mr. Mcllraiih (for Mr. Sharp) thereupon moved for leave to introduce Bill No. C-270, to amend the Small Businesses Loans Act.
Motion agreed to and bill read the first time.



BUSINESS OF THE HOUSE

George James McIlraith: Mr. Speaker, tomorrow the house will be asked to consider items Nos. 47, 58 and 59, the legislation dealing with collective bargaining in the public service and employment in the public service.


An hon. Member:: In that order?


George James McIlraith: Yes, in that order.



PROCEEDINGS ON ADJOURNMENT MOTION

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

["The minister's suggestion appeals to me very much.\nMotion agreed to and the house adjourned at 10.27 p.m.", 'Friday, February 17, 1967']
Mr. William Dean Howe (Hamilton South):: Mr. Speaker, a few days ago I asked a question in the house about the possible loss of accreditation of four of Canada's 12 medical schools. I asked the question of the Minister of Finance (Mr. Sharp) because he had suggested that the rate of increase of the medical research council estimates be reduced. I understand that the rate has been allowed to go up again to the 30 per cent that had been allowed previously. In spite of this, I feel that the threat of the loss of accreditation of four of our medical schools is a disgrace to our country. At one time we had one of the best reputations in the world for medical science. What have we today? We have a government that fails to plan. As a result our country is on the verge of medical disaster.
The Financial Post has said this:
Canada's standard of health care is dangerously close to slipping quickly and quietly to the level of the second rate.
Our scientist medical teachers are going to the United States, where they have continuing money for the advancement of medical research. There, $6.50 per capita is spent, compared with Canada's 90 cents per capita.
Referring to a book put out as a report to the committee of presidents of the universities of Ontario entitled "Health Science in Ontario Universities", I see that it says on one page that teachers and scientists in
February 16, 1967	COMMONS
Canada must be encouraged to remain in academic work and Canadian teacher scientists and graduate students now employed in the United States must be attracted back to Canada if possible. On the next page, page 19, one sentence is worth repeating. It says that at the present time full-time staff will not join faculties of medicine lacking research facilities.
Now we are faced with the prospect of four additional new medical schools in Canada, one in Hamilton, at McMaster University. It is planned to open this in 1969. Prospective students for this are in pre-medical schools, at universities. They started last fall, in 1966. Why would a government commit itself to spending $500 million on health training facilities while not allowing for the payment of a staff of teacher-scientists to run these facilities?
We are still continuing to play musical chairs between the universities, rather than plan for the future and increase one of our most valuable commodities, the supply of medical teachers, by a proper government increase each year of 50 per cent, as requested as a minimum by the deans of our medical schools. The present rate is 30 per cent, a rate which was threatened last year by the Minister of Finance when he decided to cut back the rate of increase of these grants. His statement at that time undermined the morale of the teaching staffs at every medical university across this country, and did almost irreparable harm to the four newly formed medical schools.
In the past two or three days editorials have suggested that the government should spend the money set aside for medicare on medical research. This of course is ridiculous. But research should be a part of any complete medicare scheme. Members of this government have been seen by representatives of all the societies and associations of the medical profession and some of the most prominent and well-respected members of that profession have explained the situation, hoping to get a realistic amount of money, not for their own good but so that essential work might be carried on. But to no obvious avail.
Better planning and foresight on the part of the government would have resulted in a more realistic arrangement for looking after the health of the Canadian people. The research aspect is all part and parcel of the same deal. The government's attitude is comparable to organizing a public teaching system, and teaching only part of the curricula.
Proceedings on Adjournment Motion
This government is encouraging private enterprise to do research for individual profit rather than for the benefit of the people of this country alone. The type of research which comes from private drug firms sets out to combine advantageously two or more well known drugs in a mixture which will bring a larger profit. Any worth while discoveries made in this or in other countries have been made by doctors doing university research. I might use insulin and penicillin, or even the sulphonamides as an example.
To my way of thinking, spending money along the lines I suggest would protect Canadians in at least two ways: it would keep the brains in Canada and it would allow the results of their research to be used to improve the health of Canadians and of others in the world, not solely for the profit of private enterprise. Let the medical schools have this 50 per cent annual guaranteed increase not as a gift but so that they may work for our health-


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


William Dean Howe: May I finish this sentence?


An hon. Member:: Agreed.


William Dean Howe: -the important thing being that the rate of increase could be counted on each year.


Joseph Jacques Jean Chrétien: I am glad to reply tonight to the question asked by the hon. member. No one is more inclined to agree with him than I am that a lot more money is needed for medical research, for I have close relatives in the medical profession, and one particularly who is engaged in research work.
I would point out, however, that the government has done what it was possible for it to do. It increased by one third its contribution to research facilities. It is true that we planned a 50 per cent increase, but the problem-and it is a difficult one-is that each time we increase a grant or anything else we have to collect more money.
[DOT] (10:10 p.m.)
Those who are most reluctant to permit the government to increase taxation are members of the party to which the hon. member belongs. Recently we increased the old age pension and when the time came to raise the
13152	COMMONS
Proceedings on Adjournment Motion necessary money the motion which we had to face came from the party to which the hon. member belongs. In any event the government is very aware of the importance of medical research to Canada. We also are very aware that there are problems in this field. There is the so-called brain drain to the United States. The government is aware of this problem and a new policy has developed over the last few years. I am very glad about this, because it will permit one of my brothers to come back to Canada.



Mr. Maurice Allard (Sherbrooke):: Mr. Speaker, on February 9 I put to the minister of Industry and of Defence Production the following question:
As a result of the trade mission to France and the report published in that connection, could the minister tell the house whether profitable relations and exchanges have been established between France and Canada regarding technical development and other joint projects?
Last year, a Canadian economic mission went to France with a view to promote closer relations between the two countries. A report has been published, and it would be interesting to know if practical results stemmed from those happy efforts.
From the standpoint of trade, the import-export picture between Canada and France represents a very small percentage, namely 1 per cent of all imports and exports between Canada and foreign countries. Our country would benefit very much by diversifying and increasing our commercial markets, particularly with a country like France who is a member of the European Common Market and in a position to export particular goods to our country in return for farm and manufactured products which abound here.
With respect to immigration in 1966, only 7,872 of a total 194,743 immigrants were of French nationality. There are various reasons for this small number of French immigrants. Canada should establish more immigration offices in France, we should invest more money in advertising programs and the R.C.M.P. should stop investigating each French immigrant, while immigrants from England and Ireland are accepted without any such formality.
French people should receive better assurance that they are most welcome in Canada and that skilled workmen will find here

DEBATES	February 16, 1967
immediately upon arrival permanent and remunerative work.
In the industrial field, direct exchanges of qualified personnel, the establishment of joint industrial research programs and other common projects should be undertaken, so that knowledge and skill would complement each other. Canada should also seriously consider adopting the metric system, in order better to follow the technical and industrial evolution and contend with the aggressive and perfected foreign production.
In the field of investments, Canada would greatly benefit from French capital, and the trade and economic development of both countries would gain a great deal by it.
Any effort by the central government to increase all types of relations with France would please all Canadians, I am sure, and especially the 7 million French Canadians. A bicultural country like Canada has the tremendous advantage of establishing more easily close and profitable relations with the French speaking world and Anglo-Saxon groups.


Mr. Jean-Charles Cantin (Parliameniary Secretary to Minister of Trade and Commerce):: Mr. Speaker, the visit of the Canadian economic mission to France has clearly awakened interest in closer relations between the respective business communities.
Individual businessmen in both countries are responding to the encouragement by their respective governments that they seek to develop business with their counterparts. Among the initiatives which have been taken to follow up prospects, we know of Canadian companies which are pursuing particular opportunities with French firms, but we cannot divulge the nature of any of the negotiations now under way because of their private character.
To indicate the trend further, I can advise that we know of the intentions of groups of French businessmen from particular industries to visit Canada during our centennial year to explore trade prospects-in the aggregate a total of over 1,400 persons.
These increasing contacts will give rise to some technological exchange and probably joint ventures.
The full impact of the Canadian Mission will require time to reach and be seen in its full dimension.
February 16, 1967	COMMONS
May I assure the hon. member that each subject raised in his speech is carefully studied by both governments and businessmen of the two countries.


Mr. Reynold Rapp (Humboldl-Melfori-Tisdale):: 
Hon. J. J. Greene (Minister of Agriculture):: Mr. Speaker, I thank the hon. member for drawing this situation to my attention and commend him for his ever-vigilant interest in farmers' affairs, and particularly those affecting his own constituency. With respect to the stabilization payments, the deficiency payments, I think the hon. member will agree that we can at the federal level have only a national basis of deficiency payments. If we were to have regional deficiency payments we would but contribute to the fragmentation, economically, of the nation. Any program we have must be a national one.
I would point out to the hon. member that some provinces have provincial egg marketing boards which work in conjunction with our federal stabilization program and deficiency program, to achieve possibly a more perfect equity for farmers in those provinces. I personally am a believer in the system invoked by the National Dairy Commission, and I think under our constitutional concept the best set-up one can conceive in agriculture is provincial boards that work in conjunction and co-operation with a national board, so that both intraprovincial and extraprovincial marketing can be covered by these two entities within their proper jurisdictional authority.
13154	COMMONS
Proceedings on Adjournment Motion
It is my hope that in the not too distant future there will be a national egg marketing board of the same type and nature as the National Dairy Commission, and that this board can work in conjunction with similar provincial boards to achieve a greater stability in egg marketing and egg pricing and, I think, thus ensure greater justice for our egg producers.
I might point out that there certainly has been a drop in price in the past few weeks, but that during the past year egg prices have been much better than they have been over the past number of years. This of course encouraged increased production. Irrespective of general price trends during any production
DEBATES	February 16, 1967
year there is always an increase of deliveries during mid-January and we always experience a drop in prices at that time. This year the mid-January problem has persisted over the past four weeks because of the current supply-demand picture. Present indications are that production is dropping off and it is expected that when the supply is more in line with demand, prices will become more firm. I can assure the hon. member that the Agricultural Stabilization Board is keeping this situation under constant review.


Reynold Rapp: The minister's suggestion appeals to me very much.
Motion agreed to and the house adjourned at 10.27 p.m.

Friday, February 17, 1967