1968-03-14

Hon. Maurice Sauve (Minister of Forestry and Rural Development):: Mr. Speaker, I am pleased to table, in French and in English, the first report of the Canadian Council on rural development.


Mr. Speaker:: Has the hon. member leave to table the said report?


Some hon. Members:: Agreed.



NORTHERN AFFAIRS


Hon. Arthur Laing (Minister of Indian Affairs and Northern Development):: Mr. Speaker, I desire to table two copies of an agreement between Her Majesty the Queen in right of Canada and Anvil Mining Corporation Limited.


Mr. Speaker:: Has the minister leave to table these documents?


Some hon. Members:: Agreed.



IMMIGRATION


Mr. Eldon M. Woolliams (Bow River) moved: for leave to introduce Bill No. C-209, respecting the Immigration Act and the Immigration Appeal Board Act (immigrants' bail).


Mr. Starr:: Explain.


Eldon Mattison Woolliams: Briefly, this bill seeks to amend the Immigration Act and the Immigration Appeal Board Act so that where an inquiry officer refuses bail to an immigrant who is incarcerated in Canada while waiting for his hearing, or where that immigrant has been refused an application by the appeal 27053-479
board, he can appeal to a supreme or superior court in the province.
Motion agreed to and bill read the first time.



NORTHERN AFFAIRS


[Stage Direction]
On the orders of the day:
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, my question is for the Minister of Indian Affairs and Northern Development. In view of the federal responsibility to the native peoples of Canada for health and welfare, will the minister use his influence with the Minister of National Health and Welfare to rescind recent cut-backs and decreases in federal government service in this vital field?


Mr. Speaker:: Order, please. I suggest that question is not acceptable. The hon. member is asking the minister if he will use influence with another minister. That is not a proper form of question.


Walter Gilbert Dinsdale: Then may I rephrase my question and direct it once more to the Minister of Indian Affairs and Northern Development. Is the minister aware that a directive has gone out from the Department of National Health and Welfare to chiefs and councillors in Canada indicating that the federal government has been forced to reduce many of its programs, and that resources available for health services to Indian people have also been greatly reduced?


Arthur Laing: No, Mr. Speaker, I am not so aware.


Mr. R. J. Orange (Northwest Territories):: supplementary question to the Minister of National Health and Welfare, Mr. Speaker. In view of the conflicting reports which one hears about this matter would the minister, as house leader, consider calling the health and welfare committee to determine whether in fact there have been cut-backs in these programs?


Hon. Allan J. MacEachen (Minister of National Health and Welfare):: In reply to the question asked by the hon. member for the

March 14, 1968
Inquiries of the Ministry Northwest Territories I should like to say that the funds available for health services in the north for the forthcoming year will be as great as in the preceding year if not slightly greater. In that year the funds for this service were increased by 14 per cent. We have not been able to maintain that rate of expansion for the northern people because of the current situation, but there is no reduction in the amount of estimated expenditure for the northern people for the forthcoming year.
We have, however, been obliged to review the services which have been provided, though I wish to assure my hon. friend that there will be no reduction in the number of institutions operating in the north. At the present time I am personally conducting an extensive and detailed review of this situation, and until this is concluded I should not like to prejudge the question of sending the matter to a parliamentary committee.


Walter Gilbert Dinsdale: For the sake of clarifying this vital issue would the minister agree to table the documents which have gone out to the various branches of the Department of National Health and Welfare responsible for the health care of native Canadians, both Indians and Eskimos, indicating that there have been specific instructions to reduce expenditures in this field?


Allan Joseph MacEachen: I shall be glad to investigate the possibility of tabling any appropriate communications, but I wish to assure the hon. member that no reduction of expenditure is proposed for the forthcoming year either in northern services in general or in Indian health services.


Mr. T. C. Douglas (Burnaby-Coquitlam):: Can the minister assure the house that Indians will continue to be entitled to hospital and medical care without having to prove indigence, as was reported on the C.B.C. last night?


Allan Joseph MacEachen: I understand that in the past we have been assisting Indians where indigency existed. I do not believe the hon. gentleman has made a particularly relevant point with respect to the previous practice.


Thomas Clement (Tommy) Douglas: May I ask the minister this. In view of statements made by Manitoba doctors and carried over the C.B.C., has a directive gone out, or is one in contemplation, notifying the authorities that from now on, or in the near future, Indians will not be given the medical and hospital services they have

received heretofore unless they can prove they are indigent?


Allan Joseph MacEachen: I want to tell the hon.
member that a directive has gone out from the director general of medical services in the department to his senior officers in the various regions of Canada indicating the type of services which the department will be able to offer to Indians in the coming year. I wish to make it very clear that we are not reducing expenditures as compared with last year's expenditures on these items. We have, however, been unable to maintain the rate of expansion in terms of expenditure that we did in the previous year, and because of this we have been obliged to review the nature of the services we have been offering to the Indian population.


Some hon. Members:: Oh, oh.


Allan Joseph MacEachen: I have already stated in reply to my hon. friend from the Northwest Territories that I am personally conducting a detailed review of this situation with my colleagues.


Mr. Robert Simpson (Churchill):: A supplementary question for the Prime Minister. Can the Prime Minister tell us whether he has received a telegram from the premier of Manitoba asking for clarification of this new policy, and whether he has had time to reply?


Right Hon. L. B. Pearson (Prime Minister):: To my knowledge, Mr. Speaker, I have received no telegram from Manitoba. I think my hon. friend said the premier of Manitoba. I do not recall receiving one, but I will check as soon as I get back to my office.


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I would ask the Minister of National Health and Welfare in his capacity as house leader if he would forthwith refer his estimates to the appropriate committee so it could test the accuracy of the statements he has made.


Allan Joseph MacEachen: Mr. Speaker, the hon. member surely can test the accuracy of my statements in this house.


Walter Gilbert Dinsdale: Mr. Speaker, I rise on a question of privilege. It arises from part of the reply by the Minister of National Health and Welfare indicating that no directive has gone out to the field to reduce medical services to our native Canadians. If this is so I wish to ask him who authorized the letter that went to all the Indian bands and councils across Canada.
March 14, 1968


Mr. Speaker:: Order. That is obviously not a question of privilege.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order, please. Perhaps the question might be allowed as an inquiry rather than as a matter of privilege.


Allan Joseph MacEachen: Mr. Speaker, I do not wish there to be any suggestion that the hon. member has been misled. I have said there has been no directive indicating a reduction in expenditures in comparison with the preceding year. As a matter of fact in both the northern health services and the Indian health services there has been a slight increase in the proposed estimates. The hon. member asked whether I would table any such correspondence or directives. I will consider the possibility of tabling the directives that have emanated from the department indicating the pattern of services the department presently finds it possible to make available. I have not stated there has been no rearrangement of these services; there has. I stated to the hon. member for Burnaby-Coquitlam-


Mr. Speaker:: Order, please. I suggest to hon. members that we have had several sup-plementaries, and a number of members are awaiting an opportunity to ask other questions. We shall probably have time to return to this matter later on during the question period.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Mr. Real Caouelle (Villeneuve):: Mr. Speaker, I wish to direct a question to the right hon. Prime Minister.
The Public Service Commission of Canada published recently circular No. 68-ID-3050, with regard to the position of assistant director of production at the printing bureau of the Canadian government in Hull. One of the special requirements to qualify for the position-


Mr. Speaker:: Order. The hon. member should ask his question as briefly as possible.


David Réal Caouette: I am coming to that, Mr. Speaker, but hon. members have to know what it is about, and I quote:
This position requires a knowledge of the English language but a knowledge of French would be considered an asset in the assessment of candidates.
Inquiries of the Ministry
Can the right hon. Prime Minister tell us whether, eventually, it will be mentioned in those circulars that the French language is just as essential as the English language, or whether it is only as asset?


Mr. Speaker:: It seems to me that question is more in the nature of a grievance, and I do not think it is in order for that reason.


David Réal Caouette: Mr. Speaker, I shall put my question differently.
Will the right hon. Prime Minister require, in the name of the bilingualism which he champions in Canada, that the Public Service Commission put French on the same footing as English when advertising competitions?


Mr. Speaker:: I admit the question is very important, but it is much too general in nature and, therefore, it should be placed on the order paper.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr.  A. B. Pallerson@Fraser Valley: Mr. Speaker, I would like to direct a question to the Minister of Justice. Has the government been advised why the United States government has refused the application of the province of Ontario for the extradition of Hal Banks?


Hon.   P.-E. Trudeau@Minister of Justice: Mr. Speaker, this is a matter which is handled by the Department of External Affairs, and our excellent Secretary of State for External Affairs might want to answer the question.


Hon. Paul  Marlin@Secretary of Stale for External Affairs: Mr. Speaker, the government has been notified by the United States Secretary of State that he has declined the request of the government of Canada for the extradition of Hal Banks charged with perjury committed in Ottawa. The ground for the decision of the Secretary of State is that extradition is sought on a charge of perjury arising directly out of the denial of guilt of a non-extradictable offence.
It is the view of the Canadian authorities that this exception does not exist under the terms of the extradition convention between Canada and the United States. In these circumstances the Canadian government is

March 14, 1968
Inquiries of the Ministry requesting that the Secretary of State reconsider his decision in the light of the provisions of the treaty or, alternatively, consent to the adjudication of this treaty interpretation question by an international tribunal.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. J. E. Madill (Dufferin-Simcoe):: Mr. Speaker, my question is directed to the Minister of Manpower and Immigration. Have arrangements been made this year for the entry into Canada of seasonal labour from the West Indies for the market gardening and canning industries?


Hon. Jean Marchand (Minister of Manpower and Immigration):: Yes, Mr. Speaker.


John Ellwood Madill: I have a supplementary question, Mr. Speaker. Why has the minimum wage rate been so drastically increased?


Mr. Speaker:: Order, please. The supplementary is not in order.



SASKATCHEWAN-ACCEPTANCE OF APPLICANTS FROM KENYA

[Stage Direction]
On the orders of the day:
Jean Marchand: While I am on my feet I should like to answer the hon. member for Mackenzie (Mr. Korchinski) who asked me the other day whether the hon. premier of Saskatchewan had offered to co-operate with us or contact us with regard to Kenya immigrants.
I wish to reply affirmatively. The Saskatchewan premier offered to help us, with a view to accepting Kenya immigrants in the province of Saskatchewan.


David Réal Caouette: Mr. Speaker, I should like to put a supplementary question to the Minister of Manpower and Immigration who tells us that the Saskatchewan premier is ready to accept immigrants from Kenya.
Did the Saskatchewan premier say whether that was meant to replace the people who left that province under the C.C.F. administration?


Thomas Clement (Tommy) Douglas: They are leaving under the Liberals.
tMr. Martin (Essex East).]


Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, I should like to address a question to the Minister of Manpower and Immigration. I am sorry I did not hear him when he spoke but I did not have my earpiece on and could not follow the minister in my lousy French. My question is as follows. Did the premier of Saskatchewan indicate the number of immigrants he was prepared to accept at this time?


Jean Marchand: Mr. Speaker, may I reply in my lousy English. The answer is yes, about 10 or 12 families.



INQUIRIES OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, I should like to direct a question to the acting secretary of state. Would the minister make representation to the Board of Broadcast Governors regarding the need to have the radio and television frequencies free and clear from static and other interferences on March 22?


Mr. Robert C. Coates (Cumberland):: Mr. Speaker, I have a question for the Prime Minister. Were any new government policies announced by the government through the program "Twenty Million Questions" last evening, in keeping with the recent precedents established in this regard?


Mr. Speaker:: Order, please. This question is aggressive.


Some hon. Members:: Oh, oh.


Mr. Roland Godin (Portneuf):: Mr. Speaker, I wish to put a question to the Minister of Finance.
Since the presentation of the annual report of the Bank of Canada, has the minister met with the governor of the bank to discuss ways to fight inflation, and what salary reduction has he accepted?
March 14. 1968



CONSUMER AFFAIRS


[Stage Direction]
On the orders of the day:
Eldon Mattison Woolliams: Mr. Speaker, I should like to direct this question to the Prime Minister in the absence of the Minister of Consumer and Corporate Affairs. Two days ago I asked the Minister of Consumer and Corporate Affairs a question in reference to Judge Batten's report concerning the investigation into the high cost of groceries in western Canada. In view of the fact that the minister has now agreed to have the combines investigation branch take a look at the high cost of groceries in western Canada, is it the government's intention to confine this investigation to the west and not include the rest of Canada?


Lester Bowles Pearson: I will discuss the matter with the minister.


Eldon Mattison Woolliams: May I ask a supplementary question, Mr. Speaker. Does the Prime Minister consider that the decision in this regard will somewhat usurp the function and jurisdiction of this agency and/or board described by him in his recent speech?


Mr. Speaker:: Order. The question is not in order.



INDUSTRY


[Stage Direction]
On the orders of the day:
Mr. Donald Maclnnis (Cape Breton South):: Mr. Speaker, I have a question for the Prime Minister. In his most recent correspondence with Premier Smith he referred to the amount of $1.7 million loaned to Dosco as being available to assist in the steel crisis.


Lester Bowles Pearson: Mr. Speaker, I assume my hon. friend is referring to the last communication I sent to the premier of Nova Scotia. I have asked the premier whether he is agreeable to my tabling this communication, which I would like very much to table. He asked me to hold off for a day or two so he would have an opportunity to examine it further. His letter to me has already been tabled.


Malcolm MacInnis: I have a supplementary question for the Prime Minister, Mr. Speaker. It is based on a newspaper article which refers to the government's
Inquiries of the Ministry intention to allow the $1.7 million previously loaned to Dosco to be made available in the steel crisis. My question relates to a statement made in this house by the Minister of Justice and a letter of the Prime Minister in which it was said that in addition there is a question of a possible claim by-


Mr. Speaker:: Order, please. Would the hon. member please ask his question?


Mr. Maclnnnis (Cape Breton South):: should like to ask the Prime Minister to explain the statement in a letter over his signature that there is in addition a possible claim by the federal government against Dosco in respect of $1.7 million. When did the government decide that it did have a claim, and why did the Minister of Justice not answer this question which has remained unanswered for a long time?


Lester Bowles Pearson: Mr. Speaker, may I ask the hon. member the date of the letter to which he has referred?


Malcolm MacInnis: January 23, 1968.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, I should like to ask the Prime Minister whether he can advise the house when he intends to reply to a letter from Premier Manning dated some time early in December asking in what way the Alberta health plan did not comply with the legislative requirements of the federal medicare plan.


Lester Bowles Pearson: Mr. Speaker, I think I have replied to that letter, but I will check. I think the letter to the premier went out last Saturday.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. J. N. Ormiston (Melville):: Mr. Speaker, I should like to ask the Minister of Labour whether the conciliation board chaired by Associate Chief Judge Gold, which the minister referred to in answer to a question on Monday last, has commenced its hearings. If not, has the minister any information as to when such hearings might commence?

March 14. 1968
Inquiries of the Ministry


Hon. J. R. Nicholson (Minister of Labour):: Mr. Speaker, I thank the hon. member for giving me notice of his question, thereby affording me an opportunity to get an up to date report. I am informed that the conciliation board will hold its first meeting tomorrow. I might say that, since his appointment as chairman, the associate chief judge has been doing intensive research on the subject, getting background information, etc. Perhaps I should add that the Minister without Portfolio, my former parliamentary secretary, at my request has been working closely with the parties informing them of the assistance available from the department and in other ways. Actual hearings open tomorrow.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. H. W. Danforth (Kenl (Onl.)):: Mr. Speaker, in view of the severe economic upheaval caused to farmers by the sudden closing of the Chatham sugar refinery, has the Minister of Agriculture instituted any inquiry regarding this season's plans of other Canadian food producers, particularly regarding the effect on seasonal contracting?


Hon. J. J. Greene (Minister of Agriculture):: Mr. Speaker, the question of contracting and seasonal plans for various segments of agriculture is under continuing review by the department. I do not know whether my hon. friend has any specific area in mind, but I know of no special programs at the present time apart from the normal course of constant review by the department of these programs.


Mr. George Muir (Lisgar):: Mr. Speaker, I should like to know whether the minister is now in a position to announce a floor price for sunflower seeds in order that the producers may make plans for the current growing season.


John James Greene: Mr. Speaker, any announcement in respect of floor prices would be by the stabilization board in the normal course. There is no specific announcement today in respect of this program.


Mr. J. H. Horner (Acadia):: Mr. Speaker, I should like to ask a question supplementary to the question asked by the hon. member for Kent, Ontario. Has the minister or his department, on the advice of his advisory council, established a policy specifically in respect of sugar beets?


John James Greene: Mr. Speaker, the government's policy has always been very clear in respect of sugar beets. It is to support the sugar beet growers, I think to the tune of some $6 million last year, and this is a program with which the growers were very well satisfied if my understanding is correct. The national purpose of the support program has been to support the Canadian sugar beet growers until such time as there is a world agreement in respect of sugar prices.


Mr. D. V. Pugh (Okanagan Boundary):: Mr. Speaker, will the Minister of Agriculture indicate now whether he has a report in respect of the brief submitted last October by the food producers of Canada and the Canadian Horticultural Council in respect of the importation of Australian canned goods into Canada?


John James Greene: Mr. Speaker, I believe the problem that was brought to our attention in the brief referred to by the hon. member has been before a joint committee of officials with respect to finding an ultimate solution. I believe that committee will report very shortly. Any action that is required as a result of their deliberations will be announced in the near future.


David Vaughan Pugh: A further supplementary question, Mr. Speaker. Would the minister indicate whether the whole question of the hardship caused to Canadian processors has been taken up with Australian government officials?


John James Greene: I am sure that officials not only of our department but of other departments of government have been in consultation with the Australians in regard to this very serious problem as it affects the peach canning industry in particular. If any action is required on either an unilateral or bilateral basis, of course it will be announced in the normal and proper fashion.


Mr. Ed. Schreyer (Springfield):: Mr. Speaker, I would like to ask the Minister of Agriculture if he has decided whether to refer the question of the operation of the agricultural stabilization board to the standing committee after the reconvening of parliament.


John James Greene: Mr. Speaker, the operation of the stabilization board and the officials of the board, if my memory serves me correctly, were before the standing committee when the estimates of the department were before the
March 14. 1968



committee last year, and following the resumption of hostilities here in the house-


Some hon. Members:: Oh, oh.


John James Greene: -I am very certain the new estimates will be before that committee, and certainly they would be very free to examine the officials of the stabilization board when the estimates are before the standing committee.



FINANCE


[Stage Direction]
On the orders of the day:
Mr.  R. Gordon L. Fairweather@Royal: Mr. Speaker, I have a question for the Prime Minister of which I have given him notice. Have countries no alternative but to wait out the alarming challenges to their monetary systems now being made by hoarders and speculators, or are plans well advanced for a world system based on the real worth of nations?


Mr. Speaker:: Order, please. The hon. member will recognize that the question is argumentative.


Mr. Fairweather:: Mr. Speaker, I have purged my question of any argument. I will again ask the right hon. Prime Minister whether plans are well advanced for a world monetary system based on the real worth of nations and immune from present challenges.


Lester Bowles Pearson: Mr. Speaker, I am sure my hon. friend knows that at the last meeting of the International Monetary Fund in Brazil, which I believe was held in October, proposals were made for special drawing rights which would buttress the existing international arrangements. Unfortunately those proposals have not yet been agreed to by all the governments concerned, but they are being very actively considered. I believe there is to be a meeting at the end of the month, in Stockholm I think, where I hope further progress will be made.
I hope before that time the situation on the international monetary scene will have improved so that progress can be both convincing and enduring. It is certainly necessary that a more stable currency and exchange basis be established for international trade and payments. This is a matter not only for economic co-operation but also for international and political co-operation. The
Inquiries of the Ministry lack of this has been one of the reasons for the delays we have faced in working out these new plans.



PRIVILEGES AND ELECTIONS


[Stage Direction]
On the orders of the day:
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, I have a question for the Prime Minister. In view of the fact that only two out of 12 Liberal members attended an organization meeting of the committee on privileges and elections to which the report of the committee on election expenses was referred, could the Prime Minister assure the house that the government continues to be concerned about studying and implementing the report-


Mr. Speaker:: Order, please. The hon. member's question, of course, alludes to the operations and procedures of a committee, and as such it is not in order.


Francis Andrew Brewin: With respect, Mr. Speaker, my question relates to the policy of the government in this respect. May I finish my question? Will the Prime Minister tell the house whether the government is continuing its interest and concern in studying and implementing-


Mr. Speaker:: Order, please. The hon. member for Halifax (Mr. Forrestall).



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. J. M. Forrestall (Halifax):: Mr. Speaker, my question was for the Secretary of State, who keeps disappearing. In her absence-


An hon. Member:: That is no mean trick.


J. Michael Forrestall: I see that the hon. lady has returned to the chamber. If I were poetic like the senior member for Halifax I might wax eloquent in this regard. Might I ask the Secretary of State a rather serious question. Can she indicate to the house why there was suppression of a recent C.B.C. interview with

March 14, 1968
Inquiries of the Ministry Dr. Mbadiwe, of the Biafran region of Nigeria, which was filmed for television purposes?


Mr. Speaker:: Order, please. I would think the question should be placed on the order paper. If there is urgency in it the hon. member might give me notice so we could consider the matter at the time of adjournment.


J. Michael Forrestall: On a point of order, Mr. Speaker-and you will have to direct me; it may be a question of privilege-the question I am raising is one involving the suppression of legitimate news in Canada, and news of an area in the world-


Mr. Speaker:: Order, please. I fully recognize the importance of the matter, but the hon. member is asking why certain action has been taken by the corporation. I would think a question asked in this way is not of the type which can be put as a verbal question at this time.


J. Michael Forrestall: Might I rephrase my question in this way, Mr. Speaker. I accept your judgment and your wisdom. Can the minister indicate whether a recent filmed interview was suppressed-


Mr. Speaker:: Order, please. Both the original and the rephrased question might be placed on the order paper.



CRIMINAL CODE


[Stage Direction]
On the orders of the day:
Gerald William Baldwin: Mr. Speaker, I have a question for the Minister of Justice. I assume his attention has been called to the recent important decisions of the Supreme Court of Canada dealing with habitual criminals. Would the minister have his officers make a close examination of those decisions, and would he report to the house his views as to whether amendments should be made to the Criminal Code to clarify the existing provisions?


Hon.   P.-E. Trudeau@Minister of Justice: Mr. Speaker, as the hon. member knows the omnibus amendments now being proposed to the Criminal Code include amendments in respect of this matter. I will consider, in the light of these decisions, whether further amendments should be made; but I would like to have the Criminal Code amendments considered as soon as possible.



SHIPPING


[Stage Direction]
On the orders of the day:
Mr. Alcide Simard (Lac-Saint-Jean):: Mr. Speaker, I should like to put a question to the Minister of Transport.
Because of the little interest and the lack of co-ordination and planning shown by Quebec with regard to maritime training, does the minister intend to take over the responsibility for such training as required by Quebec maritime interests?


Mr. Speaker:: It seems to me that, in its present form, that question is out of order. Since it is based on an allegation, it cannot be deemed acceptable.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and
Victoria): Mr. Speaker, may I direct a question to the Minister of Manpower and Immigration which is related to questions I have posed previously to the Prime Minister and the Minister of Transport concerning the forthcoming large scale lay-offs by the C.N.R. of dockworkers at North Sydney.
I ask the minister whether, in view of the fact that these lay-offs will involve an estimated minimum of 600 workers, with extreme hardship and dislocation caused to them, he will appoint a special task force from his department to operate on the spot to ascertain whether alternate employment can be found for these workers.
Jean Marchand: Mr. Speaker, the situation requires that we deal with it in a special way, not necessarily by appointing a task force, but we will surely send people so that these workers may benefit by all the services of the department as soon as possible.
[English]	i


Mr. Muir (Cape Breton North and Victoria):: A supplementary question, Mr. Speaker. The minister referred to benefits. In view of the fact that these lay-offs are brought about by modernization and technological change in a
March 14, 1968

crown corporation, will these workers be eligible for transitional assistance benefits during the period required to find permanent employment?


Jean Marchand: Mr. Speaker, I think that, generally speaking, these workers are entitled to all the benefits of manpower programs. I cannot say this applies to each and every one of them-we will have to consider each individual case-but, generally speaking, the programs certainly apply to these workers.



STEPS TO STIMULATE EMPLOYMENT IN CONSTRUCTION INDUSTRY

[Stage Direction]
On the orders of the day:
Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I should like to direct a question to the right hon. Prime Minister. In view of the statement by the president of the Canadian Construction Association that the construction industry in Canada faces serious unemployment before the fall, and in view of the obvious time lag in the construction industry between planning and construction, could the Prime Minister take an early occasion to indicate to the house whether the government has any plans on hand or in mind to stimulate employment in the construction industry by autumn?


Lester Bowles Pearson: Yes, Mr. Speaker.


Mr. David MacDonald (Prince):: I have a supplementary question for the Prime Minister. Would the Prime Minister not think that one very important way of dealing with this problem might be the resumption of the Northumberland crossing project?



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Mr. R. N. Thompson (Red Deer):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. In view of the request from the Secretary General of the United Nations that the Cyprus mandate be renewed, would the minister tell us whether Canada intends to renew her commitment to the peace keeping force?


Hon. Paul  Marlin@Secretary of Stale for External Affairs: Mr. Speaker, the request 27053-480
Inquiries of the Ministry of the Secretary General has not yet been officially received, but if it is the matter will be brought to the attention of my colleagues for their consideration.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. M. W. Martin (Timmins):: I should like to direct a question to the Minister of Finance arising out of the recent government decision to transfer all our United States dollars to non-liquid or non-negotiable securities. Could the minister inform the house as to the term and interest rates of the new United States securities held by the Canadian government?


Hon. Mitchell Sharp (Minister of Finance):: These are now being negotiated. I am not in a position to reveal this information because the terms have not been settled, but I can assure the house that these securities will be payable on demand.


Murdo William Martin: I have a supplementary question, Mr. Speaker. Could the minister assure the house that these securities will be payable in less than 365 days?


Mitchell William Sharp: Yes, Mr. Speaker. As I said, these securities can be cashed whenever they are needed to supplement our reserves.



INCOME TAX


[Stage Direction]
On the orders of the day:
Mr. A. D. Hales (Wellington South):: should like to address my question to the Minister of National Revenue. On February 29 the minister advised the house that his department was preparing a revised schedule of income tax deductions which would be mailed to employers by the middle of this month, which is tomorrow. I should like to ask him whether copies of this schedule have been prepared and sent out.


Hon. Jean Chretien (Minister of National Revenue):: Mr. Speaker, those forms have not been prepared, due to the revised financial policy, but we think that we will be in a position to send them for April 1 with the 3 per cent rate.

March 14. 1968
Inquiries of the Ministry


Alfred Dryden Hales: I have a supplementary question, Mr. Speaker. Will copies of the revised schedule be produced right away and sent to employers?


Joseph Jacques Jean Chrétien: Mr. Speaker, those forms are being prepared, but I do not think that they will be ready for a few days yet.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. J. P. Nowlan (Digby-Annapolis-Kings):: Mr. Speaker, I should like to direct a question to the Minister of National Defence and ask him whether he would agree to the request made to him in a telegram today or yesterday by the premier of Nova Scotia to delay any move on the proposed transfer of men between Summerside and Greenwood until Nova Scotia has had an opportunity to present a brief.


Hon. Leo Cadieux (Minister of National Defence):: Mr. Speaker, I am sure that in the present circumstances the brief will arrive before the decision is implemented.


Mr. Robert McCleave (Halifax):: I have a supplementary question, Mr. Speaker. In view of the fact that both economic and military considerations are involved in this matter, would the minister consider referring the question of base consolidation and shifts between bases to the standing committee of the house?


J. Michael Forrestall: Mr. Speaker, my question is supplementary to the one directed to the Minister of National Defence. I should like to ask him, in the light of his reply to the hon. member for Digby-Annapolis-Kings, whether the department has not yet made a final decision to transfer the search and rescue facility from Greenwood to Summerside.


Léo Alphonse Joseph Cadieux: I am sorry if I indicated that, Mr. Speaker, because the decision has been made. I was referring to the implementation.


David Samuel Horne MacDonald: Mr. Speaker, my question is for the Prime Minister. It has to do with some of the questions raised this afternoon and others raised by myself

earlier having to do with the reduction in strength of the Canadian forces base at Summerside, with a possible loss of revenue of one and a half million dollars. Will the Prime Minister indicate, as he did earlier, that the government will accept responsibility for this further difficulty to the depressed economy of the province and seek ways to make adjustments?


Mr. Speaker:: Order, please. The question is argumentative.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. R. W. Pritlie (Burnaby-Richmond):: Mr. Speaker, I sent the Minister of Justice notice of this question. Does he plan to prosecute the distributors of Red Book magazine, which carried in its March issue an advertisement on birth control in contravention of section 150 (2)(c) of the Criminal Code?


Hon.   P.-E. Trudeau@Minister of Justice: thank the hon. member for giving me notice of his question, but he should realize this is a matter for provincial authorities and not for the federal government.


Robert William Prittie: I have a supplementary question for the Postmaster General. Have the regional postal authorities in Vancouver referred this matter to him, since Red Book is an imported magazine?


Hon. Jean-Pierre Cote (Postmaster General):: I did not hear the first part of the question, Mr. Speaker.


Mr. Speaker:: Order, please. Since we are running short of time, perhaps the minister might take notice of the question and answer it tomorrow.


Mr. S. J. Enns (Porlage-Neepawa):: Mr. Speaker, my question is directed to the house leader and relates to the question asked earlier by the hon. member for Burnaby-Richmond. Will the house deal in this session with Bill S-22, item No. 60 on the order paper?


Allan Joseph MacEachen: Yes, Mr. Speaker.
March 14, 1968



INCOME TAX


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question to the Minister of National Revenue. Will the companies which are donating aircraft to the Liberal leadership candidates be allowed tax deductions on these donations, so they may pass half the cost on to the taxpayers of Canada?


Mr. Speaker:: Order, please. Orders of the day.



WATER RESOURCES


[Stage Direction]
On the orders of the day:
George Robson Muir: Mr. Speaker, I am rising on a point of order. I have been trying to catch Your Honour's eye for the last 25 minutes in order that the Secretary of State for External Affairs may be allowed to answer a question I asked him yesterday. Would Your Honour allow it at this time?


Mr. Speaker:: Yes, if there is agreement in the house to go beyond the time allotted.


Some hon. Members:: Agreed.


Hon. Paul Martin (Secretary of Stale for External Affairs):: Mr. Speaker, I should have volunteered the answer which I promised to give. Yesterday my hon. friend asked what progress was being made in considering the water resource project on the Pembina river which the International Joint Commission has recommended for development by Canada and the United States.
Officials of the federal government have given the report careful consideration. There have been exchanges between the federal and provincial authorities on this subject, and it is expected that these exchanges will shortly result in an agreement on the Canadian position with regard to the project. When this takes place, Mr. Speaker, we will then take the matter up further with the United States government.
Income Tax Act INCOME TAX ACT



MEASURE TO PROVIDE FOR SURCHARGE

Mitchell William Sharp: that the house go into committee to consider Bill No. C-208, to amend the Income Tax Act.
Motion agreed to and the house went into committee, Mr. Batten in the chair.
On clause 1-Gifts to Her Majesty.


Mr. Bell (Carlelon):: Mr. Chairman, so far as it goes I think this clause is one which would commend itself to the committee. Indeed, it is the only reasonable clause in what is a bad bill. However, what I should like to ask the minister is why he has restricted this exemption to the provinces. Why not apply this exemption as well to the municipalities or to the agencies of provincial governments? I have in mind, Mr. Chairman, such organizations as the Ontario Heritage Foundation which, for example, has been set up in an attempt to preserve historic sites in the province of Ontario-


The Chairman:: Order. I apologize for interrupting the hon. member but it is a little difficult for the Chair to hear what is being said. May we have order, please?


Thomas Miller Bell: Mr. Chairman, I was saying that I had in mind such agencies as the Ontario Heritage Foundation, with which the Minister of Indian Affairs and Northern Development has recently entered into an agreement for the preservation of historic sites in the province of Ontario, an agreement of which I think all of us would approve.
It seems to me, Mr. Chairman, that if this particular clause is good in relation to provinces it ought to be good as well in relation to provincial agencies and municipalities. The committee will be aware of the interest I have taken in this matter, since I put a question on the order paper. That question was answered on January 22 of this year, at page 5767 of Hansard, and I believe resulted in some representations being made to the minister by certain of the provincial governments.
Perhaps the minister would indicate at this stage whether he would go further than he has gone and extend consideration to these other bodies I have mentioned.


Mitchell William Sharp: Mr. Chairman, we have been considering this matter for some time. We had particularly in mind some recent donations that had been made to provinces of art

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Income Tax Act
collections and so on. Personally I had some knowledge of the McMichael's collection that had been donated to the province of Ontario. In that case a donation could not be made to Her Majesty in right of Canada because the National Art Gallery was unable to accept a donation outside of Ottawa and there was no way in which the collection could have been looked after.
It seemed to us that we at least ought to extend the principle to Her Majesty in right of a province. It is possible, of course, to extend this exemption a very long way, but I suggest to the committee that we should make haste slowly in this direction. Otherwise we may be opening the door to transactions which would have the effect of seriously reducing our revenues, thereby passing on a larger load to the rest of the taxpayers. I do not believe one should extend this exemption indefinitely to cover all sorts of donations to all sorts of agencies.
I	suggest to the committee, Mr. Chairman, that while we may not have gone far enough now, we at least ought to take this step at the present time.


Thomas Miller Bell: Mr. Chairman, the minister did not indicate why he thought it would be going too far to extend the exemption to municipalities. I agree with the minister that it should not be extended a great distance, but surely it is likely to be most effective if it is extended to municipalities. In the matter of preserving historic sites, gifts are more likely to be made to a municipality than to a province.


Mitchell William Sharp: Mr. Chairman, this is a very difficult question of degree. The original reason the exemption applied only to donations to Her Majesty in right of Canada was that they were supposed to be gifts that were of general benefit to the whole nation. When a gift is made to a province the benefit, presumably, is spread over a rather smaller area, but nevertheless an area that is sufficiently broad. When you begin to allow donations to municipalities as deductions, you start raising questions about whether the taxpayers as a whole should have to pick up the lost revenues.
I suggest to the hon. member, Mr. Chairman, that this is really a matter of degree, and at this time I hesitate to go any further.


Stanley Howard Knowles: Mr. Chairman, while we are on this point, in light of what the minister has said perhaps he would answer the question I put to his colleague on the orders of the

day. Does the minister think that donations made by private companies by providing free air travel for other leadership candidates than the Minister of Finance should be allowed as a deductible expense, which has the effect of passing half of the cost back to the taxpayers?


Mitchell William Sharp: As far as I know, Mr. Chairman, any donations that are made to me, either in campaigning as a candidate in a constituency or in campaigning for the leadership, are not deductible.


Stanley Howard Knowles: Mr. Chairman, I am not talking about campaign donations but air travel that is made available to candidates and which will cost money to the companies concerned. Does it not follow as normal business practice for these companies to charge for the cost and, in effect, recover half of that cost from the taxpayers?


Mitchell William Sharp: Mr. Chairman, I am quite sure that my colleague the Minister of National Revenue does not permit things to be done indirectly that are forbidden directly. This is a matter of administration. When the Minister of National Revenue looks at expenses that are properly chargeable he tries to discover whether they have been incurred in earning an income. That is the only criterion that is applied.


Alfred Dryden Hales: Mr. Chairman, if a donor makes a gift to a university in a given province, would such a gift qualify in this particular case?
[DOT] (3:30 p.m.)


Mitchell William Sharp: It is my understanding that it would qualify under other parts of the act, subject to the limitation that is in the act today.
There is a special position in regard to gifts that are made to the crown and that position has been maintained in the law for many years. All that this clause does is to extend the right of deduction with respect to gifts made in right of a province. That right exists with respect to gifts to Canada.


Mr. Walker:: How will art collections be valued for tax purposes? Will the original purchase price be taken into account? How does one arrive at an evaluation?


Mitchell William Sharp: I understand that when collections are donated to the government in right of Canada, that is, to the national gallery, the evaluations are made by the gallery itself.
March 14, 1968

When it comes to donations to the crown in right of a province the national gallery, of course, would be consulted. I must point out that these donations to the crown affect the revenues of the provinces as well as the federal government.


Mr.   Marlin@Timmins: I wonder whether the minister would mind answering one or two questions. Before asking him the questions I wish to read to him some comments he made regarding the International Monetary Fund meeting in Rio de Janeiro. He said in part:
I had the opportunity to meet all the ministers ol finance of the world. We met many times in large groups and in small groups. One of the main problems we discused was the problem of interest rates. It was pleasant to meet with ministers of finance from around the world because at least we could console one another. We looked at this problem; we examined it carefully and at length for a week.


Stanley Howard Knowles: The minister had better go back.


Mr.   Marlin@Timmins: I continue:
There was not one of us who could come up with an easy or early solution to the problem of high interest.
Can the minister tell us whether, since that meeting took place, he has seen any signs that might indicate that interest rates will be reduced?


Mitchell William Sharp: I am sure all hon. member are reading the newspapers very carefully these days and looking at the international financial crisis. One aspect of this international financial crisis is a continuing increase in interest rates, and that is why there is no easy answer to the problem of interest rates. It is a very disturbing aspect of the international financial situation, and until that situation is clarified I do not see much prospect of lower interest rates.


Mr.   Marlin@Timmins: If the minister will think back to the time when gold prices were increased in 1934 he will remember what that increase did to interest rates. The government at the present time is refinancing loans that it floated at that time. It is interesting to note that the Canadian government was able to finance the war at a rate of three-quarters of 1 per cent on short term bills and 3 per cent on long term bonds. These long term bonds are now coming due and are being refinanced at a rate of approximately 6.5 per cent. Considering these factors, has the minister changed his mind about the advisability of
Income Tax Act
increasing the gold price as one way of meeting the problem of high interest rates?


Mitchell William Sharp: No, Mr. Chairman. It is not the
intention of the Canadian government to take actions that would disturb the international monetary markets more than they are now disturbed. The United States government has made it clear that it will not increase the price of gold. It is not the policy of the Canadian government to follow any other course.


Murdo William Martin: Yet, Mr. Chairman, if we are to learn anything from history we must recognize that prior to the last increase in gold prices the average interest rate on government securities during the 1920's was 4 per cent and that during the 1930's it dropped to 3 per cent and during the 1940's to an average of 2 per cent. Would the minister not be extremely pleased if he had to pay only 2 per cent on government borrowings?


Mitchell William Sharp: I see no prospect of any 2 per cent interest rate, nor do I think an increased gold price would bring such a result about at this time. Indeed, an increased gold price would lead to a further expectation of inflation and might lead, therefore, to increasing reluctance on the part of individuals to lend their money at low interest rates.


Murdo William Martin: Does the minister not agree that interest rates began rising when United States gold reserves began dropping? Rates have risen in direct proportion to the loss of United States gold reserves.


Mitchell William Sharp: I am inclined to think that we ought to improve the international monetary system. The greatest contribution would be to bring into operation the supplementary drawing rights, on which we have worked for some time, to supplement the existing gold stocks and facilitate, therefore, international transactions and help to end the sort of financial disturbance that is now prevailing.


Mr.   Marlin@Timmins: Is it not true that for the past 5,000 years of recorded history human beings have been seeking a substitute for gold? So far they have not found one that is universally acceptable.


Mitchell William Sharp: In the post-war period we found means to supplement gold. The International Monetary Fund was created for the purpose of supplementing gold and providing another means of carrying on international transactions, that is, transactions between countries, and financing them. I believe the
,7620

March 14, 1968
Income Tax Act
time has come when we ought to carry this process a stage further. No one has suggested that gold ought to be eliminated as a reserve for international purposes. It would be very useful if we had a supplement to gold and we did not need to depend entirely on gold, the price of which could be changed, in order to make our international monetary system function well.


Murdo William Martin: I agree with the minister, and we must use the services of the I.M.F. and various other international bodies. Is it not obvious, though, that what happened in the past can happen again? The present situation seems to be adding a headache to a brain tumor. Measures which are taken seem merely to delay the crisis. They do not cure it. Is it not true that this crisis engulfs the world? I have read a report that about 200 tons of gold will change hands on the London market today. How long can this go on?


Mitchell William Sharp: I cannot answer that last question. In the post-war period, when we introduced modern, international financial mechanisms, we saw the greatest expansion and prosperity that the world has ever seen. I regret that we now face this sort of international crisis. I suggest, none the less, that this international crisis will not be solved simply. I think the best way of dealing with it would be to carry into effect the new kinds of international reserves that have been under discussion among countries of the world for the past couple of years. I regret that we have not had a sufficient degree of international agreement to bring those reserves into effect. If we could do that I do not think we would be faced with the present crisis.


Murdo William Martin: May I ask the minister one more question? Does the government still intend to supply gold to the United States and to subsidize the United States to the tune of 14 per cent while so doing? We sold to the United States $100 million worth of gold but that gold cost us $114 million to produce because we pay a subsidy to our gold mining companies. Is it the intention of the government to continue to follow this practice or is the hon. gentleman reconsidering this procedure?
[DOT] (3:40 p.m.)


Mitchell William Sharp: Our policy has been to keep a certain proportion of our reserves in gold and a certain proportion in other forms of exchange, chiefly American dollars invested in the United States and earning interest. I believe this is the proper policy for Canada. I

believe it is only prudent we should hold part of our reserves in gold as long as the present international financial system operates. I do not believe it would be prudent for Canada to hold all its reserves in gold. We would lose a great deal of revenue if we did so and successive ministers of finance would be obliged to impose still higher taxation in order to meet expenditures. So I think it is very wise to have invested a substantial part of our reserves in interest bearing securities.
Gold earns us nothing. It is sterile. We hold it because under the present international system we want to have some protection against the possibility that at some time in the future the price of gold might be increased. But I do not think it would be in the Canadian interest to keep more than a certain proportion of our reserves in gold. I believe that from time to time we shall sell some of our gold stocks and turn them into something which produces earnings to keep down taxation in this country.


David Réal Caouette: Mr. Chairman, I only have two or three questions for the Minister of Finance (Mr. Sharp).
In view of the confusion now prevailing, both among the Canadian people and the deputation in general, as well as among some teachers in our Quebec schools, because of this mad or panicky gold rush which results in gold transactions between various countries, could the minister now state that, as far as our Canadian currency is concerned, the gold guarantee is no longer of any account since May 1, 1940, but that the Canadian gold reserve, as he just said, is only used for the international transactions which may be effected at a given time, in short, that gold is of no use at all to guarantee the currency in circulation in the country, under our monetary system? Is the minister in a position to tell us that?


Mitchell William Sharp: Yes, Mr. Chairman, what the hon. gentleman has said is right. We retain a gold reserve for the purpose of settling international transactions. As I said in reply to the hon. member for Timmins, we have followed a policy of keeping part gold and part American dollars or dollars invested in United States securities, bearing in mind the fact that the United States dollar is based upon gold and one can never tell whether or not in the future the price of gold might be changed.
March 14, 1968

This has been the policy followed by successive governments over a long period and I think it is prudent. I agree with the hon. gentleman that a Canadian dollar bill cannot be presented in exchange for gold. Gold is retained for use in settling international transactions and for that purpose it is in my view, a very valuable part of our reserves.


David Réal Caouette: Mr. Chairman, my other question is this.
A moment ago, the Minister of Finance, in answer to a question by the hon. member for Timmins (Mr. Martin), said that Canada had to go along with the current of international affairs and that we must not upset the present course of the unsteady economy.
So one could say that we are only the followers of policies enacted internationally by foreign countries, that we must necessarily suffer the consequences of decisions taken in Washington, France, or England, and that we are unable to set down a clear and definite economic policy.
Now, I would like to ask the minister-I admit that there is now a severe international crisis and that perhaps some heads will roll in a few days or a few weeks-whether there is some law here in Canada which prevents the Canadian government or the Minister of Finance from using strictly Canadian, national credits, in order to ease the situation, and to boost the economy of the country again independently of other countries? Do we not have the means to implement something in this country without always having to run to the United States, to England, to Russia, or to other countries in the world?
At this point, I should like to put this question to the hon. Minister of Finance: Is there an act which prevents the government or the Department of Finance from using the services of the Bank of Canada to create new, debt-free, interest-free credit, a step which would not only have no influence on the international market, but, on the contrary, would enable us to increase our productivity, and would enable us to compete better than at the present time?
Does the hon. minister have any objection to using strictly national credit for Canadians, to boost the Canadian economy?


Mitchell William Sharp: In so far as transactions within Canada are concerned, this is exactly what
Income Tax Act
we do. We have established a credit system, a very complicated and very delicate financial mechanism comprised of many kinds of institutions under the control of the monetary policy of the country through the Bank of Canada. But when it comes to international transactions then, of course, it is necessary to have something which foreigners want and will accept, and there are only two things I should like to have in my reserve in this situation. One of them is gold, which will be accepted by anyone, and the second is United States dollars which remain the most acceptable currency in the world and the currency in which we must settle most of our international transactions. We do have provisions for satisfying our internal credit needs and while we make use of them in a way which may not be altogether to the liking of the hon. member, the system works very well on the whole. But it will not work internationally.


David Réal Caouette: Mr. Chairman, the hon. minister has just told us that he does not necessarily share the political ideas the Ralliement Creditiste advocates, but did the right hon. Prime Minister not tell us Tuesday in his speech that the government had only two ways of managing the country or making expenditures: borrow money or levy taxes?
Well, Mr. Chairman, the hon. Minister of Finance knows full well that there is another way. If the government is sovereign, could the minister not resort to the credit of the Bank of Canada to balance Canada's economy on the basis of Canadian production. Why does the department not use the Bank of Canada to create the credit matching that production?
What prevents it from doing that? The law?
[DOT] (3:50 p.m.)


Mitchell William Sharp: Mr. Chairman, I have had many discussions across the floor on this subject with the hon. gentleman as well as with other members of his party and those associated with him such as the hon. member for Lapointe. I do not think we are going to agree this afternoon on the best way of accomplishing our respective purposes. The government has responsibility for monetary policy and the Bank of Canada is the agency that is used to implement that policy. The Bank of Canada controls the volume of money in Canada, the volume of dollars that are created for the

March 14, 1968
Income Tax Act
purpose of facilitating the financial system. The money that is put into circulation by the Bank of Canada becomes the foundation upon which other institutions extend credit.
The hon. gentleman is very well aware of the process, and so am I. We may differ as to how it actually works, but at any rate that is the way it is done. I am of the view that the operations of the Bank of Canada, like the operations of the Federal Reserve System in the United States or the Bank of England in England or the Bank of France in France or the Central Bank in Germany, are the accepted, tried and tested methods of controlling the expansion of credit.
I know my hon. friend has a different view. I know I despair of converting him to my view and I hope he despairs of converting me to his point of view, but at any rate I think we understand our respective points of view. I of course have the advantage over him that the point of view I believe is appropriate to the modern world, to our democratic institutions and so on, is accepted throughout the world. I do not believe there is any country in the world that has yet been wise or foolish enough to accept the views of my hon. friend.


David Réal Caouette: Mr. Chairman, I should like to put a final question.
The minister just said that the Bank of Canada determines the volume of credit or money in circulation. Could he tell us who creates this volume and increases it? No doubt the minister is in a position to recognize that the Bank of Canada plays only a minor part in the whole monetary organization in Canada-not fiscal but monetary. In fact, if the federal government issues bonds for $1 billion and the Bank of Canada purchases, to-morrow morning, $1 billion in bonds, the minister is in a position to say that chartered banks have the power, under the law, to multiply that credit by fourteen. It is at that point that the Bank of Canada controls the volume of credit, that is by purchasing from the government a bond which chartered banks have the means to multiply by fourteen and, moreover, to charge interest on the multiplication by fourteen.
I understand that the minister can say that my point of view differs from his, that his point of view is different from mine and that both must be respected. I respect the minister as a man, but on the other hand, I do not respect his point of view which is keeping the country in the economic chaos now

experienced and which is merely due to a financial problem. If the minister stated: "Tomorrow morning, we are going to use the Bank of Canada", the situation would be different. Why does not the Bank of Canada perform that multiplication by fourteen instead of leaving the matter in the hands of a few bankers who are empowered to handle the economic life of the whole country?
If the Bank of Canada multiplied the government commitment by fourteen, that money would be put in circulation interest-free to finance municipalities, provinces, school boards-the government would no longer have to reduce its urgent expenses. We would then see new buildings going up, new industries created, and so on. The wage earners or those who make profits as contractors would deposit these sums in the chartered banks, so that the deposits in the chartered banks would probably be the same as now, but instead of paying interest on the fourteen to one ratio which the chartered banks can apply now, we could have credit free of debt or interest, if you wish, even if we had to repay the amount we have received from the Bank of Canada over a certain period of time and with allowance made for the depreciation of the facilities built.
Mr. Chairman, the Minister of Finance must be able to tell us that the present amount of money, of credit in circulation is in the hands of the chartered banks and not in the hands of the credit unions, even if, as the minister tells us, the Bank of Canada dictates or controls the amount of credit in circulation. I know very well that if I go into a bank tomorrow and borrow $1,000-which I do not have on me since I am borrowing it-if the chartered bank lends me this $1,000, I open a savings account, not a current account. The accounts of other people are not diminished by my opening a savings account while I have no money, but there is $1,000 in my newly-opened account.
As soon as I open a savings account, the chartered bank which lent me the money can use it as reserves deposited in the Bank of Canada and multiply by fourteen the $1,000 it just lent me.
That is where the trouble lies. That is the system which has put us in the situation which the Minister of Finance is now facing. That is the system which is to blame for unemployment in Canada, which forces the Minister of Finance to ask all the other ministers: Cut down your expenses, stop certain
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Income Tax Act
projects, scrap others, do not encourage production in Canada, lor we do not have the financial means needed.
Mr. Chairman, that is the basis of the difficulty facing the government at the present time. There are, in Canada, at the present time 500,000 unemployed, 80,000 of them in the city of Montreal alone. This includes those who are registered and excludes those who are not. Those who receive social welfare allowances are not considered as unemployed but they are anyway.
At the present time, we ask for the completion of winter works in some places. We are told that we cannot afford it, that we have to reduce our expenses. It is not permitted to carry out certain projects, to build roads, hospitals, buildings which the Canadian people need. By so doing, those who are in need are refused assistance.
Mr. Chairman, why does the hon. Minister of Finance not turn to the Bank of Canada? Why does he simply tell us: The Bank of Canada is at the service of the chartered banks to determine the volume of the money supply? The chartered banks are the ones who decide, not the Bank of Canada. However, I do not know of any law which prevents the hon. Minister of Finance from using the credit of the Bank of Canada.
If the government, this afternoon or tomorrow, would turn to the Bank of Canada to create such credits, that would add immediately to the reserves of the chartered banks and would allow them to increase those reserves 14 times. It would be a repetition of the situation which we have known in 1940, 1941, and 1942 when two Liberal members, Messrs. Arthur Slaght, of Parry Sound, and Gerry McGeer, of Vancouver, asked the Minister of Finance, Mr. Ilsley, who had created, through the Bank of Canada a new credit of $200 millions, I think, in order to finance the first war projects: Why do you not repeat that initiative, in order to finance the Canadian economy? And, Mr. Ilsley, answered: We cannot repeat that indefinitely, because as soon as we use a new credit of the Bank of Canada, it gives the chartered banks the power to multiply their reserves 10, 12, 15 or even 20 times, it puts in their hands an inflationary power. That is the inflationary power held today by the chartered banks. This is exactly the same situation and the hon. Minister of Finance knows it.
[DOT] (4:00 p.m.)
People can laugh about the present situation, but it is not funny. The Canadian people are not willing to face another depression for the sake of the sacrosanct dollar. The Canadian people are not willing to let their natural resources go down the drain to support the financial system.
Mr. Chairman, the Bank of Canada should be used fully to finance the expenditures of the federal government, the provincial governments and the municipal governments.
Speaking of municipalities, we know they are in a slump right now. The Union des municipalites de la province de Quebec is meeting in Quebec these days. I am speaking of the municipalities of the province of Quebec, but the same goes for all the municipalities. They are forced to raise their taxes. The Quebec premier told their representatives: When the provincial budget comes down, we will try to levy new taxes to help you.
We dig one hole to fill another, and the more we do, the larger the hole becomes in the attempt to fill the others.
The situation is the same in Ontario. The government has just approved new taxes on gas, tobacco, parimutuel, all kinds of things and then we are told: That alone will not suffice, we will have to cut expenditures. Ottawa cuts expenditures, Quebec cuts expenditures, and Ontario too. Saskatchewan, under Mr. Thatcher, has also raised its taxes in every field.
Mr. Chairman, how far will the Minister of Finance lead us in that direction? Until we face a depression like the one we had in 1929-30? Is it preferable to plunge 20 million people into an economic depression and to increase the power of the few individuals in Canada who control the economic blood of our country, that is money? For they are the ones who would have us kneel before them when we sit in committee to study the sob stories of the financial community.
Mr. Chairman, it is time, I feel, for the Canadian Minister of Finance and the Canadian government to stand up and tell big finance: Instead of enslaving the people, you will serve the people. This is the trouble today. Instead of serving the people, they enslave the people; instead of bringing financiers to their senses, we obey them.
The Minister of Finance should seriously consider the situation. I understand that he may say we do not share point of view, but I

March 14, 1968
Income Tax Act
have been advocating this philosophy for thirty years. When I became a Creditiste, over thirty years ago, I was only 19 or 20 years old. Why did 1 become a Creditiste? Because I never understood how it was that we were left literally to starve during the 1929-39 depression, while billions of dollars were found to wage the 1939-45 war.
How is it that for ten years, our colleges and institutions were only half filled, whereas during the war, there was insufficient space? Industries were sprouting throughout Canada. And now, 20 years after the war, as we must begin to refund what we had borrowed for the slaughter, we are facing facts: we must repay not only the capital, but also the interest. We have managed to pay that interest for the past 25 years. Today, it is the capital which must be paid. We have already paid $20 or $25 billion in interest since the end of the 1939-45 war, and our national debt still reaches $25 billion today. We have not paid a single cent of capital. We have paid, on the average, $1 billion a year in interests only on a fictitious debt created out of nothing by the Canadian banking system.
If the minister and the government had obtained interest-free loans from the Bank of Canada to meet their expenses, we would not find ourselves in such a situation. I challenge the minister to find a proper solution. Even if he doubles the taxes, introduces a bill providing for a 25 or 30 per cent tax increase, he will still not be able to meet his obligations, because the present system is not designed to cope with such a situation. The system is conceived to crush the government and the Canadian nation, and we are not getting rid of it.
Mr. Chairman, I say to the Minister of Finance that he has both the moral and the administrative obligation to put an end to this damnable financial system which oppresses the Canadian people.


Mr. Leboe:: Mr. Chairman, I should like to say a few words to the minister in this connection. I was surprised to hear the minister talk in the last few days about the international crisis and then brag today about the financial systems of all the nations in the western world. I cannot help but say to him that he has put forward one of the greatest contradictions in respect of finance that I have heard for a long long time. Surely he must understand that the people of Canada,
[Mr. Caouette.l
having considered the situation very carefully, have decided that the present financial system of the government has failed absolutely due to the fact that bank interest rates are now as high as 12J and 13 per cent. If anyone in this or any other country suggests there is a sound reason that interest rates should be as high as 12 or 13 per cent, then all I can say is 1 would have to see much stronger evidence than I have seen to date.
I believe that any alert minister of finance should be very careful to listen at this time to anyone who has anything to offer, whether it be good or bad, and assess what he has to say. Otherwise the minister would be very much like the individual who, when a person to whom he owed some money said "let us cancel the debt", said, "I would rather die owing you than not pay". If the minister continues in this way we will be faced with a situation which no one in this or any other country would like to see.
I should like to refer briefly to a small but powerful book. I suggest the Minister of Finance is quite aware of it. It was written by Vincent Cartwright Vickers. He was deputy lieutenant of the city of London, a director of Vickers Limited for 22 years and a director of London Assurance from which he resigned in January, 1939. In 1910 he was made a governor of the Bank of England and resigned this appointment in 1919. I wish the minister would compare what Mr. Vickers had to say with the situation which has been outlined by the minister over the last couple of weeks. In the opening paragraph on page 1 of this book entitled "Economic Tribulation" Mr. Vickers had this to say:
Slowly but Inevitably the old financial system is crumbling under the weight of modern conditions and the better education of the people; the sooner it crumbles the better, and the sooner it gives way to a better and more modern technique the sooner will the world achieve good will and peace amongst men.
The present order of things must change. The economic structure of civilization is obviously leaning heavily. To build upon it, to add weight to it as it now stands, crooked and unsafe, can only bring nearer the day of its collapse.
Today we are approaching the situation this man had in mind when he said that slowly but surely the mills of the gods would grind. What was written in 1941 by this man who for nine years was governor of the Bank of England we find expressed in the words of the minister today. When the minister says he does not understand what is meant when someone talks about changing the situation to one of an increasing involvement by the Bank
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of Canada in the debt of our country, I cannot understand to whom he is listening.
[DOT] (4:10 p.m.)
The minister said today that we have a fine financial system. Yet we find him also saying that the world is facing a terrible crisis and that the international monetary situation is almost beyond repair. We are now experiencing one of the greatest financial crises we have ever experienced. The situation is almost chaotic. It does seem to me that the time has come when we must stop burying our heads in the sand like ostriches and waving our tail-feathers in the air like palm trees. According to the Minister of Finance that is the position we are to assume.
I do not think the minister listened to what the hon. member for Villeneuve said and I do not think he intends to read what he said when and if he ever has the chance during the campaign. Let me tell the minister that if he expects to become the prime minister of this country and take it upon his shoulders to formulate Canadian policy he had better keep his ears tuned to some of the things which have been said. Let me refer him to the warnings given during the meetings of the committee on finance. He was told that if there was not some control of competition for deposits by trust companies and banks we would find ourselves in a terrible position because of high interest rates. I do not know how anyone can find himself in this position without being very much concerned. When we were discussing the effects of competition for deposits the Governor of the Bank of Canada said he did not anticipate high interest rates for ten years. That was the shortest ten years of my life.


Mr. Peters:: Mr. Chairman, I was very interested in the remarks of the hon. member for Timmins but I do not entirely agree with his contention. I am not sure what the real situation is in respect of gold but I am concerned about what seems to be a lack of interest on the part of the minister in what appears to be a calamity. Canada may not operate on the gold standard but we are tied very closely to the United States which does. The United States now has a national debt of some $64 billion in short and long term paper. In support of this debt the United States has approximately $10 billion in gold. If all the short term money was recalled the United States would be bankrupt.
Canada has reserves to the extent of about one-tenth of those held by the United States.
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We are tied very closely to their dollar. For many reasons we do not use Canadian dollars in international trade but use United States dollars. If their dollar collapses, even though the minister may not be worried about what will happen to the United States it will bankrupt the Canadian economy. We will then not only be bankrupt like the United States but the Canadian dollar will be at a higher rate and we will lose our trade with every nation in the world. We will be middling rich but starving.
Yesterday about $200 million in gold was transferred on the London market. This amount has probably increased today by another $20 million. At this rate it will take less than 30 days to find out whether the United States is totally bankrupt. The minister is being unfair to the house and to the country when he gives the impression that we have a new unit of exchange in the International Monetary Fund. The United States dollar is backed by gold and therefore gold is backing the International Monetary Fund. What will happen if United States short term money is recalled and the United States becomes bankrupt? Unless the minister envisages some change in the next few weeks I suggest that with the present trend the United States will be bankrupt within 30 days.
The present rush on gold will surely accelerate. Something will have to be done before the end of next week. Canada must also do something because our exchange is closely tied to the United States dollar. According to some of the remarks made by other hon. members the role played so far by the Bank of Canada has been detrimental.
When we took the limit off interest rates we were told by the minister that interest rates would go down. They have not gone down, they have gone up. They have gone up to the extent that the housing industry is now frozen. In the province of Quebec 600 major producers are leaving because of high interest rates and taking most of their business to the state of Vermont. This surely is a direct result of high interest rates and the instability of our economy.
I agree with the minister when he suggests that Canada is not going to set the gold standard. I am sure he is aware that all the countries involved in the monetary fund rejected the idea suggested at Rio de Janeiro that the United States dollar be used as the basis for international exchange. The only country interested in maintaining the price of gold at $35 per ounce was the United States. I am not

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sure what the result would be if we increased that price to $75, $100 or even higher.
I do know that for years Canada was hoodwinked into believing that it was absolutely necessary to stabilize the price of silver at 97 cents an ounce because that was the desire of the United States. We did not make money as a great silver producer. The United States then passed an act and the price of silver went up to $1.29 per ounce. We continued to produce it for the United States at that price. Some producers got smart, began producing for Britain, and the price of silver rose to $2.46 per ounce. I understand silver is selling on the commercial market for a great deal more. This would indicate that the price of silver is double what the United States is using for the base of its reserve.
The United States is not God Almighty so far as monetary policies are concerned. The United States has been unsuccessful in its negotiations throughout the world in respect of pegging the value of gold. Even with the huge amounts of gold the United States has said it has had over the years, it has been unable to establish stability in respect of its own money. This would indicate the United States has been printing scrip that it never intended to redeem. I think they are doing it with the consent of a number of countries which are now faced with a very serious problem and an almost inevitable calamity.
[DOT] (4:20 p.m.)
I ask the minister what he is going to do about this situation. What help can he give the Canadian people if a disaster develops? I calculate that it is not more than two weeks away. I am only guessing but I think that if the International Monetary Fund breaks down and gold is allowed to seek its own level the United States will have a 40-cent dollar. I am also scared that Canada will have a 60-cent dollar, which will mean that Canada will not be able to sell in any market in the world. We will be in a very serious position.
Some of the minister's colleagues may not believe that the situation is serious but I think it is when leaders of the international monetary agencies of the world are spending their Sundays visiting Switzerland not to ski but to sit down and discuss financial matters. These people do not think it is a laughing matter. I am sure those seven or eight people who have been meeting regularly know the limit to which they will be able to back currency in the current situation. I think it is a calamity for us and for the people of the world.

I do not think we will be serving the best interests of the International Monetary Fund or our own best interests if we fail to present what may be an alternative in this situation. I know there are repercussions which I do not understand in the alternative suggested, but I am quite sure everyone will agree that if the price of gold were to double there would be a great deal less interest in moving it around and keeping it under the bed. Speculation is what is moving gold around, not its value.
I believe that people in other countries and United States citizens are involved in this speculation. When people see a very serious economic situation developing which will affect them they hedge, just as the Canadian government has hedged to a limited degree. The minister should not appear to be amused by this situation or try to pass it off. A serious calamity may befall the world in the next few days. If it does occur it will make the Viet Nam war back-page news rather than front-page news. We will not need to withdraw the supply of nickel; that problem will be solved. The Vietnamese will find themselves well off.
The people who are buying gold are not stupid. They also have money, which is very important in the world of economics. These people are going to the London market and buying gold in very large quantities. They are buying $200 million worth of gold a day. This is a very large transaction. In my opinion it is not countries that are buying gold but individuals, corporations and companies interested in hedging in this way.
Perhaps the hon. member for Villeneuve did not give us the answer to the problem but I think what he said is well worth looking at. We will have to make ourselves less dependent on the United States economy or we will find ourselves very hurt by an economic collapse in the international monetary field. We may be hurt even more than the Americans who have perhaps precipitated this kind of collapse.
The Americans appear to have $10 billion worth of gold. If it is sold at the rate of a quarter of a billion dollars a day it will last only 40 days. If the buying of gold accelerates as it has in the past few days, a calamity would easily develop in the next 10 days.


Mr. Reid:: Mr. Chairman, before the minister rises to say something on this rather intriguing question of the price of gold and the mythological claim which gold seems to have on mankind, I should like to ask him to comment on two propositions. First of all, is
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it not true that if the United States were to raise the price of gold every other nation would also devalue its currency in the same proportion and we would be back in the same boat where we started? Second, what would happen if the United States unilaterally decided to stop buying and selling gold at the price of $35 an ounce and let it find its own level as a monetary metal? It seems to me to be absurd to some extent, when the United States has a gross national product of some $800 billion, that a world monetary crisis of this nature can be brought on by a balance of payments deficit of only $3 billion.
I represent a gold mining constituency and naturally we are very interested in what happens to the price of gold. But it seems to me that a great deal of the discussion this afternoon has been a little far out so far as my understanding of the economics of gold is concerned. It is my understanding that what really makes a nation wealthy and powerful is not the amount of gold it has but the extent of its productive capacity. Gold itself does not produce anything. The people working in the factories and the products they produce are the real key. I ask the minister to comment on those two propositions.


Murdo William Martin: Mr. Chairman, some of the comments made by the hon. member for Villeneuve and the hon. member for Timiskaming, to which I believe there was a reply from the minister, dealt with the fact that the Canadian dollar was not attached to gold in any way, shape or form. I should like to illustrate to hon. members just how true this is. Because of all the hullabaloo about the purchase of gold that is going on in Canada and other places around the world, I thought it would be interesting to find out just how one went about purchasing gold.
I went to the bank and informed them that I was interested in purchasing some gold. In spite of the fact that on the counter there was a big sign which said they bought and sold gold, the first thing the young gentleman who served me said was that they would not take any more orders for gold. I asked him, "What do you mean when you say the bank will not take any more orders for gold?" He said, "We are just not taking any more orders for gold." I asked, "Why?" He said he did not know why. I said, "Can you find out?" He went to find out why they were not taking orders for gold. He brought back another gentleman who then proceeded to try to discourage me from buying gold. He told me that there were
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storage costs, handling charges and this, that and the other thing.
But I persisted in getting an answer so he went on and even got to the stage of intimating that it was rather unpatriotic to buy gold. I pointed out to him that I happened to be the member of parliament who represents the largest gold producing area on the North American continent and I wondered why it was unpatriotic to buy Canadian gold in a Canadian bank. He changed his tune a little then, and although it took me some two hours and thirty minutes I was able to purchase a little bit of gold.
But the interesting point is that you cannot buy gold for Canadian dollars. You have to go back to your own bank and get the money in American funds. The most interesting point of all is that if you want to store gold in a Canadian bank you also have to pay the storage charges in American dollars. Therefore when the minister says the Canadian dollar is not attached to gold, believe me, Mr. Chairman, he is telling the truth. The trouble is that the Canadian dollar happens to be tied to the American dollar and the American dollar happens to be tied to gold, or it has been until now.


An hon. Member:: Where does the gold come from?


Mr.   Marlin@Timmins: I made this inquiry of the gentleman at the bank. He said they did not have any here and would have to send to Toronto for it. I said, "Suppose they have not any there; what will you do?" He said they would have to send to the mint for it. Apparently the mint may also be out of gold because it is processed in London, England. A few years ago we had over 200 producing gold mines in this country. Now we are down to about 25 and a number of those are closing this year. But still we have to send to England if we want to buy Canadian gold in Canada and we have to use American money.


David Réal Caouette: Mr. Chairman, would the hon. member permit a question?


Mr.   Marlin@Timmins: Yes.


David Réal Caouette: The Minister of Finance has probably never seen pure gold. Would the hon. member for Timmins send it over so the minister may look at it?
[DOT] (4:30 p.m.)


Mr.   Marlin@Timmins: Well, Mr. Chairman, I do not mind lugging it as long as I know

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where to get it. I think that the point raised by the hon. member for Timiskaming is a valid one. I have followed this situation very closely because I have been very interested in gold and I have tried to study the problem and the intricacies of the trading in gold on the international market over the years. The headlines today speak of the buying rush on gold in London, Paris and Zurich which has reached panic proportions. When the same thing happened before Christmas the international financiers were able to cool off the rush a little. Early in January, there was another run and again they were able to cool it off. Last week it started again and over the week end there was a big meeting of the Group of Ten in Switzerland. They came out with a joint statement that they were going to hold the line. However, this time it has had no effect. The panic started on Monday, continued yesterday and increased further today.
Unless I am mistaken and unless all the signs all over the world mean nothing, it would appear to me that by this week end and no later one of two things must be done. Either the price of gold will have to be raised to a meaningful level or gold will have to be demonetized. I am not sure what effect the raising of the price of gold would have. It was done in the 1930's one country at a time. What happened then was that gold moved from one country to another. If it is done sensibly at this time, what will happen will be that the International Monetary Fund will adjust all the currencies to a meaningful value. If they try to demonetize gold, then, unless the minister has more information and a greater understanding of the situation than I have, there will be utter and complete chaos in the world because, as I mentioned before, for 5,000 years people in this world have been looking for a substitute for gold, and as things have progressed over the years some countries within their boundaries have learned to manage without gold.
History has shown to us that paper money is nothing more than paper which can be used to plaster walls. It has to have some other value before it can be accepted and before it has the trust and faith of the nations of the world for use in international commerce which is so necessary in the world today.
I say again, Mr. Chairman, that not later than this week end some decision must be made or the world will face a depression which will make the one in the 1930's look like a garden party.


Mr. Malheson:: Mr. Chairman, I should like to put one or two brief and simple questions to the minister. I do not think this is the time for us to go into an extensive examination of the reform of our monetary system which, after all, has served Canada rather well in the last two decades. But I should like to ask the minister whether I am correct in my understanding of what he has said in his responses to questions and indeed in his speeches to the house and to the committee. As I understand it, first, our trade position is excellent and currently it is improving. Second, our dollar is buoyant. Indeed, if it were free it would probably tend upward. Third, fiscally speaking we are now very nearly in balance. According to some independent assessments, we are in balance or even better at present. My question is: Why do we tax now? If I understand the minister correctly, his answer is that we tax: (a) in order that Canada will not have to borrow more in what is obviously a capital-scarce market and thereby further inflate interest rates and complicate other borrowing in Canada and, (b) in order to curb consumer purchases so as to reduce inflation. Am I being too simplistic in the reasons which I advance for the government's action in coming to the country at this time for this not very substantial sum of money? Are these the reasons? Is this the situation?


Thomas Clement (Tommy) Douglas: Mr. Chairman, I just want to ask the minister a couple of questions. I should like to say first, however, that I was interested in noting that he said he had not been converted by the hon. member for Vil-leneuve. If the hon. member for Villeneuve cannot convert him I suggest that he might go back and read the speech of the Secretary of State for External Affairs on debt free money made in February, 1963, and consult his colleagues who voted for a resolution on debt free money. This might give him all the explanations he needs in order to support the position of the hon. member for Villeneuve.
My sole purpose in rising is to say that I hope that in the course of this discussion the minister will make some statement which, if possible, will assuage the fears of the Canadian people with respect to the present critical situation in the international money markets. I recognize the minister's difficulties. The minister is dealing with a very delicate mechanism. He wants to say nothing that will make the situation worse, nor is he in a position to make forecasts when all the factors are not known.
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However, it seems to me that the people of this country have some right to know what the government's plans are and what the government is striving to do. Most of us have the feeling that many of the governments and peoples of the world are like a mesmerized rabbit watching the snake getting closer and closer, and no one seems to know what to do about it. For months now we have watched the gold hoarders, the speculators and the Swiss bankers buying gold and raiding the United States dollar. The situation is approaching the breaking point.
The hon. member for Leeds spoke about our buoyant dollar. If our dollar is buoyant I do not know why the Bank of Canada had to put up some $474 million in the months of January and February in order to keep the Canadian dollar from collapsing. It could not have been very buoyant at that time. Certainly our dollar, and I do not say it with any glee, is under the same pressure as are the United States dollar and the British pound. I am not trying to allocate blame. What I am asking is that we face up to the reality of the situation.
I do not profess to be an authority on international finance, but basing myself on whatever study I have done of the international monetary theory it seems to me that the problem which has been facing the world for several years now and will face us increasingly in the next few months is the problem of the contracting world liquidity. Our international situation is very much like the situation that countries faced domestically in the early 1930's, namely, that in countries which were on the gold standard the medium of exchange was not expanding as rapidly as the economy. There was a period in the 1930's when we had an abundance of goods and people who needed the goods but we lacked a medium of exchange. When we moved from the gold standard to a managed currency within each country such as we have today we managed to provide the medium of exchange by which people could do business. Now, on an international basis, we have not been able to provide this flexible medium of international exchange. As a matter of fact, not only has world liquidity not been keeping pace with the growing trade in the world but it is now likely to contract.
[DOT] (4:40 p.m.)
I believe most authorities estimate that the devaluation of the British pound wiped out $1 billion worth of world liquidity. If the United States carries out its intention this year of
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balancing its payments, this will wipe out some $3 billion worth of world liquidity. Contraction of world liquidity could precipitate very serious problems for international trade. It seems to me, Mr. Chairman, that the world will have to think very seriously about how it can expand world liquidity to keep pace with increasing demand.
However, what I want to ask the minister is this. What prospect is there of getting some agreement reasonably soon among the members of the I.M.F. with respect to supplementary drawing rights? Also, what prospect is there of getting some agreed unit of international monetary exchange? It seems to me that this is the only hope.
I know that this question has been discussed at meetings of ministers of finance of the member nations of the I.M.F., and I understand there was some resistance to it, which I think is unfortunate. I should like to know where the resistance comes from. Is there any hope that in light of the present crisis this resistance will be withdrawn? Is there any prospect that the nations that recognize the need for what I would call a managed international currency would be prepared to proceed without, say, France, which has strenuously opposed this change? Is there any hope that the process that would normally have been left until next October can be speeded up? Frankly, Mr. Chairman, I do not think that we have until next October. If the minister is reasonably optimistic then he will relieve my mind and the minds of a lot of people in Canada, but I doubt that we have until next October.
Are there any emergency measures that can be taken in this regard? Is anything being done to bring the ministers of finance together at an early date in the hope of working out a solution? If the minister can give us any hope or reason for optimism I can assure the minister that he will set a lot of people's minds at ease at a time when there is considerable concern, in some quarters even consternation.


Mr. Laiulippe:: Mr. Chairman I shall be brief as I have ony a few specific questions to direct to the hon. minister.
Here is the first one: Why is manipulating allowed as regards the interest rate of the Bank of Canada? Why was the Bank of Canada able for about twenty years to maintain a stable rate of interest so as to guarantee a

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kind of economy which could be termed stable? But since 1945, namely since the manipulating as regards the interest rate of the Bank of Canada, the economy has been completely unbalanced. That is the reason why the interest rate has no limits and is out of control.
I should like the hon. minister to give us explanations as regards the interest rate maintained by the Bank of Canada and the high interest rate due to manipulating. In a word, why, once again, this manipulating of the interest rate?
That is the question I am directing to the hon. minister. If he will be so kind as to answer, I will have further questions to ask him afterwards.


Mr. McLean (Charlotte):: Mr. Chairman, I should like to say a few words on this question. I think that gold backing for the United States dollar is a myth. All currencies of the world are based on the United States dollar. If the price of gold was changed all currencies would also change in proportion.
A few weeks ago the amount of money circulating in the United States was $181 billion. The United States currency is not only a domestic currency but an international currency. United States currency can be spent in Europe. In the United States a dollar is a dollar. In Canada a dollar is a dollar. However, in Europe a United States dollar is no longer a dollar but a gold dollar.
To my mind, trying to prevent people from buying gold is a little out of line. The United States is contending that the price of gold should not be raised. We must remember that $750 million worth of gold each year does not enter the monetary system at all; it is going into industry and into the arts. Although General de Gaulle was blamed last year for taking gold out of the United States, I understand he did not take one cent's worth out of that country. The United States is losing gold to people all over the world. These people want to protect their investments. They are called sharpers, dishonest and unpatriotic. But money itself, Mr. Chairman, is not patriotic.
Gold does not come from the United States alone. The United States is mining only about one-third of the gold that is used in industry and the arts in that country. The United States is also using a lot of gold in its space program. The electronics industry also uses gold. This gold is procured from countries other than the United States. They are even getting it from Canada. We shut down our
[Mr. Latullppe.l
gold mines because we do not charge a proper price for the gold.
Where can you find any industry today, Mr. Chairman, that buys its raw materials at 1934 prices? I well remember the depression of 1929 which to my mind was brought about by the United States policy toward gold. The United States had gathered in gold from all round the world. This led to speculation in the United States. I remember that at that time currencies all over the world were dislocated.
I think my hon. friend across the aisle is wrong in what he says, because it was only after President Roosevelt established the price of gold at $35 an ounce that the currencies of the world were adjusted and countries were able to conduct business. I was in business at that time and if that price had not been established when it was, in six months we would have gone into bankruptcy because three-quarters of our products were exported. I remember that what happened was a direct result of the gold situation.
I cannot understand why our friends across the way want to substitute something else for gold. What they want is "paper gold". How is the United States going to finance the Viet Nam war unless it is with this paper gold? They cannot use real gold because they have not sufficient reserves. So they issue paper and call it paper gold, but you cannot get gold for it. It is not right to call that paper gold, but that is what they do.
[DOT] (4:50 p.m.)
I cannot understand that attitude. For my part I say, let us stick to gold at least while the Viet Nam war is on. I think this question definitely should be looked into. When we are paying $15 million a year in subsidies to our gold mines I do not see why we should sell the product of our gold mines to the United States for $35 an ounce, a price that was established in 1934.
When President Roosevelt established that price in 1934 people everywhere told him that this action would raise prices in the United States. It did no such thing. Prices before and after the gold hike were practically the same with the exception of some imports. But what did that action do? It restored world trade and world trade restored prices. That is exactly what we are up against today. The question is one of liquidity.
We need liquidity and we are not getting it. No matter what you say about gold, it is the base for credit. Some say that the International Monetary Fund has old-fashioned ideas. When Canada puts up $100 million, the fund
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asks for $25 million of that subscription to be in gold. Why is that done? Paper credits are expanding but the relative gold base for our money is going the other way. The United States is saying to European countries, "You have $15 billion in gold in your reserves." At the same time any United States economist will tell you that the purchasing power of the United States dollar will decrease from 4 to 5 per cent in 1968. I presume the Canadian dollar will follow that decline. Personally I do not think we can do anything about that inflation. Despite the so-called new economics we have in today's world, I do not think we can do anything about it because for a long time we have had inflation and we are going to have inflation. It has now become a question of the degree of inflation we are to have. But the United States is telling Europe, "You have got $15 billion in gold locked up in the common market and in 1968 the purchasing power of your gold is going down from 4 to 5 per cent." I ask you, who is going to believe that?
Some say that all we need to do nowadays is issue paper currency. If gold values are to be kept to the level of paper currency values, by and by your paper currency will be worthless and your gold will be worthless. That is ridiculous. People do not believe that gold is worthless. People think and have always thought that gold is the store of value.
The other day a young woman in Toronto took her savings out of her bank to buy gold. She thought she was protecting her investment; she was getting out of paper and into gold. People all over the world are thinking the same way. When a woman in India buys a gold bracelet it is because she does not trust the bank with her money and trusts gold. From the year 1340 gold has been on the upward trend. And in a while its price has reached a plateau but its price has always crept up. It has never gone down.
All the United States has to do if it wants to get out of the jam it is in is to say, "We will not buy or sell gold at $35 an ounce." That is all there is to it and it could do it within the framework of the International Monetary Fund. The president need not go to congress. In fact, I do not see why he should. I do not see why we have to defend the Canadian dollar. It is pegged at 92| cents United States. Incidentally, much of my information comes from New York international reports. When the Canadian dollar moves down three-quarters of a cent it has got to be defended by the Bank of Canada,
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but if we had a flexible exchange rate there would be no need to defend it. In the 1920's our dollar went down at one time to 76 cents United States and within one year of that it was selling at a premium. Why did things happen that way? When your dollar goes down the tariff barriers against you go down at the same time. Your exports increase and your imports decrease. It is as simple as that. The marketplace supplies the answer.
I would say that the United States is defending its dollar to save face only. It is saying that an increase in the price of gold would benefit mainly Russia and South Africa. Russia has no store of gold and neither has South Africa. The South African mines produce about $1 billion worth of gold each year but the South Africans use that money to buy commodities all round the world. That action increases international trade. As for Russia, at present they are using their funds for spaceships, armies and navies. If they had twice the amount of gold they would be over here buying pins and needles and the sort of stuff the people in Russia want.
Leaving out Russia and South Africa for the moment, it is obvious that if the price of gold were increased the approximately $42 billion of gold in the western world would double or triple in value. I was reading a book written about 120 years ago by a French economist. He said that the only way to find the price of gold is to see how much gold will buy how much silver. France at that time was on the silver standard. Applying that measurement to gold prices, gold today should be worth $105 an ounce because the price of silver has also gone up.
As for this talk of gold being a monetary measure, how can gold possibly be a monetary measure when in 1967 no gold went into the central banks? Instead, approximately $750 million worth went into industry. Accordingly, gold is a commodity. Why should it not be traded at commodity prices instead of the price that was fixed in 1934?
I cannot understand the thinking of some people in the opposition. Some of them want this paper gold. I think we have got too much paper. The world is swamped in paper. I think we want some restriction and gold has always applied a restriction. Away back in 1840 the Bank of England was checked for issuing too much paper. They had to get back to gold.

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Income Tax Act
What we are facing is very serious and we should be looking into the problem. The Minister of Finance should take this question seriously. Actually I know he takes it seriously but perhaps he cannot talk freely because he moves in the International Monetary Fund circle. All right, that may be so. Along these lines I said to the president of the mining association, "Why don't you people get off your fannies and do something about gold?" He said, "Well, we have tried to do something. We tried away back when Mr. Fleming was finance minister. He went down to Washington and he got rapped so damn hard across the knuckles that no finance minister has dared to go back to Washington since then and mention gold."


Mitchell William Sharp: Mr. Chairman, I shall be brief in replying to the comments which have been made and which have carried us far beyond clause 1 of the bill. I can understand the interest and concern of hon. members in the present international crisis. I first wish to say to hon. members who have spoken that I listened most carefully to their comments. I have been much engaged in thinking about the crisis that has existed for some time and I have devoted a good deal of my attention to considering what would be appropriate action not only for this country but for the collectivity of nations.
[DOT] (5:00 p.m.)
It is a very serious problem. I have been pointing this out to the house over a period of several weeks and it is one reason why I felt it was very desirable we should proceed with the bill before us. It is also the reason for my announcing a number of other measures to be as certain as we can be that we in Canada are not a cause of disturbance and that our defences are well buttressed so that we do not get brought into the centre of this worldwide disturbance. I say this in response to remarks made by my hon. friend from Leeds who made some comments about the position of the Canadian dollar.
As I said earlier in the house, our trade position is very good, our exports are high, our imports are not rising too rapidly. We are now getting our fiscal situation into what I consider to be a sound position and it is generally recognized, as we saw the other day in a statement by the O.E.C.D., that our fiscal policies, particularly the rapidity with which we have been able to adjust them to meet a changing situation, are commended by the international community.

There is no group of nations in the world more important than those that belong to the O.E.C.D. They include all the major industrialized countries, and if they comment that the Canadian economy is strong, that the Canadian dollar is properly priced and that our policies are appropriate to the circumstances, it is a mark in our favour which is not disregarded in the markets of the world. The policies which the O.E.C.D. commended include measures of the kind which are now before us. It has been necessary for us to make it plain to the world that we are determined to maintain a sound economy, this enabling the world as a whole to look at Canada and say: There is a country whose currency is appropriate to its circumstances. I have no hesitation in commending parliament for having taken very seriously the proposals which have been put before it and for discussing today the serious international disturbances which have been engaging our attention.
A number of questions have been asked. I do not think I can answer them all to the satisfaction of the committee but I should like to say something first of all about the relationship between the Canadian dollar, the American dollar and gold. The legal position is that the Canadian dollar is established on the basis of a relationship to the United States dollar and until this relationship is changed whatever happens to the American dollar is reflected in the value of the Canadian dollar. So the sort of comment made by the hon. member for Timiskaming that we might see a 40-cent American dollar and a 60-cent Canadian dollar is not likely to be apposite. The latter at the present time is worth 924 cents United States and until this relationship is changed by Canada, presumably in consultation with and with the approval of the International Monetary Fund, the present relationship will continue.


William Arnold Peters: That relationship is artificial. We have agreed to maintain our dollar at 924 cents. But if something exceptional were to happen to the United States dollar is it not true that the International Monetary Fund could no longer support the present value of the Canadian dollar in terms of the United States dollar? I mentioned a hypothetical situation in which the United States dollar fell seriously in value. The International Monetary Fund could not maintain the present relationship in such circumstances because it would mean the virtual collapse of the fund.
March 14, 1968


Mitchell William Sharp: The hon. member is talking now about a hypothetical situation which is most unlikely to arise. The United States dollar is the principal reserve currency in the world; it is held by central banks or treasuries, in addition to gold. So one cannot devalue the United States dollar. All one can do is change the price of gold. There is no reason to think that if the price of gold were changed or if any change were made in the relationship between gold and the United States dollar this would necessarily disturb the relationship between other world currencies and the American dollar. This is the view I hold, though I cannot say for certain. The relationship is established by other factors-relative costs, purchasing power, and so on.


Thomas Clement (Tommy) Douglas: In the event the price of gold was raised substantially would this not have a serious effect on world liquidity?


Mitchell William Sharp: Yes, Mr. Chairman. This is one of the principal reasons why an increase in the price of gold is not a panacea, not necessarily the best way of dealing with the problem of expanding international liquidity. It seems to me and to other ministers of finance who have studied this question that it would be better to have a controlled increase in international liquidity rather than an arbitrary and indiscriminate increase which would come about as a result of an increase in the price of gold. The benefits of such an increase would depend on how much gold a country held, and we must remember that gold is not distributed equally round the world in proportion to the needs of various countries or even in proportion to their reserves. Some countries, such as France and Switzerland, hold a high proportion of their reserves in gold. Others, such as Canada, hold about half. The proportion varies greatly, so an increase in the price of gold would not provide additional liquidity on the basis of need.


Thomas Clement (Tommy) Douglas: How long can the United States continue to buy gold at $35 an ounce when it costs a great deal more than that to produce it?


Mitchell William Sharp: I do not like to speculate about the actions of the United States because I am not privy to their councils. As I understand it, United States policy so far has been to maintain the price of gold at $35 an ounce. I should explain that the United States is maintaining this price not only in connection with transactions between central banks which present claims on the federal reserve system
Income Tax Act
when they cash United States dollars but it has also been providing gold at the same price in the London gold market, with the result that there is one price for gold throughout the world. As many hon. members have pointed out, very large amounts of gold have been sold in the London gold market, and this is a reflection of the very serious disturbances going on in which very large amounts of gold are disappearing out of stocks into private hoards.
[DOT] (5:10 p.m.)
I shall now deal with the final question, that raised by the hon. member for Burnaby-Coquitlam about the prospects of getting some agreement and why we have had difficulty. The so-called Group of Ten which comprises the ministers of finance of the ten most important financial countries in the world, as one might say, and Canada happens to be included in that Group of Ten, have been working for some time on the creation of a new type of reserve unit. In Rio this year we approved in principle a system of special drawing rights as a supplement to existing reserves of gold and reserve currencies. It had been understood that these new reserve units, whatever they were to be, were not to be used until they were needed. One of the tests is that they would not relieve the United States of the necessity of dealing with its own balance of payments problem. This has been one of the difficult issues. There is no doubt about it that the United States has been in balance of payments difficulties for a period of years, and these have been greatly exacerbated recently by the Viet Nam war and the unwillingness of the United States to impose taxes in order to pay the cost of that war.
I hesitate to say this because I do not mean it as any reflection on the United States-they make their own decisions-but I do think we in this country have been very wise, albeit with some difficulty, in imposing the necessary taxes upon ourselves so that our finances are in good order. There is no doubt about it that one of the reasons the United States is losing gold and one of the reasons it is in balance of payments difficulties is that it has been unwilling to do what we are doing in this parliament, impose taxes so that their fiscal position would be improved. I think that is all I have to say, Mr. Chairman.


Mr. Mongrain:: Mr. Chairman, I shall be very brief. I would simply like to point out a

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Income Tax Act
few things which I think might be useful to my colleagues at this stage of the debate.
I listened patiently to all that has been said on this bill and previous measures, and I think we are facing a situation which should be clear to everyone. We are most of us speaking about a problem which we do not understand and about which we have insufficient experience. I feel it is no presumption to say that, in this house, there are perhaps not more than three or four members who have enough experience of the complexities of international finance and I think that they, who know most about that, are the ones who are asking themselves the most questions.
I say, therefore, that this is not the time to pose as experts and try to settle international or national crises, or to promote our respective ideologies, but I believe that the time has come for us to form a kind of sacred union in order to get through the present crisis. I know that, under normal conditions, it is in order for everybody to make suggestions, in our parliamentary system. But, Mr. Chairman, I think we must draw a line, especially when, in a way, our house is burning. When the house is burning, everybody lends a helping hand to put the fire out; one does not sit idly by discussing the best way of putting it out, one acts. One puts the fire out first, and then one discusses the advisability of improving one's methods.
It is in that spirit, Mr. Chairman, that last evening, although I was quite inclined to do like others and play the giddy-goat before the government and to have the satisfaction of voting against a 3 per cent surtax on personal income tax, I told myself that, in such circumstances, one had to think of the superior interests of the country instead of merely considering our electoral interests. I also thought that if we would not co-operate with the government to prevent a worsening of the crisis, those who would particularly suffer the most would again be the small wage-earners, the pensioners who would see the value of the dollar considerably decrease, the unemployed whose number would appreciably increase, the small and average businesses which would be unable to survive. I think that such considerations should have priority over the interest which could lead us to defeat the government, to launch elections and to be in a position to say: Well, it was defeated by us. But at what cost? By a worsening of a situation which could be disastrous for the country.

Mr. Chairman, I have listened to all the representations made in this house by the Minister of Finance (Mr. Sharp); I have reread the appeal made to us by the right hon. Prime Minister. I have read the comments in the press on the pathetic appeal made for the twentieth time by President Johnson of the United States, a country with which we have such close economic ties.
I have also read, in yesterday's edition of La Presse, an article in which the author of the Kiplinger Washington Letter made somber predictions concerning the future of the Canadian dollar. I have listened to the Leader of the Opposition (Mr. Stanfield) and I should like, in passing, to congratulate him on his moderation and abnegation during a debate in the course of which he could easily have demolished the government by all sorts of demagogic arguments.
In view of all this, I have said to myself: this is not the time to hold interminable discussions. This is a time for nation-wide cooperation, for what we are trying to settle is the future of the country and of our electorate. It is not a matter of knowing whether we are smarter than those in power.
In my opinion, those responsible for the future of my country are members of the government legally in power at present, and I feel that regardless of our political affiliation, we should heed the voice of our conscience and tell ourselves: It is a time for co-operation, it is a time for a sacred union in order to spare Canada a disaster. I urge all my colleagues to put an end to all unprofitable discussions on financial theories and on ways to settle national and international crises. Let us leave it to the government to assume its responsibilities. If it is wrong, we can always call it to account at the next election, but the Canadian people will not be able to blame us for having systematically caused trouble, for selfish reasons, at this critical time.


Henry P. Latulippe: Income Tax Act
reply. I demand a reply from the hon. minis- is illogical. There are even some that lend ter, provided he understood me this time:	money at 18 and 20 per cent for industrial
why is the Bank of Canada allowed to loans, to various municipalities, school manipulate the interest rate?	boards-


Some hon. Members:: Question.


Henry P. Latulippe: Mr. Chairman, the hon. member still did not understand me. This time I should like him to understand me.
I asked why the manipulation of the interest rate of the Bank of Canada was allowed? Why is the Bank of Canada allowed to increase or lower its rate?
What are the results of the increase in the rate of the Bank of Canada? The present consequence, is the imbalance of our economy. [DOT] (5:20 p.m.)


Mitchell William Sharp: Mr. Chairman, the bank rate is a reflection of conditions in the money markets. The bank rate does not make interest rates. Interest rates are determined in Canada by a variety of factors, one of the most important being the relationship between our interest rates here and the interest rates in other countries because Canada, as the hon. member knows, is one of the largest importers of capital of any country in the world. If we are to continue to have access to that capital, our rates of return must be sufficiently attractive that the money that we need for the development of the country will come here. That money cannot be provided internally; it must be provided by the external receipts which are needed to buy the goods and services which we import.


Henry P. Latulippe: Mr. Chairman, I do not have much to say about that. The answer given by the hon. minister is not very logical and I believe the manipulation of the interest rate of the Bank of Canada would not be necessary, because this permits an increase in the interest rate at the present time.
I should like to ask the hon. minister why he is not tackling the high interest rate we have at present. Why not let that rate go down? It seems to me that if the rate of interest were lowered, it would help to stabilize the economy, to lower the costs of big as well as small enterprise. It seems to me that in this way the "price" and the "money" figures could agree with one another, as they should.
Banks are lending money for housing at a 10 per cent rate of interest and I believe that


Herman Maxwell Batten: Order, please.


Henry P. Latulippe: I believe the rates of interest should go down now-


Herman Maxwell Batten: Order. I apologize for interrupting the hon. member for Compton-Fron-tenac. I recognize that up to this point the debate has been rather wide in scope. However, perhaps I might suggest to members of the committee that we confine our remarks more closely to the bill before us which deals with an amendment to the Income Tax Act.


Henry P. Latulippe: Mr. Chairman, in this case, I will simply ask the hon. minister: where does the financial system end? Does a financial system have to be a system organized for the exploitation of the community or for financing purposes?
A financial system, it seems to me, should finance the economy of a country, of all organizations, of every individual. If a financial system does not do that, it does not perform its function. The financial system certainly does not perform its task at the present time, since it does not finance the economy of the country; is fact, it exploits to such an extent the economic organizations, that the citizens are left to die of hunger, to die by all sorts of ways, on mountains of wheat. In my opinion, the financial system should be reformed, thought over and ways to do so should be found. If the means we advocate are not satisfactory to the government, let them find some other means to finance our economy and balance the budgets of the federal, provincial, municipal and school administrations.
Nothing is balanced anymore. The economy is upside down, completely unbalanced and the solutions offered at the present time tend only to raise the cost of living, create problems, impose restraints of all kinds, prevent the Canadian citizens from building and expanding their country and prevent the Canadian people from working.
Soon, all the Canadian people will receive unemployment benefits or they will depend

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Income Tax Act
on public assistance. Therefore, if the number of the citizens who work is almost inexistent in Canada, how many in this country will live?
The Minister of Finance does not find another solution at the present time, other than restricting credit and increasing interest rates. There is no alternative other than preventing the Canadian citizens from dealing with financial matters. That is the reason why we let the interest rate go up in every field, when they are already unreasonable and exorbitant. That interest rate ruins the Canadian economy. It should be lowered and brought within the reach of the citizens, but not one hon. member asks for reforms, for something for the people, for a balanced economy.
If the International Bank does not meet the needs of our country, we do not have to follow the international regulations. Our country is a sovereign country and I think that we can find other means than those suggested by the international finance which has always exploited the people. For war purposes, money is easily found, there is no talk of financial nonsense. But in peace time, we talk of financial nonsense, we accept restraints, all kind of things which are contrary to the essential needs of the people.
There is a serious problem in Canada. We should understand once for all that we must find the means to settle it, at least to enable our people to live, build and flourish. Let us see to it that our population have three meals a day and a decent house to live in. This is the reason for the existence of a government. It is the object of a financial system. It is also the duty of the Minister of Finance who has all that responsibility on his shoulders.
Mr. Chairman, the Minister of Finance is responsible for the economy of Canada. If he really wanted, he could find other means, more logical, more permanent, more appropriate to accommodate the people of Canada and enable them to live decently and honestly in their country which abounds in resources.


Frank Howard: Mr. Chairman, from listening to the speeches made on this clause I have not understood it up until now. I gather, however, that it is a relatively new departure in terms of public policy because it would permit a person to deduct the full amount of any gift made to Canada or to any agency that the Canadian parliament establishes such as the Canada Council which I presume falls

in this category. It would permit the deduction of the full amount of any gift without regard to the 10 per cent ceiling which would pertain to the type of gift a person might make to a province, and I assume that would include any municipality. Canadian municipalities are included, but in relation to the whole bill I do not know just what this means. I assume that a person can deduct gifts to municipalities and to provinces having regard to the 10 per cent ceiling.
[DOT] (5:30 p.m.)
I suggest that once the government embarked upon this course it should have also taken into account the amount of municipal land taxes that individual home owners pay. It has been advanced by the President of the Treasury Board and his predecessor that municipal taxes represent one of the greatest costs to individuals who want to acquire homes. This can be related directly to the cost of services.
Taxes in Ottawa range from $400 to $500 for homes valued in the neighbourhood of $16,000 to $18,000. It seems to me that municipal taxes of this kind are involuntary gifts to municipalities. It may not be that the minister when drafting this bill had in mind that a person would be able to deduct municipal taxes as gifts. He shakes his head and smiles. I gather he did not intend that interpretation. This was obviously an oversight on his part. We invariably find that the greater burden of taxation is carried by individuals in the lower income bracket.
Another factor to be considered is the high rate of interest on mortgages. These rates have increased very sharply in the last few years. This is the direct result of government action, and a larger bite is being taken in this way out of the income of the individual. Not long ago a motion appeared on the order paper dealing with this matter. It suggested generally that there should be some relief for those people who have to pay land taxes. It would seem to me that by allowing home owners to deduct municipal taxes in the same way as gifts these people would be treated more fairly than they are at this time.
As I read this clause I cannot think of anybody who would be able to take advantage of the tax relief. No one I know is sufficiently affluent to be in a position to make gifts to provinces, the federal government or an agency thereof.


An hon. Member:: You don't know the right people.
March 14, 1968


Mr, Howard:: 
Mitchell William Sharp: Mr. Chairman, as I explained in reply to the hon. member for Carleton, all this clause does is extend to gifts to the crown in right of the provinces the same treatment as has been accorded until now to gifts to the crown in right of Canada. I can assure the hon. member that since I have been Minister of Finance I have looked several times at the proposals that have been made that taxes on property or interest on mortgage debt should be deductible from taxable income. I have never been persuaded that this was particularly equitable and I was confirmed in this view by the views of the Carter commission, with which my hon. friend's party is apparently in very close agreement.
The members of that commission, after investigating these very proposals, came out very strongly against them on the ground that it was not equitable as between home owners and tenants, and so on. Indeed, the Carter commission almost recommended that the imputed rent on owner-occupied houses should be subject to tax. They wanted to move the other way altogether and tax home owners even more than they are now taxed. This is the view the Carter commission came to. I mention this as further evidence that it is a very arguable proposition whether it is equitable to deduct either property taxes or mortgage interest.
In my case, one of the reasons I live in a house that I own rather than an apartment is

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Income Tax Act
that it really pays me because I do not have to pay tax on imputed income. Perhaps I should, but I certainly should not be permitted, I think, to deduct from my income the taxes I pay and-well, I do not have a mortgage but if I had, the interest on the mortgage.


Frank Howard: You are lucky not to have a mortgage. How did you reach that stage? It is interesting that the minister has finally found something in the Carter commission report to which he can attach himself. It is obviously a peculiarly isolated attachment to one aspect only of the Carter commission report. As I understand it, the proposals of the Carter commission related to a total picture and a total package. The commission did not consider land taxes in isolation and look at them all by themselves. What is required is that we look at the total tax structure as it has grown up in Canada. This is what the Carter commission did and it came to a number of conclusions with regard to that total picture.
The commissioner was considering the total picture of the tax structure in Canada when he talked about the favouritism that exists in the tax structure with respect to a number of industries in this country. The commissioner also came to the conclusion that we should consider a dollar of income as a dollar liable to taxation. It was in this context that the Carter commission made its report. Therefore the fact that the minister extracts from the report of that commission a particular view with which he happens to agree does not in the total sense, I think, make that view invalid and it does not give him grounds for advancing it as a reason for disregarding or discarding the concept about which we are talking.
If I own a home and rent a room or own an apartment block and rent apartments I can deduct for taxation purposes the expenditures incurred by me in running whatever business I am running, whether it is renting one room or renting a whole apartment block. Included in these expenses are land taxes. It is quite true that in this sense the corporation that owns a block of apartments or the individual renting a suite extracts from the tenants sufficient money to help pay the total bill and leave a profit. But the tenants do not receive any consideration in their rent because the individual who owns the building is able to deduct the amount he pays in property taxes and on maintenance and the like. The owner of the house or apartment block can deduct these things from his tax bill.

The minister did not say that our point was invalid; he said it was arguable. I submit that he cannot reject it with any validity, and any reasonable assumption that anybody will accept his rejection, on the basis that he has taken from the report of the Carter commission one or two paragraphs simply to substantiate his point of view, unless he is willing to accept the whole of the report of the commission. I say this because the report of the Carter commission was a package proposition. All I can read into the minister's remarks is that once again here is an indication that the interests of the average wage earner, the only person who cannot escape the payment of income tax, have been disregarded.


Some hon. Members:: Carried.


William Arnold Peters: Mr. Chairman, I am pleased to see so many Liberals in the house this afternoon and to find that they are still vocal. I would like to comment on the first clause of this bill. I thought I had spoken on it earlier but found that what I said bore no relationship at all to the clause under discussion. When I read the clause I was not only surprised to find that but also to find that donors would be allowed to make gifts to a province and deduct the amount of their gift from their income for tax purposes. Like the hon. member for Skeena I was shocked that anyone would feel inclined to make such a gift.
The minister in his explanation pointed out that this provision included a number of agencies of the federal government that are now being supported, at least partially, by gifts of this kind. I presume the minister was referring to federally sponsored research, probably some forms of the arts, the Company of Young Canadians and similar agencies which are accepting gifts in this way. I ask the minister how he justifies this provision. I do not know when the provision was passed, although I have looked at a number of the amendments to the act.
I presume the minister is aware of the amount of money being donated to the federal government by individuals and corporations. I am sure the minister has studied this matter because for the past few weeks he has been telling us that the government needs more money. This is obviously not a way in which to get more money. It is a way to allow a redistribution of money. In this case it is putting money into the provincial rather than the federal field. Perhaps there should be a
March 14. 1968

Income Tax Act
discussion of the relationship of this provision to the federal and provincial fields. I should like to know whether the minister has considered with the provinces the kind of dispensation there should be in respect of these gifts, and why this amendment does not include those responsible agencies of the provincial governments which should receive gifts.
[DOT] (5:50 p.m.)
In the province of Ontario, and particularly in the districts and unorganized townships of northern Ontario, there is what is called a land tax. This is not what the hon. member for Skeena referred to. This tax, which is collected by the department of lands and forests, is no better than a gift because we receive absolutely nothing in return for it. It is imposed on non-agricultural land held by an individual. In theory the government, in return for the tax, is supposed to provide fire protection. I wonder whether the minister considers that this land tax, which is really a gift, is subject to the provisions of the bill.
I should like to know why, when we are being asked to pass this amendment, we are not provided with a list of acceptable organizations in the provinces. I am not likely to be in the financial position to make donations to the University of Toronto but there are two or three people in my riding who may be rich enough to do that and take advantage of the income tax exemption. They may find that subclause 2 will allow them to include part of that donation in next year's income tax returns.
I can see the cancer society in the province of Ontario being supportet by donations from estates. There is a growing desire on the part of many families to request contributions in money rather than floral tributes. The minister appears to be giving a carte blanche cheque to anyone who wishes to make a donation to any of the provincially sponsored charities, unless he limits the number of those charities. The provision would also mean that if the government wanted to set one up it could be set up specifically for this purpose. Of course there may be regulations with respect to the provision but I wonder why hon. members seem to be so impatient to pass this amendment without knowing what it relates to.
I have always been concerned about amendments which do not state what they intend. In this case, whom will this amendment affect? I suggest that the minister may be giving away a considerable portion in
taxes to the provinces and the result could be a loss of income to the federal government which he may not have fully anticipated. I am certainly not implying that his officials have not considered this matter but I think members of parliament should have some say as to the organizations to which tax free gifts can be made. I believe that a list of them should be attached as a schedule to the bill.


Mitchell William Sharp: To satisfy the hon. member may I say that Her Majesty in right of Canada is of course the government of Canada or any agency that is designated as an agency of the government. It does not apply to anyone else. This applies similarly to the provinces. Whatever agency it may be, it must in fact be the province or an emanation of the province. It cannot be a mixed corporation. It must be an agency that is the same as the provincial government or an aspect of it.


William Arnold Peters: May I ask a question with respect to the example which I used of the University of Toronto? Certainly the Ontario government controls and operates it, with outside assistance. Would this provision apply to a donation to the University of Toronto?


Mitchell William Sharp: No, Mr. Chairman, it would be treated as a charitable donation which under the act would be subject to the 10 per cent limitation.


Frank Howard: Mr. Chairman-


Some hon. Members:: Filibuster. Shame.


Frank Howard: The hon. members who are now yapping may not be concerned about the income of the federal government, but I have some questions to ask of the minister.


Mr. Barnett:: We might not be in this position if some of these gentlemen had been here on February 19.


Frank Howard: Yes, but the fact is we are here and the minister has presented a bill to the house asking parliament to approve a provision which will reduce the income of the crown. Could the minister give us his estimate of the loss of income or the difference between last year's and this year's income as a result of this provision?


Mitchell William Sharp: I do not think this will have an appreciable effect upon revenues. The purpose is to encourage those wealthy individuals, who might otherwise be tempted to give their donations to United States art galleries and so on, to give them, for example, to the

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Income Tax Act
province of Ontario as part of their art collection, as well as to the national gallery. The effect upon the revenues is infinitesimal. I do not think there is a sufficient number of these wealthy individuals with art collections or with material of this kind which they would wish to donate outright to the crown, whether in right of Canada or in right of a province.


Frank Howard: It would seem to me, since there is no limit, that this is all the more reason why centres of education should be included under the provision so as to attract greater contributions from these wealthy individuals instead of imposing the 10 per cent ceiling. Would the inclusion in this clause of centres of higher learning such as the University of Toronto or the University of British Columbia, so that gifts to them would not be subject to the 10 per cent ceiling, be considered by the minister as an acceptable amendment?


Mitchell William Sharp: I do not think it would be advisable to go that far. The hon. member knows there are many institutions which would demand the same treatment. This would have a serious effect upon the revenues and I think would give relief to people to whom there is no intention of giving relief under this legislation.


@Deputy Chair(man)? of Committees of the Whole: Shall clause 1 carry?


Some hon. Members:: Agreed.


[Stage Direction]
Clause agreed to.
On clause 2-Corporations.
Frank Howard: Mr. Chairman, I recall that with respect to a similar clause in a previous bill the minister indicated he anticipated an additional revenue of $240 million. Is that still the situation?


Mitchell William Sharp: Yes, Mr. Chairman. The amount is approximately the same. There is some difference as a result of the change in the schedule of payments but the addition of the 3 per cent surtax makes it all up. So we are expecting about $240 million.


Frank Howard: Does that $240 million not include the 3 per cent corporate sales tax?


Mitchell William Sharp: I have delayed in answering the hon. member for Skeena because I wanted to be accurate in my answer and was looking at my notes. The new pattern will result in some companies not making as many payments in the 1968-69 fiscal year as they would have

under the schedule in Bill C-193, but this is almost exactly offset by the fact that the payments which are made will be greater by reason of the 3 per cent corporation surtax. But of course within a few weeks or months they would be paying some more, so there is no relief in the total amount of the speed-up. It just comes in at a somewhat different time.


Frank Howard: Do I understand that the income from this amount is really income which in previous years has been paid as arrearages rather than in the current year?


Mitchell William Sharp: No, Mr. Chairman. As I
explained once before when the previous bill was under consideration, what we are doing now is dealing with the corporation tax on a more up to date basis closer to the way in which individuals pay their tax. The result is that in this next year we will be getting from corporations another $240 million that they will never get back. This is an addition to our revenues. It is an additional amount that corporations must provide to us. The only condition under which they would ever get it back would be if they went out of business.
[DOT] (6:00 p.m.)


Frank Howard: Mr. Chairman, when I used the word "arrearages" I did not use it in the sense that the deadline for paying these arrearages had been passed, in other words, that the corporations had been permitted to drag on into subsequent years payment of taxes for a previous year and all that was being done was updating the payment. In this case it is not additional money; it is merely compressing the first year's payment into a shorter period of time and carrying on in that way in the future.


Mitchell William Sharp: Mr. Chairman, so there is no doubt about this-this is a point about which there does appear to be some misunderstanding-the corporations will be required to pay $240 million more taxes than they would had we continued under the old schedule. As confirmation of that, when we put individuals on a pay as you go basis some years ago we forgave the amount of the additional liability. In fact this is an additional imposition on the corporations which they never retrieve unless they go out of business.


@Deputy Chair(man)? of Committees of the Whole: Shall
clause 2 carry?


Mr. Cowan:: No, Mr. Chairman. I waited for the question asked by the hon. member for
March 14, 1968

Skeena and I rose the minute that the minister had answered the question. We are now on clause 2 of Bill No. C-208. Shall I call it six o'clock?


@Deputy Chair(man)? of Committees of the Whole: Order. It being six o'clock shall I rise, report progress, and ask leave to sit again later this day?


Some hon. Members:: Agreed.
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Speaker:: Order. It is my duty, pursuant to provisional standing order 39A, to inform the house that the questions to be raised at ten o'clock tonight are as follows: the hon. member for Winnipeg North Centre (Mr. Knowles), Income Tax; the hon. member for Carleton (Mr. Bell), Public Service; the hon. member for Northwest Territories (Mr. Orange), Northern Affairs.
It being six o'clock the house will now proceed-


Frank Howard: Mr. Speaker, before you call
the next order, there has been some conversation among members and I have a suggestion to make that may meet with the consent of the house. It is that the house make an order that in the consideration of private members' business the house take only that period of time during the hour that is necessary to deal with and dispose of item No. 1, which is Bill No. C-105 relating to Rainbow Pipe Line Corporation, and that having concluded our disposition of the bill the house then adjourn for supper.


Mr. Speaker:: Is that agreed?


Some hon. Members:: Agreed.


Mr. Speaker:: It being six o'clock the house will now proceed to the consideration of private members' business as listed on today's order paper, namely notices of motions (papers), private bills, public bills.



PRIVATE BILLS


[Stage Direction]
On the order:
House again in committee of the whole on Bill C-105. an act to incorporate Rainbow Pipe Line Corporation (Without Amendment)-Mr. Orange.
27053-481 i
Income Tax Act
Robert John (Bud) Orange: 


Mr.   Speaker-Mr. Speaker@: Do I understand that the hon. member for Northwest Territories is asking for the floor before we read the order for the house to go into committee of the whole?


Robert John (Bud) Orange: Yes, Mr. Speaker. I have a point of order. In view of the fact that this bill will not be passed by the house because the sponsors of the bill are not prepared to make any amendments, I ask leave of the house to withdraw the bill from the order paper.


Mr. Speaker:: The hon. member for Northwest Territories has moved that the said order be discharged and that the bill be withdrawn. Is that agreed?


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


Mr. McNulty:: Mr. Speaker, I believe there is unanimous agreement to rise now until eight o'clock.


Mr. Speaker:: Is that agreed?


Some hon. Members:: Agreed.


Mr. Speaker:: Perhaps it would be more orderly if we resumed in committee of the whole so that business can continue at eight o'clock.



INCOME TAX ACT


[Stage Direction]
The house resumed consideration in committee of Bill No. C-208, to amend the Income Tax Act-Mr. Sharp-Mr. Batten in the chair.
Herman Maxwell Batten: Pursuant to special order I do now leave the chair.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
Herman Maxwell Batten: Order, please. House again in committee of supply on Bill C-208 to amend the Income Tax Act.


Ralph Bronson Cowan: Mr. Chairman, when the committee adjourned I had taken the floor to ask a question of the Minister of Finance. He is

March 14, 1968
Income Tax Act
not here at the moment, therefore I am willing to put my question to the Minister of National Health and Welfare regarding clause 2.
I maintain that clause 2 of Bill C-208 is the same as clause 4 in Bill C-193 which was disposed of by this house on February 19. In citation 163 of Beauchesne's fourth edition you will find authority for the proposition that mere alteration of the words of a question without any substantial change in its object will not be sufficient. I would ask the Minister of National Health and Welfare if he will outline to me what the substantial change is in clause 2 of Bill C-208, as compared with clause 4 of Bill C-193 which was disposed of.
The expert who was authorized by the cabinet to write explanatory notes on Bill C-193 described clause 4 this way:
This amendment would require corporations to pay their corporation income tax over a period which commences two months closer to the beginning of their taxation year than at present.
He continues on for more paragraphs. The gentleman who wrote the explanatory note for clause 2 in Bill C-208 wrote about clause 2:
This amendment would require corporations to pay their corporation income tax over a period which commences two months closer to the beginning of their taxation year than at present.
Those are exactly the same words as in Bill C-193, and the explanatory note continues on for quite a few paragraphs, exactly the same as the explanatory note in Bill C-193. I am simply following in the steps of the Minister of Finance who yesterday asked the Leader of the Opposition-he said he was not doing so by way of personal needling-for the full gist of his argument. I am asking to get the full gist of what the cabinet meant in bringing in a bill which, as I said yesterday, strikes me by its resemblance in clause 2 to the former clause 4 in Bill C-193. May I have a detailed explanation as to the difference which makes it possible to bring that bill forward despite citation 163 in Beauchesne, which says:
-without any substantial change in its object-


Some hon. Members:: Question, question.


Ralph Bronson Cowan: Mr. Chairman, the Minister of Finance has finally come in. As I said, I would be happy with an explanation by the Minister of National Health and Welfare. If he does not wish to give an answer I should like to speak a little further. If he does not

intend to answer my question I should like to speak further now.


Mitchell William Sharp: Mr. Chairman, there are differences between this clause and the similar clause in Bill C-193. These differences relate to the time of the payment of the instalments of taxes in order to make up the moving forward of the tax. These represent, I believe, some fairly substantial changes and I remember that His Honour, when he was dealing with the bill, recognized this and took exception to four other clauses in the bill which were the same. On that basis I reintroduced this bill, which is Bill C-208. It was my understanding that he did not take exception to this clause as being the same as the clause in the previous bill. That, I understand, was His Honour's ruling and I do not think, Mr. Chairman, that I can say anything more.


Ralph Bronson Cowan: Mr. Chairman, I would ask the Minister of Finance where the difference is when, under Bill C-193, by making ten monthly payments you end up in exactly the same place as you get to under Bill C-208 by making five bi-monthly payments. You end up in exactly the same place, in exactly the same amount. How does this fit in with "without any substantial change in its object"?


John Robert (Jack) Nicholson: Mr. Chairman, on a point of order, Mr. Speaker has already ruled on these questions. Surely, this is purely an academic question at this stage.


Mr. Ricard:: It is a new bill.


John Robert (Jack) Nicholson: After hearing arguments from all sides of the house Mr. Speaker made his decision. He pointed out that there were differences in certain sections of the new bill before the house and none in others. Surely it is academic to be entering into further discussions, to be asking questions at this time and attempting to sit in judgment on the Speaker of this house.


Mr. Teillel:: That is right.


Some hon. Members:: Hear, hear.


Ralph Bronson Cowan: That's the spirit, boys. Don't wait for the argument. I have deliberately not mentioned Mr. Speaker's name or brought him into the discussion, but it was he who suggested to me to raise this point during argument on the bill.


An hon. Member:: I doubt that.
March 14, 1968


Ralph Bronson Cowan: Thank you. I will repeat that again. The Speaker himself suggested to me that I could raise the point during argument on the bill.


Eldon Mattison Woolliams: That must have been told to you confidentially.


Ralph Bronson Cowan: I did not bring the matter up tonight-


Eldon Mattison Woolliams: Man, oh man.


Some hon. Members:: Question.


Herman Maxwell Batten: Shall clause 2 carry?


[Stage Direction]
Clause agreed to.
Clause 3 agreed to.
On clause 4.
Mr. Orlikow:: I intend to oppose this clause in the same way as we have opposed every suggestion by this government and this minister to raise taxes at this time. Obviously, for 1968 the minister is proposing solutions for Canada's economic troubles that have been proposed by practically every government since the 1920's, when the economy has been in trouble. Those solutions failed then and, inevitably, this solution will fail now.
The minister says that the way to cure our ills is to increase taxes and decrease the purchasing power of the Canadian people. Inevitably that must lead to greater unemployment. Deliberately the minister is following policies that will foster greater unemployment.
Recent figures released by the Dominion Bureau of Statistics relating to the Department of Manpower and Immigration prove that what we said a few months ago, when the minister first made his proposals, has come true. For the benefit of committee members I shall read these figures, contained in an article which appeared in todays Ottawa Journal:
Unemployment in February rose to 482,000, up 18,000 from January, and represented 6.4 per cent of the labor force, highest level since March of 1964 .. .
The February unemployment figure was 86,000 higher than the same month of last year ...
The February percentage of unemployed, 6.4, compared with 6.1 per cent in January and 5.4 per cent in February of last year. Two years ago the February rate was five per cent.
The increased personal and corporation taxes undoubtedly will increase the numbers of unemployed. An examination of the regional figures shows what difficulties we are heading into. In the Atlantic provinces 67,000 in
Income Tax Act
February were unemployed. In Quebec, 179,000 were unemployed early this year; in Ontario there were 130,000, on the prairies 48,000 and in British Columbia 58,000.
[DOT] (8:10 p.m.)
What the minister has done can bring comfort to only one group of people in this country, that is, the forces of Quebec which are looking forward to separation. If unemployment in Quebec continues to rise at its present rate, what better argument could be advanced that federation cannot meet the needs of that province? Unemployment is rising everywhere and the policies the minister is following will make the situation even worse.
Opposition to what the minister is doing has come from many sources. Last month the Canadian Labour Congress and the Confederation of National Trade Unions made their annual submissions to the government. While these two organizations have differences about such matters as Bill C-186, their submissions with regard to economic and social matters are remarkable in their similarity. I wish briefly to put on record what the Confederation of National Trade Unions had to say in this respect. I quote this union rather than the Canadian Labour Congress because of the close association which some of the ministers opposite have had and perhaps still have, with that organization.
After all, the brother of the Minister of Forestry and Rural Development was the secretary of the Confederation of National Trade Unions, and the Minister of Manpower and Immigration was president of that confederation before he came here as a cabinet minister. I see the Minister of Forestry and Rural Development in his place. I wish to put on record what that confederation has said, because it bears directly on the proposals we are discussing today. The report I have here, which I shall summarize, states:
The Confederation of National Trade Unions advocated yesterday stimulation rather than restraint of the economy, which it described as socially anarchic. The C.N.T.U. urged the recreation of a prices board and institution of some of the main proposals of the Carter royal commission on taxation.
Sprinkled liberally throughout its annual presentation to the cabinet were suggestions that the government is creating a situation where the rich are getting richer and the poor getting poorer.

March 14, 1968
Income Tax Act
I will come back to that point in a few moments. The brief continued, according to this press report:
The fine promises of a great society which lit up the eyes of the population seven or eight years ago and preserved among the masses a spark of friendship for the system governing us have had hardly any follow-up.
The brief urged implementation of the Carter commission's recommendations that capital gains be taxed, corporation and personal income taxes be integrated and that a progressive tax rate be instituted.
I find this interesting because the Minister of Finance has on a number of occasions been highly critical of members of this group who have urged the implementation of the Carter commission recommendations. He has sought to create the impression that in doing so we were advocating a course contrary to the best interests of the working people of this country, a charge we have consistently denied. The briefs submitted by the Confederation of National Trade Unions and by the Canadian Labour Congress, both endorsing the basic proposals of the Carter commission and urging the government to implement them now, show clearly the line taken by these organizations which between them represent almost two million Canadians who work for wages.
Instead of doing this, the minister tells us that because we are in financial difficulties a surcharge of 3 per cent on personal income tax must be levied, accompanied by an increase in corporation taxes. Rather than implement the Carter commission report the hon. gentleman is penalizing those who are already paying more than they ought to pay. At the same time he allows those corporations which are in the select group of resource based industries to get away scot free, as they have all the time.
In addition, the minister and the Prime Minister have sought to create the impression that the reason for our difficulties at the present time is that we have permitted wage increases which are unreasonably large, in excess of the ability of the economy to stand, more than the increase in our productivity justifies, and so on. The Prime Minister said in his speech-and I quote from page 7 of the press release giving the text:
Corporation profits, which in the early years of expansion had risen strongly to relatively high levels, have, however, declined significantly in the course of the past two years.
That is true. But I wish that in the years when corporation profits were high, back in

1965 and 1966, we had heard from the Prime Minister, as well as from the president of the Bank of Canada, Mr. Rasminsky, who has also been making appeals for restraint lately, appeals directed to the corporations along the lines of those we hear today directed to workers and trade unionists urging them to exercise restraint and common sense.
One example of the inability or refusal of the government to urge restraint on those who ought to show it is the case which came up a couple of months ago when first Noran-da Copper, then International Nickel and Hudson Bay Mining increased the price of copper by more than 25 per cent. Members of this party raised the matter with the Minister of Finance who promised to look into the situation.
He did so, and eventually we got a statement from the Minister of Trade and Commerce in which the hon. gentleman explained that world prices of copper had risen to such an extent that a 25 per cent increase in prices in Canada by the companies I have mentioned was actually quite moderate. The fact is that the profits of those private companies have never been as high as they are at the present time. But they did not feel called upon to exercise any restraint. After all, there is a war on in Viet Nam, there is a fantastic demand for copper, there is a copper strike in progress in the United States, removing domestic producers in that country from the picture, so why not get all the market will bear? Accordingly they raised their prices by more than 25 per cent. And what did the Minister of Trade and Commerce say, speaking for the government? The increase, he told us, was quite a reasonable one and the companies were acting reasonably.
In the face of this attitute I suggest that the proposal of the government for the establishment of a board to look into prices and, I suppose, into wages-certainly not into profits, because it would be too much to expect this government to appoint a board to look into exorbitant profits made by corporations-will prove as useless and as fruitless an effort as most of the measures the minister has put forward.
[DOT] (8:20 p.m.)
We intend to vote against this tax bill because we believe that increased taxes at a time of increasing unemployment will make the situation worse rather than better. If we want to use the resources of Canada in manpower and materials to meet the need for
March 14, 1968

homes, schools, hospitals and recreation centres we should not increase taxes, rather we should cut them.
I have another reason for voting against this tax proposal. Indeed it is my intention to vote against any proposal made by the government to increase taxes, as long as it refuses to face up to the need to wipe out the tremendous inequities in our taxation system. If we had an equitable taxation system the special interests in this country such as the mining companies, the insurance companies and the trust companies would be paying tens of millions of dollars more each year in taxes than they are now paying.
These special interests have done a wonderful job in confusing the Canadian public. According to them one would think the Carter commission was a group of wild eyed socialists who had no experience with business, who know nothing about the tax system or about anything else. The facts are the exact opposite. The Carter commission was appointed in 1962 by the Conservative government under the leadership of the right hon. member for Prince Albert. Mr. Kenneth Carter was a former director of the Canadian Tax Foundation. The commission hired a large staff of competent, well trained experts who spent about three years making their studies. The study cost $3J million, and the report has been greeted with approval by everybody except the Minister of Finance and the special interests who, it seems to me, he is here to represent and to defend.
The Carter commission on taxation found that essentially Canada has an unfair tax system. It found that billions of dollars of income are escaping tax altogether, or enjoying tax privileges which make the burden of taxation on the rest of the people of Canada that much greater. It recommended lower taxes for income groups making less than $10,000 a year, and higher taxes for those making over $10,000 a year, and taxes for persons making capital gains. The commission's recommendations would have benefited 95 per cent of the people of Canada. Conversely they would have hurt the 5 per cent who get special privileges under the present tax system. Naturally we heard ad nauseam from the 5 per cent as to the inequities and iniquities in the proposals of the Carter commission.
While these special interests represent only 5 per cent of the people of Canada obviously they have the ear of the Minister of Finance and of the government because the minister has found innumerable reasons to ignore the
Income Tax Act
commission's recommendations and to refuse to implement them, saying that further study is needed, and going into great detail about the difficulties of implementing the recommendations. In my opinion, as long as we have this minister and this government in office it is unlikely that the Canadian people will see the Carter commission's basic recommendations implemented.
What did the Carter commission find out? As I said a moment ago, it found out that the present taxation system does not afford fair taxation for all Canadians. It found that the present tax structure has led to Canadians being less well off, through the lack of goods and services that could be provided by more efficient use of labour, capital and natural resources. It found that compliance and collection costs have been needlessly raised by duplication in provincial and federal administrations; and that the federal tax administration is open to political influence. I will come back to that point in a moment, Mr. Chairman, when I examine the reason why the government has not yet implemented a capital gains tax.
The commission also said:
We are fully aware that these conclusions constitute a severe criticism of the present tax system. They were not arrived at lightly nor are they the result of pre-conceived opinions.
Whenever conflicts arose in our proposals-they were reconciled in favour of equity.
We are convinced that preserving and developing the system by scrupulously fair taxes must override all other objectives.
With respect to the privileged groups that I have mentioned, it recommended that mining companies should have their depletion allowances removed. It pointed out that 85 per cent of the benefits of such allowances go to only eight oil and mining companies, most of which do not need this incentive. Removing these exemptions would provide a minimum of $150 million a year to the treasury. Mr. Chairman, that is the 1964 calculation, and I suggest that the 1968 calculation would show an even greater amount.
The commission found that the uranium industry, in its existence up to 1964, on an investment of just one quarter of a billion dollars made a profit on that investment of over $250 million, or 100 per cent, but that it paid only $30 million in taxes. I remind hon. members of the comments of my colleague, the hon. member for Sudbury, who pointed out that the uranium industry left individual miners in Elliot Lake to carry the burden of

March 14, 1968
Income Tax Act
paying for homes, when they had no jobs left. The industry left the local municipality with the cost of paying for services, for lights, sewers and schools that had been built, in expectation that it was a permanent industry. The industry itself got off scot free.
The commission pointed out that in 1964 revenues to Canadian insurance companies exceeded expenditures by $90 million, including policy dividends and increases in reserves. Income tax was paid on only $5 million of that amount, and amounted to $2 million. At the same time Canadian insurance companies, with about 30 per cent of their business abroad, paid $13,800,000, or six times as much, to foreign governments. Foreign companies paid no income tax on a comparable amount of insurance sold in Canada. Had the prosperous insurance companies been taxed on the same basis as other corporations, in 1964 they would have paid $77 million instead of $2 million.
This is the kind of tax system which apparently the minister wants to perpetuate, and in order to do so he is asking hon. members to approve an increase in personal income tax that will affect every taxpayer in Canada, an increase of 3 per cent, and an increase in taxation on corporations which are already paying their fair share of taxes. The minister is doing this in order to continue the completely despicable system of permitting oil, mining, and insurance companies to continue paying virtually no taxation at all.
[DOT] (8:30 p.m.)
I pointed out recently that the Pine Point operation owned by Cominco in three years made a profit of over $80 million, and because of the three year tax free period will not pay five cents in taxes on that money. I think it is ironical that the railway which was built in order to bring the ore out of the Pine Point mine was built by the C.N.R. I presume it was financed in the usual way by the government of Canada borrowing money on which interest must have been paid.
The Carter commission recommended that all income be taxable. If one strips away the technical language in the report this would seem to mean that income from stocks options should be taxable, that gifts should be taxable, and that income of any kind whether in the form of unemployment insurance payments, compensation payments, sickness benefits, and so on should be taxable. Of course we are told that the workers do not wish to pay a tax on these items. No one wants to pay taxes.
[Mr. Orlikow.l
I suggest, Mr. Chairman, that the amount of tax a worker would pay on unemployment payments or compensation would not be very much. This would be a small price for the ordinary worker to pay, if as part of the package the corporations paid their fair share of taxes, if those engaged in profiteering paid a fair share of the taxes and if those engaged in gambling and games paid a fair share of the taxes. Many people would not like to pay these taxes, but if we went along with the other proposals of the Carter commission which would benefit the bulk of the Canadian people they would be very happy to pay taxes on these items which I have mentioned.
The Carter commission recommended that block tax credit be given for secondary education costs and that a capital gains tax be applied to property. The commission also recommended that there be limits on expense account living. One cannot go into any expensive restaurant any day of the week in the cities of Montreal, Ottawa, Toronto, Winnipeg, Calgary or Vancouver without seeing a large number of people eating expensive lunches which are paid for almost completely by the people of Canada, because these lunches are charged to the cost of doing business.
The Carter commission also recommended taxation of families as units, with a provision for averaging year to year income fluctuations over a five year period. I have mentioned some of the recommendations contained in the Carter commission report. This party and other organizations, as well as individuals, have been calling on the government to implement these provisions. The government has refused to do this. This is not surprising when one realizes what this means to certain important industries. The mining industry on the basis of 1964 figures probably would have paid taxes on an additional $130 million or $150 million per year. Naturally the mining industry is opposed to the implementation of the Carter commission report. Unfortunately the minister seems to have listened to those engaged in that industry. The insurance companies would have paid taxes on profits of $90 million but they paid a tax on less than $5 million.
I think it is scandalous that the minister has refused to bring forward the slightest hope that the government of Canada would follow the example of virtually every other country in the western world in implementing a capital gains tax. I should like to place on the record the views in this regard of a man
March 14, 1968

Income Tax Act
who certainly cannot be called a wide eyed radical. I am speaking of Mr. Douglas H. Fullerton who has made his mark through the work he has done while serving on various commissions, having been appointed by former Liberal governments.


Herman Maxwell Batten: Order. I must interrupt the hon. member to advise him that the time allotted to him has expired.


David Réal Caouette: Mr. Chairman, before we proceed any further in the debate I have a question which I should like to ask of the minister.


Mitchell William Sharp: Mr. Chairman, before the hon. gentleman asks his question I think perhaps I should inform members of the committee who are not aware of it that there have been some very dramatic developments this evening which affect the international money markets. I am not fully aware of what these developments are, but there has been a change in the rediscount rate in the United States. I gather also that the gold market has been closed in London and there is some talk about a bank holiday. I thought I should so inform the house and ask that if possible we complete the work in the committee stage. I will have to engage in some urgent consultations with my officials to determine what action this country should take under the circumstances.


David Réal Caouette: Mr. Chairman, this is exactly the question I had intended asking the minister. I wondered whether the fact that tomorrow will be a bank holiday in Great Britain would affect the Canadian situation.


Murdo William Martin: Mr. Chairman, I wonder whether the minister could possibly answer another question. Although I have heard this secondhand, I understand an announcement has been made that the United States rediscount rate has been increased. Will that mean that this country will have to follow suit tomorrow?


Mitchell William Sharp: It is exactly considerations of this kind which I should like to have an opportunity to discuss with my advisers. There obviously has been a very dramatic development in the last few hours. I hesitate to make off-the-cuff statements under these circumstances.
[DOT] (8:40 p.m.)


Stanley Howard Knowles: In the light of the statement the minister has made, I wonder whether it would not be advisable for us to suspend the 27053-482
discussion of this bill tonight and let the minister have his consultations without the pressure of having to sit here.


Some hon. Members:: No, no.


Stanley Howard Knowles: I offer that suggestion, but if it is not acceptable there are a few things some of us still want to say. Is the minister at all interested in having this discussion suspended and the house dealing with something else tonight?


Mitchell William Sharp: Mr. Chairman, I would naturally prefer to get through the committee stage. It is not our intention to proceed with third reading tonight, so there will be another opportunity for members to say something about the bill in principle. I believe it would also be very helpful under these circumstances if the house were to take action approving the bill at committee stage.


Robert Lorne Stanfield: We do not want to cut anyone off, but we are prepared to proceed with the matter.


Stanley Howard Knowles: Mr. Chairman, first of all, it may seem like coming from the sublime to the ridiculous to raise a very minor point about the wording of this clause, but I am sure the minister would like, before he gets through with it, to have the wording of this bill correct. The proposed new part 1A, section 104A(1) in clause 4 reads as follows:
Every individual liable to pay tax under part I for a taxation year shall pay a tax for the year equal to 3 per cent of the amount by which its tax payable under part I by the individual for the taxation year exceeds $200.
When I first looked at that I wondered why the taxpayer was being referred to as "its". Perhaps that is the way the minister thinks of the taxpayer, as an "it". In spite of the fact that my French has not even reached the lousy stage yet, I have looked up the wording in the French version and if I understand it correctly, instead of "its" in line 32 it is "the".


Mitchell William Sharp: Mr. Chairman, I thank the hon. member. Apparently a slip was made in the drafting which was not noticed. If you look at new subsection (2) you will see that the "its" refers to corporations which are usually considered as being neuter, whereas individuals are not. The word should be "the".


Stanley Howard Knowles: I have the amendment written out if the minister would like it.


Mitchell William Sharp: Thank you very much.
7S48

March 14, 1968
Income Tax Act


Stanley Howard Knowles: Mr. Chairman, would you like to deal with this small change before we continue? I offer an amendment to the minister which reads:
That the word "its" in line 32 on page 3 of Bill No. C-208 be changed to the word "the".


Mitchell William Sharp: Mr. Chairman, may I say that this is not a vote of confidence.


Stanley Howard Knowles: In the minister or in me?


Robert Jardine McCleave: Mr. Chairman, I think it is either section 3 or 4 of the Bill of Rights which requires the Minister of Justice to consider carefully every piece of government legislation that comes before us. I suggest he must take his share of the blame for this lousy English.


Herman Maxwell Batten: Shall the amendment carry?


Some hon. Members:: Carried.


[Stage Direction]
Amendment agreed to.
Stanley Howard Knowles: Mr. Chairman, I should like now to say a few words about the clause as amended. I need not take time to emphasize the position that we in this group have taken, to the effect that in our view this surtax ought not to be imposed. We shall therefore be voting against clause 4 of this bill. However, Mr. Chairman-


Some hon. Members:: Question, question.


Herman Maxwell Batten: Order, please. The hon. member for Winnipeg North Centre has the floor, and I suggest that members of the committee ought to afford him the ordinary courtesy.


Stanley Howard Knowles: Thank you, Mr. Chairman. The point I want to make can be made rather quickly, but I urge the minister to give it serious consideration. This clause adds a surtax which compounds any tax inequities that already exist. One very serious inequity which has developed, because things have been put together, like Topsy, relates to the income tax that now hits certain old age pensioners, particularly those who are receiving the guaranteed income supplement.
As the minister knows, a little over a year ago the government brought before parliament a measure designed, as stated by the government, to guarantee to old age pensioners a certain level of income. That level for a single pensioner was to be $105 per month or $1,260 per year. When that was done no change was made in the income tax provisions. The result now is that a single old age
[Mr. Sharp.!
pensioner between the ages of 67 and 70 who is receiving the basic $75 a month but has nothing else, and therefore is drawing the $30 supplement, finds himself in a bracket where it is necessary for him to pay income tax.
Let me make it crystal clear, Mr. Chairman, that I have no objection to the imposition of income tax on the basic old age pension. We are satisfied that is the way it should be operated. If there is no means test it should be taxable income. However, when you require a person to go through a means or income test to get a supplement to bring his income up to a certain minimum level, and then turn around and take some of that guarantee away through the medium of income tax, we think this is grossly unfair.
Let me give the minister the figures, though I am sure they must have been brought to his attention. A single old age pensioner between the ages of 67 and 70 has an income tax exemption level, including charitable donations, of $1,100. If he gets a pension of $1,260 per year he has $160 on which he must pay tax. This tax amounts to $21.10 per year. That amount may not seem great, but this comes as a pretty cruel blow. The result is that this person is having to pay this tax, thereby cutting down the income which was brought up to the guaranteed level.
[DOT] (8:50 p.m.)
In the case of a married couple, if they are both between 67 and 70, the situation is a little worse. They receive a total of $210 a month, or $2,520 a year, and their exemption level is only $2,100. They have to pay therefore $54.10 income tax a year.
I am not quarrelling with income tax being imposed on the means test-free pension, the pension that everyone gets. But to submit people to an income test so they can be brought up to a certain minimum level, and then to turn around and take away part of that extra income is, it seems to me, grossly unfair. I think this is the kind of adjustment that ought to have been made in the income tax arrangements.
There are two or three other things I should like to deal with in this respect However since the minister has said that third reading is not being called tonight, I can deal with those points in the few remarks I shall make on third reading. But, Mr. Chairman, I should like the minister's comments on the one case I have raised. I will defer the other points I have to make until we reach third reading.
March 14, 1968


Mr. Lewis:: Mr. Chairman, on the understanding that the minister does not intend to call third reading this evening-


An hon. Member:: He said that.


David Lewis: Just hold your horses a
moment. As I was saying, Mr. Chairman, on the understanding that the minister does not intend to call third reading this evening, my colleagues who were anxious to speak on this clause have agreed to defer their remarks, in view of the emergency which the minister announced.


Herman Maxwell Batten: Shall clause 4 carry?


Some hon. Members:: Carried.


Some hon. Members:: No.


Mitchell William Sharp: Mr. Chairman, I understood that the hon. member wanted me to make some comments tonight on this point. If not, I shall defer my comments until third reading. This is a point we have looked at on many occasions. I can confirm the general calculations the hon. member made, because I have made the same calculations myself. This is a very difficult point of principle, because we do of course include as taxable income all payments of old age pensions to anyone. They are part of taxable income. This is part of a general philosophy that income is taxed, however it is received.
This, indeed, is the underlying principle of the Carter commission, which suggests that there should be a comprehensive tax base that affects all income. It is not necessarily a contradiction to supplement incomes up to a certain level, and then tax them. It may mean that slightly less is received net; but nevertheless that is in accordance with the principle that not only underlies our tax structure but underlies the Carter commission report which is trying to work out a logical structure for the taxation of income.


Herman Maxwell Batten: Shall clause 4 carry?


Some hon. Members:: Carried.


Some hon. Members:: No.


Mr. Gregoire:: Mr. Chairman, I should like to deal briefly with clause 4 of the bill which tends to increase the personal income tax, and I have always been against that.
We notice at present in the house an atmosphere which reflects pretty well the views I have always held on the subject, because the 27053-4821
Income Tax Act
Minister of Finance (Mr. Sharp) has just announced a gold crisis throughout the world, because banks are flooded with requests for that precious metal called gold. Banks are therefore being closed, a state of crisis is declared, and all that for a metal found deep down a mine-shaft, which is turned into gold and buried in another hole, at Fort Knox, United States, or elsewhere and then, additional salaries have to be paid to have the army watch over it.
Mr. Chairman, it would seem that in 1968, in Canada as elsewhere, ministers of finance suffer from gold mania.
That reminds me of the four verses of the legend of the golden calf:
Le veau d'or est toujours debout On encense sa puissance d'un bout du monde a l'autre bout
Et perche sur son pedestal Satan conduit le bal.
It refers to the legend of the golden calf, the music of which was written by Gounod in Faust.
The gold mania has taken hold of the people in the western hemisphere. It is funny that we do not hear about the same crisis in the eastern world at this time. It is funny to see that the orientals do not suffer from the same mania.
However, while we worship the golden calf, while everybody bows before it in Canada as well as in other countries, unemployment increases. Statistics today indicate an increase in the unemployment rate which reaches a record in Canada, that is 8 per cent, and 8.4 per cent in Quebec. However, nobody seems to be worried about that. We do not hear the Minister of Finance nor the Minister of Manpower and Immigration (Mr. Marchand) proclaim a crisis. There are 179,000 unemployed in the province of Quebec. Nobody considers it a crisis. But, if some people want to buy gold, they call it a crisis. If the gold reserve decreases, at Fort Knox or elsewhere, immediately those who normally worship the golden calf have a fit, a feeling of excitement prevails and the situation becomes serious. But, when there are unemployed, like at the present time in Canada and in Quebec, nobody has a fit, nobody rebels. If we have destitution, if we have slums, if it is difficult to build houses, nobody gets mad about it.
[DOT] (9:00 p.m.)
Today, taxes are going up in Alberta, in Ontario, and Mr. Johnson in Quebec has also announced a shower of taxes. That is kn^wn

March 14, 1968
Income Tax Act
as a shower of taxes. Ottawa levies taxes, and Quebec does the same.
Not content with announcing his own shower of provincial taxes, Mr. Johnson tells the mayors association he has just met: We are doing our duty, we are assuming our responsibilities, we are increasing our taxes. Do the same, gentleman mayors. That is the advice Mr. Johnson gave yesterday, to the mayors of the Quebec municipalities.
And so, the federal government, the provinces, and the municipalities increase their taxes. School boards will be doing the same.
Where will the people go, with all those increased taxes?


Some hon. Members:: Toward gold.


Gilles Grégoire: Toward gold.
In the meantime, the hon. Minister of Finance pulls out the few hairs he has left over the gold crisis. On all fours before the gold calf. Incense is burned to its power, and Satan leads the ball.
Still, if only the federal government raised taxes but gave more services. But no, it decreases them.
In Montreal harbour, the hon. Minister of Transport (Mr. Hellyer) has not done anything to solve the problem. He cancelled the subsidies to develop the Montreal airport. He cancelled the subsidies to develop the port of Quebec. He has done nothing about developing winter shipping on the St. Lawrence.
In Montreal, a new building was supposed to be erected to house the C.B.C., but the money to that end was reduced. The amounts were decreased and at the same time, taxes have increased under clause 4 of the bill now under study.
The government collects more taxes and, at the same time, it cancels the subsidies towards the construction of public buildings and for public services. At the same time, the provinces raise their taxes. That is a shower of taxes. Moreover, municipalities are advised to increase their taxes. Where are we heading, Mr. Chairman? Is it that our governments are so driven by the gold craze that they forget what is going on here, what happens to our population? The Quebec premier Mr. Johnson, said that there was only one solution and I use his own expression: Let Ottawa hand over some taxes to the provinces. But Ottawa will not let go: it is trapped in a struggle to save the dollar. Not to save the individuals or the unemployed, no: to save the dollar.

In the United States it is gold, here it is the dollar. We must save the dollar. No matter if citizens are stripped of everything, if what they have left is taken away from them, if there is unemployment and misery. We must save the dollar. Let us save the dollar.
Things have reached a point where this government's slogan is: The dollar must be saved, gold must be saved. As for the citizen, no matter. There are 179,000 unemployed in Quebec, that is 8.4 per cent of the total, and that is of no importance. There is no time to think of that: the dollar must be saved, gold must be saved.
Mr. Chairman, it makes one wonder whether the government is not a little panic-stricken in the present situation. Why does the government not wage the same fight to save the individual, the Canadian citizen, as it wages to save the dollar? It is very important in a period of crisis to save the individual also. When I see this fight to save the dollar, I wonder what is wrong with Canada that we are forced to wage such a big fight? What could be the reason for such a crisis? Why an economic crisis?
Have potatoes stopped growing in Canada, as the Minister of Manpower and Immigration (Mr. Marchand) would say? Have cows stopped giving milk, and caused an economic crisis? Have hens stopped giving eggs? Has production decreased in our pulp mills, our industries? Has production stopped? No, Mr. Chairman, we are able to produce as much as before. Our industry, our agriculture can be as flourishing as they were. There is no crisis in those areas.
Our workers are not refusing to work. They are willing to carry on; they are ready to make every effort. Our dealers are willing to keep on selling: they have goods to sell. They are not short of goods. In proof of that, there are sales everywhere. Our natural resources are still there. We are still able to tap and develop them. Why, then, a crisis of the dollar?
The average citizen, Mr. Chairman, has a right to wonder why there is a dollar crisis, when our natural resources are still there, our industries are still there, our citizens are still doing their duty to produce, our businessmen are still ready to sell and Canadian citizens are ready to buy as much and even more than yesterday.
Why, then, a dollar crisis? Whence does it arise? Is it not rather a fictitious, artificial, superficial situation brought about by great financiers throughout the world with a view
March 14, 1968

to devaluating the real resource, production, to be in a better position to control it.
When a country gets prosperous, there are financiers who endeavour to control its industries, its businesses, its economy. They try to reduce the prices of those industries, to be in a better position to buy them, to control them, as was done during the 1929 depression.
Economy was thriving then. The dollar collapsed overnight, and great international trusts, big international corporations took control of our Canadian industries and succeeded in developing them to their own advantage.
From 1929 to 1939, at a time of another dollar crisis, and not an industrial crisis, some international trusts succeeded in getting the control of our large electric power companies, our pulp and paper mills, our major industries and, at the present time, they want to start the same game all over again.
Mr. Chairman, we are told there is a crisis, but I do not believe there is a real crisis. It is only in the minds of those who administer our economic and monetary system. The dollar crisis exists only in the minds of those who manage our monetary system, that is, in the mind of our Minister of Finance, the governor of the Bank of Canada and a few others, because there is no real crisis. We still have our natural resources, our resources, our workers in a position to produce and our citizens who can buy. It seems to me quite clear, Mr. Chairman.
Now, why is there a crisis at the present time? What have we done to be the victims of a crisis which we did not want? What is at fault in Canada that we are suddenly engulfed in a crisis? What happened?
Gold, Mr. Chairman. But for the past 28 years, our money has not been based on gold. It was a minister of finance of the Liberal government in 1940, Mr. Ilsley, who stated in 1940 that the value of the Canadian dollar was no longer based on gold.
[DOT] (9:10 p.m.)
Our dollar is not based on gold. Then why? Would it be on account of the monetary crisis in the United States, in Europe, in Great Britain or elsewhere? Now, since our dollar is no longer based on gold, why should we suddenly experience a crisis? Why should we be the victims of a crisis with which we have nothing to do?
It would be about time for our Minister of Finance to solve the problems of which he is responsible and he should refrain, moreover,
Income Tax Act
from trying to solve the problems of others and plunging us in a crisis which does not concern us.
He says that the solution is higher taxes. That is not a solution, Mr. Chairman. On the contrary, it will only create a problem, because if the federal government, the provinces, the municipalities and the school boards raise their taxes, we will be showered by taxes, as they say, and the people, who bear the brunt of it, will be the victims of a crisis brought about by our Minister of Finance, who wants everybody to impose taxes. Other countries may be faced with a crisis, but it should not affect us because our dollar is no longer based on gold. However, there will soon be a crisis in Canada if everybody starts imposing more and more taxes.
Therefore, I am opposed to clause 4 of this bill, because there is no reason for this tax. Furthermore, this tax will help to bring about a real crisis which will affect the whole Canadian people. Mr. Johnson said yesterday: There is only one solution: let Ottawa lower its taxes. However, there is another solution: if Ottawa does not want to lower its taxes, let Quebec lower its own.


Herman Maxwell Batten: Shall clause 4 carry?


Some hon. Members:: No.


Gilles Grégoire: On division.


Herman Maxwell Batten: Order. The question is on clause 4.


Stanley Howard Knowles: As amended.


Herman Maxwell Batten: The question is on clause 4 as amended.
Clause agreed to: Yeas, 110; nays, 84.


Herman Maxwell Batten: Shall the title carry?


Some hon. Members:: On division.


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


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


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


Some hon. Members:: Now.


Some hon. Members:: Next sitting of the house.

March 14, 1968
Supply-C.B.C.


Mr. Deputy Speaker:: Next sitting of the house.


Allan Joseph MacEachen: Mr. Speaker, I should like to ask the house to go into committee of supply for supplementary estimates.

The house in committee of supply-Mr. Tardif in the chair.



BOARD OF BROADCAST GOVERNORS

[Stage Direction]
3c. Salaries and other expenses, $35,000.
Mr. Sherman:: Mr. Chairman, when the -committee was last on this particular item-


Allan Joseph MacEachen: Mr. Chairman, on a point *of order.


@Deputy Chair(man)? of Committees of the Whole: Order, please. The minister is rising on a point of order.


Allan Joseph MacEachen: In order to ensure the orderly discussion of the estimates, we are now considering the vote of the Board of Broadcast Governors. This will be handled by the Secretary of State. If it is agreeable, following the carrying of that item, if this is done tonight, I should like to call all of the items under the name of the Secretary of State. I hope that will be agreeable.


Some hon. Members:: Agreed.


David Vaughan Pugh: She is not running.


Louis Ralph (Bud) Sherman: Mr. Chairman, when the committee was last considering this item a few days ago I was making some remarks about the extent of the improvements that I had detected in public affairs programming on C.B.C. television in recent months. I gave credit where I believed it was justified and made the point that I felt the Beryl Fox documentary on Viet Nam last Sunday night on C.B.C. television entitled "Last Reflections on a War" was a poignantly moving and beautiful experience. In my opinion it was a much better balanced program on Viet Nam than any I had seen previously on C.B.C. television, much better balanced than the previous C.B.C. television studies of Viet Nam.
I then moved on to what will be the concluding phase of my remarks, to say a word or two about the Board of Broadcast Governors and the passing of an era in Canadian broadcasting. The era of the B.B.G. is being

phased out fairly soon and we will move into the era of the Canadian Radio-Television Commission, which will be the main supervisory authority in this field. I felt that a hail and farewell to the B.B.G., and particularly to its distinguished president and chairman, Dr. Andrew Stewart, was in order at this time.
Dr. Stewart came to broadcasting a virtual, or at least a comparative stranger. He came from the field of education to an industry of which he obviously possessed great knowledge and for which he obviously possessed great sensitivity. None the less it was an industry with which he had no direct connection. He brought to it, I suggest, Mr. Chairman, a rare dedication, a fine wit and a keen academic mind. He presided over the licensing and the control and authority-dispensing functions of broadcasting in Canada in one of its most exciting and explosive periods, when the so-called second stations entered Canada's major television markets. I refer to the new private stations that now constitute in large part the Canadian television network. Dr. Stewart, as head of the B.B.G., witnessed the inception of this new era in Canadian broadcasting, the era of private television operations and of competition in the major Canadian broadcasting markets.
I submit that as head of the B.B.G. he served both as father and as nurse to what are still comparatively new offspring. They are now testing and venturing upon new ground, but I am sure they are destined to fulfil a great role and serve a great purpose in Canadian national and cultural life in the years ahead.
[DOT] (9:20 p.m.)
I think the stations that came into being then, and all those connected with them, owe Dr. Stewart a debt of gratitude for the sagacity and sensitivity he displayed during the first difficult years of competitive television in this country. At all times in my experience Dr. Stewart ruled with understanding and responsibility. I join with my colleagues in this house in saluting Dr. Stewart for the contribution he made to broadcasting in Canada, as his board, the Board of Broadcast Governors, is phased out to be replaced by the new broadcasting authority. I suggest that the new chief of the Canadian Radio-Television Commission could do worse than mark the footsteps of the good doctor and tread in them boldly.
In the field of broadcasting in this country we stand on the threshold of an exciting era, of unexplored frontiers, when all Canadians,
Maich 14, 1968

because of the nature of the industry and of this country, will be integrally involved in Canadian broadcasting and affected every day of their lives by what is done by broadcasters. One case in point is educational television, or instructional television, a subject with which the standing committee on broadcasting, films and assistance to the arts has been studiously engaged for the past several weeks, and in connection with which that committee has been examining a wide variety of witnesses who have come to Ottawa to present to committee members their knowledge and expertise in this field.
The frontiers of Canadian E.T.V. have hardly been approached, let alone crossed. There are great chapters ahead for educational television in Canada. This is one area in which the new officers of the C.R.T.C., this new broadcasting authority, will be vitally interested. So, speaking for myself, I hope it will be possible for the views of Dr. Andrew Stewart and other members of the Board of Broadcast Governors to be made available to the standing committee on broadcasting while it is continuing its study of E.T.V. and before any long range policy in the field of educational television is formulated. All of us on the standing committee look forward to the soon to be announced appointments to the Canadian Radio-Television Commission. And we look forward to working with the new executive officers of the new broadcasting body in order to buttress and improve broadcasting in this country.
I conclude by reiterating my thankfulness and appreciation for the work that Dr. Stewart and the B.B.G. have done, a feeling that I am sure is shared by everyone in this chamber, and by expressing the firm belief that the new C.R.T.C. authority will continue in its predecessor's most instructive footsteps.


Frank Howard: Mr. Chairman, the remarks of the hon. member for Winnipeg South, in contrast with those of other members of his party in the house in weeks gone by, are refreshing. The Conservative party has usually used any occasion on which we discuss broadcasting to castigate the Canadian Broadcasting Corporation. I am sure that we all at some time or other, when viewing C.B.C. programs, have heard views expressed with which we do not agree. That is understandable, because by its nature the C.B.C. must try to please everyone in Canada, and obviously that cannot be done all the time. Consequently from time to time all of us shall see programs which we find objectionable.
Supply-C.B.C.
Regretfully, I say, we have not seen any element of reasonableness or balance in the Conservative party's approach to public broadcasting in this nation. Their criticisms have all been onesided and that is why the remarks of the hon. member for Winnipeg South sounded so refreshing. But no matter how often he expresses his views, new, fundamental views, perhaps, they will not undo the damage that has resulted from an unreasoned and unreasonable condemnation of the public broadcasting system by his party's members.
When the legislation establishing the Board of Broadcast Governors was introduced, and the old board of C.B.C. governors was to be replaced, a Conservative government was in office. That legislation was alluded to by practically everyone who supported it as the salvation of broadcasting in Canada. Credit should be given where credit is due. The man who piloted that legislation through the house was a highly respected, honoured and loved member. Practically everyone, regardless of party, held him in high esteem. I am referring to the late George Nowlan.
Regardless of the qualities of the then new legislation to establish the Board of Broadcast Governors, all was not well. All on the government side alluded to the bill as bringing in a most necessary organizational structure which would save Canadians from the denigrating effects that television and radio would have if they were allowed to go on unfettered and uncontrolled.
It is interesting to see how appointments to that new Board of Broadcast Governors, which was established by the Conservative government, were made. The board was loaded with people whose only qualification for sitting on it was that they were Conservatives or Conservative supporters. Perhaps that is why the Conservative party now find it necessary to condemn public broadcasting in Canada. The board which the Conservative party established was abortive. Those who sat on it knew nothing about broadcasting. The Conservatives loaded the board with people who had no real conscience or determination with respect to making public broadcasting a worth-while venture in Canada. The Conservatives loaded that board with political appointees. In fact, at one stage during those years, while for some purpose a national conference of Conservatives was being held in the Chateau Laurier here in Ottawa, there were in attendance goodly numbers of young delegates and young gentlemen whose purpose appeared to be, not the business of the

March 14, 1968
Supply-C.B.C.
conference itself but to search out individuals within the Conservative ranks in government who could provide a television licence. Again we saw the emergence of the lowest form of political involvement in the field of public broadcasting.
[DOT] (9:30 p.m.)


An hon. Member:: Like your relationship with the C.L.C.


Frank Howard: If the hon. member who made that comment would like to ask me a question, so that I could hear it, I would gladly yield him the floor for that purpose. Or if he would like to take the floor himself I would be glad to listen to him. I do not see any takers. The hon. member who just interrupted must be one of those whom the Minister of Agriculture labelled yesterday as one whose watermelon was more important than his head.


An hon. Member:: Filibuster.


Frank Howard: I know, Mr. Chairman, that you are concerned about the enforcement of the rules. I do not call upon you to protect me from these members who are yaking away for some unknown purpose. I am simply saying that if there is difficulty in Canada with respect to broadcasting, the Conservative party must bear the brunt of the blame because it was the Conservative party which sought to establish a Board of Broadcast Governors for the sole purpose of providing havens for its own political supporters. As a consequence, regardless of the merits which might have been inherent in the structure set-up, it could not operate with any effectiveness because it was loaded with political hacks. These are the facts. No wonder hon. gentlemen to my right take objection to the truth when it comes home to them.
I want to say with respect to public broadcasting that I am not one of those who are addicted to television viewing. Indeed if there were a scale I would be on the other end of it, inasmuch as I do not particularly like television as a medium of communication or entertainment; I seldom take the opportunity of viewing it. But I do enjoy radio and especially I enjoy the C.B.C.'s radio broadcasting.
Over the years I have enjoyed listening to those programs which have always been of extremely high quality, and show evidence of fine programming, ranging all the way from the early morning news and views, including Max Ferguson's contribution, which I am sure, is a delight to all of us, to the more

serious evening programs. Naturally there are programs which do not please everybody; any organization such as the C.B.C. which tries to deal with the Canadian population in total cannot please all the people all the time. But on balance the radio programs emanating from the C.B.C. are as fine this year as they were in years past and deserve a large measure of commendation and support.
I hear an hon. member use the word "filibuster"; I hear this word in the background. If any in this parliament over the last five years-I am not talking about right now-are liable to a charge of filibustering, it is the people in the Conservative ranks.


Mr. Regimbal:: Know all.


Frank Howard: They do not like the truth; it is too bad. They do not enjoy listening to it. We only need look at the progress made in considering broadcasting legislation itself. I understand there was agreement that if the broadcasting bill introduced this session was referred to a committee for close and essential examination, as it was, it would be considered in the house with a minimal amount of discussion. This was one of those gentlemen's agreements which are made. Yet when it got to the house we found the Conservative party unable to contain its desire to destroy public broadcasting in Canada, and for this purpose it was prepared to embark on a filibuster, day after interminable day, as though hon. members were determined to outdo their efforts during the flag fiasco.
I am attempting to talk in a reasonable way about an aspect of public broadcasting that I enjoy, namely radio. I am being enticed to depart from that subject by some friends of mine who sit very close to me. I intend to resist that temptation, however, and simply say that if we had more speeches of the type and quality of the speech about public broadcasting just made by the hon. member for Winnipeg South, a person who has obviously had a new view about broadcasting in recent times, we would get more of what people expect from parliament, namely a reasoned and balanced conversation about public policy. As it is, we find one particular party hell bent to destroy public broadcasting, to which end it is prepared to embark on a continuing program of vituperation which encourages among the general public a lack of perspective when it comes to the broad concept upon which the C.B.C. was founded. I have no further comment to make, other than that.
March 14, 1968


Mr. Graffley:: I intend to speak very briefly on this subject. I believe it is a happy coincidence that the Secretary of State should have within her jurisdiction not only the C.B.C., for which she reports to this house, but also the national arts centre currently under construction in Ottawa. I say it is a happy coincidence, because over the years the C.B.C. has had a mandate to encourage Canadian talent in the performing arts. I believe everybody in this house and in Canada generally recognizes that the C.B.C. has done an outstanding job in encouraging the performing arts in Canada. I repeat myself when I say it is a happy coincidence that the Secretary of State has the responsibility for reporting both the C.B.C. and the national arts centre. As I understand it, the new national arts centre will have a general mandate to encourage the performing arts in Canada, and I trust that the C.B.C. will co-operate to the greatest possible extent with the centre in carrying out that mandate.
[DOT] (9:40 p.m.)
I have already talked to the minister about the type of musical bodies that the arts centre will encourage initially in Ottawa. In years gone by the C.B.C., especially through its radio section, did a fine job in encouraging musical groups, although such may not necessarily be the case today.
I have also discussed this matter with the Minister of Consumer and Corporate Affairs. The national capitals of many countries have developed magnificent symphony orchestras, with the assistance of public funds. I do not for a minute suggest that Ottawa is a world capital in the sense that Amsterdam, Copenhagen, and some other capitals are, but I think we should make a start now by encouraging the role which the government must play in assisting the performing arts, and by urging the C.B.C. to co-operate with the new centre.
I wish publicly to thank the minister for the opportunities I have had to discuss this matter with her. I hope whoever occupies her position in the future-and I trust it will be the hon. lady herself, because she has done a good job in this respect-will encourage cooperation between the C.B.C. and the national arts centre in Ottawa.


Joseph-Alfred Mongrain: Mr. Chairman, I think that liberties are being taken, that the standing orders are being disregarded when we deal with matters somewhat outside the scope of the subject under discussion. At this point, I
Supply-C.B.C.
should like to avail myself of the same latitude in order to express to the Secretary of State (Miss LaMarsh) my satisfaction, and that of many Canadians, who were happy to learn today about the appointment of Hon. Georges-Emile Lapalme as chairman of an organization entrusted with the administration of an amount of approximately $10 million for film distribution.
Mr. Chairman, I think I may take the liberty of making a rather special comment, since I have known the appointee to this new position perhaps more intimately than most members, and I can say that he is a Canadian of unusual honesty, competence and loyalty. He has been noted for many years for his unfailing judgment in the field of arts, humanities, science and literature.


Some hon. Members:: Hear, hear.


Joseph-Alfred Mongrain: I wish to congratulate the hon. Secretary of State for this choice, which lead us to hope this new organization will know numerous years of fruitful accomplishments across Canada. She could not have made a better choice. Indeed, she is an old hand at it. I have already told her so, but she was not in the house at the time.
I do not say this only as a matter of courtesy which a gentleman always owes to a lady. It is in the light of results and facts. For instance, when she had the courage to say there was something rotten in the C.B.C., the Secretary of State won the admiration and the esteem of the large majority of members.
It happens that the hon. Secretary of State, in addition to her other qualities, is a Liberal. I imagine that if she were a Conservative, the same could be said about her, that is, she would have accomplished fully as much. But someone had to say some day that there was something wrong with the C.B.C. and that reform was urgently needed so that this corporation should really become the instrument of culture, national unity and common sense which it is supposed to be according to the idea of those who set it up.
I wanted to pay this tribute, Mr. Chairman, first of all in the name of all those who, like me, were concerned about certain bad habits which the C.B.C. had acquired, and who are happy to see that an effort is being made, at least, to bring about reforms and to prevent the abuses of the past.
I take personal pleasure in congratulating Mr. Lapalme for his appointment, for I had the opportunity to know him better than several of my colleagues. But I know that I
March 14, 1968

Supply-Secretary of State am expressing the feelings of many Canadians, especially those in the province of Quebec, when I say how glad we are to see that hon. Georges-Emile Lapalme has been appointed as chairman of the organization I mentioned earlier.


William Arnold Peters: How long does the minister anticipate it will be before the B.B.G. is wound up and the new commission is appointed?


Miss LaMarsh:: I think the order in council has already been passed indicating that the act will be proclaimed on April 1.


[Stage Direction]
Item agreed to.
SECRETARY OF STATE A-Departmentlc. Departmental Administration, including grants as detailed in the Estimates-To extend the purposes of Secretary of State Vote 1 of the Main Estimates for 1967-68 to provide that the Centennial Commission shall cease to exist on the 1st day of April, 1968; that all rights and property held by or in the name of or in trust for the Commission, and all obligations and liabilities of the Commission, existing before that day, shall continue as the rights, property, obligations and liabilities of Her Majesty in right of Canada; and to authorize the Secretary of State to do and perform all acts and things necessary for or incidental to closing out the affairs of the Commission and to provide a further amount of, $274,400.
William Arnold Peters: This is a quite considerable item and it gives me an opportunity to congratulate the minister on the work that was done during centennial year. Governments move slowly, and here I can think of the National Arts Centre which has been abuild-ing for years. Had the Secretary of State been able to find people like John Fisher, and some of the others in the Expo organization, much of the red tape could have been avoided. They were able to get the Expo operation developed in good time for centennial year.
Although there was considerable duplication of costs, I think all Canadians will look back on centennial year as a great success and something to remember with a great deal of pride. Building nationhood is a difficult process. It is often developed most during periods when a country has to make an extreme sacrifice. Canada took a great step toward nationhood each time it became engaged in a war, but I think Canadians combined together during centennial year to take a great stride forward into nationhood, thanks largely to the centennial commission's efforts.

[DOT] (9:50 p.m.)
I should like to congratulate that great Canadian, John Fisher, who under extreme difficulty headed up the commission and carried on even in the face of the political backbiting which went on among his friends and colleagues in the commission. He was able always to put forward the idea that it is great to be a Canadian and that one should be proud to be in Canada. I believe that his spirit as well as the utterances he made as he travelled across this country in centennial year and in preceding years, combined with the roughshod way in which the minister on many occasions administered the operation of the centennial commission and tore through the red tape, together with her ability to get things done, made it possible for all Canadians to enjoy a very fine year. Now when we are in the process of paying the bill for centennial year I think we should look back with great pride at the operation of the centennial commission. I believe this will be a memorial to the effectiveness of one woman in cabinet.


Mr. Herridge:: Mr. Chairman, I rise very briefly to support the remarks made by the hon. member for Timiskaming and to congratulate the minister for the role she played in our centennial year. I also congratulate her on her ability to find men during that year. I have heard it said that she was the ideal personality to fulfil the role of Secretary of State during our centennial year. She combined in her personality that duality of the traditional and the go-go.


Joseph-Alfred Mongrain: Mr. Chairman, I rise on a question of privilege. After what I have heard here tonight I venture to say that the Secretary of State should run for the leadership post that is available.


[Stage Direction]
Item agreed to.
2c. Construction or Acquisition of Buildings, Works, Land and Equipment-National Arts Centre, $7,500,000.
William Arnold Peters: Mr. Chairman, I am very disgusted when I look at this particular project and think of the time involved in its construction. If Campeau has been able to build four or five high rise buildings in the time it takes us to put a pile of cement in a hole which has been there for three years off and on, I think it is about time we reconsidered the construction methods we use. When I went to Expo I was very impressed when I heard Mr. Shaw and others who were responsible for the development of Expo talk about
March 14, 1968

the critical path of building. The critical path of building has been a nightmare so far as the National Arts Centre is concerned. I realize that the Secretary of State probably has had nothing to do with the construction, since this no doubt comes under the Department of Public Works.
I should like to raise the point that the government service apparently has been able to obtain the knowhow in respect of the critical path of building. I would suggest that perhaps this ability in the critical path of building might be applied to the work undertaken by the Department of Public Works. If that department is not able to meet satisfactory schedules, then perhaps they should forget about building and let Campeau do it. Before the minister leaves, whether it be this year, next year or five years from now, I am sure she would like to be able to open the National Arts Centre. I am afraid that even if she is still in the department five years from now she cannot be sure that she will have this opportunity.
I believe the construction of this building is a national disgrace. The construction site is in the centre of the national capital where anyone can see it every day. We have established that we have the ability to find and hire the right people. The minister has been able to do this in respect of the very ingenious engineering projects which took place at Expo. Surely this ability can be applied to other government departments. I suggest that when the ministers obtain approval from parliament for expenditures, that they consider the critical path of construction so that when a building is to be built it will be built within a reasonable length of time. I believe that when it takes three years to construct the cement part of a building, that is too long a period. I suggest that this situation really is not satisfactory to the minister. I believe we should be very proud of the ability she has exhibited and I think that what has been accomplished in respect of the Expo construction should be extended to other works.


@Deputy Chair(man)? of Committees of the Whole: Shall item 2c carry?


Thomas Speakman Barnett: Mr. Chairman, I wonder
whether the minister could tell us when the National Arts Centre will be finished.


@Deputy Chair(man)? of Committees of the Whole: Order. It being ten o'clock shall I rise, report progress and ask leave to sit again at the next sitting of the house.
Business of the House


Some hon. Members:: Carry on.


@Deputy Chair(man)? of Committees of the Whole: Is it the
wish of the committee that we carry on with the item?


Michael Starr: Not unless we have some idea when the item will pass.
Resolutions adopted in committee of supply this day reported and concurred in.
[DOT] (10:00 p.m.)



BUSINESS OF THE HOUSE

Michael Starr: Mr. Speaker, I should like to ask the house leader what we will be undertaking tomorrow, Monday and Tuesday? Perhaps he is able to give us this information now.


Allan Joseph MacEachen: Mr. Speaker, tomorrow we will begin with third reading of the tax bill. Following completion of third reading we will continue consideration of the supplementary estimates.


Frank Howard: In this connection, Mr. Speaker, in light of the extremely critical situation in the world referred to earlier this evening, I wonder whether the government would consider taking third reading of the tax bill on Monday, in order that we might see what develops over the week end and use third reading as a vehicle to discuss the situation?


Mr. Nesbitt:: You can do that on supply.


Allan Joseph MacEachen: I think we ought to have third reading of the bill tomorrow.



FINANCE


Mitchell William Sharp: Mr. Speaker, I should like to ask for the permission of the house to revert to motions in order that I might make a short statement.


Mr. Deputy Speaker:: Does the house agree?


Some hon. Members:: Agreed.


Mitchell William Sharp: Mr. Speaker, in view of the closing of the London gold market tomorrow I am tonight requesting all banks and other dealers in gold in Canada to suspend trading in gold tomorrow, Friday, March 15, pending clarification of the situation concerning gold markets during the week end.
I should also like to say that the governor of the Bank of Canada issued a statement tonight that the bank rate has been fixed at 71 per cent, effective March 15.
March 14, 1968

Proceedings on Adjournment Motion PENITENTIARIES



APPOINTMENT OF MEMBERS TO JOINT COMMITTEE

Mr. Bernard Pilon (Chambly-Rouville) moved:: That Messrs. Aiken, Allmand, Dionne, Fulton, Lachance, Matheson, McQuaid, Prud'homme, Ricard, Rochon, Stafford, Tolmie, Watson (ChSteauguay-Huntingdon-Laprairie), Woolliams and Winch be appointed to serve on behalf of this house on the joint committee on penitentiaries which was established on February 1, 1968, and that a message be sent to the Senate to acquaint their honours thereof.


[Stage Direction]
Motion agreed to.

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

Stanley Howard Knowles: Mr. Speaker, on Monday, March 4, as recorded in Hansard at page 7231, I put this question to the Minister of National Health and Welfare:
In view of the fact that old age pensioners between the ages of 67 and 70 who are drawing the guaranteed income supplement, even though they have no other income, are being required to pay income tax on a portion of their supplement, will the minister take up with his colleague the Minister of Finance the possibility of exempting the supplement from income tax?
The minister replied as follows:
I will be glad to discuss the matter with the Minister of Finance.
I then responded with this question:
May I expect an answer at ten o'clock one of these nights?
I can use less than my allotted seven minutes in putting this question to the Minister of National Health and Welfare tonight, in view of the fact that at 8.40 or 8.45 this evening when we were discussing the income tax bill before the house at that time I put the question to the Minister of Finance. I have to admit that the answer I got from him was not very satisfactory, so I am back where I was on Monday, March 4, urging the Minister of National Health and Welfare to make his representations to the Minister of Finance with respect to this matter.

After all, it was the Minister of National Health and Welfare who brought in the legislation providing for the guaranteed income supplement, and the point that he made over and over again was that the purpose of this legislation was to guarantee to our old age pensioners a certain minimum level of income. That minimum level was to be $105 a month for a single person, or $1,260 a year. However, as I pointed out when I was speaking during the committee stage of the debate on the income tax bill, because of the fact that a single person has a tax exemption of only $1,100, the $1,260 that he receives puts him into the income tax bracket to the point that he has to pay something over $20 a year in income tax. In the case of a married couple, the tax they would have to pay is something over $50.
In all these cases I am referring to individuals between the ages of 67 and 70. Once they are over 70, they have the extra $500 exemption and the problem disappears, at least for people at these income levels. The minister knows very well-and I am sure he will not argue with this and will not wish to misrepresent me on it-that because I believe in no means test on the old age pension, I agree that the old age security, means test-free pension has to be taxable income. That is one of the reasons that you have no means test, because you make the adjustment by means of the income tax.
So what I am talking about is not the means test-free pension but the supplement which people receive only when they are submitted to what the minister euphemistically calls an income test. Some of the rest of us still call it a means test. My point is that when persons have been submitted to a test in order to get money to bring them up to a certain level, they should not have that amount of money reduced. It is a very simple situation. The Minister of National Health and Welfare says to all his pensioner friends across the country: I have brought your income up to a certain minimum level. Then his colleague the Minister of Finance turns around and takes some of it away. I therefore ask, Mr. Speaker, if the Minister of National Health and Welfare will make strong representations to the Minister of Finance to correct this most unfortunate situation?


Allan Joseph MacEachen: Mr. Speaker, I have had the opportunity to discuss the matter with the Minister of Finance (Mr. Sharp),
March 14, 1968

and the hon. member for Winnipeg North Centre (Mr. Knowles) anticipated the results of that discussion by putting the question directly to the Minister of Finance who is responsible, basically, for the income tax law. The minister put the answer on the record tonight and there is no necessity for me to repeat it.
Of course I disagree with my hon. friend when he says that there is a means test on the new guaranteed income supplement. I imagine that no matter how long we are in the house, the hon. member for Winnipeg North Centre will continue to regard this test as a means test, while I correctly describe it as an income test. My hon. friend realizes that while this group of people to which he refers is eligible for payment of income tax, they pay this tax because they have been raised to a level of income at which all taxpayers are eligible to pay tax.
[DOT] (10:10 p.m.)
So that what the hon. member is arguing is that in this particular case we should make a special provision which would place this group of taxpayers in a special category different from other taxpayers. The Minister of Finance has given the answer, and I have nothing to add to it.


Stanley Howard Knowles: What about those over 70?



PUBLIC SERVICE-POSITION OF EXECUTIVE AND PROFESSIONAL OFFICERS RESPECTING COLLECTIVE BARGAINING

Hon. R. A. Bell (Carleton):: Mr. Speaker, for a period of weeks I have been endeavouring, both publicly and privately but without success, to induce the President of the Treasury Board (Mr. Benson) to clarify the statement of government policy on the obligations in respect of collective bargaining of public servants employed in a managerial or confidential capacity, and as well to arrange the withdrawal or reversal of erroneous directives on the subject issued in certain departments. Two simple questions, proper answers to which would have clarified the situation completely, were placed on the order paper by me as numbers 1073 and 1074 as long ago as February 19, but they have been ignored completely, despite the fact that I have emphasized their urgency twice to the President of the Treasury Board and twice to his parliamentary secretary.
When no answers were forthcoming yesterday after the questions had been called seven

Proceedings on Adjournment Motion times, I was given no option but to ask this further question, which appears at page 7585 of Hansard:
Mr. Speaker, I should like to ask the President of the Treasury Board whether the government has taken any action to remove misunderstandings existing in several departments of government due to erroneous directives that employees in executive or professional roles are required to resign from employee organizations before collective bargaining begins.
The minister replied:
Mr. Speaker, we looked into this question which my hon. friend has raised before, and found that in one department there was an erroneous interpretation of the directive of the Treasury Board. We have been in touch with this and other departments to make sure the directive issued by the Treasury Board is adhered to within the departments.
Regrettably that answer is not correct. There was more than one department which issued an erroneous directive, and in fact no effective action has been taken to make sure the law passed by this parliament is obeyed. The result has been that a great many public servants, under a totally erroneous impression of the law, have felt compelled to resign from employee organizations, to their great personal detriment as well as to the loss of such organizations. In my view, these unrepudiated directives constitute an unfair labour practice, and I hope the record may be set completely straight tonight.
What is the law? Under the Public Service Staff Relations Act certain persons employed in a managerial or confidential capacity are placed under certain natural inhibitions with respect to collective bargaining. Obviously a managerial person cannot be both manager for the employer and negotiator for fellow employees. Conflict of interest must be avoided.
Three things are equally apparent. First, not all executive or professional employees are managerial or confidential employees who will be involved in collective bargaining, and the act does not so contemplate.
Second, the final determination of who is a managerial or confidential employee involved in the duties set out in section 2(u) of the act is vested in the public service staff relations board. It is not a unilateral determination by the employer.
Third, the act contains no prohibition of a managerial or confidential employee so determined belonging to an employee organization, provided they are in a non-voting, non-policy making, non-negotiating capacity.
7S60	COMMONS
Proceedings on Adjournment Motion
Consequently, the employee organizations have established associate member categories to accommodate such managerial or confidential employees. These members have no right to join in decision making, but they can enjoy insurance benefits, social advantages, grievance procedure representation, and other proper benefits. Indeed, this is the only way they can enjoy the full advantages of the grievance procedure.
Earlier this year the cabinet authorized a document entitled "Statement of Government Policy on the Obligations of Public Servants Identified as Persons Employed in a Managerial or Confidential Capacity". This statement, a copy of which was laid on the table yesterday at my request as sessional paper 159E, is, in my opinion vague and ambiguous, and in its concluding paragraph, misleading, particularly in implying that it is solely the opinion of the employer which determines who is a person employed in a managerial or confidential capacity. That is for the staff relations board.
Subsequently, several departments misinterpreted the cabinet's statement of policy and issued firm and absolute directives to all managerial or confidential employees that they must separate from staff associations. I wish to quote only two. In the unemployment insurance commission, the directive dated February 15 stated:
This means that if you hold a membership in an employee organization you must terminate such membership.
The directive in the Department of Indian Affairs and Northern Development contained this phrase:
You will lose this insurance by dissociating yourself from an employee organization, which you must now do.
I repeat, Mr. Speaker, "which you must now do". This was addressed on February 22 to "all managerial and confidential exclusions".
I am told that there are several other equally erroneous directives, Mr. Speaker, and that the result has been a great many totally unnecessary resignations from some employee organizations, with consequent forfeiture of genuine benefits to executive and professional employees, some of them of long standing. I consider this, sir, to be unfair, discriminatory and intimidating labour practices, as they are defined under the provisions of section 9 of the act.

DEBATES	March 14, 1968
In my respectful submission the cabinet statement of policy should be revised and stripped of its ambiguities and improper influences. The improper and erroneous departmental directives should be withdrawn, and all employees to whom they were sent should be advised of their withdrawal. I ask the government to make clear the undoubted fact that the type of associate membership set up, for example, by the Professional Institute and the Public Service Alliance for managerial and confidential employees is wholly unobjectionable, and indeed that such employees should in fact be encouraged to enjoy the undoubted benefits of such associate membership.


James Edgar Walker: Mr. Speaker, I want to congratulate the hon. member for Carleton for his precise timing in asking this question on the adjournment debate. I believe he pointed out that the President of the Treasury Board answered this question today. My only wish is that the hon. member had had enough faith in the minister and in the parliamentary secretary to know that an answer to the question was forthcoming.


Thomas Miller Bell: It was not answered today.


James Edgar Walker: I do not wish to attribute motives of any kind. It is the right and privilege of every member who represents constituents to bring questions before parliament. But the awareness of an answer to this question was apparent.


Thomas Miller Bell: It has not been answered yet.


James Edgar Walker: The staff of the Treasury Board is aware of only one departmental communication-and this was made very clear by the answer of the President of the Treasury Board on March 13 last-that contained a misinterpretation of the statement of government policy on the obligations of managerial and confidential personnel. As soon as this was drawn to the attention of the deputy head, he immediately issued a directive indicating that the communication in question was to be disregarded.
The policy statement itself says, in part, that a public servant employed in a managerial or confidential capacity must refrain from any association with an
March 14. 1968	COMMONS
employee organization, as defined in the Public Service Staff Relations Act, that would be contrary to the provisions of law or that would create for him a conflict of interest.
I should like to point out to the house that, along with myself, the hon. member for Carleton was a member of the parliamentary committee that endorsed and approved these particular sections of the Public Service Staff Relations Act when it was reviewed by that committee.



NORTHERN AFFAIRS-REDUCTION IN BUDGET FOR NORTHERN HEALTH SERVICES

Robert John (Bud) Orange: Mr. Speaker, once again as a result of the directives which have been issued by the Department of National Health and Welfare I think we have created in Canada another barrier between the Indian people and the government of Canada in its efforts to bring these people into the mainstream of Canadian life. Today I asked the Minister of National Health and Welfare whether he was prepared to refer to the committee on health and welfare the question of medical services to the Indian people. Part of his reply I found most satisfactory, as it had an effect on the Northwest Territories and the northern health service situation. He told me then that he would undertake a personal, detailed review of the situation. He said that until he had concluded that review he could not prejudge the question of placing the matter before a parliamentary committee.
[DOT] (10:20 p.m.)
Here I think we face an ideological dispute, or some misunderstanding. It is my impression that the philosophy of the Department of National Health and Welfare has been that the health of Canadian Indians is not the responsibility of the federal government. In my hand I have treaty No. 11. If you examine that treaty, which was signed by the Indian people of northern Canada, you will find nothing about health services. However, in the report of the commissioner, H. A. Conroy, which is dated October 12, 1921, we find this paragraph:
Practically all the bands dealt with wanted more provision for medical attendance at each post, schools for their children, and supplies for their old and destitute.
I pointed out that they were still able to make their own living, and that Dr. A. L. McDonald, of the Indian department, was then with me, and that they could see him, and that he would attend them free if they wished, but that it was impossible for the government to furnish regular
DEBATES	7661
Proceedings on Adjournment Motion
medical attention, when they were occupying such a vast tract of territory.
Regardless of whether the government of Canada is legally responsible to the Indian people of Canada for medical health services, I believe it has a moral, ethical and traditional responsibility. I do not suggest that the Indian people of Canada will not soon look after their own medical services; I suggest that the directive which was issued by the government in the Manitoba zone on March 6 does not add up, when it says:
The bands should establish health committees whose duty it would be "to determine what Indians of the band are medically indigent". These committees should meet at regular intervals in order to keep their records of indigents up to date.
Also in the same directive it says:
Indian bands that have funds must make their own arrangements for the purchase of treatment services either by paying local physicians directly or by arranging to take part in medical insurance programs. If Indian bands wish to purchase insured medical services, whereby Indian people can go to any doctor of their choosing, medical services branch will consider assisting such bands in the payment of such insured services.
I have read many documents issued by many government departments but never have I read one more ambiguous. The effects of this document may lead to a deterioration in relations which have been so carefully built up. Through the Department of Indian Affairs and Northern Development and through community development programs we have tried to bring the Indians of Canada into the mainstream of Canadian life. Yet we have here an example of one government department doing something contrary to the policy of another. I do not know whether there was liaison, but certainly there was no advance warning that this directive to cut down services would be issued. Certainly there was no consultation in this matter with Indian advisers and councillors.
Here we have a directive coming from an agency of government which, so far as I am concerned, may destroy the relationships which we have tried to build up in this country. I know the Minister of National Health and Welfare is deeply concerned about the matter and I know he feels strongly about it. I ask him to re-examine the situation, and if there are to be changes, to let those changes be known long before they are to take place. But, in the name of heaven, let us not further destroy the confidence that the Indian people of Canada have in their government.


Mr. Alkenbrack:: Hear, hear.
March 14, 1968

Proceedings on Adjournment Motion


Allan Joseph MacEachen: The question which the hon. member for Northwest Territories asked is very complicated and it is impossible to deal with it adequately in a few minutes.
Of course the main objective of our service, so far as the Indian population is concerned, is to make sure that our Indians belong to the mainstream of the Canadian community. The best way to ensure that any person in the Canadian community is in the mainstream is to ensure that dependency is reduced and independence established. This will certainly be the objective for all groups in Canada, including the Indian population. In the Department of National Health and Welfare we have been obliged, as have other departments, to scrutinize our estimated expenditures for the coming year, and while we have been able to maintain at least the same level of expenditures for northern health services and Indian health services as was established last year, we have not been able to maintain the significant increase which prevailed over the preceding year; we increased the level of expenditures in northern health services in that year over the former year by about 14 per cent.
Given a definite budget, the officers of the medical service have had to accommodate the service provided within those budgetary

limits. Certainly the members of the department are sympathetic to the needs of the Indian population, and of the population of northern Canada. This interest and sympathy has been expressed by the continuing efforts to improve the level of services. But we have been obliged to readjust, rearrange and in some cases to curtail services for the coming year.
I have listened with great interest to the representations of the hon. member for the Northwest Territories and to other representations which have been made, and I am currently reviewing the situation in an effort to ensure that minimum changes are made in this service. There is no lack of sympathy or concern. The consideration is a budgetary one in relation to other demands on the curtailed estimates of the department. I shall be discussing this problem with my colleagues and I hope that at the end of this discussion and review I shall be able to make a more definite statement about these services.
Motion agreed to and the house adjourned at 10.30 p.m.
[The following Items were passed In Committee of Supply this day:]



DEPARTMENT OF SECRETARY OF STATE


[Stage Direction]
Friday, March 15, 1968