1968-03-06

VACANCY

Mr. Speaker:: I have the honour to inform the house that I have received notice that a vacancy occurred in the representation, that of Mr. Maurice Allard, member for the electoral district of Sherbrooke, by resignation.
Accordingly, I issued my warrant to the chief electoral officer to make out a new writ of election for the said electoral district.



QUESTIONS

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Mr. Germa: 1.	Are there any United States Army or civilian water survey crews working at present in Northern Ontario?
2.	If so (a) under which department of the Government of Canada are they operating (b) to what purpose is this water survey being conducted?


Hon. Judy V. LaMarsh (Secreiary of Stale):: 1. Not to the knowledge of the Departments of External Affairs and Energy, Mines and Resources.
2. (a) and (b) Not applicable.


FEDERAL TRANSLATION SERVICES
Mr. Isabelle: 1.	To what departments or government bodies does the Department of the Secretary of State supply the staff for a translation office?
2.	With the exception of translators assigned to the translation of bills and debates, how many regular full-time translators are there (a) in the House of Commons (b) in the Senate, with offices in the Parliament Buildings?
3.	How many translators who are not yet Canadian citizens are there in the translation bureau of (a) the Privy Council (b) the Department of External Affairs (c) the Department of National Defence?
and Corporate Affairs, Defence Production, Energy, Mines and Resources, External Affairs, Finance and Treasury Board, Fisheries, Forestry, Indian and Northern Development, Labour, Manpower and Immigration, National Defence, National Health and Welfare, National Revenue, Post Office, Privy Council, Public Service Commission, Public Works, Dominion Bureau of Statistics, Trade and Commerce, Industry, Transport, Unemployment Insurance, Veterans Affairs. Other government departments and agencies are served by the translation bureau's central services.
2.	(a) and (b) None. Because of a shortage of office space in the parliament buildings, the translators serving the Senate and the House of Commons are located with the administration of the translation bureau in the Blackburn building.
3.	(a) 1. (b) 1. (c) 1.


TONNAGE HANDLED AT VARIOUS SEAPORTS
Mr. Blouin: How many tons of merchandise were handled in 1967 in the following seaports: Montreal, Vancouver, Halifax, Port Arthur. Fort William, Quebec, Rimous-ki, Baie Comeau, Sept-Iles (including Pointe Noire) V


Mr. Jean-Charles Caniin (Parliamentary Secretary to Minister of Trade and Commerce):: Preliminary Statistics for Total Cargo Tonnage Handled at Selected Ports, 1967
Port
Montreal
Vancouver
Halifax
Port Arthur-Fort William
Quebec
Rimouski
Baie Comeau
Sept-Iles (including Pointe
Tons Handled 20,740,279* 23,096,287* 9,363,659* 15,464,609 7,174,064* 534,936 4,513,168 Noire) 22,740,432


Julia Verlyn (Judy) LaMarsh: 1. Agriculture, Bank of Canada, Consumer
Supplied by the National Harbours Board.

March 6, 1968
Orders jor Returns


SALE OF LOT, LAC ST-PIERRE, QUE.
Mr. Mongrain: X. Since October, 1967, has the Department of Public Works sold a lot on the shore of Lac St-Pierre to a Mr. Andre Pellerin of Yamachiche?
2. If so, at what price and under what conditions?


Hon. G. J. Mcllrailh (Minister of Public Works):: 1 and 2. No, however three parcels of land, parts of lots 860 and 566 were declared surplus by the Department of Public Works and transferred to Crown Assets Disposal Corporation in 1964 for disposal.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. Coates: 1.	On what date did CJCH T.V. initially make application to the Board of Broadcast Governors for Channel 8?
2.	On what date did the B.B.G. make its initial decision on the application for CJCH T.V.?
3. On what date was CJCH T.V. allowed to submit a further application to the B.B.G. for Channel 8, on what date did the B.B.G. render its interim decision on this application, and on what date did it submit its final decision on this application?
4.	What was the reason for the substantial delay between the initial application of CJCH T.V. and its second application?
5. On what date did CKCW T.V. submit its initial application for television rights in the same area covered by the CJCH T.V. application?
6.	What television companies in the Maritime Provinces are in a position to provide alternate television from the C.T.V. Network for the viewers of northern Nova Scotia, central New Brunswick and Prince Edward Island?
Return tabled.


POST OFFICE HEATING OIL CONTRACTS NORTHWESTERN QUEBEC
Mr. Laprise: 1.	Did the Department of Public Works call for tenders on heating oil for the year 1967-68 for the post offices at (a) La Sarre (b) Amos (c) Normetal (d) Senneterre (e) Macamic?
2.	If so, in what newspapers and on what date?
3.	To whom were the contracts let and in what amounts?
Return tabled.


Mr. Jack A. Irvine (London):: Mr. Speaker, I rise on a question of privilege. Starred question No. 907 in my name has been on the 
order paper since January 22. I wonder whether I could be advised when I might anticipate receiving an answer to this question.


Mr. Bechard:: Mr. Speaker, we will reply to that question as soon as possible.


Mr. R. R. Southam (Moose Mountain):: Mr. Speaker, I rise on a similar question of privilege. Starred question No. 867 has been on the order paper since December 15, and I also would like to inquire concerning when I might have an answer to it.


Albert Béchard: The answer is the same, Mr. Speaker.


Mr. Jack McIntosh (Swift Current-Maple Creek):: Mr. Speaker, starred question No. 693 which appears in my name has been on the order paper since November 14. I should like to know when I might have an answer to this question.


Albert Béchard: The answer is the same, Mr. Speaker.


Hon. George Hees (Northumberland):: Mr. Speaker, starred question No. 545 has been on the order paper since October 24. This is a very simple question for the government to answer if it wishes to do so, and I would appreciate learning when I might receive an answer.


Albert Béchard: The same answer still
applies, Mr. Speaker.


Hon. R. A. Bell (Carleton):: Mr. Speaker, I have the granddaddy of them all. My starred question No. 387 has been on the order paper since September 25.



MOTIONS FOR PAPERS

Albert Béchard: Mr. Speaker, notices of motions for the production of papers Nos. 48 and 50 are acceptable to the government.
March 6, 1968

Notices of motions Nos. 47, 49, 51, 52 and 53 are acceptable to the government subject to the usual reservations concerning privileged papers and the consent of the relevant government authorities.
I ask, Mr. Speaker, that the remaining notices of motions be allowed to stand.



REFUNDS OF OVERPAYMENTS UNDER PENSION PLAN

[Stage Direction]
Motion No. 47-Mr. Hales:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House a copy of all letters, telegrams, and other documents exchanged between the Government of Canada and all provincial governments with respect to securing the permission of the provinces to make payment to employers who have made overpayments to the Canada Pension Plan.
Motion agreed to.

[Stage Direction]
Motion No. 48-Mr. Lewis:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House a copy of all correspondence in 1968 between officials and elected representatives of the Toronto and Metro School Boards and the Minister of Manpower and Immigration regarding the education and cost thereof of immigrant children.
Motion agreed to.

[Stage Direction]
Motion No. 49-Mr. Hales:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House a copy of all letters, telegrams or other documents, exchanged since the first of November, 1967, between the government and any of the provinces in connection with the payment or commitment of the federal government's share in the following cost-sharing arrangements: vocational training schools; ARDA; conservation programs; and student loans.
Motion agreed to.

[Stage Direction]
Motion No. 50-Mr. Bell (Carleton):
That an Order of the House do issue for a copy of the statement of government policy on the obligations of public servants identified as persons employed in a managerial or confidential capacity.
Motion agreed to.
Motions for Papers B.C. INDIAN RESERVES MINERAL RESOURCES ACT
Motion No. 51-Mr. Howard:
That an Order of the House do issue for a copy of all directives prepared by the Department of Indian Affairs and Northern Development and all reports prepared for that Department since January 1, 1965, relating to the British Columbia Indian Reserves Mineral Resources Act.
Motion agreed to.

[Stage Direction]
Motion No. 52-Mr. Howard:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House a copy of all telegrams, letters and other documents exchanged between the government or any agency or department thereof, and any other person, government or organization since January 1, 1965, relating to the British Columbia Indian Reserves Mineral Resources Act.
Motion agreed to.

[Stage Direction]
Motion No. 53-Mr. Fulton:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House a copy of all correspondence, etc., exchanged between the Government of Canada and the Governments of the Provinces or any of them, since September 1, 1967, concerning a slowdown, holdback, or elimination of federal contributions towards any program or project to which it had been agreed that joint federal and provincial financial contributions would be made.
Motion agreed to.


[Stage Direction]
On the orders of the day:
Hon. E. D. Fulton (Kamloops):: Mr. Speaker, I should like to ask the Secretary of State for External Affairs a question regarding Canadian NATO bases in France. Has the government of Canada made any recent requests or had any recent communications from the government of France regarding payment by that country for Canadian owned NATO bases in France given up last year? I understand these bases cost some $18,000,000, for which France agreed to make some recompense.


Hon. Paul Martin (Secretary of State for External Affairs):: Mr. Speaker, consultations

March 6, 1968
Inquiries of the Ministry are now under way among 14 countries, particularly the United States and Canada, in respect of claims against France. Until those consultations have resulted in a conclusion I am afraid I cannot give any more definite reply. I can say that this matter is under very active consideration.


Hon. D. S. Harkness (Calgary North):: Mr. Speaker, will the minister inform the house as to the size of the claim Canada has made against France in respect of compensation for these facilities?


Paul Joseph James Martin: Mr. Speaker, this is one of the matters forming part of the consultative arrangement. An assessment is now being made of what each country considers to be its claim against France.


IMMIGRATION
[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquitlam):: Mr. Speaker, I should like to direct my question to the Minister of Manpower and Immigration. It relates to the Asians in Kenya who in a short time are to lose their work permits and may become stateless citizens. Is any special consideration to be given to these people to allow them to enter Canada, in the interests of humanity and Commonwealth relations? Will special consideration be given on compassionate grounds, and is it contemplated by the government to waive the present regulations?


Hon. Jean Marchand (Minister of Manpower and Immigration):: Mr. Speaker, I think that our regulations, as they stand now, can cover that situation. I have already told the house, if I remember rightly, that we will send special teams to Kenya as soon as the number of applications warrants it.
We are ready to examine those applications quickly when they are made.


Thomas Clement (Tommy) Douglas: Mr. Speaker, I should like to ask whether special teams have gone to Nairobi, and will some additional points be granted in order that these people may qualify? Will a special set of regulations apply in the case of these particular applicants?


Jean Marchand: Mr. Speaker, I will
inquire and tell the hon. member tomorrow if teams are already in Kenya.

As far as changing our standards of selection is concerned, we have not considered that matter yet.


Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I should like to ask the Secretary of State for External Affairs whether, if the Commonwealth is to serve any useful purpose at all, the government does not think this is a matter which should be discussed by Commonwealth members.


Mr. Speaker:: Order, please. The hon. member is now asking an argumentative question. This is not in order.


Mr. Jack Roxburgh (Norfolk):: Mr. Speaker, I should like the Minister of Manpower and Immigration to assure us that although privileges may be extended to bring in these people, this will not upset in any way the immigration policies now in force.


Mr. Gilles Gregoire (Lapoinfe):: Mr. Speaker, I wish to put a supplementary question to the hon. Minister of Manpower and Immigration.
Could he tell us whether his department has made decisions concerning the case of the young Cuban athlete who has asked for asylum in Canada?


Mr. Speaker:: The question is not supplementary.


Mr. Raymond Rock (Jacques-Cartier-Lasalle):: Mr. Speaker, I have a supplementary question. Will the minister also take seriously into consideration-


Mr. Speaker:: Order. The Chair has recognized the hon. member for Wellington South.


Mr. A. D. Hales (Wellington South):: A supplementary question, Mr. Speaker, to the Minister of Labour who is responsible for housing. Can he assure this house and the country that housing will be made available to these proposed immigrants?


Mr. Speaker:: Order, please.


Raymond Rock: A supplementary question, Mr. Speaker. In considering this immigration problem, will the minister also take seriously into consideration the high unemployment problem in Canada?


Some hon. Members:: Explain.


Mr. Bell (Saint John-Albert):: Another split.
March 6. 1968


APPLICATION FOR POLITICAL ASYLUM BY CUBAN ATHLETE
[Stage Direction]
On the orders of the day:
Mr. Ralph Cowan (York-Humber):: Mr. Speaker, I have a question that I should like to address to the Minister of Manpower and Immigration. Has a ruling yet been made with regard to the application of the young Cuban athlete in Vancouver to remain in Canada and be granted political asylum?


Jean Marchand: Mr. Speaker, I do not remember. I am going to check and I shall give an answer to the hon. member tomorrow.




[Stage Direction]
On the orders of the day:
Mr. Gerard Laprise (Chapleau):: Mr. Speaker, I should like to put a question to the hon. Secretary of State for External Affairs.
Is he aware that the Quebec premier has said that he did not receive any note from the government in Ottawa concerning the Quebec delegation to Gabon?
Moreover, can the hon. Secretary of State for External Affairs tell us at what time that note was sent to the Quebec government, and whether he is willing to table it in the house?


Right Hon. L. B. Pearson (Prime Minister):: Perhaps I ought to deal with that matter, Mr. Speaker, because the note was tabled by me. In that note which I tabled the other day I said it was suggested that the Quebec minister of education could head a Canadian delegation. That is the exact truth, and that suggestion was made. The question of a formal invitation, of course, could not arise because Canada itself had not at that time been invited to the conference. Indeed, in spite of our efforts to secure an invitation, we were not successful. But the words I used in my statement were quite accurate. The record will bear that out.


Mr. Heward Grafftey (Brome-Missisquoi):: A supplementary question, Mr. Speaker. In view of the current difficulties between Canada, Gabon and the province of Quebec, would 27053-462
Inquiries of the Ministry the Prime Minister assure the house that before continuing to push the federal cause the government will see fit to carry on the necessary constitutional discussions to clear up this matter?


Lester Bowles Pearson: Mr. Speaker, there were discussions with the province of Quebec from the very beginning of this matter.


Mr. A. B. Patterson (Fraser Valley):: Mr. Speaker, this is somewhat in the nature of a supplementary question, but it was supposed to be a main question. I ask the Prime Minister whether an official invitation has been extended to the Canadian government for the proposed educational conference in Paris which follows the one held in Gabon. Has the government been invited to participate in that particular conference?


Lester Bowles Pearson: I do not believe any invitations have been sent in respect of that conference. If such an invitation to attend were sent to Canada by the sponsoring government, which in this case would be the government of France, of course we would be very glad to accept.


Gilles Grégoire: Mr. Speaker, I wish to put a supplementary question.
Since Quebec has been invited to a conference on education to be held in France, can the right hon. Prime Minister tell us whether, on that occasion, the Canadian government intends to break off its diplomatic relations with France, as it has done with Gabon?


FINANCE
[Stage Direction]
On the orders of the day:
George Harris Hees: Mr. Speaker, I should like to ask a question of the Minister of Finance. In view of the strong indication that the government of the United States intends to impose a surcharge on import tariffs as a means of correcting its balance of payments problem, has the government of Canada been in touch with the government of the United States about this matter? If so, has it received an assurance that any such surcharge if applied will not be imposed on Canadian products?

March 6, 1968
Inquiries of the Ministry


Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, I cannot confirm that the government of the United States has any intention of imposing such a surcharge. I can say, however, that during my discussions with the Secretary of the Treasury this possibility was discussed between us.


George Harris Hees: I have a supplementary question, Mr. Speaker. Did the minister receive an assurance from the Secretary of the Treasury of the United States that Canada would not be included in any plan to impose a surcharge if one is applied?


Mitchell William Sharp: Mr. Speaker, needless to say the Secretary of the Treasury would not deal with hypothetical questions like that. I can only say that Mr. Fowler did not confirm that the United States intended to impose a tax on imports.


George Harris Hees: I have a further supplementary question. The minister has referred to the matter as being hypothetical. Does he honestly not believe that it has considerable substance?


Mr. Speaker:: Order, please.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Hon. Michael Starr (Ontario):: Mr. Speaker, I wish to address a question to the government house leader. Would he consider the following proposal, namely that in view of the fact that item No. 64 on the order paper, the second reading of Bill No. C-202, may contribute to improving the housing situation, we would be prepared to pass the bill in all its remaining stages in one day if the government would bring it forward. We would also propose to pass without debate item No. 66 on the order paper, the resolution to set up a joint committee of both houses of parliament to examine the progress and programs of the National Capital Commission, so the joint committee can get to work on this matter.
I wonder whether the house leader could indicate to us whether he is prepared to accept this proposal.


Hon. Allan J. MacEachen (Minisier of National Health and Welfare):: Mr. Speaker, I would be happy to accept the proposal with one amendment, namely that my hon. friend would agree to pass item No. 64 without debate.


Some hon. Members:: Oh, oh.



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
["You don't know."]
Mr. John Loney (Bruce):: My question is to the Minister of Agriculture. Would the minister inform the house if it is his intention when he meets the national farmers union tomorrow to quote statistics implying that they have never had it so good?


Hon. J. J. Greene (Minister of Agriculture):: I will quote statistics to show the position in which the farmers find themselves today.


Mr. Speaker:: Order, please. The question and the answer are both argumentative.



[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to address a question to the Secretary of State for External Affairs. I am reliably informed that the quickest and most effective way to stop the war in Viet Nam would be to prevent the export to the United States of Canadian nickel, which is so essential to the prosecution of that war.


Mr. Speaker:: Order, please. The hon. member should ask a question.


Herbert Wilfred Herridge: That was just a preface, Mr. Speaker; I am coming to the question now. Would the government consider negotiating an agreement with the United States on terms similar to those offered to France for the export of uranium, and in so doing earn the gratitude of all peace loving people?


Paul Joseph James Martin: Mr. Speaker, of course Canada exports a great many important mmaterials to the United States. I understand that paper is essential within the context of the question asked by my hon. friend. I do not think the Canadian government would earn the gratitude of Canadians employed in producing these commodities if it sought to restrict these exports to the United States. I am sure this would be the view of the hon. member for Sudbury, who is in the same party as my hon. friend.


Thomas Clement (Tommy) Douglas: have a supplementary question, Mr. Speaker. In view of the fact that the government has
March 6. 1968

placed restrictions on the amount of these commodities that can be exported to other countries, particularly nickel and copper, is the minister of the opinion that adequate markets for these commodities could be found elsewhere in the world?


Paul Joseph James Martin: I doubt it.


Mr. Lewis:: You don't know.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Douglas Scott Harkness: Mr. Speaker, I should like to direct a question to the Minister of National Defence. Has his department under consideration a plan to disband the Canadian Regiment of Guards, and if so for what reasons?


Hon. Leo Cadieux (Minister of National Defence):: There is no such plan, Mr. Speaker.



HARBOURS


[Stage Direction]
On the orders of the day:
Mr. J. M. Forrestall (Halifax):: Mr. Speaker, my question is for the Minister of Transport. I should like to ask the minister whether the government or his department are considering a change in the structure or the makeup of the National Harbours Board to include a representative from the port of Montreal?


Hon. Paul Hellyer (Minister of Transport):: This suggestion was made by the Montreal port commission, Mr. Speaker. It will, of course, be given the usual careful consideration. I have no idea yet what attitude the government might adopt.


J. Michael Forrestall: May I ask a supplementary question. If there is any tendency on the part of the government to follow that course, will they give equal consideration to representation from Halifax and Saint John?


Paul Theodore Hellyer: Halifax already has a representative on the board, Mr. Speaker.


J. Michael Forrestall: Is that an admission?
27053-462J
Inquiries of the Ministry TRADE



STEEL-ANSWER BY MINISTER RESPECTING DUMPING DUTY

[Stage Direction]
On the orders of the day:
Mr. Joseph Macaluso (Hamilton West):: have a question for the Minister of National Revenue arising out of the concern of one of the major steel producing areas of Canada with respect to an answer the minister gave as reported on page 7279 of Hansard for yesterday, dealing with steel coming from foreign countries. The question arises-


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


Joseph Angelo Macaluso: The question arises out of a report in this morning's Globe and Mail. I ask the minister if this report is the result of a press release or statement, or is it an erroneous interpretation of the answer the minister gave yesterday?


Mr. Speaker:: Order. The hon. member for Saint John-Albert.


Joseph Angelo Macaluso: I rise on a question of order, Mr. Speaker.


Mr. Speaker:: The hon. member's question is not in order. He is asking about a statement.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Thomas Miller Bell: have a question for the Minister of Transport. Has the minister received a submission from the Canadian Air Line Pilots Association which disagrees completely with the report on the C.P.A. crash in Japan? If so, will he reconcile these two statements and report to the house?


Paul Theodore Hellyer: I will take the question as notice.



INDIAN AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, I should like to direct a question to the Solicitor General, and ask him whether in the light of the fact one of the Indian superintendents

March 6, 1968
Inquiries of the Ministry in British Columbia has been charged with violation of trust as a public officer and with theft of over $50, will the minister undertake to inquire into the ramifications which may flow from the laying of those charges?


Hon. L. T. Pennell (Solicitor General):: I am
not familiar with the case and of course it would not be appropriate for me to make any comment at this time. I will discuss it with my colleague the Minister of Indian Affairs and Northern Development after the trial in order to ascertain if there are any related matters that require attention.



CRIMINAL CODE


[Stage Direction]
On the orders of the day:
Mr. Robert McCleave (Halifax):: My question is for the Minister of Justice, Mr. Speaker, and was raised originally in the house on February 8. Has the minister decided whether all or part of the omnibus bill amending the Criminal Code will be referred to a committee so the public will know whether or not to prepare representations?


Hon.   P.-E. Trudeau@Minister of Justice: Mr. Speaker, the decisions which we are making in that respect are continuously adjusted, on account of the chronology of events, of course. We do not know as yet when this bill might come before the house. If it is not introduced during this session or this parliament, it will be introduced during another one. For that reason, the time when this bill will be studied remains to be determined.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. R. N. Thompson (Red Deer):: I direct my question to the Solicitor General. In view of the increasing number of reports regarding the serious effects on young people of the use of illicit drugs; the growing evidence of increasing traffic in drugs; also in view of the recent recommendations of the Canadian Medical Association relating to the dangers of such illicit drugs which require legal and social restrictions against their distribution-


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


Robert Norman Thompson: I am coming to that, sir. Would the Solicitor General inform the house whether his department is considering any specific action for more effective control of this dangerous situation, including control over the dissemination of material and television programs which encourage the use of drugs?


Lawrence T. Pennell: The
R.C.M.P. is making a forceful effort to deal with the problem. The scope of the problem is revealed by the increase in the number of prosecutions for drug offences from 943 in
1966-	67 to 1,915 in the first 11 months of
1967-	68. As recently as last week the deputy commissioner of R.C.M.P. operations met with officials of the bureau of narcotics in Washington as part of a continuing consultation. A few weeks ago the commissioner convened a special meeting of all assistant commissioners heading the eight divisions across Canada for the purpose of discussing, among other things, matters relating to drug trafficking. Of course the R.C.M.P. is in touch with every agency on the continent-


Mr. Speaker:: Order, please. I suggest to the minister that perhaps this statement is a bit long.



FINANCE


[Stage Direction]
On the orders of the day:
Edmund Davie Fulton: Mr. Speaker, I should like to ask the Minister of Finance a question with relation to the recent drawing by Canada of our credit in the International Monetary Fund, amounting to $241 million. Would the minister tell the house whether any transfer tax or penalty was payable by Canada in connection with that drawing?


Mr. Speaker:: Order. I wonder whether the hon. member would not consider that this is the type of question that might be asked in a few minutes when the house considers the estimates of the Department of Finance.


Edmund Davie Fulton: With respect, Mr. Speaker, I was asking the question now so we might have the matter as background to the minister's statement.


Mitchell William Sharp: Mr. Speaker, I would have to take this question as notice, but I shall have my officials
March 6. 1968

Inquiries of the Ministry
before me later and will ask them. I am una- the resignation of the Minister of Trade and ware of any such tax or payment, but I Commerce, which I understand has- would not want to deny it without consultation.	Mr. Speaker: Order. The hon. member
knows that his question is not in order.



CANADA PENSION PLAN

[Stage Direction]
INQUIRY AS TO REFUNDS OF EMPLOYEES On the orders of the day:
Alfred Dryden Hales: Mr. Speaker, I should like to address my question to the Minister of National Revenue. Is the minister in a position to report to the house on the progress his department has made with respect to the refunding of overpayments by employers to the Canada Pension Plan?


Hon. Jean Chretien (Minister of National Revenue):: Mr. Speaker, in order to solve this problem, a new legislation would have to be introduced and I do not think that we could announce the government policy immediately.
We have already been in consultation with some provinces and we shall inform the house of any decision in due time.



HIGHWAY SAFETY


[Stage Direction]
On the orders of the day:
Mr. Barry Mather (New Westminster):: Mr. Speaker, I wonder if I could ask the Minister of Transport whether as part of the federal program for highway safety consideration has been given to encouraging the provinces to establish safety standards for used cars on an interprovincial basis.


Paul Theodore Hellyer: Mr. Speaker, this is one of the questions that we expect to discuss with the provinces when we meet with provincial representatives. Personally I think an effective standard for used cars is essential, and I should like to see one adopted which could be applied by all provinces of Canada.



THE MINISTRY


[Stage Direction]
On the orders of the day:
George Harris Hees: Mr. Speaker, I should like to direct a question to the Prime Minister. Could the Prime Minister advise the house when he expects to accept



INCOME TAX


[Stage Direction]
On the orders of the day:
Mr. Bud Germa (Sudbury):: Mr. Speaker, I should like to direct a question to the Minister of National Revenue. Have his inspectors in the income tax department been instructed to make arbitrary assessments when making a determination as to tips received by bartenders in Canada?


Mr. Speaker:: Order. The question should be put on the order paper.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. Ed. Schreyer (Springfield):: Mr. Speaker, my question is directed to the Minister of Agriculture. I should like to ask the minister whether he and his officials have yet made a determination in the claim of the western Canada potato growers that importations of United States potatoes into western Canada are at prices that constitute dumping.


Mr. Speaker:: Order. It seems to me that this is a repetition of the question asked yesterday.


Edward Richard Schreyer: On a point of privilege, Mr. Speaker, I should tell Your Honour that yesterday you advised me that the question should be asked during consideration of the estimates, but this was impossible because the minister was filibustering his own estimates.


Mr. Speaker:: Orders of the day.


Edward Richard Schreyer: Mr. Speaker, either the minister has not heard my question or he refuses to answer. I should like to restate my question.


Mr. Speaker:: Order, please. I am sure the minister heard the question.


John James Greene: Mr. Speaker, the hon. gentleman is asking for a legal opinion. He should know that the rules of the house do not permit me to give a legal opinion.

March 6, 13S8
Supply-Finance


Edward Richard Schreyer: A supplementary question, Mr. Speaker. In the light of the minister's answer I should like to ask whether he intends to make a decision on the request of the western Canadian potato growers' association for the imposition of a value for duty on United States exports of potatoes to Canada.


John James Greene: Mr. Speaker, if such decision is to be made it will be announced in the proper manner.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Frank Howard: Mr. Speaker, 3 should like to direct a question to my dear friend the Secretary of State for External Affairs. I preface my question by saying how pleased we are that he is coming to my home [DOT]community later this month. I look forward to his visit with anticipation.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order.


Frank Howard: Mr. Speaker, the question I wish to pose to the minister is whether he would enlighten us on the government's position with respect to the international boundary between Alaska and British Columbia.
Hen. Paul Martin (Secretary of State for External Affairs): Mr. Speaker, I am always very glad to enlighten my hon. friend.



FINANCE


[Stage Direction]
On the orders of the day:
Hon. J. W. Monteith (Perth):: Mr. Speaker, I should like to ask a question of the Minister of Finance. Is the minister proposing to make an offering of Canada savings bonds to the public this spring, a possibility reported in this morning's Globe and Mail?


Mitchell William Sharp: Mr. Speaker, the government has under consideration making an offer to exchange the 1959 series for a new series. I made an announcement about this some time ago.

The house in committee of supply, Mr. Batten in the chair.
] Mr. Greene.]



DEPARTMENT OF FINANCE

[Stage Direction]
Administration
4c. Grant to the endowment fund of the Vanier Institute of the Family-L'institut Vanier de la famille, $236,869.
The Chairman:: Order. House again in committee of supply, supplementary estimates (C), 1967-68, of the Department of Finance, vote 4c.


Mitchell William Sharp: Mr. Chairman, it had been my expectation two weeks ago that we would proceed with a debate on the state of the economy in accordance with the desire expressed by the opposition. Recent developments on the international scene and the adverse vote on Bill C-193 have altered the setting for this debate. It now takes on a new character and a new urgency.
The immediate and urgent task facing the government and parliament is to take action which will buttress confidence in the Canadian economy and the Canadian dollar in the midst of mounting international financial uncertainties.
There is little we can do in this parliament to affect the underlying forces at work in international markets. We do have responsibility to ensure that we do not contribute, either by our action or by inaction, to the weakening of our own position and the worsening of the world financial situation. I shall therefore take advantage of this occasion to indicate why it is that the government considers it essential to introduce fiscal measures to replace the revenues that would have been provided by Bill C-193. A resolution preceding the introduction of another and different tax bill for this purpose will appear on the order paper tomorrow.
In addition to the tax measure, which the government hopes can be dealt with as soon as possible, and the further cuts in expenditure which I shall announce, it is the government's intention to announce within a day or two proposals concerning restraint on the increases of prices and wages and other costs and incomes. These proposals will revolve around the establishment of a board of review.
[DOT] (3:10 p.m.)
Before discussing our domestic affairs and the policies that we feel should be followed in regard to them, I would like to describe some of the recent events in international financial markets since I gave my budget statement on November 30.
March 6. 1968

The devaluation of sterling and the nervous mood that has existed in international circles since that happened have brought uncertainty and speculation into many of the capital and exchange markets throughout the world. Waves of rumours, speculation and market fluctuations have occurred at various times during the past three months. Seldom have international markets been so disturbed.
Both the international exchange and capital markets have been influenced considerably by the United States balance of payments program, announced on January 1 this year, which was designed to check the outflow of gold. The main item in the United States program which has created uncertainty over its effects on Canada has been the new mandatory control over direct investments by United States controlled businesses in other countries. When this program was announced and explained to us it was evident that the United States government had tried to achieve its objectives in ways that would minimize any impact on Canada, which, as the balance of payments figures between our two countries show, would be counter-productive as far as the United States is concerned.
I was able to say when these controls on direct investments were announced that the assessments given to me indicated that these were not intended or likely to lead to any material reduction in the flow of United States direct investment to Canada this year. Since January 1 we have examined the probable effects of these controls in more detail, and discussed them with the United States on several occasions. These controls leave room for about as much flow of direct investment into Canada as would occur without them this year, with a few exceptions. In the particular case of the petroleum industry, where programs change considerably from year to year, some problems have been under review both here and in Washington, and I expect these can be overcome.
However, in the nervous mood that has existed in international markets in recent months, it was natural that there would be uncertainty and concern over the possible effect of these United States measures on the Canadian situation. Around the middle of January pressure developed against the Canadian dollar in exchange markets, apparently triggered by misunderstanding of the effects of these United States controls on direct investment. On January 21 the United
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States Secretary of the Treasury, after discussing the matter with me, issued a clarifying statement which provided reassurance that the new United States balance of payments program does not call for, nor is it intended to have the effect of causing, abnormal transfers of earnings or withdrawals of capital by United States companies having investments in Canada, and that the program provides scope for continued large flows of capital to Canada.
As the house knows, of course, there continues to be an important inflow of long term capital from the United States. Indeed, hardly a month passes without long term loan issues being made in the United States on behalf of Canadian provinces, municipalities, or other bodies here.
On January 21 the Bank of Canada increased its bank rate from 6 per cent to 7 per cent and announced that the chartered banks had agreed to discourage the use of bank credit to facilitate abnormal transfers of funds abroad by Canadian subsidiaries of foreign companies, or to replace financing which has in the past normally been provided by parent companies.
Following this clarification by the United States and the action of the Bank of Canada, the pressure on the Canadian dollar abated. The regular announcement of our reserve position at the end of January indicated that Canadian reserves during the month had declined approximately $100 million in United States terms after taking into account the drawing into our reserves of $250 million in United States dollars by the Bank of Canada through activation of part of its reciprocal credit facility with the federal reserve system.
In the early part of February there was a period of further pressure on the Canadian dollar in the exchange market as the market reacted to the news of the changes in the reserves during January. Later there was substantial pressure on the dollar again after the adverse vote on the government's tax bill. The state of our reserves at the end of February, published last Friday, makes clear that there would have been a further reduction in our holdings of exchange that month had there not been an addition to the reserves secured by the drawing upon the International Monetary Fund. If we had not made this drawing there would have been a reduction of $113 million, in United States terms, in our gold and foreign exchange holdings.

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As I said at the outset, there is little we can do about international financial developments like devaluation of sterling and the United States efforts to check the outflow of gold. We do have a responsibility to take action to strengthen and buttress our own position in the face of these international developments. There has been concern in recent years over the rise in Canadian prices and costs of production and its possible effects on the competitive position of Canadian industry. There have been more recently uncertainties as to the future action to be expected of the government and of parliament here.
First let me deal with our competitive position. I should like to recall that our trade position last year was stronger than it has been for some years past, and that by the end of the year our trade surplus was running at its highest level in over a decade. Indeed, our over-all current account position on the balance of payments in 1967, which I am told will be published later this week, has been considerably stronger than for several years previously.
While some of this strength derived from the extraordinary receipts that we obtained from tourist trade because of Expo '67, the net improvement on all our other current international transactions was nearly as large. We can reasonably expect that our current account balance this year, though it is bound to widen, will still be better than it was in either of the two years before Expo. It will thus represent an improvement in relation to the average deficit of the last 12 years, both in absolute terms and more especially in relation to our now greatly enlarged national output and volume of international transactions.
The present exchange rate of the Canadian dollar is appropriate to the situation of our economy. We are still experiencing the upward thrust in our economy which began seven years ago and which has continued without serious interruption to the present. Our export performance has been good, especially in the past few months. Imports have not been increasing disproportionately. Our economy is not significantly underutilized; indeed it is still displaying some of the effects of excess demand pressure which had built up over the long expansion.


Mr. Churchill:: Where is the crisis, then?


Mitchell William Sharp: In these circumstances a lower exchange rate would add to our inflationary problems by increasing the demand on

Canadian production by foreigners, and by reducing the use by Canadians of goods and services produced abroad. Domestic demand would have to be further restrained in order to offset the inflationary consequences of these reactions.
We must also bear in mind the effects of our action upon others and thus upon the world with which we trade and from which we derive so much of both real and financial capital. The international finance system has been under pressure for several years and has recently suffered some serious shocks. We must accept and discharge our share of responsibility for the effective working of the world system of trade and payments. That system, and the mutual assistance it involves in times of stress, provides large resources to meet speculative movements such as we have encountered recently.
[DOT] (3:20 p.m.)
Such resources are available to us as they have been to others, as is evident from the use we made of the reciprocal currency arrangements with the federal reserve system in January and the drawing on the fund in February. Further large amounts are available to us from these sources to meet further speculative movements should they occur, quite apart from the new credits which it would be possible for us to arrange if they are required.
I mentioned the influence on markets of uncertainty as to the action to be expected by government and parliament here, and I mentioned that when the tax bill was voted upon adversely there was a reaction in the exchange markets. I think we must recognize the danger of exaggerating political uncertainty in a situation such as we have now. It makes news to keep saying we face a financial crisis, that the government in Canada will be or may be paralyzed by political developments. It is possible to create a financial crisis if people come to believe these allegations about parliament. Yet parliament did not extend unreasonably the debate on the confidence motion. Parliament does want to debate seriously the state of the Canadian economy. I do not believe there is a will on either side of the house to paralyse parliament.


Some hon. Members:: Hear, hear.


Mitchell William Sharp: The excitement generated in a political crisis such as we had recently, if prolonged, may create that impression, but I believe it is false.
March 6, 1968


Some hon. Members:: Hear, hear.


Mitchell William Sharp: This can only be done by tough and somewhat arbitrary measures of a temporary character that are appropriate in an emergency like the present one. We propose to table a revised schedule of estimates reflecting these reductions for the approval of parliament, in place of the present main estimates.
March G, 19G8

I also want to announce that the government has decided to impose a freeze forthwith on the total numbers employed in the public service as a whole.
In an ideal economy where everything worked out according to the basic theory of the price system and the movement of resources, where everything was competitive, where we did not suffer from external influences or internal imperfections, we would be able to pursue the objective of full employment and of maximum economic growth without serious hindrance. But the world is not an ideal place; Canada does not have a perfect economy. We face limits upon our freedom of action. These limits must be taken into account just as much as the ideals toward which we all would strive in the pursuit of full employment, prosperity and social equity.
The chief limit which confronts us now and about which we have learned much in the last several years is that of the inflationary tendencies that develop as we approach toward full employment. We have found that at a level of unemployment of 3i per cent in 1965 and 1966 our prices began to increase sharply. Our costs increased much more rapidly than did those of competing economies. Even when the level of employment dropped off a little and the pressure of demand upon our markets was less intense, we have found that the momentum of wage increases, of other cost increases, of price increases, has kept up. That is now the chief constraint upon our policy.
Nor is our problem simply the actual price increases taking place now. What is most disturbing is the growing tendency to expect that prices will continue rising year after year in the future. It is this amongst other factors which is causing workers to seek such high wage settlements. It is this which is causing investors in this country and elsewhere to seek such high interest rates. It is this which is causing despair among the old and others with fixed incomes, especially those who are living on the savings they have made over many years. It is this which is creating uncertainty in the minds of those whose productive investment must give us more and better jobs in the future. It is this expectation of steadily and continuously rising prices, most fundamentally, which is the concern of those who must choose between investments in Canada and investments elsewhere. Therefore, Mr. Chairman, the government feels it must ask parliament now to
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adopt further financial measures of an antiinflationary character.
The country needs a clear demonstration that parliament is willing to take a determined stand against inflation even when such a stand requires that temporarily other objectives must be given second place. If we here are not willing to take the action that our great responsibilities require us to take, what can we expect of others?
We must give priority in our fiscal policy to resisting inflation. We must also plan, in consultation with business, with labour, and with all those whose decisions are important in determining prices, a means of greater understanding of the mutual danger of excessive increases in prices and in wages and other costs by which those in positions of strength can exploit their market power under present circumstances.
We cannot accomplish this direct influence upon prices and wages by imposing a system of controls upon our economy. We do not have the legal jurisdiction here in parliament to do it nor could we expect under peacetime conditions to solve the multitude of detailed problems that would require solution in exercising a rigid program of this kind. We are essentially a market economy exposed to the markets of the world. By and large, over the decades we have prospered by reason of this open economy. We have developed and expanded faster than almost any other country in the past 30 years. It would be retrograde and unnecessary to abandon all the advantages we derive from operating as a market economy, including not only the markets for goods and services but the markets for labour and for capital. On the other hand, we have to reconcile our over-all economic policies and to achieve our basic economic goals, within the framework of free markets.
Instead of legal controls we must use whatever powers of persuasion and influence we can muster in order to bring about pricing decisions and wage settlements that take into account the overwhelming public interest in price stability. Our purpose and program, which will, as I have said, revolve about the establishment of a board of review, will be to get price stability with a higher current level of employment than we could have if we relied only on fiscal and monetary measures to achieve our ends.
I have been glad to hear and see what the Leader of the Opposition has said on this subject within the last few days and I had the opportunity today of seeing something that

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was said by the New Democratic party on the subject. It seems to me that there is a good deal of agreement on all sides of the house with the general approach to this subject as I have outlined it.


Gordon Minto Churchill: What about the Creditistes?


Mitchell William Sharp: I hope that we shall find in this debate and in the measures to be taken the groundwork for an agreed set of policies that will enable us to continue our prosperity without inflation.
May I conclude by emphasizing that the present international circumstances make it urgent, and I cannot emphasize this too much, that we deal as promptly as possible with the measures that are now necessary.


Mr. Lambert:: Mr. Chairman, the Minister of Finance finished his peroration with this sentence:
I hope that we shall find in this debate and in the measures to be taken the groundwork for an agreed set of policies that will enable us to continue our prosperity without inflation.
[DOT] (3:40 p.m.)
The fact is that we have had prosperity with inflation. This government, in spite of many warnings, has continued its action heedless of inflation. We now find these latter day converts concerned about problems of inflation. The statement made by the minister is fraught with paradoxes. We find reference to the United States, the expanding economy, the pressure on prices and other factors. Canada is not fighting the Viet Nam war. We do not have shortages of commodities, goods and other things because of a war effort. I can understand how in the United States tax measures may be orthodox. They are attempting to siphon off demand, but who has suggested that the demand in Canada has ever been excessive? I have never heard of a shortage of goods or a shortage of labour, at least in most places; yet we are trying to deal with the problem of inflation, which this government has become aware of belatedly, by seeking to emulate our neighbour to the south.
I was interested in the nature of the reply the Minister of Finance made yesterday to a question I asked, as recorded on page 7272 of Hansard'.
-in light of the rather disturbing reports yesterday and this morning concerning our currency, is the Minister of Finance in a position to advise the house what steps Canada may be taking to protect the level of the Canadian dollar?

In part the minister said:
-I hope parliament will support this government in its endeavour to raise the necessary revenues which are part of the pattern to give confidence to foreigners and Canadians that the Canadian dollar is worth its present parity position.
Let us look at those words. I detect, not only in that reply but elsewhere, an implication that the present crisis is the result of parliament taking irresponsible action in rejecting Bill C-193. Let me immediately reject that suggestion. It is with a strong feeling of arrogance that the government would attempt to put forward such an argument. The opposition was acting within its responsibility. It never liked the proposal announced in the mini-budget toward the end of last November when there was no apparent pressure on the Canadian dollar. The pressure on the Canadian dollar, to the extent it has now developed, developed since January as a consequence of the devaluation of the pound sterling and subsequent pressure on the United States dollar. Since the Canadian dollar is the second dollar currency in the world we were bound to be on the front line of any assault on the United States dollar. It is quite wrong to suggest that parliament contributed to the present pressure crisis.
It was the view of the opposition that the proposed tax measure was wrong, that it was inflationary and unnecessary at the time. The opposition had the right to reject it just as it has the right to reject the proposals to be announced later this day if it considers them to be improper. The opposition will consider the proposals with great care. The government does not have a monopoly on concern for the value of the Canadian dollar. This concern is shared equally by the opposition. We will consider the government's proposals with care and there certainly will not be any conscious effort to impede the implementation of any measure we consider to be reasonable and justifiable.
Having said that, let me hasten to add that the statement made by the Minister of Finance yesterday implied that by increasing government revenues we will restore confidence. Surely this totally ignores any cutback in governmental expenditures. It is clear from the economic sermon delivered by the minister this afternoon that he feels he must tax to raise revenue and thus restore confidence in the Canadian dollar. Surely that is wrong.
The minister has clearly admitted and demonstrated the degree of inflation which
March 6, 1968

has taken place in the past year. This inflation is not classic in the sense that there is too much money chasing too few goods. The minister proposes by taxation to curb inflation. Are we to buy fewer goods made in Canada? Shall we employ fewer Canadians and therefore create new unemployment? This is what will happen to the extent that this measure is effective in curbing the consumption of Canadian goods and services. Have prices gone up because goods are scarce? That is not the case.
I still wonder what measure is to be placed before us today. In this connection let us consider the level of government expenditure. The minister has said there will be a reduction of some $75 million, although he has not indicated in what sector, and I think it would be idle to speculate in this regard. Perhaps he intends to accelerate the reduction of our defence expenditures. Perhaps he feels that a freeze in the number of public servants will result in some saving. Perhaps he plans to cut back on other government programs. In any event, these government reductions must be realistic.
I have always maintained that provincial and municipal governments share a responsibility with the federal government in respect of our economy. At this time the provincial legislatures have either received or are about to receive provincial budgets. The government of Canada should set an example regarding realistic anti-inflationary measures. We all suffer because of inflation.
[DOT] (3:50 p.m.)
We had the comic opera exercise at the time of the budget debate when the President of the Treasury Board said that the government was limiting its expenditures and had cut all the fat from them. Yet we are told we are going to limit the increase to something like 4.5 per cent. When we compared the figures of the first estimates for 1968-69 with those for 1967-68 we found there was an increase more like 8 per cent. Even if we take into account the supplementary estimates we are now considering, next year's estimates are close to 6 per cent higher than the total estimates of 1967-68.
Suggestions have been made with regard to realistic anti-inflationary measures that could be adopted. I ask hon. members to read the report of the Auditor General and his references to the unimplemented recommendations of the royal commission on government organization. This report is to parliament; it is not a report to the government. The report
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assesses the performance of the government. We see what little regard has been paid to the recommendations of the public accounts committee and of the Auditor General. It is as though the government says: We have to have these reports; they are a hair-shirt we must wear but we will ignore them as much as possible.
In Montreal this week the Leader of the Opposition indicated his willingness to support government measures to counter inflation and support the Canadian dollar, but he is not certain that new taxes are the only way to achieve these ends. We want to know precisely what the government has done in the past year with regard to implementing the recommendations of the Glassco report and what it intends to do this year. I have referred to the Auditor General's strictures with regard to non-performance in this connection, and that section of the report on page five should certainly make the government hide its face in embarrassment.
There was a reference by the Minister of Finance to, shall we say, the manufacturing of a crisis. He did not use the phrase "manufacturing a crisis" but he certainly referred to the situation. He delivered a lecture to the communications media about exaggerating political uncertainty, and he said on page 4 of his speech:
It makes news to keep saying we face a financial crisis; that the government in Canada will be or may be paralysed by political developments.
I wish he had told the Prime Minister about that. When the Prime Minister went on television that Wednesday evening we were given one of the best performances in how to stoke the fires of crisis. That lesson should be administered right within the government.
With regard to the announcement by the minister that he will later today table two resolutions with reference to tax measures, I say it must be the government's responsibility to choose the methods which it deems best suited to deal with the problem not only of inflation but of the pressure on the Canadian dollar. It is the responsibility of the government to choose its methods. It is not the responsibility nor the obligation of the opposition to be blackjacked or pressured into accepting them as being the answers.
After all, we heard the Minister of Justice say the other afternoon: We are the elected; we are the ones to choose. I say, all right, if that is what he says then the responsibility lies directly with those on the other side of the chamber and the government must be

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held accountable for any measures it introduces. If the government fails to provide methods satisfactory to the opposition the opposition will decide, in the light of the circumstances, whether they are proper measures and the government cannot say: You must not turn down our proposals or you will further aggravate the international crisis.
The problem of the parity of currencies is an international one. The United States faces a more serious problem in this regard than we do. They propose to take certain steps according to the conditions that exist in that country. Britain, too, has taken steps and may have to take further steps. But Britain will have a budget in two weeks' time. Why should we not be having a full-scale budget rather than one of these piecemeal propositions? After all, a budget during the month of March is not an unheard of thing. The only complication is the leadership race. This anchors the action or inaction of the government. Frankly, Mr. Chairman, it is my view that ultimately only a full-scale budget can help to restore full public confidence.
We must have the information upon which the government relies to advance its programs. We must know the full amount of the deficit for 1968-69 and the exact amount of taxes required to meet the deficit. We must know, for instance, just what the Expo deficit will be and how the government intends to cope with it. If the government persists in its intention to proceed with medicare on July 1 we must know what it intends to do with regard to the taxes that the minister and his associates have said will have to be imposed in order to pay for medicare. We need information in regard to these matters.
We heard this afternoon another interim statement, another in a series of ad hoc measures. 1 say, Mr. Chairman, that the sooner we have a full-scale budget the better off we will be. As a matter of fact, I would say that the lack of a budget at this time gives the impression that the government may not be telling the whole story about the economy and may be holding back until after its April convention. This adds to the confusion, to the inability to look ahead and to the general uncertainty which now prevails in the markets.
[DOT] (4:00 p.m.)
The government's failure to implement sound policies in the past and control its fiscal commitments has led it into an impasse where high taxes, inflation, high interest rates and high costs have rendered the econo-

my vulnerable to outside pressures. Had the government maintained a sound economy and the prosperity about which the minister spoke and to which we are entitled, Canada would be in a much better position today to meet the pressures from outside this country without the anxieties that we now have. I suggest that only by the formulation and adoption of sound and realistic policies backed up by a full-scale budget at the earliest possible opportunity can we get to this point.
There will be much comment on the minister's statement. I have said that I refuse to speculate about the nature of the taxes. We will wait to see what happens. There are to be cuts in expenditures. We will also have to wait to see before we comment on them. Within a day or two there is also to be a proposal concerning restraint on increases in prices and wages and other costs and incomes, based upon a board of review. It will be very interesting to see just what is intended. Will this board be given powers of compulsion and powers of roll-back? Will these apply to prices and to wages? In the case of wages, what does the government intend to do with respect to labour negotiations? I find all this very interesting, and I wonder just how much the government will rely upon such a board of review.
I am particularly concerned-and I think we will hear more-about the effect of the restraint on direct investment in Canada, especially with regard to the oil and gas industries. Last Friday night I attended the presentation of the budget in the Alberta legislature. What had been an estimated deficit of some $68 million had increased to $100 million because there was a $40 million shortfall in revenues, from capital sales revenues in the oil and gas industries. Certainly some of it was occasioned by an apprehension with regard to the intentions of this government arising out of the Carter report. There are no two ways about it. This factor has seriously affected the development of the oil and gas industries in the past year. Second, what will be the effect on the direct flow of investment into Canada in connection with the petroleum industry in the forthcoming year? This affects not only the province of Alberta but also Saskatchewan and British Columbia, although Alberta is the one to suffer most. This has implications with regard to the equalization formulas. Ultimately the government will have to make certain adjustments.
1 insist upon the necessity for the government to continue to bring to the attention of
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our friends to the south the gravely negative effects of the action of the United States concerning problems of its own, which it envisages vis-a-vis foreign nations and which has such a decided effect on Canada. As a matter of fact the effects of such action are completely contrary to their expectations. We will certainly be very interested to note what proposals the United States may implement with regard to tariff surcharges or border taxes, and anything dealing with the trade problems of the United States and Europe in particular. When their effect on Canada is considered we can only call them an unmitigated disaster.
On the basis of what has been said so far we will want to examine the minister's statement at greater length, and in the debate which will follow my colleagues will be dealing with other aspects of what was said this afternoon. When the proposals are tabled or appear on the order paper we will certainly be in a far better position to comment in greater detail on what has been said.


Mr. Saltsman:: Mr. Chairman, I was pleased to note that in his introductory statement today the minister said he was initiating a debate on the state of the economy. He has been most conciliatory. He has pointed out that the state of the economy will not be altered by the debate which will take place in the house. I hope that in discussing the points raised by the minister we will have an opportunity to come to grips with some of the basic economic difficulties facing our country.
Over the last year the Canadian economy has to a large extent been tailspinning out of control. The minister has indicated that some of the problems involved are international in scope and beyond our immediate ability to control. We have urged upon the minister in many speeches that he take firmer control of the economy and give it leadership and direction, and again in the course of many speeches we have asked that certain steps be taken in this direction. We have indicated our willingness to support measures designed to strengthen the position of the Canadian economy.
In his remarks today the minister indicated he was going to establish a board of review. We are not quite sure what he means by that. Presumably, and hopefully, he will establish a board of review based on the suggestions we have been making for a number of years concerning a prices review board. In the past he has tended to say that there is no need for a review of that type, and therefore we are pleased to see that he is at least giving some
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consideration to the necessity of reviewing the price situation in this country.
One of the regrettable features of the minister's statement was the continuous emphasis on rising labour costs in Canada and the blame he attached to that. Yet he did not find fault with the low productivity in Canada which is a result of the incredible mismanagement of our industry. Surely the blame for low productivity must be put on management rather than on labour. Labour does not organize an industry, labour merely responds to conditions in an industry.
[DOT] (4:10 p.m.)
There is information available which indicates that, despite a much higher capital input, a much higher ratio of capital per worker in Canada, we have a much lower level of productivity. Many reports indicate why this is so. Capital is not being applied in the most productive manner. I believe the Minister of Industry commented on this fact and I believe the Minister of Finance as well as other members of the cabinet are aware of this difficulty and of the need to make changes in the structure of Canadian industry. The Watkins committee lays heavy emphasis on this aspect. It is not that we feel there is an unawareness of this problem but we do say that the actions taken by various ministers in the government have not been adequate to the challenges facing the Canadian economy. It is just not good enough to blame labour for the slow growth in productivity in Canada at a time when it is fairly obvious that much of the blame should be laid on the shoulders of the branch plant economy that has developed in this country.
We have asked for the setting of an investment policy for Canada, for the setting of priorities because it is obvious to all that we cannot spend money on everything. A country has to determine those things which are important to its progress and see that the money and the resources are allocated to those purposes. A few weeks ago I made a speech on the subject of capital investment in Canada in which I pointed out the gross misallocation of resources in the industries of this country and the excessive productive capacity that has developed largely because of our tax structure. This was one of the major points made by the Carter commission which pointed out that our tax structure stimulated the flow of capital to some of our industries. The previous speaker mentioned the oil industry and commented on their

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shortfall in revenues. He blamed the lack of capital investment, but the point of the matter is that the whole oil industry was led into this position because the investment which has taken place was inspired by the inequitable tax system. Sooner or later the day of reckoning had to arrive, and it has arrived.
We have also called for a floating exchange rate. We are not saying we should have a floating exchange rate in this country because we want to isolate ourselves from what is going on in the world. We are not saying, let us look after ourselves and let the rest of the world look after themselves. I think a floating exchange rate would benefit Canada and would certainly benefit the United States as well in many ways. They would then not have to worry about whether or not the earnings on their dollars could remain in Canada. I think it makes sense for a country like Canada to have a floating exchange rate. I believe this position is endorsed by many of the leading economists in this country, particularly since we are, as the minister himself has said, one of the most vulnerable economies in the world.
I want to take a moment to deal with the question of a vulnerable and open economy. There is no basic reason why Canada has to have this kind of vulnerable and open economy. It is true we have benefited to a considerable extent from our willingness to admit capital, to admit investors into Canada. However, surely we could have obtained all these benefits and perhaps more with some kind of regulation, some kind of discretion as to the use of capital which entered Canada.
We have only to look at a country like Japan, whose growth has been much greater than Canada's, to see how policies designed to control the use of foreign capital coming into a country have worked. Japan says to the outside investor: We are delighted to have you here but we expect you to behave as a citizen of this country and to use your capital under terms which we consider to be in the best interests of our nation rather than the best interests of your nation. I think we have a right to ask this of foreign investors in this country; I think we have a right to ask this of our own investors in Canada.
We have pointed out also the difficulties created in terms of fiscal management in this country as a result of our commitment to the United States to hold reserves at a certain amount. I believe that we should get out of that commitment as rapidly as we possibly can.

We have repeatedly asked that the recommendations of the Carter commission be implemented. Members on the government side, in an effort to embarrass our party, have asked us if we want to implement all the recommendations. There are some recommendations in that report that would have effects with which we are not entirely in agreement. However, we think the Carter commission proposals, as a package, are of such overriding benefit to this country that we are prepared to take some of the disadvantages inherent in the report in order to gain the much greater advantages which the report would provide for Canadians. It would create a more equitable tax system than we have now. It would make for a better allocation of resources. It would make everyone in this country bear his full share of the operating costs of running a country like Canada rather than have the burden of taxation fall too heavily on the shoulders of the low and middle income groups. There is no reason why insurance companies should not carry their share, or mining companies or oil companies.
Recently the Watkins report was tabled in the house, and I think it is a great report. It is not a very radical report but it goes a considerable distance in pointing out the difficulties that have been created by foreign investment in Canada. I would have thought the government would implement that report immediately and would indicate its support for many of its recommendations. I should like to say on behalf of myself and many of my colleagues that we support the Watkins report. We think it is a good report. We urge the government to accept some of the major recommendations in that report.
Certainly the government should move rapidly to implement the Canada Development Corporation. They should move to ensure that disclosure by corporations is made mandatory. Then we could have a look at what is going on and the effects these corporations have on the Canadian economy. I believe the government should move rapidly to establish a trading corporation to ensure that those nations in the world that wish to trade with Canada are given an opportunity of trading on the basis of commercial transactions alone rather than being frustrated by having another country's foreign policy imposed on Canadian manufacturers.
We have asked the Minister of Finance-I hope he will excuse this expression-to get
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off his knees and stop grovelling to the financial interests of this and other countries. We have asked him to exercise the political sovereignty that the government possesses on behalf of the Canadian people. The choice he must make is to decide who his friends will be, whether they will be the vast majority of Canadians who through the electoral process have sent a political party here to be their government and to represent them or whether they will be the small group of people who have traditionally been shortsighted and stupid in terms of their outlook toward the management of the country's finances.
I rather suspect that we are not talking about a villain when we talk about some of these traditionalists. They are not really villains. I believe it is just that in their efforts to resist change, in their efforts to effect political sovereignty, in their efforts to prevent the government from acting on behalf of the people, they are being shortsighted and stupid. It is for the government to correct this attitude.
[DOT] (4:20 p.m.)
The Minister of Finance stated today that the traditional instruments of fiscal and monetary policy are no longer entirely adequate to handle the sort of problems facing the country. I have pointed out to the minister on a number of occasions that he was always hinting at this but never came out boldly and stated as much. Today he did do so, Mr. Chairman, and we in this party are delighted that he has finally taken this position. I recognize the limitations of trying to manage the economy of Canada by adopting straightforward fiscal and monetary policies only. Obviously there is a need for other methods of correcting the defects of the market system.
It is the feeling of this party that the government could have done even better with the traditional instruments of fiscal and monetary policy than they have. The effectiveness of these traditional instruments has been limited by various commitments of the government in different areas. Some that I have mentioned are the commitment to the United States to maintain a ceiling on reserves, the commitment to a fixed exchange rate, the refusal to examine investment policies and capital flow policies and, incidentally, the refusal to consider some form of exchange control.
I would not be surprised if shortly, despite the minister's intention to raise objection to
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it, we do have some form of exchange control. We are fooled no longer by the violent protests of the minister regarding things like a prices review board, because a few weeks after protesting he brings in such a board or something like it. I think there is a necessity for exchange control. This has been clearly recognized by one of his competitors in the leadership race, who has pointed out that we cannot rely on the good will alone of the United States, good though their intentions may be. After all, subsidiaries in Canada of United States corporations cannot always be effectively controlled, and we cannot rely on their good will to restrain the flow of money out of this country. Therefore we may have to take positive measures to prevent an indirect attack on the Canadian dollar as a result of excessive repatriation of interest and dividends from Canada.
It is difficult to know exactly what the government will propose in its new tax measures, but one thing seems fairly clear. The government still intends to raise approximately the same amount of revenue that it intended to raise with the previous 5 per cent surtax. One would have thought that the government, having been saved from its own shortsightedness and bungling which brought about its defeat, would have taken the reprieve given to it to re-examine its policy and to recognize that trying to balance a budget at this time is no answer to the problems facing the country.
We have in Canada a high level of unemployment. I am sure the Minister of Finance is not happy about the level of unemployment and would like to do something about it, but he seems to have given the subject lesser priority than price stability. In fact, he has given it no priority at all. However, I want to give the minister the benefit of the doubt in this regard. The minister has had a breathing spell and he should have recognized that this is no time to talk about balanced budgets. There is today, in addition to a high level of unemployment, slow growth in the economy, unused capacity and a need in many sectors to increase demand. If such need were met, then some of the revenue required would accrue to the government automatically.
This is not to say that there are not times when taxation is necessary. Sometimes taxation is necessary to pay for certain programs. We are not going to stand here and be placed in the position of arguing that certain government expenditure is required and then refuse to acknowledge the necessity for taxation to

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pay for such expenditure. However, taxation must be fair and equitable if it is to exist at all, and we do not consider that the previous proposal introduced by the government was fair and equitable in the least.
I suspect that the new proposal of the government is along similar lines, that the minister is not bringing in the recommendation of a capital gains tax or the recommendation that parliament accept the proposals of the Carter commission but will still tax the same group he intended to tax previously. If this is the case, then it is not the answer to the problem of raising revenue, nor is it a fair approach to that problem.
We are not unaware of the minister's difficulty. We recognize that he has had a whole set of problems converge on him at the same time. Many of the problems that the government of Canada is facing are extremely hard to solve. We know that the government needs money desperately. A look at the financing requirements of the government for this year indicates that they have to raise approximately $2 billion just to refinance bond issues. Last year catastrophe was averted by pressing the bonds that the government had issued upon the chartered banks. If it were not for the fact that the chartered banks picked up many of those bonds the government would have found itself in a very severe crisis last year.
The figures indicate that the public is selling government bonds and that it is very difficult to market new issues. The minister has probably reached the limit in terms of pressing further bonds upon the banks; apparently the minister does not want to increase the money supply, and these two would go together. The minister might increase the secondary reserve requirements of the banks, which might have the effect of forcing the banks to pick up government issues. He might also be able to sell his bonds by raising interest rates even higher than they are. However, I am sure he would not dare do this, nor would it be advisable to do so because interest rates today are the highest in Canadian history.
If such a program were proceeded with the cost to the treasury would be high and the tendency of the public to get out of the government bond market would strengthen. Therefore, much of the minister's energy seems to be directed toward protecting the position and adjusting domestic policies to meet this challenge.

We should like the minister to answer some questions in the course of this debate. We should like him to tell us why he does not move into a planned or more managed economy rather than have our economy dragged around by the continual changes in the international and domestic money markets. It will not do the minister any good to avoid giving this kind of answer by making a smart alec reply to the effect that we are not at war. For many people in desperate straits in this country the situation is as urgent as if we were at war. Neither will it do the minister any good to say: Look what happened to Great Britain. You cannot make a comparison between the economy of Canada and the economy of Great Britain.
[DOT] (4:30 p.m.)
The minister must give us a straightforward answer and say why he will not manage our economy to a greater extent than in the past. The government, which has been given the responsibility of managing the nation's affairs, has failed in its responsibility and it seems clear to us that its actions are designed to satisfy something known as market confidence or investors' confidence. Investors must be placated with the present tax measures. Clearly, tax measures alone are not enough to restore the confidence of investors in this country. Also, if the Carter commission recommendations were implemented the confidence of investors in this country would not be restored. But investors are not the only ones to be considered. I suggest that the minister ought to seek the wider confidence of all the people of Canada.


Some hon. Members:: Hear, hear.


Max Saltsman: On one occasion, when arguing with hon. members of this party, the minister said that even if he adopted the recommendations of the Carter commission his immediate cash requirements would not be satisfied since it would take years before the problems were ironed out. We recognize that. We say that if he is prepared to implement the Carter commission's recommendation that mining companies, oil companies and insurance companies ought to bear their fair share of taxes, interim steps to improve his cash position could be taken. Our willingness to go along with those interim steps depends on the minister's willingness to implement the recommendations of the Carter commission. If the people of Canada feel that their tax system is to be more equitable no doubt they
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will be willing to accept the imposition of a refundable tax, their money to be refunded when revenues from the various sources spoken of by Carter become available to the government.
The minister ought to take steps to make the money which federal, provincial and municipal governments need, cheaper. Tax relief ought to be provided for those who hold federal, provincial or municipal bonds. After all, those who receive dividends from Canadian corporations are eligible for a 20 per cent tax credit. Why should a similar credit not be available to those who hold various forms of government bonds? Instead of providing relief for those who acquire dividends I think we would be more justified in providing tax relief for those who derive money from government bonds.
It is important for the government to pursue expansionist policies since they would bring it added revenues without changing the tax rates. Considerable evidence shows that an increase in the gross national product brings with it an increase in the government's revenues without any change in tax rates being necessary.
Today we have suggested some alternative courses of action open to the government and we hope that the government will accept some of our suggestions. Above all, I hope the government is detemined to direct our economy. I hope it will not permit our economy to be dragged down by those in this country who have a traditional, financial stake in the mismanagement of the nation.


Gérard Laprise: Mr. Chairman, I am not in the habit of making compliments-it may be a weakness of mine-but I should not like the Minister of Agriculture (Mr. Greene) to be pleased with himself for the way he approached the study of his estimates last Friday. Still, I feel he was kinder in a way than the hon. Minister of Finance (Mr. Sharp) was this afternoon. The Minister of Agriculture had nothing new to tell us and so he kept quiet. The Minister of Finance should have done the same this afternoon, seeing he did not announce anything new with regard to a situation which the Canadian public and the members already know.
The hon. minister tried to argue the case of the government. He was replying to those who say or claim, just about everywhere, that Canada and the Canadian government are going through a major crisis, saying that this
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is false and that all is well as far as the administration of the country is concerned.
While listening to the Minister of Finance, however, we realized that Canada is in a most precarious financial situation, which is causing him concern. The minister delivered a speech of an anti-inflationary character. He is worried about the ever increasing price index which is causing the purchasing power to decrease constantly, but he does not seem to know why. Bill No. C-193, introduced by the minister after his mini-budget of November 30, 1967, was designed to check inflation, but at the same time, it reduced the purchasing power and prevented personal spending. On the other hand, the minister announced at the same time last fall, through his colleague, the Minister of National Revenue (Mr. Benson), restrictions on government investments. That was the usual way for the government to control the continued increase in prices.
Looking back a few years, we find that this method is not entirely new. In fact, since the second world war, the government has been increasing taxes once or twice a year, in an effort to keep the cost of living under control. However, the cost of living index has been climbing ever since. As a matter of fact, in 1947, when the 1939 index was still being used, it had increased so much that the government became reluctant to use it as a basis. It was then abandoned and the 1949 index was used, starting from zero, which was less embarrassing for the government.
Since 1949, the price index has gone up to about 155 points, an increase of 55 points. If higher taxes and a curtailing of purchasing power could really check inflation, why has this not happened in the last 20 or 25 years?
Mr. Chairman, the higher taxes advocated by the Minister of Finance as a means of controlling inflation will have the opposite effect: they will increase inflation and make the price index go up, while at the same time creating other problems for the Canadian consumer. The hon. minister is greatly preoccupied with trade, but does he give as much thought to the Canadian people themselves? In my opinion, that is the least of his problems.
The government wants to balance its budget but it upsets the taxpayer's budget. Thus, the opposite effect occurs.
[DOT] (4:40 p.m.)
Mr. Chairman, in my opinion, the hon. Minister of Finance has no solution to offer, as he admits in his statement. His main concern is to preserve the value of the dollar,


Edward Richard Schreyer: This is financial socialism.


Gérard Laprise: No, it is not.
In this way, Mr. Chairman, savings would be directed towards industry and private enterprise, and Canadians would become the owners of their businesses, their industries and their undertakings. It might take a few years, but it is the only way to regain control of our country, of our destiny, without having to submit to foreign influences.
The minister is always wondering where money is to be found. If he feels advisable to confine himself to Bill No. C-193 so long as other proposals are not submitted to him, I suggest that Social Credit has offered a solution a long time ago. He finds it unsuitable, but he forgets to propose anything better.
He proved once again this afternoon that the existing capitalist system is obsolete. We are not suggesting that he replace it entirely; we are merely saying that it should be reformed and put in order, because the present system is disorderly.
If the minister had implemented the suggestions that Social Credit has been making for many years, he would not be at a loss to balance his budget and to administer the nation's business, since he would have sufficient revenue. He would have enough economic and financial power to administer government affairs appropriately and to encourage investments as needed for the country's development.
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We would not be facing, as we are now, an employment or rather an unemployment crisis. There are now some 500,000 unemployed in Canada, 70,600 of which are in Montreal. Those are the most recent figures.
If the minister or the government had asked the Bank of Canada, as I said previously, to provide the funds needed for government purposes, we would not be paying $1,406,849,000 as interest for this year alone on our national debt. If we could eliminate this interest, there would be no deficit, and the hon. minister and the government would be able to promote public investment. He could avoid many problems and, furthermore, better considerably the standard of living of Canadian families, that is, of the consumers and taxpayers. In my opinion, that is the first duty of a government, and it is something that the present government seems to forget too often.
The minister did not tell us this afternoon what he intends to propose to remedy the situation. The representative of the Progressive Conservative party did not offer any solution, and that of the New Democratic party suggested socialist remedies which are already obsolete in other countries where they were applied 10, 20 and even 50 years ago.
It seems, Mr. Chairman, that the hon. minister refuses to recognize the Social Credit solution, which consists in using the Bank of Canada-our bank, the bank of the Canadian people-to issue the capital necessary to run the country. We do not suggest that it should issue all the capital, but the Bank of Canada should invest in the public sector, and the savings of the people should be used for private investment. If that were done, I feel that many problems, including the housing problem, could be solved.
[DOT] (4:50 p.m.)
The minister told us that last year fewer houses were built than had been expected. Even more are promised this year but, in view of what happened in previous years, we know beforehand that such a level will not be reached, because the interest rate on housing loans, if they attract investors, fail to attract those who want to become homeowners. That is why I feel that financiers may build houses but nobody will buy them.
Mr. Chairman, the government has no solution to offer. The minister has not added anything new to what we already know. If he wants to be serious, he will have to seek
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elsewhere than in the old system which we have known for so many years. Otherwise, inflation will keep increasing, because the minister continues to administer in the same way.
Consequently, Mr. Chairman, the Minister of Finance should not dismiss Social Credit suggestions. I am convinced that he has considered them and if, as he already said, he does not have a free hand, he should at least tell us what is stopping him. Maybe the world and our country are being run by great financiers, but he should know that the Canadian people are ready to support the party that will endeavour to rid Canada of those financiers hidden behind the curtains. I think that the minister will then be assured of the support of all Canadians. As long as the government does not take any step to improve the situation, we will remain in the present chaos.
We do not have to blame the United States, Great Britain or other European countries. We are told that they are also experiencing difficulties with their monetary system. Now, if they have troubles, we should not follow their methods but adopt new ones; we should study them carefully and thoroughly in the interest of Canadian taxpayers.
Mr. Chairman, I think that during this debate, we will again have the opportunity to hear our spokesmen who will try to state more specifically the arguments set forth this afternoon. I have had very little time to study the statement made by the hon. minister, but I am still of the opinion that he did not tell us anything new this afternoon.
He tried to tell us that there is no financial crisis in Canada or in the world. But, studying current events, I wonder, Mr. Chairman, if we are not facing a world crisis similar to that of 1929, whether we may not soon be confronted with a world war comparable to that which broke out in 1939. Well, both should be avoided!
The government must take the lead and take the necessary steps to prevent internal chaos in Canada, after which we will be in a position to set an example for other countries.
Mr. Chairman, I hope that, in the course of this debate as well as in the statement he will probably make tomorrow, the hon. minister will bring something really new with a view to improving the present critical situation in Canada. Otherwise, we will be forced to fight against the government on all fronts, that is, we will have to oppose any increase in taxes

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which continuously threatens the individual, the Canadian worker.


Robert Norman Thompson: Mr. Chairman, in rising to speak in this debate in response to the remarks of the Minister of Finance today may I say at the outset that I respect the counsel of the Minister of Finance in his warning that we are indeed in very serious financial difficulty and that unless the problem is handled wisely and carefully we will continue in a situation which could become catastrophic for the country. I agree with the minister's statement in this regard because I think the situation is serious at the present time. One has only to note the handwriting on the wall and the signs of the seasons, so to speak, to understand that this is true. So while it is necessary for me in responding to the minister's remarks to be critical of the government's policies which I believe have created much of the difficulty we face today, I speak in the hope that even yet the minister will act as I believe he should have acted long ago in an effort to bring some order at least out of the threatening financial chaos.
The most impressive aspect of the minister's speech was not so much what he said but rather what he did not say. The minister gravely warned Canadians that Canada faces economic pressures. He has gamely given up, at least temporarily, participation in his party's leadership race because he must devote his energies to the critical problems which are his responsibility as Minister of Finance. Yes, this is a great sacrifice he is making. But if this is the truth of the situation he is now reaping what he has been sowing for the last several years. We can but offer him our sympathy and hope that he will at least be able to hold the old ship steady until other measures take the place of the present policies.
Although the Minister of Finance did not say so, much of the problem he now faces is of his own making. He pleads for understanding by and co-operation from the opposition. I only wish he had listened to some of the advice given him three or four years ago from this corner of the house. Over and over again ever since the Liberal government assumed the responsibilities of office the Social Credit party through its spokesmen has warned both the present Minister of Finance and his predecessor that unless the inevitable and relentless increase in government expenditure was kept at a level compatible with the increase in the level of productivity of the nation we were headed for trouble. We

warned, to no avail, that the constant increase in government debt through deficit financing would lead to catastrophe. We warned about as well the fantastic increases in government growth and welfare spending. Bland smiles and sympathetic cynicism were about the best that we received. That was the only response.
[DOT] (5:00 p.m.)
We were not the only ones who warned the minister of the inevitable results of his policies. So did the Economic Council of Canada. In each of the council's four annual reports there have been repeated warnings about the unwarranted acceleration of government expenditures which continued to outpace the growth of government revenues. In fact, the economic council urged at least three years ago, and each year since, a decrease in government spending, an increase in productivity, a reduction in the large scale borrowings from the United States and the establishment of priorities in government spending. These warnings fell on deaf ears until the threat became obvious.
No better example of the paradoxical philosophy of the Minister of Finance and the government's financial policies can be found than in his attitude toward the implementation of medicare. In fact, he said only last January that medicare was not sound financially but that it was necessary politically. What kind of logic is this? The government is now forcing medicare on Canada and a minority of provinces-two, as a matter of fact, which for reasons best known to themselves are accepting the federal medicare proposition-moving the nation insidiously toward its implementation even though the consensus of the people of Canada is against it. This is something to think about. Yes, the government says, it will only require an increase of $50 million or $60 million this year, we will only have to raise taxes that much and the provinces will only have to increase their taxes correspondingly because only two provinces are going to implement it. How long are the rest of the people of Canada, who are going to pay through taxes the federal government's share of the cost of medicare for two provinces, going to pay money from which they will receive no benefit at all? I suggest it will not be very long. We are faced right now, because of the implementation of medicare on the first of July of this year, within the next several years with the prospect of an increase of $1 billion in taxes, half federal and half provin-
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cial, on the basis of medicare as now proposed. What kind of policy is this?
The strange thing about the attitude of the conservative opposition is that basically they have supported the same type of program. Most of their members voted for medicare in the first place. When the financial critic of the official opposition began to speak today I thought that probably his many years in the province of Alberta had really brought results because he began by talking about the decrease in purchasing power and the inevitable tightening of the belt and said that the downward spiral was going to throw us into a depression that no one wanted. He said that this is the effect of raising taxes and interest rates. The tragedy of it all is that when he proceeded to enlarge his argument he went along with the position of the government and the policies the Minister of Finance advocated. According to his reasoning, apparently there is no sound or logical answer to the whole problem of sound financing. It is time we faced up to the reality of the fact that we cannot continue to go on as we are at the present time.
Another outstanding example we face now, which has resulted directly from the policies of the government, is the situation regarding interest rates. Under Central Mortgage and Housing Corporation the present interest rate is 81 per cent and we are told it is going up at the end of the month to 8f per cent or 9 per cent. Prime bank interest rates on loans to the very highest classification of bank customers, as we have been told in the last week or two, are from 7 per cent up to 8 and 8J per cent. Normal mortgage interest rates through orthodox channels, apart from banks and government, are up to 10 per cent. I know of mortgage interest rates charged during the last few months as high as 12 per cent. How long can this continue?
The other day I carried out a brief research project into the history of depressions in this country going back to 1902. In every single case the depressions in Canada since that year have inevitably been preceded by abnormally high interest rates, and they have never been any higher than they are at the present time. Yet when we were debating the Bank Act revisions and we alone opposed an increase in bank rates, we were told by the Minister of Finance in the first place, by the governor of the Bank of Canada in the second place and by the president of the bankers' association in the third place, that if the ceiling on interest rates was removed, interest rates in the over-all picture would go down
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and there would be more money available. They took great pains to give assurances that this would be the case.
What has happened? Read the record. It is all there. Not for 40 or more years, if ever, during this century, have interest rates gone as high as they are now, at least so far as the little man who critically needs money is concerned. The other night the Minister of Agriculture boasted about the fact that more money had been made available to farmers under this administration during the last several years. Yet farm improvement loans, farm credit and even home improvement loans are impossible to obtain because the banks are not going to lend money at 6 per cent or 6J per cent when they can get 8, 9, 10, 11 or 12 per cent. We are faced with the situation, critical and serious as it is, because of these inadequate government policies.
It is disturbing to know that repeatedly economists, the Economic Council of Canada and the opposition in this house have warned the government that their policies were leading Canada to financial confusion and difficulty but in spite of this the government encouraged the change in the Bank Act so the chartered banks would be able to raise their interest rates above 6 per cent. This government is responsible for raising the bank rate. It has never been higher and with the prospects ahead of us now it will be even higher.
In addition, the government has encouraged the financing of riskless savings bonds at the highest rate in the history of Canada so people can double their money in 13 years. At least that is what the advertising says. We have sold gold, which is in short supply at home at the present time, to the United States. It has cost the taxpayer millions of dollars to subsidize the gold mining industry. We have done so at the price set for gold 30 or 40 years ago, $35 per ounce. We go along with the United States and say the price of gold cannot be raised, yet gold is the only commodity in the world today that has not at least doubled, if not trebled or quadrupled, its value since 1935. Do we have to protect the policies of the United States by inevitably adopting the same policies here in Canada even though our position is much different? I do not mean to be anti-American in any way because we cannot afford such a luxury. We ought to be able to stand upon some logic and reason so far as our own policies are concerned, particularly in regard to the financial problems with which we are now dealing. Apparently we have to hang on

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to a ragged coat-tail policy involving the perpetuation of the international monetary situation which has dried up the sources of international money and exchange to the point that today internationally, we are in even greater danger than we are at home.
[DOT] (5:10 p.m.)
I maintain that the policy of high interest rates is not a cure for Canada's economic problems. All it does is raise the cost of living for the Canadian people. It seems to me that the government could be doing much more to solve the problem about which the Minister of Finance was talking today by seeking to lower interest rates. Certainly in such a vital area of our economy as housing we should have a different policy so far as interest costs are concerned.
We are told that taxes have to be increased. We are today paying $1.4 billion of tax money just on the national debt which has never been greater, even in wartime. The minister pleads for understanding, but what kind of understanding can one apply to this kind of policy?
The minister has recommended the establishment of a board of review. What does this mean? I do not know. The minister did not attempt to enlarge upon it. If it means some kind of action and an authority that will do something toward solving the wage-cost problem which faces our farmers, the working man and Canadians generally, it may be good. But we do not know what it really means. At least, we do not know from what the minister said.
The minister talks about freezing the growth of the public service. That is a good way of economizing. It seems to me it would have been a good way to stop the increases in prices if the policy had been started last year or the year before or the year before that. The growth of governments has been double and sometimes triple the growth in productivity within the economy. Therefore we find ourselves being forced to consider more and more the alternatives that have been advanced by the President of the Privy Council who has sought to advocate to the Canadian people that the only way we can cure the problem is to adopt the policies of the socialist governments of other countries or those advocated by the New Democratic party in this house.
The spokesman for the New Democratic party said today that if we would adopt the recommendations of the Carter commission

and the Watkins report perhaps this would solve our problems. All that is being asked in recommendations of this kind is that we kill the goose that lays the golden eggs and then throw the eggs away as well. Policies of the that kind have been proven inadequate over and over again by socialist governments of other lands.
It is a strange thing that many who look to socialism of one brand or another for economic salvation believe that if Harold Wilson could not retain mastery and initiative in administering the nation's business in Great Britain, nobody could. I will read a few words that were written by a wise old man who lives in Saskatoon. His name is A. P. Waldron and he writes in The Western Producer. I can think of no wiser sage in this country whose words the Minister of Finance should read. Mr. Waldron's comments are recorded each week in this western farm paper. This is what he said last week:
The reason for Wilson's failure is that however radical and even revolutionary the socialist ideology may be in other sectors it seems to have a blind spot when it comes to the money system. Socialist governments and their treasury heads from Snowden on have always strictly adhered to policies of financial orthodoxy as do practically all professional economists. They submit almost without question to the edicts of the money power however humiliating because they believe as firmly as any banker in the soundness of what is called sound finance.
Why socialists, so ready to challenge almost everything for which capitalism stands, should make an exception of financial policy we don't pretend to know. One fact that may have influenced them at least until recently is their conviction that public ownership could and would cure almost everything. But ownership or control of the key domestic bastions of the financial system, the centra] banks, has solved nothing. Whether these institutions are owned by government or by private enterprise is irrelevant so long as existing national and internatona] financial policy continues to function according to the established rules of the game. If you belong to the club you must obey the rules and the socialists no less than the other political parties obstinately refuse to listen to any suggestion that the money system should be seriously challenged much less amended to fill the needs of the age of automation.
We must face the reality of the position today with regard to the so-called sound money system, whether as advanced by the Minister of Finance of this country, as advanced by socialist governments such as that in office in Great Britain, or by the so-called wise economists who think they can stretch the rubber a little farther in extending the present system. The fact is that there is no real change in the situation, except that it continues to get worse.
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The recent Watkins study under the tutelage of the President of the Privy Council proposes a policy of economic nationalism which would, if implemented, destroy the very basis of private enterprise in Canada. Joining with the popular cry of those theorists who speak similarly, it would throttle foreign investment capital and instead promote Canadian enterprise, resource development and trade control through the vast state investment enterprises it would set up. It was called a very good report. I did not hear the Minister of Finance say very much about it but he too must have been quite willing to blame the United States for our own error and for what we ourselves refuse to do. We talk about money coming into this country from the United States. I point out that in 1967 more than $1.75 billion of Canadian investment money went into the United States. Can we not convince Canadians that investment in this country is as worth while as investment in the United States? It is a strange thing that for every per capita dollar the Americans have invested in Canada we invest per capita nearly $3 in the United States. In this connection I would refer to an editorial which appeared in the Toronto Star of last week. It said in part:
Can't we encourage some of that southbound cash to stay in Canada and help pull ourselves up to a standard of living by our own bootstraps?
Because the financial policies of this government have dried up our sources of capital, our municipal, provincial and federal governments have to go across the border to borrow money that we refuse to provide for ourselves. In addition, this money has to be borrowed at high interest rates, causing further pressure on the Canadian dollar and bringing with it an ever-increasing national debt.
It is about time some of our politicians stopped harping about buying back foreign ownership and began encouraging Canadians to invest in Canada. It is likewise time that some of our Canadian investment dealers encouraged people who have some savings in the bank to invest their money in Canadian stocks and resource development. It is not only imperative but it is a national responsibility for every Canadian to invest his savings in Canadian enterprise and development. If this happened Canada would not require foreign investment, Canadians would be better off and we would not be facing the crisis that we face at the present time. It is about time that the Minister of Finance applied some common sense reasoning in so far as our domestic financial policies are concerned.
[DOT] (5:20 p.m.)
I do not mean to detract at all from the problem on the international scene. One of our great problems in Canada is that our sources of capital have dried up and we have to go outside to get it. One of the great problems of the world is that international liquidity is so short that there is not sufficient money to carry out normal exchanges. This is what is bringing pressure on the United States dollar as well as the Canadian dollar. We could well follow the advice of those who say that it is time the price of gold was increased. I do not favour the continuation of gold as the international standard. We got rid of it in Canada in 1935 and we have to get rid of it on the international scene also. Increasing the price of gold might be the first step toward bringing about a better situation so far as the settlement of international exchange is concerned. If the price of gold were increased to double its present value, certainly for the time being at least the international liquidity situation would be solved. This is what General de Gaulle has been talking about through his own economists, and it is his policies which are responsible for many of the pressures on the Canadian dollar and the United States dollar.
Just the other day, when the Minister of Finance found it necessary to withdraw $460 million held in reserve in the International Monetary Fund, we in this house would not even have known that this had happened had it not been leaked to the press by officials of the French government. So again we in Canada are paying for the pressures which are being exerted by France and the financial policies which have come out of the money centres of Europe against the United States and which are reflected in Canada because of the inadequacy of our own financial policies. It is about time that we began advocating international monetary reform and implementing more effective policies on the domestic scene.
I listened with intense interest to the Minister of Finance during some of the committee hearings on the Kennedy round. He spoke about the conference he had in Rio de Janeiro with the other nine members of the elite Group of Ten nations which form the special committee within the International Monetary Fund. He told us in the committee that not one of the authorities from the other nine countries had any idea of how to control the present increase in interest rates and the continuing drying up of international sources of

March 6. 1968
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capital so far as settlements and exchange are concerned. He said that they declared that interest rates would inevitably go still higher, and that some time in the future they would find some other alternative but it was not in sight at the present time. I do not understand that such experts could be so foolish as to think in this way because it has become inevitable that if some action is not taken soon Canada will plunge into a depression which will make the 1930's look, as someone said not too long ago, like a Sunday school picnic.
These are the things that concern us. This floating game of the so-called international monetary experts will have to come to an end before too long, and I can only hope that Canada will take a lead in suggesting alternative policies. The stakes are high. What we need on the international scene is a new kind of money, an international reserve currency which, as someone has said, would be as good as gold and as sound as the dollar. We cannot go on with the kind of thing that the Minister of Finance talked about in the question period on Monday.
This brings us back to the situation here at home-a remorseless increase in the size of the government, a continuing and spiralling increase in rates of interest, an increase which goes on inevitably so far as the size of the national debt is concerned, and not only the national debt but consumer debt as well. What further proof do we need that something is wrong with the source of money and capital in this country than the increased size of consumer debt? Our high standard of living today exists simply because we are putting off until tomorrow payment for the things we consume today. We are not only putting it off until tomorrow but until the next generation or the generation after that, because that is how far the projection goes in some cases.
At the same time, taxes go higher and higher. Higher taxes are not the cause of the situation but rather are symptomatic of it. This is why I had hoped that the Minister of Finance, instead of coming up with a nice, high-sounding speech and the platitudes he expressed today in his statement about the seriousness of the situation, would have proposed something a little more realistic and hopeful than just a new review board and a freezing of the size of the public service.
We will co-operate with the minister in any way we can in trying to provide some kind of temporary stopgap measure to ease us over
IMr. Thompson.]
the present situation, if it is possible. But while I say that this will be our policy as we deal with the legislation which the minister will bring forward, I plead with him to do something different from what he has done until now. If he really believes that medicare is financially not good for the economy at this time, let him put it off for another year. The provinces do not want it. Let us give them a chance to have some say on how they shall control their taxes instead of forcing them to abandon their own medicare programs which in their own way are working very effectively in meeting the needs of the needy. Why impose welfare state policies on people that most of them do not want?
What must also be done by the minister is to get really tough with government expenditure. Even with the cut-back of over $1 billion in projected expenditures for this year expenditures are still increasing by 3J per cent over last year. This does not include the supplementary estimates which will inevitably come before the end of the fiscal year ahead of us. If this were done it would be more effective than what the minister has proposed today to meet the pressures on the Canadian dollar and on the stability of the whole financial situation.
This is the situation as we see it in our party. I should like to assure the Minister of Finance and the people of Canada, as well as all of us in the house who share his concern, that while we do want to co-operate in doing what is now necessary, it is high time we stopped riding along with the status quo. We should follow the advice of a lot of soundthinking people and discard some of the policies that have been proven, countless times over, not adequate for our needs.


John Alfred Irvine: Mr. Chairman, I will not endeavour to cover the ground that has already been covered. There are a few things I would like to mention which have not been mentioned so far. I was very pleased, as I am sure most members of the house were, with the conciliatory tone of the Minister of Finance. I would almost say his tone was benevolent. It was a rather far cry from some of the words we have heard from him here at times. In fact, I almost thought at times he would come out with this quotation from the famous prayer of St. Francis:
Where there is hatred, let me sow love;
Where there is injury, pardon;
Where there is doubt, faith,
And where there is despair, hope.
March 6, 1968

The minister did mention the fact that Bill No. C-193 was voted upon adversely. I am not sure that this is the exact description I should use. I should say that the bill was defeated, and this is one thing we must remember. In our opinion the defeat constituted a lack of confidence in the government.
The minister mentioned also that there had been an upswing in business which had lasted, he said, for seven years. This would take it back to 1961. We do not want to take all the credit for it but we feel we should at least take credit for sowing the seed.
[DOT] (5:30 p.m.)
The minister said that we enjoyed a period of great expansion from 1961 to 1966. Things seem to be changed somewhat in the mind of the Minister of Finance because he also said he was going to take action and we would have a resolution on the order paper tomorrow, the purpose of which would be to bring revenues somewhat into line with expenditures. I was hoping that perhaps he might have reversed the order and said he was going to bring expenditures somewhat into line with revenues. At this time I cannot see why more taxes should be imposed. I feel that at the moment the minister should be considering very serious cut-backs in general expenditures. The minister also mentioned that the government was going to take some action to resist inflation by way of restraints on prices and wages. I am wondering what this will mean. Will it mean he is going to introduce something that will constitute price and wage controls? If he should, what effect is this going to have on labour bargaining units?
I ask these questions as a former card-carrying member of a union. I believe these are some of the things we should consider and consider very seriously. Many economists are exhibiting grave concern about our economic future. I feel that everybody in this house should be seriously concerned about things at the present time. I had the privilege of attending the meetings of the committee on finance, trade and economic affairs during the time we were supposed to have a recess. I should like to pay tribute to the executive of that committee. I am sure they were very dedicated people. The committee has just completed series of meetings on the Kennedy round of tariff agreements. I am wondering whether it was not a complete exercise in futility. These agreements had already been made. They were what you might call 27053-463*
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multilateral agreements and were being presented to the house for ratification. The only purpose I could see for these meetings was to acquaint the members of the committee and the public with some of the details of the agreements. It is my sincere hope that these agreements will have some beneficial effect for Canada. However, there are some areas about which I am doubtful and which will have a great bearing on our economic well-being.
The first one is what I would call the front-end loading feature of these agreements, the second is the anti-dumping feature and the third is the lack of tariff barriers. In so far as front-end loading is concerned, I make reference to the fact that many of these tariff reductions are to be phased in over a period of five years in five different steps. It is my feeling that a 7.5 per cent drop in the first phase may have a very detrimental effect on the economic well-being of Canada. The result could be a fantastic shock to many of our Canadian industries. I believe that for our own protection the reduction should have been more gradual.
I suppose we will have legislation in connection with the dumping feature. As I understand it, a foreign firm is allowed one free dumping. The end of a run for a United States firm or a Japanese firm, amounting to perhaps 3 per cent of their production, could equal about 30 per cent of the complete production of a Canadian manufacturing firm. Therefore this is a very serious matter. By the time the investigation is completed the merchandise which has been brought in may very well all be sold and some of our own manufacturers forced out of business.
First of all, the manufacturer who has been injured must lodge a protest. He must prove injury to himself and to the entire industry. What is the definition of the word "injury"? It can be summed up in many different ways. Some manufacturers may believe that keen competition results in injury to them. I think these things must be spelled out. Months could be spent going through the red tape and by then, of course, the damage would be done. The manufacturer could be forced out of business. Another facet which we must remember is that merchandise which has been in Canada for 90 days is exempt from any action. I hope that we will have new anti-dumping legislation before the house before too long and that we will all get together in a spirit of co-operation to work out something that will be for the general good of this country.

March 6, 1968
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Let us look for a moment at the sad economic picture which faces us. I have an item here which I took from the New York Times. The article was published the day after the Minister of Finance told us he was in New York, January 21, talking to the secretary of the treasury. The New York Times of that day carried this headline in large print, "Canada Concerned As Economic Surge Loses Momentum." I should like to quote one small part of the article:
In 1967, as Canada celebrated her centennial and Expo's turnstiles whizzed faster than anyone had dared hope, the upward economic sweep of the decade lost most of its momentum. The country's output of goods and services grew, but only by a sluggish 2.5 per cent.
The average rate of growth in the last 20 years, taking the period 1946 to 1966, was 5 per cent. It has dropped to 2.5 per cent. The seasonally adjusted unemployment rate in 1963 was 3.6 per cent and in 1967 it was 4 per cent. In January, 1968, the flat rate unemployment figure was 6.1 per cent; yet the rise in productivity in 1967 was just about 2 per cent. In spite of this, the average wage settlement was up by 8 per cent.
These are the things that I contend are causing inflation and the difficulties which many are suffering today. The Economic Council of Canada says that a healthy growth rate for Canadians to maintain an adequate level of expansion and employment would be about 5 per cent. We have not been attaining that level for the last 18 months. The minister's plan, as of November 30, was to begin this year with a 5 per cent increase in taxes which he called a surcharge. Of course, this tax bill was defeated. Unemployment, according to all the statistics, is a bit higher this year and could go to 7 per cent or even higher.
[DOT] (5:40 p.m.)
While unemployment in Canada is going up, it is going down in the United States. In January, 1968, 3.5 per cent of the labour force was unemployed in the United States, which is the lowest since 1953. There was a drop in unemployment for three consecutive months, November and December of 1967 and January of 1968, while at the same time unemployment in Canada increased. Therefore we cannot contend that unemployment is an international problem. Some economic problems are international, yes, but unemployment is one problem that is more acute in Canada than it is in our neighbour to the south and is a problem to which we must give very serious attention at the present time.

On the other hand, the cost of borrowing money in Canada has gone sky high. The hon. member for Red Deer mentioned that the interest rate for N.H.A. loans at the present time is something like 8.58 per cent. There is a good possibility that on April 1 when these rates are adjusted the interest rate will be 8f or perhaps 9 per cent. This would place a great burden on those in the lower income groups particularly. Other mortgages, of course, now carry interest rates of 9, 10 or 11 per cent. Higher carrying charges and soaring house prices prevent thousands of people from owning their own homes.
In 1950 the average price of a small three bedroom home was $14,500. The rate of interest at that time was 5J per cent. The average payment on those homes was $90 a month. In 1968 the price of a similar home averages $21,500 with an interest rate, so far, of 8.58 per cent and a monthly payment of $180 a month.
I contend that a man in the $4,500 to $8,000 a year income group has no hope of a home of his own. Such a thing is an utter impossibility, and something should be done to assist those in this wage bracket. There was a time when we used to feel that allowing a man to purchase his own home was giving him an opportunity to become a better Canadian and to have a stake in his community. It was a place where his children might play in the backyard. However, this avenue has now been closed. I suggest we must give this problem serious consideration in the immediate future.
There are many articles in the newspapers suggesting that the Canadian dollar is turning soft, that it is subject to considerable pressure as a result of sagging wheat exports, the end of Expo '67, the tariff cuts I mentioned a few moments ago, the devaluation of sterling, lagging productivity and rising labour costs. On February 14, I believe, the hon. member for Regina City asked when the Minister of Finance was going to bring in a new budget. The minister replied at that time, in effect, that he would not be introducing a new budget before the impending leadership convention. I am wondering whether he has had a change of heart, because this might mean that a new budget could not be presented until the end of April. There is also the prospect, as the minister said today, that tomorrow a further increase in taxes will be put forward.
It may be that the government and the Minister of Finance in co-operation with the government are not anxious to saddle a new
March 6, 1968

prime minister with an inheritance of mistake after mistake. The Minister of Finance tried to add a 5 per cent surtax in his mini-budget which he introduced on November 30 along with what the minister described as a financial statement. That so-called financial statement called for delays in capital spending but no particularly great cuts. It called at the same time for restrictions on housing expenditure.
I contend that although it was not intentional these restrictions did hurt the little man. The man making between $5,000 and $8,000 a year would have felt the pinch of an additional $50 on his tax bill at the end of the year. Certainly he would have felt it much more than the man in the $35,000 bracket who had to pay just the ceiling amount of $600. The $50 extra tax might make all the difference in his being able to put bread on the table for his family. It is no wonder that the Canadian Labour Congress stated at the time that the policies of the present government are favouring the rich and the powerful.
Mr. Arthur J. Smith, chairman of the Economic Council of Canada, writing in the New York Times on January 22 last, said this of the government's spending policies:
In 1965 and 1966, the substantial increase in government expenditures was superimposed on the very large expansion of demand in other sectors of the economy. Although more moderate advances in total private demand in 1967 tended to ease the public-private competition and conflict for the use of resources, it became increasingly clear during the year that government spending had been growing at an unsustainable rate-
At the same time the bank rate went up to 7 per cent, the highest in history. The index of industrial spending, which is considered a reliable barometer of growth rate, fell below 3 per cent last year. The average growth rate for the years 1946-66 was 4.8 per cent. This indicates a reduction last year of close to 40 per cent. The lag in growth rate was accompanied by rising unemployment, higher taxes, softening of the dollar and prices that rose 4 per cent over the previous year. The labour force has risen 2.7 per cent over a year ago but 6.1 per cent of that force is unemployed. If I may compare these figures with the two previous years, the unemployment rate in January, 1967 was 5.2 per cent whereas it was 6.1 per cent in January of this year and 5.1 per cent in January, 1966.
I should like to refer to an article that appeared in the Toronto Star which is not exactly known to be a Conservative paper, on
Supply-Finance
December 8, 1967. I want to put on record only one paragraph.
The federal economy program unveiled last night by revenue minister E. J. Benson consists almost entirely of restraint on proposed spending increases, rather than reductions of current spending levels. [DOT] (5:50 p.m.)
This is an article that should be of interest to everyone who is privileged to live in this country. Farther on the article indicates that there have been no-I repeat, no-actual outs. There was only a paring of departmental requests. Let us examine the proof of this. Let us look at the record of the government's spending for the past five years. In 1963 it spent $6,750 million, in 1964 it spent $6,872 million, in 1965 the figure was $7,218 million, in 1966 it was $7,734 million, in 1967-now we start accelerating rapidly-the figure was $8,795 million, and in 1968 we see another gigantic step to $10,300 million. The increase since 1963 has amounted to $3,730 million or an increase of nearly 60 per cent in five years in government expenditures. Clearly there were no cuts; instead we had a true increase in expenditures.
If we leave supplementary estimates out of both the years I previously referred to-if they are included they must be included for both years-the increase amounts to about 8 per cent. You cannot fool the public too long about this sort of thing because today they are too sophisticated to swallow that kind of fertilizer. My idea is that the government's accent should not be on the inflow into the treasury but on the outflow. That is where the accent would be in any business that was floundering around as this country seems to be. For 1967 federal expenditures amounted to $595 for every man, woman and child in Canada. How much farther can we go? Of every dollar that the average middle class or lower income person in this country receives, 34 cents is taken in federal, provincial, municipal or hidden taxes. This is a very serious state of affairs.
But savings can be made. It has been said that the minister ought to cut down departmental spending. I submit that the first department that should be cut is the C.B.C. The Secretary of State said in the house that something rotten was going on in the corporation. Is it not about time that we stopped subsidizing the C.B.C. to the tune of about $150 million a year? Why not sell it to private enterprise? Let them take it over with the understanding that they shall provide service to all areas that are now served. I do not think that the sale would be difficult to make.

March 6. 1968
Business of the House By selling the corporation we could save $154 million in the 1968 estimates on one item alone.
We can save in many other areas. Time will not permit me to enumerate them. Why should we have so many royal commissions? The Carter commission was mentioned. I do not hold with many of that commission's findings. There are some good things in the report but in my opinion some of its findings should be disregarded. What about the commission on the status of women? You know, Mr. Chairman, I was married for 30 years and I know my wife's status. She was the boss. I expect the same could be said for most hon. members. The status of women is clearly established.


An hon. Member:: You bet it is.


John Alfred Irvine: Let us consider for a moment the use of members of the other place on committees. We know that they are overworked but at the same time I do not think they would mind putting in a little extra time on these investigations. I know one senator who chaired the committee on divorce, and he did an outstanding job. Surely many other senators are willing to take on added responsibilities. We must think objectively. The time has come to chart a course. We must cut back on expenditures; we must not keep dipping into the pocket of the little man.
Consider the mess that faces us in this country. We are in a state of crisis with higher prices-prices are still rising-and lower productivity. Everybody here is concerned about our productivity. We have inflation that almost staggers our comprehension. Unemployment has risen to 6.1 per cent of the work force in some areas. In other areas it is even higher. We have rising wage rates, the weariness of the dollar and the high cost of borrowing money with all that that entails for
small businessmen and for the medium or low income man who cannot get a start in life because of present conditions. In addition to all this, we have the senseless spending of this extravagant government.
What a legacy to leave a new prime minister. How could 12 people be interested in taking over such a mess? The time has come for action. The Minister of Finance is in the mood to take it. I think he should sell the members of the cabinet on the idea of going in his direction. It is time for us to consider hard, cold business facts and to think first of this country and second of the party we serve. May I call it six o'clock?
Progress reported.



MESSAGE FROM THE SENATE

Mr. Deputy Speaker:: I have the honour to inform the house that a message has been received from the Senate informing this house that the Senate have passed the following bills without any amendment: Bill C-104, an act respecting the Bell Telephone Company of Canada and Bill C-113, an act to incorporate Commercial Solids Pipe Line Company.



BUSINESS OF THE HOUSE

Mr. MacLean (Queens):: Mr. Speaker, would the acting house leader please tell us what business the government intends to place before the house tomorrow and Friday?


Lawrence T. Pennell: Mr. Speaker, we propose to continue the debate on the supplementary estimates of the Minister of Finance. Perhaps consultations among the house leaders may vary the form of the debate. I anticipate that we shall continue with the finance estimates.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Thursday, March 7, 1968