1968-03-12

Hon. Robert Winters (Minister of Trade and Commerce):: Mr. Speaker, I wish to make a brief statement regarding final payments for barley and oats. Producers delivered 35,104,357 bushels of oats and 106,155,792 bushels of barley to the Canadian Wheat Board in the 1966-67 crop year. The pools for these two crops were closed on January 31. The amounts of the final payments to be distributed are $8,402,616 for oats and a record $35,798,202 for barley.
These are not payments by the government of Canada, but represent the net returns of the Canadian Wheat Board in the marketing of western Canadian oats and barley for the 1966-67 crop year. The board will begin mailing the final payment cheques for barley today, and immediately after completion of the barley payments the final payment cheques for oats will be distributed. The average final payment for barley of 33.7 cents a bushel has been exceeded only once, and the average final payment for oats of 23.9 cents per bushel is just slightly below last year's record payment.
I beg leave, Mr. Speaker, to table the statement being issued today in Winnipeg by the Canadian Wheat Board regarding these final payments.


Mr. Speaker:: Has the minister leave to table this document?


Some hon. Members:: Agreed.


Robert Henry Winters: The 1966-67 wheat pool
account was closed on February 29 and the necessary accounting is now being completed. I expect to be able to make an announcement in about two weeks, when the board will be in a position to commence mailing the final payment cheques for wheat. I may say, however, that through international co-operation toward the implementation of the international grains arrangement scheduled for July 1, the marketing of wheat is now more orderly both as to demand and price.


Mr. W. H. Jorgenson (Provencher):: Mr. Speaker, the farmers of western Canada will be pleased to learn that the cheques in payment for oats and barley will be issued soon. Since sales during the past crop year have been much below previous years there is a very serious shortage of cash in the hands of farmers with which to pay the necessary production costs. I might add that as a result of the fact this government has seen fit to contribute greatly to the increased cost of production, these cheques will be most welcome. During the past two years farm costs have risen at an alarming rate, and farmers are caught in a very serious cost-price squeeze.
We are pleased that the final payments on both oats and barley are relatively stable in comparison with past years. However, farmers will be looking forward with great expectations to higher payments on the 1966-67 wheat crop, although I doubt very much if those expectations will be realized.


Mr. Ed Schreyer (Springfield):: Mr. Speaker, we listened with interest to the statement just made by the Minister of Trade and Commerce. One thing that became obvious very quickly was that in terms of dollars and cents the amount involved to the producers in western Canada was almost identical to that of last year. There has been an increase in deliveries of oats to the board of about 15 million bushels, and there has been an equivalent decline in the deliveries of barley. The amount of the final payment from the board this year comes out to within a cent or two of the amount that was paid last year. It is fair to say, as the last speaker has said, that the cost-price situation in agriculture in western Canada remains acute. The amount incoming in receipts to producers remains relatively static, but meanwhile the cost of production soars.
[DOT] (2:40 p.m.)
The minister and his colleagues should be made aware once again that the cost of production indices for agriculture have increased by about 80 points from 1962 up to the present. However, there is nothing to balance off this increase in the cost of production, inasmuch as the price the producers receive for

March 12, 1968
Inquiries of the Ministry their primary crops has remained static. Between now and the end of this crop year the government must come forward with a policy on price support and price stabilization. I see no alternative, Mr. Speaker, if we are to hope to keep the grain producers in western Canada engaged in the production of wheat, oats and barley.
In conclusion, Mr. Speaker, I should like to say I am somewhat puzzled by the statement that appears on page 2 of the statement to the effect that:
-through international co-operation.. .the marketing of wheat is now more orderly both as to demand and price.
I think the minister is using euphemistic terms in that statement, Mr. Speaker, because the evidence is to the contrary. The price is still lagging, and there is not much hope in the immediate future of any improvement. We look forward with anticipation to the statement the minister will make on the closing of the wheat pool for the last crop year prior to the mailing out of the cheques.



VACANCY

Mr. Speaker:: It is my duty to inform the house that consequent upon the notification of a vacancy in the representation given in this house on Monday, March 11, 1968 by the hon. member for Sainte-Marie, and pursuant to section 10 of the House of Commons Act, I have addressed my warrant to the chief electoral officer for the issuance of a new writ of election for the electoral district of Saint-Jacques.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I should like to ask the Prime Minister a question about Rhodesia. Can he inform the house what is Canada's position in view of the request by African nations for an urgent meeting of the Security Council?


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, we have supported that request. I understand the Security Council will meet this week and deal with this matter. There will also be a meeting of the Commonwealth sanctions committee on Rhodesia I understand later this week in London.
[Mr, Schreyer.l


Robert Lorne Stanfield: A supplementary question, Mr. Speaker. Could the Prime Minister inform the house whether the government of Canada has made representations of any kind to Rhodesia within say the last 48 hours in connection with executions?


Lester Bowles Pearson: No, Mr. Speaker; no formal representations.


Right Hon. J. G. Diefenbaker (Prince Albert):: May I ask a supplementary question, Mr. Speaker. In connection with added sanctions, has the government of Canada anything to say at this time as to whether Canada intends to join with certain other Commonwealth countries in banning mail to and from Rhodesia?


Lester Bowles Pearson: Mr. Speaker, one of the matters that I hope will be discussed by the Security Council is the imposition of more stringent and additional sanctions against Rhodesia; and we would support this.


John George Diefenbaker: Mr. Speaker, within the Commonwealth is anything being suggested along the unusual line that mail to and from Rhodesia would be barred?


Lester Bowles Pearson: To be effective this matter, I think, would have to be dealt with on a universal basis at the United Nations. It could not be effectively done by the Commonwealth countries acting alone.


John George Diefenbaker: It is a dangerous course.



THE CANADIAN ECONOMY


[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquiflam):: May I direct my question to the Prime Minister. Considering the rather general statement the Minister of Finance made last week regarding a review board, would he indicate whether the government has now decided to introduce legislation and when will that legislation be introduced to set up such board?


Lester Bowles Pearson: I expect to deal with that matter in the statement which I hope I shall be permitted to make this afternoon, on second reading of the bill.


Robert Lorne Stanfield: Which biff?
March 12, 1968	COMMONS



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. Alcide Simard (Lac-Saint-Jean):: Mr. Speaker, I wish to put a question to the hon. Minister of Agriculture.
Can he tell the house whether it is correct that only the Ontario cheese producers are granted by his department, a subsidy as an incentive to exports?


Hon. J. J. Greene (Minister of Agriculture):: No, Mr. Speaker.



HARBOURS


[Stage Direction]
On the orders of the day:
Mr. Howard Johnston (Okanagan-Revel-stoke):: Mr. Speaker, my question is for the Minister of Transport. Following the review by the attorney general's department in British Columbia of the relative legal positions of the federal and provincial governments with regard to jurisdiction over Roberts Bank -which review, incidentally, indicates the strength of the provincial position-may we expect the federal government to submit its case to the Supreme Court?


Hon. Paul Hellyer (Minister of Transport):: I have not seen the legal review my hon. friend is referring to. We hope to get ahead with construction of the port, and hope that no unnecessary legal obstacles will interfere with completing it on time.


Mr. H. W. Herridge (Kootenay West):: supplementary question, Mr. Speaker. Would the minister inform the house whether the federal government is accepting from the provincial government some part of the funds necessary for the building of this port?


Paul Theodore Hellyer: That is really not necessary. We have volunteered to co-operate with the provincial government with the development of what we call industrial estates associated with the port, the reclaiming of land which would be used by industries associated with the port's development. This has already been suggested, and I am waiting to hear from the premier to see whether he wants to discuss this matter further.
DEBATES	7519
Inquiries of the Ministry


Thomas Clement (Tommy) Douglas: In
view of conflicting reports and information gaps regarding this project may I ask the minister, when the estimates of his department are before the house or when interim supply is bing considered, to make a full statement regarding this development, as there is much confusion about the federal government's position in this matter.


Paul Theodore Hellyer: I shall be glad to give that suggestion consideration, Mr. Speaker, though I do not think there is much confusion about the federal government's position. Our position is that we should like to see port facilities ready by the end of March, 1970, and we intend to go ahead and build them so they will be ready.


Mr. D. V. Pugh (Okanagan Boundary):: supplementary question, Mr. Speaker. Has the provincial government of British Columbia made a substantial offer, in the neighborhood of $15 million, to entice the federal government to come forward with its plans?


Paul Theodore Hellyer: I think that suggestion may add confusion to the matter instead of clarifying the issue. The provincial government has offered to share in a joint crown corporation for the development of the port. As I indicated, our over-all study of port facilities in the country and the best method of management and administration is just commencing. It will be some months before we know what additional local participation might be advisable in the national interest.
In the meantime, particularly in view of representations made by the three prairie provinces, which have considerable reservations about the suggestion put forward by the premier of British Columbia, we decided that the best course of action would be to build the port, continue with our study, and at the same time keep an open mind about further discussion with the province at a later date as to the possibility of additional local representation.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Hon. George Hees (Northumberland):: I
should like to address a question to the Prime Minister. In view of a report issued yesterday by the department of manpower indicating that unemployment in the three prairie provinces is now 14 per cent higher than it was a

March 12, 1968
Inquiries of the Ministry year ago, and since this is a picture which is general across the country today, is the government planning to introduce measures in the near future to stimulate the economy and prevent unemployment from increasing further?


Lester Bowles Pearson: All the government's policies are designed to that end.


George Harris Hees: As this is the kind of answer the Prime Minister has been giving me for over a year now, during which period unemployment has been steadily increasing, would he please take the question seriously and stop laughing at the unemployed?


Some hon. Members:: Order.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. J. P. Nowlan (Digby-Annapolis-Kings):: I have a question for the Minister of National Defence. In view of reports in today's press can the minister inform the house what changes, if any, are being considered involving Canadian forces bases at Summerside and Greenwood?


Hon. Leo Cadieux (Minister of National Defence):: I did announce some time ago our intention to phase out the Neptune aircraft and that in consequence we would have to redeploy the Arguses. We are doing so; we are leaving three squadrons at Greenwood, putting one in at Summerside and another at Comox. In order to maintain the operational capacity of the base at Summerside we are moving the search and rescue unit from Greenwood to Summerside, hoping in this way to achieve our aim and establish an efficient military operation while arranging that almost all areas share in the over-all reductions we have to make.


John Patrick (Pat) Nowlan: I should like to ask the minister whether he will extend the same courtesy and consideration to the people of Nova Scotia as he did to the people of Prince Edward Island by undertaking to meet a delegation from Nova Scotia to discuss the merits of this move.


Léo Alphonse Joseph Cadieux: I have not been requested to receive a delegation from Nova Scotia, though I would gladly accept such a request. As far as the decision we have reached is concerned, I do not know that we could revise it.


Hon. Marcel Lambert (Edmonton West):: supplementary question to the minister of defence. Is the positioning of the search and rescue squadron in Summerside designed to help find and rescue this government?


Some hon. Members:: Oh, oh.


Mr. J. M. Forrestall (Halifax):: I have a further supplementary question for the Minister of National Defence. In view of the importance of his announcement, involving the transfer of one service from one air base to another, would he find an early opportunity, either in the house or before the standing committee, to make a statement in connection with this base consolidation or reorientation program, which gives rise to a lot of uncertainty and concern in Halifax?


Léo Alphonse Joseph Cadieux: The situation is this. The base at Greenwood will stay at a level of over 2,100 service and civilian personnel. This represents a reduction of around 250. A similar reduction is taking place at Summerside. The over-all base consolidation arrangements are far from settled.
I hope the hon. gentleman will accept the fact that these decisions are taken very reluctantly, but we have to be realists and what I am trying to do is to preserve bases, to have the load shared by as many bases as possible even when faced with the unfortunate decision to reduce the number of personnel.


Some hon. Members:: Hear, hear.


J. Michael Forrestall: Mr. Speaker, I thank the minister for that and we do accept his assurance, but could he go one step further and indicate whether the naval base at Shearwater is in any way involved or could conceivably be involved in this movement, or subsequent movements that might come about in the ensuing months?


Léo Alphonse Joseph Cadieux: No; it would be premature for me to say anything about Shearwater. We have no plans to reduce the operations there.


John Patrick (Pat) Nowlan: As a supplementary following the minister's answer to my first question, Mr. Speaker, I would like to ask whether he has already received a protest from the premier of Nova Scotia about this move; and in view of the fact that unification was sold to the country on the basis of cost and efficiency-


Mr. Speaker:: Order, please.
March 12, 1968


John Patrick (Pat) Nowlan: -would he undertake to refer this matter to the defence committee?


Mr. Speaker:: Order. The hon. member's supplementary is argumentative.


John Patrick (Pat) Nowlan: How about the first question? [Later:]


John Patrick (Pat) Nowlan: Mr. Speaker, I want to rephrase the question which 20 minutes ago Your Honour thought was argumentative. It is directed to the Minister of National Defence. I should like to ask whether the minister has already received a protest about this move from the premier of Nova Scotia. If so, would he undertake to meet the delegation from Nova Scotia before any irrevocable move, as suggested by the minister earlier, is made?


Léo Alphonse Joseph Cadieux: Mr. Speaker, I received the telegram at noon. I am willing to meet any delegation which would come from Nova Scotia with problems relating to the base at Greenwood, but I have to confirm that the decision which was taken to redeploy Arguses, as I indicated, is irrevocable.



INQUIRY AS TO PURCHASE OF TRANSPORT AIRCRAFT

[Stage Direction]
On the orders of the day:
Hon. D. S. Harkness (Calgary North):: Mr. Speaker, I wish to direct a question to the Minister of National Defence. In view of a Canadian officer's comment that "mobile command is the most immobile force in the world," has the minister made any progress in the direction of securing further heavy transport aircraft which would have as one of their functions the refueling of the CF-5 now coming off the assembly line?


Léo Alphonse Joseph Cadieux: Mr. Speaker, may I comment on the first part of the question and say I hope my hon. friend saw my photograph in the local newspapers the other day, showing me jumping off the first helicopter that we had received for mobile command. This implies that very soon we will have the means of being completely mobile. So far as the C-141 is concerned, we are now studying all the options available to the government.


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



WHEAT-SALES AT LESS THAN MINIMUM PRICE UNDER AGREEMENT

[Stage Direction]
On the orders of the day:
Mr. Eldon M. Woolliams (Bow River):: have a question for the Minister of Trade and Commerce in reference to the statement he made about grain, in which he pointed out that the payments are made by the wheat board out of receipts from sales of wheat. Would the hon. gentleman now tell the house whether any wheat has been sold at below the minimum floor price set under the international wheat agreement, and whether any subsidies have been paid?


Robert Henry Winters: The answer to both questions is yes.



INQUIRIES OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Mr. E. Nasserden (Rosthern):: Mr. Speaker, I wish to direct a question to the Prime Minister. Has he received any other resignations, delayed or ineffective, from the cabinet, in addition to the-


Mr. Speaker:: Order, please. This question is not in order.


Mr. Frank Howard (Skeena):: Mr. Speaker, in light of the coming spring equinox, will the Minister of Transport see whether he can make an arrangement to have a large degree of visibility on those days surrounding that date?



POLLUTION


[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 Energy, Mines and Resources. In view of a report by a Hydro Quebec engineer that air pollution in Montreal yesterday was so severe as to cause power failure through short circuits, would the minister make an effort to institute a more effective pollution control program?


Hon. Jean-Luc Pepin (Minister of Energy, Mines and Resources):: Mr. Speaker, I think this would be a good subject to bring to the attention of the government of the province of Quebec.

March 12, 1968
Inquiries of the Ministry COMMONWEALTH RELATIONS



KENYA-PROTESTS AGAINST ALLEGED RACIST POLICIES

[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I wish to direct a question to the right hon. Prime Minister. Has the government made any representations to or inquiries of the government of Kenya, either directly or through the Commonwealth secretariat, with respect to the alleged racist policies presently being carried out by the government of that country against its Commonwealth residents of Asian origin?


Lester Bowles Pearson: No, Mr. Speaker, not to my knowledge.



HIGHWAY SAFETY


[Stage Direction]
On the orders of the day:
Mr. Heward Graffley (Brome-Missisquoi):: Mr. Speaker, now that officials have completed the relevant studies, and in that Washington has ordered anti-pollution standards for 1968 motor vehicles, I ask the Minister of National Health and Welfare why Ottawa has not invoked similar standards for the safety of Canadians.


Mr. Speaker:: Order. The question as asked is argumentative.


William Heward Grafftey: Could I re-fuse the question, Mr. Speaker?


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: Re-fuse is right.


Mr. Muir (Cape Brelon Norlh and Victoria):: Put a longer fuse on it.


William Heward Grafftey: May I rephrase the question to the minister. Has the minister been informed that the anti-pollution vehicle standard now law in the United States is being offered to Canadian citizens as an extra cost optional?


Hon. Allan J. MacEachen (Minister of National Health and Welfare):: Mr. Speaker, I thank my hon. friend for informing me of this. I have already been aware of it.


William Heward Grafftey: Well, I am aware of it, and I would now ask the Minister of Transport a supplementary question. Since this situation clearly demonstrates that Canadians cannot

depend on United States legislation for protection, will the Minister of Transport proceed immediately to invoke motor vehicle safety standards for the protection of Canadians?


Mr. Speaker:: Order, please. The hon. member is making a representation. I am sure it has been noted by the minister.


William Heward Grafftey: I did not hear your ruling, Mr. Speaker.


Mr. Speaker:: I suggested to the hon. member that he had made a representation to the minister which I assume has been noted.


William Heward Grafftey: Mr. Speaker, I assure the minister that it is not a representation. It is a clear call for action and justice.



DOMINION-PROVINCIAL RELATIONS INQUIRY AS TO ACTION RESPECTING OFF-SHORE MINERAL RIGHTS

[Stage Direction]
On the orders of the day:
Robert Lorne Stanfield: Mr. Speaker, I wish to direct this question to the right hon. Prime Minister. Some months ago, following the decision of the Supreme Court with regard to the matter of off-shore rights relating to British Columbia, the Prime Minister was asked in the house what next step the government proposed to take with regard to following this decision. In view of the reply that the matter was under study, is the Prime Minister yet in a position to inform the house what steps this government proposes to take.


Lester Bowles Pearson: Not at the moment, Mr. Speaker. I hope to be able to do so shortly.


Mr. Donald Maclnnis (Cape Brelon Soulh):: Mr. Speaker, am I to understand from the reply of the Prime Minister that this study is not complete despite the fact that the crown corporation has purchased the mineral rights from Dosco?


Mr. Speaker:: Order, please.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg Norlh Centre):: Mr. Speaker, my question is for either the Prime Minister or the government house leader and it is supplementary to my question
March 12. 1968

of yesterday regarding matters to be dealt with before this house rises. In view of the importance of Bill C-190 particularly in relation to the price of drugs, and in view of the fact that it has reached the committee of the whole stage, can this be included in the items to be dealt with and finalized before the house rises?


Lester Bowles Pearson: Mr. Speaker, that of course would depend on the progress in respect of the three items I mentioned yesterday.


Mr. William Dean Howe (Hamilton South):: Mr. Speaker, in view of the fact that the Parke, Davis Company has raised its prices recently by as much as 30 per cent, is there any chance that the government will give some priority to this matter so we can spare the people of Canada any further profiteering by the drug companies of Canada?



COMMUNICATIONS


[Stage Direction]
On the orders of the day:
Mr. Thomas M. Bell (Saint John-Alberl):: Mr. Speaker, my question is for the Minister of Transport. In view of the severe criticism at a meeting in Montreal yesterday of the lack of government initiative in respect of a space program, can the minister give us a progress report concerning	any such
program?


Mr. Speaker:: Order, the hon. member is asking for a statement of the type which should be made on motions.


Thomas Miller Bell: Mr. Speaker, may I revise my question. Can the minister say whether the government has made any reservations in space for Canada, or has taken any other independent action on behalf of this country in view of the severe criticism?


Paul Theodore Hellyer: Mr. Speaker, I may be in orbit but I am not at this moment responsible for the Canadian space program. The Department of National Defence-


Mr. Speaker:: Order, please. I suggest the question is one which might be placed on the order paper.


Thomas Miller Bell: Mr. Speaker, in view of the statement which appeared in the press, and in view of the chasing around
Inquiries of the Ministry by the possible leadership candidates, may I ask the Prime Minister if he can say whether the government has under consideration a space program for Canada, and whether there is any hope of it being implemented?


Mr. Speaker:: Order. The hon. member is asking a question which I have suggested cannot be asked at this time.


Thomas Miller Bell: Mr. Speaker, I should like to ask the Prime Minister this question, which I have carefully written out. Has the government made approaches to the United States or Russia recently about a joint space program and, if so, when will plans be finalized?


Lester Bowles Pearson: Not to my knowledge, Mr. Speaker. I hope there will be an announcement on this matter very shortly, depending on space programs.


Thomas Miller Bell: In view of the fact that I cannot get information on this matter I wish to discuss it at ten o'clock tonight.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. Georges Valade (Sainte-Marie):: Mr. Speaker, I should like to put a question to the hon. Minister of Agriculture.
I should like to ask him if he is ready to reply to the question I put to him yesterday concerning the instructions of his department with regard to port activities?


John James Greene: No, Mr. Speaker, but I shall reply tomorrow.



BILINGUALISM AND BICULTURALISM


[Stage Direction]
On the orders of the day:
Mr. Auguste Choquette (Lotbiniere):: Mr. Speaker, I should like to put a question to the right hon. Prime Minister.
As several months have already elapsed since the publication of the Laurendeau-Dun-ton report, can he tell us whether the government would consider the possibility or accept

March 12, 1968
Inquiries of the Ministry the suggestion that a white paper be tabled on bilingualism in Canada?


Lester Bowles Pearson: Mr. Speaker, a report has been prepared on the progress of bilingualism in the federal civil service. That report is being translated. As soon as the translation is completed, which I hope will be today or tomorrow, perhaps it could be tabled in the house.


Auguste Choquette: Mr. Speaker, I wish to direct a supplementary question to the hon. Minister of Justice.
I should like to ask him whether he has found a way to overcome the obstacles brought forward by the Quebec government with regard to insertion of language guarantees in the constitution?


Mr. Speaker:: Order. The question, as
asked, is out of order.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, I have a question for the Minister of Manpower and Immigration but in his absence the parliamentary secretary may wish to take notice of it. Has any request been received from the premier of Saskatchewan that a special effort be made to accept British subjects in Kenya for residence in Saskatchewan, despite reports that unemployment is on the increase in the prairies?


Mr. J. C. Munro (Parliamentary Secretary to Minister of Manpower and Immigration):: 1
am not aware of any such request, Mr. Speaker. I will check it out and reply tomorrow or the next day.



PUBLIC WORKS


[Stage Direction]
On the orders of the day:
Mr. Barry Mather (New Westminster):: Mr. Speaker, I have a question for the Minister of Energy, Mines and Resources having to do with the Fraser river flood control agreement. Can the minister say whether he has met with the British Columbia minister concerned, and .
whether an agreement on this matter has been signed?


Jean-Luc Pepin: Mr. Speaker, I met on Saturday with the minister of lands, forests and water resources of British Columbia. I made suggestions to him regarding the federal-provincial Fraser river flood control agreement. He is to report to his colleagues. I am to report to mine. We are to meet again in a few days.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. H. Russell MacEwan (Pictou):: Mr. Speaker, this question is for the Solicitor General. It follows a question asked by my colleague the hon. member for Cape Breton North and Victoria on March 1. Has the Solicitor General had an opportunity to talk with the Minister of Indian Affairs and Northern Development regarding the Cape Breton Indian, Stephen Marshall, who at his trial according to reports was not represented by counsel and could not speak English? Is the minister's department doing anything to assist this man in an appeal by way, for instance, of providing defence counsel?


Hon. L. T. Pennell (Solicitor General):: Mr. Speaker, I have had an opportunity to discuss the matter with my colleague the Minister of Indian Affairs and Northern Development. Every effort is being made to give assistance to this individual on his appeal.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. P. B. Rynard (Simcoe East):: Mr. Speaker, I wish to direct this question to the Minister of National Health and Welfare. In view of the great shift in opinion from universality to selectivity in welfare, and in view of our present financial situation, does the minister plan further talks with the provinces before implementing his universal medicare bill?


Allan Joseph MacEachen: No, Mr. Speaker.
March 12, 1968



SASKATCHEWAN-RESTRICTION ON FEDERAL CONTRIBUTION UNDER MEDICARE

[Stage Direction]
On the orders of the day:
Mr. L. M. Brand (Saskatoon):: Mr. Speaker, I have a question for the Minister of National
Health and Welfare which is in a sense supplementary to one asked a few minutes ago. Can he state whether money to be sent to Saskatchewan under the medicare program beginning July 1 will be designated for use for medicare only, in order in this way to help alleviate the catastrophic deterrent fees soon to be introduced in Saskatchewan in respect of the medical and hospital care plan?


Mr. Speaker:: Order. I suggest to the hon. member that his question cannot be asked at this time. If there is some immediate urgency he may wish to discuss the matter on the adjournment motion.



HARBOURS


[Stage Direction]
On the orders of the day:
Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, I wish to direct a question to the Minister of Transport (Mr. Hellyer).
In view of the urgent need to settle the serious situation now prevailing in the port of Montreal, does the Minister of Transport intend to appoint, after consultation with the local authorities, a special administrator whose authority and jurisdiction would be all-encompassing over the port of Montreal?


Paul Theodore Hellyer: Mr. Speaker, as I indicated earlier this question of the management and control of port facilities is being studied by the government. I would not wish to prejudge the results of that study, because no comprehensive look has been taken at this question for many years. I hope it will not take too long to have the inquiry completed. In the meantime we have problems at the port of Montreal, and I am sure my colleague the Minister of Labour is doing everything possible to see that the labour situation there is ameliorated.


Gilles Grégoire: Mr. Speaker, I wish to put a further question to the hon. minister.
In view of the fact that he is not too sure when the investigations concerning the port of Montreal will be completed, and since
Inquiries of the Ministry there are not only labour relations problems in the port of Montreal, could the minister inform the house whether, pending completion of these studies, he could not, together with the authorities of the city of Montreal, appoint a special manager who would at least deal temporarily with the problems of the port of Montreal?



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. Real Caouelte (Villeneuve):: Mr. Speaker, as a result of the minister's reply to the hon. member for Lapointe I wish to direct a question to the Minister of Agriculture.
Does he expect to introduce a new dairy policy providing for $5 per hundredweight of manufactured milk and, if so, when does he expect to implement it?


John James Greene: Mr. Speaker, the dairy policy for next year is now being considered by the officials of the Department of Agriculture. It will be announced as soon as possible in the house, if it is still sitting, or notice will be given in the press.



DURUM WHEAT-PROSPECTS FOR EXPORT SALES

[Stage Direction]
On the orders of the day:
Mr. R. D. McLelland (Roselown-Biggar):: Mr. Speaker, I should like to ask the Minister of Trade and Commerce whether, before he leaves his present portfolio, he will issue a statement as to what are government views in respect of future sales of Durum wheat on the export market. Is there any indication of an increased demand in the immediate future? The answer to this question would be of assistance to farmers in western Canada when making their plans for spring seeding operations.


Mr. Speaker:: Order, please. It appears to me the hon. member is asking for a statement. If he is only asking whether a statement will be made, the question would be in order.


Robert Henry Winters: Perhaps I could reply, Mr. Speaker, by saying that I can make some remarks on the subject when my supplementary estimates are being considered.

March 12, 1968
Inquiries of the Ministry POTATOES-REQUEST FOR SPECIAL MISSION TO PROMOTE EXPORTS
On the orders of the day:


Mr. David MacDonald (Prince):: Mr. Speaker, I should like to direct my question to the Minister of Trade and Commerce. In view of the deterioration of seed potato sales in the past few months, will the minister and his department give consideration to the inauguration of a special mission which might further increase this potential and thus alleviate the serious position the potato market has assumed in recent months?


Robert Henry Winters: Mr. Speaker, we are actively seeking new markets. I had the opportunity of discussing this very serious problem with the premier of Prince Edward Island when I visited there last week.


David Samuel Horne MacDonald: Having now
reported on this conversation, will the minister tell us whether a special mission, like other special missions which have been established, will be set up for the express purpose of helping to solve problems in respect of seed potatoes?


Mr. Speaker:: Order. The hon. member is reiterating his question.



BANKRUPTCY


[Stage Direction]
On the orders of the day:
Mr. Melvin McQuaid (Kings):: Mr. Speaker, I should like to ask the Minister of Consumer and Corporate Affairs whether he has received a request from the Lieutenant Governor of Prince Edward Island for a proclamation by the governor in council declaring part X of the Bankruptcy Act to be in force in that province?


Mr. Speaker:: Order. I do not believe the question is in order. It could easily be placed on the order paper. If there is some urgency, which is not apparent to me, it might be discussed later on today.
The hon. member for Kootenay West.


Herbert Wilfred Herridge: The minister has sent me an answer by mail since I rose.



INDIAN AFFAIRS


[Stage Direction]
On the orders of the day:
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, my question is for the Minister of

National Health and Welfare in his capacity as government house leader. In view of the anticipated adjournment of the house and the government's long delay in dealing with urgent problems in respect of Indian affairs, with particular reference to the visit by members of parliament to reservations planned over a year ago, will the minister take the necessary action to reconstitute the parliamentary committee on Indian affairs in order that it might meet from time to time and adjourn from place to place during the parliamentary recess?


Allan Joseph MacEachen: Mr. Speaker, I would be happy to consider that request and discuss it with the minister.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. Lloyd R. Crouse (Queens-Lunenburg):: Mr. Speaker, in view of the desperate plight of the Canadian east coast fishing industry I should like to ask the Secretary of State for External Affairs whether he can now inform the house of any progress being made toward the further establishment of base lines, which would serve as a conservative measure in respect of Canada's fisheries.


Mr. Speaker:: Order, please. If my memory serves me correctly this question was asked just a few days ago.


Malcolm MacInnis: Mr. Speaker, I should like to ask a supplementary question.


Mr. Speaker:: Perhaps the hon. member might ask another question, as the question asked by the hon. member for Queens-Lunenburg was not acceptable and there can be no supplementary question.


Malcolm MacInnis: Mr. Speaker, I will phrase my question somewhat differently. Since it has been three years or more since the government said it would put base lines into effect, I should like to ask the Secretary of State for External Affairs what is holding them back. Why can members not get answers to questions? Has the government dropped the Pearson gunboat philosophy?


Mr. Speaker:: Order, please.
March 12, 1968


Lloyd Roseville Crouse: Mr. Speaker, I should like to ask the Secretary of State for External Affairs whether it is the intention of the government to propose another law of the sea conference to resolve the international differences in respect of the 12 mile limit.


Hon. Paul Martin (Secretary of State for External Affairs):: Mr. Speaker, as my hon. friend knows, co-ordinates with regard to the base line system have been established in some sections of eastern Canada. In order to proceed with other base lines in other parts of Canada we are now giving consideration as to whether some further conference arrangements might assist us in meeting some of the resistance we have been experiencing in our negotiations with particular countries.



FINANCE


[Stage Direction]
On the orders of the day:
George Harris Hees: Mr. Speaker, in view of the resignation of the President of the Privy Council announced yesterday, will the Prime Minister advise the house which member of the cabinet is responsible for the application of the Watkins report?


Lester Bowles Pearson: All of them.


George Harris Hees: I should like to direct a question to the Prime Minister. Is it his intention to place the Watkins report under the administrative responsibility of a minister, and if so which minister?


Lester Bowles Pearson: I will assume that responsibility myself.


George Harris Hees: I have a supplementary question, Mr. Speaker. Does the Prime Minister expect to make an announcement in the near future with regard to replacements for the portfolios of President of the Privy Council and Minister of Trade and Commerce?


Mr. Speaker:: Order, please.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. J. O. Bower (Shelburne-Yarmoulh-Clare):: Mr. Speaker, I should like to ask the
Inquiries of the Ministry Minister of Transport whether his department has received representations to the effect that a Swedish ferry company is prepared to put up some $500,000 for the establishment of a test rim this summer of a ferry supplement to the Bluenose between Bar Harbor, Maine and Yarmouth, Nova Scotia, the Swedish interest having a-


Mr. Speaker:: Order, please. I should think that question should be placed on the order paper.



RURAL DEVELOPMENT


[Stage Direction]
On the orders of the day:
David Réal Caouette: Mr. Speaker, my question is directed to the hon. Minister of Forestry and Rural Development as the minister responsible for the administration of ARDA.
Has he received recently from the Quebec provincial authorities requests for assistance with a view to the construction of a road from LaSarre to James Bay?


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



POLLUTION


[Stage Direction]
On the orders of the day:
Mr. G. H. Aiken (Parry Sound-Muskoka):: Mr. Speaker, in view of the major increase in inspections for pollution control proposed yesterday by President Johnson in the United States, has the Canadian government given further consideration to stepping up its antipollution measures?


Jean-Luc Pepin: Mr. Speaker, we are doing our best. There are many things possible in the United States which are not possible in Canada. The constitutional system, for one, has something to do with this.


Gordon Harvey Aiken: I should like to ask the minister whether the United States has made any additional proposals to Canada respecting international waters as a result of this latest move.


Jean-Luc Pepin: Not to my knowledge, Mr. Speaker, but we are keeping close contact

March 12. 1968
Inquiries of the Ministry with the United States government in respect of these matters.



DEFENCE PRODUCTION


[Stage Direction]
On the orders of the day:
J. Michael Forrestall: Mr. Speaker, I should like to ask the Minister of Industry whether he can now give the house some idea when contracts will be awarded in respect of the four new destroyer escorts.


Hon. C. M. Drury (Minister of Industry):: An answer has been prepared for a question on the order paper, indicating that contracts should be let before April 12.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Edward Richard Schreyer: My question is directed to the Minister of National Defence. Since his officials are currently engaged in studying the feasibility of participating jointly with the United States in developing an airborne radar defence capability, I should like to ask the minister whether his department is drawing up contingency plans to phase out the radar stations on the Pine Tree Line.


Mr. Speaker:: Order, please. This question should be put on the order paper.



THE CANADIAN ECONOMY


[Stage Direction]
On the orders of the day:
Melville Carlyle Germa: Mr. Speaker, I should like to direct a question to the Minister of Finance. Can the minister report on the results of his promised investigation into the increase in fuel oil and gasoline prices?


Hon. Mitchell Sharp (Minister of Finance):: I will be glad to do so tomorrow.



FINANCE


[Stage Direction]
On the orders of the day:
Edward Nasserden: I have a question for the Minister of Finance. In view of

the recent report of the O.E.C.D. regarding the cost-price relationship of Canadian production, is it the intention of the government to consider the removal of the 11 per cent sales tax on production machinery?


Mitchell William Sharp: I hope the hon. gentleman has carefully read that report, and he will see that generally the fiscal policies of the government were approved.


Edward Nasserden: Mr. Speaker, the Minister of Finance made some remarks but he did not answer my question. I wonder if he would tell us whether it is the intention of the government to remove the 11 per cent sales tax on production machinery.


Mr. Speaker:: Order. The hon. member is repeating a question he has already asked.



INCOME TAX ACT


[Stage Direction]
On the order:
Second reading ol Bill C-208, an act to amend the Income Tax Act-the Minister of Finance.
Mr. Ralph Cowan (York-Humber):: Mr. Speaker, I rise on a point of order. I was not in the house yesterday, due to prior commitments which had been made when I was advised that the house was likely to be proroguing on March 8. Having followed the suggestion that on March 11 the house would not be sitting, I accepted two engagements and I was not here when the order for second reading of Bill C-207 was called.
There was a certain amount of discussion in the house yesterday, and I was very pleased with the ruling of the Speaker. Now, with the introduction of the new Bill C-208, I wish to refer to the rules of parliament with regard to bringing back on the floor of the House of Commons matters already decided in the current session.
On February 27 I spoke in the House of Commons with regard to the non-confidence motion, and during the course of my remarks I pointed out that I had been assured by two members of the cabinet that the bill which had been defeated on February 19-


Mr. Speaker:: Order, please. The hon. member should state his point of order. I think I have to remind him in all fairness that the house spent a good part of yesterday in discussing this point of order. A decision having been made, is reviving a matter on which the house has already decided. Therefore I invite
March 12, 1968

Income Tax Act
him to state his point of order as succinctly as possible.


Ralph Bronson Cowan: I will do so immediately. Yesterday the house was discussing Bill C-207. Today I am discussing Bill C-208, which I am told is an entirely new bill. I should like to refer to citation 163 on page 137 of Beau-chesne's fourth edition, which reads as follows:
A mere alteration of the words of a question, without any substantial change in its object will not be sufficient to evade the rule that no question-


Mr. Speaker:: Order, please. I wonder if the hon. member has taken the trouble to read the Hansard of yesterday, where he will see that the arguments he proposes to advance now were advanced for the benefit of the Chair. He has just stated that Bill C-208 is an entirely new bill. It is new in the sense that some of the provisions in the previous bill are not included in the one now before us, but as I read the provisions of this bill they are a repetition of some of the provisions contained in Bill C-207, which have been ruled in order.
So I do not think the hon. member would be helpful by going into all the arguments which were made during the debate on the point of order yesterday.


Ralph Bronson Cowan: Mr. Speaker, I do not intend to go into all the arguments raised yesterday. I am referring specifically to clause 2 of Bill C-208, which is similar to clause 5 of Bill C-207 and to clause 4 of Bill C-193. I have read yesterday's Hansard, and I have also read with pleasure your ruling as it appears in this morning's Votes and Proceedings. I should like to read the following paragraph from page 755 of today's Votes and Proceedings:
Clause 5 of C-207 provides for prepayment of the corporation tax. There are different rates of prepayment.
May I point out in all sincerity, sir, that I think this should read "different dates of prepayment'' because I cannot find any difference in rates. It goes on:
One hon. member found it difficult to see the difference, but there is some difference between this clause and the corresponding clause of Bill C-193.
May I draw your attention-


Mr. Speaker:: Order, please. The hon. member will have to advance his own argument. He cannot use the decision of the Chair to justify the argument he wishes to make in connection with the present bill.


Ralph Bronson Cowan: Mr. Speaker, may I draw your attention to the explanatory notes accompanying these clauses in the bills I mentioned. In Bill C-193 the explanatory note for clause 4 reads:
This amendment would require corporations to pay their corporation income tax over a period which commences two months closer to the beginning of their taxation year than at present.
In Bill C-207 the identical words are used in the explanatory note for clause 5. It reads:
This amendment would require corporations to pay their corporation income tax over a period which commences two months closer to the beginning of their taxation year than at present.
In Bill C-208 the explanatory note for clause 2 reads:
This amendment would require corporations to pay their corporation income tax over a period which commences two months closer to the begin-ing of their taxation year than at present.
The person writing the explanatory notes in all three bills was well aware of the fact that they are substantially the same and aimed to accomplish the same objective; that is, that the amendment would require corporations to pay their corporation income tax over a period which commences two months closer to the beginning of their taxation year than at present. I suggest that clause 2 in Bill C-208 violates the rule that we cannot bring back on the floor of the House of Commons a provision which has already been decided by the house.
Since I cannot use the decision of the Speaker to reinforce my own arguments, may I quote the hon. member for Acadia who pointed out yesterday that in a similar decision the Speaker of the day, whom I do not wish to identify, ruled that a clause in the Transportation Act which was previously rejected could not be brought back in an amended form. That ruling bore on a clause. This is a clause of Bill C-208 which I submit contains a provision on which a decision was made on February 19. I have read the similar parts in the explanatory notes, and the end result will be exactly the same. If the payments commence two months closer to the beginning of the taxation year, the end result will be to pay regularly for ten months. I believe this clause 2 should be withdrawn as it appears in the bill before the bill is discussed.
[DOT] (3:30 p.m.)


Mr. Speaker:: I suggest to hon. members that no point at all would be served by reviving the argument which was made yesterday. I appreciate the fact that the hon. member

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Income Tax Act
did not have an opportunity yesterday to submit the argument which he is submitting now. Unfortunately for him, though, it cannot be applied retroactively to the debate which we had yesterday. It may be that if I had had the benefit of his views I might have reached a different decision in connection with the particular clause to which he has referred. However, having considered all the arguments which were then before me I reached a certain conclusion and with regret I must tell the hon. member I do not see how I can vary the decision which was rendered after much thought and with great pain.


Ralph Bronson Cowan: May I ask if the ruling is on the different dates of prepayment or the different rates of prepayment?


Mr. Speaker:: I will rise on motions some day and correct Hansard.


Mitchell William Sharp: the second reading of Bill No. C-208, to amend the Income Tax Act.


Lester Bowles Pearson: Mr. Speaker, I am very glad to have the opportunity of speaking on Bill No. C-208, as indeed I would have been glad to have the opportunity of speaking on Bill No. C-207 yesterday. The second reading of a bill deals with the principle of the measure, and I hope to discuss that principle and the necessity for this bill within the context of the current financial and economic situation which, in the view of the government, makes a bill of this kind important and necessary at this time.
Amidst the current financial difficulties and problems, and we certainly have them, and the predictions of doom and gloom to come, it is well, Mr. Speaker, to recall the actual and potential strength of this country. This country is one of the richest, most stable and most fortunate countries in the world. It is the envy of practically every other country in the world. It is well also, in order to keep things in perspective, to recall the progress we have made in recent years which puts us in a much stronger position today to meet the difficult problems we are encountering.
The fourth annual review of the Economic Council of Canada, which was made public in September, 1967, had this to say on page 11 in the section dealing with the performance of the economy. In this paragraph the council was referring to the expansion since 1961:
This represents probably the longest uninterrupted expansion-and certainly the longest peacetime expansion-in Canadian business cycle history.
[Mr. Speaker.)


Mr. Starr:: Started by the Conservatives in 1961.


Lester Bowles Pearson: The governor of the Bank of Canada, Mr. Speaker, also mentioned the economic gains we have made, while warning us in very clear terms of the dangers and difficulties ahead, in a speech which he made last November in Winnipeg. Referring again to the period of the last six years, he said:
Our real output has increased by over 40 per cent and we have greatly strengthened the economic foundations of the country. We have added greatly to our manufacturing capacity and demonstrated our ability to sell more manufactured goods in world markets. We have continued to seek out and develop a wide variety of forest and mineral and power resources. We have added significantly to our infrastructure in the form of roads and other means of transportation. We have provided greatly increased facilities for general and technical education. And at the same time as we have done all these things we have raised our standard of living rapidly: Personal consumption per head has risen by nearly a quarter since the beginning of this decade.
Then, he went on:
Our basic problem is how to cope with prosperity and add to high levels of output already attained: Our present difficulties do not arise out of any basic economic weakness or shortage of resources-
Mr. Rasminsky then pointed out that by 1966 it was clear that our growth rate would decrease, and that the main question was whether this would take place without the expansion coming to a full stop as has happened so often in similar circumstances in the past. In fact, as matters turned out, economic expansion has continued, though at a distinctly more moderate and sustainable rate. In other words, bust has not followed boom. It is undeniable, however, that we are now facing serious economic and financial problems, but so is every country in the world including the United Kingdom and the United States.
It is true also that these problems are made more dangerous, and their solutions made more difficult, by threats to the international financial and economic co-operation which so far has distinguished the post-war years from those of the thirties. It is devoutly to be hoped that we do not return to those earlier years when governments foolishly thought they could save themselves by adopting protectionist national policies which attempted to export their own difficulties and their own problems. Today, the reversion to economic nationalism of that kind would only compound every country's difficulties and lead the
March 12, 1968

way to general economic and political deterioration which could be fatal to international progress and co-operation.
Canada, Mr. Speaker, has played, and hopes to continue to play, a full part in international economic co-operation, particularly in the international trade and payments system that has been built up and which, as we have learned to our advantage recently, is still working despite the intense strains to which it is currently subjected and which could destroy it with unhappy results.
Canada's own basic position, as I have said, is strong, and so is the backing for our dollar. If anyone feels pessimistic about the situation in Canada, let him read this report which came out the day before yesterday from the O.E.C.D., which is an international committee, and which deals with the current economic and financial situation in Canada. Our economic and financial position has stood up well, then, to the pressures which have been directed against it, as indeed they have been directed against other countries. In so far as standing up to those pressures is concerned, I should like to pay my tribute and give thanks to the government of the United States for the way it has co-operated with Canada in meeting those pressures in a way which is of advantage to both countries.
[DOT] (3:40 p.m.)
It is obvious, Mr. Speaker, that no country, certainly no country in the position of Canada, can isolate itself from those pressures which are continuing but which by their very nature make sound national policies more important than ever. We have our own responsibilities to discharge and we will not be excused for failure to do so by blaming that failure on the international situation, on the exchange gamblers, on Paris or on Viet Nam. However, Mr. Speaker, the fact remains that our financial problems today, as is the case with other countries, are being increasingly aggravated by troubled international situations both economic and political.
The problem of most immediate concern to us, Mr. Speaker, is to maintain financial stability without hindering economic expansion. This is more and more difficult to accomplish in an age of rising costs, rising expenditures and rising expectations. While government policies do require heavy public expenditures at all levels of government-and I will have something to say about that a little later -they also increasingly require the determination of priorities, again at all levels of government, in the allocation of resources.
Income Tax Act
This is the more necessary and the more difficult, Mr. Speaker, because conditions, both national and international, change so rapidly these days. It is not easy to adapt economic and financial policies to those changes. I do not think we need to be smug or complacent as to our own successes or failures, if you like, in regard to this adaptation. But I would quote from the report of this international body, the O.E.C.D., which had this to say at page 12:
A striking feature of the last two years has been the speed with which policies-
They are writing about Canadian policies.
-have been adjusted to changes in business conditions. And in most cases the timing and magnitude of the policy measures adopted was well chosen.
Again on page 31, in the conclusion of the report, there is this paragraph:
In the last two years, with the trend of business conditions changing quickly, the authorities-
They are referring to the Canadian authorities.
-have on the whole been successful in maintaining relatively high levels of employment while combating first excesses and then mildly recessionary tendencies appearing on the demand side. Both monetary and fiscal policies have been rather promptly adjusted to changing conditions.
Our most worrying problem at the present time, as I have just said, Mr. Speaker, is the threat to financial stability from the recent and continuing rates of increase of prices, incomes and costs in the Canadian economy. The steps that have been taken in fiscal and monetary policy now need to be supplemented by new procedures to ensure that the public interest in price stability is taken into account whenever important decisions affecting prices, incomes and costs are made.
Before dealing with these measures, Mr. Speaker, I wish to review the background against which these procedures that will be recommended should be viewed. In a white paper on employment and income in 1945 the government of Canada committed itself-and successive governments have accepted that commitment-to the maintenance of a high and stable level of employment. Henceforth that was to be a central objective of economic policy in this country, and rightly so.
While this objective was not always fulfilled, Mr. Speaker, during the years that followed, we did have two long periods of sustained growth and high employment. Of course, employment is directly related to

March 12. 1968
Income Tax Act
growth. That is why we had high employment, because we had the growth. This situation prevailed until the recession of the late fifties which was succeeded after 1961 by a renewed steady growth of production and employment.
There is also a direct relationship, in economic growth, between productivity and the level of real income. Therefore, Mr. Speaker, because of this relationship it is very disturbing to all members, I think, to realize that now the average productivity of the Canadian worker is still appreciably less than that of his counterpart in the United States. I am sure that all members will agree that this situation must be corrected if Canadians wish to enjoy living standards equal or nearer to those of Americans. Increases in productivity is essential if we are to have rising incomes without the kind of inflation which will rapidly erode the benefits we would otherwise receive from this rise.
Price inflation works great inequities, causing the greatest hardship to the relatively weak groups in the community who have no organized market power to combat it, those whose incomes are fixed or lag well behind the increasing cost of living. When price inflation persists long enough and creates a general expectation of further inflation, then serious distortions arise in the whole economy as well as in financial markets. The likely consequence is recession and large scale unemployment. This is particularly true in a country like Canada because our economic well-being depends so greatly on our international competitive position. When our prices rise faster than those of the United States, in particular, and of our other major trading partners, we are in trouble. That is why I was very glad to read in this O.E.C.D. report the following sentence on page 31:
There is little indication that the competitive position of Canadian industry has yet been seriously impaired.


Robert Lorne Stanfield: Seriously impaired.


Lester Bowles Pearson: Yes. It has been impaired, but this publication says that it has not yet been seriously impaired. As my hon. friend realizes, Mr. Speaker, I am not underestimating the difficulties that may cause that serious impairment unless we do something about them. Price stability is a necessary condition for achieving the other goals of high employment and adequate growth.
The responsibility of government to curb inflation is made the more difficult because

financial and currency problems are often concerned with considerations that are more psychological than concrete in nature. The problem of psychology is largely one of confidence.
There are some who appear to believe that prices and costs will continue rising in the way they have in recent months. They assume that further inflation is inevitable and thereby help to make it so. This is dangerous, of course, because inflation feeds on itself. Moreover, while some, and rightly, may fear it, others may find it good because of the feeling of prosperity and well-being it may give for a time. It can produce an l.s.d. experience-and I am not talking about pounds, shillings and pence. So government has a responsibility to do what it can to prevent the "hangover" by preventing the experience.
[DOT] (3:50 p.m.)
During the period of economic expansion which began in 1961 we had for most of that time reasonable price stability. This brought great benefits to all Canadians and demonstrated the underlying strength of our economy. It also, as I have said, brought problems of prosperity, prices and cost problems, arising out of the growing strains in recent years on our resources. Looking back in retrospect, it is clear that dangerous upward pressures on prices and costs were going to be hard to avoid, but that was not so clear at the time. In its second annual review, published in December, 1965, the Economic Council of Canada was still in a position to say, and I quote from the report of the council published in that month:
-a careful appraisal of the nature and patterns of recent changes would suggest that at the present time there appears to be little evidence to indicate that a broad and widely dispersed acceleration of price increases or accentuation of price pressures is under way.
That is what the economic council said at the end of 1965. However, as the economy subsequently moved to even higher levels of employment and heavier pressures on our resources, price inflation at that time became, and it remains, a major danger. It was then that monetary and fiscal action was taken by the government to moderate demands on our resources.
Despite the easing of pressures in the economy, Canada's price performance over the last year or two, in contrast with earlier years, has been bad. It now compares
March 12, 1968

unfavourably with that of most other industrialized countries and, of special significance to us, it compares unfavourably with that of the United States of America.
The average annual rate of increase in the consumer price index from January, 1965, to January, 1968, has been 3.7 per cent. From 1952 to 1965 it was only 1.3 per cent. During the whole period from 1949 to 1967, the rate was 2.3 per cent. So our recent performance has not been good.
It is important to note also that prices of imported goods have not been increasing more rapidly in the past three years than in the period 1952 to 1964. Obviously any marked increase in import prices can exert strong upward leverage on domestic price levels, as happened, for example, in 1950-51. But this has not been the case this time. The average annual increase in import prices has been 1.3 per cent from the beginning of 1965 to the third quarter of 1967, compared with an average annual rate of 1.7 per cent from 1952 to 1964.
In summary, Mr. Speaker, prices of most types of goods and services have recently been rising at rates that are clearly inconsistent with any definition of reasonable price stability.
Productivity, of course, is an important factor in these matters; it is an important determinant of prices and income. The only way to increase real incomes, with a given quantity of capital and labour, is to improve productivity. Increases of money incomes which run ahead of increases of real output are, for the country as a whole, illusory and self-defeating. So policies to achieve price stability must be policies to keep the over-all increase in incomes within limits set by the real increase in production.
The urgency of this matter, and it is urgent, is shown, among other things, by the fact that in the past two years new wage settlements have on the average provided for annual increases in earnings of more than 8 per cent. The O.E.C.D. report which I referred to put it at 8.7 per cent. Such increases are well beyond the long-run average gain in productivity in Canada, by any relevant measure. They are also well above the increases in the last two years under similar collective agreements in the United States, where long-run average productivity growth is about the same as in Canada.
Corporation profits, which in the early years of expansion had risen strongly to relatively high levels, have, however, declined
Income Tax Act
significantly in the course of the past two years. Profits before tax in 1967 were about 5 per cent lower than two years earlier, although non-farm output had increased by some 8 to 9 per cent. Without this decline in profits-and I admit that the decline has been from the high levels of the earlier period- wage and salary increases in excess of productivity gains would have had an even greater effect on prices.
This spiralling process in prices and incomes cannot be halted overnight, but we must do our best to check it. There is no easy way to do this in a free society and in an open economy, and Canada has about the most open economy in the world. There is no easy way to do this, especially in a period of economic expansion. Rising demands, which go with expansion and prosperity, push up costs. Rising costs push up prices. Higher prices in their turn further push up costs, which affect production and consumption and halt expansion.
For the resulting difficulties, labour blames big business and management and their excessive profits. Big business blames labour unions and their alleged excessive demands. Consumers blame the merchants. The merchants blame the manufacturers, and everyone blames the government, especially the federal government, even though more than 55 per cent of the taxes in this country now go to provincial and municipal governments.
These days I receive letters, listen to speeches and read editorials in the newspapers urging the government to cut expenditures, to reduce inflationary pressures and lower rising costs. However, the government is also urged, often by the same people who demand that we cut costs, to spend more money on pensions, on anti-pollution measures, on housing, on price supports for farmers, on education, retraining, health grants, research and on a great many other worthy and important projects and purposes. Every day we are urged to curb expenditures. At the same time we are criticized for cutting out or cutting down on some good and favourite projects, even though it is realized that in present circumstances some very desirable things will have to be postponed or scrapped or reduced in order to keep the finances of the country on an even keel.
Eventually everything has to be paid for and the government does not have any magic way of raising money for these purposes. It

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Income Tax Act
is, of course, easy to say that it can all be done by eliminating waste and extravagance.


An hon. Member:: Right.


Lester Bowles Pearson: It is easy to say that it can all be done by eliminating waste and extravagance but the problem of finding the hundreds of millions of dollars which will be required to do all the things that ought to be done, and I have mentioned some of them, cannot be met by eliminating waste and extravagance alone, desirable though that is.


An hon. Member:: But it would help.


Lester Bowles Pearson: So it becomes more and more a problem of priorities and of assessing what even an expanding economy can take on at any given time. And these priorities, let me add, are priorities within provincial and municipal expenditures as well as federal, because municipal and provincial expenditures cover more than half the expenditures of the country.


Eldon Mattison Woolliams: Why don't you take the lead?


Malcolm MacInnis: Medicare in the provinces.
[DOT] (4:00 p.m.)


Lester Bowles Pearson: I will come to that in a few moments. I will show who is taking the lead in cutting expenditures.
The government has to spend the money it collects wisely and well, of course, but that money can only be secured by taxing or borrowing. At the present time it is not easy to do either-either to tax or to borrow. Interest rates make it difficult to borrow and taxes are already high. But the money must be found and that is one of the purposes of the bill before the house. We cannot safely indulge in deficit financing when inflation, not recession, is the main danger.
To check inflation government must, of course, keep its own financial affairs in order. This requires in present circumstances establishing a balance between income and expenditure even if it means the postponement or elimination for the time being of many good projects and the reduction of government borrowing even for good purposes. We are eliminating certain programs and we have postponed or stretched out others.
We have reduced substantially the amount we shall have to spend as well as the amounts

we shall have to borrow in 1968 for all purposes. We have asked the provincial governments and, through them, municipal governments, to co-operate in this effort. Reduction of expenditures and an increase in revenues, along with a reduction of non-budgetary outlays, are, then, necessary for financial stability. This, I repeat, is why we have introduced the bill now before the house and why we shall propose further cuts in expenditure.
The critics of the government say, of course, that there ought not to be any tax increases, or that the kind we are proposing are the wrong kind; that our proposals are inflationary or that they are deflationary; sometimes these two complaints are made in the course of the same speech. They say the reductions are made in the wrong places, or that they should not be made at all, or that the reductions should be bigger. The government is accused of being niggardly or extravagant, or both.
The most persistent charge is that we have lost control of expenditures, which are said to be skyrocketing. I submit that the government has made a very real and effective effort to maintain control over increased expenditure.


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: Such control, as the Leader of the Opposition (Mr. Stanfield) quite rightly said some time ago, is the only control which in present conditions is realistic. Our effort has certainly been more successful in controlling expenditure than the effort made at the provincial and municipal levels as comparative figures show quite clearly. We are now achieving a substantial reduction in the rate of increase in budgetary expenditures. The rate of increase for 1968-69 will be 4.1 per cent. It was 12.5 per cent for the current fiscal year. On October 4 the Minister of Finance (Mr. Sharp), as reported on page 2810 of Hansard, told the House of Commons of our efforts to screen and reduce programs and expenditures and work toward a balanced budget. The opposition was not impressed. They claimed that federal expenditures remained excessive and were out of control and getting more so in comparison with the growth of our national product, and that we have no right to ask for taxes until we have reduced expenditures to much lower levels.
Let me give the house some figures to show that the percentage increase in federal expenditures, was not greater but less than the increase in the gross national product during
March 12, 1968

Income Tax Act
the last five years. There was a 42 per cent increase in the gross national product as against 30 per cent in federal expenditures. During the period from 1957 to 1966, roughly a ten-year period, the increase in federal expenditures and the increase in the gross national product were roughly the same-81 per cent. But during the same period the increase in provincial and municipal expenditures amounted to 186 per cent. For the ten-year period as a whole, the percentage increase in federal expenditures was identical with the increase in the gross national product. In that same period the annual average percentage increase in provincial and municipal expenditures was 12.1, while the average annual increase in federal expenditures was 6.7 per cent, and we shall be reducing that in the forthcoming year to 4.1 per cent.
The same trend is shown in the figures for total federal and provincial expenditures as percentages of the gross national product. In 1954 federal expenditure represented 16.9 per cent of the g.n.p. That figure in the first three-quarters of 1967 had gone down to 14.5 per cent whereas the figure for provincial and municipal expenditure had risen from 10.7 per cent to 19.4 per cent.
Equally significant are the percentage figures of total public expenditures in Canada divided between the federal government on the one hand and provincial and municipal governments on the other. In 1952 the federal percentage was 66 per cent. This had declined by 1966 to 43 per cent whereas provincial and municipal expenditure had gone up from 34 per cent to 57 per cent. I am not criticizing the increased requirements of the provinces and the municipal governments. They were, of course, required for important things. But these figures do indicate where the impact of expenditure mainly lies at the present time in terms of prices and costs. The figures tell their own story.
I should like to look at the total federal expenditure figures in more detail and consider why these have been increasing in recent years. Our budgetary expenditures in 1962-63 amounted to $6,570 billion. The projected figure for the current year is $9,885 billion. This represents an increase in roughly a five-year period of $3,315 billion. Next year we are budgeting for $10.3 billion which we hope to reduce by $75 million.
Now what was the nature of the expenditure involved in this figure of $9,885 billion which has been described as extravagant and as representing an excessive increase over
preceding years? Of this amount $1,800 million is allocated to defence. This represents 18.2 per cent of our budget and 2.9 per cent of our gross national product. It is the lowest percentage of the gross national product devoted to defence by any country in NATO except Denmark and Luxembourg. Can we reduce it? Of course we can, if we wish to withdraw from our present commitments for collective and continental defence, if we wish to withdraw from the Atlantic coalition for defence-


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: -and restrict our defence expenditures to those required for internal security and a Canadian contingent for a United Nations police force, which would mean, in effect, becoming a non-committed power in international affairs.
[DOT] (4:10 p.m.)
The second great category of expenditures in this total of over $9 billion represents payments to individuals in this country. Among them are pensions, family and youth allowances, the government contribution to unemployment insurance, and veterans pensions. These total $2,428 million.
The third category is payments to provincial governments, and this year they represent $1,892 million. These are total figures, and that is where our money is going.
Let us now look at the increases, both the amount of the increases in absolute terms and the nature of them. The first category of increases is to be found in programs introduced by the present government which represented new expenditures in 1967-68. In that year expenditures for these new programs came to $424 million.
What are these new programs? They include youth allowances, the health resources fund, the fund for rural economic development, occupational training for adults, which cost $120 million, the municipal development and loan board, post-secondary educational grants, which cost $103 million, manpower mobility, the Canada Student Loans Act, the area development program, the program for advancement of industrial technology, defence industry modernization, and general incentives to industry for the expansion of scientific research and development in Canada. All these represent a $424 million increase for very good proposals and projects.
The second category of increases covers increases in the last five years in programs

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which have been enlarged by the present government. These programs include family allowances, old age, blind, disabled and unemployment assistance, the Hospital Insurance and Diagnostic Services Act, medical research grants, subsidies and other payments to provinces, payments to municipalities, veterans affairs, freight assistance, the trans-Canada highway. Over that period these increases come to $1,075 million.
If you look at the increases over a one-year period you will find that the main increase last year in the categories of health and welfare for increased social security, debt charges, provincial and municipal governments, veterans affairs, transportation and communications, resources development and Indian affairs, aid to education, external aid and general government expenditures, which was only a $20 million increase, came to an over-all total of $975 million. Surely the increases in expenditures last year were on programs and projects which had good and worthy ends.
In this connection I would like to point out two things. The first is that of our total expenditures more than 55 per cent are uncontrollable. The second is that some of the biggest increases within the last few years have been under such things as the Hospital Insurance and Diagnostic Services Act and the family allowances programs. The increases with respect to these programs are automatic with the increases in population. Those automatic increases have amounted to $124 million this year, which could be added to those over which the government cannot exercise control because of the nature of the expenditures themselves.
Therefore I submit, Mr. Speaker, that in our expenditures to an extent never exceeded before in this country we have been relating economic policies and social policies. This is one of the things that has got us into some financial difficulty and why we now have to use the instruments of economic policy perhaps a little more effectively than we have been doing for the last year or two.
These instruments of economic policy, which the house knows are used to influence our economy, are fiscal policy and monetary policy. They are both powerful instruments. The federal government and the central bank-and here I want to pay my tribute to the way the central bank has been managing its affairs-have tried to employ these instruments as effectively as possible in the difficult and changing circumstances that they have

had to face. Yet these instruments do have their limitations. There is no doubt about that.
The impact of both monetary and fiscal policies on the level of demand in the economy is not immediate but takes effect with a very significant time lag, and that means that those policies have to be formulated with a forward view of the economy. But the economy, especially in these days, is often subject to influences that are essentially unpredictable and that make accurate forecasting very difficult indeed. The techniques of economic forecasting have improved considerably over the years but there will always remain unpredictable situations, as pointed out in the report of the O.E.C.D. to which I have referred.
There will always be the risk that the combined weight of monetary and fiscal policy will be inappropriate at some particular period of time. This risk is greatest when the economy is already operating at high levels of output and employment and when a moderate under-estimation of future demand strength may be sufficient to permit the emergence of excessive demand pressure. The reverse mistake could also be made and lead to recession.
Therefore the government has supplemented fiscal and monetary policies by selective economic programs of a longer range importance, designed to improve productivity, to encourage price competition within the economy, and to make it easier for workers to move to the jobs where they are most needed.
Among these are the programs for occupational training and retraining, the labour mobility program, the program for the advancement of industrial technology, industrial research and development incentives, the rural development program and the adjustment assistance programs. The government has also made very substantial funds available to the provinces for vocational, technical and professional education.
These selective programs, along with fiscal and monetary policies, have their effect over the longer term. But in the current situation additional measures are required to have a more direct and immediate effect. We must find some effective means of influencing, not controlling but influencing, the many individual decisions that give rise to increases in incomes, costs and prices. To this end the government proposes to establish a governmental agency, commission or board, whatever it may be called, to review and scrutinize
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major decisions affecting prices, incomes and costs throughout the economy.
This agency will analyse the nature and probable effect of such decisions and, where necessary, subject them to public review and criticism. It will also discuss price and cost problems with representatives of management, labour and consumers, in order to clarify the issues involved and ensure before major decisions are reached that all concerned are aware of the issues and that in dealing with them the public interest is taken fully into account.
The precise nature and the terms of reference of this review agency will be determined after necessary consultations with interested parties. These include provincial governments, the leading elements in the labour movement and in industry, professional associations and others concerned. We shall also, Mr. Speaker, take carefully into account any views on this proposal expressed in parliament.
Consultation with and the co-operation of the provinces will be of first importance. It is clear, Mr. Speaker, that except for businesses and operations under federal jurisdiction, prices, incomes and costs are matters largely within provincial jurisdiction.
[DOT] (4:20 p.m.)
Of course the federal government has responsibility for fiscal and monetary policy. But to avoid any conflict or misunderstanding the agency's legal functions, which we propose, will be limited to inquiry and report and to the focusing of public opinion on the findings it may make, compliance with which will be voluntary.
There are various ways in which such a prices and costs review agency could be established. But it is important that it should be done quickly and I believe this can be done by using the provisions of the Inquiries Act. It is not contemplated, therefore, that additional legislation will be required at this time. In the light of experience, if and when an agency with greater powers and authority is required-and this is the way such a board was handled in the United Kingdom-then the government can submit legislation to parliament for that purpose within the constitutional authority it has. Meanwhile action can be taken under the Inquiries Act at once to set up this machinery with carefully defined powers of investigation and report.
Income Tax Act
In connection with the role of any review agency it is interesting to look at the course adopted in the United Kingdom and followed by the government of the United Kingdom through the national board for prices and incomes. There the problem is a simpler one constitutionally, of course, than we have in Canada. According to an official United Kingdom statement the policy objective of the government in setting up that board was that "money incomes should rise in line with the long term growth of national output and that a generally stable level of prices should be maintained." The specific role of the board is "to examine and report on any questions relating to prices charged for goods or services; to pay claims or settlements or other matters relating to conditions of service and employment; or to any other form of income." The British board has interpreted its task as having three aims: "First, to bring home to the parties immediately concerned the wider implications of their actions; second, to bring these implications home to others involved in similar situations which are not before the board; third, as promoting a quicker adaptation of out of date practices to new needs through consultation between management, unions and the government." In Canada we will have the advantage of working out the powers of this review agency after studying the experience of the United Kingdom board which has been in operation now since 1965, I think.
In the United States similar responsibilities have been assigned to a cabinet committee on price stability which recently has been established. Many other countries have set up similar agencies or agencies with a similar purpose in mind. The methods adopted in other countries have varied but it is clear that machinery of this kind is found to be essential in many major industrial countries.
As an immediate step to deal with the problem in Canada pending the establishment of the board or agency or commission, a special ad hoc committee of cabinet composed of certain ministers who have responsibility in these matters is being established and charged with the responsibility of ensuring that effective action is taken jointly to develop and bring this program into effect. I have sent letters to the premiers of the provinces setting out our concern about the problem, our ideas concerning how we should proceed to deal with it and asking for their co-operation. We are proposing early meetings

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Income Tax Act
between federal and provincial representatives to discuss in detail the way in which the two levels of government can co-operate most effectively in this important task. A small group of senior officials is getting in touch with the provincial governments to prepare the way for these early consultations.


Mr. Lewis:: Mr. Speaker, I wonder whether the Prime Minister would accept a question? I should like to ask him whether he would be prepared to table the letters he has sent to the provinces.


Lester Bowles Pearson: I would be very glad to do that, Mr. Speaker. I will send a wire to the provincial premiers asking for their permission to do so. Some of them may wish that I wait until they reply.


Mr. Speaker:: Order, please. I am afraid the right hon. Prime Minister does not see the hon. member for Jacques-Cartier-Lasalle who is seeking permission to ask a question.


Mr. Rock:: Mr. Speaker, I should like to ask the Prime Minister a simple question in this regard. I hope this agency will cover the cost of drugs manufactured in Canada as well as everything else.


Lester Bowles Pearson: I would think the authority of the agency in its investigatory powers under the act would be sufficient for that purpose.
Canada is by no means alone in having to face the problem of reconciling full employment with the maintenance of reasonable stability of prices. Other countries have resolved this objective through a variety of means, but it is urgent that Canada find methods that fit the Canadian political, constitutional and economic framework. We must deal effectively with the problem because a solution must be found to it if we are to proceed with sustained economic expansion.
Mr. Speaker, I ask the house to look at the bill before it in the light of current financial conditions as well as in the light of the background of the other conditions which I have ventured to put forward and with which perhaps I have dealt at too great length. I have no hesitation in the circumstances we face to ask the house to support this bill. It represents only a part but an important part of the government's plans. These must be plans at all levels of government in order to secure for this country financial stability with an economic expansion that is continuous and sustainable, the benefits of which will be shared fully and fairly among all sections of our people.


Malcolm MacInnis: Mr. Speaker, would the Prime Minister permit one short question? In the light of the action now taken by the government can he explain why while campaigning in Quebec the Secretary of State for External Affairs (Mr. Martin) spoke of reducing the tax burden on the Canadian people rather than increasing it.


Lester Bowles Pearson: I hope the time will come, Mr. Speaker, when that may be done. Perhaps the minister was looking into the future.


Hon. R. A. Bell (Carleton):: Mr. Speaker, this government has introduced more strange and undesirable parliamentary precedents than all its predecessors put together. This afternoon another has been added-a budget by instalments. Last week we had budgets by press conference and budgets by television. This afternoon we have a budget by instalments. Last Wednesday the minister announced new budgetary measures to replace those defeated by the house. He announced them in committee of supply. Today, just four parliamentary days later, we have the unusual spectacle of the Prime Minister, in what is probably his parliamentary swan song, delivering another budget message. By what procedure? He intervenes on second reading to make a statement which is in fact irrelevant to the bill under discussion. The only way to describe this inept and bumbling procedure is "budget by instalments".


Some hon. Members:: Hear, hear.


Richard Albert Bell: One thing that is clear, sir, is that this government of alleged decision has been demonstrated to be a government of ineptitude. For, sir, this new budget which was delivered by the Prime Minister was really an admission of failure. It is an apologia for the fact that the Prime Minister acknowledges at last "that Canada's price performance over the past year or two has been bad". It has been bad, Mr. Speaker. That is what we have been trying to tell the Prime Minister and the Minister of Finance for months and months on end. Deaf to our pleas have they been. The Prime Minister went on to say: "It now compares unfavourably with that of most other industrialized countries and, of special significance, with that of the United States." Mr. Speaker, that sounds as if the Leader of the Opposition had written it.
March 12, 1968

[DOT] (4:30 p.m.)
What is the Prime Minister's remedy lor the situation? The substance of his parliamentary swan song today was apparently a prices and income review agency or commission. He has not even decided what it is to be called; that is a token of the significance he attaches to it. He says an agency or a commission, or call it what you will. Its functions, its objectives and particularly its procedures and its sanctions were left vague and uncertain. The conclusion I came to as I listened to the Prime Minister was that the proposal was a tangled and belated compromise between expediency and necessity.
Certainly inflationary pressures throughout the nation are rampant. Firm and decisive action is imperative. The savings of our people have been eroded and continue to be eroded month by month. Gains in wages have been lost due to fantastic price increases, even before wage earners have had an opportunity to enjoy them. Up and up has gone the cost of living and down and down has gone employment. Today, for example, in our greatest city, Montreal, the unemployment rate is 7 per cent, which represents an unemployed working force larger than the total working force of the capital of Saskatchewan, the city of Regina. Those who are employed are living in dread and fear of runaway inflation. Why do we have these situations in this great country? I am going to analyse some of the reasons the Prime Minister advanced this afternoon but I say to him directly, and I say what the people of Canada know, that the basic reason lies with the 27 men who sit opposite of the treasury benches.


Some hon. Members:: Hear, hear.


Richard Albert Bell: Mismanagement of
our economy, mistaken budgetary and fiscal policies, fire and fall back policies, flip flop -these have been the characteristics displayed by the Prime Minister and his band of quarrelsome, querulous colleagues. Make no mistake, it is this government which is the author of our economic misfortune, and no attempt to blame it on international factors or blame it on the provinces or municipalities has any basic realism. Excessive spending, wasteful practices, and blindness to economic forces have brought us to the brink of disaster. No attention has been paid to the warnings of the Economic Council of Canada and less to the Auditor General's reports. Politics first has been the watchword of this government.
Income Tax Act
Will this belated attempt to impose some restraint be of any value? I think the Canadian people will insist on something more than window-dressing. They have been fed enough political flim-flam and economic humbug. Look at the situation. Last June the Minister of Finance talked about guide lines and then he backed away from them. He abandoned this procedure of persuasive restraint. Today, nine months later, what does the government do? It suggests, and I think this is the sum total of the Prime Minister's speech this afternoon, that at some later date it may lock the stable door after it has investigated to make sure that the horse has really been stolen.
What about this matter of priorities that the Prime Minister suggests? What a conversion that is, Mr. Speaker. Not since the conversion of Saul on the road to Damascus has there been anything to equal the Prime Minister's new rectitude in this clasping to his breast of the very policy of priorities that he has always spurned. Priorities indeed. I really thought that only we on this side of the house had talked in that realistic manner. He says, "Oh, yes, we are going to establish an ad hoc committee of the cabinet". How that will make the profiteers tremble. Sir, if a cabinet committee frightens industry and labour as much as any form of a committee of this cabinet frightens the members of this house, inflation will be over automatically,
What of the Department of Consumer and Corporate Affairs? Some of us on this side of the house were under the illusion that it was established to do the very things that are now suggested are going to be done by this agency, commission or call it what you will. Is it that the hon. member for St. Lawrence-St. George (Mr. Turner) is in the doghouse because of his leadership ambitions? Must his wings be clipped? Is this why the Department of Consumer and Corporate Affairs is being denuded of all those great things described to us earlier in the session as its role? What is to happen with all the officials who have been appointed to this new department? The Prime Minister left this unsaid, but merely inferred the transfer of authority to the new agency, commission or call it what you will.
The absence of genuine effectiveness in the new proposal the Prime Minister made this afternoon would seem to be indicated by the fact that no legislation is proposed by the government, that the existing legislative powers are sufficient. "We will do it under the

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Inquiries Act." If parliament can be bypassed now let me point out that the government had it in its power to establish this commission or agency at any time in the last 18 or 24 months when the inflationary situation was developing. The Prime Minister said this afternoon that conditions had been bad during the last two years. That was his phrase, "bad for two years". Why then, if he admits that today, did he dilly-dally and fiddle while the flames of inflation developed?
The Prime Minister gave no indication this afternoon whether there would be any sanctions in this agency or commission. What teeth will it have? Will it be merely a toothless albatross encumbering the economy? The Prime Minister, as I say, does not even know what it should be called. Whatever it may be called, will it be merely the establishment of another cumbersome, ineffective bureaucracy to replace the jurisdiction of the hon. member for St. Lawrence-St. George, who now appears to have got himself in the doghouse?
At the moment the government's proposal, I submit, is nothing more than an expression of pious future intention. The government cannot make up their minds what to do, so they ask others to tell them. I suggest that these pious intentions look just like buckpassing. There are many questions that must be answered before the attitude of this house to the proposal in respect of this particular agency can be determined.
We on this side of the house, and let me make this absolutely clear, are determined that inflation must be stopped, but we have had enough of gay promises without any subsequent effective action. Perhaps there are two things about which I might congratulate the Prime Minister. First, he made a speech in the House of Commons and not on television. Second, at long last he recognized that the present economic expansion started in the year 1961. Listen to his phrase this afternoon, of which I made very careful note-"during our period of expansion which began in 1961". How different from what he used to say when he sat on this side of the house and when the speeches were rolled out for him by the present Minister of National Health and Welfare (Mr. MacEachen). Only because the Prime Minister is about to leave us do I refrain from saying that it has taken the right hon. member for Algoma East at least three years to destroy the expansion of the economy which the Progressive Conservative government began.

[DOT] (4:40 p.m.)
May I now give some attention to the new income tax bill, the third attempt at legislative parenthood by the Minister of Finance. This now emasculated bill is the crumbling cornerstone of the government's tottering budgetary edifice. Allegedly the tax increases which it contains-and that is all that is left of it-are designed to meet the fiscal, economic and international crisis which was once so fervently denied by the government but is now so clearly admitted on all sides as well as by the Prime Minister this afternoon.
This crisis is chiefly of the government's own creation. But I want to put to the house very directly that the real crisis in Canada today is a crisis of government, or more specifically a crisis due to lack of competent government. Whatever tinkering may be attempted by fiscal and budgetary expedients, whatever piecemeal efforts may be made to bolster our sagging economy, the crisis will not be ended until this incompetent government is dismissed by the electors. It will not be ended until the government is replaced by a responsible, effective and decisive administration. Yes, sir, the crisis in Canada today is a crisis of confidence and confidence, both domestic and international, can only be restored by a new government.
I think Strickland Gillilan must have had this government in mind when he wrote:
Off ag'in, on ag'in,
Gone ag'in-Finnigan.
What other seven words could more aptly describe the fiscal and economic gyrations of the Minister of Finance? I suggest that his words have seldom been matched by actions, and such actions as he has taken have misfired or been reversed. Unlike any of his predecessors, the Minister of Finance has permitted himself to be the prisoner of events, instead of attempting to act as the captain of the nation's fiscal fate. Yet in his rather frequent television appearances-and I do not attach anything sinister to the number of times he has been on television recently-the Minister of Finance has developed a unique talent for making his inconsistency sound plausible and his about-turns appear economically sophisticated as well as personal vindications.
This house realizes that this is the sixth income tax bill in two sessions of parliament. This country has been treated to the spectacle of what amounts to four budgets in just over 14 months. The first one was on December 19,
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1966, the second on June 1, 1967, the third on November 30, 1967, and the fourth on March 6, 1968, which now has been extended by this procedure of budgets by instalments. Of course, as we all know, there have been some intermediate so-called financial statements. The Minister of Finance has done at least one thing. He has achieved an all-time record as a budgeter within the briefest possible period. I suggest to the house that that fact in itself constitutes a confession of dismal failure and of unprecedented fiscal mismanagement. The minister says, "Oh no, this demonstrates flexibility". Flexibility, as the minister interprets it, is just an excuse for uncertainty and a cover for inadequate foresight or the total failure of any foresight.
The Minister of National Revenue (Mr. Chretien) was very clear about this. I thought he made one of the frankest presentations on television on Sunday night that I have ever heard. The interviewer's name was Mr. Martin, and I do not think it was the hon. member for Essex East. Mr. Martin asked the following question in discussing the manner in which the budget was presented:
And yet, generally enough, in the press it has been recognized as a sort of contempt of parliament.
This is what the Minister of National Revenue answered, and I quote from a translation on which I had the skilled assistance of the hon. member for Edmonton West (Mr. Lambert):
Oh well, some people! There are many traditionalists in Canada and Mr. Sharp is not one of them. He is an extremely flexible person, so flexible that in fact it is his third budget. He is not wedded to the idea that one must present a budget and be bound by it. One must follow economic circumstances, and it is not something very wrong.
The Minister of National Revenue is apparently a great one to make a virtue out of necessity. He said that the Minister of Finance is so flexible that in fact he has delivered three budgets. Flexible, indeed. Let us imagine that instead of making three mistakes he had made six. If he had delivered six budgets he would have been even more flexible. Is fiscal uncertainty to be elevated to a principle of statecraft?
The Minister of Finance has attempted to justify his various changes of course and pace by alleging international factors, as did the Prime Minister this afternoon. But I ask the Prime Minister and I ask the Minister of Finance: Can they point to any nation which has followed such an uncertain, inconsistent
Income Tax Act
budgetary policy as to need four budgets in 14 months?
In the first of these budgets the minister urged restraint. In the second he expressed fear that restraints might lead to recession or economic slowdown. In the third he reversed himself again and asserted a renewed need for restraints, and in the present budget measures he has simply reiterated or underlined that need. In the first budget he taxed, then he removed taxes, then he reversed himself and taxed again, and now in this bill he has proposed another form of taxation. Surely nothing more is needed to establish that the minister has simply resembled a cork bobbing in the economic sea, helpless to resist the waves and helpless to resist forces which he neither foresaw nor attempted to control in advance.
The Prime Minister quoted various alleged authorities this afternoon but he forgot to quote the words of the London Economist written on September 30, 1967, which focus attention on the failure of our fiscal policies as represented by this bill as vividly today as they did then. They read as follows:
Mr. Sharp, alas, cannot avoid the responsibility for inadequate fiscal action, the need for which he now seems belatedly to have realized. His budget-
That is the June budget.
-did not revive last year's expansion, but it did nothing to stem the rise in costs and prices. Worst of all, it pushed interest rates higher, because the public was unwilling to absorb bonds and generate a further increase in the money supply.
There we have stated what is responsible for the outrageous interest rates in this country today, namely, the policies of this government which have pushed interest rates higher. The article reads further:
There have been few examples of such a violent swing of the levers of economic control. Policies that would have been admirably suited to cope with a state of excessive under-utilization of resources were continued well after demand was clearly pressing too hard on the limits of supply. This was not the fault of business, which was trying to cope with its own cost squeeze, but the fault of government which ought to have been far more sensitive to the signals that the economy was making to it.
There, exposed by perhaps the most perceptive economic journal in the world, is the record of the fiscal flip-flop which has led us to our present crisis and which is the parent of this bill. The Economist pinpoints the undoubted fact that government policies are responsible for the usurious interest rates

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crippling the economy, interest rates which simply cannot be continued at their present level. It pinpoints as well the violent changes in government policy. This article, which as I say is as penetrating and perceptive today as it was in September, concludes with this comment:
What Canada needs is not a change in the country's longer term objective of well-based prosperity, but the simple recognition that the pace of spending has been running ahead of real output.
[DOT] (4:50 p.m.)
Well, sir, the government's recognition of this fact has been to increase this year's main estimates as contrasted with last year's main estimates by almost 8 per cent. I am going to deal with the Prime Minister's figures in this respect. Restraint is what the government preaches, but extravagance and wastefulness are what it practices. In his statement this afternoon the Prime Minister said that the increase in the estimates this year was 4.1 per cent over last year. I suggest that this figure is simply a delusion. It compares apples with oranges. It compares next year's main estimates with the total of all of this year's estimates. It is a phony technique of argument.
This comparison gives no consideration whatever to the supplementary estimates, no consideration to the expenditures that will be required for medicare. I say to you that the only realistic figure to put forward in any comparison of the main estimates for next year would be an increase of almost 8 per cent over last year's main estimates. There is the Expo deficit and a variety of other things to consider. Before we are finished the increase will be considerably more. I did not think it was sporting of the Prime Minister this afternoon to attempt to unload so much of the blame on the provinces and municipalities. What he did not say was that many of the provincial and municipal costs result from the fact that this government forced their hands in cost-sharing programs, and the proposal for July 1 next is forcing their hands even more.
I want to come back to the fact that this bill, as the main part of this fourth budget, came about by the most extraordinary procedure in budget history. Its second birth, resulting from Your Honour's ruling, deserves the attention of Shakespeare. The only way to describe it is, "a comedy of errors". Twenty years ago the then minister of finance, Mr. Abbott, brought about budget by radio, then a unique process of bypassing parliament and violating all constitutional precepts. The

uproar which resulted from that technique ought to have laid these odd procedures to final rest. But oh, no, what Mr. Abbott could do the present minister could do better. Last Wednesday afternoon he condescended to tell the house that he intended to propose tax measures. Did he disclose to the house what they were? Not at all. He decided to upstage Mr. Abbott by holding, within an hour of the adjournment of this house, a press conference to tell what he declined to disclose to the people's representatives. Budget by press conference is the new technique for ministers who are "with it". By coincidence, there was a popular television program later that evening and naturally the star of the show was the minister.
Budget by press conference lasted only an hour and a half as the accepted new technique and was replaced by budget by television. So Mr. Abbott, with his old fashioned budget by radio, was passe. The new technique of defiance of parliament, the new way of expressing "parliament be damned" is budget by press conference and budget by television. Finally, this afternoon we have had budget by instalments.
Again, it was the Minister of National Revenue who let the cat out of the bag completely. During the same television interview to which I referred earlier this question was put to the Minister of National Revenue by Mr. Martin:
This week there were announced new fiscal measures after the defeat in the commons of the temporary surtax of 5 per cent. These were announced by means of a press conference: it is rather unusual, let us say, in the traditions and usages of parliament.
The Minister of National Revenue replied:
Yes, it is unusual. It is the first time for a tax to be announced by way of a press conference. But it was as the result of the circumstances which prevailed last week. We were negotiating with several countries and with the United States in particular to stabilize the dollar-
Apparently the minister knew about the negotiations that were going on, although he did not really know the dollar was in difficulty. The Minister of Finance did not disclose the figures to his colleague, apparently.
-and it was absolutely necessary to disclose the new tax to the House of Commons. Since it was a Wednesday, the minister made his presentation in the afternoon without saying precisely what were the nature of the taxes he would levy and he tabled at six o'clock in the House of Commons the budgetary resolutions and he thought that these could lie-
March 12. 1968

I put down "dormant" but it might be translated "undisclosed".
-undisclosed until tomorrow in the afternoon, only the Speaker was inclined to transmit them to the press. Therefore, the Minister of Finance felt he was obliged to make a statement immediately to the press so that it would be patently clear that it was the Minister of Finance who was making the announcement. But he had warned the opposition parties that he was going to do it.
Well, sir, one of the problems with this government is that except for the hon. member for Essex East (Mr. Martin), who is preoccupied with other matters, they do not have a parliamentarian in their whole kit and caboodle. When they lost Chevrier and Pick-ersgill, and when Martin became an internationalist, they were left without a parliamentarian of any kind. They stumble from one parliamentary crisis to another chiefly because none of them has ever bothered to discover what parliament is all about. I believe, sir, they should remember what Cicero said, that "to stumble twice against the same stone is a proverbial disgrace".
With all the vigour that I can command I deplore their contemptuous treatment of parliament, their cavalier disdain for established budget practices, their scornful arrogance in by-passing this commons chamber. Then, sir, the attempt to present at this one session of parliament a budget proposal so similar in principle, as it is in this bill, to one defeated by this house constitutes a precedent dangerous and intolerable. My comments do not reflect upon Your Honour's ruling but upon the lack of parliamentary understanding by this government. If this house has any role at all which predominates over all others it is as keeper of the purse strings. The precedent set by the Minister of Finance in recent days must be reversed or it will plague our Canadian democracy for long years after all of us have gone to our rewards.
But, sir, odd and objectionable as the procedures have been, even odder still are the proposals themselves. In most aspects the proposals in this bill are far more objectionable than those defeated by this house in Bill No. C-193. I think there are certain principles upon which all members in this house on all sides can agree. All of us appreciate that drastic action is needed to restore confidence domestically and internationally. This government has brought us to that point. All of us agree that defence of the Canadian dollar is a first obligation of parliament and that it must be achieved whatever the side consequences.
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[DOT] (5:00 p.m.)
All of us support a major attack upon inflation and its continuous victimizing of every Canadian. Relative stability in the price-cost structure, I submit, is imperative if we are to achieve balanced economic growth. Our trade must be expanded, our productivity greatly enhanced, our industry made adequately competitive.
But, Mr. Speaker, this is the test: will the proposals in this bill achieve any of these agreed objectives? With respect, I submit that they retreat from rather than advance to those objectives. The proposed cure, the 3 per cent surcharge on personal and corporate incomes, will intensify rather than alleviate the fiscal malady. I put it to the house, how can you stabilize prices when you set out deliberately to increase costs of production? That is the government's dilemma. These new tax policies will in fact feed the fires of inflation and in their final impact will bear most heavily on those least able to pay. It is the consumer who will pay for this government's mismanagement.
What I am saying to the house is that what the government is doing is pursuing an inconsistent and self-defeating course. The government seeks to control or at least to stabilize prices; yet by an increase in personal and corporate income taxes it makes inevitable a rise in costs. The government apparently seeks to stabilize wages and salaries; yet it raids the worker's pocketbook, driving him inexorably to seek additional income.
These increased costs of production, inevitable as they will be as a direct result of this bill, will be passed along to the consumer. Those costs which are passed along to the domestic consumer will give impetus to the inflationary spiral. Those passed along to the international consumer will reduce our competitiveness in world trade, enhance our balance of payments difficulties and keep the Canadian dollar in a state of suspense. At the very time when we ought to be exerting a unified national effort to expand our exports, the Minister of Finance is raising our costs in a manner which can only frustrate our export drive. These tax hikes, I submit, will sabotage our trade promotion.
Over last week end in Halifax, I think it was, the Minister of Trade and Commerce (Mr. Winters) coined the term that the budget proposals would be a "decentive" to industry. He knows they will be as well a "decentive" to trade at the very time when our trade

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promotion should be most aggressive. Why he with his views about balanced budgets and "decentives" remains in this government must be a mystery to all members and indeed to all Canadians. I suggest that he would be doing a national service by insisting upon the immediate acceptance of his resignation so that he can speak his mind freely and easily. The example of the former president of the privy council is there for him to emulate.
So, sir, with this new prices and incomes commission or agency on the one side and the corporate and personal income surcharges on the other, the Minister of Finance is establishing opposing forces that are inevitably set upon a collision course. And, as in so many other matters, the government, being uncertain of its proper course, has set in motion two diametrically opposed forces and now sits back to watch which one will triumph.
The minister's attitude to this situation, Mr. Speaker, reminds me of the following statement by Plato:
Has he not also another object, which is that they may be impoverished by payment of taxes, and thus compelled to devote themselves to their daily wants and therefore less likely to conspire against him?
Are there any alternatives, Mr. Speaker, to the government's present policy? There is one simple alternative that was explicitly presented by the Leader of the Opposition (Mr. Stanfield) last Thursday night. The personal and corporate surcharges are designed to raise $150 million. But the government already has on hand $105 million in refundable corporate tax which it proposed to pay out in this fiscal year and which, under the laws enacted by this parliament, it need not repay before May, 1969. The acceleration of repayment was decided upon by the minister last June, I think it was, when he was in one of his moods which led him to think that the economy needed stimulation and when he thought that he should get some additional money into circulation to prevent slowdown and unemployment. His view of the economy has changed. I suggest he could easily and legally withhold payment instead of imposing an income surcharge.
The minister alleges that this would create problems for the minister of finance in the fiscal year 1969-70. Surely, Mr. Speaker, this is only a confession of the inadequacy of his present policies. A budget in this year within reasonable balance would give the new minister of finance in 1969-70 genuine flexibility to

care for the repayment out of growth. In any event, Mr. Speaker, I want to assure the Minister of Finance that we on this side of the house will not hold it against him at all. We would be quite glad to take our chances on what our budget will be in 1969-70.
If the minister would adopt the Leader of the Opposition's suggestion, Mr. Speaker, the difference to be made up would be $45 to $50 million. Surely, as the Leader of the Opposition said, in a budget of $10J billion it should be possible to save $50 million. It is not as if all the water had already been wrung out of the estimates.


Eldon Mattison Woolliams: They are waterlogged.


Richard Albert Bell: Yes, Mr. Speaker, maybe they are waterlogged.
Last autumn the Minister of Finance and the President of the Treasury Board (Mr. Benson) engaged in the greatest propaganda drive of all time to convince the public of their belated conversion to budget restraint. What an heroic battle, we were told, was being waged in Treasury Board to avert increases in expenditures. But when the main estimates were tabled they disclosed what I have pointed out-an 8 per cent rise over the main estimates of one year ago. The alleged "hold the line" policy had become merely a propaganda farce.
All that the Treasury Board had done, Mr. Speaker, was what is done every year, namely, cut back on departmental requests. I think everyone knows, certainly anyone who has sat in government knows, that there is an annual game between departments and Treasury Board. The departments submit considerably more than they expect to receive, believing that whatever they submit Treasury Board will cut them back. This cat and mouse game is as old as the techniques of budgeting. But this year, Mr. Speaker, for the first time the Minister of Finance and the President of Treasury Board made flamboyant boasts about the normal processes of estimating and they claimed virtue for actions which every preceding Treasury Board had considered just good fun.
Now, sir, can there be any further restraints? I point out to the minister that in the summer and autumn of 1962 the late Hon. George Clyde Nowlan and his colleagues on Treasury Board, of whom I was one, managed a reduction of $228 million in a budget of $6J billion without interfering with
March 12, 1968

any essential service. From experience I know how difficult it is, but it can be done and it can be done without loss to the economy and without loss to the essential services to the public.
I want to refer the minister to the tables that appear at page 650 of Hansard for October 18, 1962. He will see there the savings of $228 million. If $228 million can be saved from a $6J billion budget, is it asking too much to save $50 million more from a $10J billion budget, particularly when the minister proposes to save $75 million after the President of the Treasury Board, less than a month ago, assured us that not an additional dollar could be saved from the main estimates? I put it to the Prime Minister that if he would only read the recommendations of the Auditor General and the recommendations in the reports of the public accounts committee of this house he would find a good many ways to take him a long way to the objectives he has named.
[DOT] (5:10 p.m.)


Some hon. Members:: Hear, hear.


Thomas Miller Bell: Sir, there are times when I wish the minister would frame and put on his desk, so that he could see it every hour, this quotation from a message that President Grover Cleveland gave to congress:
When more of the people's sustenance is exacted through the form of taxation than is necessary to meet the just obligations of government and expenses of its economical administration, such exaction becomes ruthless extortion and a violation of the fundamental principles of a free government.


An hon. Member:: Resign.


Richard Albert Bell: When this government came to office less than five years ago spending was at a rate of about $6 billion per annum. Now, as a result of what the former distinguished Superintendent of Insurance, K.R. MacGregor, described as the "spend-yourself-rich" theory of government, spending exceeds $10.25 billion. By the end of the next fiscal year it will exceed $10.5 billion. Some of Mr. MacGregor's comments in his address to the last annual meeting of the Mutual Life Assurance Company of Canada are directly relevant to this bill and the budget policy it represents, and I quote them:
Earlier, I referred to the "spend-yourself-rich" theory of government. At this point, I should like to suggest the desirability of abandoning as well the "spend-yourself-popular" theory of government in favour of policies more attuned to the wishes of most Canadians. Political leaders seem to 27053-4751
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have been proceeding on the assumption that Canadians want a paternalistic government, but I am convinced that a majority want first, good government, in order to lead the country out of confusion and uncertainty,-
Heaven knows, we have enough of that today.
-and second, more of their incomes left for their own disposal. For many years, people have been led to think that governments can do things better and cheaper, but more are now coming to realize that all things-including universal welfare schemes -have to be paid for in full, and that an increasingly onerous tax burden is the inevitable result.
This bill is that "inevitable result", that "increasingly onerous tax burden". For the short reprieve that this government has in office it should take to heart Ken MacGregor's wise words.
The Minister of Finance and the President of the Treasury Board have been engaged in a major propaganda effort to try to convince the public that the government proposes to balance the budget. The President of the Treasury Board, as reported on page 6663 of Hansard for February 13, 1968, went so far as to guarantee a balanced budget-guarantee, if you please. Well, those are only a few of his many glib words that the President of the Treasury Board will have to eat.
The budget deficit for this year, 1967-68, will exceed $750 million. That, Mr. Speaker, is three quarters of a billion dollars. Last Wednesday the Minister of Finance, in releasing statistics which he called "a new outlook for 1968-69 budgetary position", in defiance of his colleague on the Treasury Board forecast a budgetary deficit of $40 million next year, with only limited provision being made for supplementary estimates and without any provision being made for medicare. Far from the balanced budget guaranteed by the President of the Treasury Board, we are heading into a major budget deficit, and if we get the economic slowdown, the deflation, the increased unemployment and the lower agricultural prices which are likely to result from mistaken government policies, the deficit may be much greater. The pretensions of a balanced budget are simply a propaganda hoax attempted to be perpetrated on the Canadian people.
What disturbs me, sir, is the disposition of the government and of some members of the public to blame extravagant governmental expenditures on the public service. It is an insulting fallacy that civil servants are the big spenders. The big spenders, the wasteful,

March 12, 1968
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extravagant profligates, are the members of the cabinet itself. The great majority of civil servants try to run a tight ship, and as taxpayers themselves they are sensitive to wasteful projects. But they cannot contend with their political bosses-this disintegrating cabinet. The cabinet members are the ones who throw the millions around and who fail to respond to the Auditor General's strictures.
A by-product of this type of thinking is the absolute freeze on public service establishments. I point out that rarely, indeed, do I adopt the views of the President of the Treasury Board. But on December 7, 1967, just three months ago, before the Minister of Finance imposed the freeze, the President of the Treasury Board expressed views which I ihold. Since he expressed them more forcefully and vividly than I could ever hope to do, I wish to quote them. I want members of the (house to remember that I am quoting the *President of the Treasury Board and I want them to visualize him speaking in his usual glib and jaunty manner. I quote from page 5173 of Hansard:
I do not think, however, that we should go so tar as to impose an arbitrary absolute "freeze" on present establishments. We have examined this suggestion which has been put forward from a number of quarters. Governments in the past, both federal and provincial, have attempted to "freeze" establishments. Such efforts have never been successful. They have produced inequities, distortions, frustrations, and even waste, as senior officials have been obliged to get along without the supporting staff which they require in order to function effectively.
Remember, Mr. Speaker, that was just three months ago.
The adverse consequences of an absolute freeze persist long after the freeze itself has been abolished or has been eroded away. At the very best, a freeze succeeds only in buying time until a proper policy for restraining staff growth can be devised. A freeze is not in itself a policy: instead it is evidence that no policy exists-


Some hon. Members:: Hear, hear.


Malcolm MacInnis: Resign, resign.


Thomas Miller Bell: Listen to this, Mr. Speaker.
-and that the authority imposing the freeze has proven to be incapable of devising a policy. We have a policy and we are going to apply it.
Can you not hear the President of the Treasury Board uttering those words? I say to him, "Oh, consistency, thou art a jewel."
When I started to meditate about the President of the Treasury Board, whose words I

[DOT] (5:20 p.m.)
adopt in full, and what he had done I thought that only two men could have described adequately what has taken place, and they were Gilbert and Sullivan. So I went to Utopia Limited and I read words that apply here. The words which introduce to the stage Sir Bailey Barre, Q.C., M.P., ought to apply to the introduction of the President of the Treasury Board, C.A., M.P. I quote:
A complicated gentleman allow me to present,
Of all the arts and faculties the terse embodiment, He's a great Arithmetician who can demonstrate with ease,
That two and two are three, or five, or anything you please:
An eminent Logician who can make it clear to you That black is white-when looked at from the proper point of view;
A marvellous Philologist who'll undertake to show That "yes" is but another and a neater form of "no".


Some hon. Members:: Hear, hear.


An hon. Member:: That applies to the finance minister.


Thomas Miller Bell: Sir, that which on December 7 last was evidence of no policy, is now policy. That which proved, according to the President of the Treasury Board, that the authority imposing a freeze was incapable of devising a policy, is now gospel. This house did not need additional proof of the incapacity of the authority. That which the President of the Treasury Board said on December 7 had never been successful, had produced inequities, distortions and waste, is now clutched to his heart as revealed wisdom. Need one say more to display that this yo-yo government is without a clue from month to month as to where it is going or, indeed, as to where it has been.


Some hon. Members:: Hear, hear.


Thomas Miller Bell: Henri Bourassa, from the depth of his experience, characterized this attitude when he exclaimed :"The only policy of Liberalism is to have no policies; the only principle of Liberalism is to have no principles."
This bill contains the same proposal as was made in the unlamented Bill C-193, or should I say it was lamented only by the Minister of Finance who has made it clear he considers the measure now before us to be only second best.
March 12, 1968

The feature of this legislation from which the hon. gentleman expects to receive the most substantial sums in the next fiscal period is the provision for accelerated payment of corporate income tax. What the house should understand is that this is merely a gimmick. It is a one-shot operation and in the long run it will not produce a single extra dollar; it simply helps the minister in the immediate fiscal period before us. It is useful once, and once only. In its impact it merely transfers the need to resort to credit facilities from the government to the corporations. It is unlikely to reduce in any way the strain upon the market. The Minister of Finance may be relieved of the necessity of going to the market for the $240 million which this acceleration will yield in the first fiscal period but the payers, the industrial and commercial enterprises of the nation, will probably have to borrow this amount from the banks and the other financial institutions, leaving the net market situation approximately unchanged. However, though we doubt the basic utility of this proposal we shall not oppose it in committee.
Let it be understood by all, though, that the pressure upon the capital market will not be substantially relieved. The impact of government policies will continue to hold up the already intolerable scale of interest rates. I repeat that the burden of interest charges which is being placed on the young people of this nation is becoming nothing short of a national disgrace. Usury, I regret to say, has become an accepted fact of Canadian life, not equalled since Christ drove the usurers from the temple.
It is only by indirection that this bill can be of any advantage in the major task of protecting the Canadian dollar. Yesterday afternoon a fantastic episode was revealed in this house in connection with our exchange reserves. Three times in the course of a television program on Sunday night the Minister of National Revenue stated positively that our reserves had fallen to $1,700 million, which would represent a loss of $790 million in one week. On a question of privilege the minister corrected this. What had happened? He had suffered from a lapse of memory, he said.
Did the Minister of National Revenue make a minor mistake involving only about $800 million? Poor Mr. C. D. Howe got into trouble for asking "What's a million?" Today the Minister of National Revenue forgets about $800
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million. A memory lapse, indeed. What a change. The Minister of National Revenue said our losses were running at a rate of between $25 million and $35 million each day. The Minister of Finance says the Minister of National Revenue has not been made privy to his secrets at all. But there has been no denial of the figure which his colleague gave.
In my view the proposals in this bill will not really help to stabilize our dollar position. They will further discourage investment by Canadians in Canada and force Canadian capital to seek opportunities abroad. I suggest that no one can fail to view with alarm the rapid trend of Canadian mutuals, for example, to invest in United States and other securities. At the end of 1967 Canadian mutual fund investments in foreign equities had risen to 44 per cent from 33 per cent the previous year. This vast drain of Canadian capital will be accelerated by the terms of the bill before us. While the minister is struggling to bolster our dollar he is adopting self-defeating taxation policies which intensify his problem.
Mr. Speaker, Bill C-208 is, if anything, more objectionable than the taxation measure which the house rejected earlier. It is an attempt by the Minister of Finance to make the Canadian people scapegoats for the government's own deficiencies and for the consequences of its reversible on-again off-again policies. The bill itself is an unholy tangle of opportunism and necessity. It is self-defeating, likely to inflame rather than control the inflationary forces at work in the nation. It will not solve the fiscal and economic crisis confronting Canada. The only answer to the current crisis, Mr. Speaker, is a new government.


Some hon. Members:: Hear, hear.


David Lewis: Mr. Speaker, in the course of a fairly long political experience I have seldom heard an important statement more disappointing, more devoid of content and more bewildering than the statement made by the Prime Minister (Mr. Pearson) this afternoon.
I am sure he is occupied by important national business at this moment; I should have liked to say this while he was here, because I was terribly disappointed, and I respect the right hon. gentleman. After spending an awfully long time on a silly, elementary exposition of orthodox economic nonsense he followed this up by revealing

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something he did not define-a review board which is a complete hoax on this parliament and on the people of Canada. The right hon. gentleman even entered the sphere of psychedelic economics and talked about l.s.d. He attempted to blame the provinces, the municipalities, the international world, everybody and everything except the policies for which he and his colleagues are responsible.
He gave us an elementary lecture on economics which was not relevant to the present economic situation in Canada or in any other part of the world. Then he talked about the review board which we were promised a few days ago, a board which was going to do something about controlling the pressure for price or wage increases. And it ended in nothing at all. I say to the Prime Minister as the leader of my country: It is shameful to represent to parliament and to the people of Canada that you are coming before them with a policy and then to come before them with a sham. That is shameful distortion of the duties of a government, and particularly of a prime minister, e (5:30 p.m.)
I can understand why. If you look through Hansard of the last couple of years you will find that the Minister of Finance had deprecated the idea of a review board. The Minister of Agriculture (Mr. Greene), on a late show, expressed himself in his usual amusing way about the irrelevancy of a prices review board. The Minister of Consumer and Corporate Affairs (Mr. Turner), in a speech which he made when the legislation setting up his department was before committee, was as supercilious about it as he is about most of the suggestions made to him. We have one minister who does not like the idea, we have another minister who is amused by it, and we have a third minister who is supercilious about it. In those circumstances how could we expect the Prime Minister to come out with any policy that is meaningful on the same subject?
If I sound indignant it is because I am, Mr. Speaker. This is the only area of policy in which I had hoped the government would do something today. But instead the Prime Minister comes in with a statement which literally means nothing at all and tells us nothing about what he will do about prices, wages, incomes or anything else. It is an insult not only to the intelligence of the people of this country but to the members of this house. It

is a form of cynicism I would have expected from some members of the cabinet but which I had a right not to expect from the Prime Minister himself.
When you look at the Prime Minister's statement, what did he tell us? He said, as the hon. member for Carleton (Mr. Bell) pointed out, that it might be a board or it might be a commission. Then he said it will be set up under the Inquiries Act. I looked at that act, Mr. Speaker. I do not claim to be a legal expert, or an expert on the particular relevance of the sections of that act, but that act does not provide for the kind of continuing agency which we must have to deal with the problem of prices, wages and incomes. That act talks about giving a person who is to be charged notice of the charge. Who in heaven's name is talking about a charge? The act does not give a commissioner of inquiry authority to make recommendations. What good is a board which does not make recommendations? It is entirely irrelevant to the kind of economic and social inquiry which is necessary.
We are not dealing with a Munsinger affair for which you appoint a royal commission under the Inquiries Act, of a Spencer affair, or some scandal, or some particular issue that is being investigated. We are talking about a basic economic and social policy to be made by a basic economic and social agency. What insulting nonsense it was for the Prime Minister to suggest that under the Inquiries Act he is going to set an arm of social and economic policy on a continuing and meaningful basis. It is not going to be anything of the sort.
We were told that the policy with which the government was now coming before parliament was a three-pronged policy. One prong was a bill to recoup the revenue which might have been collected under the bill which was defeated. The second was a reduction in expenditures of $75 million. I have not yet figured out the percentage which that is of $10 billion, but I suspect it is pretty infinitesimal. The third was the establishment of some kind of agency to control by persuasion or in some other way restrain the increased cost of living.
We have got the bill by which to get the taxes. The $75 million cut in expenditures is not worth a hoot in Hades so far as the people of Canada are concerned. It is no more than a scratch on the surface so that members
March 12, 1968

of the government may be able to say, "We have cut expenditures". It is another cynical outrage. So far as the third and most important part of the policy which we were promised is concerned, it is now just a large zero without meaning, without content and without purpose. Yet the government thinks that members of the opposition, and indeed its own supporters, ought to vote for it on the bill which is before the house.
I say, Mr. Speaker, that I was deeply disappointed by the statement of the right hon. Prime Minister because in his analysis of the economy he did no more than repeat the things which the Minister of Finance has said over and over again, until one was as bored when the Prime Minister sat down as one had been when the Minister of Finance sat down. The change of voice had no effect on the words that were used or the thoughts that were expressed. I am almost inclined to be Biblical about it, the voice being the voice of Jacob but the hand being the hand of Esau -the Minister of Finance. I was inspired to this kind of comment by the hon. member for Carleton but I assure you, sir, that I am not going to Aristotle, Plato, or indeed to Gilbert and Sullivan tonight, although I might be tempted to go to the Marx brothers, which might provide a more appropriate analogy.
Moreover, the Prime Minister showed his failure and his government's failure to comprehend the nature of the present problem by saying, with a kind of charming smile on his face, that sometimes this tax bill is accused of being inflationary and sometimes of being deflationary. Let me tell the right hon. Prime Minister a secret. It is a fact that this tax bill is both. It is a fact that in the present economic situation the tax bill is inflationary in the sense that it will increase prices. It will probably encourage higher wage demands through the personal surtax, and the surtax on corporations will be passed on to the consumer in the form of higher prices. Thus it will be inflationary in that sense. It will be deflationary as well because the withdrawal of this money from the purchasing power of the country will further depress the economy and further increase unemployment.
This is the dilemma in which the right hon. gentleman and his friends and their friends in the loyal opposition find themselves-these great supporters of the system which has completely tied them hand and foot. This is their dilemma, that without the necessary planning and control of the agencies of economic power in our society this kind of policy
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is both inflationary and deflationary at the same time. As I have said elsewhere, it gives you the worst of both worlds: increasing prices and increasing unemployment simultaneously. That is exactly what this policy does, and that is exactly what it will do. The right hon. gentleman shows a lack of comprehension about the present world when he is astounded by people suggesting that this bill will be both at the same time. It will indeed be both at the same time.
In a speech which I made last December I said, and so have many of my colleagues, that we cannot go along with the Conservative party's attitude to this situation. I think the government is right in saying to the Conservatives: "Stop talking about cuts in expenditures without telling us what you wish to cut out." The right hon. Prime Minister would be perfectly entitled to say to the Leader of the Opposition (Mr. Stanfield), "In my speech today I indicated the programs which have caused increases in federal government expenditures. Please indicate which of these you want cut out." Which of these programs the Prime Minister has listed has the Conservative party got courage and honesty enough to say it does not want?


William Heward Grafftey: That is an old saw.


David Lewis: It is not an old saw. It is a fact. Let parliament and the people of Canada into the secret as to which of these programs-old age security pensions, family and youth allowances, veterans pensions, equalization payments, the Canada Assistance Plan, hospital insurance, health grants, etc., etc.-the Conservative party wants cut. I say, Mr. Speaker, that if they were sitting to your right instead of to your left they would not touch a single one of these programs because they know perfectly well that these programs have the support of the Canadian people and are necessary to the welfare of the Canadian people.
[DOT] (5:40 p.m.)


Michael Starr: They do not represent the total budget. You should be honest about it.


David Lewis: I will try to be honest. I do not have to try very hard to be more honest than some other hon. gentlemen who are calling for honesty. I appreciate that they are not the total budget I realize there are other expenses involved, but they are related to these programs.


Michael Starr: They are not.

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David Lewis: I join with anyone who is tor motherhood and against sin. I am in favour of ridding ourselves of waste and extravagance. Who is not? In fact, while this was going on I had a suggestion in mind. I intended to suggest to the right hon. Prime Minister that by sacking half his cabinet he might accomplish something in the way of expenditure cuts. Undoubtedly there is waste and extravagance and it should be cut out, but I say seriously to my friends in the Conservative party-I do not wish to fight with them-that even if we cut out whatever waste and extravagance there is we still will not meet the essential problem, because the introduction of new programs to help the economy, to stimulate the economy, build houses and provide people with social insurance and medical insurance will require government expenditures.


William Heward Grafftey: It is not what they are doing but rather how they are doing it.


David Lewis: In that I will agree with my hon. friend. If what the criticism amounts to is that the government is not doing these things well, then I certainly agree with them on that. The hon. member for Ontario (Mr. Starr) asked me to be honest. I am trying to be honest. I do not intend to fool myself, any member of this house or any citizen of Canada by suggesting that it is possible to have a modern society with government participation in all the fields in which it must participate without increasing expenditures and therefore without the need for increased revenue. There is no way to avoid this. I do not propose to present my arguments on any basis other than a recognition of that fact in a modern society.
There are other areas, however, in which serious cuts in expenditures can be made in addition to cutting down on waste and extravagance. There are such things as some of those suggested by the Auditor General and by the Glassco commission. We think there are also other ways in which to cut expenditures. We have indicated these time and time again to the government. We believe Canada should stop wasting money on defence expenditures that are of no value to the international community and of no value to Canada's national interests. Every penny spent on NORAD-if my memory serves me correctly the amount is about $130 million-is a total and absolute waste because NORAD was created to meet a threatened manned bomber attack the danger of which disappeared if it ever existed at all. Most of our defence expenditures under NATO are now

useless because the situation in Europe is entirely changed. I do not wish to go into the details of this. My friend and colleague the hon. member for Greenwood (Mr. Brewin) did so the other day.
The international situation for which NATO was created in 1948-49 no longer exists. The threat of Soviet attack in Europe has certainly receded and I hope with all my heart has disappeared. Statements by representatives of all the members of NATO and the recent investigation have shown that everybody is agreed that the role of NATO should be changed from that of a military alliance to that of an organization to negotiate with the Warsaw pact countries solutions to European political problems. These, therefore, are the areas in which the government could bring about cuts in expenditures of hundreds of millions of dollars without affecting any issue of principle or welfare internationally or nationally. The right hon. Prime Minister recognized this but then said, if I remember his words correctly, that this would mean becoming an uncommitted nation.
I do not see what right-I was first inclined to use rather stronger language-the Prime Minister had to say that. France has withdrawn its military participation in NATO and is by no means an uncommitted nation. There are other nations in Europe which are not part of the military NATO machine and they are by no means uncommitted nations. We are not suggesting for one moment that Canada should be anything other than a nation concerned with the welfare and progress of the democracies and the democratic objectives which all of us in this parliament are determined to preserve and expand. That does not mean, however, that we must participate in huge military expenditures that are of no value. That is the case in respect of the expenditures to which I have referred.
This is not a debate on external affairs but perhaps I might add that I am perfectly and profoundly convinced that by hanging on to these traditional policies without the courage to reassess them-and this is true for our friends as well as for ourselves-we create harm internationally because this makes us unable to deal in a modern and relevant way with the new problems which exist in Europe and in the world. We concentrate so much on an outdated military role for NATO that the reports which suggest a political role are treated as just so many statements and words
March 12. 1S68

to which no one pays any attention. The argument continues to be heard that western Germany should have this or that or that some countries should do this or do that militarily. These are the issues on which we concentrate to the exclusion of consideration of the new political situation in Europe which requires a solution. So if we are looking for cuts in expenditures and in manpower that would be considerable and significant, these are the areas where we ought to be looking.
Then there are other areas where we could raise additional revenue. We have said this time and time again although my Conservative friends certainly have not. There are those areas mentioned in the Carter report such as the situation in which people make money in the stock market. I am describing it in that way so that it will be clear to what I am referring. There is the matter of a tax on the money people make on the stock market or from speculating in currency or in gold to the disadvantage of Canada and the world. These people get away without paying any tax on this money. Then there is the matter of the removal of concessions to mining companies!, insurance companies and oil companies.
What has happened in respect of this bill is that the Minister of Finance and his advisers have decided to put a little sugar on the pill. They have thought of us as children who would be attracted by the sugar and therefore would swallow the pill even though we regurgitated the one he tried to give us on February 19. Let me tell you that my colleagues in my party, and I join them, are pleased and proud of the fact that parliament was able to force out of this government and this Minister of Finance some little modicum of improvement in the tax bill. The rate is now 3 per cent instead of 5 per cent. It is a little more equitable because corporations are covered as well as individuals. It is definitely declared to be a temporary tax for only two years. It has removed the ceiling and it has increased the floor from $100 to $200. All these things were ordained against the minister's wishes and against the government's intentions by the determination of all opposition members not to stand for the inequity of the last bill.
[DOT] (5:50 p.m.)
We are very pleased today that parliament was able to assert itself and make the minister, against his desires and his wishes, be a little more fair. Fairness is the kind of thing
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that even when squeezed out against a person's wish is still of some value. Other things may not be. We are not going to swallow this bill even though it is sugar-coated, because it still heightens and underlines the inequities of the present tax system and it is still the wrong policy for Canada's economy.
Nothing struck me more disappointingly and distressingly about the Prime Minister's statement than this fact. He was able to make a speech of about an hour on this day, March 12, 1968, and say not a single, solitary word about unemployment in Canada. He said not one single, solitary word. Indeed, he even went so far as to make a statement somewhere in his speech, and I say this with some hesitation about the Prime Minister of this country, which was totally and factually wrong. It was untrue. Somewhere in his speech the right hon. Prime Minister said that our economy is still expanding, although at a slower and more bearable rate. The fact is that our economy is no longer expanding at the present time.
The fact of the matter is, and someone ought to have told the Prime Minister, that as of January of this year unemployment in Canada was at 6.1 per cent of the work force. Someone should have told the Prime Minister that in the Atlantic provinces the rate of unemployment as of January of this year was 11 per cent. Someone should have told him that in Quebec as of today the rate of unemployment is over 8 per cent and in Montreal is 7 per cent. Someone should have told him that on the prairies the rate of unemployment is now over 6 per cent and in British Columbia higher still.
To make a statement about the state of the economic union in Canada today and mention not a single, solitary, syllable about increasing unemployment in Canada is to be capable of that kind of self-delusion, if not distortion, which may be as admired as it is to be regretted. The fact is that we oppose this bill because of these unemployment figures. We oppose this bill because it continues a disastrous policy for Canada.
Raising $150 million additional in a budget of $10 billion is not going to arouse the confidence of the international money market unless all the people who deal in the international money market are a gang of moronic idiots. I do not think the people dealing in the international money market are morons. They are usually pretty cute, and people as cute as
7552

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they are, are not going to think that the raising of revenue by less than 1 per cent of the total budget shows an ability to control the economy. They still use some simple monosyllabic words to describe that kind of hoax. They are pretty sophisticated men and women who deal in that market. Does the Minister of Finance believe that they will really feel this is the way the Canadian dollar is being saved? That is rubbish.
The kind of thing that could really increase these people's confidence in Canada is increased productivity in this country and the accomplishment of some of those things the now-buried Watkins report suggests. I suppose the hon. member for Davenport (Mr. Gordon) resigned from the government because he has to put on sackcloth and ashes to supervise the burial of the great policy he has been promoting for so many years but which now appears to be completely dead. I do not blame him for feeling sad about it. I feel sad also.
It is my belief that we can increase the confidence in Canada if we do some of the things suggested in the Watkins report including the rationalization of Canada's industry, the specialization of Canada's industry, doing away with the idea that Canada's economy is to continue to be merely a carbon copy of the economy south of us, which is what it is now. We should do the things that will make Canada's economy efficient, and above all we should decrease unemployment to at least 3 per cent or even less. When we do that our revenues will increase, our people will have a higher standard of living, and the entire world will see a growing, throbbing economy. Surely that is the greatest safeguard of the currency of any nation in the world.
Why was the British government unable to hold its currency in spite of all the things it tried? Basically the economy of Great Britain was in very serious difficulty. Why is Canada pretty confident that we can hold the dollar with care but without too much trouble? It is basically because the economies of North America are strong. Our resources are many and our economies are rich. That is why we can do what a poor economy like Britain's, which requires a great deal of modernization and a great deal of attention, was unable to do.
These are the things we should do to protect our currency. We must manage the economy properly by planning properly, not planning the way the Minister of Finance and his advisors have been doing or, as my leader 
said the other day, by putting on the brakes one day and the accelerator the next, and, according to some of the articles I have read, at least six months late each time.
The final word I want to say, and I will not be more than a minute or two, is that in our opinion Canada is becoming so tied to the economy and even the monetary system of the country to the south that our independence, our sovereignty, our freedom of action and our self-reliance are being eroded by the policies of the government of this country supported, at least I think, by members of the official opposition. Nothing gives greater evidence of this than the Minister of Finance's own behaviour since the United States policy was announced by the president in January. I do not have any quotations but the Minister of Finance is in the chamber and if I misstate him I invite him to correct me.
In January, immediately after the President of the United States announced his policies, the Minister of Finance in his engaging way rose in this house and before television cameras stated these policies would not affect the Canadian economy. He said: We are not worried about them at all and there is no need to be concerned because they will not affect us. A little later he said he had to go to Washington to get clarification of these policies that were clear to him at the beginning of January and which did not affect us. A little later they apparently were not clear to him. Then three or four days ago he came to this house and with great glee and satisfaction informed us that the United States policies which did not affect us and which we did not care about because they had no influence on our economy, the policies which had already been clarified for him, were now not to be applied to Canada at all. He went to the most awful trouble to get rid of policies that meant nothing, according to him.
The fact is that he was not honest with himself or with us in January. He was under self-delusion later when he talked about clarification. He knew perfectly well that the United States policies would affect the Canadian economy and eventually he would have to do something about them. What does he do? Does he take some action on the part of this government? No, Mr. Speaker, he makes a trip of the mendicant to Washington. He gets down on his knees and makes a new arrangement with the government of another country, the policies of which do not apply to us. "Please do it to him, don't do it to me",
March 12, 1968

says the Minister of Finance, and when he gets the right response he comes back here with glee.
[DOT] (6:00 p.m.)
I realize it is six o'clock, Mr. Speaker. Let me conclude by saying that we will oppose the bill before us because it carries on the inequities. We are disappointed beyond words at the lack of any substance to the review system about which the Prime Minister spoke today. I hope we share the view of all opposition members that this kind of performance by the government should not only not have the confidence of the house but does not deserve the confidence of the people of Canada, particularly the working people of this country.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Speaker:: It is my duty, pursuant to provisional standing order 39A, to inform the house that the questions to be raised at ten o'clock this day are as follows: The hon. member for Vancouver-Kingsway (Mrs. Maclnnis), Consideration to withdrawing Canada's participation from NORAD; the hon. member for Queens (Mr. Macquarrie), External Affairs-Nigeria-Canadian efforts to end civil war; the hon. member for Saint John-Albert (Mr. Bell), Communications-inquiry as to reservation of satellite space.
It being six o'clock I do now leave the chair.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.


[Stage Direction]
The house resumed consideration of the motion of Mr. Sharp for the second reading of Bill No. C-208, to amend the Income Tax Act.
David Réal Caouette: Mr. Speaker, I intend tonight to proceed with a consideration of the speech made this afternoon by the right hon. Prime Minister (Mr. Pearson). 27053-4761
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I shall abstain from analysing that of the hon. member for Carleton (Mr. Bell) in which there is some good, since he blames the government for not having anticipated the financial and economic situation now prevailing in Canada. On the other hand, the hon. member for Carleton, as usual for the Conservatives, took great care not to offer a solution to the problems we have to deal with now.
That is on a par with the hon. member for York South (Mr. Lewis) who said, among other things, that the new bill introduced in the house was a pill a little more sugared than Bill No. C-193 but he too forgot to offer a plausible solution, a solution that might settle the problem.
Since 1962, we, of the Ralliement Creditiste, have been warning the government against this serious situation, this present state of economic chaos. Government members might say again and again that the same situation prevails in Great Britain, in the United States, in Belgium and in France, but this does not settle the problem here in Canada.
It is surely not by means of tax increases that we shall lower the cost of living, create employment or promote the economic development of our young country abounding in all kinds of resources.
This afternoon, we listened to the speeches of the Prime Minister, of the hon. members for Carleton and for York South and tomorrow, it will be reported in the press, on radio and on television, that the opposition criticized the government, that the latter announced further taxes, that the Prime Minister said that the federal government was spending less than the provinces or the municipalities. Now, the whole speech of the Prime Minister may be summed up this way: The provinces and municipalities spend more than the federal government.
Mr. Speaker, at a meeting of the members of the Ralliement Creditiste, we asked ourselves: in view of the precarious situation of the minority government, and in view of the fact that at times-perhaps not always, but at times-we of the Ralliement can hold the balance of power of this parliament, how should we use this balance of power, as a political party composed of intelligent beings, for I maintain the members of the Ralliement Creditiste are intelligent and reasonable beings. We asked ourselves this question: How must we use this power? Must we use it merely to

March 12. 1968
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bring on elections or rather, in a given situation, must we try to obtain maximum results for the Canadian people? That is the question we asked ourselves: Must we spend our time playing at elections?


Mr. Asselin (Charlevoix):: You are afraid of elections.


David Réal Caouette: The hon. member for Charlevoix (Mr. Asselin) says that we are afraid of elections. I am willing to fight him on his own grounds, at La Malbaie, or anywhere else for that matter. I have already defeated him and he knows it. He was a minister, but a minister who was not worth a penny.


Martial Asselin: Mr. Speaker, I rise on a question of privilege.
I invite the hon. member to meet me on my own grounds, any time at all!


David Réal Caouette: Any time at all, as the hon. member knows. He was once called "honourable". It lasted three weeks. If he thinks he is the most important person in the riding of Charlevoix, he will see what will happen in the next elections. He will lose his riding.
Mr. Speaker, we wondered whether, in a given situation, we should be content to play at elections or try instead to get the very best results for the Canadian people. That is the question each Creditiste member must ask himself, not only in the house, but outside the house. That is the question the hon. member for Charlevoix should ponder instead of thinking only of elections and spending the people's money.
In the parliamentary crisis brought about by the defeat of Bill No. C-193, was it more important to oppose the tax increase or to defeat a government which would have been followed by a similar government? That was the question.
When we think, Mr. Speaker, that there was a time when, on the other side of the house, there were 208 Conservatives out of a total of 265 federal members, and it was then that the Canadian dollar was devaluated and there were a million unemployed in Canada, one cannot accept that these people should give us a lesson and keep saying that the Creditistes are afraid of elections. From 208, their number fell to 100. They lost 108 members, I think, and now they are trying to give us a lesson!
Mr. Speaker, that does not prevent this government from having responsibilities and I shall talk about that later.
[Mr. Caouelte.l
By the course of action we took during the debate on Bill No. C-193, as well as those who voted with us, we saved Canadians an increase of about $475 million in taxes and got them a refund of more than $75 million already collected since January 1, 1968. That is, I think, a positive action which will be profitable to all Canadians.
[DOT] (8:10 p.m.)


Mr. Lamberi:: Not even a cent was reimbursed.


David Réal Caouette: Certain generous persons have accused us of having sold out to the Liberals. Did the same generous persons accuse us of having sold out to the Liberals when we voted with the government to increase old age pensions from $75 to $105 per month?
Where is the logic of certain election fanatics?
And for the information of the Conservatives-I regret that the hon. member for Prince Albert (Mr. Diefenbaker) is not here this evening, because I would give him a piece of my mind-on February 5, 1963, when the Conservative government was defeated, before the vote, I was in the office of a Conservative minister-there were two of them-and I was asked to support the government and I was told that, in the afternoon of the following day, I would be given John Diefenbaker's head on a silver platter, here, in the House of Commons. This statement was made by two ministers and the hon. member for Lapointe (Mr. Gregoire) is aware of it.
Mr. Speaker, we have not sold out either to the Conservatives or to the Liberals. But we do use our heads in parliament. I hear some members laughing. If you want to hear some more in this vein, I can oblige.
Everybody must know that we have voted against taxes and we have won our point. If the government brings in another legislation with taxes such as the one before us, we shall vote against it. Whether the vote is taken to-night, to-morrow or the day after, we shall vote against taxes, because the Canadian people is already overburdened with taxes. We submit-and I suggest to the Minister of Finance (Mr. Sharp) to listen to this-that if the Canadian government is able to lend money without interest to England, Algeria, Bolivia, India, Jamaica, or to any other country in the world, it should have at least the decency to finance its own monetary needs without interest as well. The Bank of Canada is certainly
March 12, 1968

in a position to play its own part, that is, make financially possible what is materially feasible. And I challenge the hon. Minister of Finance to tell me that that solution will not solve the problem facing the government at the present time.
Mr. Speaker, we are tired of seeing our taxes increased. I was informed earlier that the province of Ontario once more has to increase its taxes on gasoline, tobacco and cigarettes. The municipalities' turn will come next. Quebec city has just announced $1.20 increase on every $100 assessment. The city of Montreal has just announced some restrictions: such project will not be carried out for lack of funds.
The Prime Minister said this afternoon: Let us respect the system.
Earlier, Mr. Speaker, following the supper recess, I found two letters in my mail. I have one here which comes from St. Edgar in the Bonaventure riding. Unfortunately, the hon. member for Bonaventure is not in the house. It is a letter from a lady in St. Edgar, whose name I will not mention, but I have her letter in my hand. She begins in this way:
After listening to you on the television-
Mr. Speaker, I speak on television, each week, in Sherbrooke, Quebec, Carleton, Riviere-du-Loup, Chicoutimi, Rouyn-Noranda.


Mr. Mongrain:: Not on the C.B.C.


David Réal Caouette: Not on the C.B.C., of course, but on private stations.
As one might expect, people listen.
I continue:
After listening to you on the CHAU television station, I want to congratulate you, because everything you say really makes sense.
Do you hear the hon. member for Charlevoix laugh. He finds that funny. We licked him in 1962 and in 1963, but he is not satisfied yet. Rest assured that we will lick him the next time.


Martial Asselin: The next time, you are the one we will lick.


David Réal Caouette: And the former little minister without portfolio will remember it, that time.


Martial Asselin: It is you that we will lick.
Income Tax Act


David Réal Caouette: This is what that lady says:
I want to congratulate you, because everything you say really makes sense and how happy we would be if, some day, we could go to bed at night without worrying about the next day.
That is the letter of a family.
We are eight in our family. I can tell you that the children do not have everything they need. As for myself, I am sick.
This is the mother of the family who writes that.
Mr. Speaker, I have four files, with four drawers, each filled with letters like that in my office. They come from people in every part of Quebec, New Brunswick, Manitoba, northern Ontario, who complain about their economic plight. Those are needy families. Do we have to go to India to see destitutes? Do we have to go to Jamaica or to England to see poverty? We have some right here at home; we can see people who go to bed at night worrying about what the next day will bring.
I have here another letter from Cap d'Espoir, in Gaspe South county. This is what it says:
Mr. Caouette, I listen to you every week over the television station at Carleton. I like to hear you talk. I find you are so right, even if I did not vote for you. Here, in Gaspe, your party did not have a candidate. It is very sad, because some people would have voted for your party. Personally, T am frank about it, I did not vote for your party, instead I voted for the Conservatives. There has not been much change. What can we do about it, whether they are Tories or Grits, they are all alike; the system is always the same.
That is precisely what we are saying. That letter, Mr. Speaker, comes from the riding of Gaspe-


Mr. Keays:: Mr. Speaker, may I put a question to the hon. member?
Is that person the leader of your party in the riding of Gaspe?


David Réal Caouette: No, he is a former organizer of the member who just put the question, and he has just now lost him.
Mr. Speaker, having said this, I come to the analysis of the speech which the right hon. Prime Minister (Mr. Pearson) made this afternoon, a magnificent speech prepared by financial experts. There is no getting out of it, he did not prepare that speech himself. Besides, at one point, he had to change certain terms because those who wrote the speech did not use the terms he usually uses. But we realize that it was a speech intended to save the face of finance. It was not a speech for

March 12, 1968
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the people, to save the young, to save fathers and mothers, no.
It was a speech asking us to make even more sacrifices, to tighten our belt even more. Only, tomorrow, the headlines will report not -that there are many parliamentary correspondents, I see-that the right hon. Prime Minister said it was necessary to levy a new tax, that the Conservatives blamed the government and the New Democratic party blamed the government. But the solution that we are advocating, to use the Bank of Canada, will be relegated to the obituary column or the back pages of the newspapers, even to the classified advertisements, perhaps under *"Apartments for rent".
Mr. Speaker, it is certainly not through the press nor the C.B.C. radio and television networks that we can make our views known to the people. We use a network of private stations and this House of Commons to say what we have to say, to put forward our solutions. And I come to that.
The right hon. Prime Minister said this afternoon, quoting, for instance, "The 4th Annual Review of the Economic Council of Canada" published in September 1967:
[DOT] (8:20 p.m.)

This (expansion since 1961) represents probably the longest uninterrupted expansion-and certainly the longest peacetime expansion-in Canadian business cycle history.

The cycle system: cycle of expansion, cycle of recession.
When I was a boy going to school, I was taught sacred history. I learned the story of Joseph who interpreted the dreams of Pharaoh-


Joseph-Alfred Mongrain: May I ask a question?


David Réal Caouette: You could let me conclude and ask your questions later, I do not mind but I find interruptions disturbing.


Joseph-Alfred Mongrain: If the Chair would allow me. I know the hon. member is able to improvise and I have a simple question to ask him: Am I to understand that the hon. member did not receive the French version of the Prime Minister's speech, since he is quoting from the English version?


David Réal Caouette: Well, Mr. Speaker, I must say that I received this afternoon a revised French version, and I thank one of the Prime

Minister's secretaries who has sent it to me, but it is almost impossible to read it. The note accompanying the text reads as follows:
I am very sorry to send you a rough French version, but the translators have just finished. I thought you might like to have something in French anyway, even if only a rough draft. Otherwise, it would be necessary to wait for tomorrow's Hansard.
Therefore, efforts were made to give me the French version. In fact, I think there are 43 pages. I thank those responsible in the Prime Minister's office for their consideration. They must have known I was going to speak in French tonight. I want to be fair and impartial.
Mr. Speaker, I was speaking of the dreams of Pharaoh which were interpreted by Joseph. Pharaoh had a strange dream one night. In the morning he sent for Joseph and told him: I dreamt of seven fat kine. All was for the best in the best of all possible worlds, everyone was happy, the court was prosperous, everything was going smoothly. A little later, I had the vision of seven lean kine. Joseph then explained to the Pharaoh that the seven fat kine meant seven years of abundance, and the seven lean kine, seven years of famine, and that the granaries had to be filled during the years of abundance so that people could live during the years of famine.
This is what I am reminded of by this government cycle contrivance or this cyclist business.


An hon. Member:: Cyclic.


David Réal Caouette: The word "bicycle" could have been substituted for "cycle". That is what the Prime Minister said this afternoon and he further added:

It is also true that these problems are made more dangerous, and their solution made more difficult, by threats to the international financial and economic co-operation which so far has distinguished the post-war years from those of the thirties.

In 1928, Mr. Speaker, speeches similar to the one made this afternoon by the Prime Minister were heard in parliament, warning us against inflation, against a rapid economic growth, against projects that can wait, against the requirements of provinces, municipalities and school boards.
Mr. Speaker, this speach is strangely similar to the speeches made in 1928 and in 1929, a few months before the economic crash
March 12, 1968

Our most worrying problem now is the threat to financial stability from the recent and continuing rates of increase of prices, incomes and costs in the Canadian economy.

Who is responsible for that situation, for the financial instability, for the increase in prices and in the cost of production? The tax increases and not just the government expenditures.
The Prime Minister also said:

Increase in productivity is essential if we are to have rising incomes without the kind of inflation which will rapidly erode the benefits we would otherwise receive from this rise.

We recognize that a higher standard of living is closely related to increased productivity. At the present time the warehouses of our plants, our wholesalers and retailers are splitting at the seams with all kinds of goods. All

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one has to do to realize it is go around Ottawa, down Bank street, go to Eaton's or Simpson's or Caplan's or anywhere else in the country, go to Montreal, Vancouver, Winnipeg or Halifax. It is the same everywhere: the stores are full, overflowing with goods of all kinds and sales are advertised which are seasonal, mid-seasonal, quarter-seasonal, and combined. You see sales everywhere. Is productivity lacking to give the Canadian people enough purchasing power to dress, eat, and house themselves decently? Do we lack essential goods in Canada? "Increased productivity". That sounds good for the journalists who tomorrow will speak over the radio, or on television or in the papers. "Increased productivity". But, we do not even manage to sell the present stocks.
People feel the same way about it as that lady who wrote:
"Mr. Caouette, we are anxious to have a system that will allow us to go to bed at night without worrying about the following morning."
Mr. Speaker, that is the situation in which hundreds of thousands of Canadians live and, the government does not take it into account.
The Prime Minister said-with all that, I have only reached page 5-and I quote: [English]
The responsibility of government to curb inflation is made the more difficult because financial and currency problems are often concerned with considerations which are more psychological than concrete in nature.

Is the situation of that lady from Bonaven-ture "psychological"? Is it psychological or is it real, concrete?
Mr. Speaker, some people are poor, not only in my riding, but also in yours, in short, from one end of Canada to the other. But we fail to see that poverty at home, we go elsewhere, all over the world looking for it. We fail to see the poverty on our doorstep. That is the inconsistency of a government which is a slave to a barbaric financial system. That is the situation in which we find ourselves. Mr. Speaker, the Prime Minister went on to say: [English]
Productivity is of course an important determinant of prices and incomes. The only way to increase real incomes, with a given quantity of capital and labour, is to improve productivity. Increases of money incomes which run ahead of increases in real output are for the country as a whole self-defeating and illusory.


Nobody disputes that. However, Mr. Speaker, what has been the productivity of the financial system this year, that we should pay it a tribute of $1,406 million in interest only? What has the financial system produced to be able to obtain this year $1,406 million in interest on the national debt, while we lend to foreigners without interest?
The Minister of Finance (Mr. Sharp) says that when we grant loans to foreign countries, we are not lending them any money but providing them with credit. What is the difference between credit and money? Whenever the bank gives me a $25,000 credit, I write cheques just the same as if it were handing me $25,000 in pennies. When we hand them credit, what is it made of? It enables them to buy in Canada or in some other countries. Those countries will be using our credit to buy here in Canada and we are lending them without interest.
Mr. Speaker, the Prime Minister said further on, on page 8:

At the same time we are often criticized for cutting out or cutting down on some good and favourite project even though it is realized that in present circumstances some very desirable things will have to be postponed or scrapped or reduced in order to keep the finances of the country on an even keel.

Why did the Prime Minister not tell us that if there were to be a war tomorrow morning, this situation would no longer exist? The Prime Minister did not deal with that but had he done so, he would have said: This is an emergency situation. When war breaks out, they say: Hurry up, we need guns. Hurry up, war is breaking out. There will be billions of dollars to keep the country on an even keel. But in peace time, to build hospitals, schools, highways, to help the municipalities, the provinces-

Let us keep the country on an even keel, Mr. Speaker. "Everything has to be paid for eventually and the government does not have any magic way of raising money for this purpose."

The government has no magic way of collecting revenue or finding money, but it needs it. Why did the Prime Minister not tell
March 12. 1968

us who had this magic power of creating money and credit? Who controls money and credit, in Canada, if not the government? If the government does not have this magic power of finding the money necessary to run the country, to develop the economy, who then has this power? Who is the financial wizard magician who creates money and credit as he wishes in Canada?
The Prime Minister says here and this time it is serious:

The government has to spend the money it collects wisely and well.

It does so not very "wisely" but quite "well".

But that money can only be secured by taxing or borrowing.

Who makes that money, if the sovereign government of Canada is unable to do so?
The Prime Minister stated that the federal government had full responsibility for the financial, monetary and fiscal system of Canada, but that provinces and municipalities were spending more money than the federal government.
Mr. Speaker, if there are only two vehicles available to the government to find money: taxation or loans, who else has the means to make money without levying taxes or contracting loans? That is what we are asking the government and what we have been trying to explain to them for so long.
At this stage I should like to repeat, in parenthesis, what Right Hon. Mackenzie King said in 1935 during an election campaign that put an end to the administration of the Conservative government:
[DOT] (8:40 p.m.)

Once a nation parts with the control of its currency and credit, it matters not who makes the nation's laws-

Mr. Speaker, whether it be Bill No. C-193, C-207, C-210, C-392 or 1115-

-it matters not who makes the nation's laws. Usury, once in control, will wreck any nation.

This is precisely the situation in which the government finds itself at present: usury is in
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the process of gobbling up the savings of the Canadian people and the natural resources of our country in order to concentrate them in the hands of a group we call the Canadian bankers, who control money and credit in Canada. The Minister of Finance is afraid of saying so, but I am not. The chartered banks of Canada control the issuing of money and credit and when the Prime Minister says that the Bank of Canada is there in order to help us, I contend that the Bank of Canada is but a slave in the hands of the Canadian chartered banks. Such is the part played by the Bank of Canada today.
I shall go on with the statement made by Right Hon. Mackenzie King:

Until the control of the issue of currency and credit is restored to government, and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of parliament and democracy is idle and futile.


Some hon. Members:: Hear, hear. [Translation]


David Réal Caouette: That, Mr. Speaker, has been said 33 years ago.


Mr. Speaker:: Order, please. I regret to interrupt the hon. member but his time has expired, unless he has the unanimous consent to continue.


Some hon. Members:: Agreed.


David Réal Caouette: Mr. Speaker, I am very
thankful to my colleagues-


Mr. Speaker:: I regret to have to ask the
hon. member to resume his seat, but some hon. members do not agree that he continue his remarks.


Martial Asselin: Mr. Speaker, we are not against it.


Mr. Speaker:: No doubt the hon. member is not opposed to it, but I believe there are two other hon. members, the hon. member for Rosthern (Mr. Nasserden)-


David Réal Caouette: I would only need five
minutes, Mr. Speaker.


Mr. Speaker:: Is there unanimous consent to allow the hon. member to continue his remarks?


Some hon. Members:: Agreed.

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Mr. Speaker:: Is there unanimous
agreement?


Some hon. Members:: Agreed.


David Réal Caouette: I thank my colleagues, Mr. Speaker.
I arouse a great deal of sympathy by quoting a former Canadian prime minister, namely Right Hon. Mackenzie King.
Nevertheless, I would have liked this afternoon that the present Prime Minister, before leaving the house, had had at least the courage to tell us what Mackenzie King was already saying 33 years ago, when he kept on urging us to act, to take action.
He should have admitted that the government is not sovereign in monetary and fiscal matters, that it follows the instructions given by the financial interests of Canada rather than prompted by the best interests of the people. The Prime Minister drew a parallel this afternoon between the expenditures of the provinces and municipalities and those of the federal government. The Minister of Finance, the government and members of the house are aware of it, the situation is just as alarming for the provinces and the school boards as it is for the federal government. Why? Because Ottawa does not assume its responsibilities in the monetary field.
I read on February 27 last, I think in the Catholic newspaper Le Devoir of Montreal ... I am sorry, it was Le Droit, another Catholic newspaper; and I quote:
Hydro-Quebec pays $530,000 interest a day.
Hydro-Quebec only, not the province, Mr. Speaker.
Here is what the president of Hydro-Quebec said:
Hydro-Quebec has had to borrow $260,000,000 a year-
Borrow from whom, Mr. Speaker? Who has the power to lend, if governments do not have the power to create money? There are others who create this money. Money does not grow on trees, be they spruce, pine or birch trees! Is it made by men, somewhere? It does not come from heaven, as in the times of the Hebrews, who each morning gathered manna in the desert. Money does not grow in that way. It is created somewhere, but the minister will not say where. Nor will the Prime Minister!
[Mr. Speaker.)
I read on:
Hydro-Quebec has had to borrow $260,000,000 a year during the last four years "on a tighter and tighter market"-
The same market used by the Minister of Finance: Washington!
-Mr. Jean-Claude Lessard, president of Hydro-Quebec, said yesterday before the Canadian Club. He added that the cumulative debt forces us in 1968 to pay $560,000 interest each morning.
Half a million in interest only! I will tell you that soon, very very soon we shall be masters in our own house, in the province of Quebec! And at the federal level, I will tell you that many decades, many centuries of confederation will go by before we even begin to be masters in our own house!
And if to that amount are added the municipal, school and provincial taxes levied on our production, the amount of our direct expenses reaches $700,000 per day on which we have no control.


Gilles Grégoire: The federal government pays $4 million in interest alone.


David Réal Caouette: Mr. Speaker, is it known that the amount of $1,406 million in interest paid by the federal government this year represents $70 per capita in Canada? Is it known that a family made up of 5 members pays $350 in interest per year on the Canadian national debt in addition to the interests on the provincial debt and on the debts of the Quebec Hydro Commission? An amount of $70 per year. Legislation is easily passed to increase taxes and to make the Canadian people pay more.
Does the Minister of Finance not agree that the people have paid enough, that they are quite fed up with that burden, that legalized theft?
[DOT] (8:50 p.m.)
Mr. Speaker, this is what the chairman of the Hydro Commission says:
Those additional expenses exceed the amount that any other Canadian public utility undertaking has to pay.
Nevertheless, we must work with a view to the future.
Can one imagine such a statement. The more we give, the more we are bogged down, but never mind, let us head toward the future even if it means getting more and more bogged down. There is only one future in front of us, we shall sink more and more deeply as we get along. There can be no other future in a system like this. We are caught in it.
Our investment projects for the next five years will certainly exceed $1 billion and adding the repayment of loans which will become due,
March 12, 1968

we shall need approximately another $200 million before the end of 1972, said Mr. Lessard.
In order to obtain funds and carry out our program, we must, like private companies, meet the demands of the financial market and pay a higher interest rate each year, he said, and our last loan-
The loan raised by the province of Quebec or Hydro-Quebec carries a 7 per cent annual interest.
Mr. Speaker, this is where the chairman of the Hydro-Quebec Commission says:
In order to obtain funds ... we must, like private companies, meet the demands of the financial market and pay a higher interest rate each year, and our last loan, he said, at an actual rate of 7 per cent, raises a fond memory of the 3J per cent rate that we paid a scant 10 years ago.
Mr. Speaker, why is the interest rate up to 7 per cent? Is it the province of Quebec or the federal government which has fixed that rate?
The present Minister of Finance, the right hon. Prime Minister and the government said at the time of the raise: Any further tax is to reinvigorate the Canadian economy. Now, a few months after the federal parliament passed these pieces of legislation, we are in a worse situation than six months ago.
Mr. Speaker, the president of the Hydro added:
The Quebec Hydro had first to prove that it could operate smoothly the whole electrical network.
The network was operating, but the system was not.
Today, it has been proved. Our present objective is different: we want to demonstrate that this huge enterprise can be administered with maximum efficiency-
That "efficiency" depends on the financial system.
Mr. Speaker, I do not intend to take up more of the time of the house.
In concluding my remarks, I would like to quote the figures which the right hon. Prime Minister used this afternoon, when he asked the Conservatives, the members of the New Democratic party, in fact all the opposition parties: What reductions would you have us make in government expenditures? Our projection for 1967-68 is $9,885,000,000, an increase of $3,315,000,000, or 50 per cent.
The right hon. Prime Minister said: "We are spending $1,800 million for national defence this year." That has been corroborated this afternoon by the hon. Minister of National Defence (Mr. Cadieux).
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He said also: "Payments to individuals, especially in the field of social security such as the old age pension, $1.4 billion, family allowances, $630 million, unemployment insurance, $74 million, veterans' pensions, $324 million."
The Prime Minister asked: Would you like us to cut those pensions? No, indeed; everybody wants better pensions. We want to increase them.
Do we want cuts in the expenditures for national defence? Certainly! This would enable us to save $400 million and the government would not have to introduce the bill now before the house.
But the most remarkable thing, Mr. Speaker, is that the Prime Minister then quotes expenditures for joint programs and payments amounting to $1,892 million. There is also a total of $424 million for youth allowances, assistance to rural development, rural economy, manpower mobility.
Mr. Speaker, $1.75 billion are allocated for family allowances, old age pensions, allowances for the blind, the disabled, social assistance, hospital insurance, and so on. The Prime Minister asks you: What would you like us to cut in all that?
Mr. Speaker, our mistake is trying to adjust our physical possibilities to our monetary power or our financial obligations instead of adjusting our financial system to the true development possibilities of our country.
In fact, I noticed that the Prime Minister omitted one of the main expenditures, that is $1,406 million for the interest on our national debt. A sum of $1,406 million, more than the total paid in old age pensions in Canada. But the Prime Minister does not mention that fact. He does not ask us whether cutbacks are advisable in this regard. No, the matter is not mentioned or discussed at all.
But we are indeed asked: Should old age pensions be cut? Should defence expenditures be reduced? Should there be cutbacks with regard to manpower mobility? Should expenditures be decreased in a field such as economic development? But, on the other hand, we are not asked: Should expenditures be reduced for the servicing of the debt, that is, $1,406 million? The Prime Minister overlooks that point, but we do mention it. We have actually been making that suggestion to the government for a long time, even though the proposal has been termed ridiculous and we have been called hot-heads. It matters little.

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[DOT] (9:00 p.m.)
Mr. Speaker, there is a solution at this time. We have said so here in the house six years ago. I also said it in 1946, because I was here from 1946 to 1949. The solution, Mr. Speaker, lies in the answer to this question: Given its resources, its people, its social classes, its engineers, its professionals, its miners, its farmers, its workers, its experts, its will, is Canada able to guarantee to every Canadian citizen economic security in personal liberty?
Are we able to guarantee to our older citizens a pension of $105 a month? Are we able, with our brains and brawn to develop the Quebec northwest, the north of Ontario or the northern regions of Canada where doubtless lie vast resources? That is the question that we must ask ourselves.
But this is not the question put by the hon. Minister of Finance, who simplifies everything and says: Do we have the money needed? Can we borrow or tax the people? Can the people bear a heavier tax burden?
Bill No. C-208 provides for new taxes. Even if we say that we are taxing corporations or companies, the companies will have to increase their prices, when we are trying to fight inflation. When prices get higher again, it will be the average Canadian who will once more foot the bill.
He is told: Instead of a 5 per cent surtax, we will impose a 3 per cent surtax, but we will also tax the corporations which, in turn, will increase their prices by 5 per cent perhaps, so that the average Canadian will have to pay 8 per cent more instead of 3 per cent, as mentioned in the bill. This is hypocrisy, this is dishonesty towards the Canadian people.
Mr. Speaker, I shall conclude on this note. If the government can find billions of dollars in order to kill, it is time they find some to provide a good life for the Canadian people.
If the government does not know where to get money, if it knows only taxes and loans, we suggest that it turn to the Bank of Canada, which belongs to the country and to the Canadian people. It should not order the Bank of Canada to create an unlimited amount of worthless dollars, but request it to maintain under any circumstances and the whole year long a perfect balance between productivity and purchasing power.
We know that if the purchasing power of the people were increased by a national dividend taken from the funds of the Bank of

Canada, it would prevent new taxes and allow the people to buy the surplus accumulated in warehouses and wholesale stores, reinvigorate the Canadian economy and create secondary industries which would be assured of selling their production.
Then, Mr. Speaker, the Bank of Canada would be the servant of Canada, the Canadian people and the human being. It is in that direction that we are working here in and outside the house, and we will not be induced to pass bills to levy other taxes in order to solve a problem which will remain unsolved, because it has never been solved up to now.
We were confronted with the same problem during the last world war and the last economic depression from 1929 to 1939.
It is by applying the principles of Major Douglas and Social Credit that we will solve those financial and economic problems. The Minister of Finance should turn towards Social Credit instead of always looking in the same direction; he should consider the opportunities available in Canada and endeavour to satisfy the Canadian people by giving them maximum security and freedom.


Howard Earl Johnston: Mr. Speaker, I have listened with interest to the hon. member for Villeneuve (Mr. Caouette) who has, as usual, done an excellent job in laying down the principles of Social Credit. I know that after this great speech it will never again slip his mind that any vote on a budgetary matter, be it at the resolution stage, on second reading, at the committee stage or on third reading, is a vote of confidence. We in the Social Credit party are aware that any vote which will come on this bill will be a vote of confidence. This fact has been established at least I trust until the next defeat of the government.
Although we support the changed resolution, we do so reluctantly, perhaps because we have had experience in taking second looks, as evidenced by the actions of Social Credit governments elsewhere. The measures now before us are not as distasteful as the original ones which brought about the defeat of the government. We know that the country is ready and prepared for the show to go ahead in the first week in April. It would not be regarded as exactly sporting to disturb that show now. The musicians have been warming up for a long time and the stage is set for everyone to go on the road full time, not just on week ends.
March 12, 1968

However, let us warn the government that it should remember, when this parliament is called back to finish the session, that our patience does wear thin, just as it wore thin regarding the original budget measure we helped to defeat some few weeks ago. We appreciate the need to save the dollar, be it United States or Canadian, as well as the Japanese yen and any other currency of the western world in which our economic system must place its trust if it is to carry on. We know also that the Minister of Finance came back last summer from Rio de Janeiro with the idea of removing gold as the measure of international money. This was an idea that would have done credit and still does credit to the original ideas of Social Credit. Since 1935 we have always insisted that our monetary system had a basic weakness and flaw so long as for its stability it is related in any way on a metal rather than on the credit of the people. This is being proved in a most remarkable way these days. The wisdom of the stand taken in 1935 shines through all of the dreary news reports of runs on gold. The sooner a system is worked out whereby the money of this country no longer relies on this metal and is no longer at the mercy of ruthless speculators placed strategically around the world, the better off the entire world will be.
One of the things we would least like to see is another devaluation of the Canadian dollar, with the resultant loss of confidence. The Conservative party has had considerable experience along this line and no doubt would be willing to try it again had it the opportunity to do so, I do not think in this time of international crisis we can afford the type of policy and experimentation that took place in 1962.
There is one lesson the government has to learn, and it should have learned this lesson before now. It does the government no good at all to adopt policies suggested by the N.D.P., at least it does no good in this house. There is no gratitude on the part of members of that party and there is no gain for the government. I listened a few days ago to the hon. member for Vancouver-Kingsway (Mrs. Maclnnis) who a few months ago during an earlier speech described the necessity to set up a Department of Consumer and Corporate Affairs. In that speech she bit the hand that bled for her. As I listened to her the other day it struck me that she was committing a cruelty to animals; not to dumb animals, but surely to stupid animals. Surely it
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is stupid time after time to bring in legislation in line with the ideas either of that hon. lady or of the N.D.P. There were cries for many years in support of a department of consumer affairs, but when the legislation was produced the government received nothing but abuse from that party.
It was probably in light of the knowledge that the N.D.P. had for some years advocated a special status for the province of Quebec that the labour bill, C-186, was brought in. It received the same cruel and vicious treatment. I find myself in agreement with the N.D.P. that this was not a good bill, but to act on the expectation of support from that quarter was again a mistake.
Medicare was brought forward and pushed through, although almost all provinces opposed it. This was another project of the N.D.P. taken over by the Liberals in an attempt to find some ground for election campaigning that would appeal to the left. Finally we are now going to have a prices review board. This was a very special and pet project of the hon. member for Vancouver-Kingsway. No sooner was this legislation presented as a policy of this government than it was described as a toothless wonder.
I do not know why the Liberal government continues to bring forward these pet projects, only to have detraction take place instantaneously by those they are seeking to placate.
[DOT] (9:10 p.m.)


An hon. Member:: There is no gratitude at all.


Howard Earl Johnston: As someone said, there is just no gratitude at all, and I would agree with that statement. I do not know whether the speech made this afternoon has satisfied the hon. member for Vancouver-Kingsway. It did not do much for the hon. member for York South (Mr. Lewis), as was made clear in his eloquent description of the speech. In a way, I agree with him that it was rather sad that the Prime Minister (Mr. Pearson) should have chosen this vehicle as perhaps his parting speech to the house.
I realize that it would be difficult at this time to find a subject which he could revive and bring to the house, because so many of the policies of the government have been shattered and lie as wrecks and ruins across the country. It would hardly do to talk about foreign policy at the present time, because there is not much credit to be found there. It would hardly do to talk about the commonwealth, because that hangs by a very slender

March 12, 1968
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thread. It would not do to talk about the Company of Young Canadians, because that cherished dream has not got oil the ground successfully, nor would it do to talk about a prices review board at this time as a parting message of hope and inspiration to the house. It certainly would not help at all to point to Great Britain as an example, a nation whose socialist government has brought that country to the lowest ebb it has ever known, and whose policies are succeeding only in providing our country and others in remoter parts of the world with a flow of immigrants.


An hon. Member:: We need them.


Howard Earl Johnston: Yes, we do need them in British Columbia and we can use them there because that is a province that has balanced its budget for some time, and again this year has presented a balanced budget.


An hon. Member:: What rot.


Howard Earl Johnston: That province has been able to carry on an expanded program without inflation, at the same time as we have seen the federal government incur ever increasing deficits, and finally, as a last resort, is striving so desperately to come up with a balanced budget.
Here we must congratulate the minister, in that his efforts have been at least in the right direction. I would not call them courageous, but at least they are persistent. While perhaps this quality cannot be said to shine, at least it has something to recommend it when it moves in the direction of balancing the budget. I would hope that this would be the hon. gentleman's last exercise in this function.


Frank Howard: Don't go the way the other finance minister went-out.


An hon. Member:: Will the hon. member tell us whether he will support the government?


Howard Earl Johnston: I have already said that. Some days ago I indicated that the international situation and a host of internal reasons made it imperative that we do not manufacture in this country an unnecessary or a completely phoney crisis. I still think that this policy, which we cannot take any pleasure or any joy in following, is at least the lesser of the evils that confront us at this time. But we would hope that if it should be the good fortune of the minister to present other budgets to this parliament, he would be able to present more realistic ones than some in the past have been, and that he will learn once

and for all that the concept of the welfare state no longer strikes deep in the hearts of Canadians because they have come to realize, through their own experience and through watching Britain and the Scandinavian countries, that it involves a cost, and they are growing weary of paying the costs. There is no advantage to be gained along that line and much to be gained by a more courageous outlook, as well as much to be gained from introducing on the domestic scene a similar monetary policy to that for which the Minister of Finance strives on the international scene, one in which the creation of money will no longer be through the process of debt, and one which, if implemented by the nations of the world, has been described as similar to putting a paper tiger in the bank of the nations of the world.
In today's world we desperately need this kind of explosion of liquidity in order that we can increase the production of the world and in order that the two greatest nations of the world can cease to wage the experimental war in which they are engaged in Viet Nam, can cease diverting their productions to that war effort so that they can keep their economies fuelled, and through the cessation of that empty exercise can get down to the internal problems which face them both, and thus provide for the citizens of the world the fruits of that production which our technology has made possible.


Mr. A. D. Hales (Wellington South):: Mr. Speaker, as has been pointed out by several members of the house, particularly on this side, the bill before us is certainly very inadequate for the job it is supposed to do. This afternoon the hon. member for Carleton (Mr. Bell) gave a very convincing, straightforward and analytical speech, one of the best that I have heard for a long time in this chamber. I think it must have made the government realize the error of its ways and the great predicament in which it finds itself. The government has taxed, borrowed, and got itself into trouble. It is boxed in. What a book Walter Gordon could write today about troubled Canada. What a book the present Minister of Finance could write under the heading "Nobody knows the troubles I've been in".
Why does the government find itself in this kind of trouble? It is because on our front benches, with the exception of one or two of its occupants, there is not one person who has learned how to meet a payroll. The cabinet is composed of people who have had training in
March 12, 1968

the academic field, a group of former civil servants who only had to prepare estimates, ask for money and it was given: Seek and ye shall find. And it was given unto them. This was the experience they had. Now they find themselves confronted with the difficult task of operating a government in a businesslike way.
[DOT] (9:20 p.m.)
What sort of paradoxical, contradictory legislation has this group on the front benches produced? Today we heard the Prime Minister (Mr. Pearson) talking about a review board which has no teeth in it. He is going to set up a review board. What is our new Department of Consumer and Corporate Affairs supposed to do? It seems to me that one is contradicting the other. I remember two years ago we had the then minister of national health and welfare spending $700,000 to persuade people to stop smoking cigarettes or using tobacco. At the same time we had the then minister of agriculture promoting the growing of tobacco by giving subsidies. We had the then minister of finance putting a tax on motorcars coming into Canada with a value of more than $5,000, while his brother in law, the Minister of Industry (Mr. Drury) was developing a plan to bring them in duty free.
Not too long ago we had a minister of labour, then responsible for housing, trying to get the interest rate down, and we had a minister of finance, responsible for interest rates going up and up. We have had the minister of manpower stepping up the immigration program, yet the minister responsible for housing could not even find houses to take care of the citizens we have in the country today. We cannot even find jobs for all Canadians, yet we have a minister stepping up the rate of immigration. This is the sort of operation we have had from this group on the treasury benches.
This afternoon the hon. member for York South (Mr. Lewis) asked-and I have heard this from the Liberal benches, as well: What programs do you Conservatives want to cut out? When you talk about saving money, what a lot of political clap-trap that is. This was only said for political purposes. He had the audacity to suggest we were saying we would cut out old age pensions or hospitalization or unemployment assistance and the like. Certainly not; we are not going to cut out these programs. After all, who did more for the old age pensioners than this party that I
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represent? No other party has done more for them. Well do I remember the six buck boys across the way, the time they raised the old age pension by $6.
Certainly, we do not want to cut down on these programs. We want these programs, and we want other services, but we want them operated on a businesslike basis. We want to cut out the waste and extravagance. We do not want the sort of thing that was brought to our attention just lately in the setting up of the new Department of Consumer and Corporate Affairs. It has not even got off the ground. What has it cost? According to the estimates for 1967-68, supplementaries included, it cost $7.75 million to set up the new department, and it has not even taken wing. This department will not be consulted because we are going to have a review board instead.
According to the estimates for 1968-69 the same department will cost $8.75 million, up another million for this coming year. What do we hear about this department? We hear they have wall to wall broadloom rugs in their offices and lavish furnishings throughout. We hear they have a man with nothing more to do than take a pair of scissors and clip newspapers, yet they pay him $7,000 or $8,000 a year. This is the sort of thing of which we do not approve. Hon. members opposite do not approve of it themselves, yet they allow it to continue.
What about the Department of Industry which was set up in 1963-64? We spoke against the establishment of this department and said that the Department of Trade and Commerce, with a new section headed by a deputy minister, could do everything this Department of Industry would attempt to do. That department began to function in 1963-64 with a staff of 274 and a budget of $25 million. Let us take a look at it now. During 1967-68 there were 783 people employed, an increase of 509, and the budget was $171 million. In 1968-69, according to the blue book we have in front of us now, and this does not include what is found in the supplementary estimates, the staff numbered 1,025 and expenditures amounted to $161 million. This figure would be higher, of course, if the supplementaries were included. This is the type of thing we have been talking about on this side. This is what we want to see stopped.
What about travel and removal expenses for federal departments? Let us take a look at these. In 1966-67, all departments spent $76,706,000, in round figures. The following year,

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1967-68, they spent $100,896 million, an increase of $24 million in one year for travel and removal of public civil servants. Now, we come to this year, when the President of the Treasury Board (Mr. Benson) said, "I am going to cut these budgets; we are going to take a sharp knife and cut them down". If we look at travel and removal expenses for this coming year in the blue book we find they total $108,089,000, an increase of $7 million.
Now, I ask you, Mr. Speaker, in a short period of two years, why should travel and removal expenses have gone up $31 million? It is disgraceful. We have government employees flitting all over this country. Two will arrive in a place where one would do. We will have half a dozen over here where one would have been sufficient. There is no co-ordination whatever in so far as travel expenses are concerned. If you want to go on a trip, put in a requisition and the government will send you wherever you want to go. I don't know whether they travel first class or second class, but I dare say many of them travel first class. This is the sort of waste and extravagance we have been talking about for many years. One could go through all the departments. I am sorry, I cannot accommodate the Minister of Agriculture (Mr. Greene), but I could if I took the time to look up his estimates.


John James Greene: We are very frugal.


Alfred Dryden Hales: Travel expenses for the Department of National Health and Welfare increased by $830,000 in order to have people flitting around the country. The Department of Transport expenses increased by $965,000 to have people skipping here and there. The Department of National Defence takes the prize. They had an increase of $9,439,000 in one year. I ask you, what control is exercised? The President of the Treasury Board talks about wonderful control. I have yet to see it.
The hon. Member for Calgary North (Mr. Harkness) now advises me, travel expenses for the Department of Agriculture were up 30 per cent this year over last year.
Now, what about the C.B.C. about which so much has been said from this side of the house? I do not propose to take too long on this, but I should draw attention to some of the pensions given by that department. We all recall when the pension of the former governor of the Bank of Canada was increased from about $11,800 to $25,000 a year on the
IMr. Hales.]
eve of the expiry of his term of office. This increase was never submitted to cabinet for approval.
[DOT] (9:30 p.m.)
Hon. members opposite have not learned their lesson as to the control of these things, Mr. Speaker, because this sort of thing is still going on without cabinet approval, an ex vice president of the C.B.C. by the name of Briggs was promoted, almost on the eve of his retirement, to a post at $15,000 a year. Later his salary was increased by a mere 67 per cent to $25,000. Then came his retirement almost at once. Not only did he depart with a pension comparable to that paid a prime minister of Canada, but in addition the C.B.C. granted him a gratuity of one year's pay, namely $25,000. Certainly that was beyond the terms of the employment contract he held.
One of the purposes of the report of the Auditor General is to see that the taxpayer's money is not spent for a purpose or in a manner that has not been authorized by parliament. The Auditor General in his recent report devotes the longest section of his review of crown corporations to the C.B.C., during which he discloses the facts of the Briggs case and establishes that it was not within the competency of the directors of that corporation to take this action, and that the payment of this retirement allowance was not within the provisions of the Broadcasting Act. So it appears, Mr. Speaker, that the corporation had no authority to make this payment.
What is the government doing about this sort of thing, Mr. Speaker? What steps is it taking, in face of an attitude in the C.B.C. that spawns this sort of thing? What steps is the government taking to protect the $154,200,000 which the taxpayers must give the C.B.C. this year to discharge its responsibility for broadcasting? The C.B.C. have also made arrangements to supplement the pension plan for the vice president and 12 other executives of the C.B.C. A retirement pension has been arranged for these people, without the usual contribution of 2 per cent that applies in other corporations.
The C.B.C. has inflated itself, Mr. Speaker, into a self-governing empire beyond the control of parliament, and the government has done nothing to stop it. Well, I will take part of that back; the Secretary of State (Miss LaMarsh) did say that the management was rotten, and I think she knew what she was
March 12, 1968

talking about. She must have known that these things were going on.
On August 17, 1967, nearly one year ago, the President of the Treasury Board (Mr. Benson) issued a circular to all departments of government suggesting that departments set up an accounts receivable section within their financial administration. Under such a system they would add to an audited figure the sales or charges of the department and subtract from the total all of the payments received. The final figure should balance with the control figure. In other words, the money coming in and going out of each department is controlled. To date, Mr. Speaker, several departments of government have still not implemented this businesslike system, even though they were asked to do so two years ago. What control can government have over funds unless there is an accounts receivable control figure?
I should also like to make one or two observations about the inadequate accounting and financial control procedures at Fort Smith in the Northwest Territories. At page 38 of his 1967 report the Auditor General says:
1.	Internal control over cash receipts was still lacking-
2.	Departmental billings were still being released without review-
-outstanding accounts amounting to over $25,000 were left with the Fort Smith office for collection. It was not evident that any follow-up action has since been taken on these accounts or that payments have been received with respect to them.
So there is no record taken of receipts, and so on.
Then in paragraph 81, under the heading "Inadequate accounting and financial control procedures, Indian agencies" we read the following:
1.	Unsatisfactory cash handling procedures-
2.	Lack of proper internal control-
3.	Unsatisfactory accounts receivable procedures-
4.	Unsatisfactory stores and equipment control procedures-
According to this paragraph stocktaking had been carried out in an irregular manner. Imagine running a business in such a way, Mr. Speaker. To continue:
5.	Inadequate payroll records and procedures-
It appears that time records had been destroyed prematurely and in consequence the payroll records could not be verified. I place these matters before the house, Mr. Speaker, because all taxpayers would like to see things done in a businesslike way.
Income Tax Act
I do not want to go into detail on this next matter, Mr. Speaker, but I think it is suffice to say that the members of this house will recall some of the questions I asked in connection with the importation by Studebaker of Volkswagen motorcars. This situation arose because there were certain export credits outstanding to Studebaker permitting them to import cars duty free. Studebaker were in the process of going out of the automobile business in Canada and did not want to lose these credits, because they were worth money. They therefore entered into a deal with Volkswagen to bring in cars duty free, sell them to Volkswagen and keep the duty amounting to $2| million.
The minister of national revenue of that day rose in this house and told us that he was waiting for a ruling on the matter from the Department of Justice. We heard no more until the report published by the Auditor General, from which we now learn that the Department of Justice had stated that Volkswagen was the importer of the cars, not Studebaker, and that $2J million duty was owing to the crown. However, the whole thing was wiped out by order in council No. 1621 of August 23, 1967. That $2J million rightfully belonged to each and every taxpayer of this country, yet the amount was written off and the slate wiped clean. We are also told that apparently another motor car company owes us a considerable sum of money.
[DOT] (9:40 p.m.)
The Auditor General mentioned the figure of $30 million and the situation was brought about in this way. As hon. members realize, imports that are allowed into the country duty free bear a proportionate relationship to exports. If a manufacturer's exports are not sufficient to offset his imports, then this portion of his imports becomes taxable. I understand that the Department of National Revenue is not keeping up to date accounts of the transactions. The department is waiting for automobile manufacturers to report their exports, and apparently it has taken the manufacturers over 18 months to report.
Why does the department not adopt the concept that comes into play when others become involved with customs? If we import something and we feel we ought not to pay the duty on an item, we nevertheless pay the duty, and then fill out a form, make our claim, and have the duty remitted to us. Why cannot the department do that with the motorcar manufacturers? In other words,

March 12, 1968
Income Tax Act
why can it not charge them duty on the goods they import and then, when the manufacturers produce their export figures, remit that duty. Why does the department not send them a bill every six months, to show them where they stand? Yet, according to the report, 18 months has gone by and not one cent has been paid. We do not know how much the manufacturers owe. What kind of bookkeeping is this? The debt is not listed even as an account receivable. Can you imagine the income tax man coming to your place of business, looking into your books, when, at the same time you have in your pocket $30 million in accounts receivable which are not even recorded in the ledger? You can imagine what would happen to you.


Mr. Monleith:: Never mind $30 million: What about 30 cents?


Alfred Dryden Hales: That is what is happening. We expect this government to correct these things.


Some hon. Members:: Hear, hear.


Alfred Dryden Hales: accomplish something that would be effective without impairing the morale or efficiency of the public service? Why did they not do that by regulating costs and the intake of personnel over the past few years, instead of by suddenly freezing everything when it was too late to do so?
Administrative overhead costs have risen steadily in all departments and agencies. When the Glassco commission finished its work in 1963, administrative costs approximated $1 billion a year. Those costs for the year ending March 31, 1968, have now jumped to $1.6 billion, an increase of about 60 per cent over the last five years. The Prime Minister in his speech this afternoon blamed increased expenditures on the provinces and municipalities. I say to him, children who live in glass houses should not throw stones. I also say to him, sweep off your own doorstep before you pass the buck to others.
No wonder the minister comes here seeking additional tax fodder to feed the insatiable money burner that this government is. Now we find that personnel in government departments and agencies have increased by 40,000 in the last five years. The minister and his colleagues have made a great parade of cutting expenditures, but it is an empty gesture. It was obvious that no real savings could be expected from the pruning of departmental budgets which had not been finalized. It is as though a man's wife came home and said "I have saved you $500". And when asked how she had accomplished this, explained, "I looked at a fur coat which would have cost $500 but I did not buy it." It is as simple as that. That is what the government tried to tell us on December 7 when they said they were saving money. Why did not the minister take a close look at a lot of these estimates and cut out these expenditures which can be labelled as wasteful and extravagant?
[DOT] (9:50 p.m.)
The Department of External Affairs never ranked as one of the big departments, but its budget has jumped more than $1,500,000 in the last five years. What about our embassies overseas? Has no control been placed over their expenditures? The budget of the Department of Agriculture has risen $118 million.
The biggest surprise, judging by the nature of its work and the modesty of its achievements, has been provided by the Department of Manpower and Immigration. Its annual budget has leaped from about $179 million
Income Tax Act
five years ago to a staggering $403 million, an increase of $224 million in five years, or just about 127 per cent. It is true some savings have been made, but they were marginal savings at the expense of services to the taxpayer, not on such items as staff, travelling expenses, telephone calls, office rent and so on. Public works, transportation and defence services have all been pared. Indian and Eskimo peoples will have to make do with an even lower standard of medical and welfare assistance than in the past.
If the twins of finance and revenue had used a sharper paring knife the bill now before us would have been unnecessary. Recently the Minister of Finance said a great deal about the critical situation in which this country suddenly finds itself, leaving the impression that it is all due to outside influences beyond our control, and that he and his fellow ministers are waging an heroic battle to save Canada. He solemnly tells us it is the patriotic duty of all Canadians to refrain from criticism and do what he asks them to do.
Mr. Speaker, for the past five years the opposition has been pointing out to the government that its inability to control expenditures was running the country into trouble. We have tried to indicate long-range policies and demonstrate the need for better control in the economic sphere. The government's advisers have told them the same things. But hon. gentlemen opposite ignored their advisers as they ignored the opposition. Now they have landed in the economic soup as a result of their own floundering efforts, and they come crying to the people to help them out.
In conclusion I would simply say that the illustrations I have given are not all new. They have been given by others over a considerable period. What I have stated has been said by every reputable financial writer and newspaperman in Canada for the past year or more. People have lost confidence in this government. Today there is an outflow of millions of dollars on the part of Canadians who are selling Canadian securities and purchasing United States securities. This is shocking, but it has been going on for some time. People are doing this because they say they lose their money through inflation in the United States only half as fast as they are currently losing it in Canada, and there are some other advantages.
7570	COMMONS
Proceedings on Adjournment Motion
The Minister of Agriculture (Mr. Greene), addressing an FAO conference in Rome, had this to say with reference to Canadian taxpayers:
If they lose faith in the efficiency of our endeavours, if they come to believe that their taxes are but adding to the bureaucracy or to the pile of papers in some murky vault, they will lose the will to participate.
These are true words and I commend the hon. gentleman for saying them. I wish he had been able to persuade his fellow members in the cabinet to take them to heart. I have not lost faith in Canada or lost my confidence in this great country, far from it. But I along with millions of other Canadians have lost confidence in this government and I propose to vote against this bill.


Edward Richard Schreyer: While hon. members are still pondering the peroration of the hon. member for Wellington South (Mr. Hales), may I call it ten o'clock, Mr. Speaker?



PROCEEDINGS ON ADJOURNMENT MOTION

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

["I want to say at the outset that it is not the impression of the government of Canada that we are losing our position in respect of space and satellite development. I am not so sure the Department of Transport should be responsible for answering this question, but in the limited time available this afternoon I was asked to prepare a statement in reply.\nThere is no international law in existence at the moment that would provide for any country in the world making a reservation on space for the installation of a communications satellite. This is the first one. A country wishing to make use of available space may,\nhowever, notify the International Telecommunications Union, known as I.T.U., at Geneva. They would notify this organization of the intention to launch a space satellite. The organization is simply a means of providing information to interested launchers and offers no protection whatever of a place in space.\nA further development in this field was the adaptation of the International Satellite Organization known as Intal-Sat. The operation of this body is financed pro rata by its members. If a member state determines to put a satellite into orbit, an application is made to Intal-Sat, seeking its co-operation. Usually commercial satellites, a concept that is an arm of the United States Space Organization, at the request of Intal-Sat undertakes the launch. A domestic satellite for Canada would be required to occupy one or more of the eight planned positions obtainable for the northern half of the western hemisphere, including such countries of course as Brazil, Mexico and the United States.\nInformal conversations with the United States have already taken place respecting Canada's plans to launch a satellite which would bring live television into the farthest reaches of Canada and improve both radio and telephone communication. However, though the plans are being actively pursued they have not reached the stage where it would be desirable either to notify I.T.U. officially of our future intentions or to make application to Intal-Sat for launching privileges.\nI can assure the hon. member for Saint John-Albert that things are moving rapidly in that direction with the usual alacrity displayed by this government. I can understand the hon. member's concern about communications when I think of the many hours that both he and I spent in a bus unable to communicate with the outside world to determine that very interesting things were taking place in parliament.\nMotion agreed to and the house adjourned at 10.28 p.m.", 'Wednesday, March 13, 1968']
Mrs. Grace Maclnnis (Vancouver-Kings-way):: The other day I asked the Secretary of State for External Affairs a question which is being asked increasingly often by the people of Canada, and it was this:
As an aid to curtailing unnecessary spending and saving the Canadian taxpayers millions of dollars, will the government consider withdrawing Canada's participation in NORAD?
The other day I got no answer. Yesterday, my colleague the hon. member for Greenwood (Mr. Brewin) asked a question on the same subject in an effort to get the Prime Minister (Mr. Pearson) to guarantee that parliament would have an opportunity to discuss the NORAD agreement before it comes up for renewal on May 12, so that the Canadian people may know what they are being committed to.
The Prime Minister replied in these words:
No, Mr. Speaker, I cannot give that assurance. The government will have to take its responsibilities and then submit its decision to the house as is normally done in connection with these matters.
(Mr. Hales.1
DEBATES	March 12, 1968
I do not know whether this is normal or not, but I believe the people of Canada ought to be given an opportunity to discuss the NORAD agreement in all its aspects before they are committed to what will be an inexorable ten-year contract with the United States. The agreement comes up only once every ten years.
[DOT] (10:00 p.m.)
There is no doubt that when the new NORAD agreement is submitted to Canada it will contain some far reaching changes. The Canadian people are very worried at the prospect of the government signing the new NORAD agreement before we have an opportunity of knowing what its new provisions will be, and what Canada will be committed to for the next ten years.
For some years now the New Democratic party, of which I am a member, has believed and has urged that Canada should withdraw from NORAD. I shall briefly give our reasons for urging this. First we consider that NORAD is a worthless defence against a threat that never came off, the threat in the minds of United States military commanders that the U.S.S.R. would build up huge bomber fleets to use against this continent. In this context NORAD today is a museum piece along with the Maginot line. Neither has provided any security because they were not designed to meet developments that actually took place.
Second, we want to withdraw from NORAD because every year NORAD is a waste of $130 million of the taxpayers' hard earned money. At a time when the government is scraping every little bit it can from small taxpayers, it would be a big relief to the taxpayers of this country to save $130 million a year on something which is an expensive and worthless activity.
Third, we want to withdraw from NORAD because the money we could save by so doing we could use for many useful and necessary things in Canada, such as housing, medicare, and pensions, to mention only three. By providing money for these things we would do a great deal for the internal security and wellbeing of the country when, as I say, NORAD in its present form has been proven obsolete.
Fourth, if we stay in NORAD we shall be drawn closer and closer into the net of United States plans for continental defence, involving huge expenditures on new interceptor aircraft and other military hardware, of which we
March 12, 1968	COMMONS
know very little and of which we will know nothing more until the government has signed, sealed and delivered the new agreement which will commit us for another ten year period. We believe that this sort of things is far too dangerous for Canada. It means that we are choosing Canada as the battlefield for a nuclear war between powerful super powers, and I don't mean just the United States and the U.S.S.R. because there will be other super powers within the next ten years. I think that would be a very strange form of protection for the people of our country.
In the fifth place, if we mean what we say, Canada should throw her support not behind a regional alliance such as NORAD but behind the United Nations. We should work more forcefully than ever for a United Nations peace keeping force free from domination by powerful super powers.
How can we tell the people of the other countries of the world that we are free from entangling alliances, from set points of view, and from imperialism of all kinds if we are tied up tight to the Pentagon? Having seen what is going on over in Asia, and in Viet Nam in particular during the last few years, I think we should be taking this heaven-sent chance provided by the renewal of the NORAD agreement to get out of that entanglement. The United States has got deeper and deeper into that situation over in Asia, and I do not think we should allow Canada to be dragged into the morass that is the war in Viet Nam.
I urge that the Canadian people be given a chance through parliament to debate this treaty before it is signed on May 12, and I believe that those Canadian people, through the Canadian parliament, should decide at this time to withdraw altogether from NORAD.


Mr. Gerard Pelletier (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, as the Secretary of State for External Affairs indicated in his statement to the standing committee on external affairs last Thursday, the government considers that there is a continuing threat to North America from manned bombers which it would be irresponsible for it to ignore. For this reason the government believes we should co-operate with the United States in the defence of the continent as we have done in one way or another since the beginning of the second world war. If co-operation between the air defence forces of Canada and the United States against the continuing
DEBATES	7571
Proceedings on Adjournment Motion bomber threat is to be effective it is necessary to have a single air defence plan and an integrated command and control system. This requirement has been satifactorily met by NORAD for the past ten years.
The government is now in the process of negotiation and consideration of the existing agreement which expires in May. The financial burden of maintaining the NORAD command structure is borne substantially by the United States. The cost to Canada for defence against bombers arises largely out of Canada's contribution of forces and equipment to this joint task. These costs would thus be incurred regardless of whether or not NORAD existed, unless we permitted the United States to assume controlling responsibility for the defence of Canada against bombers and, indeed, for the surveillance of Canadian air space. Such a surrender of sovereignty the government is not prepared to contemplate.



Mr. Heath Macquarrie (Queens):: Mr. Speaker, yesterday, as I have done on several occasions in recent months, I asked a question about the Canadian attitude toward and participation in efforts to bring about a cessation of the war in Nigeria which has gone on for many months, a war which is called the forgotten war and one which arrests little interest and receives little space in the newspapers. This is a profound and appalling tragedy, marked as wars always are with hatred, destruction and death. I should like to see more interest and more initiative taken by this country, which has contributed so much to the development of the modern commonwealth of autonomous states. We should not wait until the explosion becomes more devastating and the dangers more threatening; nor should we wait until great power competition-and it is there as in other wars -escalates explosively.
In Canada, unfortunately, we have little thoughtful journalism devoted to an in-depth coverage of international affairs. Only the sensational ever gains attention. It would be revealing if one could enumerate the small number of dispatches emanating from or dealing with Nigeria in the months since the war began. So it is parliament which must show the initiative in this terribly important matter.
On February 9, in answer to a question of mine the Prime Minister indicated that he thought this would be a subject he would
March 12, 1968

Proceedings on Adjournment Motion discuss with the British Prime Minister. After the visit it became clear that this question was not discussed. If our belief in the commonwealth is to be more than tokenism, surely it is incumbent upon us to concern ourselves with, and exert with other commonwealth states a powerful pressure for peace in this strife torn part of the world.
We do not have to assess blame; it would be unlikely that all wrong is one side and all good is on the other. But if we circumscribe and inhibit all our actions and responses by the declaration that we recognize only Nigeria and refuse even to hear the voice of Biafra, we are in fact being neutral on one side in this terrible conflict.
The United Kingdom has certainly been neutral on one side. It is providing arms to Lagos, a practice which Lord Goodman in a House of Lords debate recently described as "wholly inappropriate, wholly shameful and wholly wrong", and I agree with him wholly. This is scarcely a helpful attitude on the part of the senior member of the commonwealth. The government in providing arms to Lagos has joined company with the Soviet union. Surely if there is any vitality in the commonwealth there should be joint action in the first instance to put a stop to this arms flow.
[DOT] (10:10 p.m.)
Out of Biafra there are trickling horrible stories of atrocities approaching the range of genocide. As the Archbishop of Canterbury said in the debate to which I have referred, "Biafra people have suffered the most terrible violence". There are serious estimates from thoughtful people of massacres of as many as 30,000 men, women and children in the eastern provinces of Nigeria. As one well known African expert has said, surely before long Biafra will end up being half cemetery and half concentration camp.
With such dreadful statistics coming out, should not one of the first orders of the day be the dispatch of a fact finding commission to get to the bottom of the situation. Surely Canada will do its part in this regard. After that might come a more important exercise. If a cessation of hostilities could be obtained, and it must, there could be a dispatch of a peace keeping force. This would have to be agreeable to both sides, but what a challenge this would be to the commonwealth states; if men from the far flung members of this unique and interesting association of nations could go to that troubled area and maintain the peace in that country, which brought such

great hopes to all believers in the commonwealth and all people interested in Africa just a few years ago. I would like to see Canada take the lead in this regard and turn our proclamations of affection for the commonwealth into concrete action to restore peace and to bring about a settlement in that area, so events could move to that kind of climax, just as in some of those other dreadful situations in other areas about which we have been belatedly concerned. This is the sort of thing I feel we should reach out for, before events drag us in. Surely farsightedness is a part of statesmanship, and surely our position in the commonwealth requires statesmanship of this order.


Gérard Pelletier: Here, Mr. Speaker, is an outline of the efforts of the Canadian government to bring about a peaceful settlement in Nigeria. I should first of all express, as we have expressed before, the government's deep concern at the tragic events taking place in this fellow commonwealth country which has the largest population of any country in Africa and potentially one of the brightest futures of any of the new nations. Canada's close association with Nigeria since its independence has been a source of great satisfaction to us; our commonwealth ties are strong and we have been able to provide capital and technical assistance to the Nigerian people as a concrete expression of our friendship and our desire to see the country develop further as a strong and responsible member of the community of nations.
The civil turmoil which has been taking place in Nigeria since the middle of last year has, as I said, been a matter of concern to us, and we have felt called upon to give expression to that concern as well as our genuine willingness to be of what assistance we can in helping the Nigerians to find means of solving Nigeria's problems. Other countries and organizations including the organization of African unity, have voiced similar concern. The Nigerian federal military government has made it clear that it considers Nigeria's problems to be of an internal character, to be resolved by Nigerians themselves without outside interference. We naturally respect this position as well as Nigeria's status as a fully independent nation, but we have taken every occasion to impress on the Nigerian federal leaders our concern with the situation in their country, and our hope that it will be possible
March 12. 1968
to reach a negotiated settlement of Nigeria's problems. These views were expressed by the Prime Minister and the Secretary of State for External Affairs during the centennial visit to Canada last October of Admiral Wey, who represented the the federal military government, and the visit in December of the Nigerian commissioner for external affairs, Dr. Arikpo.
The eastern region of Nigeria has declared itself in secession from the rest of the country and has used military and other means within its control to try to enforce this declaration. Neither the Canadian government nor any other government has recognized this secessionist regime, and we have relations only with the central authorities of the federal government at Lagos. None the less, when we express our hope, publicly and to the government at Lagos, that a negotiated settlement may be found, we mean particularly that means may be found to resolve the differences between the federal authorities and the eastern Nigerians who have declared themselves to be in secession.
It has seemed to the government that while other organizations might be able to afford assistance to the Nigerians in their search for a settlement, the commonwealth through its secretary general is at present the best placed to provide help when needed. Mr. Arnold Smith has undertaken consultations in pursuit of this aim, and has had lengthy discussions with Nigerian leaders. The Canadian government fully supports the efforts of the secretary general-


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


Thomas Miller Bell: Mr. Speaker, I will only keep hon. members in orbit for a short while this evening. This is not meant to refer to the eloquent plea of the hon. member for Queens (Mr. Macquarrie) on behalf of commonwealth action in Africa, to which I heartily subscribe, but it refers to the question I ventured this afternoon about the space program of this country.
My question was prompted by a number of press reports today, particularly in Montreal and Toronto papers, of a meeting of the Canadian Aeronautics and Space Institute which was held in Montreal. It was attended
Proceedings on Adjournment Motion by experts from universities, industry and government. Please note that civil servants were present. It was stated quite frankly that this meeting was held to get federal authorities to act quickly in establishing a space agency. It was also stated that the purpose of the meeting was to complain about the absence of a national space agency for Canada.
Some history is necessary to explain my point. I should like to refer to the statement which was made in the so-called Chapman committee report of February 1967 which said:
The need for use by Canada of communications satellites for domestic communications is clearly established, and there is a risk that ultimate control over the specification, supply, and operation of the space segment of a communications satellite system may not reside in Canada.
Perhaps the record should contain some of the references because this will be a continuing matter. The first reference, with which I have had some connection after the estimates of last year, was a question which was asked of the Minister of Transport (Mr. Hellyer) on November 17 about the meeting he had in the United States on the matter of a space program and satellite operation. The minister did not say there was direct discussion on this subject but he offered some hope when he said this whole matter was presently under discussion by the government and decisions will be announced in the not too distant future.
[DOT] (10:20 p.m.)
On December 14, 1967, I asked another question pointing out the implications of his space and satellite matter in connection with the Bell Telephone bill. At that time the minister said, as reported on page 5411 of Hansard:
If it were felt essential this matter could be given consideration, because the government has made considerable progress in its plans in respect of commercial satellites.
He went on to say that it might be possible for the committee to look into it. Well, we passed the Bell Telephone bill and the matter was not discussed. We are at the time when the civil servants have presented their study. Last January, two consortiums were formed, one being the so-called Soble consortium, which has made its request. We have a new one now that is called the Canadian communications satellite system, which includes the trans-Canada telephone system and C.N.-C.P. Telecommunications. A report has

March 12, 1968

Proceedings on Adjournment Motion already come forward and the minister has had his meetings in the United States. The deputy minister has told the broadcasting committee that some first steps have been taken, but we still have not received any definite word or a progress report.
I feel very sincerely, Mr. Speaker, that Canada must have its own space program, and I of course include satellites in this. I think that is in the national interest. It is important, even necessary, to co-operate in some aspects of this program with the United States and even with Russia. However, we must go forward and have this program in the interests of this great nation where geography problems are so tremendous. It will help our defence and many of our industries. One can think of television and other aspects of the communications field that will be affected. It is a broad subject and I will not get into it tonight. I merely ask now the question that I felt was not completely answered this afternoon:	What progress
report can the government give in this regard? At the same time, I urge the government to get moving, because we are losing our place in this very important international field, as was pointed out at this meeting yesterday which was reported in the newspapers this morning.


Mr. J. A. Byrne (Parliamentary Secretary to Minister of Transport):: I want to say at the outset that it is not the impression of the government of Canada that we are losing our position in respect of space and satellite development. I am not so sure the Department of Transport should be responsible for answering this question, but in the limited time available this afternoon I was asked to prepare a statement in reply.
There is no international law in existence at the moment that would provide for any country in the world making a reservation on space for the installation of a communications satellite. This is the first one. A country wishing to make use of available space may,
however, notify the International Telecommunications Union, known as I.T.U., at Geneva. They would notify this organization of the intention to launch a space satellite. The organization is simply a means of providing information to interested launchers and offers no protection whatever of a place in space.
A further development in this field was the adaptation of the International Satellite Organization known as Intal-Sat. The operation of this body is financed pro rata by its members. If a member state determines to put a satellite into orbit, an application is made to Intal-Sat, seeking its co-operation. Usually commercial satellites, a concept that is an arm of the United States Space Organization, at the request of Intal-Sat undertakes the launch. A domestic satellite for Canada would be required to occupy one or more of the eight planned positions obtainable for the northern half of the western hemisphere, including such countries of course as Brazil, Mexico and the United States.
Informal conversations with the United States have already taken place respecting Canada's plans to launch a satellite which would bring live television into the farthest reaches of Canada and improve both radio and telephone communication. However, though the plans are being actively pursued they have not reached the stage where it would be desirable either to notify I.T.U. officially of our future intentions or to make application to Intal-Sat for launching privileges.
I can assure the hon. member for Saint John-Albert that things are moving rapidly in that direction with the usual alacrity displayed by this government. I can understand the hon. member's concern about communications when I think of the many hours that both he and I spent in a bus unable to communicate with the outside world to determine that very interesting things were taking place in parliament.
Motion agreed to and the house adjourned at 10.28 p.m.

Wednesday, March 13, 1968