February 23, 1915

CON

Robert Laird Borden (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Conservative (1867-1942)

Sir ROBERT BORDEN:

May I ask whether my hon. friend regards a considerable portion of the expenditure as unjustifiable?

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN:

I do, and I propose to prove it later on.

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
CON

Robert Laird Borden (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Conservative (1867-1942)

Sir ROBERT BORDEN:

Did my hon.

friend move against any of it in the House?

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN:

I fail to see how the absence of a formal motion relieves the Government of its responsibility.

There is another way of looking at the matter. Was the increased expenditure for 1913, 1914, 1915, and the proposed expenditure for 1916 accompanied by a corresponding increase in revenue? Has it that doubtful justification even? Let us appeal to the arbitrament of the actual figures, starting with the year 1912-13, the first full year in which honourable gentlemen were in power after the elections of 1911.

Revenue. From all Ordinary

sources. expenditure.

1912- 13 $133,212,743 67 $112,059,537 411913- 14

126,143,275 31 127,384,472 991914- 15

130,000,000 00 140,000,000 001915- 16

120,000,000 00 140,000,000 00

In order to make a fair comparison, in these figures I have estimated the customs and excise revenue for 1915-16 on the basis of taxation prevailing before the recently

added taxation. What does this disclose? Falling revenue and rising expenditure. For 1916 they do not suggest a reduction in expenditure. They propose continuing it at $140,000,000, as in 1915, knowing full well that customs and excise revenues on the basis of the taxation in force a few weeks ago would very materially fall and produce a much smaller revenue. " Oh, no," says the Minister of Finance. " We must count upon ordinary expenditure for 1916 reaching the amount of $140,000,000 the same as for 1915, notwithstanding a falling revenue; but we will just impose more taxation to meet the deficit, that is all." No reduction in expenditure, but more taxation to increase the revenue. They decide first what they shall expend, and then consider how they are going to get the revenue. Would it not have been prudent first to determine what the country could reasonably pay in taxation in 1915-16, and afterwards determine the amount and character of expenditures? I ask honourable gentlemen if this criticism is not just? Is not the conduct of the Government in the circumstances open to the gravest censure? Was not this a fitting season for the Government to practise economy and implement its pre-election pledges?

Let us look at it from another point. Do trade conditions warrant it? Did not trade figures for the past three years stand as a storm signal to the Finance Minister? Let us look at the volume of our total export and import trade since 1913. It is as follows:

1912- 13 $1,085,264,4491913- 14

1,129,744,7251914, calendar year.. .. 860,615,163

More than a year ago the Government had evidence of declining trade. The official figures give the total trade for 1914 at only about $40,000 over 1913, and this was due to the abnormal fall exports of wheat in 1913 owing to an early harvest. The Government know that the total trade of the present fiscal year will be much below last year's, and that next year, 1915-16, the decline will probably be greater still; and yet in the face of such facts and in the light of such knowledge, we are calmly informed that ordinary expenditure for 1916 will be $140,000,000. What have honourable gentlemen to say to this?

I have been speaking in general terms, and it might well be asked of me to point out with some particularity the expenditure increases I object to, what departments of the public service I complain against in respect to expenditure, and where and how I would suggest reductions in expenditures for the coming year. I propose to do this, and I think I can present a case which the hon. gentlemen will find difficult to answer. If I fail it will not be for the want of facts. It will be due to my inability to marshall and present actual facts as they are. I feel sure that the record of the expenditures of the Government during the past few years carries its condemnation.

I have prepared a statement showing the expenditures of several of the important departments or branches of the public service, but not including 'the Militia Department which I purposely eliminate for the moment, for the years 1911-12, 1913-14, and the expenditures estimated and to be voted for 1915-16, and I invite the careful attention of the House to the several increases. The figures for 1914-15 are not available, and I take the estimated expenditures for 1915-16 as they would be practically the same, and for the further reason, that I am seeking to establish the view that our proposed expenditures for 1915-16 are, in view of all existing conditions, enormously excessive, and the failure to reduce them the real cause of the freshly imposed taxation. The statement is as follows:

Expenditures by Departments.

1911-12. 1913-14. 1915-16 Estimated.Civil Government

Fisheries

Mines, Geological Survey

Immigration

Quarantine $ cts. 4,774,678 00 843,856 98 261,718 83 1,364,999 93 182,392 43 * 1,756,565 46 10,344,487 21 2,443,846 23 2,277,099 87 9,172,035 47 $ cts. 5,607,794 95 1,229,519 19 470,506 66 1,893,297 77 220,927 83 2,182,470 95 19,007,512 63 3,849,983 86 3,286,480 25 12,822,058 44 $ cts. 7,024,253 41 1,561,400 00 547,275 00 1.875.000 00 248,000 00 2,254,928 00 22,351,830 46 4.215.000 00 3,475,079 50 16,677,355 25Public Works

Customs

Dominion Lands

Post Office

23i

Now, let me examine these severally. Let us inquire in a spirit of fairness if they are open to criticism. Let us inquire if there . exist the facts to prove that degree of reckless and improvident administration of some branches of the public service which merits criticism and the withdrawal of confidence by the people in the Government. First, let me take the expenditures for Civil Government which cover salaries and contingencies of all the departments, at Ottawa, the High Commissioner's office at London, and the salaries of the lieutenant governors of the provinces. What is the record of increases in this branch of the service?

Civil Government Expenditure.

1911-12 $4,774,678 00

1913-14 5,607,794 95

1915-16 7,024,253 41

We find that the cost of Civil Government in 1911-12 was $4,744,678.00; for 1913-14, two .years later it was $5,607,795.95,an increase of $663,116.95; for 1915, $6,850,257.91 was voted and it looks as if it would all be expended by March 31, 1915, an increase over 1911-12 of $2,000,000, an increase of $1,342,461.96 over 1914. For 1915-16, we are asked to vote $7,024,253.41, which in round figures is nearly $200,000 over 1915, $1,500,000 over 1914, $2,300,000 over 1912. These figures speak in condemnation of the Government more effectively than I can, and I leave them to hon. gentlemen for food and reflection. Has anything occurred in this country to justify this increase within the past thirty-four months? Does increased revenue, expenditure, trade, immigration, productions, or an improved public service account for it? This can only be accounted for by unnecessary additions of officials and increases of contingent expenses. Some increase was inevitable, but it is beyond human credibility that any justification exists for this enormous increase within such a short period. What have hon. gentlemen opposite to say about this? The ministers to-day say, we cannot reduce the service without inflicting hardships. My reply is that if the unnecessary increases had not been made there would be no decreases necessary to provoke hardships.

A return recently presented to Parliament is my authority for the statement that some -10,000 additions were made to the Civil Service list, in both the outside and inside service, I assume, in about the period .of two years. This number of additions may be capable of some explanation, but quite inconsequential. In the time of the present Government the Civil Service has been pros-

[Mr A. K. Maclean.]

tituted for political exigencies at the expense of the country while deteriorating the character and value of the Civil Service.

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
CON

Angus Claude Macdonell

Conservative (1867-1942)

Mr. A. C. MACDONELL:

Would the

hon. gentleman be in favour at the present moment of reducing all civil servants' salaries say by ten per cent?

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN:

What I want to point out to my hon. friend is that under a sound administration of the public service of this country the cost of civil government would be two millions of dollars less to-day than it is, and there would be no necessity for my hon. friend to ask such a question.

Take Indian expenditure, which for the same period is as follows:

1911-12 $1,756,565.46

1913-14 2,182,470.95

1915-16 *2,244,928.00

To be voted.

Here the increase in 1914 over 1912 was just a little short of $425,000. The Estimates to be voted for 1916 are again in excess of 1912 by $588,000. The administration of this department has increased in every province. In Nova Scotia I see it has increased seventy-five per cent in two or three years. The increase in salaries for Indian Affairs for next year in Nova Scotia alone makes an increase of 140 per cent over the present year, 1914-15. A recent return showing dismissals and appointments by departments credits the Indian Affairs branch with 135 dismissals and 295 engagements in about two years. This means that for every vacancy created there were, two appointments made. In this branch unnecessary offices have been created, not for the good of the service or the Indians, but for friends of the Government. The increase since 1911 has been about $750,000, an amount no one will believe to have been necessary.

The increases in Fisheries expenditures are as follows:

1911-12. . *>

$ 843,856.98

1913-14 1,229,519.00

1915-16 /.. .. *1,561,400.00

To be voted.

Here we find for 1914 an increase of $385,663 over 1912, and the Estimates for next year, 1915-16, exceed 1912 by $717,000, and this, notwithstanding the fact that a part of the staff in the Fisheries branch will next year be in the Naval branch of the department, which diminishes the Civil Service vote of the Fisheries branch by $100,000. An examination of the ser-

vices performed by' this department will disclose nothing to justify this increase.

Next, take the Mines and Geological Survey expenditures:

19X1-12 $261,718.83

1913-14 470,506.66

1915-16 *547,275.00

*To be voted.

In the Mines and Geological Survey branch the increase for 1914 over 1912 is $208,787.83, while for 1915-16 over 1911-12 it is over $285,000. The amount to be voted for salaries alone for the Mines and Geological Survey for 1915-16 is $358,775, being $97,000 more than the total expenditure of all kinds in this department in 4 p.m. 1912, and $114,500 more than the total expenditures of all kinds in 1910-11. This branch of the service has the record of 103 engagements of officials in two years, which pretty well tells the story, and I shall not say further about it other than to observe that the increase in a great measure would never have been incurred if the good of the service was the only motive. Examine it critically or otherwise and you are bound to reach the conclusion that the increase is almost indefensible.

Let me next inquire into Immigration expenditure just a little carefully. The figures for this period are:

1911-12 $1,364,999.93

1913-14 1,893,297.77

1915-16 *1,875,000.00

*To be voted.

In 1911-12 the cost of this branch of the service was $1,364,999.93. In 1913-14 it was about $500,000 greater, over $800,000 greater than in 1910-11. For the ten months ending January 31, 1913, the expenditure was about equal to the total of expenditures for 191112, or $1,301,399, and let me with emphasis call your attention to the fact we are asked to vote $1,875,000 for 1915-16. The business of this department is immigration. While its expenditures were increasing, let us see how its business was getting along. In 1911-12 we had an immigration of 354,257, whereas in the calendar year 1914 it was 168,859, just about one-half. In 1915 our immigration will probably.be from 50,000 to

75.000, and the amount we are asked to vote for that year is $1,875,000, which is $500,000 i n excess of expenditures of 1911-12, when we had an immigration of

354.000, and about the same as the expenditure of 1913-14 when we had an immigration of 384,878. The return respecting dismissals and appointments credits this

department with 110 dismissals and 343 engagements in about two years, which gives the scent to a great deal of the extravagance. I think the few facts I have given about this branch of the service cannot fail to impress one. It is expensively operated. The amazing fact is this, that apparently they do not propose cutting down expenditures, notwithstanding our financial condition and the almost complete loss of immigration. Their policy is to keep up expenditures and increase taxation, notwithstanding that the business of the department is at a standstill.

Next, take Dominion Lands expenditures, closely related to the immigration service. Let me give you the revenue and the. expenditure since 1912 in connection with this branch of the service:

Revenue. Expenditure.

1911- 12... .' $3,775,856 97 $2,277,098 S71912- 13

3,402,026 63 2,462,623 921913- 14

3,036,030 32 3,286,480 251914- 15 *2,996,271 39 f4,063,120 361915- 16

J3,457,000 00

* Estimated. t voted. t To be voted.

You will have noticed how revenue since 1912 has been declining and expenditure increasing. In 1914 there was a deficit of $250,000 in this service, the first since 1885. In 1915 there will be a deficit of probably over $500,000. Unless the Minister of the Interior undertakes heroic measures, he will soon have a deficit of $1,000,000 and more in this department. There is no defence whatever for the financial record of this service for the past few years. For 1916 there should be a reduction in the Estimates of expenditure of from $1,000,000 to $2,000,000. With declining revenue and diminishing immigration and homesteading, we have increasing expenditure. The homestead entries for the past three years show the following decline:

No. of Acreage, entries.

Fiscal year ending March 31,

1913 33,699 5,391,840

Fiscal year ending March 31,

1914

31,829 5,092,640Calendar year, 1914

25,623 4,099,680It cannot be asserted truthfully that 'this

vast increase in the administration of Dominion lands has any business justification, or was necessary for the welfare of the service and the protection of public interest. The business of the department did not warrant such increasing costs of administration. Expenditures made for purely political and partisan purposes is the open sesame to the business record of this department.

Let us inquire briefly into Customs expenditures. A comparison of Customs revenue, with the cost of collection for say five years, might be of interest:

Year ending Revenue.

March.

1911 $ 71,838,088 46

1912

85,051,872 181913

111,764,698 731914

104,691,238 431915 *77,000,000 00

Expenditure.

1911 $2,187,174 761912

2,443,846 231913

3,150,776 751914

3,849,083 861915 *4,000,000 00

'Estimated.

In 1911-12 it cost $2,187,174.76 to collect customs revenue amounting to nearly $72,000,000. For the year ending March 31 next, it will cost $4,000,000 or more to collect about $77,000,000 of revenue. No person, I may safely say, will be so presumptuous as to contend that the increased cost of this branch of the public service can be sustained by any fair consideration of the facts and circumstances. It is obvious that the service has been overmanned, that unnecessary outports have been established and unnecessary salaries paid, until a few short years of such practices have brought about the condition which the Minister of Customs admits is unsatisfactory. Besides, a great injustice is being done to those legitimately engaged in the service. In about two years, a return shows that in the Customs service there were 271 dismissals and 1,649 engagements. This tells the tale. The minister now says he cannot reduce the number of employees at the present time. A difficult task I grant you. I am pointing out the causes, not the effects, of the improper administration of the Customs service. The Minister of Customs is responsible for the causes bringing about the effects which he says can only be rectified by causing hardship. If it is difficult to repair the wrong by reduction in the service and expenditures he is to blame for that condition, and in that respect his administrative record is gravely censurable.

Just a few words as to Public Works expenditure on revenue account. In this case the figures are:

1911-12 $10,344,487 211913- 14

19,007,512 631914- 15 *20,000,00.0 00

'Estimated.

Here we find the expenditure for 1914-15 one hundred per cent greater than the year ending March 1912, when revenue and trade conditions were much more favourable. The Minister of Public Works asks for a

vote for 1915-16 of over $22,350,000 which, roughly speaking, is about what he expended in 1914-15. I recognize the necessity of public works expenditure. I admit that works commenced cannot well be abandoned, but why should the expenditures of the present fiscal year and of the next fiscal year respectively exceed the expenditures of 1912 by $10,000,000? Does the Minister of Public Works pretend to say that the conditions of trade and revenue justify his expending $10,000,000 more this year in public works than was expended in 1912? The estimated expenditure for public buildings and harbours and rivers alone total $18,379,580 for next year; this might well have been reduced for the present by 50 per cent. I do not believe that the people of any province of Canada would have objected to the most drastic measures on the part of the Minister of Public Works during the present year and during the next fiscal year in connection with public works expenditure. Many of these projected works were without justification, the necessity for others have at least temporarily passed away by reason of the declining business of the country. Expenditures for these purposes should have been reduced to the minimum this year and next year. And bear in mind that the expenditures to which I have referred do not include votes for dredging and dredging plants nor for other public works of an important or national character, whether proposed to be made under ordinary or capital' expenditure. In respect to public works expenditure is it not time to adopt some rational policy? Is not this the time to commence? Circumstances will compel us in the near future, and I believe public opinion is condemnatory of the present method of spending money on public works. In this respect the present Government have been great sinners.

The Post Office Department deserves much attention, but I can devote to it just a moment. That this branch of the public service would sooner or later come into disrepute under the administration of the late minister was inevitable. Cancelling unnecessarily existing contracts, awarding contracts without tender, awarding contracts to tenderers other than the lowest, was bound in the end to tell. I do not know what is the record of this department in respect to additional employment. It would rank high. Perhaps a few figures showing the revenue and expenditure for i few years would be profitable:

Receipts.

. .$ 9,146,952 47 . . 10,492,349 18 . . 12,051,728 86 . . 12,954,529 92

Expenditure. $ 7,954,222 79 9,172,035 47 10,822,804 57 12,822,058 44

Here we find the usual surplus of one

million dollars and over in recent years reduced to zero practically in 19X3-14. In 1914-15 there will he a probable deficit of from $500,000 to $1,000,000, the first deficit since 1900, and probably a still greater deficit will be found in 1915-16. And why? Extravagant and inefficient administration affords the answer. There is no sound business reason for it. There may have been reasons for a small portion of this increase, but in the main it cannot be defended. For the past Jew years this department has been operated almost as much for political purposes as for the public service. One could easily present a strong and unanswerable indictment against the administration of this department during the past few years, time, however, will not permit it. Investigation of this department would disclose many of the causes necessitating the new taxation proposals of the Government.

Now, Sir, I have gone into these matters with some particularity, to lay the foundation for the contention that our proposed ordinary expenditures for the next year are excessive in the extreme, as the expenditures were last year. I have shown that the several branches of the public services have been carried on during the past three years with what appears indefensible extravagance. The same is true of most other departments. The gradually increasing annual cost of operating these branches of the public service has not been for the good of the service or for the necessities of the service, or rendered necessary by the business or trade of tne country. If this condition is difficult to remedy this year it is chargeable to the Government itself which deliberately and improperly created such conditions. The estimated ex penditure of $140,000,000 on revenue ac count for next year cannot be defended. Had the public services been administered during the past two or three vee-s with solely an eye for the public good and the public service, the ordinary expenditure would for the present year be at least thirty or forty million dollars below the amount which will be expended, and the additions to the public debt for the present fiscal year would have been that much less, and the estimates for ordinary and capital expenditure for next year, 1915-16, might easily be $40,000,000. below what they are.

No effort has been made towards reduction. Every effort is directed towards increase.

Will any man seriously argue that ordinary expenditure for the years 1915 and 1916 could not l^ave been well kept within the amount of expenditures for the years 1912 and 1914 when they were in round figures respectively ninety-eight millions and one hundred and twelve millions of dollars. Why should not our ordinary expenditures this year have been within the 100-million dollar mark, and why should not the proposed expenditures of next fiscal year be within the same amount? The fiscal year 1910-11 was a fairly prosperous one. It is a year memorable in the history of both political parties. It was in that year that hon. gentlemen opposite were contending that we were so prosperous and our future so well assured, that we should engage in no tariff alliances with our neighbours. In that year, our ordinary expenditures were eighty-seven million dollars. Mr. Speaker, do you know, or does any hon. gentleman know a strong, substantial, incontrovertible reason why our expenditures for 1915-16 should be in excess of that amount, namely, eighty-seven million dollars? Under a careful administration of the public services, during the present fiscal year, and next, there need not have been any substantial deficit, if any, in respect to capital and ordinary expenditures over revenue. Consider our declining revenue, trade and immigration, . the cessation of railway construction, that our borrowings from abroad have ceased, that the public debt interest account rose during the present year by nearly nine million dollars, that we face a probable annual pension charge of ten million dollars, that the world's capital is being dissipated by the great war now in progress-in view of all these and other circumstances prevailing during the past year and likely to continue during the next, can it be seriously contended that our current expenditure for 1914-15, and the proposed current expenditure for 1915-16 are justified? A reduction of fifty million dollars and more in ordinary and capital expenditure for 1915-16 would easily be possible if hon. gentlemen opposite were attempting to govern this country solely for the country's good. The Minister of Finance apparently has no control over his colleagues in respect to expenditures. He seems to be without influence among them. I venture to say that no im-paidial man can do otherwise than condemn the expenditure policy, of the Government ever since they came into power, but

particularly of the present fiscal year and as; proposed for the next; and it is for this reason that they are directly and conclusively responsible for the new taxation recently imposed upon the country. They could easily have avoided this fresh taxation, but they made not a single effort to do so. Do not the facts I have presented to the House conclusively sustain that contention?

In respect to its ordinary expenditures this year and next, the Government is apparently proceeding upon the theory that trade and revenue will suddenly resume its former proportions immediately after the end of the war. There is nothing to indicate that this will happen; in fact, the trend of opinion is to the contrary. Compare the course now being pursued by the present Minister of Finance with that of his predecessor in 1908 and 1909, when there was a slight recession in trade. In 1909 Mr. Fielding reduced his ordinary expenditures by over ;five million dollars, just the amount of the decline in customs revenue that year. A small amount, it is true, but based upon sound business principles. In that year there was an excess of revenue over ordinary expenditure of over twenty million dollars, but still in the circumstances Mr. Fielding felt justified, on account of the recession in trade and the decline in revenue, in reducing his ordinary expenditure below that of the previous year.

Let us now consider the methods that are proposed for meeting the Government expenditures-methods which I consider objectionable. In order to meet the estimated deficit of about $60,000,000 of capital and ordinary expenditure for 1915-16, over revenue calculated on the basis of the former rates of taxation, it is proposed to raise more revenue by special taxes, stamp taxes and increased customs taxes. We are informed that the war expenditures are for the time being to be met by borrowings from the British Government. Therefore it is quite clear that the additional taxation is made necessary by our excess of capital and ordinary expenditures over revenue.

I understand hon. gentlemen opposite to contend that the fall in revenue and the fresh taxation imposed is due to

the war. If I am not correct in this, let the correction come now. At any rate this point is worthy of investigation. I personally do not believe our loss in revenue is in any substantial degree attributable to the war.

I would here like to remind Government supporters that they have always contended that an excess of imports over exports was to be deplored, and that an equality was the condition to be desired. During the past year imports have diminshed considerably while out exports have pretty well maintained the normal. We therefore find that close relation between imports and exports which Government supporters claim should prevail. I ask the Minister of Finance if that condition of affairs to-day appears to 'be productive of good results. And they are making things worse by encouraging this " buy in Canada " propaganda, which I am sorry to see members of this Parliament are supporting. I can understand local patriotism encouraging the purchase of local productions, when it is a reasonably fair thing to do so; but I cannot understand any sane mail in this country encouraging the preposterous policy of discouraging purchases from abroad. That is but adding to the sorrows and difficulties of the Government. I would think that every man in this country who has reached the years of discretion would have learned in the first few weeks of the war the economic truism that to have exports you must have imports as well. The first few days of the present war must surely have impressed that lesson upon all men now living.

It is difficult to estimate to a nicety what will be the fall in revenue for the year ending March 31, 1915, due to the war or as a result of the war. Imports were declining, war or no war, with the consequent fall in revenues. I am of the opinion that our customs revenue will be found to have fallen but little this year as the result of the

war. Our customs revenue for the year ending March, 1914, was $104,691,000; for the year ending March, 1915, it is estimated at the Customs Department at $77,000,000, a decline of $27,000,000.

I have here a table showing our dutiable imports, and the duty collected each month during the calendar years 1913 and 1914:

Month. Imports on Dutiable Goods. * * Duties Collected. 1913. 1914. 1913. 1914.January

February $ 34,358,564 s 26,234,666 $ 8,862,982 $ ' 7,029,88835,111,113 25,511,846 9,152,220 6,822,92545,630,678 34,944,885 11,912,314 9,337,771April

May 32,431,932 23,945,085 8,463,576 6,458,27140,120,651 28,346,934 10,306,244 7,619,74637,836,560 27,794,320 9,684,724 7,414,597July

August

September 39,394,223 26,424, 70 10,077,223 6,988,91739,277,690 29,497,076 10,125,3~6 8,358,94837,997,562 22,575,997 9,906,183 6,016,60635,238,192 21,061,440 9,198,657 5,657,87132,338,858 18,697,737 8,346,778 5,113,062December 28,798,409 17,482,008 7,845,300 4,953,048Total, 12 months 438,534,432 302,516,964 113,881,577 81,771,650

From this you will see that the imports of dutiable goods from January to August, 1913, inclusive, eight months, was $304,161,411; while for the corresponding eight months in 1914 it was $222,699,782, a decline of $81,461,629. The duties collected in the same period were respectively $65,224,434 and $46,931,171, a total decline of $18,293,263 in the first eight months of the calendar year 1914 as compared with the same period in 1913, or at the rate of about $2,285,000 a month, or $27,420 for the year. The total decline in customs revenue for the calendar year 1914 as compared with the calendar year 1913 was $32,109,927; so on this basis it might possibly be argued that the loss of revenue in 1914 attributable to war conditions was less than $5,000,000. That, I submit, is a fair method of computation. It would be necessary to have the customs returns for January, February and March of this year to ascertain accurately the loss of customs revenue in the fiscal year of 1915 as compared with 1914, but I venture to say no decline greater than $5,000,000 can by any fair system of computation be assigned to the war. The Government must have anticipated the present trade and revenue conditions. Many banking and commercial men in this country have stated during the past few weeks or months that the financial conditions were not due to the war, but were for other causes inevitable. The Government itself was alarmed over the conditions prevailing during the present fiscal year. I remember seeing m the press last June or July that an Order in Council

had been passed to actually deport people from this country back to Europe.

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
CON

Robert Rogers (Minister of Public Works)

Conservative (1867-1942)

Mr. ROGERS:

That is not correct.

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN:

I say I read it in the papers. *

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
CON

Robert Rogers (Minister of Public Works)

Conservative (1867-1942)

Mr. ROGERS:

You must have been reading the Globe.

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN:

I do not know whether it is correct or not, but the matter was very much discussed in the public press, and I should like to have some further explanation than a flat denial from the Minister of Public Works about it.

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
CON

Robert Rogers (Minister of Public Works)

Conservative (1867-1942)

Mr. ROGERS:

I will be glad to supply it.

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
LIB
CON

Robert Rogers (Minister of Public Works)

Conservative (1867-1942)

Mr. ROGERS:

An hon. gentleman, last night, just before the House closed, asked that such an order, if it existed, be brought down. I asked the Secretary of the Privy Council, and he gave me this reply: " There is no Order in Council ordering the deportation of unemployed in Canada." It has not been passed.

Mr. MACk^nN: I am glad to hear it, but that is only evidence of the fact that no Order in Council was passed. I assume, in view of all that appeared in the public press, that the Government must have been considering the matter. 1 am bound to accept the word of the Minister of Public Works that no Order in Council was passed.

I have only occupied the time of the House upon this point to emphasize the fact that while hon. gentlemen opposite have

said, and will doubtless say in the future, that the falling revenue for the present fiscal year was due to the war, the contention is not entirely founded upon the facts. Some decrease in trade, some small decline in revenue, may be attributable to the consequences of the war, but hon, gentlemen opposite must remember that a great deal of our export and import trade during the past few months has been directly attributable to the war. Let the war bear its own consequences, its own sins. Let the Government take care of its own obligations and its own shortcomings. The Government were more alarmed over conditions last July than now with the war on our hands. I do not mean you could infer this from their expenditures. That would only prove that they have not and never had any concern about the condition of our finances. I Should say in conclusion on this point that the excise revenues for 191516 will be about the same as for 1914-15.

Now, if the decline in revenue is not in the main attributable to the war, then the Minister of Finance should have boldly faced the situation to-day and he should have commenced a year ago or more by reducing expenditure to come within the revenues, and not by increasing taxation to produce revenue to meet expenditure. It was almost as easy to reduce expenditure to the amount of revenue as not to do so. This was not the time for increasing taxation in any form except strictly for war expenditures.

But there is to be a war expenditure ol $100,000,000, and we will be told that for this reason alone fresh taxation was necessary. I would not deny the validity of that position if such were the fact. It has been the practice of belligerent nations to meet war expenditures by taxation and borrowings. If such were all the facts and only considerations in our case a good defence might be made for taxation for war purposes. However, the minister has arranged for war loans from the British Government during the continuance of the war. There is much to be said in favour of this. Canada was a borrowing country. Her loans amounted to from $250,000,000 to $300,000,000 a year. That has been cut off, and in this and other circumstances to borrow upon favourable terms during the war, funding the same after the war, is perhaps amply justified. If the Minister of Finance saw fit to declare to Parliament as his policy, the meeting of war expenditures

fMr. A. K. Maclean.]

partially by taxation and partially by borrowings, I think he could have found justification for so doing, and the Canadian taxpayer would have met his proposals in the proper spirit. But such is not the case, and I say his proposed special taxes and customs taxation are caused solely by the fact that his expenditures are and have been absurdly excessive, and he should have kept within his revenue and on the former basis of taxation. He can give no reason for not having done so. The Government and not the war is clearly responsible for the psoposed taxation. Even if the proposed taxes were specially ear-marked and to be directly applied in reduction of war loans I do not see that the position of the Government would be improved or that they would thus be relieved of blame for our present position. In that case the deficit of consolidated fund account would have been all the greater and the additions to the net debts would have been just the same. In either event they are censurable.

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
CON

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

The hon. gentleman stated that annual borrowings of $250,000,000 to $300,000,000 had been suddenly cut off. Will the hon. gentleman give the cause? Do I understand him to say that it is caused by the war?

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN:

I suppose that was due largely to the war, or to some extent at legst, but even our borrowings were declining. I referred to the decline in the borrowings of the country as a justification for the minister in borrowing entirely the war expenditure.

At this time I am not going to discuss the taxation resolutions in so far as they relate to stamp and special taxation. If they were necessary, or were to be applied to war expenditures, I do not think they are open to serious objection as to principle, though they work some injustice and might be improved in detail. I think the tax upon proprietary medicines is so excessive as to be unjust and should yet be modified. That is all I propose to say about the stamp and . special taxes until the resolutions are before the Committee of Ways and Means, except to repeat that their imposition was not necessary at this time under proper economies and administration.

Now, I wish to discuss several aspects of the freshly imposed tariff taxation, but in rather a general way. The desire of the average man in Canada regardless of politics is to search for a justification of tax-

ation imposed by a government during a war period. Ordinary patriotism prompts a generous consideration oi such measures. Now the Government have decided that 25 or 30 million dollars of taxation shall be levied by increasing the general tariff 7J per cent, the preferential tariff 5 per cent, and the making of all articles now on the free list, with some exceptions, subject to a 7J per cent ad valorem duty, and a 5 per cent preferential rate. I have given this matter some little consideration since the announcement. I have honestly endeavoured to discover supporting facts for the tariff increases on any grounds and have failed. I have sought for a justification for the method employed and the principle invoked, for obtaining supplemental revenue, and I must say that the more thought I have given to it the more convinced am I that there exists no justification for the tariff resolutions. If we had to raise additional revenue surely this was not the proper method. The Minister of Finance sought the line of least resistance but apparently invoked no principle and gave no consideration to the interest of trade or tax payer.

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
LIB
LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN:

He took the easiest way to make a tariff. Having created these deficits and incurred these expenditures in an easy way, it was only natural 5 p.m. that he would resort to an easy method of obtaining additional

revenue.

As hon. gentlemen know we have in Canada a tariff based on the protective system. To raise the general tariff 7i per cent, to increase the preferential tariff rates 5 per cent and to say that it was done for purposes of revenue is a proposition to which I cannot subscribe. It is trifling with truth and the facts. That additions to the general and preferential tariff restrict trade and reduce revenue is axiomatic, and the proposal to increase protective tariffs in a war period is without parallel, I think. It does look as if under the banner of war the Government have brought into the citadel a tariff for protection and not one for revenue, and we are not even told how long the misnamed stranger is to be within' our gates. The country was entitled to a declaration from the minister, that this increased tariff taxation was to remain operative only during the continuance of the war as a war tax, or that it was likely to continue indefinitely. It is, I predict, likely to continue in force in the

main, so long as hon. gentlemen opposite are to remain in power.

'Some hon. MEMBERS: That will not be long.

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN:

Let us hope we will be relieved of the war and of the Government about the same time. On the day he delivered his Budget, and after announcing his tariff resolutions, the Finance Minister, concluded by a statement of the belief that his new tariff would produce revenue and stimulate Canadian industry and agriculture. Well if the new tariff is going to stimulate Canadian industry and agriculture then that tariff is here, just as long as the present Government is here, because if it is a stimulant to industry and agriculture, then we may always expect to hear it said that dread consequences will follow a withdrawal of the stimulant. I predict it will prove more of a depressent than a stimulant. Further, it seems to me that more political consideration entered into the making of the tariff than the consideration of producing revenue. Was it politics or principal that induced the minister to leave tea on the free list?

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
CON

Oliver James Wilcox

Conservative (1867-1942)

Mr. WILCOX:

Does my hon. friend

think there ought to be a duty on tea?

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink
LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN:

I do not think there

ought to be any special duties or stamp taxes upon anything. Was it political consideration advanced by political supporters in some provinces or his own business judgment that prompted this course in respect to tea? He could not have been expected to restore the tariff on the agricultural implements that he slightly reduced last year, amidst the plaudits of hon. gentlemen opposite. However, Government supporters cheered the other day when the tariff was increased on other agricultural implements for the stimulation of Canadian agriculture. How very strange this all seems. Here and there we find a sop to this interest or that interest, to this prejudice or that prejudice. Everything indicates that the new tariff was inspired by protection and-politics and not revenue or patriotism. It is utterly bereft of principle or reason.

Now, what should be the main features of a war revenue tax? It should be made as much as possible on articles relatively cheap and of universal consumption.; it should not be so high as to discourage consumption; it should be of such a nature that it could be remitted on the termination of the purposes for which it was imposed; it should be of such a nature that the

revenue would go directly and wholly, less collection charges, to the Treasury; it should not create new vested interests; it should not unduly contract trade; judged by these tests, and they are the tests usually applied in such circumstances, the tariff resolutions fail, and should not meet with favour from any person or class. To add 7J per cent ad valorem to our present general tariff could not promote revenue or trade. It is a heavy increase. It must restrict consumption, because it means increased cost to producers and to consumers, particularly in a period when the purchasing power of the country is diminishing. A revenue might possibly be obtained by an increase of 7J per cent in the tariff rates upon selected imports. Here and there items of imports might be found where this could be done with success from the revenue standpoint. Investigation would lead the way in selecting the articles. However, to increase horizontally the general tariff 71 per cent, the preferential tariff 5 per cent, and the placing of the free list articles under the genera] tariff, without exception practically, without discrimination, without consideration of the different facts that might apply to one article and not another, without regard to the existing tariff rates, without cognizance of disrupted world trade conditions, without reference to the fact that many commodities principally produced by the belligerent nations are to-day unavailable, without thought of the business conditions to-day prevailing in Canada, is beyond comprehension, and can only be understood upon, the theory that the tariff was intended for protective and not for revenue purposes; or that, maddened by the situation and the conflicting views of his friends and colleagues, the Minister of Finance concluded to revise the tariff with his eyes shut and his ears closed.

Topic:   THE BUDGET.
Subtopic:   PROPOSED WAR TAXATION.
Permalink

February 23, 1915