November 5, 1919

UNION

James Alexander Calder (Minister of Immigration and Colonization)

Unionist

Mr. CALDER:

The money is used for that purpose. I do not know what the situation will be next year, but in so far as regards this class of expenditure at the present time, it is briefly this: On account of the financial conditions existing in certain countries of Europe, we find it absolutely necessary to provide credits if certain classes of our products in this country are to secure a market. We find that is necessary this year. What the conditions will be next year, I do not know but in the case of Great Britain it is conceivable she will not be able to supply the funds necessary for this purpose. It may be true, in the case of France, Italy, and other countries with whom we wish to do business, that if we wish to carry out that intention it may be absolutely necessary for the people of this country to raise money in Canada to provide that' credit in order that we may pay our own people for the products they raise before these products can be sent overseas.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
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L LIB

Isaac Ellis Pedlow

Laurier Liberal

Mr. PEDLOW:

Is it not an actual fact

that the hulk of this $125,'000,000 voted last session has been paid out for merchandise -the products of manufactories, textiles, and so forth-and that very small proportion of the money has been paid out for farm products?

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
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UNION

James Alexander Calder (Minister of Immigration and Colonization)

Unionist

Mr. OALDER:

I do not wish to be drawn into a discussion on that phase of the subject. As a matter of fact, what the hon. gentleman states is not true: The great

bulk of this money is being used to pay for agricultural products and foodstuffs and not for manufactured goods. In the case of Great Britain I think I can say the credit has been entirely used for the payment of products such as cereals, meats, cheese, fish, and articles of that kind, and not manufactured products at all. But the matter has been discussed in the House time and again when these credits were up for discussion, and I would prefer not to enter upon any debate of that subject at the present time.

Now, the figures that I have submitted indicate that for the present fiscal year, and for the following year, the country is committed-or will be committed so far as I can see-to expenditures totalling in the neighbourhood of $909,000,000. I say that so far as we can see at the present time, and viewing the matter conservatively, it looks as though Canada would be committed to expenditures totalling no less than $909,000,000 during these two years, to say nothing of the $50,000,000 recommended in our report as expenditures in connection with this work of re-establishment, which would swell the total to $959,000,000. The finding of the committee on this phase of the question will be found on page 41 of the report:

Summing up this group of figures your committee are of the view that including the present Victory Loan, Canada within the next twelve or eighteen months will he compelled to raise, by borrowing, surfis of money aggregating from $7(00,000,000 to $850,000,000 to provide for expenditures to which the country is or will be committed.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
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?

An hon. MEMBER:

Read the next clause.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
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UNION

James Alexander Calder (Minister of Immigration and Colonization)

Unionist

Hon. Mr. CALDER:

The next clause reads:

In reference to these expenditures it is only proper to point out that while they must be provided for by borrowing from the people of Canada the nation in the case of certain of these items will have corresponding assets. This is true of loans to Great Britain and Allied countries, loans for land settlement, construction of railways, shipbuilding, housing, etc.

I intend to refer to that a little later.

I have been speaking of the possibility of going out among our people and securing the large sums of money to which I have mi

referred-the $700,000,000 to $850,000,000 which, apparently, must be borrowed, and on top of that, the $400,000,000 suggested for re-establishment purposes.

Now, let us turn to the other side of the question, that is, how shall we take care of this money if we borrow it? It will have to be paid back, and interest will have to be paid on it each year. Each year there will have to be levied upon the people of Canada the necessary taxes in order to raise the interest payable upon this borrowed sum. Let us examine for a moment this aspect of the matter.

Under Mr. Margeson's plan it is suggested that $200,000,000 be raised and distributed; under the G.W.V.A. plan, $400,000,000; under Mr. Flynn's plan, $1,000,000,000. The annual interest charge on these three items respectively would be $11,000,000, $22,000,000, $55,000,000. If any one of these proposals were adopted, one of these interest sums would have to be raised every year-$11,000,000, $22,000,000 or $55,-000,000-to say nothing of the principal. As a matter of fact, a sinking fund should be provided in order that at some future date this huge war debt would be wiped out.

The conclusion of the committee in reference to this question of interest will be found on page 42, paragraph (b), the last sentence of which is as follows:

Tour committee are of the opinion that sufficient difficulty will be experienced by Parliament in devising ways and means to meet the annual interest charges payable on the public debt already created or which must be created to meet existing commitments.

In this connection I wish to direct the attention of the House to what is set forth under the head " Present Forms of Taxation " on page 43. You will find there this statement: that prior to the war the ordinary current expenditures of the country, the amount expended for carrying on the ordinary public services, was $127,000,000 in round figures. That had grown last year to $232,000,000, and our estimate for this fiscal year is $270,000,000-not capital expenditure.; simply current expenditure. In other words, there has been an increase during the war period of $142,000,000 a year on this account. Well then, as I see it, the situation is simply this: for every dollar that is borrowed from now on for any purpose whatever we must increase the annual amount raised by way of taxation. It makes no difference for what purpose the money is borrowed; to the extent to which you increase your interest charge you increase also the amount that must be raised by

taxation in some form or other from our people. *

The interest on the public debt prior to the war was 312,893,000; this year it is estimated at $102,767,000, and next year it will be at leasit $120,000,000. Now, how is the increase in our ordinary current expenditure made up? In other words, why did it jump from $127,000,000 prior to the war to $270,000,000 last year? What accounts for the additional expenditure? It is made up in this way: the interest on the debt alone was $90,000,000; then there are the items of $25,000,000 for pensions and $30,000,000 for the Department of Soldiers' Civil Re-establishment which is caring for our disabled soldiers, a total of $145,000,000; the increase on current account is $142,000,000. Let us look ahead two or three years and see what may happen financially.

We have an estimated expenditure this year on current account of $270,000,000.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
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L LIB

Daniel Duncan McKenzie

Laurier Liberal

Mr. McKENZIE:

How much would the amount be including capital expenditure?

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
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UNION

James Alexander Calder (Minister of Immigration and Colonization)

Unionist

Mr. CALDER:

I am developing an argument on this point; I will come to that phase of it.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
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L LIB

Daniel Duncan McKenzie

Laurier Liberal

Mr. McKENZIE:

I am not asking the minister to deal with capital expenditure to which we are not committed, but anything we are committed to we might as well know.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
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UNION

James Alexander Calder (Minister of Immigration and Colonization)

Unionist

Mr. CALDER:

I see my hon. friend's point; I will come to it in a moment.

Our ordinary current expenditure for this year, $270,000,000, includes the items which I have mentioned: interest on public debt, estimated for this year at $102,000,000; pensions, $25,000,000; Department of Soldiers' Civil Re-establishment, $30,000,000. These three items total $157,000,000, and if you subtract that amount from the

5 p.m. amount of the ordinary current expenditure, $270,000,000, you get $112,300,000, in round figures, to carry on the other ordinary public services of the country. I repeat that in 1913-14, $127,000,000 was expended on ordinary current account, and included in that amount was some $13,000,000 for interest on debt, leaving $114,000,000 for all the other ordinary services of the country.

I doubt very much if, as regards that annual expenditure of $270,000,000, there can be any material saving. You cannot cut down your estimate for interest on public debt; you cannot cut down your pensions. After the next two or three years the expenditures in connection with the Department of Sol-

[M)r. Oalder.l

diers' Civil Re-establishment will begin to be cut down very "materially, but until then there does not appear to be any reasonable hope of cutting that estimate down materially. I have said it outside of the House publicly, and I say it in the House, as the ex-Min is ter of Finance (Sir Thomas White) said the other day when speaking on some other question: The problem in this country during the next few years is going to be retrenchment wherever it is possible to retrench; there must be retrenchment.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
Permalink
L LIB

James Alexander Robb (Chief Government Whip)

Laurier Liberal

Mr. ROBB:

When is the Government going to start?

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
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UNION

James Alexander Calder (Minister of Immigration and Colonization)

Unionist

Mr. CALDER:

It started some time ago, and retrenchment is in operation right now and it must continue. The knife must be put in, and the same is true of practically every belligerent country which is in the same position as we are because of expenditures growing out of the war.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
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L LIB

Charles Murphy

Laurier Liberal

Mr. MURPHY:

The minister is, I have no doubt, quite honest in the statement he makes; but when the Estimates are before the House, I will show that his statement is not correct.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
Permalink
UNION

James Alexander Calder (Minister of Immigration and Colonization)

Unionist

Mr. CALDER:

That is a matter of opinion.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
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L LIB

Charles Murphy

Laurier Liberal

Mr. MURPHY:

Not when you provide for two separate moving picture outfits in two departments of the Government.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
Permalink
UNION

James Alexander Calder (Minister of Immigration and Colonization)

Unionist

Mr. CALDER:

It may be a matter of opinion as to what is a necessary and wise expenditure. When the time comes, we shall probably be quite able to debate the matter with the hon. gentleman.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
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L LIB

Charles Murphy

Laurier Liberal

Mr. MURPHY:

There cannot be any two opinions about that.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
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UNION

James Alexander Calder (Minister of Immigration and Colonization)

Unionist

Mr. CALDER:

Coming back to the statement made by the leader of the Opposition, I have indicated the probable financial commitments during these two'years. If they amount to $700,000,000, what is the interest on that amount? If we borrow at the same rate as before, approximately 5J per cent, we shall have added to our interest charges every year no less than $38,500,000, which must go on top of the $270,000,000 to which I have referred. That is, if we find it necessary during these two years to raise, by borrowing, $700,000,000 for commitments already made, then we must provide annually the interest to take charge of that, and the amount of the interest will be in the neighbourhood of $38,500,000 per annum. In addition to that, it is estimated that our pension list is going to run up to $30,000,000. At the present time it is in the neighbourhood of $25,000,000 or $26,000,000,

so that we shall have to look forward to providing annually for years to come $5,000.000 for pensions more than we are at present paying. Taking our estimated expenditure as $270,000,000, if we add to that the interest that must be raised annually if we borrow $700,000,000 for commitments to which I have referred, and another $5,000,000 annually for pensions, we shall have to raise for many years to come a sum of $313,500,000 annually by taxation from the people of this country. If we put on top of that the suggestion that has come to us that we should raise $400,000,000 now for re-establishment purposes, that would entail a further interest charge of $22,000,000 per annum, which, added to the $313,500,000, would make a total amount to be raised by taxation in this country of $335,500,000 per annum. I do not know whether the House has followed me in my statement, but I have endeavoured to make it quite clear. Probably when hon. members read it afterwards they will be able to follow it, because it is pretty hard to follow figures, especially when one is dealing with large amounts.

I come now to the point raised by the hon. member for Simcoe North (Mr. Currie). What he has said is true, namely, that some of these borrowings represent assets that will pay interest. If the total amount that we shall have to raise is $335,500,000 annually, if all that is suggested to us is carried out, there will be something on the other side of the sheet. Assuming that eventually our loans to Great Britain and the Allies total $200,000,000; assuming that our Soldier Settlement work, both for our own boys and for the Imperials, costs $175,000,000 that we have to raise and lend; assuming that the housing scheme already provided for of $25,000,000 is carried to completion, and going further and assuming that we spend $100,000,000 on railways for which amounts we get a return as the interest on our borrowings actually comes back into the treasury-assuming that for argument-

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
Permalink
UNION

John Allister Currie

Unionist

Mr. CURRIE:

Just a moment; I observe an item here of rolling stock, equipment, supplies and materials for national and other railways. Under the ordinary rule that obtains in getting stock of that kind, bonds such as equipment bonds are issued against it, and the interest charges for rolling stock wipe themselves out annually. Would not that be a capital charge, which is returnable, because otherwise the people of this country axe going to be staggered at the enormous expenditure in connection

with those railways, and we shall be very sorry that we have public ownership?

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
Permalink
UNION

James Alexander Calder (Minister of Immigration and Colonization)

Unionist

Mr. CALDER:

The hon. member is quite right, and that is why I am trying to get a view of what our financial position will be for the next three or four years. I have put in an asset of $100,000,000 for railways, for equipment and so on, and I am assuming that they will pay their interest charges, etc. If we take the four items I have mentioned, namely, our loans to Great Britain and the Allies, our soldier settlement work, the [DOT] housing scheme and the amount for railway equipment and so on, and assuming that we get back the interest on those amounts, the total is $500,000,000, and if we take the interest at 5J per cent, we shall get $27,500,000 on that account. That would still leave us with an amount of $308,000,000 to be raised annually by way of taxation. I have probably said enough under the heading of the financial situation in order at least to show this House that we have a problem on our hands without assuming further very large burdens.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
Permalink
L LIB

Daniel Duncan McKenzie

Laurier Liberal

Mr. McKENZIE:

That financial statement should have been read yesterday.

Topic:   COMMITTEE ON SOLDIERS' CIVIL RE-ESTABLISHMENT.
Subtopic:   MOTION FOR CONCURRENCE IN REPORT OF THE SPECIAL COMMITTEE.
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November 5, 1919