June 5, 1922


On the Orders of the Day:


LAB

James Shaver Woodsworth

Labour

Mr. J. S. WOODSWORTH (Centre Winnipeg) :

Mr. Speaker, what action does

the Government propose to take with regard to the unemployed returned men who have arrived in the city of Ottawa?

Topic:   UNEMPLOYED RETURNED MEN
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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Right Hon. W. L. MACKENZIE KING (Prime Minister) :

The deputation to

which my hon. friend has just referred, waited upon members of the Government this morning and made their representations in writing. Those representations are being considered by the Government; they are also being referred to the special com-

The Budget-Mr. Crerar

mittee of the House which is, at the present time, dealing with matters affecting the position and well-being of returned men. When the report of that committee is presented to the House, there will be opportunity, if desired, to discuss those representations further.

Topic:   UNEMPLOYED RETURNED MEN
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THE BUDGET

CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE


The House resumed from Friday, June 2, the debate on the motion of Hon. W. S. Fielding (Minister of Finance) that Mr. Speaker do now leave the Chair for the House to go into Committee of Ways and Means, and the proposed amendment thereto of Hon. Sir Henry Drayton.


PRO

Thomas Alexander Crerar

Progressive

Hon. T. A. CRERAR (Marquette) :

Mr. Speaker, before I come to a discussion of the matter that is at present engaging and has engaged the attention of the House now for a period of some eight or ten days, I wish to make a reference to one or two matters that I should not like to have pass unnoticed. The first is to the fact that the Prime Minister, the leader of the Government (Mr. Mackenzie King), has been created a right hon. gentleman and can now share with my right hon. friend who leads the official Opposition (Mr. Meighen) any distinction and honour that attach to this title. I am not sure whether the addition of this handle to the hon. gentleman's name adds anything to his wisdom or not. In the very difficult and trying times through which Canada is passing, I could hope that that were the case. I, however, sincerely congratulate him on this distinction and honour he has received.

I wish also, like those who preceded me, to make a reference to the fact that this is the sixteenth budget delivered by the Minister of Finance (Mr. Fielding). The Minister of Finance occupies an unique position in this House in the fact that of the members associated with him who have had at any time in their career the responsibility of a cabinet position, the Minister of Finance is by many years the senior in this assembly. While I cannot always agree with the Minister of Finance, while I expect to have some disagreement with the proposals which he has submitted to the House, I feel that, throughout the whole length and breadth of this country, there is no man whose name stands higher in public esteem or who is regarded by Canadians as possessing in higher degree those qualities that

tend to the best in our public men than the Minister of Finance.

I have every sympathy with him in the responsible and difficult duty which he has had to discharge to the House and to the country in submitting his budget proposals for the present year. The circumstances under which this is done are grave, and I for one wish to approach a consideration of this question from the one angle of making, if possible, some useful contribution to the solution of Canada's difficult and perplexing problems at the present time. The general financial position of the country is not good; in fact, that is putting the situation very mildly. When we examine into the position of an individual as regards his ability to meet his obligation or to make progress, we usually associate that with the financial position in which he may be, and in national affairs which, after all, are simply individual affairs on a much larger scale, the same idea must govern. In considering the financial position of Canada today, we are faced with this fact-I was going to say this startling fact-that the debt of this country is almost two and a half billions of dollars; that notwithstanding that we are approaching four years from the conclusion of the war, Canada added to her debt last year over $86,000,000 and the year prior over $91,000,000. Those facts cannot be disputed. They stand out clearly before every hon. member; they stand out clearly before the country. I do not think there is anyone in this House, or, for that matter, out of it, who has regard to Canada's good name, who would wish that Canada should escape her honourable obligations. In private life we like to see the standard of personal responsibility and obligation that imposes upon the individual the duty of paying his honest debts. That must and should hold in respect of our whole federal financial administration. And if it does hold, then the burden of this debt, with the tremendous taxation that it involves, is a matter of very vital concern to every person in this country. In discussing his proposals the Minister of Finance pointed out that it is rather a difficult matter clearly to establish the balance of debt in each particular year, from the fact that the practice has varied as to the particular accounts to which certain expenditures should be charged. He made reference particularly to our railway expenditures, and I wish to say a word or two in that connection.

The Budget-Mr. Crerar

It is quite clear that a great deal, if not practically all, of the total deficit of our railways, is properly chargeable to expenditure and not to capital. I quite realize that expenditures made for the improvement of roadbed, for the purchase of new rolling stock, and for the building of new lines, are properly chargeable to capital account. But I think that the Minister of Finance and the Government will be very well advised indeed to draw a very clear line down through these items, and to charge to expenditure every cent that should be eo charged, so that we may know precisely where we are standing in respect of the whole railway enterprise. That is of first rate importance, and when that is done we must then endeavour to make provision for such expenditures. I think the Minister of Finance, in the proposals he has submitted to the House, is endeavouring to dc that in the new taxation that he is imposing. There are some who harbour the hope that these railways eventually will return to the country every dollar that is now being taken out of the taxpayers' pockets to make good the deficits and the accounts on fixed charges. I cannot take that optimistic view because, Mr. Speaker, as I have said in this House before, the occasion of this expenditure in connection with our railways is due to the wild-catting in railways that has gone on in this country for fifteen or twenty years past, at any rate for the fifteen years prior to 1914. Railways have been built where there was no need of them, and vast capital expenditures have been embarked upon and engagements made that were unnecessary. But when the individual in his business makes a mistake of that kind he has usually to foot the bill, and that is the position we are in in respect of these railways. For several years, therefore, I am afraid it will be difficult for us to escape some drain on the public treasury to make good the capital charges that arise out of this undertaking. The Minister of Finance has estimated this year that, on the basis of last year's taxation, he will have a revenue of $332,000,000. Last year on the same basis we collected $381,000,000. He has pointed out, and quite rightly, that the estimates brought down and submitted to the House provide for an expenditure of $466,000,000. This does not include the supplementary estimates which have yet to be brought down, and which, I assume, will amount to several million dollars more. At all events, putting the best possible construction on the .situation, there is,

between the minister's estimate of the revenue he will get on last year's basis of taxation and the proposed expenditure for the year, as revealed in the estimates brought down, a gap of about $140,000,000. Now, that is a very considerable amount. The sum of $140,000,000 more than covered the total annual expenditure of Canada before 1914. Consequently, when we are contemplating a budget, which on the basis of last year's taxation will fail by $140,000,000 to produce the revenue needed for the estimated expenditure this House has considered and passed, or will pass, we are faced with a most serious condition of affairs. And I cannot stress that point too strongly either in this House or out of it. The fact that we are $140,000,000 short on the same basis of taxation that we had last year is one of the most striking, thought-provoking suggestions in the whole of the budget proposals that have been submitted to the House. Our financial accounting, at any rate for the current year, does not give to the House the information as to the exact allocation of expenditures for capital and for ordinary purposes; and I presume that a great deal of it will be for ordinary expenditures. How does the Minister of Finance propose to adjust the discrepancy? He is proposing to adjust it by new taxation. He stated quite modestly-and I think perhaps it was the fact-that he was fearful that the new taxes would not quite bridge the gap that exists between his estimated revenue based on last year's taxation, and the expenditures for the current year. If the minister is correct in that view, then it imposes upon the Government, upon every member of the Government, the strongest possible obligation to curtail the expenditures of their departments wherever they can be curtailed, until we reach the point, at all events, where our outgoing expenditures are covered by our incoming revenue. That is absolutely and imperatively necessary. I have stated before that one of the most important things from this country's point of view is to get the budget within balance; that is to say, the ordinary expenditures of the Government, and the expenditures involved in the administration of the railways, apart from those strictly chargeable to capital account, should be covered annually by the revenues the country produces. That should be the cardinal guiding principle that should govern the financial administration of this country, at least for the next year or two. If we cannot make provisions for debt retire-

The Budget-Mr. Crerar

ment or debt redemption in the next few years, perhaps the time will come, a few years later, when the sun of prosperity will again be shining on the country and we shall be in a position to do that. But for the immediate present the urgent duty of the Government is to bring about this condition of affairs. I think we have pretty well reached the limits of taxation in this country. I must admit the skill and ingenuity of the Minister of Finance in devising some new methods of extracting money from the pockets of the taxpayers, but we have about reached the limit. How, then, is the desired result to be brought about? I have preached economy in the House and outside of the House, and I am going once more to raise my voice in advocacy of that great need in our national housekeeping to-day, not only in respect of our federal affairs, but, as well, in respect of the whole matter of public expenditures throughout this country. My hon. friend suggested-indeed, he did more than suggest, he stated very plainly- that a good many people in Canada failed to realize the changed conditions of this country, and I presume delegations are still coming from all parts of the Dominion pressing upon the Government the need for public expenditures in their particular localities. I think that is an evidence that there is a great deal of truth in the observation made by my hon. friend, that the Canadian people as yet have not a full and clear realization of our financial position. The tendency in Canada during the last twenty years has been towards extravagance in public expenditure all down the line. That applies not only to our federal government but to most of our provincial governments and to a great many of our municipal corporations. What is needed to-day more than anything else is a realization by our people of the need of practising economy in respect to our public expenditures, and the Government can give an effective lead in that direction by ruthlessly insisting on economy in every branch of expenditure under its charge and control.

We are considering the possibility of raising this year vast additional amounts by new taxation. I do not know how much the proposed taxes will bring into the treasury, but at any rate the Minister of Finance has gone quite far afield in imposing new taxes, and even in the face of that he tells us he is afraid his budget will not balance at the end of the year. In Great Britain taxation is being reduced, in the United

States taxation is being reduced-practically all the countries of the world whose condition is anywhere comparable to ours are reducing their taxation; and we must get to the point as rapidly as possible where taxation can be reduced. This heavy burden is pressing upon the people and discouraging business enterprise, and it is making living conditions more difficult. Therefore it is well once in a while to impress upon the Government the need of practising rigid economy.

Now, I do not want to urge economy without suggesting how such economy might be brought about. I am among those who believe that our governmental expenditures-and I include in that term municipal, provincial and federal-is altogether too much. In the years before the war, when our revenues were buoyant and our treasury overflowing, when every person, or nearly every person, was prosperous, the tendency naturally was to embark upon new forms of governmental expenditure. I may be wrong, perhaps my experience and knowledge are not wide enough to enable me to give a competent opinion, but I am of the view that right here in the federal administration of affairs great economies can be effected by the reorganization of departments and the cutting out of needless duplication of services. There are some departments-we have seen it in the estimates-duplicating the services of other departments. Some departments have their offices scattered all over this city. In this respect I would suggest that as soon as the country can afford it we should put up a few good administration buildings here to house the public departments, and so obviate having the staffs scattered over two or three square miles of territory and utilizing office space in scores of private buildings. Nothing is more conducive to extravagance in administration than such a condition of affairs.

I think, too, that there is a considerable overlapping between Dominion expenditures, and provincial expenditures, and I would suggest to the Government that this is a field which might well be inquired into. What is needed in respect to the whole matter is a large comprehensive policy. The problem needs to be attacked with vigour. We are not doing enough when we pare down the estimates of some minister a few thousand dollars here and a few thousand dollars there; that is not going to get us very far along the road of effective economy.

The Budget-Mr. Crerar

The Government has only been in office a few months, and I think there has been* a very general disposition to recognize that fact and to pass the estimates submitted, in the hope that the most rigid economy possible will he practiced. But I am pointing out now to my right hon. friend the Prime Minister and to other members of the Government that next session, if they are still in the seats of the mighty as far as power is concerned, they will not have that excuse, and I for one hope that when the next legislative programme is submitted to this House, I care not by what government, substantial reductions in the cost of running the government machine may be shown and brought into effect.

I want to say a word or two now about the character of the new taxation that has been introduced by the Minister of Finance. Any criticism I am offering is offered fully conscious of the great difficulties he must have in finding the money necessary to meet the demands made upon him. A few of these taxes 1 wish to make special reference to, and the first is the sales tax. My hon. friend has increased the sales tax by 50 per cent. I opposed the sales tax in the budget of a year ago when it was introduced by his predecessor. I think it is just as unsound to-day as it was then. Indeed, if I read correctly the speeches of my hon. friends opposite, some of whom occupy the Cabinet benches, I think I could find argument in those speeches made last session when this tax was under discussion which would support my assertion. A sales tax is unsound for the reason that it does not bear fairly upon those who have to pay it. It is true there are a certain number of exemptions from the operation of the tax, but nevertheless I submit that the person who has the smallest income and is the least able to pay this tax has to pay a share altogether out of proportion to his ability under this method of collecting revenue. Let me cite the case of a working man-he may foe a farmer, or a workman in a factory, or a clerk in an office. We will suppose he has a family of half a dozen children, and is earning anywhere between $1,000 and $1,800 a year. The sales tax hits him on a large number of articles that he must purchase for the maintenance of his family, and it hits him most unfairly. By way of contrast we have a bachelor-I was going to say a wealthy bachelor, like my right hon. friend the Prime Minister (Mr. Mackenzie King); I do not know that he is a wealthy bachelor, but at any rate he is a

bachelor. Well, he escapes the incidence of this tax almost altogether. In that respect the tax is unfair. Taxes should be levied according to the ability of the taxpayer to pay, and this method of taxation violates that sound canon of taxation. I have no doubt that this tax will provide a considerable amount of revenue, but I am equally certain that it will also be a discouragement to business. Taxes of this kind always tend to discourage trade and industry, because the heavier the tax on the articles consumed, the smaller the quantity of those articles that will be consumed, and restricted consumption means unemployment in your factories. Consequently, the tax, judged by any standard you wish to apply to it, is not a sound tax.

My hon. friend has also imposed a very considerable increase indeed in the tax on cheques. I admit there might reasonably be some increase in that tax. Under the old regulations it rested at two cents per cheque issued; under the new regulations of the Finance Minister a tax of two cents is to be affixed for every $50 or part of $50 in amount of the cheque. The result is that, in particular lines of business at any rate, the burden imposed will be a very heavy one indeed. I am not contending for a moment that no additional tax on cheques should be imposed, but I think that when this matter comes to be considered in committee-if, indeed, my hon. friend the Finance Minister has not given it consideration before that time-some change in this respect should be made. In the great majority of businesses the additional tax will probably have very little effect, but I know, for instance, of some firms doing business whose contribution under this tax will be between $50,000 and $60,000 a year. I do not know to what extent the condition may prevail throughout the whole country, but there are certain businesses that peculiarly have to do their business by cheque. Upon such firms this additional stamp tax is a very heavy burden indeed. This proposed regulation is one which might well receive further consideration when the details of the budget resolutions are taken up in committee.

Some criticism, I think, can fairly be levelled against the proposal to tax the premiums on outside insurance companies operating in Canada. Many Canadian firms are unable to get from companies registered in Canada the kind of insurance they desire, and have to go outside of Canada to obtain it. Why should they be penalized by an

The Budget-Mr. Crerar

additional tax on the premiums that the insurance company collects? Without doubt the tax will have to be paid by the person in this country who is taking out the insurance.

There is no doubt whatever that in all these burdens the Canadian people are carrying a very heavy load, and I offer to my hon. friend the Minister of Finance the suggestion which I have made before in the House and which I think has certain merit: that the time has come-if it has not already passed-when some attempt should be made to co-ordinate the financial policy of this country. I notice that this is advocated by the Citizens' Research Institute of Canada, which is making a particular study of the question of taxation. The object is, if possible, to find out whether overlapping cannot be done away with and whether expense cannot be reduced; to find out, if it can be done, Where fair fields of taxation lie. Under the British North America Act the provinces of Canada have all the powers of taxation except that relating to customs, which is vested in the federal government; and the result is that the citizens of some provinces pay three income taxes, one to the Dominion, one to the province, and one to the municipality. There are various ways in which overlapping takes place. I believe that by a round table conference you could accomplish not only the straightening out of these inequalities in taxation, but the securing of well defined fields of taxation for each governing body, in other words, we should seek a policy the result of which would be to levy taxation fairly over all the people of Canada. One other advantage that would come from such a conference would be this: it would bring home to the provinces and to the municipalities, it would bring home to the people of Canada, the precise financial position of the country at the present time. In that way I am convinced that such a conference would be a very real service to the Dominion. I think the federal government should take the initiative in this matter. They are more conversant with the situation than are the governments in the provinces or in the municipalities; and I believe that if an effective lead were given by the Government of Canada to-day on this whole question of economy, there would be a splendid response from the whole of the Canadian people.

I wish now to discuss some other aspects of the budget. With some of its proposals I am cordially in agreement. It has some

good features;-it has some features that are not so good, to which I shall refer in a moment or two, but it has, I say, some good features-and the first I would like to mention in that respect is the statement of the Finance Minister, which statement, I take it, represents the view of the Government, that it is the settled policy of the Government to secure reciprocity with the United States-to bring about a revival of the reciprocity arrangement of 1911, an arrangement which, had it been carried out, would have been of the greatest possible advantage to this country. The Minister of Finance gave good evidence I think, of his desire to bring this about in his recent trip to Washington and his taking the matter up as he did with the United States authorities. That,

I say, is to the credit of the Government.

Another welcome and necessary change is the abrogation of the provisions in the Customs Act which gave the customs officer the power to assess the value of goods imported. That provision should never have been in the Customs Act; it often operated unfairly against the firm or individual importing goods into Canada. Another provision that has been done away with-and these are provisions that those of the Progressives Who were in the House last session opposed most vigorously-is the regulation requiring that the country of origin be marked on goods brought into Canada. The whole purpose of that regulation was to make it difficult to import goods into this country, and to the extent that it did so it provided protection for the Canadian manufacturer on those goods. I believe, Sir, that was the whole purpose in view at the time this regulation was brought into effect.

Another important improvement-perhaps the most important-is the wiping out of that antediluvian provision in the customs regulations, that foreign currencies should be taken at half their pre-war value for the purposes of customs assessment when goods from such foreign countries were brought into Canada. That provision was, of course, the most outrageous form of protection that was ever placed upon the statue book of this country. It operated wholly and solely to keep goods from these countries out of the Dominion; and to the extent that you fence off certain goods, to the extent that you prevent their importation into Canada, you bring benefit and profit to the Canadian

The Budget-Mr. Crerar

manufacturer. In some respects that provision was in line with true protectionist doctrine. I have never been able to understand the philosophy of protection in this respect. If it is a good thing to make it difficult for goods to come into the countrv so that your home manufacturer may benefit, would it not be a better thing to keep foreign goods out altogether and leave the home market to your Canadian manufacturer? That would be the logical course to follow. I know my hon. friends to my right do not agree with that view.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Or opposite.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

I am very sure they do not, either.

Topic:   THE BUDGET
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LIB

William Duff

Liberal

Mr. DUFF:

Some of us do.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

If the protectionist theory is sound, why not keep foreign goods out of the country altogether? Well, this practice that was introduced by the budget of last year was in accordance with true protectionist doctrine, inasmuch as it operated to keep such goods entirely out of Canada. But the only result was to increase the cost to the Canadian consumer of similar goods made in Canada. Consequently, I say that the Government have done a wise thing in wiping that provision off the statute books.

Something has been said in the debate about trade with Germany. My hon. friend the ex-Minister of Finance (Sir Henry Drayton) described this budget as a "two and a half per cent British preference and free trade with Germany." That was rather an extreme statement, but I have observed that some other hon. gentlemen who have spoken in this debate have condemned the idea of trading with Germany, and they would like to see our customs barriers and tariff regulations framed in such a way as to make trade with Germany impossible. I cannot agree with the view expressed by my hon. friend from St. St. John (Mr. Baxter) the other day who stated, and it seemed to me an extreme view, that he would have no part or parcel with anything German. Is that the position that is being taken by the other countries of the world to-day? What is the position of the United States with respect to trade with Germany? What is the position of Great Britain? Both of these great countries are doing everything they possibly can to restore their trade with Germany-doing it to-day, doing it at this very moment. A group of financial men

from both countries is conferring with a view to extending credits to Germany so that her manufacturing and purchasing power may be increased, and the whole trade of the world stimulated thereby. Is not that a sound principle and policy to follow? Why, in the face of that, should Canada take the position that we will have no trade with Germany, that we will create conditions which will make trade with that country impossible? I say again that in that respect the Minister of Finance has acted very wisely in the change he has made.

When I come to consider the other proposals contained in the budget, I regret that I cannot offer the same commendation to the Minister of Finance. This budget, outside of the changes I have referred to in abolishing these regulations, is a protectionist budget. It is based on the principle of protection. It is true the minister has made certain reductions in the duties-2i per cent on a large number of articles coming from Great Britain; in other words, the British preference is increased to that extent. As far as the United States and the general tariff is concerned, the reductions made are very few and very far between. I think I am quite within the facts when I state- that this budget is based upon the principle of protection. Nor is there any statement of government policy in the matter from the Minister of Finance. If he had stated: We are aiming at the elimination of protection in the fiscal policy of Canada-then the changes he has made, while they would not be sufficient, or anything like sufficient in my judgment, to meet the needs of the case, would nevertheless have given to this country an idea of which way the Government was travelling. Take the item of agricultural implements, for instance. My hon. friends on the government side have a very definite policy on the question of agricultural implements. They had a very definite policy in respect to the question of agricultural implements.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

James Dew Chaplin

Conservative (1867-1942)

Mr. CHAPLIN:

Before the election.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

That policy was based on free agricultural implements. It was a sound policy, for reasons which I hope presently to give to the House. But in the changes which have been made in the tariff proposals submitted by the Government to the House, do we find anything of free agricultural implements? There is not one single, solitary lone implement added to the free list in Canada.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

Horatio Clarence Hocken

Conservative (1867-1942)

Mr. HOCKEN:

Did you expect that?

The Budget-Mr. Crerar

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

I do not know what my hon. friend expected. I am not asking him, and I do not intend to disclose to him what I expected. But that is the position and I think the Minister of Finance has not been quite consistent even in the changes he has made in the duties on agricultural implements. What are those duties? We find ploughs, for instance, reduced 2i per cent; the duty now stands at 15 per cent under the general tariff. As my hon. friend pointed out, it is very true that practically all the agricultural implements that are imported into Canada come from the United States, and consequently the reductions in the British preference are of no value as far as agricultural implements are concerned. But there have been a few reductions. Ploughs to-day stand at 15 per cent under the general tariff, and mowers at 10 per cent under the general tariff. Can any minister in the Government or any hon. member of this House tell me why there should be a difference of five per cent between the duty on mowers and the duty on ploughs? The very same materials enter into the making of a plough as enter into the making of a mower, and yet there is a difference of five per cent in the duty. My hon. friend the ex-Minister of Finance smiles at that, but I can assure him that he was guilty of the same thing a year ago when he brought down his budget proposals. Portable engines carry a duty of 17i per cent. Why should they vary from ploughs I do not know. Then tractors under $1,400 are free of duty. There is a little ray of comfort in the fact that the Government are fixing this by statute, and no longer leaving it subject to possible fluctuations by Order in Council. The duty was taken off tractors by the Union government in the early part of 1918. For what purpose? For the laudable purpose of increasing production in this country. Even under the stress of war conditions, under the stress of an urgent need, that government, which comprised many most ardent protectionists, recognized that it was necessary to take the duty off tractors in order to encourage and increase production of foodstuffs in this country. If that was a sound policy then, is it not a sound policy to-day? It is, and the Government is to be commended for making this change permanent so far as this particular tariff is concerned. But why distinguish between the tractor that costs $1,400, and the tractor that costs $1,500? The farmer who wants to buy a tractor at

$1,400 from the United States gets it in free of duty, but if some one wants a tractor a little bit larger than that, and it costs him $1,500 in the United States, when that machine comes to the customs border it is assessed $162.50 duty.

Again, the self-binder that cuts the grain in the fields has a tariff tax of 10 per cent, but threshing machines that thresh the grain after it has been har-

4 p.m. vested, carry a duty of 15 per cent. Why should that difference exist? Why should the threshing machine not be brought down to 10 per cent duty? I would also point out that the tools that are necessary to keep both of these machines in repair have to pay a duty of 30 per cent.

There is nothing consistent in these tariff proposals so far as agricultural machinery is concerned, and I can scarcely believe that my hon. friend the Minister of Finance has given this matter the fullest attention that he should have given it. Or is it possible that he was unable to go as far as he would like to go in making changes in the duties on agricultural implements? One of the amazing things in the situation to-day is the fact that among hon. gentlemen opposite, and even in the very Government itself, there are men who professedly hold almost diverse views on the question of the tariff and protection. Is that a sound thing? It is not, and I say that the Government failed, in my opinion, in implementing their pledges through their failure to reduce the duty on agricultural implements. If the Minister of Finance had come to the House and said: We would like to have cut off the duties on agricultural implements, but the needs of revenue are such that we feel we cannot bring the duties down below 10 per cent, I believe he would have had support in this House for that proposal.

But I see very little effort in that direction. When you come to the necessaries of life, where do you find the reductions on those articles? We have reductions of 2J per cent made in a few cases, but, under the general tariff to-day, on the main necessaries of life-clothing, boots and shoes, the household equipment and utensils needed in the home-the general tariff duty ranges from 25 to 35 per cent. Am I therefore unfair-and I do not wish to be unfair-in stating that this budget is, in its essentials, a protectionist budget? There is no change of moment in the tariff, for the reductions of 21 per cent made in the

The Budget-Mr. Crerar

customs duties are almost all swallowed up in the increase in the sales tax. It is well known that the sales tax on goods imported is higher than it was on the domestic manufacture, and, consequently, the ratio of increase, I submit, has practically taken away all the reduction that has been made by the 21 per cent. That is not the platform of the Liberal party. If the Minister of Finance (Mr. Fielding) had come 'before this House and said "It is true we had a tariff platform in 1919. I do not feel, and the Government does not feel, that it can cross every 't' and dot every 'i' of that platform to-day," and had been able to give some reasons why they could not go the full length, I think they would have received consideration from this House. As far as I am concerned, I would have been prepared to give consideration to that statement. But such is not the case; and, indeed, if we consider the resolution that was moved in amendment to the budget a year ago which my bon. friend, the Minister of Finance, made reference to in his speech, I scarcely think that these budget proposals that have been brought down square with that resolution. What were the cardinal principles, or the cardinal features, of that resolution a year ago? I think the second and third paragraphs of that resolution contain the meat of the whole thing, and they read:

That the aim of the fiscal policy of Canada should be the encouragement of industries based on the natural resources of the country, the development of which may reasonably be expected to create healthy enterprises, giving promise of enduring success.

That such changes should be made in the Customs duties as may be expected to reduce the cost of living, and to reduce also the cost of implements of production required for the efficient development of the natural resources of the Dominion.

I say again, if the Government had come to the House and said "We have not had time to make these changes," it would have taken a considerable degree of faith to swallow that, but they would have been in some reasonable position. But as I understand to-day from the budget proposals made by the Minister of Finance, these, excepting some minor changes which may be made, represent the policy of the Government so far as tariff reduction is concerned; and if that is the case, I submit to this House and to the country that the tariff changes made in the budget proposals submitted to the House do not implement the resolution that was moved in amendment to the budget a year ago, and, consequently, are not such as the country requires, and should have, at the present time.

I want to deal now for a moment with the attitude displayed in the budget with regard to the reduction of duties on goods from United States. I am not at all sure that my hon. friend the Minister of Finance-and I give him credit for every sincerity in his desire to improve trade relations with the United States-is taking the wisest course in making a discrimination against the United States in favour of Great Britain at the present time. I know that is a debatable question. It may be that the minister has information, or has reasons for his views, that I have not got, and I would certainly defer greatly to his judgment in that matter. But, nevertheless, it is quite apparent that even in the United States to-day, in some of its leading newspapers, the discrimination against the United States is being treated as a retaliatory measure against that country. We turned down reciprocity in 1911. The American government had approached the Canadian government of that day and said "We are willing to make an arrangement with you on this basis." The Canadian people had turned down that arrangement. I think that now we would have advanced our interests further in the matter of trade with United States if we had frankly said "We will show no discrimination against you in any changes we make." My own view is we would have gone further. I am as firmly convinced as ever that trade with United States is necessary. Indeed, if we study the trade figures submitted to the House by the Minister of Finance in the proposals he laid before us, we find the two countries with which our trade is done mainly are Great Britain and the United States. Last year we exported to the United States $293,000,000 worth of goods and we imported from the United States $516,000,000 worth. That has been the ratio or something near it for a great many years-and I might, in passing, draw the attention of my hon. friends to the right to the doleful prediction they used to make in the House a few years ago that the adverse balance of trade with United States was the cause of the depreciation of the Canadian dollar in New York.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

Hear, hear.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

My hon. friend the exMinister of Finance (Sir Henry Drayton) says "hear, hear," and his leader (Mr. Meighen) echoes the sentiment. Perhaps my hon. friends, when they speak in this debate, will explain how the discount on

The Budget-Mr. Crerar

our Canadian dollar has disappeared, while the balance of trade continues the same.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Borrowing money.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

I think the Minister of Finance has not been happy perhaps in taking that attitude towards the United States. Now what is the feeling in the United States? I am convinced the feeling is friendly to Canada, and I am convinced our protectionist friends in this country, while holding up the example of the United States to-day, will surely be deprived of that example. All the signs of the times in the United States point to the fact that they are abandoning the system of protection in fiscal policy. My right hon. friend the leader of the Opposition laughs, but we have the fact that the leading business houses of United States, the manufacturers, the leading bankers and the Chambers of Commerce of that country, are all protesting against the tariff legislation that is now before Washington. And where is this wonderful protectionist doctrine that was going to do so much for the United States? Where is the legislation introduced in the American Congress over a year ago, and scarcely any further on today than a year ago when it was introduced?

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

It is in effect.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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June 5, 1922