April 10, 1923

CON

William Alves Boys (Whip of the Conservative Party (1867-1942))

Conservative (1867-1942)

Mr. BOYS:

I quite appreciate that. A great many of these annuitants have reached the expectation of life or very nearly so. Some of these annuities, of course, have recently been purchased, and the payments will have to go on. I want to find out how much money would have to be held to take care of them; the balance would be profit.

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

Of course, that information could be procured, but I might state that there has never been any opportunity given to the department to find out anything of this kind- ,

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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CON

William Alves Boys (Whip of the Conservative Party (1867-1942))

Conservative (1867-1942)

Mr. BOYS:

Why?

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

-to the general extent that I think it should have been.

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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CON

William Alves Boys (Whip of the Conservative Party (1867-1942))

Conservative (1867-1942)

Mr. BOYS:

The department has an actuary?

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

Yes.

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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CON

William Alves Boys (Whip of the Conservative Party (1867-1942))

Conservative (1867-1942)

Mr. BOYS:

What is he there for?

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

There has never been as much interest, I think, in Dominion government annuities as on this occasion, for which I am personally thankful, and I hope the hon. member from Simcoe will have his wishes realized and a 5 per cent interest payment guaranteed for Dominion government annuities. I think it will do just exactly what he believes it will do-largely increase the sale of Dominion government annuities.

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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CON

Horatio Clarence Hocken

Conservative (1867-1942)

Mr. HOCKEN:

Does * the Superintendent of Insurance exercise any supervision over this fund ?

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

Not directly. But this department, of course, asks his advice as to the consistency and safety of changing a 4 per cent rate to a 5 per cent rate.

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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CON

Horatio Clarence Hocken

Conservative (1867-1942)

Mr. HOCKEN:

This, of course, is an insurance fund handled by the government, and having the government behind it, but I think it ought to come under the same supervision

Supply-Labour-Annuities

as any other insurance fund, and it strikes me that if this Annuity branch went about its work with the energy that ought to be applied to it, it should be possible to get all the business of that kind that is done in the country. You ought to be able to get better results at lower rates than any other insurance company. The government has no dividends to pay. The cost of management ought to be cut down to a minimum, an annuity ought to be purchasable from this fund at a lower rate than from any company, and if the people of Canada were properly approached and made familiar with the scheme in any way the department might discover to be effective, I believe there would be a very large increase in the number of those who would purchase such annuities. It is an old age pension operating, in my judgment, under the very best conditions that could be adopted, because it is a man's own thrift that secures for him the necessities of his old age. There is no element of party in it or anything of that kind. This is one feature of government policy that might be developed more thoroughly and energetically than it has been, with good results to both the annuitant and the country.

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING:

I have not had this matter before me for some time, and I did not have the good fortune to hear what was said on the matter before. I am not clear as to the meaning of this $5,000,000 surplus, if it be a surplus. I know the whole purpose of the organization has been, not to make money, but to afford an excellent opportunity of exercising thrift with the security of the country behind it. The 4 per cent rate was established in the belief that that was a fair value for the money. Then, in addition to that, there was the cost of operation. I think it was well understood from the beginning that the government would have to bear the cost of management, and the people investing their money in annuities would get the full benefit of the 4 per cent. Some months ago, I think, the Minister of Labour (Mr. Murdock), raised the question whether we could not afford to raise the basis to 5 per cent. I had the matter referred to one of the officials of the department, and he advised that this would not be profitable; that it would not help the financial situation and would be a burden to the country. There is, however, no finality in that. Rates of interest vary, and I am not prepared to say that we could not under any circumstances allow 5 per cent. I think the information asked for by the hon. member for Simcoe (Mr. Boys) can be secured, and I am sure the

Minister of Labour will be glad to procure it, if possible, and to bring it down at a later date.

If we can give the facilities of this institution to the people without incurring any very considerable increase of expense, that should be done. I quite agree with what has been said by hon. gentlemen opposite as to the character of the business. In the early days, when this organization was established, we appointed lecturers for the purpose of making the people understand the matter. It is unfortunate, perhaps, under circumstances into which I need not enter now, that the services of these lecturers were dispensed with. We were told that the business was to be handled by the post offices. Soon after that policy was adopted, down in a distant portion of my province, I thought I would go and see what the postmaster knew about it. When I asked him about the matter, he asked me three or four questions as to what I was driving at. When I explained matters to him, he said that he did not know anything about it. I said: "I am told that literature has been forwarded to you." He said: "Has it?" He said that he did not know; that he would look for it, and at last acounts he had not found it. I am not complaining of any particular postmaster in this regard. This matter is like insurance. How many of us would have taken out insurance policies if some energetic agents had not canvassed us and pointed out' the virtues of the system? While this is an excellent system, it does not reach the people; by merely placing literature in the hands of postmasters, you cannot bring the matter before the public properly. I am glad to have this attention given to the subject, and I think we might look into it again and see, before the session is over, whether we cannot afford to adopt the 5 per cent basis. The government are not going to approach this matter in any niggardly spirit. We are not going to be on easy street as regards money; but we can always get money, and I am not disposed to resort to this merely as a means of getting money. If we can get money at fair rates and at the same time establish this as a means of encouraging thrift, by all means we ought to do so.

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

I know the situation is much as has been stated by the Minister of Finance (Mr. Fielding). We might, perhaps, make a little headway if we were to apply the ordinary actuarial methods and find out where we are. My impression is that we can do much better than we have been doing. In this instance, we ought to be able

Supply-Labour

to do business much more cheaply than insurance companies, although as a matter of fact, we are selling annuities generally more expensively than they are. I may be wrong, but I believe I am absolutely correct in that statement. What I mean is that you can get better rates from an insurance company paying a dividend than you can from the government which pays no dividend. We should be able to do better than they, because we are under no cost of investment for this scheme. The money all goes into the fund without paying any percentages or commissions or anything else to anybody. We have the money, and there is no expense whatever in connection with the administration of the fund as such. Therefore, again we should be able to do business a little more reasonably and profitably to the people of Canada than insurance companies could.

I appreciate what my hon. friend says as to the difficulty of raising rates. When the four per cent annuity was first started, we had the government borrowing at something like 3J per cent, sometimes 31 per cent, and the idea of the annuity rate was a rate which would yield the annuitant a higher rate than government borrowing would. Ordinarily, that would be the case. Lately, however, we have been in the anomalous position-and I am to blame for it too; I am not criticizing my hon. friend for it at all; we should have taken up this matter before-that we have been actually paying more interest on a thirty-year debenture, at the end of which time the whole capital comes back, than we calculate our annuities at for a much less period. That, of course, is all out of joint; it is all wrong. You cannot expect to do very much with annuities on that basis. I think my hon. friend is right when he says that we are going to have cheaper money. If we get out a number of annuities at a higher rate, we are bound to lose money. While the government ought not to make money in this connection, it ought not to lose money, and therefore we should be careful. While that is quite true as regards long-term annuities, this annuity business can be looked upon as a liquid business, something similar to loans, and a higher rate can be properly applied to short-term annuities. One always pays more for a short-term annuity, and it is money which is just as useful as any other kind of annuity. We know, however, we are going to be paying a high rate of interest for some time ahead, and I would suggest to my hon. friend that he consider an extension of the rate, at least, as regards short-term annuities.

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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CON

William Alves Boys (Whip of the Conservative Party (1867-1942))

Conservative (1867-1942)

Mr. BOYS:

I understood from the Minister of Labour that the raising of the rate was under consideration, whereas I understand from the Minister of Finance (Mr. Fielding) that he had the matter looked into, but that the actuaries considered-

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING:

Not lately. Some time ago.

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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CON

William Alves Boys (Whip of the Conservative Party (1867-1942))

Conservative (1867-1942)

Mr. BOYS:

Perhaps the Minister of Labour has taken the matter up again. When he reflects that on $15,000 at 6 per cent, which rate for ordinary investment purposes cannot be considered high, because hardly any investments pay less than 6 per cent except government securities-you get $900 return, and purchasing an annuity you get only $100 more on the basis now existing, surely he must realize that that is not attractive to any investor. One would sooner put' his money out on a mortgage or some other absolutely safe security at 6 or 6J per cent. There is no difficulty in getting 6i per cent on absolutely safe investments to-day, and that would produce just about as much as the annuity does. In the one case, the money is gone and in the other, you have it. I hope the minister will take this matter up seriously and see if it cannot be placed on a 5 per cent basis. It is not surprising that the minister is not able at the moment to give these figures, because I understand this branch of the government service has recently come into his hands. It would, indeed, be somewhat remarkable if he could give these figures, although I thought he might, because we were discussing this matter some days ago and the officials knew what was wanted. These figures, however, are not available now, and I will content myself with the observation that I hope before many months we shall find this on a 5 per cent basis. I feel certain if we do that, a considerable amount of money will come into the treasury of Canada.

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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CON

James Dew Chaplin

Conservative (1867-1942)

Mr. CHAPLIN:

Coming back to the question of the number of employees in the minister's department, last evening the minister told us that it caused him a gfeat deal of pain when he was forced to discharge an employee. We know that the minister has a very kindly disposition, and last year, possibly with that fact in view, the House helped him a good deal by asking him to reduce his estimates, thus taking upon itself the burden of the responsibility for the reduction accomplished in the number of employees. I would suggest now that if the minister, in his goodness of heart, does not want to take the initiative the House might again come to his assistance by formally requesting him to reduce his estimates

Supply-Labour

another $10,000. No doubt he would come through this year, as he did last year, with flying colours and again thank the House for being instrumental in making the reduction.

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

I would draw my hon. friend's attention to some figures in connection with the cost of living and ask lum to inform the committee what particular items are chiefly responsible for the unfortunate condition they reveal. I am referring to Michell's figures. These figures are printed in the Labour Gazette, so that the minister will know all about them. Michell shows that the cost of living in January, 1922, was 165.2 and in February last 176.3. The minister might tell us the different items that are working in the wrong direction.

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

If my hon. friend looks a little further down he will see that' Michell's figures reflect trade conditions and do not deal with the cost of living as it is dealt with in the Labour department. His figures have reference to general trade conditions rather than to the actual cost of living.

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

Perhaps the minister might inform us how Michell's figures are arrived at.

Mr, MURDOCK: I do not think I could begin to determine just how Michell prepares his figures.

Topic:   SUPPLY-DISMISSAL OF JOHN J. HAYES FROM POSTAL SERVICE
Subtopic:   DEPARTMENT OF LABOUR
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April 10, 1923