June 10, 1924

PRO

Burt Wendell Fansher

Progressive

Mr. B. W. FANSHER (East Lambton):

If any person should be interested in the oil industry it is the representative for East Lambton which yields at least three-quarters of the oil produced in the Dominion. The plea advanced by the hon. member for West

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Customs Tariff

York (Sir Henry Drayton) was made entirely on behalf of the farmers who are interested in the oil industry. I am somewhat at a loss to know why any plea should be made entirely from the farmers' standpoint. With that in mind, I wish to make a few observations. The oil industry, as most hon. members no doubt are aware, is not entirely in the hands of farmers. In fact, only a small portion of it is in the hands of farmers or those who own the land. Oil companies lease the land from the farmers with the object of drilling for oil, and the right of a company to put down a well and to enter into the oil producing business is always procured from the owners of the land by a lease which gives every eighth barrel or the equivalent thereof to the farmer. So, when the hon. member for West York (Sir Henry Drayton) speaks of the bounty being of such interest to the farmer, he is not entirely correct. The amount of bounty paid to the oil industry last year throughout the entire Dominion was less than $80,000. Only one-eighth, or less than $10,000 of that bounty went to the farmers of the Dominion of Canada during last year, while on the other hand about $70,000 went to companies operating the wells and producing the oil. Why then all this plea on behalf of the farmers when the meagre sum of $10,000 is distributed amongst the farmers of this Dominion who have oil wells on their properties?

We are indebted to the hon. member for West York for the somewhat lengthy history of the industrsq and in this connection I have a few observations to make. It is true that m the early days of the oil industry there was a duty on crude oil coming into this country. At that time there was nearly enough oil produced within this Dominion to supply the needs. When, however, oil became more in demand and it was found necessary to procure crude oil from outside of this country to keep the refineries going, the Canadian refiners came to the government then in power and through their efforts secured the removal of the duty on crude oil entering Canada-another case simply of the manufacturer who was a free trader on what he had to buy but a protectionist on what he had to sell. The refiners succeeded in getting crude oil put on the free list and at the same time in retaining a protection on the refined article of from half a cent to two cents a gallon. Of course, the producers of crude oil at that time felt that they, having enjoyed the protection on crude oil, should not be left to shift for themselves.

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To satisfy the producers of crude oil, the Minister of Finance in 1904 gave them a bounty. He gave the refiners what they wished by giving them free crude oil and he gave the producers within this country a bounty. That has continued for about twenty years. Last year we were given notice that the bounty would be discontinued this year; that one-half would be cut off and that in the succeeding year the other half would be taken off; while the refining branch of the industry was left alone, it can obtain its raw product free and yet it has a protection of one-half to two cents per gallon on the refined product. What should have been done was to give assistance to neither. If the government removed the duty from crude oil, they should also have reduced the duty on the refined article and given this country the benefit. They have, however, made fish of one and flesh of another; they have put the producers of crude oil in open competition with producers of crude oil in other countries, but they have left the refiner in a position where he can charge from one-half to two cents a gallon, according to the grade of the oil, more than he could if not protected.

I was very much interested in hearing the remarks of the hon. member for St. John (Mr. MacLaren), and I observe from a return brought down in the House that some few hundred dollars less than $4,000 was paid in bounties to oil producers in his province, New Brunswick. In Ontario over $76,000 was paid in bounties and the major part of this came to the riding of East Lambton; in fact, I think I would be safe in saying that over three-quarters of the oil produced in Canada is produced in East Lambton and, therefore, three-quarters of the bounty paid would be paid in that riding. But that bounty went to no exceeding great number of producers. One hundred and fifty would count them all told. There are about fifteen oil companies operating in Canada and they get the majoi portion of the oil bounties. The farmers who have leased their lands to these oil companies get one-eighth or the small percentage.

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CON

Robert James Manion

Conservative (1867-1942)

Mr. MANION:

Surely the hon. member

does not think the farmer who just owns the land should receive the same bounty as the man who is developing the well?

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PRO

Burt Wendell Fansher

Progressive

Mr. FANSHER:

one-eighth, 'that is not placing the matter in a true light.

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CON
PRO

Burt Wendell Fansher

Progressive

Mr. FANSHER:

It reminds me a great

deal of the argument put up by my hon friends to my right in regard to the home market-their argument that the home market is of great benefit to the farmer, when in reality it is not. I was going to observe that the larger portion of the bounty goes into the hands of comparatively few men or few companies. Fifteen companies get the major portion of the oil bounty paid. Without giving the names of the companies, I wish to give a few of the amounts of bounties paid to oil operators in the riding of East Lambton for eleven months of the last fiscal year. They are as follows: $2,225, $2,594, $2,181, $4,805, $2,688, $1,592, $3,657, $3,469, $1,200, $6,337, $4,383, and $2,104. These are amounts that are over $1,000; but many of the amounts paid the farmers are below $100. The main purpose of my rising on this occasion is to correct the impression that these oil bounties are of such great benefit to the farmers as we are led to believe. It has been said in the course of the debate that regardless of all political parties in that section of the country which is to-day engaged in oil production the people are unanimously in favour of the retention of oil bounties. I wish to inform my hon. friend (Sir Henry Drayton) that this is not the case. The oil industry in Lambton county has long passed the development stage; the territory has been fairly well tested to a depth of at least 400 feet and deep drilling has not taken place to any large extent.

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LIB

Harold Putnam

Liberal

Mr. PUTNAM:

Can the hon. member

tell us approximately how many farmers benefit at all from the bounties?

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PRO

Burt Wendell Fansher

Progressive

Mr. FANSHER:

I am sorry I cannot give the exact number but I know I am well within the mark when I say that in the riding of East Lambton there are not more than 100 farmers receiving any benefit from oil bounties. There are only about 150 who receive cheques for bounties and of that number some 15 or 20 would be companies operating wells.

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PRO
PRO
CON

Robert James Manion

Conservative (1867-1942)

Mr. MANION:

I have listened with a good deal of interest to the remarks of the last speaker, and until shortly before the conclusion of his speech I had no idea where he stood on the question of oil bounties in his constituency, which is particularly affected. I drew the conclusion from the last remarks he made that as things stand to-day he favours the continuance of the bounties as they are. Am I right or wrong?

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PRO

Burt Wendell Fansher

Progressive

Mr. FANSHER:

No hon. member who

listened to my remarks can draw that inference from them; I do not stand for the continuance of the oil bounties as they are. The oil bounties constitute a protection at the expense of the public for the benefit of a few, the major part of those engaged in the industry being men who have amassed considerable wealth out of it, some of them indeed owning oil fields in foreign countries. Knowing them as I do, I believe a number of them would still be far better off without the bounty than those who are taxed to provide that bounty.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Right Hon. ARTHUR MEIGHEN (Leader of the Opposition) :

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PRO
CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Apparently I have

laboured in vain. What I am trying to make out is that if that assistance to the extent of $80,000, which turns over $500,000-

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PRO

Burt Wendell Fansher

Progressive

Mr. FANSHER:

There is an "if" there.

MR, MEIGHEN: Yes, but I have supported that "if". I think I understand Mr. Speaker, why it is the hon. gentleman made the speech he did. I thought I had made the point perfectly clear; the bounty now certainly sustains the industry, for without it operations would cease. That is perfectly obvious if the figures are correct which have been presented in detail and which have never been refuted in this House. Nothing has been advanced to even modify them;

either by the hon. member (Mr. Fansher), the Acting Minister of Finance this year or the Minister of Finance last year.

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LIB
CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

When I finish the

sentence. You know, the member for Brome (Mr. McMaster) always sees the result of a sentence a little in advance and .wants to head it off. People do not produce oil to lose. Those, then, who produce above $2.62J quit anyway; with their stopping the overhead cannot be sustained; without the overhead the others cannot produce. So where is the industry? It is all gone.

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LIB
CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Let me hear from the hon. member for Brome.

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LIB

Andrew Ross McMaster

Liberal

Mr. McMASTER:

If the bounty was discontinued, that might have the effect of allowing the less gushing wells to go out of existence, but would not the gushing wells which are making a profit without the bounty still continue?

Topic:   CUSTOMS TARIFF, 1907, AMENDMENT
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June 10, 1924