April 29, 1926

PRO

John Livingstone Brown

Progressive

Mr. J. L. BROWN (Lisgar):

The remark I would address to the House-

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

Hewitt Bostock (Speaker of the Senate)

Liberal

Mr. SPEAKER:

I saw the hon, member for Toronto West Centre first.

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CON

Horatio Clarence Hocken

Conservative (1867-1942)

Mr. HOCKEN:

Before proceeding to discuss the budget, I would like to make a few observations in reply to my hon. friend from

I Mr. McMillan.]

South Huron (Mr. McMillan). I think I should in the first place congratulate him upon having the opportunity to make the speech he has delivered to us in this House. He is entitled to great credit for his perseverance over a period of ten years to enable him to enjoy this opportunity, and, possessing that Scottish quality of determination that we all admire, he finds himself to-day able to say things which are to me reminiscent of discussions I have heard in the general store at Seaforth. I consider the hon. gentleman in a class by himself in this House. He is a hard-boiled free trader, pretty nearly the only one in the House.

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LIB

Thomas McMillan

Liberal

Mr. McMILLAN:

Allow me to say that under present conditions it is quite impossible to have free trade in Canada.

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CON

Horatio Clarence Hocken

Conservative (1867-1942)

Mr. HOCKEN:

That does not alter my characterization of the hon. gentleman. He is a hard-boiled free trader, and if conditions in this country permitted it, we would have absolute free trade if my hon. friend had his way. Is that right? Silence gives consent.

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LIB

Thomas McMillan

Liberal

Mr. McMILLAN:

Would the hon. member like me to answer?

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CON

Horatio Clarence Hocken

Conservative (1867-1942)

Mr. HOCKEN:

Yes.

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LIB

Thomas McMillan

Liberal

Mr. McMILLAN:

If the hon. gentleman

will only turn up the records of parliament when a certain large deputation waited on the government of Canada in December, 1911, when Sir Wilfrid Laurier was Prime Minister, he will notice that when we asked for reductions in duties we said also that we were willing to resort to direct taxation, if necessary, in order to meet any reductions which we called for. Might I also say that I believe I was the first man to mention that at that convention?

Topic:   THE BUDGET
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CON

Horatio Clarence Hocken

Conservative (1867-1942)

Mr. HOCKEN:

That does not alter my statement. Absolute free trade is the goal to which my hon. friend proceeds. As for direct taxation, I observe that now that we have direct taxation by this government, the particular class to which my hon. friend belongs is not notable for the contribution that it makes in the way of direct taxation.

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LIB

Thomas McMillan

Liberal

Mr. McMILLAN:

I am only sorry that it is so.

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CON

Horatio Clarence Hocken

Conservative (1867-1942)

Mr. HOCKEN:

What taxes his class pays are paid through the tariff, and if we remove the tariff, it would pay nothing at all.

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LIB

Thomas McMillan

Liberal

Mr. McMILLAN:

Oh no.

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CON

Horatio Clarence Hocken

Conservative (1867-1942)

Mr. HOCKEN:

I admire the courage of

my hon. friend. He impresses me as being a man of convictions, and having the courage to stand up and declare those convictions

The Budget-Mr. Hocken

much more freely and definitely than most men holding his views. I am always able to get along with a man who has convictions, and who will stand by them. It is the wobbler with whom it is hard to get along. My hon. friend charged this party with insincerity and I will deal with that a little later on.

He quoted Mr. Henry Ford as an advocate of free trade. Mr. Henry Ford has made about two billion dollars under protection; he has put himself into a position of financial strength that enables him now to say: I can make machines under free trade and I believe there ought to be free trade. He would do now what the British people did. In Great Britain they had protection until their industrial supremacy was established, and when that time arrived they said: Now let us have free trade. That is exactly the position of Mr. Ford to-day. I do not think a man who has made two billion dollars under a protective policy is one who can be quoted favourably as an advocate of free trade. I would ask my hon. friend: What did free trade do for the farmers of Britain? Is British agriculture in a state of prosperity today? Has it been in a state of prosperity for forty years?

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LIB

Thomas McMillan

Liberal

Mr. McMILLAN:

That cannot be answered in a word. The British farmers have been able to show to the world what we ought to do in regard to live stock production and they are not dependent on their own production of agricultural foodstuffs. For twenty years I went back and forth and I am conversant with conditions in Great Britain. The best farmers there are doing as I have been doing all my life. They have never been selling one cent's worth of agricultural produce, unless it is a little wheat. In addition to what they grow they are buying largely of foodstuffs from foreign lands and feeding animals on their own farms, in this way building up agriculture to the highest possible extent. The British farmers to-day are able to show to the world that they can lead the world, more particularly in live stock production.

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CON

Horatio Clarence Hocken

Conservative (1867-1942)

Mr. HOCKEN:

I think I ought to remind the hon. member that we are not in the corner store in the town of Seaforth and a discussion in parliament is conducted in a somewhat different manner. The fact however remains that about forty per cent of British land capable of being tilled is in grass, and there can be no doubt that the agricultural industry in Britain is, and has been for forty years past, greatly depressed. If free trade is good for the farmers in Canada, why is it not good for the farmers in Great Britain? The farmers

of the United States are more prosperous in that most highly protected country in the world than the farmers of Great Britain. Those who argue in favour of free trade for the farmers ought to cast their minds a little further than the horizon bounded by the county of Huron. Let them look over the world and find out where the farmer is prosperous; let them view the tariff conditions under which those farmers live, and I submit it will be found that the most prosperous farmers are to be found in protectionist countries.

I was sorry to hear my hon. friend belittle the fruit and vegetable grower, who is a land holder of small dimensions but who is one who works harder than any farmer in the west, harder than most farmers in the east. The only way in which a man can make a living on a fruit and vegetable farm is by bending his back and cultivating every inch of his land. These men are maintaining families on ten and twenty acres. You can go througn all the older part of Ontario and you.will find fruit and vegetable growers with ten to twenty acres, maintaining as many people on that acreage as are to be found on 200-acre farms in other parts of the province or in the west. Surely that man, who works not part of the year but every day of the year and who maintains his family on a small acreage, is entitled to just as much, if not a little more, credit than the man who has a large area of land to cultivate.

My hon. friend became quite eloquent in discussing the burdens that are placed upon the poor working people of the towns and cities by a protective policy. How does he account for the fact that about ninety per cent of these poor working people, these poor mechanics and others with their little homes and families, voted for a protective tariff on the 29th October last? Throughout all industrial Canada with the exception of Quebec-and conditions there were somewhat peculiar, because the policy voted upon in that province was not the fiscal policy of the country at all

the issue was the tariff. In the province of Quebec the issue was conscription. In Manitoba, in the Maritimes, in Ontario and in British Columbia the issue was the tariff, and in every industrial centre the people voted strongly for the policy of Imy right hon. leader (Mr. Meighen). If, therefore, the poor people for whom my hon. friend is so highly concerned know what is best for themselves, it is quite clear that they believe in the policy of protection. My hon. friend may talk free trade in this House, as Michael Clark of Red Deer, did, session in and session out, and he will make no impression upon the

The Budget-Mr. Hocken

government nor upon the country. The people who have the intelligence to see the situation in which we are placed, alongside a highly protected nation competing with us in so many things, will agree that the protective policy is necessary for Canada.

The budget has evidently been prepared for the purpose of impressing the public of Canada with the idea that this country is prosperous, and that it was prosperous last year. A substantial reduction is made in taxation, and it is attributed by the government, through the Minister of Finance (Mr. Robb), to the increased prosperity that prevailed in the year 1925. I maintain, however, that the country is not prosperous; it was not prosperous last year nor the year before, and it is not prosperous to-day. But to make my point I will take the figures of the railways. There is no better barometer of trade than the railways; if trade is good traffic is good, and if traffic is good the railways are prosperous. I find, as I have discovered myself, that business depression has reflected in the railway reports was more severe in 1925 than in 1924, and I take the ground that the relief in taxation afforded by this budget is by no means equal to the extra burdens put upon the people of the country by the government.

I take the report of the Canadian Pacific Railway and from it I quote the following:

The gross earnings for the year increased $853,849 over those of the previous year. Working expenses, however, decreased $2,073,684, resulting in net earnings, before deducting fixed charges, of $40,154,775.

The report goes on to say:

The relatively small increase an gross earnings is largely accounted for by the depression which existed in Canada during the first part of the year, the effects of which in general traffic were only overcome by the excellent harvest, to which is largely due an increase of $10,354,946 in the gross earnings during the last half of the year over the corresponding period of 1924.

But for the abundant harvest, therefore, the earnings of Canadian Pacific Railway would have been $10,000,000 less than the year-previous. If that is an evidence

4 p.m. of prosperity I should like to have it explained to me by some member who has a keener mind than I possess. It is to my mind absolute proof that the year 1925 was not equal to that of 1924. The same report goes on to say:

From a shipping standpoint the year 1925 .... was perhaps the worst of which there is record, and the result of the operations of your Atlantic and Pacific fleets were unsatisfactory, particularly in passenger revenue. The number of immigrants carried by all lines was less by over 40,000 than in 1924. Notwithstanding a decrease in expenses of $706,951 the net earnings from all traffic were substantially less than those of the previous year.

So that the opinion of this great railway company, upon whose board there are some of the ablest businessmen in Canaan, is that the year 1925 was much less prosperous than the year 1924. I notice from the report that the grain traffic carried by the Canadian Pacific Railway in 1925 was 263,000.000 bushels or 31,000,000 bushels more than in 1924.

I will admit that agriculture was more prosperous in Canada in 1925 than in 1924. but the fact is that general business suffered more serious depression. And that fact is borne out by the railway figures.

I take the Canadian National Railway report in which some interesting disclosures are made. For example, I find the following statement:

The results for 1925 may be regarded as generally satisfactory and were due to a combination of increased gross earnings and decreased expenses. From January to June inclusive, the gross earnings in 1925 were less than for the corresponding months in 1924. The movement of the large western crop made itself felt towards the end of the year with a consequent increase in gross revenue of 3.9 per cent for the year. In the face of the decreased business which obtained during the greater part of 1925, every effort in the direction of economy was put forth and maintained throughout the whole of the year. These efforts resulted in a decrease in expenses for the year of $5,637,143.25.

So that it was due to the efficient management of the Canadian National Railways that the showing was so favourable this year. I find in the same report that the Dominion government's estimate for all grains in the Canadian grain crop for the calendar year 1925 was 1,126,113,000 bushels or an increase of 33.5 per cent in the crop. In other words, the farmers of Canada in 1925 had 375.371,034 bushels more than in 1924. That includes all grains, and it is fair to assume that on the average the grain crop would run about $1 per bushel. We may therefore fairly estimate that $300,000,000 was earned by the farmers of Canada last year in excess of the year before. Yet the railways in their general traffic did not do nearly so well as they did in the previous year. The report of the Canadian National Railways makes this statement: The grain movement to the head of the lakes was increased by 9.9 per cent, and in addition to that 9,000,000 bushels were shipped out at Vancouver. It will be found that this movement of grain accounts for all the increase that was enjoyed by the two great railway systems of the country. My argument, therefore, is that the traffic arising from sources other than the carriage of farm products was substantially less in 1925 than in the year before, so that in consequence we had a greater degree of general business de-

The Budget-Mr. Hocken

pression last year. Take the passenger earnings of the railways. The passenger earnings of the Canadian National Railways decreased by $615,516. The number of passengers carried by the Canadian National Railway system last year showed a decrease of 1,032.641, or 4.5 per cent.

We all rejoice in the growing prosperity of our national railway system, but the credit for this belongs-I do not think the government will be bold enough to claim it- to the efficiency of the management and to the loyalty of the 95,000 employees. This efficiency is indicated by the fact that with an increase of $9,000,000 in gross earnings

all from the abundant harvest-there was a decrease of $6,000,000 in operating cost.

I should like to draw the attention of the House to the fact that the depression in general traffic resulted in a decrease last year of slightly over 3,000 employees on the Canadian National Railways and of 1,500 on the Canadian Pacific Railway. So that railway employees to the number of 4,500 lost their positions, or, if not, they worked half or part time. When 4,500 men connected with these two great railway enterprises, employing in the case of the Canadian National

98,000 men and, I presume, a proportionate number for the smaller mileage of the Canadian Pacific, are without work for a year, or are working only half time, it cannot be argued that this country is in a prosperous condition.

But, Sir, I think of all Canadians my right hon. leader (Mr. Meighen) should rejoice most over the prosperity of the Canadian National Railways. As was pointed out by my hon. friend from SouthWellington (Mr. Guthrie), the right hon. gentleman had a desperate fight beforehe succeeded in merging the Grand

Trunk and the Canadian Northern into one great national railway system. He was not assisted by hon. gentlemen opposite. I sat in the House during that period and I know the pessimism that prevailed among the Liberal party with regard to the future of the Canadian National Railways, and that pessimism has continued almost down to the present day. But in spite of all the opposition which he encountered the right hon. leader of this party perservered in his efforts and succeeded in establishing this great railway enterprise-a railway system run by the people and for the people. To-day, Sir, we see it rapidly approaching the time when, as he predicted, it will meet all its fixed charges, and become a valuable asset. Indeed, a prominent railway man has stated that it will be an asset equivalent in value to paying off our national debt.

Mr. Speaker, let me discuss for a moment or two the decrease in taxation. We are told that during the past fiscal year there was an increase in revenue of $29,965,000, in consequence of which the Minister of Finance is relieving the country of $25,000,000 taxation- entirely by reducing the income tax. But I should like to point out to the House that the collections of excise taxes last year amounted to $85,000,000. There are no reductions in those taxes. On the contrary, the sales tax was raised from 3 per cent to 6 per cent by the present government, and afterwards reduced to 5 per cent-at which figure it still stands -as against 3 per cent under the government supported by the Conservative party. That means the government since 1921 has added 40 per cent to our excise taxes. That percentage of $85,000,000 represents $34,000,000. So while the administration say, "We are reducing your taxes by $25,000,000," they stand convicted of having raised the taxes of the people to the extent of $34,000,000, or if we take their estimated figures for the fiscal year ending March 31, 1927, $95,000,000, they will collect an additional $38,000,000 of taxation during this period. And yet they ask for the applause of the people. Well, they are not much entitled to it.

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?

An hon. MEMBER:

They are getting

it.

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CON

Horatio Clarence Hocken

Conservative (1867-1942)

Mr. HOCKEN:

I doubt that very much.

A government which increases taxation by $39,000,000, and then comes seeking credit for a reduction of $25,000,000, is surely not in a strong position to ask for the thanks of the heavily burdened taxpayers of this country. What the government should have done in addition to decreasing the income tax-and that is something for which the country has been clamouring for a long time as being long overdue-was to cut off that 40 per cent of excise taxes. Then we would have had our taxes approximating very close to those which were collected by the Conservative government. The present administration put on the receipt tax and took it off, and then said, "What a good boy am I!" And that tax was entirely a tax imposed by this government. The cheque tax was added to enormously. Originally under the preceding government it was two cents on all cheques; under this government it is two cents on every fifty dollars. Therefore I submit that the excise tax collected last year was 40 per cent in excess of the sales tax collected in 1921.

I go further, Mr. Speaker, I say that of all taxes collected the most burdensome is the sales tax. It is felt most heavily by the consumer, it is felt in every home, and when it is

The Budget-Mr. Hocken

finally paid it comes close to a 10 per cent tax on many of the necessaries of life. It i3 a more grievous tax to bear than the income tax-which does not touch the average home- or the tariff tax, which if it falls at all on the people at least gives them in return steady employment; and without steady employment, even if one had no taxes to pay he would still be poor indeed. So that the tax felt most seriously by the people is the sales tax, which this government has increased to an extent equivalent to an increased collection of $38,000,000. So I do not give them very much credit for that.

Now, Mr. Speaker, the government is evidently expecting a great deal of gratitude from the people for reducing the taxes on automobiles. My friends to the left have been charged with forcing the government to make that reduction. For myself, I do not think that is the case. The Progressive party made its arrangement with the government at the beginning of the session, and the programme brought down in the Speech from the Throne is the programme which the Progressives insisted upon as being necessary to gain their support. But in connection with this induction in motor duties something happened. There was some other influence brought to bear upon the government, or else the government was simply dealing with those constituencies in which motor factories existed in a fashion that was called by one of that party at one time "cold justice," or, in other words, getting even with them. I think my hon. friends to my left see the wisdom, and the fairness, of the amendment introduced by my hon. friend from Fort William (Mr. Manion). His amendment says that before this reduction is made it should be submitted to the Tariff Advisory Board. That is a board of so-called experts, and if they are not experts, they can get expert help.

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PRO

John Evans

Progressive

Mr. EVANS:

Why not submit it to the tariff commission of 1920?

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CON

Horatio Clarence Hocken

Conservative (1867-1942)

Mr. HOCKEN:

I would hardly expect this government to submit it to any body but one of its own creation. They would not submit it to the tariff board of 1920 surely; they would not have confidence in them. Apparently they have no confidence in their own board either. They have appointed three men of some eminence in the country, but they have not sufficient confidence in them to submit to them this very first tariff change that comes up for settlement. In the Speech from the Throne there is a direct statement that there would be no reduction in duties, nor interference with the tariff,

until the board of experts had considered each proposed change and made their recommendations. But only a few days afterwards, comparatively speaking, the government go back on their promises and make a cut in the automobile duties the effect of which neither they, their experts, nor any other person can know without a most exhaustive and expert investigation-a cut that, in my opinion, is calculated seriously to impair one of the basic industries of this country. I submit to my friends of the Progressive party that a fair position for them to take is that this question of the duties on motor cars should be submitted to that tariff board. That is all that is being asked in the amendment moved by the hon. member for Fort William. That is not only fair, Mr. Speaker, but that is the record on which my hon. friends of the Progressive party rest to-day.

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PRO

John Evans

Progressive

Mr. EVANS:

That will come for the next cut.

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April 29, 1926