February 25, 1927

COMMITTEE ON RAILWAYS AND SHIPPING


Mr. W. T. GOODISON (West Lambton) presented the first report of the select standing committee on railways and shipping owned, operated and controlled by the government. On motion of Mr. Goodison t'he report was concurred in.


PRIVATE BILLS

FIRST READINGS


Bill No. 81 (from the Senate), for the relief of Amy Humphrey Lowe.-Mr. Rennie. Bill No. 86 (from the Senate), for the relief of Stanley Moorhouse.-Mr. Casselman. Bill No. 98 (from the Senate), for the relief of James Arthur McNish.-Mr. Garland (Carleton). Bill No. 99 (from the Senate), for the relief of Elizabeth Maud Maitland.-Mr. Hepburn.


LOAN TO CANADIAN NATIONAL RAILWAYS

LIB

James Alexander Robb (Minister of Finance and Receiver General)

Liberal

Hon. J. A. ROBB (Minister of Finance) moved:

That the order of the House referring the estimates for 1927-1928, respecting loans to the Canadian National Railway Company and the Canadian Government Merchant Marine Limited, laid on the table on Tuesday 15th, February, 1927, to the committee of supply, be discharged, and that the said estimates be referred to the select standing committee on railways and shipping owned, operated and controlled by the government.

Topic:   LOAN TO CANADIAN NATIONAL RAILWAYS
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Motion agreed to.


THE BUDGET

CONTINUATION OF DEBATE OF THE ANNUAL


The House resumed from Thursday, February 24, the debate on the motion of Hon. 32649-41J J. A. Robb (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 Mr. Coote.


CON

Henry Herbert Stevens

Conservative (1867-1942)

Hon. H. H. STEVENS (Vancouver Centre):

Just a moment or two prior to the opening of the House, we, the members of the House and others, were favoured with a very brief, all too brief, exhibition of singing, a rendering of the sweetest of music by the visiting choir from the old land, and I thought that, as the first member of the House to speak following that interesting occasion, it would not be out of place to express my personal appreciation of the splendid manner in which they rendered the various numbers on their program an expression which I am sure will be shared by others, and to extend to Mr. Sydney H. Nicholson, the organist, and the Rev. Edmund

H. Fellowes, the director of the choir, our sincere and cordial felicitations.

It might properly be hinted to me that the atmosphere created by that pleasing incident is not quite fitting to a debate upon the hard and material facts which are supposed to be dealt with in a budget. Indeed one of my very good friends from the other side of the House, knowing that I was about to speak, intimated to me very kindly that there should be no bitterness left in my soul. I wish to assure the House that there is no bitterness in my soul now or on any other occasion when I am dealing with subjects such as we have before us this afternoon pertaining to the business of the country. After all, it is the business of members of the opposition to take up government measures or proposals and subject them to the most critical analysis that we are capable of, and if there are weaknesses in them to expose those weaknesses. On the other hand it is our privilege, if not our duty, to differ from those who differ from us, and, in so far as the views we hold are honest and honourable, to advance those views with all the vigour and force of which we are capable, and to-day I intend to follow the course which I have followed in the seventeen sessions I have been in this House by dealing with this subject, I hope fairly, but with that degree of energy with which a kind Providence may have blest me.

We have immediately before us a resolution that this House shall resolve itself into a committee of ways and means, with an amendment thereto moved1 by my hon. friend from Macleod (Mr. Coote), making one or two suggestions. With this amendment I find myself able very largely to agree. I certainly do not agree with all of it. I would not hare worded it in exactly this manner, but

The Budget-Mr. Stevens

with much of the sentiment in the resolution I find myself in accord. I will just briefly deal with the amendment, but as the major part of my remarks will be directed to other subjects, I shall not spend more than a moment or two on the amendment. I may say that the last clause of the amendment is the only explicit and clear statement. The balance of the amendment is more or less of an expedient, a grouping of words, calculated, I think, to embarrass some, and to give expression to certain views not too clearly, indeed somewhat ambiguously. But the last clause reads as follows:

And further that no systematic effort is being made to reduce our national debt, the interest on which absorbs so large a proportion of the revenues of the Dominion.

I intend to deal with that question in a moment, and I find myself entirely in accord with this: that the government should be brought to task for not having dealt with the question of the public debt in a little more definite and efficient manner than they have done. In regard to the balance of the resolution, it refers to the reduction in the high cost of living. This is a term that is used very, very frequently in this House, on the hustings and elsewhere. It is a popular cry, it has a strong appeal on the hustings, politicians like to use it, and I have no particular criticism of it. But I would point out to the House that the high cost of living, according to our view, is not merely the price of goods. It involves also whether or not a man can make a living at all, whether or not he has an opportunity to work. It is of infinitely greater importance to our people that they shall have an opportunity to earn rather than to be given the cost of living figures of to-day as compared with those of a month or a year ago. So I find no great difficulty in facing that clause, because the policy I stand .behind to-day and have been standing behind for years is a policy calculated to give Canadians a maximum of employment within the bounds of their own country and the highest standard of living. So I repeat, I have no difficulty in satisfying myself that we are able to offer to the people a policy which will give them the maximum of comfort in so far as it refers to the cost of living.

Now, Mr. Speaker, I wish to turn my attention to the main subject, namely, the committee of ways and means. I think it was Sir Robert Peel who, on one occasion when facing an exceedingly difficult and perplexing crisis in the financial affairs of the old land, said that half of the task was accomplished when you frankly faced the question. That is, if this House will consider and study the problems

with which the country is faced and frankly look them in the eye, half the solution is arrived at. And so this afternoon I shall address myself very largely to bringing to the atten-ion of the House three major problems. These major problems I intend to analyze in some degree, and for this purpose I am going to take five-year periods. The Minister of Railways (Mr. Dunning) is not in his seat. Last night he invited us to consider the five years of Liberal rule, and in doing so he suggested that there had been a progression of events leading to some definite conclusion. I propose to examine this five-year period, and tq place it in juxtaposition with the five-year period preceding, so that we may get a clear vision whether or not this country is progressing, as some claim, and to what degree that progress is of value or may be measured.

Among the institutions that we have inherited from the old land is the parliamentary system of government. A subdivision of that is the budget system, generally, I think, admitted by all to be the most effective method of dealing with the financial, trade and other affairs of the nation. This budget system is supposed to give to parliament certain information. For instance, it is supposed to deal with our financial condition, that is, our debts to our own people and to other nations; it is supposed also to deal with the question of taxation, that is, the revenues secured during the past year and the proposed methods of raising those revenues in the future, together with whatever taxation changes may be contemplated; in addition to that, it usually outlines for the information of the people the conditions of industry and trade, both internal and external. It is my intention to deal with these three phases of our country's affairs.

In the first place, I wish to say to the Minister of Finance that much as I appreciate his geniality and all those fine qualities that we so much admire in him, in my opinion his budget fails adequately to reflect the real conditions of the country. This budget does not budget for the future; it offers no new ideas; it is a static budget, it is dormant, it is stationary; it shows no progress, it offers no hope, it does not look into the future or give to us any idea that the government has the slightest appreciation of the rapidly changing world conditions, or that there are certain conditions in this country calling for new or different treatment from that of the past; it offers nothing in the way of suggestion as to the replacement of our depleted natural resources; it does not indicate that the government is giving that problem the slightest consideration, the necessity of which I hope to demonstrate in the course of my

The Budget-Mr. Stevens

remarks. I say to the minister also that it is a misleading budget. It is full of equivocations. It announces, for instance, a reduced duty-there is no reduction in duty; it announces lower taxation-there is an increase of taxatisn; it announces a surplus-this surplus is a myth; it also states that there is abounding business-this is only partially true. '

The budget, however, is consistent in one respect-it reflects a complete abandonment of the pre-election pledges of the Liberal party. I have only to call the attention of the Minister of Finance and his colleagues to the remarks of the hon. member for La-belle (Mr. Bourassa) yesterday afternoon, when he unfolded the inside secrets of the Liberal party and reminded us that ?omc years ago when that party went to the country with certain views that it persuaded the people to adopt, it carried on the old fiscal policy, slightly modified here and there, but in principle the policy of Sir John Macdonald, and that secret assurances prior to the election were given to the business interests of the country that the public utterances of the party would not be given effect to afterwards should it be successful at the polls. And so I say now we come to a very similar condition: the pre-election pledges of the Liberal party are not reflected in the budget. Not that we ask that they should be; but we do ask, Mr. Speaker, with some degree of right, that a party which led the people to believe that a given set of results would follow from a given set of actions should at least carry out its pledges on the faith of which it has received a mandate from the electorate, whether those principles are right, or whether other principles adopted in the place of those abandoned are not really the right principles.

Last night the Minister of Railways was very fulsome in his praise of the Minister of Finance for having brought down his budget so early. To my mind this suggests just a little clever political strategy. The Minister of Finance smiles, but he knows it is true. He had the Duncan report on the maritime provinces before him. The government had it in their sanctum over in the east block. They studied it and they divided on it, and they are divided on it to-day, as everybody knows. They are in a dilemma regarding that report. It calls for certain things which ought to be in this budget but the government dare not put them in this budget.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE OF THE ANNUAL
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

James Alexander Robb (Minister of Finance and Receiver General)

Liberal

Mr. ROBB:

What, for instance?

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE OF THE ANNUAL
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

Amendments to the tariff

to give effect to certain recommendations of the report. The government do not dare ta

deal with that report, Mr. Speaker, because they are divided on it. So they said: Here, let us get this budget in, and then after it is out of the way we can make some promises to overcome the demands of the maritime provinces.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE OF THE ANNUAL
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB-PRO

Robert Forke (Minister of Immigration and Colonization)

Liberal Progressive

Mr. FCRKE:

The hon. gentleman is as

good as the Ottawa Journal.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE OF THE ANNUAL
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

If the Minister of Immigration (Mr. Forke) will possess his soul in patience I will deal with him in a few moments. This budget has been heralded

throughout the country as highly satisfactory.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE OF THE ANNUAL
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Louis Édouard Fernand Rinfret (Secretary of State of Canada)

Liberal

Mr. RINFRET:

Hear, hear.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE OF THE ANNUAL
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

The Secretary of State

says "hear, hear".

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE OF THE ANNUAL
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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?

An hon. MEMBER:

Hear, hear.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE OF THE ANNUAL
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

Another minister says

"hear, hear." You will observe they are ministers who say that. Well, the budget has been welcomed throughout the country, because it was feared that following on the preelection declarations of the government, particularly in western Canada, there would be drastic changes in the tariff when the budget was brought down. But that apprehension has been allayed, for there are no great changes in the tariff, and so a sigh of relief has gone up from one end of the country to the other. A safe hand, it is felt, is at the throttle. There is no danger to industry. Everything is promising because the tariff has not been tampered with. Let me read the words of the Bank of Montreal issued in their official private bulletin of February 23:

The early delivery of the budget speech by the Dominion Minister of Finance, and the announcement that no tariff changes are to be made, should be helpful to business by removing that uncertainty and hesitancy in mercantile transactions which sometimes wait upon the late pronouncement of government fiscal policy.

Yes, the budget was welcomed for what it did not do, not for anything that it did. We welcome it in so far as in it the government has stayed its hand in further reductions of the tariff. The government announces in the budget that it is not its intention this year utterly to destroy the remaining fragment of a protective principle in the tariff. In other words, they have given the protective policy a tentative reprieve from the hangman's noose.

This is called a Robb budget, and I use that term without any personal reference to the minister. It is indeed a rob budget in the sense that it robs Peter to pay Paul. It is a budget which announces a reduction of taxation while as a matter of fact there is just

The Budget-Mr. Stevens

a slight shifting of the burden of taxation. The taxation may be lowered in some small respects here and there, but the net result is an increase, as I shall well demonstrate in a moment. Let me deal with the budget, or rather the budget subject, because the budget itself would not require very much treatment. I pointed out a moment ago that the ways and means committee would have under its consideration normally the question of debt, the question of revenue, or the levying of taxation, and the question of trade conditions; and I intend to examine the whole subjeot in that order.

In the first place, I will discuss the debt. The minister announced that there would be a reduction in the debt, and in this connection I desire to bring to the attention of the House a singular fact. I have here the figures from each of four speeches delivered by the present Minister of Finance, and I will read them all to the House. On April 10, 1924, he said our surplus would be $20,750,000, to be applied to the reduction of the public debt. On March 24, 1925, he said that the public debt had been decreased by $35,900,000. On April 15, 1926, the minister informed the House, there had been a reduction in the debt of $22,350,000. On February 17, 1927, at page 387 of Hansard . the minister made the statement that there would be a reduction of $31,000,000 in our debt.

The individual reductions indicated iin these four announcements total $110,000,000, so that there should be a reduction in the debt to that extent from the year 1922. Each year this government has officially announced a reduction to the amount I have quoted, the total being $110,000,000; and bearing that in mind I would ask hon. members to follow me in an analysis of the public debt. There are two terms used in referring to the debt: one, the net debt, is the popular expression; the other is the funded debt, or, as my hon. friend from West Calgary (Mr. Bennett) described it, the dead weight debt. I myself prefer to call it the mortgage debt of the country. Now, the term "net debt" is a misnomer; it is meaningless. I hold in my hands the Public Accounts of the years between 1922 and 1926.

I take for purposes of illustration the latter year. In the Public Accounts, on page 3, will be found the balance sheet of the Dominion of Canada, and I would invite every hon. gentleman who has any knowledge of accountancy to examine that statement. What do we find in it? We find among the assets certain sums mentioned under various headings. For example, there

is "cash on hand." What does that represent? It means simply current cash that happens to be in the hands of scores of the representatives of the government throughout the Dominion, and so far as it has any relation to the reduction of the debt, it does not amount to the snap of the finger. It may be needed to-morrow; it is simply cash in the till carried from day to day, and represents no resources from which the funded debt may be paid. We might term it "petty cash " Then there is "specie reserve;" that is the gold reserve kept in the treasury in Ottawa against Dominion notes. That is something that cannot very well be used for the reduction of the fixed debt. Again, there are advances to the banks under the Finance Act; that merely refers to the fluctuating loans to the banks under that act to help the business of the country.

On the other side you have a certain amount of liabilities, including various items such as trust funds, post office money orders, outstanding Dominion notes in circulation, and so forth. The point I make is this: after subtracting the liabilities from the assets there is a net balance shown which is referred to as the net debt of the country, but which I submit has no relation whatsoever to the real debt. It is merely a balance between your assets and your liabilities, merely a bookkeeping sum; it is nothing more nor less than, a means of keeping a double entry set of books in order. Now I take the funded debt, schedule (t), which gives the sum of $2,471,000,000. However, before I discuss the funded debt I will make a further reference or two to what is called the net debt. I find that the net debt on March 31, 1922, was $2,422,000,000 and on December 31, 1926, including the amount paid off last fall, it was $2,343,000,000; that is to say, we have a reduction in the net debt of $79,000,000, in a period of five years. That' is nothing for this country to be proud of. I ask, where is the $110,000,000 of a reduction in the debt as announced by the Minister of.Finance officially year by year? It is not reflected in these figures; it cannot be found in the blue books; it is not there. It is a myth. But stranger still, I find that as between the 1922 reports and the Public Accounts of 1926, there has been a reduction in the circulation of Dominion notes of $58,880,000, which forms a part of this $79,000,000 reduction in the net debt. Let me put a question to my friends from the west who for the last ten years have been quite serious in their economic studies. Do they consider that a re-

The Budget-Mr. Stevens

duction in the circulation of Dominion notes is of any great advantage to the Business of this country?

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE OF THE ANNUAL
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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February 25, 1927