April 19, 1932

LIB

James Houston Spence

Liberal

Mr. SPENCE:

Are there any other additions the hon. member would like to take in?

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

Alfred Edgar MacLean

Liberal

Mr. MacLEAN:

' If the hon. member for Parkdale will have patience I may show him

that there are others. Certainly if he waits until another budget is brought down he will see a further substantial deficit.

If the present government had increased the public debt and had shown deficits without increased taxation, there might have been some excuse for them. But we find that deficits have increased, in spite of heavier taxation all along the line. If those deficits had been made without additional taxation, we would not think so much of them. Last year when the Prime Minister (Mr. Bennett), who was then acting as Minister of Finance, brought down his budget, his estimate of new taxation was $78,000,000. In the budget brought down this session we find an estimate of $55,000,000 for additional taxes. The figures show that in two years this government have imposed in additional taxation the sum of $133,000,000, and at a time when this country should be receiving relief from taxation.

If the Conservatives had carried out a few of the promises they made during the election campaign the deficit would be much greater than it is. What would have been the situation in Canada to-day if they had gone on with only one promise, that concerning the old age pensions, in connection with which an expenditure of $25,000,000 was involved? Had that promise been implemented, undoubtedly the deficit would have been greatly increased. As you know, Mr. Speaker, this policy of old age pensions has not been brought into effect in Quebec or in the three maritime .provinces, and the government in supplementing the old age pensions is only paying some 75 per cent to the provinces that have adopted the legislation.

Hon. gentlemen opposite when they were in opposition promised that they would start a stream of money flowing over this country. I remember the Conservative campaign literature published in my own county at that time contained this promise among others. What do we find to-day? Instead of this flow of money into the pockets of the producers and consumers of this country, we find the flow of money is out of the pockets of the people into the coffers of the government in the way of tariff and taxation-* $133,000,000 of added taxation in two years. Now, if increasing the tariff and taxation burdens of the people would balance the budget, this government should have succeeded, as they have followed that course. An advertisement in the Citizen runs: The more you tell the quicker you sell. But our friends opposite might adopt this slogan: The further they go the more they owe. I be-

The Budget-Mr. MacLean

lieve the time will soon come when the people will demand that the government go to the country and let the electorate decide whether they are satisfied with their record.

As I have already said, reducing the salaries of those who have been serving the country well has been resorted to by the government to help out the present financial stringency. This was not included in the many promises which our hon. friends opposite made before they came into power. Nearly everything else they promised but this reduction of salaries, and it has come as a great surprise to the public service. I believe the tariff changes are largely responsible for the difficulties we are in to-day. This government have a policy diametrically opposed to ours, and they are pursuing that policy with a vengeance. The present Prime Minister, speaking in the house in 1927 said:

Furthermore, and it is on this point that there is an essential difference between us, my hon. friends opposite are more concerned with foreign trade; we are more concerned about domestic trade. They are concerned about developing channels of trade that take our ships, they say, to the seven seas; we are concerned with bringing people to Canada and giving them work to do in the development of our country and at a proper living standard of wages.

This proves conclusively that the policy of the Conservative party is directly opposed to the policy of the Liberal party. As I said before, the policy of the Liberal party is directed to extending our export trade, and it was wonderful how it did expand during the Liberal regime. But immediately our friends got into office they saw fit to increase the tariff, with the result that we have lost our best customers and to-day we find ourselves with a surplus of products which we are unable to market. This home market that they were going to build up overnight, about which our good friend the Prime Minister waxed so eloquent in 1927, has not developed as he and his party expected. When he was addressing the house in 1927 I remember asking him what he expected to do with our surplus products while he was building up this home market. His answer was, "We will sell them." But it has been simply impossible to sell our surplus products, and the home market has not developed. Later on the right hon. gentleman stated it was not a matter of a year, but perhaps of generations before that home market could be developed. As I said at that time so I say now, what is to become of our surplus products while that home market is being built up? The Conservative party were going to give everyone who wished to work a chance to work, they were going to give the

Canadian workingmen a full dinner pail and a good many other things when they came into office. Well, our hon. friends have had that opportunity, they have been in power for two years, but up to the present we do not see any improvement from the putting into effect of their policy. Evidently the high tariff policy which they believed would build up industry and improve the economic situation has not worked out as expected. Let me take the automobile industry as an illustration. In 1929 our exports of automobiles and parts were valued at over $47,000,000; in the eleven months of the last fiscal year those exports are down to $4,000,000-a decrease of nearly $43,000,000 in the short period of two years. It is almost unbelievable, but this is what the record shows. No doubt the same condition obtains in a good many other industries.

As I have said before, this budget holds out no hope for the farmer, nor for the manufacturer, nor for the consumer. It is just another wet blanket thrown over agriculture and industry. I can see nothing in it for the benefit of the maritimes. Let me contrast this policy of restricting trade with the policy of trade expansion so well expressed by our former Minister of Finance, the Hon. Charles A. Dunning, on May 1, 1930, when he said:

Canada will not engage in a tariff war with any country. The world shows at the present time too many examples of disaster following such a course. As a great exporting nation our course must be the contrary one of facilitating trade with those who facilitate trade with us. Those who raise prohibitive barriers against our products entering their markets must expect that we will extend favour to our own good customers rather than to them. I speak in no spirit of retaliation. I would much rather extend lower tariff favours to those who extend them to us than to impose prohibitive tariffs in return for like treatment.

Lower tariffs to those who buy most freely from us makes for trade extension and wider markets for our products, while prohibitory duties to meet prohibitory duties generally applied constantly tend to restrict our export markets.

Nothing can be more to the point than that wise declaration of tariff policy, and events since that time have proved that the Hon. Mr. Dunning was correct. Our friends opposite have said on different occasions that there would be no retaliation. I can point out time and again where news items have appeared in the press showing that retaliation has been practised by a great many countries against Canada. Senator Robinson, speaking in the United States Senate, said:

We started this high tariff by putting on embargo rates. The othei; countries followed, and it makes no difference in the final result whether they were moved by a desire for

The Budget-Mr. MacLean

revenge and reprisal or by the non-vindictive purposes to favour their own industry. Tariff barriers such as those now standing are comparable to a blockade of commerce.

He went on to say:

To say that the United States could close home markets to foreign traffic and live by herself was silly and untrue.

If that statement is true concerning the United States, which is a much more self-contained country than Canada, it is true in a greater degree regarding this dominion. We find that Germany has imposed special duties against goods from Canada and Poland. The newspaper item states:

In the case of Canada, the special customs tariff would be postponable for a period of six months in the event that the Canadian government negotiated for a commercial treaty with Germany.

The Irish Free State has given notice of a tariff to affect all foreign imports that can be made at home; another country that has put up tariff barriers against Canada is Italy, and we find our trade has fallen off. Our hon. friends opposite cannot blame depreciated currency for the falling off in trade, because if ever theTe was a time in the history of the dominion when the United States could have bought from Canada, it was during the last two years. With their inflated currency they were able to buy here and the premium on exchange would almost wipe out the tariff between the two countries so far as they were concerned. Notwithstanding the fact that they had this favourable rate of exchange, our trade with them and the rest of the world has fallen off to a marked degree. Our exports to all countries, United States included, declined from $1,120,000,000 in 1930 to $605,000,000 in 1931, or a decrease of over $515,000,000 in two years. I ask the question here and now: Who is to blame for this state of affairs? Our hon. friends opposite cannot have things both ways. The Minister of Trade and Commerce (Mr. Stevens), speaking in the house the other evening, said that he and his government took credit for shutting out imports. He said that they had been able to balance the trade of Canada and that we now had a favourable balance of trade, that position being achieved, as he claimed, by shutting out imports. If this government are going to take the credit for shutting out imports, they must also take the blame and the condemnation of the Canadian people for destroying our export market, because it will be found that our exports have declined in practically the same proportion as our imports. Will the minister explain what has happened to our exports that they have declined almost equally with our

imports? As regards our trade with the United States, our imports have declined 52 per cent, while our exports have declined 35 per cent, so that the decline is about the same in each case.

One thing that has tended to discourage trade both from and to Canada, but especially in respect of goods coming in, has been the application of the dumping duty. This duty, which is really an increase in the tariff, has been applied by the present government in a very decided way. We can cite instance after instance where this dumping duty has been applied by the government and where, owing to the rulings which have been put into effect by the Minister of National Revenue (Mr. Ryckman), it has been almost impossible for importers and merchants to carry on trade. Our hon. friends opposite surely must realize that we cannot have trade all one way, and that if we are going to sell abroad, we must also buy. As I have stated, the tendency to shut out imports has been one of the greatest factors in destroying our export markets and placing our farmers and other producers in the position in which they find themselves to-day. It was Nicholas Murray Butler who said:

The last place to look for security is in annaments and the last way to seek prosperity is through isolation.

The Conservative party seem to believe in the isolation of trade, of shutting out imports, of living to ourselves, but I think they are finding that such a policy not only is destroying the revenue of the country, but has brought about stagnation in trade and the unemployment situation as we have it to-day.

These hon. gentlemen, not satisfied with the tremendous increase which they have made in the tariff in the past two years, have made this year another very substantial increase by raising the excise tax to 3 per cent. This cannot by any stretch of the imagination be termed an excise tax; it is purely and simply an increase in the tariff, because it applies to everything that comes into the country. Back in 1924 the average tariff was around 15 per cent; at the present time it is

22.1 per cent, the highest of any country in the world with the exception of the United States and Spain. We were led to believe that many articles would be exempt from the tariff which our hon. friends opposite imposed in the short session of 1930, but owing to the imposition of the dumping duty and the excise tax, very few articles now remain on the free list. If we take bills that some people have handed to us, we find that in many cases this

The Budget-Mr. MacLean

dumping duty works a very severe hardship. I should like to give just one illustration, that of a 'bill that was handed to me by a newspaper. It says:

The finished bill was made up like this:

Six articles at $5 each $30 00

Exchange 15 per cent 4 50

Forty per cent ad valorem duty.. 13 80

Additional duty, 35 cents per lb.. 2 28

Four per cent sales tax 2 04

One per cent excise tax 0 51

Total $53 13

We could quote a great many other items which have been handed in to us, where merchants find it almost impossible to carry on under present conditions. The Montreal Star, writing about the present budget, said:

Taxation of any kind retards recovery. The tax collector is the best friend that depression has. When a community is in the condition ours is in to-day, any impost which blocks business or chills initiative slows down the wheels of production and marketing, and tends to postpone the return of those happy days when things were at least "normal." It does not matter so very much, except to the individual, where the blow falls. In every case, it stuns public confidence, saps energy and reduces enterprise.

In conclusion, it is pointed out that the real sinners in raising taxation are the people who apply political pressure to the ministers to compel the expenditure of public funds.

Every man or interest that goes to Ottawa demanding a new expenditure is the poorest sort of patriot to-day unless his expenditure is absolutely imperative in the public interest.

The government, it is pointed out, have made economies, but have not made enough.

In passing the estimates, not a dollar should be voted -which cannot prove its right to exist.

Now this sales tax which is proposed is going to affect very severely some of the industries right in the county which I have the honour to represent. Take the silver fox industry. This sales tax, which will apply on biscuits, will hit that industry very hard, because a large proportion of the food used comes under the category of biscuits and cereals of different kinds on which the sales tax has been increased. If you add on every hundred $6 of an increase in price, it simply means that business cannot carry it; and on the other hand it will almost ruin the manufacturers of these biscuits who are carrying on at the present time under hardships and who also are performing a splendid service to the fox industry in the manufacture of this food product. The same complaint comes in regarding the duty and the sales tax being applied to ice cream. They say it is impos-

sible to increase the standard price of ice cream, because that has been regulated so long at a certain price that an additional price cannot be charged, and therefore it will reflect back on the producer of dairy products. So that it hits the farmer in that way. Containers for dairy products of all kinds are also included in this six per cent sales tax.

If hon. gentlemen apposite had told the people of this country that they intended to carry on in this way and put these policies into effect, I do not think they would have been placed in power. If they had told us that the first year they had the reins of government they would increase the debt of this country by $84,000,000, do you think the people would have given them the reins of power? I do not think so. If they had told the people that this year they would have $119,000,000 of a deficit, I do not think they would have been put in charge. Would any business concern think of carrying on under such conditions? No, sir. I submit that the first thing a business concern would do would be to call in the manager and simply tell him: "You have put my business behind in two years to this extent. I have undertaken to engage you for four years, but I find that it is far better for me to call you in, pay you your four years' salary and save my business rather than continue you in charge for four years, because by that time I shall have no business to save." This is the situation that we are in to-day, and where our friends will land us by the time their four years are up is more than we can tell.

But the worst feature of this budget is that it interferes with and annoys all business. This three cent stamp on cheques is only a small thing, but still it is very annoying and hinders business, and the six cents on every hundred dollar cheque is a tremendous tax on business. As I said, moreover, there is this six per cent sales tax and three per cent excise tax in addition to the regular tariff and the dumping duty imposed in a great many cases on top of that. Is it any wonder that business to-day is languishing and that our farmers and fishermen cannot carry on?

Our friends down in the far corner of the house have introduced a subamendment. That subamendment wipes out the amendment which has been moved by our good friend from Shelfourne-Yarmouth (Mr. Ralston): If our friends had offered a subamendmenl amending our amendment there might have been some chance of our supporting it. But when they introduce an amendment which simply wipes out the amendment moved by this side, it is impossible for them to expect

Questions

us to support it. They go on to say that they are going to restrict national production. I am not altogether clear as to what their proposal is. Do they propose to restrict the output of farm products? Do they propose to restrict the production of other commodities? Just what their resolution means along that line is something in regard to which I must say I am not altogether clear. Then, regarding the financial system, they say they are going to nationalize it. That may mean doing away with our present banking system and establishing something else in the way of control of our monetary system. These are very far-reaching reforms which would need to be given a good deal of study before they could be considered by this house and given to the public as legislation. Hon. gentlemen claim that money at the present time does not begin to compare with what it was worth when the debts were created. I do not suppose it is any fault of the present banking system if debts were created when wheat was $3 a bushel or when potatoes were selling at $2 and $3 a bushel, whereas now these commodities are worth so very little. That is a condition that has been brought about, I claim, more by the trade policies of this government than, possibly, by the monetary system; and to enter upon reforms such as our friends have advanced is, in my opinion, going a long way. However, there may be a good deal of merit in the subamendment, and, as I said, if it had been moved as an amendment to the amendment and not for the purpose of wiping out the amendment, we might have been able to support it. But under present conditions I am afraid that we cannot give it our support.

Another thing: I am surprised that our hon. friends, who are very strong on low tariffs and who back in 1921, I remember, were almost for free trade, have apparently to-day turned their backs on that policy, and now the very thing that we propose in our amendment they refuse to accept. They say, "No; we will wipe that out altogether; we will not support it." I do not know whether they have changed their ideas in that regard and now favour a higher tariff. I do not know just what their position is.

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

Pierre Édouard Blondin (Speaker of the Senate)

Conservative (1867-1942)

Mr. SPEAKER:

The hon. member's time is up.

On motion of Mr. Duranleau the debate was adjourned.

On motion of Mr. Rhodes, the house adjourned at 10.45 p.m.

Wednesday, April 20, 1932

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

April 19, 1932