March 2, 1937

THE BUDGET

DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE


The house' resumed from Thursday February 25, consideration of the motion of Hon. Charles A. Dunning (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.


CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Right Hon. R. B. BENNETT (Leader of the Opposition):

Mr. Speaker, I desire to congratulate the Minister of Finance (Mr. Dunning) upon the very complete statement he made a few days ago and for the clarity of his exposition of the position of the country with respect to its finances.

I derived some satisfaction from listening to him, for I recall that in his budget speech delivered on May 1, 1930, his only endeavour to make it into a budget speech was to estimate in May what the revenues and expenditures had been during the year ending the previous March 31. I suggested that it was desirable that in this house we should have a real budget speech in the true sense of the term, and on June 1, 1931, I suggested five factors that should be considered in the making of a budget speech. They were: first, that the financial operations of the dominion for the fiscal year should be shown; second, *that the balance sheet of the dominion as of the preceding March 31 should be shown, together with assets active and non-active and liabilities direct and indirect; third-, that reference should be made to trade and commerce; fourth, that there should be an estimate of the revenue and expenditure for the twelve months ending March 31 following; and fifth, the ways and means which would be adopted for the purpose of providing the necessary revenues to meet the proposed expenditures. It is a matter of some satisfaction, Mr. Speaker, to know that since that date every budget speech has followed that practice. So that I can congratulate the Minister of Finance the more readily in that he adopted suggestions made in 1931.

It does not occur to me that there is any very good reason why we should take any great length of time, considering all the circumstances, in discussing details of revenues and expenditures. There will be ample opportunity in connection with estimates and matters of that sort to discuss questions of expenditures; but presently I shall have some-

The Budget-Mr. Bennett

thing to say with respect to the revenues, and the effect that the raising of them has had upon the capacity of the people to pay.

So far as I can see, the minister was quite right the other day when he said that taxation had been imposed upon the Canadian people to raise a sum nearly as large as, if not larger, than at any time in their history. I can say only this, that it is my firm conviction that any effort to raise from the Canadian people by taxation any substantial sum in excess of 8400,000,000 is to put upon them a strain which they cannot bear. I think that is not an unfair statement to make, having regard to our general economic conditions, and the views expressed by economists as to conditions in new countries such as this, and their ability to stand taxation.

In this regard however I should like to revert to just one observation made by the financial critic of the party now in office, when it sat in opposition, with regard to the general raising of taxes. On April 23, 1934, speaking for the then opposition, Mr. Ralston said:

But if my right hon. friend the Prime Minister is looking for the privilege of having it said of him that he imposed taxation in this country surely his ambition is satisfied in the increase of the sales tax from one to six per cent, in the imposition of an excise tax which did not exist when he came into power but which lias been put up to three per cent, in the imposition of a two cent tax on sugar, in taking away exemptions from the sales tax, in the reduction of exemptions in the income tax; in these and in every other field of taxation I think my hon. friends opposite will be given full marks and will be held fully responsible when they come to the people of Canada, for having invented and imposed many new and onerous forms of taxation.

I wonder what Mr. Ralston, would have said if he had seen the sales tax raised to eight per cent? I wonder what he would have said had he known that this government, which has now brought down two budgets, still retains the same taxation? I wonder what he would have said had he known that hon. members who declared that a three per cent excise tax was another form of protection, as a government in its second budget would still retain that three per cent excise tax? I mention that because it is amazing, if nothing else, to find a government which in opposition so loudly declaimed against the tax on sugar, so loudly declaimed against the increase in the sales tax and the imposition of an excise tax of three per cent, now in its second budget making the declaration that it proposes to make no changes with respect to ways and means for raising the revenue of the country.

With respect to the income tax, charged as we were with increasing it, the minister was frank the other evening in saying that he had increased it slightly. And so all along the line we have the same position.

Now. I was apprehensive, remembering as I did the history of the matter, when the hon. gentleman said he proposed to make no changes with respect to taxation; for I recalled that on the first of May, 1930, standing in the place he now occupies, he reduced the sales tax from two per cent to one per cent, in the face of a deficit in this country, in the face of abnormal conditions, in the face of 824,000,000 less revenue than had been expected in the last six months of 1930, a condition which must have been known; in the face of dwindling trade in every country of the world. Why was it done? Does anyone suggest it was done to balance the budget, when a deficit was known to be inevitable? Was it for any purpose other than merely political, and was it not because of the knowledge that an election was not far off? When I hear that declaration made that we will make no concessions to the taxpayer I wonder if the same idea is in the mind of the minister and the government which pervaded their minds in 1930, and if in due season, when the occasion offers, they will make a great gesture to the people with respect to a reduction of taxation, even as they did in 1930? Those are the facts to which attention I believe might fairly be drawn.

All that may be said with respect to the balance sheet is that we have an increase in the national debt of something less than

8100.000.000. If we left out the 88,000,000 to which reference was made as coming from the profits on grain sales, we would have a deficit of approximately $95,000,000. The minister budgeted for a deficit of 8100,000.000, and this little windfall of 88,000,000 to which I shall presently refer means that the deficit is 887.000,000 instead of 895,000,000.

I do not propose therefore, Mr. Speaker, to deal at length with the balance sheet items, except to point out that we are increasing by leaps and bounds the responsibilities of the consolidated revenue fund in connection with many funds for which we are really trustees. The minister is not to blame for that. It has been the practice in this country for a generation, if not for more than that, to put into the consolidated revenue fund moneys received for superannuation funds, for annuities, for Indian lands and from the sale of school lands, and they provide working capital for the country, on the theory-

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

And the Post Office savings bank.

The Budget-Mr. Bennett

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Yes; and they provide working capital for the country on the theory that whenever called upon we shall be able to repay them. In theory that is unsound. In practice it has been useful. Whether or not having regard to the magnitude of the fund the time has come when we should carefully consider our position I leave it for this house and the future to determine. But I think it only fair to direct attention to the fact, because the sum has assumed very large proportions. I can conceive of a position where it might be difficult to obtain the necessary moneys to meet the demands which might suddenly be made upon the treasury. For instance, with respect to the school fund bonds which we gave some years ago, when the resources were turned over to the provinces, it might have been difficult, if a province had the right to demand that the money be paid, to have paid it readily. It might be difficult, too, with respect to many other matters to which reference might be made.

As to the estimated revenues and expenditures I think it is fair to say that having regard to the forms of taxation to which resort has been had the revenues have shown a buoyancy that was to be anticipated and expected. With respect to the expenditures I shall have something to say presently. But that we had a satisfactory surplus on ordinary account is quite apparent, from looking at the figures, even as the predecessor of the minister had a surplus on ordinary account during his last year of office. The present minister has a much larger one, because he has resorted to other methods of taxation, although the expenditures, as I shall presently point out, are in my judgment out of keeping with the present conditions in Canada.

Then the other question arises, namely the ways and means to be resorted to for the purpose of making good the expenditures contemplated for the next year. I have already pointed out that the minister has declared he has no intention of departing from present taxation, except in some slight items, and that he proposes to maintain the present scale of taxation.

Mr. Speaker, it must be the opinion of most hon. members that the eight per cent sales tax has worked a great hardship upon many people in Canada and that, applied as it is by wholesalers and utilized as it is by the retailer, in the sum total of the price upon which he makes his mark-up, it amounts more nearly to twelve per cent when it reaches the consumer than the eight per cent as enacted by parliament. This is a stupendous tax. As I pointed out last

year it is a strain that I do not believe the people of the country can long endure. And when I recall Mr. Ralston's vigorous denunciation of the raising of the sales tax to six per cent I can readily understand why so many complaints are heard from various parts of Canada with regard to the increase to an eight per cent rate. Under normal conditions an eight per cent rate should result in much larger revenues than we are now receiving. I recall Mr. Robb saying that he believed that in normal times in this country every one per cent of sales tax was equivalent to $20,000,000. He spoke of the remission of $20,000,000 of taxation when he reduced the sales tax by one per cent. Having regard to present price levels I do not think under existing conditions the sales tax can be said to be equal to $20,000,000 for every one per cent, but I do believe that under the normal conditions that now prevail in connection with price levels and matters of that kind it is not too much to say it is worth somewhere between $15,000,000 and $17,500,000 for every one per cent. In other words, for every one per cent of sales tax imposed upon the people of this country I think we can expect to realize at least $15,000,000, and perhaps a little more, depending upon the price of goods that are imported. That is a stupendous charge to make upon the Canadian people. I suggest it is a charge which cannot long be borne when, in the hands of the retailer, it is translated into a figure which more nearly approximates twelve per cent than eight per cent.

Closely associated with the raising of revenue is the question of trade and commerce, as has been pointed out by the minister in the speech which he made. Before one deals with that he must realize that the income tax is one of the large sources of our revenue. While the customs tax did not fall last year, it has fallen as being the principal source of Canadian revenue. At one time it was not thought possible that the income tax would yield any such sum as $100,000,000. This tax as imposed against corporations and individuals last year yielded more than that amount. It is difficult to discuss these matters in detail in view of the fact that our figures are for only ten months; however, the estimates of the minister must be taken to be reasonably accurate. I am not objecting to the budget having been brought down at an early date, having regard to the demands made upon the time of the government for other reasons, but it is difficult to discuss these matters as they should be discussed in view of the fact that as to two months we are dealing with estimates and not with realities. I

The Budget-Mr. Bennett

realize the minister had this fact in his mind in making the statements he did, but I am handicapped in what I really want to say with respect to some of these matters.

The income tax collected this year was collected on the incomes of last year. It came to me as somewhat of a surprise that this country had the measure of prosperity that it did have in 1935. Not that I was so greatly surprised in one sense, but I was surprised in view of the statements to which I used to listen from hon. gentlemen opposite. In view of the statements made by hon. gentlemen opposite when in opposition it seems almost impossible to imagine that this country could have been prosperous enough to produce

S100.000.000 from income tax; nevertheless the fact is that the largest sum of money ever realized from the income tax was realized last year.

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

The current year.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

The current year, but

from the incomes of last year. It is true that there has been an increase in the tax on corporations, but there has been no change in the tax against individuals. The increase in the tax against corporations has not been very large. Corporations whose fiscal year was not the calendar year may have had higher earnings during the latter part of their year than they had in previous years, and this may have accounted for some of the large increase in the income tax. This is a striking illustration of the extent to which a tax which in the early days yielded but a small sum of money has been made to yield a very large amount. Last year I think this was the largest single item of revenue.

I am not unmindful of the fact that the provinces have complained that the income tax is an encroachment upon their jurisdiction. Those who recall the early days of the imposition of this tax will remember that Sir Thomas White in the early part of 1917 declared that he would not impose an income tax because it was something which really was within the powers of the provinces and should be left to them to impose. Later on in the year, before the close of the session, he found it necessary to introduce into this parliament the first income tax, the effect of which was to raise a very substantial sum of money. I can remember that a previous minister on the Liberal side was of the opinion that there might be a division between individual income taxes and corporate income taxes, the provinces to secure one and the dominion the other. I think the view was then expressed that it was desirable that the provinces should secure and collect the taxes 31111-88i

on individual incomes, leaving to the federal power the right to recover taxes from corporations. No such division has been made and no such steps have been taken. It is only necessary to point out that the result has been the application of two income taxes in many of the provinces of this dominion. For instance. we have two income taxes in British Columbia, where such has been the case for many years; we now have two in Ontario and in most of the western provinces. But it goes further than that. In reality we have a third income tax because the tax now imposed operates to impose taxation upon the tax itself. The tax itself is included in the taxable income and the levy is made against the whole. Instead of its being double taxation. in reality it is treble taxation.

I suggest to the minister and to this house that the time has come when we must consider this matter. If we are to make this country attractive to new capital; if we are to induce people to invest their money in this country, we shall have to have regard to the fact- that taxation is a very important item in the minds of those who are sending their capital to new countries. For instance, I was amazed at the number of people who have gone into Kenya and other districts of South Africa to settle there because the burden of taxation is less than in most other parts of the British Empire. In all new countries great effort is being made to lessen the burden of taxation, not for the benefit of those who are there already, but in order to induce additional people to make their homes there. I received a letter the other day consequent upon a casual observation made by the Minister of Mines and Resources (Mr. Crerar) He stated that S200.000.000 had been spent in wages in the mining districts of Canada and that about S71.000.000 was all that had been paid in dividends.

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LIB

Thomas Alexander Crerar (Minister of Mines and Resources)

Liberal

Mr. CRERAR:

Wages and supplies.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

This gentleman who had been in communication with a western citizen in connection with investments in this country then said, "I am not going to risk my money if it costs that much to make a dollar." It must be known that that factor is ever in the minds of those who are seeking new fields for attractive investments. While it is very unpopular with my hon. friends to my left to suggest that there should be any lessening of the burden of income taxation, you have to choose between two things: on the one hand, the attractiveness of the country for the investment of capital, and. on the other hand, the question of the raising of revenue, or, to use a euphonious term now so current in the

The Budget-Mr. Bennett

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

But it is paid for.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

It is paid for, of course,

but it does not show in the exports of the country because no licence for its export has been issued. Therefore reliance should not be placed on the figure of $71,000,009 as indicating the amount of gold which has been actually sold, as compared with $95,000,000 in 1935, because in point of fact, I believe, the amount sold by this country in 1936 was somewhat larger than in the previous year.

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

That is right.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

realize that export trade is challenged and will be challenged more in the next few years than it ever has been before, because we shall have to meet an ever-increasing competition of wages and standards of living which do not prevail and I trust never will prevail in this country. That is the position which I put to the house at the moment, and it is one that I regard as of tremendous importance.

There are other matters that will come up during the progress of the discussion on the resolutions, and I shall not labour the point longer. But I should like to impress upon my fellow members, as far as it is possible for me to do so, the fact that we are confronted with an actuality and not with a visionary position. Some of us do not always approve of the fiscal policies or the economic set-up of other countries, but I know that in parts of the king's dominions they realize the truth of the statement I have just made. They are putting forth ever-increasing efforts to ensure to their people every possible security from the standpoint of labour by utilizing all the machinery of government to provide for themselves to the extent of their ability. That may be economic nationalism; it may be any-think you are pleased to call it, but if we take it that governments are responsible for the welfare and happiness of the people I think it is clear that unless governments can supply the people with work there can be no happiness and no ultimate prosperity. The reason the hon. member for Davenport (Mr. MacNicol) has dwelt so much upon the question of work; the reason he has visited these factories and looked into the actual conditions that prevail in order to see at first hand the conditions that exist, has been to ascertain the extent to which work may have been added to or, by reason of the policies that have been followed, taken away.

This leads me to the discussion of the next matter I desire to mention, the trade agreement recently negotiated between Great Britain and Canada. Well, Mr. Speaker, if I were given to the use of violent language I think it would be justified as I look at hon. gentlemen opposite. I wonder if they have forgotten their record with respect to the trade agreement with Great Britain. I am not going to do more than merely recite the facts. An agreement was entered into between Great Britain and Canada, which agreement was presented to this house for ratification, and at pages 72 and 73 of the journals of this house for 1932-33 it will be noted that Mr. Coote, seconded by Mr. Mitchell, moved in amendment that the following words be added to the proposed resolution:

and subject also to establishment of parity of the Canadian dollar with the British pound.

In other words they wanted to tie the dollar to the pound. Among those who rose in their places and supported that amendment were the present Prime Minister (Mr. Mackenzie King); the hon. member who is now Minister of National Defence (Mr. Mackenzie) and every other member of the Liberal party then in the house. Then came the second reading of the bill embodying the agreements, and again members of the Liberal party voted against it. The division will be found at page 92 of the journals of the house for 1932-33. Among those who voted against second reading of the bill I find the present Minister of Justice (Mr. Lapointe), the hon. member for New Westminster (Mr. Reid), the Minister of National Defence (Mr. Mackenzie), the hon. member for Macdonald (Mr. Weir), the hon. member for Winnipeg North Centre (Mr. Woodsworth), the hon. member for Skeena (Mr. Hanson), and the hon. member for Swift Current (Mr. Bothwell). In fact it might be well to read their names, in order that they might become immortal:

Beaubien

Blair

Bothwell

Bouchard

Boulanger

Bourassa

Bradette

Brasset

Brown

Butcher

Casgrain

Cayley

Chevrier

Coote

Denis

Deslauriers

Desrochers

Donnelly

Dubuc

Dumaine Elliott Fafard Ferl and Fournier

Garland (Bow River) Goulet

Hanson (Skeena) Heenan

Howard

Howden

Irvine

Jacobs

Jean

Lacroix

Lapointe

Maclnnis

Mackenzie (Vancouver Centre)

MacLean

Taylor

Macphail (Miss)

McPhee

Marcil

Motherwell

Munn

Neill

Perras

Pouliot

Ralston

Raymond

Reid

Roberge

Seguin

Totzke

Vallance

Weir (Macdonald) Woodsworth

Then on the third reading a vote was once more recorded, which appears at pages 116 and 117 of the journals for that year. Hon. members opposite became a little confused with the different agreements. There was the agreement with the Free State. Then there was a little difficulty about the Rhodesian agreement; part of the Liberal party voted for that. Then came the agreement with South Africa and there were some little diffi-

The Budget-Mr. Bennett

culties about that as well. Then at page 119 I find the vote on the United Kingdom agreement, which was 84 to 42. It is just as well that the names of the immortal crew who manned the ship of state at that moment in opposition to the government should be preserved for history. They were as follows:

Bertrand

Blair

Bothwell

Boulanger

Bourassa

Brown

Butcher

Casgrain

Cayley

Denis

Deslauriers

Desrochers

Elliott

Euler

Factor

Ferland

Fiset, Sir Eugene

Fournier

Golding

Hall

Howard

Howden Hurtubise King, Mackenzie Maephail (Miss) McIntosh

McKenzie (Assiniboia)

Munn

Neill

Perras

Ralston

Reid

Rheaume

St-Pcre

Sanderson

Seguin

Stewart (Edmonton West)

Thauvette

Verville

Woodsworth

Young

Those were the immortal forty-two. They voted against the United Kingdom agreement, an agreement which now in terms they ask this house to adopt. In order that there may be no question on that point I propose to put the deadly parallel upon Hansard; I propose to compare the paragraphs from the agreement of 1932 and the paragraphs from the agreement of to-day, to show that they are the same; the same in principle and almost identical in words. But in order to endeavour to save their faces they make some change in the relation of the words one to the other, ihough the principles have not changed and cannot change. I doubt whether, in the long history of our institutions, we have ever seen the spectacle of a government asking within the short period of less than five years the acquiescence and approval of members of the house to a document that was in terms similar in every principle to a document they had voted against just a few years before.

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LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

If there had been a different agreement in 1932 there would have been a different parallel now.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Ah, yes; if the fox had not been a fox it might have been a cat. It is hardly in keeping with general principles to say that if you had not done that and something else had been done we would not have what we have to-day. What a tribute to pay to those who negotiated the agreement of 1932!

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LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

We would have had something a great deal better.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Well, we will see whether or not it is better; it is identical.

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LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

I say we would have had something better.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Well, Mr. Speaker, I regard that as a great compliment. The right lion. Prime Minister says that if we had been able to do better he would have been able to do better. That is a very nice way to put it. Well, there is this distinction between us: the right hon. gentleman says he did his best and the Minister of Finance says he did his best, and I assume that each in his allotted sphere did his best. I will assume that; it must be so. But the general principles that governed them in their approach to the problem are somewhat different from those which governed us. We were charged with being bargainers and hagglers, and now the Prime Minister says, "If you had only done a little better before,

I would have done better." If I had been able to bargain better before, he would have been able to do better now. But I will tell you what the trouble is: he had written a record across the pages of Hansard, for the country to read. He told the people of Great Britain he was opposed to the bargain made by the late government, because they were too hard upon dear old England. He told them he was prepared to give them far more latitude than we had given them-greater opportunities. greater freedom of opportunity than we gave them. Now he says, "Oh, if you had only done better, I would have been able to do better." That is amusing; but it does not end there. Let us look at it for a minute. I will lay the clauses of both agreements section by section upon Hansard so that we may look at them.

In 1919 the Liberal party had a convention, and one of their declarations was that the British preference be increased to fifty per cent of the general tariff. That was the declaration of the Liberal party made to the people of England. That was the declaration they made to the world. "Give us power and office and we will give you a fifty per cent preference over the general tariff for entry of your goods in Canada." And it did not end there. During the debates in the house, on October 17, 1932, as reported at page 264 the present Prime Minister said:

May I go a step further and say in connection with that, so that there can be no mistake as to where we stand in the matter of British trade, and the British preference, that we would undertake to give to the trade of the United Kingdom, where goods are imported through Canadian ports, a British preference averaging fifty per cent of our general tariff. If there is anything in this particular

The Budget-Mr. Bennett

agreement that is comparable to that of advantage to ourselves and to British peoples in trade, I hope we will find it out before this discussion is over.

That is the declaration-not away back in the days of 1919, but one that was made when we were discussing the agreements themselves. That was made in 1932. Is it any wonder the British people realized that they had the promise of the Liberal party, and that they would have a fifty per cent reduction over the general tariff as a preference upon their goods? That was the promise given to them at that time. Far be it from me to suggest that the Prime Minister would not endeavour to keep his word in that behalf. I know how anxious he would be that it should be so, how anxious he would be that they should have at least a fifty per cent reduction.

Now I turn to the agreement tabled the other day. I can hear him say, in a moment of great mental perturbation, " I must keep this promise and see that they have a reduction of fifty per cent, so that the farmers in the west may feel that the promise I solemnly made in 1919, repeated in the house in 1932 and again in 1933, has been kept and honoured." And so I look at the document. I turn to item 160 and I find these words: Alcoholic perfumes and perfumed spirits, bay rum, cologne and lavender waters, lotions, hair, tooth and skin washes, and other toilet preparations containing spirits of any kind (a) when in bottles or flasks containing not more than four ounces each, 30 per cent.

And the old rate was 60 per cent. There is a fifty per cent reduction. There has been no trouble about eyewash. "Alcoholic perfumes and perfumed spirits, bay rum, and cologne"-so the farmer can say the Prime Minister has kept his word and reduced the rate by fifty per cent.

Now for a moment let us consider the agreement. Article 1 states:

The government of the United Kingdom undertakes that goods grown, produced or manufactured in Canada and consigned from any part of the British Empire which are now tree of duty, shall continue to enjoy entry free of customs duty into the United Kingdom, subject, however, to the reservations set forth in schedule I appended hereto.

The old agreement, Article 1.

His Majesty's government in the United Kingdom undertake that orders shall be made in accordance with the provisions of section 4 of the Import Duties Act, 1932. which will ensure the continuance after the 15th November, 1932, of entry free of duty into the United Kingdom of goods consigned from any part of the British Empire and grown, produced or manufactured in Canada which by virtue of that act are now free of duty subject, however, to the reservations set forth in schedule A appended hereto.

Schedule I, new agreement:

As regards eggs, poultry, butter, cheese and other milk products, the government of the United Kingdom reserve to themselves the right, if they consider it necessary in the interests of the United Kingdom producer to do so, to review at any time the basis of preference so far as relates to the articles above enumerated and after notifying the Canadian government either to impose a preferential duty on Canadian produce whilst maintaining preferential margins, or in consultation with the Canadian government to bring such produce within any system which may be put into operation for the quantitative regulation of supplies front all sources in the United Kingdom market. "

The old agreement, schedule A:

As regards eggs, poultry, butter, cheese and other milk products, free entry for Canadian produce will be continued for three years certain. His Majesty's government in the United Kingdom, however, reserve to themselves the right, after the expiration of the three years, if they consider it necessary in the interests of the United Kingdom producer to do so, to review the basis of preference so far as relates to the articles above enumerated and, after notifying His Majesty's government in Canada either to impose a preferential duty on Canadian produce whilst maintaining preferential margins, or in consultation with the Canadian government to bring such produce within any system which may be put into operation for the quantitative regulation of supplies from all sources in the United Kingdom market.

Word for word, differently placed. Not one change in meaning; only a transposition of words. There you have the old agreement and the new agreement.

It is true that at page 270 of Hansard of 1932 the leader of the government, then in opposition, made an attack upon this schedule.

Listen to his words dealing with the schedule identical with schedule I in the new agreement which he signed the other day. Listen to this:

The right hon. Mr. Amery, who represented the agricultural interests of Britain at the imperial conference in Ottawa, has made the statement since his return to England that they ought to begin the work of protecting British agriculture immediately, and not wait for any conference fn the matter. They have the principle of protection endorsed, and they ought to go ahead immediately with further protection for agriculture in Britain. What does this agreement say? It says that the British government will reserve to itself the right to impose increased duties with respect to all these dairy products. The only obligation with regard to Canada's possible benefit is that a certain margin will be preserved in the form of a preference: that is to say, the duties against Canada and other parts of the empire will not be as high as those imposed on European countries.

Is that right now? It was denounced in 1932, at page 270 of Hansard. It is now

The Budget-Mr. Bennett

submitted to the House of Commons for approval in 1937. His supporters were asked to vote against it, and, obediently responding, they voted against it. Now, asked to vote for it, immediately responsive they vote for it.

Then we turn-

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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March 2, 1937