May 31, 1938

CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I had reference to his observation that an undertaking local in its character in the first instance might, by reason of changed conditions, become national in its scope.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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LIB-PRO

Joseph Thorarinn Thorson

Liberal Progressive

Mr. THORSON:

Quite; it was once thought that we had an elastic constitution that would be self-adjusting and bring that about, but the latest decisions of the judicial committee of the privy council have removed that hope from our minds, so that we must recast the constitution in order to give parliament the necessary power to deal adequately with national problems.

Therefore it would seem to me that we should consider subjects of this sort first from the viewpoint of whether they, are really national or provincial in their scope. If they are national, then we should face these national problems squarely and make the necessary adjustments in our constitution so that this parliament may have the necessary power.

Municipal Improvements

I hope that this task will soon be undertaken by the people of Canada. We are in the position in this parliament of being continually held in contempt by reason of the fact that we have not in many cases the necessary legislative power to deal with problems that are truly national. We should acquire that power, and should do so in the interests not only of the dominion as a whole but of the individual provinces as well; for they have many duties now cast upon them which they cannot adequately discharge. The matter of unemployment relief and a program of works that will create employment is in my opinion a national one. I think this parliament is wise in bringing forward legislation such as this, because this is dealing with a national problem; if the validity of our act in so doing is challenged, we shall come to a solution of the problem all the sooner. The hon. member for St. Lawrence-St. George served a useful purpose in directing our attention to this question.

Mr. SLAC.HT: Will the Minister of Finance (Mr. Dunning) be good enough to supplement his very clear explanation of the proposed bill by giving us a list of the projects which a municipality might be 'expected to go on with under the loans they would receive under this measure, so that we may get a better idea of the type of project he has in mind?

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

It is very difficult to give an answer to that, because of the variations that exist between the municipal laws in. force in the various provinces. In some municipalities the provisions with respect to certain types of public works base capitalization and amortization on a service charge, whereas in another province the same utility is dealt with on the basis of general taxation; it is absorbed into the general scheme of things. In some provinces institutions such as the local government board in Saskatchewan-I forget what they call the similar body in Ontario and Manitoba-have a degree of authority over capital expenditures which enables them to determine whether the projects shall be a charge against the general municipal levy or be developed upon the basis of a service charge. It is quite impossible, therefore, to give a categorical answer. Really, "self-liquidating project" is the only definition I could find which would embrace all that I had in mind.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Three illustrations are given-waterworks, electric light systems, and gas plants.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Yes. They are given because in practically all provinces they are

dealt with on a service charge basis. But there is another type of case. There are waterworks already in existence, with old wooden stave pipes laid many years ago, and which involve at the present time a very high maintenance cost because of frequent breaks. The question then is, can that municipality, as a result of two per cent money and a low amortization, finance a new water main at less than or at approximately what it is now expending in trying to maintain an out-ofdate, obsolete and very expensive utility? That is another illustration.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Plus possibly an additional charge.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Plus possibly an additional service charge. I see no way of defining it at this stage any more closely than by laying down the principle that the project undertaken under the act shall be self-liquidating. Obviously we do not want to broaden it to a point where it would encourage municipalities to go into unproductive enterprises.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

"Self-liquidating" governs that.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Yes, and I am quite sure from the representations received thus far from municipalities all over the dominion that there is ample demand for help of this sort for enterprises which will be self-liquidating.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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CON

William Allen Walsh

Conservative (1867-1942)

Mr. WALSH:

I have a very complete and sympathetic understanding of the attitude assumed by the hon. member for St. Lawrence-St. George (Mr. Cahan), and the opinion expressed by the hon. member for Selkirk (Mr. Thorson). I do not wish to be understood as in any way opposing this resolution or offering anything in the way of destructive criticism of what the Minister of Finance (Mr. Dunning) proposes to do. I recognize the necessity of public works, particularly of the character which the minister has suggested, even in the resolution, but there is a question in my mind whether the works to be undertaken would continue to be for any length of time in the self-liquidating category. I am always distrustful of legislation which encourages public expenditure when the body making that expenditure is probably not in a position to bear the cost. This seems to be a measure which could be interpreted as encouaraging public expenditure on the part of municipalities even if it is placed in the category of self-liquidating assets of those municipalities. In many cases municipalities will seek to take advantage of what is offered in order to improve certain local conditions

Municipal Improvements

and will undertake public works to alleviate distress in their midst, although they can probably ill afford at the time to do so. That means a further increase of capital expenditure and of debt, even if the project for the time being is of a self-liquidating nature.

In the past we have had experience of similar enterprises and have, perhaps, spoken of them in terms which were rather gratifying; 1hey probably served for the time being a useful purpose, but in the end proved to be a very decided hardship. I am thinking of such legislation that gave certain municipalities an opportunity of undertaking public enterprises on the basis of the government of Canada paying fifty per cent and the balance being found either by the municipality or jointly by the province and municipality. Those public works have now to be paid for; they are a debt upon the municipality concerned; the result is that it finds itself in the embarrassing position of having to bear the consequences of the debt, to pay the interest and to repay the principal over a period of years. I recall also grants which were made by this parliament in days gone by for technical education in the various provinces, to encourage the building of technical schools, to the cost of which the federal government made considerable contributions. Two or three years ago, however, the government of Canada decided to withdraw contributions to technical education. The result is that the municipality finds itself saddled with the expense of the proposition which it was encouraged to go into through the offer of the dominion government to find a certain amount of money in connection with the enterprise.

I am not condemning it. It is all to the good. But in the end these municipalities find themselves with the obligation not only of providing interest on the debt and taking care of the sinking fund, but of defraying the cost of improvements and repairs of the buildings and paying the wages necessary in connection with upkeep.

Reverting to the matter of technical education, if the government had continued those grants the municipalities would have had no cause of complaint; but the government withdrew the grants. The result is that the municipalities find themseles burdened with the total cost instead of only a part of the cost of those enterprises. The buildings had to be maintained, and the purposes for which they were built had to be continued, and should be continued.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

My hon. friend will

pardon me, but surely he is not implying that particular weakness is inherent in this legislation?

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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CON

William Allen Walsh

Conservative (1867-1942)

Mr. WALSH:

No. I quite agree with the minister. That is why I prefaced my remarks by suggesting that from the present aspect these projects appear to be self-liquidating, and there are satisfactory guarantees surrounding them. But so did the other enterprises, at the beginning, seem to be in the same category. For instance, I know of a certain city in Ontario that built three technical schools, on the promise of certain grants which were made through the provinces to the maintenance of this class of school. They took advantage of the situation, and it seemed to be very satisfactory, and was so as long as the assistance was continued, but it was discontinued, and the result is that the municipality is faced with the obligation of paying for the total upkeep. That is what I am afraid of in connection with this, even with all these guarantees.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

But how could it be? The instance my hon. friend quotes rested upon the assumption that the federal government would continue annual grants from year to year forever or for a considerable period of time. No obligation under this legislation can arise upon an assumption of that sort. The municipality gets the money out and out; it knows that is all it will get. It must invest the money in a self-liquidating project; it must itself collect from the project the wherewithal to repay the federal government. It is not assuming that the federal government is going to continue to grant it money from year to year.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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CON

William Allen Walsh

Conservative (1867-1942)

Mr. WALSH:

Yes, I quite appreciate that the cases are not altogether analogous, but what I am trying to emphasize is that while we are starting out on this basis, I am not just sure where it may end. I am afraid that as a self-liquidating proposition, while it may be satisfactory for some years, over a period of time it is likely to become a liability; that is, we may be tempted to forget the circumstances surrounding the inauguration of such a grant as this. We all recognize the tremendous burden of taxation that rests upon municipalities at the present time. Many of them find themselves in difficult positions which are not of their own making but which were, so to speak, created for them. They undertook enterprises by way of relief measures during the past few years which have entailed upon them a tremendous debt,

Municipal Improvements

interest and sinking fund, all of which have to be met. In some cities over thirty per cent of the revenue has to be appropriated to sinking fund and interest. The result is that taxation is high, exceptionally so in many of our larger cities. The reaction is that building projects are at a standstill; heavy and necessary repairs to buildings cannot be made; yet if there is one branch of trade in Canada which should be improved, it is the building trade, particularly in the larger cities. They cannot be made unless there is building, and building will not be undertaken under present conditions, where the municipalities find themselves overburdened with debt and forced to raise a very considerable amount of money for the purpose of liquidating that debt or meeting interest and sinking fund charges from year to year. The only way in which we can encourage building operations in the larger cities is to lower taxation. Any measure that will tend towards lower taxation in those cities will tend to increase the business of the building trades; and any improvement that takes place will result in a general improvement in trade throughout Canada.

I emphasize that point and also the handicap under which the municipalities are working at the present time. I have every sympathy with the project in mind. I believe that the minister has surrounded it sufficiently with safeguards if they are maintained. We know governments and we know politics and we are rather afraid of legislation of this sort, but I should not like to see any legislation introduced which would encourage any municipality to enter upon a public works enterprise that will further increase the burden within that municipality and further delay the day when building operations can be carried out so that we can benefit thereby.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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CON

Douglas Gooderham Ross

Conservative (1867-1942)

Mr. ROSS (St. Paul's):

In Toronto we are faced with a very serious situation in connection with the extension of the sewage disposal works of that city. I do not know whether that can be called a self-liquidating scheme, but it is something which is very necessary, and it is also important that work be provided in Toronto in view of the unemployment situation. The present sewage disposal plant there is entirely inadequate. Sewage is going into the lake untreated-well, it is treated but we do not know how much of it gets the benefit of the treatment. It is a large project, and one that will take a good deal of money, but it is very necessary. The city of Toronto does not wish to embark upon any work which is not useful. There are a

good many projects which people are talking about, but we want something which will be useful, something which will not represent a waste of money. Work in connection with sewage disposal in Toronto would benefit that city, and, more than that, it would benefit all those who are on the great waterways from that point down to the sea. That is something else to be considered. As it is now, sewage going into the lake not only affects the health of the people but kills fish. Would it be possible in order to undertake a project of that kind to guarantee the bonds of the city of Toronto, or would it be possible to let them have so much money to start with so that they might get a part of the work done? Certainly it is a very useful work, but the city needs assistance. I should like to see something done about it.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

In this legislation there

is no provision authorizing the dominion to guarantee the bonds of any municipality. I was under the impression that the credit of the city of Toronto stood very high, and I have no doubt that the city would be able to finance any undertaking of a general sort. But while possibly an enterprise of the kind mentioned by my hon. friend might not be self-liquidating, I have no doubt at all that there are many projects in Toronto which would be self-liquidating, and which, if financed under this scheme, would relieve the general credit of the city to such an extent as to enable them to do what they might wish to do with respect to other schemes that are not self-liquidating.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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CON

Joseph Henry Harris

Conservative (1867-1942)

Mr. HARRIS:

Would any scheme in con. nection with hospital extension be self-liquidating?

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

It depends entirely on the provincial law. In some cases hospitals are self-liquidating, while in others they are not.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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CON

Douglas Gooderham Ross

Conservative (1867-1942)

Mr. ROSS (St. Paul's):

With further reference to the sewage disposal question, I do not know of any work that could be undertaken in Toronto which would furnish so much individual labour, but I do not believe that the city of Toronto could borrow money at two per cent. With the assistance of the dominion government, however, they could, and if they did have something done along that line, it would not cost the dominion anything at all.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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LIB

Norman McLeod Rogers (Minister of Labour)

Liberal

Mr. ROGERS:

I wish only to emphasize one aspect of the resolution before the committee. Actually, although it does not so state, the proposed measure is presented as

Municipal Improvements

a very definite part of the program submitted by the government to deal with the unemployment situation, and we have to consider the legislation in that context. For some years past it has been accepted as an obligation of the dominion government that we should assist the provinces in dealing with unemployment. We have accepted that obligation and have discharged it in a number of different ways. We have assisted the provinces through contributions for what has been termed direct relief. For a number of years we have also assisted the provinces in what has been known as a joint works program. Under some of these programs we have actually made contributions to municipal projects. I might mention in that connection the Winnipeg sewage disposal plant which is now being completed. That work was commenced in 1935 under the preceding administration and the obligation was assumed by the present government when it came into office. That was a definite contribution by the dominion to a municipal project. It has seemed wise, however, and in this I am entirely in accord with what has been said by the hon. member for St. Lawrence-St. George (Mr. Cahan), and the hon. member for Selkirk (Mr. Thorson) that we as a dominion government should confine so far as possible our own expenditures to projects that are definitely within federal jurisdiction.

As we look back over our past experience we must admit that much confusion has resulted from the policy of conditional subsidies and grants in aid for specific purposes, which has been followed in the post-war period. But in this legislation the dominion government is not making a definite contribution to municipal projects as such. We are rather giving the support of the credit of the national government to the municipalities in order that they may relieve unemployment and provide themselves as they see their need with these self-liquidating projects. That is the essential purpose of the legislation which will be founded upon this resolution. It is designed, with the housing legislation to be later presented, to assist in the revival of the construction industry in Canada. On the basis of authoritative information that comes to us from those engaged in the industry and also from the bureau of statistics, it can be said that there is no branch of employment in Canada that is more capable of rapid revival under proper stimulus than the construction industry. If we can through housing legislation and assistance of this land bring about a very considerable improvement in the construction industry, that will be of very great assistance I Mr. Rogers.]

in enabling municipalities across the country to reduce relief rolls and provide work as a substitute for the idleness in which, perhaps of necessity, so many of our people have been involved under the administration of direct relief. So that in the consideration which we give to this resolution it is important to keep before us at all times that the purpose of the legislation is to relieve the unemployment situation which now confronts the country.

Topic:   MUNICIPAL IMPROVEMENTS
Subtopic:   AUTHORIZATION OF LOANS TO ASSIST MUNICIPALITIES IN MAKING SELF-LIQUIDATING IMPROVEMENTS
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May 31, 1938