March 24, 1939

LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Since 1931.

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Subtopic:   CANADA-UNITED STATES TRADE AGREEMENT
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CCF

Abraham Albert Heaps

Co-operative Commonwealth Federation (C.C.F.)

Mr. HEAPS:

A little over seven years. Prior to that time the manufacturers were doing fairly well. I cannot see why we should always be threatened with the closing down of an industry the moment a duty is reduced. When a duty goes up, no threats are made by manufacturers, no better conditions are provided for those employed in the industry, and no greater stability of employment results. The hon. member for Essex East (Mr. Martin) last night spoke of the condition of the employees of this industry in his city. We know it is not very good. Yet I think the hon. member for Ontario (Mr. Moore) said their annual wages were the fourth highest in Canada. That may mean much or nothing. All we know is that the annual wages of those employed in the automobile industry are barely sufficient to give them a decent existence. To-day on account of improvement in industrial technique it takes a smaller number of days to produce the same number of automobiles than it did a few years ago. If that process continues we are bound to have a greater problem of unemployment to face as time goes on. No scheme of insurance or anything of the kind can take care of the part-time employee. I do not wish, however, to go into that aspect of the question now. But if it is possible to have a clear and concise statement from the minister as to what this three per cent really means, we should have it. We should not continually have these threats from the automobile manufacturers that unless the duty is kept up they will close their plants.

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LIB

Alexander MacGillivray Young

Liberal

Mr. YOUNG:

It was not my intention to say anything about this item until other hon. members made some observations. I congratulate this country upon having a government which is prepared to take part of the burden off the people in connection with this

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industry. I was a member of this house some years ago and am familiar with the occasion to which the hon. .member who has just sat down (Mr. Heaps) referred, when the tariff on automobiles was reduced in 1926 and we had a delegation which filled the lawn in front of the parliament buildings, consisting I believe of about 5,000 people. They had banners and all that sort of thing, and they made all kinds of threats to the people of this country and particularly to hon. members of this house as to what would be done if we dared reduce the tariff on automobiles. In fact the demonstration was so noisy that one might think the whole industry was on the verge of ruin, I remember one man in front of this building who was so violent that he put his fist as close to my face as it is safe for any man to do, and said that if we did not recognize the terrible condition to which this industry was to be brought he did not know what was going to happen.

What did we do? The tariff at that time was reduced from 35 per cent to 20 per cent on cars costing up to SI ,200 and to 27J per cent on the others. What was the result? Well, what are we hearing now? We are told that if we dare to remove even this excise tax, again the industry is going to close down, or at least some companies will have to move out of Canada. On the previous occasion no companies moved out of Canada; on the contrary they enlarged their plants, sold more cars, created more employment and the industry prospered more than it had prospered at any other time. The same thing will happen to-day. If we make it easier for people to purchase cars, more cars will be purchased.

This tariff schedule provides a rate of 17J per cent, but let us examine how that rate of duty is applied. We have three large companies manufacturing cars in this country, the Ford Motor Company, the Chrysler Corporation and General Motors. I ask this question: does any dealer in Canada who is associated with any of these companies purchase cars made in the United States? Can he purchase any cars made by these companies in the United States and bring them into Canada? The answer is that it cannot be done. In rare cases a man in Canada might sell a car to some customer who happened to be down in the United States, but that has to be done by special arrangement. Then I would ask the further question, against whom this tariff operates. Certainly it does not operate against these three major companies, which do the vast majority of the automobile business in Canada. The tariff is listed at 17J per cent, but as it is applied

at present there is an effective rate of duty to the consumers of Canada

and that is what matters-of between 28 and 29 per cent. I challenge anyone to deny that. Anyone who does so cannot know the facts.

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?

An hon. MEMBER:

Develop that.

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LIB

Alexander MacGillivray Young

Liberal

Mr. YOUNG:

It is not hard to develop. Not one automobile company in Canada will deny it. Some of the accountants employed in the automobile industry were in my office on several occasions, and they admitted this to be the case. When I purchase a car in the United States I must pay the duty of 17i per cent on the retail price of that car. A couple of years ago I bought in this country what I thought, and still think, was a very good car. There was a radio installed in it, and while I was in the United States the radio went out of commission. I stopped at the garage of a dealer handling the same kind of car, and immediately alongside my car on the street was a United States car of exactly the same type. On many occasions we in this house have been told .that the Canadian car contains a little better material, that it is a little more substantially made in order to meet Canadian conditions. We examined the two cars, which were also examined by the mechanics, and found that the materials were identical, and I believe the workmanship was just as good in the one case as in the other. But the retail price of that car in that city was $859, while the retail price of the same car in Saskatoon, where I live, was $1,260. The differential in freight as between that city in the United States and Saskatoon amounted to $100. In other words on a car which retailed in the United States at $859, after allowing for freight I was obliged to pay a difference of something over $300. That is a pretty serious matter.

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CON

Robert James Manion (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MANION:

What about the sales tax, as a matter of information?

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LIB

Alexander MacGillivray Young

Liberal

Mr. YOUNG:

I have forgotten the exact figures. There was a little difference, but it was very slight.

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SC

John Charles Landeryou

Social Credit

Mr. LANDERYOU:

May I ask the hon. member if there will be any reduction when this schedule is passed?

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LIB
CON

Richard Langton Baker

Conservative (1867-1942)

Mr. BAKER:

Was that an automobile

manufacturing company?

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LIB

Alexander MacGillivray Young

Liberal

Mr. YOUNG:

It is one of the big companies.

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CON

Richard Langton Baker

Conservative (1867-1942)

Mr. BAKER:

Would the hon. member

mention the name?

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LIB

Alexander MacGillivray Young

Liberal

Mr. YOUNG:

It is the Ford Motor Company. Is that a big enough company for you?

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CON

Richard Langton Baker

Conservative (1867-1942)

Mr. BAKER:

All right-just for information.

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LIB

Alexander MacGillivray Young

Liberal

Mr. YOUNG:

Although I am not going

to discuss those items, I have been reading recently something of the set-up of the companies in the textile trade. I ask myself this question, and I put it to every hon. member: Are we being asked to give protection of an undue character to all these commodities in order that dividends may be paid on completely watered stock? If that kind of thing is to be permitted to continue it will be a serious condition for this country. The producers of western Canada who are trying to live will not be permitted to live unless wo have a reduction in the prices of commodities which they require in order that they may produce the commodities which they should produce.

I want to thank the government for taking off this three per cent. I want to ask them to go farther. I ask them to change the incidence of the collection of this tariff so that it will be on the retail price of the car in the United States, and so that the tariff rate will not be 17i per cent but will be cut down to 5 or 6 or 7 per cent. That will enable the consumer in this country to get his car at a more reasonable price than he ever got it before.

I had no notion whatever of saying anything about it, but when I hear hon. gentlemen berating the government for taking off the excise tax of three per cent, and when I find that outside of the house the automobile companies and the parts industry are making the same kind of fuss-well, to my mind,

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what is being done outside of this house is almost blackmail. I do not blame hon. members who receive these stories; they are reflecting that attitude. But in my humble judgment this automobile industry has had all the pap-feeding which any industry should ever have had. The sooner we get down to a better basis, the better it will be for the industry itself and for the consumers of Canada.

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LIB

Robert John Deachman

Liberal

Mr. DEACHMAN:

May we return for a moment to the original situation? We entered into negotiations with the United States for mutual benefit under a trade treaty. Our negotiators went down there, and an agreement was made about this three per cent excise tax. It is now suggested that this should be changed.

There are two alternatives open to us. One is that the negotiators should be sent back there, and that they should speak to that nice, fine, mild-voiced southern gentleman, Mr. Hull, and say, " We have two or three large United States corporations operating in Canada. We have lowered the excise tax against United States importations, and we suggest to you that you permit an amendment of this agreement so that the people of Canada may continue to exploit themselves for the benefit of two of your largest motor car companies." That is all it amounts to. These are two, strong United States companies-Canadian companies let me say, with United States stockholders-and that is the suggestion.

The other alternative, a somewhat different one, was embodied in the suggestion made yesterday by the Minister of National Revenue, when he said:

The suggestion made to me as Minister of National Revenue is that the law respecting valuations for duty purposes is not being properly applied by the Department of National Revenue.

The hon. gentleman's ears and heart are touched by the voice of pleading from the motor companies, and he thinks that something may be done.

All that I can say in that regard is that these representations are receiving the consideration of the Department of National Revenue at the present time. I do not think there is anything more I can add.

But may I point out this to the Minister of National Revenue. There are many far more deeply convinced protectionists who have occupied for years the position which he now occupies; and if these mighty gleaners have gone over the field seeking justification for alteration of valuations, how does my less strenuous friend think he can find it under present conditions?

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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

Did I understand the hon. member to say that I thought some change should be made?

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LIB

Robert John Deachman

Liberal

Mr. DEACHMAN:

I will read the

paragraph.

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

The hon. member interpolated something in the middle of it; that is scarcely fair.

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LIB

Robert John Deachman

Liberal

Mr. DEACHMAN:

My hon. friend the Minister of Finance will permit me to read the full paragraph before he suggests what has been interpolated into it.

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March 24, 1939