May 1, 1939

SC

Joseph Needham

Social Credit

Mr. JOSEPH NEEDHAM (The Battle-fords) :

I suppose the budget is the most interesting piece of legislation which is presented from year to year in parliament, because in the budget we have a review of the past year's income and expenses and also estimates for the ensuing year.

If we take the volume of expenditures as presented in the budget for the year just closed, it is not encouraging from the point of view of the outlook for the Canadian people. It reports a deficit for last year amounting to $55,660,000 and an estimated deficit for the ensuing year amounting to some $66,000,000. The hon. member for Camrose (Mr. Marshall) went fully into the matter of debt, with which I had intended to deal at some length, so I shall be as brief as possible in that regard.

Debt and more debt constitute the big problem which we are facing, and along with that, of course, goes increased taxation. Debt is the great millstone round the necks of the people, if it is looked at from one point of view; but along with that is the matter of interest, which, to my mind, is never given the attention it should have. At the present time our federal, provincial and municipal debts are tremendous. We heard from the Minister of Finance (Mr. Dunning) that the federal debt is some three and a half billion dollars, our provincial debts are around two billions, and our municipal debt is about a billion and a half. For a population the size of Canada, these are staggering figures. When we go into the matter of private debts, the amount of which in many instances is just guess work, I am reminded of the brief submitted by the Saskatchewan government to the Rowell commission in the fall of 1937, and I recall one item which stated that the agricultural debt of Saskatchewan stood at $525,000,000.

I have said that, looked at in one light, our debt problem is staggering. However, according to evidence given in the banking and commerce committee, a question was asked by the hon. member for Vancouver-

[Mr. Esling.l

Burrard (Mr. McGeer) of Mr. Towers, governor of the central bank:

Mr. McGeer: Is it possible for you to imagine any way by which we are ever going to pay the debt we have got?

Mr. Towers: As the debts of the government are an asset of the Canadian people, I do not see much point in the thing; except that, to the extent that the government thinks that the distribution of those assets of the Canadian people-which are its debt-is unsatisfactory, it may take steps to remedy that distribution in any way that lies within the legislative power; in fact, in any way, I suppose-by income tax or succession duties or any other action it cares to take.

So when we learn that the debts are an asset to the Canadian people we might glory in those debts.

Topic:   THE BUDGET
Subtopic:   DEDATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CCF

Angus MacInnis

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

Mr. MacINNIS:

That is if we owned them.

Topic:   THE BUDGET
Subtopic:   DEDATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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SC

Joseph Needham

Social Credit

Mr. NEEDHAM:

The matter of distribution, of course, is referred to. It is summed up from this point of view, that the debts might be a real asset to the Canadian people if they were so distributed that the many would benefit from them instead of the few reaping the benefit and the many getting nothing. I am more concerned about the interest of the debt than about the debt itself. I wish to give emphasis to this matter of interest. I can realize where a debt might be an asset because the borrower, be it an individual or a government, needs the money and can use it to advantage. There is an amount of money borrowed which is created and placed at the disposal of the borrower. But when it comes to the paying of interest, the borrower is asked to pay something which was not put into circulation. That is the problem.

If you figure up the interest paid since confederation you will get our debt, and so I think the governor was right when he said that the debt is an asset to the Canadian people, but it is the interest which that debt incurs that is the problem and the burden at the present time. Debt involves taxation, and analysing the budget from the point of view of taxation we find that the Minister of Finance expects to take from the Canadian people the staggering sum of $550,000,000. This works out at S46 per capita, and if we take the provincial taxes, amounting to about $215,000,000, and municipal taxation amounting to about $250,000,000, we have a total of $1,015,000,000. This works out at about $90 per capita. Take the average family of four and it means $360 in taxation per family. Figure out the unemployed, those that are on relief and those that are on the verge of relief, who cannot pay taxes, and you find your burden increased from time to time.

The Budget-Mr. Needham

This matter was discussed at the conference of Canadian mayors not long ago, and one or two interesting things came out in the reports of that conference. Mayor Cory of Trenton, Ontario, urged the dominion government to assume the entire cost of unemployment relief because of the present economic condition of the country. The mayor of Portage la Prairie took exception to the implication that the dominion government was responsible for the economic condition of the dominion. He said it was not the fault of the government, but rather the failure of the business life of the country to distribute the necessities of life to the people. He said that in his own municipality a big flour mill had shut down and those who lost employment as a result became a direct burden on the municipality. He said that the dominion should get the money from the industries responsible. That was his contention. Mayor MacLean of St. Boniface gave another interesting point of view. The financial statements of banks and financial institutions for the past ten years would indicate, he said, that things are getting better in Canada, but the half million on relief would hardly agree. The prosperity of the banks does not mean the prosperity of the people. The economic welfare of the people should be raised to the level of the prosperity of the banks. There is quite a program for the government to consider.

I had intended reviewing the cost of loan flotations. This is a matter I took up last year. I asked some questions regarding it, and to-night I will deal with only one flotation because it gives a concise picture of the enormous cost of loan flotations, which I had expected would be considerably reduced in consequence of the ownership of the central bank and the work that could be done through that institution. According to the questions asked and the answers given with regard to the loan flotation refund of 840,000,000 of last November, we find that there was a discount to 97i, which meant a net reduction of 81,100,000 on that flotation. There were also the following items:

Commission $800,000 00Travelling expenses

375 45Printing and stationery

1,966 41Printing temporary bonds.. .. 1,425 33

There is a note that the definite bonds were not yet delivered. Then there were these other items:

Securities and exchange commission, filing fee $4,000 00Service of armoured car

250 00Service of signagraph

300 00Express and sundries

50 79

This made a total of $1,908,367.98 as the cost of a flotation of one loan of $40,000,000. With the discount it means that the interest yield to the investor is 3T6 per cent, while the loan is floated at 3 per cent and the entire cost to the government will be 3-25 per cent. The interest on the $40,000,000 floated for thirty years at 3 per cent will be 836,000,000 and the net proceeds of the issue to the government is $38,091,632.02. I see it is eleven o'clock, Mr. Speaker.

Topic:   THE BUDGET
Subtopic:   DEDATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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At eleven o'clock the house adjourned, without question put, pursuant to standing order. Tuesday, May 2, 1939


May 1, 1939