March 12, 1941

LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

It is not altogether a question of possibility. Perhaps the hon. gentleman

Motions jor Papers

will look at the motion. In connection with income tax collections from the city of Toronto, for example, it would be necessary to examine long lists of income taxpayers to ascertain whether or not they were residents of Toronto, and then reckon up the total amount of taxes paid by them. This is a task which a department of government should not be asked to undertake. The same applies, only in much greater degree I should say, 'o customs and excise.

Topic:   QUESTIONS
Subtopic:   TORONTO-FEDERAL REVENUE AND FEDERAL EXPENDITURES
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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

They give that information every month.

Topic:   QUESTIONS
Subtopic:   TORONTO-FEDERAL REVENUE AND FEDERAL EXPENDITURES
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

That is through the port of Toronto-an entirely different matter. This motion has reference to the city of Toronto; apparently the hon. member is talking about residents of that city. What I have said applies to inland revenue, sales tax and other federal levies, and these amount to such a substantial part of the motion that I would suggest it be dropped.

Topic:   QUESTIONS
Subtopic:   TORONTO-FEDERAL REVENUE AND FEDERAL EXPENDITURES
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CON

Joseph Henry Harris

Conservative (1867-1942)

Mr. HARRIS (Danforth):

If the word "city" were changed to "port", would that meet the minister's objection?

Topic:   QUESTIONS
Subtopic:   TORONTO-FEDERAL REVENUE AND FEDERAL EXPENDITURES
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LIB

John Gordon Ross

Liberal

Mr. ROSS (Moose Jaw):

That gives a wrong impression.

Topic:   QUESTIONS
Subtopic:   TORONTO-FEDERAL REVENUE AND FEDERAL EXPENDITURES
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

It could not be amended in that way. The port of Toronto would be the proper term with regard to customs and excise; but with regard to income tax, it would be the district office.

Topic:   QUESTIONS
Subtopic:   TORONTO-FEDERAL REVENUE AND FEDERAL EXPENDITURES
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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

Would the minister let the motion stand, and perhaps the hon. member can revamp it?

Topic:   QUESTIONS
Subtopic:   TORONTO-FEDERAL REVENUE AND FEDERAL EXPENDITURES
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Very well.

Topic:   QUESTIONS
Subtopic:   TORONTO-FEDERAL REVENUE AND FEDERAL EXPENDITURES
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LIB

Georges Parent (Speaker of the Senate)

Liberal

Mr. SPEAKER:

Stand.

Topic:   QUESTIONS
Subtopic:   TORONTO-FEDERAL REVENUE AND FEDERAL EXPENDITURES
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RADIO BROADCASTING


On the orders of the day:


NAT

Gordon Graydon

National Government

Mr. GORDON GRAYDON (Peel):

I

should like to ask the acting Minister of Transport if it is the intention of the government at this session to appoint a committee to consider the annual report and review the policies of the Canadian Broadcasting Corporation.

Topic:   QUESTIONS
Subtopic:   RADIO BROADCASTING
Sub-subtopic:   QUESTION OF COMMITTEE TO CONSIDER ANNUAL REPORT AND REVIEW POLICIES OF BROADCASTING CORPORATION
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LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Hon. C. D. HOWE (acting Minister of Transport):

I suppose the standard reply would be that the intention of the government will be made known in due course. I can go further than that, however, and say that in a war session I do not think the affairs of the

Canadian Broadcasting Corporation are sufficiently complicated to warrant the appointment of a committee this year.

Topic:   QUESTIONS
Subtopic:   RADIO BROADCASTING
Sub-subtopic:   QUESTION OF COMMITTEE TO CONSIDER ANNUAL REPORT AND REVIEW POLICIES OF BROADCASTING CORPORATION
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STATEMENT OF THE MINISTER OF TRADE AND COMMERCE AS TO GOVERNMENT POLICY


On the orders of the day:


LIB

James Angus MacKinnon (Minister of Trade and Commerce)

Liberal

Hon. J. A. MacKINNON (Minister of Trade and Commerce):

Mr. Speaker, at this time I wish to make a statement as to the government's policy with regard to the 1941-42 wheat situation. Before outlining the policy I wish to deal with the 1940 wheat quota system, and how it has worked out; the general 1940 deliveries and certain over-deliveries; the wheat position as we expect it to be on July 31, 1941; the wheat situation during the last war and the directly opposite situation in which we find the wheat problem to-day; our possible local wheat consumption and exports for 1941-42; our storage situation; the world wheat situation; the possibilities of wheat disposal, and the financial aspect of the wheat situation. Then I wish to outline the proposals as to our policy as it affects my department. I would appreciate it very much, Mr. Speaker, if I could proceed without questions until after I have made my statement.

On November 22 last I made a statement to the house dealing with the wheat position as at that time. On that occasion I reviewed the work of the government and the wheat board in meeting the unprecedented conditions which had arisen in the early part of the present crop year. It is my purpose to-day to review the main developments in [DOT] the Canadian wheat situation since my report of November 22. Before doing so, I wish to point out to the house, Mr. Speaker, that my remarks deal with the marketing of wheat and matters relating thereto. The field of production lies within the jurisdiction of my colleague, the Minister of Agriculture (Mr. Gardiner), and policy references to production lie under his management. Because some of the members may not be familiar with wheat terminology, I would explain that the crop year runs from August 1 of one year to July 31 of the succeeding year. I would like hon. members to keep this in mind when I am speaking in terms of crop years.

Quota system. The most important development in connection with the handling of the 1940 crop was the establishment of a quota system intended to allow the equitable use of available storage by farmers throughout the three western provinces. This quota system was provided through amendments to the wheat board act in July last.

Wheat-Government Policy

On November 19 out of a total of about 2,200 shipping points in western Canada nearly 1,600 points had quotas of 12 bushels per acre or less and slightly over 500 points had quotas of 15 and 20 bushels per acre. By the end of this week it is expected that every shipping point will have quotas of 15 or 20 bushels per acre. These increases were made in two ways. First, by increasing the general quotas at all shipping points in western Canada as soon as storage conditions warranted. and secondly, by increasing quotas at individual points, where local storage was available. The wheat board is making every effort to relieve the few points which remain on a 12 bushel basis. It may be said, therefore, that as far as the west as a whole is concerned a general 15 bushel quota is now in effect. In addition over one-half the shipping points in western Canada are now on a 20 bushel basis.

If every farmer wished to deliver all his remaining wheat up to 15 bushels per acre, local storage space at many points would at present be insufficient to house the wheat. However, many farmers are holding their wheat until spring or later to earn the farm storage payments. In addition the restrictions on shipments to the lake head are now being eased which will help to relieve pressure on country elevators.

The plan of payment for farm storage put into operation this year had the effect of slowing up deliveries which have, generally speaking, lagged behind the quotas established. I placed a statement on Hansard in November showing the basis on which farm storage is being paid. For example, wheat now being delivered to the board has earned 3 cents a bushel in farm storage. This plan has not only assisted a great number of farmers in a financial way, but has given an incentive to holding wheat on farms and has thus taken some of the load of the heavy delivery months usually experienced in the fall.

Up to November 19, as I pointed out to the house at that time, 221 million bushels had been delivered under the quotas then established. Since that time another 100 million bushels have been delivered so that the total receipts as at March 7 were 326 million bushels.

Before leaving the question of wheat quotas I would mention that in certain cases overdelivery of the established quotas has been permitted. Over deliveries were permitted to enable farmers to contribute to war service funds, such as the Canadian Red Cross Society, the Salvation Army Red Shield war service fund, the Young Men's Christian Association war services fund, the Canadian Legion war services fund and the Knights of Columbus Canadian army huts fund.

More recently the wheat board has permitted deliveries by producers who wished to buy war savings certificates or non-interestbearing bonds. By permitting over deliveries' in these particular cases, many of the farmers in western Canada have been able to contribute to these important causes.

In addition to these over deliveries under the quota which can be made without individual permission, the wheat board has in some cases upon special application issued special permits to allow of the delivery of low grade wheat over and above the quota established at the farmers delivery point, so as to relieve the feed situation in eastern Canada and British Columbia. It will be remembered that for the same purpose the board removed the quota on barley and oats early in the marketing season. In addition the board has facilitated the movement of feed grains and low grade wheat from country elevators.

On the basis of the present estimate of the 1940 crop, and after making allowances for seed and feed, we anticipate that, approximately 472 million bushels of wheat will be delivered during this crop year. As I have stated, approximately 326 million bushels have already been delivered, leaving a balance of approximately 146 million bushels to come in during the next five months, an income of approximately 75,000,000 dollars in cash.

I said in November that it was the expectation of the wheat board that by the end of next July farmers would have had the opportunity to deliver the entire surplus production from the 1940 crop. I feel very confident now that that will be done. In connection with remaining deliveries, however, I would like to suggest to farmers to keep storage space at their local shipping points filled as far as possible in order to prevent an undue rush of wheat in the closing weeks of the crop year. I wish to stress this.

There is, I believe, no doubt that the quota system as it was applied this year by the Canadian wheat board has given general satisfaction, and in no small degree the successful working out of a quota system has been due to the splendid cooperation which the wheat board has received from wheat producers throughout Canada, from elevator companies and their country agents and from all those who have business interests generally in the prairie provinces.

When I say that, I am not in any degree minimizing the excellent work which has been done by the wheat board. I have received dozens of letters, entirely unsolicited, from individuals, farmers' organizations, business men, municipal organizations, and others, giving the highest possible praise to the wheat board for the way in which they tackled and

Wheat-Government Policy

overcame the many difficult problems which they had to face. In the west there is a general realization that the wheat board throughout their activities acted in a completely fair, equitable and impartial manner in all their dealings with the 1940 wheat crop.

As to the expected position July 31, 1941, there are certain important factors, Mr. Speaker, which have had and are having a distinct bearing on our present wheat situation and although I do not intend to deal with them in detail, I am of the opinion that they should be brought to the attention of the members.

May I say first of all that in the last war the Canadian farmer was faced with a position which is definitely reversed in this war. Our wheat acreage then was little more than half the present level and the whole difficulty was shortage, not surplus. In this war the government had to intervene to prevent prices being radically reduced. Then the government intervened to put an upper limit on wheat. For part of the 1916 crop $2.40 per bushel was paid by the board of grain supervisors; for the 1917 crop $2.21 was paid and for the 1918 crop $2.24^. Finally in 1919-20 the then wheat board paid $2.63 per bushel. All these prices were on the basis of No. 1 northern Fort William and Port Arthur.

Since the over-running of Norway, Holland, Belgium and France, the United Kingdom has provided the only volume market for Canadian wheat in Europe and only very small shipments have gone to Eire, Portugal and Spain. At least as long as the war remains in its present phase, Canada cannot look forward to large exports of wheat. We expect exports during the present crop year will amount to about 150 million bushels, most of which will be taken by the United Kingdom. This, of course, will have a very definite effect on our wheat position at the end of the present crop year.

There are only two ways at the moment of disposing of Canadian wheat. We can either use it in Canada or we can sell it abroad. As far as using wheat in Canada is concerned we need about 50 million 'bushels for human consumption and another 77 million bushels for seed and feed, giving us a total domestic utilization of 127 million bushels. If in addition we oan only export this year about 150 million bushels, it is apparent that we can look forward to the disappearance of only 277 million bushels of wheat during the present crop year. We started the year with 852 million bushels, by far the largest amount of wheat ever held at one time in this country. This means that on July 31, 1941, we will have a wheat carry-over of about 575 million

bushels, and within a few weeks after that the 1941 wheat crop will be coming on the market.

I would now like to deal with the probable position in terms of the storage situation in Canada. The rated capacity of grain elevators in Canada is 521 million bushels including 84 million bushels of temporary annex space built in the last two years in the prairie provinces. After allowing for the storage of coarse grains and flax seed, a certain amount of Canadian wheat in the United States, wheat in transit, and space which for one reason or another cannot be used at particular times, it was obvious that additional grain storage would be needed in Canada prior to July 31, 1941, in order to take care of the balance of deliveries from the 1940 crop, and the government had given the wheat growers of Canada an assurance that they would accept from them the total deliverable portion of their wheat.

To meet this situation the government entered into an arrangement with western elevator companies for the construction of approximately 50 million bushels of temporary terminal storage space at Fort William-Port Arthur. The arrangements made were approved by order in council of February 19, 1941. I am assured a large part of this new space will be ready by July 31 of this year and the remainder in August and September. These facilities are being constructed by the elevator companies. The government has agreed to maintain all elevator tariff charges now prevailing without reduction until July 31, 1943, and to allow the companies to write off as depreciation for income tax purposes 50 per cent of the actual cost of construction in each of two successive years.

It is further agreed by the companies that after the 31st day of July, 1943, they will, upon request, each enter into agreements (upon the basis of payment of reasonable remuneration for each operation) as may be mutually satisfactory in the light of the operating experience gained during the period up to July 31, 1943, for the operation of its temporary facilities during the balance of the time such facilities are needed.

The following storage, it is expected, will be available at July 31, 1941, or shortly thereafter:

Statement showing approximation of storage as at July 31, 1941

Permanent storage, all

classes 437,000,000

Temporary country annexes 84,000,000

Suggested new, temporary terminal.... 50,000,000

the ensuing 12 months. To these commitments already made must be added any additional commitments which we undertake in respect of the 1941 crop. It is in the light of these facts that we have had to reach a decision in regard to the wheat policy to be followed for the crop year 1941-42.

The government has been alive to the difficulties of the wheat situation and the whole wheat problem has been under constant and persistent study by various branches of the government and of the wheat board. The advisory committee, appointed last fall under the Canadian Wheat Board Act, has been giving a great deal of consideration to every aspect of the problem. From the many representations which have been made to me from people in all walks of life, throughout the west and throughout all Canada, I think I am safe in saying that no Canadian problem has received more careful attention and consideration than has the wheat problem.

I shall now outline the plans the government proposes to make effective this year in connection with the 1941 crop.

(1) To take such action as will ensure as nearly as possible that the visible supply of Canadian wheat on July 31, 1942, shall be no larger than on July 31, 1941. In other words we feel that we have reached the limit of the volume of wheat reserves which should be carried.

(2) To accomplish this a definite limit will be set on the amount of wheat which it will be possible to deliver either to the board, on the open market or otherwise, during the crop year 1941-42. The limit will be 230 million bushels-for the rvhole of Canada, an amount which it hopes can be sold in the domestic and export markets in 1941-42.

(3) The Canadian wheat board and the government have given the most careful consideration to an equitable plan by which deliveries of the 230 million bushels will be distributed among wheat producers. The quota system so successful this year will be maintained and these quotas will be based on the production from 65 per cent of the 1940 acreage. The first quota will be a general one and will allow the delivery of the same amount of wheat per acre from every farmer. The second and following quotas will be certain proportions of the 1941 yield for the farmer's shipping point; that is a high yield point in 1941 will have a higher quota per acre than a low yield point. I cannot at the moment give further details of the delivery plan but I can say that the plan will be equitable as between farmers and as between areas in the prairie provinces. This plan of quotas will operate only if total production provides a marketable surplus of wheat in excess of 230

million bushels. In the event of the crop being smaller than this the system of quotas will require to be varied to meet this condition.

(4) The dominion government through the Canadian wheat board will continue to guarantee an initial payment of 70 cents a bushel basis one Northern on wheat delivered during the crop year 1941-42.

(5) The Canadian wheat board will continue to pay storage to the producers on the same basis as in 1940-41, but only on the undelivered portion of the 230 million bushels.

(6) No change will be made in the amount or incidence of the processing levy as at present established.

My jurisdiction as Minister of Trade and Commerce covers the marketing of wheat. With this I have dealt. Agricultural production lies within the jurisdiction of my colleague the Minister of Agriculture. The restrictive measures I have outlined are deemed necessary. There must be compensations in view of these restrictions and the Minister of Agriculture will now deal with these compensatory measures.

Topic:   QUESTIONS
Subtopic:   STATEMENT OF THE MINISTER OF TRADE AND COMMERCE AS TO GOVERNMENT POLICY
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LIB

James Garfield Gardiner (Minister of National War Services; Minister of Agriculture)

Liberal

Hon. J. G. GARDINER (Minister of Agriculture):

Mr. Speaker, as has been stated by the Minister of Trade and Commerce (Mr. MacKinnon), the minister of that department has, ever since there was a Canada Grain Act, been responsible for its administration, and on each occasion when we have had a wheat board act the minister has also been responsible for its administration. I think I can say without fear of contradiction that no minister of trade and commerce and no wheat board has ever had a more difficult year to deal with up to the present than the year 1940. I think I can say at the same time that the minister, his department, and the wheat board in particular, should be complimented upon the efficient manner in which they have handled that difficult situation.

We have just been given an outline of the activities of the year and of the difficulties facing us this year. As my colleague has already intimated, I desire to deal with that section of wheat policy which has to do with production and its relation to the statements that have been made.

The Minister of Trade and Commerce has stated to the house what will be available to provide handling facilities and advance upon the wheat which can be taken by the government this year.

It is considered by the government that only 230 million bushels of wheat can be delivered to the board on the open market or otherwise. In view of all the uncertain circumstances, the government is of the opinion that

Wheat-Government Policy

the advance upon the amount delivered should not be increased. The outstanding reason for that conclusion is the opinion that production of wheat should be decreased.

The figure arrived at will suggest that farmers keep before them an objective of not more than 65 per cent of last year's acreage. It has also been pointed out that a certain farm income is necessary to the maintenance of western economy. It is generally agreed that this should be not less than 325 million dollars.

If this income is going to be realized it will be necessary for the farmer to obtain from the lands which were in wheat last year a net return at least equal to that of 1940.

The government has therefore attempted to set up a plan under which that may be accomplished, while at the same time securing a reduction of the acreage in wheat to an area which is not likely to produce more than 230 million bushels.

It is not our intention to pay farmers for not growing wheat or to compel them to reduce acreage. It is our intention to pay them to do something other than grow wheat, which we believe in the long run will improve western agriculture.

We intend to do this in a manner in which, if the happenings of the war or the after-war period require it, reasonable quantities of wheat may be produced.

But, most important for the time being, we will attempt to do it in a manner which will give the farmer a net cash return comparable with what he would have had if he had followed his pre-war methods of agriculture and could have disposed of his products in the usual way.

It is our intention, therefore, to make payments of certain sums per acre on all reductions made in wheat sowings in the prairie provinces in 1941 as compared with 1940, provided the farmer does certain specified things with the land.

1. If he summer-fallows the reduced wheat acreage or part of it, the government will pay him $4 an acre for the reduced wheat acreage which is black July 1, 1941; payments to be made as soon as possible after July 1, 1941.

2. If he sows the reduced wheat acreage or part of it to coarse grains in the spring or, in the case of rye, in the fall of 1941 on lands not summer-failowed, the government will pay him $2 a.n acre in 1941 as soon as possible after proof of sowing is established.

3. If he sows the reduced1 wheat acreage or part of it to grass or clover during 1941

provided the land has not also been sown to coarse grain or summer-fallowed, the government will pay him $2 an acre as soon as possible after proof of sowing has been established and an additional $2 an acre if the same land is still seeded down to grass on July 1, 1942.

4. If he sows reduced wheat acreage or part of it which is also sown to coarse grain, or which is summer-fallowed in 1941, bo grass or/and clover or to rye in 1941, the government will pay $2 an acre as soon as possible after July 1, 1942, provided the same land is in grass or/and clover, or rye, on thaJt date.

The above payments are considered to be liberal allowances for the work necessary to utilize the lands for the different purposes outlined. The methods by which the money can be earned are intended to be varied enough to permit of the farmer adopting the one most suited to his farming conditions in order to obtain revenue which he has been denied because he is unable to deliver the amount of wheat he has been accustomed bo market.

An estimate of the amount of money which can be earned is possible. If the entire 9,000,000 acres wrere removed from wheat as summer-fallow, the amount distributed would be $36,000,000. If 6,000.000 acres were utilized as summer-fallow and 3,000,000 for coarse grains and grass, the amount distributed in 1941 wrould be $24,000,000 for summer-fallow and $6,000,000 for ooarse grains or grass, or both, whereas the farmer would have additional returns from the increased coiarse grains in this latter case, and in 1942 could collect additional amounts if the grass and rye lands are still out of wheat. Any other combination can be estimated similarly.

Certain regulations will be necessary to prevent corporation farmers or those operating farms on the tenant plan from taking advantage of the plan to the detriment of their tenants. Other safeguards may be needed. Such regulations will be provided as soon as possible.

A distribution of the funds made available by these payments between seeding and summer-fallowing, and between cultivation and harvest should be even more helpful in this difficult year 1941 than funds distributed in an increased price spread over the latter five months of 1941 and the first seven months of 1942. With this suggestion I desire to leave with the house the statement of policy as set out, in the first part by the Minister of Trade and Commerce (Mr. MacKinnon) and in the second part by myself.

War Appropriation Bill

Topic:   QUESTIONS
Subtopic:   STATEMENT OF THE MINISTER OF TRADE AND COMMERCE AS TO GOVERNMENT POLICY
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WAR APPROPRIATION BILL

PROVISION FOR GRANTING TO HIS MAJESTY AID FOR NATIONAL DEFENCE AND SECURITY


The house resumed from Tuesday, March 11, consideration in committee of a resolution to provide sums not exceeding $1,300,000,000 for the year ending March 31, 1942, for the carrying out of measures consequent upon the existence of a state of war-Mr. Ilsley-Mr. Vien in the chair.


March 12, 1941