Mr. ILSLEY:

If the Social Credit party had been asked to nominate a member he would have gone according to the- statement of the Premier of Alberta, with one view in mind, and that would have been to prevent the conference from obtaining its objective. It had been known for a long time that this conference was to be held, and if the matter had been brought up in the house we certainly could have given it consideration. Other matters of this kind are brought up in the house from time to time, and I do not think it ever occurred to the house leader of the Progressive Conservative party-

Mr. GRAYDON:

May I answer that? The reason it did not occur to us at the beginning was that we were unaware there was to be a representation from the House of Commons. At least I did not know of it.

1430 COMMONS

The Budget*-Mr. Hamon (York-Sunbury)

Mr. ILSLEY:

That perhaps is an answer, but certainly there was no great interest taken in the representation by any of the opposition parties.

Mr. HANSON (York-Sunbury):

We have been frozen out so often it is hardly worth while.

Mr. ILSLEY:

I think if I were to put the question to the leader of the opposition, whether he thought it would be advisable- I do not think it could be done, because the official list of delegates was given out weeks ago-whether he thought it would be helpful and make for the success of the conference to have representatives of all the parties in this house at the conference-

Mr. GRAYDON:

I did not say that. I only suggested our members as representing the next government.

Mr. MAYBANK:

May I make this point with reference to the proposal?

Order.

Mr. MAYBANK:

I do not want to impose my views, but I thought probably the gentleman who has spoken would welcome my remarks. I think the government is in some difficulty in choosing a person to represent the next government, supposing it be not the same as this government, because-

Order.

Mr. MAYBANK:

-no one would have suggested sending a non-member of parliament, and to get a representative of the Conservative party would mean the government would have to go outside and secure their travelling salesman, Mr. Bracken.

Mr. ILSLEY:

I had no knowledge before Friday of last week that the representatives from the United States were to be selected from both Democratic and Republican parties.

Hon. R. B. HANSON (York-Sunbury):

Mr. Speaker, I desire this afternoon to speak briefly on the budget, but before doing so I wish to make a few preliminary remarks arising out of a reflection on this party made

by the hon. member for Rosetown-Biggar (Mr. Coldwell) in the early part of his remarks on Thursday afternoon last, no doubt occasioned by the reflection cast upon his group in the remarks of the hon. member for Dufferin-Simcoe (Mr. Rowe). On that occasion the hon. member for Rosetown-Biggar stated that the nearest approach this country had ever come to revolution was under the Tory party between 1930 and 1935. That was an insult to a great government. It was intended to cast a slur upon the late government; it was intended as an appeal to prejudice. I resent the implication of that statement.

May I say that with respect to appeals to prejudice the hon. member and his group are rapidly becoming past masters. I assert with every degree of confidence that when an impartial history of that dark period between 1930 and 1935 is written, when conditions existed which were not created by the government of the day, it will be shown that the only gesture toward revolution was a manufactured gesture fomented by the communistic and socialistic elements in Canada. That movement, if there was such a movement, was led by the Tim Buck's, the Harold Winch's and others like them. These same people are knocking at the door of the socialist party here in this house and they will soon be in charge. Let me say to the hon. gentleman that while I would not for a moment accuse him personally of preaching revolution or of being a revolutionist, he and his predecessors in office have been encouraging those in this country who preach revolution. He and those around him have started forces which they cannot control. Revolution is a nasty word. Revolution plus force means treason.

I desire now to revert to the consideration of the budget.

In the course of the past twenty-three years I have listened to no less than nineteen budget addresses, delivered by no less than seven different ministers of finance. I recall the clarity of the budgets of Mr. Fielding and the admiration I always felt for his annual budget and the delivery of his annual budget address. I can honestly say that apart from the magnitude of the figures, the colossal and staggering increase in the national debt, and the announcement of contemplated increased expenditures on both war account and peacetime activity, I have never listened to a drabber budget speech than that which my hon. friend, the Minister of Finance, delivered in this house this day week. There were no flashing highlights, no spectacular announcements, nothing to make the blood run more

The Budget-Mr. Hanson (York-Sunbury)

quickly through one's veins; there was nothing to stir the imagination, no sparks and no thrills-you pay your taxes and you take your choice.

If by any stretch of the imagination one could call one feature of the address a highlight, it was that part of it in which the minister, by implication or tacit admission, indicated that the ministry was departing from the oft-avowed policy of the government to pay for the war as you go, as far as possible out of current taxation, and announced a policy of increased borrowing to make up the difference. I suggest to you, Mr. Speaker, and to the membership of this house, that that is in marked contrast with the pronouncements *of ministers of finance since the first war session of 1939, with respect to a policy which I supported at that time and continued to support down through the years. It indicates a change of front, a change of policy, dictated not by any inherent defect in the policy itself, but by a reversion to political expediency, a manoeuvre that has always characterized hon. gentlemen opposite on the eve of an election.

What is the essence of this budget? It is certain now that the essence of this budget is that substantial increased borrowings are to be relied on to absorb a substantial and marked increase in the war appropriation and in peace-time expenditures. Along that path lies inflation, and no one knows it better than the minister. What has become of the policy of controlling inflation? Has the lid been kicked right off? If not, it is pretty near all the way off. I venture to suggest that the minister and those advising him are fearful of the results of this budget. And so I assert with every degree of certainty that such a position is a marked departure from previous policy and is motivated by a desire to appease the electorate by throwing out a crumb here and a crumb there, all of which is doomed to failure at the hands of an outraged electorate, and nobody knows it better than the members on the government benches themselves. They hear it from their own followers; they read it in the daily newspapers; they hear the echoes down through the thousands of miles that extend from Vancouver to Sydney.

We are to raise by taxation and borrowing six billions of dollars, and at the same time we are warned of a loss of income tax revenue to the tune of a hundred million dollars, not to speak of other possible losses, such as, for instance, the millions of dollars withdrawn by the socialization of business, such as the Montreal Light, Heat and Power Company expropriation. We are told that we must

borrow at least $320 million more than we did last year because the cash deficit will be that much greater.

The income loss suggested by the minister is found in the budget resolution which provides that after June 30 there will be no more compulsory savings for individuals. The system was set up two years ago with a twofold purpose-to take purchasing power from the people and thus prevent inflation, and to add to war revenue. I am bound to say in all honesty that at the time that policy was introduced I supported the principle of compulsory savings, although I did not support all the provisions under which the policy was being worked out. Whatever may have been said as to the soundness of the principle, as to its necessity

and it was largely based on necessity-and as to its efficacy, it is now certain that it never was well received by the public. Personally I rather regret that. It was not received well by the public because it bore too hardly on those in the lower income tax groups who had not perhaps the means of substituting insurance premiums or mortgages payments and had less ability to pay. It bore less hardly on those in the higher income brackets, who, while they may have had the ability to pay, also had readily at hand the means of evading the payment of compulsory savings by way of substituting life insurance premiums and mortgage payments under the law as it has obtained to date. All these conditions were well known to the public, and certainly they were well known to the minister when he brought down his proposals two years ago. Now at this last and1 dark hour confronting the administration a change of heart takes place-not necessarily a change of conviction; because I believe that the minister was convinced two years ago that the policy was right, and that he is so convinced now. The' change is based once more on political expediency, a policy so often resorted to by hon. gentlemen opposite. Vain hope! It is too late. The damage is done in the minds of the public. The resentment against enforced savings, withholdings from payrolls already diminished by numerous levies such as subscriptions for war savings certificates, victory bond purchases on a monthly payroll payment plan, contributions to unemployment insurance, enforced deductions for income tax collected at the source, and I was going to say a dozen other like deductions from the workers' pay cheques, rankled in the minds of the wage-earners in the lower income tax groups, and they are not likely to be appeased by an eleventh hour conversion. This party warned the govern-

4432 COMMONS

The Budget-Mr. Hanson (York-Sunbury)

ment at the time the exemptions were reduced to the low level at which they stood recently that they had been reduced to too low levels. Time has proven that we were right.

Especially are the lower bracket wage-earners not to be appeased by this gesture, because it is indicated as clear as daylight itself that the deficiencies created by this gesture of appeasement were accompanied by the announcement that more money must come from the same source in the form of larger and larger so-called subscriptions to victory bonds and war savings certificate campaigns, and presumably by the same strong-arm method that has characterized the administration with respect to inducing men in the home army to enlist in the active army.

We are now in the sixth year of the war. While the end is not in sight, we are all hopeful that victory will soon be ours. I desire now to draw the attention of the house to what I consider to be a glaring omission from the budget, and that is the failure of the minister to indicate in even the slightest degree to business and industry and to the workers in business and industry, and by the same token to agriculture, what is to be the taxation policy of this nation in the post-war world. I know that the minister will say immediately that no government can announce in advance what the fiscal policy of a succeeding government is to be-and there is bound to be a new administration succeeding this one at no distant day. But this government could announce at this time that the tendency of post-war taxation should be downward. That should be the aim of every one of us; because if there is one thing more than another that is causing anxiety to business and industrial executives and to the wage-earners and to the workers and to agriculture, it is this uncertainty, this lack of information or even intimation as to what level of tax structure this country is to have in the post-war period. I say this with confidence, that until the principles, and I go further and say that until the quantum, of post-war taxation are considered and the country is informed what they are to be, business enterprise in this country, while willing and anxious to do so, will be unable to formulate plans for full employment. That full employment must come from private industry, no matter what theories we may hear advanced across this floor. It will come without question from private industry if tax policies are suggested now under which capital may devote itself to new construction, reconditioning, deferred maintenance, and the

capital cost of change-over from war production to peace-time activity, in an intelligent and capable manner, and designed to give that full employment which we all so devotedly desire. With corporation taxes as high as they are, and with no suggestion made or indication given as to what tax policy is to prevail henceforth, it is impossible, I assert, for industry to plan for the future.

I hear this on every hand, and I have no doubt that the government has heard of it. With excess profits taxed at 100 per cent, no company, no industry, can increase its working capital to take care of its post-war requirements. This expenditure, so necessary, must come out of fresh capital investment-risk money, which will not be available until the risk is known and evaluated. I challenge anybody to contradict the soundness of that position. True, my hon. friend knows and we all know that at some time the refundable portion now collected from incorporated companies is to come back, but until this budget was presented that was in the dim and distant future, wholly unavailable until long after the close of hostilities, and1 then only piecemeal. Meantime the refundable portion has been an asset in name only. I happen to know that for a time it was not considered that this should be taken into account in the assets side of a company's balance sheet. There was much debate on that point; finally it was the consensus that it should be taken into account as an asset. If it was an asset, it was an asset in name only-frozen, inconvertible, of absolutely no use except to swell the figures in the balance sheet. Even under the proposed amendment it is little more than a frozen asset; it is not a liquid1 asset. I suggest that this has been and is a bad condition-bad for business, 'bad for employment, and bad for the country. There is no measure of relief for business in this budget.

But my hon. friend will say that there is encouragement and assistance to industry in the corporation tax amendments which he has announced, designed presumably to promote capital outlay for the purpose of post-war conversion. Let us examine that position.

The government has been made aware of the situation to which I have alluded, and I gather that reluctantly it has come to the conclusion that this situation should be eased1. That is about all you can say about it. Two or three pseudo-remedies have been proposed1 by the minister. None of them will be particularly helpful; they will fall far short, I predict, of whait is required.

The Budget-Mr. Hanson (York-Sunbury)

What is proposed with regard to this refund?

It is proposed that business firms may borrow, if anyone will lend them the money on that class of security, the refundable portion of the income and excess profits tax already paid, by way of assignment, upon which they will pay interest of five per cent, or four per cent, as the case may be, while the government allows them no interest. But it is to be done only in cases where in the opinion of the government it should be done. The government is to constitute itself the sole judge; the individual company, to whom the money belongs, has nothing to say about it; and the government has retained to itself the power to say whether the purpose of the assignment is to enable the taxpayer to make capital expenditures which will-again in the opinion of the government and at their whim and pleasure, without any measure of right on the part of the taxpayer- contribute to the post-war conversion of the taxpayer's business and provide substantial employment. All these conditions have to be fulfilled, and the government has to be convinced.

What a power that leaves in the hand's of the Minister of Finance! This government is becoming an oligarchy. We have this session the amendments to the Transport Act and to the Aeronautics Act, and only now is business in this country beginning to wake up to the colossal powers which, under these measures, are being vested in one man. I suggest that the government ought to revise this type of policy, and not establish ministers as dictators -because that is what they are becoming. The minister is setting himself up as a dictator as to who will get his money back and who will not get his money back.

I suggest, sir, that lending institutions will not lend solely upon the security of an assignment of the refundable portion of taxes paid. Of course they- will accept it as collateral; they will take as collateral anything they can get, but to say that any lending institution will lend solely upon the strength of an assignment of this refundable portion of taxes paid is just silly. The C.CE. might. I do not know what they might do. They do not know themselves.

Mr. COLDWELL:

Are you sure that the

Tories do?

Mr. HANSON (York-Sunbury):

I think

we do. We always have had principles, and we have always lived up to them. That is more than some other people have done. If I wanted to go into that sort of thing I could recall what occurred in Saskatchewan the other day, when principles were put into storage for the duration of the election.

One reason why you will never get a lending institution to lend money on the sole security of this assignment is that the time of repayment would be too distant and too uncertain. Such an assignment would, I repeat, be acceptable only along with other collateral, and the character of the borrower.

But that is not my principal objection to the minister's proposal. This refundable portion is the taxpayer's own money, taken from him, if you will, by compulsion, but his own money, lent to the government.

Mr. McGEER:

Without interest.

Mr. HANSON (York-Sunbury):

Without

interest. Some day, after a period of time, he will receive payment. Why should be be obliged to hypothecate his own money? In a bona fide case the government, if it wants to contribute to post-war conversion of a taxpayer's business and provide employment, should give the money back as a matter of right, not as a favour. That is what I object to. This money is going to be handed out as a favour to the taxpayer, and I suggest that fundamentally it is a matter of right to the taxpayer. .

Mr. ROWE:

His own money.