April 13, 1945

MINIMUM NUMBER OF DAYS PRESCRIBED BY CHIEF ELECTORAL OFFICER


On the orders of the day:


NAT

Grote Stirling

National Government

Hon. GROTE STIRLING (Yale):

Mr. Speaker, may I ask the Prime Minister how it is possible under the act to call an election in six days less than the minimum prescribed by the chief electoral officer?

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LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Right Hon. W. L. MACKENZIE KING (Prime Minister):

I would say to my hon.

friend that I consulted the chief electoral officer

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War Appropriation-Munitions and Supply

this morning in regard to the statement I intended to make this afternoon, and he gave me the fullest assurance that the election could safely be held in that time.

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NAT

Grote Stirling

National Government

Mr. STIRLING:

So this statement on page 6E8 of Hansard is inaccurate?

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LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

I cannot say

as to that, but I can say that I have the positive assurance of the chief electoral officer that polling can safely take place on June 11. I am surprised that my hon. friend should raise any question about our having an election then.

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NAT

Grote Stirling

National Government

Mr. STIRLING:

He raised no question

other than that if a mistake is made under the act after the statement of the chief electoral officer it would be a very serious matter indeed.

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LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

That is quite right.

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WAR APPROPRIATION BILL

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


The bouse resumed from Thursday, April 12, consideration in committee of a resolution to grant to His Majesty certain sums of money for the carrying out of measures consequent upon the existence of a state of war-Mr. Ilsley-Mr. Bradette in the chair.


DEPARTMENT OF MUNITIONS AND SUPPLY

NAT

Howard Charles Green

National Government

Mr. GREEN:

Mr. Chairman, there are two -matters on which I would ask the minister to make a short statement to-day. The first has to do with government policy on the renegotiation of contracts for war supplies. In my home city of Vancouver there are quite a number of small manufacturing plants doing engineering work, largely in connection with the building of ships. These firms have made representations asking that the government investigate the whole situation with regard to renegotiating contracts, that the situation be clarified and some uniform system adopted, and furthermore provision made that they be allowed to get back in due course the refundable portion of the excess profits tax they have paid.

Most of these firms started in a small way, as the minister knows, and they have done excellent work manufacturing war materials of various kinds. They have provided jobs for a great number of men and women and have in reality built up new industries in our city. The situation is probably the same in many other centres in Canada. In view of the fact that their growth was, of course, largely

a war development, the}' have been subject to heavy excess profits taxation and have been unable to retain sufficient funds to lay aside for the post-war days. Of that taxation, in the last two years-the minister will correct me if I am wrong-twenty per cent was considered as refundable, the plan being that they would get that much back after the war. We are told that they have planned to use that twenty per cent for conversion to production of civilian goods and as working funds for their operations in the days of peace. But a short time ago the Department, of Munitions and Supply stepped in and has been carrying on the renegotiation of these contracts. I do not want to be taken as condoning for a moment the making of unfair profits out of war production. Every member of the house would be very much against that. But in some cases this work was done by tender, in competition with other firms, and now, after the work has been done and the excess profits taxes have been paid on that basis, these firms are faced with renegotiation of their contracts, and in some cases at least- the refundable portion of their tax has been eaten up by reason of the renegotiation carried on by the Department of Munitions and Supply. Hon. members will see that that will havp a direct effect on the ability of these firms to employ people after the war. It may force many films out of business at a time when the government is relying on industry to provide a great number of jobs. That is the policy of the present government, and I am convinced that it would be the policy of whatever government is formed after the election; I do not think there is much chance that Canada will adopt state control of all these industries. It is therefore particularly important that these firms be given a reasonable chance to carry on and provide jobs.

The policy of renegotiation of contracts does not apply to firms which are doing civilian work; it applies only to firms on war work, which of course means that the latter are dealt with far more severely. I would ask the minister to make a statement as to policy in this connection. I repeat that these firms are asking that the whole situation be clarified. Apparently there are no uniform rules; each firm is dealt with on a separate basis; and I ask that an attempt be made to permit them to retain the title to the refundable portion of the tax they have paid. That is the first matter I am placing before the minister to-day.

The second has to do with the shipbuilding industry, which of course is the industry for which most of these smaller firms are produc-

TFar Appropriation-Munitions and Supply

ing. Last summer the Canadian Shipbuilding and Ship Repairing association presented a brief to the government which contained suggestions and recommendations having in view the furtherance of the interests of Canadian marine transportation. I should not like to be taken as agreeing with all of these submissions, but I shall read them to the house because I think they are very important. The shipbuilding industry is of great consequence to Canada, from the point of view not only of providing work but also of maintaining our navy in the days of peace. In fact it should be one of the key industries of Canada. These are the recommendations made by that association:

1. The government should restrict the coasting trade of Canada to vessels now registered in Canada and hereafter built in Canada.

2. That a national shipping policy should be enacted whereby Canadian ship owners engaged in foreign trade in and" out of Canadian ports will be encouraged by all possible means, including subsidies if necessary, to build and register their ships in Canada.

3. That the government should give consideration, as a part of the post-war reconstruction policy, to the replacement of obsolete vessels employed in the government service by new vessels built in Canada.

4. That all Canadian naval vessels shall be built in Canada, and that the government make representations to the British government to establish a policy whereby educational orders for British naval vessels may be placed in Canada in the post-war period.

5. That steps be taken to reduce vessel orders awarded by the government to those shipyards owned and/or controlled by the government with a view to liquidation of these shipyards as soon as the war emergency permits.

6. That the government should promote a policy of aid to Canadian shipbuilders to enable them to build ships for foreign ownership, through the medium of loans secured by mortgages. or other approved financial arrangements.

7. That a committee be appointed by the government to study a polity of government purchase of Canadian-owned and registered vessels engaged in the Canadian coastal trade and which have become obsolete, at a fair valuation to be applied as a credit against Canadian built replacement tonnage.

8. That Canada's shipbuilding and shipping policies be controlled through one government authority, and that Canadian shipbuilders be invited to nominate representatives to all committees dealing with questions relating to marine transportation.

This will be of interest to the Minister of Fisheries:

9. That all vessels engaged in the Canadian fishing industry shall hereafter be built in Canada.

10. That consideration be given to the establishing in the principal shipbuilding districts of special facilities for technical education in shipbuilding and marine engineering. *

These recommendations were submitted to the government, and press dispatches of September 11 of last year set out that an eleven-man interdepartmental committee was being set up by the government to consider a merchant shipping policy. The report went on to say that this interdepartmental committee would-

-report to the cabinet upon completion of this study and a meeting will then be arranged at an early date between Mr. King and members of the cabinet and the five-man executive of Canadian Shipbuilding and Ship Repairing Association, which submitted the brief.

In addition to the shipbuilders, the labour unions whose men were building the ships were very much interested in this brief, and asked that they also should be allowed to be represented at this meeting with the cabinet. That is very important, because, after all, to the unions it is a matter of jobs, of enabling the men and their families to live. Will the minister tell us whether or not that meeting has been held, and if not, when it will be held, and also what the general policy of the government is with regard to maintaining the shipbuilding industry after the war?

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LIB

Clarence Decatur Howe (Minister of Reconstruction; Minister of Munitions and Supply)

Liberal

Hon. C. D. HOWE (Minister of Munitions and Supply):

Mr. Chairman, with reference

to the small machine shops on the Pacific coast, I may say at once that I have some sympathy with the owners of them. They started as small shops, as a rule, with little equipment, and they have become large shops with modern equipment-at the expense of the government; nevertheless they are faced with the post-war years with operating that sort of plant. Under the tax laws the standard of profits of these firms is low, and I think that any relief they should get should be in the direction of change in the basis of standard profits. It is the duty of my own' department to place war contracts at the lowest possible cost consistent with fairness. That has been done with the main contracts. Where direct government contracts have been placed and where costs have been reduced, it has been the custom to have frequent renegotiations: For example, the shipbuilding industry, when it became more efficient was able to increase the profit on a ship from about 830,000 to as much as $300,000. Naturally the shipbuilding industry was renegotiated, and it is operating to-day on about a three per cent basis. That happens with every type of contractor that has a direct contract with the department. The costs are watched very carefully; we have our auditors checking costs, and as soon as the costs improve so that the profit becomes excessive, it is the custom to renegotiate the contracts with both retroactive and current effect.

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The shops to which my hon. friend refers are not main contractors of the department. In other words, for the most part they do not receive contracts direct from the department; they are subcontractors of the shipbuilding firms; therefore they come in a special class. The government has no direct dealing with them; consequently it does not audit their accounts. Nevertheless, in examining the shipbuilding industry as a whole, it was found that whereas the costs for the finished ships have been brought down progressively as costs improved, the shipbuilders did not renegotiate their subcontracts, with the result that many were paying the same price for components in the third year of the war as they were originally. That led to an investigation of the position of the subcontractors, and it was found that they were the real profiteers of the war.

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NAT

Howard Charles Green

National Government

Mr. GREEN:

The minister does not mean that in its worst sense?

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LIB

Clarence Decatur Howe (Minister of Reconstruction; Minister of Munitions and Supply)

Liberal

Mr. HOWE:

No, but I mean the people who have made excessive profits in the war are usually subcontractors.

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NAT

Howard Charles Green

National Government

Mr. GREEN:

Any profits that they made were taken away by taxation.

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LIB

Clarence Decatur Howe (Minister of Reconstruction; Minister of Munitions and Supply)

Liberal

Mr. HOWE:

Taxation has nothing to do with the Department of Munitions and Supply. The tax collector comes in after the department gets through. Were it charged that any subcontractor had made thirty per cent I do not think anyone in this house would accept my explanation that it does not matter, because the tax collector would get part of it. That would not be an excuse at all. We must make sure that our contractors are not overpaid. My department has been steadily on the job of renegotiating war subcontracts, and it is a tremendous job. They run into many hundreds. But the work is progressing and the recoveries are really startling. I suppose the profits made by some of the small machine shops to which the hon. member refers run as high as twenty-five or thirty per cent of their turnover. Of course that is wholly excessive.

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NAT

April 13, 1945