April 13, 1945

LIB

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

Liberal

Mr. HOWE:

My department simply sits down with the contractor and says: "Look here, an audit of your books shows that you have made this large profit. We do not think you are entitled to that profit; we think a reasonable scale of profit would be this." The amount we have recovered out of those transactions runs into millions of dollars. There has been no great difficulty in arriving [Mr Howe.]

at a fair settlement. It is true that the shops to which my hon. friend refers will not have the refundable portion of their profits which they expect, but they will have the refundable portion to which they are entitled in equity. So far as I am concerned my department had no option; knowing that those profits existed we had to go out and recapture them. That is what we are doing.

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NAT

Howard Charles Green

National Government

Mr. GREEN:

Take a case where a firm

tenders on a job in competition with others.

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LIB

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

Liberal

Mr. HOWE:

They did not tender to us.

Those firms were not main contractors of ours. They may have tendered to a shipbuilding firm, but even if that were done, a tender put in in 1940 should not govern the price being paid for the article in 1943, 1944 or 1945. In other wTords the original price may have been put in as a tender in 1941. As a rule the shipbuilding firms have not rechecked their subcontract prices as they should have done as the efficiency of the industry improved; therefore we are forced to do the job.

As I say_ these are not direct contractors of ours. The position of those firms is not as serious as my hon. friend might suppose. After all, most of them have been furnished with greatly improved and enlarged shops and greatly improved machinery. They are all fitted with the most modern machinery, and they are permitted to write them off under accelerated depreciation so that the small man is in a vastly better position to operate after the war than he -was at the beginning of the war. He may require working capital; if so, he will, of course, have first recourse to the industrial bank which was formed to take care of exactly that kind of loan.

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NAT

Howard Charles Green

National Government

Mr. GREEN:

That would mean they

would have to borrow money and pay interest on it.

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LIB

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

Liberal

Mr. HOWE:

Borrow working capital.

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NAT

Howard Charles Green

National Government

Mr. GREEN:

Would the minister be willing to have an : ./estigation made into the position in which those firms find themselves?

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LIB

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

Liberal

Mr. HOWE:

We are investigating every

day.

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NAT

Howard Charles Green

National Government

Mr. GREEN:

I mean taking them as a

group and having the whole situation looked into.

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LIB

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

Liberal

Mr. HOWE:

It is not a matter of a

group; it is a matter of each firm. We do not deal with groups. Each company sits down with our cost accountant and renegotiation officer and his case is discussed. If some

War Appropriation-Munitions and Supply

of his work happened to be private work, that is eliminated, because we have no right to negotiate private work. If the work is being done by tender, and if he has an exceptionally efficient plant, that is all taken into account, and my renegotiation officer and the firm -never fail to agree under all the circumstances to a reasonable profit.

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NAT
LIB

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

Liberal

Mr. HOWE:

Right back to the beginning

of the war. We have officers from each department all across Canada doing that kind of work; and I may say to the hon. member that it is not small change they are recovering. To date the total gross recovery from renegotiation runs into $250,000,000. You may say the tax department would have recovered that, but at least $70 millions is not recovered by the government.

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NAT
LIB

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

Liberal

Mr. HOWE:

Oh, yes.

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NAT
LIB

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

Liberal

Mr. HOWE:

We take the responsibility

for correcting the tax situation. If the firm has paid income tax on the income that it expected to have before renegotiating we take its refund to the income tax office and have its income tax readjusted accordingly. All that is taken care of as part of our renegotiation. That is a very important part of our department and in my opinion it is an excellent piece of work that they are doing.

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NAT

Howard Charles Green

National Government

Mr. GREEN:

What would happen if it

was found that the firm was operating at a loss?

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LIB

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

Liberal

Mr. HOWE:

That is taken into account

too. We usually hear of that much more quickly than we hear of the profits. If a firm is operating at a loss, it does not go on very long before we hear about it.

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CCF

Angus MacInnis

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

Mr. MacINNIS:

May I say a word on this subject? I have had letters from those firms about which the hon. member for Vancouver South has spoken. In my view the principle of renegotiating is accepted both here and in the United States where they have contracts of this kind. The only point that can be made is this: has renegotiation been carried on on a proper basis? Neither the hon. member for Vancouver South nor myself is in a position to express an opinion on that. I cannot see that a committee can be appointed to deal with it now. If the house were in session for

a longer time and the war expenditures committee were sitting, then there would be a possibility of hearing these people and having them explain their case. In lieu of that we shall have to take the statement of the Minister of Munitions and Supply. He has given me an insight into it that I did not have before.

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LIB

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

Liberal

Mr. HOWE:

As to the shipbuilding brief,

I am glad my hon. friend has said that he would not support every chapter of it. I read the brief of the committee of shipbuilders.

I pointed out that it was a one-sided brief. It asked for a great many things that the government should do, but I saw nothing at all in it showing what the shipbuilders must do.

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CCF

Angus MacInnis

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

Mr. MacINNIS:

That is free enterprise.

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April 13, 1945