Shortly before the house rose last evening I made an appeal to the minister to increase the percentage of the reduction from income tax on gas wells for exploration and drilling purposfes. The minister was emphatic in his reply, but I found some difficulty in following his arguments and his explanations. He said he was probably stating it in the Greek way, but Greek is a language of which I have no knowledge. He said that because a certain amount was allowed for depletion of gas wells, amounting to some twenty-five per cent of the income, thirty per cent was a sufficient reduction for exploration and drilling purposes. I say definitely to the minister that in the circumstances neither is sufficiently, high. I pointed out to him last night as clearly as I could the importance of the natural gas industry to certain sections of Ontario, particularly the Niagara area, in which I happen to live. The greater proportion of the people in that area depend on coal gas for fuel. Everybody knows that to-day coal is in very short supply, and that it is even more necessary than ever to have sufficient gas produced to allow the people who have already installed gas fixtures to continue to use gas. As I pointed out last night, it is impossible to change over gas equipment to the burning of other kinds of fuel. [DOT]
In the riding which I have the honour to represent, Haldimand, there are some 1,800 gas wells in operation. In the past number of years since the natural gas industry has flourished there, some three or four times that number have gone out of existence; they have been abandoned. Some of them have been dry wells. I venture to say that at least three times as many as are in existence to-day have been abandoned because their usefulness has gone. At the present time drilling is going on in that area, because, as I have already pointed out, it is necessary to keep up the supply. I think I am safe in saying that at least ten per cent of the wells drilled turn out to be dry and of no value whatever. That is a strong argument in support of my request for an increase in the reduction of thirty per cent.
Income War Tax
The amount for exploration and drilling should be increased to at least forty or perhaps fifty per cent.
It is clear that there is no use in a company spending all their profits in the driling of new wells to keep up the supply. After all, the average life of a gas well is not very long. I am on safe grounds, I think, in asking the minister to increase that percentage of reduction.
Later I shall have something to say about the depletion allowance, which is twenty-five per cent, I thinly. I believe that they are entitled to a certain increase in the depletion percentage as well. Mining and oil wells are getting a larger depletion rate than that. However, in the meantime I should like to appeal once more to the minister to enlarge that thirty per cent reduction for exploration and drilling to at least forty per cent, if not fifty per cent.