July 30, 1946

PC
CCF

Angus MacInnis

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

Mr. MacINNIS:

They are all over the province except that part of the province that is not habitable. I have gone all over the province and I know what it is like. What happens is this. The mines are worked out,

Income War Tax

and the people who have settled in those localities find themselves without means to make a living. The result is that they have to move and start life anew somewhere else. What a responsible government should do is to take a part of the profits of the mine and a part of the proceeds of taxation that is levied on the mines and set up a fund, so that when a particular area is worked out the workers who have made their homes there can be removed to new areas where new work is starting up.

Besides that, there is, around these mines, land that can be used for other purposes. There are some agricultural lands that could be developed at the same time. Nothing is done, however, except to take out everything that is in the ground and then to clear out. That is pretty much the case so far as the forests of British Columbia are concerned. It is only within the last few years that, after great pressure, sometimes from the government's forest service employees, who each year drew attention to what was happening to the resources of the province, some action has been taken. Whether it is soon enough to catch up with the spoliation of our resources is a question which no one can answer at the present time. This sort of thing, done in a hit-or-miss fashion to help a few speculators, is not good enough. We should have a programme extended over a number of years that would be beneficial not only to those who are getting money, by hook or by crook, from people who are so innocent that they will put their money on the horses or in a mine-

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PC
CCF

Angus MacInnis

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

Mr. MacINNIS:

Oh, no. These people do not put money on the C.C.F. Those who put money on the C.C.F. are people with intelligence who want something for the future. Some day they will get a return, and it will not be a depleted mine.

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PC

Frank Exton Lennard

Progressive Conservative

Mr. LENNARD:

The hon. member for Vancouver East made a remark to the effect that I was not expert in anjdhing. Let me assure him that I have never posed as an *xpert in anything, but I will say this. Those hon. gentlemen who sit directly to my left profess to be experts on everything under the sun, but I would remind them that those who live in glass houses should be the last to throw stones.

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LIB

Walter Little

Liberal

Mr. LITTLE:

I have lived in a mining district for the past thirty-five years and have seen prospectors going out prospecting. I knew Sir Harry Oakes when he was a poor man like the rest of us in that part of the country, and I know he was one of the best 63260-259

prospectors we had. I do not, therefore, like to hear anyone say things about a man who has gone. I have no brief for him in having left the country, but I can say that there was no finer man than he when he was plain Harry Oakes.

In my opinion, we would not have had a mine in Cobalt or Noranda, or Kirkland Lake or Timmins if any government had been developing those properties, let alone my hon. friends opposite who profess to know so much about mines. I have seen men, prospectors, leaving and staying away for six weeks at a time, and when a prospector comes back one would hardly know that it was the same man. That was the effect that his sojourn in the bush had had upon him.

Of course there is the motivating idea of making money. That was the idea that I had when I first went to that part of the country. I went into lumbering and 'remained in it until I went to Kirkland Lake and got into transportation. I put up the first building in Cobalt and I know what these mining men went through. I should like my hon. friends to start mining, going into a place and spending thousands of dollars in a hole and not getting a cent out of it. See how- long they would stay in power under those conditions.

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PC

Agar Rodney Adamson

Progressive Conservative

Mr. ADAMSON:

I wish to congratulate the hon. member for Timiskaming on what he has said. He has shown something of the pioneering spirit that has made this country what it is to-day, and it is to be devoutly hoped that that spirit will not be killed in this chamber.

I wish to put on the record some figures in answer to the contention that labour and other people in general get no benefits out of mines. The figures I am going to put on the record will show that labour and the town do profit from the mines. In the first place, there is an entirely - wrong impression about the development of mining. A ton of rock is absolutely of no value to the country unless it is developed. If it is developed it is worth to the country in new wealth the minerals it contains.

Briefly, I should like to put these figures on the record, because I think they are germane to the argument we have had to-night. These are the official figures compiled by the department of mines of Quebec for all the mines in western Quebec for 1944. The average value of a ton of ore was $6.35. This was at $38.50 an ounce for gold. The cost of developing was as follows: general development, 57 cents; development, 74 cents; mining, $2.32, and milling, 93 cents, making a total of $4.56 for direct mining costs. That figure of $4.56

Income War Tax

represents very largely the cost of labour. Therefore, out of the $6.35, labour got the bulk of the $4.56 which went for direct mining and milling costs.

Let us get down to cases. Let us look at the profit which all these mines made. The earned surplus of all these mines after taxation was sixty-two cents a ton. The country was better off to the extent of $6.35. Labour got $4.56, or very nearly $4.56. The cost of steel and powder and other things are there, but the great bulk of the cost of mining and milling is labour. Therefore labour got many, many times more out of the $6.35 than did the owners of the property. Surely it is of tremendous advantage to this country that this sort of thing should go on. It is of advantage to labour, because labour gets the bulk of the value of the ore. It is of advantage to the country, because the country is $6.35 richer for every ton of ore that is treated, and there are a great many other advantages as well.

I merely wish to refute as definitely as I can that it is the rich man and the rich company that make the profit. The cost of mining was $4.56, and the profit, sixty-two cents. These are the figures and I think they should be on the record in this debate. That was at $38.50 an ounce for gold.

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Amendment agreed to. Resolution as amended agreed to on division. 31. That the deductions from tax allowed to a corporation whose principal business is the production, refining or marketing of petroleum or petroleum products in respect of drilling and exploration costs be extended to oil wells spudded during the year 1947 and the deepening of oil wells which is commenced in 1947 but that in respect of such wells the deductions be reduced from 26! per cent and 40 per cent of the cost to 20 per cent and 30 per cent respectively.


LIB

Douglas Charles Abbott (Minister of National Defence; Minister of National Defence for Naval Services)

Liberal

Mr. ABBOTT:

With respect to resolutions 31 to 35 inclusive, the tax credits now granted to petroleum, natural gas and mining industries, in respect of exploration expenses are continued for another year with an appropriate adjustment in the reduction of the flat rate tax on corporation income from forts' per cent to thirty per cent. Also under resolution 31, the existing tax credit granted for expenditures in regard to a new oil well is extended to include expenditures incurred in the deepening of an existing well.

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PC

Douglas Scott Harkness

Progressive Conservative

Mr. HARKNESS:

In connection with resolutions 31, 32, 33 and 35, which are the ones which deal with oil, gas drilling and exploration. I do not wish to repeat what I said in the budget debate, with reference to these matters. However, I should like to draw to

the minister's attention the five suggestions which I made at that time and to ask him what action the government is prepared to take in connection with them.

So far as the oil industry is concerned, I have been cheered by some of the concessions which the minister has made to the cooperatives and to the mining business since the budget resolutions have been discussed. I was particularly interested in his announcement that, so far as the gold mines were concerned, the depletion allowance was to be changed so that, as he said, those who need help least will not get most. I strongly recommend to him that he change the regulations so far as the depletion allowance for oil wells is concerned, with that same idea in mind.

The other concession given to gold mines is that new mines would pay no income tax for the first two years of operation. In a modified form that might very well be applied to the oil business. As the minister has said earlier this evening, the first three years of an oil well's operations are its most profitable ones. That is quite true; nevertheless a concession which will accomplish much the same effect should be given to oil wells to encourage further drilling.

The five suggestions which I made when I spoke in the budget debate were as follows: First, the extension of the fifty per cent tax drawback for deep-test wells, to completing abandoned exploratory wells. Whether that is covered in the present regulations, I do not know. I hope the minister will clarify that and afford the extension of that fifty per cent drawback to wells drilled in the plains areas, where it is practically essential to have a large amount of drilling if we are to keep up our present oil production in Canada, let alone expand it. Second, an increase in the depletion allowance from the present 33J per cent to 50 per cent, with probably a regulation in connection with it similar to the one they have in the United States, so that it can be spread over several years and carried forward or backward as desired in order to take care of years in which there is no profit, and other years in which there might be a big one. Third, that all drilling costs, permit and leasing expenses, geological and geophysical expenses and so forth be allowed as deductions for income tax purposes and that these deductions be taken as and when desired. That is, they may be carried forward or backward. Fourth, that the present income tax regulations in connection with oil and gas wells be made part of the permanent tax structure in order that operators may be able to make future financial plans knowing where they stand. Fifth, removal of the subsidies now being paid on

Farm Implements

crude oil being imported into the prairie prov-vinces in order to enable western crude oil to reach its true economic level. If the minister would make a statement covering these points we might have a good basis on which to proceed.

Resolution stands.

Progress reported.

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At eleven o'clock the house adjourned, without question put, pursuant to standing order. Wednesday, July 31, 1946.


July 30, 1946