May 12, 1947

LIB

Jean Lesage

Liberal

Mr. LESAGE:

It is too bad that the hon. member does not understand French.

Topic:   THE BUDGET
Subtopic:   DEBATE ON ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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SC

Charles Edward Johnston

Social Credit

Mr. JOHNSTON:

But I can read the budget.

Topic:   THE BUDGET
Subtopic:   DEBATE ON ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

James Horace King (Speaker of the Senate)

Liberal

Mr. SPEAKER:

Order.

(Translation):

Topic:   THE BUDGET
Subtopic:   DEBATE ON ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Jean Lesage

Liberal

Mr. LESAGE:

I have here what amounts to a tale on Social Credit by de Maupassant. It is the story of Mr. Law, a very clever piece of writing by Henry de Jouvenel in his book

Huil cents ans de Revolution Frangaise. I may have time to read it later on.

(Text):

I do not have to repeat the reasons given by the Minister of Finance for being careful at this time. I do not have to repeat what I said at the beginning of my remarks about the obligation which would be ours to replace by indirect taxation the revenue the government would lose by a further cut in direct taxation, but Mr. Speaker, I believe I should insist on that subject in my mother tongue.

. (Translation):

When on Wednesday last, the hon. member for Pontiac (Mr. Caouette) rebuked the hon. the Minister of Finance (Mr. Abbott) for

failing to remove the tax on incomes of less than S3,000, he mentioned the hundreds of so-called "pressure cards" he had received clamoring for removal of the tax.

I have received a number of such cards myself. The only point they make is that members should be as generous with the taxpayers as they were with themselves when voting themselves a S2,000 exemption. I feel it is high time the people knew that $2,000 exemption only did justice to the members of parliament. Indeed any taxpayer is entitled, in computing his tax, to deduct from income such expenses as are directly incurred in the discharge of his duties as long as they are justified and whether they be travelling expenses, living expenses or what are commonly called office expenses. In the performance of their duties, as members of parliament, hon. members incur yearly travelling, accommodation and administrative expenses well in excess of $2,000. Before hon. members were granted that exemption, they were in an unfair situation because the right to deduct those expenses from their taxable income was not recognized. The $2,000 exemption did not place the members of parliament in a privileged situation; on the contrary, that provision only partially decreased an injustice and placed them on an equal footing with the remainder of the taxpayers.

Let us see what would be, under the present circumstances, the effect of an increase of that exemption to $3,000 on the public finances. \\ e must start from this principle, because it is the only sound one in economics, that the government must take in taxes what it spends on public administration and on social security programmes, particularly on old age pensions and family allowances. The Minister of Finance figures that personal income tax receipts will amount to $695 million in 1947 and $625 million in 1948. If exemptions were brought up for everybody to 83,000, the revenue would amount in 1948, according to my information, to about $200 million, which means a two-thirds reduction or $425 million on the expected returns. If the Canadian people hope that the government will continue to pay for old age pensions, family allowances, pensions to blind and health services, which cost more than $400 million a year-and I am convinced that such is the wish of all my constituents-we will have to find elsewhere the money required for those ends. If the funds are not secured through direct taxation, they must be obtained through indirect taxation.

The Budget-Mr. Lesage

I quote the very words uttered by the leader of the Social Credit party, the hon. member for Peace River (Mr. Low):

Indirect taxes are hidden taxes which increase the cost of production and the cost of living.

They are levied at various stages of the production of goods and, therefore, as each middleman must make a profit on the tax itself, the latter is increased manifold before it is passed on to the consumer. Thus, for instance, according to the budget, the present 8 per cent sales tax will bring in $325 million during the next fiscal year. If the government decided to raise the level of exemptions to $3,000, they would lose $425 million, and if they wished to recover that amount by raising the sales tax rate, it would be necessary to boost it to approximately 20 per cent. This means that the prices of some essential products would be increased not only 12 per cent, but that much plus the additional, I should say the multiplied profit accruing to the agent, the wholesaler and the retailer. The prices to the consumer, in the case of certain articles, would thus be increased 50 per cent or even more. The small wage-earner would suffer therefrom, as he would be compelled to pay the increased cost of goods and necessities of life. That is one of the main reasons why I submit that direct taxation, income tax being the finest example of this method, agrees' better than any other with the princpiles of distributive justice.

Mr. Speaker, since I still have a few minutes at my disposal, I should like to quote a few excerpts from a book written by M. Henry de Jouvenel and entitled Huit cents ans de Revolution Franqaise:

The financial genius that was Law or Lass conceived evei'y form of modern credit. He showered them on a distressed country with the cheerful faith of an inventor who ascribes universal powers to his discovery.

That applies to our social credit system, does it not?

M. de Jouvenel continues by pointing out that up to 1721 Mr. Law had scattered all over France paper-money worth billions. A further excerpt will underline the similarity with the Social Credit policy and that of the Electors' Union.

No more debt, no more taxes, no more bankruptcy, no more class distinctions! Life had become one grand festival where, as at the open air stock exchange of the rue Quineam-poix, according to Buvat, "thronged all kinds of people, scholars of the Sorbonne, priests and friars who took part in the trading, "as well as lords and lackeys, courtiers and criminals, courtesans and duchesses who danced and fraternized.

Topic:   THE BUDGET
Subtopic:   DEBATE ON ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Pierre Gauthier

Liberal

Mr. GAUTHIER (Portneuf):

Hear, hear.

Topic:   THE BUDGET
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LIB

Jean Lesage

Liberal

Mr. LESAGE:

. . . Many grew rich so quickly that footmen who had become masters continued to climb, through force of habit, behind their newly bought carriages . . . Under the magic wand waved by the Edinburgh goldsmith's son, precious stones, velvet, silk and gold adorned at a moment's notice the shoulders of beggar girls and destitutes. . . .Millions were pouring from the printing press. . . .

They were printing money just as the supporters of social credit would like to print it.

Millions were pouring from the printing press. Bourdon, a cafe waiter, picked up 30 and Chambery, a floor polisher, collected 40. The Chaumont woman, a small-ware dealer in Namour, garnered 100. Duhautehamp, a painter suddenly engaged 90 servants. The sale of high titles became such a prosperous business that the comte d'Evreux, of the House of Bouillon, married the daughter of Crozat, a former lackey, although she was but thirteen years of age. The marquis d'Oise, of the Villars-Brancas family, still in a greater hurry, became engaged, in consideration of an annuity and an endowment of 4 million, to the two-year old daughter of a financier, Andre, whose 10,000-pound notes were exchanged, a few months later, for a lunch. _ _

It was an area of madness in which the whole social hierarchy collapsed.

Then came the selling out and afterwards the crash of stocks, and finally the flight of Law and panic. _

All classes were ruined, and they voiced the same lament in front of the bank's closed doors; the first comers were smothered, and the corpses were then picked up and brought under the smashed windows of Law's house, under the Louvre balcony, in the gardens of_ the Palais-Royal. Public execration was rising, and no longer made any distinction between, law, the regent and the king.

Pestilence became rife, as happens in every sinister era, and it killed 100,000 people. In 1721, bankruptcy and death had ended the feast.

Social credit had been resorted to, Mr. Speaker.

A dishonoured government, a nobility and a clergy who were disgraced, a people who felt their sufferings all the more because their fall had been sudden, after they had believed for a full year that they had attained happiness; weakness at the top, anger at the bottom; such were the results of Law's sojourn in France.

I shall have concluded in one minute, Mr. Speaker. With the permission of the house-

Topic:   THE BUDGET
Subtopic:   DEBATE ON ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

James Horace King (Speaker of the Senate)

Liberal

Mr. SPEAKER:

I am sorry, but I must remind the hon. member that he has spoken for forty minutes.

(Text):

Topic:   THE BUDGET
Subtopic:   DEBATE ON ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Jean Lesage

Liberal

Mr. LESAGE:

By leave of the house, Mr. Speaker, I would ask for time to say one word more.

Topic:   THE BUDGET
Subtopic:   DEBATE ON ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

James Horace King (Speaker of the Senate)

Liberal

Mr. SPEAKER:

If the hon. gentleman has unanimous consent.

Topic:   THE BUDGET
Subtopic:   DEBATE ON ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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?

Some hon. MEMBERS:

Agreed.

The Budget-Mr. J. E. Smith

(Translation):

Topic:   THE BUDGET
Subtopic:   DEBATE ON ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Jean Lesage

Liberal

Mr. LESAGE:

Before concluding, Mr. Speaker, may I be permitted to caution against a number of swindlers, those who have sent or might be tempted to send these so-called pressure cards. I have myself made a serious checkup of the names of those who sent them to me and I found that not 2 per cent of them would pay income tax under the proposed rates. I caution them, as I am by duty bound, for were the government to raise the exemption to $3,000, the small wage-earners would be those who would be the victims, as they would receive less in old age pension and family allowances, and they would pay more in indirect taxes, 'thereby paying the exemptions granted to those who would have swindled them. Indeed, these demagogues do not work for the benefit of the average farmer, the humble worker or the ordinary family man, but for their own advantage, exacting from those who have to save their money to eat, the sum of 5 cents for one or two cards that cost only a fraction of one cent.

In concluding, I ask the hard-working people of the splendid constituency I represent in this house to throw out of their homes, of their public organizations, these swindlers, these visionaries, these irresponsible demagogues, who attempt to stir up public opinion by unattainable promises in the hope of quenching their own thirst for power and domination.

Topic:   THE BUDGET
Subtopic:   DEBATE ON ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

John Eachern (Jack) Smith

Liberal

Mr. J. E. SMITH (York North):

Mr. Speaker, in rising to make a few observations in this debate, I desire to join with those who have preceded me in extending congratulations to the Minister of Finance (Mr. Abbott) upon the excellent manner in which he presented the budget to the house, and also to congratulate the government upon the contents of that budget, containing as it did a report of a splendid surplus and announcing welcome tax reductions for a great many people throughout Canada. It has, I am sure, been very well received throughout the country, and I submit that it merits the support of the members of this house.

The budget, reflecting the general prosperity of Canada, and revealing the excellence of the job accomplished by this government in reconversion from wartime to peacetime production, has been inspiring to the Canadian people, and tended to create confidence. It has tended to create confidence in Canada and also to create confidence in the government, and at a time when confidence means a very great deal in our national life.

The minister, in presenting a picture of prosperity in Canada, was careful to draw

attention to the fact that we live in a world still disorganized after many long years of war, and that until such time as peace, prosperity and plenty are restored to all the countries of the world, there is no need for us here in Canada to be complacent.

Events of recent years have made the world small indeed, and we as Canadians must face up to our responsibilities of citizenship, not only as Canadians but as citizens of the world. Our future in Canada depends in large measure upon two factors: How we

are able to get along among ourselves here in Canada, and how we are able to get along with the rest of the world.

Here in Canada we have many reasons to give thanks that our lot has been cast in a happy place. If we would stop more often to count our blessings, and less often to air our grievances I think we could be here in Canada a more happy and more contented people. We face the future in a world still disorganized and weary after long years of war, a world in which there is still a threatening force no less terrifying than war itself. But as Lloyd George said in one of his great speeches of the first war, while there may be shadows in the valley, there is sunshine on the hills. So as Canadians today we are looking to the hilltops, where the sun shines brightly with the hope of better days in the world at peace.

Here in Canada where we are able so soon after a strenuous period of war to present a budget of the quality presented here last week, there is certainly no need and no place for pessimism. We have every reason to look forward to the future with confidence. We know that industry has been converted almost entirely from war-time to peace-time production, and that employment and production are at high levels. Foreign trade has reached heights never before attained and, best of all, the outlook for continued trade and employment is good.

Despite the high volume of production, demand for products of our primary industries continues to exceed production, and the government is to be commended for seeking to give continuing security and stability to the incomes of our farmers by negotiating long-term sales agreements for our products.

Farmers of Canada did a magnificent job during the war, and they did that magnificent job under extreme difficulties. They are continuing to do a magnificent job of production in this post-war era. The coming of peace did not eliminate all the problems of the farmers. The most serious problem confronting farmers today is the acute shortage of farm help. It is not only a matter of wages,.

300S

The Budget-Mr. J. E. Smith

as some people point out, because farmers in the district I have the honour to represent are prosperous. They offer good rates of wages for farm help, and still are unable to obtain it. The only solution, as I see it, is for this government to take the initiative in bringing to Canada a large number of farm workers; not hundreds, but thousands of such farm workers could be absorbed on the farms of Ontario, and within a very short time. I think we need have no fear concerning bringing to Canada a large number of immigrants of this type. However, in our immigration policy we must guard against bringing to this country any of those who have tendencies toward communism or any other ism in opposition to democracy, and not in keeping with the ideals of our democratic way of life.

Topic:   THE BUDGET
Subtopic:   DEBATE ON ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PC

Edmund Davie Fulton

Progressive Conservative

Mr. FULTON:

Including socialism.

Topic:   THE BUDGET
Subtopic:   DEBATE ON ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

John Eachern (Jack) Smith

Liberal

Mr. SMITH (York North):

Not only must we guard against the influx of communists to this country, but I hope that those communists who have been convicted of treason against Canada will, at the expiry of their prison terms, have their Canadian citizenship revoked. They should be deported to those countries which claim their higher loyalty.

We have had a long discussion in the house regarding controls, and I think the people of Canada have reason to be thankful to the government for its control policies. Controls have served Canada well, and I think in the matter of decontrol we have been proceeding quickly enough. But there is one feature of housing control which I should like to mention, one feature which I consider has lingered long enough on the stage of our national planning. I think the time has come when that regulation in connection with housing, which prohibits people who own their own homes from moving into them, should be dispensed with. It may be said that this will cause evictions; but I submit that the hardship and suffering of evictions are no less heartrending than the sufferings occasioned in those cases where people, many of them elderly and who, by virtue of lives of thrift and industry, own their own homes, are now unable to move into them because of these regulations. I should hope that the regulations might be altered in the not distant future.

Income tax reductions announced in the budget will afford a welcome measure of relief.

I think the minister was right in his statement that there had grown up in Canada an acute tax consciousness. Had this been allowed to fMr. J. E. Smith.]

continue without any reduction in taxation at this time, I agree with the minister that it would have worked against the best interests of Canada and been a hindrance in our reconversion programme.

Like many others, I would have been happy if the tax reductions had continued further, and particularly into that field of so-called nuisance taxes. I am going to mention only one tonight, and to say that I agree most heartily with those hon. members who have advocated the removal of the tax on radio receiving sets. I submit that this tax should be abolished, and for three reasons. First, apparently so far there has not been devised an efficient and economical manner of collection and enforcement; second, it should be abolished because it is unpopular, for the simple reason that so many people know that so many other people do not pay it; and. third, and most important of all, it should be abolished because the ownership of radio receiving sets is now so general in Canada that there is no need for a special tax as a special privilege. If money is needed for the upkeep or maintenance of the Canadian Broadcasting Corporation, it might just as well be taken from the general .revenue, thus saving the people of Canada the nuisance and expense of this special levy.

As I said at the outset, our future in Canada depends in large measure upon two factors, namely how we are able to get along together here in Canada, and how we are able to get along with the rest of the world. We look out upon a troubled world and read anxiously and hopefully as conferences are held from time to time throughout the world seeking to establish peace and order throughout the world, and sometimes we are restless and impatient at the bickerings and disagreements between nations. But should we in Canada be too critical of the nations of the world in their disagreement if we honestly look at ourselves and examine the present position of dominion-provincial relations in this country?

I am sure that it was a matter of great regret to all Canadians, irrespective of their political affiliations, that better results did not come from the recent dominion-provincial conferences. Today, looking to the future of Canada and looking to the problems which we face, both nationally and internationally, I agree with those who say that this matter of dominion-provincial relations is one of our most important internal problems. Turning back the pages of history to the stirring days preceding confederation, we

The Budget-Mr. J. E. Smith

find that in those days there was strong support for a legislative union with a system of government providing a single parliament for the whole country. However, the fathers of confederation, in their good judgment and in the light of the then existing conditions, could not be expected to foresee the future of almost a century and they decided upon a federation which provided for provincial governments as well as a central and national government.

There were difficult problems to settle in bringing about confederation, difficulty as to division of power between the national and the provincial governments. Many of those difficulties are with us today. They are so great and so important that it is becoming abundantly clear that, until we settle them, our progress as a nation will be hampered and our plans for the good and welfare of our people will fall short of what we would have them be.

In the confederation debates in Upper Canada in 1865 a supporter of confederation said:

I am satisfied that one of the great advantages of this union will be found in this, that we will be raised above our sectionalism and come to feel and act as the citizens of a great country.

Canadians everywhere tonight reecho that wish. If we are to achieve the greatness which we deserve; if we are to attain to our rightful destiny we must face up to our problems, not as Ontario Canadians, not as maritime Canadians, not as Quebec Canadians or not as western Canadians; we must face up to them as Canadians. The problems which we face are of such magnitude as to test our best Canadianism.

I said that there was general disappointment of the failure of the dominion-provincial conferences and there has been some discussion in an attempt to assess the blame for those failures. However, I think the people of Canada are not merely so concerned as to who was responsible for the failure of those conferences as they are concerned with the fact that the failure of the dominion and the provinces to come to an agreement is holding up many measures of vital concern to the future of the Canadian people. This government's social security programme cannot be fully effective until some agreement is reached between this government and all the provinces. The issues at stake are so great and so far-reaching that, even in the face of what might seem to be impossible and

insurmountable barriers, I should like to see this government take the lead in making another attempt to settle this question. I think the only way to settle these problems satisfactorily is to call a dominion-provincial conference, and I submit that this government would be rendering a great national service by reconvening the conference at as early a day as possible.

When such a conference is held-and I hope it will be-I suggest that those who sit around the conference table representing the provinces and the dominion should discuss something more than who is to tax whom, and how much. I am sure the people of Canada would like to see the representatives of the provinces and of this national government discuss seriously, honestly and free from provincial or political bias, the problem of overgovernment in Canada. We should like to see them discussing in a businesslike manner the ways and means of eliminating duplication of services rendered by the national and other branches of administration. Overgovernment is a burden on the taxpayers of Canada; it continues to grow and it is a burden about which we do very little.

I am sure the people of Canada would like to hear representatives at a dominion-provincial conference discuss a national health policy which would ensure our people against the economic disaster which is visited upon so many through sickness and disease. We should like to see the representatives of the provinces and the dominion agree on a policy of cooperation in the establishment of a hospital building programme which would provide adequate and modern hospital facilities, not only in the great centres of population but in the small communities all across Canada. We should like to see the dominion and provincial leaders discuss ways and means whereby our aged citizens would be better cared for.

The people of Canada would like to hear a discussion at this conference of the matter of jurisdiction and responsibility, so that cooperation would be possible in a great national plan of reforestation whereby the rich resources of our land could be perpetuated for coming generations and our waste spaces made fruitful and productive. These and many other great national problems might well be the topic of discussion at a reconvened dominion-provincial conference, with the possibility of great good to all the people of Canada.

Understanding within our borders is one of our primary needs today, and I repeat that this makes the matter of dominion-provincial relations one of our leading internal problems. To meet the challenges which we face, to meet the problems which confront us, we must have a

The Budget.-Mr. J. E. Smith

spirit of understanding and cooperation between all the people of Canada; we must have a spirit of understanding and cooperation between all branches of government in Canada. To that end I am suggesting that we should call as quickly as possible a dominion-provincial conference. If this national government does its part with this conference and the failure and disappointments of the past are forgotten I am satisfied that the people of Canada will be quick to judge if there are still around at conference tables those who are more interested in playing politics than in playing ball with the rest of Canada.

Coming as I do from Ontario, one of the richest provinces of this country, I want it to be known unmistakably that, no matter how we may have been misunderstood, no matter how wre may have been misrepresented, we in Ontario are ready and anxious to throw in our lot as Canadians with our fellow Canadians from coast to coast in a united effort to build a better Canada.

On motion of Mr. MacNicol the debate was adjourned.

It being three minutes after eleven o'clock, the house adjourned, without question put, pursuant to standing order.

Topic:   THE BUDGET
Subtopic:   DEBATE ON ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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END OF VOLUME III

May 12, 1947