Of the estimated Expenditure for the fiscal year ending March 31, 1952, for each Department
Per cent of
Per cent of National
Per Capita Expenditures Income
National Income $14,164,000,000 $1,021.13 100-000 100-00National Defence
1,600,000,000 115.35 44-606 11-30Defence Production
64,212,001 4.63 1-793 -45Finance
582,758,603 42.01 16-246 4-13National Health & Welfare .. 474,214,103 34.19 13-220 3-35Veterans Affairs
209,180,700 15.08 5-831 1-47Public Works
92,616,145 6.68 2-582 -65All other departments
563,934,105 40.66 15-722 3-98Grand Total $ 3,586,915,657 $ 258.60 100 000 25-33
Population of Canada 13,870,946.
When one takes a look at the estimated expenditure of more than three and a half billion dollars for the ensuing fiscal year, and realizes that those dollars will go out and compete with the expenditures of 13,870,000 individual Canadians, one begins to wonder just exactly what is going to happen to prices unless something very effective is done, and that very soon, to prevent any further inflationary rise.
On the present basis, with the cost of living index at 179-7, according to the return for the month of February-and I think it will be much higher when the March figures are made known-what does this huge sum in the estimates do to our people? Here is what I think it will do. The budget estimates of $3,586,915,657, recently tabled by the Minister of Finance, have a total purchasing power today of only $1,996,061,172, in terms of the dollar in the base period 1935-39.
That means that the purchasing power lost to the Canadian people through runaway prices will be no less than $1,590,854,485, on the estimates of the Minister of Finance alone. This means that every man, woman and child in Canada will be deprived of $114.69 in purchasing power through inflation of prices on the cost of living index of 179-7, on the government estimated expenditures alone. And of course in addition to that we will have to calculate what the loss in purchasing power for each individual in Canada would be on the expenditures of provincial governments, and on their own behalf when they attempt to buy food, eggs, meat, cheese, pay the rent, buy replacements, make repairs, buy clothing and all that sort of thing.
When all those things are calculated, then I would ask the house what kind of future for the Canadian people those figures presage. That is the question which every
serious-minded person in Canada will have to ask himself. Is it going to be possible for the Canadian economy to right itself, or is it going to be necessary to have government action to bring prices under control and to stabilize our Canadian economy?
Evidently the government has had faith in the ability of our economy to right itself, but I say to you that government policy has failed. Even fiscal measures the government took as anti-inflationary measures have failed, as witness the recent heavy jump of over four points in the cost of living, within one month. It must be kept in mind that the present situation has arisen only partly as a result of economic affairs. I was talking during the dinner hour with a member of the house who expressed a thought with which I can agree. He does not happen to be a member of the opposition, but that does not make any difference; he is right, just the same. He says, and I agree with him, that to a certain extent the present situation has arisen because of psychological factors. That is perfectly true. So that We have to keep in mind economic factors, some of which I have stated, as well as a number of psychological factors, which have placed a terrific pressure upon prices.
When I refer to psychological factors I have in mind the fear of war, which is one, and the fear of shortages, which is another. Those fears have compelled men throughout the country to do much more buying and much more hoarding perhaps than they should be doing. I believe that situation can be well illustrated by looking around and asking oneself how many 1951 automobiles people own today. It might be interesting to note that the statistical review published a short time ago indicates that there was an increase in motor car purchases in Canada between 1949 and 1950 to the extent of 60
per cent. What does this mean? It simply means that the people of Canada who can get hold of the money to buy cars are trying to get under the wire so as to have the latest possible model. They fear they will not be able to get new cars for a long time.
That is one of the psychological factors we have to keep in mind. No one knows how long the present condition of cold war will last. But if it should last for a number of years, then it is conceivable that our economy could be shot to pieces by runaway prices-unless of course proper remedial action is taken at once. That is exactly what Stalin wants. At one time he and his communist pais throughout the world predicted that the free economies would fall into devastating depression and ruin themselves that way. World circumstances prevented that. Now it is very likely that those same enemies firmly believe that they can make inflation do for them what depression failed to do, or what they failed to get depression to do.
International communism will do its utmost to wage for many years, just as long as it is possible for them to wage, a war of economic attrition which will revolve around the continual shrinkage in the value of our currency and the currencies of all the democracies. Stalin knows that our economy and the economies of the free democracies can be wrecked just as effectively that way as by an all-out shooting war. It is likely that he will follow the cold war method just as long as he can, feeling that we have not the brains nor the will to make the necessary financial and economic changes to ward off disastrous economic break-down.
If we allow ourselves to be further weakened economically the chances of our ultimate victory over communist imperialism certainly will become quite uncertain.
It is obvious that something will have to be done immediately to bring runaway prices under control. The questiop is what? That is the big question. We believe that in normal times when economic laws are allowed to operate a free economy is the best economy. We do not advocate a system of direct government controls as a permanent part of the type of economy that we would like to see, but we are not now living in normal times. I must emphasize that. Therefore we will have to adopt policies designed to meet the present difficult conditions and to get us out of these present difficult conditions.
On one or two occasions since the session opened in January the Social Credit group have put on the record what we consider to be the necessary short-time requirements to stabilize the Canadian economy in these
Cost of Living
times and to make certain that we are not destroyed economically. I shall take just one or two brief moments to review the outstanding phases of the proposal which we have put forward. We think that it will be necessary for the government suddenly, overnight-it should not be done in a long drawn out way, a matter of invitation, such as has been suggested in the past-to impose over-all price and wage controls. That does not mean the freezing of prices by any means. When you have applied over-all controls overnight, then of course you have to set about an adjustment of prices to provide a fair profit and an adjustment of wages perhaps to conform with the adjusted price levels about which I have spoken.
If we make this effective and complete I am satisfied that it will be possible to hasten the time when our economy can be free again to operate according to well defined fundamental economic laws. Farm prices will have to be adjusted to provide for a parity with the adjusted price levels. This may require a certain amount of subsidizing. We advocate that that be done wherever necessary in the interests of parity for the farming population of our country.
The next thing is to see that every possible encouragement is given to increase the production of the required goods and services in our country. I do not think we can stress this point too strongly. The best cure for inflation, the best remedy for rising prices, is the production of the necessary volume of goods and services. We believe that it may be necessary to use producer's subsidies and various other kinds of inducements to get this all-out productive effort. If it is necessary, let us get it done because there is no better way of meeting the situation than through an all-out productive effort.
The third important step is to maintain ihe purchasing power of the low income groups in our country to enable them to buy the necessities of life. The hon. member for Rosetown-Biggar (Mr. Coldwell) and the hon. member for Carleton (Mr. Drew) have pointed out the tragic circumstances of a good many of the low income groups in Canada as a result of runaway inflation and runaway prices. We feel that it might be necessary- if it is necessary we will certainly support the government in doing it-to introduce consumer subsidies on certain selected items, perhaps on quite a number of items that go into the everyday cost of living.
If commodities do become scarce then we feel it may even be necessary to introduce rationing in order to see that there is an equitable distribution and therefore some sort of equality of sacrifice in whatever effort we