June 14, 1951

PC

Gordon Graydon

Progressive Conservative

Mr. Graydon:

-that that was suggested.

Topic:   HOUSING
Subtopic:   QUESTION AS TO FEDERAL PLAN FOR CONSTRUCTION IN DEFENCE AREAS.-PRIORITY FOR BUILDING MATERIALS
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LIB

Robert Henry Winters (Minister of Resources and Development)

Liberal

Hon. Robert H. Winters (Minister of Resources and Development):

I can only repeat what I have said before, that the whole question of housing is under active consideration by the government, and that any decisions as to policy will be announced as they are arrived at.

Topic:   HOUSING
Subtopic:   QUESTION AS TO FEDERAL PLAN FOR CONSTRUCTION IN DEFENCE AREAS.-PRIORITY FOR BUILDING MATERIALS
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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Donald M. Fleming (Eglinton):

I should like to ask the minister if he is correctly reported in today's press as having said at London yesterday that no priority will be given in respect of building materials in favour of either public or private housing.

Topic:   HOUSING
Subtopic:   QUESTION AS TO FEDERAL PLAN FOR CONSTRUCTION IN DEFENCE AREAS.-PRIORITY FOR BUILDING MATERIALS
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LIB

Robert Henry Winters (Minister of Resources and Development)

Liberal

Mr. Winters:

I have not seen the particular report to which the hon. member refers. What I did say yesterday in London was that no system of priority had been arranged for the program contemplated under section 35 of the National Housing Act.

Topic:   HOUSING
Subtopic:   QUESTION AS TO FEDERAL PLAN FOR CONSTRUCTION IN DEFENCE AREAS.-PRIORITY FOR BUILDING MATERIALS
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CIVIL DEFENCE

REQUIREMENTS OF MUNICIPALITIES


On the orders of the day:


PC

Gordon Graydon

Progressive Conservative

Mr. Gordon Graydon (Peel):

May I ask the

Minister of National Health and Welfare, under whose jurisdiction civil defence now comes, whether the municipalities across Canada have been circularized, or whether there has been communication with them, asking how much money they will require and what equipment they will need in connection with the civil defence plan. I ask this because of his director having said that there is no response from the municipalities.

Topic:   CIVIL DEFENCE
Subtopic:   REQUIREMENTS OF MUNICIPALITIES
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LIB

Paul Joseph James Martin (Minister of National Health and Welfare)

Liberal

Hon. Paul Martin (Minister of National Health):

The hon. member knows that the municipalities would report directly to the provincial governments. Municipalities are the creatures of the provinces. I know that such negotiations are now going on.

Topic:   CIVIL DEFENCE
Subtopic:   REQUIREMENTS OF MUNICIPALITIES
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PC

Gordon Graydon

Progressive Conservative

Mr. Graydon:

That is not what your director says.

The house in committee of supply, Mr. Beaudoin in the chair.

Topic:   CIVIL DEFENCE
Subtopic:   REQUIREMENTS OF MUNICIPALITIES
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DEPARTMENT OF DEFENCE PRODUCTION


76. Departmental administration and payments to Canadian Commercial Corporation and other corporate agencies for services provided in connection with' defence purchasing and1 production, $5,000,000.


PC

Howard Charles Green

Progressive Conservative

Mr. Green:

Is it the intention of the

Minister of Defence Production to make a statement?

Right Hon, C. D. Howe (Minister of Defence Production): Mr. Speaker, I have in mind making a statement of some length. This department has been in existence for only two and a half months and, if the committee will bear with me, I shall give a complete statement on the work of the Department of Defence Production.

Last March, in introducing the bill to establish the Department of Defence Production, I outlined the organization and functions of the proposed new department. I now intend) to review what the new department has been doing in the two and a half months we have been in operation. I propose to say a brief word on the organization, and then to refer to some general matters that affect the over-all operations of the department.

Topic:   DEPARTMENT OF DEFENCE PRODUCTION
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SC

Solon Earl Low

Social Credit

Mr. Low:

Mr. Chairman, I beg the minister's pardon for interrupting him at this point, but I would ask that the chairman of the committee call order so that we may hear the minister's words.

Topic:   DEPARTMENT OF DEFENCE PRODUCTION
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LIB

Louis-René Beaudoin (Deputy Chair of Committees of the Whole)

Liberal

The Deputy Chairman:

I was just about to do so. I thank the hon. member for Peace River for having called attention to the disorder which prevails in several parts of the chamber. We have not yet the benefit of the amplifying system; therefore in order that we may be able to hear the statement which is being made by the Minister of Defence Production, we must have silence in the chamber.

Topic:   DEPARTMENT OF DEFENCE PRODUCTION
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LIB
LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe:

The suggestion is that we have silence behind the curtain as well as in the chamber.

Topic:   DEPARTMENT OF DEFENCE PRODUCTION
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?

Some hon. Members:

Hear, hear.

Topic:   DEPARTMENT OF DEFENCE PRODUCTION
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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe:

To continue my statement, from then on it will, I think, be convenient to deal with the different programs which we are carrying out in the various divisions of the three main branches of the department: the production, general purchasing and materials branches. I will begin with the organization of the Department of Defence Production.

I have arranged for hon. members to receive copies of the organization chart of the department. I hope this will be of assistance to them in the consideration of the estimates and the work of this department.

When the department was established on April 1 of this year the majority of the staff was recruited from the government service, chiefly from the Department of Trade and Commerce and from the Canadian Commercial Corporation. A number of employees have also been drawn from sections of the government service that have been discontinued or are cutting down on staff, such as the wartime prices and trade board, emergency import control divisions, etc.

As I mentioned last March, we have also recruited men from industry to head up a number of divisions and to provide the technical knowledge that is so essential to the job we are trying to do. You will recall that under the Defence Production Act the minister may make appointments outside the normal procedures of the Civil' Service Act. However, relatively few appointments have been made in this manner, and where it has been done, it has been used chiefly to secure specialists from industry; and in most cases these persons are serving without government salary. At the time of its inception there were 871 persons employed in the new department, and three-quarters of them came from the Canadian Commercial Corporation. By June 1 the staff had increased to 1,120.

Supply-Defence Production This figure is exclusive of crown companies, such as Defence Construction Limited, Canadian Commercial Corporation as it is now constituted, etc.

In addition to the offices at headquarters in Ottawa, the department has offices in the leading cities of Canada, and also in Washington and London. The department has taken over the district offices formerly operated by the Canadian Commercial Corporation, but in Toronto and Montreal the office accommodation was insufficient to meet the expanded needs of the new department, and other quarters have been leased. Headquarters of the petroleum and machine tools divisions and the wool division of the Canadian Commercial Corporation are located in Toronto; the chemicals and explosives division and the pulp and paper division are in Montreal. Other divisions of the department are also represented in these two cities, and in each case there is an office manager to co-ordinate the administrative work in these two centres. As space was limited in the Canadian embassy in Washington, it was necessary to move the department's office to new quarters on June 1.

In the Washington office we have on-the-spot representatives for the different divisions of the department that have a direct interest in what is happening in the United States priorities field.

To avoid duplication of effort, arrangements have been made to use trade and commerce officers and facilities in London, England, and also at St. John's, Newfoundland, and Vancouver, British Columbia. In each case it was found that the interests of the two departments were sufficiently close to warrant such a course and that it was unnecessary at this time to set up separate offices.

Turning now to some of the problems with which we are dealing, I think I should start with the question that first arises in connection with the wide variety of things that are required by modern armies, navies and air forces. Should these items be produced in Canada, or obtained from other sources of supply? In many cases it has not been easy to arrive at these decisions. A number of factors are involved. As you know, a decision has been taken to adopt United States type equipment for our army. This means, in many instances, that before we can make production decisions we must secure rights to manufacture from the United States, as well as plans, specifications and bills of material. Frequently we must also secure special security clearances for departmental officials or Canadian industrialists to visit plants in

Supply-Defence Production the United States in order that they can study special production problems at first hand.

In the beginning we found that the securing of the necessary rights to manufacture, the specifications, and access to production sites was a time-consuming process. Naturally there are reasons why this might be so. The rights of private industry, as well as government proprietary rights, are involved. The security of highly classified material must be adequately safeguarded. I am satisfied, however, that we have now worked out with the United States authorities procedures which will facilitate and accelerate the release of the rights and information which we require.

Another factor is our limited requirement for military end items in certain fields, which does not make it practical to undertake Canadian production if we would only be filling our own orders. In some instances we feel that because of special circumstances our production would be particularly efficient, and in such cases we attempt to interest the United States in our production facilities. According to our agreement on economic cooperation, signed by Canada and the United States last October, we are pledged to utilize the combined production facilities of our two countries to the best possible mutual advantage.

There are, of course, certain cases where, despite limited Canadian requirements and lack of United States orders, we feel that it is important that we initiate production in this country. The reason for such a decision is that we feel that if a war should develop, we would have immediate need of heavy production in certain fields, which could not be brought into being unless we establish a nucleus now. This entails partial tooling up, training key production personnel, and studying new production techniques. In some instances, in order to get better production runs, we have offered to make some of our output available as mutual aid to our NATO allies, financing the production from funds voted by parliament for this purpose. I might add that we do not make such offers unless we are assured by the defence production board of NATO that such supplies would help meet a real deficiency which could not be adequately met from European production. Examples of items which we are now offering to NATO countries from current production include 155 millimetre howitzers and other artillery items, as well as certain radar and other electronic equipment.

So much for the questions involving decisions as to what to produce in this country. When a decision has been made to build a

IMr. Howe.]

certain type of aircraft or a certain type of ship, certain types of armament or any other complicated piece of equipment, we are faced with establishing the necessary facilities.

In most cases existing plants have to be largely rearranged or new plants built, machine tools have to be purchased and production tooling and setting up expenses incurred. In some cases it is advisable to establish these facilities with capacities greater than our immediate requirements, as a measure of insurance. We have two basic policies that we follow in dealing with these cases. If industry will put up its own money we offer them accelerated depreciation so that they may reduce the value of their investment to a reasonable figure in the event that the facilities are not required for the original purpose and have again to be converted. I might add the obvious fact that, if the facilities are required by the government after they are written down, the government receives the benefit, as the assets can only be depreciated once. If it is not possible to persuade industry to advance its own money on terms satisfactory to the government, we provide the facilities through direct capital assistance, but in that case we retain title to the assets. Sometimes one course seems advisable, sometimes the other, and on rare occasions some combination of the two.

To date we have concluded arrangements for accelerated depreciation in three cases. We have five formal applications under study, and nine or ten others in the early discussion stage. Because so many of these cases have not yet been settled, I cannot give the house much in the line of figures as yet, but the three settled cases involve assets to the value of approximately $1,500,000. The formal applications before us involve assets valued at approximately $20 million.

In capital assistance we have projects in various stages of completion which will ultimately aggregate $107 million, only part of which, however, will be spent in this fiscal year.

One further matter that I might mention in dealing with the estimates is the department's revolving fund. This of course is a statutory vote, and was discussed at some length when the Defence Production Act was being debated. However, because of the importance of this vote, I should like to advise hon. members of the commitments which we have entered into and have financed through the revolving fund. To date a total of $74 million has been allocated from this fund to provide for the purchase, and resale, during the year of textiles, wool,

strategic materials, shipbuilding, and ammunition components, to the value of some $250 million.

Topic:   DEPARTMENT OF DEFENCE PRODUCTION
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PC

Howard Charles Green

Progressive Conservative

Mr. Green:

That has nothing to do with

the money advanced by way of capital assistance?

Topic:   DEPARTMENT OF DEFENCE PRODUCTION
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June 14, 1951