The Minister of Finance has the power to transfer that portion of their profits which he decides should be part of national revenue from their account to the consolidated revenue as he has, mind you, for all these other proprietary corporations under the Financial Administration Act. The Bank of Canada is in a unique position in that it is not competing with any privately owned banking institution in Canada. It is not in competition with the chartered banks, whereas these other proprietary corporations, for the most part, are in active competition and are compared with their private competitors so far as profit and loss statements are concerned.
No, they will not be subject to provincial taxes, nor will the provincial crown corporations, of which there are a fair number-I think for example of Hydro-be subject to this taxation. We would hope that perhaps, if this pattern worked out satisfactorily, the provinces might copy it. The effect on their revenues will be exactly the same, because the profits of those provincial crown corporations go in the end to the provincial treasury. Such a program provincially will do the same thing, and put these
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provincial crown corporations in a position where a better or more accurate comparison can be made of the relative efficiency of publicly-owned corporations and privately-owned corporations competing in the same fields.
Since we are taking paragraphs 7 and 8 together, I should like to make a few remarks in this connection and they apply, to some extent, to paragraph 9. Paragraph 7 reads as follows:
That the special deduction from income to a taxpayer whose principal business is the production, refining or marketing of petroleum or petroleum products or the exploring or drilling for oil or natural gas or mining or exploring for minerals, be allowed for expenses incurred in the 1955 operations on the same basis as for expenses incurred in the operations in the years 1951 to 1954.
I can see the purpose of that resolution, and Nos. 8 and 9 whose purposes are very similar. I presume it is to promote the exploration for gas and oil and the prospecting for minerals and things of that sort. I think that is a worth-while thing to promote. in this country at this time. But, Mr. Chairman, you will remember that during the budget debates of 1950 and 1951 certain representations were made I think on sections similar to this one-they may not have been numbered the same, but they had the same purpose-by the hon. member for Comox-Alberni and myself urging that similar consideration should be given to those who are practising conservation in the forest industry.
There is a tremendous need for the conservation of our forest resources in this country at this time. That procedure is being preached in every provincial legislature and it has been preached in this parliament. This worth-while purpose is being supported across Canada by many important and recognized organizations. I think it is generally accepted that anything we can do to promote the conservation of our natural resources is something that should be done, and done now for the future.
I happen to know that many large lumber companies in recent years are developing policies along these lines; they are spending large sums of money to conserve our timber and to provide timber for future generations by tree planting in some cases, by the building of fire guards, by the building of trails and by the building of roads. That type of policy is being adopted by more and more companies and also by quite a number of smaller owners. I have a knowledge of quite
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a number of smaller owners of forest resources in British Columbia who are doing this, and farmers at this time are being urged to do the same.
Mr. Chairman, I do not like to interrupt the hon. member but there is no conceivable connection between the cost of conservation and the cost of reforestation, and these concessions which are given to mining and oil, because mines and oil wells, unlike forests, are wasting assets. The argument which the hon. gentleman is making is one as to whether the cost of reforestation should be regarded as an operating cost or a capital cost; but it certainly has nothing to do with these three resolutions. It has been raised on other occasions. It is a matter which is now before the Minister of Finance for study. But as to the individual items here, it has no conceivable connection at all.
Mr. Chairman, I should like to ask just two or three questions. I had practically finished. I think there is some relation, because these items provide for the development of natural resources and what I am suggesting provides for the development of natural resources and the conservation of them. I want to ask the parliamentary assistant whether, as a result of representations made by members of this house and, I believe, by corporations and some individuals outside the house, consideration has been given to making provision for income deductions on account of expenditures in connection with forest conservation policies by companies or by individuals. If so, why has not favourable consideration been given to that matter at present?
Just before I conclude, Mr. Chairman, may I say this. I may be off the beam a bit. It may be possible, under the present law, for companies to charge these expenditures legitimately against the expenses of their operations. If that is so, I should like to know it. I should like the parliamentary assistant to advise me whether it is possible to charge against operating expenses moneys expended for the conservation of forest resources in any operation by a company, a farmer or any individual owning timber.
It seems to me that these questions might more properly be asked of the minister when he is dealing with his estimates. These three items have to do with
special privileges to the mining industry, and the metalliferous or industrial mineral mine industry. You cannot expect the parliamentary assistant, who is prepared to reply to pertinent questions on these resolutions, to cover the whole field of whatever other questions hon. members may want to have a reply to. I think that on the estimates the hon. member might put to the minister any question that is unanswered now. When the minister comes before the house with his estimates, the hon. member might remind him that he wants an explanation with regard to this question that he has put on Hansard today. I think that he might wait until that time for a reply.
Mr. Chairman, I want to ask a question. I am sure that item 7 has reference both to oil and to mining. I had hoped, and I would hope, -that these provisions might become a permanent statute rather than be a matter for reintroduction every year under the budget resolutions. I feel that they are valuable and desirable; in fact, they are absolutely necessary. Particularly in view of the rather precarious state that certain parts of the mining industry now find themselves in, I feel that consideration should be given to making them a statute.
I have also seen statistics to the effect that it has been our experience that only one well out of seven drilled is a producer of either gas or oil. I think that information shows to the committee more than anything else the absolute necessity for having a provision like this with regard to the extremely hazardous business of drilling and prospecting for petroleum and natural gas.
I wonder whether the parliamentary assistant has any figures with regard to the expenses in connection with the drilling and exploration for natural gas and oil or as to the claims made under those regulations? If he has, I wonder if he will give them, because I think it is of enormous importance to the country to do everything possible to assist the industry. We like to talk about our greatly expanded petroleum industry; but when it comes down to the facts, when you really see how hazardous the whole business is and how many times you have a failure, you appreciate the situation. A company that I unfortunately have been interested in has, I think, drilled 47 dry wells. I think that may be a record. Perhaps that is just my luck. But I believe that this provision is absolutely vital and I should like to see it made a statute. I wonder whether the parliamentary assistant has any statement to make on its operation.
Mr. Chairman, these three items are very closely connected, of course. They are nothing new. They are extensions for another year of these special deductions. Both mining and oil are unusual industries in that mines and wells are operating on wasting assets. If any company is going to sit tight on its present ore body or on its present well, in the end it is going to be out of business. They therefore have to go out, explore and try to find new ore bodies or new oil fields. They are unlike the farmer or the forester who can, by conservation of his present operation, have his new crop develop on the same holding. That is why this special deduction has been given, namely to allow these companies in this special position-and this is item 7-to charge against their operating costs the cost of exploring away from the mine or well to find other ore bodies or oil pools. It is a very valuable concession to these industries as the hon. member for York West has pointed out. The industry would like to have it permanently in the statute. Up till now it has been on a yearly basis, but to give some measure of security it is projected ahead three years. In the last budget we told the industry that we would permit this concession at least as far as 1954, which gives them confidence in planning an exploration program for the next three years. This year we have extended that period for another year, until 1955. This may not be quite as satisfactory to the mining and oil companies as permanency, but it is much better than the old way to just leave them another year ahead. That is the situation in that case.
Now with respect to paragraph No. 8, which has to do with deep test wells, which are wells drilled to an unusual depth: In that case an even greater special concession is given, in that oil companies are allowed to deduct from their revenues the cost of this exploration, and in addition from their tax payable 30 per cent of the cost of drilling these very deep wells. The record has not been quite as dismal as the record of the hon. member's company, but naturally the hazardi on these deep test wells is greater, the cost is very much higher; and so this encouragement was given. It is a very much more valuable encouragement than the previous one, and that is why we still have it on a year to year basis, on the recommendation of the head of the geological survey.
The last one is another special exemption given to mining companies. It illustrates the point we both made a little earlier, that mining corporations are treated quite differently because of the speculative hazard, and the fact that they are working on wasting assets. They are given exemption from income tax
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on the first three years of production. Here again the industry would like it to be permanent. Until recently it was on an annual basis. In the budget of a year ago we projected it forward three years. The last budget provided that they would have this concession up until 1954 so could plan accordingly. A year has passed, so we are now advancing it to 1955. The companies coming into production this year will now know that the first three years of their production are going to be exempt as far as income tax is concerned.
These are three concessions to these very special industries which are very highly valued1 by the industry.
I realize they are valued, and I entirely approve of them. The only point I wish to make is the one about making them statutory. My other point is that today the expenses involved in bringing a mine to production, any type of mine, run into, instead of thousands of dollars or hundreds of thousands of dollars, as in the old days, millions. And instead of being a matter of possibly a year or so before profitable production might reasonably be expected, the average is in the nature of five years, even though a mill begins to operate very frequently on exploration ore, or exploration rock, comparatively early in the life of the mine. I am not going to press this point at the present time, Mr. Chairman, but I feel that under the somewhat changed circumstances there is a good reason, and a good case, which can be made for even an extension over the three years, particularly with regard to base metal mines where the mill may start to operate in order not to have a large dump or a large rock pile, and also in order to begin possibly to pay exploration costs at an early date. Frequently that test or exploration mill has to shut down and the ore body may not be proved. But because once the mill starts operating the three-year period begins I feel that under the new technique there is reason why this three-year period might be extended.
However, I do not wish to press this at the moment; I would merely bring it to the attention of the minister as an example of the sort of thing that is happening today in mining.