March 10, 1953

PRIVILEGE

MR. PRUDHAM CANADIAN NATIONAL RAILWAYS, EDMONTON SALE OF PROPERTY

LIB

George Prudham (Minister of Mines and Technical Surveys)

Liberal

Hon. George Prudham (Minister of Mines and Technical Surveys):

Mr. Speaker, I rise on a question of personal privilege. In view of the interest that has been shown in my personal and business affairs, I think that I should make a statement at this time.

When I was elected to parliament in 1949 I was conducting two modest business enterprises in Alberta with headquarters in Edmonton. One was called the Prudham Construction Company Limited and the other, which is still in operation, Prudham Building Supplies Limited.

When I was made parliamentary assistant to the Minister of Resources and Development (Mr. Winters) I sold, and was paid cash in full for, my interest in the construction company with the provision that when the current contracts were completed the affairs of the company would be wound up and the name discontinued.

From the time of my election until the company was sold, the company had no dealings of any kind with the federal government. Since the time of the sale I have had no financial interest whatever in that company or any other company or individuals doing construction work for the federal government.

Prior to the election Prudham Building Supplies Limited had the opportunity of tendering on federal government building supply requirements in northern Alberta and in the Northwest Territories.

When I first came to Ottawa I requested all departments of government to instruct their purchasing agents to delete the name of our company from all requests to tender and from all purchases. The officers of the company were given strict orders not to tender or to accept orders from any purchasing agent of the federal government. That policy is being strictly adhered to.

Prudham Building Supplies Limited was established in 1944. From a small beginning the business soon expanded to outgrow the original site, which is located between 81st and 80th avenues in south Edmonton on the

east side of 104th street which is the main highway leading south from the city to Calgary and the Leduc oil fields.

The company bought additional land on the west side of the highway for lumber storage. In 1946, three years before I was elected to the House of Commons, the Prudham Building Supplies company entered into a lease agreement with the Canadian Northern and Canadian Northern Western Railway companies covering the use of land immediately south of the original Prudham site and adjacent to the old station building and freight sheds at a rental of $125 per year plus taxes. The lease was later amended to raise the rent to $300 per year plus taxes and the term extended until December 31, 1955. There were also discussions about possible purchase.

During the early months of 1952 the officials of the Canadian National Railways informed the building supplies company that having completed arrangements with the city of Edmonton the railway was establishing a new freight terminal in south Edmonton and that the railway no longer required the station building for its own use and that the railway would consider selling the building as well as the land under lease.

The station building is a brick building which was built in 1913. It was built for the needs of passenger traffic of that day and, although substantially built, it is in need of repair and is obsolescent for the purpose for which it was built and is of very little use for other purposes.

The railway company informed Prudham Building Supplies Limited that as it had a lease on the vacant property that it would be given an opportunity to buy. As regards price, the agent for the railways stated that the railways would have an appraiser from their own staff make a valuation and also have appraisals made by independent valuators.

A few weeks later the agent of the railway companies informed the Prudham Building Supplies company that the appraisals had been completed and that the price asked by the railways for the land under lease plus the station building and site was $85,000.

After carefully considering the proposal the building supply company informed the agent of the railways that the price was unreasonably high and that the Prudham Building

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Privilege-Mr. Prudham Supplies Limited would prefer to continue as lessee under the existing lease with the railway companies, which still had almost four years to go.

After a few weeks the agent of the railway companies again approached the building supplies company and asked for a reconsideration of the proposal. The officials of the building supplies company, once again, stated that in their opinion the price asked was beyond reason, but that if the railway company would include the old freight shed and the property on which it stands the building supplies company would entertain a further proposal.

The freight shed is a building approximately 40 x 200 which was built in 1913. It is in a bad state of repair, having been built on a foundation of wooden blocks. Adjacent to the freight shed is a timber platform used for unloading purposes, which is also in bad repair.

After a further delay the agent of the rail companies advised that he had received word from head office that the railway companies would consider selling the whole property including the land, station building and freight shed.

Prudham Building Supplies Limited engaged Weber Brothers Agencies Ltd., a competent and reliable Edmonton real estate company, to make an appraisal of the property, who appraised the land, station building and freight shed at $88,300. The city of Edmonton valuation of this property for assessment purposes is: 1.88 acres of land at $4,500 per acre, $8,460; two buildings at $22,566; making a total of $31,026 for the entire property.

Early in September, 1952, the railways quoted a price to the Prudham Building Supplies company of $105,000, for the entire property. On September 16, 1952, the Prudham Building Supplies company countered with an offer of $100,000 for the entire property. This was later accepted by the railway companies.

The building supplies company has no knowledge of the appraisal made by the railway company officials or by the private concerns they engaged to make the valuation, but based on the appraisal by the Edmonton firm employed by the building supplies company, and comparative real estate and the city of Edmonton valuation, the company considers that it paid a very high price.

The railway company at no time indicated whether they were offering this property to anyone else. Prudham Building Supplies company did tender on the property and the tender was accepted.

At this point I wish to say that it was on my suggestion that an announcement was made to the press.

This was strictly a hard-boiled business deal for the railways. They were out to get the last dollar possible for the railway company. Their points of argument were that the building supplies company needed the property very badly and that it could make better use of it than anyone else and therefore they expected it to pay more than anyone else. The building supplies company could not dispute those arguments. I believe that the railway company officials made an excellent deal for their company. I am confident that any competent appraisal made of the property would show that the railway company made an excellent sale.

From the Prudham Building Supplies company's standpoint, this high price was justified because heavy traffic conditions which have developed on 104th street, which is now a four-lane highway leading south to the oil fields and Calgary, have made it extremely hazardous to cross this thoroughfare to the lumber storage property which the company has been using on the west side of the highway. In other words, the property that the company has been using is divided by a four-lane highway. The building supplies company operations involves the shuttling of loads of lumber, as well as foot traffic.

During the past summer one of the employees of the Prudham Building Supplies Limited was killed in a traffic accident while on duty. Since that time employees of the company have been extremely nervous and fearful of the highway crossing and have repeatedly made representations to me about the danger of crossing the highway during the course of their work both from their standpoint and that of the travelling public.

I should like to emphasize that the building supplies company, having a lease on the railway property, which did not expire until December 31, 1955, was not contemplating a move at this time except for reasons of safety. On the other hand, the railway company, when it took the initiative in this matter, knew that it was assuring an indefinite . continuance of the freight business of the building supplies company, which last year amounted to more than $77,000 to the C.N.R. alone. Obviously no one will dispute the propriety of this.

It is obvious from the figures I have quoted that the Prudham Building Supplies could have carried on comfortably until December 31, 1955, under the lease at a yearly rental of less than $500 including taxes for the railroad property excluding

buildings. This $500 per year is less than one-half of 1 per cent of the purchase price which the building supplies company paid the railway. On the other hand, the purchase of the property will make it possible to make a permanent concentration of all company operations on one side of the highway and thus avoid the hazards to life and property.

In order to consolidate the company operations on the site of the railway property, it will be necessary to incur heavy expenditures, in addition to the $100,000 purchase price, for extensive filling and drainage and also to relocate the railway tracks. These expenditures would not have been possible or warranted under the lease. In the light of these factors, it was considered advisable to pay the high price demanded by the railway company.

I wish to state as emphatically as I possibly can that at no time did I, or anyone on my behalf, or on behalf of the Prudham Building Supplies company, attempt to exert any influence, politically or otherwise. I have no doubt if anyone wishes to make further inquiries to get the railway's side of the story they will have an opportunity to do so in committee. So far as the Prudham Building Supplies company is concerned, the C.N.R. is just another company competing for transportation business.

I am in entire agreement with the principle, Mr. Speaker, that a member of parliament and especially a cabinet minister should not do business with the crown; but when the crown goes into the railway business, it is difficult for a businessman doing business on a Canadian National Railways line to avoid shipping freight over that railway, and it is also difficult for him to secure trackage property that is essential to his business except by buying or leasing it from the Canadian National Railways.

If he cannot do either of these things without incurring criticism, it simply means that it will be difficult to induce active businessmen to run for parliament. A strict application of this principle to a publicly-owned transportation system is likely to put active businessmen, who are in the House of Commons, out of business or out of the house.

I realize, Mr. Speaker, that it is the duty of members of parliament to act as watchdogs of the nation's business, but I am also beginning to realize why it is becoming increasingly difficult to persuade many capable and honourable business and professional men to offer their services in public life.

I wish to state that at no time have I ever, directly or indirectly, used my position to further my own financial interest.

Income Tax Act

Last evening, the hon. member for Wetas-kiwin (Mr. Thomas) demanded my resignation. In the last election campaign I had as opponents one of the outstanding leaders of the Conservative party in Canada, and a man representing the Social Credit party who, in my opinion, is equal to or above the average in ability, intelligence and integrity, of the members of that party. I also had an able C.C.F. opponent.

If anyone wishes to eliminate me from the House of Commons he will soon have the opportunity to try once again in West Edmonton.

Topic:   PRIVILEGE
Subtopic:   MR. PRUDHAM CANADIAN NATIONAL RAILWAYS, EDMONTON SALE OF PROPERTY
Permalink

INCOME TAX ACT

WITHDRAWAL OF PROHIBITION ON DEDUCTION OF PROVINCIAL OR MUNICIPAL CORPORATION TAX

LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Hon. Douglas Abbott (Minister of Finance):

Mr. Speaker, it is not customary to refer to details of a proposed bill until that bill is introduced into the house, but in view of the question asked on March 5 by the hon. member for Three Rivers (Mr. Balcer) concerning the deductibility of certain provincial taxes for income tax purposes, I wish to make the following statement.

Under section 12 of the Income Tax Act, provision is made that specific corporation taxes paid to the government of a province or to a municipality are not deductible as an expense in computing income. These taxes which are not deductible are defined by regulation. The present regulation defines such corporation taxes to be those which have been imposed since September 1, 1941, or, alternatively, the amount of any increase in such taxes which applies following September 1, 1941. The regulations do not single out any particular tax for disallowance.

For some time, the government has been considering this present limitation and believes that it would now be appropriate to remove it. Accordingly, it will be recommended in the bill to amend the Income Tax Act that, with effect for the 1953 taxation year, the prohibition on the deduction of provincial or municipal corporation taxes will be withdrawn and any tax imposed on corporations by a provincial government or municipality which has not rented its rights to impose such tax and which, under ordinary rules, would be regarded as an expense of doing business, will in future be deductible.

This amendment is being recommended in conjunction with the proposal which I announced in my budget speech of increasing the credit for corporation income tax from 5 per cent to 7 per cent in accordance with the principle that nothing in federal legislation shall in any way discriminate

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Inquiries of the Ministry against a province which does not enter into a tax rental agreement. This is in line with the declared intention of the federal government that nothing should be done which could be interpreted as pressure, direct or indirect, on any province to accept or renew a tax rental agreement.

Topic:   INCOME TAX ACT
Subtopic:   WITHDRAWAL OF PROHIBITION ON DEDUCTION OF PROVINCIAL OR MUNICIPAL CORPORATION TAX
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THE CORONATION

REPRESENTATION OP SOUTH AFRICAN WAR VETERANS


On the orders of the day:


LIB

Tom Goode

Liberal

Mr. T. H. Goode (Burnaby-Richmond):

Mr. Speaker, I should like to ask a question of the Minister of Veterans Affairs. Is it the minister's intention to recommend that representatives of veterans of the South African war be sent to the coronation.

Topic:   THE CORONATION
Subtopic:   REPRESENTATION OP SOUTH AFRICAN WAR VETERANS
Permalink
LIB

Hugues Lapointe (Minister of Veterans Affairs)

Liberal

Hon. Hugues Lapointe (Minister of Veterans Affairs):

Mr. Speaker, most careful consideration was given to the matter of official veterans representation at the coronation, by the coronation committee, the formation of which was announced some time ago by my colleague the Secretary of State (Mr. Bradley).

The committee recommended that the two large veterans organizations in Canada, the Canadian Legion of the British Empire Service League, and the National Council of Veterans Organizations, would be asked to nominate two candidates each. These two organizations have within their membership veterans from the South African campaign, as well as veterans of world war I and world war II. These four veterans have already been chosen and recommended by their respective organizations and arrangements are being completed for their travel and accommodation.

Topic:   THE CORONATION
Subtopic:   REPRESENTATION OP SOUTH AFRICAN WAR VETERANS
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IRRIGATION

SOUTH SASKATCHEWAN RIVER


On the orders of the day:


PC

John George Diefenbaker

Progressive Conservative

Mr. J. G. Diefenbaker (Lake Centre):

should like to ask the Prime Minister whether or not any further investigation is now going on as to the advisability of the South Saskatchewan power and irrigation project. If so, who is engaged on the work?

Topic:   IRRIGATION
Subtopic:   SOUTH SASKATCHEWAN RIVER
Sub-subtopic:   FURTHER INVESTIGATION
Permalink
LIB

Louis Stephen St-Laurent (Prime Minister; President of the Privy Council)

Liberal

Right Hon. L. S. St. Laurent (Prime Minister):

Mr. Speaker, if by "investigation" the hon. member means whether any attention ' is being given to the problem at this time, I can say that that is being done, that I am personally considering the representations contained in the brief submitted by

(Mr. Abbott.]

the Saskatchewan government and comparing those representations with the pertinent parts of the report, and with recommendations that have been made about the project by the engineers of the P.F.R.A. organization. If the hon. gentleman intended to ask whether anyone had been engaged to make further engineering studies at this time, then the answer would be in the negative.

Topic:   IRRIGATION
Subtopic:   SOUTH SASKATCHEWAN RIVER
Sub-subtopic:   FURTHER INVESTIGATION
Permalink
PC

John George Diefenbaker

Progressive Conservative

Mr. Diefenbaker:

Would the Prime Minister be prepared to table the suggestions made by the Saskatchewan government?

Topic:   IRRIGATION
Subtopic:   SOUTH SASKATCHEWAN RIVER
Sub-subtopic:   FURTHER INVESTIGATION
Permalink
LIB

Louis Stephen St-Laurent (Prime Minister; President of the Privy Council)

Liberal

Mr. St. Laurent:

Well, I was informed by the premier of Saskatchewan that he was forwarding copies of the brief to every member of parliament.

Topic:   IRRIGATION
Subtopic:   SOUTH SASKATCHEWAN RIVER
Sub-subtopic:   FURTHER INVESTIGATION
Permalink
?

An hon. Member:

He has done that.

Topic:   IRRIGATION
Subtopic:   SOUTH SASKATCHEWAN RIVER
Sub-subtopic:   FURTHER INVESTIGATION
Permalink
?

An hon. Member:

We all got one.

Topic:   IRRIGATION
Subtopic:   SOUTH SASKATCHEWAN RIVER
Sub-subtopic:   FURTHER INVESTIGATION
Permalink

March 10, 1953