April 26, 1954

PC

Wallace Bickford (Wally) Nesbitt

Progressive Conservative

Mr. W. B. Nesbitt (Oxford):

Mr. Speaker, there are two points with which I should like to deal during the present debate on the budget. Both of these matters relate directly to the budget itself. First of all is the matter of the textile industry and other similarly affected industries in the country such as the machine tool industry. I know that these matters have already been dealt with in this house at great length on many occasions besides this and that they will probably be dealt with again. But this problem with respect to the textile industry, the machine tool industry and others, of course arises owing to the matter of cheap labour and exchange advantages when trading with other countries which far overcome any tariff advantages there may be to the industries in this country.

I am particularly interested in this matter because in the city of Woodstock, which is the principal city in the riding I represent, there are 2,000 textile workers, many of whom are out of work and most of the remainder are on a short-hour week. In addition, the town of Ingersoll, which is a town of 7,000 persons also in my riding, is virtually dependent on the machine tool industry and lately that industry has been threatened for the same reasons, namely by the importation of machine tools from Holland, England

and, in some cases, the United States. For the sake of brevity I should like to deal chiefly with the matter of the textile industry. As I say, I do not intend to deal with it at any great length because it has been dealt with many times before.

As I think most hon. members of the house know, within the last few months a great many textile plants throughout the Dominion of Canada have been closing down, many of them apparently permanently. Since the textile industry is, I understand, the largest employer of persons in the Dominion of Canada,-a year ago almost 200,000 persons were employed in the industry-this situation is an extremely serious one. Recently the Minister of Finance (Mr. Abbott) made a speech after delivery of the budget at, I understand, a radio press conference. The implication of the minister's remarks has caused a great deal of concern in various parts of the country, particularly in my own constituency. I have not before me the exact words of the minister because they were made over the radio but the effect or the implication of his words was that if certain industries, particularly the textile industry, were not able to stand on their own feet, they would have to go by the board. I do not know whether the minister is returning to orthodox Liberal policy of 1911 when the matter seemed to boil down to the question of whether or not Canadians were to be hewers of wood and drawers of water but this impression, rightly or wrongly, has certainly been created by the minister's remarks on that occasion.

I think it is only fair to ask of the minister the following questions with regard to the textile industry, the machine tool industry and certain other industries. How far is the government going to go with regard to this matter of allowing Canadian industries to be put out of commission by competition from foreign countries? The second question is this. Are we going to have a textile industry or are we not? If so, to what extent? As I think every hon. member in this house well knows, there are many considerations other than the economic one which require that we have a textile industry in Canada. The country was glad enough to have one in 1939 when the war broke out; and this statement most certainly applies to the machine tool industry as well.

Mr. Speaker, my remarks will take about two minutes with respect to this matter, and I should like to finish them if I may do so. There is one further thing in this regard. The present policy of the administration has caused a great deal of dislocation in the textile industry in particular. Many plants

have closed, and many are on short time with the consequent loss of purchasing power within the country. The Minister of Trade and Commerce (Mr. Howe) recently suggested to a group of farm implement workers that if they could not get a job in that industry, they could go some place else. This is certainly not an easy matter today because there is in this country a big housing problem, a fact which I understand the government is well aware of in view of the new housing act. It is not easy to go from one town to another and to find a new place to live. The cost of moving is extremely high these days, and if you have to go any distance it is an expensive proposition. More than that, there is another question that arises. Can the new industries in the country absorb all these people who have lost their jobs in the textile industry? Lastly, a great social problem is created. It is a hard thing for a person who has had a senior position of some form or other in the textile industry-a dyer or something like that; a high salaried man-suddenly to have to go out to find a new job in a totally unrelated industry and to take a menial job at a reduced income. That is extremely hard on him and on his family. I think that these are things which the minister should take into consideration with a view possibly to making some changes in the excise tax and in the Customs Act.

At six o'clock the house took recess.

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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AFTER RECESS The house resumed at eight o'clock.


PC

Wallace Bickford (Wally) Nesbitt

Progressive Conservative

Mr. Nesbitt:

Mr. Speaker, I should now like to direct one or two brief remarks to the Minister of Labour (Mr. Gregg) with respect to an alteration to the Unemployment Insurance Act that I wish to suggest. It is my feeling that in times of economic stress, or recession as we say nowadays since the other word is no longer in vogue, some consideration might be given to changing the unemployment insurance regulations so that if those seeking jobs in the country should be in excess of a certain figure, let us say, 300,000, the government would be in a position to declare that there was a situation calling for emergency action, and that under such conditions the one day waiting period in a week be set aside until the number seeking jobs had receded to the figure set-300,000.

I fully realize that under ordinary economic conditions the theory behind the Unemployment Insurance Act is that those drawing unemployment insurance share part

The Budget-Mr. Nesbitt of the load. In that way the one day waiting period is somewhat analogous to a $25 deductible insurance policy. However, in times when the number of those seeking jobs becomes larger than a figure that could be decided upon after careful study I submit that the one day waiting period should be abolished for the following reasons. It would alleviate the economic pressure, from a sociological standpoint, on families in need. It would keep up purchasing power in the country and help to prevent the downward spiral which is the reverse of the upward spiral of inflation.

This type of alleviation as far as it goes would be somewhat better than a program of public works as it would affect those most directly concerned in any period of recession. It may be that the thinking behind the act may have to be revised. If a proposal such as I have made were adopted I realize there would have to be greater contribution from employees, employers and the government, but I still feel that consideration should be given to this suggestion and that in times of recession it would help matters materially.

There is a subject in the budget with which I wish to deal at some length. I refer to the change in the income tax proposed by the minister so far as the taxation of mutual fire and wind insurance companies is concerned. To review the history of this matter very briefly, these mutual insurance companies have come into being because of a need in the country. As most hon. members are aware, the ordinary straight line insurance companies, as they are sometimes called, are not at all anxious to, and in many cases will not insure farm properties. So far as the few companies that will are concerned, their rates are very high. When the need arises this type of thing grows up. The only way farmers can protect themselves is to band together and form mutual insurance companies. These companies are analogous to credit unions.

I do not propose to go into the subject of credit unions at any great length at the present time. I only wish to say that credit unions, like mutual insurance companies, came into being as the result of a need. Standard banks and loan companies, because of very heavy overhead and the difficulty and cost of collection, have to charge very high interest rates on small loans. As a result the people who needed such loans the most were quite unable to get them because the interest rates were out of all proportion to the good derived from the loan. Accordingly credit unions came into being, and I feel quite sure that most hon. members know that they are

4134 HOUSE OF

The Budget-Mr. Nesbitt able to lend money at very low rates of interest because of the fact that there is no overhead in office expenses and because people do the work for nothing on a voluntary basis. There is also the fact that, credit unions being localized, the officers in charge know the people with whom they are dealing and they have a much better idea whether or not they are a good risk.

I only mention this in passing because credit unions are somewhat analogous to mutual insurance companies, and I point out that credit unions are not taxed. Then there is the question of co-operatives which are again somewhat similar in nature to mutual insurance companies. Co-operatives are of course taxed to a certain degree. Without going into the details of the taxation of co-operatives at any length, may I say that after their patronage dividends are refunded they have to pay a tax of 3 per cent of the capital employed at the beginning of the year, but this is a relatively small amount. It is a very low rate of taxation.

To get back to the main subject of mutual insurance companies. As most of us realize, these companies are not basically profit-making institutions but, as I have already pointed out, only a group of farmers banded together in order to insure and look after themselves.

I do not think anybody would take any exception to a tax being placed on the interest from any investments that these mutual insurance companies hold. I think that is a fairly self-evident thing. The income from such investments should be taxed, but in my view the surplus of these insurance companies, with one reservation which I am going to deal with immediately, should not be taxed.

The minister may very well say that these companies do not necessarily have to pay a tax on their surplus because it can be returned to the policyholders in the form of a dividend. But section 117 of the Ontario insurance act-and I believe the situation is much the same in the other provinces-sets out that such companies, depending on the amount of policies outstanding, must have a surplus of a certain size in order to be in a position to refund to the policyholders. These figures have been outlined in some detail by my colleague, the hon. member for Perth (Mr. Monteith), and as they have already been set out I will not take up the time of the house to deal with them again. But I should like to mention in passing that the amount of surplus that has to be set aside before refunds can be made is related to the amount of insurance policies that have been underwritten.

I would agree that any surplus arising after the figure set by the Ontario act has been

reached probably should be taxable, but it is very unfair to tax the surplus of a company until this figure is reached. Such a surplus is in the nature of a reserve. Its amount is laid down by the provincial government concerned and the companies have no choice but to observe the law. This reserve is set up to protect the policyholders and until the amount of surplus or reserve set is reached none of the surplus can be refunded by the company. I should like to suggest that mutual fire insurance companies and mutual wind insurance companies not in a position to legally make refunds should be free of taxation. Otherwise it makes it very difficult for these companies to build up the surplus required by the province in order to be in a position to refund.

For example, a company in my riding increased its policies by $10 million between 1950 and 1952. Accordingly, under the terms of the Ontario insurance act it had to increase its surplus by $60,000 before the company could make any refunds to the farmer policyholders. During this period from 1950 to 1952, the surplus was increased by nearly $50,000 but $17,000 of this had to be paid in taxes. During this period, therefore, only $33,000 was actually added to the surplus. I point out that taxation at this rate makes it very difficult for such companies to reach the surplus necessary before any refunds can be paid.

I cannot understand why the minister has made this proposed alteration in the Income Tax Act. It certainly discriminates against the poorer insurance companies. The richer companies, who have already established the necessary surplus under provincial legislation to enable them to pay refunds, can do so and they do not have to pay any further taxes of this type at all. All these companies have to do is to pay out any future surplus in the form of refunds. This proposed amendment, as just pointed out, makes it extremely difficult for the poorer companies to build up the surplus to the point where they can make refunds.

This situation has been aggravated by the economic conditions prevailing in Canada during the last few years. Inasmuch as building and replacement costs have greatly increased during the past years many people have increased their insurance policies, and the amount of insurance underwritten by these companies has greatly increased, thus increasing the surplus they must have before any refunds can be made.

With all respect, the tax appears like a spite tax imposed by the minister as a result of the supreme court decision last May which enabled these companies to get around the

former section of the Income Tax Act. Following the supreme court decision it was held that mutual insurance companies did not have to pay income tax except on income from investments.

It seems that this might very well be a spite tax because in Ontario, for example, there are 66 mutual fire insurance companies. In 1951, when taxes were levied at about the same rate as proposed by the minister now, the total taxes collected amounted to approximately $184,000. In 1952 the taxes from these 66 companies amounted to approximately $158,000. From the point of view of the total revenue required for the budget, this amount seems relatively trivial.

It hardly seems fair for the minister to reduce taxes on diamonds, furs, cigarette holders, pinball machines and other luxuries, while, in effect, at the same time putting a tax on an essential article such as fire insurance which farmers, as a rule, can get in no other way. It seems very unfair, as I said, to tax an essential service and make the farmer the goat.

I should like to say a word now about mutual wind insurance companies. In the last few years in Ontario, for some unaccountable reason and I suppose we shall have to ask the weatherman about this, there has been an increased hazard from tornadoes. The result has been that a great many more persons are taking out wind insurance and those who have such insurance have been increasing it. Shortly before the Easter recess, according to the newspapers, tornado warnings were posted in Ontario. The result has been that wind insurance companies have had to greatly increase the amount of insurance they have had to underwrite, thereby increasing the amount of surplus that these wind insurance companies have had to have. If they are taxed on the surplus it makes it difficult to build it up to the point where they can make refunds to their customers.

In conclusion on this subject I would stress that the minister should give this subject further consideration. I am sure he has had many representations already, but it does seem unfair that credit unions are not taxed, co-operatives are taxed in a relatively small way, whereas mutual insurance companies, which are basically and essentially the same type of thing, should have this tax on their services. As I said before, I do not believe the people who are concerned with mutual fire insurance and wind insurance companies are worried about paying taxes after the surplus has been built up to the point where they can make refunds to their patrons. It is during the period of building up the surplus

The Budget-Mr. Bourque to the point required by provincial law before they can make refunds that they object to the tax.

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Romuald Bourque

Liberal

Mr. Romuald Bourque (Ouiremoni-St. Jean):

May I first add my congratulations to those that have already been accorded to the Minister of Finance (Mr. Abbott) for the skill and clarity with which he has again this year presented his budget to this house. Under the direction of the minister, the Department of Finance has gained added distinction, and the succession of budgets introduced by the minister has brought credit to Canada not only among our own people but in many nations abroad. I join in expressing the general regret that the minister has determined this shall be the last budget he will present to this house. For that reason this budget has been described as his swan song, but like all the others that have gone before it, its melody has been one that must please the great majority of the people of Canada.

The consistent melody throughout the minister's tenure of office has been sound financing which has kept this country's books in balance, and which is reflected in the position held by the Canadian dollar in the money markets of the world. We are the envy of many nations whose financing, perhaps for reasons beyond their control, has constantly led from one deficit to an even larger deficit. Our Minister of Finance, rightly I believe, determined upon a policy of paying as we go without imposing unbearable burdens upon the taxpayer. He has managed thus to reduce our national debt, meet all our obligations and provide essential funds for our expanding defence forces.

In the history of this country to be read by future generations the term "Abbott budget" will be read with pride by all those who make a serious study of this period of world-wide financial problems and difficulties. We have been well served by a minister who has grasped the fundamentals of budget making, who has a sense of history and who wisely looks to the future while formulating his budget for today. The Abbott budgets have been worthy successors to those of Fielding and Robb and Ilsley, which through good times and bad maintained this country's finances on a sound foundation and contributed to our national growth and development.

As a member of this house and a supporter of this government I was proud when the minister, in his important budget address, spoke as a Canadian who put the welfare of his country above local, sectional or party interests. This government is pledged to

The Budget-Mr. Bourque maintaining and developing Canadian unity; to the encouragement of increasing co-operation and understanding between the provinces. We are building here a great new nation. To succeed we must be prepared at times to sacrifice some of those things which may seem important to us as individuals, but which play no part in drawing together our various racial and religious groups and helping them to work and live together in harmony.

As a French Canadian and a Catholic I have addressed many audiences in many parts of Canada, and have spoken steadily and consistently in support of national unity. I have frequently pointed to the dangers that lie in the continuance of ancient prejudices, and have urged all those who believe in the future of Canada to speak up for understanding and friendship between all our people and between all our regions.

It has been said many times since world war II that Canada stands in the same position as the United States occupied in the concluding decades of the nineteenth century. We might also look to an even earlier period and find an example of the problem that seems to be facing Canada today. Abraham Lincoln, one of the greatest presidents in the history of the United States, was dedicated to the preservation of the union. Opposed to him were the forces of one section of the country which flaunted its pride in its past and took up arms in order to break the union which had been achieved less than a century before. In his first inaugural address President Lincoln spoke for the union in these words:

Before entering upon so grave a matter as the destruction of our national fabric with all its benefits, its memories, and its hopes, would it not be wise to ascertain precisely why we do it. Will you hazard so desperate a step while there is any possibility that any portion of the ills you fly from have no real existence? Will you, when the certain ills you fly to are greater than all the real ones you fly from-will you risk the commission of so fearful a mistake? All profess to be content in the union if all constitutional rights can be maintained. Is it true, then, that any right, plainly written in the constitution, has been denied? I think not. Happily the human mind is so constituted that no party can reach to the audacity of doing this. Think, if you can, of a single instance in which a plainly written provision of the constitution has ever been denied. If by the mere force of numbers a majority should deprive a minority of any clearly written constitutional right, it might, in a moral point of view, justify revolution-certainly would, if such a right were a vital one. But such is not our case. All the vital rights of minorities and of individuals are so plainly assured to them by affirmations and negations, guarantees and prohibitions, in the constitution, that controversies never arise concerning them. But no organic law can ever be framed with a provision specifically applicable to every question which may occur in practical administration. No

foresight can anticipate, nor any document of reasonable length contain, express provisions for all possible questions. Shall fugitives from labour be surrendered by national or by state authority. The constitution does not expressly say . . .

From questions of this class spring all our constitutional controversies, and we divide upon them into majorities and minorities. If the minority will not acquiesce, the majority must, or the government must cease. There is no other alternative; for continuing the government is acquiescence on one side or the other . . .

If a minority in such case will secede rather than acquiesce, they make a precedent which in turn will divide and ruin them; for a minority of their own will secede from them whenever a majority refuses to be controlled by such minority. For instance, why may not any portion of a new confederacy a year or two hence arbitrarily secede again, precisely as portions of the present union now claim to secede from it? All who cherish disunion sentiments are now being educated to the exact temper of doing this. Is there such perfect identity of interests among the states to compose a new union, as to produce harmony only and prevent renewed secession? Plainly, the central idea of secession is the essence of anarchy. A majority held in restraint by constitutional checks and limitations, and always changing with deliberate changes of popular opinions and sentiments, is the only true sovereign of a free people. Whoever rejects it does, of necessity, fly to anarchy or to despotism. Unanimity is impossible; the rule of a minority, as a permanent arrangement, is wholly inadmissible, so that, rejecting the majority principle, anarchy or despotism in some forms is all that is left.

The union survived, thanks to the strength of a president who saw the threat to its existence as the most important fact that existed at the time of his inauguration. Canada, too, must survive, not as a group of individual, independent states or provinces, each adopting and following its own policies regardless of the interests of all the others, but as a federation of provinces concerned of course about their own prosperity and their own rights but dedicated to the development of a single great nation, in the prosperity and development of which all will share.

My own province of Quebec has a long and stirring history in which all of us whose heritage is French take pride. We have no wish to sacrifice our language or our religion; and no responsible person in Canada has ever suggested that we should. Neither do we have any wish to be considered apart from the rest of Canada nor to be looked upon as other than good Canadians. The Minister of Finance, who comes from the province of Quebec and who represents an important constituency in that province, recognized that fact in his budget address. He spoke in support of a principle which surely all of us here in this Canadian parliament must accept, the principle that this federation of Canadian provinces must be preserved and that no individual or group, from whatever misguided notions, shall have the right to destroy it.

World conditions imposed upon the minister the necessity of keeping our defence budget

at a high level, and thus made impossible the reductions in taxation which he and all members of the government would have liked to introduce. Taxes upon business continue to be heavy and this burden, made necessary by the continuing high cost of defence and other essential public services, constitutes a threat to our continued economic development.

It has already been pointed out, Mr. Speaker, that Canada, through high wages, taxation, and the high cost of operating in a country of great distances and great climatic variations is in danger of pricing itself out of world markets. This danger has already been demonstrated by the textile industry, which finds itself unable to compete with textile producers from other lands. Unless we are to weaken our defences and lower our standard of social security and pensions, we must continue to maintain our sources of revenue which come through taxation. I would suggest to the minister and to his successor as head of the Department of Finance that some consideration be given to a source which has until now been entirely overlooked both in this country and, I believe, in the United States.

Capitalist organizations are subject to taxes upon their earnings, whether these come from their own operations or from their investments. During the past years of full employment another group of capitalist organizations has developed and has remained tax free. I refer to the great labour unions with huge memberships. The unions receive dues from their members and in many cases have established large reserve funds which are invested in stocks and bonds and thus return dividends, or profits each year to the union. I have no argument with this. They are to be commended on their sane business acumen and foresight. I am pleased, as many others must be, to see that the labour unions are recognizing the importance of profits and thus are likely to be more concerned in the future than some of them have been in the past about the earnings of capitalist companies. The fact that many of these unions will share in the profits of these industries will bring a closer and more intimate understanding between capital and labour and we will all benefit by this mutual interest in the country's industries.

Neither do I suggest that any tax should be imposed upon capitalist labour organizations which is not also imposed upon other capitalist groups. All incorporated companies that make a profit pay taxes upon those profits. It seems only fair and equitable that labour unions which make a profit should be similarly taxed.

The Budget-Mr. Purdy

I have no figures for Canada, but I do have some astonishing figures indicating the extent of labour union profits in the United States and there seems to be no reason to think that the profits of Canadian unions, in many cases only the Canadian branches of American unions, should not be on a comparative basis. Writing in the Daily Mirror of New York on April 9 this year, Victor Riesel reported that Dave Beck, head of the teamsters union, told a California audience that his union has been earning an average profit of $113,000 a month on the stock market, or more than $1,500,000 a year. Riesel estimates that the union has some $5,000,000 invested in securities and has a reserve of some $32,000,000.

Just a month ago, Riesel reports further, the American Federation of Labor central labour union in Philadelphia employed a securities adviser formerly connected with a local brokerage house. The city's 195 unions will share the services of this adviser to make certain their funds are invested in the most potentially profitable stocks. The C.I.O. national maritime union recently deposited some $25,000,000 from one of its welfare funds in a bank for future investment.

The bigger unions, Riesel reports, have funds as high as $175,000,000. The international garment workers union earns about $1,000,000 a year on investments and the locomotive firemen and enginemen's union takes in $1,100,000 a year, according to recent reports.

The trend towards labour investments in the United States is increasing as reserve funds grow, and the same situation will develop in Canada. Here is a legitimate source of income or profits taxation which should not be overlooked and it is one which fairly tapped could only be welcomed by those who insist each year upon the imposition of higher and higher taxes upon profits. I offer the suggestion for serious consideration to the Minister of Finance who must welcome any new source which will permit him to maintain present high revenues without imposing undue hardship upon those who are already paying the nation's taxes.

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Gordon Timlin Purdy

Liberal

Mr. G. T. Purdy (Colchesler-Hanls):

Mr. Speaker, one week ago today the people of Nova Scotia at Halifax buried a great chief to a province's, yes, to a nation's lamentation. I was a member of this house during the period of Angus L. Macdonald's labours here as minister of naval affairs. Following that, for the next four years, I was one of his bonnets in the legislature of Nova Scotia, the province he loved so dearly. Last year it was my privilege to carry his colours in the

The Budget-Mr. Purdy provincial election. I was not successful, but his government was again returned with a substantial majority.

In the early thirties it fell to the honour of Mr. C. P. Blanchard of Truro in my constituency, that of Colchester-Hants, to place the name of Mr. Macdonald in nomination in the provincial convention as our leader. At that time he was practically unknown in politics. From that time until his death I had been closely associated with him in political matters and am proud to say that I loved Angus L. Macdonald. His name has now been added to the long list of great political figures from that little province down by the sea who have gone to their great reward: Howe, Thompson, Tupper,

Fielding, Borden, Ralston and scores of others. Angus Macdonald is gone, but his memory will remain in Nova Scotia forever.

One of his greatest ambitions in recent years was to lead the 100 pipers over the Canso causeway at the time of its opening. The causeway will be opened soon. The pipers will march, and the pipers will play, but instead of the colourful dress of the band, many of us will see through a veil of tears leading that procession the gallant figure of Angus L. Macdonald with his kilts swaying in the breeze and the tune we will hear will not be "The Road to the Isles", but "Flowers o' the Forest". While in the case of Angus L. Macdonald memory is not the only thing that grief can call its own, yet it was my hope that the causeway would be named after him. I understand, however, that Mrs. Macdonald has given her consent to the Halifax-Dartmouth bridge being named in his memory, which may interfere with this. The bridge is a provincial-municipal undertaking and I feel that the people of Canada as a whole would not wish that Nova Scotia alone be responsible for preserving in stone or some other suitable way forever and a day the memory of this great Canadian.

I suggest that the opening of the causeway, which is a federal-provincial undertaking, would be the time and place for such recognition and urge the minister from Nova Scotia and his associate the minister in charge of the historic sites and monuments board to take my suggestion into prompt and favourable consideration.

The late Joseph Howe, another great Nova Scotian, is responsible for these famous words:

A wise nation preserves its records . . . gathers up its muniments . . . decorates the tombs of its illustrious dead . . . repairs its great public structures and fosters national pride and love of country by perpetual reference to the sacrifices and glories of the past.

iMr. Purdv.l

Surely this nation would wish to profit by these words and see that the name of Angus L. Macdonald is associated with this great undertaking and his memory brought forcibly to the minds of those who pass that way so that they may be reminded that in our humble way we all have a part to play in developing this great Canada of ours. Further, it would once again bring home to us that "lives of great men all remind us we can make our lives sublime, and, departing, leave behind us footprints on the sands of time".

This afternoon, Mr. Speaker, I listened with deep interest to the remarks of the hon. member for Westmorland (Mr. Murphy) and other hon. members from the maritimes dealing with matters of importance to those provinces down by the sea. As a representative of Truro, which is the railway centre in Nova Scotia comparable to that of Moncton in New Brunswick, I wish to commend the hon. member for the words he used on behalf of our railway people.

Coming now to the other project mentioned, namely the Chignecto canal, having been born and brought up within sight of one of the surveys carried out on that project, and having travelled the route of the old Chignecto marine railway which it was thought would take the place of the canal but unfortunately did not develop, I would like to associate myself with the hon. member's request that the Chignecto canal be considered as the maritime end of the St. Lawrence waterway and developed along with that great undertaking. Surely the maritime provinces are quite within their rights in asking for that.

I do not propose this evening, Mr. Speaker, to go into the great problem of maritime rights except to draw to the attention of some hon. members who have not been here over the past few years the fact that we in Nova Scotia, New Brunswick and Prince Edward Island have a heritage in regard to things which we believe were promised to us at the time of confederation but which have not yet been carried out.

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CCF

Harold Edward Winch

Co-operative Commonwealth Federation (C.C.F.)

Mr. Winch:

Mr. Speaker, I am sure we all wish to hear the speech of the hon. member and I would ask him, through you, sir, to speak a little louder because it is impossible for us to hear him over here.

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Gordon Timlin Purdy

Liberal

Mr. Purdy:

Mr. Speaker, I would certainly like the hon. member to hear what I have to say because if he had paid a little more attention to what I am saying than he has done over the past few months it would be much better for Canada.

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CCF

Harold Edward Winch

Co-operative Commonwealth Federation (C.C.F.)

Mr. Winch:

Mr. Speaker, I still could not hear that remark.

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Gordon Timlin Purdy

Liberal

Mr. Purdy:

Read it in Hansard. Now, sir, as I was saying, at the time of confederation we in the maritime provinces, as other hon. members brought out this afternoon, believed we had received certain promises. We thought we would be enabled to market our natural products in the central provinces through means of the Intercolonial railway and through other means which would enable us to make up what we were losing in our north and south trade. Without wishing to take up the time of the house on this point I would like to illustrate how that situation has developed up to the present time.

Today, Mr. Speaker, it costs me $22 per thousand to send my lumber to Toronto. On the other hand, a friend of mine in Windsor, Nova Scotia, who is in the plaster business- and I would like to remind the house that these are both natural products

has a net return of $8.30 per ton on plaster shipped to the Toronto market compared with $16.50 a ton for a comparable industry in Ontario. In other words, our people in the maritime provinces are not able to enter the central Canadian markets, as we were promised at the time of confederation, because if we did our workmen would have to work for just one-half the amount received by those employed in industry in the central provinces.

However, Mr. Speaker, this is the place but certainly not the time to develop this point further. It may be Nova Scotia has not developed as we thought she would under confederation, but we still love her and we are very glad to return to our native province when we are through here.

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CCF

Erhart Regier

Co-operative Commonwealth Federation (C.C.F.)

Mr. Erhart Regier (Burnaby-Coquitlam):

Mr. Speaker, I have not heard such good news for some time as that which was related to the house tonight by the hon. member for Outremont-St. Jean (Mr. Bourque) when he listed for us the millions of dollars the labour unions were beginning to pile up. I think that is a very good omen and I would like to see the day that when there is some difficulty across the bargaining table the labour union representatives do not immediately have to think of those who may be hungry at home if they do not kow-tow to the wishes of the employer. I would emphasize again how happy I am to hear that some of the labour unions now have such assets that they are compelled to employ investment advisers.

However, the hon. member did not mention one matter which I read about in that connection within the last few days, and that was the case of where one of those wealthy labour unions-and it was, I believe, the teamsters union-had helped out in refinancing a plant and were thereby able to

The Budget-Mr. Regier ensure the continued solvency of that plant as well as the security of their own employment. In view of the large earnings of those labour unions we might well give some thought to the possibility of the unions investing these moneys and the workers thereby enabled to become part owners or at least have a much more real personal interest in the welfare of a particular enterprise than they had when they were merely wage earners.

At this time I cannot help but comment on a thought which occurred to me recently when I reread the speech from the throne. Like many other hon. members, Mr. Speaker, I am at this moment attempting to make a guess for my family as regards how long this session may last. I therefore reread the speech from the throne in order to determine what work had been outlined there and with which we had not yet dealt. I noticed two matters. The St. Lawrence seaway project and pensions for the handicapped, and I reflected "well, is it not typical of the Liberal government in Canada that those things that would mean so very much to people all over Canada are being left to the very last." I sincerely hope, and this is my only reason for mentioning it, that this house is not going to go home for a summer recess on the understanding that pensions for the handicapped may be a possibility next year. I believe that since we have announced these pensions as far back as last fall we should not allow these people to wait for legislative action over such a long period of time. I believe we would have been more considerate of these people if we had completed the negotiating which was necessary before we made any announcement. These people are very, very hard up and a great many of them have been waiting many, many months wondering whether their standard of living is going to enjoy any change and how long they will have to wait before things improve.

In looking over this business of the national economy I notice that the gross national production last year is listed at some $24 billion. Then I notice that the Minister of Trade and Commerce (Mr. Howe) confidently predicts that there is going to be available for reinvestment purposes in Canada this year the sum of $6 billion. Out of a gross national production of $24 billion, $6 billion means that out of every four dollars' worth of goods that were produced last year, one dollar has been laid aside and is available within the national economy for reinvestment purposes. At this time when our home market needs a boost, I think that percentage is out of all proportion to what it ought to be.

4140 HOUSE OF

The Budget-Mr. Regier

If you take into consideration the net national production, the situation is much worse. There is a great deal of money being made in Canada. I should also point out that the $6 billion is a great deal more even than this federal government-which on the whole renders a great many services to the people of the nation-receives from the people by way of taxation. When we hear of the criticism that the federal government is spending too much money, I think we should see the thing in its proper light and should remember that there is even more money available for reinvestment than is being used by all the activities of the federal government.

I think that the greatest evil or harm of this large amount available for reinvestment purposes, however, lies in the purposes for which this money is going to be used. We have in Canada surpluses of almost all the basic commodities that we produce. Yet the managers of this investment money are this year proposing to build still more mills and still more factories to turn out yet more goods that we already cannot sell. Therefore, as my leader has done once before this year, I would advocate that it is time a national investment board were set up. We have great need for investment in this new land of ours. However, our investment at this time should be in durable consumer goods such as highways, hospitals, schools, more modern penitentiaries and other like social measures. A national investment board would be able to give some direction to the flow of investment money that is available within the nation.

I should like to make just a few remarks also on a part of the budget address given by the Minister of Finance (Mr. Abbott). I notice that he went to great lengths to express his satisfaction at the fact that the soft-currency areas of the world were rapidly gaining that blissful state known as convertibility. I am sure we all look forward to the day when nations can buy and sell wherever they wish to sell in the world, and will have the money with which to complete the necessary transactions. However, we in the C.C.F. have always advocated that this business of convertibility should be handled by an international agency under the auspices of the United Nations. What has happened? Under an international agency all the "have" nations of the world would assume their share of the responsibility. The rest of the world is improving the value of their money in terms of the United States dollar merely by means of learning to get along without it. This does not affect the Americans nearly as much as it affects us. I understand that if the need arose they really have to rely on the export market for only some 2 per cent of

their national output whereas we, a country with only about one-tenth of the population of the United States and even greater natural resources, must export or die; and by "die", I mean suffer the pangs of the hungry thirties all over again.

Those who are operating the United States economy do not seem to be much concerned about what happens to the Canadian economy when convertibility is established in the soft-currency areas of the world. It does not hurt them but it certainly hurts the primary producer of our land. It is extremely hard for Canadians to sit idly by and accept the assurances coming from the Canadian cabinet that everything will be all right when we see the people of Australia ordering Russian salmon which they do not like as much as they like our salmon and paying for it more money than they would have to pay for our salmon only because they have not the United States dollars with which to buy our salmon. I think that is maybe putting the situation crudely, but it is putting it in language that the Canadian primary producer, especially the fisherman, is well able to understand. The same thing applies to the sales of Canadian wheat, Canadian lumber, Canadian apples and all the other basic primary commodities of Canada.

Each day I am in the house I spend much of my time looking at the front seats of the government and observing the reactions I can see there. I never saw them look more unhappy than they looked on the day they returned from the economic conference in Washington and the report that was given us told us exactly what we were afraid it would tell us. It told us that they had received a polite "no" over in Washington. I think it is time that we insisted to our good friends south of the border that, much as we like world-wide convertibility, we do not want it to come about at the expense of our markets.

I now come to my last major subject. The first plank in the platform of the British Columbia section of the C.C.F. calls for the establishment of a permanent dominion-provincial secretariat. We believe that there are plenty of dominion-provincial difficulties with which to occupy the full time of such a secretariat. We believe that the situation as to the federal government versus the Quebec government would never have arisen if there had been a permanent dominion-provincial secretariat in operation in the past ten or fifteen years; we do not think that such basic differences of outlook in the Canadian economy would have arisen. We believe that almost every department of government would be involved in such a secretariat. We have these meetings taking place all the

time. I understand that there is one taking place right now on a relatively minor matter, namely in regard to interprovincial trucking on the highways. We hear of these meetings every once in a while.

We think it would be much more satisfactory if some kind of permanent arrangement were made. I think that a dominion-provincial conference would also help to emphasize to the federal authority the needs of the lower levels of government. I doubt very much whether there is one provincial government in Canada now that has the resources in relation to its obligations available to it that the federal government has. Over and above the powers of taxation the federal government also has wide fiscal and monetary powers which it has used on past occasions and is able to use again. I do not think there is a municipality in the whole Dominion of Canada that has resources in relation to its obligations as adequate as those of the federal government.

I am thinking of the needs of possibly the smallest unit of local government, our public and high school boards. I am thinking of those in charge of looking after our educational needs. These needs are growing all the time but very little is done. It may be said that five-year agreements are made but in five years a great deal can happen so far as the needs of these lower levels of government are concerned. In five years a lot can happen to the value of money. I believe it was the Rowell-Sirois report which came out with the flat statement that if the upper levels of government would exercise the same measure of economy as was being exercised by the local municipal governments our nation would have nothing to worry about.

One does not have to be around here very long to realize the great disparity between the value of money here and the value of money to the volunteer municipal official back home whose obligations, I maintain, are just as important as those of this government. Yet even though he is sacrificing night after night of his time year after year in performing such work he is unable to satisfy himself that he is meeting these responsibilities. At the present time our municipalities have special local growing pains. I should like to advocate a policy of very low interest loans for self-liquidating municipal undertakings in order to help our rapidly growing municipalities to meet their needs. I should like to see the federal government assume full responsibility for all the main highways of the Dominion of Canada. I should like to see the provincial governments assume responsibility for all secondary highways and the municipal governments take over the local or market roads, as I believe we usually call them.

The Budget-Mr. Regier

This is one matter which could be ironed out by a permanent dominion-provincial secretariat, and I am sure that eventually agreement would be reached. I am certain of one thing, that we would not have the federal government agreeing to pay one-half the cost of a large section of the trans-Canada highway in one part of British Columbia when that highway, we are given to understand on good authority, is going to be flooded by a huge hydro development possibly even before it is fully completed.

With respect to the field of health services, if you look at the outlay by provincial governments for such services you will see that high costs are making it impossible for Ihe provincial governments to fulfil some of their other responsibilities. So far as housing is concerned, we heard numerous speakers emphasize during the housing debate that the housing act does provide for dominion-provincial-municipal agreements for low cost rental housing. The fact remains, however, that this provision has been on the statute books for a goodly number of years and the municipalities and provincial governments have not taken advantage of it. Some speakers have taken them severely to task for not taking advantage of the legislation.

I submit there is something wrong with the legislation. The municipal and provincial governments are as interested in low rental housing as the federal government but their resources are so limited that even though the terms offered to them for low rental housing may seem adequate when viewed from the federal sphere they do not seem adequate to those people who have to take the initiative in the matter.

In the field of education Canada faces a serious crisis. I know there are constitutional difficulties involved but I am going to stick my neck out, as it were, and offer an easy short-cut. I do not do so lightly. I have taken up the matter with a number of educational officials from time to time and they think the idea is at least worth putting forward. I think our teacher shortage might well be overcome if the federal government, in lieu of something else, would offer to pay directly to every teacher, certified as registered and engaged in teaching by a provincial government, a grant of $1,000 a year. I think that would meet with quite a favourable reception as an immediate measure that could be undertaken to eliminate the supervising of classrooms of thirty-five or forty youngsters by grade 9 or grade 10 students. That situation exists from one end of Canada to the other today and something has to be

The Budget-Mr. Regier done about it or those teachers who really are teachers are soon going to leave the field in even greater numbers.

I should like to emphasize again that this business of democracy that we talk so much about has its foundations in the lower levels of government and not in the federal government. Democracy is built from the bottom up and the people who build democracy in Canada today are our local parks board commissioners, our school board members, our municipal councillors, our mayors, our provincial governments, and to a certain extent also the federal government. But the most important part of democracy is to be found in the lower levels of government. Let us give them the tools and they will do the job.

We find that sometimes they are obliged to resort to very desperate measures. In British Columbia we have a 5 per cent retail sales tax. In the province of Saskatchewan there is a sales tax and also in the province of Quebec. There is a sales tax in some municipalities. Do we want to force all our municipalities to levy sales taxes? Some municipalities levy poll taxes. Some are forced to raise their licence fees, thereby hindering commercial development. Yes, these lower levels of government need more revenue and that revenue can be allotted to them without impinging upon their constitutional rights. It is being done and has been done for years and years. The federal government has rendered assistance to the lower levels of government. To my mind it has not been adequate but they have done so and I think it is time they did so more adequately and showed that they have some confidence in democracy.

However, we in the C.C.F. do not agree with the Conservative amendment which says that a dominion-provincial conference should be called for the purpose of bringing about a reallocation of taxing authority. I think, to be exact, the words are "reallocation of taxing powers". I do not believe any municipal government wants the right to levy a sales tax. I believe all provincial governments would very much like to abolish their sales taxes. I believe that the less taxing levels of government we have, the better we will be. However, they must have more revenue.

We agree with the Conservative amendment that some tax reduction is possible. We especially do not like the excise tax. We regret that concessions were made to luxury goods. I feel that a concession to the automotive industry would have been much wiser than a concession to those buying fur coats, hunting equipment and the like. We believe there is a good deal of waste and no effort

is being made to conduct a proper efficiency survey on the operations of this $5 billion a year undertaking known as the federal government.

We agree with the Conservative amendment that this government is doing nothing towards helping to solve the unemployment problem, and that the inaction of this government has lost for us the major share of our overseas markets. However, we are unable to agree with the Conservatives when they say that a dominion-provincial conference should be called for the purpose of reallocating the powers of taxation.

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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SC

Charles Yuill

Social Credit

Mr. Charles Yuill (Jasper-Edson):

In rising to take part in this debate, I should like to draw the attention of the house to a few of the things that would perhaps enhance the situation of the farm industry. Coming as I do from an agricultural constituency, I feel that it might be important to mention a few of the ways and means that this government could use to enhance the take-home pay of those who participate in this greatest industry in Canada.

Since agriculture is the major industry of the country, and since we have had three bumper wheat crops in a row, the equivalent of approximately five average crops, one might think that every one in the agricultural industry would be prosperous. A glance at the record does not indicate this to be so. The figures I am about to quote are taken from briefs submitted to the government of Canada by the interprovincial farm union council. We find that farm income has taken a drop of $137,270,000 in one year, that is from $2,811,949,000 in 1952 to $2,674,679,000 in 1953. At the same time, the farm debt in the three prairie provinces increased from $367 million in 1946 to $486 million in 1952 and chartered bank loans increased from $283 million in 1952 to $381 million in 1953.

Borrowings under the Farm Improvement Loans Act were increased from $85 million in 1952 to $98 million in 1953, and there has been an increase in applications for loans in 1953 of 33 per cent over the previous year. This does not indicate prosperity. There are many contributing factors to this unhappy situation. It is not a matter of overproduction but rather one of underconsumption, caused by lack of proper distribution, that aggravates the situation. Until this government is willing to put into circulation sufficient credit or currency to equate our ability to consume with our ability to produce within Canada, and to trade on a mutually advantageous basis with other trader nations by accepting the currency of those countries in

payment for our products, there is little hope for a prosperous industry in Canada, be it agriculture or anything else.

There are other things the government could do to stabilize the agricultural industry. They could keep an eye on the unfair practices and exorbitant price fixing of the farm implement manufacturers. They could investigate the alarming increase in the price of fertilizer as well as the unfair practices of the packing plants and their unreasonable spread between the price paid to the producer and the price charged to the consumer. There should also be closer observation of the methods of grading and mixing of coarse grains at the lakehead.

Returning to the price of farm machinery, may I say that since price controls were removed in 1946 the rate of increase in the price far exceeds the increase in production costs. While it is true that wage rates in the farm machinery manufacturing industry have increased it is also a fact that owing to the rapid mechanical and technological advances in the industry the average output per worker has increased to the extent that the labour cost per manufactured unit has been greatly lowered. In 1945 the average output per worker in dollars was $2,223, while in 1950 it was $4,218. On the other hand, wages and salaries in the industry constituted 42-4 per cent of the gross selling value in 1945, and this dropped until in 1950 the percentage was only 28-9.

Furthermore, the operation of the Farm Improvement Loans Act has greatly reduced the credit losses, collection costs and administration costs of farm machinery producers. With these facts in mind, it does seem advisable that an inquiry should be made into this situation.

Let us turn now to fertilizer. Today the use of fertilizer is almost a necessity. Year by year the use of artificial fertilizer has been increased. However, the cost has increased to the point where farmers cannot afford to buy this product. This will have a decided effect upon production and the farmers' income as well. One company, the Consolidated Mining and Smelting Company of Canada, seems to have a monopoly on the manufacture of fertilizer in western Canada. The price of fertilizer has doubled in the last ten years, and seems to be still advancing. From 1940 to 1945, sulphate of ammonia, the chief source of nitrogen, was produced at a plant in Calgary owned by the federal government at an average cost of $19 per ton, while at Trail and Welland it cost $29 per ton. When the Consolidated Mining and Smelting Company took over the government owned plant at Calgary in 1946, the price

The Budget-Mr. Yuill was raised to $40 per ton and is still going up. I am told that today it is about $118 per ton.

Let us see what has happened to our livestock industry. Taking the records of the three largest delivery points, Montreal, Toronto and Winnipeg, we find the average price paid for all grades of cattle in 1951, as compared with 1953, are as follows: In Montreal in 1951 a farmer received $24.82 per hundred, and in 1953, that price was reduced to $14.31 per hundred. In Toronto in 1951, the price received was $29.70, and in 1953 it was reduced to $17.34. In Winnipeg in 1951 the price for livestock was $27.40, while in 1953 it was $14.70. This shows a decrease of 43 per cent in two years.

Is it any wonder the producer is worried? I fail to see why cattle prices should have been reduced so drastically-certainly not because of our supply! We find, according to the September issue of "Current Review of Agricultural Conditions in Canada", issued by the Department of Agriculture, that we in Canada consume 95 per cent of all the cattle we raise. We find that the latest statistics show stocks of meat held by packers, abattoirs, and cold storage warehouses as of December 1, 1953, were 13 million pounds less than on December 1, 1952. This gives the lie to the supply-and-demand argument as the reason for declining prices.

Examining the long term trend of livestock numbers, as it is related to human population, we find that in 1900 Canada had 1,278 cattle per 1,000 population, while in 1953 we had only 784 cattle per 1,000 people. Considering Canada and the United States jointly, we had only 66 per cent as many cattle in 1953 as we had in 1900.

The latest figures compiled from national revenue taxation statistics for 1951 show the entire meat industry had, after taxation, a net profit of over seven and a half million dollars, the equivalent of 30 per cent of the share capital, while the producer had to settle for not much more than fifty cents on the dollar in the sale price of his cattle. This proves that the packing plants have been having a field day at the expense of the producers and consumers alike.

Since lifting of the controls that were in effect during the war the packing plants have been taking the public for all the traffic will bear. There was a time when you could see some evidence of compatibility between livestock prices and the wholesale prices of the finished products-but not any more! In many cases the quality of their products has deteriorated, and the wholesale prices do not reflect any relationship between the rail grade price and the wholesale price.

The Budget-Mr. Yuill

The packers never miss an opportunity to make some easy money. I know what I am talking about because I have over 43 years of experience in the retail trade and do not have to go out of my own shop to prove what I say. I mentioned in my maiden speech an incident that occurred last Easter, a year ago. As many of you know, there is an extra demand for smoked hams at Easter. Just before the butchers had an opportunity to purchase their supply of Easter hams the packers went into a huddle and decided overnight to raise the price of smoked hams eight cents a pound, in spite of the fact that rail grade price of hogs had dropped 65 cents per hundredweight.

I have seen the price of cooked hams and bacon go up as much as ten cents per pound overnight, with little or no justification. When top rail grade prices for hogs range from 28j to 33 cents per pound, can anyone tell me why the wholesale price of cooked ham should be $1.02 to $1.06 per pound, or why sliced back bacon should be sold at 95 cents a pound wholesale? It will be hard to convince me that these prices are necessary to make a fair margin of profit.

There are many other indications that the producer is not getting his share. In the beef market the producer is again at the mercy of the packing plants, particularly if he has an off-type animal which, in spite of its grade, invariably finds its way well up the grade when offered for sale at wholesale. They try to justify their tactics by the old story of supply and demand. Assuming they are right, do you not think the producer should enjoy the fruits of his labour and share in this increase?

Another thing that has caused the farmer some concern is why he was not considered in the price support extended during the hoof-and-mouth epidemic? The farmer was told, by inference at least, that there was nothing to worry about, that he would still receive the basic floor price of around 23 J cents per pound, and that then all would be well.

You can imagine their surprise and disappointment when they sold their heavy hogs, into the raising of which they had put all their extra grain and a great deal of extra labour, for as low as 11 -J cents per pound, or only 50 per cent of the prices expected.

The government then turned around and paid the packers 60 cents per pound to process hogs for which, in some cases, they had only paid 11J cents. Surely the farmers should have received the subsidy. I suggest that the government take immediate steps to check and put a stop to these unfair practices,

[Mr. Yuill.1

for one can see how such practices affect the purchasing power of the consumer and jeopardize the interests of the producers as well.

I am sure that all the farmer wants is to be allowed to sell his produce on the open market at a reasonable profit and buy his machinery and other necessities on the same basis.

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PC

John Alpheus Charlton

Progressive Conservative

Mr. J. A. Charlton (Branl-Haldimand):

Mr. Speaker, I believe I would be voicing the opinion of many people throughout the country if I were to say that this has been the most disappointing budget we have had in a number of years. Of course there is very good reason for it: there is no election in the offing for at least the next year or so. We know that this year the government did not feel the budget had to be as attractive as it did last year.

The strange fact, however, is that while taxes were reduced on many luxuries, they were maintained on what we consider the necessities of life. For instance, I do not believe anyone would suggest that fishing rods, golf clubs and cameras are necessities. I am wondering why the government has taken this position. Could it be because this is the last budget the Minister of Finance (Mr. Abbott) will bring down, and that he might have wanted to help out some of his friends who like to go on fishing and hunting trips?

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PC

Lewis Elston Cardiff

Progressive Conservative

Mr. Cardiff:

Probably the minister wants to go fishing.

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PC

John Alpheus Charlton

Progressive Conservative

Mr. Charlton:

Yes, probably he goes fishing at times, too. It is true that the tax on tires and tubes was reduced by five per cent. But another strange fact is that there has been no reduction in the prices of new automobiles usually equipped with four or five new tires and tubes. Is the manufacturer absorbing this five per cent? Certainly it is not being passed on to the consumer.

The budget offers no relief for the unemployed; it offers no relief to industry or to the individual. I had intended to say a few words about agriculture, but I shall not speak at length on this subject because I shall have another opportunity to do so when the estimates of the Department of Agriculture are under consideration.

Many people in urban districts seem to feel that farmers are getting away without paying income tax. Some might be doing so-I am not prepared to say. But I can say, Mr. Speaker, that as a general rule farmers are not trying to get away with anything in connection with the filing of income tax returns. Some farmers have not made out income tax forms because they have felt they did not make enough to pay income tax. They did not feel they were making enough money to

bring themselves within the taxation brackets, and therefore they felt it was not necessary to complete the forms.

The policy now being followed by the income tax branch in demanding net worth statements from farmers who have not made out income tax forms is most unfair and unjust. Some of the inspectors-I will not say all of them-who have had nothing to do with farming during their lifetime are not very sympathetic. They seem to think the farmers are getting away with something. When they make out returns for a farmer they do not make any effort to consider his position favourably. I wonder how many members in the house would want to come into the house in the evening and make bookkeeping entries after working on a farm from six o'clock in the morning until six o'clock at night, out in the air all that time, and doing hard work.

It is not usual for farmers to do that sort of thing. Probably they keep a little notebook in their hip pockets and a short pencil, about two inches long, to do their bookkeeping; but when the inspectors come around to the farms and figure out an arbitrary assessment of a farmer's income the main thing they are looking for is what the farmer's living has cost him. I refer to that part of his living which he has taken off his farm. I have been told by many farmers that these inspectors wanted to charge them $2.50 for every chicken eaten in the farm home. I am sure that most hon. members would agree that that would be ridiculous. I have one case in my riding where an inspector insisted on charging $2.50 for every chicken that the farmer had eaten in his own home. Probably that is the retail price that the inspector would have to pay for a chicken if he bought it in the store, but that surely could not be any justification for charging the farmer at that rate.

I had a case a few years ago where inspectors wrote to various farmers in the district and advised them to meet the inspector some 30 odd miles from the farmers' homes, at nine o'clock in the morning in a hotel room. Although most farmers might make a special effort to get up a little earlier and to get through their chores by nine o'clock, certainly they could not very well drive 30 miles and be there at nine o'clock and take all their books with them. Then, if they missed one little item they probably would have to drive back 30 miles to pick it up while the inspector sat in the very comfortable hotel room waiting for the man to come to him. Those are some of the injustices carried out by some of the inspectors-I will not say all.

The Budget-Mr. Charlton

In view of the tax relief given by the government of the United States, it is reasonable to say that our manufacturers in this country are to be put to a further disadvantage in supplying both the domestic and the export market. I ask this question: Would anyone in this House of Commons expect a horse to go into a race with hobbles on him? That is exactly what this government is asking industry to do. It is hobbled with high taxation, and yet the government expects industry in this country to compete not only in the domestic market but in the export market as well, and I include agriculture.

Many of the manufacturers in foreign countries are working at much lower costs than we are, and even in many instances under controlled currencies at low levels which give them a further advantage over our industries here. The minister has admitted that some industries in the country are under distressed conditions. He has said, and I quote two small passages from his budget speech at page 3726 of Hansard:

Until quite recently our industries have been protected more by external shortages than by our traditional tariff structure. This special form of protection is now disappearing, and some of our industries are finding that they have not watched their costs as carefully as they should, that their break-even points are uncomfortably high, and that their costs and prices are out of line.

A little further on in the same speech he said:

The re-emergence of keen competition in trade means readjustment and reappraisal. It means a sharpening of pencils and a careful re-examination of managerial and labour efficiency. This is not an easy process, but it is a very necessary one, and the longer it is postponed the more difficult it becomes.

These words could be quite naturally directed right back at the government. Have they made any attempt to readjust their costs of government? Have they made any attempt at all to sharpen their pencils and to do a little soul-searching of their own efficiencies or inefficiencies in the administration of government? Not that we can see or find in this budget. I would suggest to the Minister of Finance that before he castigates industry and tells them to cut costs, this government should sharpen its pencils and do a little in that direction.

Take for instance the textile industry. The Minister of National Revenue (Mr. McCann) made it quite plain that he was not ready to assist that industry in any way other than by the passage of Bill No. 29. He made that statement before the textile union when they interviewed him. Is the textile industry necessary in this country or is it not? If it is

4146 HOUSE OF

The Budget-Mr. Charlton necessary in time of war, then surely to goodness it is equally necessary to keep it alive in times of peace.

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Robert James Wood

Liberal

Mr. Wood:

How much bonus do they need?

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PC

John Alpheus Charlton

Progressive Conservative

Mr. Charlton:

The hon. member will have his opportunity to make a speech after I am through, if he will choose to do so. The textile industry in this country, as the government well knows, is in very great difficulties. Many of the factories have closed down permanently. Many more are working a short week. There are four such industries in my riding all working on short time, and have been for quite some time, and yet the government refuses to do practically anything for them. In the event of another war, which heaven forbid, the textile industry would be one of the most important industries we have, because certainly in this country, or in any northern country, clothing has a very important part to play in any army.

The textile industry has employed over 100,000 people during the past few years. It is one of the largest employers of labour we have in Canada. I understand that today fewer than 80,000 people are employed in that industry, and even though 80,000 are apparently employed, many of them are working three days a week or less. Surely something more concrete can be done than has been done so far for this important industry.

Another industry that is under great stress is the agricultural implement industry, which is directly affected by the economic difficulties of the farmers across Canada. The government has spent much time making statements across the country about how valuable a large store of wheat is to Canada. That may be true; but, Mr. Speaker, if I had a dining-room full of gold bullion I could not buy anything with it until I sold it. The same is true of wheat. The wheat will buy nothing until it is turned into cash, and certainly the farmers in the west or in the east cannot buy the equipment of the agricultural equipment manufacturing concerns unless they have the cash to do so. I want to commend the labour organizations that brought the brief before the Minister of Trade and Commerce (Mr. Howe) some time ago. The U.A.W.-C.I.O. of Brantford were among them. I want to commend them for realizing just how important farmers are to their livelihood.

Cheap food and employment do not and cannot go together. If farmers cannot get a reasonable amount for their produce then certainly the employers who are manufacturing farming equipment will not be able to employ the workers to make these implements whatever the cost may be because the farmers

[Mr. Charlton. 1

are not going to be in a position to buy them. It would therefore seem that labour is finally recognizing the buying power held by the farming community. Farmers today are not buying because they are afraid to let go of the dollars they now have for fear of future prices.

Another industry affected is the electrical industry, and, of course, agriculture, as I pointed out before. Dealing with one case alone with regard to the agricultural industry I would like to draw to the attention of the house the recent importation of onions. I read a piece in the newspaper a week ago which recounted that 243 carloads of onions have been brought in from the United States and sold in this country compared with 17 carloads of Canadian onions sold here. Many tons of Canadian onions are being dumped and used as fertilizer while American onions are being brought in to compete against our own product. The same thing can be said as regards the peach growers, potato growers, celery growers, strawberry growers, tomato growers, and last but not least the dairy-farmers of Canada.

Now, Mr. Speaker, there is just one other point I want to mention which has been brought out very well indeed by the hon. member for Oxford (Mr. Nesbitt). This was in regard to resident mutual insurance corporations. This was dealt with in item 6 as reported at page 3736 of Hansard on April 6 during the budget speech and reads as follows:

For the taxation of a resident mutual insurance corporation, other than a life insurance corporation, as though the surplus arising from its insurance activities on and after January 1, 1954 were a profit from a business . . .

The remainder of the quotation has to do with non-resident mutual companies. As I have already pointed out, the hon. member for Oxford has set out the position in which these companies find themselves, and I fully concur with all he said regarding their difficulties. These companies were set up to help farmers who ordinarily could not obtain insurance from any other source for most of the bigger companies are in different fields and they do not wish to undertake farm risks. Again, these companies were set up more or less as co-operatives to help the farmers out, but in spite of the fact that they are trying to help themselves under difficult conditions it seems they will have to pay this huge income tax to keep from building up a surplus in their own companies.

I have had several telegrams and letters from such insurance companies in my own riding and in one case in particular the company's risks during the period 1941 until 1953

have risen nine times. Now, Mr. Speaker, it is very difficult for a company whose risks are increasing at that rate to build up the kind of surplus referred to by the hon. member for Oxford and which is necessary under an act of the Ontario government. In the case of a risk which is greater than $25 million they have to have a reserve of 60 cents for every $100 carried, and that increases to one dollar on a risk of $2 million, so that one can well understand how difficult it is for these smaller mutual insurance companies to carry on paying income tax on their earned surplus and at the same time be able to build up a surplus sufficient to comply with the Ontario government act.

I do not feel it is necessary for me to go over many of the points raised earlier, but I concur with the remarks made by the hon. member for Oxford and the hon. member for Perth (Mr. Monteith) in this regard, and I believe the government should reconsider their position with regard to these mutual insurance companies. The supreme court passed a ruling last year and this budget apparently affects that ruling.

There is one other thing I wish to deal with for a moment and that is to commend the work carried on by the Grand valley conservation authority, and also the Grand river anti-pollution committee. In addition, I would like to commend the government for reducing the taxation on equipment being purchased by municipalities by 10 per cent, and I would like to suggest that they go a little further and aid the municipalities along the Grand river who are now dumping raw sewage into the river and creating extremely unhealthy conditions. It is entirely unfit for children to swim or bathe in the river. It is now getting to the point where fish being taken from the Grand river at its mouth are being refused by dealers in New York and Montreal because of their flavour. That means a great deal to fishermen who depend on these fishing grounds for their living. It meant as much as $1,500 in two weeks for one fisherman down there so one can readily see how great this problem is. It is difficult for these municipalities to carry the burden of this sewage disposal without some assistance. I know there have been many resolutions forwarded both to the provincial and the dominion governments, and I would ask this government to consider giving assistance in some way in conjunction with the provincial government so that they can develop sewage disposal plants in the cities and towns along the river where the pollution is so great at the present time.

As I pointed out before, the children are being deprived of their swimming and the

The Budget-Mr. Poulin odour is terrible along the river especially at the lower end. The town of Dunnville has to depend on the Grand river for its water supply in the same way as the city of Brantford and other towns. It will cost a tremendous amount of money for the cities to put in these sewage disposal plants and I would urge this government to co-operate with the provincial government in granting money to deal with this problem.

(Translation):

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
IND

Raoul Poulin

Independent

Mr. Raoul Poulin (Beauce):

Mr. Speaker, I wish to take the opportunity afforded me by this debate to make a few more brief comments on a matter I have already discussed on various occasions in this house, that is the production and sale of margarine in Canada.

I do not intend to pose as a prophet or as a Mr. I-told-you-so; nevertheless, even if it seemed utopic during some years to defend, on the floor of the house, the dairy producers against margarine producers, those who did so, and I was not alone in doing it, had at least a foreboding of what is taking place today. And what is happening now-official statistics are there to prove it-is that butter consumption has decreased in Canada since the introduction of margarine, that is since about 1948.

I wish to quote official figures from a pamphlet published by our national dairy council.

According to those statistics, 370 million pounds were consumed in Canada in 1948. In 1953, that is five years later, the consumption had declined to 328 million, or 42 million less, or a decrease of 11 per cent. On the other hand, the same statistics inform us that the butter consumption of our population was 28-7 pounds per capita, whereas it fell to 22-2 per capita in 1953, which is a decrease of 6 * 5 pounds per capita, or 23 per cent. This is a substantial decrease both in total and per capita consumption.

Moreover, we have today, in stock, at the beginning of the butter-producing season, the highest surplus we ever had. The quantities of butter now held by the government, thanks to its excellent butter-purchasing policy, amount to approximately 30 million pounds. If we add to this the quantity held by private individuals, we arrive at an approximate figure of 45 million pounds at present in stock in this country. And this at the very moment when the new production is arriving on the Canadian market.

The Budget-Mr. Poulin

I do not hesitate to say that this creates, to my way of thinking, a dangerous situation for the 445,000 dairy farmers of this country and also for the majority of Canadian workers. I will be asked, and quite rightly so, how it is that an overproduction of butter can constitute a threat to the workingman in this country.

The answer to this seems quite simple. Two million people in Canada live mainly from dairying. That means more than two million people who consume those things manufactured by the workers of our towns and villages. And these people, I must add, are no ordinary consumers. If we compare the amount devoted to the purchase of consumer goods in the case of the workingman on the one hand and in that of the farmer, on the other, we will find that in the latter case, this amount is enormously larger. As it happens, not only does the farmer consume personal goods such as clothes, food, household equipment, automobiles, etc., but he is also a large purchaser of articles for farm use: agricultural implements, chemical fertilizer, prepared feeds, drainage equipment, building materials, etc. It is therefore no exaggeration to state that the most important consumers in this country are the farmers.

We find there the economic explanation of the fact that every time the agricultural industry is having trouble in Canada, almost immediately we are faced with demoralizing unemployment among the labouring people of our cities. It has been so during the economic depression of 1929-1939; the same thing has happened again during the past few months, although on an evidently much reduced scale.

Farm incomes started to decrease in 1952 and they have fallen again in 1953 and, that same year, our country began to feel the impact of unemployment. I would like to quote here official statistics, which surely cannot be contested because they are taken from the Votes and Proceedings of the House of Commons, No. 85, of April 5, 1954. On

Topic:   EXTERNAL AFFAIRS
Subtopic:   THE BUDGET
Sub-subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink

BUSINESS OF THE HOUSE

LIB

Walter Edward Harris (Minister of Citizenship and Immigration; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. Harris:

Mr. Speaker, tomorrow we shall continue this debate. If it is concluded, we shall take the bill having to do with the Vocational Training Co-ordination Act, then the one in connection with the Research Council Act, then the one having to do with the Opium and Narcotic Drug Act, and then the resolution standing in the name of the Minister of Finance (Mr. Abbott) with respect to crown corporations.

Topic:   BUSINESS OF THE HOUSE
Permalink

At ten o'clock the house adjourned, without question put, pursuant to standing order.


April 26, 1954