-if I say that other people have told me they are getting accustomed to his cyclical budgeting. Some people have even ventured to say his are political budgets. People naturally supposed that this was not a year in which anything might be handed out to the Canadian people. When I say "handed out to the Canadian people", that is not a proper term to use because we know that any relief we get at budget time is as a result of money which we have already contributed to the public purse. A government has no money except what it extracts from its people.
At any rate, we were faced with a budget of $4,600 million, of which 43 per cent was allocated to defence. Even while the minister was speaking with his usual optimism-it is a great thing to have optimism, and I wish we could have it with some justification at the moment-I could not help but think about the state of the country. This was brought to my attention when I was at home during the Easter recess. One could not help but notice that it was not a spirit of optimism which prevailed.
One or two of my bank manager friends talked very seriously about the situation, and pointed out how slow business was, and how credit had been curtailed, particularly at the country points which are serviced by the wholesalers in my city. This curtailment of credit had forced the merchants to go on a cash basis, and their customers were suffering a great deal because they did not have money to purchase things. Many farmers had the equivalent of money, for in many cases their granaries were bulging with wheat, but as this house knows very well it has been difficult to sell that commodity in recent times.
At one point during the journey home I saw twenty railroad workers who had been discharged on that particular date getting off the train. My own city is rather susceptible to that sort of unemployment because it is a railway centre. Business conditions in the country are generally reflected by the business that the railroads are doing. Of course, this extreme optimism, which is characteristic of the Minister of Finance, is not confined to him. I suppose the Minister of Trade and Commerce (Mr. Howe) might be called the supreme optimist of Canada. One or two other cabinet ministers are optimists too.
I recall certain optimistic speeches that were made by cabinet ministers in my city just before the election. There were five of them who visited my town in the period before the election, and with my usual modesty may I point out that I am now returning their visit. They were very optimistic at that time, and could see no reason for gloom. I notice the Secretary of State (Mr. Pickersgill), our new and junior cabinet minister, is also optimistic. I note in a clipping I found this morning in a Vancouver paper that they actually call the junior cabinet minister the prime minister "designate". The article says he is in no hurry to take over, and I would suggest that is a good idea on his part.
The Secretary of State was very optimistic about the state of the nation and particularly in regard to export trade. One comment in
reply to his optimistic remarks in this paper was to the effect that preliminary figures issued by the bureau of statistics showed that exports for the first quarter were actually down from the same period in 1953. However, the Secretary of State says this:
I am a politician, not a business forecaster, but I do not mind saying export trade is holding up very well and shows no sign of setback.
The two articles were side by side or nearly so in the same paper.
Just as a personal note, and it has no bearing on the question, I should like to comment on the statement of the minister that he is a politician and not a business forecaster. He had been talking about the hon. member for Vancouver South (Mr. Phil-pott) and the hon. member's remarks concerning radio and the private ownership of television. According to the Vancouver paper, the minister said that he and the other cabinet ministers always listened very attentively to members of parliament such as the hon. member for Vancouver South and that the government always listened to what members of parliament have to say, especially when they are members supporting the government. I would suggest that statement from the junior member of the cabinet proves that he was right when he said he was something of a politician rather than an economic forecaster. However, I did not take the statement of the minister too seriously.
I should like to comment now on the statement that export trade is holding up and the fact that our trade generally is good. We in this group, of course, have always been known as being full of gloom. If the minister would study the statistics put out by the dominion bureau of statistics he would find that the figures do not bear out his statement as to export trade, but they would bear out his statement that he is not an economic expert. This D.B.S. bulletin of April 26, 1954 in my hand has to do with the same export trade the minister was talking about. It says:
There were 66,274 cars of revenue freight loaded on Canadian railways during the week ended April 14 as compared with 73,227 in the same period of 1953, bringing the cumulative total from the beginning of the year to 969,605 cars as compared with 1,052,441 a year earlier.
Those of us from the west are interested, of course, in grain loadings. I see in the third paragraph of this same bulletin a reference to reduced loadings of grain. Well, we do not have to be told about that. The paragraph to which I refer is as follows:
Reduced loadings of grain, miscellaneous car loadings and less-than-carload merchandise contributed to a drop of 1,722 cars in the western division to 22,912 cars for the week.
The Budget-Mr. Knight
Then it goes on to say that coal shipments were up to the extent of 209 cars.
Well, that is not a particularly bright picture. Yet, our cabinet ministers go around the country trying to keep the people cheerful and to keep them satisfied with the administration that happens to be in office. For instance, during the Easter holidays the Minister of Agriculture (Mr. Gardiner) was out in the west. May I say I was pleased to see him in his seat today, and to note that he has made such a good recovery from his recent illness. He always seems to thrive on political activity, and perhaps that is one of the reasons he is looking so well after the Easter recess.
Perhaps I shall return to that point again. Meantime I should like to refer to a clipping I have obtained that deals with the subject of credit buying, and appears in this evening's issue of the Ottawa Journal. It bears the heading: "Credit Buying Hits New High at $1,836,000,000." And that is in a country, Mr. Speaker, where we are supposed to have everything, where we have more God-given natural resources than any other country in the world. Yet we cannot buy the proceeds of our own production, and have credit buying to an amount of $1,836,000,000. The article says:
The amount of money Canadian consumers owed for the things they bought on time rose by $59,000,000 to a new high of $1,836,000,000 in the final quarter of 1953.
Does anyone suggest that the people took a sudden splurge of extravagance in that particular time, or does it not indicate that they were short of purchasing power? The article says:
A Bank of Canada survey, contained in the bank's monthly statistical summary, showed that the rise in debt continued in most sectors of the consumer economy-with the exception of buying on time through finance companies which largely finance automobile sales.
Consumer borrowing from banks and other credit institutions was up, and so was buying through the use of charge accounts and instalment plans in retail stores.
I suggest that is not an indication of a very healthy state in our country at the moment.
I should like to say a word or two about the budget itself. I suppose the main feature was the reduction of the excise tax from 15 per cent to 10 per cent on certain goods, and in addition to that the abolition of the 15 per cent excise tax on some goods. This latter group consisted chiefly of luxury items such as electrical supplies, if those can be classified as luxury items. May I say that they are luxuries for a great many people in our country. Then, furs came under this same category.
The Budget-Mr. Knight
However the income tax remained the same, and the 10 per cent sales tax was not changed. I thought as I read the items that some relief might have been given on the necessary articles of daily use. Anyone who will study these items, with particular reference to furs or even electrical equipment, will find that relief is given on goods that are purchased only once or twice in a lifetime, or on those which many people cannot afford to buy at all. I should have liked to see more relief on the smaller items, the day-to-day purchases of the ordinary family. These however appear to have been neglected. The items on which the excise tax has been reduced are those which people of moderate incomes either do not buy at all or buy only once or twice in a lifetime. The relief on the smaller items is so small that it will never be handed down to the consumer. For instance, let us take the small reduction on the price of the gas, or whatever it is called, that is used in the manufacture of soft drinks. The reduction is so small that it certainly will not amount to as much as one cent a bottle in the price to the consumer, and will be absorbed at some other point, perhaps in the profits cf the wholesaler or the manufacturer
As I have said, there is no relief in the income tax schedule. It remains the same; and so does the sales tax. I was glad to note that the minister saw fit to reduce the taxes on municipally purchased and used machinery. For many years in this house I have been suggesting that if we want to encourage small towns to have proper fire-fighting equipment there should be no taxes levied against those machines. I congratulate the government and the minister upon having given this measure of relief.
However I am not so happy about the sales tax on other items, because I feel it is inequitable. This is true, of course, in respect of all sales taxes. They become a heavy burden upon the people in the lower income groups. When a man is spending practically his total salary on food and clothing, when he is paying rent and raising a family, practically the whole of his income is subject to sales tax. The people of Canada generally do not know that they are paying this sales tax, at all. And that is my second objection, namely that such taxes are hidden.
Unfortunately we have a sales tax in Saskatchewan-and I hope they will be able to get rid of it some day. However there is some excuse in the provinces for putting it on, because they do not have the wide taxing powers of the dominion. But when a man pays the provincial sales tax he pays two or
three cents over the counter and is perfectly conscious of the fact that he is paying that tax. On the other hand he knows nothing about the dominion sales tax. He simply pays his bill over the counter, the tax having been imposed at the manufacturer's level, and he does not know that he has been mulcted of that particular amount. As I have said, this tax falls heaviest on those who are least able to pay.
Another objection I have to the budget is that there were left in the taxing structure certain injustices perpetrated the year before. One of the most amazing of these features, and one hardest to explain, because it is somewhat technical, is the fact that a man who draws his income solely from dividends on corporation shares pays no income tax at all, with the exception of the small tax he pays to the old age pension fund. That is something that is almost incredible to most people. I do not wonder that they have difficulty believing it.
The day before yesterday when I made out my income tax return I discovered that -hon. members will laugh at this; all right, let them laugh-I was able to deduct $4.40 or $8 something, I have forgotten, not, sir, as a deductible amount but I was able to deduct that amount of money actually from the tax which I was assessed. To me that was an amazing thing. I think it is wrong. The minister of course will say that the funds have already been taxed in the hands of the corporation, and that if we were to adopt my suggestion to tax it, it would be double taxation. I do not want to go into that argument although I believe that I could probably expose it as a bit of a fallacy. I do not mean it is a fallacy that the money has not already been taxed. But in its relation to individuals, when we are talking about the income coming from investment or coming from work, and showing there the contrast, then I say there is an injustice. As a matter of fact, while the man who has an income of $10,000 derived in the way in which I have indicated would pay practically no income tax, it is also true that the man who worked for an income of $10,000 would have to pay an income tax of $1,650, or something of that sort, assuming both were married and had two children.
As I say, people in the country, audiences, are simply amazed when that fact is drawn to their attention. Some alteration should be made in it. The other inequity of which I was thinking is the fact that there is a ceiling upon the amount of contribution we make to the old age pension fund. Certainly the method by which it is done is quite contrary to our own philosophy in this
particular group. I need hardly relate how it is done, although there may be a few hon. members who are not acquainted with it. Hon. members no doubt know that under the famous 2-2-2 formula the 2 per cent additional tax is put on the income of each individual paying taxes for the old age pension fund, to supply pensions for himself or for other people or for both, as the case may be. Therefore, if you have $1,000 taxable income you pay $20. If you have $2,000 taxable income you pay $40; if you have $3,000 taxable income you pay $60. Hon. members would expect it to go on and rise so that when you got to $4,000 or $5,000 taxable income you would pay a proportionate amount. But that is not how it works. In other words, there is a ceiling, and when you have $4,000 taxable income you do not pay in proportion to your ability to pay; you simply stop right there, and if you have an income of $10,000 or $20,000 it does not make any difference, you pay the little sum of $60 only into the old age pension fund, in spite of the fact that you yourself are entitled to $40, the monthly pittance, that we pay to old people who have no source of income at all.
There are those privileges to those people. I know the minister does not so consider them. He is thinking about the whole thing and the collective picture, the actuarial basis and all the rest of it. I am thinking of the human beings who are affected by that particular thing. Some provision should have been made in this budget to remove that ceiling. Along with that there should have been some remission of the sales tax with which I have already dealt.
We would have liked to see higher exemptions in the taxation of the lower level incomes. I think I remember my leader suggested $1,500 for a single man and double that for the married couple. One might say: We need the money; why should we remit taxes of that type? Well, the thought that occurred to me when I began to talk here tonight was this matter of the general picture. It seems to me that the general picture needs some expansion of the purchasing power in the hands of the Canadian people.
I do suggest that some remission of these particular taxes would give us a bit of a boost in the matter of putting extra purchasing power in the hands of the people, and it might have boosted our economy and kept it going for at least some time longer.
There is a question with which I have not yet dealt, namely, defence expenditures and the consequent or necessary taxation. I shall admit, of course, that in the present state of 83276-264
The Budget-Mr. Knight the world we must have defence expenditures, but I am just wondering whether we might not have hoped for some reduction; and the question arises in my mind as to how effective any defence expenditure can be in these days, in the light of the new and awful discoveries that science has inflicted-and I use the word deliberately-upon the world. It seems to me that if these mechanisms of science are so awful as they are said to be and if we are committed to spend as much on defence this year as we were last, then we have to face one of two things: Either we must completely change our whole method of defence, if indeed there is any good in doing that, or else we are simply pouring money down the drain by continuing to perpetuate methods of defence which were all right ten years ago but which, in the light of the discoveries to which I have already referred, may be of no value at all.
I am going to suggest that even from the point of view of defence we might be better off in the defence of ourselves by giving to the world, and particularly to some of the underprivileged countries of the world, a feeling of our sympathy and sincerity in the form perhaps of material gifts or certainly technical assistance; and that the best defence that we can have, particularly from the point of view of the Asiatic people, is to give them that knowledge of our willingness to help. We take the view that the creation of friendliness and good will in the world is of more value in the promotion of peace than is the handing out of bullets and of guns and of the implements of war.
That is all I wish to say at the moment, sir, in regard to the budget but I do want to say something about our disappointment-and this applies particularly to the Saskatchewan members of our group-that nothing is being done, and no provision is being made for expenditures in the matter of the Saskatchewan river dam. The people of the province were disappointed. I have been talking to them lately and I know that. I shall not go here into the arguments, shall not describe the drought cycles which have bedevilled our economy over the years in Saskatchewan or instance our need for a greater population, and for a greater diversification of farming, and for the consequent stability that a nation or a state or a province is assured by the residence of people upon the land. I know the right hon. member for Melville, the Minister of Agriculture, was in my own city among other places during the Easter holidays. I have always envied the minister's plausibility and his ability to convince people. It has
The Budget-Mr. Knight been one of the reasons for his political success. I noticed in my local paper, the Star-Phoenix, of April 17, a heading which says: "Outlook for dam better." Do you know why these people are convinced that the outlook for the dam is better? It is because the Minister of Agriculture told them so. All right; that proves the thing I have just said. I would point out of course that he has been telling them that for many, many years. I suppose he still thinks it is good for another election, and I would not wonder but that it is. I shall quote a line or two of this clipping:
The federal government's viewpoint toward the proposed South Saskatchewan river dam appeared to be getting "more and more favourable."
This is quoted as being the opinion of those people who are members of the institution known as the Saskatchewan river development association and who met the minister. When they went out of the meeting they said the federal government's viewpoint towards the proposed South Saskatchewan river dam appeared to be getting more and more favourable every day. What a gift the Minister of Agriculture has. I could go on and read some more of this but I do not think I will.
There is one thing here which is very interesting, and which appeared in the same newspaper. What I am referring to is not a political speech or a speech of any kind made in the heat of the moment by the Minister of Agriculture, but a deliberate statement made by the minister at an interview with, I presume, a reporter on this particular newspaper. The interview carries a very interesting headline. It states: "Ottawa Ignoring Commission's Report on Dam, says Gardiner". With you, sir, in the chair I cannot ask the Prime Minister (Mr. St. Laurent) a question but I am wondering what the Prime Minister's comment would be on that particular statement. Does that headline mean that they are going to proceed with the dam? I take it that the people of Saskatchewan in view of the minister's remarks will not be at all disappointed. I hope that the confidence of the Saskatchewan river dam association is justified.
I do not wish to go into political affairs in Saskatchewan. Certainly I never interfere in provincial-political affairs, but I believe I am entitled to speak in regard to federal-political affairs as they relate to the province of Saskatchewan.
This may be news to some hon. members, and it certainly is news to me, but I understand we have had a distinct resurgence of Liberal-political activity in that particular province. We might notice, for example, that the Minister of Agriculture was closeted with
the president of the Liberal association and what we used to call " the machine", though perhaps my hon. friends on the other side of the house prefer the word "organization". However, there have been some signs of political resurgence and particularly in the minister's sphere. I notice, for instance, that one of the chief Liberal organizers, a very fine man and a good fellow in his own right, Mr. Bird, has been put in P.F.R.A.-or is it P.F.A.A.-and then our old colleague, Mr. Dewar, who it might be recalled attained some notoriety in public affairs in this country, has now joined one of the minister's departments, and in fact I believe it is the same one. I presume of course that those gentlemen will be employed solely in the work of their department. These factors are very interesting to me, and I would also like to observe in passing that I notice the minister's picture has appeared in several newspapers including the Star-Phoenix, Yorkton Enterprise, etc. Indeed, the minister has had a very busy and active time during the Easter week. But who am I to blame him if he hopes to gather in a few votes for the Liberal cause in Saskatchewan, for goodness knows they need them badly enough.
Then there is this question of choosing a new leader and my right hon. friend has always been king of the Liberals in Saskatchewan, and he is not particularly fond of crown princes, as at least one hon. member of this honourable house is well aware. Whether the leader of that party is Dr. Thomson on the one hand, or my right hon. friend's son on the other, I would suggest that the direction of that machine will be retained here in Ottawa which, incidentally, is one of the things of which some of my young Liberal friends who are voting for his party are not too fond at the moment. They are inclined to say, rightly or wrongly, that direction from Ottawa had perhaps something to do with Liberal misfortune in both provincial and federal elections of last year. However I am not competent to judge that and I simply throw out the idea.
As I said before, I have no objection to the minister catching a few Liberal votes if he can get them by promising this dam, so long, and only so long as the dominion government finally carries out its promise and builds the dam. After all, we do not want to wait until we are all dead. We want to see the results of this project on those at times arid plains. Whatever may be the minister's motives, the main thing is to encourage construction of what I think would be a national asset, and if he does succeed in gathering in some votes, or even if he does not succeed
at all in making capital and gathering in a few extra Liberal votes, there is always the greater compensation.
I have no doubt most hon. members are acquainted with the story of Saul who was sent out to gather in his father's asses and succeeded in founding a kingdom. I hope that that is the fate which will befall my right hon. friend the Minister of Agriculture and I hope the job will be done. After all, the main thing is to found the kingdom, and I hope that that will be done in the province of Saskatchewan and water should be brought to those plains.
This has been a subject which has been discussed in this house time and again, and 1 do not wish to repeat myself, but I think, sir, having at least said a word or two in regard to the budget and as regards this irrigation project, which is particularly near to my heart, and the hearts of the people in Saskatchewan and the people in the city who are dependent upon the farm life of the province of Saskatchewan, I shall resume my seat.
Subtopic: ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE