April 25, 1955

LIB

George James McIlraith

Liberal

Mr. Mcllrailh:

I was ready to do so just

as soon as Mr. Speaker had finished, but the hon. member for Winnipeg North Centre was able to voice his interjection before that time had arrived.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

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

Mr. Knowles:

I wanted to be sure the

hon. member had a chance to speak. We have not heard from him for quite a while.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

George James McIlraith

Liberal

Mr. Mcllrailh:

There are members in the

house who think it is not wise to be heard too frequently.

Mr. Speaker, the bill before the house seeks authority to grant to a patent application an effective filing date of July 20, 1950. The necessity for the legislation arises out of the somewhat technical requirements of our patent law and procedure in dealing with applications. In 1947 an application under No. 564079 was filed and dealt with. By amendments to the regulations under the Canadian Patent Act there is procedure for what is known as supplementary disclosure, covering subsequent discoveries related to any patent application pending before the patent office. In this particular case a further application by way of supplementary disclosure was made in 1950, because of further research work that had been done on the subject matter of the patent.

This application by way of supplementary disclosure procedure was rejected and it was held that a new application was required, but by the time the application by way of supplementary disclosure was rejected the statutory period for filing the new application had lapsed, and the consequence of the procedure is that the applicants are not able to have the patent granted through the regular channels under the patent legislation.

As I say, the procedure is somewhat technical, and I have perhaps oversimplified it a little. I think it would be the wish of hon. members when dealing with it in committee to go into the whole matter in some detail, but I doubt that it is practicable or possible to give a much fuller explanation at this stage that would be of a helpful nature to

[The Acting Speaker (Mr. Applewhaite).]

hon. members in considering the matter. I therefore ask for the second reading and then the reference to the committee.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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Motion agreed to, bill read the second time and referred to the standing committee on miscellaneous private bills.


LIB

Edward Turney Applewhaite (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Applewhaite):

Private and public bills now having been disposed of, the house will revert to the business which was interrupted at five o'clock.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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THE BUDGET

ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE


The house resumed consideration of the motion of Hon. W. E. Harris (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell, and the amendment to the amendment of Mr. Coldwell.


LIB

John Horace Dickey (Parliamentary Assistant to the Minister of Defence Production)

Liberal

Mr. Dickey:

Mr. Speaker, as all hon. members had an opportunity during the Easter recess to return to their constituencies and consult with those whom they represent in this house, I am sure those of us who support this government returned very much encouraged by the public acceptance of this budget. I am sure that hon. members opposite do not come back to take part in the budget debate in any way aided or comforted in the task before them.

In the debate this afternoon the hon. member for Simcoe North (Mr. Ferguson) in the course of his remarks referred to experiences which he underwent on his return from Europe a few weeks ago, when he landed at the port of Halifax. I am not going to deal in any great detail with what the hon. member had to say, not having been there at the particular time to which he referred. I am unaware of the actual facts involved. However, I do know that the building to which he referred mainly in his remarks is not only newly built but is a building which at the time he was there was, and indeed still is, under construction. I would point out to the house that the inconvenience and difficulties which he experienced were obviously the result of the upsetting and unusual conditions which always exist when a building is required to be used for its normal purposes while it is in the course of construction or substantial renovation.

I can assure the hon. member and the house that so far as the treatment of immigrants and other passengers landing at the port of Halifax is concerned, the evidence I have seen is completely contrary to the evidence that was given in this house this afternoon by the hon. member. I have on many occasions been present when large numbers of immigrants and other passengers were being handled by the immigration facilities at Halifax. I have seen the facilities provided there for them, the speed and courtesy with which the necessary formalities of customs inspection and other matters are carried out, and the general satisfaction shown by those who go through the normal procedure of landing at that port. I have seen many completely unsolicited letters written to individuals and officials at the port of Halifax thanking them for the extreme courtesy and care that has been shown in dealing with newly-arrived Canadians, particularly, and the general public as well.

Mr. Speaker, my real purpose in entering this debate is to deal with a question which is, I think, of considerable importance and interest to this house and to the Canadian people. Statements have been made in this debate by several hon. members opposite, and indeed they have been made outside this house by the same members and others, to the effect that we in this country export an undue proportion of our natural resources in the raw and unprocessed state. The hon. member for Dufferin-Simcoe (Mr. Rowe) and the hon. member for Broadview (Mr. Hees), particularly, in the last day or so have made assertions of this kind in contributions to this debate. The well-worn phrase, "the hewers of wood and drawers of water" has been used. The suggestion has been made and the impression left that government policies are at fault and that there exists a situation which is unhealthy and not in the best interests of Canada.

I want to deal with this matter on a factual basis, to try to point out just what is the real situation and then deal with some of its implications for the Canadian economy and the Canadian people. First of all I should like to make two or three preliminary points. The first is that Canada is the greatest trading nation in the world on a per capita basis. This trade and the resultant Canadian prosperity has been built up in the only way that was possible, namely by producing the things we can produce and which can be sold on

The Budget-Mr. Dickey the world market, and producing them better and more cheaply than they can be obtained from other sources.

The second point is that if we take a narrow point of view it is possible to say with truth that to manufacture completely in Canada the raw materials we produce would provide to Canada, in the form of income and employment, the maximum return which can be achieved from those particular materials. However, in my view it is not true to argue from that particular statement to the general statement and say that it follows that the maximum benefit of resources development in Canada would accrue to us by insisting upon complete manufacture of all our raw materials before they leave this country. Our experience and, I believe, that of other countries, seems to me to prove that a sound program of resources development cannot be built on such a narrow foundation. What is perhaps even more important, I think our experience proves that a broad program of resources development creates the only possible basis on which any substantial development of secondary industries can be built.

The third point I should like to make is that we ourselves are dependent on imports of raw materials. I do not think it is generally recognized or understood that we in this country are, in fact, net importers of industrial raw materials. We hear a great deal about Canada being a great storehouse of natural resources and that the world is becoming increasingly dependent on Canadian raw materials. Those statements are true. But what Canadians do not realize is the fact that we are a net importer of the raw materials that go into our industrial production.

For example, in 1953 our exports of industrial raw materials amounted in value to some $300 million. These included nickel, pulpwood, iron ore, asbestos, copper, zinc and other similar products. Our imports of industrial raw materials in the same year amounted to about $550 million, covering such things as crude petroleum, coal, raw cotton, iron ore, raw wool, crude rubber, etc. Hence we are a net importer of industrial raw materials to the extent of about a quarter of a billion dollars.

What is the explanation of our dependence on these imports? Canada has a rapidly growing industrial economy which requires raw materials which we do not produce or which we have not in this country, but which we are obliged to go out and buy, sometimes at extremely high costs. We believe in buying

The Budget-Mr. Dickey in the cheapest markets in the world, and we get our imports from the cheapest sources. But the point I want to make is that those who are critical of our exports of raw materials would do well to recognize and keep in mind the dependence of our secondary industries on imports of essential materials which we ourselves do not possess.

Let us look at the facts of our trade. I am going to use 1953 because that is the last year for which final figures are available. The principal raw materials we export are agricultural and vegetable products consisting mainly of food; animal and animal products, which also are to a large extent food; non-ferrous metals; non-metallic minerals and their products; and wood and wood products. In 1953 the proportion of our total exports which were raw materials was 32-2 per cent. The proportion of our total exports that were partially manufactured or semi-processed was 28-9 per cent and the proportion of those which were fully manufactured . was 38-9 per cent.

The first point of importance to recognize in these figures is that the largest segment of our export trade is in fully manufactured goods. The second is that the value of our exports of fully manufactured goods was $1,600 million in round figures. The value of our raw material exports was $1,328 million. In spite of all that has been said by hon. members, opposite and others, the first fact to remember is the preponderance of fully manufactured goods in our export trade. The second is that adding the proportion of semi-manufactured goods in our export trade, the total amounts to 67-8 per cent. In other words, two-thirds of our export trade consists of fully manufactured and semi-manufactured goods, combined with only one-third left for the export of raw materials.

A closer examination of these figures brings out some even more striking facts. Of our total raw material exports, approximately 80 per cent are agricultural and vegetable products, wheat, feed grains and various kinds of food products. These things are exports which must almost inevitably leave this country in their raw state because they are designed for either human or animal consumption. If we add to these agricultural and vegetable products the category of animal and animal products the proportion rises considerably more, in fact to over 85 per cent. In other words if we were to try, as was suggested by the hon. member for Broadview, to make some extreme, and I think impractical, efforts to reduce the proportion of our exports which are in the category of raw materials, we would either have to stop

exporting wheat and feed grains and that sort of thing or try to work on a mere 15 per cent of our total export trade.

One result of the speeches and statements that have been made on this subject by hon. members opposite has been, I think, to create in the minds of the Canadian public an idea that our resources development industries are in some way in the category of poor relations in the Canadian economy.

Mr. Speaker, I think nothing could possibly be further from the fact. Canada's resources industries in 1953 provided jobs for 1-6 million Canadians, or 31 per cent of Canada's total labour force. Thirty-four per cent of Canada's national income of $19 billion was earned by Canadians working in these industries, and 564 per cent of the Canadian investment program undertaken by business, amounting to $34 billion, was devoted to the development, the growth and the extraction of our natural resources from our lands, our forests and our waters.

We all recognize, Mr. Speaker, how important to the Canadian economy has been our great investment program, amounting to over $5 billion last year, and I think it would be most unfair to that great segment of our economy, the resources development industry, not to recognize that almost two-thirds of that investment program arises out of that particular industry.

I should like as briefly as I can to cite some of the reasons our resources industries are so important to Canada and to the Canadian economy. First of all there is the contribution we make to international security and prosperity. Industrial raw materials, fuels and food are the three basic economic ingredients which a free world requires in its endeavours to increase international security and prosperity. We in Canada not only have an abundance of these resources but we are developing them in an efficient manner and at a rate that is hardly matched by any other country. Therefore a broad resources base makes Canada one of the strongest natural allies in the cold war for the United States and the other countries of the western alliance.

The second matter to which I should like to draw attention is that the expansion of our resources industries is balanced with a growth of secondary industries. Our resources development in Canada has gone hand in hand with the expansion of secondary industries. Both these developments have taken place in response to long-term demands, and there has been little if anything in the way of forced or specially induced expansion in Canadian resources development or in secondary industries. The sole exception is certain

developments during and after the war for defence reasons. Notwithstanding the recent renewal in the house and elsewhere of the cry that we are the hewers of wood and drawers of water, our production of food and raw materials continues to be looked upon not only by Canadians but by our allies as very respectable occupations, and we are interested in an economic expansion that is well balanced but which will have to be on the basis of resources development as well as the industrial front.

The third point I should like to make has to do with the diversification that we have been able to achieve in our resources development, which has lessened our economic vulnerability. Canadian resources development, as a result of the program that has been carried on over the last few years, is now much more broadly based than it ever was before. In the fuel field, coal and hydro power are supplemented by the newcomers, oil and natural gas. In the mining field our traditional resources of nickel, copper, lead and zinc have been supplemented by uranium and titanium. Further, resources industries, which were of minor importance before the war, have become major factors in our industrial raw material development-for example, aluminum and iron ore. This broadening of our natural resources base has undoubtedly removed some of the vulnerability of the Canadian economy, which was inclined to suffer when world demand dropped for certain particular commodities.

The fourth matter to which I should like to refer is the contribution that resources development has made to strengthening regional economies within Canada. Our resources development program has made an important contribution to Canadian regional economic diversification and to the opening up of new land for settlement. For example, the prairie provinces used to depend primarily on agriculture for their prosperity. Now we have important oil and natural gas developments in Alberta, uranium mining in Saskatchewan, and nickel and copper mining in Manitoba, with processing and refining industries located in these regions in increasing numbers. More recently the development of mining prospects in the maritime provinces and Newfoundland is having an increasing effect. The Kitimat aluminum project, the Lynn Lake non-ferrous metal mines, the Labrador iron development, all mean the building of new railway lines into these regions and the opening up of new areas of virgin northern country.

The fifth point is the effect that the development of our resources industries has had

The Budget-Mr. Dickey on improving our balance of payments position. We have been selling as much of our raw materials resulting from these great developments that could not be used in Canada at excellent prices on foreign markets, and this has had a very beneficial effect on the Canadian economy.

The final point is the general one of the contribution to general economic stability. Canadian resources located in inaccessible regions, or difficult to prove up or extract on an economic basis, could in most cases only be developed by the making of large capital expenditures. In the post-war period substantial and for the most part increasing amounts have been invested for this purpose in this country. High capital spending for resources development has been one of the most dynamic and vital factors making possible a continuing rise in Canadian economic activities. In fact, but for the very large and diversified resources program, Canadians could not have avoided the consequences of the so-called inventory recession in 1949 in the United States to the extent we did.

Having dealt with our resources development industry, I should like to come to the vital question of whether we should process more of our industrial raw materials before export and, if so, how it should be done. This is a problem that has been given consideration for many years. When the alternative was between leaving the resources unused or selling them abroad in unprocessed form, initially at least, the answer given in this country in most cases has been, let us go ahead with the development of these resources. But this problem has remained how to increase processing at home and how to convince our customers that it is in their own as well as in our long-term interests for them to take more raw materials in processed form when they can be produced in Canada more efficiently than or at least as efficiently as in other countries.

What progress has been made in this regard? With the permission of the house, Mr. Speaker, I should like to put on Hansard two tables taken from the government publication "Trade of Canada". These tables show the total exports of Canada for 1929 and 1953, both in percentage and value terms, broken down as between raw materials, partially manufactured goods, and fully manufactured goods.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

William Alfred Robinson (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

Has the hon. member permission to place these tables on Hansard?

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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?

Some hon. Members:

Agreed.

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Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

John Horace Dickey (Parliamentary Assistant to the Minister of Defence Production)

Liberal

Mr. Dickey:

The tables are as follows:

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TABLE L-EXPORTS OF CANADIAN PRODUCE SHOWING THE PERCENTAGE DISTRIBUTION OF THE DEGREE OF MANUFACTURE FOR THE MAIN GROUPS, CANADA, 1929(0 AND 1953


Item Number Group 1929 (') 1953 Raw materials Partially manu- factured goods Fully manu- factured goods Total exports Raw materials Partially manu- factured goods Fully manu- factured goods Total exports% % % % % % % %I Agricultural and vegetable products (Except chemicals, fibres and wood)- (a) Mainly food 80-6 (2) 19-4 1000 86-0 7-8 13-2 100-0(b) Other than food 13-2 0-6 86-2 100-0 41-7 0-3 58-0 100-0Sub-total 68-0 0-2 31-8 100- 0 79-7 0-7 19-4 100-0II Animals and animal products (Except chemicals and fibres) 51-3 5-5 43-2 100-0 60-1 3-4 36-5 100-0III Fibres, textiles and textile products 17-8 17-8 64-4 100-0 6-6 17-3 70-1 100-0IV Wood, wood products and paper 7-8 34-9 57-3 100-0 5-0 42-9 52-1 100-0V Iron and its products (3) 7-9 92-1 100-0 8-6 17-5 73-9 100-0VI Non-terrous metals and their products (Except gold) 35-8 59-9 4-3 100-0 22-5 68-2 9-3 100-0VII Non-metallic minerals and their products (Except chemicals) 70-3 14-7 150 100-0 34-5 57-4 8-1 100-0VIII Chemicals and allied products 100-0 100-0 100-0 100-0IX Miscellaneous commodities 100-0 100-0 100-0 100-0X Grand total 38-3 19-0 42-7 100-0 32-2 28-9 38-9 100-0XI Grand total less I and II 16-5 34-1 49-4 100-0 10-9 42-3 46-8 100-0 Source: Basic data from annual editions of Trade of Canada for the fiscal year ended March 31, 1930, and for the calendar year 1953. (0 Fiscal year ended March 31, 1930. (2) Exports amounted to only $65 thousand which is too small to show in percentage terms. (3) Exports amounted to only $19 thousand which is too small to show in percentage terms. 3094 HOUSE OF COMMONS The Budget-Mr. Dickey´╗┐TABLE 1(a).-EXPORTS OF CANADIAN PRODUCE BY MAIN GROUPS AND BY DEGREE OF MANUFACTURE, CANADA, 1929(0 AND 1953 Item Number Group 1929 (*) 1953 Raw materials Partially manu- factured goods Fully manu- factured goods Total exports Raw materials Partially manu- factured goods Fully manu- factured goods Total exports$ million $ million $ million $ million $ million $ million $ million $ millionI Agricultural and vegetable products (Except chemicals, fibres and wood)- (a) Mainly food 252-3 0-1 60-7 313-1 811-9 7-4 124-2 943-5(b) Other than food 9-5 0-4 61-8 71-7 63-9 0-4 39-0 153-3Sub-total 261-8 0-5 122-5 384-8 875-8 7-8 213-2 1,096-8II Animals and animal products (Except chemicals and fibres) 68-2 7-3 57-5 133-0 150-8 8-6 91-5 250-9III Fibres, textiles and textile products 1-6 1-6 5-8 9-0 1-6 4-2 18-5 24-3IV Wood, wood products and paper 22-6 101-1 165-9 289-6 64-1 556-1 675-2 1,295-4V Iron and its products (2) 6-2 72-4 78-6 30-8 62-6 265-0 358-4VI Non-ferrous metals and their products (Except (gold) 55-2 92-4 6-7 154-3 153-0 465-4 63-1 682-2VII Non-metallic minerals and their products (Except chemicals) 20-1 4-2 4-3 28-6 50-9 84-5 11-9 147-4VTTT 22-4 22-4 137-9 137-9IX 20-1 20-1 124-1 124-1X Grand total 429-4 213-3 477-6 1,120-3 1,327-8 1,189-2 1,600-4 4,117-4XI Grand total less I and II 99-5 205-5 297-7 602-7 301-2 1,172-9 1,295-7 2,769-8 Sources: Trade of Canada Fiscal Year Ended March 81, 1980 and Trade of Canada Year Ended December 81, 1958, Vol. I. Sum of components may differ slightly from totals shown due to rounding. (0 Fiscal year ended March 31, 1930. (2) Exports amounted to only $19 thousand in 1929. The Budget-Mr. Dickey 3096 HOUSE OF The Budget-Mr. Dickey I am putting on the record in these tables the total proportions for 1953, and the same information is given in the table for 1929. These figures show that since 1929, by reason of natural development, we have made significant progress in increasing the proportion of natural resources products being exported in processed form, either fully or semimanufactured. The table will show that there are four main groups of exports which show substantial declines in the proportions shipped abroad in raw form in 1953 as compared with 1929. Three other main groups show somewhat smaller increases. The main decreases took place in the classification of non-metallic minerals and their products, which were down one-half, from 70 per cent in 1929 to 35 per cent in 1953; in fibres, textiles and textile products, down from 18 to 7 per cent; in non-ferrous metals and their products, down to 23 per cent from 36 per cent in 1929. If hon. members will study these tables I believe they will see a very clear pattern emerge. From this I submit that it does not appear that we are shipping an unduly large amount of our natural wealth out of this country, in its raw state, to supply factories in other countries. It is true that we do export considerable quantities of natural resources products in their raw form, especially foodstuffs, but their relative share of our total exports is declining, and the great bulk of our non-food raw material exports is processed to varying extents in Canada. The belief has been expressed that if Canada insisted that all her natural resources products be completely processed before being exported, unparalleled prosperity would result. Unfortunately it is not nearly as simple as all that. For example, to begin with, any attempt to compel foreign buyers of Canadian products to alter the form of their purchases would lead quickly to serious losses of our world markets. There are alternate supplies and substitute materials for most of our natural resources products, and undoubtedly other countries would utilize these in the face of any such Canadian restrictions. Second, any such action would invite retaliation. Other countries would follow suit to Canada's ultimate detriment, as we are on balance, as I pointed out earlier, a heavy net importer of raw materials of the industrial type. If the inward flow of these raw materials were interrupted our steel mills, our textiles mills, our natural rubber and aluminum smelting industries would suffer severely. The aluminum smelting industry would be especially vulnerable, since it



depends entirely upon imported bauxite and imported cryolite, with Canada's main contribution being abundant low-cost hydro power. In addition, some of our exports of raw materials are really part of an exchange trade based on the economies of transportation or on the interchange of complementary products. Both these factors operate in the two-way flow of iron ore, with the totals being almost in balance in 1953, when exports were valued at about $31 million and imports at $28 million. For similar reasons of economy it may turn out that when Canada achieves a large measure of self sufficiency in crude petroleum supplies it will be done by large exports balancing large imports rather than by processing all our own crude oil. I should like now to deal with the extent of industrialization that would be required in Canada to process all the natural resources products we are capable of producing. This may be gathered by looking at the iron and steel picture. It is expected that within a few years Canada's iron ore capacity will have expanded to 25 million tons annually. The question arises, why do we permit the export of this raw material rather than require its conversion in Canada into steel and steel products? Superficially that is an attractive suggestion. But besides the necessity of finding markets for that steel production, there is the rather difficult problem of finding $5 billion in capital investment which would be required to create in this country that kind of steel capacity. Without assured markets I am very much afraid that we would not find capital ready to risk itself in that way. In summary, if I may just list the reasons for the present state of our trade in raw products and manufactured goods, and the reasons for the developments which have taken place since 1929, I would say, first, that Canada is a low-cost producer of a number of raw materials for which there is a world-wide demand in their natural form, and has become an important source of supply for many of the countries which need these raw materials. Second. Canada's domestic market for most of these materials is small, and frequently such resources would not be developed at all except for the export market. For example, the nickel developments at Sudbury would never have been made to meet the requirements of the Canadian plating industry. Thirdly, it is usually more economic to produce in larger quantities; and selling in wider markets reduces the cost of production, which



benefits the Canadian consumer and the Canadian manufacturer who also uses these raw materials. Fourth, the development of natural resources often contributes to regional economic development, as I have pointed out. Fifth, the development of Canada's natural resources for the export market usually paves the way for the setting up of domestic industries to process the resulting materials for home use, and eventually for export as well. Certainly that has been our experience in a number of fields. Finally, the export of raw materials is a part of Canada's economic structure and any drastic reduction, whether due to restrictions on exports in raw form or not, would upset the whole economy. Any upset in the balance of payment pattern could mean large trading deficits for Canada, and eventually even the curtailment of essential imports. Therefore I think that in respect of this, as in many other problems, the correct view is the balanced view based on the facts. I submit that the generalized and unsupported statements made very frequently on this matter by hon. members opposite have not been contributions to clear thinking in respect of the Canadian economic position today or its future prospects.


PC

William Marvin Howe

Progressive Conservative

Mr. W. M. Howe (Wellinglon-Huron):

Mr. Speaker, in rising to take part in this debate I do not intend to delve into any particular aspects of the budget. They have been dealt with very ably and efficiently by some of the other members of our party. However, I should like to deal with one or two problems that are particularly applicable to my own riding and constituents and which, if promptly acted upon and dealt with in an effective way, could have a great economic effect on the whole of Canada.

I do not wish to belabour an issue that has been debated from time to time in this house, but I do notice that issues that are continually brought to the attention of the government sometimes do find their way into legislative measures. The question I am going to discuss was mentioned in the latter part of the second great war, and has been mentioned so often since that I cannot understand why some concrete policy has not been advanced by this government to assist in the decentralizing of industry.

A great deal of the buoyancy of our financial position in the world today is due to the fact that foreign capital is being invested either in the development of our natural resources or in the creation of new industrial empires. I feel that consideration should be given and planning should be done 50433-196

22, 1955

The Budget-Mr. W. M. Howe

to see that those empires will be set up under conditions and in locations that will be in the best interests of Canada as a whole.

I feel that there are three main departments of our government that would be economically affected by planning of this kind. The first department is that of transport. Indications are that our railroad systems have been operating at a tremendous deficit for the last year. In fact we know that in the year 1954 the Canadian National Railways had a deficit of $28,758,098. They find that some of this deficit arises from the fact that quite a number of their branch lines are not paying. I feel that if industry, which is being centralized in our metropolitan areas, could be distributed throughout the entire width and breadth of our country it would naturally give more business and bring more revenue to our transportation systems. I also feel that if many of these branch lines are discontinued the possibility of smaller communities getting any of these industries will become practically nil.

Another department that is involved is the Department of Northern Affairs and National Resources which, through co-operation with the provincial departments of planning and development, should take some steps to see that great industrial empires do not encroach on our very valuable agricultural lands. I speak particularly of the lands in southern Ontario, where we have been endowed by old mother nature with fertile soil, a moderate climate and all the natural attributes to make that one of the most productive fruit and vegetable districts in the world. Man can never replace these natural resources which have been given to us, and there are many districts where soil and natural conditions make it impossible to carry on agriculture economically, yet where it would be feasible to build manufacturing plants.

Then we have one other department of the government which is directly involved, namely the Department of National Health and Welfare, which has the task of promoting and developing civil defence. We hope and pray that these tense periods will pass and there will not be another great war, but we know that we must look upon this matter with a sense of reality when all the great nations of the world are doing their utmost to keep ahead in the creation of new weapons of destruction. To this department falls the task of looking after the safety of the citizens of our country in case of attack.

When so many people are gathered together in great metropolitan areas the task of protecting or removing them from these areas becomes well-nigh impossible. We shudder to think what could happen. We have seen

The Budget-Mr. W. M. Howe it happen before when our weapons of destruction were many times less devastating than they are today. Had more thought and planning been given to this situation the expensive projects that we find in our larger centres to relieve traffic congestion, such as subways and through expressways, might not have been necessary. I feel that if more direction were given, many industries could settle in smaller communities to the mutual advantage of both the industries and the communities. Today we find that people living in those smaller communities are demanding and getting all the facilities provided in more thickly populated areas. If they had more supporting taxpayers the burden of municipal taxation on property owners would be less oppressive.

The second matter I wish to speak about is also one that has been given considerable publicity in this house, but it is also one about which I feel not too much has been done. I refer to the condition of the farming industry in our country. When one looks over the budget one finds that as regards the farmers as a whole very little relief has been given to alleviate the trying circumstances in which they find themselves. It is true that the average farmer may pay a few cents less in income tax, though when I spoke to a couple of my constituents during the Easter recess I found that one indicated that his reduction in revenue from the sale of his hogs over the past year was $2,500, while in the case of the other the reduction was $1,500. Therefore I think they will find that their reduction in income tax will be very small this year because a lot of them will not have to pay any tax. The farmer may get his tires a little cheaper. If he has a car to turn in he will likely pay a little less for a new one than he did before.

A survey by Dr. MacFarlane, of the Macdonald agricultural college, indicated that according to the bureau of statistics a year's work by an agricultural worker was worth only $3,600, while a year's work by workers in other occupations was worth almost $5,000. The explanation is that while the prices of farm products have been steadily declining for several years, the prices being charged for other products have been going up. In other words the producers of our agricultural products are not getting an undue share of the national production.

I am sick and tired of the fanfare and headlines that follow declines in agricultural prices. So much has been said about our high-cost economy that when beef prices drop, when hogs, poultry, or any other agricultural products go down in price, headlines proclaim that according to the index of the bureau of

[Mr. Howe (Wellington-Huron) .1

statistics the cost of living has dropped. I do not think, Mr. Speaker, that when it is caused by only one segment of our economy it is too much to shout about, and I feel it is a very selfish way of looking at this question.

No part of our national economy can live unto itself today. If farm prices drop, the things the farmers buys are fewer, and believe me, he is willing to buy when he is making a profit on his operation. He is willing to buy such products as farm implements, clothing, electrical appliances, automobiles and many other ordinary commodities of everyday life. When the farmer stops buying the manufacturers of all those commodities find that production soon catches up with the demand and there are lay-offs that are not all caused by the dumping of commodities by other countries where labour costs are lower. They are caused partly by the falling off in the purchasing power of one of the basic industries of our country.

I say that part of the fluctuation in the farmers' prices and in our agricultural returns results from the fact that today we have no definite, genuine market on which we can depend from year to year. The United States of America has from time to time been a good customer, but under ordinary circumstances and in an average year the United States produces more agricultural products than she herself can use.

The budget gave no indication that there would be any increased promotion of trade in agricultural products with other countries. There was a time when we enjoyed access to and even preference in the British markets where, because of their tremendous population, there are approximately 30 million people to be fed every year, and which is one of the most permanent and stable markets in the world for agricultural products. There was a time when our cheese ranked first in demand by the people of Britain. How do we know that the newer generations who have grown up and who have developed an appetite for this product from other countries will have the same preference as the rank and file of British people?

In those days not only did our cheese go to Britain, but our butter, our pork and our heavy steers went to that market. We do not send any beef today, and in that connection it might be interesting to note that Britain buys 70 per cent of the beef produced in the world. I feel that a great deal of the uncertainty in our agricultural economy is due primarily to the loss of this market.

This great Liberal government tells us that one of the reasons we had to give up the

British market was that Britain did not have the dollars with which to buy the products of our farms. But did this government leave no stone unturned to see that every possible dollar's worth of defence production was spent in Britain? The report of the Department of Defence Production, January 1 to December 31, 1954, indicates that materials purchased in the United States in the period April 1, 1951 to December 31, 1954 totalled $493,731,000, whereas those purchased in Great Britain amounted to only $104,255,000. Had more dollars been spent in Britain she might have had dollars which could have been used to stabilize our agricultural economy.

This government has been telling business, which has been in straitened circumstances for years, that they are faced with another buyer's market. This applies not only to business in Canada but to business in the international field. If the farmers of our country felt that there were adequate markets for their products and that when they were ready for market there would not be a surplus they could produce more than they are producing of cattle, hogs, poultry, butter, cheese, etc., and their cost of production would be reduced while our gross national product would be increased.

In the face of continued drops in agricultural prices there is one other thing I should like to mention, a phase which was applicable not only to my own riding in 1954, but because of excessive rainfall during the harvest season applied equally to many districts, particularly in southern Ontario. It is true that last year the western provinces had an unusually wet crop year, but the farmers there have the facilities of the Prairie Farm Assistance Act to help them when needed. The farmers in southern Ontario depending on late crops such as flax, white beans, soybeans and sugar beets to get extra money to pay taxes and many other yearly debts that accumulate, particularly in these days of high production costs on our farms, found there was no assistance available to them.

I maintain that what is good for one section of this dominion in time of economic strain should be applicable and within the reach of every farmer who needs it. I should like to endorse the suggestion made by the Canadian Federation of Agriculture that we recommend the development of an adequate scheme of crop insurance with costs to be borne jointly by the federal and provincial governments and the producers.

In closing I should like to say a few words about education, a matter which I understand will be brought up before the coming dominion-provincial conference. We have no 50433-196J

The Budget-Mr. Herridge greater asset in our country than our youth, and we should leave no stone unturned to see that everything possible is done to fit them to take their place in the world of today. Most municipalities are trying to do this, but with the limited means of taxation at their disposal they are finding it well-nigh impossible.

I feel that the federal government, which now takes over 75 per cent of the tax dollar, must do more to assist this very important function of government at all levels. This was the conclusion arrived at after a research program carried out by the Canadian school trustees' association under the direction of Dr. M. E. LaZerte, a distinguished Alberta educationalist. This report indicates that to ensure equality of educational opportunity for all Canadian children the dominion government should designate special grants to the provinces for the specific purpose of assisting education.

At six o'clock the house took recess.

Topic:   TABLE L-EXPORTS OF CANADIAN PRODUCE SHOWING THE PERCENTAGE DISTRIBUTION OF THE DEGREE OF MANUFACTURE FOR THE MAIN GROUPS, CANADA, 1929(0 AND 1953
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AFTER RECESS The house resumed at eight o'clock.


CCF

Herbert Wilfred Herridge

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

Mr. H. W. Herridge (Kootenay West):

Mr. Speaker, I must say that this slender and somewhat weary Friday evening audience is not very inspiring.

Topic:   TABLE L-EXPORTS OF CANADIAN PRODUCE SHOWING THE PERCENTAGE DISTRIBUTION OF THE DEGREE OF MANUFACTURE FOR THE MAIN GROUPS, CANADA, 1929(0 AND 1953
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CCF

Major James William Coldwell

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

Mr. Coldwell:

You have the Prime Minister (Mr. St. Laurent) and the Minister of Finance (Mr. Harris), and I am here.

Topic:   TABLE L-EXPORTS OF CANADIAN PRODUCE SHOWING THE PERCENTAGE DISTRIBUTION OF THE DEGREE OF MANUFACTURE FOR THE MAIN GROUPS, CANADA, 1929(0 AND 1953
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April 25, 1955