Mr. McCullough (Moose Mountain):

You

cannot intimidate the farmers with that sort of proposition.

Mr. Tucker:

My hon. friend is trying to

twist my words. I am not trying to intimidate anybody. I am putting before the house exactly what happened before this conference and what I think would have been their attitude in an even more pronounced way if they had known for sure the advice that the wheat board was giving. I want to tell my friends of the C.C.F. this. I am sure that their actions must be interpreted by the rest of Canada in a way that they do not like. They keep professing to be favourable to the wheat

board but they continue to find fault with what is being done in respect of the wheat board's work. They continue to ask for things that the wheat board consider they cannot do and still retain the confidence of the farmers of western Canada. Then when my hon. friends are asking for these things, demanding them and stirring up demands for them they say, "We still are the best friends of the wheat board".

Mr. Argue:

Who forced the wheat board to distribute box cars? *

Mr. Tucker:

As to that matter, may I say that the wheat board already have power to do that.

Mr. Argue:

The minister forced them to use it.

Mr. Tucker:

My hon. friend made his speech and I did not interrupt him. I know that it must be unpalatable to him for me to have these actual facts put before this house. My hon. friends may suggest all they want to that this thing cannot be sold to the farmers and that sort of thing. I have taken the attitude that I will try to tell the truth here and will rely on the sense of justice of the people of Saskatchewan to support me in doing so. I am putting before this house what was passed by that conference and what happened at that conference.

The government knew that the conference had refused to endorse the wheat board's being asked to handle this question-had definitely refused to do so. That is something that cannot be denied. Further, they knew the attitude of the wheat board in reference to this matter. They also know the attitude of western Canada which was that the wheat board should not be endangered, as it would have been according to the wheat board's own opinion which they undoubtedly thought should be taken in that regard. Is the government then to be blamed for acting upon the advice of a conference called for that purpose and for doing the thing in a way that appeared to be the only way in which it could be done to provide these advances, namely through the banking system-a procedure which was not refused or turned down by this conference. It was the only way in which it could have been done if it was not to be done through the wheat board, and if the wheat board said: "We cannot do it and we will not do it, and we will not try to do it, and if you destroy us, why that is your responsibility." Then, of course, it seems to me the government did the only thing it could.

I have no fear, Mr. Speaker, with regard to what the people of western Canada will

The Address-Mr. Tucker say if it comes to an actual showdown and they know the facts and that the opposition parties are insisting on demanding that the government load a burden on the wheat board that might break its effectiveness as a marketing agency for western Canada, and that they are insisting on this even at the risk of endangering the wheat board. I am satisfied that the people of western Canada will say that the Liberal government and those who support it did right in doing nothing to endanger the existence of the wheat board. I say that to the C.C.F., and they can make the most of it.

I ask them this question. If the wheat board is of the opinion that farm financing cannot be done properly by the board and still preserve their effectiveness as a marketing agency-and apparently that is their opinion; there is no reason to doubt it-is it the C.C.F. attitude that this should be done regardless? On this question of getting help to the farmers in this time of emergency, do they say that we should risk doing away with the long-term plan of keeping the wheat board? I just wonder whether my hon. friends really take that attitude? That is what I wish to say about that meeting at Saskatoon. In my opinion the government did the only thing it could do, consistent with the advice brought from that conference. Anybody who reads the resolutions passed by that conference, or who attended the conference, knows that what I am saying is true.

I intend to come back to this question of grain marketing, but there are one or two things I wish to say before I do that. We are being invited to vote lack of confidence in this government.

Hear, hear.

Mr. Tucker:

And the C.C.F. endorse that. If that motion of lack of confidence carried it would mean a new election. Does anybody in the C.C.F. really pretend that if an election were held there is any other alternative to the present government than a Progressive Conservative government? Surely, they will not pretend that they would have any chance of forming a government. Are my C.C.F. friends anxious to replace the present government with a Progressive Conservative government? They do not answer. I know they would not dare to say that, because Saskatchewan would repudiate them if they did so. When they ask us to vote against the government they are asking us to take the chance that we might have a Progressive Conservative government instead of a Liberal government. Since I know western Canada does not want that, why should I vote lack

The Address-Mr. Tucker of confidence in the present government? I ask them, why should they do it?

Where would our provincial government be without the money it gets under the

dominion-provincial agreements?

Oh!

Mr. Tucker:

The C.C.F. may say "oh". They know themselves that we could not carry out our educational program; we could not carry on our hospitalization program without the money we get under the

dominion-provincial agreements. Have they any guarantee that if this government were defeated and succeeded by another government, we would have dominion-provincial agreements under which we would get the money which we get today, to the same extent and under the same circumstances? They could not guarantee it; and yet they are ready to take that chance. I myself know the attitude of some of the members of the government of Saskatchewan. They would hate to take the chance of having this government defeated when they are faced with that kind of possibility. They know that is true.

Let me in this connection deal with the attacks that are being made on the wheat board today. The government is being attacked because of its wheat board policy. The central point of that policy is the wheat board and the maintenance of the wheat board. If the government were defeated, as the C.C.F. want, could my C.C.F. friends tell their friends in Saskatchewan that they would guarantee the wheat board would be 'maintained as the exclusive marketing agency of wheat, oats and barley, as it is today They cannot do it. They could not guarantee it. They are ready to take a chance on this very thing that is so important. They are doing it for what purpose? They are doing it for political advantage, Mr. Speaker, that is all.

They say they want to see the Liberals stand up and be counted. Yes, Mr. Speaker, I am ready to stand up and be counted in support of a government that maintains the wheat board as the marketing agency for our grain. Certainly, I am ready to stand up and be counted and support the government that is bringing in improved dominion-provincial agreements under which our province can give a standard of education and of health that it could not give without them.

I was elected to this house in 1935. At that time one of the problems in Saskatchewan was that we had no access to the large incomes of the corporations and of individuals in the central provinces, and that we could not, without impossible taxation, give the

What about wheat?

Mr. Tucker:

I am not afraid to deal with wheat. The people who should be afraid to deal with wheat are those who profess to be in favour of the wheat board and yet are always advocating policies which will destroy it.

I wish to say a word in regard to external affairs. I commend the Secretary of State for External Affairs (Mr. Pearson) for the attitude he has taken at NATO to the effect that the attention of the western world should be directed to building up economic strength and economic co-operation. We cannot hope to build up solid military strength unless we have economic strength.

Surely, we do not want to repeat the mistake we made in the thirties when each country tried to solve its unemployment problem, its problem of low farm prices by taking individual action. In this way each nation hurt the other nation. The result was the terrible experiences we had in the thirties. At that time, we resolved that never again would we

The Address-Mr. Tucker be a party to doing that sort of thing. I want to commend the Secretary of State for External Affairs for pointing out, particularly to our good neighbour the United States, that article 2 of the North Atlantic treaty is an integral and important part of that agreement; that therefore, they should take no steps that are unfair to the other members of that organization hoping as they do to live up to the terms of that agreement. I believe that, in emphasizing that, our minister was doing a good thing, not only for Canada but for the whole of the western world. Why then suggest that we embark on a different scheme on a national basis and follow the past United States system of subsidy and giveaway, regardless of the extent to which it may destroy the economic foundation of neighbouring countries? When it is suggested to us we do the same, is it not being suggested, Mr. Speaker, that we repeat the mistakes of the thirties?

I want to commend the government for taking the lead at GATT and saying that we should adopt trade policies leading to a greater measure of trade. I want to commend the government also for taking the lead at the NATO conference in saying that, if we are going to solve these problems which are besetting agriculture in all countries of the western world, we must work together in harmony. Things should not be done because one nation is strong and thereby able to take a position that may almost ruin a neighbouring nation. Surely our Secretary of State for External Affairs deserves the united support of every member of this house in that connection. Yet my friends of the opposition say I should vote against the government. I am not afraid to vote in favour of not repeating the mistakes of the thirties, and I do not think my hon. friends opposite should ask me to do otherwise.

I should say a word of commendation about the good work done by the Minister of National Health and Welfare (Mr. Martin) at the United Nations. One of the things that hampered the work of the United Nations was its lack of universality. Our representatives there succeeded in getting 16 of the nations of the world admitted to membership, thereby strengthening the organization and making a contribution to peace. By giving that leadership our representative added lustre to the name of Canada in the councils of the world.

Now, I would like to say a word about farm prices. I have looked over the index figures, but I have not time to give them now. I would point out that if you allow for a hoped for further payment on wheat, the index of farm prices is back around 228-8 based on

200 HOUSE OF

The Address-Mr. Tucker 1935-39. His costs stand at 228-9. In other words the prices received by the farmer and the cost of doing business are both more than twice as much as in 1935-39. This figure of 228-9 is the index of farm prices. It allows for 20 cents more per bushel on wheat which brings the index of farm prices to 228-8, which is one-tenth of 1 per cent away from the index of farm costs. In other words, if you calculate that we will get another 20 cents on wheat the farmer is now back-

Mr. Nicholson:

Where do you get that figure?

Mr. Tucker:

I am hoping for it.

Mr. Nicholson:

Where do you get it?

Mr. Tucker:

I am hoping for it. If we do not get it, the situation will not be so good. I am hoping we will get a further payment on oats and a further payment on barley but I have not taken this into my calculations. In any event, we have got back to the position where what the farmer now gets from what he sells, relatively to what it costs, is relatively the same as in the period 1935-39.

In the interval, his position has been much better. His position has been getting worse during the last four or five years. His costs have been going up and the prices at which he sells his goods have been going down. This situation has been reflected in the trend of the population and it is something to which I am sure the government is giving attention. The figures I got were from the Canada Year Book and they seem to me significant figures-figures to which every member should give some attention. I have only the figures for 1941 and 1951. In 1941 the number of people engaged in agriculture totalled 1,083,816. By 1951 the number had decreased to 826,759, that is a decrease of roughly

257,000 or 23-7 per cent. The number has decreased by almost one-quarter. I think that trend has gone on since 1951.

On the other hand, in the case of those engaged in all forms of gainful occupation, including agriculture, the number in Canada in 1941 was 4,195,000 in round numbers, whereas in 1951, and this does not include Newfoundland, the number had increased to

5,179,000, or an increase of 24-4 per cent. Therefore, while the number of people engaged in gainful occupations went up by 24-4 per cent in the decade from 1941 to 1951, the number of people engaged in agriculture went down by 23-7 per cent.

It is quite obvious that it has been felt by the people of Canada that it is much better to be engaged in some occupation other than farming. So far as I understand their attitude,

the royal commission on agriculture in Saskatchewan, noting that the number of people in Saskatchewan in agriculture had gone down, that the number of farms had decreased, that farms have increased in size, believed that no fault should be found with that because the only way in which a farmer now can make a living is by doing business on a bigger scale. Therefore you have to have larger farms for the farmer to have an adequate income, and as I take it they do not find fault with that trend.

But the government must bear in mind that sociological changes like that bear down very heavily on the sections of the community affected and the government must always keep in mind that these changes should not be permitted to happen faster than considerations of humanity warrant, or faster than would be in the best interests of the basic economy of the country. This is something to which careful attention must be given and it is one of the reasons why I feel that the rest of Canada should have no hesitation in supporting any modest measure of temporary assistance to the farming industry that may be necessary to temper this situation until we can find out exactly what the long-term position should be.

Mr. Nicholson:

Why modest?

Mr. Tucker:

I think I should now say a few further words in regard to the wheat situation. I think at the outset that I should say that I commend the stand taken on this matter by the Minister of Trade and Commerce (Mr. Howe) down through the last four or five difficult years. The attitude has been taken over and over again by opposition groups that we were losing our markets, that we were faced with a pile-up of grain, that we needed to get rid of our grain, that we had to do something about it, that this grain surplus was striking at the very foundation of our economy in western Canada.

I may be wrong, but in my opinion if there had been any indication on the part of the minister responsible for our program, if there had been any weakening in support of the wheat board, if there had been any indication that this vast quantity of grain would suddenly be thrown on the markets of the world: if there had been any thought that that was likely to happen, it would have broken the world price of wheat. What that would have cost the farmers of this country is incalculable.

Yet the Minister of Trade and Commerce is attacked for his firm stand on this question, for his being behind the wheat board, for his saying that there will be no fire sale of

wheat-that the situation is not as bad as it has been painted by the opposition. I think on reflection we must all admit that he has done a good service to the farmers of this country and for that reason he deserves support when the time comes to vote.

One thing that was significant to me in the speech yesterday by the Minister of Trade and Commerce was that up until, I believe he said early in November, there had been no great demand for our wheat and then suddenly it came on faster than he had ever experienced before. At a time when there is an open market, speeches such as those that have been made would not have much effect because people dealing in wheat would know the exact supply situation. They would not go according to speeches.

But when there is a tremendous amount of wheat in the hands of a government and that government is being attacked by the opposition because there is a great deal- too much-wheat on hand; when it is being contended that a new policy should be followed, that a more aggressive sales policy should be adopted, that something should be done to get rid of it, those people who are thinking of buying wheat may be inclined to believe that the government may finally give in, and should that occur the price of wheat might drop substantially and therefore they hold back to see what effect the opposition attack may have.

I think it is fair to say that this continual outcry on the part of the opposition that there should be some change in the marketing of wheat, that the wheat board is not getting rid of the wheat fast enough, that the government should be thrown out because it is not doing a good selling job- when these things occur other people may think that the opposition may be able to bring down the government and they may decide to hold back to see what happens. How much damage has been done by these cries which have been heard in the past, that the government should get rid of our wheat, nobody can tell, but I do point out that to me it seems to be a case of playing politics at the expense of the farmers of our country.

The minister has pointed out that he feels from his long experience that we are going to get through this situation without changing our policy, without creating panic and without throwing our wheat on the world market and breaking the price. Because he takes that optimistic position he is attacked. He takes the attitude that it is a good thing that we have a surplus because we may have a crop failure when we would need that 67509-14

The Address-Mr. Nickle surplus to meet the demands of our customers. This is in the best tradition of former great leaders in western Canada.

Western Canada likes the straightforward attitude of the Minister of Trade and Commerce because he talks to them in a blunt, straightforward way. Yet we continue to have this outcry that there should be a change in his attitude. As an example, last night I read where a Conservative member of the provincial legislative of Manitoba had said that a new wheat policy was needed. He said that the problem of farm security could be met by paying on farm-stored grain. His solution for the disposal of our surplus was practically a forced sale, make prices and conditions suitable to the consumers in the importing countries.

Would it not be a sad thing if when, through the goodness of Providence, we had a good crop, as a result of weakness on the part of the Minister of Trade and Commerce in doing the things suggested by this Progressive Conservative member of the legislature of Manitoba our wheat was pressed on the markets of the world so as to break prices. The result would be that our farmers would lose-and the country would lose -through that goodness of Providence rather than being benefited. Surely we should be glad that we have a minister who says that we are going to take advantage of the goodness of Providence by seeing to it that the farmer benefits. That is the attitude of the Minister of Trade and Commerce and I intend to support it-to stand up without hesitation and be counted, believing 1 am thereby supporting the best interests of the farmers of our country.

At one o'clock the house took recess.

Mr. Carl O. Nickle (Calgary South):

Mr. Speaker, I should like to begin in the usual way by extending my congratulations to the mover (Mrs. Shipley) and the seconder (Mr. Laflamme) of the address in reply to the speech from the throne.

I should like to follow that with a note of personal congratulations and best wishes to the Minister of Trade and Commerce (Mr. Howe) on reaching his seventieth birthday. I might say that he followed up this milestone in his life by making a most spirited address to this house yesterday. Although there may be some differences of opinion as to the accuracy of some of the comments he made

202 HOUSE OF

The Address-Mr. Nickle at that time, he certainly showed a great deal of spirit for a man who has, throughout his career, done a great deal for our country.

I should like now to extend congratulations to the hon. member for Rosthern (Mr. Tucker), who spoke just prior to myself. He should be congratulated because, during the course of his address, he gave the province of Saskatchewan an export of a new kind. The export which he introduced to this house was red herrings, the same brand of red herrings that was introduced into the house yesterday by the Minister of Trade and Commerce as a new export from Port Arthur.

The principal red herring injected into these debates was the red herring that those who are critical of the government's handling of the present agricultural emergency are people who are attempting to throw out the Canadian wheat board. I do not think that any member of this house, or perhaps even newspapers or others that have been mentioned by these two gentlemen, are seeking deliberately to destroy a means of orderly marketing. However, in supporting generally the principle of the Canadian wheat board, I do not think anyone in his right mind, farmer or otherwise, could fairly assume that the support of a principle of orderly marketing necessarily means support of all the actions of those who may be carrying out that policy of orderly marketing.

The Minister of Trade and Commerce, in his statement, went to great lengths to establish that, in his view, production of surpluses of agricultural products was in the long run a good thing for our economy. He tried to imply that others who may not think as he does want to see shortages rather than surpluses. That is most unfair and most untrue. When we take the minister's reasoning that it is in the national interest to continue producing surpluses of all kinds of products, particularly of wheat, despite any temporary state surpluses, then it must necessarily follow that, if maximum production is in the national interest, then it is also in the national interest that the burden imposed by this method of production should be carried on a national basis in the national interest and should not be a burden imposed upon the producers of agricultural products alone.

If it be true that it is in the national interest to maintain a high level of production regardless of the state of our overseas markets for these products, then it must follow, and even the most ardent supporters of this government's policy must agree, that the present very limited emergency steps contemplated in the speech from the throne

are steps which still impose on the prairie farmer the great burden in the national interest of carrying something which is a responsibility of the nation as a whole.

The minister made some reference to retail sales in the prairie provinces for the first nine months of 1955. He compared them with the first nine months of 1954 and from that comparison came to the conclusion that the western farmer has no need of cash. He stated in his comparison that retail sales were up, I believe, some four per cent in Manitoba, that retail sales were down only one per cent in Saskatchewan and were up some six per cent in Alberta. But let me point out that this particular gauge is a most unreliable one and presents a very false picture of the actual state of affairs. A far more reliable gauge of the actual cash position of the agricultural producer in the west would be one based upon how much farmer debt has increased during this period of 1955, when retail sales were maintained. How much more do the western farmers now owe their local merchants? How much do they owe their suppliers of all forms of products? How much, in turn, has the debt of those merchants and suppliers increased as compared with those in the east and other parts of Canada from whom they buy their products for resale to the western farmers? It is only fair and honest to say that the farm debt position has very greatly worsened during 1955. Such is the need for cash that a great many western merchants in smaller towns and cities alike have had to go on a straight cash basis with the farmer. The farmer's credit is no longer good, simply because the merchant himself finds he cannot maintain his own credit position and continue getting goods if he has nothing to show for the sale of his products except a debt owing by a farmer without cash.

I know we have in southern Alberta a very sad situation which accentuates the belief that there is a crying need for more cash for the farmer. That is the fact that many farmers are disposing of No. 1 and No. 2 wheat for feed. Good grade wheat is being taken by merchants of all kinds in exchange for petroleum products, household appliances, motor cars, foodstuffs and so on. It is being taken in for as low as 50 cents a bushel for No. 1 wheat. That wheat, in turn, is being sold at merchant's cost, or even less, for feed. This is at a time when our elevators are loaded with huge quantities of low grade wheat which at this stage should properly be used to supply the feed needs of the west as well as the east.

I am not going to offer any specific solution for the farm problems of the west. The

leader of my party has outlined what I believe is a good emergency program at this time-cash advances to farmers-and a good suggestion for a long-term solution, that is, to toss this problem to the Gordon commission for a full study of all the aspects of future policy on wheat marketing in order that we may evolve a plan that will ensure not only maximum production of agricultural products but a fairly steady flow of cash for those products, in order that those who produce them may continue to live on a standard comparable to the rest of Canada.

I should like to devote the rest of my time today to a discussion of another phase of the western Canadian economy, one which, at least in one regard, has shown a great deal more progress than has our basic industry, agriculture. I refer of course to petroleum and natural gas. During 1955 the petroleum and gas industry poured into western Canada as direct investment more than half a billion dollars, to be exact some $503 million in new capital investment in oil and gas exploration and development, land acquisition, pipe lines, refineries and everything else that goes to make up that particular industry. This investment of more than half a billion dollars in one year is by far the largest rate of investment in Canada's history in any single natural resource. It of course reflects the steady growth that has taken place since 1947 v/hen the Leduc discovery started off the oil boom.

This year western Canada, the four western provinces and the Northwest Territories and the Yukon, are now assured of a still greater investment. There will be poured into the west this year by the oil and gas industry a minimum of $680 million, a rate, I might say, which dwarfs by many times the investment rate of the industry of only $12 million a year nine years ago. But if the critical problem of the oil and gas industry, that is, the solution of the gas export question, is settled, new investment in the four western provinces in 1956 will not be $680 million but Will climb to a minimum of 813 millions of new dollars.

The effect of that kind of capital investment upon a part of Canada whose basic industry has suffered and suffered severely is an effect which is incalculable, I might say, and this is a good measure of the importance of these resources to western Canada as well as to all of Canada, that nine years ago this industry supported directly and indirectly some 25,000 men, women and children in western Canada. Today the number of western Canadians supported directly or indirectly by the oil and gas industry is not

25,000 but exceeds 300,000 people.

The Address-Mr. Nickle

There is every reason to believe that over the next few years, provided the industry can continue to grow through freedom to market its products, provided we can develop along with oil and gas production ancillary and associated industries, petrochemical, steel and so forth, to supply oil needs, we will in a relatively few years have at least one million western Canadians supported by these twin resources.

I am going to toss a very few more figures on oil at you, Mr. Speaker, and then get down to the question of our problem with respect to gas. In 1955 this industry, which is pouring so much in capital investment into western Canada, took out far less, but it still took out some $301 million worth of crude oil which it marketed, of course, in Canada and the United States. This year we have a substantial market growth ahead of us for oil. This year we will be marketing 156 million barrels of oil with a worth at well-head of something over $376 million, making oil, of course, by a substantial measure the No. 1 mineral producing industry in terms of cash produced in all of Canada.

In 1955 this western industry managed to produce some 353,000 barrels of oil daily, an amount which represented 57J per cent of the petroleum needs of the Dominion of Canada. That record was set only eight years after the discovery of Leduc at a time when our oil hunger in Canada was less than half what it is today and when we were only able to produce less than 10 per cent of our needs. This year we will produce in western Canada some 429,000 barrels of oil per day equal to 65 per cent of this year's demand for the whole of Canada.

I might say, however, that these figures, while large, must be stacked up alongside one factor, and that is that our ability to produce oil in western Canada is growing even faster than our ability to market it. Right now in the four western provinces we can produce no less than 700,000 barrels of oil per day compared with 20,000 barrels a day nine years ago, if we have the markets to absorb it. The figure of 700,000 barrels daily is made up of the maximum efficient rates of production of all the thousands of oil wells in the west as determined by competent engineers employed by governments and oil companies.

We are, therefore, not producing to our full ability. We are producing some 55 or 60 per cent of the amount of oil we could produce if we had markets. But a breakdown of where we are selling oil and how those markets for oil have grown sets a pattern we might well bear in mind when we consider oil's twin product, gas. In 1954 we first

67509-14J

204 HOUSE OF

The Address-Mr. Nickle broke into the United States oil market and in that year we managed to dispose of 7,900 barrels of oil per day, all of that going into the area along the western end of lake Superior on the United States side. In 1955 these exports of our oil to the United States increased severalfold. They increased to 50,800 barrels daily, and in this year we will be able to market in the United States at least

112.000 barrels of oil daily, an amount which represents 26 per cent of the expected oil production of western Canada. In other words, the United States market has become a very vital factor in our market planning.

The sale of oil to the United States in this year alone will bring to Canada a minimum of $113 million in United States currency which will continue to improve greatly our trade position with our neighbouring nation to the south. Without this United States market for oil and the lift that access to that market provides to support capital spending in the development of new resources in western Canada I believe quite firmly western Canada would lose capital investment of at least a quarter of a billion dollars per year.

I use these figures because they do indicate the importance to the development of these resources of the west of access to markets outside of Canada. It will perhaps interest hon. members to know, and this rather disturbs me at times when I think about it, that even a year ago we faced certain problems in Ottawa, and they were not confined to the government side of the house alone. The problem that faced us was that there were members of the house who were still attempting to place restrictions upon the route of oil pipe lines plus restrictions upon the marketing of our oil that would have, if approved, ruled out the market growth we have been able to enjoy across the border.

You may recall the stand taken some years ago by the Minister of Trade and Commerce (Mr. Howe) when he ruled that the first oil pipe line should go partly over United States territory to Sarnia, Ontario. I was not in politics at that time but I strongly supported his position because that was the most economic means of bringing the oil east. What has been the effect of that decision? It can be summed up this way, that because that oil line reached Ontario by traversing in part United States territory we were placed in contact by means of the pipe line with a United States market which in 1956 is going to take from western Canada approximately

54.000 barrels a day of western Canadian oil.

You may recall a year or so ago the protests lodged on the other side of the house against expansion southward from Vancouver of the Trans Mountain oil pipe line.

(Mr. Nickle.]

Those objections, I am happy to say, were overruled. But had they gone through, and had we been unable to move oil by pipe line south from Vancouver into the northwest United States, this is what would have been the effect this year. Western Canada would have lost a market which this year will amount to 58,500 barrels of oil per day. Those two markets in the United States which are available to us only because of the relative freedom given to the oil industry to plan its transport systems on the most economic basis without too much regard for the location of the 49th parallel today, mean that western Canada, in terms of production, is producing an extra $300,000 worth of oil per day and that the Canadian economy is being strengthened by that amount. As I indicated to you earlier, even access to that United States market does not take care of our oil surplus problem. We are still capable of producing almost twice as much oil as we are able to market in Canada and in the United States, but the oil industry are not calling for subsidies of any kind to help them out. They are simply leaving their wells cut back to the amount of oil they can produce efficiently and can market in the areas to be served.

That brings us to the question of gas. Our oil planning has been based upon a fairly wide recognition of the fact that a pipe line is merely a means of transport between an oil field or a gas field and a market. Unless that pipe line can move that product to a market at a price which the customer is willing to pay and at which the producer is willing to sell, the pipe line cannot be a success financially and cannot do the job for which it was intended in moving the products from the field to the market. With regard to gas, unfortunately, our thinking in this country on both sides of the house to a large degree has been based upon the acceptance of a purely emotional appeal without one whit of regard for the cold economic facts of mounting surpluses of gas in western Canada and the cold economics involved in*the setting up of a transport system or the economics of producing gas, transporting it and getting it to a market at a price which the customer is willing to pay. As a result of this emotionalism with regard to gas, we have now had in Canada seven long years of growing surpluses of gas in the west and continued indecision in the east. During those seven years we have seen oil pipe lines and the oil industry expand tremendously but in Canada gas has remained the one single resource of our country which has been so badly mishandled by politics that that resource still remains shut in. It is a resource whose present worth, having regard

to proved reserves today, is something over $2 billion at the well-head and is a resource which could become the basis for a great industrial future for all provinces of western Canada and a great stimulus to industrial development in eastern Canada as well. That resource is still shut in.

We have had some changes in thinking. At long last we now have approval, after about seven years, of the first gas line from western Canada across the Rocky mountains to the Pacific coast. The plan that has finally been evolved is a compromise one and it is not the most economic plan by any means. However, it is one which will at least this year finally get gas rolling. That compromise plan involves a high degree of co-operation between this country and our neighbour to the south. That co-operation is essential because Canada's west coast cannot possibly provide a market big enough to support any kind of pipe line from anywhere unless the biggest part of the pipe line through-put goes into United States markets. That is enough to be said for the system in the west. At last we shall get a pipe line built there now. I might say that had the government two or three years ago recognized the problems that are in the way, and had they recognized the solid basis for the fears entertained across the border that because of Canada's exportation act and the restrictions in that act there could be no trust on the part of United States consumers as to security of either flow or price of gas from Canada, the situation would be different. Had the government recognized those facts two or three years ago and had they brought down in 1953 or 1954 the amendments to the export act which were finally brought down in the spring of 1955, the pipe line to the west coast would today be in operation on a sounder and more economic basis, in terms of values of gas, for the governments of British Columbia and Alberta, and the producers of gas in the northern parts of those two provinces and on better terms for the consumers in British Columbia.

We now come to the pressing problem of what to do about a gas pipe line eastward. As this house knows, Mr. Speaker, several years ago-in 1952, as a matter of fact-I urged this house to accept an international arrangement which would involve United States gas flowing into eastern Canada and western Canadian gas moving across the prairies and southward into the midwestern states. That plan has now been accepted in part under the new compromise arrangement between Trans-Canada Pipe Lines Limited and Tennessee Gas Transmission Company. Part of this plan will involve a decision in this house in the next few weeks. In 1952

The Address-Mr. Nickle also-and many times since then-I tried to establish the fact that the all-Canadian pipe line, which all of us would like to see if it were feasible, was in fact a policy that could not be carried out without subsidies; that it could not stand on its own economic feet; that it was not financially feasible because banks, insurance companies and investors are not stupid enough to put their money into a proposition when they know they are going to lose. In any case, we finally reached the stage in January of last year when the allCanadian pipe line concept fell flat on its face after it applied to the Canadian government for a guarantee of its bonds in order to allow a private company to carry out not what the pipe line company wanted to do but what the government said it had to do, namely to build an all-Canadian line before it could sell any gas in the United States market which was needed to help support the line. You know what happened to the bond guarantee. It was turned down. Incidentally, I was most happy to see it turned down. But that occurrence opened up a new problem. What could be an alternative? One would be to defer the all-Canadian line-in other words a line through a thousand miles of northern Ontario -until such time as eastern Canada's markets had been built up sufficiently to support such a project and in the meantime to allow western Canada gas to move into nearby United States markets and build up eastern Canadian markets with gas through existing pipe lines reaching from the southern United States. As I mentioned earlier, that plan has been accepted but the government, supported by the Ontario government, has ruled that, along with those two features of export to the United States from western Canada and import to eastern Canada from the United States, must come at the same time-before it is economically feasible or privately financially feasible-the northern Ontario line. That brings us up against the cold fact that there is a price tag on nationalism.

If we want this northern Ontario gas line now instead of when the north or eastern Canada can support it, then somebody must pay for it, and that is the proposition which the government of Ontario and the government of Canada have now brought forward. They plan to build this northern Ontario line as a joint government enterprise and to lease it to a private company, namely, Trans-Canada, who would carry out the more economic phase of the over-all plan.

There are some here and elsewhere who would like still to maintain their previous position of an all-Canadian project and get themselves off the hook by making this whole pipe line project from Alberta to Quebec a socialized project. I will comment a little

The Address-Mr. Nickle further on that in a moment. But the present proposal of Tennessee Transmission and the Trans-Canada Pipe Lines, coupled with the government part of the northern Ontario line, is one that can go ahead this spring only if the federal power commission of the United States will approve the import of Canadian gas into the midwest and the export of United States gas to Ontario and Quebec. Of course, most hon. members know that hearings before the federal power commission at Washington are due to start later this month. Quite frankly, the odds are against the early approval of that proposition by the federal power commission. The chances of approval were a great deal better a year ago; they were far better two or three years ago than they are now.

One of the prices that we have to pay for our indecision and our dilly-dallying around with this problem for several years in the building up of a set of circumstances, resentments and other things in the United States, which are prejudicing our chances now of quickly cracking the ice to get the markets which were ours for the asking not too long ago.

The great opposition to the importation of gas to the midwest stems from a group of United States pipe line companies who are already marketing United States gas in the area into which Tennessee Transmission would contemplate exporting Canadian gas. That opposition is led by Northern Natural Gas Company which supplies Minneapolis and other parts of the midwest. Northern, as many hon. members know, is a company which for a number of years has been a prime supporter of importing gas from Canada, and until the collapse of Trans-Canada's original project a year ago, Northern were intending to be the distributor, through their existing system, of Canadian gas in the United States midwest. They have now been frozen out. They are the company which had hopes of getting Canadian gas. They made a great deal of effort to get Canadian gas. They now dislike seeing somebody else bring the same product in to compete in their markets.

Some other utility companies farther south than Minneapolis take the attitude that at this stage they do not want to see a fresh ;ompetitor supplying the same product into areas in which they are now bringing United States gas, and in which they have a very leavy financial investment. I would suggest ;hat that poses another problem. At least, it brings up another possible solution to the ix in which we are now.

May I summarize? We have ahead of us n this parliament some important crises that

will have to be solved if we are to resolve this very serious gas problem in the future. We can accept the present compromise plan which this government has worked out in co-operation with the Ontario government, Trans-Canada and Tennessee Transmission; but the odds are against approval of that over-all plan in its present form by the United States federal power commission in time to start any construction in 1956.

In lieu of the present plan, we can urge on the government that the present plan be modified in the United States section by bringing in as participants with Tennessee Transmission in the line of connection at Emerson, Manitoba, where the Canadian gas would move south to the United States, the existing gas utility companies of the United States midwest. If we did that, we would perhaps eliminate their objections before the federal power commission. In other words, their position might then be not one of opposing a new competitor but rather of supporting a new supplementary supplier of gas from Canada, in which they themselves had a financial stake. It is a suggestion that carries a lot of merit. It is the only hope I see of getting any pipe line east from Manitoba started in 1956.

Then, we come to a third general proposition, and that would be to defer construction of the northern Ontario section of the line, that is, the government section, and redesign the United States territory links of this east-west pipe-line system. In other words, build a line from Alberta to Ontario, following roughly along the line of the route of the existing oil pipe line between Alberta and Ontario, which incidentally, is the lowest economic route and would not cross the areas in the United States now being served by existing United States pipe lines. It would reach into a part of the United States which does not now have natural gas, but is anxious to have it, and could absorb many times the amount of gas that could be marketed at this time in northern Ontario.

If that were done, then the northern Ontario line would be built a few years hence, at the time of the looping stage of the pipe line system. As hon. members know, the capacity of a line is limited by the size of the original pipe line. A 30-inch diameter pipe is now planned for northern Ontario. In a few years that line would have to be paralleled by another large-diameter pipe line to meet the growing market needs. But that parallel line or loop would not necessarily have to be laid along the same section of territory. It could go north of lake Superior, and at that time step into the eastern Canadian market built up in advance

for it, and could be supported without government help, as is the case with the present uneconomic pipe line in northern Ontario.

I might say that if we redesigned the United States section of the line there would still be no hope of getting any line built in 1956.

The fourth proposal which is made by some people is that we socialize this whole project, socialize Trans-Canada and build this whole system as a government operation from Alberta to Quebec. There are some who think that is an easy way out, and there are others who believe as a matter of faith that government ownership of projects such as these are in the best interests of the country. I want to say only one thing, namely, that an over-all government-owned pipe line would impose upon Canada a whole new set of problems. Gas is simply one of several fuels. To socialize the pipe line would bring Canada face to face with the problem of how to satisfy the coal miner, how to satisfy the coal operator, how to satisfy the railway worker who is transporting coal or fuel oil, how to satisfy the fuel oil dealer in Canada and those who are distributing or are in any way concerned with the production, transportation or marketing of these competing fuels.

If we socialize one fuel, we may be forced through necessity to socialize them all. In lieu of socializing the others we may be forced by necessity into setting up a new system to subsidize the low, free enterprise fuels to compete with the socialized ones. That is one of the problems we shall be faced with in Canada if we socialize the gas line.

The other problem is a very real one. If we socialized the gas line in Canada we would find ourselves face to face with a very strong new opponent to the import of Canadian gas into the United States. This new opponent would be the United States coal industry who, as a matter of course, opposes all gas and oil pipe lines in the United States, whether they are entirely domestic or international. If we gave the United States coal industry new arguments, if we gave the free enterprise United States coal industry, the free enterprise United States railway system, the free enterprise United States oil industry who are now being asked to compete in their home market with socialized fuel from another country, new arguments, I am very much afraid it would take years to break through the barrier of that United States border in order to get outlets we desperately need for surplus western Canadian fuel.