Order.

Mr. Speaker:

It seems to me that if the hon. member for Humboldt-Melfort had put a question to which he claims he has not received an answer he was entitled to ask the minister if he had any further information to give him. The minister has indicated that he is not in agreement with the hon. gentleman as to the meaning of certain terms in the hon. member's question, and which appear in the minister's reply. Where do we go from here with regard to the rule that a reply to a question is not debatable?

Mr. Bryson:

May I ask a supplementary question, sir? Was this man employed by the minister's department in any year or years prior to 1956 as an inspector of P.F.A.A. work?

Mr. Gardiner:

He has been employed

exactly as the answer says. Mr. Marshall was one of many who were called upon as needed to do inspection work on a daily rate basis, and he had been employed on that basis from time to time for years and on no other.

Mr. Macdonnell:

Mr. Chairman, this matter was fully discussed during the resolution stage in this chamber, and the bill went before the banking and commerce committee where it was further discussed, and I do not propose to go round the course again.

There are one or two brief comments I wish to make. I indicated at the resolution stage that it seemed clear that this was a step, although a very small one, in the right direction, and, as I say, 1 do not propose to add to that.

I do want, however, to put very briefly on the record one point which arose in the banking and commerce committee and which I

thought was important, and that had to do with the position of crown corporations. There was a great deal said about the position of crown corporations, and the minister's parliamentary assistant made a very frank statement on that subject which I wish to put very briefly on the record. There had been questions asked by the hon. member for St. Paul's (Mr. Michener) and the hon. member for Eglinton (Mr. Fleming) with regard to the practice followed by crown corporations, and questions were asked as to whether there had been a directive from the minister for use by his department and by the crown corporations, and the answer given by the parliamentary assistant at page A12 of the reporter's unpublished transcript was:

I do not know that it was ever a formal directive. I think it was, rather, an informal instruction.

Then there was a later reference to this question of a directive or instruction. I myself asked this question of the parliamentary assistant at page A13 of these notes:

Can we take it from this that the situation-as between the minister and the corporations-is being reviewed in the sense that a crown corporation should behave as the department is behaving in respect to crown property which is owned, controlled and used for government purposes?

Mr. Benidickson:

Yes. that was the point which I made. Because when we-

That is, the Department of Finance.

-are doing that on normal federal government property, it is natural that the department would now look again at the practices of the crown corporations. But it is embarrassed by the different roles that these corporations have, and their different contributions to the communities in which they have property.

I think that is understood. The parliamentary assistant pointed out that there were, in certain cases, statutory provisions regarding certain corporations with regard to taxes. That is true, I think, in certain respects, with regard to the railways. The hon. member for St. Paul's (Mr. Michener) then said:

Mr. Chairman, I would like to make a further point. As this is the time of year when many municipalities are dealing with taxes, it seems to me that it would be desirable for the Department of Finance-which gave a directive, instructions, or made a suggestion some years ago as a result of which the corporations have been negotiating taxes in the intervening years-while waiting for a full review, that they put the principle of this bill before the boards of directors of these corporations, or the managers of the agencies, so that when they negotiate this year's tax arrangements with their various municipalities,'they will come as near as they can, in respect of the allowances that Mr. Benidickson has referred to, to the position the crown is properly taking in respect to this bill. It seems to me that that would solve a lot of the problems arising out of the bill.

I have put that on the record, Mr. Chairman, because it seems to me that this was a very practical collateral result from the bill. I was glad it took place; and Mr. Michener's

suggestion as to bringing it to the attention of the municipalities and trying to put them in a position as soon as possible to take whatever advantage they can of it seems to me a practical one, and I want to get it on the record, too.

As to the bill itself, it was discussed at length. It mainly had to do with technical points with regard to the incidence of taxation. Mr. Burns, the representative of the department, indicated to us that in his administrative work he had little difficulty with the municipalities. I hope that will continue to be the case.

Mr. Hamilton (York West):

Mr. Chairman, I realize that it is almost impossible to say anything in connection with this legislation without repeating what has been said several times before. On the other hand, I do not think that we need to make any apologies in that regard because it is only by the continual pounding that has come from this side of the house that we have seen some gradual improvement in connection with the taxation situation that faces municipal governments in the country.

I think that we should say first of all that this legislation today is far from solving all the problems that face municipalities. As a matter of fact, as far as it goes, it is good legislation; but in most respects it will probably help those municipalities which, on a comparative basis, need it least. By that I mean that there are a large number of municipalities which are at present undergoing rapid expansion. In most cases they have little government property from which they can expect additional revenue as a result of this legislation. I would think for the most part that those which are of a more static nature, with larger type buildings, are the ones that will benefit most.

I mentioned the question of development because, of course, unless there is continuous development throughout all municipalities there will be a drying up of the tax revenue source for this government as well as for all other governments. As a matter of fact, I am reminded today that this action is similar to what the physicians are complaining about now in connection with tranquilizer drugs. In a report from Montreal dated March 5 and appearing in this morning's Globe and Mail I noted this statement:

A Manitoba doctor today suggested that medical men may be giving patients too many tranquilizer pills and that a pill in many cases is not as good as a bit of understanding.

Of course, I think that is the type of treatment that the municipalities are getting in this legislation. This is the type of legislation where we say to them, "We will give you a few dollars here, and for gosh sakes go away 82715-123

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and don't bother us for a while". They are not going to be able to go away because, as I say, their problems are multiplying with the development of the country. I might say as well that their problems are multiplying especially at this time because of an indiscriminate application of the tight-money policy to all borrowers. The Toronto Star Weekly in an editorial of October 27 of last year, referring to criticism made by the premier of New Brunswick, had this to say:

Mr. Flemming's criticism is that the tight money policy fails to distinguish between the special economic needs of the various sections of the country. As he puts it, "it is about as sensible as a man with ten children feeding them all castor oil regardless of their individual needs".

The same editorial goes on to say this:

Mr. Frost feels the tight money policy disregards the essential nature of provincial and municipal development. "The provinces and the municipalities," he declares, "are the right arm of this country's development; cut off the right arm and then see what you are left with."

We face this situation in connection with municipal requirements of funds for developing these services which are needed for an ever-increasing number of people coming into the country. The municipality is caught in a very tight squeeze. It is required to provide all these facilities and at the same time it just does not have the revenue source to take care of the job.

Mr. Hunter:

Where is the relevancy of all this?

Mr. Hamilton (York West):

Mr. Chairman, I think the hon. member for Parkdale can be convinced of its relevancy. When he gets his municipal tax bill, and he happens to be a constituent of mine, he will be more sure that what I am saying is relevant.

The Minister of Finance (Mr. Harris) said today that he was quite sure that 100,000 homes would be built if the Minister of Public Works (Mr. Winters) had said so. Those homes will be built, Mr. Chairman, if the money is available to builders and if the municipalities can supply the services for those homes. In an article from Montreal which appeared in the Ottawa Citizen of January 10 I notice this statement:

Unless the federal government loosens up on mortgage money, Canadian home builders are facing a construction slump this year which may drop home construction as much as 50 per cent below the 1956 peak of close to 135,000 completed dwellings.

I suppose the hon. member for Parkdale says, "What connection is there in this quotation?" What I say is this. If these people do not get the funds required to build the homes, then we will have it working out that the municipality will be having to take care of the additional people

Municipal Grants Act

without the tax source of the additional homes which ordinarily support the school services and the various services required.

It seems to me that here is a definite opportunity to do something about the tight-money policy without using controls. It may be that we feel that a great many of these restrictions are necessary. But surely they are not necessary in connection with municipal debentures and the borrowing for services of this type. For every dollar that we can see that the municipalities get, it means one less dollar for which they are going out into the borrowing market. They certainly can ill afford to pay the type of interest that is asked at the present time. I must say that I was amazed when I heard the Minister of Finance a short while back saying something to this effect, "Well, of course, if it were something which was really essential, they would pay the additional interest rate but if it were of a nature that it was not so essential, then of course they would not build it". Mr. Chairman, they have no choice. These things must be built. Hence I say that until the government is prepared to sit down on a sincere basis with the provinces and divide up the tax base properly, the municipalities are going to be caught in this tight credit squeeze that we have at the present time and they have no way to go.

I have heard people say, "Well, things are all right in Ontario. We have had a new budget and we have raised an additional $100 million. That $100 million is going to close the gap and everything is all right". What I say is this. Any hon. member who has read the remarks made by the member for Riverdale in the local legislature-I refer to Mr. Macaulay in the provincial house- will see that this amount of money does not solve the problem of the municipalities.

Mr. Benidickson:

Mr. Chairman, surely my hon. friend's remarks are not in order on this particular bill. They may be appropriate when we come to the budget or on the estimates of the Minister of Finance. But this is a bill which is purporting to give the municipalities in ex gratia payments the equivalent of full taxes on federal property. Surely all this reference to dominion-provincial relations and in turn the relations between the municipalities and the province is out of order on this bill.

The Chairman:

Order. I must say I agree entirely with the point of order raised by the parliamentary assistant. I have been allowing the hon. member to lay the groundwork for his remarks, but I do think that he should begin now to discuss this bill rather than discuss collateral matters. May

I point out that in committee of the whole we are governed by the strict rule of relevancy. My own opinion has been that these general discussions are not permissible on clause one of the bill, although some members disagree with me on that point. It would require an expression of the house on appeal, I suppose, to decide that because from the precedents one could make a pretty good case in either direction.

However, I am not going to develop that thought now. I am merely going to ask the hon. member to devote his remarks to this bill which is, after all, very confining and refers to grants to municipalities by the federal government.

Mr. Macdonnell:

Could I offer one remark? So far as the general discussion under clause one is concerned, I thought the principle was well understood. It was only for that reason I did not rise while the Speaker was in the chair. With regard to the other point, as to the relevancy of the remarks of the hon. member for York West, the same argument was made to me when I was speaking on this and the answer I made at that time was that surely one could not establish the position of the municipality without showing its relationship to the other situation. I think at that time my suggestion was accepted.

Mr. Hamilton (York West):

First of all, I appreciate the help from the hon. member for Greenwood. I might say to you, sir, that you have not only allowed me to lay the groundwork for my remarks but you have allowed me to make almost all the remarks I was going to make. This may indicate the ineffectiveness with which I have been hammering away at this point. On the other hand, I have no apology for it. I shall continue this line of attack in connection with the situation which faces the municipalities. Surely in connection with discussing the general content of this bill, which I understand is my privilege under the first clause, I am entitled to say that I do not think the government is going nearly far enough in this legislation which is before us. Surely, I am also permitted to go the additional step and say how I think they might have handled this particular situation to work out a more permanent solution.

I will only say one or two things in conclusion. I would hope that proper attention might be paid to the situation that faces the municipalities in Ontario. This is one of the great developing provinces of the country, yet when I look at the amount of money which is collected by this government and the proportionate amount which is returned to Ontario, it actually staggers me. I find that the federal government collects $1,100

million in corporation taxes and Ontario contributes about half of that amount. We get back only $127 million. When we talk about personal income tax-

Mr. Benidickson:

I must rise on a point of order again. If my hon. friend will look at the explanatory note to the bill, and from his remarks I think perhaps he has not, he will find the main purpose of the bill is to increase grants on federal property to pay the full tax equivalent. He suggests he should be entitled to speak about the things that this bill does not do. Surely, he must still relate that to grants in lieu of taxes. Now, the bill proposes to pay the full tax equivalent. Is my hon. friend suggesting that we should discuss whether or not we pay more than 100 per cent of full taxes-more than would be paid by anybody else on that property value? Surely that is the only discussion relevant to this bill.

Mr. Hamilton (York West):

I am suggesting, sir, we will never have a solution to the problem which this bill is apparently designed to cover unless we are prepared to use some other method of working out a solution. In concluding I will say this, that the same remarks I have made on the tax base covering corporation taxes could be made on the whole tax field, personal and otherwise. Until such time as we have a conference in good faith, then I say we are going very quickly down the road to cut off our own sources of tax revenue right here in Ottawa.

Mr. Gillis:

I know the subject matter to which the minister objected in so far as the last speaker's remarks were concerned is out of order. I wish it were not because I should like nothing better than to debate the issue of the amount of money that is taken from Ontario. In my judgment a large percentage of what Ontario claims by way of taxes is wealth that comes from the different provinces across this country. I should like to put on the record, item by item, the amount of money. Personally, I am firmly of the belief that a country like Canada, with its centralization, can only get equality in education or health or for municipalities, as well as the many other desirable social objectives for which most of us are aiming, by a redistribution of the wealth in the way it has been done under these provincial agreements. If the Ontario and Quebec members are not prepared to go along with that kind of thing, then the answer to our social and economic problems in this country is decentralization of industry or by paying taxes in the province from which you take the wealth.

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A large percentage of the wealth produced in British Columbia and a lot of the revenues of the main offices of corporations in Ontario and Quebec comes largely from other provinces, but the taxes are paid through the central office. This is equally true of succession duties. Fortunes are amassed in the central part of Canada because of centralization. The taxes are collected there, and I think if you are going to attempt to redistribute these moneys as evenly as possible, the dominion-provincial agreement is the only way it can be done. Otherwise, you have to start revising your economy by decentralization of industry and paying taxes where the wealth is produced. At any rate, I know I am out of order in saying that but the hon. member provoked it. It is a subject about which I feel pretty strongly. Sometime we may get into a real discussion on the subject when it is in order and we may be able to sort out some of the fallacies that are thrown around from time to time in statements such as the one which provoked me to get up at this time.

The bill itself has only one objective and that is to try to provide more assistance for the municipalities in the matter of the taxation of crown property. It is an improvement over what we had but it certainly does not answer the problem of placing the municipality in a financial position to take care of its responsibility. However, that is another subject and I do not think it comes within the purview of this bill. This bill is an improvement over what we had. There are some questions I should like to ask later on the clauses but I only rose now to give you that outburst because it was provoked by my hon. friend.

Mr. Hahn:

Mr. Chairman, it is not my intention to become involved in a discussion of dominion-provincial relations. Unfortunately the hon. gentlemen who have just taken their seats did not see fit to do so during the debate on the bill a year ago.