March 21, 1957

CCF

Thomas Speakman Barnett

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

Mr. Barnett:

All was grand and fine. I am drawing this to the attention of the Minister of Finance because, as far as I am concerned, in British Columbia we have a situation at the present time that illustrates better than the situation in any other part of Canada some of the things that my colleague, the member for Nanaimo, was trying to drive home in his speech when he was pointing out what happens when we attempt an over-expansion in capital expenditures.

As I look forward into the vistas of the future in Wenner-Gren land I can see this great premier of this province setting out on a monorail which leads away through the future right past the north pole and right on to the moon, and in its trail is a continuous expansion program of multi-billion dollar projects. That is the sort of thing that the Hon. W. A. C. Bennett talks about when he is speaking as the premier of this newly-named province. Of course, when he is talking in another capacity as the minister of finance of the province-

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SC

Alexander Bell Patterson

Social Credit

Mr. Patterson:

You have been reading Barry Mather.

The Budget-Mr. Barnett

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CCF

Thomas Speakman Barnett

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

Mr. Barneti:

I may say I find Barry Mather better reading than this budget speech of the Hon. W. A. C. Bennett. We have some unpleasant responsibilities as members of parliament in the reading we have to do. As I was saying, Mr. Bennett also made a budget speech not long ago when he said:

British Columbia can be proud of her achievements in 1956.

And again:

Over one billion dollars was invested in the construction of new plants and in the expansion of existing ones.

Again:

-and that our population rose to a total of some 1,398,000. If this is so, an increase of 20 per cent has been experienced since 1951, which is greater than that of any other province in Canada.

Then on page 6:

Also of deep concern are the consequences that could result from current national credit policies. Rising interest rates can only go so far; after that they either compel the shelving or the cancellation of projects related to economic expansion.

Under normal conditions any slackening in industrial expansion is balanced by a rise in capital expenditure by provincial and local governments. The backlog of that type of expenditure in British Columbia is so great that normally expenditures of this kind would provide constant buoyancy to our provincial economy for many years to come.

And a little later on:

In British Columbia, where economic growth in relation to ultimate potential is still fractionally small, we are concerned mostly with the long-term factors of a continuing growth. Our natural resources are so great and varied as normally to attract large and highly diversified kinds of private enterprise. We know from experience that such enterprise, by its own accord, periodically takes the steps necessary for a consolidation of gains. We, therefore, become justly apprehensive of artificial distortions, and short-term consideration which may either retard of prevent economic growth.

That might all sound very tine but I think the $1,000 million investment which Mr. Bennett talks about should be related to some of the matters which have been brought up in this house by the hon. member for Nanaimo, who suggested that of the total expansion program since 1949 of $24 billion, a total of $18 billion had come from the retained earnings of corporations.

As everyone in this house realizes, one of the main factors in the economy of British Columbia is the forest products industry. I come from an area on the coast of the province which is one of the great lumber and forest products producing areas. A good many millions of this billion dollar expansion have been spent in that area and by and large I am quite ready to admit that that expansion has been welcomed by a great many people who live there. Up to a point it has been a good thing, but a situation appears to be developing which some of us have been concerned about for quite a long time.

I am reminded of a headline which appeared not long ago in the Financial Times which indicated the Minister of Trade and Commerce (Mr. Howe) saying to the lumbermen: Get back to normal. In my opinion that headline was a number of years too late. The booming economy upon which Mr. Bennett and his supporters have been riding, as on a bubble, may not be too secure and I think Mr. Bennett is becoming a little jittery. One of these days he will have to think about getting back to normal.

The Minister of Trade and Commerce should have told the lumbermen back in the booming period of the second world war to remain normal as far as their prices were concerned. If we had in the field of lumber exports something similar to the Canadian wheat agreement with Great Britain the situation which some lumbermen of British Columbia fear is about to happen might not happen. I shall not go into the details, but by way of illustration I would like to point out that the last table of wholesale price indexes, contained in the weekly supplement to the Canadian Statistical Review of March 12, 1957, indicates the average wholesale price index as standing at 229.4 compared with 100 for 1935-39, whereas the index for lumber and timber stands at 441.8. As far as I can see, there is only one other item in the index higher than that and that is scrap iron and steel, which stands at 447.4.

It might be noted that British Columbia produces something like three-quarters of the lumber produced in Canada, and that may have something to do with the situation which is giving concern to the Minister of Finance and those like myself who realize that there are inflationary pressures. This has created some concern in the mind of the minister of finance of British Columbia even though he is not prepared to admit it.

As far as he can see, the only solution seems to be to go on spending and spending in the field of capital construction without giving any thought to what may happen if that capital spending should stop. When he talks about industry adjusting from time to time and taking the steps necessary for the consolidation of gains, the only meaning I can take from that is that sooner or later industry is going to stop this rapid expansion of plant and equipment.

Once that is done, then some of these thousands of people who have been attracted to our province may not be such welcome citizens as they are at the present time.

I notice a dispatch in the press-hon. members may have noticed it in the eastern papers .-in which the secretary of the British Columbia Lumbermen's Association is reported to have been painting a rather gloomy

picture of the prospects in the lumber market for the year that lies ahead. I think that anyone who is familiar with the situation in British Columbia knows that this is a time of year when conditions quite often become gloomy in the lumber industry. Another headline in last Tuesday's Vancouver daily Province-the same paper which carried this report from the secretary of the British Columbia Lumbermen's Association-said that the negotiations which are going on between the union and the bargaining organization of the big employers were increasing in tempo.

But even if one were to discount the propaganda element in stories of the present decline of the lumber market, this situation is one which some of us who have worked in the lumber industry have been afraid might come one of these days. If one is working for one of these large corporations, one is not supposed to worry about anything more than whether or not there is going to be a large wage increase as a result of the next negotiations. But there are a good many workers in industry who are concerned about the broader picture of the welfare of the industry and who can, I think, understand that this process of having allowed our export production of the principal basic commodity of the province to rise to the figures indicated in this index of wholesale prices which has resulted in the large corporations being able to retain for expansion purposes tremendous profits of millions of dollars each year must, sooner or later, bring about a situation where these few large corporations are simply going to be expanding in an attempt to get a larger share of the existing market. Sooner or later this program of rapid capital expansion will have to come to an end, and when that happens, particularly if it should be that the existing market has temporarily or permanently declined, then our province is going to be in a very grave situation, and many thousands of workers who have been working at what, compared with the national average, are quite good wages, are no longer going to have that sort of job.

So, Mr. Speaker, I think the hon. member for Nanaimo, when he drew to the attention of the house and of the government the view that the real cause of these inflationary pressures is overspending in capital construction, was simply making a realistic appraisal of the situation as it exists, certainly, in the province from which he and I come.

From time to time we have the opportunity of seeing the reports of some of these large organizations which operate on the coast. The last report which has come to my attention is the annual report of Crown Zellerbach, Canada, Limited. This is one of the large and efficiently run corporations, part of whose

The Budget-Mr. Montgomery operations are in my constituency, which has been welding together the component parts of various former companies into an integrated forest products industry. The company has been undertaking a very substantial program of capital expansion, a large part of which is in one of the centres of my community, and I would like simply to bring to the attention of the house one or two figures drawn from this statement. The company's net income for 1956 was $1.32 per share on ordinary stock outstanding, on which they declared a dividend of 50 cents and retained 82 cents in the business. The company's total profit for the two years 1955 and 1956 was $19,810,450, of which they retained $15,870,266 in the business, and if we analyse the statements made in the other sections of the report we find that all of that money has been spent in additions to property. In this past year, according to this statement, that is, the year 1956, they spent on additions to property the sum of $23,630,611. And one can examine the statements of any of the other of these corporations and find the same thing taking place.

One of these large corporations in my area, which is conducted on an even larger scale, namely the MacMillan-Bloedel Corporation, has certainly been expanding out of retained earnings at a terrific rate over a period of a considerable number of years. I know that one can argue pro and con as to the effects that this is having on our economy, but I think what is going on at the present time in our basic forest products industry in British Columbia certainly bears out the thesis of inflationary danger that was put forward by my colleague the hon. member for Nanaimo when he opened the debate on behalf of the C.C.F. party in this house.

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PC

Gage Workman Montgomery

Progressive Conservative

Mr. G. W. Montgomery (Victoria-Carleton):

Mr. Speaker, I want to say a few words on this extraordinary budget, but before I do I must say I gathered from the speech by the hon. member for Colchester-Hants (Mr. Purdy)-I do not know whether I understood him correctly or not-that he was speaking in favour of Stanfield underwear.

I want to congratulate him on advertising that Nova Scotia product, which is very popular in Nova Scotia today.

I said that to my mind this was an extraordinary budget. I have read it once or twice, and it seems to me it tries to be a lot of things to a lot of people; the coating is very sweet, but I think the frosting is very thin. Before I forget it, in all fairness I think I should congratulate the minister upon his delivery of his address. His debonair manner at least gave the appearance that he knew what he was doing and I am sure

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LIB

Walter Edward Harris (Minister of Finance and Receiver General; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. Harris:

It depends on where you breathe.

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PC

Gage Workman Montgomery

Progressive Conservative

Mr. Montgomery:

That is certainly illuminating. There may be a great many concessions in it. But by the time the small business man employed a bookkeeper to work out the system in order to get the benefits, he would find that the expense of determining the amount of his saving would be far greater than the amount of that saving.

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?

An hon. Member:

It is just hocus-pocus.

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PC

Gage Workman Montgomery

Progressive Conservative

Mr. Montgomery:

It is just like the position of the poor mother. When she takes the family down to the shop, she gets a little bit off on tea, coffee, pop and bubble-gum; but what she saves there she is going to have to put in the parking meter in order to keep

The Budget-Mr. Montgomery her car from being tagged while she is shopping, and it will not any more than do it.

Laying all jokes aside, Mr. Speaker, I do not think there is too much happiness over this budget right in this house. In view of the increased cost of living, the decreased purchasing power of the savings of the people in such forms as insurance, investment, bonds and whatever you like, which have been considered to be safe over the years, the value of those savings has gone down, when you are considering the purchasing power of them now in comparison with the purchasing power of the money at the time they were purchased. No, Mr. Speaker, I think that this is not too much of a sunshiny budget.

I just want to pass on to another point. I do not want to take very much time; I will not take any more than I can help. However, I turn to the problems of the maritimes. These are not new. For years the difficult economic position of the maritimes has been recognized. I am going to recall to the minister tonight that it was recognized-and well recognized-by the Liberal party, the party that has formed this government. Back in 1949 and prior to that time they told us that if they came to power they would take steps to correct the policies that were compelling our people to accept less than the national average for our industry and labour; that the maritime freight rates would be adjusted; that policies would be instigated that would assist in supplying cheap electrical power. If any hon. member does not believe me, let him look up their own charter. It is there.

The people in the maritimes, being fairly honest and trusting citizens, accepted the Liberal party's word for it. They fairly well supported the Liberal party and assisted in putting them back in power. Then along came 1953 and again some other promises were made. But this time they had hooked on to them excuses. There was the Korean war. There was this and there was that, and they could not get anything started. The people in the maritimes then commenced to wonder. But at least they gave them another chance. But the sun commenced to come out and the clouds commenced to roll away in New Brunswick and when the people had the opportunity there, so great was their wrath that they turned out the old regime in the province. Things have commenced to look better. We cleaned house down there. We have a government with new ideas. It came out with honest, able and economic policies. Industry and agriculture have been revitalized. People are encouraged. Our standard of living is getting better. Our young people are more inclined to stay at home. It may be that the

The Budget-Mr. Montgomery members of this government in Ottawa who come from the maritimes will try to take some credit for that improvement. Very well. Go out and talk to your people. Let them decide who is going to get the credit.

This new look in New Brunswick and in the maritimes is more attributable to an able and energetic administration working for the advancement of the people of New Brunswick and of the maritimes in general than this government would like to admit. We have there a government that is respected by other provincial governments and it is making its influence felt throughout the nation. In view of that fact, is it any wonder that the people of Nova Scotia began to be restless? Having seen their sister province commence to prosper with new ideas and a new government, is it any wonder they did likewise when they had the opportunity? In addition to that, they had not forgotten that the promises of this government in 1948 and 1949 and again in 1953 were falling by the wayside. Nothing was being done by this government. Ottawa seemed to have two deaf ears to the pleas down there. I think now the handwriting is on the wall. I think that this government see it and are rushing out now, like a government in its last days, trying to do something to retrieve some of that support which they certainly have lost. I am not going to find fault with that attempt.

The Gordon report came out and it contained many recommendations; I refer to the preliminary part. I am not going to repeat the things that might have been left out. I prefer to take that report as I find it. Let us take hold of the best part of it and let us try to use it. What have this government done? They have taken hold of the maritime transportation part of it. They have given us a raise of 10 cents in freight assistance, and a promise. Oh, yes; there is a promise. They are giving us the promise that they will appoint a commission and go into this whole transportation problem. That is fine. The Minister of Agriculture (Mr. Gardiner) has given us $1.10 a ton on moving feed grain in from the west. That is fine. But it had to be pinched out of him in the face of an election. Then they came through with another promise, namely that they will connect up the hydro systems between Nova Scotia and New Brunswick.

Then it is said one of the ministers will be prepared to recommend to the government that they build thermal stations. This is good, and I am not condemning it. However, Mr. Speaker, I want to point out that in two elections the government has made promises which they never carried out and I do not think they can come back and fool

[Mr. Montgomery.)

the people of the maritime provinces by giving them 10 cents on one matter and $1.10 a ton on another, which is less than one-half a cent a pound and two promises which may or may not be carried out.

I say to this government that if they come back in power we are going to hold them to that. We do not want to hear any stories about the provincial government not agreeing to this or that. We need that power, whether it is thermal power or hydro power. There is no reason in the world why this government could not have assisted in the development of the St. John river and by so doing they could have saved the power users of New Brunswick considerable money, and without risking one cent. This would have been a great inducement for industry. I am not going any further with that now. I am just telling you that $2 million, two promises, a 10 cent piece and half a cent a pound is not good enough.

The next thing I want to take up is the tariff on potatoes. I do not think I need to say very much. I do want to remind this government and the Minister of Finance (Mr. Harris) in particular that this matter has not received the attention from this government that it should have received. It is in the same position as the maritime freight rates. The subject of freight rates has been brought to the attention of the government by the provincial governments, the maritime transportation commission, industry, private citizens and members of parliament. It was one of the first tasks I had when I came here. All you have to do is go back to Hansard of 1953 where I pointed out to this government that it was important they tackle the problem. Up until now no attention has been given to it. I have been talking, along with other members in this house, about the potato situation for three or four years. I am not going to take the time to read too much from Hansard about it, but in April 1955 the minister promised to refer this matter of the tariff on potatoes to the board. He promptly did so.

On April 18 he made a submission to the tariff board. On November 5, 1955 the tariff board completed its findings and filed a report with the government. This was about 16 months ago. At the time the minister said they were going to seriously consider the report. I asked a question of the minister as reported on page 6922 of Hansard for August 3, 1956. I said:

Will the minister make a statement indicating the government's intention with reference to tariffs on United States potatoes entering Canada on and after September 1 next.

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LIB

Walter Edward Harris (Minister of Finance and Receiver General; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. Harris:

I never refuse.

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PC

Gage Workman Montgomery

Progressive Conservative

Mr. Montgomery:

Here is what he said,

as reported at page 2400 of Hansard:

No, there is nothing further on that, and I do not think I ought to add anything at the moment. But I assure the house that as soon as I have information I will communicate it.

I asked him whether there was any further information and whether there were any negotiations. I would like the minister to tell us before this debate is over whether any negotiations are going on and whether they are proceeding satisfactorily?

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LIB

Walter Edward Harris (Minister of Finance and Receiver General; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. Harris:

Will the hon. member permit

me to tell him now, as part of his speech, or does he wish to go on?

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PC

Gage Workman Montgomery

Progressive Conservative

Mr. Montgomery:

I am about through. If

the minister would be good enough to answer at the end of my speech I would appreciate it because I want to finish to give another hon. member an opportunity to get started.

I just wish to end up by saying that this government has been dilatory not only to the potato producers but they have been dilatory to the maritime provinces. It is not something new that has taken place overnight. They have had this information from

The Budget-Mr. MacEachen members in this house for seven or eight years and now just before the election they come up with the promise of a little bit of money to boot. I am not condemning that. All I am saying is that that is a poor way for a government to act. I am saying that the government does not deserve the support of the people whom they have fooled for eight or nine years. Thank you.

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LIB

Allan Joseph MacEachen

Liberal

Mr. A. J. MacEachen (Inverness-Richmond):

Mr. Speaker, I listened with great interest to the hon. member who has just taken his seat and while I know he is a sincere advocate of the cause of the maritimes I want to assure the house that I certainly do not agree with his interpretation of the effect of this budget upon the maritime provinces and upon the province of Newfoundland. I believe that a serious study of the budget, and particularly of its application to the maritime provinces, shows that this budget is one of the most important budgets, if not the most important, in so far as the provinces of the eastern part of Canada are concerned.

I find that several hon. members in the official opposition find the budget very scant and disappointing in so far as its application to our provinces is concerned.

Yesterday the leader of the official opposition did my constituency the honour of appearing at a Progressive Conservative convention to nominate a candidate in that riding, and in the course of his remarks, as reported in the Chronicle-Herald, Mr. Diefenbaker charged that the Liberal government at Ottawa had ignored the demands of the Progressive Conservatives for 22 years, but suddenly, almost on the eve of the election, had dusted them off and presented them as their own. Therefore, I would conclude from this report of the remarks of the leader of the official opposition that he certainly takes paternity for the maritime proposals, and looks on these as proposals advocated by his own party, but finds fault with them only because they have been delayed.

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PC

Thomas Miller Bell

Progressive Conservative

Mr. Bell:

They do not go far enough.

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LIB

Allan Joseph MacEachen

Liberal

Mr. MacEachen:

I would suggest that

probably the Leader of the Opposition and some of his chief spokesmen in the house like the hon. member for Greenwood (Mr. Mac-donnell) and the hon. member for Eglinton (Mr. Fleming) should compare notes of their appreciation of this budget and its application to Nova Scotia. But, of course, the Leader of the Opposition had the opportunity to sense the feeling in the province of Nova Scotia, and he knew very well that the feeling in our province is that this is an important budget,

a budget that will have fundamental and far-reaching consequences on the economy of the province of Nova Scotia. Because he realized this fact he was desirous of keeping within the atmosphere that this budget created in the province of Nova Scotia and I agree with his appreciation of the application of this budget as I interpret his words as reported in the Halifax newspaper. But, as I would like to show in the course of my remarks, I do not share his view that the paternity of the proposals in this budget is the Progressive Conservative party because I believe an examination of both the transportation proposals and the proposals for power indicate that various sources, and in particular the federal government, on the power problem, initiated the studies which finally resulted in this proposal on power in the maritime provinces.

However, before dealing with the problem of transportation and the problem of power development in the Atlantic provinces, I just wish to say a word about the budget itself and its role in the modern political community.

In his statement on the budget the hon. member for Greenwood quoted Philip Snowden to the effect that if any government took half a crown more than it needed it was guilty of getting money under false pretences. Now, I consulted my historian friend from St. John's and he confirmed my view that Philip Snowden was a chancellor of the exchequer in the United Kingdom before the modern revolution, as I would term it, had occurred in public finance. I believe that if the hon. member seriously subscribes to this view of the labour chancellor of the exchequer he has overlooked perhaps a most important development in modern fiscal policy, namely, that a budget is not solely to collect taxes or to estimate expenditures and to balance the same, or nearly balance the same, but a budget is also a powerful instrument to determine the level of employment and income, and a very necessary instrument to control inflation and deflation.

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CCF

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

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

Mr. Knowles:

The hon. member means that is what it should do.

On motion of Mr. MacEachen the debate was adjourned.

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BUSINESS OF THE HOUSE

LIB

Walter Edward Harris (Minister of Finance and Receiver General; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. Harris:

We shall continue with this tomorrow.

Topic:   BUSINESS OF THE HOUSE
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At ten o'clock the house adjourned, without question put, pursuant to standing order.


March 21, 1957