November 11, 1957

UNITED NATIONS

ATTITUDE OF CANADIAN DELEGATION TOWARD INCREASE IN BUDGET


On the orders of the day:


LIB

James Garfield Gardiner

Liberal

Right Hon. J. G. Gardiner (Melville):

Mr. Speaker, in the first place I should like to welcome back from the FAO conference the Minister of Agriculture who is now in his seat-

Topic:   UNITED NATIONS
Subtopic:   ATTITUDE OF CANADIAN DELEGATION TOWARD INCREASE IN BUDGET
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?

Some hon. Members:

Hear, hear.

Topic:   UNITED NATIONS
Subtopic:   ATTITUDE OF CANADIAN DELEGATION TOWARD INCREASE IN BUDGET
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Mr, Gardiner:

-and I would like to ask him this question.

Topic:   UNITED NATIONS
Subtopic:   ATTITUDE OF CANADIAN DELEGATION TOWARD INCREASE IN BUDGET
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?

Some hon. Members:

Oh, oh.

Topic:   UNITED NATIONS
Subtopic:   ATTITUDE OF CANADIAN DELEGATION TOWARD INCREASE IN BUDGET
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LIB

James Garfield Gardiner

Liberal

Mr. Gardiner:

Did the Canadian delegation to the FAO conference support an increase of one-third in the FAO budget for the coming year? If not, why not?

Topic:   UNITED NATIONS
Subtopic:   ATTITUDE OF CANADIAN DELEGATION TOWARD INCREASE IN BUDGET
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PC

Douglas Scott Harkness (Minister of Agriculture)

Progressive Conservative

Hon. D. S. Harkness (Minister of Agriculture):

Mr. Speaker, I should like to thank the hon. member for Melville for his kind welcome back to the house. In regard to his question, the subject did not come up whilst I was there. The discussion of the budget for FAO, as I think the right hon. gentleman knows, actually takes place in one of the commissions which were to begin their meetings today. Therefore there was no discussion on that particular subject while I was in attendance.

Topic:   UNITED NATIONS
Subtopic:   ATTITUDE OF CANADIAN DELEGATION TOWARD INCREASE IN BUDGET
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LIB

Walter Adam Tucker

Liberal

Mr. W. A. Tucker (Rosthern):

May I ask a

supplementary question to that asked by the hon. member for Melville. Is the minister prepared to tell the house what is the attitude of the government toward the budget of FAO, or what instructions have been given by the government to our delegation to the meeting of that organization?

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PC

Douglas Scott Harkness (Minister of Agriculture)

Progressive Conservative

Mr. Harkness:

No, Mr. Speaker, I am not prepared to do that at this time.

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Subtopic:   ATTITUDE OF CANADIAN DELEGATION TOWARD INCREASE IN BUDGET
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LIB

Walter Adam Tucker

Liberal

Mr. Tucker:

I should like to ask the Minister of Agriculture another supplementary question. Did he not take some position with regard to the budget of FAO when he spoke at the conference of that organization which he attended?

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PC

Douglas Scott Harkness (Minister of Agriculture)

Progressive Conservative

Mr. Harkness:

Mr. Speaker, what I did in speaking at FAO was to indicate what I thought and think is the necessity of FAO funds being spent in the places and in the ways in which they are most urgently required and can do the most good. It seemed to me that some of the proposals in the budget submitted by the director general were not proposals which would accomplish that purpose.

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CANADIAN NATIONAL STEAMSHIPS

REPORTED TRANSFER OF EIGHT VESSELS TO FOREIGN REGISTRY


On the orders of the day:


LIB

Lionel Chevrier (Official Opposition House Leader; Liberal Party House Leader)

Liberal

Hon. Lionel Chevrier (Laurier):

Mr. Speaker, may I ask the Minister of Transport this question. Is it a fact that the Canadian National Steamships have taken a decision to transfer eight of their vessels on the West Indies run to foreign registry, and will the government permit the transfer of these ships from Canadian to Trinidad registry?

Topic:   CANADIAN NATIONAL STEAMSHIPS
Subtopic:   REPORTED TRANSFER OF EIGHT VESSELS TO FOREIGN REGISTRY
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PC

George Harris Hees (Minister of Transport)

Progressive Conservative

Hon. George H. Hees (Minister of Transport):

Mr. Speaker, I wish to thank the hon. member for his courtesy in giving me notice of his intention to ask this question. I had intended to make a statement on this important subject, and my statement will cover the answer to his questions.

Mr. Speaker, subsidized steamship service between Canada and the West Indies dates from 1892. The service has been operated under different conditions at different times, but since 1928 it has been performed by the Canadian National (West Indies) Steamships, Limited, a company incorporated for the purpose of carrying out Canada's part of the

1926 West Indies trade agreement.

In 1952 the Canadian government gave notice that it intended to withdraw two of the passenger boats from the service. As the remaining three motor ships and the five steamers could not meet the requirements of the agreement, the various West Indies governments withdrew their subsidies, and since then the service has not been bound by trade agreement requirements.

The service has had a long record of operating deficits. Only the years 1941 to 1948 resulted in any profit. Subsidies granted by the government of Canada approximated $6 million between 1892 and 1927, and since

1927 the government has assumed operating

Inquiries of the Ministry deficits totalling an additional $7 million. As hon. members will recall, it was because of this situation that the operations of the company were carefully studied by an interdepartmental committee in 1955.

Having regard to the fact that Canada's trade with the colonies amounted to $34 million exports and $35.5 million imports; that the company's management was making a creditable effort to develop additional traffic; that a recapitalization, whereby the government took equity stock in exchange for bonds, would reduce fixed charges by $260,000 per year; and that the long-term prospects of service indicated the possible attainment of a break-even financial position, the then government decided on continuance of the service for a period of five years, after which time the results would be reviewed to see if further continuation was justified.

It is against this background that I wish to refer to recent wage demands made upon the company. On September 10, 1956, the seafarers' international union, which is the bargaining agent for the 220 unlicensed personnel employed on the eight vessels, submitted demands for basic wage increases averaging 50 per cent; an increase in overtime rates; a reduction in hours of work at sea from 48 to 40 hours per week; payment for two additional statutory holidays; the establishment of a health and welfare plan, and other items. These demands, if granted, would mean a total increase of 80 per cent in payroll costs, or $450,000 per year, almost all of which would have to be borne by the taxpayers.

The company made a counter-proposal offering an 8 per cent increase in basic wages; an increase of 25 cents per hour in overtime rates; payment for one additional statutory holiday; an additional payment of 10 cents per working day to each employee in lieu of a health and welfare plan; and certain other concessions, all conditional upon a two-year agreement. This offer was rejected by the union.

On September 27, 1956, the then minister of labour appointed a conciliation officer, but his efforts failed to effect a settlement.

On December 28 a conciliation board was established and hearings commenced on January 7,.l$f>7. The union again proposed its original demands. After lengthy deliberation the majority report of the board recommended, inter alia, a 10 her cent' increase in wages; an increase of 30 cents per hour in overtime rates; 10 cents per day in lieu of a health and 1 welfare plan, and a ' two-year agreement. The company accepted the conciliation board's report but it was rejected by the union, and the men were called out on strike on July 4.

Various attempts to settle the strike, including personal intervention by the present Minister of Labour, produced no results during the summer and early autumn. In an effort to terminate the strike the company proposed a further meeting with the union. This meeting was held on October 15 in line with the settlement recently reached on Canadian National coastal services in Newfoundland. The company offered the union a 15 per cent wage increase; a 15 per cent increase in overtime rates and a two-year agreement from date of signing, together with other items recommended by the board of conciliation. Notwithstanding that the company offered the union an increase in wages 50 per cent greater than that recommended in the conciliation board's majority report, the union found the offer unacceptable and the company was obliged to withdraw it.

As of last Thursday the strike had been going on for 127 days; and has already cost close to half a million dollars. With winter rapidly approaching and consequently serious implications for the ships immobilized in Montreal harbour, it became absolutely imperative that a final effort be made to settle the strike immediately. Therefore on Thursday the company sent a telegram to the union offering to effect a settlement on the basis of the October 15 proposal and advising that this offer would be left open until twelve o'clock noon on Saturday, November 9. In view of the element of urgency attending the situation the company advised the union that, failing notification that an agreement to this effect would be signed, the management would have no alternative but to transfer the registry of the vessels from Canada.

I sincerely regret that the union did not see fit to accept the company's offer, an offer which I would remind hon. members went considerably beyond the recommendations of the board of conciliation.

On Saturday the company took steps to initiate transfer of the ships from Canadian registry to registry in Trinidad. It is the opinion of the government that under present circumstances, and having regard to Canada's desire to aid and assist the proposed federation of the West Indies, the service can best be administered under this arrangement. I mdy say that very earnest and careful consideration has been given to all possible alternatives to actual transfer, but they raise such serious disadvantages of one kind or another as to render them unacceptable to the government. At the same time the government was reluctant, in the interests of Canada-West Indies trade and relations, to permit outright abandonment of the service.

With respect to any suggestion that increased costs could be assumed by the government, I might remind hon. members that over the years the government has borne a substantial share of the costs of this service, and was prepared to assume the additional cost which would have resulted if the union had agreed to settlement on the basis of the company's final offer. Even this offer, according to the company estimates, would have resulted in an increase in operating costs approaching $200,000 and a return to a deficit operation which would be in the neighbourhood of $200,000, to be borne by the taxpayers. Beyond this we were not prepared to go, in view of the record I have mentioned and our belief that we would not be justified in placing the burden of heavier operating losses on the Canadian taxpayers.

I fully realize that with the transfer of these eight vessels to registry in Trinidad there will remain on Canadian deep sea registry only ten cargo ships and eight tankers. These remaining vessels, I should point out, are mostly engaged for a large part of the year in our coasting trade or are operated by subsidiaries of industrial firms whose business provides them with captive cargoes. In either case they are less affected by foreign flag competition.

This transfer is only one of a long series of sales and transfers of Canadian-owned shipping to foreign registry. Since war's end companies with ships on Canadian registry have found it increasingly difficult to operate their vessels profitably in competition with low-cost foreign carriers. This is understandable when one realizes that the daily operating cost of a 10,000-ton cargo vessel on Canadian registry exceeds that of a similar vessel on foreign registry by at least 50 per cent; and if one takes into account the cost of building the vessel in Canada the difference exceeds 60 per cent. An estimate of the operating cost, excluding fuel, is that it costs $100,000 more per year to operate on Canadian registry than on United Kingdom registry. These adverse cost differentials do not take into account any tax or other benefits which foreign registry often provides.

In these circumstances the problem of maintaining and encouraging Canadian shipping and shipbuilding industries presents a number of serious difficulties. Both industries are severely handicapped in normal times by having to bear a level of costs which is probably the second highest in the world. By offering a measure of tax relief the Canadian Vessel Construction Assistance Act has gone some way toward stimulating ship construction in Canadian

Inquiries of the Ministry yards. A bill to amend the act, now being considered by parliament, would add further to the benefits already provided.

It is evident, however, that on the ship operating side an unfavourable cost differential hinders the Canadian operator who must compete in the world market for the carriage of international trade. Measures of assistance which may be proposed must, of course, be considered in relation to the costs to the taxpayer and the effect on our trade relationships. The royal commission on the coasting trade is expected to present its report within the next few months, and at that time it will be appropriate to determine whether or not any change in policy might be desirable not only in respect to coastal shipping but also deep sea shipping.

Topic:   CANADIAN NATIONAL STEAMSHIPS
Subtopic:   REPORTED TRANSFER OF EIGHT VESSELS TO FOREIGN REGISTRY
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LIB

Lionel Chevrier (Official Opposition House Leader; Liberal Party House Leader)

Liberal

Mr. Chevrier:

May I ask a supplementary question. May I thank the minister for the very comprehensive report he has given, and I take it that the answer to the two questions is in the affirmative?

Topic:   CANADIAN NATIONAL STEAMSHIPS
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PC

George Harris Hees (Minister of Transport)

Progressive Conservative

Mr. Hees:

The hon. member is correct.

Topic:   CANADIAN NATIONAL STEAMSHIPS
Subtopic:   REPORTED TRANSFER OF EIGHT VESSELS TO FOREIGN REGISTRY
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November 11, 1957