May 14, 1964

PC

Marcel Joseph Aimé Lambert

Progressive Conservative

Mr. Lambert:

With this exception, Mr. Speaker. If a certain matter is not in the bill then it cannot be discussed on the committee stage. This is the only time-either on the

resolution stage or now on second reading- to draw attention to the fact that certain matters are not in the bill. Therefore I respectfully suggest that if hon. members wish to make points in that regard they should make them at this stage and not defer them. Otherwise they will have to hold their peace.

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LIB

Lucien Lamoureux (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

What the hon. member says is obvious. I was just referring to the particular remarks made by the hon. member who was asking specific questions of the minister, questions which should be asked at the committee stage.

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PC

Philip Bernard Rynard

Progressive Conservative

Mr. Rynard:

I respect your ruling, Mr. Speaker, but I do not think that this matter is included in the bill, because I referred it before to the parliamentary secretary and I do not believe he answered it at the time.

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NDP

Robert William Prittie

New Democratic Party

Mr. R. W. Priilie (Burnaby-Richmond):

Mr. Speaker, 1 should like to mention another matter which is not covered by the bill. I believe I brought this question up when the national revenue estimates were before the house last time. This has to do with the question of income tax deductions for contributions made to political parties, and I just throw out this idea to the minister, who perhaps might consider it at some time.

There is a private member's resolution on the order paper in the name of one of the hon. members for Halifax which is due to be discussed next Wednesday concerning this very subject. Some reform in connection with the payment for elections is a matter which has been talked about before; indeed, I believe it was part of the Liberal party's platform. I would suggest that at least modest amounts should be exempt for income tax purposes. It seems to me that this would be a very easy step to take and that some measure of reform should be instituted in this rather vexed question of campaign expenses. I make that suggestion now for the minister's consideration and I hope that he and his colleagues in the cabinet will discuss this matter before very long.

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RA

Charles-Arthur Gauthier

Ralliement Créditiste

Mr. C. A. Gauthier (Roberval):

Mr. Speaker, I have a suggestion to make to the minister before he rises to speak, regarding the deduction of the cost of the equipment used by the workers, especially the loggers.

I would have liked to see in those amendments something which would have made it possible for bush workers to deduct from their net income the cost of the equipment which they use.

In my opinion, this is a gross injustice toward the small wage earner. While all the big companies are allowed to deduct the cost

Income Tax Act

of their equipment, there is absolutely nothing in the legislation to do justice to the small wage earners, allowing them to deduct the cost of their own equipment.

About ten years ago, in the forest industry of our area people were not as hurried as we are now and equipment was less costly. But now, things have reached a point where a bush worker has to spend substantial sums of money-between $500 and $600-to be suitably equipped, and that before starting to work in order to earn about $1,000. He is required under the Forestry Act to buy a power saw, special clothing and so on. So that a bush worker has to contract a debt of $400, $500 or even $600 before he starts to work.

That is why I am asking the minister to put in an amending clause that would enable the bush worker to deduct the cost of that equipment.

Some might say: Well, that equipment enables bush workers to earn more.

If the cost of production or the price of a cord of wood had increased because of this equipment, we would not insist so much. But the price of a cord of wood is still the same as it was 10 years ago, yet the heavy burden of this modern equipment is being imposed on our bush workers. I think this is a glaring injustice. I again ask the minister to provide an amendment along those lines.

The situation has become urgent. Even last winter, when salaries were supposedly decent, there were lumbermen who left the forest to collect meagre unemployment insurance benefits, because that was more than they were getting cutting wood in the forest.

I hope that the minister will take note of that situation.

I should like to raise another point with regard to equipment, that is the farmer's equipment.

I fail to understand why an amendment could not be introduced to assist the farm people in this regard. That is a very efficient method of assisting the farmer, by allowing him to deduct from his income the cost of the new and modern machinery he needs.

I think that such an amendment would be extremely important also as far as farming is concerned. I ask the minister to consider the matter and to introduce some measure which would bring a few extra benefits to our farmers, the same as we do very generously in the case of the big companies.

I hope, Mr. Speaker, that the minister will take these points into serious consideration.

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RA

Lucien Plourde

Ralliement Créditiste

Mr. Lucien Plourde (Quebec West):

Mr. Speaker, I was anxiously waiting for the day when I could express my ideas against this Income Tax Act. As a piece of legislation, it is the worst mess one could find. One cannot

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make head or tail of it. It seems to me that the laws of a country should be written in short, simple terms, in order to be understood and obeyed. But today our legislation is so muddled and complicated that only a lawyer can understand it. In my opinion, the Income Tax Act is one of the most discriminatory and ambiguous acts we have in this country. And yet if the people complain and shout "enough", the government is taken aback.

To avert such misunderstandings, I would suggest that the government revise this act as soon as possible and make it clearer by using very plain but precise terms, without forgetting to grant, for charitable donations, a uniform exemption throughout Canada; whether it be of 10 or 8 per cent does not matter, but let it apply to all Canadians without anybody having to show receipts for his contributions.

Those in charge of charitable organizations should be left alone once and for all, and the pestering of parish priests should be stopped by means of a new and better legislation. No member of this house would tolerate the inconvenience imposed upon our parish priests who are very busy and already overworked, and who are asked to do this free of charge, of course.

The best solution would still be to grant a $3,000 exemption to single people and a $5,000 exemption to married people. This would eliminate a lot of red tape and save on stationery. I think that in the end, the government would not lose so much and tax-papers, as well as the clergy, would be very grateful. Why require receipts if officials are to decide the amount to be accepted, on orders from the deputy minister of national revenue or from any other authority?

On the basis of all the complaints I have received from my riding, that of Quebec West, I have come to the conclusion that the taxation division of the Department of National Revenue has accepted the $100 deduction as a standard, regardless of the income. I am speaking of the people who are in that category, those whose total charitable donations were not allowed. It seems to me that the department has been more strict in the case of single people, as if the latter did not have to think about their future or give to charity.

I should like to give you just a few examples to illustrate the complaints I have received from my riding. There is the case of a bachelor, Mr. Dollard Wiseman, 310 Marie de l'lncarnation st., Quebec city 8, who on April 11, wrote me as follows:

Two days ago, I received by mail from Ottawa, a notice of assessment informing me that, after examination, my claim for charitable donations had been reduced to $200. In my federal income tax return for 1963, I claimed a $424 deduction from a salary of $4,240.

Hon. members, charity is a personal matter. However, what I do not understand is that a Canadian government bureaucrat, who happens to be your employee, since you are a member of the House of Commons-and since you are unquestionably the boss, being a servant of the people-takes the liberty of managing his business without your consent.

It is true that I am single, but, good heavens, I do not have to pay the piper. We are allowed to deduct 10 per cent for charitable donations, and I find that the law is not adhered to in my case.

Mr. Speaker, the taxpayers can see that the government does not even abide by its own legislation; then, why would you have them observe such legislation? Why they, and not the government?

I hope that you will do your best in order that I may be granted my 10 per cent. I am sending you the notice and the said cheque.

After consideration, your claim for charitable donations has been reduced to $200.

The following is extracted from another letter which he wrote me.

Charitable donations can be made to religious institutions as well as to parochial or other organizations. I would like you to tell me why I am deprived of my right, that is 10 per cent for charitable donations. My question can be summed up as follows: Is every Canadian denied his 10 per cent and is the amount claimed reduced to $200, as in my case? If so, I have proof to the contrary. This confounded red tape in Ottawa about single persons in Quebec must stop.

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LIB

Lucien Lamoureux (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

Order. For the last few minutes, I listened with much interest to the speech of the hon. member for Quebec West.

I know he has a point to bring before the house and we all listened to him with much interest, but I think his observations are not directly relevant to the matter the house is now asked to pass.

He must relate his comments to one specific point, that is to the bill now under discussion. Besides, that is the usual practice in the house. It is not only a matter of making comments generally related to the field of taxation or national revenue. Comments must be specifically related to the bill we are discussing.

It is a bill amending another act, and the speech of the hon. member must relate to the bill amending the act, and not to the act which is amended.

Consequently, I request the hon. member to relate as much as he can his remarks to the bill now under study.

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RA

Lucien Plourde

Ralliement Créditiste

Mr. Plourde:

I understand that I am infringing the rules of the house with my claim concerning the income tax. I have taken this opportunity to put forward the rights of my voters because I wonder when the opportunity will be given to me to raise a grievance against the Department of National Revenue

or to make new suggestions which would enable it to take action along those lines.

However, I will not say more about it today. I shall resume my remarks some other time, but I could not let Bill No. C-91 now under study pass without exposing the way in which our people are treated by the income tax office.

Consequently, I move, seconded by Mr. Gauthier:

That Bill No. C-91 be not now read a second time but that it be decided that in the opinion ol this house, an investigation should be ordered regarding the doing of the inspectors of the Quebec city office of the Department of National Revenue.

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LIB

Walter Lockhart Gordon (Minister of Finance and Receiver General)

Liberal

Mr. Gordon:

Mr. Speaker, I would suggest that this amendment is out of order.

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LIB

Lucien Lamoureux (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

If no additional comments are forthcoming with regard to whether or not the proposed amendment is in order the Chair is prepared to make a ruling. I feel that the proposed amendment is out of order because it is not relevant to the matter now before the house. I would simply refer hon. members to May, sixteenth edition, page 554, where it says that an amendment is out of order if it is irrelevant to the subject matter or beyond the scope of the bill. This amendment deals with matters relevant, I suggest, to the administration of the Deparment of National Revenue and not relevant to the bill now before us. With regret I must therefore say that the amendment is out of order.

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PC

Lloyd Roseville Crouse

Progressive Conservative

Mr. Lloyd R. Crouse (Queens-Lunenburg):

Mr. Speaker, I wish to speak only briefly on the bill. It is not my intention to delay the minister in presenting his arguments. However, since holding his present portfolio I believe the minister has been toying with the possibility of discouraging foreign investment in Canada. Instead of discriminating against foreign investment I believe he should reconsider his views and do what he can to encourage capital investment from any country. Certainly we in Nova Scotia have seen considerable expansion in industrial growth due to capital which has been brought into our province from the United Kingdom, and especially by Swedish interests. I should like to leave the thought with the minister that he should not worry too much about where capital comes from because once it is invested in Canada these companies generally become good corporate citizens.

I believe further that we need to encourage Canadian investment in common stocks. According to recent reports Canadians today have something like $800 million or more in their savings accounts. This is a larger 20220-207

Income Tax Act

amount in reserve than ever before in the history of the nation. If we are to encourage the release of this capital we must make investment in Canadian common stocks more attractive to Canadians.

At the present time investors are allowed to deduct 20 per cent of the amount of their dividends from common stocks when paying their income tax. This encourages Canadians, of course, to participate in buying the common stocks of Canadian companies. But if we are to release the great fund of money at present resting in savings accounts I suggest that the minister should give some thought to increasing the percentage of dividends on common stocks, which is deductible for income tax purposes. I believe it could well be increased from the present 20 per cent to 30 per cent or even 33J per cent. If this action were taken it would provide a greater incentive for Canadians to participate in the economic growth of this country.

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NDP

Barry Mather

New Democratic Party

Mr. Barry Mather (New Westminster):

Mr. Speaker, in a very few words I should like to add a British Columbia voice in support of a proposal put forward a few minutes ago by a speaker from a Quebec constituency. He and I would both like to have the minister give serious consideration to an amendment to the income tax regulations which would permit the deduction from income of the moneys which have to be spent by producers such as loggers, fishermen and farmers on special equipment, tools and clothing in order to carry out their functions. I believe that such deductions are already allowed in the United States. I can see no reason why we should have one set of rules enabling the operators to make such deductions for income tax purposes, and yet the actual workers involved in the same industries do not have this benefit. I strongly urge that real consideration be given to such an exemption. There are many thousands of workers in British Columbia who would benefit from it and who now lose because of the lack of it.

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PC

William Howell Arthur Thomas

Progressive Conservative

Mr. W. H. A. Thomas (Middlesex West):

Mr. Speaker, there are a few comments I should like to make in this debate. First of all, I would be prepared to commend the minister, at least in some respects, upon his aims and objectives. No doubt every government that has ever undertaken to govern this country has tried to do its best for the citizens and so far as possible, to provide equity as between citizens. I take it that this budgetary effort is no different from others in this regard.

Now, of course, the job of the opposition is to find weaknesses in these budgetary efforts. We find in this one some areas in

Income Tax Act

which we have no difficulty at all in finding some glaring weaknesses. One area of the budget which we can commend is the deduction of tuition fees for full-time students, as well as for part-time students. This I believe is a provision that will meet with general acceptance across this country and will be of considerable assistance to our university students, as well as to our high school and technical school students.

The favourable adjustments in the depreciation allowances to encourage the establishment, development and expansion of industry in areas where unemployment still persist is also a move in the right direction and should be commended. Anything that can be done to create more job opportunities in Canada certainly should be done, and I think will meet with ready acceptance by all citizens. The adjustment of the depreciation on heavy machinery at this time will be good news to many of our contractors and we must admit that contractors across Canada are having their difficulties at this time. This machinery is given a terrible beating and it wears out very rapidly. The increase in the rate of depreciation from 30 per cent to 50 per cent will, I am sure, be very welcome news to many of the people in the contracting business.

There is not much in the budget anywhere for agriculture. These amendments are no exception. I should like the minister to give serious consideration to one item which, as it is presently applied, is not fulfilling the purpose for which it was intended. I refer to the depreciation allowances provided for agriculture. One of the expenses on farms across Canada which is expressly prohibited from being disallowed, is the expense associated with clearing brush. In the newer areas of the country, the clearing of brush is done for the purpose of plowing up that land. The Income Tax Act treats this as a capital expenditure and, in some respects, I would agree it may be capital expenditure. In so far as the older parts of Ontario are concerned, however, where the land was cleared 100 years ago and has grown up a number of times with succeeding crops of thorn bushes, the clearing of those thorn bushes is not a capital expenditure. It is, in effect, the clearance of a weed crop although it is only undertaken every year or two, whereas weeds may need to be dealt with every week.

The eradication of thorn bushes in southwestern Ontario is a current expense of the agricultural industry in that area. It may only be done once a year or twice a year, or one might not cut these bushes for five or ten years, but it is a continuing current expense on these farms in southwestern Ontario.

I feel that where expenditures are made for that purpose, certainly the intention of the act is that a deduction should be permitted for income tax purposes.

We come now to the provisions that are being made for educational assistance to our 16 and 17 year old students. We have been warned by the minister that this problem may be dealt with in a different way. We have been warned that certain amendments will be made to the act. I consider this very welcome news. This is a thorny problem and it was debated at length during the resolution stage of this legislation. Since we do not know what will be contained in the amendment, since we cannot possibly know, I see no alternative but to make our wishes known at this time during second reading of the Income Tax Act bill.

The discussion of this problem the other evening was extended and most interesting. It seems that the government is undertaking to mix two things. This point was brought out during the discussion the other evening. It is the intention to provide educational assistance for boys and girls during their 16th and 17th years. Normally, during those years they are in high school and the expenses for keeping them in high school are great. This legislation fits in very well with other efforts, the scholarships, student loans and other financial measures that are being taken to assist our students.

But when we try to deal with this project as educational allowances, immediately we run into constitutional difficulties. The minister has admitted this, and it is generally admitted. We are faced, therefore, with alternative policies. We can continue or attempt to continue with this project to provide educational grants. We can keep trying to get around all of the constitutional difficulties involved, or we can take the simpler way, which is to extend family allowances from the present level of 16 years of age to the level of 18 years of age.

As was so well pointed out by the hon. member for Peace River (Mr. Baldwin) the other evening, the Family Allowances Act already provides that allowances may only be paid to children who are in regular attendance at school. The act reads as follows:

The allowance shall cease to be payable if the child does not regularly attend school as required by the laws of the province where he resides, or does not receive training that, in the opinion of the competent educational authority designated by such province-

-and so on. It goes on to deal with Indians and Eskimos, and other special cases, but it is not the intention of the legislation to pay family allowances to children who should be in school and who are not in school, and it

is the intention of the proposed project for providing assistance to children aged 16 and 17 years that they should not receive any assistance unless they are going to school.

It therefore follows that only school children can be paid family allowances under the Family Allowances Act, and if we expand the act to take in boys and girls in their 16th and 17th years it would accomplish the very same thing in a general way, that the proposed educational grants would accomplish. I will try to make this point clear. If we extend family allowances to the 18th birthday this will cover children who possibly will always be dependant, crippled children who would not attend school, and retarded children. However, the same regulations which now apply to boys and girls aged 14 and 15 years, namely that they must be in school, would apply to boys and girls 16 and 17 years of age.

We would get almost exactly the same effect by an extension of family allowances as we would get through educational allowances, and I believe the cost will not be significantly greater. It would be approximately the same, and we would get away from all of the constitutional and other difficulties, and from the confusion into which the educational grants proposal is leading. I think this has been admitted by all concerned, and I would make a plea to the minister and the government to stay away from the educational grant concept and make a straight, simple extension of family allowances to the 18th birthday. We will then have the parents all across Canada, the children all across Canada and the taxpayers all across Canada treated in exactly the same way. I am sure this would be much more satisfactory to all concerned and would be well received by all concerned.

So far as the program which is now being carried on in Quebec is concerned, a similar program might be carried on in any other province which wishes to undertake it, but I want to say that an allowance of $20 for high school students aged 16 and 17 years is not too much, and other provinces may wish to supplement the family allowances if they are increased to the extent proposed, of $10 per month for children aged 16 and 17 years. The proposed allowance is not too much, even if it were doubled by some of the provinces.

The family allowance method is a much simpler way of dealing with this problem, and I hope the minister and the government will stay away from these proposed educational grants and give a straight extension of family allowances to the 18th birthday.

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SC

Jean-Louis Frenette

Social Credit

Mr. Jean-Louis Freneiie (Porineuf):

Mr. Speaker, I will not take more than a few 20220-207i

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minutes to call to the minister's attention a problem which is very close to my heart. It concerns the little people who, because they get a few hundred dollars interest a year on capital they saved the hard way, are penalized by having to pay income tax on that amount.

We admit that, since the minister assumed his post, we have noticed his very definite intention to give Canadians the possibility to regain control of the country's economy or at least to take an active part therein. In that light, I would be inclined to believe that it would benefit Canadians to exempt from income tax the interest paid on the savings of small people up to-I take the liberty of giving a figure-$250 or $300, for instance.

There is, of course exemption of 20 per cent on Canadian corporations dividends but, in my opinion, it is not enough to stimulate savings as we should stimulate them.

Economists are always preaching thrift, putting it as a desirable virtue. I think they are right; looking back upon the past, I notice that countries like France may have avoided, at times, economic disasters precisely because of the small savers, especially the French farmers.

In my opinion, this is a most appropriate opportunity to ask the minister whether it would not be advisable to consider granting the small savers certain tax exemptions on the interest they receive.

We talk about investments. I can well understand that it is difficult, if not impossible, for Canadians to make investments if they are not encouraged to save their money.

I honestly believe that, there, the Minister of Finance (Mr. Gordon) would really have something to encourage workers and farmers to save, those people, as I said, to whom savings would come in handy.

I do not wish to stand up for capitalists who are paid such a tremendous amount of interest on their equally tremendous investments. I want to speak for people who have but a little sum of money put aside and who, in my opinion, deserve to be encouraged.

Before returning to my seat, I also wish to say that I am in complete agreement with the requests made by the hon. member for Roberval (Mr. Gauthier) in respect of the exemptions which should be granted to certain workers such as farmers and bush-workers, especially as regards the purchase of special tools and equipment.

I feel that those citizens are now suffering an injustice. It may well be that the problem now facing them has never been considered. That is why I think the time has come to

Income Tax Act

deal with this particularly delicate and interesting problem which workers and farmers are up against.

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RA

Louis-Philippe-Antoine Bélanger

Ralliement Créditiste

Mr. L. P. Antoine Belanger (Charlevoix):

Mr. Speaker, I cannot but echo the opinions of my fellow citizens in the county of Charlevoix, and I would say, throughout Canada who are dissatisfied with the present Income Tax Act.

As the Minister of Finance announced his intention to introduce a few amendments to this legislation, I might submit a few myself.

To my mind, the present act has become obsolete, in respect of deductions, for instance. Admissible deductions for single and married people, which are $1,000 for a single person and $2,000 for married people, are no longer justified at such a low rate. The reason I raise this point is that the exemption was set about 20 years ago; at that time, it had been estimated that the amount of $2,000 was the absolute minimum to support a family and that it should not be taxed.

But since, the cost of living is probably three times, if it is not four times, as high, yet we still have the mere exemption of $2,000 for a family and $1,000 for a single person.

That is blatant injustice, nonsense which should be rectified as soon as possible. Such a move would certainly be well received by the Canadian people, and this government would certainly gain a great number of followers.

I also would like to mention another point, already raised by other hon. members who preceded me. As a former workman, who had the opportunity of seeing what happens in plants and factories, I was able to establish that there was some discrimination with regard to tax deductions for tools.

A doctor, or any other professional man who buys the tools needed in his profession is allowed quite important deductions. Yet, a workman who has to get a tool chest in any plant, which often costs him $200, $300, $400, $500 and even $1,000-and I must say that today, you do not get a very good tool chest for $1,000-is not allowed any tax deduction for that equipment.

This proves that the act, which might have been good 20 years ago, is now quite incomplete in this field, which results in serious discriminations. And I would like the Minister of Finance to think of those discriminations when he introduces his amendments.

I would like to point out another very serious injustice arising from the present Income Tax Act. I am speaking of succession duties. These are most unfair, because they only affect small businesses. Big businesses

do not pay succession duties, for they do not die, they are passed along from shareholders to shareholders. On the other hand, small family industries are handed down from father to son and suffer immensely from the estate tax, so much so that sons are often obliged to sell the family business in order to pay the tax.

That is particularly unfair. Especially when people had the courage and the ability to build an estate to hand down to their children when they pass away, they do not deserve to be treated that way or, at least, they should be spared just as are the big businesses.

I only wanted to make those few remarks because as far as the bill itself is concerned, as I have just stated, I have nothing much to say, for it does reduce taxes. As long and as often as the government will propose tax reductions, it may be assured of my support.

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PC

Maclyn (Mac) Thomas McCutcheon

Progressive Conservative

Mr. Mac T. McCuicheon (Lambion-Kent):

I have no intention of taking up much time or of delaying the progress of this measure but I should like to repeat, as the hon. member for Middlesex West (Mr. Thomas) has pointed out, that there is opportunity in this legislation for discrimination. I direct the minister's attention to clause 3, which has to do with the end of the taxation year and the period within which payment may be made into a registered pension fund or plan. An employer is now to be permitted to make payments into these funds 120 days rather than 60 days after the end of the taxation year, whereas the ordinary individual is limited to 60 days. It seems to me that under this provision there is a chance of discrimination taking place, and I direct the hon. gentleman's attention to it although I am abundantly certain that this was not his intention.

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PC
LIB

Herman Maxwell Batten (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Batten):

Does the house agree to call it five o'clock?

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?

Some hon. Members:

Agreed.

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LIB

Herman Maxwell Batten (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Batten):

It being five o'clock, the house will now proceed to the consideration of private members' business as listed on today's order paper, namely notices of motions for papers, private bills and public bills.

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May 14, 1964