July 13, 1964

PC

Eugène (Gene) Rhéaume

Progressive Conservative

Mr. Rheaume:

The figures are 1963.

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?

An hon. Member:

Were they any different in 1962?

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PC

Eugène (Gene) Rhéaume

Progressive Conservative

Mr. Rheaume:

Here we go, Mr. Chairman, with that great Grit argument that says that since things were not done before, they need do nothing more. I have said in the house before that the great belief of Liberalism is that you do nothing except take office and that by some strange osmosis, by some mysterious alchemy, everybody in Canada is better off. The Minister of Agriculture stands there and says: Why, we are drinking sillabub in Calgary, and everywhere else everybody is full of milk. I do not know what the minister is full of, but Canadians in my part of the country are not full of milk.

With respect to the whole matter of federal-provincial relations it is frightening to me when I see nothing being done in the Canadian north. In the last 15 months federal spending has in fact dried up. When I think of the projects which are now in the process of offering hope to the people, I realize that not a single one of them has been started in the last 15 months. They are all merely carryovers. I do not mean they are not good. The Great Slave lake railway will penetrate the Northwest Territories. For the first time on August 10 steel will have crossed the 60th parallel. Every Liberal in the House of Commons voted against the Great Slave lake railway when the bill was before the house. Telecommunications are in fact being extended down to the Arctic ocean, but this is not a new program; it was started three years ago. The same is true of school construction.

What is frightening to me as a northener is that the tremendous effort put forward in the five years of Conservative administration was merely a beginning. When the hon.

member for Chateauguay-Huntingdon-La-prairie asks whether these terrible conditions among the Eskimos existed in 1962, the truthful answer is yes, they did. Certainly they did. But the fact of the matter is that in 1962 some 60 per cent of the Eskimo children at least had access to schools compared with less than 15 per cent in 1957.

I am one who has never tried to suggest in the house since being elected that all the answers were provided by the Conservatives, but the groundwork of schools, nursing stations, hospitals, communications, airports and roads was laid. A good start had been made, against tremendous opposition by the members of the opposition of that day, the Liberal party of Canada. They said it was a nightmare. I am not going to repeat all the things they said. Let it be clearly understood that the facilities that were then being provided were nothing more than the groundwork. At no time did the previous administration ever say that everything was solved and that there was nothing but harmony, sweetness and light in the Canadian north.

The previous administration said many times-I used this at the time I was campaigning; it was true then and is still true- that the maddeningly slow job of counteracting the terrible human problems had begun. What frightens me and what I lay at the doorstep of the present administration is that they have cancelled this program, and I suggest that the things they have done are not worthy of respect.

One or two programs that perhaps did have a bit of imagination when applied in the south are completely stupid when viewed in a northern context. I think of the winter house construction program. I would love to read the Minister of Labour some of the letters I have received from northerners who are trying to qualify for the $500 bonus under a program that contained no special provision for transportation problems long after the rivers are frozen up and you cannot ship stuff in there. The program made no provision for climatic conditions. One of my constituents said to me: I am sure the Minister of Labour does not know whether he is talking about Hay River in the Northwest Territories or Florida.

I think of how the Minister of Labour said in the house that the government was going to lessen the number of months in which municipalities can qualify for the municipal winter works program. He said that winter in this country only extended

from late November to early March. I do not know when winter ends in Inverness-Rich-mond or wherever he comes from but I can tell the house that I was at Cambridge Bay and Coppermine in the Northwest Territories about 10 days ago and the water is still frozen, with the result that the ships will not get in for a while yet.

Ever since the government took office there has been a complete absence of any reference to the Northwest Territories and the Yukon. Just a few weeks ago the hon. member for Yukon proposed a resolution that would have done something in terms of tax relief for the north. The hon. member for St. Lawrence-St. George, who is a bit of a northern expert by virtue of having made two trips in a DC-3, talked out the resolution. He said: No, this is not a good thing for northerners; if there is anything that would harm them it would be an income tax reduction. His remarks were fascinating and not only in terms of their strange logic because it is usually that embryo leader of the Liberal party in Ontario, the hon. member for Renfrew South, who does these things. But here we had the parliamentary secretary to the Minister of Northern Affairs and National Resources saying: No, no, from my vast and profound experience of the Canadian north the people do not need a tax reduction. It is a bit like the Minister of Agriculture saying that children do not need milk.

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An hon. Member:

How many trips did he make?

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PC

Eugène (Gene) Rhéaume

Progressive Conservative

Mr. Rheaume:

He made two trips. Having made these remarks I am going to close with a plea to the government. I want them to be a bit like the Secretary of State for External Affairs when he said: Well, if I said that I was obviously wrong. I want them to admit their mistakes. I want them to resolve that in the interests of the poor, ragged and tattered people who frequent Canada's north they will depart from this policy of helping only those areas where the most federal seats are.

The charge has been made that the Liberal party has never really cared about equal opportunities for Canadians, that they only worry about those places where they can get the most federal seats. There are people who believe this is one reason why the change was so obvious under the previous administration, in that for the first time in Canada the maritimes, the west and the north received a fair share of the federal treasury. If this charge is not true, and I 20220-344

Federal-Provincial Relations for one would like some evidence from the present cabinet that it is not true, then maybe some day in the future some prime minister of Canada can alight from an airplane at Frobisher Bay on Baffin island and honestly say to the people there, "We are all Canadians; the only difference between you and me is that you were here first."

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LIB

Maurice John Moreau

Liberal

Mr. Moreau:

Would the hon. member permit a question?

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PC

Eugène (Gene) Rhéaume

Progressive Conservative

Mr. Rheaume:

Certainly.

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LIB

Maurice John Moreau

Liberal

Mr. Moreau:

In view of his statement that the Liberal party do not believe in equalization of opportunity, I wonder how the hon. member justifies his party's position on family allowances which, I am sure he would agree with me, is one of the greatest equalization factors for the Eskimos in the north?

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PC

Eugène (Gene) Rhéaume

Progressive Conservative

Mr. Rheaume:

It is difficult to answer this question in a few moments. I do not happen to be an expert on what went on in this house in 1944, as my hon. friend from York-Scar-borough is. However, I do know this-the hon. member for Winnipeg North says the hon. member doesn't know even what is going on now. I do not believe that is quite true. I do know this, I will stand behind the record of the leader of the official opposition in so far as social justice in this country is concerned, if the hon. member for York-Scarborough will do the same.

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SC

Bert Raymond Leboe

Social Credit

Mr. Leboe:

I have no intention of making extensive remarks tonight. However there are one or two things I should like to mention. There was a reference made this afternoon to succession duty taxes in British Columbia and to people moving out to British Columbia, thus enabling that province to benefit from the succession duties. I should like to remind the committee there is something else that takes place that is very important. As a result of climatic conditions, a good many people go to British Columbia looking for work and they become a charge on the municipalities and the province of British Columbia. When you are out of money and you have to go on welfare you might just as well live in a warm climate, so people go to British Columbia and bask in the beautiful climate.

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An hon. Member:

From the Yukon?

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SC

Bert Raymond Leboe

Social Credit

Mr. Leboe:

I do not know whether or not they come down from the Yukon. Those people are generally wealthy, I believe, and that is the reason they are up there.

Federal-Provincial Relations

Now, the minister did say something about understanding in Canada. When he replies, I should like him to enlarge upon the statement he made that there were people in Canada who were making understanding between the various sections of Canada more difficult. I should like to know what the minister had in mind when he said that there were these people. If the charge is left as it is, it is a little difficult to know whether he is talking about one part of Canada, two parts, or six parts. I should like to have him deal with that.

Reference was made this afternoon, also, to the Alaska highway. I think this, along with the trans-Canada highway, is something that does enter into the fiscal arrangements between the province and the federal government. There is no secret where I stand on the subject of the Alaska highway. I believe that we should get along with the paving of those sections which fall in the alignment and which do not require a great deal of reconstruction before paving. British Columbia has offered to pay one half of the paving cost to the northern boundary of British Columbia. I believe the federal government should move immediately in this direction. I am sure the minister of northern affairs and the Minister of Public Works agree with me, but unfortunately they have deputy ministers who are perhaps a little more difficult to deal with than the ministers.

If this extra paving is undertaken throughout the whole length of the highway which falls within Canada, then the work should be done by Canadians under Canadian contracts. If this were done we would avoid the serious situations which evolve when you have United States contracts and Canadian contracts and the United States contractor may be paying $3.50 for a catskinner while the Canadian contractor may only pay $2.55. We would avoid this situation and we would also be able to collect from the United States after negotiations had been completed. We are not giving away all our trump cards because sooner or later the United States will want a railway to Alaska. When they do, if they have not settled the Alaskan highway question properly, then they are going to be in difficulty with their railway to Alaska.

I should like also to mention a situation in connection with the returns to the provinces from natural resources. I have not heard the minister answer this question as yet, and I have been here most of the time. Has consideration been given to the value of

the returns to the provinces for the natural resources that have been alienated? I recall an article some years ago in the Toronto Telegram which pointed out that out of an equal number of units, shall we say, of the alienation of natural resources the province of Ontario had $4 million returned to the people whereas a like amount gave the province of Alberta $112 million. I am wondering whether or not this return to the people of the provinces from their natural resources is taken into account when the figure is used as a basis for taxation purposes under this new scheme.

The minister also mentioned that there were circumstances surrounding the provincial situation now that were not contemplated. I gathered from that he was referring to the fact that Ontario is not left alone as the basis, as it were, but several provinces are brought into the picture. I take it from his statement that is the accepted thing. If you are going to develop a province, you will have to create in that province an industrial climate, and this is exactly what has been done in the province of British Columbia to the extension of railway, and hydro facilities. Any province that will go into the business of earnestly developing power and transportation facilities is bound to get more development for that province.

The hon. member for the Yukon and the member for the Northwest Territories mentioned the development of their areas. I think they have a good point. Rather than try to penalize provinces that are developing their natural resources, why not pour a little money into the northern areas to help develop those areas? I think these hon. members have a good point which should be followed up vigorously. If the federal government did that, then perhaps in the future they could gather more taxation from that area. It might be a fertile area and well worth spending some very large sums of money.

We have been talking about the difficulties that we have in the provinces and municipalities. We know that today expenditures amounting to millions and millions of dollars are being wasted for national defence. I should like to pose this question for the Minister of Finance. Would he be able to tell us, if suddenly we were confronted with a situation in which this defence expenditure were put into the production of consumer goods, where the money would come from to buy those consumer goods which would be turned out instead of armaments? I think there is a dilemma facing the minister here

which he would hate to contemplate. It has been said over and over again-and it is a difficult thing to say-but sometimes we wonder whether we can afford peace under our present financial structure. There is some sense attached to this. I can recall the period during the war when we in Canada were faced with great inflationary pressures because of the fact that huge sums of money had been pumped into the war effort. So we devised a scheme of victory bonds, war savings certificates, war savings stamps and compulsory savings so as to take money out of circulation and hide it away against the time when it could be filtered back into the economy after the war had ended. We know today that the Liberal government was able to balance its budget for nine years with money which was flowing back as a result of returns from savings certificates, war savings stamps, compulsory savings and so on.

When the situation is in reverse, as it is today in many parts of the country, should we not have the same financial process making sure that the purchasing power is in the hands of the people so as to buy back the things which they themselves produce by using the methods which were used during the war to prevent inflation, only in reverse? Should not the converse be brought into being so that we could put money into circulation at municipal level so as to establish a greater increase in the amount of goods and services which are taken home and actually used?

There was a program on television last night dealing with what they call cybernetics- automation and technological advances. Something which Mr. Aberhart said 30 years ago was said on that program last night as if it were a new idea. That is, the day is coming when people are going to receive cash money in their hands which they have never earned, but which is rightfully theirs because of the ability of society to produce goods and services in a modern machine age. This was put across on television as though it were a new concept. But if you look back into the record of history you will find that Mr. Aberhart pointed this out 30 years ago.

I say to the minister that if we were suddenly to find ourselves without any need for national defence capital spending, he would certainly have to revolutionize his present ideas. One alternative would be for him to answer the questions which were placed on the record today, for the second time, by my leader the hon. member for Red 20220-344i

Federal-Provincial Relations Deer. If he would answer those questions, perhaps he would have some idea how to extract himself from such a dilemma as I have just mentioned.

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PC

Charles James McNeil Willoughby

Progressive Conservative

Mr. Willoughby:

It is certainly not necessary for me to tell this committee that I am not a financial expert, and I am certainly no economist. But I am one of the representatives from the province of British Columbia and I am disturbed about some features of this resolution. I hope the Minister of Finance will make them a little more clear to us when he has the opportunity to do so. It seems to me the hon. gentleman has perhaps taken too literally the fact that British Columbia is supposed to be debt free. It looks as though British Columbia is in serious danger of coming out on the short end of this deal.

I am sure every one of us in this committee agrees that adjustment, or abatement, as long as it will create harmony in Canada and assist parts of Canada which up to the present have been less happy economically than some of the other provinces, is to be supported. On the other hand I think they would also agree that to create harmony in one part of Canada while at the same time creating disharmony elsewhere is not an answer to our national problem. I do not intend to go into detail on the subject of this resolution because I do not consider myself qualified to do so, but I do wish to bring up certain points for the minister's consideration in the hope that he will throw some light on them when he has the opportunity to reply.

The resolution before us changes the basis upon which equalization is to be paid from the national average to the average of the two top provinces. This being so, British Columbia and Ontario are caught in the squeeze again because they are the two top provinces and, obviously, the rest of Canada will benefit out of general revenue in some way so as to make up the difference. The raising of the succession duty rebate to 75 per cent will not make any difference to the province of British Columbia because we have been among the fortunate ones, to that extent, in the past.

What I am worried about is this: 50 per cent of the natural resource revenue of the province is to be deducted from any sums to be abated to the province. It is obvious from the table which the minister gave us last Tuesday evening that under this formula British Columbia will receive only a very small amount of the increased revenue which

5422 HOUSE OF

Federal-Provincial Relations is to be distributed among the provinces. This to me seems unfair. I should like to ask if it is right that we should have to contribute toward the expenditures of this country under this abatement plan the amount of money which is received from expendable resources. We know that some of this resource income is derived from sources which are not permanent-they are bound to be a declining asset. I think the majority of us from British Columbia realize that the assets which are to be taxed under this new scheme will include our forests, our gas, our oil and perhaps some of our mining resources. These are expendable resources. They are provincial assets and I cannot see how we can possibly allow them to be taxed on such a basis as is now proposed. I hope the minister will make sure that these resources are at least maintained, so that we shall not be overpaying our share of taxation. I should also like to ask, particularly with regard to forestry, whether we are to be taxed on the gross profits of our forest resources or whether we are to be allowed to deduct the cost of maintaining such necessary services as protection against fire, reforestation and so on. I hope these matters will all be clarified when the minister brings in the bill. I hope he will tell us just what he means by natural resources in relation to forestry products.

There is one other question. Where does hydro power enter into this picture? Is that a natural resource? Does the minister contemplate that the sale of Columbia power to the United States means we have a resource which is taxable? These are things I want to know about; they are things the people of British Columbia are entitled to know about. I have no intention of speaking any longer, Mr. Chairman, except to say that I put these questions before the minister in the hope that he will give us a further explanation on the bill upon which this resolution is based, in order that we may have a better understanding of what we are faced with in British Columbia.

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PC

Terence James (Terry) Nugent

Progressive Conservative

Mr. Nugent:

Mr. Chairman, I thought the hon. member for Northwest Territories touched on one aspect of the problem that must always concern members of this house; that is, the question of the division of the taxation dollar available in Canada. I do not say this just because that territory does not have the same kind or form of government as the provinces; but it is a fact that this territory is a very vast land which is sparsely

populated. It is new frontier. We know something of some of the wealth it contains, but we have very little conception yet of just how valuable those resources may be to the whole of Canada once they are tapped.

I think these are questions that have occurred to most of us when we have been considering the question of comparative wealth and the opportunities of each of the provincial governments when considering their own natural resources, their own markets, populations, etc. Certainly the first thought that occurs to my mind is that if there is a responsibility to develop an area of Canada so that its natural wealth may become available to our children and grandchildren, if we look forward to the day when those resources may be absolutely essential to Canada's needs at a future date, there must be a government that has the financial resources and is able, because of its constitutional power, to give leadership and make provision so that we can develop that part of the country.

Mr. Chairman, you will note that I referred not only to financial resources but to constitutional power. I think this is a question that has not bothered members of this house enough when we have been dealing with taxation possibilities in this country. Anyone who has looked over Canadian development during the last few years, certainly since the war; anyone who has been aware of the challenge to this nation to meet changing world conditions; anyone who has considered our position tradewise and industrywise, our trade patterns, and has considered tax concessions and trade agreements, must realize that the good of the whole country still depends upon the power and strength of the federal government.

I would like to illustrate this one point in my argument with reference to our trading program. I would like to remind members that the problem presented to Canada a few years ago, when we came out of the war, was that we were a country rich in natural resources; that we had developed only those resources primarily that supplied raw materials; that automation had displaced people from jobs in these industries, and we found that if we wanted our people to be gainfully employed, only in the manufacturing of our own raw materials could we provide that kind of employment. We therefore had to develop our secondary industries; we had to find the money for them; we had to find the trained personnel, and Canadians after

the war were not well trained; they were not even well educated. We sometimes forget that in a land as rich as Canada, where for so many years there was so much opportunity for a man of ingenuity, strength and desire to carve himself out a very comfortable living, there was not the accent on the need for formal education to enable a person to make his way in this country. Canadians were, classically speaking quite an ignorant people at the end of the last war. We found our general standard of education to be very low. The European cities who were starting to build their new factories with the latest automation devices concentrated on manufacturing industries and had large pools of skilled labour to draw from; and we found we had none.

I suggest that anyone who looks at the crash program we undertook to provide money for vocational schools, to provide scholarships and bursaries, and the incentives we insisted upon so those schools could be built in order that Canadians could start to be educated and take the jobs we were beginning to provide in our new industries, cannot say that education is simply a provincial affair. I know I am treading on very dangerous ground when I suggest that the federal government has any responsibility or should have any say in this field; but I think I have illustrated the point, and our history illustrates the point, that whereas education was a provincial responsibility, it had become a federal responsibility to try and match the economy of this country with the demands of modem civilization. The provincial authorities, not having the responsibilities in this regard, had not looked far enough ahead and had therefore failed to meet the educational requirements of the changing situation.

I presume that those who preach the sanctity of provincial rights are going to say, "What should have been done was turn this money over to the provinces so they could have built these schools". But it was not just a case of turning the money over to the provinces; it had to be a case of achieving the desired objective of Canada as a whole. If we had given each provincial government a certain amount of money and had said, "Spend it on education", they would have said it was within their right to spend it as they saw fit and we would not have had nearly the effective results that were needed in this regard.

It is this aspect of the national problem of the sharing of the tax dollar that I think has not received enough consideration in this

Federal-Provincial Relations house. Today there are too many responsibilities that must be tackled on a national scale. The hon. member for Northwest Territories pointed out how the people in his area are neglected and what their standard of living is like. He drew attention to some of the difficulties they have to put up with. And they are all Canadians. I think those of us in this house would agree that if they are able and willing to work as hard and apply themselves as industriously as the rest of us in other parts of the country, there is nothing unfair in suggesting that they should be entitled to a fair standard of living. I suggest that in many of our negotiations with the provinces this question has bothered the provincial governments very little, if at all. As the hon. member for Bow River pointed out, certainly it is the job of each provincial premier to try to get the most for his province; and I can certainly understand the adversary system whereby you have everything best said by a person appearing on one side, and then the best said on the other side. The premiers come and defend their needs and the federal government must defend the needs of the federal government.

I suggest to hon. members that no matter what constituencies we represent we are all elected as members of parliament for Canada, and we cannot get too parochial in our views. I suggest we must be Canadians first and members of a province next. I am afraid we must look at some of the financial responsibilities under the British North America Act, and instead of saying that our only problem is to redistribute the tax dollar so as to allow the provinces to carry out those responsibilities which they are stuck with and which grow on them each day, we should perhaps take a close look at the powers which the provinces have and at the powers the federal government have and see whether more of the provincial responsibilities cannot be shared by the federal government. I am not suggesting that these powers necessarily have to be transferred, but I do think that if those problems which are important to all Canada are to be tackled in such a way as to give any sort of equality to the people in Canada, despite differences in the natural resources of the different provinces, there must be more uniformity in those projects which are so important to the trade and industry of each province.

I find it a little distressing to find signs of interprovincial strife in attracting industry. Certainly it sounds well and good for each

Federal-Provincial Relations province to do what it can to attract industry to its area, but we wonder how far we can go in making concessions to certain firms because they are located in a given province before we are penalizing other firms because they are not so located, and I mean other Canadian firms. I wonder how far we can go in this direction before it can honestly be said that interprovincially, so to speak, we are erecting trade barriers between provinces.

I suggest that wherever new industries or depressed areas come to the attention of the provincial governments, if we are going to put more financial power into the hands of the provinces, part of which money being used to develop their own resources, it may be necessary to force the provinces to co-operate a little better across the country so that there is more uniformity in the manner in which concessions to industry are made.

The hon. member for Bow River mentioned the taxing powers of some former governments. We have certainly heard mention of some of the efforts made by the previous government to equalize the tax benefits throughout the country. The province of Newfoundland is not very rich. The Northwest Territories has tremendous problems. The province of Prince Edward Island is very small, and probably overburdened because it has to bear a provincial government for such a small population. If all provinces are to be treated alike there cannot be equality of opportunity; there cannot be what I call a fair Canadian share of the wealth of this country, by any stretch of the imagination. I think that when we are considering taxation and concessions to one province or another, as soon as we start making an exception of one province and as soon as we bring in a federal plan which allows one province to opt out, we are opening the door to fragmentation. I think the pension plan as it was first envisaged was a particularly pointed example of that sort of thing. Any scheme which is to be so far reaching that it might in a few years build up such tremendous sums of money and which would be so important to so many people when it could not be called all-Canadian, which might in fact be competing with a scheme put forward by another province, to me presents one of the most ridiculous situations this country has had to face-one which 1 suspect the members of this house, from what I have heard so far, have not begun to dream of or are not very willing to look at. I suggest that this impact on the nature of

the government, on the nature of democracy in Canada and on the nature of our federal-provincial relationship has not been seriously enough considered.

I think I have mentioned before in this house, and it will bear repeating, that once the provinces get their hands on the pension funds which will be built up, once each provincial government has the ability to put its hand on a large sum of money which it can direct toward aiding its own industry in its own way, when we consider that that has in some instances already taken the form of competition with other parts of the country, and when we realize that provinces always try to attract industry, I suggest that the ownership of that amount of money and the amount of influence it would have is bound to have a very far reaching effect on the type of government you will get in each of the provinces.

Carried not to its logical conclusion but just carried a step or two further, it is not hard to envisage provincial governments changing their policy or being kept in power because of the manner in which they have been able to use their money to attract more industry into the province. One of the ways to do this, of course, is by way of tax concessions within the provinces; tax concessions at the municipal level, making available special loan funds at special rates of interest, and so on. I suggest that once any of these devices fail to prove effective enough there is another simple step which can be taken if the province has the money. There is always money available for a provincial government to lend to some of its friends, or to set up business in competition with businessmen who will not co-operate. I fail to see how we can prevent such a natural course of affairs being carried on if we continue to regard taxation problems as though they were created for one province and by making special deals with another province. Every time there is a suggestion similar to that contained in this resolution, the question must be looked at on a dominion-wide basis. If one province for any reason is unwilling or unable to go along, if it feels this is an undue interference by the federal government in provincial affairs, then I suggest the alternative is not to surrender to the province and merely give them the money and aid in this fragmentation which is going to make life in Canada so much more difficult; the alternative I suggest is that the provinces themselves must co-operate. When they ask for special concessions, each and

every province, having regard to the wish of each to obtain autonomy, must be able to co-operate one with another. I suggest that this is not impinging upon federal authority. It is paying regard to the responsibilities of the province, and this will enable co-operation to take place. I also suggest it would provide the machinery for the federal government to assist all provinces on a common basis and would bring about some uniform method of handling each change in responsibility as the need for new sources of revenue arises.

I am afraid most of us have not looked long enough and hard enough at deficits. Certainly when the Conservatives were the government the Liberals made enough noise about the deficits and how dangerous they were, but we have seen nothing to date which indicates that the danger has passed. The present trend of concessions to individual provinces has done nothing but make the problem more acute.

When we consider such fundamental responsibilities of the federal government as deficits and our need to help through external aid the less developed countries, there is no doubt that any time this government considers the changing demands of society there is no reason for us to believe there will be less demand than at present on the federal dollar. Therefore I suggest that we look With extreme suspicion on any further scheme by which federal funds may go to one province for a distinct purpose where that province is going to use its money differently than another.

I have never been too enthusiastic about a strong central government but it is only basic, facing the political facts of life, to realize that a strong central government is essential is we are to keep up as a modern nation state. Other nations have gone to great extremes. They have started trading cartels. They have formed great state trading companies and restrictions are placed on private manufacturers on the way in which they can compete in foreign markets. Many new devices and stratagems have been used by those governments to make sure that they get a fair share of the world market.

I suggest that we are going to be called on more and more for such things as export credits and export insurance, for more and more use of devices such as aid to depressed areas, and more tax concessions for industries, for new industries and expanding industries. There is going to be a greater and

Federal-Provincial Relations greater demand, and if that demand is to be met by individual provinces rather than the federal government, then the intraprovincial warfare resulting is going to cripple this nation even more than the fatal flag issue has done.

I suggest that every time we are going to consider a resolution of this type we must take a look at what it is going to do to the powers of government, what it is going to do to the relations of provincial governments one to another, as well as what it is going to do about crippling the federal government so that it can no longer meet all those responsibilities it already has, not to speak of those which will arise in the future.

Topic:   DOMINION-PROVINCIAL RELATIONS PROVISION FOR REVISION OF FISCAL ARRANGEMENTS AND TAXATION PROVISIONS
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PC

Gerald William Baldwin

Progressive Conservative

Mr. Baldwin:

Mr. Chairman, I am encouraged to make a brief intervention in this debate because of the alert and intelligent interest which the Minister of Finance is giving to the members on this side of the chamber. I am sure he is absorbing with great interest the remarkable flow of ideas which have come principally from the official opposition and I hope that the bill which the minister has ready-that is, assuming it is ready in case he has not anticipated the speedy passage of this resolution-will contain some of the very intelligent and fine suggestions which members of the official opposition have been making. I am glad to see the minister has the bill and I hope by the time it is presented some of these suggestions will have found their way between the four corners of it.

The real pith and substance of the resolution will, of course, be contained in the bill which the minister is going to bring forward, and at that time there will be room for an excellent debate. At this stage I want to deal with what I think is a by-product of this resolution because it is my view that behind the fagade of the resolution there lies one of the real problems which is gnawing at the vitals of this nation, and that is the virtual stumbling position to which our federal system has now brought itself, and which is exhibited in the type of resolution such as this which the minister has introduced to the committee.

The natural tendency is to shrug our shoulders and accept the necessity of this resolution as simply being the most recent patch on the fabric of our country's constitutional system, a patch which probably covers numerous other patches. It is an attempt, as usual, to attack the consequences and to walk past the real root causes of the situation, which develop

Federal-Provincial Relations from time to time, compelling the federal government to provide these additional aids to the provinces. The trouble is like a hydraheaded monster, that every time we fix up a temporary solution of this kind unfortunately we find later that there are ten more problems which the federal and provincial governments have to deal with.

I think that is manifest when you just look at the order paper. Today there appeared under government notices of motions the bill dealing with the loans to students. A short time ago we passed the bill dealing with youth allowances. These are excellent programs. I am for them and I think they are going to do a great deal so far as the educational facilities of the country are concerned. But what are they going to do with the financial position of the provincial governments? There is going to be a tremendous amount of pressure exerted on them to provide the fiscal plant and facilities which the provinces are compelled to provide constitutionally, to take care of the increased number of students who, I hope as a result of these two measures, will be seeking to secure a better education. This means I suppose that in two or three years the minister will be met at the conference table with demands for more money to meet the requirements to provide these additional educational facilities.

There are other measures on the order paper, measures to provide for the old age pensions, in which the provinces have a direct financial concern. There is a measure to amend the Crop Insurance Act which is probably going to draw more provinces into the crop insurance field, and is going to place some financial burden on those provinces. There is a measure dealing with the department of forestry and rural development, which leads us to think of the ARDA program, which causes a financial burden on the provinces. Then there is this particular measure itself. These are just a few of them and my submission is that this simply means we are only trying to strike down the effects of our failure to deal with this matter as it should be dealt with, by going right to the root of it.

Parenthetically I think it is quite a tribute to the flexibility of our system that we have been able to adapt it, to mould it, to change it, so that when during periods of two great wars additional strength was required at the core or heart of the federal government, that strength flowed into the government at Ottawa. But conversely now, with a weak government far too sensitive and susceptible

to public opinion, with strong, almost domineering provincial governments and leaders, we find the flow of strength away from the central government to the provincial governments.

I feel that if this tendency continues and increases, as it is bound to, in the not too distant future the stresses and strains upon our constitutional system will probably cause it to snap. There is no doubt that these movements are so strong and irresistible that thoughtful Canadians are beginning to wonder if the tide will leave the federal government stripped of the minimum and essential power to deal with matters of fiscal administration and trade policy. Once this happens, then we are in a rough way.

I recall not so very long ago that the minister of revenue of Quebec, who as far as I know seems to be a very reasonable man apart from his political affiliations, suggested apparently in perfect seriousness that the federal government should consult the provincial governments prior to the enactment of fiscal and monetary policies, which are the direct responsibility of the federal government. I asked the minister a question about this and Mr. Speaker stopped me, probably quite properly. I am not sure what the answer would have been, but this just indicates the extent to which the stripping away of the powers of the federal government has gone.

There is another aspect to this matter. In a democratic parliamentary system governments should be the boss within certain limitations between elections, helped of course by a hard working and intelligent opposition. But at election time the government must face its masters, the people, and at that time any government, whether provincial or federal, should be prepared to account, on the basis of the principle of constitutional responsibility, for the moneys which it has taken from the taxpayers and has spent. What becomes of that theory under this system? The provincial governments are securing an increasingly larger share of their revenue from the federal government. In the result, Mr. Chairman, there is a failure of responsibility. The provincial governments are even boasting of the fact that they have used pressure to squeeze more money out of the federal government. If this is carried on I greatly fear it will lead to a whittling away, an erosion, of the constitution and the proper democratic powers of the legislatures of this country.

I have more to say on this subject, Mr. Chairman, but I am going to leave it until the bill is before us. I do want to make one further suggestion and then I will sit down in plenty of time for the resolution to be passed, unless what the opposition has said has stimulated members on the government side to offer additional suggestions to the minister. I support what the Leader of the Opposition had to say when he proposed that there should be a procedure of dealing with this entire matter. I do not subscribe entirely to the methods he suggested, but this matter must be tackled right at the root of the difficulty. There should and must be an examination of the entire spectrum of the relationships between the federal and provincial governments.

This cannot be done through the medium of the B. and B. commission, which is simply a forum where violent and opposing philosophies and theories meet head on. It provides a good three ring circus at times but you do not come out with any useful suggestions. You do not do so either at federal-provincial conferences of the usual type which, as I said before, are simply a bargaining table where the provincial premiers come as to an auction sale to demand, like Oliver Twist, more and more and more.

I suggest that the answer lies in a meeting of representatives of the federal and provincial governments without this paraphernalia, in an atmosphere which is free from the harsh and rasping discordance that we have seen too much of in and out of this house in connection with debates as to national symbols, which are quite important but which I do not think are appropriate at this time.

Let me conclude on this note. I think there is a general reservoir or fund of good will in all parts of the country, throughout all the various provinces whether it be Quebec, Ontario or the Atlantic provinces, but because of the character of some of the debates which have been initiated by the government that bank account of good will has had cheques drawn against it. Before it is too late, before the fund is exhausted, I suggest to the government that they should act at once to call together a conference of the type envisaged by my leader to deal with the entire problem so that we will not have to follow this piecemeal approach of trying to deal with these problems one at a time, and by the time we get one solved we find there are 10 new ones. Only in this way will we be able to make a substantial contribution to the

Judges Act

constitutional problems of this country and be able to do away with the type of resolution which we are being forced to discuss tonight.

Resolution reported and concurred in.

Mr. Gordon thereupon moved for leave to introduce Bill No. C-lll, to provide for the

revision of certain fiscal arrangements with the provinces and to provide adjustments of fiscal arrangements and taxation provisions consequential upon the provision of youth allowances to parents resident in certain provinces.

Motion agreed to and bill read the first time.

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JUDGES ACT

PROVISION FOR SALARIES FOR ADDITIONAL JUDGES

LIB

Guy Favreau (Minister of Justice and Attorney General of Canada; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Hon. Guy Favreau (Minister of Justice) moved

that the house go into committee to consider the following resolution:

That it is expedient to introduce a measure to amend the Judges Act to authorize the provision of salaries for seven additional judges as follows:

(a) three judges of the superior court of Quebec;

(b) one justice of appeal of the supreme court of Alberta;

(c) two Ontario county court judges; and

(d) one British Columbia county court judge.

Motion agreed to and the house went into committee, Mr. Lamoureux in the chair.

Topic:   JUDGES ACT
Subtopic:   PROVISION FOR SALARIES FOR ADDITIONAL JUDGES
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LIB

Guy Favreau (Minister of Justice and Attorney General of Canada; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. Favreau:

Mr. Chairman, the purpose of this resolution is to amend the Judges Act in order to provide for the salaries of seven additional judges in Canada, as follows: three new judges for the superior court of Quebec; one additional judge for the appellate division of the supreme court of Alberta; two additional Ontario county court judges; and one additional British Columbia county court judge.

Every hon. member knows that, under section 92 of the British North America Act, the province has jurisdiction to set up, organize and maintain the courts. On the other hand, under section 92 of the same act, the governor in council is responsible for appointing the judges of the superior court as well as those of the county courts. Consequently, each province, having set up a superior court or a county court, amends its legislation as need be, for the purposes of the administration of justice, to extend the membership of the court. Since the appointment of judges and

Judges Act

the payment of their salaries come under federal jurisdiction, the federal Judges Act is amended accordingly.

I must say that in the case of Alberta, Ontario and British Columbia, the provincial acts have already been amended in order to provide for an increased number of judges as indicated in the resolution under study. As for the province of Quebec, the act has not yet been amended, but it will be before the end of the present session of the Quebec legislature. The request has been formally submitted by the attorney general of the province of Quebec, following representations made by the bar, the chief justice and the deputy chief justice of the province of Quebec.

The government is following the same policy as its predecessors and I feel it is the only one possible under the constitution.

Since the administration of justice comes under the provincial authorities or governments, one must presume that whenever provincial legislation concerning the courts is amended at the request of a provincial attorney general to enlarge the scope of a court, such action it taken only after consideration has been given to the matter, that it meets a real need in the province, and on the basis of the respective responsibilities of both the attorney general and the government of the province in matters pertaining to the administration of justice within the province.

Considering that eventually judges will have to be appointed, I feel the government must amend the Judges Act; obviously, additional precautions will have to be taken when, on the recommendation of the cabinet, the Governor General proceeds to appoint judges whose salary is now set by the law.

Consequently, I would suggest to the house that when it was passed the usual stages, the act be amended along the lines I have just indicated.

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Subtopic:   PROVISION FOR SALARIES FOR ADDITIONAL JUDGES
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PC

Marcel Joseph Aimé Lambert

Progressive Conservative

Mr. Lambert:

Mr. Chairman, there are just a few remarks I should like to make, first of all, on item (b) in the resolution. I am sure that, coming from the province of Alberta, I fully appreciate on behalf of the bar and all connected with the practice of law the necessity that has arisen during the past two or three years for a further expansion of the appellate division of the supreme court of that province. The population increase and the additional burdens on the court have made it absolutely essential that this be done. I am glad to see that it is being done. I am

sure that the same thing applies to the appointments envisaged in the remainder of the resolution.

However there is one point about which I should like to inquire from the minister. It concerns something that his predecessor had agreed with me should be done and it involved an amendment to the Judges Act. I am referring to a sort of lapsus that occurred last year in amending the Judges Act dealing with changes in the pensions or salary levels of certain judges who had retired just before the passage of the legislation and actually going back, I think, to deal with those who had been compulsorily retired in 1961. Perhaps this would have been the cut-off date. There were some rather, shall we say, agonizing cases-I do not like to use the phrase "distressing cases"-but there were some hard cases. The changes in the judges' salaries had been envisaged for some considerable time. They had been seriously considered by the previous administration but they were so tied with other things they were not brought forward. I am wondering why, at this stage, the minister has not proposed or the government has not proposed we review this matter, because it has been my understanding both with his predecessor and with the government leader in the other place, that this likely would be attended to at the next opening up of the Judges Act.

I must regret this has not happened on this occasion. Of course, there is still an opportunity during this session to deal with the particular item of business and if the Minister of Justice, in his capacity as house leader, wishes to have another one of these fillers on the legislative side, we would certainly entertain an amendment to the act regarding the matter I have suggested.

Topic:   JUDGES ACT
Subtopic:   PROVISION FOR SALARIES FOR ADDITIONAL JUDGES
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July 13, 1964