April 21, 1947 (20th Parliament, 3rd Session)


Clarence Gillis

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


If you could settle the question of subsidies tonight you could prorogue the house tomorrow morning; the work of the government would have been completed. I am very much interested1 in subsidies. The Minister of Justice stated that there were two
important functions that subsidies perform: one was to avoid inflation, and the other was to act as a means of redistributing income. I agree with him on that, but there is another important function that subsidies can also perform.
In a country like Canada, where you have a complete concentration of most of the major industries in the central part of the country, and most of the markets, since central Canada has the population, we find1 at the same time a flow of trade east and west, where practically everything that is produced has to be marketed in the central markets, so that in my opinion subsidies are necessary. Therefore the third important function that subsidies have to perform is either in eastern or in western Canada. Industries operating in that part of the country will not be economic industries under the present set-up. Some system of subsidies will have to be maintained by the federal government where industry that is essential to the country is uneconomic because of geographic reasons, and the removal of such subsidies deals a death-blow to any industrial set-up east or west.
May I point out to the minister the mess that we are in, both in Nova Scotia and in New Brunswick, in connection with the coal industry. I say, without fear of contradiction, that the removal of the subsidy on Nova Scotia coal, or the refusal of the government to subsidize the wage increase demanded at this time by the mine workers in order to meet the rising cost of living, is responsible for that situation.. If you take the loss in wealth, to say nothing of the loss from human suffering, and the blow it deals to the people, undermining their confidence, in those who are legislating for them, you cannot compute what we have lost in that part of the dominion. The removal of subsidies was the reason in that case. The government subsidies came off on April 15 on fuels imported into Canada, and a. week later there is an announcement by those who sell coal in Canada that coal prices have jumped from $2.75 to $4 a ton, an increase immediately that subsidies were removed to the consumers in central Canada. United States coal today is going into Nova Scotia and is selling at $28 a ton. That is plus freight in that province. A press item today states that United- States coal, plus freight, is selling to the consumer in Nova Scotia at $28 a ton. That is with the subsidies removed. But he who is selling coal in Canada has a way of compensating himself when the subsidy is removed. He immediately announces a price increase to the consumer equivalent to what the subsidy w^as to him. The consumer then
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ia paying the shot. But those in Canada who produce a commodity that was subsidized, when they ask for an increase to compensate for the rising cost of living because of the removal of subsidies and price controls, today have to go out and enter into what is, in effect, anarchy, and fight it out in the street with the boss. That is because of lack of government responsibility.
In my opinion this question of subsidies lies at the root- of our economic problem. I do not think anyone can maintain price controls once that system of subsidies is removed; and I definitely believe that, if this economy is to survive under the present scheme of things, most of the basic industries in this country will have to be subsidized to some extent in order to hold down prices. I am not so much concerned about the secondary industries; I am speaking about the basic industries like fuel, power, agriculture and textiles. In my opinion they will have to be subsidized if prices are to be held down. As the hon. member for Mackenzie pointed out a moment ago, the lower income groups are today not in a position to purchase the commodities which they require at the price they are selling for. Taxing those in the higher brackets and redistributing that income by holding down prices to those in the lower income groups is, in my opinion, the only way to maintain any kind of stable economy under the scheme of things as we have it today.

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