I can tell my hon. friend opposite, to ease his mind, that I do not want to make a run on the treasury myself.
I am thinking at the moment of the city of Toronto, where they need a big customs house.
I think that is something they should get, and I have no doubt they will get it in time. There are of course a good many other localities besides Toronto and Montreal in which public money should be spent, because I know in certain sections of the country they are very badly in need of post offices and other public buildings. I do not- suggest that this money should be spent on public buildings alone, however, and I will give you an instance of another way in which some of this money could be profitably spent. In the town of Kapuskasing, within the limits of my own constituency, we have the best experimental farm in the whole of Canada, but within the last year I have had several reports from the settlers of that district fo the effect that some of the horses belonging to that experimental farm were being hired out in order to make both ends meet. There is a case in which I believe some money could be spent to great advantage, because it is not fair for the settlers of that district to have to compete with government agencies in that way. I have suggested to the Minister of Agriculture (Mr. Motherwell) that sufficient money be given that experimental farm to permit them to meet their own expenses, and relieve the settlers in that neighbourhood from this unfair competition.
We cannot always go by what we see in the newspapers; sometimes they contain the whole truth and nothing but the truth, but at other times they contain very queer things, and I would not like it to be understood that I am suggesting a run on the treasury. I do not intend to make any such raid unless conditions absolutely warrant it, but in this case I believe we could spend at least $10,000 more with very good results.
One of the other things with which I would like to deal while I am on my feet is the very momentous question of the taxation of railway properties. People in the town of Cochrane, and when I say that I include the whole district of northern Quebec and northern Ontario practically from Quebec city to the Manitoba border, have been agitating for the last ten years at least that the property of the Canadian National Railways, or at all events a section of the old National Transcontinental line, should be taxed. We had several promises made by different ministers of federal governments of both parties, but with no result, and I am putting this before the house not in' any political sense but because I believe it to be a national matter. In order that this cause might be furthered, before the house opened I gave notice of the following motion:
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Taxation of Canadian National Railway property, on that portion of the railway system primarily known as the National Transcontinental, and extending from Quebec city to Winnipeg, for municipal and school purposes, in all localities, along these sections of the railway municipally organized-
Whereas, government ownership of the Canadian National railway system has created a burdensome situation in a number of municipalities through having a large portion of otherwise assessable property placed on the exempt list; and
Whereas, in many cases the loss of municipal taxes from such exempt property is out of proportion and creates a very serious loss of revenue absolutely needed for the proper administration of municipal affairs; and
Whereas, the prerogative of the crown, of having crown property exempt from taxation, was established prior to the crown ever expecting to or undertaking to take up competitive business in full competition with private corporations which are subject to municipal taxation; and
Whereas, it would appear that justice and equity would preclude the crown from taking advantage over private corporations in the discharge of corporate business; and
Whereas, the National Transcontinental was built by the Dominion government for the Grand Trunk Pacific railway on the understanding that it would be handed over to this latter railway on completion and under a lease, as an integral part of the Grand Trunk Pacific system; and
Whereas, the principle of taxation of railway property on the Canadian National railway has been maintained and in some cases established, in most sections of the present corporation, namely; over the portions of the system originally called the Grand Trunk railway, the Grand Trunk Pacific, the Canadian Northern and the Intercolonial;
Therefore be it resolved: That this house urges tile waiving of the prerogative of the crown of exempting any such railway property from municipal and school taxation, on that section of the Canadian National railway system originally known as the National Transcontinental railway, from Quebec city to Winnipeg, for all organized municipalities along that part of the Canadian National railway system, which is occupied and used solely for the administration and maintenance of that portion of the aforesaid railway system.
A few days afterwards I received the following letter from the Clerk of the House of Commons:
January 19 th, 1928.
Dear Mr. Bradette,
The notice of motion which you sent in for the order paper does not seem to be in order, as resolutions to increase a charge upon the people must be introduced by the government with the recommendation of the Governor General.
You are asking by this motion that the house urge the waiving of the prerogative of the crown of exempting the Canadian National Railways from the municipal taxation in a certain part of the country. If you secure an affirmative 56103-rl2i
vote, the government will be bound to renounce these taxes. In other words you are asking for a decision of the house on a charge upon the people without following the ordinary practice.
I took the matter up with Mr. Speaker this morning and he entirely agrees with me. I regret therefore my inability to give notice of this motion when the session opens.
As I said before, this is a very important matter for northern Ontario. I have no quarrel \Vhatever with public ownership. I am well aware of the fact that public ownership is dcfing wonderful work in the province of Ontario; it has certainly accomplished striking results from an industrial and commercial point of view in the southern portion of the province. I doubt, however, if we should have the prosperity we enjoy to-day in northern Ontario if we had had to depend upon that policy. To private ownership and the investment of private capital we owe much of the development in the northern parts of the province. In presenting the case as I do for the town of Cochrane I am speaking for the whole of northern Ontario and northern Quebec. In that sparsely populated northern country the municipalities need all the taxation they can get, and the amount involved here will run to from $75,000 to $100,000 a year.
I am going to read a memorial which was drawn up by the town of Cochrane, discussing the merits of the case. Other municipalities have concurred in this representation, and although it is somewhat lengthy I deem it better to place it before the house so that all hon. members may be apprised of the fact. The communication in question reads as follows:
The municipal council of the town of Cochrane, in conjunction with other municipal bodies in northern Ontario and northern Quebec, has the honour to place before the honourable the Minister of Railways and Canals, the great injustice suffered by the towns and villages in these localities through the differentiation in respect to taxation for municipal purposes of the Canadian National railways, and to respectfully submit the following facts in connextion therewith: -
(1) The National Transcontinental line was built by the Dominion government for the Grand Trunk Pacific Railway on the understanding that it would be handed over to this latter railway on completion and under a lease, as an integral part of the Grand Trunk Pacific system.
(2) The National Transcontinental line, to all intent and purpose, was completed at the close of the year of 1913 but the failure of the Grand Trunk Pacific Railway to fulfil their undertaking left the National Transcontinental line at the mercy of an indifferent operation of portions of the road, by contractors, thereby greatly retarding the development around hero, until in July 1915 it was consolidated with the Intercolonial railway into the Canadian Government railways and has been in operation ever since.
(3) A large section of the National Transcontinental line has heen built through virgin lands
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of northern Ontario and northern Quebec and must be considered, in every sense of the word, purely a colonization road and the townsites along this section have been laid out on picked out level stretches of either muskeg or swampy bush land which required an enormous amount of groundwork in the clearing, in order to permit even the most rudimentary town planning.
(4) The building of this colonization portion Of the National Transcontinental line can therefore in no way be considered a boou to the towns along its right of way as all these towns had to come subsequent to the building of the railway and they have since done their full sh9.re in the colonization and development of the territory within their sphere of influence, in even a larger proportion than the railway itself has done for northern Ontario and northern Quebec.
(5) The demand for educational and sanitary measures alone, in the building up of the towns to the present time, has been out of all proportion to the ability of ratepayers of these towns, to meet, since the largest property holders, the railways, are exempt from municipal taxation.
(6) Conditions as they exist to-day in Cochrane are to be found in a more or less like measure along the entire colonization section of the National Transcontinental line between La Tuque, Quebec, and the Manitoba boundary.
(7) In addition, the town of Cochrane, in common with other towns and villages along the National Transcontinental line in northern Ontario and northern Quebec, has suffered repeated devastation and the town of Cochrane especially, suffered on two occasions almost complete destruction by fire which struck the town from surrounding bush lands and for which no blame can be attached for lack of prevention.
(8) Again, owing to the inability of collecting adequate taxes, by reason of exemption of railway property, the town of Cochrane suffered severely through the scourge of epidemics, brought about through lack of funds to complete necessary sanitary improvements, with the consequence that the ratepayers have been greatly impoverished besides causing intense suffering through loss by death of a large number of citizens.
(9) In the year 1919 the town of Cochrane petitioned the Dominion government and parliament for relief through permitting assessment of railway property within the municipality' and a promise was made that pending legislation of the session of 1919 would make special intervention by the government unnecessary, as through the creation of the Canadian National Railway Company, this company would be given a lease of the Canadian Government railways and would take the status of any ordinary corporation.
(10) Statements made in the House of Commons at that time by the leader of the government, as appearing in Hansard of that session, clearly indicate the intention of the government to fulfil promises made to the town of Cochrane, but there is nothing in the final bill enacting the Canadian National Railways Company to supplement such statements.
(11) The colonization section of the National Transcontinental line is the only railway built in Canada through virgin lands in the last forty years which has never assisted in the building and subsequent progress and development of towns and villages along its course, by assuming their just share of taxes to such muni-
cipalities, and yet the proper operation of a railway, and the subsequent success from such, preconceives that towns be built and conveniences be furnished to further the welfare and provide suitable living conditions for the employees of such railway.
(12) There is no place in Canada which presents a more incongruous situation than that which exists in northern Ontario and northern Quebec with respect to exemption of railway property from municipal taxation and no comparison can be made with other sections of the Canadian Government railways where the advent of the railways came subsequent to the existence of towns and villages, thereby bene-fitting such towns and villages in a large measure. Any assistance, therefore, which may " be granted to the town of Cochrane and other municipalities along the colonization section of the National Transcontinental line, can in no way be considered a precedent, to be followed in respect to other places.
At a meeting of representatives of municipal bodies from along the colonization section of the National Transcontinental line between La Tuque and the Manitoba boundary, at which delegates were present from Cochrane, Sioux Lookout, Redditt, Kapuskasing, Hunta and Moonbeam in Ontario and Privat in Quebec, the following representation was fully concurred in.
Therefore, having in mind the unwillingness of the Dominion government to open up the general question of taxation of Canadian government railway property, the undersigned municipal corporations urgently request the honourable, the Minister of Railways and Canals to favourably consider the justice of making an annual compassionate grant, in lieu of taxes, to the municipal bodies affected and to have the necessary appropriation for the current year included in the supplementary estimates to come before the House of Commons during the present session, on the basis of the average annual loss of taxes had the railway property been subject to taxation.
The loss from taxation suffered by the town of Cochrane, based on a property assessment of the National Transcontinental line within the municipality, as appearing on the Cochrane assessment roll, of approximately $300,000 since 1915, when the line became operative, would at an average tax rate of 40 mills represent a sum of $12,000 annually, or for the whole period until the end of the year 1923 a total of $108,000.
The loss from taxation suffered by the town of Sioux Lookout, based on a property assessment of the National Transcontinental line within the municipality, as appearing on the Sioux Lookout assessment roll, of approximately $448,900 since 1915, would at an average tax rate of 40 mills represent a sum of $17,950 annually or for the whole period until the end of 1923 of the year 1923 a total of $161,550.
The loss from taxation suffered by the town of Kapuskasing, based on an assessment of $20,000 since 1921, the inception of the town, would at an average tax rate of 42 mills amount to $840 annually or a total since 1921 of $2,520.
The loss from taxation suffered by the public school section No. 2, Clute and Calder, at
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Hmita, based on an assessment of 83,000 would at an average rate of 22 mills amount to $66 annually or a total since 1921 of $198.
All of which is most respectfully submitted.
We sent several delegates to interview the government of the day, and although we were all given a warm welcome and a sympathetic reception, no headway was made in the direction of the desired legislation. I have here several letters that 1 have received either from members of the government or from one or other of the two political parties dealing with this matter.
Here is a letter signed by Senator G. D. Robertson, and written under date of February 14, 1923:
Dear Sir: .
This will acknowledge receipt of your letter of the 8th inst. together with printed circular enclosed referring to the desirability of the Canadian National Railways being assessed for municipal and school purposes.
At Cochrane and other points along the Transcontinental where the railway property represents a large portion of the improved property in the municipality, I readily appreciate the propriety of the railway bearing some of the cost of municipal taxation, especially for schools, as most of the children attending such schools are children of employees of the railway company and such employees ought not to be taxed for school purposes more heavily than are similar employees in other municipalities where the proportion of taxation is more widely distributed. This question was discussed some two years ago by the late government, being brought to its attention by the undersigned after my return from Winnipeg in August 1920 via the Transcontinental railway, when this question was brought to my attention, but it was not deemed advisable to take action at that time, or until the whole of the government-owned lines were merged into one system. Now that this is being done and the Grand Trunk and Canadian Northern portions of the Canadian National system do pay taxes, there would seem to be no good reason why some reasonable rate of taxation should not also be imposed upon the portions of the national system formerly known as the Canadian Government Railways.
I shall be glad to lend such aid as I may be able to bring some relief to your municipality, and others similarly situated, but feel that the movement should be initiated in the House of Commons, as the jurisdiction of the Senate, of which I am a member, respecting the introduction of money bills might be questioned.
This is a letter dated February 23, 1923, from Mr. William Irvine, M.P.:
I have received your communication, alsc resolution passed by the municipality of Cochrane, regarding the taxation of Canadian railway property -within the boundaries of your municipality. I certainly am in favour of the taxation which you demand, and if the matter is brought before parliament, it will certainly receive my support.
I have on file at least a hundred letters from ministers, premiers of the day and
members of parliament, and although many of these letters were absolutely non-committal, some of them were sympathetic. From these letters I gathered the impression that this matter was going to be brought before the house. I had the good fortune on one occasion of listening to the late Hon. Frank Cochrane, then representing a portion of the riding which I have the honour to represent to-day. He was at that time Minister of Railways and, speaking at Cochrane, my home town, he said that government railway property should be taxable; that it was an injustice, especially in connection with that section of the Transcontinental, that it should not be taxed. Do hon. members realize that to-day, as has been stated in those petitions, the Canadian National railway system is actually paying taxes on most sections of the road, and that in 1925, if I am correct, special grants were given to the provinces of New Brunswick and Nova Scotia, to the amount of $230,000 a year, as compassionate grants in lieu of taxes? As I said at the outset, we do not want straight taxation, but I believe we are entitled to a compassionate grant.
In the same year, 1925, an amount of $75,000 was offered to the province of Ontario, but for some reason, unknown to us and known only to Premier Ferguson, that offer was turned down. As I said at the beginning I believe the taxation on the whole system from Cochrane to Winnipeg will amount to $100,000, and I do not see why the Premier of Ontario refused that grant, which was and still is absolutely necessary. If the government is willing and ready to-day to extend that grant, it should be distributed through the provincial government or the railway municipal board to the municipalities. I remember on one occasion when a delegation was waiting upon the Hon. Mr. Ferguson, asking him for taxation on. the Temiskaming and Northern Ontario railway, which is a provincially owned railway, the answer he gave us was in this sense: The moment we
receive taxation from the Canadian National, the Temiskaming and Northern Ontario and the provincial government will do their share. In my home town the total assessment of those railways is at least a million dollars, so that if we were to receive a compassionate grant it should amount to at least $10,000 a year. I know the Canadian Pacific has a special department, with officials visiting all sections on which they are paying taxes. As hon. members are aware they are paying taxes on practically their whole
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system, but we would be satisfied with a compassionate grant instead of a straight assessment. Perhaps many people are not aware of certain facts. This is a clipping from the Northland Post, a Northern Ontario newspaper:
An enquiry from Ottawa regarding the conditions of British government property in London brings the information that the Imperial government pays practically on government property in London the local tax rates. The thing is done in the frequent British way of meeting a troublesome situation by doing what ought to be done, but specifying that no legal obligation is admitted. The Imperial government declines to acknowledge any liability for taxes but appoints an officer to report what is fair. The officer reports that it would be fair for the government to pay a certin amount to the local authorities -and it turns out that this certan amount is equal to what would be the taxes if the property were taxed.
As I say, we would be quite satisfied in Northern Ontario to receive such a grant. We do not want a straight assessment. Perhaps in the discussion some legal point might be brought up which it would be hard for us to overcome. After approaching the Canadian National Railways on many occasions we wrote a letter to their attorney and this is the reply, dated May 14, 1923:
I have your letter of the 9th inst. You ask whether the act incorporating the Canadian National Railway Company gives the directors wide powers in respect of taxation. In reply I beg to advise that it does not. The only powers that are given to us in respect of the Canadian Government Railways, under the entrusting order in council, are to manage and operate the property, that is, we practically have the powers of a general manager. Now the exemption from taxation relating to crown property held by his majesty in the right of the Dominion is found, as you know, in the British North America Act. As general manager we have no authority to disregard the terms of the British North America Act. It would be just as reasonable, or even more reasonable, to expect the Postmaster General to pay taxes on post office property and to waive the crown right for exemption as it would be for us to attempt to do so in respect of crown railway property in the town of Cochrane.
It seems to me that the only remedy can be by act of parliament, or by some act of the Dominion government directing us, notwithstanding the exemption, to pay taxes. This direction could not be limited to the town of Cochrane, it would have to extend equally to every municipality through which the government railways run, or wherever they own property, and the question therefore is a very large one. Furthermore, if the crown in respect of railway properties pays taxes, the same condition, though with less force, could be made by any other municipality where Dominion property is situated, in respect of post offices, military property, canal property,
immigration property, and all other property held on behalf of the crown. You cannot, it seems to me, admit liability in one case and deny it in another. You would have to treat all municipalities fairly and on an equal basis.
It can readily be admitted that the town of Cochrane is situated disadvantageous^ in respect of its taxable area, since a great deal of property is held for railway purposes either by Dominion railways or provincial railways. Both are equally exempt under the same act. On the other hand, it must be admitted that the town owes its very existence to the two railways in question.
If the matter came before our directors I would be obliged to advise them, from a legal point of view, that they had no power in themselves to waive the exemption provided by the British North America Act, as the question is purely one for the Dominion and provincial governments to consider and to remedy as they see fit. The only feasible remedy that I can see would be by a special appropriation made by parliament to the town in lieu of taxes, but whether the government or parliament would be content to recommend or pass such an appropriation is very questionable, in view of the discrimination they would thereby be making in favour of your municipality as against all others.
Those are some of the objections against such taxation. On one occasion I met Mr. Ruel personally and he made the same argument, that the British North America Act should be amended so that the government railways could pay taxes. Everyone is aware, without being a legal light, that when the British North America Act was drafted in 1867 there was no thought that the government would go into the railway business; that railways would be under public ownership. It was well known that the Canadian Pacific was under construction and no one dreamed that the government of the day or any future government would go into the railway busniess. But I believe in view of the manner in which the Canadian National Railways are being administered the system if not legally, at least is morally bound to pay taxes.
At the time of the amalgamation of the railway systems now forming the Canadian National Railways the Right Hon. Arthur Meighen, during the discussion in committee of the bill to effect the amalgamation, said, as reported in Hansard at page 1697:
It makes the new corporation liable at law and vests in the new corporation the rights at law of a corporation rather than putting it in the position of the crown. . . It can act as a corporation not subject to the restrictions or to the enjoyment of the privileges of the crown.
And again at page 1698 we find him saying:
Upon amalgamation the company will own the direct physical assets.
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Further at page 1703 we find him proceeding:
Does not this bill mean that we are attempting to set up a system of corporate management divorced from direct government interference or control of this great railway system-corporate as distinguished from departmental management? ... It seems to me to be a very real company. We want to make it a real company, but it will be a very unreal company if one-half is to be departmental and the other half corporate. I do think that while it is true that this is in reality a government enterprise, it is equally true that we are trying to operate it as a business concern under corporate management.
To live up to the spirit of these words, as the system to-day is being administered absolutely independent of the government-for I believe every member on both sides of the house will recognize that politics do not enter into the management-the whole system should be liable to taxation.
At page 1690 of Hansard I find the following pertinent statements of Sir Thomas White, at the time Minister of Finance and acting leader of the house:
This railway company of which the government is the virtual proprietor, notwithstanding the corporate form in which its assets are held, is not a department of the government in the same sense that the Railway or Customs or Inland Revenue is a department of the government.
That is a complete answer to the letter of Mr. Ruel, the counsel of the system regarding the ownership of the Canadian National Railways. Sir Thomas continued:
As I pointed out last evening when I spoke upon this matter, there are two ways in which the Dominion government could administer this great railway system which has now come into our hands and such other systems as may be acquired in the future. One way would be to attempt to administer them as the Intercolonial railway was administered, by the Railway department of the government, which, as the committee knows, is under the direct control of the Minister of Railways. The other way, both for practicability of administration and for divesting the government as far as possible of control in order that no question of political patronage may enter, is to administer them through the medium of a joint stock company or companies. Take the situation as it exists to-day. The various departments of the government, including the Railway department in respect of the Canadian Government Railway, make their estimates, and all expenditures are audited by the Auditor General, as my hon. friend has indicated. But in connection with the Canadian Northern Railway Company, whose stock is held by the government-just as the stock of this company which we are now creating will be held for the government -the administration being under a corporation is carried out as corporations carry out their enterprises. The corporation, as such, receives all revenue, and all expenditures are made under the authority of the board of directors.
It will be seen that it was said by tne government of the day that the Canadian National railway system was going to be run as a private corporation absolutely independent of the government. From that a layman would gather that the corporation would be liable to taxation just like any other private corporation. Another thing: to-day the Canadian National railway system is paying taxation to the tune of millions of dollars. Apparently what is meat in one case is fish in another, and northern Ontario seems to foe out of luck because of the fact that at the time of the construction of the National Transcontinental line the Grand Trunk Pacific did not want to undertake work of construction from Quebec to Winnipeg and through some unforeseen development the line was not taken over by that company. But I see no reason why we should be penalized on that account. It is absolutely unfair, and, I repeat, that morally, if not legally, the section of the population affected should be given compensation by way of taxation.
In the course of the evidence given by Mr. A. J. Mitchell, vice-president in charge of finance of the Canadian National Railways, when he appeared before the parliamentary committee on national railways and shipping, he stated that municipal and provincial taxes and taxes on lands in 1920 on the national lines amounted to $1,371,853.41. But northern Ontario did not get a cent of that money, other sections of the country benefited, and even the provinces of Alberta and Saskatchewan, although they may not be getting direct taxation, are taxing the revenue of the system. Here is another typical case which I quote:
A report from Toronto states that the Canadian National Railways lost the appeal in the divisional court respecting the business assessment on the Toronto suburban ticket office, executive offices and express sheds. The court of revision held that the assessments were not validly made. Judge Denton restored the assessment, and the Ontario Railway and Municipal Board affirmed his order. Now the appellate court sustains the board's ruling.
My time is almost up, Mr. Speaker, I have made this appeal as strongly as I know how, but I fear through lack of experience I have not made it nearly as convincing as I should like it to be.
Topic: EXPORT OF UNMANUFACTURED TOBACCO FROM CANADA BY FISCAL YEARS IN POUNDS