Mr. Herridge:

Mr. Speaker, while I am opposed to the principle of this bill, I was paired with the former president of the privy-council who I expected would be here this morning. However, when it comes to paring I am a George Washington. Had I voted, I would have voted against the motion.

Mr. Herridge:

I have a brief question. Could the minister enlighten the house as to what the $350,000 is to cover? Could she tell us what pictures have been purchased with this money, and in view of the fact that she has many more cultural opportunities than the member for Kootenay West could she explain to the committee the purpose and the philosophy behind abstract art?

Mr. Herridge:

Mr. Chairman, I rise very briefly to support the remarks made by the hon. member for Timiskaming and to congratulate the minister for the role she played in our centennial year. I also congratulate her on her ability to find men during that year. I have heard it said that she was the ideal personality to fulfil the role of Secretary of State during our centennial year. She combined in her personality that duality of the traditional and the go-go.

Mr. H. W. Herridge (Kootenay West):

Mr. Speaker, when I listen to these debates on fiscal and monetary policy and also when I listen to the Leader of the Opposition (Mr. Stanfield) I am always reminded of a well-known Doukhobor saying to the effect that if you stir the waters long enough you will muddy them so that no one will be able to see the fish.

I must say, having listened to the Leader of the Opposition and read in today's papers what happened in Toronto yesterday, that I cannot reconcile the philosophies of these two gentlemen. I think they are rather out of tune. I suggest to the Leader of the Opposition that he consult with the premier of Ontario to make certain that they are taking the same philosophic approach to taxation policies in this country, policies that represent the view of the Progressive Conservative party.

I intend to be brief, Mr. Speaker, because I do not think there is any necessity for me to repeat many of the arguments that have been made by members on the opposition side of the house in regard to this legislation. Let me say that I entered this debate with every sympathy for the minister, whom I recognize as an honourable man of integrity who is trying to do the best he can from his point of view under these very difficult conditions. However, Mr. Speaker, he suffers from the restrictions that are imposed by government policy. He suffers from the restrictions imposed by his own view of economic affairs and also from the restrictions imposed by all of those persons who occupy comfortable pews in Canada at the present time.

Nevertheless I give the minister credit for his work in connection with achieving complete exemption from United States controls over capital outflow to Canada and the additional $900 million in United States funds as stand-by credits to protect the Canadian dollar. I hope that these two major developments will be successful in maintaining the dollar at its present level. In my opinion, Mr. Speaker, it would be very hard under present circumstances to find fault with the minister's resolute action in defence of the Canadian dollar. This does not tie me in with the international bankers in any respect whatever, but I think it only fair to say that. As to what will be the effect of these actions, Mr. Speaker, I simply quote the Prime Minister's words today-that we must never give up hope. That is the attitude of a great many of us at this time to this aspect of our budgetary problems.

I am of the opinion that this new bill is more equitable than the former bill because it reduces the surtax on individual incomes from 5 per cent to 3 per cent. It also imposes a similar 3 per cent on corporation profits. I have heard some discussion in this connection and am given to understand that this 3 per cent tax on corporations may impose a hardship on small companies engaged in business or in manufacturing. We might hear more about that later in the committee stage.

[DOT] (5:00 p.m.)

I want to say a word or two about the Carter report, since it has been discussed a few times. I shall be brief. I see the agonized expression on the face of the Minister of Industry (Mr. Drury) but I intend to pursue the subject. The minister has been subjected to some criticism for his failure to implement the principles of the Carter commission report. However, so far as I am personally concerned, while our group supports the general principles of the Carter report, I am of the opinion that the minister was wise to allow all those interested in its recommendations to make representations to the government and to the various parties in this house. I have been personally advised by officers of the Royal Canadian Legion and other veterans organizations that they were very pleased to have the opportunity to make representations with respect to the proposed taxation of disability pensions.

The Canadian Federation of Agriculture, the national farm unions, the British Columbia Fruit Growers Association, the Beef Growers Association, the co-operatives, credit

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unions, various organizations interested in the status of women-I do not know why such an ancient chap as I am should always be getting letters from the ladies with respect to problems only-and other groups have informed the government that they are glad to have the opportunity to make representations with respect to certain recommendations contained in the Carter commission report. I think that was wise. I do not think it was possible to take action on such an important taxation proposal without getting the reaction and representations of those it is intended to affect.

As a strong supporter of the main recommendations of the Carter report, personally I am glad that the government has provided the opportunity for the representatives of these various groups to present their views. However, I am disappointed to know that this bill provides for the taxation of people in receipt of the $105 a month which they have been able to obtain only after passing a means test. Surely here was an opportunity for the government to recognize one of the principles outlined in the Carter commission report, when introducing this bill. I hope when we reach the committee stage some more will be said about this. I trust the minister has a more satisfactory answer than has appeared so far.

I now want to say a word or two about foreign investment, because that has been mentioned in this debate. The problem of foreign ownership of Canadian industry and resources is becoming more and more acute, and members of this party join with many other Canadians in deploring this development, not in a spirit of narrow minded nationalism but rather because foreign ownership and control often brings with it a pattern of industrial development that is not in the interests of the Canadian people. It also makes progressively more difficult the control and management of the Canadian economy by the Canadian people through their elected governments.

When the Regina manifesto was the economic bible of our party-and I still have a lingering affection for the Regina manifesto; I was one of the early pioneers in this movement, you know-this situation would have been handled very easily indeed. We should simply have said, "Let's socialize all these companies," and that would be the end of it.

It may interest you to know, Mr. Speaker, that I was very surprised when talking to that philosopher, polemic and poet of the

Income Tax Act

press gallery, Mr. Arthur Blakely, to hear that he was a strong supporter of the Regina manifesto. However, my spirits drooped when he gave me his reasons. He said he knew our party could never get elected to power while the Regina manifesto was our program. Needless to say, I was very interested in his observation. Since the time of the Regina manifesto our party has changed its policy. It now believes that the crucial issue before the Canadian people is not the nationality of the shareholders of any company, but rather, who determines and guides our national development. It was for this reason that the financial experts of this party discarded at the outset the idea of wholesale or extensive nationalization.

For one thing, our experts say that nationalization is impracticable, since it could not win the public support which is essential for any policy in a political democracy. It is for that reason that the New Democratic party proposes a Canada development fund, under government control, which would channel Canadian savings into investment in public or private enterprises, or a combination of both, to the advantage of the Canadian people as a whole. I think the former president of the privy council has done much to create a climate that is favourable to that idea in this country. He also wrote a book on the question.

I frankly admit I am not expert on financial affairs; I leave those questions to persons who have made a particular study of them, but I am a bit confused about the advantages or disadvantages of a fixed or floating exchange rate. However, Mr. Speaker, my reading on this problem indicates that over the years government of all political stripes have used fixed and floating exchange rates at particular times to meet what were described as national emergencies. I trust that in the near future the minister will inform the house of his reasons for supporting a fixed exchange rate under present circumstances.

I will frankly admit, Mr. Speaker, that my opposition to this bill is not based on intellectual concepts related to the handling of money, but on government policy in general. And here I want to list three or four reasons which induced me to oppose this bill. One of them is inflation. That is a subject that has been extensively discussed in this house and country. Surely all of us realize that inflation is one of the most serious problems we must face at this time and that inflation is the

March 13, 1968

Income Tax Act

reason for the increased cost of living, and the consequent increasing injustice suffered by those who are required to live on small fixed incomes-people such as pensioners of various types.

We know that the major cause of inflation in Canada at this time is the war in Viet Nam. Regardless of any bumbling or mistaken policies by this government, that is the major cause of inflation on the North American continent at this time. I might say in that respect that I consulted some persons who are, shall I say, well known in United States banking circles, and they have confirmed this.

The United States is living in a war oriented economy, the effects of which have been felt over the entire North American continent, which suffered a similar experience, though, to a lesser degree, during the Korean war. Therefore in my opinion in the interests of the Canadian people the government ought to do all it can to stop the war in Viet Nam. I am reliably informed that the quickest and most effective way to stop the war in Viet Nam is to prevent the export to the United States of Canadian nickel, which is so essential to the prosecution of that war. I am also informed that nickel is in short supply in Canada and in some other countries, and it is for this reason that the International Nickel Company is borrowing $50 million in the United States for plant expansion.

In this connection, considering former government action, I cannot understand why the government does not consider negotiating an agreement with the United States for nickel on terms similar to those offered to France for the export of uranium and, in so doing, earn the gratitude of all peace loving people, and take a confident step toward stopping inflation and the consequent increase in living costs in Canada, in addition to any other measures that the government of this country ought to take.

I find that in the Financial Post for January 27, 1968, Knowlton Nash wrote:

In Caesar's day, it cost about 75 cents to kill an enemy soldier; in world war II, the cost was up to $50,000 per dead enemy. In Viet Nam it's costing about $1 million for every enemy dead.

That indicates that the war economy of the United States and the cost of the war are the basic reasons for the inflation we suffer from at this time.

[DOT] (5:10 p.m.)

I am opposed to this measure because of government policy in this respect. While I am

normally a peaceful man, I am not a congenital pacifist. It is for this reason that as a Canadian socialist, in opposition to the views of some of the leaders of our party at that time, I supported the Canadian government's efforts in the second world war from the commencement, realizing that the Canadian government was fighting Hitler and the nazi philosophy which was a menace to our civilization. I wonder what would be happening now if Hitler had won that war. We would either be dead or in slavery. As I say, I am naturally inclined to be peaceful. Therefore, since about 1950 I have been opposed to Canada's support of NATO and have generally supported the arguments put forward by that well-known United States ambassador, Mr. Kennan. I have had no hesitation about presenting my views on this subject both in this house and in the country.

I must say I was interested to hear this morning that my arguments in this respect, presented at our founding convention in 1961, still linger in the memory of that impeccable, pithy and impartial columnist Mr. Maurice Western who was present on that occasion to hear two of the leading figures argue the case for staying in NATO and two other speakers, one of whom was the hon. member for Kootenay West, speak in favour of Canada's withdrawing from NATO. Anyway, since its founding convention in 1961 this party has been opposed to Canada's continued participation in NATO; we have made it clear that Canada should not remain in NATO, once that organization became a nuclear alliance.

The hon. member for Trinity (Mr. Hellyer), the former minister of national defence, replied to a question addressed to him by the hon. member for Kootenay West by saying, that NATO was a nuclear alliance and that the Canadian air division had a striking capacity 100 times greater than that required to destroy Hiroshima in the second world war. This is another reason I am opposed to the measure before us-because of the expenditures in relation to NATO membership.

What about NORAD? Since our founding convention in 1961, this party has repeatedly questioned whether any significant contribution has been made to the defence of Canada by NORAD. In any case we believe the organization has outlived its usefulness, that the agreements should therefore be terminated and that some of the money spent in this connection could be better spent on providing conventional troops or trained civilians for

March 13, 1968

the United Nations, or in aid to underdeveloped countries.

The estimates for the Department of National Defence for the coming fiscal year total $1,700 millions. We could have saved at least $700 million of this for a starter had we withdrawn from the NATO and NORAD agreements. This is another reason for my opposition to the bill before us.

I am also opposed to the bill because the government of Canada has refused to use the Bank of Canada to provide the social capital required by federal, provincial and municipal governments for social investment, such as housing, hospitals, schools and other necessary facilities required by governments.

In conclusion, I wish to philosophize to a modest extent in order to place my ideas before the house. I fully appreciate the minister's difficulties occasioned by government policy, his own ideas on economics and the fact that society's technology shapes the lives and the understanding of citizens. The technology of our times, while it is air-conditioned and automated, is still essentially capitalist in its structure and logic. We have more comfort today, but after talking to the dozens of people I meet I question whether the people as a whole are any happier than their parents were 50 years ago; in many cases they have lost their purpose in life, lost their zest for undertaking things and lost their community identity because of the increasing size of our cities.

Mr. Herridge:

Mr. Speaker, I was paired with the hon. member for Davenport (Mr. Gordon), who was called away on official business. Had I voted, I would have voted against the bill.