Hon. W. Earl Rowe (Dufferin-Simcoe):
Mr. Speaker, may I be permitted to deviate for a few moments from the subject now under debate in order to extend the sympathy of, I am sure, everybody in the house to the hon. member for Cochrane (Mr. Habel), chief whip of the opposition party, in the sad bereavement which he and his family suffered yesterday in the death of Mrs. Habel.
I realize that the annual budget is always an issue of keen national concern. This large budget is no exception, and before dealing with some of the implications may I extend my congratulations to the Minister of Finance (Mr. Fleming) on the able presentation he made the other day. It has been my privilege to observe at close range eight different ministers of finance in this parliament, and I may say that I think Canada has been very fortunate in having the outstanding talent, the high type of character, the devotion to duty and the distinguished service given by all these gentlemen. I feel we are still fortunate in having the hon. member for Eglinton as our present Minister of Finance. In native ability, in culture, in devotion to duty and industry I think he is unexcelled by any of his illustrious predecessors.
I know we all have a sense of pride stirred within us when we read that our gross national product has exceeded $35 billion. I must say, however, that as long as we have an unemployment problem and huge deficits on international payments and trade, I think we should beware of taking the size of the gross national product as a sound yardstick of our progress as the former government did. It is true that it indicates the vastness and variety of our resources and the native ability of our people. It is true that it emphasizes that no matter what may lie ahead we as Canadians hold the blue chips in terms of natural resources. We have more resources than any country with a similar number of people has ever enjoyed and we have need
of a farsighted, vigorous, energetic population characteristic of this northern climate.
With respect to those totalitarian people with whom we are forced to compete we must be wary of following the pattern of smug complacency followed by the previous government and of failing to recognize that we are meeting a new form of international competition from another type of society altogether. We have to stop and take stock of the totalitarian dictatorship which now controls half the world. They think they can outdo us, as it were, and gain economic supremacy over us. They believe we have grown soft as a result of our high standard of living and what they regard more or less as our reckless extravagance, short working hours and so forth. They believe we have grown soft and as a result shall fall like ripened fruit into their hands.
I think they underestimate us in holding that view but at the same time I suggest that we must avoid the pride and complacency that seemed to characterize those who ruled this country over a long period of time. We can rejoice in the fact that we have vast resources and a high standard of living but despite this we should at this period in our development tighten our belts a little and go to work in an effort to face the challenge of this problem.
It has been my privilege to watch the progress of this young country for some time both from the fields of agriculture and the factories of industry. I have been privileged by the sufferage of Dufferin-Simcoe to listen to more than one third of all the annual budgets that reported the progress of this dominion in this house and therefore I would feel unworthy of the responsibility that my experience imposes if I hesitated to draw attention to trends that I believe have been and are dangerous to the security and progress of this country. It may be somewhat unpopular to refer to these trends but may I suggest it might be economically disastrous to ignore them.
We must face these issues. We cannot avoid them and we do not desire to. One trend that has been dangerous in my opinion has taken the form of a surrender by all parties to what I might describe as popular or political clamour to have governments do so much for so many. I am not so reactionary as to suggest-indeed, I do not admit that I am reactionary at all, but I do not suggest- that there is not a need for social welfare legislation-I am not unmindful of the fact that while on one hand we talk about our high cost of production and our high cost economy we are, on the other hand, handing out to the people in many cases assistance to
provide things which they should earn for themselves and which falls within individual responsibility to provide. We have a great free enterprise system but it is overburdened with all these costs that must come from the production of that system.
One of the chief reasons why the remnants of the one third great Liberal party are now sitting in the shades of opposition is because approximately one half of our industrial enterprises and three quarters of our raw ore resources are controlled by foreign interests. The people of Canada are anxious to have our economic independence restored before it is too late. That is why we have had the change of government.
With regard to the increasing responsibilities in the field of so-called social welfare, I realize it is probably of little use referring to the value of the dollar in 1925 and the value of the dollar today, but surely it makes us stop and think when we realize that the cost of the welfare aspect to our economy today is more than four times greater than the total cost of all government administration when I first entered this parliament. Surely we should stop and take stock at this stage in our development.
As a consequence of the trend to which I just referred it is probably difficult to reconcile such a highly burdened economy with the economies of other countries with whom we compete in the production of finished goods and where wages are less per day than our costs are per hour.
May I venture to suggest to industry that they must lower their costs to meet this type of competition. That is their chief duty. That is a primary function of business management. Management must devote itself to this daily task in order to survive. The management of Canadian industry today is I believe among the best in the world. It operates with a high standard of employment and maintains the highest wages and shortest working hours and more frequent coffee breaks than business management in any country of the world except the United States, and yet we try to meet the additional burden that confronts us.
It is obvious that industrial management in this country is good or it could not survive under these conditions and pay all the fringe benefits it does and still pay to the government in the form of other charges over 50 per cent of all it makes.
In every branch of our primary industries we have witnessed a revolution in the production of goods with a corresponding reduction in manpower. In agriculture we have witnessed the same thing. We see today that twice as much can be produced as was 79951-0-188
The Budget-Mr. Rowe produced 25 years ago employing one-third as many people. It is estimated that inside of a very few years agricultural production employing only 10 per cent our people will produce more than is produced today.
During this period of transition it is important that we be alert to these changing conditions. When the opposition were in power they seemed almost to have fallen asleep. They ignored these changes which screamed for attention before their very eyes. They did little to provide for employment in other fields of enterprise. They dismally failed to give the necessary encouragement for the establishment of secondary industries and employment therein which industries would process finished products in this country. Indeed, clinging to their old free trade doctrines they encouraged the importation from low wage foreign countries of finished products with a high labour content and apologized for it by expressing the need to buy finished goods everywhere so they could sell our raw products with a low wage content in the markets of the world. It is not difficult to sell goods to someone who wants them or to someone who cannot do without them. This form of economic appeasement has been unsound.
As a result of the policies of the previous administration the expansion of industry and the creation of jobs in Canada was only about half as good as it has been in the same period in West Germany, Japan, the United Kingdom and the United States. It is important to remember that three of those countries, as all hon. members know, underwent destruction during the war. Despite that their industries have been rebuilt. They have increased their industrial activity and employed people just twice as fast, percentage-wise, as Canada has.
Do not let us fall into the old Liberal habit of believing in that kind of optimism where you say that everything is fine as long as it does not happen to me. This country is strong and virile. Indeed, it has to be to stand that type of complacency. It has also, to the extent to which I have referred, failed to maintain its place in probably the most active industrial expansion period of the world. Like the lost minute, those days are gone forever. Had we not failed in that period the immigration policy would be different today. We would not be having a curtailment to less than one third of the immigrants we brought in in 1913. We would not have had the situation where 510,000 of our educated boys and girls were going to the United States to find employment in the last five years of the former regime.
The Budget-Mr. Rowe
These things should be studied, Mr. Speaker. There was a time when they should have been taken at the flood. There was a time in world prosperity when we should have been alerted in a business way rather than stay in this smug complacency. The result of it is we find ourselves today with international deficit payments of $1,500 million and a trade deficit of over $500 million, and dividends going out of this country to those who control half our industry and three quarters of our raw resources. At the end of last year it amounted to $500 million. That did not come about because this government was elected; that did not come about overnight; that was established and left, with the consequent growing unemployment, on the doorstep of the present government. For the second time in my years in this house we have had that heritage from the Liberal champions of free trade.
Then, Mr. Speaker, we have a lack of population. My hon. friend is mumbling something but I hope he is thinking more than he is talking. We find that the lack of population is closely associated with the unemployment problem. I am sure that it is recognized by every hon. member within the sound of my voice as the chief problem and as the chief challenge of this government today. What does the opposition suggest as a solution? The only solution I have heard is that of enlarging the free trade pattern which did so much to create the problem itself. The opposition has suggested free trade with the United States. Then, they suggested free trade with the United Kingdom, but they backed away from that one very fast. Now they have gone farther afield and out into the Atlantic and they say, "We want free trade within NATO. We do not know what we are going to do with the inner six; we do not care what happens to the outer seven, but we will take them all, let the chips fall where they may."
This old doctrine of free trade was outmoded 50 years ago. This reckless trend which has been developed and followed under such complacency, the habit of using our gross national product as the only yardstick, disregarding, as they did, trade deficits every year but one in 10 years before this government came to power, measuring prosperity as they have, exporting our raw products as a specialty and importing finished products as a political expediency, has been as unfair to labour as it has been unsound and extravagant to our economy.
For over 30 years I have sat here and listened to vigorous debates on the unemployment problem, only to see it temporarily
relieved from time to time by the grim necessities of wartime. That is not good enough and I do not believe we have to endure it. I think it can be improved and under this dynamic government that we have elected it will be improved. It has become almost chronic.
At this point, Mr. Speaker, may I pay a tribute to my old friend and colleague, the Secretary of State for External Affairs (Mr. Green), for his untiring and capable influence with other countries toward disarmament. I mention it because we all hope and pray that he may be successful and that we shall have a substantial measure of success. Here let us pause and realize that if he is successful, and if we accomplish the goal we are all striving for, there will be a change in the economic picture. We will have to find a place for those who have been toiling in the extravagant and wasteful work of producing the defence equipment that we have all felt was so necessary. These men must be placed somewhere else; we must find some form of employment for them. Owing to our swiftly changing labour conditions, opportunities for increased employment are not going to be found in agriculture or in the production and exportation of other raw products.
May I again emphasize what I believe has been a tragic misapprehension indulged in by many in this house, namely that we must accept finished goods, with a high labour content, from other countries before we can sell our raw products in other countries. I have repeatedly said this in this house. I am speaking about the manufacturing industry because I am interested in the labouring man. I have probably less manufacturing in my riding than many others. I have no personal interest in management, and I am not connected in any other way at the present time with the manufacturing industry, but I am conscious of the fact, as I believe every hon. member is, that that is the only avenue in which we can find employment to absorb the boys and girls we are now educating. They must be employed by the manufacturing enterprises in this country.
I do suggest that so far as having to buy the finished goods from the countries where we sell our raw products is concerned, as everyone knows, while we hold those blue chips in raw resources and the United States is depleting hers we have a market for those products there and in many countries of the world. Does anyone suggest for a moment, in saying that we have to buy the finished products before we can sell our raw products, that a steel plant that buys the raw ore from Labrador or from Steep Rock will go to the textile people in the United States and say,
"We want to get another load of iron ore. How about the Canadian home market? Have you been able to absorb it all? You are selling twice as much as they are producing for themselves. You are getting in on their textiles, but do you think you are getting enough of them?" Does anyone for a moment think that is the situation? No, Mr. Speaker. It might happen in a country under a dictatorship, but it does not happen in those countries where we hope to develop our greatest trade.
Do not let us forget, that the United States and other countries buy raw products from us as and when they need them. If it were otherwise, we might achieve a favourable trade balance. We buy more finished products from the United States than any other country, and this has been true for the last half-century. We have been buying more every year during the last 10 years except one, and that was during the Korean war. If that theory is sound, then why does the United States of America not take our uranium when we want to sell it so badly? Stop and think about it, gentlemen.
I can well recall the days when the Liberal party was in power, and twice in the history of their government the United States closed us out of their market for western cattle and other agricultural products. There was the Fordney-McCumber tariff in the late 1920's and the Hawley-Smoot tariff in 1929. The late Right Hon. Mr. King warned us to be careful not to provoke the United States with any trade proposals because of our raw products going to the United States. We were buying a million dollars worth of products per day more from them than we were selling and yet overnight, Mr. Speaker, as you will recall, they closed their market to our western cattle and agricultural products.
I mention these things to remind this house and to remind the country that we do not need to take the finished products of these foreign countries to the exorbitant extent we are today merely for the sake of selling raw products which have less workmanship content in them. This policy is unfair to labour. It is extravagant and unsound to our economy. Surely, if we learn slowly, we learn by experience that this condition is not as it has been represented.
No, Mr. Speaker, let us not forget that after all when we need markets so badly the only market in the world over which we have any control is our own. It is one of the greatest markets in the world. No similar number of people buy so much in the way of manufactured goods and consumer goods. We buy as many automobiles, frigidaires, 79951-0-1881
The Budget-Mr. Rowe radios and television sets as many countries that have over 100 million people. This is a great potential market that will give increased employment and will do more to solve the problem of markets for agricultural products in the long term than all the parity prices and novel ideas that we have had presented as solutions for agricultural problems. No other development is as necessary as the development of that home market.
The possibilities for development of that market are illustrated by the fact that we are paying about $270 per capita for products from outside the country. Just stop and think of it; that is 10 times per capita more than any other important industrial country in the world ever bought from outside its borders. Should we wonder that we have unemployment, that we have to build post offices, give handouts, enact social legislation and so forth? I have always known that you cannot put much politics into business, but let us try in this time of challenge to put a little business into politics. Let us observe these facts that are screaming for solution. I think the United States of America buys about $28 per capita of products from outside the country.
I am glad to observe that our government has taken into account the difficult conditions in the textile and other manufacturing industries. I am glad they are taking a step in the right direction in that regard. I am glad to observe that they are trying to get away from that free trade pattern that was set by their predecessors. This is a change for which the people of Canada voted; this is a change which the people of Canada expect from this government, led by a dynamic Prime Minister (Mr. Diefenbaker), who is supported by one of the ablest cabinets we have had in Canada since confederation. This government has more numbers behind them, and more youth and clean-cut ability than I have experienced in my time. This is a great opportunity to put into effect the policies for which this party stands, the traditional policies for the development of our own resources within our own country. I am sure that is what this government is trying to do. Despite the handicaps that manufacturing industry has had, the high taxes, stubborn competition, they certainly employ more people, pay more of our taxes and give needed freight tonnage and freight revenues to our railways to a greater extent than all the other industries of Canada combined except mining.
I can only suggest that it is rather amusing to me that those who are struggling to hold together the tattered remnants of the Liberal party, are feebly drawing attention to the related problems of unemployment. You
The Budget-Mr. Rowe would imagine this problem had only developed since the election. It has been said that Rome was not built in a day. These issues have not developed overnight. We find that unemployment has been almost chronic for some time in this country. They tell us now that the unemployment situation is bad and that our per capita debt is terrible. You would think these conditions only arrived overnight. They do not tell you that the debt more than doubled in the last five years of their regime. They say the international balance of payments situation is bad, but they do not tell you that during the last five years of their government our deficit in goods and services totalled over $6 billion. This heritage has again been dropped on the doorstep of the incoming government.
These are some of the reasons the opposition gives for having no confidence in the present government. May I suggest it is very amusing because it just emphasizes why the public has not any confidence in them. In the interest of enlarging our home market for farm products, employment for an increasing population and strenghtening our national economy, I urge the government to restore confidence and stability in our manufacturing industries. Changes must be made in that old free trade pattern that has already threatened our economic independence. Had it not been for the extravagant stimulus of defence production, this dangerous trend would have been far more conspicuous.
The manufacturing industry is indigenous to a sound economy. Its encouragement and expansion are now as equally challenging to the government as are the agricultural problems. These two industries are complementary and neither needs to be sacrificed in the interest of the other. The employment in the factories of industry is as vital to this country as the work in the fields of agriculture.
I say again, and this may be politically unpopular, that it is economically dangerous to avoid this problem. The future of our industrial growth is unlikely to be confined to either the St. Lawrence or great lakes areas. Indeed, Winnipeg now challenges the record of Hamilton, as we see the smokestacks rising in the wheat fields of Saskatchewan. Edmonton and Calgary seem to hold happy arguments as to their greatness in their rich and lucky province. Indeed, the hope of the maritime provinces as well as the great prosperity of British Columbia depends on the steady growth to which I have referred. We are facing a new age in these swiftly changing times in a world that is becoming industrialized more rapidly all the time.
I do not believe our customs and tariff structures in this country have changed much in 50 years. I think it is high time that we streamlined and modernized our approach to these gigantic problems as we face days of possible economic adversity such as we have never experienced previously. As you know, Mr. Speaker, our tariff structure has been kicked around all during these years as a political football. I have had a couple of passes at it myself. It has been nicknamed to suit the season and to suit the occasion. It has been called "reciprocity" sometimes. At others it has been called in debate "brick for brick", "don't provoke the U.S.". At other times it has been called a "counter-vailling duty plan". Sometimes the policies have been fixed more in Washington than in Ottawa. It is about time that we took a straight or new look and did a little bit of a face-lifting job on our whole customs and tariff structure which has not had an investigation since 1907. I think we must modernize and streamline this approach.
In this regard may I suggest and urge upon the government the necessity of giving consideration to the enlargement of our tariff board so that it might give hearings to direct appeals and submissions from producer and consumer organizations that might expedite its findings and recommendations accordingly to the government.
Before closing may I again mention the general agreement on tariffs and trade, commonly known as GATT. This is another child of the former government left, for better or worse, on the doorstep of the present government. We were told by the former government that before they went over to negotiate this treaty, "we lowered our tariffs more than anybody else before we entered negotiations, and that is why they liked us so much". They made the agreement. Strange as it may seem, the present government has adhered to it more diligently probably than many of the other signatories. However, if our industrial employment is going to be unduly endangered by adherence to GATT, I think we had better consider the advisability of having a more practical fiscal policy made in Ottawa rather than in Geneva. Even in these days of such great international tension and uncertainty we cannot afford to sacrifice our economic independence on the altar of world diplomacy.
In closing I wish to pay a compliment to our dynamic Prime Minister for his efforts, during election time and since then, to bring to this great young country of Canada a greater degree of national unity. In that regard I believe we can all say that this government has succeeded to no small degree. In our provincial and dominion relations, and
in all classes, races and creeds are more closely united than they have ever been at any time since I entered parliament. I believe a great deal of credit is due to this vigorous new government in Ottawa. Despite these challenges and despite our troubles the future is not as dark as some might think it to be. I believe it will be a brighter future if our people are encouraged to face realities. I believe we need that same type of unity that marked the habits and practices of our people in this country when our survival was at stake, at that time their achievements surprised the world. I believe that type of unity between the west and the east, the farmer and the manufacturer, industry and labour, the capitalist and the shareholder, and between provincial and dominion governments must be re-established. Our people will then guarantee a sound economic future that can maintain a way of life that no other people have ever approached.
Topic: THE BUDGET
Subtopic: ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE