[Stage Direction]
Mr. T. L. CHURCH (Broadview) moved for leave to introduce Bill No. 144, to amend the Judges Act.
Some hon. MEMBERS:: Explain.


Mr. CHURCH:: This bill contains two
sections. The first refers to judges serving bn royal commissions, while the other provides that a judge of any court referred to in the act shall be bound, when rendering decisions, by the last decision of the court of final appeal in respect to the application of the same question of law.
Motion agreed to and bill read the first time.



QUESTIONS

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Mr. HAMILTON:: What amounts have been contributed, by years, since 1930, by the federal government towards the construction of the trans-Canada highway: (a) in Ontario; (b) to section White River west to Manitoba boundary; (c) to section between White River and North Bay; (d) to section between North Bay and Quebec boundary?


Mr. ROGERS:: Statements of expenditure submitted by the province do not classify disbursements by the districts mentioned. The statement attached, however, sets forth payments made to the province of Ontario with respect to trans-Canada highway construction under each of the relief acts from 1930 to date on those divisions made by the province in submitting statements of expenditure, namely (a) Hawkesbury to Pembroke section, (b) Pembroke to North Bay section, (c) North Bay to Schreiber section, (d) Schreiber to English River section, (e) English River to Manitoba boundary section.
[Mr. Carding
Province of Ontario-Trans-Canada Highway
Net payments made by Dominion on claims rendered by the Province of Ontario for Trans-Canada Highway work under Relief Legislation
Section	The Unemployment Relief Act, 1930	The Unemployment and Farm Relief Act, 1931	The Relief Act, 1932	The Relief Act, 1933	The Relief Act, 1934	The Relief Act, 1935	The Unemployment Relief and Assistance Act, 1936	The Unemployment and Agricultural Assistance Act, 1937	Total$ cts.	$ cts.	$ cts.	$ cts.	$ cts.	$ cts.	$ cts.	$ cts.	$ cts.163,922 50	294,230 95	89,845 90	547,999 3576,542 79	262,500 00	97,293 78	40,500 CO	476,836 5717 500 00	2,027,688 58	612,693 03	46,590 86	2,704,472 4737,500 00	300,000 00	857,493 03	84,500 00	8,412 86	1,287,905 895. English River to Manitoba Bound-	87,500 00	330,056 58	1,402,676 73	312,044 24	2,132,277 552, 4 and 5. Pembroke to North Bay,	3 119! 850 51	3,112,850 512 to 5. Pembroke to Manitoba Bound-	2,066,472 95	2,066,472 95142,500 00	3,112,850 51	76,542 79	163,922 50	892,556 58	6,745,856 02	1,139,583 17	55,003 72	12,328,815 29
In addition to the above the Dominion paid $1,317,319.43 under Relief Legislation toward the cost of "Board Camps" established by the Province for Highway Work, but the portion thereof pertaining to Trans-Canada Highway cannot be determined from accounts rendered.
Questions
Questions


QUEBEC PROVINCIAL EMPLOYMENT AGENCIES
Mr. FOURNIER (Maisonneuve - Rose-mount) :: [DOT]
1.	Is the dominion government participating in the expenditures of provincial employment agencies in the province of Quebec? If so, in what amount, and to how many of such agencies ?
2.	Has the transfer of such agencies to the exclusive jurisdiction of the dominion government been considered?


Mr. ROGERS:: 1.	Yes. During the fiscal year. 1937-38, under the terms of agreement between the federal and Quebec governments pursuant to the Employment Offices Co-ordination Act, 1918, the province of Quebec was reimbursed from federal funds to the amount of $34,659.66. The province maintains 19 employment offices in 11 different centres, and the above named amount was supplied in respect of the total expenditures incurred by the province during the period in the maintenance and operation of all these offices.
2.	The subject of employment offices was mentioned in the recent correspondence between the Prime Minister and the premiers of the provinces regarding unemployment insurance, but no proposal was made for the transfer of these offices to the exclusive jurisdiction of the dominion government.


CANADIAN NATIONAL RAILWAYS-SPADINA WHEEL SHOP, TORONTO
Mr. MASSEY:: 1.	Is work being done for the Canadian National Railways at the present time at the Spadina wheel shop in Toronto?
2.	Has any such work been transferred from the Spadina wheel shop to shops in Loudon, Ontario, or elsewhere ?
3.	If not, is it the intention to have such work, or any part thereof, so transferred, and to what shop or shops?
4.	What number of employees of the Spadina wheel shop would be affected by such transfer?


Mr. MASSEY:: I received information this morning from an authoritative source which answers this question completely, and, with the consent of the house, I would ask that it be dropped.
Question dropped.


CUSTOMS AND EXCISE PORTS AND OUTPORTS
Mr. FERLAND:: 1. What are the locations of the various customs and excise ports and outports in each of the provinces of Canada?
[Mr. Rogers. 1
2. What were the revenues of each of such ports and outports during the last fiscal year?


Mr. ILSLEY:: To compile the information requested would require considerable time, but the information is already available in detail for the fiscal year ended March 31, 1937, in the report of the Department of National Revenue containing the accounts of revenue, and the report of the department containing similar detailed information for the fiscal year ended March 31, 1938, will be published in the near future.


UNEMPLOYMENT
[Stage Direction]
On the orders of the day:
Mr. C. G. MacNEIL (Vancouver North):: I should like to direct the attention of the government to a statement which appeared in a Vancouver newspaper and is attributed to a minister of the crown, to the effect that force will be used to deal with the single unemployed in Vancouver. I should like to ask if that statement is an expression of the present policy of the government.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: I have not seen the
statement to which my hon. friend refers. Any statement of government policy would be made in the house, not through the press.


MILITARY UNIFORMS
[Stage Direction]
On the orders of the day:
Mr. J. A. MARSH (Hamilton West):: I
should like to ask a question of the Minister of National Defence (Mr. Mackenzie) in connection with the purchase of military uniforms by military units. The commanding officer of a military unit in the city of Hamilton made application to the ordnance department to purchase 35 summer drill uniforms at the price paid by that department, namely, $4.66 each.


Some hon. MEMBERS:: Order.


John Allmond Marsh: In order to make my question plain I shall have to give certain details.


Mr. SPEAKER:: The hon. member should be as brief as possible in stating his question.

National Housing Act


John Allmond Marsh: My question is this:	In
view of the fact that the Department of National Defence and this government are appealing to manufacturers to grant men time off to go to camp, will this unit be granted permission to buy these uniforms direct from the department at $4.66 each rather than having to buy them from the supplier at a cost of $7.92 each, f.o.b. Ottawa? That is the recommendation made by the department.


Hon. IAN MACKENZIE (Minister of National Defence):: I was apprised of this
question only a few moments ago, but I have a reply from the department which will possibly satisfy my hon. friend. It is as follows:
Limited quantities of khaki drill uniform, sufficient for the requirements of the permanent force personnel only, are provided by the Department of National Defence. The departmental vocabulary price is $4.44 per suit.
It has not been possible with the limited amount of money provided for the purchase of uniform clothing to build up sufficient stock to permit of issues on payment or repayment being made to units of the non-permanent active militia.
Authority, however, has been granted for units of the non-permanent active militia to wear khaki drill uniform at regimental expense, arrangements for the purchase to be made by the officers commanding units.
These uniforms are not available except for permanent force personnel.


John Allmond Marsh: In view of the fact that a considerable number of items necessary to military uniforms have to be purchased outside of Canada, and duty and sales tax have to be paid on these articles-notably, that of Highland regiments in Canada; and, particularly, on sporrans, kilts, wool clothing, feathers and bagpipe parts-will the Minister of National Defence, together with the Minister of National Revenue, consider the matter of relieving such purchasers of this impost of duties, since such purchase is for national defence and in the interests of good citizenship?


Ian Alistair Mackenzie: Mr. Speaker, with reference to the question asked by my hon. friend, numerous representations have been made in regard to the point he has raised. However, the question of tariff or rebate is not within the control of the Department of National Defence. We are considering it now.



NATIONAL HOUSING ACT


[Stage Direction]
-PROVISIONS WITH RESPECT TO LOW RENTAL HOUSES AND MUNICIPAL TAXES
Hon. CHARLES A. DUNNING (Minister of Finance) moved that the house go into committee to consider a proposed resolution to repeal the Dominion Housing Act, 1935, and reenact certain provisions thereof with amendments and additions thereto; and to make certain provisions with respect to low rental houses and municipal taxes.
He said: Mr. Speaker, this resolution is preliminary to the introduction of a national housing act. The new act will be divided into three parts, each distinct and whole in itself and attempting to deal with a specific phase of the housing problem.
Part I involves the repeal of the Dominion Housing Act and the reenactment of parts of it, together with important changes and additions designed to bring the facilities of this act to individuals and communities that have not hitherto benefited from it. This part of the legislation, part I, is intended solely for families who wish to own their own homes, and strong emphasis is placed upon facilities for families in the lower income brackets and in the small and remote communities.
Part II contemplates an experiment on a comprehensive scale in the low rental housing field, about which we have heard so much in this house and in the country in the last few years.
Part III is intended as an attack on the major obstacle retarding the building of new houses, the high level of real property taxes.
It is unnecessary for me, I am sure, at this stage to spend any time in dealing with the social and economic evils of insanitary, unsafe or inadequate housing accommodation or with the advantages to our people and our economy of raising the standard of housing conditions and restoring a more normal level of activity in the great group of construction and building supply industries which play so important a part in sustaining employment in normal times, which suffered perhaps more than any other industry from the effects of the depression, and which have been the most laggard of our industries in recovering from the depression. All these considerations are well known to the house. I' can assume, therefore, that there will be a keen and sympathetic appreciation of the objectives
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[Stage Direction]
which this legislation seeks, which I would define as (1) a substantial contribution to the elimination of unemployment in a field where it has been most heavily concentrated, and to the general stimulation of business recovery; and (2) a substantial contribution to the improvement of housing conditions, particularly for families of low income, at the same time giving our people, our provincial and municipal governments and the house building industry, a lead as to sound methods and policies that may be followed in the future.
While a real effort has been made to get substantial results and to get them promptly, I think a careful examination of the legislation which will follow this resolution will also indicate that care has been taken to safeguard the interests of the dominion and to surround the various parts of the program with provisions to ensure safe and sound businesslike procedure.
I said a few moments ago that part I repeals and reenacts part of the present Dominion Housing Act, with important changes and additions. It will be remembered that the present Dominion Housing Act was passed in 1935. It followed an examination by a committee of the house of the housing question and was the subject of extended debate in this house before it became law. Very little was done; in fact I do not think any loans were made under the Dominion Housing Act of 1935 by the former government. The act was there when the present government came into office, and we have been operating under its provisions ever since.
It early became apparent, however, that there were certain grave defects in the operation of the present Dominion Housing Act. The government endeavoured to meet those defects in so far as the powers contained in the act would permit the government to do so. We did, in fact, in September, 1936, by the changed regulations then put into effect liberalize the operation of the act very materially. However, I think it will be recognized by all who have followed the operation of the Dominion Housing Act that it suffers from at least two grave deficiencies; but before saying that I should at any rate give the Dominion Housing Act this commendation : It was the first effort in this country to deal with the problem of housing by the dominion- parliament; and in spite of the defects and the weaknesses which have developed in operation, it should be noted that prior to May 31 of this year, 4,249 family

housing units have been financed under this act, involving an aggregate expenditure of $17,350,000, and as of that date the average loan per family unit was $4,083.
As a consequence of the broadened regulations made available in September, 1936, there has been a considerable acceleration of lending activity under the act, but it nevertheless remains true that the total volume of this lending activity has been substantially less than is desirable. Moreover, the defects to which I have previously referred are as follows: First, the unwillingness of the lending institutions to make loans in many small and remote communities, and second, the reluctance of the lending institutions to make loans for small amounts in what they regard as the less desirable residential areas of the larger urban communities, despite the fact that these districts are, in many instances, the only areas in which it is possible for the people in the relatively low income groups to build houses for themselves.
Those are the main defects of the original legislation, and part I of the new bill seeks to remedy them. The new provisions of part I, I shall now endeavour to summarize briefly, but naturally I shall have to await the production of the detailed bill, which is necessarily somewhat complex, before entering into a general debate on the matter.
In the normal case of a loan under part I- and I use the word " normal " as distinct from the special low cost provisions to which I shall later refer-a housing loan may in future be made for from 70 to 80 per cent of the lending value of the new house, and of this total, whatever it may be, the dominion will advance 25 per cent, and the private lending institution or local municipal authority, as the case may be, 75 per cent. Under the old legislation the dominion's advance was 20 per cent of the lending value, and the maximum amount of the joint loan was 80 per cent, with provision made by regulation for 75 per cent and 80 per cent loans in certain cases as well. This change will simplify accounting, lessen bookkeeping costs, and eliminate the temptation to manipulate estimates of cost and of appraised value in order to bring the loan within the existing 70, 75 or 80 per cent categories. Provision will be made in the bill that in the case where the lending value does not exceed $2,500- that is the definitely low cost house-a loan may be made up to 90 per cent, of which the dominion is to advance its 25 per cent.
Mr. BENNETT:: What relation does the lending value bear to the real value?

National Housing Act


Mr. DUNNING:: "Lending value" is
defined in the statute as " the lesser of estimated cost of construction or appraised value, as the case may be."


Denton Massey: It does not include the land?


Charles Avery Dunning: Yes. I wish my hon. friends would be good enough to defer their detailed questions. I must admit this matter is quite complex, and I am desirous of making a detailed statement, after which I shall be glad to deal with questions.
I have just stated that one of the new provisions involves the possibility of a 90 per cent loan by the lending institution, in the case where the lending value is $2,500 or less, and of this 90 per cent loan the dominion will advance its 25 per cent. That is to take care of the case where it is difficult for the individual to put up a minimum equity of 20 per cent at the start. Under Canadian conditions, with the risks of change in property values and changing conditions of employment, I do not claim that 90 per cent loans give a sufficient margin of protection to the lender; nor am I sure that it is normally a kindness to the individual to encourage him to attempt the risk of home ownership with only a 10 per cent equity. Nevertheless I know there are in this country thousands of individuals in the lowest income groups who pay a large percentage of their total income for the rent of necessary housing accommodation, and consequently it is very difficult for them to put aside each month the small amount in savings that might be expected to give them, over a period of years, a 20 per cent equity in a home. The government is prepared, therefore, to try as an experiment 90 per cent loans in cases where the lending value of the property does not exceed $2,500. If an individual wishes to build a home at a higher cost than this. I think we are justified in requiring him first to build up a 20 per cent equity in the form of either a lot, or cash, or both. It will be clear, of course, that to justify lending institutions in making this type of loan, it will be necessary to give them a more effective inducement, of which I shall now speak.
I am confident, I may say, that we shall be able to get the consent of at least some lending institutions to make these small high percentage loans to deserving people in certain sections of our larger cities, in the suburban and rural areas, in fishing villages, mining towns, and small urban communities generally.
The most important change which we are proposing in this part of the bill to deal with, the matter to which I have just been referring, involves the application of the home improvement plan principle of a pooled guarantee, in respect of loans made by lending institutions and falling into certain definite categories. It will be observed that the home improvement act, which was put on the statutes a year ago, and under which some $17,000,000 have now been advanced for home improvements, involves the pooled principle; that is to say, the government's guarantee of 15 per cent under the home improvement act applies to the aggregate losses of the lending institution operating under the law.
As regards the experience up to date-it is a little early to speak of final results, though I can assure the house that the losses are running substantially below the amount of the guarantee-it is such as to warrant the government in attempting to apply the same principle with respect to the construction of low cost houses. In other words, we are asking for authority to enter into contracts with lendiug institutions under which we will guarantee them against loss up to a maximum of 20 per cent of the total amount of 80 per cent loans made by them which do not exceed $4,000 each for a single family dwelling, and made in such communities or districts as may be designated by the minister, and up to a maximum of 25 per cent guarantee in the case of 90 per cent loans. I hope I have made that clear. The application of the pooled guarantee principle is for the purpose of inducing and justifying the lenders in making loans in communities remote from the larger centres, small communities which as an ordinary business proposition do not commend themselves to lending institutions, both because of the cost of looking after a few loans involving considerable travelling expenses, and also because of the security factor involved in the low re-sale value of property situate where sales are infrequent, as is the case in rural communities as compared with our'larger urban centres. So we say, to express that in another way, on all loans made in these areas, which must be defined by agreement, of $4,000 by a lending institution, a percentage guarantee against loss will be given to the lending institution, and the smaller the total amount of the loan and the larger the percentage which it bears to the lending value of the property, the higher will be the percentage of guarantee which the government will give as an inducement toward the financing of low-cost homes for owners thereof.
The figures I have just given, up to 25 per cent in the case of 90 per cent loans, are of course maximum figures. It is proposed not only to designate special areas, consisting of small and remote communities in which loans
National Housing Act

are not now being made, but also to develop a schedule of the amounts that the government guarantees, which will be graduated downwards in accordance with the size of the loan, say from three to four thousand dollars, and graduated upward in accordance with the percentage which the loan bears to the lending value, that is to say from 70 to 80 or 90 per cent. In other words, we may go up to the maximum of 20 per cent guarantee in the case of 80 per cent loans for $3,000 or less, but the guarantee which we will give with respect to a 70 per cent loan for an amount of $4,000 will be very much less, possibly, I should say offhand, 5 per cent. The development of a schedule of this sort is, of course, a difficult and complex process and cannot be fully detailed, I am afraid, in a statute.
A further important change in connection with part I is to make it possible for a payment to be made to a lending institution to assist it in defraying the special costs incurred in arranging loans, making appraisals, inspections and so forth in small and remote communities designated. This payment is not to exceed $20 for any one loan, plus a mileage allowance fixed by the minister for necessary travelling expenses based upon the distance from the nearest place from which the loan can be arranged and supervised by the lending institution. I am sure that members from many constituencies who have communicated with me from time to time about housing matters will appreciate the kind of difficulty which this amendment seeks to meet. I have had many communications from districts away from the larger centres complaining that no loans have been made in those communities. It is perfectly obvious that no lending institution can afford under present conditions to have its representatives make to such areas the several trips which are required in order to make a loan and inspect the house during the progress of construction. Nevertheless, residents of such communities naturally feel that they have as much right as residents of large urban areas to participate in the benefits of a national housing act. It will be necessary to designate the communities and areas in connection with which such assistance is to be given and to arrange for a schedule of allowances which will be payable in communities at varying distances from the nearest point from which the loan can be arranged by the lending institution.
Another new provision in part I increases the maximum amount which may be paid out by the minister in respect of advances, losses and expenses. A maximum of ten million dollars was the authority under the old act;

it is proposed to increase this authority to twenty million dollars. Under the old act the dominion has already committed itself to $4,500,000 in respect of the $17,300,000 housing construction to which I referred earlier. The figure of $20,000,000 provided in the resolution now before the house gives us under the authority a leeway of about $15,500,000 which, together with the funds advanced by the lending institutions under the provisions of the act, should make it possible to make aggregate loans up to $60,000,000 or more under this part of the national housing act.
There are other minor amendments in connection with part I which I think can be very much better taken up on the bill itself in committee, but I have endeavoured to outline the broad provisions effecting the changes. Part I, as I said at the outset, is designed for people who desire to own their own homes and it is designed to make it easier for them to do so. It is designed to make it easier for lending institutions to make loans to enable people to own their own homes, and every provision which has been changed has been designed, to use the term I used before, to "liberalize" the application of the act. I did not use the word political!}' in any sense. The other day when I used the word "conservatively" some of my hon. friends opposite were welcoming a new recruit, but I did not use that word politically either.
With respect to part II, this is designed to make possible a comprehensive experiment in the field of low rental housing. It is based upon acceptance of the arguments advanced in this connection by the national employment commission, and it follows in general though not in detail the main lines of the program suggested by that commission. In this connection I wish to stress a point made in the preamble to the bill. The preamble will point out that in some areas the housing conditions fall short of minimum standards of health and decency, and that these conditions may affect not only public health and morals, but the employability and efficiency of our working population. While the primary responsibility for decent, safe and sanitary housing conditions must rest, under our constitution, upon the province and upon the municipalities, nevertheless, the proposed dominion program is justified by emergency conditions, because it is designed to create needed employment, to direct attention to the importance of the housing problem generally, and to provide a basis of experience upon which the provinces and the municipalities may follow sound and proven policies in the future.

National Housing Act
Briefly, part II, low rental housing, provides that the minister, with the approval of the governor in council, may make loans to local housing authorities to assist in the construction of houses to be leased to families of low income. The aggregate principal amount of the loans under this part is not to exceed 830,000,000.
What are local housing authorities under the bill? Local housing authorities may consist of either of two types, depending upon whether on the one hand the municipality desires to enlist the cooperation of private enterprise in working out its low rental housing scheme, or whether on the other it desires to operate it entirely under the municipal authority. If the municipality desires to enlist the cooperation of private enterprise, private capital and business management of a private nature, it may do so through the medium of a limited dividend housing corporation with capital sufficient to provide for 20 per cent of the cost of the project. This capital, it is presumed, will be subscribed by public-spirited citizens who may be expected to plan, construct and administer the enterprise on sound business lines. They are limited in dividend on the capital they invest to a rate of 5 per cent, and from information I have it will be possible to organize such limited dividend housing corporations in some instances at a lower dividend maximum than this. Secondly, if the municipality desires to operate a low rental housing project under municipal auspices, it may do so through the medium of a commission or other body having authority to construct, hold and manage houses built as a low rental housing project, and in the case of a municipality doing the job itself in this manner it is required to put up an equity of only 10 per cent. In the case of a limited dividend housing corporation a 20 per cent equity will be required. In the case of a municipal housing corporation a 10 per cent equity will be required.
What will be the dominion's contribution? The dominion's contribution, which I think all will agree is substantial, is to be made on the basis of the dominion supplying the bulk of the funds, 80 per cent in the case of a limited dividend housing corporation and 90 per cent in the case of a municipality, at very low interest rates. In the case of a limited dividend housing corporation, where the equity subscribed privately must be at least 20 per cent, the interest rate will be If per cent per annum; and in the case of other local housing authorities, that is municipal bodies, where the equity required is only 10 per cent, the interest rate is two per cent per annum. Semi-annual payments must be made by the 51953-232
local housing authority to cover interest and to amortize the principal over a long period. In the case of a limited dividend housing corporation the semi-annual payment therefore will be seven-eighths of one per cent for interest and one per cent for amortization. In the case of a municipal local housing authority the semi-annual payment will be two per cent, of which one per cent represents interest and the remaining one per cent amortization. These rates of amortization in both cases will mean that the loans will be completely retired in between thirty-four and thirty-five years. That then is the dominion's contribution.
Let us now consider the provincial contribution. If the local housing authority is a municipal body, then under the same principle which was enunciated in connection with the municipal improvements assistance bill we must ask the provincial government to guarantee repayment of the amounts advanced by the dominion. As I stated on a former occasion, the municipalities are completely creatures of the provincial legislature. Changes made in municipal law by provincial legislatures may have the effect of rendering the security held by the dominion in connection with the project completely useless, and for that reason we believe we are justified, where the dominion is putting up 90 per cent of the amount to be invested in a low rental housing project operated by the municipality, in asking that the province should guarantee repayment to the dominion government of its loans in that regard. No such guarantee is asked of the provinces in connection with a scheme operated by a limited dividend housing corporation. Obviously the larger equity, double the amount, renders that less desirable, and from my point of view at least it has this advantage, that those municipalities which desire to undertake low rental housing projects will, I believe, be able to get going with the matter very much more quickly if they can interest public-spirited citizens in putting up 20 per cent of the cost through the medium of a limited dividend housing corporation than they will be able to do, by reason of delay due to changes in law which might be required in some cases before the municipal law would be sufficiently broad to enable them to operate municipally.
What must the municipality do? The municipality must have approved the project, and must have secured the guarantee from the province, if it is to be operated as a purely municipal project. The municipality must also agree that municipal taxes on the low

National Housing Act

rental housing project, during the period of its operation under this legislation, while there is any money owing to the dominion, shall not exceed one per cent annually of the cost of the whole project. We ask the municipality also in the case of the limited dividend corporation, in case they prefer this method, to agree that if the administration by that method involves a shortage in the amount due the dominion government, the municipality will reduce taxes still further to enable that amount to be made up. Not having the guarantee of the provincial government, we must there insist upon the closeness of municipal interest in the scheme and a degree of responsibility. The municipality must also agree not to levy taxes on the income of a local housing authority. Also, if the municipality is operating directly a low rental housing scheme, it must put up, as I said before, 10 per cent of the total cost, which of course may be and in most instances will take the form of land for the project. In addition, the municipality may-there is no "must" about this-make	additional
voluntary contributions to a rent reduction fund, which I shall describe a little later.
What about the rental provisions? No family housing unit in a low rental housing project is to be rented to a family whose family income is equal to more than five times the economic rental of the unit, unless there is no demand for the unit from families of lower income. The logic behind this provision is that a family can afford to pay about 20 per cent of its annual income for rent. If this 20 per cent is sufficient to pay the economic rental of housing accommodation, private enterprise should be able to provide sufficient housing accommodation without any special subsidy from the state. "Economic rental" is defined in the bill as a rental which gives a return of 9j per cent on the cost of construction plus the annual municipal taxes. Families of low income are defined as families whose total family income is less than five times the economic rental of a family housing unit built as part of the low rental housing project. The annual rental to be charged a family of low income is to be not in excess of 20 per cent of the total income of such family. Provision is also made for the possible establishment of a rent reduction fund by voluntary contributions from the province or the municipality concerned. These contributions are not compulsory; but if it is desired by the municipality to lease the accommodation at lower rates than are made possible by the annual carrying charge of the project, that is at rates low enough to meet the needs of families in the very lowest income group, then

the municipality and the province are in a position to reach this objective by making voluntary contributions to the rent reduction fund.
As far as safeguards are concerned, there will be provision that evidence of the need for a low rental housing project must be shown by the municipality concerned. The area must be adequately planned and zoned. The project must be of sufficient size to give reasonable economies. Economic design and sound construction will be required. The management of the local housing authority must be satisfactory. The terms of acquisition of the land must be satisfactory. The terms of the charter of any local housing authority must be satisfactory. The local housing authority must agree to keep the houses in a satisfactory state of repair, and keep books and accounts and make an annual report to the minister. A limited dividend housing corporation must give an option to the municipality to buy the project for the amount of the corporation's paid-up capital and any unpaid dividends. Let me repeat that in another form: If any municipality adopts the limited dividend housing corporation method of dealing with this problem, then the corporation, when formed, must give an option to the municipality enabling the municipality to take over the enterprise at any time, the amount to be paid being fixed by the amount of the paid-up capital of the corporation plus any accrued dividends. Thus those investing their money in low rental housing projects under the limited dividend corporation method are assured that they can at no time get more than 5 per cent return on their money, neither can they hope for any accretion in the capital value of their investment. A further provision is that if there is a breach of contract to pay, the amount of the loan may be declared due and payable or the interest rate may be increased.
Let us now consider the amount of loan which may be made in a municipality for the purpose of low rental housing projects. The total of the loans made in any municipality must not exceed that proportion of $30,000,000 which the population of the municipality bears to the total urban population of Canada on the basis of the 1931 census. That proportion, Mr. Speaker, will give ample opportunity for the development of large scale experiments, particularly in our larger centres, in the direction of low rental housing projects.
There may be some criticism at first sight because of the slightly lower rate of interest which it is proposed to charge a limited dividend housing corporation as compared with a municipality operating directly. After all,

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the private persons who organize a limited dividend housing corporation must put up an equity of twenty per cent, which is twice the amount of the equity required in the case of a municipal corporation. The private persons who organize such a corporation will be required to do a vast amount of work in connection with planning the project, supervising construction and managing the project during its useful life. Their dividends are limited to a maximum of five per cent, which is not a very high rate for individuals who are willing to risk a substantial amount of capital for thirty-four or thirty-five years. Then, of course, I have already referred to the other provision which ensures that the limited dividend housing corporation must give an option to the municipality which will preserve the right of the municipality to take over the project at the amount of the capital invested by the limited dividend corporation. Also I believe it desirable to give every inducement to get private capital to cooperate [DOT] in this task of solving the problem of families with low incomes, on a non-profit basis. I am sure not all but many municipalities would very much prefer to have limited dividend corporations of this sort take up the burden rather than themselves assume responsibility for active participation in a housing scheme and the obligation connected therewith. In this connection, of course, we have the experience of the housing scheme of 1919 and everything connected with it. With one or two outstanding exceptions, such as the city of Winnipeg, the municipal administration of the 1919 housing effort is not something to which we can point with very much pride. However, either method is available to the municipality concerned.
One of the most important reasons, to which I referred briefly a moment or two ago, for making provision for loans at low rates of interest to limited dividend corporations, of course is that they can initiate their programs immediately, in most cases I believe without waiting for the action of provincial legislatures or governments authorizing the guarantee of loans made by the dominion. I suppose some hon. members will be surprised to learn that in at least one of our great cities-in fact I know it is the case in more than one, but in one particularly-the work has been very much advanced along this line. A great deal of preparatory work in planning a low rental housing project has been done already, and I believe the group to whom I am referring will be in a position to get this work under way very promptly: It should be noted also that the limited dividend housing corporation has been tried 51952-2321
with conspicuous success in many instances in the United States, in Great Britain and in some other of the northern European countries. Many such corporations have had quite remarkable records, even during the depression. Those who have invested their capital have found not a lucrative but at least a fairly satisfactory investment for their personal funds, and I am hoping that as a result of the present program we may be able to induce leading business men in many communities to devote their time, ingenuity and experience to the organization and management of limited dividend housing corporations. While their monetary dividends will be small I think the dividends they will receive in personal satisfaction through having made a contribution to the solution of the housing problem ought to be ample compensation.


Mr. CAHAN:: I should like to ask one question. Under the limited dividend housing scheme the limited dividend will be in addition to the entire cost of administration of the corporation, I presume?


Charles Avery Dunning: Of course they must first pay the entire cost of administration before any money is available for dividends, and they may pay only five per cent under any circumstances.
I should now try to give some information as to the rentals which should be made possible under such schemes. It will be apparent, of course, that the rentals will vary as between different communities because of differences in the cost of construction of the average family housing unit. This in turn will depend on several factors; the cost of building materials in the community, the level of wages paid to building craftsmen, the relative efficiency of labour, the skill and ingenuity which are shown in designing and planning the houses, the care and efficiency displayed in supervising the construction in order to keep down costs, the size of the project and the extent to which large scale economies can be secured in the cost of land; also, last but not least, the efficiency of operating management. For the sake of illustration I think I am at liberty to draw on some of .the results worked out in one of our largest cities, where building costs are high but where a great deal of time and ingenuity have been devoted to working out detailed plans for what was intended to be a low rental housing project to be built and managed by a limited: dividend corporation. The group of responsible business men behind this scheme I think deserve the commendation of Canadians generally for getting down to hard work on a specific project rather
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Richard Bedford Bennett: Is that not too much?


Charles Avery Dunning: It works out at about that.


Richard Bedford Bennett: I thought it was one per cent for amortization.


Charles Avery Dunning: It is seven-eighths per cent half yearly for interest and one per cent for amortization; twice If per cent is 3f per cent. A five per cent dividend on the twenty per cent equity would be $10,800. Municipal taxes at one per cent of the cost of construction would be $10,800. The cost of management expenses, heating, maintenance and repairs, allowance for vacancies, et cetera, has been checked carefully by many interested parties, and is put at $32,000. The total annual carrying charge on the project would be $86,000, which includes a five per cent dividend on the twenty per cent equity

This means an annual carrying charge per average dwelling of $215. The rental per month of a heated apartment would be just under $18. It must be remembered that this is an apartment project and that these rentals cover heating. For an unheated apartment the rental would be between $15 and $16 per month. Of course smaller units could be rented for a proportionately smaller amount. I give this merely for illustration purposes and as evidence of the work that is being done along these lines in some of our larger communities. In other communities where the average family unit could be constructed at a lower figure, proportionately lower rentals would be possible. If still lower rents are desired than are provided for by an estimate such as this, they could be secured by the municipality or the provincial government or both making voluntary contributions to a rent reduction fund. In other words, this program makes it possible for municipalities to attain any results they wish in the way of rent if they are prepared to make the appropriate contributions.
The third part of this bill is unique. It is designed for the purpose of making a direct attack over the next three years on what is believed by many to be the major factor retarding house construction in this country. I may say that the idea back of part III was communicated to me particularly by the hon. member for Halton (Mr. Cleaver) in connection with a small scale experiment which has been made in the town of Burlington, and by other members who have not been following it quite as closely but who have called my attention to what has been made possible through a combination of the old Dominion Housing Act with the principle now laid down in part III of the bill now before the house.
While there are other factors, I think most will admit that the cost of real property taxes in our municipalities is the most important deterrent to the construction of new homes. In many municipalities the taxes are so high that many people prefer to live in a rented house and let the landlord worry about taxes and the carrying charges on his investment. If we ask why taxes are so high we find ourselves in a vicious circle. To an important degree taxes are high because relief costs are high. Relief costs are high because unemployment exists, and unemployment exists because, among other things, there is little construction work being carried on. It follows, therefore, that if we can stimulate the construction industry we will create employment. The creating of employment will decrease the

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burden of relief charges upon our municipalities and thus tend to lessen, other things being equal, the burden of taxes upon existing real estate.
It is therefore proposed in part III of the bill now under consideration that the Minister of Finance, with the approval of the governor hi council, shall be authorized to pay the municipal taxes levied upon a house, the construction of which begins between June 1, 1938, and December 31, 1940, up to the following amounts:
100 per cent of such taxes for the first year in which the house is taxed;
50 per cent of such taxes for the second year in which the house is taxed; and
25 per cent of such taxes for the third year in which the house is taxed.
Municipal taxes are defined to include the general municipal tax and the school tax, but excluding special and local improvement taxes. The minister pays only the increase in such taxes due to the construction of the new house. The principal conditions to be complied with are relatively simple. As an evidence of good faith, having regard to the dominion's contribution under this part III, we think that municipalities owning considerable numbers of lots suitable for the building of low cost homes should cooperate by making such lots available at a figure not to exceed $50 each to people who want to build low cost homes. Many of our municipalities are doing this already in various ways and we think it should be a condition of the dominion's grant in aid of municipal taxation.
The second condition is that the cost of the construction of the house must not exceed $4,000. Municipal taxation assistance is confined entirely to low cost homes. I should have said in connection with the first condition regarding the municipality making land available that this does not mean that the assistance by way of grants from the dominion is confined to low cost homes built upon lands supplied by the municipalities. The assistance in connection with municipal taxation is intended to apply to the increased municipal taxation brought about by the construction of any home anywhere in Canada which costs under $4,000 to erect. The house must be built by a person for his own occupation and the owner of the house must be released by the municipality from paying any part of the taxes which the dominion pays. Naturally, this taxation subsidy is not given with respect to any house constructed under part II of the bill which deals with low rental housing, but it would apply to houses constructed under part I.
If we can by this means stimulate the construction of new houses which would otherwise not be built, we will have done a great deal to reduce the costs of unemployment and the consequent burdens upon our municipalities. Apart from the vitally important social advantages of restoring the employable unemployed to normal employment again, existing property owners should benefit in a direct financial sense by the consequent reduction in tax burdens for the relief of the unemployed and by the fact that there are being created a larger number of units to carry the burden of taxation. Of course, it is impossible to predict how many houses will be built prior to December 31, 1940, as a result of the stimulus given by this part of the new bill. However, if we assume that the houses eligible for this tax subsidy are constructed during the three years to the value of $100,000,000, we can make certain estimates as to the volume of employment created and .the aggregate cost to the dominion.
We assume that as a result of this volume of construction municipal assessments will be increased by the same amount, namely, $100,000.000, and that the average tax rate is two and a half per cent of the cost. When we bear in mind that assessments of improvements are frequently on the basis of 60 to 75 per cent, or less, I think these assumptions are reasonably safe. In that case the total cost to the dominion would be less than $5,000,000 for the three-year period.
It has frequently been estimated that eighty per cent of every dollar spent in house building goes to labour, either direct or indirect. If this estimate be correct, the $100,000,000 spent on the construction of low cost housing during the next three years would provide $80,000,000 in wages to workmen in the construction trades and in the building material and supply industries, and the result would be, if that were true, that for every $1,000 paid in wages the tax subsidy would cost the dominion about $54.70-and that is very much cheaper than relief.
Some members, of course, will regard these figures as extremely optimistic, and prefer to make their own calculations. However, even after making a considerable allowance for a margin of error, I think the house will still agree that if employment can be created by this method it will be amply worth while to the Dominion of Canada.
Now, Mr. Speaker, studying as I have studied during the last three years this housing problem and the manner in which it has been met in various countries, I reached the
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conclusion long ago that we would of necessity have to evolve in Canada a plan suitable for Canadian conditions. There is scarcely a country in which an attack has been made on this problem which has not experimented over a long period of years with different types of legislation before finding the best means of dealing with the problem. Indeed, in many countries which are most progressive in this regard there are several different types of schemes in operation. We have had the advantage up to date of our experience only under the Dominion Housing Act, supplemented during the last year with our experience under the Home Improvement Act. We believe that with the best will in the world this parliament cannot make a success of any housing scheme without a broad degree of cooperation from many sections of the Canadian public.
In the first place, to my mind it is most important to rid the mind of the man of small means of the fear which is there now of the responsibility involved in building even a low cost home for himself. Fear is very largely the cause of this depression, and on this continent particularly it is a fear which has not the same justification as it has in Europe. In Europe, close to all of the international difficulties now existing, people fear war. We may fear it on this continent, but at least, Mr. Speaker, the centre of disturbance is five thousand miles away from us. Our fears on this continent rest upon a different basis, and they have been existing now for several years.
The evidences of fear on the part of people of small means who have small savings are found in the growing savings deposits in our banks and trust companies. People in many cases would rather put their money into the safe keeping of institutions which they deem to be safe than attain the ambition of a lifetime by the ownership of a home of their own, involving a commitment for the future, rendered uncertain in their view because of the high taxation, the uncertainty of employment, and this widespread fear of depression.
If the government and parliament of this country can, by the degree of cooperation involved in the three parts of this act, stimulate the man of small means through the knowledge that his parliament and his government have faith in the future of the country, and that the people as a whole are willing to put their credit behind the small man, and are willing to give to him advantages-ease of payments, ease of cost, contributing towards his load of taxation-something worth while will have been accomplished.

I know what it means when a man is contemplating building a small home. The big costs come in the first year; a thousand and one things happen to increase his burden of expenditure during that period. I know what it will mean to thousands of artisans in this country to know that for the first year there will be no tax bill with respect to municipal and school taxes on that house; that for the second year there will be only fifty per cent, and for the third year only seventy-five per cent. I know what it will mean to people of small means to come within the provisions of the low cost housing features of this bill.
One of the great objectives, therefore, is to cooperate to cast out fear on the part of those who must initiate this scheme through their desire to own a home of their own, which is one of the most healthy aspirations in the breast of any man.
Secondly, and this is vitally important, we must have the hearty cooperation of those great trustee institutions of the savings of the people of Canada in the form of life insurance companies. The people of Canada have displayed their faith in life insurance to a degree that is exceeded by only one other nation on the face of the earth, and the sums entrusted to our life insurance organizations are immense. The responsibility for their investment is very great, and I know that those responsible for the investment of such funds feel their responsibility very keenly. I do say that this legislation is designed to cast out fear on the part of those investment institutions also, and to encourage them, as partners with the parliament of Canada, to make advances for the purpose of building homes not merely in our larger great centres where everything is easy, and where salability of property in case of foreclosure is relatively greater, but also in the smaller centres throughout the country. The tendency in the 1 st few years with respect to the financing of homes has been to accelerate the growth of our great communities and to retard the normal growth of those small communities throughout Canada which are still the backbone of our country. We must therefore get the cooperation of the lending institutions. They have a great stake, and I do hope, Mr. Speaker, that they will see their way clear to cooperate one hundred per cent in the carrying out of the objectives of this bill.
Then we also require in connection with certain parts of the bill the cooperation, of course, of the municipalities, in the setting up of the local housing authorities, providing for adequate zoning and planning ordinances, granting the partial tax exemption called for

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under part II of the bill relating to low rental housing, and doing real constructive work on the planning of low rental housing objects.
We desire the cooperation of the provincial governments in providing legislation, where legislation is necessary, because of the character of their existing laws; in giving leadership, we hope, and direction to the municipalities within the province, and in giving the provincial guarantee where low rental projects must be carried on by a local housing authority which is municipal in character.
Last, but not least, the construction industry. I hope that none of my friends, members of parliament who may have connections direct or indirect with the building construction industry, will misunderstand when I say that this legislation is a challenge to the building construction industry of this country, and is so intended. It is often stated that of all our industries, the one most laggard in advancing, in taking advantage of possibilities of improved technique, of lowering costs, of the standardizing of commodities, is the building industry. I do not join in that criticism, but I do say that there is one way in which anything this parliament may do in connection with housing can be killed, and that is for the building construction industry, capital and labour, material suppliers and all the rest, to believe that they can, by reason of it, start a steady upward trend in the price of the commodities they have to sell, whether those commodities consist of capital, goods or labour. We require the maximum of cooperative effort from everybody concerned; also, and not least, from leading citizens in every community. In this connection we are doing as we did the other day in connection with municipal improvements; we are stepping into a field which hitherto has not been a field of the dominion parliament, a field which, according to the opinions held by very eminent gentlemen, we have no constitutional right to occupy, and which we can justify entering at all only as primarily an attack upon our great national problem of unemployment. We require, therefore, the cooperation not only of all members of the house, but of all citizens, in what I sincerely believe to be a constructive, long-range, national housing act.


Richard Bedford Bennett: It is very interesting to
have listened to the admirable address of the Minister of Finance (Mr. Dunning), which more properly might have been made on the second reading of the bill, when we would have had it in our possession and would thus
have been able to follow the details of it.
I think his original intention must have been to deliver it on the second reading, having regard to the words he used in closing his speech. On the other hand, there are certain promontories that stand out in the legislation, and we are enabled to understand the general drift of it, although so many details determine its success that it will be very difficult to express opinions on the bill until such time as we have them before us.
It is gratifying to know that the matter to which I directed the attention of the Minister of Justice (Mr. Lapointe) the other day was at least foreshadowed by a speech made by a member of the administration in the province of Saskatchewan. It will be recalled that it was indicated that we were to have this measure; and the minister was not quite sure, but "surely there must be some mistake" that the minister had said it would be approximately fifty million dollars. My information on that point, however, was accurate, as indicated by the press reports. In that regard I took the trouble to look up what happened to the Secretary of State for India, who published a telegram in India that had been sent from India to London; on his own responsibility he sent it back to India without consulting the prime minister or the members of the government; it was printed there and telegraphed back to London from India,-much as the speech made the other evening in Saskatchewan as to the intentions of this parliament with respect to a low-cost housing program came by telegraph to Ottawa and other centres of the country and was published before this parliament had been made aware of the proposal. In that case Mr. Lloyd George dismissed Mr. Montagu. A report of the incident will be found in the Annual Register for 1922. These words are rather important:
In the middle of the month a political crisis of the first magnitude arose owing to the publication of a message addressed by the government of India to Mr. Montagu. The message stated that the government of India felt it to be their duty again to lay before his majesty's government the intensity of feeling in India regarding the necessity for a revision of the Sevres treaty.
Then follow some details, and the record proceeds:
The publication of such a message naturally caused a widespread sensation, more particularly when it became known that the publication had been sanctioned by Mr. Montagu without reference to his colleagues in the cabinet. Almost immediately following on the publication of this message came the announcement of Mr. Montagu's resignation. The resignation waB announced by Mr. Chamberlain in the House of Commons on March 9.
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The report in Hansard of what took place on the 9th of March is wholly beside the issue here. But Mr. Chamberlain took the opportunity to point out that the doctrine of cabinet solidarity was so important that it must be preserved, and that when the Secretary of State for India saw fit to send to India and permit publication through the press there of a message which had not been communicated to the prime minister or the government or to parliament, his resignation should be sought, as it was; and he ceased to occupy his position.
There is an issue here, as I think the Minister of Justice was quick to grasp the other day, an important principle. A very important proposal involving fifty millions of public money is made known to the people of Canada through a speech delivered by a member of the administration in the far-off province of Saskatchewan, which is then telegraphed to this city and to other cities of the dominion. Such, of course, is in contravention of the rules that govern in respect to matters of this kind. I only point out the Montagu case because it happens to be the most recent outstanding case where a departure from the rules governing cabinet solidarity brought about the enforced resignation of the minister who had offended.
The legislation which is to be based on the resolution must naturally be followed with great interest by every member of the house. I think it will be agreed that it will be almost impossible to follow the details of the legislation if you look at the terms of the resolution upon which the legislation is to be based; for the resolution is silent with respect to the details with which the minister has furnished us. For instance, there is no indication of the rate of interest. There are no indications of many other matters on which the success of the legislation depends.
I am not complaining as to that. I do not suggest that the minister should be asked to furnish in great detail in a resolution the particulars of his impending legislation; but certainly matters relating to rates of interest have hitherto been held to be matters that should properly be indicated in a resolution upon which legislation is predicated.
Those who were then members of this house and who recall the meetings of the special committee which dealt with the question in 1935, and the discussions in this chamber on the legislation introduced by the former minister of finance, Mr. Rhodes, will recall that on that occasion he pointed out with great clarity that this was after all by way of experiment, and the authorization of ten millions of dollars was intended to be 
the beginning of the experiment which has resulted, as the Minister of Finance has pointed out, in a fair measure of success, some seventeen millions of dollars being invested in these enterprises. The principle upon which it was thought possible to undertake dominion participation in low cost housing was discussed by a committee of this house, and at length in this chamber. The minister a moment ago referred to our lack of experience in this country. I could not help recalling the words of Tennyson, that we are heirs of the ages. For the minister knows, as do those who are responsible for what has been said as well as what has been printed, that this legislation embodies in terms, with respect to one part of it, the experience of other countries in a similar field of activities. The minister nods his head affirmatively 'because he made a passing reference to the point in his admirable address. We have then the experience of other countries in dealing with this problem. We have in particular the experience of Scandinavian countries and we have had to a lesser extent the experience of the people of England who, by reason of their form of government, have confined themselves to a smaller number of methods than those which are contemplated by this legislation.
The legislation, Mr. Speaker, to be based upon this resolution contemplates our occupancy of three distinct fields of activity. With respect to one the dominion parliament has given its sanction to our thus occupying the field, and the experiments that have been made in the days that are past have been sufficient to warrant the view, as the minister has stated, that we should continue our efforts in that direction. After all, a year or two is a very short time in which to draw an inference or a conclusion from the operation of any statute, as has been found in practice. But to the extent to which, as the minister has pointed out, our experience warrants it, we certainly would be derelict in our duty if we did not continue the operations of the act of 1935. That act therefore, in its essential features, is to be maintained, but the amount of money to be made available is increased. Broadly, that is the position.


Charles Avery Dunning: It is considerably more than that.


Richard Bedford Bennett: There are certain matters of detail. I will deal with one of them. The minister referred to the liberalizing regulations of 1936. Even in that regard the political aspect must not be overlooked.

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He said that the liberalizing regulations of 1936 did something to widen the operation of the statute. Now, there was no amendment to the statute that warranted those regulations; they were within the ambit of the statute as passed in 1935; and the modification of the regulations came about by reason of the experience derived from the operation of the statute, which was the intention as expressed by the minister of finance of that day standing in the position which the present minister occupies.
The other phases of the legislation which are to be modified in the light of experience are changes that have been brought about in consequence of the knowledge which we now possess. I think the minister made that abundantly clear. But when you pass into the second field of our activities as indicated by the act, there you have indeed the application to Canada of principles that have been found useful and effective in other countries. But they have attained their end by different methods. For there are constitutional difficulties in this country as compared with other countries where there is but one legislature to be considered in dealing with these matters.
One must bear in mind, therefore, that there are certainly grave difficulties-if I followed the minister aright-that must be met. Unless the provinces are prepared, through the creatures they have created, namely, the municipalities, as well as by their own act, to take the necessary legislative action, part II will not become effective. I am leaving out for the moment the question whether or not the legislatures will be called together to deal with the matter, but there is one thing that is obvious to every hon. member and that is that no municipality, in the absence of specific legislation, can grant special rates of assessment.


Charles Avery Dunning: There are some cases in which it is possible, but very few.


Richard Bedford Bennett: I am bound to say that in my recollection of the municipal law of this country the essential element upon which the supreme court acted in a well-known case was that the burden of taxation shall be borne ratably and proportionately according to the assessment made, and that no power rests in the municipality, unless specifically given it by the legislature, to make a distinction between one class of ratepayer and another as to payment of taxes only upon a given proportion of the assessment.


Charles Avery Dunning: In some cases that authority exists as between the province and the municipality to a degree, though I am not certain that it is to a sufficient degree.


Richard Bedford Bennett: Bearing ' in mind the principles that have been applied by the courts in connection with assessments, 1 think it may be said that as a general rule there can be no such thing in this country as discrimination with respect to the amount of taxation that is to be paid by a given proprietor as distinguished from his contiguous proprietor. Now we are going to do that.


Mr. VIEN:: That is correct in Quebec.


Richard Bedford Bennett: It is generally correct.


Mr. SLAGHT:: In Ontario, with the approval of the municipal board.


Richard Bedford Bennett: As the hon. member for Parry Sound (Mr. Slaght) has said, instead of going to the legislature for many matters within the terms of the municipal board act, the approval of that board is equivalent to the approval of the legislature. That is in Ontario. But there is a limitation upon that, a very clear limitation, namely: the action taken by the board must be within the ambit of the jurisdiction conferred upon it by the legislature. That is a fair statement of its position, and in some instances it is very limited. That contemplates first the conferring of new powers upon the municipality; secondly, those powers can be conferred only by the legislatures; and thirdly, that involves obviously action being taken by the legislatures before this provision in part II can become effective.
I pointed out to the minister the other day how much I regretted that this measure had not been submitted before the legislatures had risen in order that effective action might be taken by them to deal with the matter at their recent sessions. I am not going to traverse the other points made by the minister as to the conditions precedent to the dominion exercising its lending power. I think that in two instances the minister overlooked the fact that guarantees are being given by the dominion, to the lending companies in connection with the sums that they invest in these enterprises. There is just one matter to which I would refer, and I am sure it is in the mind of the minister, from what he said. The difficulty of private capital investing in these undertakings-and I do not greatly disagree with what he said with respect to fear-lies in the fear of action being taken by the legislatures which will impair the value of the security. Now, we cannot interfere in these matters ourselves. We have no power
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as a dominion to make these conditions except as conditions upon which the loan is made. The minister pointed out what those conditions were. But when they involve legislative action which cannot be taken by a municipality itself, it means that the legislatures of the several provinces must agree to the conditions and terms which we impose. Whether they will or will not is purely conjecture, about which I shall at the moment say nothing.


Norman McLeod Rogers: That is solely with respect to low rental housing.


Richard Bedford Bennett: No; both parts II and III are affected by it. I am coming to that in a moment. As to part II it is quite obvious that we have no legislative jurisdiction with respect to the major number of the conditions mentioned by the minister.


Charles Avery Dunning: There is no doubt about
that, as to part II.


Richard Bedford Bennett: Yes. The minister very properly has Said, by inference, that we propose to make it a matter of contract-that is, acceptance of the conditions-before we will make the grant. That is the only method by which we can do it.


Charles Avery Dunning: That is the only door open to us to do our part.


Richard Bedford Bennett: There would be another
way, but that is a way of which the government does not think well, and about which I shall not enter into a controversy at the moment. The imposition of conditions precedent upon the borrower-I use. the term "borrower" as a generic term-by the lender is again a matter involving property and civil rights, with respect to which action of the legislature may impair the value of the arrangement made. It is not like banking and commerce, where we exercise ancillary powers, as we did in connection with invading the field about chattel mortgages (Tennant v. Union bank), but here it is not a question of being ancillary within the decision within a more recent case in the privy council in connection with radio receiving sets. This cannot be said in any sense to be ancillary to it. In other words we have no legislative power to start with. Not having legislative power we are seeking to occupy the field by the imposition of conditions in a contract which we make for the purpose of lending the money -a contract not with the province, and not with the municipality, but direct with the borrower himself. The minister said just now that it is the only door open to enable us to operate in this field. I would say there

is another method by which it could be done, but that method the government do not desire to follow; they have made it quite apparent that they do not, so we will leave it at that. It will be recalled that this question did arise in this parliament in the days of the assistance given to highways, and in the case of one other statute as well. It is not necessary -to traverse that ground this afternoon.
With respect to parts I and II, I think I can summarize the position in a few sentences. First, antecedent to the exercise of our power, which must be by way of imposition of conditions under a contract, we have no legislative jurisdiction in the premises. That is apparent. Second, in the exercise of the powers we shall have to insist upon conditions being observed which, after they are merged in a contract, will not ;be subject to our legislative control. The minister nods his acquiescence.


Charles Avery Dunning: Therefore the provincial guarantee.


Richard Bedford Bennett: I was just going to say, that is why the minister repeated to-day what he said a few days ago, that we must have a provincial guarantee. The reason given for it is, shall I say, ample from one angle, but it is a dangerous one from another angle, as the minister at once observes and understands, without going into details. I think however it is fair for me to say that having acquiesced in the principle in respect to part I in 1935, in the light of what the minister has said I see no reason why we should depart from the support of that principle. With respect to part II the principle is sound. But just how under our constitutional structure it can best be applied, I am not at the moment going to express an opinion, because the speech that was made was, as I say, more properly a second reading speech; for we would then have had before us the printed bill and thus be able to follow the details.


Charles Avery Dunning: Perhaps my right hon. friend will let me explain why I did not do that. I felt that I could not ask the house to pass the resolution without giving the particulars.


Richard Bedford Bennett: I appreciate that the minister departed from what was in his mind originally, and gave the house the benefit of his lucid exposition of the details; but it was quite obvious that the house could not follow it unless they had before them the printed bill. They will have to take Hansard and apply it to the printed bill. That will obviate the necessity of the minister making his speech

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over again on second reading. And he probably has afforded opportunity for the people of the country to have some knowledge of the proposal, although I doubt if they will have as clear an understanding as they might have had if the bill had been printed and the speech made on second reading.
With respect to the third field which the minister proposes to occupy, I shall be very brief. I need hardly say that the question of the federal government assuming taxes in municipalities is nothing new. The minister said it was unique, but during the last ten or fifteen years I venture to say there has not been a month during which communications have not been received from municipalities asking that local improvement taxes on crown property be paid by the dominion and that the property be made subject to municipal taxation. For instance comer lots are frequently occupied by federal buildings, and such lots when in the possession of other owners are heavily taxed for local improvements- that is, sidewalks, sewers, and the like. It will be within the memory of some that we have from time to time voted sums of money through the Department of Public Works for the purpose of providing some of these taxes. One of the submissions made to the so-called Rowell commission was that dominion property should pay municipal taxes. Now we propose to pay the whole of the tax for the first year after the construction of the new buildings. I point out that to do that, if it is on the basis of the ordinary assessment, which would be thirty mills in some communities, would call for a larger sum than the minister contemplates paying. That necessitates authority being given to the municipality to lessen and restrict its power of taxation with respect to properties covered by this bill, namely those other than part II. It will require some act of legislation.


Charles Avery Dunning: To enable us to deal with part III we require legislation.


Richard Bedford Bennett: I have not any doubt that it will, for this reason; the minister does not propose to pay the tax on the basis of the normal assessment rate.


Charles Avery Dunning: Oh, yes.


Richard Bedford Bennett: But in his speech he
placed a limitation upon it.


Charles Avery Dunning: We intend to pay the
amount by which the municipal and school taxes have been increased by the erection of the building. The figures I used were based upon a calculation of cost rather than of assessment; they were used for the purpose of illustration. Whatever the taxes are we will pay them.


Richard Bedford Bennett: But not the whole tax.


Charles Avery Dunning: No, the amount by
which the taxation has been increased by reason of the erection of the building.


Richard Bedford Bennett: That is the point exactly. Two factors complicate the situation. Taxes are on the basis of assessment, not cost. And the minister very properly pointed out that improvements are taxed in some municipalities at fifty or sixty per cent of their cost, in other cases a little higher. It would therefore follow that there must be an adjustment in each case, based upon cost, for the purpose of determining what our contribution should be.


Charles Avery Dunning: No.


Richard Bedford Bennett: It could not be otherwise.


Charles Avery Dunning: The only regulating
factor is that we will not pay on a house which exceeds $4,000 in cost.


Richard Bedford Bennett: Quite; that is simple, and you are not going to pay the whole of the taxes.


Charles Avery Dunning: We will pay that portion of them represented by the taxes on the building.


Richard Bedford Bennett: Precisely; you are not going to pay the whole of the taxes.


Charles Avery Dunning: The taxes are usually
divided under two headings, land and buildings.


Richard Bedford Bennett: The municipal tax notice that I receive for a piece of property in Calgary is for all the services that are supplied to me, or to my house, by that city. It involves many matters; sidewalks-[DOT]


Thomas Vien: Land and buildings.


Richard Bedford Bennett: I am coming to that. It includes sewers, sidewalks and so-called improvements, the latter being the buildings erected on the land. Under this measure the government propose to pay the taxes only on the difference that is shown by the cost of the building on that assessment.


Charles Avery Dunning: No, by the assessment
on the building, which was not there before, remember.


Richard Bedford Bennett: The minister made it
perfectly clear that we are not going to pay all the taxes. That is the first point. The second point is that the portion of the taxes we are going to pay is that portion which would be represented by the increase in taxes consequent upon the construction of the building-
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Charles Avery Dunning: That is it.


Richard Bedford Bennett: -as assessed by the city, of course.


Charles Avery Dunning: Surely.


Richard Bedford Bennett: It is conceivable that
this would mean only half relief where the taxes are as high as fifty and sixty mills. I only point that out to the minister now, because it will be a matter requiring very careful consideration in committee when we come to deal with the bill itself. I know that in some of our municipalities the tax rate has risen to as high as fifty mills, and I believe in some parts of Canada

I am speaking now from my memory of Doctor Brittain's record- the municipal taxation has gone as high as sixty mills.


Mr. HEAPS:: It all depends on the nature of the assessment.


Richard Bedford Bennett: It also depends to some extent on who makes the assessment, but at any rate that is true. What I have to say with respect to part III is that however anxious we may be, as I think we all are, to give some stimulus to the building industry and to create an interest on the part of people to have homes for themselves, to help in tying themselves to their communities more securely than otherwise they would, we have to remember what our constitutional limitations are.


Charles Avery Dunning: That is an awkward thing to have to remember, but we must remember it.


Richard Bedford Bennett: I agree with the minister that it is an awkward thing to have to remember; yet we must remember it. That is why I have been so anxious that we should have a constitutional conference for the purpose of discussing the question of the amendment of our constitution. But I am not going to do more than reserve the right to discuss the details in the fullest possible way when the measure is before the house, and I shall content myself by merely saying that as to the general principle I should think there would be no conflict of opinion in any part of this house. But I must say that as the undertaking has been outlined here to-day I think our right to act is dependent upon too many conditions over which we have no control; and which, if acceded to by those with whom we deal contractually, are still subject to the very difficulties the minister quite properly pointed out, namely the question of the right of the legislatures or of their creatures legally authorized so to deal with the subject matter of the security as to render it practically valueless from our standpoint, having regard to the extent of our advance.
[Mr. Bennett.1
The question of the amount of our advances under different circumstances, and the question of the creation of corporations really with preferred stock not entitled to receive more than 5 per cent in interest, are really matters which concern the methods adopted to accomplish the purpose. In my judgment they may be improved upon by this house, by timely suggestions that may be made when the bill is in committee. We adopt the broad principle by supporting the resolution. We reserve in full the right to determine how best we may be able to achieve that end, having regard to the constitutional limitations which exist. Certainly at the moment I am not disposed to give my approval to an acceptance of the methods indicated by the minister, as being sound either in practice or in theory, as applied to this particular type of case, although I recognize that the minister has adopted one of two methods. There are only two methods open, and the method adopted is the imposition of conditions upon the exercise of a power, which conditions are to be embodied in a contract between the individual and the state, which contract is still subject at least to the general law-making power alike of the province and the dominion. In that way we may create a situation of grave difficulty from the standpoint of the country itself and in the administration of the legislation.
I want to make just one observation as to something which is sometimes forgotten by my friends who talk about cheap money. I think the largest of the building societies operating in England is the Halifax society.
I	believe at the moment its assets-


Charles Avery Dunning: There are one or two nearly as large, but I imagine the Halifax society is the largest.


Richard Bedford Bennett: There are two very much alike, but I think that is the largest one
II	you look at the hoardings in London to-day you will find they are advertising money at 5 per cent, and they are getting the loans at 5 per cent.


Mr. McGEER:: They raised the rate to 5 per cent, and building stopped in England.


Richard Bedford Bennett: I am only referring to what happened some two years ago, when building was at its height. I was not over there this year, but I was there last year. The English plan brought into being over a million houses and the building societies have never made as many loans. The rates that have prevailed have been between 4 and 5 per cent, and on the hoardings the advertisements gave the rate as 5 per cent. I merely mention that because it is doing a wrong to the people of this country to induce them to believe that

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money can be obtained in England for nothing or next to nothing. All you have to do is look at one of the handbooks recently published, having to do with the year 1937, and you will find what I have said abundantly demonstrated.
It is not correct to say that building stopped under those circumstances. That is not what happened. What happened was that the plan which had been enacted by parliament had completed its operations, and the building societies are doing a great business in every part of the kingdom, both in deposits on the one hand and in loans on the other. I merely mention that because sometimes I have heard men talk about the cheapness of money loaned by the building societies in Great Britain, and I made the matter the subject of definite and particular inquiry.


Thomas Vien: Is the 5 per cent inclusive of sinking fund?


Richard Bedford Bennett: The loans are predicated upon monthly repayments, which in most cases involve amortization. I cannot say in detail whether that is so in all cases, but in many cases there is involved the making of 120 payments of so many dollars each, based upon an interest charge at the rate of 5 per cent per annum.


Thomas Vien: That would be inclusive of amortization.


Richard Bedford Bennett: Quite.


Charles Avery Dunning: Not always; only under some plans.


Richard Bedford Bennett: Certainly; it is a matter of contract. That is a fair way to put it.
There is just one other thing I desire to say to the minister. I doubt if any wooden house would stand a thirty-five year amortization plan. I merely mention that because certainly it is a departure from the rule that is observed in other countries with respect to wooden houses. Other countries do not do much in the way of building wooden houses now. All these houses in. England were of brick. The joists were not steel; they were wood, but the houses themselves were brick. In that case the amortization was not as high as thirty-five years. In most of the continental countries, especially in the Scandinavian countries, the houses are of brick; the joists and girders are not of steel, but of wood. Thirty-five years is a long term amortization.


Charles Avery Dunning: Thirty-five years was mentioned in connection with the low rental housing scheme. Apartments might be built under part II.


Richard Bedford Bennett: I am dealing with part II. It seems to me that this is all that I can usefully say at this time. I should like to study the details of the bill which I consider to be of much more importance than the acceptance of the principle. In other words, there is no difficulty about the principle; but there may 'be tremendous difficulty, having regard to our constitutional limitations, in working out the details.


Abraham Albert Heaps: Mr. Speaker, it would be extremely difficult for any one to discuss the proposals made this afternoon by the minister without having before him a copy of the bill. One can discuss the question only in a general way. May I say at the outset that I desire to commend the minister and the government for the step they have taken in this resolution. In 1935 a report submitted by a committee of this house proposed a comprehensive national scheme, but nothing was done at that particular time. At last we are coming to grips with this most important question. In many parts of Canada house construction has lagged. Housing accommodation is required in many of our large industrial and urban centres. I believe the legislation to be based upon this resolution will give a decided fillip, may I say, to the building industry of Canada. It will provide homes and create employment. In addition it provides a self-liquidating scheme which will prove of inestimable value to many people in the Dominion of Canada. Some of the details referred to by the minister will have to be gone into quite carefully. The minister referred to municipal taxation, but this question is so involved that I would prefer to see the bill before passing any judgment upon the point. The minister stated that the taxation could not exceed one per cent of the value of the house built.


Charles Avery Dunning: Under part II, one per
cent of the cost of the project.


Abraham Albert Heaps: In other words, if a house
costs $4,000-


Charles Avery Dunning: Part H covers low rental housing schemes, and the one per cent relates to the total cost of the whole project. A project might include a number of houses or apartments, as the case may be.


Abraham Albert Heaps: Even so, the point I wish
to make is the same. I have always objected to the creating of a preferred class of citizen in any community, especially in connection with taxation. Under this plan we are creating a class which is to be given preferential treatment over other sections of the community.
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The minister has pointed out that under this scheme homes or apartments will be rented at from $15 to $18 a month. If those are suitable for accommodating small families, I believe that we shall be meeting the situation in a reasonable way.


Richard Bedford Bennett: Not by apartments.


Abraham Albert Heaps: If we can provide homes or apartments for the rental mentioned by the minister, I think we shall be going a long way to meet the situation. In many of our large industrial centres many people prefer to live in apartments rather than in self-contained homes. In other communities the reverse may be true, and the people may prefer the self-contained home to the apartment. In the colder parts of the country where people have to withstand the rigours of the climate, many of them do prefer to live in apartments where heat is furnished. If, as has been stated by the minister this afternoon, we can provide such accommodation for $18 a month, we shall be working toward a desirable objective.


Charles Avery Dunning: I hope my hon. friend
does not take my remarks this afternoon to be in any sense a guarantee. I gave an illustration which was based upon two years of work in one of our largest cities. The figures I gave had been evolved by a committee comprised of all classes of society and also experts. I took those figures and applied to them the interest rates and the conditions of the bill in order to arrive at an approximation of what that scheme would cost at the present time. That is why I made the reference to the importance of keeping costs down. It was just an illustration.


Abraham Albert Heaps: I feel the estimate given by the minister was a little low. It might be possible in certain parts of Canada where buildings do not have to withstand too cold a climate to furnish accommodation at that cost, but I think the cost might be slightly higher in those parts of Canada where the weather is more extreme.


Thomas Vien: It would have to be on a large scale.


Abraham Albert Heaps: About twenty years ago I saw certain plans which might fit into a scheme such as was suggested by the minister this afternoon. I do not agree with the stipulation as to the income of the family. I do not think the minister should hedge the scheme around with too many "ifs" and "buts." I do not think it is fair to stipulate that the accommodation to be made available at from $15 to $18 a month shall be 
available only to those earning up to $90 a month. The man who is earning $100 or $110 a month should not be debarred from the opportunity of renting a low-cost house.


Charles Avery Dunning: He would be debarred only if there was some fellow earning as low as $90 a month who wanted it.


Abraham Albert Heaps: I do not think we should have even that stipulation. We should allow a little more discretion to the municipalities in choosing tenants. In my humble opinion the success of such a scheme depends upon the type of administration. As the minister pointed out probably the only municipality in Canada that was able to make a success of the housing scheme of 1919 was Winnipeg. I was a member of the council when the provisions of that act were put into operation. We borrowed money at 6 per cent and lent it to the borrowers at 7 per cent. With the difference in the interest rates that city has been able to make a slight profit on the undertaking all through the years. Many of the homes have been paid up. When we look back over the years it is almost inconceivable that certain municipalities got into the difficulties they did. My main purpose, however, in rising was to say that I am pleased indeed that the government has introduced this resolution, which is to be succeeded by a bill. I need hardly say that we will give it our wholehearted support.


Thomas Langton Church: Mr. Speaker, I have had some experience with housing programs as head of a city, one in 1913. I opposed one in 1919. The city of Toronto negotiated with the federal government in 1919. A large sum of money was borrowed and many houses were built, but for the most part the scheme was a failure. The money was paid back by Toronto and the other municipalities. The result was that the general body of the taxpayers had to shoulder the deficit burden. In my humble opinion it would be far better if this government would give a certain portion of the income tax, say one-third, back to the municipalities by way of a subsidy, bonus or subvention and so aid building and construction. I think that would lead to more actual building of all kinds and construction than anything else. This bonus or subsidy to the municipalities should consist of thirty-three and a third per cent of the net federal income tax collected by the dominion and would help out real estate and bring lower taxes. In that way the municipality could prepare the way and build municipal institutions of all kinds looking to future requirements, as

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Italy has done. In the past four years Italy has been building various -municipal institutions with federal aid of all sorts to take care of municipal expansion for the next forty years in that country and so aid recovery and give work. But in Canada our municipalities have -been starved; they have h-ad no money for any public works. Go over any municipal public building and you will see old paint, old doors, and a dilapidated building. No new construction can be undertaken, and the result is that taxes on real estate are such that nobody wants -to own it. The average tax on property in a large city is a rent in itself, as every member knows, and through no blame to our municipal councils who get no aid and have their revenues taken from them.
I think the minister should do something about the mortgage and lending companies in Ontario. I live in the district of Eglinton, North Toronto, and at one time more than half the homes there, if necessary, could be taken- over by the mortgagee. They are not worth the price of the mortgage. If -the minister could rap on the doors of some of these large lending companies and force them to bring the interest rate down-6i -per cent is the prevailing rate in that locality where thousands of houses have been buil-t and most of the owners cannot pay their taxes-he would be doing something worth while, and get cheaper money for mortgages.
A housing committee was appointed by this house in 1935 and it did good work as far as it went, but the committee was somewhat handicapped. One good thing it did was to go to the Ontario government and ask them to give municipalities the power -to pass bylaws to allow renovations -to homes to be undertaken, on the grounds of public health and to stimulate building activity. Much good was done in Toronto. The municipalities were allowed to make loans for that purpose, and hundreds of properties were renovated without expense to -the federal government. But it would not have been so bard on the owners of the homes if renovations had been helped by a federal bonus, or subsidy as an aid to housing.
There should be some other form of subvention provided to assist the municipalities because people in the cities who are out of employment cannot possibly pay their taxes and are often out the rent, and it would be far better if the minister dealt directly with the larger municipalities and handed them back some of the money they have paid in income tax, and so aid municipal recovery and expansion and real estate.
As to the type of building, I have seen something of this class of construction, which no doubt will be built by local concerns under this bill, in the city of Cleveland, where large apartments have been built by the local authorities with federal aid. But one consideration, Mr. Speaker, is that the average workman will not move from the slums to another district. He wants to stay with his neighbour and the person from whom he gets his house supplies. That was brought out in the evidence before the 1 ousing committee in 1935 and was so in the case of Leeds, England. They want to deal with the same grocer and the same butcher and get credit, and so they hesitate to move to some new district where the local authorities are receiving governmental assistance in housing projects; they could not pay the rents anyway. The question of transportation also comes in for the suburban worker. It is one of the main factors in housing and slum clearance and all other factors depend on it.
I asked the government early in the life of this session if they were going to bring down any housing or slum clearing legislation, and the minister said no; there would be only the housing act and the home improvement plan legislation, and now at this late date this large sum of money is being provided.
I have read the text of the resolution, and in my opinion it will be a good thing for some people, and the loan companies, but the property owners are becoming very much scared of legislation of this kind. It is class legislation for the benefit of the big loan companies and other large institutions; that is all it is. If the minister wants to do something to help the building and construction industries, let him hand back one-third of the income tax to the large cities, as a bonus or subvention to industry, the income tax which they have paid. The cause of the suburban worker is also being forgotten, the man who owns his own little place. I fear the new deal will not be an improvement.


Denton Massey: Mr. Speaker, I am sure it was with a good deal of satisfaction that those of us who have been particularly interested in this great national question of housing surveyed the resolution which is on the order paper to-day, and which has been so ably spoken to by the Minister of Finance (Mr. Dunning) this afternoon. I quite agree with the right hon. leader of the opposition (Mr. Bennett) when he said that there should be no objection in any part of the house to the purpose of the bill which is to be brought down by the minister.
The house will recall, Mr. Speaker, that it was my privilege last session to introduce a
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resolution urging upon the government the necessity of considering this vital question in a practical and direct way, and accordingly it is with a good deal of personal satisfaction to-day that I have listened to the remarks of the minister. There are, however, one or two points that I should like to discuss at this stage and present to the minister for his consideration prior to the bringing down of the bill. I do not intend in any way, shape or form to discuss now the details of the bill because, despite the clarity with which the minister this afternoon has presented its purpose and principles, it is indeed a complex subject which cannot readily be grasped in the course of one hour, even though it has been so clearly presented.
But one point which I think is of extreme importance is the method of application of the moneys available to the municipalities on the basis of population. If one city has five thousand of a population and another city has five thousand of a population, in the one municipality, as a result of conditions in the last few. years particularly, housing may be a serious problem, while in the other municipality of the same size, so far as population is concerned, housing may present no problem. There could be no more money granted in the one case than in the other, which seems to me to be inconsistent with the situation that may readily exist.


Charles Avery Dunning: The criterion in this bill is the urban population of Canada.


Denton Massey: Yes, and I am speaking of a city. It may be a city of fifteen thousand people, any city the minister may conceive of, with a housing situation which is acute as a result of certain local conditions in that urban area, whereas in another city in another part of the province or in another part of the dominion, as a result of conditions prevailing there, there may be no housing shortage at all. Yet the first municipality, in which there is a housing shortage, and which needs more money than the second municipality, in which there is no housing shortage, can get no more money than the second, and that seems to me to be inconsistent with the situation which may readily exist. In other words, there should be some terms in the bill relative to the need of the municipality besides the consideration of population only, which is a cold-blooded-on-paper fact.


Charles Avery Dunning: If my hon. friend will permit me just a word of clarification, I doubt very much whether a large enough scale low rental housing project under part II would be possible by a small municipality, for the

reason that the costs incident to a small scale project would render it prohibitive for the purpose which part II seeks to serve.


Denton Massey: I agree; but I was thinking particularly-and the minister will appreciate this, I am sure-of a municipality where, say, some new industry had moved in, and as a result there has been a sudden demand for housing, with no houses available in answer to that demand. The result is that you have a population inadequately housed even though the municipality may be small. There are such places in Canada where perhaps a mill, or whatever it may be, has been built, bringing in new workers and causing a demand for houses. I was going to suggest to the minister that he give consideration to that contingency arising and insert in the bill such sections as will deal with that particular point.
In the second place, the minister will be aware, from his knowledge of what has been done in other countries, that in Sweden particularly, and in the United Kingdom as well, large tracts of land in the suburban areas of municipalities have been purchased by the municipalities for the purpose of purchase by individuals for the erection of small homes. If this is to be done by municipalities under this legislation, the taxes from these newly purchased areas are found money to the municipality. True, the lands have been purchased; money has been laid out to purchase the land; but taxes on that land have not been received by the municipality at any time because it has not been within the boundaries of the city. According to the minister's statement, as I understand it, the portion of the taxes that is accruing as a result of the improvements to that land is to be paid by the government 100 per cent the first year, 50 per cent the second year, and 25 per cent the third year. Am I correct in that? On the other hand, these are new taxes accruing to the municipality. In the case of Sweden and, I believe, in the United Kingdom, although I cannot speak with authority there, these taxes have been absorbed by the municipality as not having existed before. Perhaps it might be possible in drafting this measure to bear that fact in mind; for it has been of tremendous benefit to the new home owner in a suburban area.


Charles Avery Dunning: That is, that the municipality would absorb what the dominion did not absorb?


Denton Massey: Exactly. In other words, the municipality carried its own burden.


Charles Avery Dunning: That is worth thinking of.

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Denton Massey: Yes; I think that is a point the minister might bear in mind.
The next point is that a tremendous advantage has been given the small home owner in the way of price as the result of standardization of plans. One does not like to think of a row of houses, each one exactly the same as the one on either side of it. On the other hand, various plans have been presented by architects in countries such as the United Kingdom, Sweden and Denmark where the house is a standard house in the main as far as its construction is concerned, although there have been various changes here and there which have altered the outside appearance of the house so that it gives the impression to one who passes it of being a house different from the one next to it, although actually they may be the same. They have gone probably to greater lengths in that regard in Sweden, where they have three distinct types of house for various sizes of family. Further, in the development of their suburban areas they have made provision so that the houses are not located on the properties in exactly a straight line. In some instances the houses are staggered slightly; in other instances they are set forward or backward, as the case may be. But that is beside the point.
It would seem to me desirable, in view of the fact that this legislation emanates from the federal government, that some thought should be given to the question of obtaining designs for small low-cost standard houses.


Charles Avery Dunning: We have that now.


Denton Massey: I know we have that now, but not down to 82,500.


Charles Avery Dunning: Oh, yes.


Denton Massey: As low as 82,500?


Charles Avery Dunning: Yes. The last competition was specifically for that class, and produced quite remarkable results. My hon. friend will have to pay for it, I am afraid, but he can get a set of the designs.


Richard Bedford Bennett: They are copyrighted.


Denton Massey: I have seen the designs. But I understood there was some question whether or not the houses could be built in all parts of this country for the figures estimated.


Charles Avery Dunning: That, of course, will
always be a debatable question.


Denton Massey: A $2,500 house in Halifax may not be a $2,500 house in Vancouver. The aim was to have a $2,500 house. I fully understand that. But I was thinking more
of the pre-fabricated or partly pre-fabricated houses, and it seemed to me that some thought might be given to that suggestion. It would have to be worked directly in connection with the municipalities where the houses are to be built. In the case of Sweden, where so much pre-fabrication is done, the houses are built of wood, whereas in England the same cannot be done, because the houses are built of brick. It might be worth considering that the government should work directly with the manufacturers or the mills in the matter of production of, for example, casements, frames and so on, which can be built to standard specifications. All these things tend to reduce the cost of houses.
I listened carefully to the minister's remarks, but I failed to hear anything with reference to any consideration to be given to the man who wished to assist in the building of his own home. There is a feature which, as the minister well knows, has been a most attractive one in Sweden, that if a man provides labour in the building of his own home, all that goes towards reducing his obligation, pro-rated, if you will-


Charles Avery Dunning: It is possible.


Denton Massey: -and because he supplies $200 worth of labour, the amortization is just that much less as far as he is concerned.


Charles Avery Dunning: It is possible, under part I.


Denton Massey: It is possible under part I? Again, I am not criticizing; I was just suggesting this, not having seen the bill. I am very glad to hear what the minister says.
Lastly-for I do not wish to delay the house any longer-it seems to me to be unfortunate that we introduce a bill to deal with this great national question of housing and neglect the blot which is upon the escutcheon of this country, namely our slums; for I can find nothing in the minister's remarks this afternoon that dealt with this ghastly situation. The minister well knows that those who are at present compelled to live in the slum areas of our cities will not find it possible in any way, shape or form under this measure to build their own homes.


Charles Avery Dunning: Part II is designed
especially for them.


Denton Massey: But these men have no money whatsoever. They cannot shoulder 10 per cent and build their own homes.


Charles Avery Dunning: My hon. friend has completely misapprehended the scheme.


Denton Massey: I think not.

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Charles Avery Dunning: Part II does not involve any investment at all on the part of the individual. It is wholly a low rental housing proposition for just the precise class of people to whom my hon. friend has now referred.


Denton Massey: Quite.


Charles Avery Dunning: Part II is intended specifically to take care of the problem to which he has referred.


Denton Massey: To attack the position of those who now live in slum areas, those who at present are on relief, those who have no incomes, those who have no jobs? They are to be permitted to go to these new areas with nothing at the back of them, and no prospects?


Charles Avery Dunning: The municipality can
go even that far if it wishes.


Denton Massey: But this rests with the municipality entirely.


Charles Avery Dunning: They can go even that far.


Denton Massey: But the minister will admit it is up to the municipality? How uncertain!


Charles Avery Dunning: To a point. Does my hon. friend think there is any possible scheme of building houses for people to rent for nothing? That is what we come down to. If the only way to clear slums is to provide houses for people with no income at all to get them without paying anything for them, then I must confess I am stumped. I cannot face that one.


Denton Massey: I do* not think the minister is stumped by any manner of means; for if he looks to Sweden he will find an answer to that. That is exactly what has happened in Sweden. The municipality has built the houses. They found it cheaper to build the houses and move those who were in the slum areas to those houses than to attempt to maintain them where they are.


Charles Avery Dunning: The municipality can do that under part II of this bill.


Denton Massey: Exactly, but will the municipality do that?


Charles Avery Dunning: Well, this parliament cannot make them.


Denton Massey: Of course that is beyond the minister's control. I admit that. But here is a scheme which is designed primarily to assist the one who would be a small home owner, but on the other hand is there anything within this scheme which will assist the municipality itself to become the landlord?


Norman McLeod Rogers: Yes. Part II.


Denton Massey: That is within the bill? I am glad to hear the minister make that comment.
I think we may congratulate the minister, not only upon his presentation of the scheme this afternoon but upon the fact that it has been brought down in the way in which it has been. I was greatly relieved to see the scheme in view of the fact that last year, as reported on page 748 of Hansard, during the course of the debate on housing the minister said:
From the time of confederation all measures with respect to the building of houses have been provincial laws or municipal bylaws passed under authority of provincial legislation. We might as well face that fact. Recently we have been put in our place by a very high authority with respect to our powers. Our powers with regard to matters of this kind are limited very largely to paying out the money of all the people of Canada for the benefit of some of the people of Canada, under conditions which are largely affected if not governed by provincial jurisdiction.


Charles Avery Dunning: That is it. That is precisely the condition.


Denton Massey: It would seem to me, then, that that difficulty has been overcome.


Charles Avery Dunning: Really, that is all we
can do.


Denton Massey: "That is all we can do," says the minister. One may hope then that this scheme will be accepted by the provinces; for if it is not accepted by the provinces, then the municipalities within those provinces which may not accept the plan will suffer as the result of the lack of action of the provincial legislatures. I wonder then, if when the bill is introduced the minister will be prepared to state what he considers to be, as a result of the contacts he has had with the various provinces, the chances of the provinces accepting the terms of this bill. In view of the fact that throughout the length and breadth of Canada this bill has been heralded, first in Saskatchewan, and now in this house, a tremendous amount of interest is being taken in it; the hopes of many people are being raised; and it would seem to me to be very unfortunate to raise the hopes of those who anticipate that day when they will be able to build and occupy their own home, only to have their hopes dashed by the action of some stubborn legislature in this dominion which fails to cooperate as we sincerely hope they all will.


An hon. MEMBER:: What else can they do?

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Mrs. MARTHA LOUISE BLACK (Yukon):: May I say a few words, as probably the only member who can hope for nothing from this bill? It has been said that at thirty-fire years of age the house would be too old. Our homes in Dawson are built largely on a glacier. The home in which I live, a frame house, is almost forty years old. It still stands; it is still comfortable and I expect to live in it as long as our people up there send us here.
Mr. 0. B. ELLIOTT (Kindersley):	From
the experience of the last three years' operation of the Dominion Housing Act it would seem that it is almost hopeless to look for any loans from the lending institutions, apparently because the returns to the insurance companies have not been sufficient to induce them to take part in this work. I was glad to hear the minister refer to the insurance companies Last year I tried to obtain a loan personally from different insurance companies in Edmonton for the purpose of building a home for myself. I was prepared to put up more than the twenty per cent equity and to comply with all the regulations. I had plans for the home and I approached several of the insurance companies as well as mortgage companies, but they would not give the cooperation they promised in connection with the Dominion Housing Act. I even went to the mayor of the city of Edmonton and called up several insurance companies, but with the same result. They say they have not made loans for the last seven years in Alberta, and that suggested to me that it was not because of any opposition at that time to the social credit government.
The city of Edmonton during the fall embarked upon a plan with money obtained, I believe, from the dominion government for unemployment relief. The plan was quite successful. They built several apartments and private homes, apparently to the satisfaction of those who were in charge of the project. Of course, as the minister pointed out, the city has a large number of vacant lots and these were utilized for the purpose. The only fly in the ointment is the increase in the price of materials that have been going into homes. There has been a constant increase, in the western provinces at any rate, in the price of materials, especially plumbing. The remarks of the minister in that respect are therefore opportune and I wish at this stage to commend the government. I think they are to be congratulated on bringing in this legislation, because it is certainly required in the western provinces in 51U52-233J
both the urban and the rural municipalities. The municipalities themselves can make good use of the money. I would ask the minister what the maximum amount of interest will be to the private individual who builds a home. Will the maximum be 1| or 2 per cent?


Charles Avery Dunning: I should prefer to answer questions when the Speaker leaves the chain.


Mr. ELLIOTT (Kindersley):: I will cfoseby commending the minister, because I believe-that this legislation will be beneficial.
Motion agreed to and the house went into* committee, Mr. Sanderson in the chair.


Charles Avery Dunning: With respect to part I,-
the rates of interest remain, as under the old Dominion Housing Act, subject to arrangement between the dominion and the lending institution. The rate under the Dominion Housing Act is now five per cent on the combined amount-five per cent to the borrower, brought about by the dominion's contribution going in at a lower rate, as it has from the beginning, enabling the lending institution to collect slightly more than five per cent on its part. I shall have more information in that regard. It remains a matter of agreement. So far as part I is concerned, the rate to the individual borrower will remain at five per cent. With respect to part II, that is a community undertaking; no rate to the individual borrower is involved at all. I explained in my remarks the rates of interest which will be applicable in that regard.


Otto Buchanan Elliott: Has cooperation been promised by these insurance and loan companies?


Charles Avery Dunning: To be frank with the
house, I did not feel that I could discuss the precise terms of this legislation with any one of those at present under agreement with the minister under the old statute, before presenting the matter to the house. What has been discussed with a number of them has been the broad criticism that has arisen in the operation of the Dominion Housing Act, and I have listened to everybody's ideas. From the views expressed to me by representatives of lending institutions with regard to this, that and the other improvement that they think might be desirable, I have very high hopes that most of those who now cooperate will continue to do so more actively as a result of the changes made. But I have no direct assurances with respect to that feature. My hon. friend is speaking, of course, of part I of the bill. It can be readily understood that in listening to the

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views of many lending institutions there will be a large variety of opinions among them as to what will be the most effective and suitable method.


Richard Bedford Bennett: Depending upon what
they pay for their money, some of them.


Charles Avery Dunning: Yes, and depending upon the precise nature of their operations and sometimes geographical limitations. Hon. members of this house can do one service in connection with this act-I mentioned it once before when speaking of the old Dominion Housing Act. The parties who could render great service and who render the least are those local institutions, local to various parts of the country, which have direct and peculiarly personal connections with people of given localities, provinces in some oases and counties in others. They are the most difficult to get to cooperate in this matter. The great national institutions have given a good deal of effective cooperation-many of them, not all-but it is characteristic of the smaller localized institutions that, with the exception of the Caisse PopuLaire in Quebec and one or two others here and there throughout the dominion, in general there is a problem where local institutions which are most closely in touch with the local people will not come into our scheme.


Otto Buchanan Elliott: In respect to these corporations, would a credit union be considered such an institution?


Charles Avery Dunning: The caisses populates in Quebec are credit unions. For the minister to enter into an agreement with any institution, credit union or otherwise, it must be able to carry out its own end of the business.


Richard Bedford Bennett: It must have a local
habitation and a name.


Charles Avery Dunning: Exactly, and it must be able to advance the money. The caisses populaires in Quebec which are under agreement with us have demonstrated their ability to advance the money to build a small number of houses under the scheme. I remember in one case a caisse populaire indicated that it desired to enter into an agreement, but its whole assets would not provide the money for one house. I did not feel justified in entering into an agreement with that institution because it did not seem to me that it could function as the housing act or parliament intended. A credit union having sufficient assets, being empowered to do this kind of business by the legislation creating it, and having a habitation, as the leader of the tMr. Dunning.]
opposition said, and the ability to do the job, I see no reason why I should not enter into an agreement with it.


Otto Buchanan Elliott: It could make a direct agreement with the government, one not requiring to be endorsed by the province?


Charles Avery Dunning: There is no end'orsement by the province of agreements with lending institutions. Lending institutions must satisfy the minister of their ability to do what is contemplated by the legislation.


Richard Bedford Bennett: The minister is talking now about part I.


Charles Avery Dunning: About part I entirely.
There is no provision in parts II and III for agreements with lending institutions.


Richard Bedford Bennett: And the province does not figure in part I.


Charles Avery Dunning: The province does not figure in part I at all. But when the hon. member asks whether a credit union would qualify, I cannot answer that question any more than I could if he asked me whether a life insurance company would qualify. It depends entirely on the situation of the institution. For instance, has the credit union the power under its incorporation to do that sort of thing? Certainly there is nothing to prevent a credit union, because it is a credit union, from entering into an agreement with the minister. As I say, I have agreements already with caisses populaires in Quebec in two or three instances, and they are credit unions. They are the best type of credit union we have in this country.


Richard Bedford Bennett: I believe that is true. There is one matter that I think the hon. member for Kindersley (Mr. Elliott) has overlooked in the case he put to the minister. There is in Edmonton, for instance, a life insurance company which has substantial sums loaned on mortgages. Owing to recent legislation in Alberta the solvency of that company is threatened. Therefore insurance companies have now, I think, practically concluded that it is unsafe to make any further loans in Alberta. The minute legislation was passed which took from insurance companies two per cent of their mortgages, they having predicated their reserves-that is the measure of their ability to meet their responsibilities-on the expectation of life according to the mortality tables and on a three per cent rate on their investments, this had the effect of reducing their capital by two per cent. And the other provision does away with payment of interest. The result is that the companies which have to maintain a reserve will not put it into mortgages in Alberta. That is the real trouble.

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Charles Avery Dunning: As far as Alberta is concerned.


Richard Bedford Bennett: My hon. friend was speaking about difficulty he had in making application for a loan himself. Hardly a day goes by that I do not receive communications, and I think one of the difficulties the minister should face fairly is the fact that the old spirit with respect to local institutions is gone. You cannot bring it back by merely invoking the spirit of the past; it will not come back.


Charles Avery Dunning: I am afraid that is true.


Richard Bedford Bennett: I am sorry it is true. I will explain why it is true. Taxes. Our federal tax touched these companies just as much as it did the great companies. A case came to me; I cannot help but think about it; a man had a small private bank, and he had all the funds he borrowed invested in real estate mortgages. Between the operation of the Farmers' Creditors Arrangement Act and other legislation he is ruined; he is through. It closed him up. The mortgages cannot be realized upon. The minister knows that the business of life insurance companies does not permit of experiments being made in connection with these matters. They have to know that the investment of the premiums received from their policy holders will return sufficient to pay their claims on the estimated dates when they become due according to the mortality tables. If they fail to do that, they come within the punitive provisions of the law. I think the minister should keep in mind that the local institutions can no longer be relied upon; in fact they are getting out of business just as fast as possible.


Charles Avery Dunning: Not the local trust companies, in the maritimes for instance.


Richard Bedford Bennett: Well, the maritimes have two or three. They have the Eastern, but it has an office in Montreal, it is no longer a local institution as it was when it started. Another one has an office in three of the provinces. The reason is that it is no longer possible for local business to carry on successfully.


Charles Avery Dunning: They have to expand
or die.


Richard Bedford Bennett: Yes.


Mr. BERTRAND (Laurier):: Would this
legislation apply to the building of summer homes? Around Montreal a number of people with very small incomes have been building homes outside the city. There is a small town called Plage Laval which was started a few years ago, nothing but summer homes there, but to-day I think there are between 1,500 and 2,000 houses.


Charles Avery Dunning: Summer homes can be
dealt with under part I.


Richard Bedford Bennett: There is no limitation
of any kind.
There is one question I want to ask the minister. I did not quite follow him when he said 3| per cent. I understood him to say the rate is If per cent with respect to the 80 per cent advance, plus one per cent amortization, which would make 2f per cent. With respect to the 90 per cent, where the risk is greater, the rate he said was two plus one which would be three per cent.


Charles Avery Dunning: Perhaps my right hon.
friend might await the report, because he has confused two things, which it is quite easy to do because of the necessarily complex nature of the remarks I had to make. The 3| per cent represented a calculation of the cost to a limited dividend housing corporation operating under part II. Its interest cost would be If per cent, and its amortization w'ould be two per cent.


Richard Bedford Bennett: I thought the minister
said only one per cent.


Charles Avery Dunning: One per cent half-yearly, seven-eighths plus one per cent half yearly. I may have got twisted on that myself.


Richard Bedford Bennett: I rather think the minister said one per cent per annum.


Abraham Albert Heaps: The minister referred a few minutes ago to the money being lent at 5 per cent. Is it 5 per cent to the borrower, or 5 per cent that the government are going to charge?


Charles Avery Dunning: Five per cent to the
borrower, under part I.


Richard Bedford Bennett: That is what the rate
now is.


Abraham Albert Heaps: At what rate is the government going to give that money to the loan companies?


Charles Avery Dunning: Does my hon. friend
mean, what is the dominion's share costing the loan company?


Abraham Albert Heaps: No. The money is to be
lent to the borrower at 5 per cent. What rate is the government charging the loan companies that give this money to the borrower?


Charles Avery Dunning: We do not charge the
loan company anything. At present we make up 20 per cent of the total amount. Under the new part I we shall advance up to 25 per cent of the total amount lent; that is, the dominion will actually put that money in.
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The rate which has been used, up to date, with respect to the dominion's share, if my memory is right, has been 3| per cent or 3J per cent.


Richard Bedford Bennett: The profit, so to speak,
has been from one to 1J per cent.
Mr, DUNNING: Yes. I shall have all that information when the bill is in committee; but at the moment, speaking from memory, I think the dominion's proportion is calculated on the basis of a cost of 3J per cent.


Abraham Albert Heaps: There is just one other point. In his statement to the house to-day the minister said the average amount of the mortgages was $4,000. That is the total amount loaned by the mortgage companies on the homes built?


Charles Avery Dunning: The average now is something over $4,000.


Mr. MITCHELL:: I am sure the right hon. leader of the opposition did not wish to leave any false impression when he was speaking of the effect of the two per cent securities tax recently imposed in Alberta. I understood that was the tax to which he was referring.


Richard Bedford Bennett: He certainly endeavoured to leave the impression that it had had a most injurious effect upon the credit of the province, and that it had made it impossible for the insurance companies to lend money in Alberta. I want to make that perfectly clear.


Archibald Hugh Mitchell: That is exactly the impression I understood the right hon. gentleman to wish to leave. I want to point out to the committee that the hon. member for Kindersley said definitely that last year, before that securities tax was imposed, he had attempted to borrow money and had been told by the various companies he approached that they had not been making loans in Alberta for the past seven years, at least such loans as he required, in connection with a home in Edmonton. I hope the right hon. gentleman will not object to my pointing out this fact in this connection.


Richard Bedford Bennett: I am obliged to the hon. member for Medicine Hat. I did not intend to imply that the application of the hon. member for Kindersley last summer was dealt with in the light of legislation passed this year; if my remarks were open to that construction,
I very much regret it. What I did desire to say was that the legislation, even prior to this year, had had a most injurious effect upon lending by loan and insurance companies. It is a matter of knowledge to me they have indicated that in view of the legislation which had been passed with respect to foreclosures, {Mr. Dunning.]
with respect to the acquisition of equities of redemption and the undesirability of owning property with the taxes, that prevailed, the directors had made up their minds that they would be derelict in their duty to their policyholders if they took the premiums and invested them in real estate mortgages in Alberta. That is the position.
Resolution reported, read the second time and concurred in. Mr. Dunning thereupon moved for leave to introduce Bill No. 145, to assist the construction of houses.
Motion agreed to and bill read the first time.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
Thursday, June 9, 1938