REPORTS OF COMMITTEES


[Stage Direction]
Fifth report of standing committee on banking and commerce.-Mr. Cleaver.

[Stage Direction]
Mr. S. M. CLARK (Essex South) presented the second report of the special committee on railways and shipping owned, operated and controlled by the government.
Hon. DOUGLAS ABBOTT (Minister of Finance) moved:: That items Nos. 434, 435 and 479 of the estimates for 1947-48, approved and reported upon on Thursday, May 8, 1947, by the sessional committee on railways and shipping owned, operated and controlled by the government, be referred to the committee of supply.


[Stage Direction]
Motion agreed to.

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

Mr. CASE:: 1.	To whom was the concession awarded in connection with tenders for apples and hay in the A.F.V. range, St. Vincent township, Grey county?
2.	What was the amount of the successful tender?
3.	Was this the highest tender submitted?
4.	What was the amount of the second highest tender and by whom was it submitted?
5.	Is the concession let for a period of five years ?
6.	Has a surety bond been required to guarantee the proper care and maintenance of the orchards? If so, in what amount?


Mr. LAPOINTE:: 1.	Mr. H. L. Isaacs, Thornbury, Ontario.
2.	$3,800 a year.
3.	Yes.

Questions
4.	$3,500 a year. Mr. Richard F. Doran, Meaford, Ontario.
5.	Yes.
6.	No.


SUGAR BEET DISEASE-NEMATODE
Mr. MURPHY:: 1.	What areas in Canada are infected with the sugar beet disease known as nematode?
2.	Are any areas infected with any other sugar beet disease? If so, where?
3.	What efforts are being made to control or eliminate these diseases?
4.	Is transport of sugar beets restricted in any of these areas? If so, where, and what transport restrictions or orders are in effect?
5.	Have any representations been made with respect to control or elimination of this disease? If so, by whom ?
6.	Has any provincial government suggested a dominion and provincial proposal, contribution or action to control or eliminate this disease? If so, what provinces made such offer or proposal and what action has the government taken?
7.	What are the main causes for spreading this disease, and what, if any, action by entomologists, engineers or other government agents has been taken or recommended to eliminate such causes?


Mr. GARDINER:: 1.	A single field at Glencoe, Middlesex county, Ontario, and twenty-three farms embraced in an area of approximately four square miles at Blackwell, Lambton county, Ontario.
2.	Yes. Sugar beet diseases of at least occasional economic importance in Canada, together with the provinces in which they are known to occur, are listed below:
Cercospora leaf spot (C. beticola)-British Columbia, Alberta, Ontario, Quebec, New Brunswick.
Fusarium root rot of seedlings (F. culrno-rum)-Alberta.
Phoma leaf spot and black leg (Phoma Betae)-British Columbia, Manitoba, Ontario.
Ramularia leaf spot (R. beticola)-British Columbia.
Rust (Uromyces Betae)-British Columbia.
Damping off (Rhizoctonia Solani)-Manitoba.
Black root of seedlings (various fungi)- Ontario.
Black heart (boron deficiency)-Ontario, Quebec.
Curly top (virus)-British Columbia.
Savoy (virus)

Ontario.
Mosaic (virus)-Ontario.
Rhizoctonia rot (Rhizoctonia Solani)- Ontario.
3.	All the diseases listed are under observation or study and where of known value or use recommendations for their control are made known to the affected growers or industries:
Cercospora leaf spot, Fusarium root rot, Phoma leaf spot and damping off are only occasionally sufficiently prevalent to be of economic importance, but not sufficiently so to warrant recommending control measures.
Ramularia leaf spot and rust are occasionally severe enough to cause an appreciable decrease in crops of beet seeds in the Fraser river valley and on Vancouver island, B.C. These are under study at the Dominion Laboratory of Plant Pathology, Saanichton.
Black heart, which occurs occasionally, can be controlled by an application of borax to the soil.
Curly top and mosaic occur occasionally in seed fields, and can be controlled by roguing the infected plants in the seed fields and in the fields where stecklings are being grown.
Savoy is occasionally present in sugar beets destined for the sugar factory. Since infection has already taken place, nothing can be done to control the trouble; removing the infected plants only reduces the crop.	-
Black root of seedlings is prevalent wherever sugar beets are grown in south western Ontario. Several fungi are usually found associated with the trouble, and some adverse soil condition is no doubt partly responsible. It may cause as high as six per cent of the acreage sown to sugar beet in that part of Ontario to be abandoned-ploughed up and sown to something else. It is more prevalent in late sown than in early sown sugar beet fields. This trouble is being investigated by the Dominion Laboratory of Plant Pathology, Harrow.
Rhizoctonia rot of sugar beet may cause a loss of roots as high as 20 per cent in some fields in some years. Crop sanitation and crop rotation are the only practicable means of control.
4.	Yes. The nematode in question, Hetero-dera schachtii, has been designated a plant disease within the meaning of the Plant Disease Act of the Province of Ontario, R.S.O. 1937, chapter 346 (as amended by 1941, chapter 42, and as amended by 1942, chapter 30). The regulations under this act are in force in the Blackwell area described as follows:
"The area in the township of Sarnia, in the county of Lambton, bounded on the north by lake Huron; on the east by the Brigden side-road from lake Huron to the king's highway No. 7; on the south commencing at the Brigden sideroad by the king's highway No. 7 in a westerly direction to where the said highway curves south, thence continuing along the old road which continues westerly from the point
Questions

the king's highway No. 7 curves south to the sideroad between lots 21 and 22; and on the west commencing at the said- old road in a northerly direction to [DOT] lake Huron along the sideroad between lots 21 and 22, and as continued northerly to lake Huron, is hereby designated as a 'precautionary area'."
The transport restrictions in this area, as covered by regulation under this act, are as follows:
"Sugar beets within the precautionary area shall not be transported, except by railway cars, outside of such area and sugar beets from outside such area shall not be transported into the precautionary area provided that sugar beets outside the precautionary area may, with the written approval of the provincial entomologist, be transported to the London Road shipping station.
"(a) Wagons and trucks used in the precautionary area in the handling and delivering of sugar beets shall have boxes with tight fitting bottoms and. tight fitting sides and ends for four inches above the bottoms and shall be free from holes and cracks of sufficient size for dirt to sift through.
"(b) In the precautionary area sugar beets shall be forked from the boxes of the wagons and trucks and all the dirt remaining in the boxes shall in each case be weighed out with the wagons and trucks.
"In the precautionary area dirt shall be returned to the field from which the sugar beets are harvested.
"Earth from railway cars used in the transportation of sugar beets from the precautionary area shall be completely removed by washing at the sugar factory and all such earth and water shall be disposed of in a manner approved by the provincial entomologist."
Further orders in effect are:
"Sugar beets on any field which is found to be infested with the nematode, Heterodera schachtii (Sugar Beet Strain), shall be harvested as early as possible and shipped in as few railway cars as may be arranged.
"Beet seed shall not be grown within the precautionary area.
"If the owner or lessee of any property affected by the provisions of the act or of these regulations, fails to comply with the act or these regulations, or if the owner or lessee of such property is out of the province or his whereabouts are unknown to the inspector, the inspector, with the approval of the provincial entomologist, may make such arrangements as he deems necessary to have such control measures or treatments carried out and any expense incurred shall be payable

by and recoverable from the owner or lessee of any such property in accordance with the provisions of the act."
5.	Yes. By the Canada and Dominion Sugar Company.
6.	No. There being no proposal no action could be taken.
7.	The nematode is spread by flood water, transported in infested soil on the best crop or crop remains, by mud and soil adhering to footwear, the feet of farm animals and equipment. The restrictions stated above in reply to questions 3 and 4 are all designed to reduce to the practical minimum the spread of the nematode. The pest has been under study and investigation since 1931. For the last two years, in cooperation with the sugar company and chemical industry, the dominion Department of Agriculture has been actively studying the utility of soil fumigants as a control measure. These might, if an ideal fumigant could be found, conceivably eliminate the pest.


INDIANS-MOTHERS' ALLOWANCES
Mr. CASTLEDEN:: 1.	Has any assistance in the form of mothers' allowance been paid to Indians on reserves in the province of Quebec by the government of that province?
2.	Were instructions given to any officials of the Indian Affairs Branch to have this assistance discontinued? If so, what instructions?
3.	What steps have been taken by any officials of the Indian Affairs Branch to have such payments discontinued?


Mr. GLEN:: 1.	Yes.
2.	No.
3.	The Acting Inspector of Indian Agencies in verbal conversations with the responsible provincial officers drew their attention to the existence of duplication of relief services already provided by the Indian Affairs branch, as a result of such payments.


FEED GRAINS-COST TO NOVA SCOTIA FARMERS
Mr. WINTERS:: 1.	Has there been an increase in the price of No. 1 feed barley and No. 1 feed oats since 17th March, 1947, and, if so, how much?
2.	Did the above-mentioned increases in the price of barley and oats increase the cost to Nova Scotia farmers of feeds involving these grains?


Mr. GARDINER:: 1.	Oats:
New ceiling, 65 cents in store Fort William.
Previous ceiling, 51J cents in store Fort William.
Or advance in ceiling of 13J cents.
New subsidy, 10 cents.

Questions
Authorized advance in price 34 cents per bushel.
Barley:
New ceiling, 93 cents in store Fort William.
Previous ceiling, 64f cents in store Fort William.	.
Or advance in ceiling of 281 cents.
New subsidy, 25 cents.
Authorized advance in price, 31 cents per bushel.
If all grades of oats and barley trade at ceiling as they are at present, the advance would be as above.
If oats trade at floor prices, there would be no advance in oat prices for No. 1 feed or lower grades, as the floor price is 614 cents per bushel (10 cents above the old ceiling, and this is covered by subsidy).
If barley trades at floor prices, there would be an advance of i cent a bushel for No. 1 feed or lower grades, as the floor price is 90 cents per bushel or 251 cents above the old ceiling (25 cents per bushel of which is covered by subsidy).
The floor price schedule is as follows:
No. 1 C.W. oats, 65 cents per bushel until further notice.
No. 2 C.W. oats, 65 cents per bushel until further notice.
Extra No. 3 C.W. oats, 64 cents per bushel until further notice.
No. 3 C.W. oats, 63 cents per bushel until further notice.
Extra No. 1 feed oats, 63 cents per bushel until further notice.
No. 1 feed oats, 61J cents per bushel until July 31, 1948.
No. 2 feed oats, 614 cents per bushel until July 31, 1948.
No. 3 feed oats, 614 cents per bushel until July 31, 1948.
No.	1	C.W.	6 row	barley,	93	cents	per
bushel until further notice.
No. 2 C.W. 6 row barley, 93 cents per bushel until further notice.
No.	1	C.W.	2 row	barley,	93	cents	per
bushel until further notice.
No. 2 C.W. 2 row barley, 93 cents per bushel until further notice.
No.	2	C.W.	yellow	barley,	92	cents	per
bushel until further notice.
No.	3	C.W.	yellow	barley,	91	cents	per
bushel until further notice.
No.	3	C.W.	6 row	barley,	91	cents	per
bushel until further notice.
No. 1 feed barley, 90 cents per bushel until July 31, 1948.
No. 2 feed barley, 90 cents per bushel until July 31, 1948.
No. 3 feed barley, 90 cents per bushel until July 31, 1948.
In the case of off-grades, and grades lower than No. 1 feed oats or No. 1 feed barley, the selling price will be the spot price or 614 cents per bushel in the case of oats, and the spot price or 90 cents per bushel in the case of barley, whichever is the higher in either case.
2.	Answered by No. 1. Increase, if any, would be in proportion to the oats and/or barley used in preparation of the feed.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. CASTLEDEN:: 1.	Was any scrap metal sold to the Anaconda American Brass Limited by War Assets Corporation and War Assets Limited, to date? If so, of what type and quantity?
2.	What price did Anaconda American Brass pay for these scrap materials?
3.	Was any non-ferrous metals sold to (a) Anaconda American Brass Limited, of Toronto and (b) Consolidated Mining and Smelting Corporation, by War Assets Corporation and War Assets Limited, to date? If so, what type and quantity to each of them?
4.	What was the price received by war assets for this material from each of these companies?


Mr. McILRAITH:: Return tabled.


WAR ASSETS-EMPLOYEES AND INVENTORIES
Mr. JACKMAN:: 1.	When did war assets corporation have the greatest number of employees on its payroll?
2.	How many employees were there?
3.	At that time what was the value of goods declared surplus and carried on the books of war assets corporation?
4.	What was the basis of value?
5.	As of March 31, 1947, how many employees did war assets corporation have on its payroll?
6.	As of March 31, 1947, what was the value of the inventory still remaining with war assets corporation?
7.	What was the amount of sales of war assets corporation during the first 3 months?
8.	What was the value of goods declared surplus during 1947 by (a) the navy; (b) the army; (c) the R.C.A.F.; (d) other government departments or agencies?
9.	Have any of the above sources further supplies likely to be declared surplus?
10.	If so, what sources and how much from each source?



BARBARA ANN SCOTT


[Stage Direction]
On the orders of the day:
Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, yesterday the hon. member for Waterloo South (Mr. Inquiries of the Ministry

Homuth) asked me if I would interest myself in the cause of Barbara Ann Scott, and see that the young lady got all the protection possible. He asked me if the government would send some message to the Canadian representative on the international Olympic committee. Yesterday, after the meeting of the house, I sent the following message:
Ottawa, May 7, 1947
J. C. Patteson, Esq.,_
Canadian Pacific Railways,
London, England
I was asked in the Commons today if the government would cable you as the Canadian representative on the international Olympic committee to see that Barbara Ann Scott's interests were protected in the present controversy. Government will appreciate your doing all possible to protect Barbara Ann's interests to_ the full. Please advise what reply you would wish me to make to the Commons on your behalf.
Mackenzie King
I received the following message this morning:
London, 1947, May 8
Mackenzie King,
Ottawa
Yours seventh. Am awaiting report from Canadian Olympic committee concerning Barbara Ann Scott which understand air mailed sixth. Upon receipt will immediately reply to President Edstrom at Stockholm who you can safely assume will consider facts impartially and dispassionately. You have my assurance do all possible protect her interests.
Meantime deprecate this excessive publicity which is certainly not helpful.
J. C. Patteson EXTERNAL AFFAIRS



REPORTED WITHDRAWAL FROM SERVICE OF CHIEF OF INFORMATION SERVICE

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On the orders of the day:
Mr. GORDON GRAYDON (Peel):: Mr. Speaker, yesterday in the press there was an intimation that the chief of the information service of the Department of External Affairs was contemplating leaving his position. Is the minister in a position to make an announcement with respect to the authenticity of that report?
Right Hon. L. S. ST. LAURENT (Secretary of State for External Affairs): I cannot say what any member of the public service may be contemplating. All I can say is that there was no intimation of any such contemplation given to me.


Gordon Graydon: Does that mean directly or indirectly?
Mr. ST. LAURENT: Neither directly nor indirectly.



USE OF OIL-DRIVEN LOCOMOTIVES-EFFECT ON MARKET FOR NOVA SCOTIA COAL

[Stage Direction]
On the orders of the day:
Mr. P. C. BLACK (Cumberland):: I should like to ask a question of the Minister of Transport. Is his department replacing the coal and steam-operated locomotives in Prince Edward Island with oil-driven diesel engines, and also is it testing out large unit diesels between Montreal and Halifax? Let me point out that if that is so, this would destroy one of the best home markets we have for Nova Scotia coal.


Hon. LIONEL CHEVRIER (Minister of Transport):: Mr. Speaker, the hon. member did not give me notice of his question. While I would be prepared to make a statement on it now, I do not think it would be wise to do this until I have ascertained all the facts. Then I shall be glad to give a reply.



PRIVILEGE


[Stage Direction]
On the orders of the day:
Mr. NORMAN JAQUES (Wetaskiwin):: Mr. Speaker, I rise to a question of privilege. My attention has been called to an article on the front page of today's Montreal Gazette. The so-called interview was a statement which I gave to the Gazette yesterday over the telephone. Obviously most of the remarks, including the quotations attributed to me, are pure fabrications. What I said of Gerald ' Smith was that he had done more to expose communist plots than any other public man in the United States of America. And what I said I would do in Canada was that I would do my best to expose communist plots here.
It is true that I did address a meeting in Philadelphia last Thursday night. The meeting was sponsored by the American Gold Star Mothers-mothers who have lost a son or sons in the war.


Some hon. MEMBERS:: Order.


Mr. SPEAKER:: Order. The hon. member has stated his question of privilege, and should be satisfied, without feeling that he is obliged to make a speech.


Norman Jaques: 

THE BUDGET


[Stage Direction]
The house resumed from Wednesday, May 7, consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell (Muskoka-Ontario), and the amendment to the amendment of Mr. Coldwell.
Mr. H. R. JACKMAN (Rosedale):: Mr. Speaker, may I congratulate the Minister of Finance (Mr. Abbott) upon the presentation of his first budget. It might be termed a tax-weary budget, and I predict it will not be his last one.
Before mentioning the various provisions presented to the house, I should like to correct an impression the hon. member for Rosetown-Biggar (Mr. Coldwell) may have made when he answered an interjection of mine in regard to why our young men were leaving for the United States. I suggested the C.C.F.; and the leader of the C.C.F. mentioned that there might be other reasons. To quote him precisely, he said this:
The hon. member asks me about the C.C.F. We were not in power anywhere in Canada from 1930 to 1935 when emigration to the south and deportations to England were on a scale such as we had never had before in the whole period of our history.
That was a Statement which, at that time, I was not able to refute. Since then, however, I have obtained figures


James Horace King: Order. There is too much noise in the chamber. I must ask hon. gentlemen to moderate their voices, because it is most disagreeable for the hon. member who has the floor.


Harry Rutherford Jackman: I have, however, obtained figures for emigration to the United States from Canada for the five-year period ending 1930, and I find that it amounted to 299,000. And for the five-year period ending 1935 it amounted to 37,000, which is in strange contrast with the words of the hon. member, when he said that emigration was on a scale such as we had1 never had before in the whole period of our history.
As to the deportation of people from Great Britain, who had not acquired the five-year citizenship period! in this country, I find that for the whole ten-year period 1932-42 they amounted to 9,501. I should also like to point out that the number of Canadians returning from the United States during the five-year
period ending 1935 was 56,000, whereas the number of Canadians who emigrated to the United States was 37,000. Apparently many Canadians who were in the United States found that conditions in Canada under Right Hon. R. B. Bennett were much more favourable than were conditions in the United States. I trust that the leader of the C.C.F. will be more careful in statements he gives to the house. Up to the present I have always taken them at their full face value; now I realize I must scrutinize every word, and I am afraid I must advise the Canadian public to do likewise.
The Minister of Finance cautioned business not to increase their prices unduly. That was sound advice, and in this regard the minister was following in the footsteps of President Truman. What he said was that business men should reduce their prices as volume and efficiency of business expand. That is all to the good, and a course of action which sound business men willingly follow; for nothing attracts additional competition like high profits.
I should like to put on record the margin of profit on a dollar of sales of some of our representative companies for the year 1946. May I say to the C.C.F. that some businesses did not do so well in 1946 as they did in previous years. I think it will be apparent to the house that the margin of profit per dollar of sales is not as substantial a factor in the price level as is commonly believed, and perhaps the attempt to make business the whipping boy is not as well founded as our C.C.F. friends would like to make out.
The following is a list of companies selected because the figures were readily available, showing the percentage net profit per dollar of sales in 1946: Aluminium Limited, 10-95 per cent; British Columbia Packers, 2-16; Burns & Company Packers, -035, or one-third of one cent; Dominion Dairies, 1-55 per cent; Dominion Stores, 1-29; International Nickel 22-30; Laura Secord candies, 7-91; Loblaw Groceterias, 2-28; Massey-Harris, 3-03; Silverwood Dairies, 1-80; Tamblyn's drug stores, 3-87; Zeller's Limited, 4-36 cents. It is obvious that even in a sellers' market the margin of earnings is a small factor in the price to the consumer.
In relating these percentages to one another two considerations must be borne in mind. One is the rapidity and volume of turnover, and the other is the relative proportion of capital to other factors. If at great capital cost an industry renders itself entirely automatic, as the hydro-electric industry virtually has, almost the sole cost is the servicing of the
The Budget-Mr. Jackman

capital; hence the earnings per dollar of sales must be greater than in many' other industries. This explains why all heavy industries with great plant expenditures must have a relatively high return per dollar of sales. Another factor is that some companies do a single operation and make a profit, while others handle the article from the raw material stage to the consumer's home, and there is only one profit, despite the many handlings.
Earnings generally were good last year due to abnormal volume making up the slack of the war years and the filling of inventory pipe lines and the virtual absence of selling costs. The value which the public is putting on the price of shares would indicate that much harder sledding is ahead.
May I now say a word or two in regard to the figures which the Minister of Finance brought down in his budget. Last year this country contributed to the coffers of the federal treasury almost $3,000 million. The expenditures were $2,632 million, leaving an apparent surplus of $352 million. We may indeed rub our eyes when we see such colossal figures, for it does not seem many years ago when our normal budget of revenue and expenditures ran around $500 million, and the C.N.R. deficits of $50 million were considered by many to be leading the country into bankruptcy. That does seem a long way away from the present. Canada is, however, but the sum total of its people, and no one's individual finances have mounted in anything like the scale in which the dominion government's finances have gone up. Since governments create nothing, the people are therefore entitled to get some idea in regard to taxation and the spending of the huge sums of money which today the government takes from the people.
The government is without question the biggest business in the country, and yet we find in the cabinet thirteen lawyers and two business men. That may be why we have a political rather than a business budget.


George James McIlraith: A good budget and a good cabinet.


Mr. MACKENZIE:: A people's budget.


Harry Rutherford Jackman: We have already heard about the alleged surplus of $352 million arising from the fact that the sales of war assets amounted to $372 million, an extraordinary item. The bonds which were sold to buy these assets are still outstanding and remain unpaid. They are held by the banks, insurance companies and by the people generally, and yet the money which was received

from the sales of these goods was not used to retire any of the debt. Indeed I wonder what the government would 'have done had they received from the sales of war assets not $372 million but let us say $1,000 million or $2,000 million. Surely their consciences would have pricked them then, but the principle remains the same in any situation.


Douglas Charles Abbott: We would have reduced the debt by that amount.


Harry Rutherford Jackman: Last year there was also the failure to set up an adequate reserve against the large amounts lent to Great Britain and to various European countries for the purpose of rehabilitating them and purchasing goods in Clanada. Altogether about $1,700 million in loans were granted, and yet this government set up a reserve of $25 million. It is very much 'like a good man lending a group of friends, who had been sick or who were recovering from operations about $1,000, hoping that when they recovered they might be able to get on their feet and repay him, but in the meantime he set up a reserve of $15 against 'the possibility that one or more of them would not be able to repay in full. If the government had acted as a business man would naturally act in such circumstances, and set up a reserve of about 20 per cent, the total surplus of $350 million would have been used for that purpose. It serves no useful purpose to fool ourselves about these loans. We hope that they will come back one hundred per cent, but it is only common ordinary prudence to allow for some reserve, and that reserve should be allowed for when the proceeds of these loans are being spent in Canada to swell our whole economy on which our tax rates are based, and on which the coffers of our treasury becomes swollen. This is the time when the reserve should be set up, and not at some other time.
We are not so much interested in the criticism of the government's presentation of its accounts for last year as we are in how it proposes to run the business of the country for the coming year. The estimates last year exceeded expenditures by $137 million. Not only the government but perhaps we of the opposition are also subject to criticism for allowing estimates to go through beyond the spending possibility of the government, and that spending possibility has never been underestimated. Perhaps it might be well if we adopted more of the method carried on in the United States, where appropriations come before the house in a more general over-all way than they do under our system. Certainly when the estimates come down it

The Budget-Mr Jackman
is very difficult to get items substantially reduced, and the government therefore must take the responsibility for the vast expenditures which it has saddled upon the people of the country. This year the estimated expenditures on ordinary account are up $12 million at $1,304 million, or 8108 per head of population. Then we have in addition demobilization and reconversion expenditures of $56 per capita, equal to $164 in all, on both ordinary and special account.
I am quite sure that many people in my riding would rather be content with half the services which the government is providing and have $82 per head returned to them for their own use. Little do they realize that these vast sums of money are being extracted from them, because so much of it is taken silently through indirect taxation. If they could have the money themselves they could spent it in their own way, which they would much prefer to do rather than have the government dictate to them exactly what they shall have and what they shall not have.
I do feel, Mr. Speaker, that the only way we can get our taxation down, the only way in which we can get the economy of this country on a sound basis, is not by attacking all the individual items which come before us in the large blue book of estimates; we must decide how much we can spend, just as any ordinary person or ordinary business would do. Here it has always been the custom to spend all we like on everything we need. Of course, we can afford it because we have twelve million people! But we never seem to think how we shall raise the money or what sacrifices will be entailed on the part of our people when we are considering the spending of money.
We should first of all estimate what we can safely take from the people of Canada in the form of taxation and keep our economy in full production, and then decide how much, and whether all of it would be usefully spent. But as it is, we have gone on spending for years and years various amounts, and the day of reckoning must come when ways and means must be found for the raising of this money. Only last night all hon. members received in their mail an envelope containing a number of blue sheets from the civil service commission advertising for new staff.
I have nothing against any one of these items, which I shall put on the record, but if we do not consider whether we can afford things before we go and spend our money or do our hiring we shall never get the expenditures of the country down and taxes down to a rate where we shall be able to restore incentive to our people. I do not suppose there is a
member in this chamber who could not use the services of some other person. I could use the services of a research worker, as many others no doubt could in their business; we can all use additional staff now and then. If it were merely a question of writing out a ticket and getting additional staff by that simple operation we would have considerable expenses to cope with and there would be nothing left. The cost of services would go up. But this government decides that something may be useful and therefore we must have it.
This is the list of the applications which are called for in the public service. This is in one day's mail. For the experimental farm there are four assistants with salaries from $2,100 to $3,600. Then, also in the Department of Agriculture, there are eight soil specialists, male, with salaries from $2,100 to $3,300. There is an inspector of concentrated milk plants, Department of Agriculture, salary $2,700 to $3,000. In the Department of Mines and Resources they are calling for no less than thirteen associate geologists ranging from $3,000 to $3,900. Then there is a publicity editor and writer for the Department of Fisheries, Ottawa, $3,600 to $3,900. Then we have for the Department of External Affairs, foreign service, officers required, grades 1 and 2, a total of from 25 to 30 with salaries ranging from $2,700 to $3,900.
, I do not doubt for a moment but that all these positions are required or that the persons to be employed would be useful. But this is building up a tremendous overhead for the country to carry, and I do not think we have any proper control. If this goes on we shall get ourselves into the position where the people-those that are left who are not already on the public payroll-will find that they have a crushing burden which they can no longer support, and we shall find ourselves in a first-class depression.
It is only through increased production that we can raise the standard of living. The present budget should be looked at from that point of view and from that point of view alone. Is it a production budget or is it just a political budget? This budget, in the words of the minister, proposes to concentrate the reduction almost entirely in the field of personal income tax. What the minister did was good, but it did not go far enough. He has at last discovered that the people are tax weary, that the present scale, to use his own words again, would constitute a serious impediment to the full working effort and a brake upon the drive and initiative of men and women in all groups and classes-and I would underline "all groups and classes."
The Budget-Mr. Jackman

However else the minister might have liked to distribute his reductions, political and economic necessity required that he should first give attention to the lowering of the personal income tax. This necessity made the budget a comparatively simple one as far as what it did was concerned. Its sins of omission are more important. For those whose modest incomes do not bring them into the taxable brackets, the failure of the government to reduce indirect taxes on a long list of items such as clocks, watches, radios, phonographs, toilet articles, leather goods, telephone and telegraph tolls, silver-plated tableware, candy, soft drinks, to say nothing of the heavy special taxes on amusements, motor cars, tires and the 25 cent tax on a 33 cent packet of cigarettes, the budget brought no relief. These taxes bear most heavily on those who can least afford to pay them. The removal of rent controls and the cancellation of wartime tariff suspensions also increase the cost of living.
Of far greater importance to the low-income group was the withdrawal of subsidies with no compensating benefit. Last year those subsidies which made things seem cheaper than they really were-goods sold below cost- amounted to $208 million, or $17 per head, for every man, woman and child, and when you take the small family budget in the lower income groups, you can realize how much that difference will mean to them.


Mr. KNOWLES:: How much did they save as a result of that?


Harry Rutherford Jackman: The lower income groups?


Stanley Howard Knowles: Yes.


Harry Rutherford Jackman: As a result of the removal of subsidies?


Stanley Howard Knowles: Because of the $208 million. how much was saved to the consumers of Canada?


Harry Rutherford Jackman: What I am suggesting is that $208 million was used to subsidize various articles and these subsidies are fast disappearing and the people will have to pay that much more. Perhaps the member for Winnipeg North Centre (Mr. Knowles) realizes that butter went up ten cents a pound the next day, and cheese four cents. In my riding, may I say to him, many families will be doubly grateful that this parliament passed unanimously the Family Allowances Act.
What the Progressive Conservative party has advocated for some time would now afford some relief to that great class of taxpayers whose incomes are in the low taxable brackets, and will be hard hit by the increased cost of

living due to the government's action. We have advocated the raising of the minimum exemptions from $750 to $1,000 for single persons and from $1,500 to $2,000 for married persons. The government claims that if the exemptions were increased it would be unfair to those who pay no taxes. What then, may I ask, was the case last year when the very slight increase in the exemptions exempted half a million small taxpayers from paying any tax at all? The government cannot have it both ways. What the government should do is follow a production expansionist policy, and give the workers every encouragement to earn more by producing more. In any event it is not desirable to tax incomes below the $1,000 and $2,000 limits, which I consider "socially necessary exemptions". Our government should not become an agency for lowering the standard of living of the Canadian people.
Let me say here, Mr. Speaker, that experience does not bear out the popularly held opinion, which at one time I shared, that some tax on everyone makes all the people tax conscious and therefore government-spending conscious. The theory seemed good, but the result has been quite to the contrary. The parliamentarian, much less the workingman, can scarcely grasp the billion dollar figures in which we now deal, and the only result of taxation in the brackets below the "socially necessary exemptions", as well as higher rates of taxation above those brackets, has been to demand higher take-home pay. That is the only pay that counts. High taxation- and last year it began at 22 per cent above the minimum exemption of $1.500-was a fruitful cause of labour unrest. Such taxation does not have the educative effect it was believed to have, and results in permanently raising the cost of production.
Apart from the refusal to raise the exemptions, the schedule of reductions is not well designed to raise the standard of living, which can be done only through greater production. The minister used honeyed words when he said:
Nine out of ten taxpayers will find their taxes reduced by 29 per cent or more from existing rates.
That is good politics, because nine out of ten votes are more than sufficient to ensure anyone's election. Perhaps the government forgot to count the very great number who are not taxpayers or who pay very little tax, and to whom the increased cost of living, due to the budget, is worse than a positive increase in taxation. The minister then went on to say:
The reduction as compared with present rates is as much as 54 per cent in the bottom bracket, but is limited to about 6 per cent or 7 per cent in the top brackets.



S, 1947

[Stage Direction]
The Budget-Mr. Jackman
Of course everyone knows that taxation must consider ability to pay-that is, the higher the income the higher the rate-but everyone in all economic classes is faced with greatly increased living costs. The severe impediment to a full working effort, and the brake upon the drive and initiative of men and women in all groups and classes which the minister mentioned, applies to all classes. Extraordinary rates of taxation were cheerfully borne during the war years as a relative small sacrifice; but if the minister had been as much interested in production as in votes, he would have realized that the same carrot which he admitted had to be dangled before the humblest workingman to remove "the serious impediment" or to take "the brake" off, must also be dangled before the biggest business or professional man.
One of the advantages of being a politician is that one has friends in all walks of life; and I have yet to find that people are really very different when it comes to the important things of life. Generally speaking they are moved by the same desires; and two common desires are economic security and advancement, even though they may be on different levels. If the minister felt it was necessary to provide a carrot with 54 per cent nutrition for one class, we might have thought the same reasoning would have led him to follow a similar course, and certainly a course which was better than to have provided a carrot with only 6 per cent nutrition, for those in the upper brackets. The government is budgeting for a surplus next year of $190,000,000, so that there might easily have been a little more nutrition all round and, may I say, a little more production.
A businessman would be just as much interested, if not a little more so, in encouraging those whose work in a competitive market had entitled them to higher pay. Because on them he is relying for his most difficult type of work, and they are the hardest to replace; but not so the Liberal government. Since there are not very many in the higher pay class, their votes are not really important.
Douglas Charles Abbott: Those rates affect the individuals with an income of $250,000. There are not very many of them.


Harry Rutherford Jackman: No, and there are not very many above $10,000 a year.


Douglas Charles Abbott: They get about twenty per cent.


Harry Rutherford Jackman: If the government did what was right, it might be misunderstood politically. A glance at the rapid increase in tax rates, not in the $250,000 bracket with which the Minister of Finance seems to be so familiar-


Douglas Charles Abbott: Just by hearsay.


Harry Rutherford Jackman: -but in that bracket after $1,500, we find that on the next $100 the tax is 10 per cent; on the second $100 it is 12 per cent, and it goes up to 18 per cent on the fifth $100 after $1,500. The rate still goes up on a scale which no one could possibly climb, because the degree of ascent is much too great. That shows how quickly the government starts to discourage the worker nowadays. If one looks at the report of the Canadian National Railways and divides the total wage bill by the number of employees, he will find that $2,000 is considerably below the average salary. A married man pays a tax at the rate of 20 per cent on anything over $2,000. Quickly it climbs until at $17,000 it becomes 50 per cent and then climbs up to 80 per cent until it reaches the class with which the Minister of Finance is so familiar.
Then there is the surtax on investment income, which may be substantial. My own opinion is that while there must be some scale, it ascends too rapidly and too high to restore the incentives and to take off the brakes the minister mentioned. Unless some people are human and some are mechanical, I am quite sure that he is wrong.
It is also interesting to look at the comparison of our new rates with those proposed in the United States. Up to $2,750 income the new rates in Canada will actually be lower than they are in the United States. But after $2,750 it will be more expensive to earn your living in Canada than to go across the line. I should have thought that the minister and the government would have been just as much interested in keeping on this side of the line those bright young people, some of our best technically trained young men and women, who are leaving Canada to go to the United States; yet he fixes a limit of $2,750. Let me tell him here and now that that is not the objective which these young people have in mind when they leave our country and go across the border. One wonders why the Minister of Finance, inasmuch as he is an old gunner of the first war, does not raise his sights and aim at the target instead of at no man's land; because that is what he is doing here.


Douglas Charles Abbott: That is a striking figure of speech; it is pretty good.


Harry Rutherford Jackman: When the minister draws up this scale with the dividing line of $2,750, he is doing something which accomplishes absolutely nothing; because a man earning less than $2,750 is very likely to be a workingman, and let him try to go across the
2S78
The Budget-Mr. Jackman

border. It will be found that he comes under the contract labour classification and is not allowed across the border. But if you take a young man in the white collar class, a university man or other technically trained person, he will have no difficulty in crossing the border. So the minister's proposal accomplishes nothing. He is aiming at a class which cannot get across the border, and he gives no satisfaction to those who can.
Income tax in Canada in pre-war days was sufficiently moderate not to prove a brake on incentive. The rate of increase during the war was astounding; andl in addition to pointing out the need for revenue the government used to argue that because of the increased prosperity and the shortage of civilian goods some of the money or purchasing power had to be drawn off in taxation in order to prevent competitive bidding for goods in short supply. The house will recall that even compulsory savings were resorted to in order to accomplish this end. Many goods no longer are in short supply and it is expected that many producers soon will be looking for buyers. If we are to keep full employment, as much purchasing power as possible should be restored to our people.
One of the greatest disappointments of the whole budget was that it contained no reference at all to the income of married women and the effect that the earning power has on the taxes of the husband. As it stands today a wife may earn only $250; once she earns more than that amount the husband's marital exemption of $750 is reduced dollar for dollar with the wife's income. The result is that if the wife earns $750 or over she is not only taxed by the government but the husband' loses his entire marital exemption of $750. So, looking at it from the standpoint of the family income, the wife who works is subjected to an enormous tax, and this has a very bad effect on our whole working economy. The result is that incentive is gone. What the country needs today in order to meet its problems is more production; but solely as the result of government planning-and I hope my C.C.F. friends will take a look at government planning here-we find married women workers in our light industries, our textile trades, dlress goods factories, domestic help, office help, nurses, and so on, stopping work just as soon as they have earned $250. Yesterday in this very building one of my friends told me his experience was not only that they stopped work; they came to work one day and did not feel like working the next day, when they wanted to go shopping or to do something else. So they just left and did not [ .Mr. Jackman.]
turn up until it pleased them, and did not care very much because they could only work so many days in the year, and if they did not work in his factory there were plenty of other factories looking for work people. So this halter on incentive, if you like, this check on production leads to great difficulties in running our factories, particularly in the light trades. Many of these married women do not have to work; they have available time, and are prepared to work only if there is enough incentive. The previous Minister of Finance said he thought it would be unfair to give the husband his marital exemption in any case, but has the government ever looked into the situation? The fact that a married woman works means that additional family expenses are incurred; there are more meals outside the home,, perhaps someone to do the housework, and less economy in the running of the household. And this whole matter is not one which concerns any real reduction in revenue, because it might easily be shown that there would be a positive increase in revenue if this very foolish taxation of married couples where both are working was removed. So it is simply a matter of government policy, which is foolish in the extreme.
Before leaving the personal income tax brackets might I remind the house that in all the remarks of the Minister of Finance it was implied that such reductions as he brought down were due to the insistent demand of the people, not to government leadership. Further reductions are necessary; but if these incentive reductions must come through popular clamour I fail to see how we are ever going to get a production budget which is so necessary for the welfare of our people, for without business leadership and the ability to assume risk our economy will stagnate and all our people will suffer. At page 2554 of Hansard we find the minister saying:
It is the high marginal rate of tax on additional earnings that discourages additional work, enterprise and initiative, and consequently we must aim in our reductions at cutting down these marginal rates of tax.
Unless some Canadians are human and some are mechanical it is absurd to argue that a man in the 22 per cent bracket, which was the starting bracket after $1,500, needed a reduction to restore his incentive and to take the brake off production, and at the same time to say that the man in the 50 per cent bracket does not need the same treatment. This budget gives one man a 59 per cent reduction and the other a reduction of about 18 per cent.

The Budget-Mr. Isnor
Those who provide business leadership, those who are willing to risk their savings and their capital, are vital to the expansion of our industry and to full employment. Present tax rates prevent saving for investment; they require annual inroads on capital to maintain the standard of living to which their work has entitled them, and result in refusal to undertake the risk of new business because the government shares only the profit and not the loss. They find government bonds, which are as nearly riskless as anything can be, better investments. We need the best brains-
Some lion. MEMBERS: Oh, oh.


Harry Rutherford Jackman: -the best management, the best leadership, the best workmen in all fields that we can provide and encourage. I say to some of those who seem to be amused that I certainly do not find the best brains over there.


James Horace King: Order. I am sorry to
interrupt the hon. gentleman, but his time has expired.
Mr. JACKMAN; May I just say, then, that a good engineer does not oil part of his machine only. The government creates nothing; let us be sure that it does not destroy I
Mr. GORDON B. ISNOR (Halifax): Mr. Speaker, several of those who have preceded me have complimented the Minister of Finance (Mr. Abbott) on this remarkable budget, so I do not think it necessary to add to those complimentary remarks <a't this time. Rather I should like to express my regret that the financial critic of the official opposition was not feeling at his best in his effort to criticize the budget. I say 'that in all sincerity, Mr. Speaker, because I believe the hon. member for Muskoka-Ontario (Mr. Macdon-nell) can do a great deal better than he did the other evening.


Mr. MERRITT:: That is very generous of you.


Harry Rutherford Jackman: He did extraordinarily well, we thought.


Mr. ROSS (Souris):: How is the weather in Halifax?


Mr. ISNOR:: Someone suggested that I was about to make a political speech in connection with the Halifax by-election, and may I say in all frankness that I hope it will help. If I could make a speech equal to the budget speech there would be no question of the by-election in Halifax.


Mr. FRASER:: There evidently is a question about it.


Gordon Benjamin Isnor: No, not very much.


Ian Alistair Mackenzie: Not if you go down there.


Gordon Benjamin Isnor: I should like to touch upon one or two points raised by the hon. member for Rosedale (Mr. Jackman). He referred to the criticism of immigration by the hon. member for Rosetown-Biggar (Mr. Coldwell). I do not intend to go into the figures, because it is not necessary; a simple explanation is all that is needed. The same conditions existed in the United States from 1930 to 1935 as unfortunately we had to put up with under the Bennett regime. It is only natural that young Canadians who were in the United States were unable to pay their board and therefore returned home where they would not have expenses to meet. I think to a large extent that is the answer, and it requires no elaboration.
The hon. member referred also to the large revenues we were taking from the people of Canada. The fact that the people of Canada are able to pay that, and pay it cheerfully, indicates the great prosperity we have. I do not think anyone minds paying a fairly good price for an article provided he has the money, but if you have not the money, no matter how cheap a thing is it is still dear. That is an old business maxim that is fairly well recognized. I think we are in a very fortunate position in Canada to be able to carry on in such a cheerful manner.
The hon. member referred to war assets having been taken into consideration in arriving at the surplus. It is true that there was a return of $362 million from the disposal of war assets, but the hon. member must remember that those goods were paid for and charged up in our regular budgets of previous years. You cannot show it in one place and not in another. It was debited to the country in the regular way and naturally when these things are sold the receipts are put into revenues.


Mr. COCKERAM:: This was borrowed
money, and they were paid for out of taxes.


Gordon Benjamin Isnor: You cannot repudiate a statement made by a former minister of finance that we were both taxing and borrowing to pay for our war effort. It is safe to say that the great bulk of the war assets were paid for out of taxes obtained from the people of this country, so why should not the $362 million go into our revenues?


Mr. ROWE:: That is a new way of financing.
The Budget-Mr. Isnor


Gordon Benjamin Isnor: Does the hon. member know of any better way after we have disposed of the goods than to use the revenue for carrying on our operations? Perhaps at some future time he will enlighten me.


William Earl Rowe: I certainly know a better way, but I do not want to take up your time.


Mr. BERTRAND (Laurier):: Tell it to the country.


Gordon Benjamin Isnor: The hon. member referred to this budget as being not a business budget but a political budget. I do not know what he meant by that. It may be because of my lack of experience in the political arena, or because I cannot follow political manoeuvres as well as the hon. member for Rosedale, but I say to him that it does not matter where he goes, he will find people praising the Minister of Finance for one of the finest budgets that has ever been brought down.


James Arthur Ross: Very few.


Harry Rutherford Jackman: I am sure it is not the way the hon. member runs his business.


Ian Alistair Mackenzie: Even in Toronto.


Gordon Benjamin Isnor: The hon. member for Rosedale says that that is not the way I run my business. I run my business in the same economical manner as the government.


Douglas Charles Abbott: And you are equally
successful.


Gordon Benjamin Isnor: I have the same objective in mindi-not to have a deficit, as happened so often when hon. friends on the other side were in power, but rather to work for a surplus, and a handsome one.


William Earl Rowe: You did not sell part of your building to get a surplus, did you?


Harry Rutherford Jackman: You did not charge the cost of your inventory into your sales?


James Horace King: I should like to remind hon. members that on second reading of a bill they do not have the right to speak twice.


Gordon Benjamin Isnor: Thank you, Mr. Speaker, for trying to prevent these interruptions. However,
I do not mind them because this afternoon we have had it fairly dull up to now. When nine out of ten people you meet are smiling, you know that there is good reason. That reason is to be found in the words used by the Minister of Finance when he said that nine out of every ten are going to enjoy income tax reductions of from 29 to 54 per cent. This budget has been particularly pleasing to a large class of people with which the hon. mem-

ber for Rosedale has not been in particularly close touch, those in the lower brackets who are going to enjoy a 54 per cent reduction.


James Arthur Ross: How much does that 54 per cent work out to in dollars?


Gordon Benjamin Isnor: I wall tell you in just a minute. To a large number of taxpayers the proposed rates of income tax will bring the Canadian personal income tax below the proposed United States tax. It is true, as the hon. member for Rosedale has said, that there will be a slight difference for those in the higher brackets, but as the hon. member for Vancouver North (Mr. Sinclair) so rightly said, that is the way it should be. I am for those in that particular income bracket-and perhaps that also will be classed as a political statement. All right; if it is, the fact is that we are looking after the greatest number of our population who are wage earners. Those are the people I am particularly interested in. I know that the hon. member for Rosedale and the people of his particular circle are well able to look after themselves, but I think the government is to be complimented upon taking particular pains to see that the reductions apply particularly to these other people.


Harry Rutherford Jackman: Will the hon. member tell me whether I am right or wrong when I say that during the depression years when the Liberal government were in power there were 10,000 people on relief in Rosedale riding?


Gordon Benjamin Isnor: If there were 10,000 people on relief in Rosedale riding it certainly would surprise me. If that is so, then there was something lacking somewhere in Ontario which I did not know about.


Harry Rutherford Jackman: It was under a Liberal government.


Ian Alistair Mackenzie: What about your
provincial government?


Gordon Benjamin Isnor: I can only say that when one is dealing with a budget which applies to all parts of Canada you cannot take one little section of a riding, even though it is considered important by the representative; you must take the over-all picture. At the end of March, 1947, we had the greatest number of usefully and gainfully employed we ever had in the history of Canada, and this is due largely to the policies of the present Liberal government.


Mr. BROOKS:: WThat about Nova Scotia today?


James Arthur Ross: Yes, what about Nova Scotia?

The Budget-Mr. Isnor


Gordon Benjamin Isnor: I will answer for Nova Scotia in a moment, but I suggest to the hon. member for Royal that he stick to New Brunswick and let his deskmate ask questions about Nova Scotia.


Gordon Knapman Fraser: Don't worry; he can look after himself.


Gordon Benjamin Isnor: I cannot help thinking back to the evening when the Minister of Finance presented this budget. I sat here looking at the faces of my friends opposite in the Progressive Conservative party. I saw the expressions of wonderment on their faces.


James Arthur Ross: He always was a good performer, with little to work with.


Gordon Benjamin Isnor: Then I looked beyond, to their left, down to the C.C.F. group. Their faces led me to think that they must be asking themselves: "Could this really happen? Could a budget such as this be brought down, particularly when we have heard so much about blue ruin, depression and the like?" Then I looked into the galleries and I saw there the happy expressions which joined with the Liberals in saying, "Well, that is a wonderful budget."


Mr. GILLIS:: What were you drinking that night?


Gordon Benjamin Isnor: In a broadcast I made recently I said I wanted to be fair to the social crediters; they semed to be just as happy as hon. members sitting on the government side of the house.


James Arthur Ross: They do not realize what 54 per cent means.


Gordon Benjamin Isnor: I remember the generous applause which greeted the Minister of Finance when he rose to speak, and the loud acclaim which was given his opening optimism when he declared, in ringing tones, that the huge and difficult budgets of war years were behind, and that we were all very, very happy to realize that fact. I noted the loud acclaim which met his declaration that Canada is today enjoying matchless prosperity.
May I pause here to pay tribute to a great Nova Scotian, the former minister of finance. I think it is because of his policies, and the policies of the government, that the present Minister of Finance was able to present to the house and the country such a splendid budget.


Alfred Johnson Brooks: There must have been some reason.
Mr. ABBOTT [DOT] That is a good one.


Gordon Benjamin Isnor: I am not detracting at all from the Minister of Finance-and, indeed, he is sincere enough to agree with me on that.


Douglas Charles Abbott: And the minister did say it.


Gordon Benjamin Isnor: In fact I think he is one of the most brilliant men we have ever had in the house.


James Arthur Ross: Which one?


Mr. MICHAUD:: Hear, hear.


Alfred Johnson Brooks: What about that fellow who shouts "hear, hear" all the time; what about him?


Gordon Benjamin Isnor: I was glad to hear the Minister of Finance say that the government was in accord with the general principles of free enterprise, and stated that it was a sensible way of getting things done. I do not wish to discuss this whole question of free enterprise this afternoon, because it might not properly link up with a discussion of the budget-this fine budget which is so acceptable to the people of Canada.
The hon. member for Rosedale referred to increasing supplies. With increasing supplies of materials, with efficiency and cooperation of labour, with greater production and with ample salaries, Canadian business enterprise is in a most favourable position. Last weekend it was my privilege to visit the busy city of Hamilton, and I was pleased with the manner in which they carry on business in that city. Members from all the groups in the house were present, and they, with me, remarked about the efficiency of one plant in particular that we visited, where we saw the complete production from start to finish of a Canadian product. This was not just an assembly plant, but rather a plant doing a complete job. What did the president of that organization say? He said, "We are expanding, and we hope to build another unit"-and he told us the size of it-"which will employ an additional (500, as soon as we can get the materials to build and to go ahead with our plant." There was no blue ruin there, no fear of expanding production so far as that plant was concerned.
The same applies to a great many of our industrial plants. They are not afraid to go ahead because of the excess profits tax, they are expanding as quickly as it is possible for them to do so. This is a good sign for Canada.


Mr. LOCKHART:: The hon. member
missed the best part of the area down there; he went right by it.
The Budget-Mr. Isnor


Gordon Benjamin Isnor: Oh, no; we saw your part of the country, but like some other sections of Canada you are a little backward so far as the weather is concerned.
Yesterday the hon. member for Dufferin-Simcoe (Mr. Rowe) said there was no relief for business and earlier in the debate the hon. member for Muskoka-Ontario could not find anything in the budget that would be good for business. Let me refer to a large class which this budget will affect in a satisfactory manner. I would refer hon. members to the year book for 1945, which shows that in 1941 we had engaged in the wholesale business in Canada 24,758 employers. They, in turn, employed 94,627 males and 22,844 females. In addition there are 13,656 proprietors actively engaged in wholesale lines. I shall add the figures together later on, to show the effectiveness of it.
In the retail business there were 137,331 retail stores employing 297,047 full-time employees. That is subdivided into 188,658 males and 108,389 females. In addition there were 95,561 part-time employees. Added to these were 131,823 proprietor workers engaged in their own stores. These are figures which are worth thinking about. These are the people who are going to enjoy the benefits of the budget in a marked fashion.
In personal services, such as barber shops, beauty shops and the like, there were 14,259. Again referring to the city of Halifax-and possibly I shall be criticized for mentioning this, because of the approaching by-election- we have 915 retail stores, each employing in proportion the same number of employees as are employed elsewhere in Canada. In the town of Dartmouth we have 147 stores. All these will benefit. There is a total of 669,817 taxpayers who will derive direct benefit from the budget.
As at May 1, 1947, the Dominion Bureau of Statistics shows that there were 17,425 reporting employers, who reported 1,853,195 employees. This figure is exceeded only by those of 1943 and 1944. Just think of that- 1,853,195 gainfully employed in Canada at the present time. The average weekly earnings of workers in these firms reporting stood at S35.88 as compared with 832.44 a year ago. A weekly salary of $35.88 for fifty-two weeks of the year would give a total of Sl,850.16 per individual. Of this group of 1,853,195 who averaged $1,850 a year, if single they paid a tax last year of $257. Under the new taxation rates they will pay $180, which means a saving of $77 for each individual, or roughly speaking a saving of 30 per cent of their tax. The married man who was paying $68 will pay

$36 under the new rates, which will give him an additional spending power of $32 or 47 per cent. If you take the number that I have given and multiply it by the $77 saving I have mentioned, you will find that the total saving to this class alone amounts to $142,696,015. That is a remarkable saving, and yet my hon. friends of the opposition rise in their places and say that it does not mean a thing to the average taxpayer.


William Earl Rowe: It does not, if you take the increased cost of living into account.


Gordon Benjamin Isnor: If you put "ifs" in you can build up any kind of structure. I shall answer by saying if this had not taken place they would have felt the increased cost of living much more.
But speaking of the increased cost of living, I should like to refer my hon. friends to the increases following the first great war as compared with the present situation. I say that is once again a tribute to the present government. They took action which was not taken after the close of the first great war. Because of the control exercised and the foresight of this government our buyers are placed in a splendid position. It is true that the cost of living is high but, to use the word used by my hon. friend, if these controls had not been exercised it would be a great deal higher than it is today.


Mr. GRANT:: That will keep them quiet.


Gordon Knapman Fraser: It will not keep us quiet because you cannot buy the stuff today. The index is based on the things you cannot get.


James Arthur Ross: The minister from Kings!


Thomas Vincent Grant: Louder.


Gordon Benjamin Isnor: Knowing that I am a business man I am sure that some of my hon. friends on the other side are wondering what I shall have to say about the excess profits tax.


William Earl Rowe: And the sales tax.


Gordon Benjamin Isnor: That is about the only thing I have heard any real criticism of over there. They have asked why we did not do away with the excess profits tax to allow expansion of industry in Ontario and Quebec. Even though this may be a little hard for the big men in Ontario and Quebec to take I shall say right here that for the rest of Canada, for the maritimes from which the hon. member for Royal (Mr. Brooks) and the hon. member for Cumberland (Mr. Black) come, and elsewhere in Canada with the possible exception of Ontario, it is good news, because they do not want the excess profits tax to be thrown back

The Budget-Mr. Isnor
into the laps of these big men, particularly at the present time when they are still operating to some extent under wartime prosperity. I do not hesitate to say I believe that if we had not put the excess profits tax into effect during the war we would have created a large number of millionaires in Canada, which would not have helped the situation.


Alan Cockeram: Business did not object to it during the war.


Gordon Benjamin Isnor: What has happened to these men? It is true that they had a standard profit fixed for them on the 1936-39 basis. They were given pretty generous treatment, but they were obliged to pay the excess amount over their normal business, and rightly so. I say that as a business man. Why? Because I believe that owing to the excess profits tax they were able to set up a reserve which it is doubtful that any except a very few would have done. They have that 20 per cent refund coming to them, which is a good nest-egg.


William Earl Rowe: What is the situation if they had a small profit in those years?


Gordon Benjamin Isnor: In which years?


William Earl Rowe: In the years of standard profit.


Gordon Benjamin Isnor: The hon. member intimated a moment ago that perhaps he was better versed in business matters than I am. Surely he must know that these men had an opportunity to overcome that difficulty. If they had a depressed business during the period, they were permitted to appear before a board of referees and have a standard profit set. It could have been properly adjusted. In fact during the past two or three months auditors and chartered accountants throughout the country have been kept exceptionally busy because they felt that the excess profits tax would be wiped out and they would not have the opportunity in the future of presenting their case.


Alan Cockeram: Some of them are not adjusted yet.


Gordon Benjamin Isnor: Some of which?


Alan Cockeram: Some of the standard rates.


Gordon Benjamin Isnor: There may be the odd one, but the great majority are adjusted. They have cleaned up practically all of them. I would say they have done an exceptionally good job so far as the adjusting of profits standards are concerned.


Mr. McIVOR:: Were any millionaires mad* in this war?


Gordon Benjamin Isnor: None of my friends were in that class; therefore I cannot answer.


Alan Cockeram: You did very well.


Gordon Benjamin Isnor: I was fairly successful; I worked hard. I did not kick about the excess profits tax.


Alan Cockeram: You are saying other people did, which is not correct.


Gordon Benjamin Isnor: I used it to good advantage, to continue people in employment, to do my little bit toward helping the country.
Since I have paid so many compliments to the Minister of Finance perhaps I may be permitted !to be a little critical at the moment.


Some hon. MEMBERS:: Good.


Gordon Benjamin Isnor: That is the beauty of being an independent member like myself; I can be critical even of my own government.


Alfred Johnson Brooks: It must be pretty bad when you criticize it.


Gordon Benjamin Isnor: I am going to mention the luxury taxes, because I feel there is discrimination against certain people. There are not many retailers in the House of Commons; therefore I am justified in bringing this to the attention of the minister. No doubt he had to decide this year-he does not take me into his confidence-what would be best for the country as a whole. In his judgment he decided that he should allow certain taxes to remain and to give, as he did, certain taxpayers reductions ranging from 29 per cent to 54 per cent. I should like to point out to him that the sales tax is spread over every commodity and over practically every type of sale. In addition he penalizes jewellers, furriers, the leather people and other trades. It is because of that discrimination that I draw his attention to the luxury tax, and I suggest to him that it should be looked into. Perhaps it is too late to do anything this year, but it should be looked into for the future in order to bring all on the same level.
I hold in my hand a brief which no doubt has been received by all hon. members. It comes from the Canadian Retail Federation. I have not had an opportunity of studying the particular sections referred to, but I do know the story well enough to refer to such items as the hon. member for Rosedale has already mentioned. A fountain pen is a very necessary thing in these days, and yet the Minister of Finance says that to use a fountain pen you must pay a 25 per cent additional tax. Clocks-some of us cannot get up in the morning without a clock-have a luxury tax
2S84
The Budget-Mr. Isnor

placed on them. Trunks, billfolds, shopping bags, are taxable; oil paintings, oriental rugs, and many' other items incidental to living in the way enjoyed by the hon. member for Rose-dale, are not taxed. That is why I say there is discrimination.


Alan Cockeram: There is discrimination.


Norman James Macdonald Lockhart: The minister is in the same high category.


Gordon Benjamin Isnor: My hearing is pretty good, but I cannot hear a whisper. I quote from the brief of the federation.
It has been suggested that the moment is inopportune to repeal the excise tax upon the items to which we have referred, because to do so would involve pressure from other groups who would demand similar treatment. If this argu-men is valid, it would appear to us that it would be applicable to any budget period-which gives rise to the fear that these so-called special wartime taxes are now to become part of our permanent economy.
I think the Minister of Finance will agree that these were purely wartime measures put on to prevent spending and an increase in the moneys that came into the hands of individuals. I quite agree that during war time that was justified.


Mr. McCANN:: Revenue was needed too.


James Arthur Ross: Cut out some of the extravagance.


Gordon Benjamin Isnor: 1 do not think that revenue [DOT] was the really important point. Some of these items did not run into very many million dollars. I would point out to the Minister of National Revenue, and I do so in a kindly spirit, that there is a question whether it is wise from another angle. The great majority of our merchants in Canada keep proper records, but there are those, and there are such people in all classes, who evade this type of tax, and it is this type of tax that leads to evasion, rather than the regular sales tax, collected as it is in a fair manner. I hope the minister will bear that in mind.


James Joseph McCann: We know that, and we have caught up with a lot of them.


Gordon Benjamin Isnor: I thought I would mention this as a duty to those who have presented the matter to me from time to time.
I was struck by an article I saw recently in the Financial Post. I generally look to the Financial Post to see what it has to say, since it leans to a great extent to the views of those whom some would call our Tory friends, but whom I prefer to describe as Conservatives. The Financial Post says that the Tories ask first to raise old age pensions, then eliminate the radio licence fees, then increase

agricultural floor prices-that, I believe, came from the leader of the opposition-then raise income tax exemptions, as the member for Rosedale suggested, and treat veterans more generously, just to mention a few of their suggestions; and in the same breath they ask that taxes be reduced.


James Arthur Ross: Cut out the extravagance.


Gordon Benjamin Isnor: I would ask the hon. gentleman to look over the estimates and then point definitely to any extravagance so far as this government is concerned.


James Arthur Ross: I have done it on more occasions than one.


Gordon Benjamin Isnor: I have referred to the statement of the Minister of Finance that the object of the budget was to encourage free enterprise. I do not know whether that is the best term these days. I prefer "progressive" enterprise. I looked up the word "enterprise" in the Oxford dictionary and I find this meaning given;
Enterprise: Undertaking, bold or difficult one, courage, readiness to engage.
The method of the enterprising is -to plan with audacity and execute with vigour; to sketch out a map of possibilities and then to treat them as probabilities.
That is what the Minister of Finance is doing in his budget-looking to the future, and giving the average taxpayer an opportunity to increase his spending power, thus keeping up employment and production, in which my Conservative friends are so greatly interested. I suggest that they should be supporting the budget to the limit instead of engaging in petty criticism.
May I say a word to those representing labour?-and I believe that in a measure I represent labour. I believe the real interest of labour lies with an independent economy rather than with socialism, which again and again has destroyed labour's opportunity. Organized labour has a greater stake in the private enterprise system than either management or capital; for that system is the union's chief hope of survival, and I say that without fear of contradiction by any of those who pose as leaders and supporters of the labour group.
I wish to throw out another constructive thought. I have nothing whatever to say about the social measures being brought out by this government. The country as a whole owes them a debt of gratitude for the manner in which they have enlarged social services, and with the additional social measures coming into operation I would hesitate to be the least bit critical, but I believe that we

The Budget-Mr. Isnor
can invest in undertakings that would be productive and self-liquidating. We could invest to a greater extent in that direction than we are now doing. I believe the country would do well to follow the advice that has been given, not from one source but from different quarters in this regard. The member for Vancouver North (Mr. Sinclair) brought up the question of irrigation as it applies to his particular section of the country, and other members from the west have also discussed the question. If it can be shown that such projects are self-liquidating, then I think the government would be well advised to undertake them. With that thought in mind I would ask the government to give serious consideration to greater investment in projects that might be undertaken in connection with breakwaters and wharves for the benefit of the fishermen along the Atlantic.
I could elaborate on that, but I think that one sentence covers the subject as well as it could be dealt with if I spent half an hour trying to make a stronger case.
I throw out these suggestions to the Minister of Finance, but I am not unmindful of the representations that have been made in the past and during recent years in regard to the marshlands of Nova Scotia. There is a wonderful opportunity to do some useful work that would add to the wealth of our province. If these projects are undertaken- fisheries and the marshlands-we can look forward to a greater degree of prosperity in the maritimes.
I am in accord with what has been said- and I do not hesitate to give him credit for having raised the question-by the hon. member for Cape Breton South (Mr. Gillis) with reference to the Canso project. The question has also been raised from time to time by others. Last year the member for Inverness-Richmond (Mr. McGarry) made a very strong appeal to the government in the matter. I am happy to associate myself with these gentlemen and other members who have brought this question to the attention of the government. I also associate myself with the member for Queens-Lunenburg (Mr. Winters) who last night discussed subjects relating to Nova Scotia.


Gordon Knapman Fraser: The member for Cumberland (Mr. Black) has been bringing up the question of the marshes for the last six years.


Gordon Benjamin Isnor: I said there were others.
The hon. member would not allow me to forget the member for Cumberland-


Gordon Knapman Fraser: You would not forget him.


Gordon Benjamin Isnor: -and I am happy to fink his name with the others. I might even go
beyond that and look back to the period from 1940 to 1945 when the then member for Col-chester-Hants, Mr. Purdy, made such a strong plea. At that time the member for Cumberland joined Mr. Purdy in his representations.


Alfred Johnson Brooks: What has been done about it?


Gordon Benjamin Isnor: It has been getting careful attention, and I am very hopeful.


James Arthur Ross: Due consideration.


Gordon Benjamin Isnor: I am surprised at the hon. member for Royal laughing it off.


Alfred Johnson Brooks: I was not laughing it off. I was laughing at your ancient history and nothing being done; that is all.


Gordon Benjamin Isnor: I for one am anxious to see these three projects undertaken, along with others.


Mr. DEPUTY SPEAKER:: Order. I must inform the hon. member that his time has expired.


James Arthur Ross: He has unanimous consent; give him a new start.


William Ross Macdonald: With the unanimous consent of the house, the hon. member may continue.


Gordon Benjamin Isnor: Thank you, sir. I was just going to make one more point in connection with the transfer of labour from the maritimes. It is unfortunate that such a thing has to take place. All members from Nova Scotia regret it. The hon. member for Colchester-Hants (Mr. Stanfield) will appreciate what has taken place so far as his own town is concerned. There is an article in to-day's Truro paper headed, "Shortage of materials affecting Truro's textile mills." It goes on to say that this company from Ontario, the Monarch Knitting Company, are now in the maritimes looking for women workers to be transferred to Ontario for employment. Truro is an aggressive and enterprising town. We are very fortunate to have here in the House of Commons a man of the type of the hon. member for Colchester-Hants. His firm has done a great deal for Nova Scotia and for Truro. I should hate to have the continued employment which he has given to the town of Truro affected by the transfer of workers or by people from Ontario being permitted to come in and take from him and from other manufacturers any of their skilled help. The manufacturers in Truro have done a wonderful job, not only for Truro but also for Nova Scotia and the whole of Canada. As an hon. member said to me one day about
The Budget-Mr. Blackmore

Stanfield's underwear, "It is right there on your breast, no doubt." The great majority of members are no doubt wearing it. Stanfield's underwear is sold from one end of Canada to the other. I suggest to the Minister of Labour and those on the government benches that they do not permit the transfer of labour from Nova Scotia but that instead they encourage to the greatest extent possible the purchase of products made in Nova Scotia and in the maritimes generally in order to increase employment in that part of the country.


Mr. J. H. BLACKMORE (Lethbridge):: Mr. Speaker, with at least two of the observations made by the hon. member who has just taken his seat (Mr. Isnor) I am in hearty accord. The first is that we should encourage all over Canada the establishment of self-liquidating projects and enterprises. The second is that the industry of this country should be decentralized. I wish to join with the hon. member in a protest against the way in which the industries of Nova Scotia and the maritimes have been undermined, weakened, destroyed and brought to the central provinces in times past. I wish to support him in the contention that these industries should be restored to the maritimes; and if it requires government assistance to accomplish that objective, I should be in favour of government assistance even though it does require expenditure.
This afternoon I had intended to speak about the matter of taxation and debt, but certain things which have occurred in the house have made me feel that it was my duty to leave those two topics for discussion at a later time and to turn my attention, and that of such members of the house as will follow me, to the problem of our beet sugar industry in this dominion.
At the present time we are in danger of losing 50,000,000 pounds of sugar production in 1947. I have brought that fact to the attention of the house two or three times already by means of questions. Let me once more draw the matter to the attention of the house and the country; it is not one which should be treated lightly. Last year, Canada and Dominion Sugar Company had 26,681 acres of beets signed up by contract. Of that number. 23,375 acres were harvested. They produced 70,000,000 pounds of beet sugar. Evidence for this can be found in Wellington Jeffers' article in the Globe and Mail of January 18, 1947.
Only yesterday, on May 7, hon. members heard the hon. member for Victoria (Mr. Mayhew) announce that up to noon May 5, 
this sugar company has had signed up only 26,089 acres. It is quite obvious that the sugar company has not the chance this year to produce the amount of sugar that it had last, even if it has the exceptional weather conditions which favoured its efforts then.
The farmers are not signing up because they fear a shortage of labour. In 1946, 575 acres of beets were lost because there was not sufficient labour to care for them. Hon. members heard the announcement made by the Minister of Labour (Mr. Mitchell): yesterday, but his announcement was like most of the announcements which have come from the government during the last few months with regard to the sugar industry-it was full of fallacies, misrepresentations and illusions.
For the information which I am going to give to the house this afternoon, I shall draw largely on a pamphlet entitled, "When can Ontario's Beet Sugar Production be Restored?" published by Canada and Dominion Sugar Company Limited, Chatham, Ont., in January, 1947. Hon. members will therefore know that the figures which I use are pretty . likely to be dependable.
It might not be generally known that Mr. S. R. Noble, sugar controller during the war, on January 27, 1947, told the joint delegation of the Canadian Sugar Beet Growers' Association and the Beet Sugar Processors of Canada that he was apprehensive of a more critical situation in Canada's sugar supply for the end of 1947 and the first half of 1948 than anything which has yet existed. Evidence for this will be found in a document entitled, "Notes on the dominion subsidy on domestic beet sugar production." I do not know how many hon. members have access to this document, but anyone interested may read the one in my possession. The document is signed by Mr. H. Sulkers, secretary of the Canadian Beet Producers' Association and other men prominent in the beet sugar business. Their signatures make the document authentic. In the light of the fact that Mr. Noble .told these gentlemen that solemn truth, I must say that I find myself completely at a loss to understand the indifferent attitude which the government is taking in the matter of signing up the remainder of these beet contracts for this year. There is plenty of labour in the country if the beet sugar industry can get it, and there is plenty of land available.
On May 7, as recorded at page 2845 of Hansard, the Minister of Labour made this remark:
I am not aware of any serious difficulties that occurred in 1946 because of competition between tobacco growers and those engaged in the rais-

The Budget-Mr. Blackmore
ing of sugar beets. I am advised that the labour supply was adequate for both those branches of our agricultural economy.
It is quite evident that the minister had not gone into the problem far enough, or he would not have made a statement like that. May I tell hon. members some of the things that occurred last year, according to the information in my possession. Last year the Canada and Dominion Sugar Company sent out scouts to enlist labour for the beet fields. These scouts visited the counties of Norfolk and Simcoe and the Niagara peninsula, and had a considerable measure of success. At the Petrolia camp the company established a hostel to make it easier for those working in the beet fields to find accommodation, in order to encourage them to remain there. One day there were thirty beet workers, a cook and a helper at that hostel. The next day only the cook and helper were left; all the men had been lured away by the tobacco growers. How had they done this? They had offered the men higher wages than the beet raisers could afford, considering the relatively meagre income they were to receive from their beets. I am told the tobacco growers offered the men $125 a month, and in addition said they would give them work inside during the stormy weather. These attractions were simply beyond the power of the beet growers to meet, and as a result the men left. All a farmer has to do, if he is contemplating signing a beet contract or refusing to sign one, is to keep in mind one or two bitter experiences like that. All that is necessary is to see a part of that 575 acres of beets going to ruin because of lack of labour, to warn him off any possibility of signing a beet contract. There are, at best, so many risks involved in beet growing that he cannot afford to take an additional chance like that.


Mr. MAYHEW:: I wonder if the hon. gentleman would put on record the last part of the statement I made in the house, starting with the words "Beet sugar production in Canada." Otherwise I think he will leave the impression that there has not been an increase in the production of beet sugar in Canada.


John Horne Blackmore: I thank the hon. gentleman. I was just going to do that, and by the time I get through I think he will prefer that I had not done so, because once more the statement is based on too little information. The minister meant well, but he did not have the whole picture. May I read from the statement of the hon. member for Victoria (Mr. Mayhew) as recorded at page 2845 of Hansard for yesterday:
Beet sugar production in Canada in 1946 was 30 per cent greater than the average for 1935-39. This is a greater increase than that
of any other beet sugar producing country. Given at least average climatic conditions it is expected that production in Canada in 1947 will exceed that of 1946. In the light of these facts there can be no adverse reflection upon Canada's contribution to the world sugar position.
I now point out to the minister something which, in his busy life, he has probably not had an opportunity to investigate. What we are discussing at the present time is the production in Ontario, not the over-all production throughout Canada. It is quite true that in Alberta, where conditions in regard to the obtaining of labour were much more favourable, production was increased. There the competition of hoed crops, cash crops, with the beet sugar industry was not so intense as in Ontario, as I shall point out in the course of my remarks. In the Ontario scene, however, the picture is very disheartening indeed, as I think the minister will recognize in the light of the figures I shall put on Hansard in a moment. What we are discussing, let me repeat is the Ontario production, for it was in Ontario last year that 50,000,000 pounds of sugar which could have been produced were not produced, because not enough beets were available to supply both the Wallaceburg and Chatham factories, the consequence being that the Wallaceburg factory was left idle. The minister will also be interested to consider that there was a great deal of adverse comment in high places in the United States because of the fact that last year Canada produced so small a percentage of her sugar needs as compared with what she disposal. If Canada does no better this year could have produced with the capacity at her in comparison with what she could do, then I am afraid that adverse criticism in the United States will be much louder and more dangerous, and will be heard much higher up.
May I now give some figures to show the minister how serious has been the deterioration in the beet sugar industry in Ontario during the war years, since the administrator took over. Perhaps I ought to stop here and say that I do not wish to reflect too much on certain hon. gentlemen; but in considering the beet sugar situation since Mr. Noble took over as administrator I have had the impression that he has been deliberately designing the destruction of the beet sugar industry in Canada, and I cannot escape the conviction that he has been deliberately seeking to destroy the beet sugar industry in Ontario. I do not propose to bring before the house at the present time evidence to substantiate that allegation, but before this session is over I shall do so and give the administrator and all his friends opportunity to present a defence, if
The Budget-Mr. Blackmore

they feel disposed to do so and if they can. With respect to Ontario's production since the administrator took over, I now quote figures given on page 4 of the pamphlet to which I referred previously, "When can Ontario's beet sugar production be restored?" These are the figures showing Ontario's production of beets, in long tons:
Year	Long tons
[DOT]1939	  39,706
1940		  43,747
1941		 37,974
Now we begin to see the policies of the administrator taking effect:
Year	Long tons
1942		 26,355
1943		 8,329
1944		 17,629
1945		 19,560
1946		 31,250
Hon. members will notice that whereas in 1939 this province produced 39,706 tons, in 1946 the production was only 31,250 tons. This shows pretty clearly that something serious has happened to the Ontario beet industry. So much for that.
Now, I think hon. members will be quite astonished when they hear of the devices which have been used to weaken, to choke out, to smother, to strangle the Ontario beet sugar industry. First, there were price ceilings. The price ceiling on sugar has been maintained so low in comparison with ceilings on other crops such as tomatoes, tobacco, beans and corn, that the beet sugar industry has been placed at a serious disadvantage. The price ceiling on beet sugar was brought in at a relatively early period, and has been rather consistently maintained. I am not objecting to the establishment of price ceilings. It was well that the Canadian people should have been able to buy their sugar at a low rate, but the difference should have been made up by the government to the sugar factories or the sugar companies by way of a subsidy, which would have enabled them to carry on and expand without causing the people to suffer. This is an extremely important matter. Another device used was subsidies given to competing crops such as corn, peas, beans, tomatoes and perhaps tobacco, although I doubt there was a subsidy on tobacco. Subsidies were given to these other crops which put them in an advantageous position in competition with the beet sugar industry as regards available labour. This has had a serious effect, being one of the factors which brought about the closing of the Wallaceburg plant during several of the war years.

Another thing has been done about which the ordinary man on the street or even the ordinary member of parliament knows nothing. The beet sugar companies customarily have sold their sugar on the basis of delivered-to-the-trade. They usually have sold their beet sugar in the winter time when rates of transportation on the lakes were higher than in the summer. But the price was fixed on the basis of the lower summer rates. That bled a little more out of the beet sugar industry of Ontario. Not very much blood needs to drip away from a person's body in any given minute to constitute a fearful drain provided that it continues long enough. This drain has been going on constantly during the war years and I am told it is still going on. Hon. members will find this discussed on page 5 of the pamphlet to which I referred.
Prices are the really vital factors which affect the stability of any factory and certainly prices have seriously affected the stability of the beet sugar factories. I should like to quote some figures to show hon. members what has been happening with respect to prices and how it has affected the sugar beet industry in Ontario. First, I should like to read a passage from the bottom of page 6 of the pamphlet from which I am drawing my information. It follows:
But price was a factor, the only really vital factor, as is shown by comparison with tomatoes and tobacco, both of which increased in acreage as prices increased, despite the fact that the labour requirements of these crops are fully equal to sugar beets.
In that statement a sad story is conveyed. Before giving the acreage figures for sugar beets, tobacco and tomatoes in southwestern Ontario since 1939, I should like to point out that tobacco and tomatoes are the major competitors which have tended to choke out the Ontario beet sugar industry. I feel that these figures may not be very interesting to hon. members, so I shall read them off rapidly and they can get them out of Hansard. The figures for acreage are as follows:
Sugar beets Tobacco Tomatoes
acres . acres acres
1939	
35,850	77,900	21,9701940	
38,010	53,450	22,7301941	
30,100	57,450	24,0651942	
20,700	67,830	22,9151943	
9,200	63,340	20,9411944	
14,500	79,359	29,4001945	
17,660	83,140	26,684
Those figures are significant; they will show hon. members why it is the beet sugar industry in Ontario requires a special kind of help at the present time.

The Budget-Mr. Blackmore
The following figures show the subsidies and other assistance in dollars per ton which have been given to various crops by the federal government since 1942:
Sugar	Toma-	Sweet	Greenbeets	toes	Corn	Peas	BeansPer	Per	Per	Per	Perton	ton	ton	ton	ton1942 .	.... $2.08	$1.00	$2.00	$7.50	$5.001943 .	
3.33	3.00	4.00	40.00	7.501944 .	
3.33	6.00	4.00	10.00	7.501945 .	.... 3.33	6.00	4.00	10.00	7.501946 .	.... 4.85	(Subsidy replaced by	equivalent	increase in	ceiling price)	
Hon. members can see what has been happening to the beet sugar industry. It has just been gradually choked out. The note to these figures reads:
Dominion government assistance as applied to sugar beets of 16 per cent sugar content. All of these subsidies were paid to growers except the equivalent of 63 cents per ton of beets which went to the processor.
I think that is probably sufficient on that aspect of the question.
I turn now to page 8 of the pamphlet to which I have been referring, where details of the average returns per acre on three important field crops of high labour requirements are given for two recent years:
4944	1945
Tomatoes	
$155.80	$100.80Burley tobacco	
299.00	262.50Sugar beets	
112.53	108.50
Almost anyone will wonder why in the world, in the case of a commodity so important to the Canadian people as sugar, there should have been allowed to continue such a wide disparity in prices. If it was not by design, then how did it happen?


Mr. JOHNSTON:: It could have been stupidity.


John Horne Blackmore: It might have been stupidity and we will allow for that.
Next, I should like to give a comparison of prices per ton on various crops as between 1941 and 1945:
	1941	1945
	Per ton	Per ton
Burley tobacco 	... $290.00	$520.00Tomatoes 	... 14.10	20.35Corn, canning 	... 10.75	14.00Peas 	55.30Green beans 	... 47.00	77.50Sugar beets 	... 7.64	10.36Those figures must	impress all 1	hon. members. Supporters of the government in the house, and in radio programmes over the air, have been endeavouring to impress upon the people that the reason the beet sugar industry was not doing so well was that it was not 83166-184
able to compete successfully. How can an industry compete when its hands are tied; and not only when its hands are tied, but when its feet are tied-"hog-tied", as we say in the west.
I turn now to the labour costs aspect of the question. With net returns on sugar beets up thirty-six per cent, labour costs have grown as follows: in 1941, $18 per acre, and in 1945, $33 per acre, or almost double. That is an increase of $15, or eighty-three per cent. The rise in labour cost per acre is greater by over thirty per cent than the rise in net return to the farmer, even including the Ontario provincial subsidy.
I turn to the question of losses through various other kinds of manipulation, which have been exercised to the detriment of the beet sugar industry. I refer to page 9. Two by-products of the beet sugar industry which are of considerable importance are beet pulp and beet molasses. The Canada and Dominion Sugar Company sells dried beet pulp I am told; most of the other companies sell the beet pulp wet. Dry beet pulp, and molasses from beets, constitute two lucrative by-products which greatly add to the general profitability of the beet sugar industry.
Let us see what managers in Canada have done in respect of these two important items. About two-thirds of the dried beet pulp from Ontario in pre-war years was sold in the United States. As from 1941, the Ontario company was directed by the Ottawa feeds controller to sell the product for feed in Canada. In January, 1947, the difference between prices in the United States and those in Canada was as follows: The Canadian ceiling price f.o.b. plant is $26.40 a ton, while the United States price, f.o.b. Michigan plant, just across the border, is $49.40 a ton, or almost twice as much; and the differential against the Canadian producer is $23 a ton.
A similar situation prevails with respect to beet molasses. The Canadian ceiling price f.o.b. plants is $28.75 a ton, and the United States price f.o.b. Michigan plants is $38 a ton, or a differential against the Canadian producer of $9.25.
All that is to be remembered is that the amount of money which the company was able to derive from some of these by-products entered into the amount it paid the farmers for the production of their beets. So that when the company was restricted in its income from the sale of these two by-products it was necessarily restricted in the amount of money it could pay the farmer for producing beets; consequently the farmer was automatically restricted in the amount he could pay for labour.

The Budget-Mr. Blackmore

In 1941 the total Ontario production of beet molasses was 15,628 tons, of which 10,475 tons, or sixty-seven per cent, was shipped to the United States. A similar percentage of beet pulp was shipped to that country. However, of the 1946 output a relatively small percentage was allowed to be exported to the United States.
Under ceiling prices, pulp is relatively cheaper than other cattle feeds, so that the demand has grown in Canada under price control. The demand for beet molasses has also grown in Canada. It is used in the manufacture of yeast, citric acid, and many other products.
Hon. gentlemen will ask if I would advocate that the price should have been allowed to rise, or if I would have favoured keeping prices down for 'Canadian stock feeders. Well, obviously I would agree that the cattle producer or stock producer in Canada should have 'been able to get feed cheaply. But that is no reason why the producer of beet pulp should have been penalized. There should have been, I say again, a substantial subsidy which would have made up to the Canadian producer that which he lost because his product was under a ceiling price; but no such subsidy was forthcoming. The dictator who presided as administrator over Canadian sugar concerns just would not listen as regards any of these matters. The result has been that an important Canadian industry has suffered.
I believe that is sufficient on that aspect of the matter. Meanwhile, while all these other adverse developments have been in progress, processing costs have been rising rapidly. At page 10 of the pamphlet to which I referred we find a list of increases in processing costs. These increases are shown as
follows:
Labour (base rate per
hour)	
Coal (per ton)	
Miscellaneous supplies
(per unit)	
Bags (sugar) (each)... Bags (pulp) (each) ....
1941	1946
40 cents 70 cents $6.29	$7.70
21-5 cents 48-9 cents 14-2 cents 23 [DOT] 5 cents 17 cents 31-5 cents
Notwithstanding all the considerations I have mentioned, we have people like the Minister of Justice (Mr. Usley), who will rise in their places and try to convey to the house and the country that this industry would require altogether too much by way of subsidies and too much tariff protection in order
to survive. How can one describe such an attitude? One cannot possibly characterize it properly without violating the rules in respect of parliamentary good taste.
(Mr. Blackmore.]
There is another aspect which, while not so important, has had its serious effect, since the closing of the Wallaceburg plant. Obviously farmers who produce beets are located throughout the areas in which the Wallaceburg and Chatham plants are situated. When one of those plants is closed, then farmers must transport their produce some considerable distance in order to deliver it to the other plant. The sugar factory had to absorb this cost. I am told that the farmer was paid on the delivered-to-the-factory basis. This is found in the pamphlet to which I referred. Thus the company has had. to absorb this loss. Then, too, the company has had to finance subsidies from delivery of beets to the factory to the time of payment for the sugar. In order that hon. members may understand this situation, let me point out that certain subsidies were being paid on the beets, and the factory generally paid those subsidies about the time the beets were delivered. Then, until the sugar was sold the factory could not get reimbursement from the government for the amount it had paid out. The result was that the factory became a sort of banker for the government during six or eight months of the year. Just think of that, for an outrage!
Yet, would the sugar administrator listen? Would the Minister of Finance listen? Would the chairman of the wartime prices and trade board listen? No, not they. They would not listen to this or to any other of these problems, or provide any sort of remedial measure. No wonder the province of Ontario had to step in, with its own provincial subsidies, to save the sugar industry in that province from complete destruction.
The beet sugar industry throughout the war came to the dominion government time after time with well-reasoned briefs-moderate, scientific and factual-and asked certain considerations. Never once have the beet sugar people been given what they have asked for. This year of 1947 was no exception. On January 27, and dates following, the combined beet producers and beet processors of Canada met government officials-first the sugar administrator, and then others-and presented their case. Mr. Sulkers, secretary of the Canadian Beet Growers' Association, asked that an additional subsidy of SI.08 be allowed beyond the 60J cents given in 1946, because, said Mr. Sulkers, "the administrator is going to pay eight-five cents a ton more for his raw canes from abroad than he was paying in 1946. If he is to give us parity he must increase the price which we are to receive, and this is what we compute to be the increase which he ought to give us". Would!

The Budget-Mr. Blackmore
the sugar administrator listen to that? Not he. Would the Minister of Finance listen? (Not he.
The beet people asked for certain subsidiary advantages not difficult to give. They asked that the controls be lifted on dried beet pulp and on molasses or the raising of the ceiling price. (Here I would point out, there could have been a subsidy to make up for what they wished.) It was refused. Molasses was decontrolled shortly after, but I do not know that it was because these people asked for it; it may have been.
In addition, they asked that an allotment of three pounds of sugar per ton of beets delivered be given to the man who delivered the beets, up to 200 pounds or up to 100 pounds. The idea behind this suggestion was that a man farming would be encouraged to produce three or four acres of beets to a farm in order to be able to get the additional sugar. It is an obvious device. It would not have cost the government anything. The man, before he got his additional three pounds per ton of sugar, would have produced a ton of beets, and about 300 lbs. of sugar. Would these wiseacres we had in authority in Canada agree with that request? Not at all; that would have been to intelligent for them. They would rather leave the sugar unproduced, which they are doing.
The beet men asked that the factories be not required to finance the subsidies between the delivery of the beets and the sale of the sugar, but that was denied. May I read to the house a statement from the document to which I referred a short time ago, prepared by the beet people and signed by Mr. Sulkers. I read from the bottom of page 2 as follows:
It was represented with all the vigour at the command of the various spokesmen that maximum domestic beet sugar production would not be achieved in 1947 unless the sugar administrator set his sights considerably higher by way of subsidy.
There is no excuse for the sugar administrator; there is no excuse for the Minister of Finance; there is no excuse for the government. The whole situation was made abundantly clear to them.
Let me now point out two or three other aspects of this question which are serious. In the main, Canada's sugar supply comes from the international sugar pool. Yesterday the hon. member for Victoria, B.C., pointed out that we got our sugar supply from the international pool. That is granted, but practically the dominating factor in the sugar pool is the United States of America. According to information which I have, the United States government bought the whole of the 83166-184J
Cuban 1947 crop, which is the important element, the deciding factor in the whole situation. They bought the whole of the crop for 1947. The United States therefore controls it. Let the United States once get the idea that Canada simply does not intend to play her part, that she does not mean to play ball, what would be the obvious decision and conclusion of the United States? I say that, as matters stand, our whole sugar situation in the year 1947-48 is in jeopardy.
There is another aspect of this question which should have a little attention before I close. Much has been said against beet sugar because it requires tariff protection. The argument is advanced all over the country that the industry should not be allowed to survive because it needs tariff protection. Let us look at the tariff protection which some other agricultural products have. Take barley. One would hardly think barley required protection in Canada. Barley has a twenty-five cents a bushel protection under the general tariff and 22i under the intermediate tariff. Beef has four cents a pound protection under the British preferential tariff, eight cents a pound under the general tariff and six cents a pound under the intermediate tariff. Butter has eight cents a pound protection under the British preference and fourteen cents a pound under the general tariff, twelve cents under the intermediate tariff. I could go on and give a list that comprises practically every commodity which Canada produces on her farms. Look at the protection we have to give to our butter. No one can manufacture and sell oleomargarine in Canada because it comes into competition with butter!


James Horace King: Order. I am sorry to interrupt the hon. member, but his time has expired.


John Horne Blackmore: I do not wish to encroach on the time of the house. I will simply close by urging that without further delay the government go to work on this problem and devise means whereby the men who would sign up to raise sugar beets for the Dominion Sugar Company shall be guaranteed their labour, and whatever other encouragement they require.


Mr. R. E. DROPE (Northumberland, Ont.):: The budget is a subject of great concern to the people of Canada, most of whom were disappointed in it, because some of the taxes that were on might have been taken off, and because some so-called nuisance taxes, as they are known, were not abolished. I am thinking particularly of the heavy taxes on soft
The Budget-Mr. Drove

drinks and chocolate bars which are largely purchased by the youth of our land. It would seem, now that the war is over, that these taxes might be discontinued. The radio licence should also be abolished. The tax of twenty-five per cent on silverware which was put on during the war, was imposed, if the former Minister of Finance (Mr. Ilsley) is reported correctly, with the idea of discouraging production. This tax has served its purpose, which was to discourage the use of critical materials needed for war purposes. Surely there is no need to continue this argument now that the war has been over for two years. Many veterans and young couples are attempting to establish their homes. Knives and forks are a necessity which should not be subject to a luxury tax of twenty-five per cent.
The special excise tax discriminates between one type of retail sale and another and, in effect, is discriminatory. For example, a refrigerator is taxable; an icebox is not. An electric range is taxable; a coal range is not. Clocks, watches, shopping bags, et cetera, are taxable, while oil paintings, oriental rugs and many other items incidental to luxury living are not taxable. It has been suggested that the moment is inopportun- to repeal the extra tax on the items to which I have referred, because to do so would involve protests from other groups who would demand similar treatment. If this argument is valid it would appear to me that it would be applicable to any budget period, which gives rise to the fear that these so-called special wartime taxes are now to become part of our permanent economy. In my opinion it is most desirable, in the interest of maintaining reasonable business confidence, that these irritating and discriminatory taxes should be removed.
The Post Office Department appears to be making considerable money. Apparently it had a surplus of over $10 million last year. Is it not time that consideration be given to bringing the postal rate back to three cents instead of the four-cent rate which has been in effect for some time. I do not think it was the intention that the post office should be a money-making concern; rather it should be a service to the people at cost.
The price of dairy products is of great concern to the people of Northumberland county as well as to the majority of Canadians. Prices have been supported1 by subsidies and ceiling prices have been put on many products. The last announcement of the Minister of Agriculture (Mr. Gardiner) on behalf of the government is, in my opinion, most unsatisfactory. On May 1, the ceiling price on butter

was raised ten cents. If it was the intention of the government to assure reasonable prices to the producers a floor price should have been established at the same time. We have reached the time of year in this country when production exceeds consumption in butter; therefore it is necessary for someone to carry surplus butter during the summer months, which is the high production season. It is unreasonable to expect that any buyer will pay the ceiling price and carry butter for several months only to sell it at the same ceiling price. Producers of butter fat have been placed in an impossible position by this government paying higher amounts for other dairy products, and thereby cream producers are placed at a disadvantage as compared with others.
This situation was accepted during the war, but it is surely unreasonable to expect that it should now be continued. It is owing to wrong government policy that it is necessary to import several million pounds of New Zealand butter, which should have been sent to the British people, who are so greatly in need of fats. Moreover, I understand that some 38,808 pounds of this butter have not been sold in this country after having been brought in.
All the butter that is required could be produced in this country if the producers received a reasonable price. As a result of the present government's policy, consumers are paying more for butter and, producers are receiving less. If the ceiling price and rationing are to be continued, a better floor price should be put on products to assume farmers reasonable prices. The cheese producers are not satisfied with the price they are receiving. The minister announced the other day that he would take all cheese at the floor price. Surely this is discouraging to the cheese producers, to hear that the government are going to take all their cheese at the floor price.


Mr. GARDINER:: We did not announce that.


Robert Earle Drope: If it is necessary to sell at less, then the farmers should be paid a better price and the difference carried by all the people of Canada. A prosperous agriculture will provide one of the best markets for our manufactured goods, and everything possible should be done to assure a reasonable return for our basic industries.


Clarence Gillis: I am going to contribute my little bit to this debate. This is not a large or enthusiastic house. The budget, which has been played up both by the Minister of

The Budget-Mr. Gillis
Finance (Mr. Abbott) and by the members who have spoken from that side of the house, is, in my opinion, a complicated document. To make an analysis of that budget from the financial point of view, under the mechanics of things as they are today, is not a realistic approach to it.
At this time I am not going to make a financial analysis of the budget. The hon. member for Rosetown-Biggar (Mr. Coldwell), speaking in this debate, spoke for this group, and I think he went pretty thoroughly into the financial ramifications of the budget. I am in hearty accord with what he said, and I believe that even from that point of view he pretty well exploded the airy pronouncements of the Minister of Finance.
I am going to attempt to tell the house what I think of this budget as viewed by the man in the street, and you cannot discuss this budget realistically without relating it to the rapid increases in the cost of living, because in the final analysis what the dollar will buy for the average man is the thing that counts. Giving him slight tax relief here and there and then taking 100 per cent back from him by increasing his cost of living and lowering his standards is not relief, and that is why I say it is tricky. Viewed as it was reviewed by the headlines of the press, the budget is likely to appear to people as having done something. In my opinion the reverse is true.
Let me mention this in passing, for example. Working the relief out on a percentage basis, taking the statement in the press that the lower income groups were relieved by fifty-four per cent, let us see what that actually means to the man who receives $150 a month and who has a couple of children-and that is about the average across the country, if we take those who are employed and are paying taxes. That fifty-four per cent means a relief of nineteen cents a week. That man eats every week; he pays bills every week, and he saves nineteen cents by that fifty-four per cent reduction. Then the Minister of Agriculture (Mr. Gardiner) comes along the next day and announces an increase of ten cents a pound on butter. The average family, or the family I have been discussing in that $150 income group, will consume about 2-3 pounds of butter a week. Therefore the Minister of Finance the night before gave him a relief of nineteen cents and the Minister of Agriculture took twenty-three cents from him the following day.


James Garfield Gardiner: The last member said they didn't pay it.


Clarence Gillis: The group I am talking about does. So that this man is four cents worse off so far as the actual purchasing power of the dollar, or the standard of living, is concerned than he was before the budget was announced. That is on that one item of food alone. Of course, fifty per cent of our wage-earners are in the group that pays no taxes at all. These people have not sufficient income to pay taxes. Well, the fellow who does not pay taxes is twenty-three cents a week worse off than before the minister brought down his budget, because the Minister of Agriculture, in that one item of food alone, threw back upon him twenty-three cents and he got no relief. He is that much worse off.


Robert Wellington Mayhew: Suppose the Minister of Agriculture had made his announcement first.


Clarence Gillis: It would not make any difference, but it was timed very well for political purposes. The Minister of Finance gets headlines to the effect that he is relieving those in the low-income groups, while the Minister of Agriculture might not have been noticed in the ballyhoo there was in the press about the budget. His announcement may not have been noticed; perhaps it has not been noticed to any great extent except by members who are trying to police the standard of living of the Canadian people.
I think what would have been more realistic on the part of the government would have been to step up the exemptions to the figures mentioned by the hon. member for Rosetown-Biggar. That would have done away with the necessity for returns. For this group that has suffered a decrease in its standard of living under this budget, plus increases in prices, it would have obviated the necessity of filing any income tax returns, and that in turn would have saved the government a large amount of money in administration expenses. If the government had wanted to do something for the lower income group, and that is the group for which something has to be done, that is the sort of action which should have been taken. This filing of income tax returns, every member will agree, is one of the greatest yearly headaches, and the chap who is not getting anything at all by way of relief and who has to continue filing that return finds himself worse off at the end of the year than before the budget was brought down. If the suggestion I make had been followed, this chap would at least have been saved this headache of filing returns and the government would have got rid of much surplus staff which they have checking returns that do not mean very much to anyone.
The Budget-Mr. Gillis

Of course the worst beating that people in the low-income groups have taken during the last year has been that increase in the cost of living. I have here a clipping from the Ottawa Journal of May 4, which does not bear out many statements one hears with regard to increases in prices. This clipping states-and these are official figures too:
The cost of living index, reeling under the impact of higher prices, advanced 1-7 points during March to 130-6 at April 1-the biggest jog in the line since 1941-the Dominion Bureau of Statistics reported on Saturday.
This is dated May 4. Continuing:
Higher food prices accounted for most of the increase, while clothing and home furnishings also contributed to the unprecedented rise.
The bureau's food index mounted from 148-7 on March 1, to 151-6 as beef, sugar, vegetables and fruits were chalked up higher in grocery stores across the dominion. Price increases for a broad range of clothing items advanced the index from 133-1 to 136-9.
Anyone who tries to argue that the low-income groups in this country have received any relief from this budget is either badly informed or trying to fool somebody; because, in the final analysis, by this action alone- by the removal of price controls and by the removal of subsidies-the low-income groups have taken a terrific licking, and the budget offers to them no relief in any way, shape or form. That is the way it affects the man in the street, as he will find when he has had time to analyse it. That budget, if it was brought down for political purposes, will certainly not draw any water to the mill of the government.
I want to devote most of the time at my disposal in this debate to .the part of the country from which I come. I hear members of the house say, "The C.C.F. is talking depression; they would welcome a depression; they are going to bring on a depression." May I say that some of the most outstanding economists in North America today are writing books on the subject and, if they know anything about it, they forecast a trend in that direction within the next few years. But at this time I am not going to talk about the general trend. I wish to inform the Minister of Finance and the members of this house, particularly the maritime members, that the maritime provinces have already struck a depression. They have been in the throes of a depression for the last year, and from an economic point of view they are today in as bad a condition as they were in at any time during the depression which preceded this war. I wish to compliment the hon. member for Queens-Lunenburg (Mr. Winters), who spoke last evening. Not enough of the maritime members, particularly those on the

government side of the house, approach the matter as courageously as he did. By figures which I am not going to bother quoting again, he definitely pointed out the inequality in the distribution of the wealth of this country, as it applies to the maritime provinces. They are, as it were, the step-children of confederation. He did a realistic job.
There are one or two things, however, on which I do not agree with him. He said that one of the main considerations in dominion-provincial relations was the right of the province to retain certain small taxing fields. I do not agree with that statement. I think the tax agreements were a minor item when placed alongside other problems involved in dominion-provincial relations, such as, for example, the question of social security as contained in the original proposals made by the dominion government to the provinces. We cannot forget that most of the people in this country are suffering from the want of medical attention because they cannot afford to pay for it. That applies right across the dominion, with the exception of Saskatchewan, in which province a health programme has been instituted with regard to which some progress has been made. But, generally speaking, you can have as much health in this country as you can buy, under present circumstances; and no more or no less. In their original submissions, the dominion government did propose to institute a health programm-e. The thing we do not want to forget is that we have a large number of people between the ages of sixty-five and seventy who would, have obtained some relief under the original proposals. They are calling for it. I think every member of this house, if he visits his constituency occasionally, will have the same experience that I had. I have had women come in, particularly those who had raised families and had given them to the nation, had lost them overseas-some came back but cannot secure employment-with no income whatsoever and no home, wondering when the old age pension is to be brought down to sixty-five years and take them in. That is a question which would have been settled under dominion-provincial relations. Lack of security is one of the things which is responsible for most of the isms that creep into a country.


Ian Alistair Mackenzie: May I ask the hon. member how many veterans who came back from overseas have been out of employment in Canada?


Clarence Gillis: I can tell the minister that on the island of Cape Breton, from, which I come, there are 2,600 registered unemployed.

The Budget-Mr. Gillis


Ian Alistair Mackenzie: That is a particular case.


Clarence Gillis: That is quite all right. I am speaking for the part of the country from which I come.


Ian Alistair Mackenzie: I am talking about the whole country.


Clarence Gillis: It is up to the other members of the house to speak for their ridings. In the section I come from there are 2,600 unemployed. That is the number registered; and there are many unemployed who are not registered. I will talk to the minister about veterans affairs when his estimates are before the house.


Ian Alistair Mackenzie: And I will talk to you, too.	[DOT]


Clarence Gillis: I shall have a lot to say; and after we get through the minister may not be as cocky as he is now.
I was talking about the mothers who had contributed sons to the services which saved the institutions of this country in order that we may sit in seats of this kind and grow fat. These are the people I am talking about. I am talking about dominion-provincial relations, and I am not giving our own premier in Nova Scotia much credit for the quibbling that has been done on this matter.


Ian Alistair Mackenzie: He is a very fine man.


Clarence Gillis: Yes; he is a good Tory.


Ian Alistair Mackenzie: He is a very fine progressive Liberal.


Clarence Gillis: He is a good Tory. Just a few days ago I noticed an item in the Globe and Mail, which said that Premier Duplessis stood up in his place in Quebec and deprecated the fact that Premier Macdonald was being insulted. He considered that himself, Drew and Macdonald were the future saviours of this country.


Ian Alistair Mackenzie: You had better leave Macdonald alone.


Benoît Michaud: Nobody can use abusive language better than Mr. Duplessis.


Clarence Gillis: A person is known by the company he keeps. You have that group which I have mentioned which has received no relief from this budget, and who are panhandling a living, as it were, after contributing their all to the nation. That problem might have been solved under dominion-provincial relations.
I said a moment ago that fear is the thing which breeds most of the isms in a country. The Prime Minister (Mr. Mackenzie King) a short time ago deprecated the fact that there are several groups in this house. What
brought them her*? It was the failure of the old-line parties to solve the problems of this country. They are the original protesters against the inactivity of those entrusted with the management of the affairs of Canada.


Ian Alistair Mackenzie: They are in great minority.


Clarence Gillis: They will flourish and grow to the extent that you people continue the policy which you have had for the last seventy-five years and which, as far as I can see, you have not changed in any respect, not even in this budget. As to the average man who today produces the wealth of this coun-try_and this goes for the farmer, the fisherman and for every industrial worker-fear is the thing which drives him away from the machines that have exploited him in the past. It is fear of old age, after he has slaved and worn himself out on a farm or in industry, with nothing ahead of him but the scrap heap by way of social security in this country.


Douglas Charles Abbott: Governments cannot cure
old age.


Clarence Gillis: But you can provide for
it, just as you provide for judges and everyone else in the government service. It is the government's function to provide for it. You are squawking because communism is developing in the country, but you fail to provide for those who built this country and produced its wealth.


Ian Alistair Mackenzie: May I point out to
hon. members that twenty-five years ago we had sixty-five members down in that corner, and what have w'e now?


Clarence Gillis: Well, what is here today
is solid, and we are going to stay here and fight this battle to its conclusion. I say, to the extent you 'continue to legislate for fear in the hearts and minds of the people who produce the wealth of this country, to that extent groups such as this will grow and eventually take power in Canada. All you have to do is look across the ocean to Great Britain, Australia and New Zealand, where the modern mechanics of government are being applied to their resources for the alleviation of human misery rather than the amassing of wealth. I said the average farmer and worker feared old age, which means they have to go to the scrap heap. We see thousands of them in this country hobbling around on sticks, with no chance for medical attention. They cannot get in a hospital because they cannot pay for it. Many of them are worn out prematurely. They cannot qualify for that pauper's allowance called the old age
The Budget-Mr. Gillis

pension, so they just wait the streets or depend on what some member of the family may be able to give them.


James Joseph McCann: There was never a citizen of Canada denied hospitalization because he could not pay for it.


Ian Alistair Mackenzie: It is the best country in the world.


Clarence Gillis: I do not know anything
about what the minister has just said, but I know that I have had to take veterans of the first war to a hospital in a car, and become personally responsible for the bill.


James Joseph McCann: Where?


Clarence Gillis: In the part of the country
from which I come, and it is no different from the rest of Canada.


Ian Alistair Mackenzie: Does my hon. friend
suggest for one second that the veterans of Canada are not better looked after than the veterans of any other country in the world today?


Clarence Gillis: I am saying that maintenance allowances and everything else applying to the veterans should be increased fifty per cent and they would not be too well taken care of.


Ian Alistair Mackenzie: We all agree with
that, but last year this country spent $807,000,000 for the care and after-care of veterans in Canada. That was spent by 12,000,000 people, and I think it was pretty decent, generous action on the part of the people.


Clarence Gillis: Well, as I told you in your
veterans affairs committee and your pension committee, the solution is not to dump all the social security problems upon the veterans affairs department. Other legislation is necessary in this country to augment it. You are handling many problems-


Ian Alistair Mackenzie: Who started it?


Clarence Gillis: You are handling many problems in connection with veterans of the first war because there is no place else to send them. You generously do what you can for them, but other social security measures should be applied in this country to care for them, because in the final analysis they are not war service disabilities but disabilities of the ordinary citizens of this country.


Ian Alistair Mackenzie: That is part of the programme of the government.


Clarence Gillis: Yes, but it is class legislation. You can do something about it for the veterans, while many thousands of citizens of this country are denied any relief for the same 
disabilities. I was talking about fear because of lack of security. You live in fear from the day you start to work until you go to the grave; and what does the average worker in this country do for most of his lifetime? He tries to carry a SI,000 life insurance policy so that his family may be sure there will be enough money to bury him after he dies He is afraid to die; he is afraid of leaving a family to the tender mercies of an unknown future without his protecting hand. The minister wants to travel a bit in this country.


Ian Alistair Mackenzie: I have travelled it far more than my hon. friend has. I can tell him that I have been in ten times more places in Canada than he has.


Clarence Gillis: Well, I did not travel in a private car, at the expense of the taxpayers.


Ian Alistair Mackenzie: Nor did I. I travelled through the Peace river country by canoe in 1923.


Clarence Gillis: You should take a spy-glass with you.


Ian Alistair Mackenzie: I travelled this country as an immigrant. My hon. friend can never hurl that accusation at me.


Clarence Gillis: Well, I am hurling it. You travelled on the wrong side of the tracks.


Ian Alistair Mackenzie: I know more about the picture than you do.


The ACTING SPEAKER (Mr. Golding):: Order. I would ask hon. members not to interrupt the hon. gentleman who is speaking.


Clarence Gillis: Thank you, Mr. Speaker. The minister is a bit touchy this afternoon. Either he is getting a little old, or his conscience is bothering him.


James Garfield Gardiner: You would like to get into a private car yourself.


Clarence Gillis: I did travel in a private car, but the caption on the door of the car was "Twelve horses or forty men."


Douglas Charles Abbott: I travelled in that car, too.


Clarence Gillis: It was a private car, and I was never ashamed of it.


James Garfield Gardiner: But you would like to get into one of the other kind, too.


Clarence Gillis: I am not so sure. I'll tag along with the rank and file. I was trying to describe a condition to men who have never had any fear of insecurity, and who have never experienced any of the fears I have been trying to point out. I was going on to say that if the Prime Minister is afraid of

The Budget

Mr. Gillis
groups developing in this country, a situation which he does not like, the thing for him to do is remove that fear from the minds and hearts of the working people by a proper overall social security plan. That will remove it; and you need not be afraid of taxing people for such a plan, either. I had the privilege, for twenty-six years, of working as hard as anyone in this house has worked. I was never afraid of paying taxes. When I had an income that put me in the income tax bracket I was quite satisfied; and I was never afraid of being taxed for the purpose of providing security. I have taken part in meetings for twenty odd years. I have helped write pension acts and insurance acts which we tried to sell to the government of our province or to the corporation for which we worked. We were quite willing to pay our proportionate share of those security measures, but we could never get anyone to go along with us on them. If you are providing something in return for that tax the working people of this country will not be afraid to pay it, but they have not the opportunity.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Clarence Gillis: Mr. Speaker, at six o'clock I was doing my best to make everybody on the other side of the house as mad as possible. For the remainder of my time I am going to be specific and try not to tramp on anyone's corns. At six o'clock I was pointing out that the budget could not be properly analysed as to the benefits accruing to the people of Canada unless it was checked with the increasing cost of living. It is no use giving a person something with one hand and taking it away from him with the other. The hon. member for Queens-Lunenburg (Mr. Winters) stated on Tuesday evening that he came from a riding largely made up of people engaged in the fishing industry, and he said that the fishermen of his constituency would approve the present budget. That might be so if one relies on the press, particularly the headlines in certain sections of the country, but I still submit that the fishermen, on both the east and west coasts, is still the forgotten man. I have a few figures which will illustrate the position of the fishermen, on the east coast at least. The prices for fish quoted in Halifax on May 3 were as follows:
Cents per pound
Cod	 21
Haddock	 41
Halibut	 16 to 20
That is what the fisherman received. On the same day chain stores in Ottawa were offering fish at the following prices:
Cents per pound
Cod, frozen	 37
Smoked fillet	 39
Halibut	 42
There is a terrific spread between what the man who goes to sea to catch the fish and undergoes most of the hardship is receiving under present price ceilings and what the consumer in central Canada is paying. I am not going to go into the fisheries question in detail, but I should like to refer to a brief put out by the fisheries council of Canada, located at Ottawa. They make a few recommendations which I think should be checked and implemented as soon as possible. One is:
The "Act for the Support of the Prices of Fisheries Products" approved by parliament on August 15, 1944, has not as yet been made effective.
The fisheries council desires to urge upon the government the importance of proclaiming this legislation at the earliest possible date. The council's views of this important subject are amplified later in this brief and now may be summarized as follows:
1.	Early proclamation of the act.
2.	Board to contain representatives of the industry.
3.	Use of funds available to promote long term benefits to the fishermen rather than as relief payments or the dole.
I suggest that the Minister of Fisheries (Mr. Bridges) should proclaim that act at the first opportunity so that it may become operative.


Ian Alistair Mackenzie: How much of the difference between what is paid to the producer and what the consumer in Ottawa pays is absorbed by transportation costs?


Clarence Gillis: I have not figured it out, but I imagine there is quite a lot of it.


Alan Cockeram: And the processing.


Clarence Gillis: However I think it is something the Minister of Fisheries should take up. The act should be proclaimed and the necessary machinery set up. At the present time, with the prices the fishermen are receiving, they are not able to maintain a standard of living equal to that of those in the rest of Canada who are steadily employed. Some effort should be made to set up the necessary machinery whereby the fisherman will get a

The Budget-Mr. Gillis

reasonable share of the national income. He is certainly working as hard as anyone else in this country.
I should like to say something more with regard to prices, to the Minister of Finance. There is an agitation right across the country for the removal of the tax on soft drinks in order to bring the bottle of pop back to a nickel, and there is also the chocolate bar problem. These two nuisance taxes should be removed, but if they are removed an effort should be made to see that prices do not go up rather than come down.


Mr. REID:: I wonder if the hon. member has examined the balance sheets of the soft drink and chocolate manufacturers? I have examined them and I am surprised the hon. member is advocating what he is.


Clarence Gillis: I am not advocating the removal of these taxes for the benefit of manufacturers of soft drinks and chocolate bars; I am advocating their removal for the benefit of the children who purchase them. I have no more faith than has the hon. member that the larger manufacturers will not shove prices up rather than bring them down, but in the soft drink industry there are a number of small manufacturers in whom I have confidence, and I believe they would pass on that saving to the consuming public. Some control would have to be exercised by the government over the larger ones in order to see that prices were brought down.
I want to say a few words about the depressed condition of the maritimes, and I am going to be as unprovocative as possible. Most people in central Canada, particularly in Quebec and Ontario, when they hear us talking about employment in the maritimes and asking for subventions, are apt to say, "You want this, that or the other thing," and believe that they are giving us something. The reverse is true. When the maritime provinces entered confederation they were the most prosperous part of Panada, and the statesmen' of that time hesitated about coming into confederation. The fears which they expressed at that time were well founded because, after confederation, everything that existed in that part of the country that was wealth producing began to be siphoned into central and western Canada.
I want to show the house what was taken from the maritimes, and I am going to speak only about Nova Scotia. I shall let the New Brunswick members speak for themselves. I do not intend to go back beyond forty or fifty years. I say this because I have always looked upon governments, both federal
'.Mr. Gillis.]
and provincial, as trustees of the resources of the country, who would supervise their exploitation so that the greatest value to every section of the country might result from that exploitation.
The picture I see today in Nova Scotia is largely attributable to Liberal government; because it will be remembered that we have not had Conservative governments on many occasions since confederation in that province.


Mr. MacNICOL:: Bad luck for Nova Scotia.


Ian Alistair Mackenzie: Very lucky.


Clarence Gillis: The fact of the matter is that we have not any representatives in the present legislature of Nova Scotia from that party. At least the Liberals have sense enough in that province not to get wrapped up in the other party, and become contaminated, as they have in western Canada.


Ian Alistair Mackenzie: You get good government in Nova Scotia.


Clarence Gillis: Here is how good it has been, as I see it. As I said a moment ago, I am not going back very far. A Liberal government had been custodian of our resources during the period I am going to mention. And what did we lose to central Canada? I should like the hon. member for Halifax (Mr. Isnor)-the only member from that city at the present time-to pay attention to what I am saying, because he waxed most eloquent this afternoon on how good things were in that part of the country.
Fifty years ago we lost control of our finances. At that time we had the Merchants Bank, the Bank of Nova Scotia, the Halifax Banking Company, the Commercial Bank of Windsor, and the Union Bank of Halifax. Maritime capital was being applied to the resources of that province for the purpose of developing it. But all the control of her finances is now in Montreal and Toronto.


Gordon Benjamin Isnor: What happened to those five banks?


Clarence Gillis: They were amalgamated, or siphoned off. Try to get money from them today to develop an industry in Nova Scotia which competes with something up here, and find out what happens. They hamstring you. He who controls finance, controls the country.
In addition to that, we lost industry. We lost a cotton mill at Halifax, and one at Windsor. We lost a paint works at Halifax, and three tobacco factories. We lost four or five shoe factories which were employing people, and the people they employed were spending money in Nova Scotia. We lost two silk factories and several woollen mills. We lost a cheese factory at Antigonish, and a

The Budget-Mr. Gillis
fairly large one at that. We lost a cement works which drifted into a merger, and came into Quebec. We lost a large fertilizer plant at Sydney, and a tinplate plant operated by Shaw and Mason of Sydney. We lost a large tar and chemical plant from Sydney. We lost a skate factory at Dartmouth, and a sugar refinery from the same place during the war. We lost a nut and bolt plant which employed 1,500 men, and had been a peacetime industry for some thirty years. It left there in 1943. We lost shipyards at Pictou and a plate mil! at Sydney. The Minister of Reconstruction and Supply (Mr. Howe) will remember that one. It employed 600 men during the war and it is not operating now. I hope to sell it in the near future, though.
That is the picture showing how well they managed it. That is the way the east has been depressed. That is why there are 30,000 unemployed.


John Ritchie MacNicol: Are there 30,000 unemployed in Nova Scotia?


Clarence Gillis: In the maritimes; 15,000 of them are in Nova Scotia. If any business employed that kind of manager for two years, and he showed that kind of record in his balance sheet, on the assets side of his ledger, what would happen? They would put him into gaol for about thirty years; and rightly so.


Charles Edward Johnston: They would make him a Liberal member of parliament.


Clarence Gillis: We hear a lot about planning. What does it mean to that part of the country? We have lost all that wealth. We do not quarrel so much about what somebody else may have as we do about the control they may exercise over our natural resources, thereby stopping the creation of new wealth. This is the kind of thing that is doing it- centralization in the two central provinces in connection with the financing of industry, and because the distributing organizations are able to keep the east and west depressed, at their will. It is the control they exercise which we complain about mostly.
But they say that private enterprise is planning. Here is the planning they are doing; and it means precious little relief they will bring to the maritime provinces. These statistics are taken from page 9 of the forecast for 1947 on investment by Canadian business, which was made by the Department of Reconstruction and Supply, and tabled in the house a month or so ago by the minister of that department.
In 1947 they plan to spend $1,066,458,000. That is a lot of money. Where are they going to spend it? They are going to spend 83166-185J	j
five per cent of it in the maritimes; they are going to spend 26-7 per cent in Quebec; they are going to spend fifty per cent in Ontario; they are going to spend eight per cent in the prairie provinces, and they are going to spend ten per cent in British Columbia.
Your free enterprisers, who have money to invest, will spend the most of it in the two central provinces, with the complete centralization which they have today. The east and the west will remain the overseers of the poor, as they have been for a good many years.


James Horace King: Order. I am sorry to interrupt the hon. member, but I must remind him that he has exhausted his time.
Some hon. MEMBERS.: Go on.


Clarence Gillis: I shall finish in a few minutes. In order to get some degree of balance in the economy of this country, if Canada is to become a nation, it will be necessary for the federal government to do some planning itself. So far as I can see, unless the federal government is prepared to institute a programme of public investment in the maritime provinces by way of secondary industries, there is no solution for the problem; it will become worse and worse as the years go by.
I notice that the provincial government has a capital budget this year, and it is spending some money, a little on the highways and on hospitals, and on hotel extension.


Gordon Benjamin Isnor: What do you call a little?


Clarence Gillis: Not much; an odd million or half a million here and there. But the point I make is this, that while these expenditures are all desirable, none of them is a wealth-producing project. They will take the edge off for a short time by some construction work, and will result in hiring some labour at thirty cents an hour to work on the highways, as usual. But some secondary industries must be put into that part of the country.
We have tried it. For example, a small canning factory attempted to open up in Sydney, but they have been held up for about seven months on a molasses quota; and they are still held up. The bridging of the strait of Canso would have got us through this transition period, so far as unemployment is concerned; and that was recommended to the house by a committee of the house in 1942. Nothing has yet been done about it. The borings are completed; the cost of the project is known. In a return tabled in the house on April 23 the Minister of Transport (Mr. The Budget-Mr. Gillis

Chevrier) definitely stated that a causeway across the strait of Canso would cost $17,797,000; a bridge, $27,276,000. He ended by saying that this project could not be started because the policy had not been determined. They have been determining that since 1942. That project would have employed 4,000 men for a period of three years and would have got us through this difficult period.


John Ritchie MacNicol: May I ask the hon. member who quotes $26 million?


Clarence Gillis: That is an estimate from the Department of Transport, contained in a return brought down in answer to a question by the hon. member for Cumberland (Mr. Black). In 1946 an appropriation of $300,000 was voted for the building of a breakwater on Cape Breton island. Although the money was appropriated, nothing has so far been done. That would have created considerable employment. A fish processing plant and a big freezing plant are held up on the island of Cape Breton because the necessary repairs to a wharf in the Point Edward area along the Waterford coastline is held up. Those necessary establishments are held up because the necessary repairs have not been made to a wharf. Many things could be done down there.
I should like to conclude my remarks by saying that if the government is saving its public works programme to take the country over a difficult period which may come two years from now-I will not say for election purposes-they are making a mistake. Quite a few hon. members on the other side of the house who know something about the system and about economics realize that there will be a recession within the next couple of years. It may be a good thing to save the public works programme in Ontario and Quebec and other provinces where there is no recession, but in the maritime provinces the time to commence public works programmes was a year ago. The public works projects to which I have referred are national assets, because, if they are not carried out, when the government gets around to creating some employment in Nova Scotia there will be nobody there to work, since they are leaving that province every day. Our best people are leaving. In the maritimes we lose fifteen thousand a year to the United States. The people who were employed are pulling out.
I would seriously suggest that subsidies, which dovetail into the budget, should again be paid. The removal of the subsidies is the thing which will prevent us from holding the price line and everything else. I do not think it can be held without subsidies.
[Mr. Gillis.7
The minister said that he had a large surplus. That is fine, if the function of the government is to save money and produce large surpluses and allow certain sections of the country to go to pieces, but I do not think it is good government. If the minister had taken some of the millions of dollars which he boasted about here a few nights ago; if he had taken $5 million of that surplus and given it to the Minister of Labour (Mr. Mitchell) in February, we would not have had the whole economy of Nova Scotia torn to pieces today because of a strike in the coal industry, which is the basis of the whole economy of that province. I seriously suggest that the Minister of Finance and the Minister of Labour have a conference to see if the Minister of Labour cannot wheedle a subsidy out of the Minister of Finance in order to break the deadlock down there and get something done.


Mr. PAUL EDMOND GAGNON (Chicoutimi) (Translation):: Mr. Speaker, I fail to see, for the Canadian people, any occasion for excessive rejoicings in the advent of a new minister in the Department of Finance. Although no doubt can be entertained as to the ability of both the present minister (Mr. Abbott) and his predecessor, it nevertheless remains apparent to all who listen to them or bow to their wishes, that both these men are equally intent on emptying, as far as possible, the pockets of the Canadian taxpayers.
"The country", states the horn, the Minister of Finance, "enjoys a degree of prosperity unknown in our generation." Without fear of contradiction' one might also add that it enjoys the very doubtful privilege of having the most extensive black market organization ever, that the people are still at the beck and call of the most powerful and costliest bureaucracy of our history, that they experience the most terrible scarcity of building materials ever known and that hundreds of Canadians wear themselves out hunting for non-existent housing accommodation, that the burden of taxation is the heaviest ever born by our people in peace time, that the gross debt of Canada is at its peak, since, on March 31, 1947 it had reached a total of $17,659,627,000, while it stood at $3,540,237,614, on March 31, 1938.
The government has announced a surplus of $352,000,000 for the fiscal year just ended, but it should not be forgotten that in addition to the revenue derived from the liberal War Assets Corporation, Canadians, during the fiscal year 1946-47, paid $16,340,000 in excise

The Budget-Mr. Gagnon
taxes on automobiles compared to $6,701,000 in 1945-46, which represents an increase of $9,639,000.
On cigars, cigarettes and tobacco, they paid $76,318,000 as against $70,229,000 in 1945-46, the increase amounting to $6,089,000.
On cigarette paper and tubes, $6,943,000 as against $4,645,000 in 1945-46, which represents an increase of $2,298,000.
On gasoline, car owners paid $36,220,000, compared with $29,836,000 in 1945-46, the increase amounting to $6,384,000.
On phonographs, radios and tubes, $2,526,000 as against $646,000 in 1945-46, the increase amounting to $1,880,000.
In 1946-47, Canadians paid $1,185,000 on imports but only $787,000 in 1945-46, which represents an increase of $398,000.
On sugar, $11,339,000 in 1946-47 as against $9,974,000 in 1945-46, which represents an increase of $1,365,000.
On amusements, $14,552,000 in 1946-47 as against $13,387,000 in 1945-46, representing an increase of $1,165,000.
On non-alcoholic beverages, they paid $18,634,000 as against $16,657,000 in 1945-46, the increase amounting to $1,977,000.
In other words, Canadian taxpayers paid a total of $1,022,120,000 in indirect taxes, as against $821,485,000 in 1945-46, which represents an increase of $200,635,000.
After paying $1,436,400,000 in direct taxes, including $695,000,000 in the form of personal income tax, I am of the opinion that the taxpayers really deserved more than the slight income tax reductions provided for in the budget. The Minister of Finance should have thanked the Canadian people for its magnificent financial support and modestly conceded that the Government had been free to spend as it wished the money thus obtained.
I also find the Minister of Finance rather presuming in his praise of the "speed and smoothness with which we have made the transition from war to peace."
In the opinion of many people, this transition is on the contrary quite difficult and even more costly than the one which followed the first world war. The last two wars in which we have been forced to participate have left painful memories in our minds, and have deeply affected both our hearts and our pocketbooks. People have not forgotten that from 1915 to 1944 they gave away to the federal government, in war taxes and succession duties alone, a total of $9,476,158,656. They are hoping for a 'breathing spell. The workers who toiled and moiled from 1939 to 1947 to fill the sieve-like coffers of the dominion treasury feel perfectly justified in asking leave to think of themselves and their families. Too much of their war-time wages has been swallowed up by Ottawa for them to put money aside, while this year's budget holds the promise of a future that is anything but rosy. A substantial reduction in tax rates, especially on personal incomes, is necessary if the government wish to avoid criticism on the part of poor people and small wage-earners, if they sincerely desire to prevent the spread of subversive ideas and if they intend to leave to the worker the fruits of his labour so that he may face the future with some confidence. Let us provide our people with bread, clothing and houses and they, in turn, will show their gratitude to their leaders by their respect of the laws and their disregard for diabolical suggestions put forward by communist or other agitators. Such is the request which I place before the authorities on behalf of the fine constituency of Chicoutimi which I have the honour to represent in this house.
I thank the' hon. Minister of Finance for his statement that the government of which he is a member "do not contemplate a continuing, large-scale programme of government lending to finance our exports." It is gratifying to hear that the gifts to England have ended and that our government have now decided to look after the affairs of our own country.
Then, he will perhaps find time to solve the problem of dominion-provincial relations, about which I hope I may be allowed to say a few words.
On April 2, 1947, the Montreal chamber of commerce, whose 4,300 members are business men of that city, unanimously passed an important brief on dominion-provincial relations.
Since the problem is weighty and the group which has tackled it extremely competent, the brief deserves the attention of our present leaders and I believe all who are interested in seeing happy relations between the dominion and the provinces would be well advised to consider it.
After openly heralding the importance of "fully preserving all constitutional guarantees granted the provinces," the chamber of commerce stated that:
. . . the present dominion proposals would bring about too great an economic and financial centralization.
It adds that the principle on which these proposals are based invariably suggests that the provinces surrender, in return for financial compensation, their power to tax incomes, profits and estates.
The Budget-Mr. Gagnon

The very definition of that procedure evidently implies at least partial centralization as regards not only the levying of tax, but also the enacting of tax legislation. Because of this latter implication, such procedure impedes the free exercise of the rights granted the provinces by the constitution. Provincial autonomy in the taxation field does not consist only in the collection of revenue now purported to be sufficient; a government which is deprived of its power to levy taxes is no longer a true government, because its action is dependent upon that of the authority holding the power of the purse.
After warning against the danger of subsidies which inevitably lead to bargaining between the dominion and the provinces, the memorandum continues as follows:
Much stress is laid on the fact that the agreements would be of a temporary nature, thus preserving the autonomy of the provinces, which could recover at the end of the five-year period, the rights yielded to the dominion government. This argument is in itself sufficient proof that they would have to abandon temporarily the rights and privileges conferred by their autonomy.
As 'the reasons given to justify such relinquishment are of a permanent nature (maintenance of prosperity through a centralized cyclical budget, through a centralized policy of social security and full employment), it is difficult to see how the nominal five-year period provided for in the proposed agreements could really be significant. Such agreements do not contain any automatic resolutory clause; therefore it would be necessary for the dissatisfied provinces to denounce them in order theoretically to put an end to their operation after the expiration of the basic period. Any province which is not ready to relinquish definitely its taxing power in the fields covered by such agreements must, if it is conscious of its responsibilities to its cititzens and to the country, refrain from authorizing the dominion to put into operation a comprehensive and permanent economic control 'and social security programme if, in order to retain its constitutional rights it must, five years hence, withdraw from the programme and thus disrupt this machinery. In other words, the settlement of permanent problems, such as full employment and social security by means of temporary agreements could give rise to serious political strife at a time when the country would be in the greatest need of the loyal cooperation of every party.
Finally, in their belief that "agreements between Ottawa and the provinces are needed to maintain in this country the atmosphere of security which is essential to its progress" the Chamber of Commerce submits as a basis for a common understanding that-
(a)	each government retain the right to initiate legislation in the fields of taxation allotted to it under the constitution, which seems to be the only system consistent with their respective autonomies;
(b)	the provincial governments being restricted to direct taxation, they should be free to resort to it according to their needs;

(c)	all governments agree to simplify the tax collection system and to exchange all information needed for such a simplification and for the standardization of legislation.
I believe, Mr. Speaker, that the Montreal Chamber of Commerce is to be commended. It has proved equal to the fine reputation which it has gained throughout Canada in the past. Coming as it does in the wake of the Quebec premier's statement, his brief clearly shows that the people of this country are of one mind on this vital matter and that representations made on their behalf by the provincial authorities truly reflect their outlook and aspirations.
My last point is about the Canadian National Railways, whose deficit of over nine and a half millions we've had to make good this year. Should not the government be well advised to consider the possibility of refinancing our railway system's consolidated indebtedness through a new government-hacked bond issue at only 2 per cent? With the present rate of between 3 and 5 per cent, in 1946 alone the Canadian public have had to foot an interest bill of $23,358,514.18 on a debt of $530,422,997.55. At 2 per cent, they wouldn't have to pay more than $10,608,459.95.
The saving thus achieved, namely $12,750,054.23, might we'll be used to improve the service between Montreal, Quebec City and Chicoutimi, so that our district might at long last receive the decent and fair treatment it deserves. The government would do well to give this matter special attention and, they will earn the gratitude of the people of Canada, especially those in the county of Chicoutimi, if the necessary steps are taken.
(Text):


Benoît Michaud: If I had been sure that
the estimates of the Department of Agriculture would be taken up in the not too distant future, Mr. Speaker, I might have refrained from speaking on this occasion. However I deem it expedient to come back to this question which to such a great degree interests the potato growers of New Brunswick. On February 4, I covered the problem in a general manner and pointed out that it is in bumper crop years that prices go down below the cost of production. I also pointed out that, in the opinion of the farmers of New Brunswick, something should be done to ensure reasonable marketing at all times. In furtherance of that objective I expressed the view that an adequate price could be obtained only through some sort of orderly marketing under an agency of the government. As far as Ii know, that was the first time that such a policy had been advocated in the house. I was not sure

The Budget-Mr. Michaud
then that the idea would meet with universal approval. It would be presumptuous on my part to claim that it did meet with universal approval, but I can stay that all those who wrote to me or spoke to me about it-and there were many who did'-agreed entirely with the suggestions I made on that occasion. In any event, nobody expresed disagreement with the plan suggested, and for that reason I feel that it meets with practically universal approval on the part of our growers.
Before turning to what I feel should be done as regards the future, may I say a word as to what has happened since I spoke in the house on February 4. As hon. members know, shortly after that date the United Kingdom placed an order for a considerable quantity of table stock potatoes from Prince Edward Island, something which probably never happened before and is not likely to occur in the future. Then we received orders from Portugal and Brazil, which was also something unheard of as regards table stock potatoes. In the meantime it turned out that the United States found out to their sorrow that they were short of potatoes with which to fill orders they had accepted from European countries. We all know that early last winter the Lnited States government destroyed considerable quantities of potatoes because, at that time, they had no hope of finding a market for them. But somehow or another they carried the dumping of potatoes too far in the state of Maine. This is the only reason why the price of potatoes rose around April 20. In other words, it was the blunder of the United States government which brought some measure of relief to our farmers recently and at the same time saved this government from the serious embarrassment of having to go into the potato business on May 1, pursuant to the order in council passed last October. In my opinion, this is nothing short of miraculous and it is not likely to happen another year.
The fact that the government was miraculously saved from serious embarrassment as a result of improvident action in the United States should not prevent us from facing the problem for the future as it should be faced. The wheat growers of the west have their Canadian Wheat Board Act which guarantees them a floor price for their product. There is an effective minimum or floor price for practically all farm products. Potatoes are the only exception. The result is that we are left to struggle with the implacable law of supply and demand, which is neither fair nor equitable in years such as 1946. We are also exposed to, and are often victims of, unfair competition in marketing.
In the winter of 1945, when I sat in the legislature of New Brunswick, I heard it said time and again that unfair marketing practices were being carried on in New Brunswick particularly as regards the marketing of seed potatoes in South and Central America. An order would come up and a certain price would be arrived at between the dealers. Then another dealer would underbid the former and get the order. It would appear that such unfortunate practices occurred again during the present crop year. It is commonly stated, and not denied, that on the Saint John river, as a result of such unfair competition, the farmers lost money to the tune of some 135,000 in connection with the sale to Argentina last fall.


Mr. SINNOTT:: That is peanuts.


Benoît Michaud: It may be peanuts to the hon. member for Springfield, but it is not peanuts to the average farmer in my constituency and it possibly is not peanuts to the average farmer in his own constituency. The farmers are again under the impression that something similar occurred recently in connection with the orders from Portugal. Whether there is any truth in the rumour or not is of no practical consequence now, because prices have gone up above anything that the farmers could possibly get on those orders from Portugal and Brazil.
I bring out those facts in order to illustrate the necessity of an effective marketing agency for our farmers. The farmers do ask for such an agency. In support of their request, may I quote from certain reports published in divers papers at the time of the farmers' convention or meeting here in Ottawa sometime around the end of February. The first one is from the Ottawa Journal of February 27, and reads in part as follows:
The meeting, called by the Canadian Federation of Agriculture requested the directors of the federation to place before the government a draft federal agricultural products marketing act to be dealt with at the present session of parliament.
And further down:
The proposed act would set up a dominion marketing board with control over distribution, quantity, quality, variety and maximum and minimum prices of regulated farm products in interprovincial and export markets.
And further down:
G. F. Perkin. Ontario government director of marketing, told the delegates "practically all" cash crops in his province were under marketing schemes, but many farmers felt the need of extending regulations to cover interprovincial and export trade.
The Budget-Mr. Michaud

When the large majority of producers of a particular product agreed on a marketing plan for their crops, it was "a question of fairness or common justice ' that the plan should apply to all.
In the Telegraph-Journal, a New Brunswick newspaper, of February 28, we find a report of the meeting, from which I want to quote just one paragraph:
The federation would have the government set up a dominion marketing board with powers to regulate, distribution, grades, quantity, prices and marketing of certain farm goods going from one province to another or into foreign trade.
Again in the Telegraph-Journal of March 3 I read the report of a meeting of farmers held at Bristol, which I think is in the county of Carleton:
A well attended meeting of potato growers and shippers was held in the community hall at Bristol. Mr. . . . was named chairman and Mr. . . . secretary.
I skip part of it and come to the material paragraph:
It was decided that it was advisable at this time to send a delegation to Ottawa. Setting up of a marketing board and steps to bring about acreage control were discussed. A committee of five was set up to meet the New Brunswick potato council to discuss various matters.
The meeting went on record as being unanimously behind any organization set-up to assist the growers obtain a fair price for potatoes.
There does not seem to be any doubt that our farmers want efficient marketing agencies for their products. Our next consideration is, which government has jurisdiction in the matter? I am well aware of the fact that on this question of marketing we touch upon a complicated constitutional problem. I hardly know more than the ABC's of constitutional law, but the experts of the Department of Justice will be able to correct me if I go too far astray. For that reason I venture to express the following views on the constitutional aspects of the problem. In the first place, I feel that the matter of controlled acreage is strictly one within provincial jurisdiction. The question of marketing, however, may be a matter of either provincial or federal jurisdiction according to the extent of the trade involved. Under section 91 (2) of the British North America Act the federal government has jurisdiction with regard to the regulation of trade and commerce. This section of the act has come up for interpretation in a number of cases, most of which went to the privy council. I have carefully reviewed the digests of the cases, and have come to the conclusion that the gist of the decisions is that the provinces have jurisdiction to regulate trade and commerce within their 
own boundaries but have no authority or jurisdiction to regulate foreign and interprovincial trade.
It is probably due to that generally accepted interpretation that the province of New Brunswick in its act of 1937 respecting the control of agricultural products purported to give to its board authority to-
-fix from time to time, the price or prices, maximum price or prices, minimum price or prices, at which natural products may be sold in the province at wholesale for resale or use in the province.
That is section 4(1) (c) of our provincial act. Under this act the province cannot fix prices on agricultural products going out of the province. I presume the Minister of Agriculture (Mr. Gardiner) has good reasons for not introducing during the course of the present session a farm products marketing act in accordance with the representations of the Canadian Federation of Agriculture. The need for this legislation may not be so urgent in regard to farm products other than potatoes. It is true that under our export and import permits legislation, which was passed early this session, it might be possible to regulate to some extent the export of our potatoes to foreign countries, but in my opinion this would be a clumsy and unsatisfactory manner of trying to regulate this important part of our external trade. Potatoes are one of our important cash crops, possibly the second largest export cash crop, though I have not the figures to make that statement without reservation. In any event, it is of considerable importance, and for that reason I feel that something should be done to ensure proper export marketing.
Then there is the matter of interprovincial trade. New Brunswick and Prince Edward Island supply a considerable quantity of the potatoes consumed in other provinces, particularly in Quebec and Ontario. Marketing in these provinces has never been satisfactory because of the lack of proper marketing organizations. For those reasons I feel that we should have a potato marketing board1 immediately, quite independent of any agricultural products act which may be set up at some future time. May I point out to the Minister of Agriculture that the provincial minister of agriculture agrees with me in this matter. In order that there may be no misunderstanding about it, I wish to quote from a letter from him dated April 22, 1947. Mr. Taylor, who by the way is possibly the most competent minister of agriculture we have had in New Brunswick since confederation, writes in part as follows:
I am definitely of the opinion that a central marketing agency is the only means by which

The Budget-Mr. Michaud
New Brunswick potatoes can be marketed to the satisfaction of all concerned. I have stressed this in no uncertain terms with the growers, the dealers and the federal authorities.
Then he refers to our New Brunswick act:
This act is largely along similar lines to that which is in effect in a great many of the provinces, but acts of this nature have no authority in regard to controlling the marketing of any product in export or interprovincial movement. A marketing plan was set up under this act but due to its being general knowledge that there was no legislative power dealing with the export it was of no effect. I have strongly urged on the federal authorities that in order to make provincial marketing legislation effective it is necessary to have a federal act that has the authority in regard to interprovineial and export movements.
And further down:
I trust that the present legislation which is being considered in Ottawa will give the federal authority that is necessary to make a complete job of the necessary legislative authority and should that be the case we would be only too glad to urge on the producers in New Brunswick to organize in order that they may take advantage of same, but failing to provide federal legislation it is absolutely out of the question for our growers to organize and control the marketing under our provincial legislation.
Mr. F. W. Squires, a member of the New Brunswick legislature and former leader of the opposition, recently referred to this matter, I believe in the month of April although I have not the exact date. As reported in the Telegraph-Journal he had this to say:
I must say, however, that as regards the expansion of our potato industry, that the minister of agriculturefie is referring to the provincial minister. -has done the best he could, but has met with a refusal to cooperate from certain interests and by a cold-blooded and refractory attitude by the dominion government.
I know those remarks are not justified in so far as they relate to the federal government, but I just wanted to point out to the minister the form of criticism which is likely to materialize in New Brunswick if something is not done by this government to bring about a better marketing of our huge crop of potatoes. I urge the minister either to introduce legislation during the present session or to give such assurance regarding marketing as may be necessary to put our farmers at rest in connection with this problem which is so vital to them. I want to emphasize the importance of their having something definite in this connection before seeding gets underway in my province, and that is the reason I am speaking tonight.
If we are to rely entirely on the Agricultural Prices Support Act should our 1947 crop turn out to be as heavy as the 1946 crop, what
will be the policy of the board in assisting the farmers? I wish to warn the minister that, although the steps taken last fall were sound and he is to be commended for taking them, any purchasing which may be done by the government in order to relieve a situation similar to the one we had this winter will have to be done before May 1, and even before April 1, if it is to be of any real assistance to the farmer. The peak price for potatoes is reached about March 1, and I submit that any future policy similar to the one adopted last year should provide for a date not later than March 1. How the date of May 1 was arrived at last fall I do not know, but there has been considerable criticism along the Saint John river as to what occurred when a high official of this Department of Agriculture went there. I do not wish to air that criticism on the floor of the house, but if the minister wishes I shall be glad to tell him confidentially what the farmers are complaining about, and, in my opinion, rightly so.
The easiest and the wisest way to overcome all this difficulty is to provide marketing legislation during the present session. I submit that a potato marketing board could be operated with a minimum of cost to the government and a maximum of efficiency for our farmers. I know some hon. members will say that this is socialistic legislation. Personally I do not care very much about words and definitions; what I am interested in is results. After all, it is hardly conceivable to have a state 100 per cent socialistic or 100 per cent private enterprise. The business of any government should be to strike a happy medium between those two extreme views. We have already nationalized a number of the utilities and services in this country, and with good results. In any event, this marketing board would not be any more socalistic than the wheat board and the other boards which, in my opinion, are performing useful functions. Before leaving this point I wish to urge the minister once more to tell our farmers what they may depend upon next year in the nature of assistance against the possibility of a situation similar to that which prevailed until a few weeks ago in New Brunswick.
Before resuming my seat I wish to make a few comments on some of the criticisms which were voiced by some of the members of the opposition. As we say in French, "A tout seigneur tout honneur". I shall begin with the hon. member for Muskoka-Ontario (Mr. Macdonnell). In his able speech he used the word "disappointment" very often. To those of us who were sitting on this side
The Budget-Mr. Michaud

of the house it was easy to read disappointment on the faces of the Conservative members when the Minister of Finance (Mr. Abbott) announced the reduction in personal income taxes. The leader of the opposition (Mr. Bracken) previously had advocated a cut of thirty per cent. He made sure that the target was too high to be reached by the Minister of Finance, but when it turned out that the average reduction was twenty-nine per cent our hon. friends opposite were very much disappointed and their disappointment was evident on their faces.
The hon. member for Muskoka-Ontario referred, with tears in his eyes, to the middle class which was not being properly looked after, and he defined that middle class as those with incomes between $3,000 and $7,500. What should be understood by the term "middle class" is not easy to determine. One might think it referred to the middle third of our population from the income point of view, and a more liberal interpretation might take in a larger proportion, possibly the fifty per cent of the middle group between the lower and the higher income brackets. But no matter how we look at it, I cannot agree with the hon. member as to where this middle class should fit in to the scale of income earners.
During the 1946 session the hon. member for Lethbridge (Mr. Blackmore) placed on Hansard a letter received from the bureau of statistics over the signature of Mr. J. L. Forsyth, statistician. From this letter it appears that according to the 1941 census 32-9 of all wage-earners in Canada had an income of less than $450 a year-that is for the year from June 1, 1940 to June 1, 1941- 31-6 per cent had an income of less than $950; 91-5 per cent had an income of less than $1,950, and there were only 6-8 per cent in receipt of incomes over $1,950 a year. Assuming that those figures would require revision upwards in order to bring them in line with present-day wages, I think it is fair to assume that possibly today 75 per cent instead of 91-5 per cent, as in 1941, do not earn more than $2,000.
If we look at the problem from the point of view of income tax returns filed for the year 1945 we find that there are only 165,000 taxpayers with incomes between $3,000 and $7,500, which is much less than seven per cent of the total number of income taxpayers and is only 1-4 per cent of the total population of Canada. In addition, there are 34,500 income taxpayers paying on incomes of $7,500 or more. If we take all taxpayers with net incomes of $3,000 or more we find that they represent about eight per cent of the total taxpayers, and only about 1-7 per cent

of the total population. I submit that those figures establish conclusively that the middle class referred to by the financial critic of the opposition cannot, by any stretch of the imagination, be considered as a truly middle class of our population. It may be said at the most that it constitutes the middle class of the top five or six per cent in the upper income brackets. As I look at those figures I come to the conclusion that what I consider our middle class is practically income tax exempt, at least so far as married people are concerned, and it is with those people that the government should be primarily concerned.
The hon. gentleman mentioned that much of our foreign trade is made possible only by the fact that we lend money. According to an answer to a question asked by the hon. member for Kootenay West (Mr. Herridge), and, I think, filed during the present session, it appears that our exports for 1946 amounted roughly to $2,300 million as against $1,900 million for our imports, leaving a favourable trade balance of some $400 million.
Our loans to Great Britain and to other European countries amounted to something in the neighbourhood of $2 billion, of which $648 million were used up in 1946. The loan clearly contemplated-and no one knows this better than the hon. member for Muskoka-Ontario-and may I say I am sorry he is not in his seat-


Mr. CASSELMAN:: He is ill, as a matter of fact.


Benoît Michaud: The loan contemplated that, to the extent and for the duration of the loan period, we should carry out this loan to a very large extent by our excess of exports over our imports. How could it be done otherwise? Would the hon. gentleman find it better business if our imports had balanced evenly with our exports, with the result that we should have had to advance in actual cash the whole sum of $648 million instead of approximately $264 million, as we actually did.
If we subtract from our total exports that portion which was made possible through lending, there are still left exports to the extent of $1,700 million, which is approximately twice our pre-war exports, and even higher than our wartime exports prior to 1942. When we bear this in mind it will be recognized that Canada is not doing too badly in the matter of foreign trade. And for that reason I cannot see any object in the remarks to which I have just referred, to the effect that our foreign trade is possible only by the fact that we lend money. When the

The Budget-Mr. Michaud
financial critic of the opposition has to refer to this type of criticism, it strikes me that their party cannot find much that is seriously wrong with the budget.
There is just one other subject of criticism from the same hon. gentleman, which struck me most forcibly. It is his reference to the easy money policy of this government and the question of interest rates.
At page 2803 of Hansard we find the following remarks:
For that reason I say that I believe the preservation of a strong middle class-
Again the middle class.
-is important not merely economically but as going down to the very roots of our political being.
And further down:
Fifty years ago the man who retired with a modest competency could get five or six per cent on it and he could reckon on living the rest of his life upon the proceeds. What happens today when he receives three per cent? And he is lucky if he gets that.
And further down:
I suggest that this very important factor be taken into consideration-it is very important indeed-that there are large elements in the community who are suffering greatly by that policy. One other thing I would like to say in that connection. I would ask whether we can go on freeing other things and leaving the rate of interest tied down tight.
Mr. Speaker, this is where I and, I hope, the vast majority of Liberal members in the house-I am sure my hon. friends directly opposite share this view-and, I hope, the great majority of the people of this country, say we differ radically from the policy of the Progressive Conservative party.
On the other hand, I am grateful that the party has so clearly expounded its position on this important question. The hon. member fears that interest rates will remain tied down tight, I regret to say that his fears fill me with joy. Yes; I do hope that interest rates will remain tied down and will be pressed further down, and tighter. In the middle ages theologians and moralists took the view that it was sinful to charge interest on money lent. This practice was generally described as usury. The immortal drama by Shakespeare, "The Merchant of Venice", is based almost entirely on this very principle. For some reason or another the churches relaxed from this hard and fast rule, and gave tacit approval to the charging of interest, I suppose the answer of the moralist to this change of attitude as regards the ethics of charging interest might be explained in terms somewhat similar to those of the Divine Teacher when asked why, under the old law, a man was permitted to have more than one wife. When it comes to
quoting scripture, I am not well versed, and I would not know where to find the passage in question. But my recollection is that the answer was somewhat along this line, that it was on account of the hardness of their hearts. Possibly it was on account of the hardness of the hearts of moneylenders that interest rates were subsequently tacitly approved by moralists and theologians.
Why should anyone be reaping interest, clipping coupons on gilt-edged securities, and sit idle, while someone else toils to pay the interest on those bonds? Why should anyone thrive, in that manner, on the fat of the land? Our present-day civilization, with its highly developed economic and financial system, makes it possible for a person to set aside for the future the proceeds of his labour, in excess of his immediate wants. This excess of his productive activity he can convert into money or liquid assets, and tuck it away in absolute safety to be used at some future time. This happy state of affairs was hardly possible centuries ago, and it is not likely possible in countries which have not reached our degree of civilization, as, for instance, great portions of Asia and Africa.
But the fact that our society makes this situation possible should be sufficient reward for the saver. Therefore there should be no necessity for paying him, in addition, juicy interest in the nature of additional reward for his savings. Please bear in mind that in speaking about interest in this vein I have in mind gilt-edged securities, such as government bonds, and so on. There are a great many people in this country who think as I do. May I just refer to one of them for the time being. Every member in the house knows, or should know, about Wilfred C. Krug, who, every once in a while, writes open letters and advises the Minister of Finance and parliament how to handle money situations. I had heard of this gentleman some time before coming to this house, and I agreed with him almost entirely on financial matters. For that reason I save every letter that comes from him, and commend his writings to the attention of all those who are eager to listen to the other side of the story. Much as I should like to quote extensively from Mr. Krug, I shall confine myself to just two paragraphs which appeared in a letter reproduced in the Windsor Daily Star of March 26, 1947:
While we detest the reparation policy that Russia is trying to impose on conquered countries, -we completely overlook the burden that was imposed upon the Canadian people as a result of the war. A sum of $481,207,000 annually is being exacted from the Canadian people in the form of interest on the national debt, It is a form of reparation demanded by s creditor class for loaning money to help win the
The Budget-Mr. Michaud

war. While those who stayed at home loaned their money at interest, one million Canadians offered their lives without interest. This creditor class will receive approximately $10,000 million interest (reparation) during the coming twenty years and the debt will still remain unpaid. The class will profit year after year because of war. "The burden will continue to be onerous not only for us but for the next two or three generations" unless we do something sensible about the matter.
While we condemn Russia for the violation of the rights of people in other countries, it behooves us to make sure that the rights of our own Canadians are observed here in Canada. These rights are not observed when the Canadian people are taxed $481,207,000 annually in order to permit a creditor class to profit year after year from war. By refunding the national debt, as it matures, through the Bank of Canada, we can get rid of the interest burden. The Bank of Canada has been used to finance $1,868,000,000 of the national debt. It can be used to finance the remaining $15,000 million as well.
I know the hon. member for Muskoka-Ontario and most of his colleagues would not be able to subscribe to the views of Mr. Krug. I am particularly glad, however, that the Conservative party has placed itself on record in no uncertain terms on this much debated question of interest rates.


Mr. BENTLEY:: Are you placing the Liberals on record?


Benoît Michaud: I am placing my views on record. If there were any doubt as to whether the Conservatives had receded to some extent from their former position as defenders of big interests and special privileges this doubt has now been completely dispelled by the speech of the financial critic of their party, and for this fact I think we should all be duly grateful.
Just one more word on this point, and it is to urge the government to use the Bank of Canada to finance our national lending as suggested by Mr. Krug. If, however, they should be unable to subscribe wholly to this view I suggest then that everything be done to bring it about slowly by reducing interest rates gradually so that eventually the same results can be achieved. In my opinion there is only one justification for interest being charged, and it is in cases where some degree of risk is involved. If I borrow money to go into business-the lender is perfectly justified in charging me interest at a rate commensurate with the risk involved, but where there is no risk, as in government bonds, I fail entirely to see the reason for the payment of interest, at least at more than a nominal rate. I think my time has expired. Much as I should like to continue I shall conclude.


Mr. J. W. BURTON (Humboldt):: This budget reminds me somewhat of the weather; very few people like it; everybody talks about 
it, and the only one who can do anything about it does not seem to want to. However, speaking in support of the subamendment moved by my leader, the hon. member for Rosetown-Biggar (Mr. Coldwell), I desire to use most of my time in dealing with the budget and its effects on the farmers of this country. But before doing so, may I make a few observations of a general nature?
First, I wish to repeat what I have said on many previous occasions, that the first charge on the production of a nation must be a decent standard of living for those people who make that production possible. A corollary to that is the fact that a nation's greatness is judged by how well it provides for the aged, the sick, and those suffering from physical handicaps. This was so ably presented by my colleagues, the hon. member for Cape Breton South (Mr. Gillis) and the hon. member for Moose Jaw (Mr. Thatcher), that I need not enlarge on it. But I wish to underline their questions wherein they asked why this government is so reluctant to establish the social security programme outlined prior to the dominion-provincial conferences; I would even go farther and add, at least with those provinces that have shown their willingness to cooperate by signing an agreement.
While we all enjoyed the able speech delivered by the Minister of Finance (Mr. Abbott), yet it was astounding to many of us that a man in such a responsible position could adopt such an air of easy indifference to the-needs of so many people. For example, he said, as reported on page 2554 of Hansard:
The exemption levels established last year are high enough to exempt completely from tax more than half the people earning incomes in, Canada. Consequently it can be said that any person who pays income tax now has more than an average income, taking his or her marital and dependent status into account.
As my leader so ably proved in his statement which appears on page 2809 of Hansard, the present exemptions are below bare living requirements. Is any greater indictment needed of our present financial and economic system than that, in the peak years of national production and income, over half of our people earning incomes should be forced to exist on substandard levels? But our Minister of Finance blandly goes on in the style of a barker for Ringling Brothers. A person could almost hear him say, "Hurry, hurry, hurry; come this way and see the biggest freak of the year." Just listen to what he said on page 2554 of Hansard:
I am consequently proposing to make a substantial reduction in taxation in this budget. Moreover I am proposing to concentrate this reduction almost entirely in the field of personal income tax.

The Budget-Mr. Burton
If the general public fall for that kind of shell game, then P. T. Barnum's famous words are true. The minister said that he was proposing to concentrate the reduction in taxation almost entirely in the field of personal income tax, while conveniently obscuring the fact that he was piling another $10 million reduction on the $279 million melon that big business had presented to them in the previous budget. In addition to this, the excess profits tax will disappear entirely before this fiscal year is over, which, in the ultimate end;, means that the personal income taxpayer is at the short end of the bargain.
When we look at the table on page 2552 of Hansard we find that the Minister of Finance expects a revenue of $325 million from the sales tax, which is an increase of $27 million above last year. It must be borne in mind, as has been pointed out on previous .occasions, that the sales tax bears most heavily on those who can least afford it, and should have been reduced or entirely eliminated from everything except those articles which are out-and-out luxuries. But in his hurry to eliminate the excess profits tax the minister could not see his way clear to do so. He even turned a deaf ear to the kiddies in their plea, and continues to filch pennies from them when they buy their pop and candies. Here is another gem from the minister's speech at page 2559 of Hansard:
A short time ago in this house I urged Canadian business men to reduce their prices as their volume and efficiency of business expand. I stated that it is neither proper nor even good business to charge all the traffic will bear. I *want to emphasize that view again now. We in the government, and the vast majority in this house and in this country-
I believe he took in too much territory there, I may interject.
-believe in what is now called "free enterprise." We believe in it not as a windy doctrine or a mystic ideology, but as a sensible way of getting things done.
I will prove to him before I am through what that is worth.
It must prove itself and justify itself by its results. With the orderly removal of controls, with increasing supplies of material, with efficient and cooperative labour-
He does not want much, does he?
-and with ample markets, Canadian business enterprise is in a most favourable situation. We all expect it to show its mettle both in production and in marketing. We expect it to show its ability to keep down costs and prices.
And how, I may interject.
In its own long-run interest, as well as in the national interest, business must keep its prices down and its profits within reason.
What a hope! Yes, what a hope! I have here a clipping from the Rural Co-operator entitled "Surprise":
It is only a year ago that the Right Hon. J. L. Ilsley, then Minister of Finance, solemnly told parliament that the wartime prices and trade board had assured itself that even with an increase of 12i per cent in implement prices the manufacturer would be earning for the ensuing year profits less than the average of 19,36-1939. It must have been la surprise, therefore, to Mr. Ilsley when he learned the other day that Massey-Harris Company Limited had, in 1946, at $2,125,569, its highest net profit since 1929.
Later on, the same paper says:
The one-hundredth anniversary of this company is therefore an occasion for rejoicing, although perhaps more so along Bay and King streets than out on Ontario farms. One index of the progress of Massey-Harris during 1946 was a net gain of four points in the listed value of the common stock. This meant a gain of thirty per cent on capital for anyone who shrewdly bought at the beginning of the year and sold at the end of the year-and, it should be borne in mind, such a gain would be untaxable income. Let a farmer buy a herd of purebred cattle at the beginning of the year and sell the same animals at the end of the year at thirty per cent gain-and he finds the profit on buying and selling that stock is taxable income.
The Rural Co-operator says further:
There would be more justice and wisdom in taxing the speculator's gain and exempting the farmer's.
I most heartily concur in that statement. This is not the only company that showed these profits. Just before I came to the chamber there was a slip on my desk referring to the Toronto Star of May 6, wherein it is said that an average increase of 54.9 per cent in net profits is revealed in the annual reports for 1946 of twenty-seven industrial companies. Again I say to the minister, what a hope !
We in this group and) most of the organized farmers agreed to the wheat agreement, believing that the government would hold the price line on the cost of living and production. But the government's action during past weeks caused many of us to believe that once again we have been betrayed, and this budget proves that suspicion. I wish that every farmer in the country could read the speech of the Minister of Finance and then read the one by my leader, the member for Rosetown-Biggar, because I am certain that at least eighty per cent of those farmers would vote for our subamendment wherein we express regret that the government failed to raise income tax exemptions and failed to make provision so as to enable more than half the population who are compelled to live on incomes below the present exemptions to have an opportunity to improve their standards of living.
The Budget-Mr. Burton

The farming industry has more than its share of those who must live on a substandard level. I have here a table compiled from figures issued by the dominion bureau of statistics. These figures show that, according to the 1941 census, farm operators comprised seventeen per cent of the country's workers; yet in that year they received only 9.6 per cent of the national income. Here are the percentages for several other years:
Year	Per cent
1938		 10-7
1939		 11-6
1940		 10-4
1941		 9-6
1942		 13-2
1943		 '11-0
1944		 42-8
1945	(Preliminary estimate)	 1T0
That is not all. I have here a copy of sessional paper No. 228, dated April 14, 1947, being a return to a motion of the hon. member for Battle River (Mr. Fair). It discloses this information, showing the number of farmers who filed income tax papers in the years listed and the number of those who were not assessable: I
	Number filing	Number
	income	not
Year	tax returns	assessable1939-40 	
8,927	7,5721940-41 	
18,918	16,7831941-42 	
29,281	22.5061942-43 	
29,741	22,2271943-44 	
68.791	48.5441944-45 	
104,588	75,4591945-46 	
136,039	82,731
I may say, too, that this return shows the amount of money collected from farmers for income tax in various provinces. This is interesting. The following amounts were paid by farmers in the fiscal year 1945-46.
Ontario	 $1,086,179
Manitoba	 1,866,590
Saskatchewan	 2.587,632
Alberta	 1,114,000
All the other provinces put together paid in from the farmers in income tax sums amounting to only chicken-feed, including the province of British Columbia.


Thomas Reid: Have you British Columbia? Mr. BURTON:	The British Columbia
farmers paid S317,025 in that year. All the other provinces including British Columbia contributed very little compared with the amount paid by these provinces in the way of income tax, which goes to show that those provinces in the farming industry are not so hot as some people would lead us to believe they are. 1 have not the time to go into all the figures contained in this return, but I can assure the house that it is interesting. Furthermore, I have here a return which was

tabled, sessional paper No. 228 D, moved for by the hon. member for Rosetown-Biggar, and dated May 1. The figures in that return are brought up to date on percentages and so on. Of the 652,928 farm operators as per the 1941 census, 20-8 per cent filed income tax papers for 1945-46; and, mark you this, only 8-2 per cent of those wrere assessable, while 12-6 per cent were not assessable. While some of the remaining 80 per cent, or very near that percentage, that did not file returns may be taxable, yet with the severe penalties attached for failure to do so, it is safe to assume that the majority of those whose net income were above the exemption figures have filed their returns.
I contend that the information contained in those two returns once again proves that the farmers of this country have not received their fair share of the national income. It must also be borne in mind that many of the farmers who have been assessed are treated in an unfair manner, because in most cases the small net income on which the farmer must pay a tax is the combined income of two, three or sometimes more members of the family. There are also quite a number of other cases where the income tax regulations place an undue handicap on the farmers. I may say that in this morning's mail I received from one of my constituents a letter, part of which I should like to read for the benefit of the Minister of Finance (Mr. Abbott) as well as the Minister of National Revenue (Mr. McCann). Again this is only an example, one of hundreds if not thousands of similar cases throughout the country. Here is what this man had to say:
We hauled water winter and summer for twenty years, round trip of four and a half miles for all the stock until 1944 when we drilled a well that in all cost us approximately $900. We were on the point of selling this farm for what we could get for it, and move elsewhere; now my son is willing to carry on right here. I know of two near neighbours contemplating drilling wells this summer, but because of no income tax deduction on it are hesitating; they think they would rather reduce their stock and buy some power equipment instead, which I think is a mistake. I think a drilled well should have a ten-year scale of deduction.
With that and with many other things along that line I most heartily agree. But again time presses and I need not bring more cases to the attention of the ministers. Surely if they look for them, they can find them.
I wish to bring to the attention of hon. members what Mr. W. A. Drummond, a Canadian agricultural economist, had to say, namely:
Canadian agricultural history shows that with few exceptions it has not been possible to secure

The Budget-Mr. Burton
enough revenue from any single branch of farm enterprise to keep the farmer and his family throughout the twelve months and to do it consistently year after year.
Is it not strange that an outstanding victim of capitalism is the little man, be he farmer or small businessman? These are the people who would practise private enterprise in its true sense, were it not for the stranglehold that monopoly capitalism exercises on our national economy. Economically, farmers are still little men. They are, therefore, one of the most consistent victims of our present capitalist order. That fact is the underlying reason for the recurring agriculture crisis in our generation. Very often, when spokesmen for big business are talking to the farmers, they try to lead them to believe that we in the C.C.F. would take their farms from them. This is not true. It has been denied officially on many occasions, but still that malicious campaign is going on in some parts of the country. Therefore I wish to deal briefly with the C.C.F. agriculture policy, which is the fourth plank in the Regina manifesto, and I quote:
4. Agriculture.
Security of tenure for the farmer upon his farm-
Let me repeat that, "upon his farm."
-on conditions to be laid down by individual provinces; insurance against unavoidable crop failure; removal of the tariff burden from the operations of agriculture; encouragement of producers' and consumers' cooperatives; the restoration and maintenance of an equitable relationship between prices of acricultural products and those of other commodities and services; and improving the efficiency of export trade in farm products.
The security of tenure for the farmer upon his farm which is imperilled by the present disastrous situation of the whole industry, together with adequate social insurance, ought to be guaranteed under equitable conditions.
The prosperity of agriculture, the greatest Canadian industry, depends upon a rising volume of purchasing power of the masses in Canada for all farm goods consumed at home, and upon the maintenance of large-scale exports of the stable commodities at satisfactory prices or equitable commodity exchange.


Ian Alistair Mackenzie: May I ask the date of that manifesto?


Joseph William Burton: That was July, 1933, the
original manifesto of the C.C.F. It has been the basis of the C.C.F. policy during all these years.


Ian Alistair Mackenzie: Was there not a second Regina manifesto?
Mr. BENTLEY; It has not changed once since then.


Joseph William Burton: It has not changed once in so far as that policy is concerned.


James Garfield Gardiner: Read from the question and answer handbook.


Mr. COLD  WELL@: Yours?


James Garfield Gardiner: The one you wrote.


Mr. COLD  WELL@: I didn't write it.


Ian Alistair Mackenzie: I am glad you didn't.
Mr. BURTON; If only one of these ministers would talk at a time, Mr. Speaker, maybe I could deal with them. I do not hesitate to deal with them, and I want to say this much as far as the Minister of Agriculture (Mr. Gardiner) is concerned. He may bring his handbook here and my leader, the hon. member for Rosetown-Biggar, will deal with it at any time and in any way that he wants him to.


James Garfield Gardiner: I know it by heart.


Joseph William Burton: And the minister cannot get away with some of the twists that he and some of his colleagues in Saskatchewan tried to pull off at that time. So far as the Minister of Veterans Affairs is concerned, I want to say that we in the C.C.F. have our annual provincial conventions, and we have our national conventions every two years. Our organization is run from the bottom up and not from the top down, as are some other people's political organizations. I also want to say that so long as the fundamental principles which were laid down in the first manifesto issued at Regina in July, 1933, are retained and built upon, we are always prepared to make changes in detail to meet the conditions and the times.


James Garfield Gardiner: Why did Agnes Mac-
Phail quit at that meeting?


Mr. COLD  WELL@: You had better ask
Miss Agnes MacPhail. and she will tell you herself. Ask her at the same time why she joined the C.C.F. afterward.


James Garfield Gardiner: Why did she leave?


Ian Alistair Mackenzie: If I may ask a question, did the C.C.F. ever come out definitely for a policy of the socialization and nationalization of land in Canada?


Joseph William Burton: No.


Mr. COLDWELL:: The minister knows
better. Why repeat these canards?


Ian Alistair Mackenzie: They are not canards.


Joseph William Burton: Apparently those people
who are spreading this malicious campaign about the C.C.F. do not all do it in behind the bush. At least I am glad to see some of them have enough courage to come out in the open. Some of those people do not like
The Budget-Mr. Burton

this Regina manifesto, because that was the first Magna Carta the farmers and ordinary people of this country had. Some people do not like to be confronted with the actual platform of the C.C.F.; they would rather go out and tell the people in and around and behind what they think the C.C.F. policy is.
Perhaps I might be allowed to go on with this manifesto. Some day I would be more than delighted to take the Minister of Veterans -Affairs (Mr. Mackenzie) and the Minister of Agriculture (Mr. Gardiner) to a little school we have, so that they may learn the C.C.F. policy properly. This manifesto goes on for several paragraphs to deal with the depression as it existed at that time.


Ian Alistair Mackenzie: Will my hon. friend
permit me at some future time to produce proof that the C.C.F. party did definitely come out for a policy of the socialization and nationalization of land in Canada?


Mr. COLD  WELL@: Certainly. Any time
you can produce proof we shall be glad to see it.


Joseph William Burton: If I may be allowed to
continue I should like to quote from the manifesto:
We propose therefore:
(1)	The improvement of the position of the farmer by the increase of purchasing power *nade possible by the social control of the financial system. This control must be directed towards the increase of employment as laid down elsewhere and towards raising the prices of farm commodities by appropriate credit and foreign policies.
(2)	Whilst the family farm is the accepted basis for agricultural production in Canada the position of the farmer may be much improved by:
(a)	The extension of consumers' cooperatives for the purchase of farm supplies and domestic requirements; and
(b)	The extension of cooperative institutions for the processing and marketing of farm products.
Both of the foregoing to have suitable state encouragement and assistance.
(3)	The adoption of a planned system of agricultural development based upon scientific soil surveys directed towards better land utilization, and a scientific policy of agricultural development for the whole of Canada.
(4)	The substitution for the present system of foreign trade, of a system of import and export boards to improve the efficiency of overseas marketing, to control prices, and to integrate the foreign trade policy with the requirements of the national economic plan.
In season and out of season, Mr. Speaker, we have stated that ownership of property by the individual is not only desirable but should be encouraged. Furthermore, we have frequently made it plain that private ownership of property becomes vicious and undesirable only when such ownership deprives

others of similar opportunities; or, even worse, when individuals or groups of individuals use such ownership to dominate and exploit their fellow men. If spokesmen for the other parties wish to criticize our policy in that respect that is their right and privilege; but I do ask them as honourable gentlemen not to misrepresent that policy to the farmers. Or, which is just as bad, when it suits their convenience they tell others that we want to socialize the property of everybody but the farmers. Again that is not true.


Ian Alistair Mackenzie: What does that mean? What does my hon. friend mean by that remark? To socialize everyone but the farmers; and that is not true?


Joseph William Burton: That is something your friends do when it suits their convenience; they go out and tell certain people that we want to socialize the business of everybody but the farmers.


Ian Alistair Mackenzie: And that is not true?


Joseph William Burton: That is not true.


James Garfield Gardiner: Whom are you going to socialize? What are you going to socialize?


Joseph William Burton: You come to that little school some day and you will learn all about it. I just pointed out to hon. gentlemen that the whole basis of our socialization programme is that those properties which lend themselves to the domination and exploitation of other men are the properties which need to be socialized. I want to say to my hon. friends that the problems of the farmers will not be solved in the way some of them want to do it, by misrepresenting the C.C.F. policies. Nor will tactics of that kind help to solve any of our problems, national or provincial. Therefore I plead for tolerance, fair play and better understanding, that in the end we can all say we have played our fair share in an endeavour to bring about the brotherhood of man.


Mr. C. C. MILLER (Portage la Prairie):: In the province of Manitoba, Mr. Speaker, there are other parts as well as the constituency of Portage la Prairie. Tonight, in opening my little speech, I should like to talk for a while about a situation in the federal constituency of Churchill, and I hope and anticipate that the hon. member who represents thj,t constituency will support me in what I have to say, and also that all hon. members from Manitoba will rise in this house and echo or at least endorse the sentiments I propose to express.

The Budget-Mr. Miller
In the newspapers of Manitoba within the last few days there has been talk even of the secession of the town of Flin Flon, in Churchill riding, from the boundaries of that province. There have been meetings, not of four or five agitators but of as many as a thousand and fifteen hundred citizens, who have been discussing what they consider to be a grievance, which has assumed such proportions that I feel justified, as I am sure the hon. member for Churchill (Mr. Moore) will feel justified, in bringing it to the attention of this house. Their quarrel or grievance is this. The town of Flin Flon is an important mining centre. It has a population generally admitted to be at least ten thousand, though there was some disagreement between the people who carried out the census and the officials of the town. However I believe that is the population. Flin Flon is the entrance to an important mining area in the north. They go into that area by railroad, but they have no highway into it. They feel they are entitled to a road, and I think almost everyone who lives in Manitoba agrees with the citizens of that town in their argument.
The province of Manitoba has a problem in this connection. They have a story to tell; they have a defence to the charge made by the citizens of Flin Flon, but notwithstanding any defence the province may have the citizens of that town have a real grievance. I believe the road should be built. The answer of the province is ths. The Garson government say they do not know what it will cost. I do not think any government could be asked to build a road without the cost first being ascertained. They suggest also that they cannot get contractors to undertake this job or even surveyors to make the preliminary surveys in order to ascertain the cost. If there is really talk of secession-and I hope it is only talk because I cannot believe the people of Flin Flon really want that-the matter would, of necessity, come before this house because it would require an amendment to the Manitoba act in order to change the boundaries of that province.
If the province of Manitoba cannot get surveyors to make a survey of this desired road I think the federal government should undertake the work, whether or not the provincial authorities ask them to do so. If the provincial authorities do ask them, then I think the dominion government should agree to lend the provincial authorities the necessary engineers and surveyors to complete a preliminary survey. I suggest that the federal government should volunteer assistance in the construction of this road or at least study the situation to see whether the road could be
built either under joint arrangement between the dominion and the province or solely by the dominion. It might be said that the dominion does not have to build this road because it is a provincial problem. Normally that is true, but in this country and in Manitoba the dominion government has assumed the responsibility for building roads into mining areas, and this is one of the richest mining areas in the whole dominion.
This mining area has no road at all and it is entitled to one. Roads have been built to mines, and I submit that the people of Flin Flon are justified in complaining that some government has not seen their plight and come to their rescue. I am pleading for the town of Flin Flon in the constituency of Churchill, Manitoba, because I maintain that one of the richest industries in our province is being affected by lack of road transportation into and out of Flin Flon.
The building of the road could be justified on the ground of its being an attraction to the tourist trade. We have heard of the great value to this country of the tourist trade and I ask hon. members, what would bring United States tourists and United States dollars into this country in greater numbers than a good tourist road into that vast untouched northwestern part of this country? I will leave that and I hope other hon. members from my province will take it up in their speech.
There is one matter in connection with income tax that I wish to mention tonight and I do not intend to do so in any critical way. I want to refer to a situation which has developed in the western provinces as a result of the disclosures made by the figures referred to by the hon. member for Humboldt (Mr. Burton). Whether they are right or wrong does not matter; that is what the people believe. If that belief is erroneous, it should be corrected immediately. There is scarcely a farmer in Manitoba-and I venture the same is true of the farmers in Saskatchewan-who does not feel that he is being discriminated against as compared with farmers in other provinces in the collection of income tax. I can scarcely believe that there is any such discrimination, but the rumour exists and it is causing ill-feeling among the farmers of the west. That rumour should be contradicted immediately by the Minister of National Revenue (Mr. McCann) or the Minister of Finance (Mr. Abbott), wboe%rer should make the correction.
I am not arguing whether it is true or whether it is false, but our farmers believe that there are at least seven income tax assessors in the city of Winnipeg working
The Budget-Mr. Miller

solely on farmers' returns for Manitoba while there are only two in the city of Toronto working on farmers' returns for Ontario. If that is true I submit that the farmers of western Canada should be given exactly the same treatment as the farmers in other provinces. I am not suggesting that the Minister of National Revenue should chase the farmers of Ontario or Quebec; all I am suggesting is that these fears should be cleared up, so that the farmers of western Canada may know whether or not they are being discriminated against in the collection of income taxes. I call upon the Minister of National Revenue to tell this house frankly how many income tax assessors are working out of each income tax division and directing their full-time efforts toward a review of farmers' returns. I maintain that that is something to which this house and the farmers of this country are entitled.
There are some features about the budget that one might like. I do not think the hon. member for Restigouche-Madawaska (Mr. Michaud) is fair when he says that we on this side do not like the income tax deductions. Does he think we are fools or we are less than human? That was a childish statement which should not have been made by a man of mature years. As far as I am concerned, there are five or six objections to the budget. In the first place, I maintain that the Minister of Finance should have increased the exemptions. Had that been done, the measure of relief would have been more in keeping with what the people are entitled to.
I read what the minister said and I heard him deliver his budget speech. It was his first budget and it was the first one I heard, so that we started out together. However, on reading and re-reading what he said I cannot follow the logic of his argument. I still maintain that the proper and better method of providing relief to the people of this country would have been to raise the exemptions. The figures I suggest are $1,000 for single people and $2,000 for married people. People earning less than that should have been set aside and not taxed in any shape or form. It should have been a true exemption; it should have been set aside, regardless of the amount earned. We would then have the position where people who did not earn over $2,000 would not be taxable. The people in the middle income brackets would have had some relief through the raising of the exemptions, relief to which they were entitled.


Douglas Charles Abbott: You would have had to tax them in another way; that is the only difference.


Calvert Charlton Miller: I cannot see that argument.


Douglas Charles Abbott: There are not enough people earning $2,000 a year and up.


Calvert Charlton Miller: We would suggest, perhaps in an amateurish way, that some of the seventeen departments which are showing increased expenditures should show decreases. There is one matter of local interest to me, the taxation of electrical energy. That was a wartime tax which was necessary, but from its inception it has been collected unfairly. The tax is a percentage of the electric light bill. In Manitoba, to which I should perhaps confine myself, there is Pontage la Prairie, from which I come; there is the city of Brandon, not far from us, and there is the city of Winnipeg. Winnipeg has a cheap electric power rate. While the rates charged in Portage la Prairie may not be large, they are much larger than those charged in Winnipeg. As I say, these electric light bills are taxed on a percentage basis. In the city of Winnipeg the same number of kilowatt horns would bring a bill of roughly $4, as compared with $10 in the city of Portage la Prairie. We both pay a percentage, and I say that is unjust. I maintain that the itax, if it is left at all, should be on the basis of the kilowatt hours used, and not on the basis of the amount of money set out on the electric light bill. As a matter of fact, I believe the tax is unfair, anyway, and it should have been brushed off the map altogether.
I am going to join with those who said that the tax on chocolate bars and soft drinks should have been taken off. All of us have received letters from these organizations. It is quite obvious that was not a spontaneous effort on the part of the young people themselves. Nevertheless I believe their contentions have great merit. In my own city of Portage la Prairie we have a small soft drink company which employs quite a few people of whom alL, I believe, are returned men and women. That industry, if nickel drinks were restored to the market, could enlarge and hire extra people.


Douglas Charles Abbott: It could not get any more sugar, though.


Calvert Charlton Miller: The sugar situation could be handled, because I do not think it is a factor, not in the soda-water business. I believe, if the price were returned to a nickel, there would be an expansion, because the whole industry has been built up on the nickel drink. The tax brings in only something like $20 million or $22 million. I believe the highest amount ever taken in was $22 million.


Douglas Charles Abbott: That is a lot of money.

The Budget-Mr. Miller


Calvert Charlton Miller: Yes, it is a lot of money, even to the Minister of Finance. But it is not so much, I suppose, when one talks about a budget of over $2 billion. I know the difficulties with which the minister is faced; nevertheless I am adding my voice to the voices of those who have gone before, protesting against this tax.
I am also not satisfied1-and I realize I can do nothing about the matter but raise my objection tonight-that consideration has not been given by the Minister of Finance in his budget to the giving of income tax exemption rights in respect of other members of a farmer's family. I believe consideration has not been had for the fact that, to earn an amount of money, a farmer must earn it through the joint enterprise and joint effort of his wife and family on the farm. I do not believe that has been properly brought home to the people in the towns and cities. However that may be, it is true. Certainly I believe some adjustment should be wTorked out, so that this fact would be taken into consideration. Certainly if any of us had to bring our wives and families down to our offices to help us make our livings, we would figure out some way whereby our wives and children would receive some consideration in the matter of income tax exemptions.
I also regret that small businessmen, of whom there are many in the riding from which I come, have had little relief in the budget. I shall not enlarge upon that, but shall be content to subscribe to what was said by the hon. member for Halifax (Mr. Itenor) and the hon. member for Northumberland (Mr. Drope) this afternoon. I had one of those briefs sent to me, the same as other hon. members did. However I believe much could) be done to encourage small businessmen in the small towns; because, after all, during the period of hard times in the west those small businessmen had a pretty tough time of it. They can make a little money now, and I say to them, "All power to you". Let them have every encouragement we can give them.
I realize the difficulty there would be in carrying out my next suggestion; but I must express my regrets that, with his ingenuity, the Minister of Finance did not devise some ways or means of giving some sort of taxation exemption to hog raisers, so as to encourage hog production. I know that is difficult of application, and it is difficult to discriminate between classes. But at the same time it is so urgent, not only to meet our market commitments, but also in the economy of the west, that, in my humble judgment, that hog
industry, which is rapidly dying out, should be encouraged. That is the way I still maintain it can best be encouraged.
There is one feature about the budget speech of the Minister of Finance which I like very much, and I want to tell him about it. That was the prophecy he made in his speech where he stated that he would remodel the present Income War Tax Act; and I think he would even change the name of it. I hope that when the new form of legislation is produced in the house it will have the twin advantage of being understandable not only by laymen but by lawyers who, up to date, have not been able to understand the income tax law.
In Portage la Prairie we have an industry of which we are proud, and I should like to say something about it. We are extremely grateful that that industry was located in our midst. It is a pilot flax fibre mill. The Department. of Agriculture has built and is operating a creditable experiment in the production of flax for fibre purposes in the western provinces.
An extensive investigation was made as to where that plant should be located and, after a most thorough investigation by experienced men in that line, the city of Portage la Prairie was chosen as the site for it. I understand that it was chosen because the land surrounding Portage la Prairie had been proven to be the producer of one of the best types of fibre flax that could be produced anywhere in western Canada.
On December 21, 1945, I, in common with many citizens of Portage la Prairie and district, attended at the formal opening of that pilot flax mill. Believe me, there were few there who did not have great hopes that at last, in the city of Portage la Prairie and district, we had the mechanics of an industry which might do much not only for our own area, but for the entire province of Manitoba and, indeed, for the whole of western Canada.
Professor T. J. Harrison, chairman of the Manitoba fibre flax committee, was at the meeting, along with the minister of agriculture of Manitoba, and other notables. Professor Harrison told us why the site at Portage la Prairie had been chosen, and the reason he gave was the one I have just placed before the house.
During that time, even while the mill was under construction, there were seeded and already growing in the area surrounding the city 100 acres of fibre flax and 100 acres of oil flax. There was also a ten-acre experimental plot on the provincial government farm. This mill, as constructed, can handle, roughly, 1,000 acres; but there were never, so far as I know, 1,0.00 acres seeded to both kinds of flax.
The Budget-Mr. Miller


Ian Alistair Mackenzie: What year was that?


Calvert Charlton Miller: The mill was opened
officially on December 21, 1945, and it has a capacity to handle 1,000 acres of flax. I know the mill cost over $100,000, and that it has in it the best possible equipment. There is also available equipment for harvesting flax. I am not sure of the figure, but I believe that probably the entire investment by the Dominion of Canada in that plant would be in the neighbourhood of $250,000 or $300,000.
I understand that it employs twelve or fifteen persons, including scientists who are conducting scientific experiments. As I said before, we had great hopes for that mill. We had been led to believe-and not necessarily by officials of the department-that it would be used for experiments, not altogether in connection with oil flax, but mainly in respect of fibre flax. We also calculated that when it proved that flax could be profitably raised and that it was a good type of flax, perhaps the mill would be turned over by the government to private enterprise and expanded, or perhaps the government would expand it themselves. I do not think the experimental stage has yet passed, but in any event the people of the area are slightly worried that the operations of the plant are to be curtailed. That would be a tragedy, not only to us who have, as I said, great hopes for it, but a tragedy to the whole west, because I believe it has been proved that flax to maintain a mill like this can be grown in western Canada.


James Garfield Gardiner: May I ask where the suggestion has come from that the activities were to be curtailed?


Calvert Charlton Miller: I am leading up to that. The suggestion has come from the farmers, because ordinarily arrangements have been made to seed, as I say, from 80 to 200 acres of flax in that area. This year no arrangements are being made with the farmers to seed any flax. At the moment fifty-six or sixty stacks of fibre flax-two I think are linseed flax-are piled up in the yard near the plant. But that flax will all be run through by August or September, and all that is in sight is ten acres of flax which is being grown on the provincial farm in the Portage la Prairie area. The board of trade of the city of Portage la Prairie are concerned because we do not want that plant to be curtailed. What we want to know-and perhaps the Minister of Agriculture will tell us that when he speaks-is what is to be the future of this mill. I should like to know if the experimental period has been completed. Is

the mill to be expanded by the government? Is it to be sold to private enterprise for the purpose of expansion? Do the officials of the minister's department believe that good fibre flax can be grown in that area and in western Canada? May I just say that I am not complaining or criticizing in any shape or form the officials of the minister's department. On the contrary, I have always had the greatest courtesy and cooperation from Doctor Archibald, from the chief of the fibre division and also from the local manager of the plant at Portage la Prairie. But I suggest that the plant should not be curtailed in any way. I am hoping that it will not, because it is an industry that can do much for the west in proving that this type of flax can be grown in the west.
As I said, the whole district is proud of the mill. We are hopeful of its future and we are confident that something good for the west will come out of it. Our hope is that there will be no curtailment of its activities; that it will be expanded rather than curtailed.
I should lake to say a few words about the Prairie Farm Assistance Act, and they will be few because quite frankly I know not a great deal about it. I wish to make a few remarks, because I believe that the Minister of Agriculture is still considering whether he will bring in certain changes or a new act at this session. The farmers in our community, which happens to be a reasonably good one, feel that not a great deal of benefit is derived by the farmers of Manitoba from this act. They are not so unselfish as to feel, though, that they would particularly object to a continuation of the one per cent deduction from the sale price of their grains; but they believe that the adjustments of claims should be on an individual basis rather than on the block system as followed now. They would also like to have some provision put in the act for the withdrawal of the farmers of any province who would desire to withdraw from the scheme. I do not know how it could be worked out, except that I imagine it would have to be done with the permission or at the request of the provincial legislature. But I should like to have some consideration given to a provision for the withdrawal of farmers in Manitoba from the scheme if they desire to do so. I am inclined to think that if they could withdraw they would do so; certainly that is true of the most of the area which I represent, unless the act is changed to provide for individual consideration of claims rather than on the present system of the block scheme.

The Budget-Mr. MeGarry
The income tax deductions which were announced by the minister in his budget are not too great an achievement. We were entitled to expect that there would be deductions to that extent. They are certainly nevertheless an acceptable step in the right direction, notwithstanding what might be suggested by the hon. member for Restigouche-Madawaska (Mr. Michaud).
In closing, let me urge upon the minister and upon his department that the government *endeavour to economize in the year which lies ahead, so that next year they will have their financial house in order, as it should be now, and be in a position to give the people of this country additional tax reductions, not only income tax deductions but deductions in those nuisance taxes, sales taxes and other taxes which are bearing so grievously upon them.


Mr. M. E. McGARRY (Inverness-Rich-mond):: In rising to say a few words in the debate on the budget, I wish to preface my brief remarks by extending hearty congratulations to the Minister of Finance (Mr. Abbott) who presented a very good budget in a lucid and impressive way. The minister has brought to the house, to the taxpayers, to the industrialists and to all who are concerned with the economy of the nation an encouraging message. He presented it in such a lucid way that all intelligent people can interpret and understand it, and I am sure they will appreciate it as well. I submit, as the minister himself has admitted, that the job of preparing a budget such as this, with all its virtues, was made comparatively easy because of the splendid condition in which he found the Department of Finance and the economy of the nation, owing to the efficient control afforded by his predecessor and by the series of controls which kept prices down and prevented them from sky-rocketing to altitudes which would be disastrous.
I wish to congratulate the hon. member for Muskoka-Ontario (Mr. Maedonnell) on his splendid efforts. I join in the expression of sympathy extended to him by my colleague the hon. member for Halifax (Mr. Isnor). I really believe that we harbour in our hearts more compassion for the hon. member than did his own party because, knowing he was not physically fit on that day, they imposed an impossible task upon him. They asked him to weave a fabric of constructive criticism when they knew full well that he had not the warp or the woof to make such a garment. In spite of the fact that the workman was quite efficient, he had no material to work with.
The hon. member for Muskoka-Ontario pictured a dim and gloomy condition for the industry and economy of the nation. His diagnosis was not correct, and when he undertook then to pronounce a prognosis for what was to occur in the future, I say that, as these two things go, particularly in medicine-I believe it is the same in politics-if your diagnosis is wrong you have very little upon which to base your prognosis.
I disagree with the hon. member's diagnosis when he pictures such a gloomy condition in our economic affairs, because certainly he knows very well, as everyone in Canada knows and as the world knows, that the economic condition in this country today is quite sound. It must be. After a comparatively short period, after the cessation of the most depleting war, we find 1,000,000 men who were engaged in war services now being placed in industrial pursuits. We find today that our external trade has reached a level that was never before attained. We find that the savings in the banks have increased by large proportions since 1939. We find a great increase in bond holdings, a great increase in life insurance. So that when one looks around him, if he is not prejudiced, I cannot understand why any person would stand up in this house or anywhere else and say that our economic and industrial condition is deplorable, when, as I said before, not only the Canadian people but people throughout the world know that our condition in that respect is sound.
I now come to a point of agreement with the hon. member for Muskoka-Ontario, when he says that governments cannot start industries, that they are not supposed to start industries. I agree with him there. But what governments can do, and what is the responsibility of governments, is to legislate so that opportunity for the initiation and the development of industries will be made possible. On the other hand, private industry must do its share. It is not a bit of use for the government to legislate wisely or to afford opportunities for private industry unless private industry and we ourselves take advantage of that opportunity.
We will all admit that during 1946 a great many of these opportunities were not taken advantage of. At a time when the whole world was hungry, many people starving, and prices and production were at such a high rate, it was unfortunate that we in this resourceful country did not take advantage of that condition and increase production to its full limit. But our production was
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hampered by strikes and labour disorders and disagreements. In a resourceful country like Canada, where we are capable of consuming only one-fifth of what we are capable of producing, and with the countries of Europe in the condition in which they are today, there should be no such thing as the lowering of production with the resultant unemployment conditions that obtain.
Production and employment are, I believe, the elixirs of the life of a nation, and if we are to bring about peace and prosperity in this country these are the two factors which we must consider as essential. On the other hand, there is no use in asking the primary producer or the industrialist to increase production if the facilities which warrant that production are not afforded. Let us take a few of our primary producers. Take the fisherman, for instance. He is an important element of our producing population, and it is no use asking him to increase his production if he has not an entrance to his harbour; if he has not adequate wharfage room in order to land and process his fish. If he has to leave his boat out to the mercy of the winds and waves; if he has not proper shelter for his boats; if he has not some centre of refrigeration where he can feel secure that he has bait in order to carry on his operations, he cannot produce.
In the constituency where I live and where fishing is carried on to a comparatively high degree, I know of instances, at the time when fish are schooling-I am speaking of shore fishing-when for -want of bait the fishermen's production is nil. They should have the facilities. Another thing that should be afforded at certain points along the fishing coast is life-boats, so that the fishermen would have security when they are out and are caught in a storm, in order that they may have a chance to save their lives. I know what happens along that shore. Men who have only comparatively small boats are afraid to go out any distance, but they would certainly undertake to go and increase production greatly if they had that security.
So much for the fishermen. I would say that in the same way every stimulus should be given to the farmer. He must be given ever}' opportunity and every inducement not only to remain on his farm but to increase his production. I agree with what the hon. member for Cape Breton South said with regard to the marshlands. I think it was he who referred to them. I believe that this is something which should receive the attention of the Department of Agriculture this year. I am not finding any fault with the assistance which is given to the prairie farmers; in fact, 
if I were going to make any comment, I would say that it should be increased. I believe that the Prairie Farm Assistance Act should be extended so as to deal with the whole of the Dominion of Canada.
Not only do I refer to the marshlands, but we have another menacing agency bringing about destruction of our lands along our river shores. Right in the community where I live, the farmers who have intervale land are every year losing acres and acres of it through erosion and ice floes. I think I would be safe in saying that there are some farmers who had twenty acres of intervale land when I went there twenty-five years ago but who, I believe, have not half that amount left today. I know for a fact that the farmers along these rivers have done everything they could to protect their land, but so much damage has been done and so many inroads have been made on the land that today it is impossible for the individual farmer to cope with the problem. When this act is extended, which I hope will be this year, circumstances like this should be taken into account.
As far as the lumber industry is concerned, I believe I can say that in Nova Scotia our production is greater than the demand. I agree with the hon. member for Halifax (Mr. Isnor), who suggested the other day that it would be to the advantage of the lumbermen of Nova Scotia if the export quota were increased.
I now come to the mining industry. That is one of our greatest problems in the mari-times. In a country with a climate like that of Canada, everyone will realize that the production of coal is essential. We all know what happens in countries where shortages of coal obtain, as in England. We found that the coal industry there was almost paralyzed. We found that lighting had to be rationed and, what was more deplorable, that there were a great many cold children and people living in those areas.
I understand that most of our coal reserves are in Alberta. We have coal in the maritimes and in British Columbia, but in those areas the mining of coal is difficult and costly. Another drawback with respect to Nova Scotia and New Brunswick coal is that we are so far removed from our natural markets. This makes transportation an impotrant part of the operation. It is therefore no wonder that the coal problem, particularly in the maritime provinces, has been one of our greatest political and economic troubles.
We have the problem of supplying coal for our home needs and of maintaining a market. The problem is that we must endeavour to maintain not only a supply for our own needs, but a lasting and profitable market in the only

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place where we can dispose of our coal. We will all admit that the coal miner is a vital part of our economy, and it so happens that he is subjected to more danger in his operations, possibly, than any other person engaged in any other industry. The maritime coal problem is complicated just now by strikes, and this, of course, is one of the vital and serious matters of today. Before the strike was declared, the problem was complicated by a lowering of our production. When production is lowered, the cost of producing rises proportionately. Some people, who are not likely well qualified to judge, blame the miners; some others, who are equally unqualified to find the cause, blame the operating companies. I can say that the miners in the maritime provinces have been accepting a wage which has been consistently lower than that-paid to the United States miner or the British Columbia miner.
There is another feature which should be mentioned. The average age of the miner in the maritime provinces is higher than that in either the United States or British Columbia. As far as the companies are concerned, it is a fact that the location of the coal seams makes it difficult to reach them and expensive to work them. There is another factor. I do not know Whether it is the fault of the company or not, but, as I understand it, they are now operating on lines which were laid down many years ago. So I say that the companies are quite justified in pointing out their physical nandicaps, and the miners are equally justified in pointing out what I have stated before, namely, their lower wage level, their higher average age and the fact that figures on absenteeism must be examined with great lare.
Finding a solution for a problem involving so many factors is not going to be easy, and we have not too much time in which to do it; for it is generally accepted that, unless some remedy is soon forthcoming, the mining industry of the maritime provinces is headed for disaster. This disaster would affect the mari-times first and most seriously, but eventually its effect would be felt all over this dominion; and many of the effects would be profound. Therefore I say that it becomes a problem for the entire nation. After all, the prosperity of Canada depends upon the accumulated prosperity of the major factors. Therefore I would say that, in the emergent need for a solution of this serious national problem, the best planning efforts of the coal industry itself, the miners' unions and the government should be coordinated and combined. If we are to maintain the industry, we must have it so arranged that the miner must get a fair wage,
the company must have a fair profit and coal must be produced at such a price that it will be competitive with other coals which will appear on the only market we have.
The coal problem is not the only serious difficulty confronting the maritimes, for we now have the problem of unemployment. During the war period we had no unemployment in Nova Scotia. We had no war projects, but enlistment for war service and war work outside the maritimes provided employment for our people. There is one project which was mooted years ago and was promised priority after the war. The hon. member for Cape Breton South (Mr. Gillis) referred to this project in his speech this evening. It is a project which has been proved feasible by competent engineers, a project to which we lcok hopefully to relieve our unemployment and the resultant exodus of young people from our province. I refer to the spanning of the strait of Canso. This will cost some money, but the amount required will be comparatively small, compared with the amounts spent in other parts of the dominion for projects not so strongly indicated; and it must be remembered that these other projects were far from Nova Scotia but we never hesitated or complained abouit paying our full share of their cost.
Apart from the benefits which would accrue directly to Cape Breton and the whole of the maritime provinces, and indirectly to the whole dominion, this project has an economic value. If I had time I could show by authentic figures that the savings to be made by eliminating the cost of operating the Canadian National ferry and the highway ferries over a reasonable period of years would more than equal the interest and sinking fund which would be necessary to defray the capital cost. I believe this is a business proposition for the government. The completion of this project will render a long delayed service. It was promised as one of the first postwar undertakings. The plan is feasible; it is of national importance; it is economical. Thousands of our people are idle, so that there should be no delay in getting the project under way. Full employment and full production were two important factors in Canada's successful war effort. The same two factors are equally essential in this conflict on rehabilitation and reconstruction.
I have no doubt that the government has a complete realization of all this, and my reference is for the purpose of emphasis. A chain is no stronger than its weakest link, nor is a nation Stronger than its major component parts. The maritimes are one of the
Veterans Affairs

major component units of this great confederation. They have contributed their share to the cost of public works in other parts of the dominion. They should not be forgotten when their needs are greatest, when they ask for the public works they so greatly need and so richly deserve, particularly when the project for which they ask is for the good and benefit of the whole dominion.
On motion of Mr. McCann the debate was adjourned.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Friday, May 9, 1947