Mr. J. L. GIBSON (Comox-Alberni):: Mr. Speaker, I rise to a question of privilege. In the Globe and Mail of this morning it is stated that I attend Liberal party caucuses. This statement is incorrect, because I attend neither their caucuses nor those of any other party in the house.


Mr. GRAYDON:: It is a pardonable error.



DEBATES COMMITTEE


Mr. JEAN FRANCOIS POULIOT (Temis-couata):: Mr. Speaker, by leave of the house
I move, seconded by the hon. member for Fort William (Mr. Mclvor):
That the standing committee on debates be empowered to sit while the house is sitting.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Mr. J. A. CHARLTON (Brant):: I should like to direct a question to the Minister of Agriculture (Mr. Gardiner): Is the minister aware of the fact that "Last Mark", owned and bred by James Fair of Cainsville, in Brant county, won the King's Plate yesterday, at Toronto Woodbine Park, bettering the previous record by one and three-fifth seconds?


Gordon Graydon: We will have another winner on June 7.


An hon. MEMBER:: Also ran.



THE BUDGET


[Stage Direction]
The house resumed from Monday, May 24, 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. E. B. McKAY (Weyburn):: Mr. Speaker, the budget brought down by the Minister of Finance (Mr. Abbott) this year was, to say the least, a disappointment to most Canadians. It is a typical big business budget, which makes little or no attempt to meet the great problem of the day, that of the high cost of living. Despite increased living costs the personal income tax exemptions remain unaltered except for a few people over sixty-five years of age who are fortunate enough to have an income.
There has been only the slightest gesture to remove hidden taxes which constitute one of the nation's heaviest burdens. The removal of the eight per cent sales tax on the essentials of life should have been part of the government's program this year to meet the high prices that the consumer is called upon to pay. This tax could have been very well removed from clothing, shoes, furniture, kitchen utensils and dishes without dissolving completely away the huge surplus of three-quarters of a billion dollars which has been declared this year by the minister. But the government has removed the sales tax on only thirty-eight food items- a weak gesture indeed toward meeting the high cost of living.
The acute housing shortage could have been relieved by removing the sales tax on construction materials, plumbing fixtures and electrical fittings. If that were done I am sure there would be more inducement for builders to get on with the much needed housing program. But the government continues to do nothing to reduce construction costs, with the result that our home building program lags dangerously.
Both the farmer and labour are disappointed with this year's budget.
Mr. A. R. Mosher, president of the Canadian Congress of Labour, has stated in a press release that income tax exemptions should have been raised to ease the drastic drop in "real income," and that the sales tax should have been abolished on clothing and construction materials. There are also protests, almost without number, from farmers
The Budget-Mr. McKay

and farm organizations regarding the failure of the government to realize the pressing need to meet the high cost of living by drastic cuts in hidden taxes and by an increase in the income tax exemptions. But the government does not appear to be unduly alarmed about these protests; otherwise something surely would be done about them. After its terrible blunder in removing price controls, the least the government could now do is to endeavour to redeem its position by removing taxes which bear most heavily on the consumers, particularly on those in the low income brackets. But the sales tax and the excise tax largely remain. Very little has been done to reduce living costs.
I believe that something may be said for maintaining taxes at a reasonable level in order to retire public debt. Those taxes should be collected from the people who are best able to pay them. Corporations and persons with high incomes are the ones best able to meet those obligations. Had the government retained the excess profits tax, which was removed last year, income tax exemptions could have been increased, all sales taxes abolished.
The burden which the great majority of Canadians bear in high living costs could have been materially lightened had the government brought down a "humanity first" budget, rather than one based on big business practice. It is indeed most difficult to reconcile the present attitude of the government to sales and hidden taxes, in the light of a statement made to this house in 1931, on June 4, by the late Colonel J. L. Ralston, who then protested against the higher sales tax being imposed upon the public by the Conservative government then in power. He stated on that occasion:
Yet as I say the tax has been increased from one per cent to four cent and it is being passed on to and paid by the only people who do pay- the consumers. It is the ordinary, everyday consumers, the men and women who are hard put to make ends meet, men who are out of work, who are now called upon to pay the extra amount in connection with the sales tax.
But the attitude of the government seems to have changed. The excise profits tax has been taken off big corporations, but the sales tax on most consumer goods still remains.
I believe that one of the main evils of Canada's economy, as identified by the Rowell-Sirois report, is the heavy dependence of the government on taxes which take no account of the citizen's ability to pay. The sales and excise taxes are perfect examples of this evil. They bear equally on rich and poor

alike, regardless of their income. Moreover, in hard times they discourage consumption, and hence production. In good times like the present they may not seriously retard the public demand for goods, but they definitely add to the cost of living and add to it inequitably. Sales and excise taxes simply add to the financial burden of every household in the country, and run counter to all the nation's efforts to put taxation on a sound basis.
Everyone hears and knows a lot about income tax but very few realize the import of Canada's hidden tax system. The income tax in 1947-48 placed $659 million in the federal treasury, but this represents only twenty-five per cent of the tax burden that Canadians pay to the federal treasury. The other taxes with the exception of the corporation and excess profits taxes, which realized $591 million during the last year, are much more onerous than the income tax, because they are largely hidden from view. The customs tax last year produced $293 million, excise taxes $464 million, sales taxes $372 million, and succession duties $30 million, and these together with several other taxes produced seventy-five per cent of .all federal revenue from taxes, or three times as much as the personal income tax. The total tax bill for the past financial year was $2,452 million. Based on a Canadian population of some twelve million, this means that for each person in Canada there was a federal tax of $204.33, or on the basis of a family of five a tax of $1,021.65. Of this amount, sales and other regressive taxes account for seventy-five cents of every dollar paid in federal taxes.
Few people realize the variety of these taxes. The federal government taxes building materials, plumbing equipment and manufactured commodities with but few exceptions. Automobiles, pianos, rugs, kitchen utensils, and even children's toys and clothing all carry the eight per cent sales tax.
There is a federal tax on long distance telephone calls, telegrams, railway, bus, air and steamship travel. If a broken clock or watch has to be replaced, you must pay an extra 25 per cent excise tax. The government, however, has seen fit to remove the tax on the lowly alarm clock, for which all early risers are thankful. A smoker who buys a pipe or lighter pays an extra 35 per cent tax over and above the eight per cent sales tax. Fountain pens carry the same tax.
Canadian troops during the war paid $1 for 300 cigarettes because they were tax free. In most parts of Canada 300 cigarettes now cost $5.25 which means that $4.25, or 28 cents a package has gone largely into the federal treasury.

The Budget-Mr. McKay
Children who buy chocolate bars are obliged to pay a 30 per cent tax, plus the eight per cent sales tax. The same applies to chewing gum. Soft drinks are subject to a 25 per cent tax, plus one cent per bottle, and there are huge federal taxes on tobacco and liquor which realize millions of dollars. With that I for one have no quarrel, because these are definitely classified as luxuries, and if the government requires taxes-and all governments do-these are commodities that could well stand the tax.
A cheque requires a minimum federal excise stamp of three cents, and one cent postage on a letter is a recently imposed federal tax. Coal, unless imported from Britain, carries 50 cents a ton excise tax, plus eight per cent sales tax, and when you pay your life insurance premium the federal government collects two per cent as tax.
If you furnish your house, the furniture and carpets include eight per cent sales tax; and electrical apparatus, including radios, electric stoves, refrigerators and toasters, are subject to an extra tax of 25 per cent. We must not forget the excise tax on matches, furs, toilet preparations, cameras and a host of other articles; and also the customs taxes which filched $24 per capita from our pockets last year, and have been reflected in the price of consumer goods.
Most Canadians will not quarrel with taxes on luxuries, but any tax on the essentials of life is unjust because it has no relation to ability to pay. Such taxes are the sales and excise taxes, largely hidden from view. These taxes bear most heavily on people with families, and substantially add to the high cost of living.
The manner in which the sales tax is collected gives rise to a further injustice. The eight per cent sales tax is placed on manufactured goods and is based on the manufacturers' selling price. When the wholesaler sells the commodity to the retailer, his markup is calculated on a price which includes the original tax. The same thing happens at the retail level, and therefore the tax actually paid by the consumer is much higher than eight per cent- probably nearer to twelve per cent. This tax should, have been wholly removed from the necessities of life in order to ease the burden of the high cost of living on people with low incomes. In view of the great surplus of $700 million this year, the government should have taken steps to remove the sales tax on essentials of life and on construction materials as well. Such a measure would have been antiinflationary and would have had a far-reaching effect on lowering price levels.
I also fed that the tax on chocolate bars, candy and soft drinks could have been
removed. Children, who are the great consumers of these commodities, ought not to be penalized, especially when the government has found its way clear to remove the amusement tax on night clubs and pari-mutuels. Last year the government removed the excess profits tax. This meant a loss to the treasury of several hundred millions of dollars. This tax ought to be reimposed, and with this increased revenue the, government would then be in a position to increase income tax exemptions to $1,250 for single persons and $2,500 for married persons, as is proposed in the C.C.F. amendment. Such exemptions are justified, if for no other reason than the increased cost of living in the past two years. The present exemptions are inadequate to meet the demands of the high price levels now prevailing.
I suggest further, in the interests of public welfare, that all hospital bills, doctor, dental and funeral expenses ought to be deductible from income tax. For the farmer who is finding it increasingly difficult to make ends meet, breeding herds ought to be recognized as capital assets, or at least a $500 tax exemption allowed on the yearly sale of livestock so that livestock production can be encouraged and maintained. I feel too, that in view of the biggest surplus on record the government could well afford to permit reasonable deductions from income tax for interest and mortgage payments on farms and homes if such mortgages were incurred prior to 1939.
Finally, in order to encourage farm and home ownership, I believe deductions of at least $250 a year should be allowed from income tax on the purchase of a farm or an urban home. I believe the adoption of the recommendations I have just made would do much to relieve the plight of the low income groups, and would improve the well-being of all Canadian citizens. The acceptance of such a program by this government would mark it as progressive, as a government more interested in human welfare than in currying the favour of the big interests.
Mr. JOHN R. MacNICOL (Davenport): Mr. Speaker, the hon. member who has just taken his seat began his remarks, as did others who preceded him, by saying the budget was so disappointing that the people with whom he has come in contact were greatly depressed. I am not going to take up any time talking about a matter that has caused so much depression among the people. I am going to try to do something that will lift the hearts of the people of Canada, particularly of those who live in the maritime provinces.
The Budget-Mr. MacNicol

I have a resolution on the order paper, in the discussion of which I would have said much of what I intend to say now had I had the opportunity of speaking on it. Since I shall not have that opportunity I think it is only right that I should withdraw the resolution. Therefore, with your consent, sir, and with the consent of the house, I ask that the resolution standing in my name be removed from the order paper.
I am going to base my remarks on a Canadian Press dispatch dated April 19 appearing under the heading "Survey of mari-times shows prosperity low". In the course of this article the statement is made that the per capita income in the maritimes is only from 63 to 78 per cent of the average throughout Canada. This is indeed very low, and I will try to present a program to change that from low to high. The maritimes are the forgotten part of Canada. They have endured great depression, greater than should have been their lot.
Hon. members who were on the rehabilitation committee in 1943 and who listened to the debates, and hon. members who read the minutes of that committee, were impressed by the great opportunities there are throughout Canada if we Canadians would only review the resources of the country as we should and make some effort to develop them. The committee members themselves carefully surveyed the minutes and made a number of recommendations, perhaps a dozen. Those dozen recommendations I will reduce to five, but the five will contain the meat of the dozen.
The first recommendation was that maritime capacity to produce electric current should be greatly increased and at the same time rural electrification should be expanded. The second was that maritime primary and secondary industries should be greatly expanded. The third was that the maritime marshlands should be reclaimed. The fourth was that bottlenecks obstructing maritime trade, such as lack of a bridge across the strait of Canso and lack of a canal across Chignecto isthmus, should be overcome. Lastly, it was recommended that maritime agriculture should be given the benefits now extended to western farmers under the Prairie Farm Rehabilitation Act. I am not going to discuss all these recommendations; I will take the first two.
I began to make inquiries in the maritime provinces which I visited three times for the purpose of ascertaining what holds back expansion of industry in that part of Canada, and the obstacles the committee thought should be removed in order to make for the expansion of maritime economy. The results of these inquiries I propose to give to the house.
At the outset I suggest that lack of expansion in the maritime provinces as compared with the rest of Canada is largely due to the lack of cheap electric power. That statement is supported by the Saint John reconstruction committee in their brief, which states clearly that in the first place expansion in the production of electricity is necessary to the expansion of industry, and secondly that a surplus of electricity is coincident with and precedent to industrial expansion.
After making an exhaustive survey I am convinced that if they had cheap electricity, with their splendid resources, they would expand much more rapidly than they have done.
One might ask how they compare with the central provinces in the production of electricity.
Electricity itself comes from several sources, or can be produced from several sources: first, water or hydro power; second, coal; third, oil; and fourth, gas. It is not my intention to deal with the last two, but only with the first and second, namely, hydro power, and power produced by coal.
It might be asked how the maritime provinces compare with the central provinces in capacity to produce power from water. Well, the two central provinces are happily situated. They have magnificent rivers, with a firm and substantial flow; when they make dams on the rivers they have a considerable height of water in the penstocks at the power houses from which they are able to develop a large quantity of cheap power, and their own advancement has been largely the result of cheap power.
I know from long experience in industry that the province of Ontario-and the same is true of the province of Quebec-owes its great industrial expansion to its capacity to produce cheap hydro power. In the maritimes they are not similarly situated. I do not know whether the time will ever come, but until someone proposes a method of developing power in the tidal estuaries, the maritimes have only one real hydro-electric power, namely that on the Saint John river at Grand Falls; and that is greatly handicapped by the lack of reservoir capacity. The reservoir capacity behind it is small, and the result is that while perhaps today, when the spring freshets are running down the river, they can produce 60,000 horsepower, in July or August it will be down to 30,000^
You cannot expand industry on such hydro development. But the maritimes have what Ontario and Quebec have not, namely, very large resources of coal, and today we can produce electric power just as cheaply from coal as from hydro power. There are those

The Budget-Mr. MacNicol
who will not believe that; nevertheless it is true. The Ontario hydro commission itself gives evidence of that, because at this moment it is building or planning to build a gigantic
150,000	horsepower plant in the vicinity of Windsor, Ontario. I have discussed the subject with their engineers, and they say that with proper coal and the latest modern high-pressure high-temperature boilers, using pulverized coal and turbo-generators, they can produce electricity as cheaply from coal as from water.
The maritime provinces have very large resources of coal, and I am sure that those resources can be their salvation in the production of power if the program I shall announce is carried into effect. And from that on, with cheap power and a surplus of power which they can easily have, they would invite industry in. I shall mention some examples of the industries I have in mind.
For quite a few years after my first travels in the maritime provinces I was convinced that unless they had cheap electric power there could not be much greater progress for them than that which they have so far attained. But being convinced that by means of their coal they can have cheap electric power, and a large surplus of it, I am equally convinced that the maritimes, if they receive the support they should receive, the support which I am going to suggest they should receive, will get on their way towards industrial expansion.
At least ten years ago, when this idea first presented itself to me, I began making surveys. At that time the whole of central and southern England was being revolutionized through the production of electricity. In England they had no hydro power of any consequence, and so they began to develop the power they require by production of electricity from coal. When I was in England making the first initial survey in relation to the production of electric power from coal, I found many new electric plants, with the most modern type of boilers. They were high-pressure high-temperature boilers, using pulverized coal which is blown in just like oil. I have seen a great many installations using pulverized coal, and you could not tell it from oil when you looked into the furnace. They had turbo-generators. With this equipment the whole industry of electric power production has been revolutionized, with the result that in every city in southern England-around London and for fifty miles out of London-you will find thousands of new industrial plants. The same thing applies to Manchester, Birmingham, Oldham, Leeds, 5849-276
and a score of other cities I visited to inquire into their production of cheap electricity.
All their power plants are connected together by what is called a grid system, and through their connections with the power plants of the country, they have 5,500 miles of main line. grid. Today over in England their development staggers everyone who happens to have the privilege of seeing it. That power system does not cover the whole of England, and it is not the only one, but it is rapidly expanding. It is using 26,000,000 tons of British coal yearly. If we can expand maritime electricity production from maritime coal, it would at once provide a fairly good permanent home market for their coal and would take up a great deal of slack.
Following my return from England I pursued that study extensively and have been doing so for quite a number of years now. In the course of it I have visited a large number of electric power plants. Some of them were smart, modern power plants, of the new type which is called an outside-built plant. They were delivering electricity at a low price per kilowatt, as I will show later. I am satisfied that if we can assist-and that is what I intend to propose-the maritime provinces to equip themselves so that they can have an abundance of cheap electricity, they will be on their way much more rapidly than we dream of. There is no reason whatever why they should not expand like every other part of Canada, or of the United States, England or elsewhere, that has cheap power. There is no reason under the sun why they should not expand or why their industrial fabric should not expand. I am convinced that it will.
Returning from that survey in England, I travelled across tire United States where there were these modern power plants using coal. I discussed the matter with the engineers to ascertain the cost of production of electricity in a coal-fired plant as compared with water, and I found it satisfactory. I am going to set out to show that in the modem coal-fired power plant, burning powdered coal-which, as hon. members know, is blown into the furnace -and with turbo-generators, electricity can be produced on the basis of one kilowatt hour per pound of coal used, 13,000 B.T.U.'s and up. The maritimes are well supplied with coal. In a few minutes I will produce evidence of that. But to continue with my reference to the survey which I made in connection with the cost of producing electric power from coal: everywhere I found that it ranged from possibly 0-9, perhaps 0-92, 11 or 1T2 pounds of coal per kilowatt hour to as low as 0'9 pounds of coal per kilowatt hour. That is cheap electricity. We cannot do any better anywhere.
The Budget-Mr. MacNicol

With electricity that cheap, I am sure the maritimes would go ahead rapidly.
There is nothing that gives me so much heartache as to see what is happening in the maritimes. It is staggering to read daily in the press of the large numbers of fine young men and young women, the flower of the maritime provinces, moving away, many of them to the United States, many to the central part, of Canada. Of course we are glad to have them here, but the majority of them should have the opportunity to earn a livelihood in their own provinces and to build up their own part of the country. If we cannot build up those provinces, it will be just too bad for the influence of the maritimes in the central part of Canada.
Continuing the investigation, I found that there was a great power plant-and it is only one of the many that I visited-at Michigan City, on the way to Chicago. If you go by the Toronto trains-I suppose by C.P.R.-you will pass that gigantic plant at Michigan City, with its many smokestacks. It has a capacity of 100,000 kilowatt hours of power. It powers the whole of southwestern Michigan and the whole of northwestern Indiana. The engineers will tell you that the power is produced there, on the average, on the basis of one kilowatt hour per pound of coal. That is mighty cheap power.
Some years ago those interested in the subject made a series of investigations which were referred to as the steam-station-power-costs investigation. Many were made. In the fourth investigation along that line, according to one of the editors of the Electrical World, a prominent electrical magazine, the average found was 0-92 pounds of coal per kilowatt hour. If therefore I base my argument for the maritime provinces on the basis of one kilowatt hour produced from one pound of coal, I am doing it on good authority.
As I said earlier, I am backed up by what the hydro are planning in their new plant at Windsor. They would not do it if they did not know they could do it on that basis. So I will say again, and I do not believe it can be repeated too often, that the salvation of industrial expansion in the maritimes-and it must be greatly expanded in order to keep its own folks at home and give them jobs- is the using of maritime coal to produce electricity. There is any amount of coal there, and the Lord has situated it conveniently. There are four main areas of coal. The largest and most important one of course is on Cape Breton island. According to our own bluebooks they have approximately two billion tons of No. 1 coal rated at 13,200

B.T.U.'s, which is a high B.T.U. capacity. Today they produce a little over four million tons of coal. They told me down there that if labour conditions were what they should be, or what they think they should be, or what the hon. member for Cape Breton South (Mr. Gillis) thinks they should be, and if they had better equipment in the mines, they could produce much more coal. I believe they can. If labour conditions were satisfactory and they had efficient machinery for taking the coal out of the mines there is no reason why they should not produce more coal. If they could produce six or seven million tons of coal, that would be a great advance in the maritime economy, because after all coal is their greatest source of revenue.
The next centre is the Westville, New Glasgow and Stellarton area, where I believe they produce about 500,000 tons a year. That coal is 12,500 B.T.U.'s, still a very high grade. The next area is in the riding of the hon. member for Cumberland (Mr. Black), at the Springhill mines, where they produce 600,000 tons a year. I have been there and looked over the plant carefully. That is a very high grade coal, up to 13,600 B.T.U.'s. Close at hand are the Joggins mines where they produce about 250,000 tons a year of 12,000 B.T.U. coal.
In the province of New Brunswick they have only one coal area, at Minto, where they have in reserve approximately 100 ^million tons of
12,000	B.T.U. coal. All maritime coal is conveniently situated on the mainland for transportation. In Prince Edward Island they have no coal, but they have one splendid harbour. They have more than one harbour, of course, but at Charlottetown, represented by the hon. member for Queens (Mr. McLure), they have an outstanding harbour. In that harbour they have a power plant; and perhaps I had better begin there and then go back around the rest of the maritimes. They have at Charlottetown a fairly modern power plant located on the harbour. Ships can come right up to the dock and unload, and with a simple method of taking the coal from the ships to the power plant they would have to all intents and purposes a dockside plant which would be as good as the best. Today that plant produces something around 8,000 to 10.000 kilowatt hours. They are modernizing that plant, and by next year or the year after I believe they will be producing 15,000 kilowatt hours. That is a reasonable capacity for the island, at present.
On the land side the largest power plant is at Minto, where they produce 23,460 kilowatt hours. That is large for the maritimes, but small in comparison with the hydro plants up

The Budget-Mr. MacNicol
this way, and also small in comparison with the big plant which is to be erected at Windsor, Ontario, to burn coal. Then at Maccan, Nova Scotia, they have a really smart little plant, which I went to see a couple of times. It is much like the electrical plants I went to see in the United States, and it is now producing about 17,500 kilowatt hours. I was glad to learn that they are increasing the size of the plant to double the production, and that within a short time they will be producing
35,000	kilowatt hours. I hope to live to see the day when that production will be doubled again, in view of what I may say later as to the possibilities of expansion. They also have a fine power plant at Halifax, and two splendid plants on Cape Breton island.
I am going to suggest, Mr. Speaker, that the great lack in the maritimes has been a firm extra supply of cheap electric power. That is why they have not expanded. It is not the fault of the present power plants. I have nothing but the best to say about the maritime power plants I have mentioned, but I want to see their capacity doubled. I am convinced that another 25,000 kilowatt hour plant at Halifax would give that city the opportunity to expand to which it is rightly entitled. Another 25,000 kilowatt hour plant on Cape Breton island would permit that thrifty part of Nova Scotia to expand. Nothing will induce expansion of industry like extra power. As I said at the beginning, that is how Ontario has expanded; we have always had the power.


Mr. McCANN:: We do not have it now.


Mr. MacNICOL:: We will have it within another year, when the hydro-electric power commission will turn into the wires an additional million and a half horsepower from the gigantic dams being built up the Ottawa river. In addition, in two years time we will have available the big power plant to be constructed at Windsor. Therefore if we do not have the power now we soon will have it. The hydroelectric power commission is a concrete example of the result of the production of a vast number of kilowatt hours of cheap electricity distributed throughout the province of Ontario. No one knows better than the Ontario hydro-electric power commission that the expansion in this province has resulted from an abundance of cheap electricity; and this is also well understood in Quebec.
I believe I had come to the suggested new power plant for Cape Breton island. I should like to see another 25,000 horsepower plant in the New Glasgow-Westville-Stellarton area. They are almost up to capacity now, and one big new plant would meet their additional needs at the moment and leave a surplus for 5849-276J
expansion. I also believe both the Minto area and the Saint John area in New Brunswick should have new power plants of not less than
25,000	horsepower capacity. There should be a new plant at Moncton, another at Bathurst, perhaps one at Campbellton in the north, and one down in the southwestern portion of New Brunswick. While I am at it, I believe I left out the southwestern portion of Nova Scotia, which generation after generation, has been more or less standing still, largely because of lack of power. A plant should be erected there. As Nova Scotia has the coal; why should it not have the power?
Now I come back to Prince Edward Island. I mentioned the power plant at Charlottetown. There is another small plant at Summerside with a capacity of about 1,500 kilowatt hours. A plant of 25,000 horsepower capacity at Charlottetown would permit the distribution of power throughout the island, and I am sure production would expand like nobody's business. I have been from one end of the Mand to the other. The power situation at Charlottetown is fairly good at the moment, but there is not much for the rest of the island. They must be given a chance to expand and develop their own resources, to produce in their home plants; and nothing will bring about that result better than an abundance of cheap electricity. I urge as strongly as possible, that these suggestions be adopted, because I am convinced that only by some such program can the maritime provinces expand. Their primary and secondary industries can be greatly enlarged, and that is essential if they are to expand economically so that their people may have something to do at home.
You may ask how all this has come about. Well, everywhere I went I asked engineers, "What would you recommend that the federal government do?" and I am going to tell you what these engineers suggested. Probably there will be other suggestions, some perhaps better than these; but the first one given me was that the federal government should advance one-third of the cost of that power program in the maritimes and one-third of the cost of rural electrification. That is what we did here in Ontario. We paid one-third of the cost for protection against floods on the Grand river, which amounted to a large sum of money. It is a suggestion which might be worth considering. In the case of the maritimes, the government could do what they are doing in the western provinces. I shall refer to that in another debate.
Next, they could make an outright capital grant as is done in western Canada in connection with conservation of water and re-
434;
The Budget-Mr. MacNicol

clamation programs. In western Canada outright capital grants are made under P.F.R.A. for the building of dams and dug-outs, and the same thing could be done in the maritimes.
Next, the federal government could lend money to build new power plants or to modernize or make additions to present large plants, including interlocking provincial grid transmission systems, at a rate of two per cent, repayable in forty years. Which one of these plans would be the most attractive to maritimers, I do not know.
Next, pay a subsidy of one mill per kilowatt hour for ten years for power produced and sold, or its equivalent, $1.25 a ton on maritime coal used in the production of electricity and its distribution throughout the maritime provinces.
There is a program that will bring results. I do not look upon it as being a mere matter of cost, because the federal government would reap a return in the form of sales and income taxes, and after a while in the form of succession duties, a hundred times more than what they would put into it. Aside from that, it is imperative that we do something to assist the maritime provinces. The Canadian Press dispatch which I quoted earlier refers to the average income in the maritimes as compared with elsewhere. Stop to think what it would mean if we could bring the average income in the maritimes up to the average income in Ontario.
I do not want anyone to think that in talking about the maritimes I am not talking for Davenport riding, Ontario. If such a program were carried out, Davenport riding, which I have the honour to represent, and Toronto and Ontario and Quebec would profit. As I said a few moments ago, one of the immediate results of the new power plant at Maccan was the building of a new salt plant at Amherst. This is a very fine plant employing 100 or perhaps more men and women. It is well worth going to see.
When I went through it I examined the machinery to see where it came from. I found that some of the machinery came from the fine city of Brantford. I found that the radiators were from the plant in Toronto in which I worked for many years. The evaporators had had been made in Owen Sound, in the riding of the hon. member for Grey North (Mr. Case). Other machinery had been made in Hamilton, and much of the electrical equipment came from Sherbrooke, Quebec. This shows that that new salt plant brought business to Ontario and Quebec.

I do not know of any better way by which I can help my riding. I never talk about my riding, because I want to see the country opened up. I know that, as the country is opened up, the factories in my riding will get something to do. Just recently an announcement was made that another new plant is to be erected in Amherst by the Bendix Corporation at a cost of S9,000,000, to employ 750 people. I say without fear of successful contradiction that if cheap power is made available in the maritimes, along with proper means of transmission throughout the length and breadth of the provinces, those provinces will expand as they have not expanded since confederation.
If anyone else can tell me of any other plan that will put the maritime provinces on their feet I should like to hear it. I know that Ontario and Quebec have expanded greatly because of their cheap power. I spend my time in travelling and I try to do what I can to help Canada. I know that as the west expands, as the maritimes expand, they will order materials from Ontario and Quebec. We will get our part of it. We should all go along together. One part of the country cannot be prosperous with other parts not prosperous.
I have done my best on this occasion to present a program which, on the basis of many years of travel and survey in England, the United States and Canada I am convinced will bring about the economic rebuilding of the maritime provinces on a scale never dreamed possible.


Mr. P. E. WRIGHT (Melfort):: Mr. Speaker, I should like to compliment the hon. member for Davenport (Mr. MacNicol) upon his excellent talk on the maritimes. Sometimes Toronto is accused of being selfish, but we can never accuse the hon. member for Davenport of that. He is always thinking of other parts of the country, for which attitude he is to be complimented.
Many hon. members who have spoken in this debate have prefaced their remarks by saying that the budget is a disappointment.
I do not think it is a disappointment; I think it is exactly the type of budget we could expect to get from our present Minister of Finance (Mr. Abbott). I do not think the people of Canada expected to get water out of a stone, and they did not get it in this budget.
However, the Minister of Finance must be realistic. I think it is time that we had realistic people as ministers of finance in this country. The minister is reported on page 4063 of Hansard as saying:
I believe that all parties in this parliament and most Canadians share the view that the

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national budget is no longer merely a matter of the government accounts that should be balanced every twelve months on some financial rule of thumb. We view the national budget now as an integral part of the nation's business, influenced by and having an influence upon the state of employment, income and prices.
Again he states:
This government and this parliament must accept a considerable measure of responsibility for influencing and, indeed, directing economic trends in so far as that can be done within the framework of our political and economic principles. Were we only a small municipality, unable to influence the mighty economic forces determining the prosperity of our citizens, it would still be wise for us to look further ahead than this year and to put something by at present.
I think that is a realistic point of view_ to take. In the past we have been like the ostrich, burying our heads in the sand and trying to make out that budgets did not affect our everyday life. However, today we recognize the fact and face up to the responsibility that budgets have a real influence and that they can be used to balance our economy and maintain a proper relationship between consumption and production in our country. Our hon. friends to the right in the Conservative party say that this is too great a power to be given to the government. However I think it is only the people's representatives who should and must accept that responsibility.
In my opinion the minister was wise in budgeting for a surplus at this time, although I do not agree that that surplus should have been the amount that it was, some $670 million. I think this year and next year the minister would be justified in budgeting for a surplus of probably $500 million. The minister should be straightforward in the matter. He should have given to parliament last year a more correct estimate of what our surplus would be.


Mr. ABBOTT:: He did the best he could.


Percy Ellis Wright: It seems to me that there was too great a difference between the estimate of $190 million and the $670 million which we attained. This year we budgeted for a surplus of some $489 million. We hope that is more nearly correct than last year's estimate, and it probably will be.
Surpluses are not something that we should be ashamed of. As businessmen or farmers we are rather proud if we get a surplus. That is what we are working for, and government surpluses should be viewed in somewhat the same light. But there is a difference between a government surplus and a surplus which the average individual or business attains through individual effort. The government gets it surplus through the efforts of the Canadian people as a whole, from their industry and from the taxes which the government collects from them as a result of that industry. It is not the surplus that matters so much as how you attain the surplus and from whom you get it, and I am afraid that is where the minister and I shall have to part company, because I cannot agree with him in some of the methods by which he has accumulated his present surplus.
I think we have come to agree in Canada that direct taxation is fairer than indirect taxation. People should know where the taxes are coming from. In 1946-47 the minister collected by direct taxation $1,412,156,000, and in 1947-48 the estimate was $1,286,878,000, or a decrease of some $125,278,000. On the other hand in indirect taxes, in 1946-47 the minister collected $1,022,129,000, and in 1947-48 $1,134,325,000, or an increase of $112,196,000.
The minister would have been better advised had he collected more in direct taxes and less in indirect taxes, because direct taxation is a fairer means of taxation. But the situation is even more disturbing when we analyse the figures to determine just which direct taxes are being increased and which are being decreased.
In the personal income tax field, for instance, the minister collected in 1946-47, $694,530,000 and in 1947-48, $659,828,000, or a decrease of roughly $40,000,000. On the other hand, in 1946-47 he collected, through the excess profits tax, $448,698,000, while in 1947-48 he collected only $227,000,000. The excess profits tax was discontinued as of the first of January of this year. The excess profits tax has yielded a lot of money to the tax funds of this government during past years; in round figures, it yielded in 1943-44, $468 million; 1944-45, $465 million; 1945-46, $494 million; 1946-47, $448 million.
The minister in his budget-and the other members of the government have so stated- said that it was necessary to remove this tax to encourage production in this country, that when we wanted to increase production we had to give some incentive to industry to expand in order to obtain that increased production. If it is necessary to give industry an added incentive to produce, I think it is also necessary to give the farmer's of this country some added incentive for increased production, and to give the worker in the factory some added incentive to put in a little more overtime to increase production. But the minister has not given the same incentive to these primary producers as he has given to industry by the removal of the excess profits tax.
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If he had raised the income tax exemptions for the lower income groups to SI,250 for a single person and S2,500 for a married person we would have got a great deal more production. I know there is no single factor in the agricultural areas of Canada that has held up production to a greater extent than the income tax. Whether we like it or not, the farmers, as hon. members who have contacts with our agricultural areas well know, are saying that they are not going to milk cows to pay income tax, and that they are not going to feed pigs to pay income tax. Unless some incentive is given to the primary producers in this country to increase production, we can expect a rising cost of living because of the scarcity of essential food products. The Minister of Finance might very well have considered giving some exemptions to the primary producers engaged in the production of foodstuffs and to the working men who are employed in the factories and producing all our goods and services.
In my opinion the government is itself to blame for inflation in this country: first, by removing controls; second, by removing the excess profits tax, and at the same time encouraging the reinvestment of millions of dollars which might have been paid in taxation, in expenditure on new plant and equipment by allowing double depreciation on new and reconverted plants and equipment. The minister admitted in his budget speech that it is this capital expansion which is taking place in Canada that worries him, and yet the government deliberately set out to encourage this capital expansion. I have in my hand a government pamphlet entitled "Encouragement to Industrial Expansion in Canada- Operation of Special Depreciation Provisions -November 10, 1944-March 31, 1949." It is published by the authority of the Right Hon. C. D. Howe, Minister of Reconstruction and Supply. It is an enlightening pamphlet and gives the government's reasons for allowing special depreciation. It says at page 22:
The significance of this income tax deduction, frequently called "double depreciation," was that it permitted companies, while profits and taxes were high, to postpone the taxation on a portion of their profits to a later period when it was understood that taxes would be lower. The purpose of this provision was amplified by the Minister of Finance on June 26, 1944. in his budget speech: "First, it will allow the taxpayer to recover a part of his capital whenever earnings are good but will still leave all the income or profit actually realized from the venture over its whole life subject to taxation; second, it will allow him, in respect of such new investment carried out at a time when the government has declared the conversion and expansion of industry to be desirable, to transfer some of his income from a period when war-

time tax rates may still be in effect to a later period when he may expect normal taxation to be lower. To this extent, it will relieve such investment for postwar purposes from such wartime taxation of business profits as may still be in effect at the time the work of conversion or expansion is carried out.
The minister goes on to give certain examples of just what this will mean to the taxpayer who is expanding his plant and equipment. He said:
To take three companies each having an income before depreciation of $100,000 in 1945 and each having established standard profits of $50,000:	The first company having no investment in a new capital project -would pay a gross tax (income and excess profits tax) of $65,000, including a refundable tax portion of $8,333, or a net tax of $56,667. The second company making an investment of $250,000, of which $100,000- was for a building and $150,000 for machinery and equipment, would pay, after allowance of normal depreciation rates on new investment, a gross tax of $4-5.000 or a net tax of $40,667, after deducting the refundable tax portion of $4,333. The third company making the same investment expenditures and being permitted to charge double depreciation would pay -a gross tax of $25,00-0, including a refundable tax portion of $333 or a net tax of $24,667. The third company would thus be paying $1-6,000 less in taxes than the second company, and $32,0-0-0 less than the first. These amounts do not reflect the full savings by the investing companies using varying depreciation rates because some of the pro-fits, the distribution of which may be postponed, will be subject to taxation at a later date.
This provision really meant something to these companies, and as a result of that we find that the companies themselves have taken advantage of the provision to the extent that in 1945 they made application for and were granted $232 million in depreciation for the period of operation, November 10, 1944, to March 31. 1949; in 1946, $377 million, and in 1947, $845 million, or a total of $1,392 million, after cancellations, reinstatements and adjustments had been made. The house will notice that there is a very large increase during 1947. Naturally those companies which had excess profits in 1947, and which in the normal course of events -might have had to pay 85 per cent of these excess profits in -taxes, were anxious to expand their plant and equipment. because they knew the government had already announced that the excess profits tax was coming off at the end of 1947, and if they could keep that money out of the hands of the government for one year they knew they would be safe. Therefore naturally there was a tremendous increase in applications for double depreciation on plant and equipment during 1947. I say to the minister that was one of the main reasons for the rise in the

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cost of living and the scarcity of materials that we had in Canada in 1947, and that we have in 1948.
The minister did not give the same concessions to the house builder; he did not give the same concessions to the farmer who wanted to buy land or to expand his plant as he gave to these companies in the class which I have just indicated. Let me give a little further analysis and show the size of the companies which received this special depreciation. On page 45 of this booklet the following appears:
Smaller projects involving expenditures of less than $100,000 were most numerous. They made up 77 per cent of all applications received, but involved' only $105 million or 8 per cent of total expenditures approved. On the other hand, 3 per cent of all applications were for projects of $1,000,000 and over, and comprised $815 million or 58 per cent of all investment expenditures contemplated. These figures indicate that the major part of the industrial investment program is due to the expansion of a small selected group of large industries.
It may be all right. I believe expansion is necessary in Canada, but I do not think the larger units, which quite possibly could have financed their own expansion, should have been given these special privileges with regard to depreciation. The same thing applies to the regions benefited. On page 9 of the booklet the following appears:
Ontario anticipates the largest amount of investment projects with approved special depreciation,. $605 million. Quebec is next in line with $509 million, followed by British Columbia with $165 million, the maritime region with $65 million, and the prairie region with $48 million.
Again the whole program has been one of centralization, centralization not only in regions but in the hands of small groups of tremendously large industries, which they have been able to build through special depreciation allowed by the government. That is where I disagree with the minister. I disagree with him in the method by which we attain these surpluses, and in the method of taxation that we are using in this country. It is time we recognized that small business has a place in Canada; that small business is the backbone, and must be the backbone, of our economy. Until we give it an equal opportunity with large industry, through the taxation policy that we follow in this country, then I am afraid that small industry cannot develop, nor can we spread our industries into the areas about which the hon. member for Davenport has just spoken. We should be able to distribute our industry more in Canada than is being done at the present time. It
is my opinion that the government, through its fiscal policy, can have an influence in the distribution of industry.
The government needs to adopt some new method of giving encouragement to production and the ownership of houses. If the government wishes to do that it might very well give consideration to an exemption of up to $1,000 on capital invested in a house or in a farm in this country. Thousands of our young men have come back from overseas and have settled on farms, some through the Veterans' Land Act and some on their own. Because of our present system of taxation, it will be almost impossible for these young fellows to pay for their farms. It is almost impossible for the average workingman to pay for a house because of the high cost of construction today, and that high cost is the result of the government's policy. One of the reasons for it is the government's policy of special depreciation, whereby large industries are going out and bidding for every bit of the available material in this country to use in the expansion of their own industries in order to take advantage of this special depreciation.
Let us be fair; let us give to all groups in this country an equal chance. That is my main criticism of the budget. I think the budget should be used as an instrument of fiscal policy, an instrument to give to all the people of Canada an equal opportunity.
Mr. HARRY R. JACKMAN (Rosedale): Mr. Speaker, in the two budgets which the Minister of Finance (Mr. Abbott) has brought down he has been very fond of making records. In his first budget he brought down a surplus the like of which we had not seen in Canada. The budget which he brought down last Tuesday was the most disappointing budget in our history.
My colleague the hon. member for Peel (Mr. Graydon), when he was home over the week end, was hailed by one of his constituents who asked whether the hon. member might put questions on the floor of the house. When my hon. friend replied "Yes", his constituent said, "Will you ask the Minister of Finance when the budget will be brought down?" Another man, one of my own constituents, said that this budget which we saw last week reminded him very much of the paraphrased quotation, "Abandon hope all ye who live and labour here."
During the war years the Canadian people were willing to stand any financial strain that might be put upon them and accounted it but a small sacrifice. But I do not suppose that any people in any other country during the war years had suffered such a tremendously
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accelerated rate of taxation as did the Canadian people. From 1939 to 1944 our taxes rose from $500 million to over five times that amount; and now, with the federal government taking twenty-three cents out of every dollar of the people's earnings, the great question which this budget poses is this: Is Canada, by a silent revolution, rapidly becoming a bureaucrat-controlled state, or is individual freedom to survive? Revolutions can be silent as well as violent.
The second question is whether this is a production budget, or whether the high rate of taxation is destroying incentive, thus feeding the fires of inflation and taking bread out of the mouths of our people.
Contrary to the impression which the minister wished to give, taxation has decreased by an insignificant amount in total, and the rate of taxation is also very little reduced. The total amount to be taken in federal taxes, $2,384 million, is now almost as great as was the national income in 1933, when it amounted to $2,632 million. It is an amazing situation, to think the federal government is now taxing as much as the total national income was in 1933, and it is particularly amazing when we remember that the government creates nothing. The present budget offers no relief whatsoever in the personal income tax bracket, and it represents a reduction of only three per cent in total taxation from last year s extraordinary burden, when an unexpected surplus of $670 million was realized, or an amount equal to $55 per head for every man. woman and child.
Notwithstanding this unexpected windfall, the government refuses to reduce taxation. Surely the government is on the defensive, for there is not a taxpayer in the country who believes that its policy is either fair or sound.
_ Last year the Minister of Finance, with immodest pride, boasted that he had produced not only the largest surplus but a surplus which was equal to the aggregate of all the surpluses since confederation. This year he might equally have boasted that he had brought down a surplus which included not only last year's but all the surpluses of foregoing years since Canada was a nation. But he was singularly silent, because he knew that, while people were asking for bread, he was going to hand them a stone.
Everyone has been concerned with the rising cost of living. The government looked for a scapegoat and instituted the prices committee. As was suggested when the resolution was introduced, they have not called as a witness either the governor of the Bank of Canada or

the deputy minister of finance, who could well explain the inflationary background of rising prices due to the government's war fiscal policy. Nor have they sought to discover the influence of taxation on the cost of living, which would be a proper assignment for that committee.
All taxes, including personal income taxes to some extent, tend to find their way into the cost of the things we buy. Imagine, then, the influence on present-day costs of a government which takes in taxation alone $2,384 million out of a total national income of $10,820 million, or, as I mentioned, twenty-three cents out of every dollar earned. Put in another way it means that Mister Average-Canadian is working ten hours for Ottawa out of every forty hours he is employed. Add to that provincial and municipal taxes, and Mister Average-Canadian probably finds himself working a total of one and a half days for the state, leaving only three and a half days to meet his direct family expenditures.
The surplus last year was equal to the total of personal income tax payments by all Canadians, and yet not even a gesture of thanks was made by this government. The rate of taxation is still extraordinarily high. In the personal income tax field, after the minimum and niggardly exemptions, the first $100 earned is taxed ten per cent; when $500 is earned the rate is twenty per cent; if $8,500 is earned the rate is thirty-five per cent; and when $17,000 is earned the rate is fifty per cent, from which poiDt it rises to eighty per cent, and if there is investment income in excess of $1,800, there is an additional four per cent.
The smallness of the exemptions and the rates of taxation speak for themselves, and one need hardly refer to the fact that the rate at the peak of taxation a few- years ago was but a few per cent higher than what we are faced with today. It suffices to say that in the peak year of 1944-45 income taxation produced $768 million, and in 1947-48, $660 million, or a reduction from the wartime peak of a mere fourteen per cent. Whatever the reductions may have been, they are a far cry from 1939, when the total personal income tax taken by the government was $61,000,000. We still have an increase of 1,100 per cent and are apparently not entitled to any reduction.
The minister mentioned that he was budgeting for production. The facts indicate that he is budgeting for a continuance of the high cost of living, which is not to be confused with inflation. How any government thinks it can extract twenty-three cents from every dollar of national income and not force prices

The Budget-Mr. Jackman
up is beyond imagination. The fact that the government have just removed the eight per cent sales tax on certain processed foods is an indication that in their heart of hearts they know that taxation is directly contributory to the high cost of living.
In view of what I have said, what does the minister mean when he said there have already been three substantial reductions in the personal income tax, and it "offers no serious impediment to work or initiative-at least none that could be removed by any further reasonable reduction". His qualification would seem to admit that any taxation interferes with incentive and therefore with production.
1 think he is right up to a point, but he has lost his sense of balance when it comes to calculating the effect of restoring even a moderate amount of incentive. Incentive-destroying taxes are the greatest sin against the financial integrity and the productive efforts of our country. If given reasonable incentive and rewards, Canadians will work like beavers preparing for a long winter.
One of the amusing and amazing things about the minister's budget is that the extraordinary amount of surplus last year, $670 million, was unexpected. But once having got it into his hands, he finds a thousand and one reasons why he should keep it there, and why this method of painful extraction should be continued indefinitely.
There is nothing new in the idea of a cyclical budget. It has been practised by people with common horse sense for at least five thousand years. Now, however, the individual is not to be allowed to keep what he earns, but the state will keep it for him. The state, not the individual, will provide for the proverbial rainy day. It never has in the past.
The unexpected size of the surplus is a reflection on the government's estimates and the whole theory of a managed economy. One would think dire calamity would happen if the government did not retain last year's surplus and budget for another one. Once having gotten a surplus, even by chance, and finding that the people have not been forceful enough in asking for some relief, the government have thought up ways and means of keeping from the people their own money. The government have therefore trotted out the idea of cyclical budgets on the basis of taxing for a surplus in good times so that they can spend more of your money than they take away from you in bad times. In the meantime the individual is lost sight of.
Are Canadians not to be trusted to look after their own earnings, or must the government do it for them? Who built Canada 5849-277
up? Was it a race of foolish, improvident people or a race of pioneering, hard-working, thrifty, God-fearing people? Money will burn a hole in the government's pocket just the same way as if you take a spare $100 out of your bank and carry it around loose in your pocket.
Are we to build up the state and forget the individual? Never can you have a prosperous state without a prosperous people. Do Canadians want the state to look after all their housekeeping? Do men and women want to rely solely on the state for their jobs and for their old age? No, they want an opportunity to provide for themselves. They do not want to be spoon-fed like a baby, but rather they want a chance to manage their own affairs like men. Anyone who has been familiar with government spending knows that the individual usually obtains much better value for every dollar spent than does some government agency with its tremendous overhead and its lack of regard for the sweat and toil which savings represent. It is high time that the reins of government were taken out of the hands of a bureaucracy and were returned to parliament and the people.
No consideration was given to allowing the wage earner or the farmer,-again with his own money-any relief to meet the rising cost of living. With an amazing and unexpected surplus, the least that might have been expected was some increase in the present tax exemption levels of $750 for a single person and $1,500 for a married couple. It has always beggared the imagination of the speaker that any government should place a direct tax which lowers the standard of living below the minimum level to which Canadians with their skill and resources are entitled. With the cost of living increased from 130 in April, 1947, to 153 in 1948, or eighteen per cent, one would have expected that a trustee of the people's money would afford them some small measure of relief, despite three trifling reductions since the peak of wartime taxation. Perhaps a change of trustees is long overdue.
The ability of the government to concede and the need of the people for some increase in tax exemptions are so clear that one can only surmise that any reasonable government would have been willing to grant some concession, had it not been for an administrative bureaucracy that just did not want to go to the trouble and bother of changing the income tax forms.
The only managed economies which we have known in recent times were the national socialist regime under Hitler, the fascist
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corporate state under Mussolini, and communism under Stalin. Once you put the money managers in the saddle, their every excuse for failure is "give me a little more power; let me tighten the reins a bit more and use a little more severe bit in the mouth of the once gallant horse." Finally, t'he animal is completely tamed because it has lost its spirit; but it does not win any more races and it does not perform in the way it used to. The spirit of enterprise is lost and a general lowering of the standard of living is t'he result.
Surely this continent has seen enough of managed economy when the Roosevelt pumppriming experiment was unsuccessfully tried in the United States, and billions of dollars were thrown away in an attempt to get the United States economy moving. Let me tell the minister that all the cyclical budgets in the world and all the pump-priming in the ocean are not worth a nickel as compared with the force of men's fears and hopes.
The minister talks about iuflation and how his present action in denying the people what is rightfully theirs is best for them. The candy, which is not the minister's candy after all, is to be handed out one stick at a time and the child is not allowed to have the whole bag in his own possession. But the minister overlooks the fact that he himself may lose the bag. The 'house might have been more interested if the minister had explained that the government itself is responsible for inflation; that inflation is due to nothing more or less than the wartime fiscal and monetary policy of his government; and I am not criticizing him at the moment for that. He might also have pointed out that too much money is just as inflationary, whether spent by an individual for something useful and where value is received, or whether spent by the government for something likely a good deal less useful and likely where value will not be received. In an interesting speech by Courtland Elliott, C.B.E., who has the happy advantage of both a sound theoretical training and a practical background, he has this to say:
The fact is that government expenditures and their financing are the most potent inflationary forces in the world today. Yet having absorbed the shock of present tax rates, we seem to be willing to accept the delusion that taxes cannot be reduced because of inflationary measures.
I venture the prediction that when times change we shall accept the explanation that taxes cannot be reduced materially because we shall then be in a deflationary period and relief and public works expenditures will require high taxes.
It is incredible to anyone with a knowledge of government ways and particularly of political pressures that any government could be

a saver of money over a long term. It might have been possible at some time in our history, but not since governments have allowed themselves to be held responsible for the prosperity of the people. Moreover, it is hard enough to save money when one has worked for it with the sweat of one's brow. But as far as the government goes, there is a saying, "Easy come, easy go."
It was also interesting to hear the minister say:
In any case, once full employment is reached, as it was last year, any expansion in total output is bound to be limited and gradual.
This is a nice pretty statement which just does not mean a thing. I can think of no economic group in the country that would not produce more if they did not have the burden of an additional rate of taxation on additional production. What has happened to the minister's clear thinking when in his budget of 1947 he said:
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.
There is not a farmer member of this house who does not know that more milk and butter could be produced but for the discouraging effect of higher taxes on additional production. The same applies to cattle and hog raisers; and indeed I am told that good hired men will not even work for bosses who make income tax deductions from their pay. The result is that the farmer pays the tax himself. The hired man is interested, as is everyone else, in take-home pay, and if it is not high enough he strikes for more. The same thing applies in our cities to household assistants. We would have more houses built if carpenters, plumbers and plasterers were not faced with incentive-destroying taxation. There is no need to stop at the artisan classification. Nurses often have carefully figured out just how much income takes them into the next higher bracket or causes their husbands to lose their marital exemption. The same goes for professional men, who now indulge in long, extended vacations because of the economic futility of working additional hours. What is the use of working an extra evening in the week if the bulk of the earnings is to be taken away in taxation? If we lived in a vacuum the minister's contention might be right; but we do not, and it might be a good thing if he had a little more time to go around and learn something about the problems of his constituents in St. Antoine-Westmount.


Douglas Charles Abbott: He gets around quite a bit.

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Mr. JACKMAN:: Well, it is surprising that his majority the last time was only sixty. Continued high taxation has led and will lead to demands for higher wages, to strikes, and to a lessening of production. Only recently it was noted in the newspapers that the medical doctors had increased their fees. All taxation-and this goes for income tax, too- eventually enters into the cost of the things our people buy. It is hard enough to get people to work for themselves, much less for the government.
Another point on which there is some confusion, Mr. Speaker, is this. Full employment does not mean full production. Many times in Canada's history we have had full employment when production, both in agriculture and in industry, was but a bare fraction of what it is today. Doctor Mackintosh of Queen's university recently pointed out that the gross output in Canada in 1938 was $5-1 billion and that this year it will exceed $14 billion. Our population has not changed substantially in that period. After allowing for the rise in prices, the increase in real output per capita is about thirty-five per cent. The output of all workers has been increased by the use of more power, capital equipment and management. With some incentive to businessmen, particularly owners of small businesses, to acquire the machines, and with some incentive to the workers to operate the machines to the full, then we can expect a still further and immediate substantial increase in production. Full employment and full production are not necessarily the same thing. The brawn, muscle and skill of the farmer or workman when directing the power-driven machine has made possible the steadily rising standard of living on this continent. We need to encourage, by restoring incentive, owners to venture forth and workers to put forth their best efforts, so that the national pie will be greater and the slice of each will be larger.
The minister says that "to slash our taxes now would fasten controls more securely on our national life." The opinion of many is that if we do not restore incentive and production the government will always find reasons for retaining controls to regulate the distribution of scarcity. Again, it was interesting to hear the minister say:
It has done what a government could do to meet inflationary pressure by the most fundamental method, that is, by stimulating increased production to satisfy excessive demands.
Later on he said:
On our taxation side, our policy has been to reduce our taxes where they were impeding work and production.
What a change in his thinking from last year; or shall we say, what wonders were worked by a small dose of Abbott's relief remedy! The small cut in taxation which worked this miraculous cure was so powerful that it must have been encased in an atomic bomb!
The minister directed attention to our national expenditures, and mentioned particularly the large amount that went into new construction, industrial plants and equipment, public utility projects and housing. I shall not criticize the government unduly for its policy of double depreciation. At some time in the life of a plant the cost is allowed to be written off for replacement purposes, and the fact that the depreciation was accelerated does not necessarily mean that the total tax take is less. I would point out, however, that the policy of double depreciation was another example of faulty planning. Hindsight shows it to have been totally unnecessary and to have aggravated the inflationary tendencies aready existing in our economy. Had we needed to create employment, it would have been a fine thing, but once again our economic managers saw dimly through dark-coloured glasses. The effect of upping our dollar from 90 cents to 100 cents U.S. also had the effect of encouraging manufacturers to embark on extensive capital improvement programs requiring the importation of American machinery, and this at a time when we did not need to encourage expansion on t'he part of anyone. As a result of accepting the advice of those who hold themselves out as expert managers of our economy, the minister was able to say:
Our forecast proved to be much too conservative; prices, wages, profits and expenditures all increased much more than we anticipated.
On all four counts the government was wrong. In his reference to the rapidly rising price level in Canada, the minister said the adjustment was inevitable but was made easier because of the government's action on July 5, 1946, in restoring the Canadian dollar to parity with the LTnited States dollar. Of course he does not think a ten per cent increase in prices would have discouraged the buying of American products by Canadians. Many of us think otherwise. Now that he is in a distressing predicament in regard to United States exchange, having wilfully lost the country's reserves, he imposes embargoes and import restrictions. Just yesterday morning a fresh batch of import restrictions were announced by his colleague the Minister of Trade and Commerce (Mr. Howe). This is just another example of how one control breeds another, until the camel is occupying the tent and the
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Arab is outside shivering in the cold of the desert night. Furthermore the Minister of Finance Should write it down in his copy book that Canadians will not permanently accept a lower standard of living than Americans, and it would be interesting to know what his government has done to increase the purchase of Canadian products by the United States. Indeed I should have thought at least half the cabinet would have been in Washington in an endeavour to increase our trade with that country, particularly to have them buy more of our products.
As to the corporation tax, little need be said at this moment. Before the war it was eighteen per cent; and I hope my hon. friends of the C.C.F. will remember that. It is now thirty-five per cent or thirty-seven per cent, depending upon the province in which the corporation carries on its business. It is true that the excess profits tax has been done away with as of the end of last year, but its place has been taken in large part by the increased normal corporation tax rate. I do not know whether anyone thinks corporations are soulless treasure houses that have some endless means of paying taxes, but one might as well realize that corporation taxes, like all other taxes, rapidly become absorbed in the cost of the articles corporations make and sell.
If I may refer again to the theory of the cyclical budget, the minister has pointed out the advisability of saving in good times to tide over bad times. If it works that way, the principle is sound. But the political philosophy to which most of the members of this house subscribe is that the state is but the sum total of its people, and I for one would prefer to see our people with some reserve themselves, so that like sensible human beings they could have some fat on their bones to tide themselves over the more difficult times. Again I would reiterate that a pump-priming has never been successful in any country and that individuals are entitled to put something by for their own rainy day in the same way as a veteran is entitled to save some of his money, so that he may make a down payment on the small home he so badly needs; or a farmer or a businessman is entitled to retain some of his earnings to pay off his borrowings. Parents are likewise entitled to put something by for the education of their children, to say nothing of their own old age.
The minister also mentioned as a reason for a cyclical budget that we might be confronted with a large increase in expenses for national defence. To quote him, he said:
Otherwise we would have to add to the other disturbing effects of an expanded defence pro-

gram the complications of sudden inflationary expenditures or sudden increases in taxes. A substantial surplus will help to keep our powder dry.
To this I may only add that what is needed to deliver the goods is a new powder monkey.
In the last war we froze our civilian economy and the wages of our workers in civilian production. In order to expand our war production, wages of workers in war industry rose to new high levels, so that boys of sixteen and seventeen found themselves earning much more than their fathers whose wages were frozen. It was, of course, necessary to drain off some of this surplus purchasing power, because civilian production could not be expanded. I wonder wffiat is to become of our economy and our freedom if, on top of the present high levels of taxation, we had to increase, because of armament expenditures, our general level of taxation. If we were fighting for our freedom against a foreign foe we should surely lose it to those who were regulating our internal economy. For this reason, if for no other, the minister should endeavour to cut down government expenses and reduce our level of taxation, so that it is not only bearable but able to stand the imposition of wartime taxation.
In his third reason for a cyclical budget or a managed economy, the minister stated:
Tax reductions would add nothing to production.
In this, as I have already stated, I think he is immeasurably and entirely wrong. He made a reference to certain unknown strong or fortunate groups who could look after themselves if the inflation he feared took hold. May I say to him that, like war, inflation is a national calamity and I know of no one who does not fear it as one should fear the devil.
The one small bone that Mother Hubbard was able to find in the cupboard was the elimination of the sales tax on processed foods. Nothing contributed to the rising cost of living more than the pyramided sales tax, and I think it was a surprise to many that this tax was applied against a great list of food products that did not happen to be sold in their raw state, such as cereals, all packaged foods, all canned goods, preserves, jams and jellies, and all smoked meats such as sausages, bacon and ham. It had always been understood that the sales tax did not apply to two of the three great essentials of life-food and shelter-and now that understanding is virtually a reality. For this I congratulate the minister.
It is interesting to note, however, that he says that this relief from taxation will create little additional inflationary pressure. I agree

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with him, but not more so than I would agree with him if he were to reduce taxation generally.
Time will not permit me to go into the comparison which the minister made of United States taxes with our own, but I would point out that the tables which he placed on Hansard clearly show that our own system of taxation is anti-social. The single man is taxed more in the United States, whereas the married couple are taxed more in Canada. I congratulate the minister for granting an additional exemption to people over sixty-five years. It was long overdue.
As to succession duties, I should like to say just one word. While I have not had an opportunity to examine the effect of the changes, I am one of those who believe that succession duties are one of the fairest forms of taxation. Large inheritances make for inequality of opportunity among our citizens, and substantial succession duties provide a desirable source of revenue because they have not the objection of incentive-destroying taxes.
As a final justification for withholding from the Canadian people a substantial part of what they create and earn, the minister said:
The activities and scope of government in Canada have been extended by popular consent and indeed by popular demand. Parliament and the government have a wider responsibility than before the war, particularly in the field of economic affairs.
This cannot be gainsaid, but any government which is worthy of the name should be at some pains to point out to the people that the money which goes to finance social services is not created out of thin air. Because of the extent of our social services, no longer is the money taken from one group and paid over to another group of our people. Every family in the land is subject to direct and indirect taxation for the express purpose of providing these social services, although many people have the feeling that someone else is paying the shot. True leadership would indicate to our people that the extension of many social services simply means that they will be taxed in order that the government may provide them rather than that they will be able to save in order to provide the services for themselves. The money will in either case come out of their own hard-earned savings.
Already taxation, federal, provincial and municipal, is taking close on to a third of what all our people are producing. This is a startling amount in comparison with pre-war figures. If it goes on far enough with a few per cent added each year it will soon bring us up to fifty per cent of our earnings being
retained by the government. We shall have lost our freedom as individuals and be subject to some form of state socialism or of outright communism. Again, revolutions can be silent as well as violent.
Canada was built up on the principle of individual liberty, and if one is not permitted to have some financial reserves he loses his economic freedom. The liberties which we hold most sacred are lost to us because we are subject to political domination at every turn. It is my belief that we shall do better, that we shall be more creative, that there will be more to divide and distribute among all if free enterprise is allowed to function and the individual is permitted to retain his economic freedom with which goes his political liberty.


Mr. DANIEL McIVOR (Fort William):: Mr. Speaker, I have much pleasure in congratulating the minister upon his budget. My first reason for offering congratulations is that, notwithstanding the headlines and prophecies of federal members and others, there was not one bit of leakage until the minister announced his budget. As one lion.. member said, "Only God and Abbott knew what was in the budget." Considering the pressure, considering the telegrams and letters which he received, I think this is proof that he is a man of stability and one who can keep his own counsel.
This proves that those who prophesied a great reduction in income tax were false prophets, and I would give a warning now to those who are beginning to make prophecies about the next budget, that it will be an election budget. This means, I suppose, that there will be no tax reductions, that the budget will be just as tight as this one. If it is, it will certainly be a feather in the cap of the minister. It is easy to do the popular thing. I listened, for instance, to members of the opposition urging that old age pensions should be increased to $60 a month, and I think they should. If I were an old man and had nothing to live on but $60 a month I would not be able to go very often to the picture shows, and I certainly would be glad that I did not smoke a pipe.
The hon. member for Brandon (Mr. Matthews) struck a very fine note when he said, in effect, that this was a good business budget. When I contract a debt and sign a note, Mr. Speaker, I am in duty bound to take up the note and pay the debt, and when we realize that, according to the hon. member for Brandon, one billion dollars has been paid off the national debt within two
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years, meaning a reduction of $30,000,000 in interest charges, that is something for which the Minister of Finance (Mr. Abbott) is to be commended.
Another thing for which I commend the Minister of Finance is for not making promises. It is so easy to make promises. So many men in different walks of life have found themselves in difficulties because they could not fulfil their promises and somebody took legal action against them for breach of promise. You cannot do that against our Minister of Finance. The only man who has made a promise to this house is the Prime Minister (Mr. Mackenzie King), and he has made a good one. The hospitals are finding it very difficult to carry on and to find sufficient beds for their patients, and the Prime Minister has promised $30,000,000 to help them. That will be very helpful indeed to those who are ill.
Another thing upon which I congratulate the minister is this, and I was reminded of it by a letter that I received yesterday from somebody at Fort William who has found that this budget makes a difference in her grocery bills. She says that this is the first time she has experienced a little relief from high taxation, and she mentions a reduction of five cents a pound on ham and bacon and says that her grocery bill will be smaller So that is the best kind of tax reduction for her.
The minister may be up against it a little, because he has given some relief in his budget to the men and women who are over sixty-five years of age, for he may find that there are more people over sixty-five years of age in Canada than he thought there were before this budget came into existence.
I would have liked to see a reduction made in the sales tax for the relief of our retailers, and I would also have liked to see the excise tax reduced. But there is a long year ahead of us and many things can happen in that year. I notice that the tax on silver-plated articles has been reduced. I would like to see watches put on the free list. Watches are used universally and are a necessity. I would also tell the minister that he should give some relief in the matter of wedding rings. They, too, should be put on the free list. Imagine a young man getting married and not being able to buy a wedding ring, and then two or three weeks afterwards his wife goes to a social gathering and it is seen that she has not got a wedding ring on! The Minister of Justice might say that was the beginning of a divorce, but of course that is not always true.
Another thing I would like to see is some relief for the mining industry. I have received a number of committees from the mining industries at the head of the lakes, and I

would like to see a little more help given to our mining industry. When we could not get jobs for our men during the depression I remember how we used to go to these mine operators and how they helped out our unemployed. I am sure the minister will take this into his sympathetic consideration.
I would also like to express the thanks of our community to the government for having increased by twenty-five per cent the pension that is paid to those who fought and risked their lives for us. That will come out of the surplus for next year perhaps. I think it is the absolute duty of the dominion government to look after these men, and the women too, who gave their best and came back less fit than they were before to do their life's work.
When the Prime Minister promised assistance amounting to $30,000,000 to the provinces, I was very well pleased because we in Fort William need hospital aid. If a certain government is elected in Ontario I expect we shall get about $300,000, but if another government is elected maybe we shall not get it. When I see beds in the halls of hospitals, outside the maternity ward, the children's ward and other wards, I say it is high time that our governments got together, and I thank the Prime Minister for this encouragement. When the provinces make their recommendations to (he dominion government they will get their share, but it is necessary, of course, for the provinces and the dominion government to get together.
I should like to say in closing that in Canada we have more nearly realized than any other country, including Russia and even New Zealand, the four freedoms. Where is the man today who cannot get a job? I know some people may have difficulty in getting work because of poor health or accident or for some other reason; but there is no reason why, if a man is willing to take the first thing that comes, as you and I did, Mr. Speaker, and work at that until he gets something better, all our people can be employed, and that makes Canada the greatest country on earth.


Mr. W. A. McMASTER (High Park):: Mr. Speaker, the few remarks which I shall make this afternoon will, I hope, be constructive and mean something in the future as to the manner in which the government brings down its budget and perhaps also as to the manner in which this budget will be dealt with at a later stage by the house this session.
I heartily agree with the Minister of Finance (Mr. Abbott) that in good times we should budget for a surplus. As long ago as 1791, Alexander Hamilton, who was perhaps the

The Budget-Mr. McMaster
first and leading economist of his time in any country, said this in his report to congress:
As the vicissitudes of nations beget a perpetual tendency to the accumulation of debt, there ought to be in every government a perpetual, anxious and unceasing effort to reduce that which at any time exists as fast as shall be practicable consistently with integrity and good faith.
From that time until the present it has been the hope, the desire and the aim of every country in its budget to have a surplus in good times so as to be able to meet the deficits which are bound to come in the bad times which have always followed. In the United States in the time of Hamilton they had a debt of S77 million. This was progressively reduced until in 1812, when the war with Great Britain broke out, the debt was only $45 million. It was increased by that war to S133 million. This again was reduced until 1851 when it stood at $68 million.
The civil war, which was perhaps the greatest war of all time up to that date, increased the debt of the United States to $2,756 million, which for a people of thirty million, was not anything like the debt which we are now bearing in Canada, but which at the time was thought to be almost unbearable. However, the United States faced the problem, and in the year 1893 this had been reduced from $2,756 million to $838 million. Because of the depression which then arose, it stood still until the beginning of the great war.
The first great war raised the debt of the United States to about $25 billion, which, at the time, was thought to be almost an astronomical figure. They again attempted to reduce it and in fifteen years had reduced it by $9 billion to about $16 billion. Then came the depression of the thirties and the debt kept going up until in 1936 it amounted to $34 billion. In fact it doubled in those depression years.
We all know that the last war increased the debt of the United States to such an extent that it is now about $269 billion. At the present time they are doing what they can to reduce this debt.
I must say that in the last year the United States had an income of about $40 billion. While they had expenditures of $42 billion, in that $42 billion they include all loans which they made to other countries. As I recall it, about $7 billion of the $42 billion is made up of loans made to European countries. That is why I am going to say that in Canada actually we have no surplus. It is true that, because of the bookkeeping methods we have adopted, the minister shows a surplus of some $450 million or $500 million, but certain things
do not appear in the expenditures. For instance, they show only $75 million toward a sinking fund. We must remember that during the last year we advanced to other countries the sum of about $646 million. This advance of $646 million was one of the main factors which produced large incomes in the country. It is fair to say that of this $646 million, which was spent in loans to other countries, and out of which goods were provided, perhaps as much as half, or over $300 million, would be taken back by the government in the form of taxes. This is more likely to be the case, because that extra amount of money which was obtained by the people would be added on to the ordinary income of the people and would place them in higher income brackets. Therefore I think the Minister of Finance in his budgeting should have allowed about $300 million-which is about one-half of what the United States allowed-as an expenditure during the last year. If that were done the surplus would, of course, practically disappear.
It is unfortunate that the minister, in some of his talks to the newspaper men last year, referred to a surplus. As a result of that, a great deal of adverse criticism was voiced. Actually, if the figures had been put on the same basis as they are placed in the United States there would not be a surplus at all, but a deficit.
I have looked into the figures of this year, and I have been unable to find about $50,000,000 which was voted to the provinces of Saskatchewan, British Columbia, Alberta and Manitoba last year. To my way of thinking, that is as much an expense as if it were paid out of your pocket, because actually before that time it had been carried as an asset of government. The writing off of it amounted to an expenditure. I spent some time looking, but I have not been able to find where the payment appears in the accounts as presented by the government. I very much doubt whether it appears anywhere. That would reduce the surplus also.
It is of great importance that we have a surplus in good times, because of the method of showing the receipts from income tax, corporation taxes and other taxes. I wrote a letter to the Minister of National Revenue (Mr. McCann), and he quite frankly replied that so far as the receipts for any fiscal year are concerned it means all the money that is paid in for that year. He refers to an example I cited and says:
In the example which you have cited, if a taxpayer paid his 1946 tax on the first of March, 1947, it would be considered as 1946-47 revenue. If a similar payment, even although it were on account of 1946 tax, were made on the 15th
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day of April, l!/47, then that payment would be considered as 1947-48 revenue. The taxation year for which a tax may be paid has no bearing whatever on the fiscal year to which the revenue is credited.
It may be said' that for statistical purposes separate records are maintained with respect to the amount of tax collected for any particular calendar year. This is entirely separate from the amounts which are considered as revenue for the fiscal year.
Therefore one might expect that if a depression came along the moneys which may be received for any year may be very much less than the money actually paid for that year; because of that, I say the listed receipts for any year do not actually give the amount of money that was paid for that year; and for that reason also the surplus shown is uncertain. It should be scrutinized closely and should not be accepted as the definite amount of any surplus.
The question arises, how do you produce a real surplus? Of course there are only two ways by which a government can produce a surplus. They are similar ways to that by which any person in private life could produce one. You must either increase your revenue or reduce your expenditure.
I should like to deal for a moment with the question of reduction of expenditures since I would be the last person to suggest to the Minister of Finance that he should increase his revenue in any way, because the hon. member for Rosedale (Mr. Jackman) has shown that we are now paying twenty-three per cent of our total income in taxes. When we take into consideration provincial and municipal taxes the amount is probably thirty-three per cent. We must remember that everybody is not paying thirty-three per cent. Some people pay no taxes; others are paying ten per cent; still others are paying fifteen per cent, and so on, but some are paying seventy-five per cent or eighty per cent. But if the total amount of taxes paid is thirty-three per cent of the total income, then I believe the future of our country looks very bleak indeed. I recall that we used to talk about England as the country of high taxes. As I recall it, the highest amount paid there was thirty-six per cent of the total national income. We all know what conditions were there at that time. If these conditions obtained in Canada in ordinary times it would impose a very great burden indeed upon the Canadian people.
The minister may ask me how I would reduce expenditures. I say to the minister that expenditures must be reduced. Actually a great deal of them cannot be reduced. I recognize as well as the minister does that the

interest on the national debt must be paid. I can understand and appreciate the fact that we are paying a very low rate of interest on that indebtedness; that the amount might be increased; that, instead of being $450 million, it might easily be $550 million.
I recognize at once that, since we have started to pay family allowances, we shall continue to do so. It would be a tremendous undertaking on the part of any government to change that. I understand that our veterans must be looked after, and all these uncontrollable expenditures must be taken care of, but there are other things that the minister must face. I went to some pains today to look at the increase in expenditures from 1938 to last year, and in some cases the present year, and I find that those expenditures which are purely ordinary administration and departmental expenditures, could be kept down more than they are.
We are going ahead, putting more people on the payroll, paying them more money, and while it may be good for these people, I can only say to the minister that if he keeps on in that way he is doing what the C.C.F. wants to do. He is putting everyone on the payroll. You cannot spend yourself into prosperity by having a lot of people on the payroll, any more than you can drink yourself into prosperity. The minister must face these things.
I would point out some of the departments in which there has been a tremendous and unjustified increase. Let me take first agriculture, and I am speaking now of the administration end of it. I begin with 1938-39, which was perhaps a normal year. We shall be lucky if we ever have an average year as good as that in the rest of our lives. I do not know whether we shall have any better times than in the past, but I do not think the millennium is coming soon. It is rather the other way around; it is farther away. In 1938-39-I will say 1938 for the sake of brevity'-we spent in agriculture for administration $9,527,000. In the year 1948-49, as set out in the estimates, that is now $18,000,000.


Douglas Charles Abbott: The hon. member for Souris wanted us to double it again. He suggested the other night that we double it.


William Alexander McMaster: The hon. member for Souris is an enthusiastic agriculturist, but I am not speaking about the things to which he was referring. I am speaking about administration, whereas he was speaking about that which has to do with the production of better grains, cereals and so on. Go ahead with that as much as you like, but keep down administration expenses.

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Douglas Charles Abbott: It requires administration if you extend those services.


William Alexander McMaster: In external affairs in
1939, when we were an ordinary country minding our own business, we spent $1,057,000, and for the next year we shall spend, as provided by the estimates, $9,777,000. It has gone up 900 per cent. It seems to me that Canada is going beyond the point it should go in these expenditures. I realize that a great deal of this is caused by present conditions. Maybe a million of it has to do with the united nations and perhaps half a million with other organizations which are more or less international in character; but I still say that we are spending altogether too much on external affairs, and I suggest that we can reduce the taxes on our people if we do something in this connection.
I come now to something I do not understand, and that is the annual amortization of bonds and commissions. In 1938 we spent practically $5,000,000, and that has gone up to $8,000,000.
In the finance department, which is a large department, I know, administration cost about $3,500,000 in 1938, and that has gone up to over $20,000,000.
In the fisheries department there has been an increase from $2,036,000 to $5,996,000. After all, while we can do something for the fishermen, we may have to do something more than that for them in bad times, because they have had bad times in the past and may have bad times in the future. Perhaps an expenditure of about $3,000,000 might be helpful to them in bad times, more helpful than such an expenditure now on something that is not directly beneficial to them at the present moment.
The justice department has gone up from $2,748,000 to $3,601,000, which is not much.
The labour department has risen from $788,000 to $2,295,000. In that connection I would refer not only to the administration of the labour department but to unemployment insurance. The rather considerable sum of $18,000,000 is paid out in salaries. It may be a large department; and that sum has nothing to do with the contribution of $17,000,000 which the government is making to the unemployment fund. It strikes me that $18,000,000 is a very considerable sum to pay for carrying on the administration work of that department; that is, the unemployment insurance department.
The House of Commons has gone up from $1,800,000 to $3,878,000. Immigration has gone up from $1,335,000 to $3,788,000. Indian affairs has gone up from $5,305,000 to over $7,000,000. Lands, parks and forests, special
projects, has gone up from $2,249,000 to $5,738,000. The post office has gone from $35,000,000 to over $67,000,000. Public printing and stationery has gone up slightly.
I now come to public works. We have been talking about budgeting for bad times, and many people in the past have said quite truly that all public works should be left if possible until bad times come. In that connection I should like to read something that might be helpful to the government. It appears in a book by Erik Lindtahl, written some time ago. It is in regard to budgeting for a surplus in good times. He says: "The benefits of so doing are: (1) Financial gains would accrue to the state and to the local authorities through a reduction in the average level of costs for construction work, etc. (2) There would be less unemployment and better utilization of production capacity during depression years. (3) There would be more stable prices and less violent economic fluctuations owing to the monetary effect of the recurrent under-andover balancing of the budget through adjustment of public expenditures between boom and depression years."
We have heard about cycle years and their effect on budgeting, and this writer points out that the trade cycle should not be allowed to affect normal public activities. That is why I say that it would be no kindness to the people employed by the government in these administrative jobs if we were to dispense with their services during bad times, and yet we cannot keep them there in ordinary times. I suggest in fairness to them, that their services should be dispensed with as far as possible in good times and, if possible, they should be taken on in bad times when they need the jobs. Public works should be undertaken in depression years.
Too much has been done in these late years. The tax burden should be lighter during depression and heavier during boom. I agree with the minister in that regard, and I was moved to read that statement of Mr. Lindtahl because public works have risen from $20 million in 1938-39 to a total of $59 million in the present estimates. I would suggest to the minister that a great deal of this work should be left until such time as it can be done to greater advantage and with less expense to the country, and so that the money would be distributed among a larger Amber of people.
I have made some suggestions in a business way, and I hope that even politically they will bear results, even from the standpoint of those who might put them into force.
I would suggest something about revenues. As I have said, perhaps the revenues are high, but new revenues can be obtained from those

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who now ecsape taxation and who are able to pay. In the last analysis, the money should be obtained from those who are most able to pay, and I suggest that there is a large field of unearned increment that lias not been taxed.
When I say this I do not want anyone to say that if you allow for unearned increment you have to allow for losses, because I will not admit that for a moment. The United States lost revenue because they allowed the losses of stocks to be set off against gains in stock. That is not right; it is not fair; it is not necessary, and I am not suggesting that that should be done.
But there is a great deal of unearned income. One reason for that is this high income tax. Of course I am not a prophet. I am not a great businessman either or I would not make this statement, because it might have some adverse effect. But I am sure that prices of many stocks are kept up today in the hope that somebody will make some money out of those stocks, which money will be untaxed. What these people want is to get some money that is not taxed, because they do not want to pay taxes any more than anyone else does; and in the case of rich people, the taxes are fairly high. I would suggest, for instance, that that would be one of the most effective ways of stopping inflation.
If there is anything in the world that I want, it is to stop inflation. I hitched my political life to the promise that I would do my best to stop inflation. During the war the government did a good job in keeping down inflation, but I am not so proud of what they have done since. In some cases I believe that where they should have been firm, they yielded; it looks as though inflation may get the better of things. I know there are a great many people who are gambling everything on inflation. They are buying everything of a tangible nature. They actually think the same thing will happen here as happened in Germany; therefore they will buy something tangible, and the other people who have investments in government bonds or mortgages will be paid off with worthless pieces of paper. One of the ways to stop that is to tax unearned increment.
I suggest that the sooner the government get their experts to work at that, the better it will be. so that something may be evolved. It cannot be all-inclusive. There would be many who would escape it, but it would, I believe, have a most salutary effect on stopping the rise in prices.
A few days ago I spoke about accelerated depreciation in speaking about housing. I do not intend to go over that again, but I shall simply say that what I placed on Hansard at 
pages 36S9 to 3691 inclusive, I stand by. I did not intend to say anything about this accelerated depreciation, but I believe that it was allowed at a bad time. I believe it had an inflationary tendency. I think the government themselves are to blame in that they set a date at which this allowance for depreciation must be spent. If they had put the date further ahead, I would not have felt so badly about it, although for the life of me I cannot see why these people perhaps should not pay their taxes the same as everybody else. I realize, as one of the other speakers has said, that this depreciation is only accelerated, but I think it should have been decelerated. It should have been put off until some later time. It was given, of course, for the reason mentioned by the hon. member for Melfort (Mr. Wright). As mentioned in the book put out by the government, it was done so that the people could get the benefit during a period of high taxes and not have to pay high taxes; for in bad times, of course, when there were no excess profits or no profits, there is little or nothing to charge depreciation against.
I have said something about increasing the revenue. I think it can be increased in the manner I have mentioned by taxing unearned income and otherwise. Then we could decrease some of the revenue, because I believe the people in the lower income brackets are paying too much. I think everybody should bear a fair share of the burden, but the people in the lower income brackets are bearing their burden in paying the sales tax. I hope the government will go through that sales tax list and leave out many other articles. They can add something else on luxuries for those who can pay, but I would suggest that if possible they should remove from that list some other articles used by the people in the lower income brackets. After all, on the list are one or two things that go into the building of houses, which is important. The poor man must have a house. I do not, of course, deal with the whole list, but I should like the minister to do something for those people who are in the lower income tax brackets by removing that tax which is bad, which cannot be seen, and therefore probably arouses much less vocal opposition than does the income tax.
I think there should be a larger amount of exemption for each child. Inflationary prices affect the married man more than they do anybody else, because for every child he must buy clothes, shoes and other necessaries. The amount of inflation affects him in proportion to the number of children he has. If they have two children, they are affected to double the extent the married couple with no children, so that something should be allowed more than

The Budget-Mr. McMaster
the $100 now allowed. I should think this amount could quite easily be increased and shouild be increased perhaps in such a way that the people with greater wealth should not be able to take advantage of it. They can get along all right, and most of them have not many children anyway, so that it will not affect them so much.
Again I think the rates of income taxes that were manipulated a little, and helpfully, downward by the minister at the last session, could be still further decreased. I am willing to agree that everybody should have a sense of responsibility for the way in which the country's business is carried on, and nothing brings that to his mind more quickly than the fact that he has to pay something toward it, no matter how small may be the amount. I would suggest to the minister-and I shall be somewhat definite in my suggestion in this case-that where previously the tax was started at ten per cent-that is, on the first $100-it seems kind of hard that a man after he gets over a very limited income, should have to pay $10 on an additional $100 of income. That could be put down to, say $4 and then jumped up by $4 a hundred until it gets to twenty per cent. Maybe it could be jumped by $2 a hundred and go to a higher base. This tax is a great burden on the people who are in this low-income tax group. They could be given a sense of responsibility at not so great a price as they are paying at the present time. I would be quite willing and would suggest that this concession, causing as it does a loss of revenue, which goes all the way up the line, should not be available for those who have incomes of $5,000 or more. I realize as much as does the minister-and he has said so publicly-that every increase in exemption that we give to people in the lower income tax groups goes all the way up the line; and that for the rich people it means an exemption at the rate of perhaps fifty per cent or sixty per cent.
I now come to another point, and I have spoken about it quite often. I feel just as strongly as ever on the subject; and if I need any reason for bringing it up now, it is in the fourth clause of the resolution relating to income tax, where it is suggested that expenses be allowed to people in the transportation business and to others who are in the business of, I think the wording is, the sale of real estate or on commission. It struck me, when I read it, that it is a much restricted clause.


Douglas Charles Abbott: Not only real estate.


William Alexander McMaster: It may not be intended to be only real estate.


Douglas Charles Abbott: On commission; people who operate a business and who are receiving remuneration by commission.


William Alexander McMaster: I think that was what was intended; it applies not only to those who are selling real estate, but to all commissions and otherwise. I would urge that whatever regulations are made, and whatever concessions are to be given, they should be put in a definite form. Definite regulations should be made, saying these people shall get exemption for stated reasons. These should be publicized, and the rulings made should be available to the people. They should know what exemptions everybody else is getting. When they make up their income tax, it is a worry to them when they do not know exactly what is intended to be allowed. I would suggest in this case, and in fact in all other cases where there is a discretion as to allowance, that it be made definite.
I want to read to the minister something which is applicable not only to his discretion in this case but to all other discretions under the income tax laws. These words were written longer ago than I had thought; they appear in chapter 45 of that famous book, "The Decline and Fall of the Roman Empire", by Gibbon:
The discretion of the judge . . .
In this case it is the minister.
... is the first engine of tyranny. The laws of a free people should foresee and determine every question that may probably arise in the exercise of power and the transactions of industry.
I suggest to the minister that he go to some pains in making regulations covering every point in his discretion; that these should be publicized, and that the results of any act or decision on his part should be made public.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



CRIMINAL CODE AMENDMENT


[Stage Direction]
The house resumed from Tuesday, April 13, consideration of the motion of Mr. LaCroix for the second reading of Bill No. 2, to amend the criminal code.
Mr. DAVID CROLL (Spadina):: Mr. Speaker, I suppose that all hon. members have one thing in common; without exception we are anti-communist. So we must persist in our
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constant opposition to the spread of communism, for no one in this country but communists wants communism to prosper. Personally I dislike and distrust communism because it is dictatorial, because it is tyrannical and because it is totalitarian. Others hate it for these as well as additional reasons. I think they are all good. In dealing with this subject, without reference to party I think this house can be divided into two groups. In my view one is effective and the other is less effective.
One of these groups comprises those whose anti-communism is emotional and whose tendency is to fight heresy with the weapons of repression. Their hatred of communism is not confined to religious grounds. There are those whose hatred of communism is based on economic beliefs; based, as a matter of fact, so little on religion that any deviation from what they call free enterprise is to them treason. There is room also for those who cherish a love of country above all that our divers religious and economic heritages may offer. So far as these people are concerned, the heresies are against the church, capitalism and patriotism, and they say the solution is repression.
There is another group whose hatreds are shared by all others but who prefer to fight on grounds of reason rather than emotion. They are prepared to strike at the root of the evil. This group sees communism as a revolutionary movement headed down a blind alley, but definitely the result of social causes which it feels it can remedy. Its weapons are the traditional freedoms and the progressive removal of social injustices, with which Canadian people thoroughly agree. These are not martial weapons, but these people feel that they will strip the enemy of their weapons at least. I believe that the strategy of this latter group will be more effective in defeating the common enemy of both groups.
When repression is proposed1, when the outlawing of the communist party reaches the point of vote in this House of Commons, I ask myself, and every member of the house must ask himself, whether the persecution of a revolutionary minority is the answer. I have searched history, and I find that all that such persecution achieves is the gratification of some less attractive impulses of the persecutors; and, what is far more important, the ultimate triumph of the persecuted.
Let us examine the history of our own country. In 1917 communist groups were banned in this country. In 1918, after the close of the war, the order banning them was repealed. In 1921 the communist party was formed; and in 1932 the party was made illegal under the infamous section 98 of the

criminal code, which by the way was rarely used. In 1936 that section was repealed. In 1940 the party was again made illegal in this country, and in 1945 the ban was removed from the communist party.
In the interval, in 1942, the party changed its name to Labour Progressive. Under the auspices of that name and in the midst of the kindliest feeling toward them when this country was concerned with our heroic ally- tanks for Russia, aid to Russia, Stalingrad, Uncle Joe and all that sort of thing-the party was able to elect some members to the city councils of Winnipeg and Toronto; they were able to elect a member of the board of control of Toronto. Later the people of Toronto woke up and did away with him nicely, democratically by the way. Members were elected to the Ontario legislature and, I believe to the Manitoba provincial legislature, and one member was elected to this House of Commons.
It seems obvious that the passing of a law does not do away with them. They now claim a membership of more than 23,000 in Canada. They may be just puffing in the usual manner, but on the other hand it cannot be denied that they have shown considerable strength in some of the industrial areas in Canada. It is also to be noted that Bulgaria, Yugoslavia, Poland and Hungary all passed laws to do away with communism. Look at them now. That is a fate which I should like to avoid.
Let us take a look at Italy. Twenty-seven years ago Mussolini outlawed the communist party and declared to the world that he had done away with it. Then came the war; he died and his regime fell. We found Italy swarming with communists; there were millions of them. Italy had to make a choice; she had either to outlaw the communist party or to defeat it by democratic processes. Italy decided to do it the hard way. She fought and she won. Although it was not a decisive victory, it was undoubtedly a decisive battle which now gives her the opportunity to strengthen her social defences.
Last week presidential primaries were held in the state of Oregon, Stassen and Dewey being the candidates. Stassen had preached the outlawing of the communist party, and Governor Dewey took him up on it, accepted his challenge, debated it nationally and locally. The people of Oregon spoke and Dewey was elected.
I believe, Mr. Speaker, that no matter what action we take against the communist party today, we shall find that there will be a revolutionary left wing popping up the minute that conditions get difficult again and men begin to

Criminal Code Amendment
lose their jobs, and somebody behind a wicket says: All those who want relief will line up on the right.
I started out at the beginning by defining the emotional approach to anti-communism and I advocated the rational approach because, amongst those with the emotional approach, there are people with dangerous illusions. They tend to pin the red label on all those whose political positions veer a little left of centre or who do not agree with their own political views. This not only overrates the enemy, but alienates political allies. Let me give the house an example.
The Secretary of State for External Affairs (Mr. St. Laurent) spoke in this house a few days ago and outlined Canada's foreign policy. It was a magnificent report of the greatest significance to the nation. It was moderate, and it met with the approval not only of members of the house but of the general Canadian public. This is what he said:
Canada would play her full part in every movement to give substance to the conception of an effective system of collective security by the development of regional pacts.
Yet in some sections of the country we hear comments being made upon it such as this:
Brutally warlike and imperialistic.
Again:
The most dangerous proposals.
Again:
The most incendiary ideas.
That is the way in which the communists talk about our foreign policy. Yet is it fair to say that all people who use similar terms are also communists? If that is so, then I need only tell you, Mr. Speaker, that exactly these words were used by the Duplessis press in Quebec to describe the minister's speech. They are not communists; no one can suggest that. They may not be very bright, and they may be opposed to this government, but they are not communists. I merely point out the danger of condemning by association. Regrettably it springs from a tendency to hang the red label on people who are not guilty of it and from an eagerness to use the red label to discredit sometimes a trade union, sometimes a social movement or anything else of a progressive nature that appears within a greedy man's grasp.
I do not think we shall get anywhere in that way. Our attack on communism must be as realistic as the communist attacks which took Rumania, Bulgaria, Yugoslavia and Czechoslovakia ; it must be tailored to the thinking of our own people, and it must be directed against the reds who are really communists. It must
not rest simply on the assertion: "No matter what it is doing to you, our way of life is best." That is not good enough.
If I may be personal, to me communists are not necessarily those from across the seas; they are not those who simply demand socialized medicine, or higher old age pensions, or the restoration of price controls. I do not think anyone could hold any such views after having been progressively the mayor of an industrial city, the minister of labour of our largest province, and the member representing a large working-class constituency.
No; communists, to me, are people. To me, a communist is a man who holds a certain card; just as a fellow-traveller is a man whom I suspect of holding a party card but of being too discreet to admit it. As human beings go, many of them are as you and I. They give to the poor; they love their children; they are well informed, and their personal lives are not unlike ours. The trouble is that they are fanatics, blind, unreasoning fanatics; and no one can convince me that fanatics are not potentially dangerous. They are prepared to use boldness and force, or stealth and cunning, whichever the situation calls for. It is a coldblooded brand of power politics, utterly ruthless and utterly merciless in its belief that the end justifies the means. Its end is world domination. Their loyalties lie outside the borders of this land, despite their parrot-like reiteration to the contrary. The single-track mind, whatever its terminus, is a menace to all of us whose preference is for individual freedom, for tolerance and a willingness to see two sides to most questions. It is a menace to the vast majority of Canadians.
We have a criminal code for those who break the law. Let us apply the law for crimes they commit, not for ideas they have. I heartily approve strengthening the code to deal with these people and with subversive activities, but I am opposed to outlawing people for religious, political, social or economic views.
If, as has been suggested, we outlaw the communist party, or the Labour Progressive party, or whatever title it may appear under next, then I assure the house that our emotional impulse will bring forth hearty approval. This approval will come from, among others, the Labour Progressive party. We will drive them underground, which means that they will be given a stimulant toward organization, a badly needed provocation to party activity. They are born conspirators; they thrive on the cloak-and-dagger life; we will confer on them, by outlawing their party, a sense of romance that will attract converts, particularly immature converts, and what is more, we will toss into their lap the partisan
Criminal Code Amendment

halo. Out-in-the-open events often make them a little silly. But they are skilled tunnelers and sub-surface operators.
No, Mr. Speaker, let us be guided by reason rather than emotion. Communism is on the wane in this country mainly because people have jobs; they have enough to eat, and some of them are able to lay something aside for a rainy day. Some day I hope that the government gets around to finding a scientist who has a political turn of mind. I have a particular job for him. I hope that that political scientist will undertake the work and find out the relationship between calorie intake and communist enrolment in a given country. It seems to me that that is a study we have neglected.
I have said that the communists are on the way down. If anyone doubts that they are slipping, is there any' other explanation of their somewhat embarrassing support or attempted support of the C.C.F.? On every platform in this province, from every housetop the CLEF, are saying: We do not want their money; we do not want their support; we do not want their votes; we want no part of them. If they were an asset, that, to me, would not appear to be the normal reaction.
Where is their influence in this country? They have no representatives in the House of Commons. I am even surer that they have no representatives in the Senate. In so far as the legislatures are concerned, the communists have a few members in the province of Ontario, and I think one in the province of Manitoba; but their members are known, tagged and minimized. In the municipal councils they may have one here or there, but they are overwhelmed by numbers. And mind you, Mr. Speaker, the only way that they are able to elect members to these various legislative bodies is that there is a great deal of inertia amongst our own people. Where we find seventy-five per cent of the people voting, they have not a chance.
Someone may say that they have influence in the administrative offices of this country. I doubt that. We have had reason to believe that if they were there, they were cleaned out. They certainly are not in our police departments; they certainly are not in our armed services. I do not believe that they have any great influence in this country.
Communism can become important, but only when the masses of the people have been driven into despair by hunger-that is what happened in eastern Europe-or into a mistrust of democracy itself-that is what happened in Czechoslovakia. We in Canada can certainly produce a revival of communism only

if unemployment is permitted to rise again, or if we drive the communist party underground, which has always favoured their growth; for, like a weed, they flower in adversity.
My advice is to keep them out in the open. Let everyone see their leaders and their party members. By all means tell the people, retell the people, and tell the people again what the communists stand for, and make them campaign as you and I campaign, in the open market places of political ideas. The Canadian loves freedom for himself; but he detests and fears insecurity for his family; and if we deprive him of his present modest measure of security he will again, as he did in 1930 and in 1934, listen to those who propose that he trade in his freedom.
Poverty is the great catalyst that drives an exhausted society to communism. In Europe not only have they had poverty, but on top of that they have exploitation, corruption, race hatred, discrimination, inequality of opportunity and injustice. In this country, if we keep things healthy economically for the masses of the people, there is nothing at all that we need worry about. But if we permit collapse again we shall once more have some form of red peril, no matter under what name it travels.
The challenge is to make democracy work, for when democracy becomes positive communism becomes negative. As for myself, I have sufficient confidence in our institutions to believe that they will survive the onslaught of political controversy. They will grow and improve and benefit our people. Reason, history and experience tell me that this bill, if passed, will play into the hands of the communists, and that is the last thing I want to do.


Mr. T. J. BENTLEY (Swift Current):: Mr. Speaker, I do not think I have a word of disagreement with the last speaker. If I have I shall have to read his speech carefully to find out what it is; because his sentiments were expressed as I should like to be able to express mine. However I am going to deal with the matter from a slightly different point of view, from the point of view of an ordinary everyday Canadian citizen who has a tremendous belief in the past of our country, a tremendous faith in the future of it, and an infinitely greater faith in the intelligence of the Canadian people to listen to, screen and accept or reject ideas that are submitted to them. If our eighty years of responsible government have not taught all of us that we as a people are capable of doing that, then we have not been able to learn the lessons of history.

Criminal Code Amendment
Furthermore, we have in the mother country some valuable lessons. They have never attempted a thing of this kind. I have been in London myself-and a great many other hon. members who have been overseas have been there-and listened to the variety of speeches one will hear in Hyde Park, in Albert Hall and in other places. Only the other day a man told me that he was over there during the war and attended an open air meeting being held around the smoking ruins where one of the big rocket bombs of the Germans had fallen. Right there a man was standing up making a speech, condemning the British government for its treatment of German prisoners of war, and nobody tried to take him down off his box; nobody interfered with him. They let him talk, I do not suppose he had the slightest effect on the government's treatment of prisoners of war. But when the people can believe in the right of free speech to the extent that they will allow a speech of that kind around the smoking ruins of one of their buildings where probably lives were lost, it indicates that they have learned the value of democracy, or, as the hon. member for Spadina (Mr. Croll) sajrs, the open-market discussion of political ideas and other kinds.
I hold in my hand a little clipping from The Economist of London, and it is headed, "No United Kingdom 'Witch-Hunt'." It reads as follows:
Action against professing communists in the United Kingdom government service has long seemed desirable, but it must not be allowed to develop into the kind of excesses which have lately been witnessed in Washington. There may be something laughable in the spectacle of Hollywood reduced to a jelly of fear of "radicalism"; but there is something tragic in it, too. In the last resort, democracies must work out their own means of self-protection by their own democratic method. That is the only final assurance that it cannot happen here.
That is something that everybody can learn. We come back closer to home, and while I am not a supporter of my hon. friends opposite-[DOT] there was a time when I was, many years ago in my juvenile life when I had not seen the light-I retain the democratic right, Mr. Speaker, to go back there if I want to.
Mr. JOHNSTON; You would hate to do so.


Thomas John Bentley: I am not going to do so, but I have the democratic right to do so, or to support my hon. friends here, or my hon. friends there, and I want nobody to take that right away from me. I will oppose any attempt to do that, and I equally oppose the attempt to prevent anybody else from expressing his ideas. I do that on idealistic democratic grounds. But I also want to say, as the hon. member for Spadina has said, that there is a very good practical reason why I do not want to see a bill of this kind passed in this house.
It so happened that I attended the first meeting called to organize the communist party in that part of the country in which I lived shortly after world war I. You will remember, Mr. Speaker, that things were more or less upset politically. Ideas were undergoing certain changes. There was questioning going on, and obviously everybody was imbued with what he thought was a new idea and was endeavouring to express it.
I went to that meeting and listened carefully to the man who came to tell us the story of what we could do for this country if we formed a communist party. When the time came to sign up members I had to make up my mind, and I did. I did not find in that meeting, or in the program suggested, the place where my political faith could find a home, and so I left the meeting and have never attended one of that kind since. But I have watched them closely, and I believe that the decision to which I came at that time was the right one. They still have no place for me in their particular organization, nor have I any desire to be there.
On the other hand, in our political life in this country I must, on behalf of those who wish to support me, go out into the open market of political ideas and take on all comers who do not believe as I do, and I am perfectly willing to do so. If any member on the other side wishes to come to my constituency and promote his ideas I am prepared to stand on the same platform with him and oppose his ideas and advocate my own. The same goes for my hon. friends over there or in any other part of the house and the same goes for those who believe in the communist idea.
At no time, however, have I ever suggested, and I hope I shall never so far lose my faith in democratic methods as to suggest, that because someone over there or over here, or anywhere else, does not agree with me I must prevent that person from having the right to say what he wishes to say. Certainly I will never suggest that such a person be put in jail or be outlawed or shot or treated in any other way that some others might treat us.
I am not alone in that belief. Responsible members on the Liberal side apparently feel the same way, for I have a report that appeared in the newspapers, from the Canadian Press, wherein the Secretary of State
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(Mr. Gibson), who is not in his seat at the moment, is reported to have said at a meeting held at Kitchener-and these words are in quotation marks:
"Some people suggest that the communist party should be outlawed and its papers banned. I do not believe this is the answer . . . if we have nothing better to offer than the communists, then we have no excuse for opposing them; but if, as we generally believe, our system is superior, then our people of all groups and classes have a right to know in what ways they benefit by supporting our democratic system." *
There is a place where the Secretary of State and I can meet on common ground, and that is, I expect, rather rare for him and me.
I wish to point out also that a bill of this kind exhibits two characteristics, to neither of which I should like to see Canadians subject. It indicates either a lack of faith in the Canadian voter or else a childish fear of something because we have not the courage to get out and face it and take the necessary steps to make it impossible for the thing we fear to grow.
In another debate in this house the hon. member for Vegreville (Mr. Hlynka) put some figures on the record. His speech will be found at page 3555 of Hansard of May 3 of this year. He took his figures from the World Report of April, 1947. The figures were released in London, according to his statement, and he gave the size in numbers and percentage of population in various countries of the communist party. In Canada, his figures indicate, there are 23,000, or one-fifth of one per cent- [DOT]2 per cent.
I remember the early days of Hitler's regime when he was turning his hatred upon the people of the Jewish race and when he tried to make and finally succeeded in making the German people believe that the whole future of Germany was endangered by allowing this small section of the population to live. He made it stick so well that these people were almost eliminated.
At that time the Jewish population of greater Germany w'as, I believe, something less than one per cent of the total population. Do we want something like that to happen here? Do we wan t to debase ourselves so far as to try to bring about the conditions recommended by this bill, because we are afraid of one-fifth of one per cent of the population of Canada who have been active in this country for something like twenty-eight years?
I cannot conceive of an idea of that kind emanating from a Canadian citizen whose forebears pioneered this country and took an active part in the development of our democratic institutions, a Canadian who, like myself,

knows only this as his native land, who believes in our institutions, in the land where his particular racial group and mine have learned to get along together in amity without threats, except on the part of a few fools, to go and shoot each other. I cannot understand such a man bringing in a bill of this kind. It seems to me inconceivable.
If this bill had come from a newcomer to Canada who had emigrated from a country where they had never had the advantages of our historical background, I could understand it. But from a fellow Canadian like myself, I am frankly unable to understand how it could be proposed.
Let us see whether there is truth in the dangers that these people represent. We are told that one of their first points of attack is among the working-class organizations. Mr. Speaker, for a great number of years I have been very active in the farm organizations of Saskatchewan, big ones and little ones, from small institutions comprising a few people who handle in a co-operative way coal, wood, gasoline, and things of that kind, to the larger ones that handle the great grain marketing and the great distribution of all commodities.
We have communists in Saskatchewan. There may be some in the co-operative movement; in fact, I would be amazed if there were not. I expect that some have probably tried to gain official positions in the elective fields of these organizations, but of all the organizations I know, I am aware of only one co-operative farmers organization in Saskatchewan that has one communist on the board of directors, and he is there, not by any claim to political superiority by reason of his beliefs but because the people who elected him believe he is a competent director of the organization. If he attempted to introduce any of his ideas into the operation of that organization he would suffer defeat at the next election.
Of all those organizations, I know of not a single one that is to the slightest extent dominated, among its elected officers, by communists. I hold in my hand their News Letter, volume 3, No. 4, of April, put out by the Co-operative Union of Saskatchewan, and I wish to show how co-operatives believe in democratic performance, in democratic practices and in democratic activities in all their fields. I will say this, and it cannot be disputed, that no co-operative organization in this country that I have ever heard of has ever endeavoured to prevent, by law or repression, even the kind of private enterprise they are opposing, from continuing, although we have frequently had some types of private enterprise that have tried with some success to persuade the present government to make

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it more difficult for co-operatives to grow than they have for some of the great semimonopolies in this country. However, they stand absolutely for religious freedom, racial tolerance, freedom of assembly and freedom of speech. That is at the masthead of every co-operative organization I know of in the west. They say further that the denial of any of these rights to any one group endangers the whole edifice. I think that is a potent statement. If we establish in this country things of the kind suggested, we shall weaken our faith in the system we have been building, I think successfully, over our nearly eighty-one years of nationhood since we got responsible government.
I know that on many occasions in the past I have criticized, as I shall in the future as long as I am here, those in authority when I think they have done wrong. I believe it is through that kind of criticism, when it is sound and when it is submitted to the public, that we make improvements. That is how it has gone along. We did not always have the state that we have at the present time. It was much worse at one time. We had, shall we say, most unmoral political activities in the past; even in my lifetime I can remember them. I do not believe that we have nearly so much of it now. In the main I believe that the great majority of the people who are elected to this House of Commons, and to our legislatures, are men and women of integrity, who did not buy their way via the rum jar and other methods of that kind. I believe that we are improving our political life. We shall not improve but shall rather weaken our position the minute we undertake to say that, because of somebody we do not like or somebody we think we have cause to fear, we shall do as is suggested. The minute we say we must prevent these people from talking, we are doing as the hon. member who spoke just ahead of me said; we are making it possible for them to build up something that we might have great cause to be afraid of in the future. I am never afraid of anything I can see, but I can get desperately afraid of shadows when I do not know what is contained therein. I think that goes for our whole political life.
Another thing the co-operatives say is this, and I am quoting now from the April letter of the co-operative union:
Remember

the technique of the anti-democratic is always the same. First, a small minority group is singled out for persecution and denial of the right to meet, to speak, to worship.
When that is done, Mr. Speaker, then we start from there on the downward path reversing the history of our country. I should like to tell some of the things that have happened
that I know of. I should like to tell my hon. friend one little story. A man came to our western country not so many years ago, and because he knew a great number of us in that country were Protestants, he brought out what was supposed to be the obligation taken by the Knights of Columbus. He sought out everyone he could think of who was a member of the Masonic order, and saw that he got a copy of it. It was the most damnable document I ever read in my life until I came to Ottawa to this session of parliament when I received another one which I will describe in a moment if I have time.
That document set out all the things that the Catholics would do to the Protestants, the most vicious kind of things they were going to practise on them in order to make this a Catholic country completely under the control of the Knights of Columbus. They held meetings in our community and they asked us to go there. I went to listen, and I was extremely angry. When the meeting was over, when this man had finished speaking, I got up. I said, "Here you are; you call yourself a decent individual. Yet you come here and try to destroy my faith in my neighbour and create in me an emotional hatred for him, because you say he claims he is going to do something to me." I took that document, tore it and threw it in his face. He became very angry and came to my office the next day. He started again, and I had the great and glorious pleasure of taking him by the windpipe and tossing him out through the office door. He never came back again. I do not want those things to happen in this country.
Mr. LaCROIX:	Even to your neighbour
communists?


Thomas John Bentley: As long as my neighbour the communist is subject to the same laws as I am in this country, and as long as he does not break those laws. If he does break those laws, he must be dealt with by the police force, the same as I or anybody else who breaks the laws. There is plenty of law to take care of all the misdemeanours or major crimes that can happen in this country. We have a good police force. We have good city by-laws in our urban places. We have plenty of protection to see that nobody is permitted to do things to us that our law says must not be done; and I believe implicitly in law and order.
The other document I mentioned that I received was just as bad, and I received it from an anonymous person out in Vancouver, British Columbia. This was anti-Jewish, and was trying to persuade the reader that the
Criminal Code Amendment

Jews must be dealt with both harshly and severely in this country. It did not say to kill them, but if I had been subject to emotionalism, as it was hoped the receiver would be, I would have easily read into it my right to go out and kill them. I was told the question was, Who is a Jew? This paper said not to have the slightest doubt about who is a Jew when you meet him. If he looks like a Jew, he is a Jew. So with regard to anybody I do not like, all I have to do is to describe him as a Jew and go out and do something harsh to him; because if he looks like one to me, he is one.
The same thing would eventually apply to these people. When you start to pick on some kind of people, some day you will say, "Not only do I suspect you of holding a card, but I am going to strip you and look for a card." And if I do not find a card on you, I am going to say, "You are a communist, anyway, and something is going to happen to you." From there wre go on from one to the other, to the Japs and to the Jehovah's witnesses who tried to propagate a certain kind of religion and who should be allowed to do so. We shall go from them to somebody else, and pretty soon we would have ourselves in a political turmoil instead of having the democratic rights we are supposed to have.
I should like to go on at some length to give more quotations from this paper, but I know there are others who wish to speak on this matter and I do not want to take more than my share of the available time. Jt seems a pity that we have only an hour for these particular things, because if anyone takes his full time-
Mr. LaCROIX: You are doing your best to talk it out.


Thomas John Bentley: Mr. Speaker, the hon. member said I was doing my best to talk it cut. That statement is completely and utterly untrue. I did not make the rules of this house. Those are made by the government. I have only this occasion to speak on this matter, and others will want to do so also. I am perfectly willing, when the matter comes to a vote, to stand and be counted on the basis of what I have said here tonight. Anybody who says I am deliberately talking this bill out is telling a deliberate untruth; and I should like to use a stronger word.
As I said, Mr. Speaker, I do not want to take all the time available tonight. I have probably already taken more than my share. There is plenty more that I should like to have said, both from my heart and from my

mind, as well as from this document from which I was quoting the co-operative unions' Monthly Letter, which is put out by the kind of people I believe in and trust. But I hope I have at least said enough to convince some members of this house that the Canadian people are intelligent enough to be able to get out and listen to all the political ideas that may be expressed by anybody in this country and to choose what to them is the best. I will abide by their decision, because I believe it will be a good decision when made by them.


Mr. L. W. SKEY (Trinity):: Mr. Speaker, my remarks this evening will be very brief. I expect to conclude within three minutes, so that hon. members will have an opportunity to vote on this bill if they wish to do so.
My choice is very simple. I must support the bill because I have in my constituency the leader of the Canadian communist party, Mr. Tim Buck, who has been opposed to me in elections and whose influence and methods I know very well. At the same time I must deplore the fact that this bill has had to be introduced in this house by a private member, and that a better bill designed to accomplish the. thing we all want, that is the security of our Canadian way of life, has not been sponsored by the Minister of Justice (Mr. Ilsley) or the Prime Minister (Mr. Mackenzie King).
In the short period of the last ten years we have seen free countries fall under the spell of the police state. We have seen the Baltic states, Yugoslavia, Roumania, Bulgaria and Hungary come under the spell of communism. Today we see Greece menaced by this same absolute form of government. Only a few weeks ago we saw Italy win a notable victory over the communist ideology in its last general election. Czechoslovakia has gone under, and Finland has been forced to sign a most unfortunate agreement. The Baltic states of Estonia, Latvia and Lithuania are politically dead; and the march of the iron curtain is ever westward.
The people who support these absolute doctrines do not understand our political philosophy, the fair play in which we believe and the tolerance which we have always maintained under our British institutions. Therefore they cannot be met by ordinary means; they must be met by strong measures. Though in this bill there is much that democratically minded people must deplore, I have no choice but to support it, because I believe that communism is the number one menace to the world today and that, unless we take positive action against it, in the end we must be weakened and possibly succumb.

The Budget-Mr. Caouette


Mr. RALPH MAYBANK (Winnipeg South Centre):: Mr. Speaker, I have no doubt whatever-


Some hon. MEMBERS:: Question.


Ralph Maybank: Hon. members are calling ''Question", but this bill will not be voted upon tonight. I did not want to speak at this time; I wanted to give the measure more consideration and to speak at greater length. Obviously, of course, I cannot say what I should like to have said in the time at my disposal this evening, but whatever ideas had occurred to me I am going to set aside for just a moment in order to comment upon the speech to which we have just listened. I believe the hon. member for Trinity (Mr. Skey) gave us an excellent example of where this sort of legislating will lead us. In effect he said, "I have Tim Buck for an opponent in my riding, and I am in favour of this bill".


Lawrence Wilton Skey: On a point of order, Mr. Speaker-


Ralph Maybank: There is no point of
order. I am interpreting my hon. friend's remarks.


Lawrence Wilton Skey: Only because I know the methods they employ to delude the Canadian people.


Ralph Maybank: That is all right. The hon. member was on his feet for some time-


Lawrence Wilton Skey: Three minutes.


Ralph Maybank: He had a good opportunity to explain all the explanations he endeavoured to make. My construction of what he said is just as I put it to you, Mr. Speaker.


Lawrence Wilton Skey: It is quite wrong.


Ralph Maybank: Well, perhaps on some other occasion the hon. member will explain the last explanation. That is exactly the way in which people will approach this sort of problem; not being able to meet with arguments opponents of the sort dealt with in this bill, they will have the law on them. If necessary, they will make a law they can have on them and do something to them, fine them or put them in jail or something like that.


Lawrence Wilton Skey: Why does the government not sponsor a proper bill?


Ralph Maybank: The hon. member for Trinity and other hon. members might just as well understand now that they cannot win elections in that way.


Some hon. MEMBERS:: Nine o'clock.


Ralph Maybank: I hear it said that it is nine o'clock. I desire to speak further upon this bill and analyse it, as well as some of the philosophy underlying it. That cannot be done this evening, so I move the adjournment of the debate.


Mr. SPEAKER:: The time reserved for public bills having expired, the house will now revert to the business under consideration at six o'clock.



THE BUDGET


[Stage Direction]
The house resumed 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. REAL CAOUETTE (Pontiac):: Mr. Speaker, when the people of Canada learned about the budget they were very much disappointed, for many good reasons. I do not intend to speak very long in English; a little later I shall continue in French. I should like to draw the attention of hon. members to the fact that if social credit policies had been applied in this country we would not have had to face the things we are facing today. During the war, social credit policies were partly applied; for instance, the subsidies given to producers, which constituted a step toward the social credit policy of just prices. If this policy were still followed in this countiy we would not face shortages of mei-chandise and complaints from the consumers.
During the war we made gifts to other countries. In peacetime it would be no harder to make those gifts to our own people, and they would be completely satisfied. All during the war we never heard anything about a shortage of money in this country, though they say that in order to carry on the war we were obliged to tax the people heavily, that the people were paying all these expenses, and so on. When war was declared in 1939 the people of Canada were not able to finance it because we were just like a lot of broken nails. We had been starved for the ten previous years. However, just overnight in 1939 we were able to find the money with which to build up the strongest war machine we had ever had in this country. It should be just as easy to build up in peacetime a machine to assist our people.
The Budget-Mr. Caouette

Another thing which looks like social credit policy is the provision for family allowances which has been in effect since July, 1945. If Social Crediters had not been talking about a national dividend from 1930, 1931 and 1932 we would not have family allowances in this country. I agree that a Liberal government passed the law, but it was the Social Crediters who formed public opinion in regard to that matter.


Mr. MICHAUD:: Why did you not put it in, in Alberta?


David Réal Caouette: I will answer the hon. member for Restigouche-Madawaska. During the dinner recess I heard it said that Aberhart had promised a national dividend but had never given it, that he preached social credit for eight, nine or even ten years but that we do not have it yet. It is said that Mr. Manning, the present Premier of Alberta, is still talking about a national dividend, but it has not been granted. This is not the fault of Social Crediters. They endeavoured to obtain a charter for a provincial bank of Alberta, but it was refused and they were unable to go ahead with their policies. The blame rests on the government which stopped them from going ahead to apply social credit.


Mr. LOW:: A dog-in-the-manger attitude.


David Réal Caouette: It may be said that a national dividend has not been declared under the Manning administration, but one thing must be said about that administration in Alberta; it is the most honest government in Canada today. You will hear that, Mr. Speaker, not only from me, but even from some of our Liberal friends who know something about it.


Mr. CRUICKSHANK:: Have you ever been in Alberta?


David Réal Caouette: Yes. For your information I was there last year.


George Alexander Cruickshank: You just passed through.


David Réal Caouette: They would not allow the hon. member in Alberta. The adoption of the social credit philosophy is a duty in this country. It is not only a duty; it is an obligation that it be established. For an hour this evening we have been hearing about communism. Communism is an idea and you cannot put an idea in jail.


Mr. GRANT:: What about Fred Rose?


David Réal Caouette: You put him in jail, but you have not put communism in jail. You will have communism in this country until you can offer a better idea. We stand for

free enterprise; we stand for security with freedom, which is just the opposite of communism. Let us go ahead with the social credit philosophy; let us explain it to the people and put it into practice. We should be doing more about it than presenting a budget such as the Minister of Finance (Mr. Abbott) presented the other night. The government is just following the same line as it followed before. The same abuses remain and nothing is corrected.


An hon. MEMBER :: Toryism.


David Réal Caouette: Toryism and Liberalism. Something must be done and it cannot be done just by making speeches. We can continue to talk in this house, but if we do not do anything to stop communism by proper action, by establishing a system which will permit our people to have a good standard of living, we shall be wasting our time completely.
The trouble today is finance, and the Minister of Finance knows it. There is a shortage of money this year in this budget. The Minister of Finance would like to pay all the debt of this country, but he is not able to do that. He may pay the interest and a little off the capital debt, but he cannot go very far with it. He is not so sure about next year. This year we have prosperity, but it is a strange and funny prosperity, because there are people unemployed and there are people who are starving today.


An hon. MEMBER:: No.


David Réal Caouette: 
Mr. GAUTHIER (Portneuf):: You do not lack imagination.


David Réal Caouette: businesses or develop new inventions have not the courage to go ahead with their plans because our financial and taxation systems do not permit them to do so. We have to hire accountants to do our bookkeeping in an effort to hang on to our earnings. Otherwise, the returns go entirely to the government. Private enterprise must be respected. May I quote the following excerpt from an article by Mr. Leopold Richer which I have read in the newspaper Notre Temps:
There remains as a bulwark against the rise of communism and socialism, the impressive fortress of American capitalism. However, in the neighbouring country as everywhere else, private enterprise is attacked from without and from within. From outside, by all those forces which lead, particularly in Europe, toward the state control of production and wealth sources. From within, by its own abuses, its static condition, its blindness, and, its slowness in adapting itself to new conditions.
Western Europe is being helped in her fight against communism; but is it known that victory is thus being ensured to socialism in Europe? Now after all what is socialism if not a bridge thrown across the abyss of bloody revolutions to enable people to cross over peaceably from capitalism to communism? Does one realize finally what a ridiculous situation the capitalist countries find themselves in? They are providing the enemy with arms.
Mr. Richer adds:
Even if it is understood that North America should go to the aid of starving and impoverished Europe, one can rest assured that this will not ensure the survival of private enterprise. Is the latter looking for an ideology? This ideology already exists. It is there, within the said enterprise and its social realm.
As Mr. Esdras Minville recently reminded the members of the Montreal Chamber of Commerce: "The world of tomorrow will either be Christian or communist. Business men cling to freedom of endeavour and to private enterprise. And rightly so, because these are important fundamentals of a social order based upon the respect of human dignity. But if business has rights, it also has duties to perform, the first of *which is to serve society."
If capitalism is to survive, it can pursue but one objective. It must aim at making private enterprise serve the community. But once this objective has been set, we get a new outlook on the future and private enterprise can save the community many tragic upheavals.
It seems to me, Mr. Speaker, that no intelli-, gent citizen, having read that article, should1 be satisfied with saying: "How beautiful and logical". On the contrary, everyone should make up his mind to follow that lead in order that we may achieve the results which we are seeking.
The problem today lies more in the distribution of goods than in their production. Our

industries, both primary and secondary, could produce even more goods if they were only given an incentive to do so. What we are lacking is buying power in the hands of the consumers. The replacement of man-power by machine creates a problem to which there must be a better solution than ever-increasing unemployment.
Today, production depends more and more on mechanization. The worker, who has been replaced by the machine, is no longer remunerated. He loses his wages and everything. If we come to the point where machine replaces the worker, instead of serving him, man will be enslaved.
The purpose of economy is not to provide employment, but to satisfy the needs of man. Such is the purpose of economy. Those who do not think that it should serve the people are simply off the track.
Full employment is not an impossibility. For instance, instead of using fifty men or a steam shovel that takes the place of some two or three hundred men, we could bury the steam shovel and put some five or six hundred men to work with teaspoons. That would give work to everyone. It would be a way of achieving full employment as it is advocated by members of the C.C.F. and by our Liberal friends opposite.
By applying every social credit principle, the policy advocated by the Electors' Union would solve and cure the economic ills that are rife in Canada.
The Social Credit party suggests a cure that would save the people as well as free and private enterprise. Other groups, as I have just pointed out, offer full employment or similar plans that, in short, are just as effective as a poultice applied to a wooden leg.
In the budget speech, the Minister of Finance (Mr. Abbott) told us that he could not reduce the personal income tax; the people must understand, he said, that even with more money, they could not buy more than they do at present. There is at least one course they could take, but that is quite out of the question today. Indeed, &8 per cent of our workers earn less than S2,000 a year and they are burdened with debt practically the whole year round. If they had less taxes to pay they could afford to pay their bills. Many such people, hundreds of them, are in urgent need of money.

The Budget-Mr. Caouette
They have barely enough to live on, $2,000 to $2,500 a year and they would rather spend that money for their family, but they are prevented from doing so. It is alleged that they could not purchase more commodities with this money, but they could at least pay for what they are buying now.
The program of the Union of Electors is more than ever a practical one,, and those who do not now recognize it as such will have to admit it before long. If we must wait till we are shaken out of our complacency, it will not take long. It is no secret that the communists are gaining throughout the world. Once again, I say that we must do something at home.
When we ask that all revenues of less than $3,000 a year be tax-free, such a provision is possible and logical. No valid reasons can be given in this house for the maintenance of a tax on all incomes over and above $750 for single persons and $1,500 for married people, when we, as members of parliament, enjoy exemptions of $2,750 for single persons and $3,500 in the case of married people. We find it to be a good thing for ourselves; it is logical and none of us voices any criticism; we are glad to have that exemption but let us not forget that all constituents in our respective counties and every Canadian would also be delighted and pleased to be relieved in some measure from the burden of income tax.
And now, a word concerning the old age pensions of $60 per month at age 60. Some may ask, where will the money come from? Where did it come from during the war? Let us get it from the same source.
Tonight I shall discuss not the methods but the results that are desired. Let us ask ourselves whether Canada can produce enough to pay a $60 monthly pension without the means test, to people in the sixties.
Then we should grant monthly pensions of $60 to our incapacitated or disabled people after they reach the age of 21. No one could assert that Canada is unable to produce sufficient to ensure our incapacitated of disabled people a monthly pension of $60 at the age of 21, when we are in a position to grant pensions to our office workers after the age of 60. If we can give huge sums outside Canada we should certainly be able to give some assistance to those who need it in this country.
The fourth point is the monthly $20 national dividend which we demand. That dividend is
still possible. As I said at the outset, family allowances are based on the same principle as that dividend. Moreover, the latter would not be based on laziness as some claim; on the contrary it would be based on and linked with production, and production itself cannot materialize if it is not linked with work.
Dividends would be handed out for labour. The higher the level of production, the fatter these dividends would be. There is absolutely nothing illogical or unfeasible about it today in our country. In the present state of industries, equipment and mechanical devices, we must find a remedy to the social unrest that prevails among our people. In a letter to the King of Sardinia, the Monsignor Rendu, Bishop of Annecy, wrote as follows:
The progress of industry has given rise to such odious abuses that one has to go back to the times of paganism to find the same degree of callousness and contempt of humanity as exists today. What astonishes me most is that public opinion or what is generally called by that word does not rise against this ever-increasing disorder which engulfs the community like a wave blown by a storm from the middle of the ocean. The abolition of slavery was the source of a noble enthusiasm . . . ; however there is no one to suggest a remedy to this most painful and loathsome disease of humanity. The wailings of its victims are plainly heard, but no one dares raise his voice from fear of those who press them in an effort to extract gold from them.
The same conditions prevail today. Everyone is afraid to raise his voice against finance, against those who control money and credit or against those who are treating man as a piece of machinery. Under social credit from the social standpoint, we are not afraid of attacking evil wdiere it exists and of applying the remedy where it is needed instead of resorting to futile remedies.
If we do not want communism in Canada, let us at least provide honest means of livelihood to each and everyone of our citizens. Let there be among us the rich, the not-so-rich, millionaires and the poor, but we should see that in Canada nobody lacks the necessaries of life. Let us at least guarantee basic necessities.
In his encyclical Quadragesimo Anno, Pope Pius XI expresses himself as follows:
For then only will the economic and social organism be soundly established and attain its end when it secures for all and each those goods which the wealth and resources of nature, technical achievement, and the social organization
The Budget-Mr. Caouette

of economic affairs can give. These goods should be sufficient to supply all needs and an honest livelihood, and to uplift men to _ that higher level of prosperity and culture which, provided it be used with prudence, is not only no hindrance but is of singular help to virtue.
Mr. Speaker, I will fell my hon. friends from the other side of the house that if social credit is no good, if it is a dangerous thing, a thing to be feared, what is there to stop the government from applying in Canada the social doctrine of the church? Who prevents them from doing that? It is the financiers, the people who control money and credit,, who are only too glad to lean on us to make war, to make the gun-makers wealthy, but when it comes to making the Canadian population wealthy there is no more money. The money-makers are for war; they like war. Then they come and take away from us the money we have been able to make during or after the war, and that for many years to come.
As far as communism is concerned, Mr. Speaker, I would like to call the attention of the house to one fact. For the last month there has been vile propaganda against that northern section- of the province of Quebec which I have the honour to represent in this house. The papers reported that there were 3,000 communists at Val d'Or, 4,000 at Rouyn and 2,000 at Malartic. It was even said that machine-guns had been found at Yal d'Or, in the cellar of the member for Pontiac. However, when they came to my house they found that it had no cellar, so how could it hide machine-guns?
This whole story is a malicious fabrication, reflecting on the population of the northern part of the province. At Val d'Or as elsewhere, the people are peaceful, peace-loving, mindful of their own business. They are not communists. There are no more communists in Val d'Or or in Rouyn -than here in the house at Ottawa, or in Montreal. We have no such people. Those living in the north are for the most part Catholics. In my constituency they are Social Crediters, which means that they are anti-communists.
Before resuming my seat, Mr. Speaker, I would like to call to the attention of the Minister of Public Works-he is not in his seat at present, but he will read this-the fact that we in Val d'Or are in great need of a post office and that the hon. Minister of Public Works (Mr. Fournier) should see his

way clear to satisfy the numerous demands that come from the city of Val d'Or, and provide it with a post office. We also ask for the establishment of a rural mail delivery service in all the parishes of the county of Pontiac, which are all agricultural or colonization parishes. Some people there have to walk as much as five or six miles to fetch their mail. We ask for a rural mail delivery service. We are entitled to it, but here again I suppose money will be lacking.
For two years now we have been demanding a home delivery mail service for the twin cities of Rouyn and Noranda. The Postmaster General (Mr. Bertrand) says that a post office should be constructed at Noranda or at Rouyn, and that he does not know what to do. Those people in the north want to be told, not where the post office is to be built, but whether they can have their mail delivered at the door. As far as the means employed are concerned, that is the government's business, the Post Office Department's business. The population wants results. If we get none there, because the member is not a Liberal, it means that it is just the same as in Russia where communist methods are employed. The representatives of the people must be respected, whether they be Liberals, Conservatives. C.C.F. or Social Crediters. When their constituency needs something, let them have it, instead of waiting till the next election to give them empty promises. Those are the things which my constituency most urgently needs. I hope that the responsible ministers will see to it that those requests are satisfied as soon as possible. The whole population suffers from injustice at present. We are entitled to these services and have a right to expect results.
In conclusion may I state that, from the economic point of view, social credit provides a solution. If it is not good, let another one be brought forward. Its philosophy is not a materialistic one. On the contrary it is a good spiritual philosophy and we will fight for its application throughout Canada.
(Text):


Mr. T. B. BARRETT (Norfolk):: Mr. Speaker, my contribution to the debate will be brief, for I do not intend to indulge in any detailed criticism of the budget but merely to endorse what already has been very well said by other members of this party.
I find that the manner of the Minister of Finance (Mr. Abbott) is so engaging that, as far as I am concerned, in his administering of a very bitter pill I am somewhat disarmed.

The Budget-Mr. Barrett
However, in spite of his assurance that the medicine will be good for us, I think the harshness and bad taste of the dose will not only nullify any good effects which theoretically it should have, but tend to destroy that confidence which is so necessary between patient and physician if a cure is to be effected.
The disease, the minister tells us, is inflation; the cure, high taxation. But this heavy burden of taxation, especially as it bears upon the lower income group, is having a definite effect in slowing up production; and increased production, it seems to me, which would help to satisfy the pent-up demand, would be a much better way of beating inflation than taking the people's money away from them so that they will be too hard up to buy what they want.
My conception of the function of government is probably an old-fashioned one, but I believe that government should interfere as little as possible with the ordinary affairs and the lives of the people. If injustices are being perpetrated by any one group, it is the duty of the government to correct and curb those abuses. But otherwise I think they should, as much as possible, leave the people alone to run their own affairs and they should make conditions such that the people will be encouraged to make a reasonable profit rather than discourage and discredit them for so doing.
I deplore this ever-growing tendency toward government interference in private business which is so greatly advocated by my hon. friends to the left and which is practised by my hon. friends opposite. I shall probably be dubbed as a Tory reactionary for taking this stand. Since that term is bandied about so often, I think it worthwhile to inquire into just who are the reactionaries in this house. According to my understanding, a reactionary is one who persists in advocating outworn and discredited policies. Socialism is nothing more than state management, state control and state paternalism. It is the oldest form of government known to society.
In the olden days of the tribal system it probably worked fairly well, in that stage of social development. The chief had full control over the lives of the people of his clan, and looked after them in a paternal way. As civilization advanced, this system developed into the old feudal system, and for a great many years that worked well, at that time. But society has outgrown that. It is now outworn and discredited. On the other hand, the system which this party stands for and supports, that of the greatest freedom of the individual-out of which have grown all the freedoms which we enjoy, such as the freedom of association, universal suffrage, freedom of elections and 5849-278
all the other benefits of democracy-is the most modern, the most advanced system, and has been more conducive to human happiness than any other system recorded by history. I therefore leave it to the judgment of the house as to who are the reactionaries.
Moreover, while our hon. friends of the C.C.F. are extremely voluble in repudiating these embarrassing advances which are being made to them by communism-and I quite acknowledge their sincerity in this repudiation -I must point out to them that, while their methods of approach and their methods of administration differ vastly from those of communism, in the long run the ultimate aim is the same, namely state control of the people. In fact, as Lord Lothian said a few years ago at an Empire club banquet, communism is the only form of socialism that will work. In this connection, with your permission, Mr. Speaker, I should like to read into the record a resolution which I have received from a group of Ukrainian citizens in my own constituency. It is as follows:
We, Canadians of Ukrainian origin, numbering 80 gathered ait a public meeting in Waterford, Ontario, May 16, 1948, unanimously resolved to bring to your attention the following:
1.	In 1918, by the will of forty million Ukrainian people on their ethnographic lands of Europe, a democratic Ukrainian national republic was formed, which was recognized by the western powers.
2.	The Ukrainian national republic was annihilated by the armed aggression of the Muscovite Bolsheviks between the years 1918 and 1920, and a fictitious totalitarian state the so-called Ukrainian Soviet Socialist Republic was formed, which, even today exists due to the dictatorship of the ruling communist party and to the terrorism of the secret political police.
3.	Since that time the Ukrainian people have struggled unceasingly against the Soviet occupants, viz.: millions of lives lost in that struggle, the present uprising of the Ukrainian partisan army, and the new 300,000 Ukrainian political refugees in the allied occupation zones of Germany.
4.	Only after occupying the Ukraine, and annihilating the more intelligent and more active elements of the Ukrainian people by mass executions, by banishments, and by artificial famine, were the Muscovite communists able to commence the realization, of their imperialistic plans for undermining the whole world.
5.	The Union of Soviet Socialist Republics, with its anti-national, totalitarian, terrorist regime, appears as the greatest threat to world peace, world freedom, culture and the Christian religion.
6.	By means of revolutions, civil wars, economic crises and subversive acts of its fifth column communist parties in every country, the U.S.S.R. aims to overthrow the existing democratic regimes and to form vassal states, based on the dictatorship of communist minority.
7.	The communist parties of the world, under various aliases, are in reality branches of Moscow's communist party of Russia and a fifth column of the U.S.S.R., whose orders guide their
The Budget-Mr. Knowles

activities. Their activity is aimed at the destruction and overthrow of countries wherein they function.
Therefore, we appeal to the Canadian government and especially to its united nations representatives:
1.	To investigate, to introduce and to support at the united nations forum, the just requests of the forty million Ukrainians in regard to the renewal of the Ukrainian democratic national republic on their ethnographic territories.
2.	To question the right of Mr. D. Manuilski, who has been appointed by and represents the occupational Eussian regime, the right to speak in the name of the Ukrainian people.
3.	To point out to the members of the united nations the threat to world peace of the present totalitarian U.S.S.R. government with its antinational regime and its imperialistic foreign policy.
4.	To outlaw the so-called Labour Progressive party, which is a branch of the Russian communist party and a fifth column of U.S.S.R. The L.P.P. is not a Canadian party because its headquarters are outside Canada and this party's activity is aimed at exterminating the democratic regime in Canada.
5.	To extend a sanctuary on Canadian soil to the Ukrainian political refugees, who at present are found in western Germany and Austria. These peoples are anti-communists, and are representatives of every walk of life. During the last three years under the protection of the western allies they have displayed their skill in organizational and constructive work.
These displaced persons if assisted to settle in Canada would spearhead the movement and combat communism since they are victims of its menace. We feel that the settling of these people in Canada will raise the standard of Canada culturally and economically. In the present grave international crisis these people look with foreboding at the future and have no opportunity for a total expression of their constructive abilities.
We trust that you, being acquainted with the foregoing, will draw the necessary and fair conclusions and meet our request with approval. We remain,
Faithfully yours,
Mike Podolak, Chairman of meeting.
John Danyeevich,
Secretary.


Mr. STANLEY KNOWLES (Winnipeg North Centre):: Mr. Speaker, in his budget speech the Minister of Finance (Mr. Abbott) said we should view the national budget in relation to the whole economy of the country. He went further and said we should think of it in terms not only of the present but also of the future.
With that sentiment I thoroughly agree, but I fail to find in the budget speech or in the policies of the government any implementation of that high principle. As far as the budget itself is concerned, it seemed to me that the Minister of Finance applied that principle of planning our national affairs in relation to our whole economy only with respect to the

national debt. To him it seemed a matter of supreme concern that we plan everything to make as large a reduction as possible in our national debt. All of us feel a measure of sympathy with that idea, for it is in keeping with something most of us go through personally. We find that debt is a millstone around one's neck, and that it is highly desirable to get rid of it if at all possible. But it is also true in the experience of ordinary human beings that most people like to live for something else than just paying off debt. Most people like to enjoy life in the process, and to feel that they have something to look forward to. I suggest that there is a parallel between that ordinary human experience and the problem which faces us in planning our national economy. I believe it is our job as a parliament, and the job of the government, to find a balance between reducing the debt as far as that can be done, and at the same time making provision for improving the standard of living and providing our Canadian people with an opportunity to enjoy life here and now.
Just in passing, I should like to remind the minister and the house that if his position were completely logical it would mean that we should do our best to get the national debt down to some small figure, such as it was a number of years ago. When we look at some of the statistics with which we have been furnished we find that in 1933 our national debt was only about 82,500 million. In 1947. on the other hand, our national debt was over $13,000 million. Most of us have memories of 1933 which are much more bitter than those of 1947. The fact is that in the year of the infinitely smaller national debt we had the worst depression this country has ever known, but in the year of the huge national debt to which I have referred we had what the government, at least, calls a time of high prosperity. I do not say one is the cause of the other, but certainly these figures disprove the suggestion that by simply reducing our national debt to some smaller figure we would bring back prosperity. What counts is not the size of the national debt but the level of our economic activity, and the production of the goods and services that go to make up the standard of living of our people.
As a matter of fact, this point was driven home to the house a good many times during the course of the war by the present Minister of Justice (Mr. Usley) when he was Minister of Finance. Time and again he was chided by Mr. Hanson, then leader of the official opposition, over the huge debt which was being piled up. The minister found this chiding somewhat to his liking, for it enabled him to reply that this huge national debt was but an

The Budget-Mr. Knowles
index of the increased productivity of the country. Many times he told us he had no fear of our ability to carry a much larger national debt as long as we had a high level of economic activity and high productivity. So I suggest that the aim of the government's budgetary proposals and the aim of parliament should be not simply the reduction of the national debt to some hypothetically low figure, but rather the raising of the level of production and the standard of living of the Canadian people.
I felt that the best part of the budget speech was the part the minister did not read. As a matter of fact, I want to compliment the minister and his officials on the way in which the white paper was put together this year. In his speech the minister indicated that there were certain new departures; and I have found it extremely interesting and valuable to look through the statistics contained in the budget white paper. I am sure these figures will be very useful to us in time to come. I was particularly pleased with the way in which the minister had prepared for us not only figures relating to government accounts but figures relating to our national economy in the broader sense. I am interested also in the figures he gave relating to the amount of money spent by governments at all three levels in relation to the total national income of the country as a whole.
Some hon. members may fear that having said this, I shall be launching into a reading of a lot of these figures. That is not my intention tonight. I do wish to call attention, however, to the figures in the appendix to the budget, on page 4111 of Hansard, where a table appears headed, "Personal disposable income per capita". This table, like many others in this appendix, gives comparisons for the years 1939, 1944, 1946 and 1947. The particular table to which I refer indicates quite clearly that there has been a considerable increase in the amount of personal disposable income per capita in this country since 1939, and I happen to know that the figure in 1939 was considerably higher than it was in 1933. Even with the increases that have taken place, however, we find that the average personal income per capita in Canada! for 1947, before the deduction of taxes, was $804. The direct personal tax amounted on an average to $63, which left a net personal disposable income of $741 for every man, woman and child in this country.
It all depends on one's approach to this subject whether that is a good figure or not. When one thinks of it in terms of average individual income it does not sound very much, but when someone points out that it is the 5849-278i
average income that people can spend for all the goods and services they need to keep alive, the average income of every man, woman and child, then it might be said that it is pretty fair. For example, if the average for every man, woman and child is close to $750, to use round figures, it would mean that a family of four-a man, his wife and two children- would have an average annual spendable income of $3,000. Again I say that sounds very good when one speaks in terms of averages.
But nothing is more deceptive in statistics than averages and that rule certainly holds good in this case. It so happened that about a day or two after we got the budget and this interesting appendix which the minister gave us with it, his colleague, the Minister of National Revenue (Mr. McCann), presented us with a green book entitled, "Taxation Statistics." This book bears the publication date of September, 1947. Again I am grateful to a department of government for what it has done in compiling useful statistics. I wish to refer to some figures found on pages 116 and 117 of this new and interesting book. The figures on these pages are headed as follows:
Estimated distribution of taxpayers, income, and revenue by income class and by marital status and dependents.
These figures are for the taxation year 1946, which is the last year for which these statistics are available, and one can understand that they could not be any later than that just yet. I wish to make a comparison between the average personal disposable income which the Minister of Finance gave in the appendix to the budget with the figures furnished by the Minister of National Revenue. I do not want anyone to say I am dealing with figures that are not comparable, so in the table given by the Minister of Finance on page 7 of the appendix I shall take the figure for 1946 and compare it with those given by the Minister of National Revenue for the same year. In that year the average personal income in Canada was $769 before taxes were deducted. With the deduction of taxes, it is brought/ down to $704. It is a question which of those' figures one should take for the purpose I have in mind, but I suggest that the round figure of $750 is fair enough, and for my purposes it is on the conservative side.
What I am anxious to do is to show hon. members how deceptive that average is. It is very nice to say that every man, woman and child has $750 a year to spend on the things he needs. Thus it might be said that $3,000 a year for a family of four is not too bad. But what is the picture as given to us
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by the Minister of National Revenue in his book, "Taxation Statistics"? To begin with, I may say there are several columns in these pages headed "single no dependents", "single one dependent", "single two or more dependents", "married no dependent", "married one dependent", "married two dependents", "married three dependents", and so on. I intend to take the figures from only three columns. The three I have chosen are "married one dependent", "married two dependents" and "married three dependents". In ot,her words, these are families of three, four and five persons. I have taken them as being a sort of average Canadian family.
If it were true that the Canadian people have this glorious average of $750 a year per person it would mean that families of three should have an income of $2,250 a year. But what is the story for a family of three persons, namely, a married couple with one dependent? There were in the year I am considering, 1946, 423,520 taxpayers in that class. Of those 423,520 taxpayers in the class of families of three, only 161,020 had $2,250 or more. On the other hand, 262,500 of them had incomes of less than $2,250, or, in other words, less than this glorious Canadian average.
Let me put it in percentages. Only 38 per cent of families of three persons who pay taxes had the average income or better; 62 per cent of them had less than the average. Bear in mind this further fact that I am taking only the figures for those in the taxation bracket. If you add to the 62 per cent to which I have just referred the families of three that do not pay income tax that are below the exemption levels, the number of which is not given, you raise to a much higher figure those families of three Canadians who are below the average to which I have referred.
Let me go into the next column which deals with married persons with two dependents, or, in other words, a family of four. If the glorious Canadian average meant anything it would mean that a family of four should have an income of four times $750, or $3,000 of disposable personal income. But what is the story of families of four? According to the figures furnished by the Minister of National Revenue, there were 294,616 taxpayers in the class of families of four, or married with two dependents. Of those 294,616, only 48,166, or 17 per cent, had the average or better. On the other hand, 246,450, or 83 per cent, had incomes in 1946 below the glorious average.
Again I point out that that figure of 246,450 families of four persons having less than the average income takes into account only those who paid taxes. If you add to that figure the families of four that had incomes so small that

they did not pay taxes at all and therefore are not included in the taxation statistics, the percentage of Canadian families of four having less than the average would be even higher than 83 per cent.
I move over into the next column which is headed "married three dependents", or in other words, families of five. What is the story there? Again, if the average of $750 meant anything it should mean that families of five have an income of $3,750 a year. I find in the case of these families of five, in 1946 there were 142,524 who paid taxes, and of that number only 14,224-


James Joseph McCann: Where did you get that figure of 14,224?


Stanley Howard Knowles: I am taking those who were receiving $3,750 or more. The minister will find that dividing line about half way down the column. I have taken this average of $3,750 and added the figures from there down-the minister can check them and draw my attention to it if I have made a mistake- and it comes to 14,224, which is ten per cent of the total number of taxpayers in that group, whereas there are 128,300 who are below $3,750 in the families of five. This means that, of the families of five who pay taxes, 90 per cent have incomes of less than the average figure of $750 per person.


James Joseph McCann: There may be two in the family who are not dependents at all.


Stanley Howard Knowles: The heading on the
column is, "married three dependents". If they have other members of the family who are not dependents they are not claimed as dependents by the taxpayers.


James Joseph McCann: You ought to put on the record, with respect to the family of five who, according to your figures, are earning $3,750, or five times $750, that all of them put together had to pay a tax of only $190 on the average.


Stanley Howard Knowles: The Minister of National Revenue is missing my point altogether. I am not now complaining about the amount of tax the people had to pay. I am complaining with respect to the thousands of people who are in such low income brackets that they do not pay income tax at all.


James Joseph McCann: If that is your only complaint we can attend to that.


Stanley Howard Knowles: That is the best promise we ever got from the ministerial benches. I want to make one further comment about this class, namely, families of five. I have taken as the average $3,750, namely, five times the

The Budget-Mr. Knowles
average individual income of $750, and I have shown that 90 per cent of the families of five have less than that average. Actually in the group "married three dependents", namely, families of five, there are 56,800 who have less than half the average, and that figure of 56,800 represents 40 per cent of the married taxpayers in this country who have three dependents.
I point out again that my figures are on the conservative side, because they do not include the thousands of persons that there are in each of these categories whose incomes are below the exemption levels altogether.
I submit, Mr. Speaker, that this turns that glorious Canadian average of $750 per person into a pretty sorry picture when one has to face the fact that there are that many Canadian families trying to get along on incomes so far below the average. This average income is very nice if you have it or if you are in the brackets above it, but it is poor solace and poor comfort to those who are away down below to be told that, on the whole, things are so glorious in this country.
There are two comments I want to make on the statistics to which I have just referred. The first is. if I may go along with the line of thought that was in the mind of the Minister of National Revenue, that these figures support the criticism that has been made from many quarters of this house against the Minister of Finance for his failure to increase the tax exemption levels. Others have pointed out, and I will not take time to repeat it, what has happened to the cost of living. The Minister of Finance himself pointed that out very effectively in his speech when he told us that it was the thing that had chiefly concerned all of us during the past year or so. What 1 am pointing out now is that it is no theoretical or hypothetical consideration but a real problem for thousands of Canadians whose total personal disposable income is so far below the Canadian average.
The other comment I make on the basis of these figures is that they reveal pretty poor planning on the part of the government of the day as far as the standard of living of our Canadian people is concerned, and it points up the need for tremendous improvements in our economic conditions both in terms of economic productivity and in terms of social security. I do not wish to go into these matters at any great length tonight, but I want to say a word or two in particular with regard to the second of the things I have just mentioned, namely social security.
If any government accepts it as its duty to make its budget have some beneficial effect
upon the life of the country; if, as the Minister of Finance said in his budget speech at page 4072 of Hansard-
In the world of today we must be prepared to undertake much that is new, much that is daring, much that is big.
-one of the places to start is in the field of social security, a need that is high-lighted by the kind of figures that I have given the house tonight taken from the government's own statistics. With so many of our people down in those income brackets where living is so tough, it is not good enough to plan for better programs of social security years or decades in the future-


Mr. MARTIN:: What other country spends as much of its national income on social security and welfare services as Canada?


Stanley Howard Knowles: That question is repeated so often, every time we talk about conditions in Canada, that it is losing any point it ever had1. What we are concerned about is Canada. Even if the conditions to which I have referred are the best in the world, still we are not satisfied with them and no parliament or government has any right to be satisfied with them.


James Joseph McCann: All things are relative.


Stanley Howard Knowles: Things are relative, but it is relatively hard to live at the standards of living and on the incomes which these people receive.


James Joseph McCann: They are living better than any other people in the world.


Stanley Howard Knowles: There we are, right back to the same old argument. I say to the government that their job is not to be satisfied by comparisons with other countries-and I am not sure that there are not some other countries where in some respects they have things a little better than we have.


James Joseph McCann: Where are they?


Stanley Howard Knowles: But in other respects we are better off here. However I am not going to enter into that argument.


James Joseph McCann: No, that is the argument that kills yours.


Stanley Howard Knowles: It is the argument that will kill your government, and you know it,


James Joseph McCann: It is the argument that kills your argument.


Stanley Howard Knowles: The minister has been in this official atmosphere for so long that he has forgotten what these things mean to the people back home. I sat here a week ago tonight when the budget was brought down
The Budget-Mr. Knowles

and sensed the general feeling in the house that it was a tough sort of budget but perhaps a necessary one, and I knew the Minister of Finance felt that, after people had thought it over, they would thank him for it. But I happened to be home in Winnipeg over the weekend and I was amazed at the things people said to me whom I met even casually during the two or three days while I was home.


James Joseph McCann: Tell us what they said.


John Ritchie MacNicol: It would be unparliamentary language.


Stanley Howard Knowles: I found far more disappointment with this budget, even amongst people who are Liberals, if you please, than even I expected.


James Joseph McCann: They will tell you the truth.


Stanley Howard Knowles: They did, that is it. They told me the truth. They told me they could not understand-


James Joseph McCann: What is it? We are prepared to hear it.


Stanley Howard Knowles: They could not understand the Minister of Finance bringing down a budget with the huge surplus that was announced and doing nothing to improve the position of those in the lower income brackets. If the Minister of Finance wants to know it, I had not planned to speak in this budget debate, believe it or not, until I went home and found so much opposition to it that I felt-
. Mr. ABBOTT: You had better capitalize on it.


James Joseph McCann: Tell us what the opposition is other than that it did not meet your demand for a cut in personal income tax.


Stanley Howard Knowles: I just told the minister, and he has repeated it. That is the chief opposition of the people of this country to this budget. They say that, with a surplus of over $600 million, the Minister of Finance surely should have found it possible to raise the exemption levels and give some taxation relief to those in the lower income brackets.


James Joseph McCann: Everyone of those people realizes-


Stanley Howard Knowles: How about standing up?


James Joseph McCann: I will rise. I am sorry; I did not want to interrupt the hon. gentleman.


Some hon. MEMBERS:: Oh, oh.


James Joseph McCann: There is not a person in this country who does not realize the obliga-

tions that we have because of the war, and frugal, sensible people who understand the economic conditions of this country, are prepared now to pay our share of our vast debts.


Benoît Michaud: Hear, hear.


Stanley Howard Knowles: That is absolutely right; people are prepared to pay their share, but people to whom I talked, some of whom are in the upper income brackets, did not feel that it is fair to keep on taking so much from the people in the lower income tax brackets.


James Joseph McCann: The only people who are talking that way are the hon. member and other politicians who are doing it for political reasons. On economic grounds it is not sensible.


Stanley Howard Knowles: 
Mr. BEAUDOIN:: Will the hon. member
permit a question?


Stanley Howard Knowles: Yes.


Louis-René Beaudoin: Is it true that the Saskatchewan government has cut down the old age pension recently?


Eric Bowness McKay: No; raised it.


Stanley Howard Knowles: The Saskatchewan old age pension is the basic $30 a month that is provided for by federal statute, plus a $5 supplement added by the Saskatchewan provincial government.


Thomas John Bentley: And they all get it.


Stanley Howard Knowles: Alberta pays a supplement; British Columbia pays a supplement, and there is a certain kind of supplement in Ontario.


Lawrence Wilton Skey: A $10 supplement.


Stanley Howard Knowles: With an additional means test. I am just stating these figures to give the total picture. Do not get me off into that, because it would be quite a long story. I frankly do not like the way in which we have been led into making old age pensions a political football and tossing it back and forth from the federal government to the provinces, or from one province to another. In my view what should have been done is something along the line which was proposed in the government's proposals to the provinces back in 1945.


Louis-René Beaudoin: As a matter of fact, your government did cut it.


Mrs. STRUM:: They never did any such thing.


Stanley Howard Knowles: I happen to come from Manitoba; therefore it is not my government. But Saskatchewan at no time reduced the pensions payable to the old age pensioners in the province.


Paul Joseph James Martin: They withdrew the $5 supplement last fall.


Stanley Howard Knowles: The story of the Saskatchewan old age pensions was this: first $20 years ago, then raised to $25 in 1943 when this government did it here, raised to $28 a few years later by the Saskatchewan government itself, then raised to $30 a month about two years ago, and raised to $35 a month a few months ago. At no time has it been reduced.


Paul Joseph James Martin: Is it not a fact that last fall when the Old Age Pensions Act amendment became effective the $5 supplement payment that Saskatchewan normally paid was withdrawn by the provincial government and restored at the beginning of the present year?


Stanley Howard Knowles: The $5 provincial grant that the province gave for about a year before this government came through with it was paid in lieu of the $5 which it was expected this government would provide. When they came through-


Mr. GIBSON (Hamilton West):: Pretty weak!


Stanley Howard Knowles: When it came through they did exactly what Premier Garson did in Manitoba, and nobody in this house had a word to say about that.


Mr. TIMMINS:: What was the hon. member for Moose Jaw (Mr. Thatcher) complaining about out in Saskatchewan last October?


Paul Joseph James Martin: Saskatchewan was the only
province to withdraw payment.
The Budget-Mr. P. Gauthier


Stanley Howard Knowles: The Minister of National Health and Welfare knows he is just indulging in the kind of practice that a certain magazine did. He is just carrying on this attempt to set the dominion against the provinces, and one province against another, and the old age pensioners suffer as a result of it.
I want to point out that the government of Saskatchewan has recently added another $5 and made it clear that it is paying what it regards as 25 per cent of a $50 a month pension, and it calls upon this government to give their share of the $50 a month pension.
Back in 1945, and I presume they meant it, the federal government made offers to the provinces, which included the expectation that this government would pay out $217 million for old age pensions in 1948. I know all the arguments about these two provinces down here who will not sit down and talk things over and agree upon something for the good of Canada as a whole, but this government apparently expected to spend $217 million on old age pensions in 1948. In this year's estimates the amount allotted is $65,000,000. I do not call that a good budget. With a surplus of $670 million, the government allow only $65,000,000 for old age pensions in the year 1948, when in 1945 they talked of putting aside $217 million for old age pensions.


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


Some hon. MEMBERS:: Go on.


Stanley Howard Knowles: Just two minutes more, Mr. Speaker.
I was one of those who applauded mpst enthusiastically-I meant it and still do-when the Prime Minister made the announcement a few days ago in regard to health measures. We welcome a beginning in that field with all the enthusiasm we possess. But I cannot help noticing on the other hand that, whereas in 1945 there were proposals that involved the federal government spending $150 million per annum on health measures, we now have proposals laid 'before us for only $30,000,000. That kind of budgeting is not good enough for a government whose job it is to exercise some responsibility in respect of the well-being of the Canadian people as a whole. Our people have a right to expect something a great deal better.
There was more that I should like to have said, Mr. Speaker, but I will not trespass upon the time of the house. I thank you for the two minutes extra you have given me.
fMr. Martin.]
(Translation):


Pierre Gauthier: Mr. Speaker, my first words will be to congratulate the treasurer, the Minister of Finance (Mr. Abbott) on the angelic patience he has shown all through this debate.


Benoît Michaud: Hear, hear!


Pierre Gauthier: The treasurer has to listen-


Benoît Michaud: To dissatisfied people.


Pierre Gauthier: -over and over again to the same criticisms and requests. After having heard members criticize his failure to reduce the income tax, he will listen in a few days to a possibly greater number of members who, after all their criticisms, will ask him for increases, pensions of all kinds. They will tell him-like I am going to do tonight-that he should provide for public works, the construction of post offices, repairs to piers, et cetera. That is why I think he deserves to be congratulated, although those are the only congratulations I shall address to him tonight, for I believe, like Samuel Johnson, that praise like gold and diamonds owes its value to its scarcity. I ask him to continue, not always to pay attention to minor details but. as he has done, to face the future squarely without any fear of criticism, shaping his course with the knowledge that each of his actions and motions, as well as each of the words he has uttered are in the best interests of the people.
I heard last night the hon. member for Moose Jaw (Mr. Thatcher) tell us in perfect French, for which I congratulate him, that there are fundamental differences between his group and the communist party in so far as their respective ideologies, objects and methods are concerned. As regards the objects and methods, I might admit that often enough the hon. member is right. But in connection with any fundamental difference in ideology, I cannot see how the advocates of socialism, under whatever form, can know so little about it as to believe that they diverge from a theory which they have upheld from the very beginning, that is the Marxist theory. They are opposed to dictatorial methods used by communism, but let us remember that socialism and any form of government control of industries is a totalitarian method and if they do not propose to overthrow governments by force, if they plan to achieve that end through the popular vote, it is certainly not by advocating what can be called real democracy, because after all we must remember that in

The Budget-Mr. P. Gauthier
England, after two or three years in office, the government proposed to nationalize that most noble of all arts, medicine. Fortunately, the United Kingdom medical association stood firmly and the government had to fall back and let the people obtain medical care as it should be given, that is on the basis of devotion and self-sacrifice.


Benoît Michaud: Hear, hear!


Pierre Gauthier: Mr. Speaker, I read in the Ottawa Journal today an article which is exactly along my line of thinking. In a certain debate, I referred to the position of Spain with respect to the united nations and especially the United States and the British commonwealth. As we are trading with Spain, I think I will be allowed to say a word about this article and even add to it. The Ottawa Journal said-and I am giving a hasty translation-that during the civil war in Spain, men who hold eminent positions in the communist party today were then acquiring their basic experience trying out, as de La Fontaine puts it in one of his fables, their first set of teeth. There we find Georgi Dimitrov who drew up plans for the international brigades in Spain and is now the Red dictator of Bulgaria. Tito was then known under the name of Joseph Brozovitch. He was in the forefront with Dimitrov and he is today the dictator of Yugoslavia. Klement Gottwald was a political commissar in Spain and today he is the strong man in Czechoslovakia. Andre Marty who was in active charge of the Dimitrov plan, is today a communist leader in France. I would say that he is the chief communist agent in France because he held a key position in the leadership of the communist party in that country. I am adding this to the article because the latter does not state that Andre Marty, his ancestor, was the communist leader in 1871, when Napoleon III fell. Luigi Longo, notwithstanding some newspaper items, holds in Italy a position exactly similar to that of Andre Marty in France. Longo presides over the military and political organization of the communist party in Italy. Mention is mostly made of Togliatti, but the real leader is Luigi Longo. These two men were making a first test of strength with Doctor Negrin the then president of the so-called democratic government of Spain. Therefore, those were the men who ran everything their own way in Spain and who were defeated by Franco.
Spain is accused today of being ruled by a fascist government and of still putting up with such a regime. At the same time, I am sorry *[DOT]849-279
to say, the united nations do not hold it against Russia to be party to two treaties, the first with the united nations, the second in relation to the three powers agreement of Japan, Germany and Italy. It is this secret document which was made public by the state department of the United States and which truly existed though its existence was denied, as it was bound to be, by Soviet Russia. In the case of Spain, with which we have commercial dealings, it is a crime, but no such crime attaches to Russia for having had double dealings with the countries of the world.
As I cannot speak indefinitely on Spain without being called to order-I thank Your Honour for your indulgence-I shall only put on record this question asked by the honourable member for Charlevoix-Saguenay (Mr. Dorion): What are the figures relative to our trade with Spain from 1936 to 1947?
We find that in 1936, our imports from Spain totalled $1,129,315 while our exports amounted only to $469,160, more briefly, in 1947, we bought $3,003,000 worth of goods from Spain but sent her commodities valued only at $940,594. To borrow a well-known saying from one of the high officials of the Department of External Affairs, this means that if the word "consul" is as old as trade, we should appoint a consul to Spain since we have been trading with that country for quite some time.
I understand that Mr. Glass who is in Lisbon with Mr. Morin is doing very creditable work, but, even if Franco is still leader of the Spanish government, we ought to appoint a consul who would supervise Canadian business in that part of the Iberian peninsula.
I said that my words of praise for the treasurer would be brief but I added that, like other honourable members, I would make various requests. I take the liberty of putting two on record. Since 1939 I have been pleading for the building of a post office at Donna-cona, one of the most prosperous new towns of the whole province of Quebec.


Some hon. MEMBERS:: Hear, hear!


Pierre Gauthier: Under direction from the late and regretted Mr. Cardin, Minister of Public Works at the time, I had succeeded in having the Department of Public Works purchase a piece of land in Donnacona and prepare plans, and in having a credit approved in the 1939 estimates. Unfortunately, the war came and it shattered all hopes of these people to whom I owe much and who
The Budget-Mr. P. Gauthier

have a right to expect a great deal from the federal government as well as from the provincial government.
I renew this request because, since 1939, the population has increased by 1,200 which is sufficient indication that the building used for this service is entirely inadequate. The people are justifiably complaining. Allow me, Mr. Speaker, to quote the following resolution passed by the municipal council of Donnacona, which was communicated to me and of which I sent a copy to the Minister of Finance (Mr. Abbott) some time ago:
January 5, 1948.
Whereas the town of Donnacona is the seat of the county of Portneuf, province of Quebec, and is at the same time a very important industrial centre;
Whereas all the citizens of Donnacona recognize the untiring work done by Mr. Arthur Delisle, postmaster;
Whereas the premises now occupied by the post office are too small and no longer suited to the needs of an important town like Donnacona;
Whereas the whole population of Donnacona earnestly demands the building of a post office by the dominion government;
Whereas the dominion government has already purchased in Donnacona a site for the building of a post office;
Whereas the dominion government has already recognized the necessity of a post office at Donnacona;
Whereas Donnacona requested the building of a post office six years ago;
Whereas the said post office is now urgently needed;
It is moved by Alderman Isidore Dore, seconded by Alderman Elisee Veillette and unanimously carried that the dominion government, through the Post Office Department, be entreated to accede to the request submitted by the citizens of Donnacona regarding the erection of a post office to meet the needs of the people.
I have been urged by the citizens of Donnacona to renew the request I made some time ago to the Minister of Finance. I hope that his supplementary estimates will include an appropriation of at least $35,000, because the plans drafted in 1939 are now inadequate and will have to be revised to cope with the mail traffic at Donnacona. I said, a while ago, that the people of Donnacona deserve it. They give the finest example in the whole country of the co-operation that should exist between labour and industry. In that district, where strikes are unknown, grievances are settled through discussion, thanks to the perfect agreement that exists between industrialists as well as civil and religious authorities. If this example were followed all over the country in every district and community, there would be no cause to grieve over long work stoppages that entail heavy financial losses to industry and labour, but more especially to the workers' families.

I now come to my second request. I shall state it more briefly because the plans are not yet complete. I have in mind the building of a wharf on the St. Lawrence just opposite the picturesque parish of Cap Sante, perhaps one of the most attractive tourist haunts in the constituency of Portneuf, along with Descham-bault and Neuville.
I wrote to the Minister of Public Works (Mr. Fournier) stating my reasons for requesting the building of a wharf. I do not need to restate them in the house. I trust however the Minister of Finance will as usual have the patience of an angel and kindly listen to the claims of the member for Portneuf. They are few but he has them at heart. They are submitted with the best intentions. A friend of mine, the hon. member for Outremont (Mr. Rinfret) has reminded me of a request I had forgotten. I thank him for it. On behalf of all the farmers in my constituency and throughout the province, I ask the Minister of Finance to consider the case of those farmers compelled, as you know, to pay income tax.
I would ask the hon. Minister of Finance and the hon. Minister of National Revenue (Mr. McCann) if they could not find one way of reducing the income tax in the case of farmers. Let me explain why I make that request. The farmer employs on his land one, two or even three of his sons to whom, quite often, he pays no salary. I would ask the Minister of Finance and the Minister of National Revenue if it would not be possible to deduct from the farmer's taxable income a certain amount in lieu of such salaries in order to allow him, and especially his song, to work with greater heart, to make the land more fruitful, and so to enable them to develop and enrich the heritage which was entrusted to them. They will be able in this way to keep more money at home, if possible, which will benefit the family and the young people.
I know that it is often stated that the federal government pays for family allowances. Had I only had the time I would have put on record the moneys which it provides in grants and subsidies of all sorts to the farmers of Quebec alone. Unfortunately, eleven o'clock is coming on and I see that my time is almost up. I have no intention of uselessly lengthening this debate.
I would therefore ask that special consideration be given to those farmers who employ their sons on their land, from, shall we say, sixteen to eighteen or nineteen, in order to help develop the national family heritage, and in order also to encourage those farmers' sons to stay on the land, to help, for several years, their parents, their younger brothers

The Budget-Mr. P. Gauthier
and sisters, so that greater sunshine may yet flood this good Canadian earth to which the farmer is so atta'hed and for which he has given so freely of his sweat and oftentimes, of his blood.
Mr. Speaker, I often regret that our hon. friends opposite do not read the history of this country more often when I hear them comparing our standard of living and that of other countries.
If they understood the wholeheartedness, courage, physical energy and strength with which our fathers devoted themselves to moulding Canada into the land we know, they would realize that this is a land of sacrifice if ever there was one. Even if they have slight grievances and feel that the people are not entirely satisfied, they should not dare to draw comparisons that always sound feeble, especially when the Canadian standard of living is set beside that of other countries.
It is good to be living in Canada, as those who have been elsewhere very well know. One need only look around to ascertain that I speak the truth when I say that Canada can be favourably compared with any other country in the world.
I	regret, Mr. Speaker, that I am short of time; however, I wish to congratulate again the hon. the treasurer on his patience. I beseech him to disregard all critics; let him think and act as a true Canadian, always bent on making Canada the happiest country in the world.


Benoît Michaud: Hear, hearl
(Text):
On motion of Mr. Ilsley the debate was adjourned.



BUSINESS OF THE HOUSE

Gordon Graydon: May I ask the acting leader of the government what the business will be tomorrow?


Douglas Charles Abbott: We shall continue with the budget debate.


Gordon Graydon: If the budget debate should be concluded tomorrow what will be taken up?


Douglas Charles Abbott: I think we shall go into supply. I believe that is the understanding.


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

[Stage Direction]


Wednesday, May 26, 1948