Hon. CYRUS MacMILLAN (Queens) moved:: That the second report of the special committee on honours and decorations, presented to the house on the 24th instant, be now concurred in.


[Stage Direction]
Motion agreed to.

Right Hon. W. L. MACKENZIE KING (Prime Minister) moved:: That the names of Messieurs Fournier (Maisonneuve-Rosemont) and Coldwell be substituted for those of Messieurs Abbott and Douglas (Weyburn) on the select committee on war expenditures.


[Stage Direction]
Motion agreed to.

[Stage Direction]
PRINTING OF CERTAIN DOCUMENTS AND PAPERS IN "votes AND PROCEEDINGS"
Mr. VINCENT DUPUIS (Chambly-Rou-ville) moved:: That the attached list of documents and papers, referred to in the third and final report of the joint committee of both houses on the printing of parliament, be printed in the Votes and Proceedings.
Motion agreed to:



PUBLIC EXPENDITURES


[Stage Direction]
On the orders of the day:
Hon. R. B. HANSON (Leader of the Opposition):: I desire to ask a question of
the Minister of Finance. It will be recalled that on July 21, as reported in Hansard, page 4447, I asked the minister whether it was proposed, as indicated in an item appearing in the Ottawa Citizen of July 20, to establish a new supervisory authority in order to exercise greater control of governmental expenditures, and particularly to eliminate needless extravagance. In his reply the minister stated that a specific proposal for the watching of a certain class of expenditure had been discussed, and that one of his colleagues would be in a position to make a statement before the close of the session. When may we expect to have that statement?
Status oj "0 Canada"


Hon. J. L. ILSLEY (Minister of Finance):: Perhaps the Minister of National War Services, who was the colleague to whom I referred, can say a word about that.


Hon. J. T. THORSON (Minister of National War Services):: The subject to which the leader of the opposition has referred relates to proposals of economies in the matter of government offices. It is still under consideration. No decision has been made as yet with regard to the matter.


Richard Burpee Hanson: That is, the principle itself has not been established by the government. Has a commissioner been, appointed?


Joseph Thorarinn Thorson: No one has been appointed.


Richard Burpee Hanson: And the principle itself is still under consideration?


Joseph Thorarinn Thorson: It is still under
consideration.



&quot;0 CANADA&quot; REQUEST FOR FURTHER STATEMENT IN ANSWER TO QUESTION AS TO STATUS

[Stage Direction]
On the orders of the day:
Mr. T. L. CHURCH (Broadview):: I wish to ask the Prime Minister a question referring to his reply on the evening of July 28, as reported in Hansard, page 4S88, to the questions which had been raised about eight times this session on the flag and the national anthem by the-hon. member for Quebec-Montmorency (Mr. LaCroix).
The right hon. gentleman replied to me the other evening in reference to the statement he made on the national anthem in 1927, and he-stated that since that time we had had in: Canada a royal visit, on which occasion the two anthems were given equal recognition. In reply to an hon. member whose own side started this, he had already said in the house two or three times that in view of the fact that the war was on, the question in regard to a flag and an anthem could stand over until after the war, which I think was wise. It was secondary, and I did not start it. I should like to ask the Prime Minister to clarify the statement he made last Tuesday, because, when the law was looked into by me in 1927, on a question then put, the right hon. gentleman, then Prime Minister, stated that the existing anthem, "God Save the King," was and always would be Canada's national anthem, but that there was another one, which was somewhat provincial, like "The Maple Leaf Forever," and another provincial anthem namely "0 Canada." Would he clarify that

Status oj "0 Canada

statement? I think the house should decide these two matters according to the Prime Minister's reply of a month ago.


William Lyon Mackenzie King: I should like to clarify what I said, but I doubt if I could do so in words other than those I have already used. There
are times and seasons for all things, and this time of war does not seem to me, and I am sure it does not seem to hon. members generally, to be an appropriate time to provoke a discussion, either in the house or in the country, on the question of either a national anthem or a national flag. I believe that by custom, so far as the national anthem is concerned, it may be said that both "God Save the King" and "0 Canada" have been regarded-


Mr. MacNICOL:: And "The Maple Leaf Forever"-


William Lyon Mackenzie King: No; I am .speaking only of the two-have been regarded .as national anthems and have been accorded like recognition, not in all cases, but generally by courtesy. I should feel that during the period of war it would be preferable to allow matters to remain as they are. To go beyond 'that at this time would undoubtedly occasion 'misunderstandings abroad if they did not also *occasion misunderstanding at home. It would be the wish of all, I am sure, to avoid unnecessary controversy. I feel strongly that at an appropriate time this house should pass a resolution which would give definite status to the national anthem or anthems to be accorded due recognition and observance in Canada, but I do not think that the present is an opportune time.


Thomas Langton Church: The visitors referred to just
did that as a matter of courtesy.



PICKERING MUNITIONS PLANT


[Stage Direction]
On the orders of the day:
Richard Burpee Hanson: On July 25, as reported at pages 4702 and 4703 of Hansard, I asked the Minister of Munitions and Supply certain questions in connection with the explosion at the government munitions plant at Pickering. Is the minister now in a position to reply to those questions?


Hon. C. D. HOWE (Minister of Munitions and Supply):: The proceedings of the inquest came to my hand only yesterday. I have not

had an opportunity to prepare a complete statement, but I can give the house certain information, and I am glad to do so.
On Saturday last, in reply to an inquiry of the leader of the opposition, I agreed to give the house a full report on the explosion which took place in the shell filling plant at Pickering, Ontario, some weeks ago, which resulted in the death of one employee and serious injury to three others. This accident occurred while a round of 2-pounder anti-tank ammunition was being buffed, to reduce the thickness of the metal of the cartridge case, that it might fit into the chamber of the 2-pounder antitank gun. The cartridge cases in question are made by a Montreal manufacturer, who up until June 8 had delivered a total of approximately 1,550,000 cases to this particular shell-filling plant. Of this total quantity of deliveries some 850,000 had been assembled into complete rounds by June 8, and of those assembled rounds about 10,000, or 1-17 per cent, had failed to pass the chamber gauge test. As soon as these defective rounds were discovered, an immediate investigation was ordered, as a result of which it was discovered that the defect was caused by overly thick metal at the mouth of some of the cartridge cases. The manufacturer promptly eliminated this fault and the first batch of acceptable cartridge cases arrived at the shell-filling plant on June 9.
It was then decided not to use any of the cases delivered before June 9 in the assembling of finished rounds of ammunition, but to set aside the balance of the 1,550,000 cases delivered before June 9 until they could be thoroughly checked and, if necessary, rectified. However, prior to this decision, a number of these faulty cases had been assembled into complete rounds. The question was whether the rounds should be broken down, or whether the neck of the cartridge case should be buffed to reduce its thickness. Both these operations are attended with considerable danger, and it was decided to adopt the second alternative, inasmuch as this would permit the salvaging of the entire round, whereas the breaking down operation would probably have resulted in the complete loss of all the over-size rounds.
Ten thousand rounds of faulty shells were successfully rectified by buffing, with the use of a 6-inch buffing wheel. It was subsequently decided that the operation could be speeded up with the use of a 12-inch buffing wheel. The 12-inch wheel was installed on June 8 but apparently was never properly tested. This wheel was not put into immediate operation because, with the delivery of satisfactory cases from the manufacturer in Montreal, on

Pickering Munitions Plant
June 9, there was no further need for buffing complete rounds. On June 25, 700 of the cases which had been delivered prior to June 9 were put into the line for filling and assembling, as a result of an error on the part of one of the workmen. This error was discovered by the floor foreman, but not before 100 of the cases had been assembled into complete rounds. When these rounds failed to pass the chamber gauge test, the floor foreman, under the impression that the 12-inch buffing wheel had been thoroughly tested, ordered the rounds to be buffed on that wheel. After three or four rounds had been buffed the explosion occurred which resulted in the death of one of the employees and the injury of three others. Immediately following the accident, the cartridge case manufacturer installed special equipment, at his own expense, in the shell-filling plant, to handle the balance of the 700,000 cases delivered before June 9. This work has been carried on efficiently and with entirely satisfactory results.
I have not had time to go through the coroner's report, but the following is the verdict of the jury:
We your jury empanelled to inquire into the death of Alexander Dodwell, present our finding: that the deceased met his death while in the employ of Defence Industries Ltd., Pickering, Ontario, on June 25, 1942. This death was accidental, the result of an explosion while polishing wheel was being used to remove high spots on a 2-pound shell.
We recommend that greater precautions be taken in future, and that other and safer methods be used in this operation should the need again arise.
My hon. friend, the leader of the opposition, said:
What the citizenry must know is why 60 per cent of all the shell casings received up to June 8 from the Montreal plant were defective; why 420,000 out of 700,00 received were defective.
That is 420,000 out of 1,550.000, as a matter of fact. The reply is that these passed through the inspection at the Montreal plant, although there was a minor defect. The extra thickness in the metal amounted to one or two thousandths of an inch. It was passed probably by inexperienced inspectors.
I may say that the inspection of munitions is carried on by an inspection board of Great Britain and Canada. The inspection board is responsible to the authorities in Great Britain for inspection of British munitions and to the Department of National Defence for inspection of Canadian munitions. The board is a very large organization, I think some 15,000 employees. The work has been splendid. The handling of high explosives is of course a dangerous operation. This death at Pickering
is only the second death we have had in such operations. In the case of the first death the person who died stated on his deathbed that it was his own fault, that he had broken the safety regulations. In this case there is no doubt these shells slipped through inspection. There is not a duplicate inspection; they are inspected out of the shell casing plant, and they come to the shell-filling plant with the inspector's seal on them. After the filled round is completed the filled round is inspected with the gauge to make sure it will fit the chamber of the gun, and it was then that this situation w'as detected. As I said,
10,000	of the rounds had been rectified by the method used on these rounds but with another emery wheel. It was not expected that any more filled rounds would require revision, but through an error about 100 filled rounds were filled and were buffed on the larger emery wheel, which had not been tested out and properly adjusted.
The second question is:
Was there any inspection at Montreal before the shell casings were shipped? If not, why not?
Of course the shells were inspected, and it was due perhaps to inexperience of the inspectors that these shells were passed.
Was there any inspection at the Pickering plant before loading? If not, why not?
As I say, the shells come into the plant with the seal of the inspector on them, and another inspection at that point would be a duplication, which is not considered necessary.
Is the inspection system effective? If not, why not?
I doubt if any one in this war effort has on the whole done a better or more workmanlike job than the inspection board. It has been a splendid job working under pressure. They had to take on and train thousands of inexperienced men and women and this, the first serious error that has been discovered, I think is not a reason for condemning the inspection board unduly.
Who pays for the defective shell casings, and who pays for the buffing of defective casings?
That is paid for by the manufacturer of the casings. We pay the manufacturer on inspection certificates but it is well understood in munitions production that the approval of an inspector does not free the manufacturer, that if defects are subsequently found the manufacturer must make them good. And he is doing so in this case.


Mr. COLD WELL:: How are these shells
paid for?
Pickering Munitions Plant


Clarence Decatur Howe: They are paid for by the British government.


Mr. COLDWELL:: Is it unit cost or cost-plus, or how?


Clarence Decatur Howe: Unit cost contracts.
Who is responsible for the production of 420,000 defective shell casings in one plant out of a total received of 700,000?
Well, they were manufactured in the plant of Rdbert Mitchell company, and the Robert Mitchell company are responsible. But I think it is a case where a very minor error was made due to defective inspection.


John Ritchie MacNicol: It is one of the best plants in Canada.


Clarence Decatur Howe: Yes, it has been one of our finest shell casing plants.


Major James William Coldwell: Are any recreational facilities provided for the men engaged in this plant during the hours between shifts, or when they are at lunch? I ask that question deliberately because I know that is done in Great Britain, in order to keep the workers from spending the off hours in the bars of the inns and public houses. I have been told by people working in these plants that there is nothing for them to do except go and have a chat in the beer parlour. This means the drinking of several glasses of beer, which may affect them both from the point of view of their own safety and from the point of view of inspection. Have we followed the practice in Great Britain, where they have noon concerts, the workers themselves often taking part in it, in order that the workers may have the right type of recreation during their off periods?


Clarence Decatur Howe: Great care has been taken to provide cafeteria accommodation inside the plant but away from the danger zone. We try to provide ample recreational facilities on our own grounds, where of course there is no beer to be had. The shifts are short- eight hours, with a lunch period; and I doubt very much if the workmen leave the grounds from the time they come on in the morning until they go home at night.
It must of course be recognized that in these explosive plants safety depends on every man knowing his job and doing it. The greatest care must be taken to ensure cleanliness and precision in every operation. We are filling about 2,250,000 shells a month, and I think it is remarkable that the. accident record is such a splendid one.
{Mr. Coldwell.]


Mr. DOUGLAS (Weyburn):: What provision will be made for the family of the man killed? Will it come under the Ontario compensation law, or a special provision by the federal government?


Clarence Decatur Howe: It comes under the dominion compensation laws, which in this case follow the same scale as the Ontario laws.



POSTAL SERVICE


[Stage Direction]
On the orders of the day:
Mr.  J. H. KARRIS@Danforth: I wish
to ask a question of the Postmaster General. I am sorry I did not have an opportunity to advise him in advance. Would the minister be good' enough, before the house closes, to table a copy of the agreement or contract for the carrying of mail from the Ottawa post office to the Uplands airport, and advise us whether there is in the agreement a fair wage clause, and also whether tenders were called for this contract?
Hon. W. P. MULOCIv (Postmaster General): I shall be glad to obtain the information, whether or not it is possible to table it before the house adjourns. In any case I shall be glad to forward a copy to the hon. member.


Mr. HARRIS (Danforth):: Will the minister answer the question whether there is a fair wage clause and whether tenders were called?



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. CLARENCE GILLIS (Cape Breton South):: This morning I received a telegram from the employees of the Dumart plant. A commissioner has been investigating the recent trouble there, and I understand that his report has been made to the department. Is the minister in a position to table the report before the house adjourns?


Hon. HUMPHREY MITCHELL (Minister of Labour):: I have no knowledge of it, though I mentioned the matter to my officials this morning. I shall be glad to comply with my hon. friend's request, or, if it is not possible to table the report before the house adjourns, I will arrange to have a copy sent to my hon. friend.

Air Raid Precautions



HANDLING OF UNEMPLOYMENT INSURANCE BOOKS IN DISTRICT OFFICES

[Stage Direction]
On the orders of the day:
Mr. G. K. FRASER (Peterborough West):: I have a question to direct to the Minister of Labour. I understand that unemployment insurance books must be completed after each job and before another job may be taken. I have before me a letter from a man who states that he sent his unemployment insurance book to the district office on July 10 but did not receive an answer from that office until July 24. In that answer he was told that the delay in replying to his letter was occasioned by the unusual press of business, and they hoped he had not been greatly inconvenienced. Then the letter goes on to say that he might get a job at Pickering, and he is also told:
If interested, I would thank you to advise me, or if you decide to go at once you can pick up your insurance book at this office on your way there.
This man lives sixty miles from that office. Is there any way in which the minister can speed up the work of these offices and help out these men? This man has lost the time between July 10 and July 24, and he asks whether he is entitled to unemployment insurance for that period, because he missed out on a job.


Humphrey Mitchell: I shall be glad to look into the facts of the case. My hon. friend will appreciate that with over three million persons coming within the orbit of the act, occasionally we will get some questions such as the hon. gentleman has raised. But he may rest assured that I will look into it to see if the work can be expedited.


Gordon Knapman Fraser: There are not three million people in the district where this happened. These incidents have occurred in other offices as well, and I think the work should be speeded up.


Humphrey Mitchell: If my hon. friend had just sent me a note we might have been able to deal with the matter better. When you are dealing with three million people, if all the trials and tribulations we run into are to be made the subject of questions on the orders of the day, it will create an almost impossible situation.



AIR RAID PRECAUTIONS


[Stage Direction]
On the orders of the day:
Thomas Langton Church: I would ask the Minister of Pensions and National
Health if before the house adjourns he would be prepared to make the statement he said he would make with regard to the blackout situation. I have seen him about it several times. No doubt the air raid wardens have done excellent work, but I suggest it should be extended to work of a more practical nature. These blackouts have been largely discontinued in England because most of the raids occur during the day time. I believe these blackouts have no military value. I appreciate the splendid work that has been done by the air raid wardens, as everyone does, but would it not be better to give them some practical instruction, such as teaching the public to handle a rifle at the miniature ranges, as was done in Finland?
Hon. IAN A. MACKENZIE (Minister of Pensions and National Health): Before the Easter recess we spent the great part of a day in a thorough discussion of the air raid precaution situation throughout the Dominion of Canada. In regard to the blackout system, while authority is vested in the Minister of Pensions and National Health, as a matter of fact in actual practice this authority has been delegated in the various provinces to the provincial premiers or in some cases to the attorneys general, who consult with the three defence services before a blackout is arranged or staged. Actually, therefore, a blackout is not ordered by the Minister of Pensions and National Health, but is authorized by him at the request of the provincial authorities.
In regard to the services of those engaged in air raid precautions work, there are to-day
150,000	of these people in Canada who have volunteered and who have been most zealous in their work. Perhaps in some cases they are a little over-zealous, as my colleague the Minister of Munitions and Supply (Mr. Howe) might testify, but they are doing most excellent work. The question of the relative value of their service, as between this air raid precaution work and the reserve army, has been considered most carefully by the Minister of National Defence and myself, and a very thorough working arrangement has been arrived at between the two departments.


Thomas Langton Church: A blackout lasts only
twenty minutes in Halifax. Why should it last for an hour in Ontario? Why should the large municipalities not have jurisdiction over this matter themselves instead of the provinces?


Mr. MACKENZIE (Vancouver Centre):: I should be glad if my hon. friend would make his complaint to the authorities of his own city of Toronto, because we do not direct the length of a blackout in that city; we only
Supply-National Defence

authorize it at the request of the provincial air raid precautions committee in conjunction with the defence authorities of that district.


Thomas Langton Church: Most of the prosecutions seem to be in the city of Toronto. Here is the case of a woman eighty-three years of age whose husband was prosecuted because she had a small candle burning. She had heart disease, and to let in a little air she opened a window screen.



DEBT LEGISLATION


[Stage Direction]
On the orders of the day:
Mr. G. H. CASTLEDEN (Yorkton):: The recent disallowance of debt legislation passed by some of the western provinces has led to considerable apprehension on the part of many people in regard to the security of their homes. Apparently it is too late for any legislation to be brought down this session, but would the Minister of Justice give us some definite assurance that some effective action will be taken to safeguard people in their homes during these days of stress?
Hon. L. S. ST. LAURENT (Minister of Justice): I do not think the Minister of Justice can give the hon. member any definite assurance as to what the government will do. The matter is being considered, and when a decision has been arrived at it will be announced. Pending that, I can give no assurance whatever, other than that the matter is receiving careful consideration.

The house in committee of supply, Mr. Yien in the chair.



DEPARTMENT OF NATIONAL DEFENCE

[Stage Direction]
Normal services.
180. Cadet services, $659,000.
Thomas Miller Bell: Mr. Chairman, I understood that this morning we were to go on with the estimates of the Minister of Mines and Resources, and we are ready for him, but now we seem to be going into another department.


Hon. J. L. RALSTON (Minister of National Defence):: I asked that my department be brought in. I have an appointment a little later which I want to keep.


[Stage Direction]
Item agreed to.
18S. Battlefields memorials, $13,680.
Thomas Miller Bell: Some little time ago I wrote the minister with regard to the possi-

bility of equipping certain men, particularly those on the Pacific coast. The minister acknowledged the letter and said the matter was being looked into. On Vancouver island I believe a number of civilian corps have been organized, and if they are to be of any use they should be both regularized and equipped. I do not think it w'ell that any civilian groups should be apart from the control of the military authority. I am not going to elaborate the matter; I think the minister knows to what I refer. Could the minister tell me something about it?


James Layton Ralston: I did not expect that
this would come up, because as my hon. friend knows it is really a war appropriation item rather than one coming under these items. I can say to my hon. friend in the first place, however, with regard to regularizing the corps of which he is speaking, the Pacific coast militia rangers, the hon. member for Vancouver South has been at least as much interested as anyone else in that connection. The corps is regularized; it is a part of the Canadian militia. With regard to equipment, I did get a complete list of what had been issued, and I must say that I was very much gratified at the amount of equipment being issued. The hon. member for Vancouver South sent or gave me a letter from a gentleman out there complaining that equipment had not been issued. I telephoned the Pacific coast and obtained this list of the equipment now being issued, and as a matter of fact I intended to ask my hon. friend to come to my office and I would show it to him. I have not the list with me this morning, but I can assure my hon. friend and the committee generally that equipment is being procured faster than I really expected in connection with this militia corps. They are different from the reserve army. They are a reserve militia organized under a special order, but they are still part of the Canadian army. We are endeavouring to do our very best to equip them as quickly and as completely as possible, having regard to the special work they are doing.


Mr. GREEN:: There is one matter I should like to bring to the attention of the minister, and that is the question of the intelligence organization at National Defence headquarters. I realize that much publicity cannot be given to that branch of the department, but I suggest to the minister that there is a great need of increasing and strengthening the personnel in that branch. We are now in the position where Canada may become a battle ground, particularly on the Pacific coast, and I suggest it is very important that we should have

Supply-National Defence
in Canada an intelligence section functioning much as the similar sections function in Great Britain, the United States and other large nations. I would ask that during the time the house is adjourned, in fact at as early a day as possible, the minister give the matter careful consideration, because I am quite sure something should be done along that line.


James Layton Ralston: The matter has had more than consideration. As a matter of fact a definite change in organization, an increase in organization and, to use my hon, friend's word, a strengthening in organization, has already been authorized and is now taking place. My hon. friend knows, of course, that operations and intelligence are 'together. We are strengthening both branches, having particular reference to the intelligence side of it.


Mr. NEILL:: I did not hear exactly what the minister said. Did he say he was fully satisfied that the equipment was going out, or that it had gone out?


James Layton Ralston: What I said was that I cannot recall from memory just the list of equipment. But I said that when my hon. friend sent to me a letter from a gentleman out there complaining that no equipment had been issued I immediately-


Alan Webster Neill: I have half a dozen like that.


James Layton Ralston: Then my hon. friend says the same thing. I immediately had my officials get in telephonic communication with the Pacific coast, and they gave me a list of the equipment. I am thinking particularly of tommy guns. There was a large number of those, and any other articles of equipment which were being issued at that time. I should think it would have reached them. It must be a week ago my hon. friend sent that letter.


Howard Charles Green: It was two or three weeks ago.


James Layton Ralston: And I got in touch immediately after that. I have sent for the list so that I might give any of my hon. friends an exact statement with regard to it. Of course I am never satisfied with anything in connection with equipment until they are fully equipped. But I am satisfied everything is being done-and that is not simply "language," -that all possible is being done to provide such equipment as is available, and that there is more equipment available than I expected at this early stage.


Alan Webster Neill: May we have a copy of that letter later in the day?


Gordon Knapman Fraser: I was out at Connaught ranges and I found that all the flush toilets and showers were closed up, and that wooden latrines were being used. I have had many complaints from that camp in regard to flies arising from that cause. A great many men out there have had dysentery. Will the minister see to it that the showers and flush toilets are opened up for next year? We will not have time this year, I imagine.


James Layton Ralston: I have a report from the inspector-general regarding that same matter. The matter was taken up with the quartermaster-general and we sent a man out there. One was the district engineer of military district No. 3. I am satisfied that the condition will be corrected for the future. I am also satisfied that an improvement was made as a result of the inspector-general's report.


Gordon Knapman Fraser: That is true.


James Layton Ralston: I have in my hand now the list about which inquiries were made. I do not know whether the committee will consider it sufficient to have this information communicated to the hon. members for Rosetown-Biggar and Vancouver South. It shows the exact number of Winchester carbines, the number of rifles, Stens, the rounds of ammunition SAA 9 millimetre and -303 ammunition. I would prefer, however, not to put all this information on record.


Howard Charles Green: It might be helpful to the enemy.


James Layton Ralston: If the committee will permit, I shall be prepared to show the information to these hon. members, and to any other hon. members who wish to see it.


[Stage Direction]
Item agreed to.
The CHAIRMAN:: There are no supple-mentaries.


James Layton Ralston: Yes, votes 428 to 4S0, which are three additions in amounts to items already passed.


Thomas Vien: Items 428 to 430 have been passed. They are for the fiscal year ended March 31, 1942.


James Layton Ralston: I believe that is correct.


Mr. GRAYDON:: May I have the privilege of asking one question with respect to item 184? When does the minister expect the book of remembrance will be completed? What progress has been made with respect to it?
Supply-Justice


James Layton Ralston: The decoration of the pages has been completed, and the sheets are being checked and examined now for any imperfections. It is expected that they will be handed to the binders about August 1. The employment of assistants to the artists has already been terminated, and the services of Mr. Beddoe, who was actively engaged in connection with the work, will cease on August 31. I should think the answer would be that it goes to the binder in August, and as soon as the binder has completed his operations, the work will be finished.



DEPARTMENT OF JUSTICE

[Stage Direction]
88. Departmental administration, $156,750.
John Ritchie MacNicol: When the minister's able predecessor, the late Right Hon. Ernest Lapointe, was in the house, he announced on one occasion in recent years that he could not carry on until the recommendations of the penitentiaries commission which investigated the appointment of certain penal commissioners were implemented. He indicated that he would not be able to carry on without parliament giving him the right to make such appointments. These have not been made yet. If the minister is carrying on without those appointments having been made, he must be having a hard task. .
Hon. L. S. ST. LAURENT (Minister' of Justice): The deputy minister has not represented to me, since coming to the department, that there was any deficiency in staff. I have not noticed any undue delay in carrying out the duties of the department.


Thomas Miller Bell: I should like to ask the minister about the possibility of the government's giving some consideration to the appointment of the penal commission, which was recommended four years ago. At that time the matter was discussed in the house, and I thought there was a very general opinion that the report was an excellent one, that the recommendations were good and that it showed that Canada was out of line with modern thought in the realm of prison reform. These reforms are as badly needed now as ever. A few days ago we heard of a man who had been imprisoned in Toronto, and his story seems to be confirmed by the premier of Ontario. If his story is correct it emphasizes the need of the consideration anew of prison reform, both federal and provincial. In my opinion our penitentiaries should be placed under a proper commission in which we could have complete confidence. I am not going to prolong the discussion because it. is too late in the session, but I do want

to ask the minister if he is prepared to recommend to the government that they give consideration to the report of the royal commission which was tabled in this house, I think some four years ago, with a view to implementing some of the recommendations, particularly the principal one, which recommends the appointment of a proper commission to supervise our prisons so that they may be more like reformatories than places of punishment.


Richard Burpee Hanson: I was
going to raise this question myself, but my hon. friend got to his feet before I did. In 1936 a royal commission was appointed. This commission travelled all over Canada and Europe, and a large sum of money was spent. The chairman was a well known former member of this house, now a member of the judiciary of the province of Quebec, and quite qualified to undertake the work pf the chairmanship of the commission. The commission made a definite report, the main recommendation being the establishment of a commission to administer our penal institutions instead of a superintendent as heretofore. That recommendation has been consistently ignored; at any rate the government has failed to-implement it. On one occasion I queried the former minister of justice, and he said he was unable to find the right men. I felt at that time that that was an evasive answer. If he had searched diligently I think he could, have found many gentlemen in the ranks of the Liberal party who would have been willing to take on that job. The result is that we have had to continue under the old system, which was so consistently condemned by the minister's predecessor in office and by hon. members to my left, and perhaps more particularly by former members of their group. I am w-ondering if the position was as bad as they said it was. But the fact remains that constructive recommendations were made in the report of the commission with respect to penal reform. Has this government given effect to any of them, and if so, which ones?' Has any consideration been given to the introduction of the Borstal system? I am afraid that like the report of many another royal commission, this report has been pigeonholed' and we shall never hear of it again, especially when the department's estimates are brought up at the eleventh hour. There is no doubt that the people will stand behind the government if proper reforms are put into effect when it has been shown that they are needed.
I have never taken the view that our penal' system was as bad as some people painted it..


Mr. McCANN:: It is worse.

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Richard Burpee Hanson: My hon.
friend on my right says that it is worse. I do not think it is, but perhaps my knowledge is not extensive enough to warrant my expressing any definite opinion, any first-hand opinion at all events. I should like to have a statement from the minister as to why action has not been taken on the report of this royal commission.


Mr. MARTIN:: Is it not a fact that many of the recommendations have been followed?


Richard Burpee Hanson: They will tell you that, but we are never told what they are. They always hide their light under the proverbial bushel. I hope the minor complaints have been corrected long ago. Great advances have been made in penology and in medical science in recent years, and I should have thought that our penal institutions would try to keep step with them. There has been nothing done in setting up a new system; in the main we are following the principles of the old system which was so roundly condemned by hon. gentlemen opposite and by hon. gentlemen to my left during the regime of Mr. Guthrie as minister of justice.


Thomas Langton Church: Last year the former
minister of justice brought the estimates of his department before the committee on February 25, almost immediately after the address in reply to the speech from the throne had been debated. This department covers two branches, one having to do with the administration of justice and the other having to do with the penitentiaries. Last year these branches were taken up separately. The Department of Justice in Canada carries out the functions performed by five or six departments in Great Britain. First, the minister is the Attorney General of Canada; he appoints judges and has control over the administration of justice. Second, he performs the duties of the home secretary in looking after these institutions. Third, he performs some of the duties of the lord chancellor in advising in connection with appointments. Fourth, he performs the duties of the solicitor general of England and solicitor general of Scotland. Fifth, he has other administrative duties to perform. He performs all these duties as Minister of Justice and Attorney General of Canada.
Last year I directed the attention of the minister to the fact that 110 people had been killed by motor cars in the city of Toronto. I wrote the present minister about this the first day he was in office, and I hope he will look into this matter during the recess of parliament. This is a grave situation-nearly ten times the number of
men killed in the one city, in motor car accidents, in one year, than the number killed-eighteen-in the battle of Queenston Heights. Another matter which I should like him to take up is the one to which I referred last Saturday, the amendment of the Judges Act. It is too late to do anything with it now, but this amendment would prevent judges serving on commissions, and also require judges, in the decisions given by them, to follow the decisions of the court of final appeal.
The Attorney General of Canada appoints the county court judges, the high court judges and the supreme court judges. The provinces have control over the organization and administration of the courts, but the jurisdiction is concurrent. The judges are federal officers so far as the criminal code is concerned, and other federal matters relating to the federal power have been placed under their jurisdiction. They are also provincial officers. There are so many judges either away sick or doing war or commission work that the courts in Ontario have become congested. In the high court trial division, which consists of twelve judges, practically all the work is being done by six; some of the judges have not done any work for a long time. It is unfortunate, and I think the time has come when no more judges should be released for commission work.
In connection with this particular vote I may say that we have always had a very well administered department and that it possesses the confidence of the people. You, Mr. Chairman, as a lawyer of vast experience, know how difficult it is for lawyers and litigants when, owing to the unforeseen length of a trial in some other part of the province, the trial judge is not available at the time next assigned to him. The frequency with which of recent years judges have been drafted from their judicial duties to undertake all kinds of extraneous work impairs the efficient administration of justice and causes congestion in the law courts. In any case, the commissions to which they are appointed are largely fact-finding bodies only, duplicating the efficient powers and functions of parliament, of the committees thereof, and of the many outside boards of recent innovation in war work, and furthermore they are a costly adjunct to good parliamentary government of the people, by the people and for the people, cause delays and interfere with parliament's right to immediate solution of social and economic problems of urgency to good government.
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Thus, as I say, a system has been gradually built up in Canada of judicial commission government. This tendency was discerned by the British bar association and many other such organizations. The time has come when the bar associations should have a great deal more to say than they have at the present time in the appointment of judges.
I have dealt with the high courts. Now come to the county courts. In the county of York we used to have only three county court judges. One is still alive-Judge Morson, a very able and well-beloved judge. Some hon. members, among them the hon. member for Essex East, were law students when he was an active member of the bench. There are now three or four county judges trying to do his work. Some county judges are on blackout work and do nothing else; others are on rentals administration; still others are engaged on commissions. Some of the appointments to the bench in the county court are purely political. I hope that the new minister, who is a distinguished member of the bar, will give due consideration in connection with appointments to the representations made by the bar associations and others.
As regards another branch of the service, that connected with the penal institutions, the minister may be described also as the home secretary of Canada. I think the items in this connection had better be taken together; it would save a lot of time. I trust that in the recess of parliament the minister will have some time to devote to the representations of the $600,000 prison commission which was appointed by this government, especially with relation to young offenders and the Borstal system. Many of the young people got into penitentiaries during the depression. There was no work for them to do; they rode the rods; they were sent down as vagrants, perhaps escaped from custody, and two years or more were tacked on to their sentences. Some of them had never been in trouble before. These institutions are not all they should be. A shake-up is needed. I hope something will be done about the Borstal system and that the public will get better value for its money.
I congratulate the minister on his law officers. One of them whom I know, Mr. Yarcoe, is a very fine citizen, as was his father before him. He entered the university of Toronto and is a distinguished graduate thereof, having attended also Harbord collegiate, and was brought up in the service. He is a very good man.

A word with regard to the institution of prosecution. Under our judicial system the enforcement of the federal law is on the attorneys general of the provinces, not on the Minister of Justice. The enforcement of all federal law, prosecutions for infractions of those laws, all directions to the crown attorneys, comes directly, and rightly, under the control of the provincial attorneys general. I trust that the minister will bear this matter in mind, and the gravity of the motor car peril, and will also give consideration during the parliamentary recess to the representations to which I have referred.


Mr. MacINNIS:: As members of the committee know, a special parliamentary committee dealing with the defence of Canada regulations sat during the session and made a report, which has been tabled. I should be glad if the minister could see his way clear to indicate the attitude of the government on that report, since it is not likely that it will now come up for debate in the house. I am not asking for a lengthy statement by the minister, but before the house adjourns I should like some information as to what is to be the attitude of the government to this important matter.


Richard Burpee Hanson: I also wish to raise my voice in connection with this matter, but to confine my remarks to one recommendation of the committee. I have no desire to have a debate.
The report of the committee will be found in the Votes and Proceedings of July 23, page 595, and I draw the minister's attention to the following recommendation:
1. That paragraph 2 of regulation 39B be revoked and the following paragraph substituted therefor:-
(2) It shall be a defence to any prosecution for an offence against regulation 39 or 39A. to prove that the person accused intended in good faith merely to criticize or to point out errors or defects in, the government of Canada or any province thereof, or either house of parliament of Canada or any legislature, or the administration of justice or the conduct of the war.
And then the following sentence:
The only material change in the above paragraph is the addition of the words "or the conduct of the war".
I had the pleasure of listening to Sir Norman Birkett when he addressed the committee and answered questions, and I was not only amazed but delighted at the evidence of liberality which was exhibited by him in connection with the operations of the regulations in England. I suggest, with respect to this one item, that the minister give some clear indication of the government's policy with regard to prosecu-

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tion of persons on allegations that their utterances might interfere with the conduct of the war. I have read, with a keen sense of revelation, of the effect of the regulations as they stand now, the judgment of Chief Justice Robertson in the case of Rex v. Stewart. On the basis of that decision, everyone will appreciate how all-inclusive this section is, and it must be remedied. It is a very arbitrary section. Furthermore, the government itself in a recent prosecution has recognized the injustice of the application of the section.
I do suggest to the minister-and I am not going to labour the argument-that he should give some reassuring statement to-day that the recommendation of the committee in that regard will be speedily carried out, if it has not already been carried out. The government has power to do it by order in council. If the government does not change this regulation, public opinion will continue to revolt at the idea of enforcement in a given case. I admit that public opinion sways back and forth. In the early stages of the war, as in England, there was a demand for the internment of everyone against whom there was the slightest suspicion, and public opinion went to the other extreme. There is a happy medium between the two. The department should not be swayed too much by public opinion, but when it is demonstrated that public opinion is right, as it was when the government withdrew the prosecution against Colonel Drew-not on the grounds stated by counsel, which were trivial and wholly untenable, and indeed were the laughing stock of the whole country-


Thomas Vien: Order. I have given a certain latitude and I am willing to continue to do so. It is out of order to refer to a debate which has already taken place in the house during the present session, or to a report which has been tabled in the house and in regard to which a motion for concurrence is pending-


Richard Burpee Hanson: There is no motion.


Thomas Vien: There is the possibility of a motion. The report has been tabled.


Richard Burpee Hanson: But there is no motion.


Thomas Vien: Order, please. It is
irregular to refer to a report on the estimates of this department. Standing order 58, paragraph 2 is clear. We have to limit the discussion in supply to the item before the Chair. The leader of the opposition has not
so far abused the latitude extended to him, but he was on the verge of doing so and of engaging in a general discussion of the report of the committee on the defence of Canada regulations or of the Drew incident, and in order to mete out to all hon. members the same measure of justice I must now apply rule 58 more stringently.


Richard Burpee Hanson: I have no desire to pursue the matter further. As a matter of fact, I have said all I intended
to say.


Major James William Coldwell: May I call attention
to a matter-


Thomas Langton Church: On a point of order, may I respectfully suggest-*


Thomas Vien: There is nothing before the Chair on which a point of order can be taken. The leader of the opposition has agreed with the ruling of the Chair.


Major James William Coldwell: I too should like to say something about the defence of Canada regulations and the administration of justice thereunder.


Thomas Vien: That would be out of order.


Major James William Coldwell: But this item is departmental administration, $156,750.


Thomas Vien: If the hon. gentleman will look at page 90 he will see the details of expenses involved. Under rule 58 we must adhere strictly to the item and these details.


Major James William Coldwell: I will bow to your ruling, without quoting the rule.


Angus MacInnis: Would the minister make a statement, and if it is not in order on this item, I should like the chairman to indicate the item under which it would be relevant, on the point that has been raised. I should be glad if he would do so.


Thomas Vien: I have no objection to the minister making a statement if he chooses to do so. It is out of order, but I assume that he has unanimous consent for a short statement on the point raised.


Some hon. MEMBERS:: Agreed.


Thomas Vien: It is in the discretion of the minister.
Mr. ST. LAURENT: I desire to give the house all the information I can upon any matter within the competence of the Department of Justice. I have listened to four or five observations from various sections of the house and I should like very shortly to deal with them.
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First of all the hon. member for Rosetown-Biggar (Mr. Coldwell) referred to a recent case in which a man was released, as he apparently understood, from a penitentiary and made some statement in which the premier of a province concurred about conditions there. The hon. member is under a misapprehension. The person in question was in a provincial, a local gaol, and he was there because of the recommendations that were made in connection with the defence of Canada regulations last year. I do not know whether it was part of the report, but it was a recommendation that if anyone were being detained under regulation 21, he should in the first instance be lodged in a local gaol until he decided whether or not he would object to internment, so that being in the local gaol he could the more easily communicate with counsel than if he were at once removed to an internment camp. The person to whom the hon. member referred was arrested on an order for detention which had been made in 1940 and which it had not been possible to execute before that because the person against whom it was directed had not been available. Apparently he had been in hiding. When the order made in 1940 was executed he was, in compliance with the recommendation of last year, lodged in the local gaol.
Habeas corpus proceedings were taken by his counsel, and the pertinent dates are these. He was detained and placed in the local gaol on April 4. On the 14th habeas corpus proceedings were instituted and they were not disposed of until May 15. In the meantime, on April 24. his counsel had filed objections against his detention. These objections were not referred to the advisory committee while the proceedings on the habeas corpus writ were pending before the civil courts, but as soon as they were disposed of the file was placed before the advisory committee to deal with the objections. That case was involved with one other in which proceedings for violation of the National Registration Act had been instituted and the same counsel was appearing for the two persons. Trial against one of them was proceeded with and there has not yet been a decision by the judge who took the case under advisement. Counsel for the person who was recently released on compassionate grounds had obtained leave to file a written brief. These advisory committees have I think been taking some time to come to a conclusion precisely because of the publicity in the newspapers about the kind of report that was to be made by the committee of this house in connection with the defence of Canada regulations. It is unfortunate that so much time was consumed, but I do not think there is anything which

shows that there has been undue delay in the Department of Justice. The delay was unfortunate, but was the result of the proceedings adopted by counsel for the man in question.


Major James William Coldwell: I used that as an illustration; I did not intend to raise the question in that particular case. I am more interested in what the government intends to do with regard to the institution of prison reform and possibly a commission to control the penitentiaries.
Mr. ST. LAURENT: That is the point I was coming to next. On February 25 a return was tabled showing that thirty-eight of the recommendations of the commission have been implemented, and to what extent. Since that time a further recommendation has been dealt with, having to do with the inspection of penal institutions. I wish first to state what we have done and then why up to the present time we have not been able to go further.
There was criticism in the royal commission's report that on points of sanitation, nutrition, health and medical service there was much to be desired in a number of the institutions that the shops or industries in the institutions were not well organized, from the point of view either of training or of production, and that the penitentiary farms were badly managed.
Some months ago we arranged with the departments of Health, Labour, and Agriculture to constitute committees of representatives of each of these three departments to inspect the penitentiaries in the respective localities. Committees were appointed by them and we have received reports from some of these committees. We are having all the penitentiaries inspected, and have invited recommendations from these committees. Within a very short time the inspections will have been completed and the recommendations made.
These committees were asked to inspect and to report upon such improvements as might be made without the expenditure of large sums of money. When I came to the department one of the first things I did was to try to familiarize myself with the recommendations of the commission. I found that fully to implement the recommendations would require the expenditure of very large sums of money for additional construction. At this time it is not possible or practicable to consider the construction of additional penal facilities. Money has to be used for other purposes, and the material is not available for any but essential and urgent purposes.
The appointment of a commission was linked up with the new system that was recom-

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mended. A commission is not really necessary for the administration of the penitentiaries in their present condition. The leader of the opposition was inclined to consider as evasive the answer given at one time, by my predecessor, that he had not found proper persons to appoint to his commission. I have seen the files and correspondence with several persons in that regard, covering a considerable period. The candidates the minister had in mind did not desire to accept under the conditions set out in the report. I am not saying that had there been advertisements and a call for tenders, something of the kind, it would not have been possible to find commissioners. But the minister evidently was anxious to get a proper commission. He considered a certain number of names and corresponded with some of these gentlemen, but was not able to arrange for the kind of commission he desired. Since I came into the department I have not had time to give this matter the kind of consideration it requires before one would feel disposed to come to the House of Commons and recommend-or defend -the commission appointed.
I have had frequent representations from members of the bar and others interested in penology. I think I may say that I have always given those recommendations sympathetic consideration, and that if I have any responsibility, when there is a change in the financial situation and materials are available, I shall have projects to recommend to the House of Commons. But in the meantime we have endeavoured to carry out to the fullest possible extent the recommendations of the commission that would not involve large expenditure or substantial change in the set-up.
The leader of the opposition referred to debates in this house about the situation in the penitentiaries, and said he did not think the situation was as bad as it had at times been painted. Fortunately there is no one in this house who has first-hand information as to what goes on in the penitentiaries. From the reports I get the situation can be improved by improving the methods of penology, but the system that exists is, I think, being competently administered. Every time there has been any complaint from any hon. member or anyone else about some incident in the penitentiaries it has been carefully investigated. The endeavour has been to have the investigation made by someone not connected with the Department of Justice, by someone selected from some other department. It was following that line that we requested and obtained the appointment of these committees from the departments of Labour, Agriculture, and Health, to secure a report upon existing conditions.
I do not think there is anything more that I can say at this time, unless some special question is-suggested.


Major James William Coldwell: My recollection is that the commission made some eighty-eight practical recommendations regarding our penitentiaries, the principal one of which was undoubtedly the appointment of a commission to supervise the entire system. The startling increase in the incidence of crime in this country over the past fifty years, particularly among young people, is something that should make us think. As a matter of fact during the past ten or fifteen years crime in Great Britain has decreased.


Paul Joseph James Martin: Certain types of crimes.


Major James William Coldwell: Yes, different types of crimes; but it seems to me that one of the causes of crime lies in the fact that a large number of young people, in their teens, are convicted of crimes and sent to penitentiaries, where they associate with hardened criminals, often with degenerates, and as a result they come out as confirmed criminals for life. The commission which inquired into our penitentiaries drove home that point very thoroughly, as I remember it, though I have not the report before me and have not looked at it for some time. It seems to me we need to go into this matter thoroughly, even in war time, and perhaps particularly in war time. With so many women war workers we find this situation: that while the fathers are overseas or away, the mothers are at work and no provision is made for the care of the children. As a result we may have, if not during the war, probably after the war, an increase in crime owing to present delinquency which may later result in crime.
It seems to me that we need to reform rather than punish. A year or two ago, I have forgotten just how long, I had the opportunity of a long personal discussion with Mr. Patterson, his majesty's commissioner of penitentiaries throughout the British empire. I am not going into all the matters we discussed with regard to prison reform, but one thing did impress me. Knowing that I was born in the county of Devonshire, he said, "There is one place I should like to pull down at once, if I could; that is Dartmoor, and all places like Dartmoor. Those are prisons of the old type, and we are never going to get rid of crime as long as we punish people as we have been punishing them, in prisons like Dartmoor/' We have in Canada prisons which in some respects are like Dartmoor, and I should like the minister to give consideration to all eighty-eight of the recommendations of the commis-
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sion and particularly the principal recommenr dation, the appointment of a proper commission qualified in modern penology.
I quite understand that the former minister of justice may have had some difficulty in finding suitable persons, but there are suitable persons who can be secured. They must be different from some of the people who are dealing with crime and criminals to-day; that is to say, they must regard crime in some instances as an incurable disease, to be treated accordingly, and in other cases as a grave delinquency, and treated accordingly; and try to reform the individual. It seems to me we could get people sufficiently progressive in their outlook with regard to crime to act upon such a commission. I would not suggest that we advertise; we could not, but if a careful survey of this country were made I am convinced that socially minded people will be found with the breadth of vision and the soundness of heart to undertake this important work. I wanted to take this only opportunity we shall have this session of impressing upon the minister my view that one of the most important recommendations ever made to this house was contained in that report, and that the government and the minister should act upon those recommendations, perhaps not all of them but at least the principal ones, at as early a day as possible.
Mr. ST. LAURENT: The hon. member will be glad to know, I am sure, that the population of the federal penal institutions has decreased by something over 600 since the outbreak of war, and by almost 400 in the last year. The matter of penology is not so simple here, because the proper handling of the situation might involve constitutional changes. Only those who go to the penitentiaries, that is to say only those who have been sentenced to two years or more of detention, come under the jurisdiction of the federal authority, and to do the very laudable work the hon. member has in mind naturally there would have to be sooperation on the part of the provinces, because it is not so much in those who receive long sentences that criminal habits are likely to be fostered by contact. Certainly the matter will have to be seriously considered, and I think reforms will have to be discussed with the provinces and made in such a way as to cover the whole field of penology.


Paul Joseph James Martin: There is one matter on which I invite the minister to make a general comment. This matter possibly should have been considered by the committee dealing with the defence of Canada regulations, but that was not done. I refer to the general

problem of espionage. This continent was amazed recently to learn of the effective work done by the Federal Bureau of Investigation in the United States in regard to the apprehension of eight persons who had come directly from Germany to do sabotage. Though the matter is still before the Supreme Court of the United States, in the language of Mr. Justice Frankfurter yesterday there could be no doubt of what were their intentions. The fact is that these eight saboteurs came to this continent and were landed on the shores of the United States. It might be reasonably presumed that these eight were but a portion of the complete complement, the full number of which we do not know. I do not ask the minister to give the committee details of the steps that have been taken to deal with situations like this, in so far as the reorganization of the mounted police is concerned, but I do think the house and the country expects from the minister a statement as to whether or not any of these saboteurs have been apprehended in Canada, or in any event a general assurance as to the steps that are being taken in the event of their coming here.
Mr. ST. LAURENT: With respect to this recent incident I can say to the house that the Royal Canadian Mounted Police, the British Security Control Service and the Federal Bureau of Investigation are in very close and constant contact in connection with these problems, and no one has been found here in Canada who would appear to be of this group of which eight have been apprehended in the United States. Immediately after they landed in the United States the information was sent to all points in Canada where Royal Canadian Mounted Police are stationed, and a very careful investigation has been made in each locality.
That brings me to another point with regard to which the leader of the opposition put a question some days ago, and with respect to which I think I should make a brief statement. As I said a moment ago, these intelligence services are all in close cooperation, and frequently exchange information and recommendations. A year ago the heads of the British security control measures were here, and after their discussions with this government order in council P.C. 6441 of August 20, 1041, was passed, providing for the creation of a security control service for Halifax.
Siome time ago, early in June to be exact, Sir Cannop Guthrie, chief of the British security control measures in the United States, and Brigadier Stratton, who is in charge of security services in the United Kingdom, visited Ottawa. They had previously visited

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Halifax and other points in Canada. A conference was held, and was attended by the ministers and other representatives of the Department of Justice and of the three armed services. The manner in which intelligence work was being done in Canada w'as fully discussed, and it was pointed out that from the time of the outbreak of the war up to the present, not one spy had been arrested on Canadian soil. The gentlemen connected with the British service were inclined to believe that that was not because there had not been any spies. They were inclined to the view that there must have been some here, that if there were not some here now there must have been some at some time, and that if we had not succeeded in finding them or picking them up it was perhaps because our services were not sufficiently extended.
After a long and full consideration of the whole project, and after we had been told about the kind of system operating in Great Britain, in some of the dominions and in the colonies, it was suggested that we should have connected with the Royal Canadian Mounted Police a security control body. The recommendations of this committee were taken next day to the war committee. Of course I cannot go into details, but the outcome was that on July 14 order in council P.C. 6073, which has already been tabled, was passed. This order in council provides for a possible security control branch of the Royal Canadian Mounted Police of as many as 700 operatives, at an initial cost in the first year of $1,458,000. When the system has reached full development, in the event of its being carried to that point, this amount is to be taken out of the two billion dollar appropriation for war purposes, because it is regarded as something essential to the successful prosecution of the war.


Paul Joseph James Martin: It is to be under the
control of the commissioner of the Royal Canadian Mounted Police?
Mr. ST. LAURENT: Under the control of the commissioner of the Royal Canadian Mounted Police, but to be formed in groups of sixty, progressively.
Arrangements were made that two officers who had been active in forming the British security control service would come out here to instruct the first group. It was represented to us that there would be a course of instruction of not less than six weeks as to the methods which have to be adopted to carry out the purpose for which this is formed. The two British officers have now arrived, and the first group is being formed. One of the difficulties is that of finding competent men,
under our present man-power situation, to do this work. We were informed by Brigadier Stratton, who has charge of the similar service in the United Kingdom, that over there practically all the operatives were taken from the armed forces. The commander of a unit in the armed forces would inform his unit that so many men were required for such service. Those having special qualifications would volunteer, and from those volunteers the men would be selected. The intention would be that those carrying out this work would have army allowances and army pay.
The officers may not all come from the armed forces, and it may be that all the men will not come therefrom. The Minister of National Defence is reluctant to release many men from the army for this work, but did agree that his share of the first group of sixty would be supplied, and that he would then see, from the training these men got and the work they were going to do, whether he would consider it less or more important than the 'work the men in the army are already being prepared to do. It was suggested that officers might very w'ell be lawyers who had had criminal practice, and who would direct the squads of this security service. That is the manner in which the service has been organized in the United Kingdom, and we were informed that it is proceeding efficiently and successfully.
The rates of pay and allowances provided will be comparable to army rates of pay and allowances, and those who will enlist for this service, if they are lawyers who have had criminal practice, will be making very much less than they might expect to make in the exercise of their practice.
Here we did not know very much about this special branch of the service, but we were impressed by the information we got, and as a result the first group of sixty is being formed. The two British officers are here to give that group instruction. Though the order in council was passed for the whole scheme, the intention is to go ahead progressively, and to proceed as the efficiency may be shown to us from the results obtained-I do not mean results obtained in actual operation, but the results we can anticipate from the kind of training given to these men of the first group.
The intention is to have a system which will enable us to make a check on everyone entering or leaving the country. The Canadian body would be in close touch with M15 in the United Kingdom and the similar organization in the United States. Information would be constantly exchanged, and we were informed that in that way we would be filling what was looked upon as a gap, because
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of the fact that we did not have an exactlj' similar organization in Canada to that which exists in the United Kingdom, in some of the dominions, and in all the crown colonies, and which also has representatives in most of the ports of south America and a great many places in the United States. In this manner information is being gathered from all these sources and is made available to all the operatives.


Paul Joseph James Martin: Is there a liaison body between the Royal Canadian Mounted Police and the Federal Bureau of Investigation?
Mr. ST. LAURENT: Yes. We have an officer in Washington, and there is an officer of the Federal Bureau of Investigation in the Justice building here in Ottawa. There are daily exchanges between the Royal Canadian Mounted Police and the Federal Bureau of Investigation. There is an almost constant interchange of information.


Thomas Vien: May I invite the cooperation of hon. members to carry on with this debate in an orderly fashion. I have given a great deal of latitude. The first question asked by the hon. member for Rosetown-Biggar (Mr. Coldwell) was in respect to penitentiaries. The item covering penitentiaries comes later. The question asked by the hon. member for Essex East (Mr. Martin) had to do with the Royal Canadian Mounted Police. The item covering the Royal Canadian Mounted Police also comes later. We will have a duplication of discussion if we do not stick to the item before the committee. I appreciate that we are in the dying days of the session and perhaps a little latitude should be allowTed, but I ask the cooperation of hon. members to stick to the items as much as possible.


Major James William Coldwell: This item covers departmental administration, which would take in many things. When we were discussing the estimates we understood that if as many matters as possible relating to a particular item were inquired into at the same time we might get through. Otherwise we might have to rise on every item. I have a number of questions to ask and I could rise and make a speech on every item, but I do not want to do that.


Thomas Vien: The hon. gentleman is quite right, provided that it does not give rise to a general discussion on the points raised. A request for general information is almost always allowed, but if it gives rise to a discussion such as we have had this morning, it is not in order.


Angus MacInnis: I was under the impression that I was in order, but those who were out of order have had their questions answered. I asked the minister if he would indicate to the committee the attitude of the Department of Justice, and the government if he cares to, in connection with the report recently presented 'by the committee on the defence of Canada regulations.
Mr. ST. LAURENT: One point was raised by the leader of the opposition with respect to the insertion in subsection 2 of regulation 39 of the words "or the conduct of the war." I am prepared to recommend to His Excellency in Council that those words be inserted. I have no quarrel with the language in which the general body of the recommendations is expressed. But the publicity which has attended this matter has created the impression that if the ban on the communist party in Canada is lifted it will be equivalent to legalizing the communist party in Canada. The impression also seems to be abroad that this is the only country among the allied nations where communism is illegal. I think it would be most unfortunate to do anything which could be looked upon by any part of the Canadian people as a blessing on the communist party by the Canadian House of Commons. In my view that would be entirely incorrect. I hold the view that the real communist doctrine is illegal here regardless of anything contained in the defence of Canada regulations, just as it is in the United States and in the United Kingdom. I hold the view also that not everyone to whom the label of communist has been attached participates in those views.
All I can say at this time to the hon. member is that the matter will certainly receive careful consideration. So far as the Minister of Justice is concerned he has no desire or intention of detaining anyone because he entertains certain political opinions. It is only because of action that may be looked upon as subversive that any repressive measures can properly be adopted. It is only because of action that could be looked upon as subversive, it is only because of the fear that further such action may be taken, that any one should be continued in detention. The implementing of the report is something which will have to be considered by His Excellency in Council, who makes the regulations. The Department of Justice will endeavour to carry out the defence of Canada regulations in such form as they may happen to be at any time. That is the function of the Department of Justice; it is the function of the governor in council to make the

Supply-Justice
regulations and modify them from time to time as occasion may require. Personally I should be most reluctant to recommend to the governor in council anything which might be . interpreted by the country at large as legalizing real communism in Canada.


Thomas Miller Bell: I hold no brief for the communist party, but I think originally it was a mistake to ban it, and I have said so on many occasions. I hope the minister will give serious consideration to this matter. Apart altogether from what is supposed to be the point of view of the communist party, it seems to me that the widest possible discussion should be allowed even in war time.


Thomas Vien: I would point out to the hon. gentleman that I asked the leader of the opposition to desist from discussing any matter covered by the report of the committee. The hon. gentleman had put a question to the Minister of Justice and I thought it might be advisable for the com-mitteee to have the minister's answer, but I would not like this to develop into a general discussion. ,


Major James William Coldwell: I am not going to discuss the report of the defence of Canada regulations committee. As the minister probably knows, I have placed a number of questions on the order paper and have sent him some articles privately which had come to me. They indicate that while this party is being banned on the ground that it is a danger to the state, we have in our midst men who have and who are promoting fascist ideas and wrho I am told are in the government's employ. I am going to be specific. For instance, there is a man by the name of Charles Crate who edited a fascist newspaper published in Winnipeg, called the Thunderbolt. I remember on the front of one issue there appeared three symbols described as the trinity destroying the country-the Jewish .symbol, the symbol of the Roman Catholic church, and the symbol of the Masonic order.
I believe I have that copy in my files. This man is still writing to people saying that the root of the cause of this war is the Jewish problem. He is raising race prejudice and hatred. If you listen to Vichy and nazi broadcasts you will find that that is precisely what they are saying in French, in an effort to indicate that this country is something other than we believe it to be. That man has been in the employ of the government.


Paul Joseph James Martin: Is he now?


Major James William Coldwell: I do not know whether -or not he is still with the government. I am
told he was formerly the editor of the Thunderbolt, which I have read and which I consider the most vicious thing I have ever seen. I have never seen anything more vicious issued by the communist party relating to the overthrow of the state than I have seen in the Thunderbolt. I draw this matter to the attention of the minister because this may be the last opportunity I shall have. The series of questions I have placed on the order paper . will probably not be answered, but I have sent some material relating to this man to the minister and he will probably receive it to-day.
Mr. ST. LAURENT: All I received from the hon. member were some clippings from the Canadian Tribune-


Major James William Coldwell: That is right.
Mr. ST. LAURENT: -with which I was not tremendously impressed. I can tell him that before I received his letter the matter of Crate was under investigation. I had received a report on the 20th of July from the commissioner of the Royal Canadian Mounted Police in that connection, and the report was to the effect that the investigation had been constant since 1939 in respect of this man, that all his activities were known to the police, and that they had not yet found sufficient to justify proceedings.


Major James William Coldwell: I am not asking that the man be incarcerated. I would say that, even yet, he is entitled to a fair trial, as every other individual is. The public accusations made against him are of such a nature that I think they would warrant careful investigation, and not give the impression that we are making chalk of one group and cheese of another.
At one o'clock the committee took recess.
The committee resumed at three o'clock.
Progress reported.



INCOME WAR TAX ACT

[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved the second reading of Bill No. 115, to amend the Income War Tax Act.
Richard Burpee Hanson: I desire to make a few brief observations on this bill. It is I think a matter of the most profound regret that a bill of this scope and character should have been introduced so late in the session. I do not mention that in any spirit of scolding. I realize the difficulties that must have been experienced by the draftsmen, the officials and the minister in preparing this bill, because
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in effect it is to a large degree a new income tax measure and its preparation must have involved the burning of a good deal of midnight oil. The fault I think lies in the fact that the budget was brought down at too late a stage in the session, and for that, of course, I think the minister must assume responsibility. That he has an excuse, if not a complete alibi, is I think probable; nevertheless, as I said in the address I made on the budget on June 3.0 last, a budget of the character, the importance, the magnitude and the scope of this b'udget should not have been left until we were near the end of the sixth month of the session. I speak on that point not only because of the effect upon the membership of the house-because after all I suppose our time is public time; we are public servants and therefore at the disposal of the public-but because of the effect upon the taxpaying public who are called upon to make the greatest readjustments. Considerable hardships will result from the delay by reason of the fact that six months of the calendar year, which is usually the fiscal year for individuals and for most corporations, had elapsed before the taxation proposals of the minister were brought down to parliament and made public. To readjust themselves to the situation which has been created by that delay will be a task of considerable difficulty to the taxpaying public. When the measure is put into operation I hope that the Department of National Revenue will give consideration to the difficulties which are bound to arise because of that fact, and to individual cases of hardship wherever possible, in order that taxpayers may properly adjust themselves to the aggravated position which has been set up by the government's delay.
I do not think that even yet the Canadian public realize the implications of this taxation measure. I do not think that the salaried people, the wage earners in the lower brackets, yet realize its implications. I am not able yet to convince myself that the taxation imposed on the lower incomes, on wage earners below a certain scale, is not, despite what has been stated in the house by the minister and by at least one of his supporters, more difficult for them than it was before. From the analysis I have been able to make of these taxation measures I should say that the burden upon the lower income tax brackets has been tremendously increased, and I believe that is the reaction of the country.
Nevertheless, I understand the minister's attitude and the attitude of the administration. There has been a huge increase in the

purchasing power of the public, and especially in the purchasing power of those in categories below $5,000. It is the minister's expressed desire to capture as large an amount as possible of this increased purchasing power in order that he may avoid the dangers of inflation, the danger of over-expending on consumer goods, with the consequent tendency to violate the price ceiling. Whether it will have that effect I do not know, but that undoubtedly is the intention of the measure, and I should think, judging it from the standpoint not of an economist, but purely of a layman who is endeavouring to give his best study to a measure of this kind, it would have that effect. At all events, whenever an effort was'made in the resolution stage to alleviate some of what would appear to me at least to be cases of obvious hardship, the minister has fallen back on the formula that the country just needs the money and has to have it, and with that in many instances we have had to be content.
I say that not with any desire to scold the minister, but rather in order to point out to him what I believe to be the public reaction to this measure, and that is that the changes are exceedingly heavy and come with lightning rapidity. I know that the tempo of our war expenditure has increased. I know the commitments of the government have been based, not upon what they have in the treasury but upon what they deem to be the measure of production for war purposes which they think the nation should attain. Nevertheless in a small nation of eleven and a half million people there must be some limit to the policy of pay as you go. I know that statement will not be popular in some quarters. There are people who think that that policy, carried perhaps to an exaggerated degree, is the soundest policy. But I repeat what I have said earlier in the session, that something must be left for the rehabilitation of this country, and for the rehabilitation of industry. If this nation is to survive we must have some nest-egg left for the post-war period.
Therefore I suggest ito the minister that, before the next session comes around, when he frames his next budget, he give consideration to what I suggested a short time ago, namely, that posterity has a right to assume a substantial portion of the cost of this war. This war is being waged for our individual and national safety, and as much for posterity as for the present. In this war we are seeking to end war. If we are to do so, those who come after us should bear their fair share of the burden. What that fair share is I am not at the moment in a position to indicate, nor do I desire to do so.

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This measure of taxation came with staggering suddenness and is imposing a staggering burden on the people of Canada. Because of that fact it is incumbent upon the government to see that for every dollar of expenditure a dollar's worth of value is obtained.
There were brought down in this house yesterday supplementary estimates carrying appropriations of some $23,000,000, just on the eve of the Saskatchewan election. I suggest to hon. members that there is some connection between those two things. The people of Canada are having a staggering tax bill laid upon them, and at the same time comes the announcement of the payment of $23,000,000 in bonuses, largely to the people of Saskatchewan when a Liberal government is about to appeal to them for their franchise.


Mr. MAYBANK:: Would the hon. member permit a question? Is there one item in the supplementary estimates to which he will take exception?


Mr. HANSON (York-Sunbuiy):: It is not necessary to answer that question. I am talking about the timing of the announcement. We are still playing politics with the people's money. That is the point I am making. We are trying to bribe the people of Saskatchewan with the taxpayers' money, taken from them under a staggering tax burden.. The announcement of that supplementary estimate at this time undoubtedly is to influence the decision of the electors of Saskatchewan at the approaching election. Surely a time of war, and when this country is staggering under this great burden as a participant and active belligerent in the greatest war in history, is no time for political gestures of that kind. The people of Canada ought to mark their disapproval of that sort of thing.


Ian Alistair Mackenzie: And of political speeches such as the hon. gentleman is making now.


Richard Burpee Hanson: I do not know anybody who was more guilty in days gone by of making political speeches than the hon. member.


Ian Alistair Mackenzie: Not in war time.


Ralph Maybank: There was the same announcement last year.


Richard Burpee Hanson: But there was not an election. The timing of this announcement is most significant.


James Lorimer Ilsley: It was announced several months ago.


Richard Burpee Hanson: But the estimates are brought down just as our
minister of politics, the Minister of Agriculture (Mr. Gardiner) reaches his native heath. Make no mistake about it. There is a political connection between these two things. I think the time has come, as I said a week or two ago, when the mental attitude of hon. members of this house towards political partisanship, towards partyism, should be changed, at least for the duration of this war. The synchronizing of these two things did not just happen: they are in a measure cause and effect. It is wholly deplorable that with such heavy taxation the announcement is made on the eve of the Saskatchewan election with the purpose of influencing the electors of that province to return the Patterson government.


Mr. BROOKE CLAXTON (St. Lawrence-St. George):: There are two points I wish to make briefly. This bill undoubtedly affects the lives of the people of Canada to a greater degree than any other legislation of the kind that has been introduced. Hon. members I believe will agree that it is of the utmost importance that such far-reaching legislation should be understood by the people whom it affects. On that account may I respectfully suggest to the Minister of Pinance and the Minister of National Revenue that they take into consideration at the close of this session the complete revision and consolidation of the Income Tax Act, so as to make it more simple, clear and understandable than it is to-day. I realize the difficulty of doing so, but it is of paramount importance to all the people that that job be done as soon as possible.
The second point I wish to make follows the one made by the leader of the opposition (Mr. Hanson), that is, that the people do not yet realize the full implications of this legislation. I hope the Minister of National Revenue and others will bring it home to the people by eveiy appropriate means of publicity between now and September when the tax becomes payable. I urge upon them that they use the means and resources adopted in the application of the price ceiling, so that when the people first have salary deductions made they will understand what the deductions are, why they are being made, the consequences to their own income and way of life.
This bill brings it home, perhaps more than any legislation we have yet had, that this is a people's war. The people will bear their full share of the burden better if they understand the taxation and what it will mean to them in advance of its actual incidence.
So that while expressing the congratulations of I believe every one of us to the minister
Income War Tax Act

upon the part he has taken in this legislation and in the debate I just bring these two points respectfully to his consideration.


Mr. R. M. WARREN (Renfrew .North):: I had no thought of taking part in this debate, and would not have done so had I not wondered whether it would be in the best interests of this country to do as was suggested by the leader of the opposition (Mr. Hanson); that is, to pass on to posterity a greater part of the cost of this war. In meeting people I have been surprised at the few complaints I have heard with regard to the burden they are carrying in connection with the war effort. Nothing seems to please them so much as to learn that to the extent of about 80 per cent this country is paying for the cost of the war out of taxation. People are surprised to discover that this is the case. Then when, you tell them that in addition Canada proposes to make a gift to Great Britain this year of a thousand million dollars, they are simply astounded, and they are pleased that we as a .people are able to carry such a burden.
When I hear anyone suggest that we pass on a burden of debt to posterity I always remember the experience of Renfrew county during our last period of prosperity. During that time the construction of county roads was inaugurated, and the county council adopted the policy of paying for those roads by means of twenty-year debentures. I suppose what happened then' in our municipality was happening all over Ontario; these debentures were issued at rates of 5, 5^ and 6 per cent, and for years, particularly during the depression, the burden of that interest has been a tremendous tax on the ratepayers of that county. Instead of paying for the construction of those roads once we have paid for them at least twice. While the roads were being built the people were receiving good incomes, and the cost could have been borne at that time much easier than during the years of depression. I recall that the burden was so great that many of us looked for some way of getting out from under that load. We have almost wiped out that burden now, but I do not believe you could induce a Renfrew county council ever to put their heads in a noose like that again. We learned a lesson through that experience which I think will remain with us for a long time, to avoid long term debentures.
I think the same principle should be applied now. I believe our people are willing to shoulder a very heavy burden, and if they can possibly do so they prefer to pay as they go. That idea is popular throughout the

country, and as long as we are able to manage I believe the minister will receive the general support of the public in that policy.
Mr. GiRAYDON:	I did not want to interrupt the hon. member as he went along, but I should like to ask him a question. Did I understand him to say that 80 per cent of our total expenditures are paid out of taxation? That has not been my understanding.


Ralph Melville Warren: That has been my understanding, that 79 or 80 per cent has been paid in that way.


James Lorimer Ilsley: Perhaps I can answer the
question. During the year just past some 78 per cent of our total direct expenditures was collected by taxation, but that did not include assistance to Great Britain. For the present year, including assistance to Great Britain, the figure will 'be slightly over 50 per cent.


Mr. P. E. WRIGHT (Melfort):: I should like to raise just one point which I mentioned the other evening in connection with the excess profits tax act; that is the incidence of this tax on western agriculture, in that farmers are going to be forced, under regulations passed by the dominion government, to market two crops in one year. This fall we will have regulations limiting the amount of grain that can be marketed, as a result of the lack of storage facilities, which means that a large portion of the crop will be carried into next year. The same thing occurred in 1941, and as a result many farmers had to market two crops during 1942. If that happens again this year a great many farmers will be paying income tax, whereas if they had been allowed to market their crops normally over the two years they would not come within the group of income taxpayers; and they will have all their expenses to pay just the same.
It seems to me that in these cases an injustice is being done. It is just as though the government were to prohibit the payment of part of a man's salary and carry it over into another year, thereby placing him in an entirely different income group. That is what is going to happen this year in regard to many farmers in western Canada, and it will make a tremendous difference to them. When I raised the question with regard to excess profits the minister stated that not many farmers would be affected. I agree that not very many will have a net profit of more than $5,000, but under our present income tax arrangements quite a large number will be paying income tax unfairly, because of the fact that

Income War Tax Act
under government regulations they are likely to be forced to market two crops in one year. I think the , minister should take this matter into consideration and make some allowance in this regard.


Mr. BONNIER:: I have been asking for a copy of this bill in French, but there do not seem to be any. I do not see why bills as important as this should not be printed in French as well as in English. I should like to have a copy in French, or I think we should wait until we can get them.


Mr. SPEAKER:: I understand that the French copies will be made available later in the day, but at the moment we have none.


Mr. H. R. JACKMAN (Rosedale):: Mr. Speaker, we have before us what is probably the greatest and most sacrifice-compelling budget in the history of this country. In order to frame proposals which will produce the revenue and at the same time bring about the least possible suffering on the part of the people of Canada, I believe we should be given more figures in regard to our national income, as to who gets it and particularly as to who has been getting the tremendous increase since the beginning of the war, in order that we may have an equitable scale of taxation.
The minister's budget address contained no reference whatever to any calculation of the national income last year. In last year's budget there were several references to this point, but this year, possibly because of some uncertainty as to the figure, the minister has left us completely in the dark. However, I believe it will be considered a fair figure if I mention $6,500,000,000 as a reasonable estimate of the national income for the current year. We are to spend out of that sum $3,900,000,000 on war expenditures and our peace-time budget. That leaves us with $2,600,000,000. I know that these are large figures, and very difficult for anyone to grasp. But when I tell the house that $2,600,000,000 is lower than the lowest point of the depression, the figure for 1933 being the low point of that time, showing $2,640,000,000, there will be some realization in the minds of our people of just how great a sacrifice the people must make during the current year. We are to be reduced to a level, so far as our civilian expenditures are concerned, equal to the lowest point in the depression. Fortunately that sacrifice and the hardship entailed by it will not be spread as unevenly as it was during the depression years, because we see about us a higher standard of living generally than we did see in the depression years.
However I would suggest to the minister that the figures on national income be computed either by his department or 'by the Dominion Bureau of Statistics, which functions under the Department of Trade and Commerce, so that hon. members may have some idea as to what the total national income of this country is, how much goes to investment income, how much goes to private enterprise such as farmers and shopkeepers, how much to wage earners and salary earners, and how much to the other brackets in which the national income is ordinarily divided.
Let us find out where the money is and where the increase is going, if there be any increase. And no matter where that increase is to be found, let it bear its fair share of the very heavy burden which must be borne in order to finance this war.
In regard to how much of the war we should pay for currently, it is quite impossible for us to follow the dictates of that principle to which we should like to give adherence, namely, that that which is physically possible is financially possible, and pay the whole cost of the war currently. If we go on under the present system we are bound to find cracks and fissures which will develop, and which indeed may wreck the system. It will result in the same distress of mind on the part of a great body of our people that we found during the depression, when people who were able and willing to work but were unable to get work said that the system was made for man, and not man for the system, and cried out for a change and indeed are still crying out for a change. It is probably for this reason that they are subject to doctrines and theories which are totally unworkable. But if we find that the present financial system, the motive which is its driving force and the whole structure of debts which it entails is to be jeopardized in the attempt to finance such a large proportion of the day to day war costs, then there will be a feeling of desperation on the part of another great section of our people. They will be looking around for panaceas which will perhaps be unsound, and I suggest to the minister it might have been better if in his budget he had leaned more heavily on the possibility of borrowing greater sums from our people rather than taxing them at the high rates proposed in the present budget.
For instance in the United States the present budget, the proposals of which are still under consideration, looks forward to financing about 30 per cent of the war and ordinary expenditures. That perhaps is a low figure for any great country to contemplate. We on the other hand are attempting this year to finance out of our current revenues 52 per cent of our total war costs, peace-time costs, and aid

Income War Tax Act

to our allies. It is a very great burden, and one which we would not have thought possible a few years ago. But yet with the tremendous amount of money which is being put into circulation, and the siphoning of part of it back into the taxing system, we are attempting to do what is almost impossible.
I can only wish the minister every success with his proposals, although I must qualify that with the statement I have already made, that I believe them to be unduly high. There is one other point of perhaps some little significance in connection with the changes in the excess profits tax. I may say to the house that the real change in the excess profits legislation is not the increase from 80 per cent to 100 per cent, the 20 per cent being returnable after the war period. That is not nearly so drastic as a slight change in the mechanical or arithmetical method of calculating the excess profits tax, a change which brings into the treasury a very large sum of money, about $165,000,000 additional. This amount, which will be taken out of industry, means that there will be that much less to distribute. No company can retain now more than 70 per cent of its pre-war profits. That is something a great deal more important than the fact that there is a 100 per cent tax on profits derived from the war.
The fact is to-day that no corporation in Canada can retain for distribution to shareholders or for its maintenance, or for the carrying on of its ordinary corporation activities, more than 70 per cent of its pre-war standard. And the figure of $165,000,000 additional which is taken by the excess profits tax, leaving aside entirely the 20 per cent which will be refunded to the company, means that a very substantial amount of capital values will be destroyed. One might multiply the $165,000,000 by twenty, which would be a 5 per cent income rate, and geit a very substantial figure. Even if one took $100,000,000 instead of $165,000,000 additional revenue, and capitalized that smaller figure, he would find that there would be a destruction of capital value amounting to some two billions of dollars through the change in this method of figuring the excess profits tax. This, I suggest, is not a good atmosphere to create when we want to raise from the people untold millions of dollars in order to finance a war effort. If you put your people in a position where they are going to be worried about their obligations, and if those who are in business and who have obligations at their banks or elsewhere find their collateral values becoming smaller and smaller all the time, then they cannot subscribe to loans, or to act in the very many ways in which they can be help-
ful in raising money. They are not in a position to give the minister the support they would like to give him.


Mr. J. H. BLACKMORE (Lethbridge):: Mr. Speaker, there are one or two observations I should like to make on the bill as a whole, a bill which reflects a great deal of care and study in its preparation. I believe however that it still is not satisfactory.
I should like for a moment or two to deal with the question of allowing posterity to pay for the war. It is my opinion that posterity is going to have all the trouble it can take care of without paying for any war we may fight. Posterity within our memories had all the troubles it could take care of. I believe future posterity is not going to be very much more fortunate, especially if the men in charge persist in maintaining the system they have used for the past generation.
I believe the structure on the whole is too heavy. It destroys incentive. There are those who say that we shall be able some time to get our people to the point where they will produce without the profit motive. When that time comes perhaps we shall have some way of providing their livelihood other than through profits which they are able to make by reason of their activities. But until such time as we have some additional means of aiding them in making their livelihoods, I think we must depend entirely on the profit motive to get the ordinary individual to work.
I say that this taxation structure will destroy the motive to activity. I think it will be found also to tend to keep people from going into employment. There are far more unemployed people throughout this dominion than the ordinary member of this house or the ordinary individual in this country realizes without giving it some thought. I see no way in the world by which these people can be absorbed into employment unless we allow a certain amount of purchasing power to remain in the hands of the people who would employ them. We are taking that purchasing power out of the hands of these prospective employers, and wre shall find a large percentage of our people continuing to be unemployed and therefore unable to do their share in connection with the war effort.
Not enough care has been taken to give the debtor and the creditor a fair deal. Why should we be so sympathetic for the mortgage and life insurance companies and disregard utterly the tens of thousands of smaller merchants, even the larger merchants, from end to end of this country? These are the men who stood by those in need during the dire days of the depression; the men who granted credit to impoverished farmers and

Income War Tax Act
suffering tradesmen and other people when no one else would give them credit. As a result of the generosity of these men tens of thousands of people throughout this country were able to make it go, as we say. Now what is happening? Just at the time when there is a possibility of these debtors paying a part of what they owe and giving the creditors a chance to carry on, the minister seizes the money with which they would pay and leaves both the creditor and the debtor to suffer. I submit that that is unjust and unnecessary.
I do not know of any part of this country from which we have not heard outcries of condemnation because Alberta, for example, has realized the necessity of cutting interest rates. The clamour has gone forth that she wished to disregard her debts. The Minister of Finance standing in the position in which he is, is supposed to be the very paragon of virtue with respect to the paying of debts; yet he is putting on a taxation structure which is rendering impossible the payment of debts. Up to the present time he appears unable to see the inconsistency of his own behaviour. I think this bill should be redrafted with the object of allowing a man ito keep at least 10 per cent of his income provided it is paid on outstanding debts which he has honestly contracted. By doing that the minister would add to the well-being and happiness of the country. If he could realize how many sleepless nights have been spent by the small business men throughout the country, how many gray hairs have been developed by people who are in debt and who, as a result of this tax structure, see no possibility of ever getting out of debt, he would be led to make some sort of allowance for the repayment of old honourable debts. I do not think that 10 per cent of a man's income would be at all too much. I think the minister would get the money in some other way, probably through the increased prosperity of those who would have outstanding debts repaid. Even though he did not get the money, the country would be so much better off that such a measure would be sound economy.


Angus MacInnis: Mr. Speaker, I am not going to take up the time of the house at any great length, but I want to say a word or two in regard to this bill, particularly in view of some of the things that already have been said, so that the record may be straight in so far as this group is concerned.
During the many weeks that the budget and the resolutions, and now these bills, have been before the house, I admit that my sympathies
44561-319J
have been with the Minister of Finance (Mr. Ilsley). He has been accused of doing this and that because he needed the money. If he needed the money, he needed the money because we need the money. He was doing and is doing the thing that somebody in his position would have to do for us. That is the way in which it has appeared to me. Because it has appeared to me in that way I cannot allow myself to be too critical, although I am satisfied that this budget will bear quite heavily upon some people.
These are not the people who are paying excess profits taxes; they are not the people who are making profits at all. My understanding of profits is that they are something that somebody or some corporation makes out of the labour of others. No one makes a profit out of his own labour. There is only one reason for employing a person, and that is that you can make a profit out of his labour; that he will produce more than you have to pay him in wages. It is the accumulation of these small amounts that each individual produces beyond what his labour costs his employer that constitutes the profit of the employer. I am not greatly concerned about the profit makers, because we are not going to win this war by increasing profits. I was surprised at what was said by my hon. friend to my left, but not at all by what has been said by my hon. friend to my right, about the necessity of having a profit motive in order that we may provide incentives for people to do things. I should like to ask the' people who think that way: what incentive,, what profit incentive, do we give the men who go into the armed forces? Surely when those men are prepared to give their lives we should be prepared to give whatever property and wealth we have beyond sufficient to enable us to live on the same scale1 as they are living. Despite the burdensome nature of this budget, I am quite satisfied that the hon. member for Rosedale (Mr.. Jackman), the hon. member for Lethbridge (Mr. Blackmore) and myself will be able to live as well as the men who are in the armed forces of Canada, and probably a little better. I do not see where we have any reason to eomplain. However, I would ask the minister to watch the effect of his budget upon the lower incomes and be prepared to give sympathetic consideration to some of their difficulties, so that when we meet again and another budget is brought down, some easing of their burdens may be brought about..


Clarence Gillis: Mr. Speaker, I should like to bring to the minister's attention a matter which I discussed when this legislation was previously
Income War Tax Act

before the house. I drew the minister's attention to those in non-essential industries who do not come under the bonus regulations which offset the cost of living. I pointed out that it is under the normal tax for the most part that these people are affected, and there are thousands of them in Canada whose wages have been so affected. The cost of living has advanced 15-2 per cent or maybe higher; yet they come under the normal tax. Some special dispensation should be made for that particular group, who have already taken 15-2 per cent more of a load than the average citizen has done. This is a discrimination. It may be an oversight on somebody's part that consideration was not given to them. I do not think that the minister would thereby be backing up on his budget arrangements. Those who make representations to us cannot understand why employees in certain industries should be compensated for the increase in the cost of living, while hundreds of others who happen to be in what is classified as non-essential industry are not. Their employers cannot increase their wages, under the orders in council administered by the wartime prices and_ trade board; they do not come under the bonus arrangement at all; nevertheless this normal tax affects every one of us. The minister Should try to find some way to relieve them. If it cannot be done under the budget, then someone who has the authority should see to it that the wartime prices and trade board, under the administration of the cost of living bonus-and it comes under the minister's own department-should arrange some adjustment in their behalf.


Mr. A. H. BENCE (Saskatoon City):: The remarks I have to make arise out of the principle enunciated by the hon. member for Lethbridge (Mr. Blackmore) in the latter part of his remarks as to the payment of old indebtedness. Since this matter was introduced in the house some weeks ago I have had, as I am sure the minister and other hon. members have had, letters in regard to the position of men and women in this country who have entered into arrangements to pay off some of their old obligations-obligations which arose in many cases through no fault of their own. I know one particular instance of what I would call tough luck. A certain man's family incurred a lot of medical bills. His wife had a prolonged illness, which ended in her death. He had a reasonably substantial income., between, $300 and $350 a month, but he had to make arrangements with his creditors to pay over to them a
.
considerable part of that income in order to avoid their taking legal action. I understand the necessity of reducing ordinary consumer consumption, but is there no way in which exemption could be provided in the case of persons who have entered into binding obligations to pay off indebtedness? After all, the money they are using is not going to buy consumer goods; it is not competing with things which are necessary for the war effort. Moreover, these people are going to be in the uncomfortable position of being besieged by their creditors, and sued. Additional cost will be placed on their heads, and the little property they have gathered up during the years will be taken away from them under circumstances which are very unfortunate indeed. In the particular case I was referring to there has been no protection at all. The province from which I come has found that its debt adjustment legislation is invalid; in any event, that legislation did not apply to debts which have arisen in the last six or seven years. Under these circumstances the man to whom I have referred, if his creditors get tough-and after all, they have to have their money-is going to be sued and put to a great deal of difficulty and trouble.


James Lorimer Ilsley: There are just two or three remarks made by hon. members to which I should like to refer.
The first is the view expressed by the leader of the opposition (Mr. Hanson) that we should load more of the cost of this war on posterity. I want to make it clear, and to be as emphatic about it as possible, that there is no way by which that can be done. To say that there is, is to indicate a lack of appreciation or understanding of the factors in the situation.


Harry Rutherford Jackman: The emphasis is on borrowing versus taxation.


James Lorimer Ilsley: If the hon. gentleman had said, as the hon. member for Rosedale (Mr. Jackman) has said, that we should borrow more and tax less, that is not an impossibility; it is not by its nature impossible. But to shift any part of the burden of a war from one generation to a future generation is absolutely impossible. The cost of a war are the costs in life and in sacrifice of standards of living, of comforts and conveniences and necessities which come to the people who are living when the war is being fought. Those are the costs of war, and they cannot be shifted to those who come afterwards. What can be done is what is suggested,

Income War Tax Act
most mistakenly I think, by the leader of the opposition and the hon. member for Rose-dale, that instead of taxing ourselves so heavily we should borrow from each other in larger amounts. Now, borrowing from each other in larger amounts simply means that when the future comes a larger number of persons, or one part of the population, will be paying to another part of the population larger interest charges. That is all it means, and that is not shifting the burden to the nation in the future; it is simply effecting a different distribution of wealth, a different distribution of income, in the future.
I think that the Conservative party, if that is the policy of the party, is making a great mistake. If the leader of the opposition, and the hon. member for Rosedale, who is I assume, influential in framing the financial policies of the opposition, are expressing the views of their party, they are making a great mistake when they advocate a policy of that kind. By so doing they are promoting social inequity and social injustice in the present and in the future. What is most serious about it is that they are saying an appealing thing, because it sounds so plausible and so reasonable to the ordinary person that it really is a shifting of the burden to our children and our children's children, and when the war begins to pinch, when hardship sets in, people say, "There must be some way to avoid this." But there is no way to avoid it. If this nation, when it gets to the limit of its productive capacity, decides to devote a very large proportion of the production of the nation to war, a smaller and smaller proportion of the national production must be devoted to the satisfaction of civilian requirements, and that means hardship; it means reduction in standards of living.
There is no way of financing by which that can be avoided. The only thing you can do is to distribute the burden as equitably as possible, keeping in mind distribution not only in the future but in the present. The only point I have argued, and which this government has contended from the beginning, is that by taxing as heavily as we can, we are distributing that burden of hardship and sacrifice more equitably than we could in any other way. It may sound strange for me to say this, but in some respects, the member for Acadia (Mr. Quelch), whose views are expressed with ability and force in this house, has a better understanding of these facts than the member for Rosedale. His recent speeches have indicated that he understands the question of taxing as heavily as we possibly can. I do not know whether his views are shared by the
member for Lethbridge (;Mr. Blackmore), and it is only from there on that the member for Lethbridge and the member for Acadia part company with me. I just wanted to puncture this balloon, about easing the hardship, which is being floated now by the leader of the opposition and his associates. I would ask them not to do it, because it is fallacious, dangerous and mistaken.
The other point I want to make is of a different kind. The leader of the opposition made another statement to which I take sharp exception, because there is no foundation whatever for it, and that is that the government is still playing politics with the expenditure of government money. I take exception to that statement, not because I am particularly anxious to put the government on a pedestal, to establish for it a reputation for virtue, financial or otherwise; but for this reason. If the people on whom we are loading heavy burdens of taxes took that remark seriously; if they read in the newspapers that the leader of the opposition says we are spending twenty or twenty-five millions to influence the result in the Saskatchewan election, a very bad feeling would be created, and the people whom we are asking to assume these burdens would say, "Oh, well, if that is the way you are going to waste our money, if that is what you are going to do; if you are going to play politics with the money you are borrowing from us and taxing out of us, well then, try and get it. We will try to prevent you from getting it."
That is the seriousness of a statement of that kind. Let me make clear exactly what happened. This policy of a bonus to wheat farmers in the west was settled in February last and announced early in March. It was the corollary, a concomitant of our 90-cent wheat policy. If I remember correctly, the leader of the opposition was in favour of dollar wheat, or at any rate some, high price for wheat. If he had had his way the expenditure would have been considerably greater than the expenditure here. But even with 90-cent wheat-and I hope this will not stir up a wheat discussion-we knew, and it was obvious to everyone, that without some inducement to prevent farmers who could grow wheat from growing it, we would have a tremendous surplus of wheat with a good crop. We are going to have a big crop as it is, but we are not going to have nearly as much wheat, nor are we going to have nearly as serious a problem in regard to storage and in regard to finance as well, as if we had several million acres more of wheat than we have.
Income War Tax Act

By the payment of these coarse grain and summer-fallow bonuses, the acreage this year has been kept down very close to the acreage of last year, even though there were millions of acres of summer-fallow lying there, with a great temptation to put it in wheat. Nevertheless, the payment of the bonuses and the appeal to the patriotism of western agriculture have resulted in the wheat acreage being kept pretty close to what it was last year, and that is the reason, from my point of view, for the expenditure of that money. I am not saying that I did it because I wanted to help anyone, or anything of the kind. But from the point of view of the national finances that is a justification for the expenditure of that money, and the policy was announced in the early part of March last. The money is being provided now-why? Because my colleague the Minister of Agriculture (Mr. Gardiner) is arriving in the west, or because the premier of Saskatchewan has announced a provincial election? No. The amount is being announced now because the supplementary estimates are tabled now, and this is the only time it could be announced.
Believe me, there was not a member of the government who had any political motives at all or any thought of politics in view. What else could we have done? Our policy was announced last February. This money had to be provided, this was the only place in which it could be provided, and this is the amount that is necessary to carry out our policy.


Mr. STIRLING:: May I ask the minister
a question? Was it not an unfortunate thing, in preparing the main estimates, to cut $30,000,000 for this purpose, and then have to restore three-quarters of it at this late date?


James Lorimer Ilsley: The main estimates-


Grote Stirling: Certainly it had a misleading effect.


James Lorimer Ilsley: The $30,000,000 is the amount voted last year. In fact, it was more; it was $35,000,000 that was voted last year for this purpose, and when the main estimates were brought down we did not know what our wheat policy was going to be. If my recollection is correct, the main estimates were prepared early in January and tabled at the beginning of the session, immediately on the conclusion of the debate on the address. Our yearly agony over the wheat policy takes place in February, and we do not give birth to our policy until early in March. Therefore we could not put it in the main estimates but had to put it in these estimates. I do not want anybody in this house or anyone outside to think that there was anything political about sMr. Ilsley.]
that, and if the leader of the opposition had given the matter any thought he would have realized that.


Mr. McNLVEN:: Is the whole of that
amount payable in Saskatchewan?


James Lorimer Ilsley: Oh, no. It is paid in the
three western provinces, and some even in British Columbia.
There are one or two other points which I may touch upon, but I do not want to go into every question that has been raised. We cannot recognize debts, for the reasons stated on the resolutions. The administrative problem would be terrific, and after very careful consideration we felt that we could not do it.
The hon. member for Cape Breton South (Mr. Gillis) makes a plea for workers in non-essential industries who are not receiving cost-of-living bonuses. They are not ineligible for the cost-of-living bonus. If the cost of living rises over the cost of living in October last they are entitled to the cost-of-living bonus; that is, if it rises as much as one point. And they have the liberty, under the labour wage order, to apply for cost-of-living bonuses to cover the cost of living for a date antecedent to that. Whether that is ever done, whether it is ever granted, I do not know. Something would turn, I assume, on the ability of the employer to pay, and something would turn on the desirability of keeping them in non-essential industries. Certainly I would be opposed to making any income tax concession, because our taxes are based upon the incomes people receive. If they receive smaller incomes, their taxes are smaller. I should think it entirely inappropriate to make any change in our income tax.
With regard to the bill before the house, I am very sorry indeed that a bill of the length and importance of this bill has not been distributed before this, and that it has not been possible to prepare it before this, and that when distributed it is without explanatory notes. But I have had the explanatory notes mimeographed and distributed to hon. members.


Some hon. MEMBERS:: No.


James Lorimer Ilsley: Well, they are on the table;
I thought they were distributed.


John Ritchie MacNicol: Is there much change in the bill from the resolutions?


James Lorimer Ilsley: No, there is very little change. I am ready to point out any changes that there have been, so fa- as I can remember them, but nothing li * wicus nature has been changed.

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[Stage Direction]
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Vien in the chair.
On section 1 (1)-Normal tax.
Gordon Knapman Fraser: I wish to ask the Minister of National Revenue what is being done about these refunds. I have had many letters regarding them. I have one before me dated July 24, in which it is stated that about the middle of this year a refund was applied for amounting to $10.56, and so far it has not been received. Some of these people have an income of $450 a year, and to them $10 is a lot of money. They do not want to wait a whole year for the refund. Is there not some other way in which these refunds could be expedited?


Mr. GIBSON:: The difficulty is that there are thousands and thousands of forms that have to be checked before finding out what the person's income amounts to. We cannot give a refund without checking the employer's returns, and various other returns, such as returns of dividends paid. It is a new department that has had to be built up, and personnel has had to be trained in handling the refund claims.


Gordon Knapman Fraser: The minister said that before.


Colin William George Gibson: I said it about two days ago. No great change has taken place since.


Gordon Knapman Fraser: These forms are returned at what time?


Colin William George Gibson: At various times throughout the year, but it is only after the close of the calendar year-in the following February-that information is given regarding the specific individuals from whom deductions have been made.


Gordon Knapman Fraser: This request for refund was in February. One would think that by now the refund would have been made.


Colin William George Gibson: It could have been if you could stop and deal with any one case, but when there are thousands of cases, they are dealt with together until after employers' returns have been filed and the information recorded. Then the refund claims can be considered, and that person's claim may not have been reached.


James Lorimer Ilsley: Rule 2, on page 7, relates to officers. It has just been pointed out to me within the last three or four minutes that this
is incorrect as applied to women officers. Women officers get, I think, about two-thirds of what the male officers get. Therefore I think some proviso will have to be added which will state that this rule does not apply to female officers. I suggest that the governor in council be empowered to apply the principle of the section to female officers in proportion to their rates of pay. I think something of the kind will have to be done.


Grote Stirling: By inserting such a suggestion in the bill?


James Lorimer Ilsley: Yes. I would ask that the section be allowed to stand until we have something drafted.
Section stands.
On section 1 (2)-Graduated tax.


Mr. MAYHEW:: Is a married woman supporting a husband who has no income treated the same as the husband?


Colin William George Gibson: She would get the married exemption, just as he would in the other case.


John Horne Blackmore: I suggest to the minister that he allow this bill to be considered in committee after eight o'clock. The bill has been changed extensively, and it was put into our hands only within the last few minutes. It is utterly impossible to read the bill through and got any kind of understanding of it at all in the time we have had. We should have at least a little time to look at it.


Thomas Miller Bell: That is reasonable.


James Lorimer Ilsley: Well, that is all right.
Section stands.
Progress reported.

The house in committee of supply, Mr. Vien in the chair.



DEPARTMENT OP JUSTICE

[Stage Direction]
88.	Departmental administration, $156,750.
Angus MacInnis: I should like to have your decision, Mr. Chairman, as to the proper item under which to bring up the matter of the appointment of judges. It seems to me this item would be the appropriate one.
Mr. ST. LAURENT: It could come here, or under any of the items providing the salaries for some special court. On item 88 the hon. gentleman might be allowed to make such observations as he desires to make.
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Thomas Vien: I hope they will be brief, because a discussion of the matter referred to would noit be in order on the item now before the committee.


Angus MacInnis: Yes, Mr. Chairman, I will be as brief as possible, but I should like you to understand that this is the only opportunity hon. members have had to consider the estimates in connection with the administration of the affairs of this country during this fiscal year.


Thomas Vien: There is no intention of limiting the discussion when it is under the proper item. But when it is not under the proper item the discussion is carried on only by tolerance, and my difficulty lies in the determination of what is proper and what is unreasonable.


Angus MacInnis: I asked for your decision as to the proper item, and I am willing to abide by your ruling, Mr. Chairman.


Thomas Vien: Will the hon. gentleman state again what he intends to discuss?


Angus MacInnis: The appointment of judges.


Thomas Vien: I think that would come more properly under item 90. The hon. gentleman could then speak with much more freedom.


Angus MacInnis: That will be satisfactory.


Harry Rutherford Jackman: May I ask the Minister of Justice what is being done to see that the labour of those in the penitentiaries is directed toward the war effort?


Thomas Vien: I think that question should be asked under item 97.


Mr. HAZEN:: If I may be permitted, I should like to bring to the attention of the Minister of Justice an injustice which I believe has been done certain residents of New Brunswick whose lands front on the nontidal waters of the Saint John river, by reason of an order in council passed on May 9, 1940, and now embodied in section 9 of the special fishing regulations affecting that province.


Thomas Vien: That would not come under this item by any stretch of the imagination. I do not know any item of the Department of Justice which would cover that subject.


Douglas King Hazen: I may be wrong, Mr. Chairman, but certainly I think this comes under the administration of justice. I am asking for justice on behalf of certain people.


Thomas Vien: I doubt it very much, since apparently those are regulations with
fMr. St. Laurent.]
respect to fisheries. At any rate, even if it were a question of the administration of justice, which we may determine a little later, it would come under item 90.


Clarence Gillis: Under item 89, in view of the
observations made by the minister-


Thomas Vien: Perhaps hon. members will allow item 88 to pass.


[Stage Direction]
Item agreed to.
89.	Remission service, including remuneration to members of the Royal Canadian Mounted Police force (to be expended under order in council, and not to exceed $1,600) for assistance to this service, and an amount of $10,900 t* reimburse the Royal Canadian Mounted Police force the amounts disbursed by them in ordinary pay and allowances to their men on loan to this service, $52,592.
Clarence Gillis: With respect to the setting up of the new security service for the whole of Canada-
Mr. ST. LAURENT: Perhaps the hon. member might defer any discussion of that matter until we deal with the estimates concerning the Royal Canadian Mounted Police, which department has to do with the security control.


Thomas Vien: That will be found in item 320, at page 38.


Clarence Gillis: This item states ". . . including remuneration to members of the Royal Canadian Mounted Police force." It was with respect to the question of remuneration that I wanted to speak.
Mr. ST. LAURENT: That is remuneration by one branch of the department to the other branch for special services rendered by the Royal Canadian Mounted Police in making investigations for purposes of remission or the exercise of clemency.


[Stage Direction]
Item agreed to.
90.	Administration of justice-miscellaneous expenditure, $6,000.
Douglas King Hazen: If I may be permitted just a moment before you give a ruling, Mr. Chairman, I am asking for justice on behalf of certain farmers who have had their rights and property taken away by order in council, and without compensation. This order in council raises a constitutional question which I should like to bring to the attention of the Minister of Justice, sinoe he has been one of the leaders of the bar in Canada and a former president of the Canadian Bar association. It is a matter with which I think he should deal. If you will permit me just one more word, I have not taken up the time of this house unduly; in fact I have tried to save as much

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time as I could. I might have brought up this matter on the motion to go into supply, but I was not sure the Minister of Justice would be here then, and in any case it will not take a great deal of time for me to present the case. It is a matter of some constitutional importance. I feel that these people have been done an injustice which should be rectified, and if I may have the permission of the committee I should like very much to bring the matter to the attention of the minister.
Section. 9 of the special fishing regulations provides that the use of nets in non-tidal waters, except under a permit from the Minister of Fisheries, is prohibited. As permits are not issued by the Minister of Fisheries to those riparian proprietors on the non-tidal waters of the Saint John river, it is my submission that this so-called regulation is not a fishing regulation in the true sense of the term but a confiscation of private property, and that it is ultra vires of the powers conferred upon the dominion parliament by the British North America Act.
Certain facts have been brought to my attention which have an important bearing on this matter, the truth of which I believe can be established beyond question. These facts are as follows. First, that in the latter party of the eighteenth century-


Thomas Vien: Order, please. Unless
there is unanimous consent to suspend standing order 58 (2), I cannot allow the hon. gentleman to proceed. It is preposterous under the estimates of the Department of Justice to allow an hon. member to discuss the merits or demerits of a question of law arising out of an order in council. If it is the unanimous wish of the committee that standing order 58 be suspended, at least I shall be protected against the charge of allowing one hon. member to infringe the rules and holding other hon. members strictly to the same rules. Can I assume that the hon. gentleman has the unanimous consent of the committee to the suspension of standing order 58 with respect to his proposed submission?


Grote Stirling: I submit that this being a matter which is causing the hon. member a great deal of difficulty, he might be given the opportunity now to place the matter before the Minister of Justice in a very few words.


Thomas Vien: If it is the unanimous wish of the committee, I am quite satisfied.


Mr. GOLDING:: Could not the hon. member have a talk with the Minister of Justice 44561-320
about it at any time? It seems to me this should have been discussed when the Minister of Fisheries had his estimates before the house.


Thomas Vien: Then the hon. member does not have unanimous consent, and in my opinion he is clearly out of order.


Douglas King Hazen: May I say a word to the
hon. member who has just spoken. I am anxious to have this matter on record. I could have gone to the Minister of Justice and handed him what I have to say, but-


William Henry Golding: All right, go ahead.


Thomas Vien: The hon. member has
unanimous consent.


Douglas King Hazen: I wish to thank hon. members of the committee for the courtesy they have extended to me. I regret having to take up the time of the committee in these dying hours of the session, but as I have pointed out, a matter of justice is involved, and I should like the Minister of Justice to consider the facts.
The facts of the case are these:
1.	That in the latter part of the eighteenth century the crown made grants of land fronting on the non-tidal waters of the Saint John river to certain united empire loyalists who settled in New Brunswick.
2.	That these grants conveyed not only a certain acreage of land but also-and I quote from the grants-
All .	.	. fishings, fishing waters, profits,
commodities, appurtenances and hereditaments whatsoever thereunto belonging or in any wise appertaining.
3.	That the Saint John river above the head of tide is not navigable.
I might elaborate upon that, but I shall not do so. I -can say definitely, however, that that is a fact which can be proven.
4.	That the most valuable commercial fish that frequents these waters is the salmon, and from the time these grants were made the grantees and their successors in title have caught these fish during the open season by nets set out from the bank of the river in front of their lands, for a short distance into the stream.
5.	That these nets were limited in size and in length by the regulations and they did not block the river or prevent fish from passing up the stream.
And then follows this important fact:
6.	That netting is the only way in which these fish can be caught. They cannot be caught by bait or trolling. They will not rise to a fly except in a very few pools along

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this river. These pools are not owned by the riparian proprietors on whose behalf I am speaking.
7.	That since section 9 of the fishing regulations has been passed, the Minister of Fisheries (Mr. Michaud) has refused to grant permits to these riparian proprietors to use nets in the waters adjoining their lands, and in consequence this so-called regulation has the effect of prohibiting absolutely the riparian proprietors from exercising their rights in their property in the only way they can be exercised, namely, by netting.
These I believe are the facts pertinent to the matter. They can, as I have said, be established without difficulty.
It is a well-established principle of law that in New Brunswick proprietors of land that abut non-navigable rivers are the owners of the soil of the alvus or channel ad medium filum aquae and have the exclusive rights of fishing in the waters in front of their lands. This is not a riparian right arising from the right of access to the river but is a right of property, and one of the profits of the land over which the waters flow; it has been called a territorial fishery.
I think the case of the Queen v. Robertson, which was decided by the Supreme Court of Canada in 1882, is ample authority for this statement.
Mr. Justice Strong in the case of In Re Provincial Fisheries said that:
In the Queen v. Robertson this court determined that the right of riparian proprietors upon streams above tide water, and whose titles were such as to give them, according to the general common law principle, the ownership of the beds of the streams to their middle lines, to fish within the limits of their own lands, was a private and exclusive right of property, a proprietary right of the same character as that to the herbage or trees growing upon the land, or the minerals or game to be found upon it, and that this right of property could not be impaired by any legislation, but that of the legislature of the province in which the property was situated, which, under subsection 13 of section 92 of the British North America Act 1807, possesses the exclusive right to legislate concerning "property".
If it is denied that the Saint John river is non-navigable above the head of tide, then I would point out that these grants from the crown conveyed in addition to a certain acreage of land "all fishings and fishing waters", and in consequence the grantees and their successors in title obtained what is known in law as several fisheries which are rights in property, and which gave them the exclusive right to fish in front of their lands to the middle thread of the river.

The proprietary rights of these grantees were not adversely affected by confederation. Chief Justice Ritchie in the course of his judgment in the case of the Queen v. Robertson said that he could not discover in the British North America Act the most remote indication of an intent to deprive either the provinces or the individuals of their property rights in their respective properties, and the privy council in the Provincial Fisheries case said:
Whatever proprietary rights in relation to fisheries were previously vested in private individuals remain untouched by this enactment.
I submit therefore that it is clearly established by the law of this country that whether the waters in this river above the head of tide are navigable or non-navigable, these land owners have in law a right of property in the fisheries in front of their lands.
An attempt is now being made by what I submit is an abuse of legislative power to take from the legal owners their rights of property in their fisheries by the enactment of this special regulation 9. Its effect is to prohibit the owners of property from using their properties in the only way it can be used, that is by netting. It amounts to a confiscation of property without compensation.
It is not necessary for me to tell you, sir, that the British North America Act provides that-
In each province the legislature may exclusively make laws in relation to property and civil rights.
Where, then, does the dominion government, or, to use the words of the act "The Queen, by and with the advice and consent of the Senate and the House of Commons", get the authority to take away these people's legal rights in property without compensation? Surely it cannot be contended that subsection 13 of section 91 gives the authority.
In 1897 the privy council held in the fisheries case that on the true construction of section 91 of the British North America Act the enactment of fisheries regulations and restrictions was within the exclusive competence of the dominion and not within the legislative powers of the provincial legislatures. It points out in the course of its judgment that there was a broad distinction between property rights and legislative jurisdiction; that there was no presumption that because legislative jurisdiction was vested in the dominion parliament, proprietary rights were transferred to it; that section 91 of the British North America Act did not convey to the dominion government any proprietary

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rights in relation to fisheries; whatever proprietary rights in relation to fisheries were previously vested in private individuals remain untouched by that enactment.
In the course of its judgment the privy council said:
It must be remembered that the power to legislate in relation to fisheries does necessarily to a certain extent enable the legislature so empowered to affect proprietary rights.
I would direct the attention of the minister to the words "to a certain extent" that qualify that statement. They are important; they cannot be overlooked. Most regulations affecting private property limit to some extent the use of the property, but do not deprive the owners of its use. I submit that it was never intended nor was it ever expected that the dominion government, under the exclusive power given to it to make fishery regulations, could or would attempt to take away from people what they legally owned. I submit that it is beyond the power of the dominion government to do so.
During the presentation of their case before the privy council the provinces submitted that if the power to make regulations was vested in the dominion parliament it might be abused so as to amount to a practical confiscation of property. Dealing with this argument the privy council said:
The suggestion that the power might be abused so as to amount to a practical confiscation of property does not warrant the imposition by the courts of any limit upon the absolute power of legislation conferred. The supreme legislative power in relation to any such power is always capable of abuse, but it is not to be assumed that it will be improperly used; if it is, the only remedy is an appeal to those by whom the legislature is elected.
The fear expressed by the provinces when this case came before the privy council, that the power if placed in the hands of the dominion parliament might be abused so as to amount to a practical confiscation of property, has now been realized. The assumption of the privy council that the power would not be abused, I am sorry to say, has been proved wrong. This abuse of power has resulted in an attempted confiscation of private property without compensation, and it cannot be allowed to go unchallenged.
I would call your attention to the fact that this so-called regulation was passed under authority of section 34 of the Fisheries Act, which gives the governor in council power to make regulations. But section 9 is not a regulation in the true sense of the word; it is a prohibition. The words "regulation" and "prohibition" are not synonymous. A regulation implies the continued existence of that which is to be regulated; a prohibition puts an end to a right that previously existed. An attempt has been made to take away the-proprietary rights of these owners in their several fisheries; an attempt has been made to stop them using their property. The enactment is not legal and is beyond the powers granted by section 34 of the Fisheries Act.
I ask the minister to look into this matter and take steps to have this so-called regulation rescinded. If he cannot see his way clear to do this, I would ask him to have the matter referred to the supreme court on a stated case. If this is done, I ask him to see that the owners of these fisheries are represented. They were not represented in the provincial fisheries case. These are all poor men, and they cannot afford to take legal action at this time.
In bringing this matter to the attention of the minister I wish to emphasize the fact that this is not an academic question, but one that affects the rights of certain citizens of this dominion. When I brought the matter to the attention of the Minister of Fisheries (Mr. Michaud) when his estimates were under consideration in June last, I said that to deprive a person of what he owns without hia permission and without compensation is a theft, and I charged the Minister of Fisheries and the dominion government with the theft of property by reason of their passing this order in council. The Chairman took exception to the word's I used and ordered me to withdraw them, which, of course, I did. I said also that these people had been treated like non-Aryans under a nazi regime because they had had their legal rights in property taken from them. This is the way the people in that part of New Brunswick feel about the matter. I submit that it is not in the best interests of the country that this condition of affairs should be permitted to continue.
I have often wondered what the reaction would be in the British House of Commons if a matter of this kind were brought up. I imagine there would be an uproar in that house, which respects the property rights and freedom of the individual, if legislative action of this kind were taken by order in council. These people own rights in their property, and those rights have been taken away by order in council without any compensation being paid, I ask the minister to take this matter into consideration and if he cannot see his way clear to have the order rescinded, that he have a stated case submitted to the supreme court in order that a decision may be obtained.


[Stage Direction]
Item agreed to.
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[Stage Direction]
90. Administration of justice-miscellaneous expenditure, $6,000.
Angus MacInnis: This was the item under which I was told I could bring up the matter . I had in mind. Unfortunately it has been the practice in this country to appoint judges largely because of political services rendered. I thought that when the new Minister of Justice took over his important office we could look for a discontinuance of this practice. Last winter a new chief justice of the Supreme Court of British Columbia was appointed. The appointment made has not in my opinion given satisfaction to the people of that province. Quite recently the provincial bar association discussed the matter of the appointment of judges-largely, I believe, because of resentment over this appointment. Both of the big daily papers in Vancouver commented upon the appointment. The Vancouver Province, the largest daily paper in British Columbia, and a paper noted for its reasoned editorial comment, made this statement:
The reward goes to the profession of politics rather than to the profession of the law-and that, in the interests of la.v and justice, is not desirable.
The new chief justice in British Columbia has not only been an outstanding man in the political party to which he belonged, a man to whom anyone would have to go who wanted to get anywhere in the Liberal party in British Columbia, but during his whole period of residence in the province he has been a corporation lawyer.


Thomas Vien: Order. To whom is the hon. gentleman referring?


Angus MacInnis: I am referring to the Chief Justice of the Supreme Court of British Columbia.


Thomas Vien: Order. Under the rules [DOT]of the house it is not permissible to make any comment on the chief justice or any justices of the high court, or any high official of the crown, except by impeachment. Further, it is not permissible to read articles in newspapers containing comments which may be construed as being offensive toward the person of a high court judge or a high official of the crown.


Angus MacInnis: I have not, as far as I am aware, read anything offensive, nor have I said anything offensive. If it is considered offensive to say-


Thomas Vien: Order. The remarks which I have heard from the lips of the hon.
gentleman are of. the nature of a criticism of the character of the judge-


Angus MacInnis: Decidedly not.


Gordon Graydon: On a point of order-


Angus MacInnis: Just a minute.


Thomas Vien: Order, please. I may have misunderstood the words. Is it not a criticism of a judge-?


Gordon Graydon: To be a Liberal?


Angus MacInnis: No. May I tell the
Chairman again what I said.


Thomas Vien: All right.


Angus MacInnis: Is it a criticism of a judge to say that he has been a corporation lawyer, that he has been one of the chief industrialists of the province of British Columbia, and that he has been "the power behind the throne" as the saying goes, in the political affairs of the Liberal party in British Columbia? If that is criticism, then it proves my point that he should not have been appointed.


Thomas Vien: It may prove the point that the hon. gentleman desires to make, but it is not permissible to discuss a judge in this house. It is not permissible to discuss the character, the conduct or the background of a judge except by motion for impeachment.


Angus MacInnis: I am discussing neither his character nor his conduct. I am giving this committee his background to indicate to the committee that appointments for political-


Thomas Vien: Order, please. It does not matter; the person of a judge cannot be made the subject matter of discussion in this house except under impeachment, and no hon. member can, under the rules of the house, suggest that a member of the judiciary has been a political organizer or a strong political partisan, because that very statement is a reflection on the judge himself.


Some hon. MEMBERS:: Oh, oh.


Thomas Vien: If hon. gentlemen
desire to appeal from my ruling, that is the only remedy.


Angus MacInnis: This position, Mr. Chairman, is not possible. A member is entirely muzzled with regard to a very important part of the public administration. What I want to call attention to is this, that the way in which judges are appointed is not a proper method of appointment. I will give members of the committee-


Thomas Vien: Order, please. There is nothing to prevent the hon. gentleman from discussing at large the system of the appointment of judges. That is perfectly in order. But when he makes reference to one particular

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judge, who happens to be the chief justice of a province, for the purpose of discussing his political background, I say that this is of the nature of a reflection on that particular judge and against the rules of the house. There is nothing to prevent the hon. gentleman from discussing-


Grote Stirling: What rule?


Thomas Vien: -the system of appointment of judges.


Angus MacInnis: Mr. Chairman, I bow to your ruling. I have said all I wanted to say in that regard. I think I have justified the raising of this point, because your decision has proved beyond the possibility of a doubt the correctness of my position.


Thomas Vien: Not under the rules.
The position of the hon. gentleman was distinctly out of order in respect of the rules of the house.


Grote Stirling: What rule, may I ask?


Thomas Vien: Citation 305:
All references to judges and courts of justice and to personages of high official station, of the nature of personal attack and censure-


Grote Stirling: "Of the nature of . . ."


Thomas Vien: I shall not discuss it.
If hon. gentlemen desire to appeal from my ruling they can do so, but I say that to point to one judge as being objectionable because of his political background is strictly against citation 305.


Angus MacInnis: I appeal from your ruling, Mr. Chairman. I think it is perfectly preposterous.


Thomas Vien: Very well, if you desire to appeal, all right. The hon. gentleman being alone, there is no appeal from that ruling.
And several hon. members having risen:


Thomas Vien: The appeal from the
ruling is to the full house. Do hon. gentlemen appeal to the full house?


Angus MacInnis: Mr. Chairman, I said I
had finished with the point, and I was going to observe your ruling.


Thomas Vien: If the hon. member
does not appeal from the ruling, that disposes of it.


Angus MacInnis: But if you insist, Mr. Chairman, that I am not to be allowed to talk, I am going to appeal from the ruling. The decision is up to the Chair.


Thomas Vien: Does the hon. member say that he has finished?


Angus MacInnis: Not with what I am
going to say. I am finished with what I have said.


Gordon Graydon: May we have citation
305 read again for the clarification of the issue?


Thomas Vien: I referred to citation
305, in May, which has been followed in this house.


Gordon Graydon: What is it?


Thomas Vien: It is this:
All references to judges and courts of justice and to personages of high official station, of the nature of personal attack


Grote Stirling: Which this was not.


Thomas Vien: Well, if I may be
allowed to continue reading:
-and censure have always been considered unparliamentary, and the speakers of the British and Canadian houses have always treated them as breaches of order. Members have even been interrupted in committee of the whole by the chairman when they have cast an imputation ' upon a judicial proceeding. The proper course for persons who feel called upon to attack the conduct of a judge is to proceed by way of a petition in which all the allegations are specifically stated so that the person accused may have full opportunity to answer the charges presented against him.
I stated that the hon. gentleman, in referring to an honourable member of a high court of the land and citing him as exemplifying what the hon. gentleman considers a wrong system, of appointing judges, was out of order.


Gordon Graydon: On a point of order, Mr. Chairman, may I point out-[DOT]


Thomas Vien: There is no point of order before the Chair.


Major James William Coldwell: Then we must of
necessity-


Thomas Vien: The ruling is not
disputable.


Major James William Coldwell: Then we must appeal from your ruling.


Thomas Vien: If you must.


Major James William Coldwell: We did not want to do that because we have no wish to delay the committee; but may I point out to you, Mr. Chairman, on the question as to the proper course to follow with regard to the conduct of a judge, that when a man is sitting in some other capacity he is no longer sitting as a judge. All the government has to do to prevent discussion on any question in this house is to appoint a commission consisting of a judge, and that moment we are stopped.
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Thomas Vien: I have given my ruling. I stated that citing a judge and discussing his political background was certainly against the spirit and the letter of rule 305.


Angus MacInnis: I did not cite anything that this gentleman had done since he became a judge. I did not reflect on anything he had done since he became a judge, and indeed I did not reflect on anything he had done before he was appointed.


Paul Joseph James Martin: But the implication is there.


Thomas Vien: Be that as it may, I suggest that we consider the incident closed and continue.


Angus MacInnis: I was objecting to the method of making appointments. I do not know what the method is in other provinces, but in British Columbia the qualification necessary for elevation to a judgeship is, apart from being a lawyer, that he shall be defeated at a provincial or federal election. The hon. member for Vancouver South (Mr. Green) was opposed by a Liberal lawyer in 1935. My hon. friend was elected and the Liberal defeated, and a few weeks afterwards :the defeated Liberal was made a judge. In 1940, the hon. member for Vancouver South [DOT]was again opposed by another lawyer, who in [DOT]turn was also defeated, and a few weeks .afterwards he was made a judge.
Mr, STIRLING: That is all he needs.


Angus MacInnis: In my opinion, to be defeated by my hon. friend the member for Vancouver South is not necessarily a sufficient qualification for a judge. I suggest that a better qualification would be if he had defeated my hon. friend the member for Vancouver South.


An hon. MEMBER:: Oh, no.


Angus MacInnis: The hon. member does not get the point.


Thomas Vien: Let us come to the administration of justice.


Angus MacInnis: I am drawing this point to the attention of the Minister of Justice. He is a man eminent in his own profession, and he knows the qualities required in a judge. He knows the necessity of having persons not only learned in the law, but persons with a strong social outlook, persons who are concerned not only with property rights but with the rights of the citizens as a whole. That is the reason why I brought this matter to the attention both of the minister and of the committee. I tell the .committee and the minister that other appoint-
IMr. Coldwell.I
ments such as the one he has just made will destroy the confidence of the people of British Columbia in the judiciary of that province.


Mrs. NIELSEN:: This item makes provision for miscellaneous expenditures, $6,000. Has any of this money been used to keep a check on those men who have been released from the camp at Petawawa, who were interned there because of fascist or nazi sympathies? I believe that in the course of two years some two hundred men have been released from that camp. On the word of some anti-fascists who were in the camp at the same time, some of these fascists, when released, gave the fascist salute and intimated to their friends that they were going back to work. Will the minister make a statement in this regard, and let us know what check is being made on these men and their activities.
Mr. ST. LAURENT: No part of this item is devoted to the purposes mentioned by the hon. member. With regard to the unanimous consent given to the member for St. John-Albert (Mr. Hazen), had I known that he had put the same speech on Hansard on June 11, 1941, as appears at pages 3830 and following, I would have suggested that it was not necessary to extend unanimous consent this afternoon.


Douglas King Hazen: May I point out that the present minister was not Minister of Justice then. I addressed those remarks then to the Minister of Fisheries, who failed, I thought, to understand what it was all about. I knew the Minister of Justice had been one of the leading lawyers in the Dominion of Canada, president of the Canadian Bar Association, and I thought it was a matter in which he would probably take some interest.
Mr. ST. LAURENT: The matter is quite interesting but hardly pertinent to the administration of the Department of Justice. If any of the persons in whom the hon. member takes such a legitimate interest feels that his rights have been improperly interfered with, he can disregard the necessity of securing a licence, place a net and be prosecuted, having the case taken to the courts, which exist in New Brunswick as they do elsewhere, where he can present the argument the hon. member has made.


Douglas King Hazen: Yes, but the Minister of Justice knows that if that suggestion were carried through to its conclusion, it would involve taking the case to the privy council, and how are these poor farmers along the river to do that? That is the reason why I

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have asked that a case be stated and the matter taken to the supreme court of the country for decision. These riparian owners have never been represented whenever any of these constitutional matters have come up and their rights were affected. They have never been represented before the courts of the country, and they cannot afford to appear before the courts. That is why I say that a special case should be stated.


Dorise Winifred Nielsen: Am I to understand by the minister's reply that no moneys are spent to check up on the activities of nazis released from internment camps?
Mr. ST. LAURENT: None of this $6,000 is devoted to that purpose, but the Royal Canadian Mounted Police, in connection with whose activities there are quite large votes to be dealt with, keep very close surveillance over all those who have at any time been interned.


Thomas Miller Bell: Under which vote will the committee be dealing with the matter.


Thomas Vien: Item 320 and following.
Mr. ST. LAURENT: I am not sure there will be any vote here-


Major James William Coldwell: I could not find it-[DOT]
Mr. ST. LAURENT:	-but it would
, probably be proper to discuss it there, because those boards are provided for under the war appropriation. As, however, the items concerning the Department of Justice in the war appropriations were not particularly discussed at that time, the understanding was that it would be proper to refer to them when the general vote on the mounted police was being considered.


George Hugh Castleden: There is one matter with regard to the administration of justice on which I wish to say a word. I am sorry to see no increase in this item, because the administration of justice in these times is increasingly difficult by reason of the fact that so much of our law to-day is in the form of orders in council. We have just had published to the end of March, 1942, the sixth volume, totalling about fifteen hundred pages. As we know', ignorance of the law is no excuse for breach. It is very difficult for us here to keep up with the orders in council which are passed. How can people in general know what the law is in these times? It is impossible.
Could this item not be increased so that something might be done to acquaint the people with some of the recent changes in the
law? They have very few opportunities to become acquainted with them, and suddenly they find themselves running foul of the law. Has the minister any plans for giving more information to the people? There are so many boards and controls that sit in their offices and have power to pass orders and regulations which have the effect of law, of which people are absolutely ignorant, until, as I say, they run foul of them. People are finding their liberties curtailed to an extent they did not believe possible. Is there any means whereby this information can be made available to the people to a greater extent than at present?
Mr. ST. LAURENT: I do not think it is possible to publicize these orders in council and regulations to any fuller extent than is being done. Some of the most important perhaps are those having to do with price control. An extended and, I thought, effective campaign was put on to acquaint the public with those provisions. It must be remembered that these are not normal times and that regulations have to be made and sometimes modified frequently. I agree that it is difficult even for one who got his knowledge of law in the law schools to feel that he is every day aware of all the provisions made. It is one of the unfortunate consequences of the circumstances in which we find ourselves.


Gordon Knapman Fraser: The minister claims that we have had a great deal of publicity on this. That is true. I have here an article entitled:
"How Do the Orders Affect Me?" Eight Million Workers May Ask.
Eight million British workers are affected by the far-reaching provisions of the essential work orders, and for their benefit the Ministry of Labour has issued a booklet guide sub-titled: "How Do the Orders Affect Me?"
Mr. ST. LAURENT: I think the hon. member has probably seen, as I have, several booklets having titles similar to that. When I got back to my apartment the night before last I found a booklet in connection with rent control, setting out in the form of a catechism with questions and answers pretty full information respecting the application of that law. That is one of many publications which I have seen that have been put out for the purpose of familiarizing the public with the effect of those regulations.


Gordon Knapman Fraser: I have something to say about that. In Peterborough they distributed those booklets to every house, but they were all in French. In an Englishspeaking city that is a waste of money and time.
Supply-J ustice

Mr. ST. LAURENT: It is apparent that what was done in Peterborough is one of those regrettable errors. Similar errors have been committed in the province of Quebec, where, through someone's blunder publications exclusively in the English language were sent out in a French-speaking community. I believe efforts are being made to avoid having such things occur. I shall be glad to bring the matter to the attention of the proper office because we hear of such errors happening much more frequently in the province of Quebec than elsewhere.


Mr. NICHOLSON:: Some time ago a sessional paper was brought down giving the names of the members of the national war services staff. One of the associate deputy ministers is Mr. Justice Davis of Saskatchewan. Is Mr. Justice Davis, in addition to his salary as a judge, receiving under section 1 of the Judges Act a per diem allowance of $10 when he is attending at any place other than where he is by law obliged to reside? Did he receive an allowance last year in addition to his salary when he was in Ottawa?
Mr. ST. LAURENT: I am under the impression that no per diem allowance is being paid. It is not to my knowledge that any such payment has been made to Mr. Justice Davis' since I came into the department on December 10 last. I have seen no correspondence or anything that would indicate that there was any such payment.
Mr, HAZEN: While many things are said by the hon. member for Vancouver East with which I do not agree, I think he rendered a service to his country this afternoon when he brought up the question of the recent appointment of supreme court judges or chief justices in the provinces. I think he is entitled to some answer from the minister to the question he raised. He asked the minister to make a statement as to what the qualifications are for the appointment of chief justices.


Some hon. MEMBERS:: Carried.
Some 'hon. MEMBERS: No.


Alexander Malcolm Nicholson: The minister has been asked two questions.
Mr. ST. LAURENT: I did not understand that there was any question. I understood there was a very strong opinion expressed by two hon. members.


Thomas Vien: I would point out that the qualifications of judges are stipulated in the law.


Douglas King Hazen: That is a valuable suggestion.


Thomas Vien: It is not a suggestion. I do not think it is in order in the committee to put to a minister questions with respect to t'he law. He is not here to interpret the law. The Judges Act stipulates the qualifications of a judge.


An hon. MEMBER:: He can say so.


Thomas Vien: If he chooses, but we cannot delay the work of the committee if hon. members ask questions which the minister does not choose to answer.


Angus MacInnis: A word may clear up this matter. I do not wish to press it any further. The appointments were discussed, and usually when the appointment of a civil servant or any other appointment of the government is criticized in the committee the minister concerned makes a reply. If the minister does not see fit to make a reply, I accept it that no reply can be made.
Mr. ST. LAURENT: I do not think it behooves the Minister of Justice to discuss in committee on the passing of the estimates of the department the reasons why certain gentlemen were selected to exercise t'he functions of high court justices. I think it would be an improper precedent to discuss in this committee on the estimates the reasons for the recommendations made to his excellency for the appointment of members of the judiciary.


[Stage Direction]
Item agreed to.
Stipendiary magistrate's court in the Yukon territory.
95.	Administration, $5,040.
Gordon Graydon: You are going so quickly, Mr. Chairman, I cannot keep up with you, but under the item dealing with the salaries and travelling allowances of judges I should like to bring one matter to the attention of the Minister of Justice, and to ask one question.
Mr. ST. LAURENT: I would point out that this item is for $5,040 for the administration of the magistrate's court in the Yukon territory. The other item covering judges' salaries and travelling allowances is statutory.


Gordon Graydon: That is what I wanted to speak about, the statutory item.
Mr. ST. LAURENT: I am not familiar with the manner in which these things are dealt with, but I was under the impression that these payments which have to be made and which are charged to the consolidated revenue fund were not the subject of discussion in com-'

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mittee, because the committee does not have to vote them. They are merely included as a matter of convenience, to show what portions of the sums expended in the department are provided by statute charging them to the consolidated revenue fund. If, however, there is any information the hon. gentleman wishes to obtain that I can give him, I shall be glad to do so.


Gordon Graydon: If the session were not drawing so near its close I would take issue with the minister on the point he has raised, because this is the only place in the estimates on which a matter concerning our judges properly may be brought up. If the minister will turn to previous debates in this house I think he will find that numerous questions have been asked and lengthy discussions have developed on occasion with regard to these items. However, I wanted to ask this one question. Does the Department of Justice at Ottawa keep any record of the number of reserved judgments of Canadian judges, both of the supreme court and of county and district courts, to show how long such judgments have been delayed or reversed, and the number of the judgments so held up?
Mr. ST. LAURENT: The department has no information in that regard and no way of getting it. As a matter of fact, the administration of justice, as my hon. friend knows, is a provincial responsibility, the federal government appointing the judges and providing their salaries and travelling allowances. During the years in which I have practised at the bar I have had occasion to feel that there were grounds for complaint in this connection, but such complaints must be brought especially to the attention of either the attorney general of the province or the Minister of Justice in order to have them dealt with, because there is no other way in which we would have knowledge of what is happening. We do not keep tab on the number of cases heard, or the dates when they are taken under advisement, or the dates when judgment was rendered. I know from my own at times rather unfortunate experience that sometimes there is long delay and, I have felt at times, unjustifiable delay between the time when the case was reserved for judgment and the time when ultimately the judgment was rendered. At times I have called the attention of the attorney general of my province, and at times the attention of the Minister of Justice, to what I looked upon as something which, to say the least, was unfortunate for those who were interested.


Gordon Graydon: If I may just follow that with one remark, I rather think the time has come when the Attorney General of Canada,
who is also the Minister of Justice, should confer with the attorneys general of the various provinces with respect to the point I have raised. It is a very serious matter. There have been a good many complaints with respect to it, though when I speak of complaints I would hope that neither the committee nor the minister would feel that I was referring to the local judge in my own county of Peel, Judge Archibald Cochrane, for his was one of the best appointments this government has made in a long time to the county court bench. But I must say that there are many instances in which these complaints are very well founded, and I think there ought to be some kind of regulation-


Paul Joseph James Martin: Not confined to the county court bench.


Gordon Graydon: No, it is not confined
to county court judges. I do think there should be some kind of regulation to protect the litigants of this country against these long reservations of judgments. I feel that unless a judge is ill he should not take longer than six months at the most to make up his mind on a case. If he takes longer than that, and is still in good health both mentally and physically, then I think he should pay out of his own pocket the costs of another trial, which should follow automatically. At least that would bring to a good many judges a more complete realization of their responsibilities with respect to this matter, and I bring the suggestion to the attention of the Minister of Justice. This trouble is of long standing, I admit, but these are days of considerable urgency, when people have to assume their full responsibility, and surely it is not too much to ask of the judiciary that they should carry their full share of the burden in this regard.


[Stage Direction]
Item agreed to.
96.	Payments of gratuities to the widows or to any dependent children of judges who die while in office, $15,000.
Angus MacInnis: How much of this amount was expended last year, and how many widows and dependent children benefited by the appropriation?
Mr. ST. LAURENT:	I am sorry I have
not the details as to the persons to whom payments were made. This is for the purpose of providing the equivalent of two months' salary to the estate of a judge after his decease, if he leaves dependents.


Angus MacInnis: Is it necessary to prove
that his dependents need that assistance, or what are the requirements before that amount is paid?
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Mr. ST. LAURENT:	I think it has been
paid almost as a matter of right in all cases where there was a widow or there were dependent children at the time of the death of a judge in office.


Angus MacInnis: It seems to me that this is another case of "to him that hath shall be given, and from him that hath not shall be taken away even that which he hath." Such a terrific fuss is made about giving $20 to an old age pensioner, but here payments are made of much larger sums, with no accounting given to the house as to the persons to whom these payments are made.


Alexander Malcolm Nicholson: I must support the hon. member (Mr. Maclnnis) who has just spoken. We find that pensions granted to retired judges start off at $6,666.66 for the first judge in the list, and that the amount for the second one is $12,000, or a pension of $1,000 a month. I come from a part of the country where many of our people have much difficulty in getting old age pensions at the age of seventy. They have to submit proof of birth, and all that sort of thing. If they receive $15 to $20 a month they are receiving the maximum which can be granted to them. It seems to me this is an item about which the minister should give more information.
Mr. ST. LAURENT: That pension of $12,000 a year was fixed by statute when it was provided that at the age of seventy-five years justices of the Supreme Court of Canada would be retired. That was provided for judges who had been appointed at a time when the appointment was for life. When the statute was amended to provide for their retirement at the age of seventy-five years it was provided that those who were appointed before the change was made would be retired on a pension equal to full salary.


[Stage Direction]
Item agreed to.
Penitentiaries branch.
97.	Branch administration, $111,597.
Harry Rutherford Jackman: Would the minister give the committee a statement as to the number of penitentiary prisoners used in war work?
Mr. ST. LAURENT: I believe that practically all have been used in war work. There has been an effort in all the penitentiaries to disregard for the time being the objection which used to be made that there should not be competition of prison labour with ordinary civil labour. Under the exigencies of the war situation we came to the conclusion that that objection should not be considered as valid, and that we should have done by prisoners in penitentiaries as much useful work as possible.

For instance, we are taking to the penitentiaries uniforms and1 other army stores for reconditioning purposes. There has been a considerable increase in agricultural production carried on in connection with the penitentiaries, regardless of whether or not we would be producing more than would be required for consumption in those institutions. Careful attention has been given to making as good use as possible of those who are imprisoned.	*
Recently an arrangement was worked out between the attorney general of Ontario and the Department of Justice for the purpose of using the remission branch to issue tickets of leave to men who might be placed on farms, so that they might work out the balance of their terms there. Constantly more is being done along those lines. However since the very beginning of the war the policy has been to use to as good advantage as possible all labour available in the penitentiaries.


Harry Rutherford Jackman: Is it the custom of the department to pay the prisoners or their families any compensation whatsoever?
Mr. ST. LAURENT: There is no payment. There is an allocation of five cents a day placed to their credit for the purchase of tobacco, pipes and the like. There is no actual payment for work performed. Of course that does not apply to the arrangement made with the attorney general of Ontario. Those prisoners would obtain tickets of leave, and an arrangement would be made for their remuneration for any services they might render outside the penal institution.


[Stage Direction]
Item agreed to.
457. To provide hereby, notwithstanding anything contained in the Consolidated Revenue and Audit Act or any other act or law, for payment out of the consolidated revenue fund to the widow of the late Right Hon. Ernest Lapointe of an annuity at the rate of $1,800 to commence from November 27, 1941, and to continue during her lifetime, $2,417.
Grote Stirling: The government has
placed in the supplementary estimates an item the discussion of which is extremely difficult. I feel the diffidence I imagine most hon. members would feel in, making reference to a suggested annuity to the widow of the right hon. gentleman who sat with many of us in the house. That the government has seen fit to place this item in the supplementary estimates means, I believe, that very grave consideration has been given to the matter. All I desire to say is that I doubt the wisdom of setting up a precedent. After consideration, the government has

Supply-Justice
decided to offer this payment to the widow of the late right hon. gentleman. In so doing, it has created a precedent.


Major James William Coldwell: I believe all of us who sat in the house with the Right Hon. Ernest Lapointe realized that he gave unstintingly of his ability and his services to this country. We all admired him for the work he did over a long period of years. But I feel very much as did the hon. member for Yale when he drew the attention of the committee to the item. A principle is here being established.
A case might be made out for the consideration of hon. members who have served for many years and who perhaps have sacrificed their personal careers in the service of the state. In this particular case I saw a return which indicated that over a period of years since 1904 there had been payments from the public treasury amounting to nearly $300,000. Of that sum I believe about $27,000 was charged to expenses, and therefore ought not to figure in the gross amount. But I think it is proper to say that in this house during the last few years we have shown no inclination to provide properly for old age pensioners, and that we have done nothing for mothers of families, who must look after those families when they are left without a bread-winner. We have widows of soldiers who have been killed in the service of their country, but who are receiving a comparatively small amount under the provisions for dependents' allowances. It seems to me that if we are going to adopt a principle of this kind we ought to adopt it for all those who serve the country, in whatever capacity they may serve. This means, of course, that practically everybody who performs any useful service during a long life is performing a service to the state. My suggestion is that we should consider, not one isolated case of this description, but the whole matter of persons left with perhaps insufficient to maintain a reasonable standard of living in the social security plan we adopt for all our people.
As has been drawn to the attention of the committee, from time to time we do make provisions for certain individuals. In one instance we have made provision to the extent of $12,000 a year. We all appreciate the great service rendered by the late Minister of Justice, but this way of treating this particular case is open to serious criticism and objection. However, I must say that it is preferable to not bringing it before the house, to doing it in some other way. I know of
another case which was objected to by the leader of this group back in 1925 or 1926, and the widow in question was placed upon the payroll of the library and, I believe, is still on that payroll although she is not performing any service for the money she receives. I noticed that case when I was looking through the estimates a couple of years ago. To my mind that was the wrong way to handle such a case and I favour the present method. If this is a necessitous case, it should be considered in the light of the situation of others who are in a similar position. I want to make that quite clear. What we want is a social security system, not the picking out of an individual here and another there. We should give to those who serve the country in any capacity that security in old age and in sickness to which they are entitled because of the services they render.


[Stage Direction]
Item agreed to.
Royal Canadian Mounted Police.
320. General administration, $238,525.75.
Clarence Gillis: The Minister of Justice will recall that some months ago I corresponded with his department and with the Department of Finance with respect to the Royal Canadian Mounted Police guards employed on the docks at Halifax. There are some hundred men doing this work. While they are under the supervision and direction of the Royal Canadian Mounted Police, they are not paid the rates of wages received at the present time by the constables of that force. When this addition to the force was made, the understanding was that the rates paid would be those paid to constables in the regular force. Since the establishment of this guard, the Royal Canadian Mounted Police constables have received an increase of 50 cents per diem in their allowance. These guards are partly uniformed, and they have asked that they either be given the increase paid to the Royal Canadian Mounted Police constables or brought under t'he cost-of-living bonus regulations. I understand that the Department of Justice has recommended to the treasury board that either one or the other should be done, but unfortunately nothing has been done to date to level off the rates paid to these men who are performing an essential service. I am wondering if the new security force being set up by order in council will be treated in the same way as this guard force.
Mr. ST. LAURENT: The security control force will be treated the same as the men
Supply-Justice

in the army. If enlistments cannot be secured voluntarily, recourse will be had to the Mobilization Act to secure the necessary men. It was felt that this force should be treated the same as is done in the United Kingdom which has a similar service.


Clarence Gillis: I should like to deal specifically with this question of the Royal Canadian Mounted Police guards. There are many of these guards across the country, particularly in the seaports, and they are doing an essential work. Most of them are ex-service men from the last war, but many are men who have been discharged from the services during this war. The rates paid are certainly not in keeping with the work they are performing. A supervisor is paid $2 a day, with an allowance of $1.60, making his total pay and allowance $3.60 a day. A married man receives $1.60 and an allowance of $1.60, or a total of $3.20 a day. An unmarried man receives SI .60 and an allowance of $1, or a total of S2.60 a day. The great majority of these men are married, and the cost of living in seaport towns is very 'high. I understand that the establishment of this force was arranged between the veterans' organizations and representatives of the government, and it was decided that the rates paid would be the same as those paid to constables in the Royal Canadian Mounted Police. Since that time the police constables have received an increase of 50 cents a day. There is no reason in the world why these men should not receive the same increase.
If the treasury board is not prepared to grant this increase, then these men should come under the cost of living bonus regulations. I know the Royal Canadian Mounted Police commissioner has done everything he can to have an adjustment made, and the Department of Justice has made the necessary representations. What I am finding fault with is the fact that when certain departments bring down recommendations that certain things should be done in the best interests of the department, a few men on the treasury board can refuse to take action. I think members of this house should express their opinion whether we should have a dictatorship behind the scenes in the handling of finances and the curtailing of work which must be performed by the departments. Not only have these men on the treasury board interfered in this case, but they have interfered with the payment of dependents' allowances in connection with the armed forces. When the regular estimates of the Minister of Finance (Mr. Usley) are up for consideration I shall

have some pertinent things to say with respect to that. I should like to hear an expression of opinion, particularly from hon. members from Nova Scotia and the Halifax district. There are perhaps 150 men engaged at that port. They work in all kinds of weather, and they must be keen about doing their job. Yet a few men on the treasury board can interfere with the recommendations of the Department of Justice and the commissioner.


Ralph Maybank: This cost of living bonus, which has been mentioned by the hon. member, is causing a good deal of trouble in the district from which I come. I entirely agree with what he said in so far as he was delivering strictures upon the treasury board and its interference with justice to persons who work in one way and another for the people of Canada. The attitude of treasury board should not be tolerated. I do not care which minister is present who happens to belong to it. I think treasury board considers nothing whatever except pinching a penny, and the members of it do not care whose penny they pinch.


Grote Stirling: That is what they are
there for.


Ralph Maybank: I often wonder how the
woman would have fared who is mentioned in the bible-


Mr. MacKENZIE (Neepawa):: What do
you mean by "pinching"?


Ralph Maybank: I will explain that even
to the hon. member's satisfaction. The widow had a mite, which was a very small sum of money. She went to the synagogue and dropped it in the collection plate. She was commended by the Master and became a famous woman. Had she happened to be a charwoman in a government institution, attention would never have been drawn to her as it was drawn to the woman in the bible, because the treasury board would have got the mite away from her and she would never have been able to go to the synagogue and drop anything in the collection plate. I do not know of any organization that is responsible for more injustice in this country than the treasury board of this government. Everywhere you turn you run into cases where, because people can do nothing to defend themselves, they have had something taken away from them. In nearly all cases you find that they are either officers who cannot organize their case, or poor people who cannot speak for themselves. You will find women who are already poorly paid, and some-rule takes away some small pension they

Supply-National Revenue
have. You find rules that persons are called "casual workers" in order to prevent them from getting the cost-of-living bonus. There is no rhyme or reason to the rules and regulations and various formulae that the treasury board adopts and promulgates. If the mounted police are not getting the cost-of-living bonus, obviously they should get it.
I do not know that the people of Canada appreciate as fully as they should the police system we have. I know that the Royal Canadian Mounted Police are held in very general esteem, but I doubt very much if their full excellence is realized. We have had quite a deal to do with the mounted police recently in connection with the defence of Canada regulations. You get an idea of the spirit of the force when you are dealing from time to time with representatives of that organization and seeing them otherwise; and I think we can say that one of the reasons we have not had a great deal of sabotage in this country is the excellence of our police force. When I consider that, as well as the ordinary justice of the case, it is amazing to me that treasury board or any other branch of the government should deny these men, as well as others who cannot speak for themselves, the cost-of-living bonus. I cannot speak too strongly in condemnation of that sort of thing.


[Stage Direction]
Item agreed to.

[Stage Direction]
Income tax division.
198. District offices, $3,717,270.
Harry Rutherford Jackman: I should like to have some statement from the minister on the condition of collections in the various offices, or taking the dominion as a whole. There is a feeling, perhaps entirely unjustifiable, on the part of some that collections are not as good as they should be; that some people who should be paying income tax on their personal incomes or on their businesses are not doing so, and that there is not an adequate check. In the newspapers we see reports from time to time of prosecutions entered by the crown against people who have put in fraudulent income tax returns or who have made other evasions. Sometimes the penalties are substantial, but as compared with the penalties exacted in the United States, where income tax evasion, to judge by the fines, is looked upon as one of the most heinous of crimes, the penalties exacted in Canada are by no means severe. I wonder whether the minister would state what condition the income tax collections are in, whether or not the. arrears are very substantial, and just how recently have checkups been made.
I know that in my own case, which is one that for certain reasons might have been gone into, I had to ask the officials in Toronto to come to my office and make sure that the returns were in adequate form. I found that in two cases the obligation was on one side and in one other year the obligation was on the other side. Therefore it was nearly three years before any clearance had been given, and I know that that condition is quite common. On the other hand, you find that in Toronto *the officials will, perhaps, telephone a taxpayer because a certain item of bond interest which appeared in one year did not appear in another year. In one case which came to my attention the bond had been called, and the fund reinvested in some other security. I believe the minister should give the committee some indication whether his department is able to cope with the greatly increased amount of work which it has to undertake to-day, and whether he can get the necessary accounting personnel and inspection personnel to do the work which the present burden throws upon his department.


Colin William George Gibson: Of course the work of the income tax department has increased tremendously. Collections for 1941-42 amounted to over $652,000,000. The staff has increased, not in proportion to that increase, but from 1,755 in 1940-41 to 2,416 at the end of the 1941-42 period, and we * expect to further increase it to 3,111. There has not been any great increase in the percentage of taxes outstanding. Of course we have not cleaned up all the arrears, which are always being subjected to scrutiny, and consequently there are outstanding amounts which are under dispute, and in some cases two or three years old. But as a whole the percentage of collections has held up very well, as the collections indicate. There is difficulty in getting trained personnel, particularly chartered accountants, and every effort is being made to secure them. We are hoping to have the national war services department grant postponements to chartered accountants when they are required for essential services, because be feel they are a special class which should be granted special consideration on account of their technical ability.


Clarence Gillis: With regard to the refundable part of the faxes, I believe an arrangement has been worked out whereby the employee registers his application with the employer-


Colin William George Gibson: I suggest that this question be brought up to-night when the income tax bill is being considered.


[Stage Direction]
Item agreed to.
At six o'clock the committee took recess.
Auditor General's Report
[Stage Direction]
After Recess
The committee resumed at eight o'clock.
Progress reported.


[Stage Direction]
Bill No. 125, for the relief of William Taffert.-Mr. Bercovitch.


James Lorimer Ilsley: Certain hon. members asked that I make a statement on the public accounts before the end of the session. With the consent of the house I should like to make that statement now.
On June 4 last, in reply to some criticisms made by the hon. member for Temiscouata (Mr. Pouliot) in regard to the detail with which information on government expenditures is supplied to parliament, I stated that the whole matter was under active consideration at the time, and promised that before the session closed I expected to be able to make some recommendations, which recommendations the house might adopt if it wished to do so.
On that occasion I pointed out that information in regard to the financial operations of the government are presented to parliament in two different documents: one, called the public accounts, w'hich is a report made to me by an official of the government, the deputy minister of finance; and the other, the report of the auditor general, an officer of this parliament and answerable to this parliament. There had been some criticism of the form of the public accounts, which, as I stated, are in the same form and practically of the same dimensions as they have been for a great many years, but in some cases at least what was really being criticized was the form of the auditor general's report.
With two reports covering the financial activities of the government, it is only natural that such confusion should take place. I therefore indicated that we have had under active consideration the question of "whether the form, the amount of detail, in both the public accounts and the auditor general's report should not be changed," and whether parts of the material now published in the auditor general's report should not be incorporated in the public accounts in order to

let the Minister of Finance take direct responsibility for it as the head of the Department of Finance.
In the course of our consideration we have studied not only the law and the historical background relating to the reports to parliament on government revenues and expenditures, assets and liabilities, et cetera, in so far as Canada is concerned, but also the practices followed by the United States, the United Kingdom, and the other British dominions. Our desire was to draw from all possible sources lessons and suggestions as to the best possible way in which to present to parliament the information necessary to enable it to exercise wisely and efficiently its control over financial matters and assure itself that the executive arm of government is properly carrying out its stewardship. As a result of the study and consideration given to the whole matter, I am glad to be able to announce that the government has decided to accept certain recommendations made jointly by the auditor general, the deputy minister of finance, and the comptroller of the treasury. The government believes that these recommendations are sound, and, if they commend themselves to the judgment of the house, they will be implemented with respect to the accounts for the current fiscal year.
The essential feature of these recommendations is that there should be tabled under a common cover both the public accounts and the auditor general's report; that in future this single document should be called the public accounts, and that, in recording the outlays made by government departments and agencies, the "details" of expenditures printed in the estimates should be followed, but supplemented by such other material as the Minister of Finance may consider necessary to elucidate adequately the uses to which the grants made by parliament have been applied.
To be more specific, the contents of the single report would be organized substantially as follows:
(a)	Part I, to consist of an over-all survey and report of the financial operations of the year in such form as will clearly portray the policies followed.
(b)	Part II, to consist of the balance sheet of Canada, certified by the auditor general.
(c)	Part III, to consist of the revenues of the year classified by departments and sources; this to be signed by suitable executive officers and certified by the auditor general.
(d)	Part IV, to consist of expenditure statements as submitted by the comptroller of the treasury and certified by the auditor general.

Auditor General's Report
(e)	Part V, to consist of such miscellaneous statements as may be necessary to report all transactions not included in the preceding parts.
(f)	Part VI, to consist of the report of the auditor general on the statements in the preceding parts and on such other matters as he is required to report to the House of Commons.
It will, I think, be apparent at once to the house that a single report of this type will be an enormous convenience to members in their work of analysing and appraising the multifarious transactions which are necessarily involved in the receiving and spending of a sum of money approximating four billion dollars. When sums of this magnitude are expended in millions of individual transactions, the work of the member who seeks to understand the operations of government is bound to be difficult enough in any case; it is incumbent upon us, I think, to see that he does not have to wade through a chaotic mass of material scattered over two massive volumes, each covering largely the same field but in a different way. It seems to me, also, that presentation of the accounting records relating to expenditures on the same basis as the details in the estimates should facilitate a better control by the house when voting supply.
In regard to the degree to which itemization of detail will be carried, it will be noted that responsibility for decisions in this field will in effect have to be assumed by the Minister of Finance, because the deputy minister of finance and the comptroller of the treasury are his officials. Probably the Minister of Finance should be in a better position than anyone else to give directions as to the nature of the breakdown necessary to elucidate transactions of interest to the house. If the minister does not go far enough to satisfy hon. members he can be called to account on the floor of the house.
In so far as I personally am concerned, my attitude will be to place primary emphasis on the necessity of disclosing to the house all information that is really useful in enabling it to perform its essential functions. Naturally, in regard to war expenditures, considerations of secrecy will have to be kept in mind because of the necessity of not giving aid to the enemy; in regard to all expenditures there are also considerations of man-power shortage and cost which call for every practicable economy consistent with the public interest. In this latter connection I may add that I hope the new procedure will lead to certain savings in staff and in cost by the elimination
of some duplication existing at present in the accounting work of the Department of Finance and the auditor general's office.
The public accounts and the auditor general's report for the fiscal year 1941-1942 are now in the course of preparation and must be ready this autumn. It is impossible to effect the various changes in organization and staff and the necessary adjustments in accounting systems in time to implement the recommendations I have outlined above, in connection with the reports now in preparation. If, however, the recommendations are satisfactory to the house, they will be put into effect in time to have their results appear in the report for the current fiscal year, which will be issued in the fall of 1943. I am advised, however, that the auditor general's report for the last fiscal year is being enlarged so that the house will receive a fuller disclosure of information, for which some members have been asking. Last year, for reasons beyond the control of the audit office, it was found to be impracticable to bring together a tabulation of payments to war contractors, charged to the Department of National Defence, at any figure under $25,000. That task, it will be noted, is statistical rather than audit, but the audit office has installed a punch-card equipment which will enable the record to be carried down to payments as low as $10,000, a figure which should give a good over-all coverage. I believe an attempt will be made to make the record as illuminating as possible within the limits imposed by necessary considerations of secrecy. In regard to the departments generally, there will be certain variations in the details of the accounting record. In some cases a break-down of expenditures under a particular vote into payments of $1,000 or less will be necessary to give a clear picture of what has happened, while in other cases a $5,000 minimum may tell the story fairly. That, I understand, will be the general objective of the auditor general-to tell the story in all cases in as clear and simple a way as may be practicable.
I trust that what we are trying to do this year will prove acceptable to the house under all the circumstances and that the more important changes which I have recommended in regard to the report which will appear next year will be warmly welcomed.
I was also asked to make a statement or give the house some information as to the audit and treasury control of crown corporations. I have a statement on that subject which I now lay on the table.
Auditor General's Report


John Ritchie MacNicol: If it is in order I should like to say just a word with regard to what the minister has said in reference to a wider description to be given in the public accounts. In years past I made an earnest study of the public accounts and the auditor general's report, and they gave very full and extensive surveys of the expenditures of each department. I am glad to say that the minister is going to return, to a large extent, to the former system; if I understood him correctly he said that general accounts relating to the departments would be shown as low as $5,000.


James Lorimer Ilsley: I think it is $10,000 in connection with war contracts.


John Ritchie MacNicol: I should like to see the report go a great deal lower than that. An item for $5,000 is quite large. If, for instance, one wants to look up something pertaining to Indian affairs, in connection with the motorboats or motorcars used in connection with Indian agencies, and so on, a limit of $5,000 would be too high to enable one to look very *closely into the expenditures of many departments. However, as one who has pressed very hard for a more extensive report in connection with the public finances, I am glad to see that at least we are getting some concession. The hon. member for Temiscouata (Mr. Pouliot) is not in his place at the moment, but he also has pressed for this more complete breakdown of expenditures, and I feel it my duty on his behalf, too, to thank the minister for this action. I want to compliment the hon. member for Temiscouata upon having pressed for the same thing that I have been requesting, together with others in the house.


James Lorimer Ilsley: The hon. member for Wellington North (Mr. Blair) made a similar request the other day.


John Ritchie MacNicol: Yes, but the hon. member for Temiscouata and I have been at it for quite a while, together with the leader of the opposition (Mr. Hanson).



INCOME WAR TAX ACT

[Stage Direction]
The house resumed consideration in committee of Bill No. 115, to amend the Income War Tax Act-Mr. Usley-Mr. McCann in the chair.
On section 1-Normal tax.
Grote Stirling: Following the remarks made by the leader of the opposition on second reading, it appears to some of us that it is almost futile to endeavour to take up a bill of this magnitude and extent and attempt to dissect and debate it in a matter

of hours. A couple of weeks would not be too long for that. I would suggest, in order to facilitate the work of the committee, that as we go through the bill the minister might be good enough to describe clause by clause what is new in the printed bill. I think that might go a considerable distance in elucidating the subject before the committee. Some of us had an opportunity of reading the mimeographed sheets that were distributed, but even with that assistance it is far too large a measure for us really to dissect it in the hours, probably, that are at our disposal.


James Lorimer Ilsley: I will try to do that, Mr. Chairman. I should not like to be held to a rigid undertaking to bring to the attention of the committee everything that is new, but I have tried very hard to keep new features out. There are a number of provisions that I should like to have inserted in the bill, but I knew they would just open up discussion, and since it was getting late in the session, these sections follow the resolutions very closely. Of course it is one thing to draw up resolutions which give a general idea of what one intends, and another thing to put those intentions in the form of a bill. When the attempt is made to do so, all kinds of minor difficulties arise, and minor questions of policy have to be decided in drawing the bill. I will bring to the attention of the committee everything I can think of. I do not think there is anything new in the rules contained in section 1.


Grote Stirling: I believe a considerable amount of discussion took place in the resolution stage.


James Lorimer Ilsley: Oh, yes; there was a very long debate on the resolutions, and so far as I know there is no change of any importance in these rules. I have an amendment to be moved to rule 2 on page 7 of the bill. The amendment is that rule 2 of section 1 (3) of this bill be amended by adding thereto the following proviso:
Provided that the aforesaid amount of $1,600 shall not apply in respect of female commissioned officers, and that the governor in council may by order fix an amount to apply in respect of such female officers, having regard to differences in pay between male and female warrant or non-commissioned officers.
That gives the governor in council a little power, but clearly it is inappropriate to put a floor of. $1,600 under the tax of the female commissioned officers, because their pay is only about two-thirds that of the male officers.


Colin William George Gibson: I so move.


Grote Stirling: Is that (c) in line 24?

Income War Tax Act


James Lorimer Ilsley: It is a proviso put on at the end of (b). It is not (c). This is at line 23 of page 7, after the word "children".


Alan Webster Neill: And will it be (c)?


James Lorimer Ilsley: No, it is a proviso.


[Stage Direction]
Amendment agreed to.
James Lorimer Ilsley: My officers direct my attention to one small change in these rules. It was provided in the resolution that the normal tax should not operate to reduce the income of a married person below $1,200. These rules provide that neither the normal nor the graduated tax will.


Grote Stirling: Is that on page 27


James Lorimer Ilsley: That is at the bottom of page 6, and the top of page 7, and involves a slight change from the resolution.


James Joseph McCann: Is section 1 carried?


Some hon. MEMBERS:: Carried.


James Joseph McCann: On section 2; shall section 2 carry?


Mr. NOSEWORTHY:: Do I understand by the change in section 2 that a married man may earn $1,200 and his wife $660 and be exempt from taxation, provided she is working?


James Lorimer Ilsley: The hon. member is now going back to section 1. I understood that section 1 was carried. But if the hon. member wishes, we will return to that section. We did not take it up rule by rule. I suggest, Mr. Chairman, that we refer to these as clauses. Is it the practice to refer to the sections "as clauses, or to the clauses as sections?


James Joseph McCann: The numbers in heavy black are the sections. For instance, section 1 goes to the middle of page 7. The subsections are the rules.


James Lorimer Ilsley: There seems to be some ambiguity about that. The method you have described, Mr. Chairman, is the one we usually follow. The trouble is that the rules are divided into sections.


James Joseph McCann: Do you wish to take them up in detail?


James Lorimer Ilsley: No, I do not.


Gordon Knapman Fraser: Take them up page by page.


James Lorimer Ilsley: I think section 1 of the bill is carried.


James Joseph McCann: Section 1 is carried. The next is section 2, at page 7.


James Lorimer Ilsley: Correct.


Joseph William Noseworthy: May I have an answer to my question?


James Lorimer Ilsley: Then section 1 is not carried. The hon. member wishes to go back to what part of section 1?


Joseph William Noseworthy: The section referring to the exemption of a married woman that gives the husband the right to be taxed as a married man. My question is: does that give an exemption of $1,860 on the two incomes? The husband gets an exemption up to $1,200, and the wife up to $660.


James Lorimer Ilsley: If the wife's income is earned income, that is correct.


Joseph William Noseworthy: What is the tax which that couple will pay if the husband's income is $1,860 and the wife stays at home to raise two children? Would it be $153?


James Lorimer Ilsley: Something in that neighbourhood. I see what the hon. member is driving at, and I should like to know whether he thinks we should do that.


Joseph William Noseworthy: I agree with the principle, but I think there should be some exemptions in lower income brackets for the married man with a family. For instance, I have worked out a table which shows that the married man without children is exempt to $1,200. If he has $1,250 he pays the entire $50 in taxation. If he gets $1,300 he pays the $100 in taxation. That is 100 per cent of his increase over the $1,200. If he has $1,350 he still pays 100 per cent of his income over $1,200 in taxation. If he has $1,400 he pays 68 per cent of his increase over $1,200 in taxation. The higher his salary or income becomes, the lower the percentage he pays on his income over $1,200.


James Lorimer Ilsley: But he gets half of all this back.


Joseph William Noseworthy: That applies until you get to $2,500, and then it starts to rise. And the higher his income becomes, the higher the percentage on income over $1,200 he pays. It looks as though the budget is in reverse up to $2,500.


James Lorimer Ilsley: It is just in reverse of what *the hon. member says it is.


Joseph William Noseworthy: That is, the lower a man's income, the more of his income over $1,200 he pays in taxation. The same applies to the married man with one child. At $1,250'
Income War Tax Act

he pays 100 per cent of his income over $1,200. At $1,300 he pays 63 per cent. At $1,350 he pays 44-3 per cent, and then the amount is reduced until you reach $2,000. Then he starts to climb again. The same principle applies to the man with two children, except that it is a little worse. I am wondering on what principle the budget was built, in respect of the very low income brackets.


James Lorimer Ilsley: The principle was to protect the taxpayer against having his income depressed below a certain level. If we take that out, we can meet the hon. member. But it is because we have a floor in there, a provision that, whatever tax we put on, it shall not go below $1,200 or $660, that the feature arises about which the hon. member has spoken.


Joseph William Noseworthy: With respect to the base according to which 30 per cent is charged on the first $500 or portion thereof over $1,200, does the minister not think that it would work out better to have that broken down, instead of taking 30 per cent on the *entire $500?


James Lorimer Ilsley: The national defence tax principle was incorporated in this bill. That
is,	you go all the way down to the first dollar after you get above a certain level, with the proviso that the taxes shall not reduce the income left below a certain level. The result is that a person who gets slightly over that level has a larger proportion of the income in excess of that level taken. The national defence tax principle was pretty well accepted for a couple of years and we decided to adopt
it,	but to alter it as well.


Mr. MARSHALL:: It is raised.


James Lorimer Ilsley: Seven per cent instead of five, but half of it is returned.


Alan Webster Neill: Apparently the explanatory notes do not agree with the bill. On the first page of the explanatory notes we find No. 3 which is divided into three, and then the last *of those is divided into two. Where in the bill shall I find this subsection:
The aggregate investments and activities of a number of persons are to be taxed as if they had carried on the business in corporate form, securing equality between investors.


James Lorimer Ilsley: That will be found on page 8 *of the bill, line 29. The hon. member has read section 3, subsection 3, paragraph 3, and that is what appears in the bill. It may be a little difficult to follow, but it is correct.


Alan Webster Neill: The subsection which reads: '"where any person acts"?


James Lorimer Ilsley: That is right.


Alan Webster Neill: What does it mean?


James Lorimer Ilsley: That is the tax on the royalty company.


Harry Rutherford Jackman: With regard to the provisions that a married woman can earn $660 without having her bracket deducted from her husband's salary, this is putting a premium on marriages without children. A married woman who has no children is free to work, whereas the wife of a husband with a family of two, four or five children is unable to leave home and cannot bring in any income. The family where the woman works is obviously better off under this provision, not only from the point of view of increased income but from the point of view of taxation, because $1,800 as a combined income of the two would be taxed less than a similar amount being earned by a husband alone. I remind the minister that he has had to make a change here in order to comply with human nature. In many respects the budget does not take account of the fact that there is such a thing as human nature. If the budget provisions were framed with a greater recognition being given to that factor, I think the minister would find that there would be a greater contribution to the war effort. I should like to quote a Canadian Press dispatch, dated Ottawa, July 2, as follows:
A finance department spokesman to-night expressed the opinion that there would be no widespread move by married women to quit their jobs because of the increase in income tax rates imposed under the new budget. A couple would be better off financially because the wife worked and also she would have the joy of knowing she is helping Canada in these critical times.
Once again I suggest that if the minister would consult the members of this house or a committee of the members of this house, he would not run into these errors which result in subsequent changes.


Donald Alexander McNiven: Is the schedule which
appears on page 3 of the bill the same as that given to the house by the minister when he presented his budget on June 23 and which appears on pages 3582 and 3583 of Hansardf One example given on page 3583 is that of a man with an income of $4,000. He is shown as paying a gross tax of $1,148. Under the schedule which appears on page 3 of the bill an income of $3,500 would pay an initial tax of $1,300, and another $500 would pay a tax of 45 per cent, or $225 in addition, making a total of $1,525. To this would have to be added 7 per cent normal tax, or another $280, making a total of $1,805. The income referred to on page 3583 of Hansard is that

Income War Tax Act
of a married man with two children. Therefore he would be entitled to a deduction of $366, which would leave a remainder of $1,439, under the schedule on page 3 of the bill.


James Lorimer Ilsley: Has the hon. gentleman
subtracted $660 from the income?


Donald Alexander McNiven: Rule 1 reads:
For the purposes of this section, the income [DOT]of every person, except trustees or other like persons acting in a fiduciary capacity, shall be subject to a deduction of $660.
The rule then goes on to consider incomes of various amounts, which would lead one to believe that they were exclusive of the $660. I am just curious to know if there has been a revamping of the schedules as originally presented by the minister in his budget speech on June 23, and if the tables as presented in that speech accurately reflect the rates contained on page 3 of the present bill.


James Lorimer Ilsley: The point raised by the hon. gentleman is one of draftsmanship; there has been no change. The procedure is to apply rule 1 and then apply rule 2. This means that the $660 comes off and then rule 2 is applied to the remainder. If that is done, the results will be exactly as stated on Hansard. I do not think the hon. gentleman has taken off the $660 before applying rule 2.


Donald Alexander McNiven: I did when dealing with t'he schedule on page 3 of the bill, but I am not certain that it was done in the minister's table w'hich appears on page 3583 of Hansard. That is, the $4,000 income referred to on page 3583 of Hansard might really mean a gross income of $4,660.


James Lorimer Ilsley: So far as the statements made in the budget are concerned, the annual income in the left-hand column did not mean, after the deduction of $660, it included the $660.


Alan Webster Neill: Should not that section, line 33, read: "On the first $500 of taxable income"?


James Lorimer Ilsley: This is the theory of this drafting. Look at rule 1:
For the purposes of this section, the income or every person, except trustees or other like persons acting in a fiduciary capacity, shall be subject to a deduction of $660.
The draftsman thought he was saying, "For the purposes of this section the income shall be deemed to be the income less $660-in excess of $660". That is the way it will be interpreted, as far as that goes.


Alan Webster Neill: Well, that is why I suggested it should be $500 taxable income.


James Lorimer Ilsley: To make a change here, unless we are sure, is just as dangerous as can be. It is that kind of changing which has been going on for weeks and has to stop at some time, but if it is clear that the change should be made it certainly ought to be made. But that is the theory of the drafting of these rules, that really the rule defines income as being the income less $660 for the purpose of these rules. For the purpose of this section of the rules, section 2, income shall be taken to be income subject to a deduction of $660.


Alan Webster Neill: Yes, but it requires the language of the minister to make it clear, whereas the inclusion of the word "taxable" would require one word instead of a number of words.


Grote Stirling: May I point out that earlier the minister said that rule 1 must be applied before rule 2. If you apply rule 1 you will arrive at a certain figure of income; on that you will apply rule 2.


James Lorimer Ilsley: Yes. That comes to the same end as the other.


[Stage Direction]
Section agreed to.
Section 2 agreed to.
On section 3-Superannuation or pension fund payments.
James Lorimer Ilsley: At the very end of that section is a subsection providing for the taxation of royalty companies, and the hon. member for Calgary East has suggested that there should be words making it clear that the trustee shall have the right to deduct the taxes which he must pay the government of Canada from the royalty owners. Therefore the following amendment has been prepared:
That subsection 3 of section 3 of the Income War Tax Act as contained in subsection 3 of section 3 of this bill be amended by adding thereto the following:
and any taxes paid by the trustee under this act or the Excess Profits Tax Act, 1940, may be charged by the trustee rateably to those persons having such interest in such proceeds and deducted from the amounts due them by him.


Colin William George Gibson: I so move.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Section 4 agreed to.
On section 5-Deductions for superannuation or pension fund.
Gordon Knapman Fraser: As
regards superannuation and pension funds, in the bill as it was originally, it was stated to be in regard to pensions not repayable during
Income War Tax Act

the continuance of such employment. Under some of the companies' pension schemes- under our pension scheme-payments made into the pension fund by an employee may be repaid without the man leaving the employment, provided he withdrew from the plan, in which case he would lose the company's contribution also. Would that be in that class, or covered there? They pay in half and he pays in half to the pension fund, but the plan is that he can get it back in case he has sickness or for other cause.


James Lorimer Ilsley: The hon. gentleman is
talking about the offsets against compulsory savings, a matter which comes up later.


Gordon Knapman Fraser: Well, this bill is so much different from the other, it has us all confused.


Alan Webster Neill: In subsection 7 of section 5
it states:
(q) subsistence allowances of commissioned officers of the Canadian naval, military and air forces, except to the extent that such subsistence allowances in any case exceed $1.70 a day.
Is that deductible from the refundable portion of the tax? Is that what it means?


James Lorimer Ilsley: No. This was a provision
that subsistence of officers should not be taxable except to the extent that the subsistence exceeds $1.70 a day. In the past the subsistence allowance has been regarded as part of the income of the officer and, whether he received it or not, whether he got rations or an out-ofquarters allowance, it was fixed at 70 cents, to be very reasonable about it. But in making my proposals with regard to the relief of commissioned officers, I proposed that we wipe out the subsistence for taxation purposes, though only to the extent of $1.70 a day. Some of the higher officers get much more than that, $3, or more than $3 a day. It is really income, there is no doubt about it, and a substantial part of income. But we are making it $1.70.


Alan Webster Neill: Does the officer get $1.70 in
every case even if he is living in barracks?


James Lorimer Ilsley: Only if he is living out. The hon. member for Yale (Mr. Stirling) asked me to draw attention to changes, and I said I would as far as I could. There is a provision on page 10, line 23, which is an amendment to a provision of the Income War Tax Act relating to superannuation or pension funds or plans. The present provision of the Income War Tax Act is that lump sums may be paid by companies into their pension plans to augment them if they consider it necessary, and they may deduct from their income, for
I Mr. G. K. Fraser.]
taxation purposes, one-tenth per annum of that lump sum payment over the following ten years. That is the present provision in the law. This provision amends that and preserves the rights of those who have done that in the past, and is, we think, a much fairer arrangement. It provides for the opinion of an actuary and the advice of the superintendent of insurance and allows for serial payments as well as lump sum payments. It is a complicated question, but a great deal of thought has been given to it and I think it is an improvement on the old plan. I would not have mentioned it but for the fact that the hon. gentleman wanted me to call attention to any changes that were made.
I think I should also direct attention to the change at the top of page 11 with regard to medical expenses. There was some demand that we should add practical nurses, and we have gone to some extent in doing this. Everyone understands the dangers of evasion and the difficulties there would be if we went the whole way and simply included practical nurses along with registered nurses. But we have included "the salary or wages paid to one full-time attendant upon the taxpayer, his spouse or any such dependent, who was throughout the whole of the taxation period necessarily confined by reason of illness, injury or affliction to a bed or wheel chair and including also the salary or wages paid to one full-time attendant upon the taxpayer, his spouse or any such dependent who was totally blind throughout the whole of such taxation period and required the services of such an attendant." We have added that to the costs of attendants under such conditions, and it comes in as well as the expenses of nurses.


Gordon Knapman Fraser: Would that be for a blind person registered with a blind institute?


James Lorimer Ilsley: It applies to the totally blind, I do not know whether registered or not.


Harry Rutherford Jackman: I commend the minister for the change, but is it not unduly stringent where it 'says "spouse or any such dependent, who was throughout the whole of the taxation period necessarily confined by reason of illness, injury or affliction to a bed or wheel chair". Does that not mean that the person must be a chronic invalid?


James Lorimer Ilsley: That is the intention.

Income War Tax Act


Harry Rutherford Jackman: Otherwise there is no assistance.


James Lorimer Ilsley: No.


Alan Webster Neill: When this bill was last before the house considerable discussion turned upon the fact or alleged fact that a junior officer received less pay, having to pay income tax, than a senior non-commissioned officer, who does not pay income tax. Was that taken care of?


James Lorimer Ilsley: Yes. The hon. member will see if he turns back to page 7, rule 2 and rule 7. That is the $1,600 provision, the one I amended in respect of the female commissioned officers. That is designed to prevent what the hon. gentleman has mentioned. It will prevent it in two of the services, not wholly in the naval services.


[Stage Direction]
Section agreed to.
Sections 6 and 7 agreed to.
On section 8. Reduction of tax payable by reason of voluntary savings.
Alexander Malcolm Nicholson: Has the minister any information as to the amount of money still outstanding in connection with the home improvement plan? Have representations been made to him with regard to payments under that plan as provided under 7A (d), covering principal payments under mortgage or agreement of sale? The Department of Finance has a financial interest in these payments, and representations have been made to me that they come within the same category as payments on mortgages.


James Lorimer Ilsley: There have been a few representations to the effect that we ought to include them and put them in the same category as payments on the principal of mortgages, but I do not think they are in the same category. They are personal debts. There is no lien on the property. If he does not pay the debt he does not lose his property because there is no lien or mortgage on it. If we allow those debts we shall be led into the allowance of all debts. I have an amendment to move to section 8:
That the first four lines of clause 8 be struck out and the following substituted therefor:
1.	Section 7 of the said act, as amended by section 12 of chapter 18 of the statutes of 1940-41, is repealed.
2.	The said act is further amended by adding the following section immediately before section 8 thereof as section 7A and that the word "or" at the end of subparagraph (i) of paragraph (b) in line 34 be struck out and the word "and" be substituted therefor.
Those are the amendments. They do not change the effect at all.


Mr. EVANS:: In connection with the reduction for payments on mortgages, would agreements of sale be in the same category?


James Lorimer Ilsley: Yes.


Gordon Knapman Fraser: Will a wife be allowed to-take as a deduction from the graduated tax the amount which her husband otherwise would be taking? It seems to hang on a technicality as to whose name the property stands in. In this case the husband has gone overseas and the wife is paying this out of her own income.


James Lorimer Ilsley: Is the property in her husband's name?


Gordon Knapman Fraser: Yes; he is a soldier overseas.


James Lorimer Ilsley: No, she has not that privilege.


Gordon Knapman Fraser: Does the question I asked in regard to pension plan come under this?


James Lorimer Ilsley: Yes.


Gordon Knapman Fraser: Under this pension scheme payments made into the pension fund by the employee could be repaid without the man leaving the employment, provided he withdrew from the plan, in which case he would lose the company's contribution also. He pays half and the company pays half.


James Lorimer Ilsley: I hesitate to give rulings instantaneously on these questions, but I am of opinion that that pension fund or plan would qualify, that payments into it could be used as offsets against the refundable portion of the tax. The ruling will be given by the Department of National Revenue, but the principle that applies is whether the employee would have been eligible for participation in that scheme if he were not an employee of the company. If he had to be an employee to be eligible for participation, the intention is to permit payments into the plan to be used as offsets. I think he would qualify under that.
There is one thing I should like to say about annuities. I am not moving any amendment, but holders of government annuities are writing letters requesting that payments be allowed as offsets. Of course I argued that matter out on the resolution, and I shall have to stand by what I said then. But I want to point out that the intention is not to carve our government annuities and permit payments on other annuity contracts to count as offsets; the intention is to apply the principle which is stated here in the bill, without discrimination between contracts, whether government or private. I want to make that
Income War Tax Act

very clear. I should think that the application of that principle would disqualify payments on government annuities. It might also disqualify payments on various other annuity contracts. I would not want it to be thought that we are framing something deliberately to disqualify payments on our own annuities. I think we must adhere to the principle, which is that the premiums cannot be postponed without substantial loss to or forfeiture by the taxpayer. That is the principle we have to stand by. If we depart from that, we shall be letting in all kinds of things.


Alan Webster Neill: Is there no forfeiture under government annuities?


James Lorimer Ilsley: I do not know of any. My understanding is that a person can discontinue the payments and not suffer at all; he can pick them up again after five years. If he cannot afford to continue them in the meantime, he can continue when he gets his refundable tax back.


Gordon Knapman Fraser: On some annuities for the first few years if one had to drop them he would certainly lose money.


James Lorimer Ilsley: How?


Gordon Knapman Fraser: Because the payment to the insurance agent has to come out of it and there is a loss in some cases.


James Lorimer Ilsley: Well, if they cannot be postponed without substantial loss to the taxpayer the payments will qualify as offsets, but that is a question to be decided by the Minister of National Revenue administering the measure.


Gordon Knapman Fraser: I have had letters regarding annuities from people who claim that even when the war is over they might not be able to pick them up again because taxes will be so high. These people are trying to keep these annuities for their old age.


James Lorimer Ilsley: They will have the money. If they do not pay it to the government on their annuity they will have paid it to the government in compulsory savings. They will have all the money, with 2 per cent interest.


[Stage Direction]
Amendment agreed to.
Alan Webster Neill: On the section that we have just been discussing-
(i) life insurance policies on the lives of the taxpayer, his spouse and his dependents.
-a case comes to my mind. A working man took out a policy on himself for a moderate amount; he did the same as to his wife 
and the same as to his daughter. Time went, on, the girl grew up and got married, but he is still paying the premium on her policy. Would he be allowed to deduct that?


James Lorimer Ilsley: No, unless she is a dependent still.


Donald Alexander McNiven: The principle of savings as incorporated in the bill by the minister in his address on June 23 was very favourably received throughout the country as one of the outstanding features of the budget. I am very sorry indeed that the minister has not found it possible to include dominion government annuities within the scope of that savings feature. I have no objection; in fact I think it was a very fine thing, that he has extended exemption	to life insurance
premiums.
Since 1908 the dominion government has extended an invitation to the general public to provide for old age by the purchase of annuities. Up to the end of the fiscal year 1940, some 58,915 Canadians have availed themselves of that opportunity. From that number 20,416 contracts have matured, and the owners of those contracts are in receipt of a government annuity. For a time it was thought that those annuities were taken advantage of by well-to-do people, in fact rich people. But the average of the 20,000 contracts which I have just mentioned is $416 per annum. This means that the low income group are making this provision for their old age. When I mention the sum of $416 it will be agreed that they are making a very modest provision. Then, when you come to analyse those 20,000 contracts, you find that 8,865 were for less than $300, while only 1,559 were for $1,200. When you look at the class of people who are taking out these contracts, you find that over 50 per cent are women, engaged as school teachers, stenographers, nurses and so on, women who contemplate having to take care of their old age themselves. They are in receipt of modest salaries. They are so living as to make regular contributions to the annuity contracts which they have purchased in the expectation that when the contracts mature they will receive the amounts provided for.
That is the analysis of the contracts which have already matured, but there are more than 34,000 people who have contracted with the government to make similar payments, and I think it fair to say that the contracts outstanding are of the same class as those which have matured. That is, the 34,000 individuals who up to the end of 1940 had purchased dominion government annuities.

Income War Tax Act
included school teachers, stenographers, nurses, business men in a small way, farmers and so on. Their savings are limited; they are not able to make provision for their old age in the manner in which they were invited to do by the dominion government and at the same time make the compulsory savings provided for in this bill. It is only because these people are among the small income group that I make this appeal to the minister. I should have mentioned that to my own knowledge there are large numbers of clergymen who have attempted to provide for their old age through the purchase of annuities. Goodness only knows that clergymen throughout this country have not been overly well paid. An hon. member suggests that they are in receipt of pensions, but those pensions are so small that they are not sufficient to support the clergymen when the time comes for their retirement.
I think the minister might well give this section further consideration and extend some concession to that very large group of individuals who are endeavouring to provide for themselves. He should not overlook the fact that the moneys paid in on account of annuities go into the very same fund as the savings made under this bill; both go into the consolidated revenue fund. What is more, money paid under these annuity contracts cannot be withdrawn until the contracts mature, unless a person dies before the maturity of the contract; it is there for an indefinite period. It is true that under the compulsory savings feature the money is retained for a period after the cessation of hostilities, but it is almost certain that most of that money will become payable long before the great majority of the annuities now in force will mature.


James Lorimer Ilsley: I want to make it perfectly clear that persons who buy government annuities, or who have bought government annuities, as far as I can see are not hurt at all except to the extent of 2 per cent per annum on their premiums. Let us consider the situation of one who has bought a government annuity; let us say that I bought one on which the premium is $100 a year.


Harry Rutherford Jackman: I think anyone can see that there is no harm done; but, if the minister will allow me to say a word or two, I cannot possibly see where the difference lies between the government annuity and life insurance. I support the contention of the hon. member for Regina City. I have had a number of letters from nurses, young women in business and older people who are trying to make some provision for their old age. I fail to see where a person is discriminated
against if he fails to pay the premium on a life insurance policy which, let us say, has been in force for more than three years, as will be the case with the great majority of people. Of course some will be brand new, and there would be a real discrimination there. I do not want to bring up this matter with any idea whatever of lessening the number of savings contracts that may be used as offsets against the minimum saving requirement, but where is the substantial loss or forfeiture to the taxpayer if he lets his premiums fall by the wayside for three or four years? The majority of the people had to let their premiums go during the depression, and then when times got a little better they picked them up again.
The second point is that under section 5 there is provision whereby people who belong to large institutions, insurance companies and large corporations, are not only allowed to save money but get a tax deduction of up to 5 per cent of their salaries, whereas the people who pay money into a government annuity are allowed no tax deduction. The coupling of sections 5 and 8 I think works a very great discrimination in favour of the person saving with the large institution, as against the person who has the foresight, sagacity and energy to provide for his or her old age.
The third point is that if the minister does not allow people to continue to make payments under their government annuities, under which the government gets the money, which cannot be withdrawn, but instead makes the people pay part of their tax in the form of a minimum savings requirement, then perforce these people will have to drop their government annuities, and as I see it the government will be no better off. With those people it is entirely optional whether they pay the minimum amount of savings or pay the money into a government annuity. The reasoning of the minister in endeavouring to follow his own principle "without substantial loss and forfeiture" is again fallacious, and I think he is working a real hardship on a large body of people with small incomes who are endeavouring to provide for their old age through the purchase of dominion government annuities.


James Lorimer Ilsley: The person who insured his life in the early years of the policy at least does expose himself to substantial loss or forfeiture by letting his premiums lapse, because he cannot get a loan on the policy to keep it going. The hon. gentleman must be talking about a policy that is so far advanced that the individual can get a loan of enough money to carry the policy for a few years.


Harry Rutherford Jackman: The average policy.
Income War Tax Act


James Lorimer Ilsley: The question is whether in
connection with life insurance we should have tried a time limit, whether we should have said that the policy would qualify if it had run for five years and would not qualify if it had run for six years. The moment we get refinements like that we get into a field where it is impossible to make a rule, and hon. members, like the hon. member for Rosedale, would rise in their places and ask why, if it was all right for five years, it would not be all right for six years.


Harry Rutherford Jackman: That is the minister's
suggestion, not mine.


James Lorimer Ilsley: Just a moment. The way in which the resolution was drawn, at one stage gave some members the fear that we were going to test life insurance policies and rule on life insurance policies, and see whether failure to pay premiums really would lead to substantial losses by forfeiture. From various members the sentiment emanated that that was not a desirable thing to do. I agreed, and we did not intend to do it. We always intended to allow all life insurance, 'because of the impossibility of making a rule which would not give rise to a lot of discrimination.
But, generally speaking, the failure to pay premiums on life insurance hurts you. It results in substantial loss by forfeiture. Generally speaking, it is true, but the same is not true of certain annuity contracts. The only thing which happens to a person who has a government annuity contract, under the rule which we are laying down is this: If he simply cannot pay his annuity, make his annuity payment, and pay the amount to the government too-and in nearly all cases we would expect them to do that, namely to do both; we would hope they would because we certainly must expect more from most people of this country than merely the non-refundable taxes; we certainly must get more than that from them-


Harry Rutherford Jackman: It is optional with the person. You cannot force them to maintain a contract like that, if they cannot do it.


James Lorimer Ilsley: Let me come back to what I was saying; I cannot seem to finish. If a person who has an annuity contract cannot keep up both-and as I say, in most cases I think he will be able to-then what happens? He drops one. The money goes into the consolidated revenue fund in a different way, and comes back to him later with 2 per cent interest. Whereupon he can pay up his back annuity payments, and carry on his contract. That was the way we tried to do. We are not trying to chisel him down. That would not pay. The government is trying to maintain

a principle, that' is all. For application to private business, governments and everybody else it is trying to maintain a principle. If we once got away from the principle, and allowed any kind of praiseworthy or meritorious saving, then the compulsory savings part of our receipts would be very greatly diminished. They would not amount to much at all.


Alan Webster Neill: You have to be cold-blooded.


Gordon Knapman Fraser: I asked the Minister of National Revenue what kind of arrangement he had made with the insurance companies in regard to receipts he would require for these deductions. Has he come to any arrangement with the insurance companies as to the receipts people have to turn in with the insurance premiums?


Colin William George Gibson: No arrangement has yet been made with the insurance companies, because the bill has not yet been passed. These receipts will not be filed with the income tax department until about a year from now. Therefore there is no immediate rush to make that arrangement.


Gordon Knapman Fraser: Oh, yes, there is an immediate rush, because these people who are paying their premiums will most likely have to have them in duplicate. A year from now they will find it difficult to get them in duplicate from the company. There rvould be a lot of writing back and forth. I am wondering if the minister has made any arrangement with the insurance companies.


Colin William George Gibson: We have not any definite arrangement, because the bill has not yet been passed.


Gordon Knapman Fraser: Did the minister not discuss the matter with them?


Colin William George Gibson: I understand the matter has been discussed with representatives of the insurance companies.


James Lorimer Ilsley: In pursuance of my undertaking to draw to the attention of the committee any new features, in so far as I can remember them, I want to point out that the class of straight life policies has been changed to some extent, but not to amount to a great deal. The policies which now qualify are those on the term plan, or which are of a type which provide for premiums to be payable throughout the lifetime of the insured, or until the insured attains at least the age of sixty-five years, and for a period of not less than thirty years. The premiums are slightly different from the premiums on straight life, and it is desirable to include those. Otherwise a great many policies barely distinguish-

Income War Tax Act
able, so far as premium payments are concerned, and serving the same purpose as straight life policies, would be debarred.
Section as amended agreed to.
Sections 9 and 10 agreed to.
On section 10A-Deductions.


James Lorimer Ilsley: The hon. member for Vancouver South (Mr. Green) suggested that the expression "registered prospecting syndicate" was not wide enough to include certain prospecting organizations. The statutes of some of the provinces have been examined, and we think the wording is now wide enough to include every form of prospecting organization we desire to cover.


[Stage Direction]
Section agreed to.
Section 11 agreed to.
On section 12-Persons liable to income tax.
Joseph William Noseworthy: I understand that this section deals with the income tax on nonresidents. Could the minister give us any idea of the amount of profit which goes out of Canada to non-residents during the course of the year? I have here Hansard for April, 1941, in which the minister indicated a change in the rate of income tax on non-residents. He then estimated that this tax would bring in an amount of $43,000,000. This seems to me to indicate that there must have been at least $300,000,000 in profits on investments in Canada going to non-residents. Had these people been taxed as residents at last year's rates, they would have paid about $240,000,000 instead of $43,000,000.


James Lorimer Ilsley: When was my statement made?


Joseph William Noseworthy: On April 29, 1941. The minister then estimated that at 15 per cent the tax would be $43,000,000, and this means that there must have been at least $300,000,000 in profits on investments going to non-residents. Canadians drawing that amount of profits from investments in Canada would have paid $240,000,000 in taxes, so that, as I understand the situation, it appears that nearly 60 per cent of the investments in Canada are foreign capital, or subsidiaries of United States or other foreign companies.


James Lorimer Ilsley: I have not the statistics before me. However, I had to withdraw from quite a lot of that tax a year ago. The hon. member was not in the house then, but it will be recalled that I got into some trouble in respect of that tax. I attempted to tax remittances to holders of bonds, the interest of which was payable in United States funds. There were various reasons developed why it was not desirable to continue to do so. Hon.
members will recall what happened. I have no statistics on the question of non-residents. We do not tax remittances by Canadian subsidiaries to United States parent companies. We tax the profits of the Canadian subsidiaries under the Income War Tax Act and under the Excess Profits Tax Act, but we let them send their dividends home.


John Ritchie MacNicol: It would not be fair to do otherwise.


James Lorimer Ilsley: That is arguable. Perhaps the 5 per cent might be justifiable, but we decided not to do it. The United States tax 5 per cent under similar circumstances when the money goes the other way.


John Ritchie MacNicol: Are they doing it now?


James Lorimer Ilsley: We have the right to do it
under our convention with the United States, but we have never done it. There is a large flow of money from Canadian subsidiaries to United States parent companies.
Section ageed to.
On section 10A.-Deductions.


Donald Alexander McNiven: Would the minister permit a question under section 10A? Is it possible to get a deduction under this section for contributions to more than one syndicate?


James Lorimer Ilsley: Yes.


Donald Alexander McNiven: A man would be entitled to a deduction of $500 with an aggregate of $5,000?


James Lorimer Ilsley: That is right.


Donald Alexander McNiven: He might invest in half a dozen and get the same deduction on each.


James Lorimer Ilsley: Yes.


Donald Alexander McNiven: Five hundred dollars and up to $5,000 in each syndicate.


James Lorimer Ilsley: Five hundred dollars in each one, $5,000 altogether.


Donald Alexander McNiven: It says:
. . . and not exceeding $5,000 in respect of the aggregate of the contributions made to any one such association, syndicate or mining partnership.


James Lorimer Ilsley: That is wrong. I will suggest an amendment, that section 10A be amended by striking out the words "any one such association, syndicate or mining partnership" in lines 15 and 16 and substituting the following, "all such associations, syndicates and mining partnerships".


Colin William George Gibson: I(move accordingly.


[Stage Direction]
Amendment agreed to.
Section 10A as amended agreed to.
[Stage Direction]


Income War Tax Act
On section 13-Salaries and other periodical payments.
Gordon Knapman Fraser: Subsection 3 provides in the case of bearer coupons or warrants that the taxes imposed by this section shall be collected by the encashing agent or debtor. Will that not put quite a strain on the banks?


James Lorimer Ilsley: This is not new.


Gordon Knapman Fraser: Was that done in the case of coupons?


James Lorimer Ilsley: Yes.


Gordon Graydon: Subsection 4 reads:
In the case of interest or dividends in respect of fully registered shares, bonds, debentures, mortgages or any other obligations. . . .
Does this mean that a man who has a mortgage on his home and is paying interest to a private individual or a mortgage company will deduct 5 per cent from the interest?


James Lorimer Ilsley: No. This is in connection with non-residents. This is a withholding tax.


Gordon Graydon: It has nothing to do with the ordinary resident?


James Lorimer Ilsley: No.


Ralph Maybank: In connection with the section just passed I should like to ask where a definition will be found of base metals and strategic metals? Is foil considered as a mineral?


James Lorimer Ilsley: There is no definition in the act. The Minister of National Revenue places his own interpretation upon these words after consultation with the metals controller or the Department of Mines and Resources.


Ralph Maybank: That is in the original
act?


James Lorimer Ilsley: No, it just works that way; that is all.


[Stage Direction]
Section agreed to.
Sections 1.4 to 22 inclusive agreed to.
On section 23-Taxpayer's estimate of tax payable.
James Lorimer Ilsley: I want to say a word about the last subsection of this section. I made a statement two or three days ago about these corporations which will, under this bill, make their payments in twelve instalments, and I said that the interest and/or penalty for deferring the payments due at the end of July and at the end of August would be 3 per cent instead of 8 per cent and that that would apply up to the end of the twelvemonth period of payments.

I wish to say two things in addition, and I want these to foe brought to the attention of the companies in so far as they can be.
In the first place I appeal to the companies to pay just the same if they possibly can. I appeal to their desire to help the activities of the country and the government to that extent. I did not mean by that announcement to intimate that it was just as satisfactory to the government to have them defer their payments until six, eight, ten, or twelve months; that is not the case. We want the money to be brought in. The concession was made to meet what was represented to be an intolerably harsh situation, because some of the companies were on instalments, and the last two instalments, those due in July and August of this year, would fall due on the same dates as the two first instalments of the coming year. Then there were other companies not under the instalments, I presume, which were intending to defer one-third of their tax until August 31. Therefore that is the first point I want to make, that the government would like the companies to make payment of their instalments if they possibly can.
The second point I want to make is this. I see some hon. gentlemen smiling to think that I would be so naive as to make an appeal like that to people. I do not agree with that at all.


John Ritchie MacNicol: What was the word the minister used?


James Lorimer Ilsley: I said "naive". But I want to point out that, in fixing the rate of 3 per cent, which appears to be a low rate, that 3 per cent is not deductible as an expense in carrying on the operations of the company, and therefore it is not the ordinary 3 per cent that they would be paying +o a bank which would be deductible as an expense of carrying on the business of the company. It is strictly not deductible, and therefore it is a less attractive rate of interest than at first blush it might appear to be.
Therefore I would ask the companies for two reasons to make their payment at as early a date as possible: first, because it is helpful; second, because it will pay.
I want to say that I am told that the other day Hansard reported me as giving the rate as 2 per cent, not 3 per cent.


Mr. CASSELMAN:: That appeared only in part of the section.


James Lorimer Ilsley: The rate was 3 per cent.


[Stage Direction]
Section agreed to.
Sections 24 to 27 inclusive agreed to.
On section 28-Gift tax rates.

Income War Tax Act
Alexander Malcolm Nicholson: How much does it cost the treasury of Canada to have the section applicable? In other words, how much more revenue would be available if we did not have this section?


James Lorimer Ilsley: I do not think any estimate would be possible. The revenue derived from the gift tax is not a test of what we gain by it or what we would lose by repealing it. The gift tax is a deterrent to transfers which minimize income tax, but I could not say how much of a deterrent it is. It is impossible to say.


Harry Rutherford Jackman: It might result in
diminishing returns.


Frederick Clayton Casselman: And upon which you
still collect income, from the gift tax, other than the $4,000 which is exempt.


James Lorimer Ilsley: I do not know that I understand the hon. member for Mackenzie, but certainly, if I have an income on which I am paying 70 per cent and I can give away half of it, so that I and the donee each pay at the rate of 40 per cent, the government is out a lot of money in income tax. Therefore a deterrent such as this has an indirect benefit to the treasury which is probably very great but which certainly is not susceptible of measurement.	[DOT]


Alexander Malcolm Nicholson: I understand that some of the larger firms have been making very substantial gifts, hoping it will have some advertising benefit, and I wondered if this might not be the time to refrain from giving any consideration in respect of gifts which are made in that way. I think it is a bad principle on which to make gifts.


Paul Joseph James Martin: Those are bonuses.


James Lorimer Ilsley: I think the hon. member
must be talking about charitable donations, or something of that kind.


[Stage Direction]
Section agreed to.
On section 29-Date payable.
John Ritchie MacNicol: You have been so expeditious, Mr. Chairman, that you deserve congratulations, but you went so fast that I did not notice the section which has reference to the date when private persons are to commence paying their quarterly instalments of this year's income tax. When the resolution was before the house, I believe the minister changed the date of the first payment to October.


James Lorimer Ilsley: That is right-from September to October.


John Ritchie MacNicol: October 15?


James Lorimer Ilsley: Yes.
44561-321J


John Ritchie MacNicol: And the second payment is on January 15?


James Lorimer Ilsley: Right.


John Ritchie MacNicol: That has not been
changed?


James Lorimer Ilsley: No.


[Stage Direction]
Section agreed to.
Section 30 agreed to.
On section 31-Interest and dividends.
Gordon Knapman Fraser: With regard to subsection 2, if you know that the earnings of, say a married man, are less than $1,200, is it necessary to deduct the tax from his wages?


James Lorimer Ilsley: It must be deducted if he
is earning at the rate of $1,200.


John Ritchie MacNicol: I asked this before, but
I am not yet quite clear about it. In the case of the ordinary janitor, if I may so call him, who cuts a householder's grass, and fires his furnace in the winter time, and to whom one pays perhaps $10 a month, does one have to deduct this tax off his $10 a month?


James Lorimer Ilsley: If it is at the rate of $1,200 a year you would have to do it.


John Ritchie MacNicol: How would the ordinary householder know? For instance, I pay a man $10 a month for cutting my grass and firing my boiler, but I do not know if he does the same thing for any other people on the street, or for how many, and therefore I would not know whether he was making over $1200 a year or not.


James Lorimer Ilsley: If the hon. gentleman pays the janitor at a daily rate-


John Ritchie MacNicol: Not a daily rate but $10 a month.


James Lorimer Ilsley: How many days does he work?


John Ritchie MacNicol: I suppose he cuts grass once or twice a week in the summer, and he would fire the boilers twice a day in winter.


James Lorimer Ilsley: If he is working for the hon. gentleman at a rate that will work out at $1,200 a year he ought to deduct.
Mr. MARTIN . That is not the question. As I understand the hon. member's question, it is this. Suppose that man were working for ten people from each of whom he received $10 a month. It is supposed to be deducted at the source; who would do the deducting?


John Ritchie MacNicol: Who would know for how many he worked?
Income War Tax Act


James Lorimer Ilsley: The hon. gentleman does not have to make inquiries as to where he is working or whether he is working for others or not. He attends to his own knitting. If he is paying that man at the rate of $1,200 a year he must deduct.


Mr. ESLING:: Does the employer deduct both the normal tax and the graduated tax, or only one?


James Lorimer Ilsley: Both under this.


William Kemble Esling: What assurance can the employer give the employee who disputes his right to collect? That is to say, who decides the controversy as to whether he is receiving $660 a year or not? Further, will there not be a repetition of existing conditions in regard to the defence tax, which was collected under similar circumstances? Does the minister know how much defence tax was collected under similar conditions, which has not yet been refunded? I can readily see that it is impossible for the department to know, for the reason that in connection with these taxes which were deducted from persons who were not liable to taxation there was no income return. It seems to me it is only just to the government to advertise the fact that where defence taxes w^ere collected during the past year from those who were not liable for such taxation they may apply to the government. I might say that the government to-day has $23 which I paid to persons and passed on to the government, which persons were not liable for the tax. But there are so many people who do not know that this tax is refundable.


James Lorimer Ilsley: There were 47,000 refunds in the last fiscal year in connection with the national defence tax, and the amount of national defence tax collected was $107,000,000. There may be some ragged ends about it, but it was a pretty successful tax and pretty widely accepted. When the tax was introduced in the house a great many hon. members raised difficulties about janitors and persons receiving tips and persons hired for an hour or two every week, and one might have become discouraged about introducing such a tax. We also heard about the impossibility of ever checking refunds. But the fact that we collected $107,000,000 in the last year and made 47,000 refunds shows that both the refund system and the taxation system have some merits.


George Hugh Castleden: Has the minister any figures to show how many cases there are of people who paid the tax whose income was less than $660?


James Lorimer Ilsley: One could not have such figures.


George Hugh Castleden: In how many of the 47,000 cases of refund wrere people receiving less than $660?


James Lorimer Ilsley: Some of them may have been refunds of overpayments rather than refunds to persons who were not liable.


[Stage Direction]
Section agreed to.
Section 32 agreed to.
On section 33-Coming into force.
James Lorimer Ilsley: This section is not of much public interest. It is rather a dry section. It makes provision for the coming into force of various sections of the measure, but there was a little mistake in drawing it up. I will hand it to the Chairman.


Clarence Gillis: I asked the Minister of
National Revenue this afternoon if he could give some idea of what system had been adopted with regard to collecting the tax at the source for the refundable portion of the income tax, and he asked to have the matter left until to-night when some explanation would be given.
Mr.. GIBSON: That is in regard to deductions held from' the employee. The employee will be asked to file with his employer a statement showing what amounts he claims to be paying either on insurance premiums, on capital payments on mortgages, or to the superannuation or pension fund. The employer will have a list showing, first, the various rates of wages-and the tax is applicable to those rates of wages-also the total amount of the refundable portion of the tax at that rate. Consequently, when the employee files with his employer a statement showing the amount he claims to be paying, if it is equal to or less than the amount of the refundable portion the employer will deduct that from the amount he has withheld and make that allowance to the employee. Then, as the employee does not file with the employer his actual receipts but just gives the statement at the end of the year when he files the income tax return the employee will send to the department a statement with the actual receipts for these payments.


Joseph William Noseworthy: With regard to the exemption for principal payments on mortgage, is it understood that the mortgage must be registered in the taxpayer's own name, or may it be registered in his wife's name?


Colin William George Gibson: It must be registered in
his own name.

Income War Tax Act


Joseph William Noseworthy: There will be a
lot of property transfer.


Thomas Vien: The amendment is:
That the first fifteen lines of the said clause 33, namely subelauses 1 and 2 be struck out and the following substituted therefor:
"Sections 1. 33 (1); sections 1, 2, 4, 6, 7, 9, 10, 11, 12, 13, 17, 18, 19 and 21, and subsections 1 and 2 of section 3 of this act, and subsection 2 of section 3 of the Income War Tax Act as enacted in subsection 3 of section 3 of this act, and subsections 1, 3 and 6 of section 5 of this act, and paragraph 2 of subsection 1 of section 5 of the Income War Tax Act as enacted in subsection 7 of section 5 of this act, and subsection 2 of section 8 and subsection 2 of section 13 of this act shall be applicable to the income of the 1942 taxation period and fiscal periods ending therein and of all such subsequent periods.
2. Subsections 2 and 4 of section 5, and subsection 1 of section 8 of this act shall be applicable to income oi the 1941 taxing period and of all fiscal periods ending therein and of all such subsequent periods.


Colin William George Gibson: I so move.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Preamble agreed to.
On the title.
Harry Rutherford Jackman: The minister referred in the afternoon to the fact that "it is absolutely impossible to shift any part of the war burden from one generation to a future generation". The title of this bill is the "Income War Tax Act". The income tax was first brought into this country by the Conservative government during the last war. Ever since that time we have had an Income War Tax Act, of which the bill before us to-day is just an amendment. I should like to ask the minister whether or not he believes the last war has ever been fully paid for by the people of Canada. What he said this afternoon was "the costs of the war are the costs in life, in sacrifice and in the standards of living, et cetera". If I may say so, the minister's mind is confused. What he has said refers to the human and physical costs of the war, not to the financial costs. Will he show me where the financial costs of world war No. 1 have ever been satisfied, either by this country or by any other country? Or will he show me what country throughout the world has ever paid off its national debt, unless it be the small country of Venezuela, which by a fortunate circumstance had more revenue than it knew what to do with.
Then we come to the question whether or not we should adopt a budget such as this
which entails so much taxation, or should proceed on a policy of more borrowing and less taxation at the present time. The minister had no doubt whatsoever in his mind that his budget was the only possible solution of Canada's financial problem in 1942.


Thomas Vien: I am sorry, but I am afraid there is more than latitude involved here. I think it includes longitude as well. This speech might be appropriate on second or third reading, but it is not in order on the question as to whether "an act to amend the Income War Tax Act" is a proper title for this bill.


Harry Rutherford Jackman: If you wish to rule in that way, sir-


Thomas Vien: Perhaps on third
reading.
Bill reported.
Mr. ILSLEY moved the third reading of the bill.


Harry Rutherford Jackman: If I may continue where I left off, we find that even in the very small brackets where a man receives $500 over and above the $660 exemption he is subject to a 30 per cent rate of taxation. This is particularly high where the taxpayer's income has remained stationary or even receded, as has been the case quite frequently. Therefore it might be asked, why are such rates necessary? The minister has proceeded on certain assumptions, which are to his mind inviolable. He states that borowing from each other is by no means a solution of any of our difficulties, nor is borrowing from each other even to a greater degree than at present obtains a satisfactory method of helping to finance the great war effort. He stated that if that were the view of the party to which I belong there were certain social effects which were very bad. I might point out that there are two sides even to that question. Even he I hope does not contemplate that the burden of taxation will result in the complete ruin, even by slow death, of the enterprise system or of individual economic liberty and substituting therefor a system of state bureaucracy. If the minister will analyse the situation, he will realize that the difference between us is one of degree rather than of principle. Let me ask him this:	Is it better for a country
to suffer an increase in taxation from 20 per cent to 50 per cent for five years, or an increase from a basic rate of 20 per cent to 35 per cent and carry that rate on for ten years in place of the much higher rate for a
Income War Tax Act

period of five years? If I might cite an example, if a city installs a water system which costs $10,000,000, the city fathers have the choice of taxing the people during the current year for the full $10,000,000, or of spreading that cost over a period of ten years or whatever period may represent the useful life of the property.
Of course we know that the munitions and other things that go into the war are blown to atoms. Nevertheless we are fighting for a principle of liberty and for our own salvation, and surely that is not something which will evaporate as soon as the war is over. We hope to end wars for all time, and if I may say so, I believe that with the mounting costs each year resulting in a succeeding higher figure it will be impossible for us to pay the total burden or even as large a portion as we are attempting to do now out of our current income.
If we confine ourselves to only one objective of the budget, namely the raising of money, rather than the question of how much income we can prevent from coming into the market to buy goods which do not exist for civilian consumption, I might ask the minister how it is that he hits upon the figure of 52 per cent of our war expenditures and other expenditures to be met by taxation, and 48 per cent to be met by borrowing. Why did he not hit upon a figure of 50 per cent for each, or why did he not follow the policy adopted in the United States of 30 per cent by taxation and 70 per cent by borrowing? I have not the figures for Britain, but I doubt very much if they would be as high as ours. Canada, with its direct, indirect and corporate taxes, is probably the most heavily taxed country in this war. As regards the old country, with whose income tax brackets we sometimes compare ours, we find that occasionally the rates here are actually higher. On top of that, and bearing in mind particularly that we are an industrial country, we have a 40 per cent minimum corporation tax, which does not exist at all in the old country. There exists there only the excess profits tax, which we now have up to 100 per cent.
We might ask ourselves how the minister arrived at the sacrosanct 52 per cent? Why should all other figures be fallacious and harmful, as he termed the suggestions which I offered? Why, may I ask, does he not tax us 100 per cent of our total war effort and our ordinary expenditures? Why stop at 52 per cent? If his arguments are sound up to 52 per cent, then why are they not sound up to 100 per cent; or possibly, if I argue for 45 per cent or 40 per cent of taxation to meet our total costs, why are my figures necessarily
[Mr. Jackman.)
unsound? All his arguments apply with equal force against any greater or lesser figure than the particular one which our budget strikes, namely 52 per cent. May I ask, then, did he get it out of thin air and then set it up like a golden calf, to be worshipped, with no deviation allowed whatever from it, so that all unbelievers must be regarded as heretics? More probably he followed the same principles that others have followed. The taxation which any minister of finance or any committee working on the budget would have suggested probably would have been the very limit which the financial machine would stand and still function in high gear, for there never was a time when a minister of finance needed money so desperately as it is needed at the present time. A deflation of the financial structure, which is the effect of this budget just as it was the effect of the preceding budget, will not help the attainment of that objective.
The difference between us is where the line between borrowing and taxation can be best drawn for the year 1942. Neither from the point of view of revenue nor from that of removing spendable money from the market is there any immediate difference between borrowing from our own people and taxation, for borrowing is only taxation deferred. In either case the people give up the money and their spending power is removed. The only difference is that the incidence of the tax, the question of on whom it shall fall, has not yet been decided. With this budget, as under the previous budget, though now greatly aggravated, it is a case of the pace and not the race that kills. If we are to have a preservation of the enterprise system and the economic liberty of the individual, then we cannot be asked to accept more than the system will stand, or to accept it faster than the system will stand it. Possibly it would even stand greater burdens if it were given adequate time. Even our hon. friends to the left, when under a previous leader, suggested that a considerable period would be required in which to switch over from the present economy to the economy which they espouse, unless everything were to fall by the wayside during the interval.
This budget was felt by many people to be particularly severe, in view of the fact that in the last loan the minister asked for $650,000,000. Perhaps it will be admitted that this was a low objective, because naturally the minister wanted to make a real success of the loan. But when approximately $1,000,000,000 was voluntarily subscribed by the people of Canada, the business men and others who subscribed to that loan felt that the minister should ibe satisfied that they were willing to

Supply-Mines and Resources
put their shoulder behind the wheel and raise all the money that could possibly be raised, and do so voluntarily. One of the most dangerous and objectionable features of the present budget is not in the increase in the excess profits tax from 80 per cent to 100 per cent by means of a 20 per cent refundable portion, because, after all, that is a delayed saving, which eventually will come back to the company; it is the change, which I mentioned this afternoon, in the method of figuring the excess profits tax. This is a mere change in the arithmetical or mechanical method, but it has a very great effect on the amount of income left to these various corporations. If I may illustrate it by an example, since this budget was introduced we have seen that the principal chartered banks in Canada have had to reduce their dividends from $8 to $6. That is a direct reflection of the incidence of this excess profits tax. It is not so much to give up $2 a year on a security like that, but it is the fact that the reduction in dividend is reflected in the capital values of these securities to the extent of twenty times the dollar amount. For $2, therefore, $40 must be deducted from the capital amount, and that results in an atmosphere which is entirely deflationary. It prevents people from having as much with which to meet their obligations, particularly business men from having as much money with which to meet their financial obligations, as they otherwise would have had, and it produces an atmosphere which is not as satisfactory for the purpose of floating loans as otherwise would have been the case.
We are always impressed in this house with the sincerity and forthrightness of the minister. It is very convincing; it would be convincing even if he were wrong. But if I may say so, finance is a matter for unruffled tempers and cool calculation. I remember very well being called to the telephone one morning at two o'clock, to be told that Great Britain had gone off the gold standard. It was then felt by all of us who believed in orthodox finance that this was very nearly the end of the financial world. As a matter of fact, experience since that time has shown us that we have got along very much better off t.he gold standard than was the case in 1932, for example, when we were on the gold standard. A difference of opinion, particularly when it relates to degree rather than to principle, should not have the effect of calling forth from the Minister of Finance such terms as "fallacious," "dangerous," and "mistaken." If I may once more mention this subject, we have seen this bill pass through several stages in this house to-night. Very few of us have had a chance to read the
amendments, nor have we been able to grasp their contents or their significance. This is one of the most important bills with which this house has had to deal this session. Until we resort to the budget committee system, where we shall have ample time not only to read and consider the bills but to receive the benefit of the opinion of experts, it is impossible for this house to make the contribution which the people of Canada expect it to make. Not until the budget committee system is adopted and the representatives of the people are consulted, shall we have democracy substituted for bureaucracy and a people's budget adopted in this house.
Motion agreed to and bill read the third time and passed.

The house in committee of supply, Mr. Vien in the chair.



DEPARTMENT OF MINES AND RESOURCES

[Stage Direction]
Surveys and engineering branch.
152. To provide for general expenses of the committee as established under P.C. 682, dated February 17, 1941, to report on the conservation of the waters of the St. Mary and Milk rivers.
John Horne Blackmore: Last evening when we were considering this item I read the findings of the special committee appointed to investigate the whole matter of the use of the waters of the St. Mary and Milk rivers along the United States boundary in southern Alberta. The essential facts brought out in the findings were as follows, that under the order of October 4, 1921, Canada's share of the St. Mary river would be 362,000 acre feet, and of the Milk river, 40,000 acre feet. Since 1921, Canada has constructed irrigation works to use from the St. Mary river 163,000 of her
362.000,	and from the Milk river 2,000 of her
40.000.


John Ritchie MacNicol: That is 40,000 what?


John Horne Blackmore: Acre feet. According to the order of October 4, 1921, that is the amount.


John Ritchie MacNicol: I have read that carefully.


John Horne Blackmore: In the division of waters of the Milk river and the St. Mary river between Canada and the United States, Canada was apportioned 362,000 acre feet from the St. Mary river. Canada has constructed irrigation works with which she has been able to use 163,000 of those 362,000. She was apportioned from the Milk river 40,000, and she has constructed irrigation works with which she has been able to use 2,000.

Supply-Mines and Resources
It is obvious to every member in the committee that Canada has fallen far short of using the share of the waters of those two rivers which was apportioned to her by the order of October 4, 1921. The serious thing for us as members of this committee and as responsible members of the House of Commons of Canada in this year 1942 is this, that a very valuable asset belonging to the people of Canada as a whole-not only to the people of southern Alberta-is in danger of being lost because Canada has neglected to construct the irrigation projects which would enable her to use beneficially the water which was apportioned to her as her share on October 4, 1921.
On the other hand, what has the United States done? She has not been asleep at the switch as Canada has. She has constructed irrigation projects with which she can use all her share of the St. Mary river waters and the Milk river waters, as well as all of Canada's share of both of those waters. What does that mean? What does that imply? I ask any hon. member to tell me what he thinks that must mean in the minds of the people of the United States.
Before I have finished my observations the question is going to be raised that we in Canada cannot afford in war time to build these irrigation projects. May I now point out that in 1921 the recommendation was made to the government of Canada that those irrigation projects should be constructed.' But after the last war Canada went on a saving spree, as a result of which the irrigation projects were not constructed, and they have not been constructed up to the present time- with, of course, the consequent risk of the loss of these precious possessions.
I turn now to the recommendations of the committee as they are found at page 8 of the report. I propose to read only part of two of the recommendations. I read as follows:
The construction of the main reservoirs and connecting canals would provide the necessary facilities to store in Canada Canada's share of these international waters and would thereby be an insurance against the loss of a valuable resource. The construction of the main reservoirs and connecting canals is, however, not enough and unless provision is made, by extension of irrigation works to provide for beneficial and productive use, the expenditure involved by the dominion would not of course be justified.
Then, skipping a portion, I reach the following on the same page:
(a) That the dominion undertake and assume as a 100 per cent responsibility the construction of the main reservoirs and connecting canals to provide storage facilities for Canada's share of the waters of the St. Mary and Milk rivers as apportioned under the order of the international joint commission of October 4, 1921. 
And again:	[DOT]
(b) That the dominion's part in the construction of the project be carried out as a federal post-war development, and that the cost thereof be regarded as non-reeoverable.
W ith the last part of that recommendation I have no quarrel, namely, that the cost be non-re co verable. But with the first part, namely, that the construction of these projects shall be deferred until after the war and shall constitute a part of the post-war reconstruction programme, I do emphatically disagree, for the reasons I have already indicated.
History will repeat itself. I voice the apprehension before hon. members that if the construction of this project is deferred until after the war it will again be neglected, as it was neglected after the last war. The first thing we know we shall have lost in Canada for our children, and our children's children, to t'he end of time, a most precious heritage-


Gordon Graydon: Is this an essential wartime project?


John Horne Blackmore: Before I answer that, may I just paint a picture for the hon. member.


Mr. ROSS (St. Paul's):: Is the report before the government? Is the hon. member discussing the merits of the report, or whether the government has done nothing in connection with it?


John Horne Blackmore: Just now I am answering the question of the hon. member for Peel, as to whether this is an essential war-time project. May ,1 just conjure up to him this picture: If the war on the Pacific develops, as it might do, and the Japanese Should happen to gain footholds on the western coast -which God forbid-or if they should develop such striking power there as would necessitate the maintenance on Canada's part of a very large defensive force along that coast-


Thomas Vien: If the hon. member
has the unanimous consent of the committee he may continue; otherwise he is out of order. The matter now before the committee has nothing to do with the merits or demerits of the report; it is simply an item covering the expenses of preparing the report. Therefore it is not in order, under our rules, to discuss at this stage the contents of the report. We are called upon to determine whether it is expedient to pay $500 for the general expenses incurred by the committee. Is this expenditure appropriate or not? That is the only question

Supply-Mines and Resources *
before us. If the hon. member says he would conclude his remarks in a very few minutes I would ask the committee to give him leave. Otherwise I must apply the rules to prevent a general discussion from ensuing. Otherwise, where would I draw the line?


John Horne Blackmore: Five hundred dollars has been paid for this report, and I understand that the same amount was paid last year. Responsible members of this house want to know what was obtained for the money expended; they want to know whether it has been worth while. There is only one way in which we can determine whether that $500 was wisely spent, and that is to see what was got out of it.


Thomas Vien: The hon. member may say whether he is in favour of this expenditure or against it, but he cannot discuss the merits or demerits of a report which is not before us at this time. We are in committee of supply to which this report has not been submitted.


Mr. CRERAR:: I think the hon. member has performed a valuable service in drawing this matter to the attention of the committee. This vote is really for the purpose of printing the report. When the report was received earlier in the year a number of mimeographed copies were made. There were some graphs and maps attached to it, and the purpose of this vote is to print the report so that it will be available to those who are interested and wish to study it. Perhaps I am trespassing on the bounds of order, but I should like to say that the report is a very full and important one. When the session is over and we have time to study these matters, I have in mind taking the matter up with the Alberta government. On the basis of the report an agreement with the Alberta government will be necessary in connection with certain features of the development. The development will cost a considerable sum of money, and it was thought that this could be usefully carried on when the war is over. So far as our position with the United States under the international agreement is concerned, I do not think there is much danger of our losing it during the period of the war. In other words, Canada's position will be just as secure at the end of the war as it was at the beginning. With the statement I have made and with the assurance I have given, perhaps the hon. member will agree that your ruling, Mr. Chairman, should stand.


John Horne Blackmore: If I could have five or six minutes to lay out the essentials I 44561-322
would be quite satisfied. I did not intend to speak long, but the hon. member for Peel raised the question.


Gordon Graydon: I apologize.


John Horne Blackmore: The hon. member for Peel has no reason to apologize.


Thomas Vien: Do I understand that the hon. member has the leave of the committee to speak for five minutes more?


Some hon. MEMBERS:: Agreed.


John Horne Blackmore: I shall proceed by continuing what I was going to set forth for the benefit of the hon. member for Peel. If we have to maintain a large force on the Pacific coast, I ask the hon. member for Peel whether it would be wiser and more economical for Canada to transport canned vegetables and canned fruits all the way from Ontario to the Pacific coast than to transport them from southern Alberta?
Mr, MacNICOL: We would like to buy from southern Alberta too.


John Horne Blackmore: A wide area consisting of 345,000 acres could be brought under irrigation for about $15 000,000, and it would provide all the vegetables and fruits which would be needed by all the armed forces that would be necessary to defend Canada along the west coast and Alaska.


Gordon Graydon: We grow pretty good ones in our own part of the country.


Douglas Gooderham Ross: How long would it take to get the land into production?


Thomas Vien: Order. The hon. member has five minutes and I should like him to use them. Otherwise this will develop into a general discussion.


John Horne Blackmore: After I have used up my five minutes I shall be willing to answer any questions. I am prepared to do so; I am not saying that I want to do so.


Thomas Vien: I think the hon. member misused a minute or two himself by putting questions to others.


John Horne Blackmore: This area has a climate which is probably as dependable as any climate on the north American continent. There is excellent soil and an abundance of water that would not fail. This area could be developed to produce 87 per cent of the sugar used by Canada before rationing was introduced. In addition to that, it could produce a great deal of meat and milk and all manner of animal products after probablv a year or

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two of intensive development to prepare for production. I quote from page 151 of the report:
The value of animals fattened in feed lots during the season 1941-42 totals about $3,900,000 including cattle and lambs.
And again:
Over 90 per cent of the grain fed cattle were placed in the feed lots on irrigated areas. During the same period 100,000 lambs from the ranges of southern Alberta and southwestern Saskatchewan were placed in the feed lots and fields of the irrigated districts.
That indicates the potentialities of this area. I should like to read from page five of the 1941 report of the Alberta sugar beet growers, as follows:	.
We now feed and finish annually upward of 100,000 lambs and 25,000 cattle in this small area.
That refers to the relatively small area now under irrigation, and accordingly we can form some estimate of what could be done if the whole area were under irrigation.
This food producing area is in a safe region just east of the Rocky mountains. It could be more easily defended against western attack than perhaps any other area, and it is more remote from eastern attack than any other area in Canada.
It is strategic because it is so near the possible battle area, both in Alaska and along the western coast. We are sure of it because there is an excellent climate, plenty of water and good soil.
In addition, we would be safeguarding our birthright with respect to that water. As matters stand now, we are in danger of trading our birthright for a mess of pottage.
I repeat once more: when this war is over, there will be a cry for economy and there will be a danger of our neglecting to construct this project. I suggest to the members of the committee and to the minister that that portion of the recommendations of this committee which asks that construction of the project be deferred until after the war be disregarded. There are too many of us who are looking for this war to end within the next year or two. It may last ten years. It is high time that members of the parliament of Canada and of the government of Canada began to use a little foresight instead of dragging along everlastingly with hindsight.


[Stage Direction]
Item agreed to.
Surveys and engineering branch.
151/. Geodetic service, $133,780.
George Hugh Castleden: What is being done this year with regard to this service?


Thomas Alexander Crerar: It is simply a continuation of the work that has been going on for many

years. I understand that my hon. friend has some knowledge of mathematics, and therefore probably he knows more about the inner meaning of this vote than I do. It is for the purpose of establishing by triangulation the precise points in various parts of the country from which all other surveys are made. It is particularly important, for instance, in the matter of boundary lines, in the matter of hydrographic survey work, and especially in the matter of getting precise maps. During the past year we have been asked to extend this work, by some of the defence services. When you are laying out flying routes and all that sort of thing, accuracy is necessary. The purpose of the geodetic survey is to determine by a rather intricate method of calculation the precise points from which all surveys start. This vote has been in the estimates for a great many years, and the work is being carried on because of its necessity.


George Hugh Castleden: That was why I asked the question. I was wondering whether there was any extra work on account of the war. The work of surveys along the boundary is, I suppose, continuing. After they have made a survey of the international boundary, by the time they have completed that one, I suppose the work has to be done over again, has it not?


John Ritchie MacNicol: All kinds of issues come up all the time across the boundary.


Thomas Alexander Crerar: Yes, that is the case: for instance, particularly in the mountain sections, to get the precise points on which the boundary is determined. I might add that to-day practically the whole staff of the geodetic survey is engaged in work relating to the war.


[Stage Direction]
Item agreed to.
Indian Affairs branch.
160. Branch administration, $56,032.
Thomas Miller Bell: I want to say a few words, and I think this is the best place to say them. I am not going into the situation to-night-it is too late-regarding the condition of the Indians in the country. I think the condition of our Indian population is a sad reflection upon the white population of our country, from the point of view of disease and so on and so forth. But what I am going to mention to-night is this, that it seems to me that the life of an Indian is not regarded as being worth very much by some of our magistrates, and even perhaps by the department itself. I learn that at a place called Chippawa Hill, on Saugeen reserve, in this province, an Indian named Ernest John was

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killed on February 16, 1941, on highway No. 21, about two miles from his home. The police and the county coroner were informed at once, and an inquest was held in Southampton on February 19. The jury reported that Ernest John met his death as a result of being hit by an automobile, and up to the time when Mr. McGill, director of the Indian Affairs branch, was good enough to give me a report about the matter, namely March 13, 1942, the car and the driver had not been located.
There was a second case. An Indian named Louis Kahgee was killed on the same highway on October 25, 1941. This time the automobile and the driver were found, the name of the man being James Porter. He was tried, convicted and fined $20 and costs, and his permit was cancelled. A fine of $20 and costs, after the second death on that highway, seems to me to be out of proportion to what should be done in cases of this sort.
I assume that efforts were made though without success, to find the car and the driver that killed the first Indian. We, I am quite sure, would have prosecuted in every way that inquiry had it been in one of our provinces and had one of our own white citizens been killed, and I am quite sure that had a second white man been killed on that highway within a few months, the man responsible having been found, we would have made very careful investigation as to whether he was responsible in both cases. In any event, I do not think the fine would have been $20 and costs.
I am not blaming the minister. I am not blaming the department. But I bring this to the attention of the committee because I think it shows in some degree that there are people who value these Indians rather lightly. I am not going into the health situation, because that comes under another item. I believe the hon. member for Vancouver East (Mr. Maclnnis) is going to say something on that score, and I do not want to duplicate to-night, because it is getting late. But I bring the matter I have mentioned to the attention of the minister, the department and the committee, to make a protest against the manner in which these cases were apparently treated by some authority, I do not know who they were.


John Ritchie MacNicol: Are there any Indians
working in the Indian department here in Ottawa?


Major James William Coldwell: May I have an answer
from the minister?


Thomas Alexander Crerar: Before I answer the question of the hon. member for Davenport, may I say a word with regard to the matter raised by the hon. member for Rosetown-Biggar. It is true that these regrettable incidents happened. Whether the victim be an Indian or a white person, it is the duty of the provincial authorities to do all they can to apprehend the person who is guilty and to punish him. Unfortunately, in the first case cited they were not able to find the culprit who had run this Indian down and killed him. I do not wish for a moment to reflect upon the care or the energy with which the provincial police discharged their duty. I assume that they exhausted all the means they had to try to find the guilty party. Precisely the same thing happened in the second case. The guilty party was apprehended; he was taken before a magistrate; he went through the ordinary processes of law where the crown prosecuted. Whether or not the magistrate, in the light of the circumstances revealed, showed undue leniency, I cannot say, but the point I wish to make is that the administration of the law in regard to both these cases rests precisely where it would have rested had the victims been whites instead of Indians.
I am inclined to agree that on the face of it the penalty imposed in the second case appears light. In saying that, I do not wish to reflect on the administration of justice. However, I think my hon. friend has probably rendered some service in drawing the matter to the attention of the committee, and I have not any doubt that his remarks, and perhaps my own also, will reach the proper authorities who have to do with the administration of the law in these matters.
As regards the question raised by the hon. member for Davenport, there is one Indian working in this department. I should say that that is in the head office here. We have, of course, a number of Indian schoolteachers teaching in day schools in various parts of the countiy.


John Ritchie MacNicol: I investigated the Indian department in Washington and in a number of slates of the American union. In each case I found quite a number of Indians in the Indian department.


Thomas Alexander Crerar: As a matter of fact, I
believe there are several in the service here in Ottawa.


John Ritchie MacNicol: That is what I asked.


Thomas Alexander Crerar: I mean, in various departments of the government service. I am speaking now of t'he Indian branch of Mines and Resources.
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Douglas Gooderham Ross: I resent the remark made by the hon. member for Rosetown-Biggar (Mr. Coldwell) that the Indians seem to be treated in some inferior way. It is a reflection on those who have to do with Indians. For many years I have known an Indian settlement in the Georgian bay, and as a matter of fact I have tried to get the Minister of Transport to put some buoys in the bay to make it easier for them. There is a summer resort, and there are many settlers and Indians there. The Indians are a fine people, and the citizens of this country have the greatest respect for them. It is a reflection on the Canadian people to say that the Indians in Canada are not treated like human beings.


George Hugh Castleden: The condition in regard to the Indians on some of the reservations in Saskatchewan are far from satisfactory. Economic conditions on some of the reserves are deplorable, and there seems to be very few people to espouse their cause. The first thing wrong with the administration, it seems to me, is want of appreciation of the fact that the Indians are not all naturally adapted to farming, and it is useless to try to make them self-sustaining on farms when they are not capable of learning agriculture. Many of them have tried to follow the instructions given, but their farming operations are not successful. They have a certain natural ability along other lines, but their talents are not properly developed. It was the intention of the department in setting aside these reserves that opportunity should be given for the Indians to make their living, in part at least, by trapping and fishing, but the recent drought conditions have practically depleted those areas of fur-bearing animals, and fishing as an industry among the Indians is gradually petering out. The educational facilities on the reserves need a complete overhauling. The Indians complain that the children do not receive the kind of education in t'he residential schools which they would like, and they would much prefer to have the children left at home and provided with such educational facilities as the ordinary day schools afford, as was intended in the treaties.
There is a most deplorable condition resulting from t'he manner in which the reserves are managed. Indians living on the reserves, not full-blooded, may be evicted if the man in charge has reason to evict them. They have no means of earning a living, and therefore they become squatters along the edge of the reserves. Along the Gordon reserve in Yorkton these people are the responsibility of no one. The provincial government takes no responsibility for them and the federal government

likewise repudiates responsibility, the result being that the condition of the Indians there is comparable with that of those found among the share-croppers of the southern states. Social and economic conditions are frightful. In past years a good many of these Indians have tried to eke out an existence on the reserve by working for farmers in the neighbouring district. But economic conditions among those farmers are such that they cannot pay decent wages, so that the Indians are finding it increasingly difficult to make a living. They are now trying to haul wood off the reserve into the town in order to make some money. I repeat, the whole condition of the Indians, so far as my constituency is concerned, is far from satisfactory, and a new approach is necessary.
I understand that the department is doing something on a large scale in the line of fur farming and the development of certain natural areas where t'he Indians can carry on muskrat farming on a scientific basis. These farms have been successful. The Indians show an aptitude for that kind of thing and have found it a great deal better to carry on work along that line.
There is, I believe, need for some change in the department to meet the changing conditions in that western land where these Indians are being kept on t'he reserves. Drastic action is needed. I have brought this matter to the attention of the authorities in the department on a number of occasions and have had some investigation and a little improvement, but what has been done has not solved the problem by any means. The matter must be gone into, and I should like to have a statement from the minister as to what he intends to do.


Some hon. MEMBERS:: Carried.


George Hugh Castleden: I would ask the minister for a statement on the condition of affairs in the reserves, particularly the Gordon reserve.


Thomas Alexander Crerar: I do not know that I can give my hon. friend any precise information about any particular reserve he has in mind. The Indian problem is one that has to be viewed as a whole. It is a slow, patient, difficult business in which to make headway, and that difficulty, frankly, is due in the main to the characteristics of the Indians themselves. I do not think the charge can be levelled against the people of Canada that they are wholly indifferent to the welfare of the Indians.


George Hugh Castleden: I did not say that.


Thomas Alexander Crerar: The size of the vote we have here is an indication of the interest which

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not only the government but the white population have in the Indians. I am bound to say that there have been very serious errors in policy in Indian administration going back over a great many years. I have no hesitation in saying that, and I ithink it stems originally from a wrong idea. Go back sixty or seventy years. At that time the Indians were steadily, and in many instances quite rapidly, declining in population, and although they were wards of the state and were treated as such, the view was held in many quarters, sixty or seventy years ago, or even later, that the Indian problem would solve itself ultimately by the extinction of the Indian. That is no longer true, because the Indian population is increasing and the rate of increase is bound to accelerate. Humanitarian impulses alone have demanded better care for the Indians, better medical attention and education, and therefore we have to-day in this country approximately 120,000 Indians, with the certainty that they will increase in population.
I have no hesitation in saying that that problem is one, the seriousness of which in its implications is not realized by the Canadian people as a whole. We are modestly endeavouring to produce conditions in as many areas as possible under which the Indians may be self-supporting. That is true particularly in the northern parts of the different provinces. We are aiming at and have carried on for the last three or four years definite programmes for the restoration of the fur-bearing animals by means of which these Indians in the past made their livelihood. Sufficient success has attended that experiment to prove beyond reasonable doubt that it can be done. We have had full cooperation from most of the provinces. I would mention particularly the province of Quebec where we have secured three areas from the provincial government, in extent from ten thousand to twelve thousand square miles each, where we hope to restore beaver, muskrat and other furbearing animals. To do this takes several years. Since, however, that is brought about and trapping is done under proper supervision, conditions are created whereby the Indians in these localities can secure a permanent income.
There is the question of education and medical care, concerning which I understand an hon. member from Vancouver wishes to say something. Perhaps I can deal with that item when he raises his question. But in the prairie provinces on most of the reserves we are endeavouring to get the Indians to adapt themselves to agricultural pursuits, the growing of grain, the raising of cattle. On many of the reserves very good success has attended
those efforts. Of course in the last ten years these reserves have suffered as other parts of the country did. This season it seems probable that on some reserves we are going to harvest veiy good crops.
It is an important matter to have the right kind of Indian agents and supervision. All I can say is that the points my hon. friend has raised are fully appreciated by the officers of the department, and I think we are making progress toward a better state of affairs.


Thomas Clement (Tommy) Douglas: The minister mentioned agriculture. I have part of one Indian reserve in my constituency, and I have a summer cabin in another reserve north of Carlyle. Therefore I have had an opportunity of seeing how the Indians live and some of their problems. I shall not detain the committee now as to the conditions under which the Indians live, which in some cases are absolutely appalling. It has been my privilege on many occasions to meet committees of Indians on these two reserves. I have asked them what is the one thing that could be done to enable them to help themselves, and they said this-I pass it on to the minister-that under the original treaties the provisions for giving them agricultural tools, for instance, were based on conditions that obtained at the time the treaty was made, and those conditions no longer obtain. On one reserve they told me they were being given hoes each year. A man would get a hoe each year when probably he had the hoe from the year before. They were getting agricultural implements that were out of date, and they wondered if it would be possible to get some modern agricultural implements on a group basis, say for half a dozen or a dozen to have a binder or a plough or some horses, and cooperate in their use.
I have gone to a number of the little patches of farms they have; they are very inadequately equipped to carry on anything like decent agricultural operations.


Thomas Alexander Crerar: As far as agricultural equipment is concerned, on the reserves that are suitable for agriculture the Indians are supplied with modern equipment. My officials here have not the precise amount, but it runs to perhaps $20,000 to $25,000 a year.


An hon. MEMBER:: Does that include tractors?


Thomas Alexander Crerar: It does in some cases, and modern equipment. They are not by any means tied down to the kind of agricultural equipment that existed at the time the treaties were made.
But there is no gainsaying this, that it is difficult to bring the Indians to a realization of the need for attending to the agricultural
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job at the time it should be attended to. I might cite one instance illustrating that. An Indian was ploughing on his farm. It was summer-fallow, and it was important to get it ploughed at a particular time. Another Indian came along; they sat down and talked a couple of hours and then decided to go off on some kind of expedition. The Indian unhitched his horse just where the plough was, took off the harness and laid it on the plough, went away and did not come back for four or five days.


Gordon Graydon: Would this not be for the agriculture estimates?


Thomas Alexander Crerar: Yes. However, I have answered the hon. member's question.


Mr. EDWARDS:: I would be remiss in my duty as an honorary member of one of the Indian tribes of Canada if I did not say two things that have been driven home to me as being uppermost in the minds of the Indians at this time.
One relates to the war. I have been reminded that in the last war an order in council was passed exempting Indians, by reason of their status, from compulsory military service. Not enjoying any rights of citizenship as such, being wards of the government, they were exempted from compulsory military service. That does not apply at this time, and there is a feeling of resentment in that regard. I commend to the government the advisability, the rightness, of reconsidering the status of the Indian as a ward of the government, yet subject to compqlsory military service. It does not affect many of them, but the Indian still has in his mind-at least the western Indian- the treaty rights which they understood exempted them from any obligation to take up arms against their fellow man anywhere.
Next I want to commend the department for what it has done in the selection of agents to deal at first hand with the Indians. I think any success we have had so far is directly attributable to the Indian agent who comes into direct contact with them. But I want to say this: the Indians in my constituency at least were originally hunters. Anyone knows that the wild game have left the slopes of the Rockies, and perforce the Indian has been compelled, even as you and I, to change his mode of life and of gaining his livelihood. The tribe with which I am affiliated is known as the Stoneys, and their reserve indeed lives up to the name; it is stony. While it was fine as a hunting reserve, it no longer sustains the fur-bearing animals 
to provide these men with a livelihood. I urge upon the minister, as I have done heretofore, the duty and obligation of making available to these Indians potential grazing and agricultural lands.


Gordon Graydon: May I ask the hon. member if he is a chief in the tribe?


Manley Justin Edwards: Yes, I am a chief.


Gordon Graydon: What is the name?


Manley Justin Edwards: The name of the chief is Mountain Grizzly.


Ralph Melville Warren: I should like to endorse the remarks of the hon. member for Calgary West (Mr. Edwards). I happen to live in a riding in which there is an Indian reservation, and I am quite ready to admit that when these reservations were established the poorest available land was chosen on which to place the Indians. While the hon. member indicates that the land may have been good for hunting and fishing, certainly it was not good for the purpose of making a livelihood from the soil. Residents of the reserve in my riding have left the reservation and made good as ordinary Canadian citizens. They have worked as government employees in this city; they served in the army during the last war and are serving in this war. They are typical Canadians, and I do not know why these splendid people should not have all the rights of Canadian citizens, why they should not be qualified to vote at elections and why they should not have all the opportunities which are enjoyed by other Canadians.


[Stage Direction]
Item agreed to.
Indian Affairs branch-Medical.
163. Indian hospitals and general care of Indians, $1,462,873.
Angus MacInnis: I wish to say a few words with regard to the health situation among the Indians in the province from which I come. Before doing so, however, I should like to point out to the committee that we are all agreed that the condition among the Indians of this dominion is anything but what it ought to be. Furthermore, the Indians being wards of the state, the government of this country has a responsibility to them; and if the provincial governments, or police forces, or the administration of justice in the provinces, do not properly protect the Indians, then it is the duty of this government, as the guardian of the Indians, to see that the necessary protection is extended to them. .
I think it was during the session of 1939 that I drew to the attention of the committee of the house then dealing with this matter the

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ravages that tuberculosis had made among the Indians of British Columbia. A few days ago I was reading the report of the board of health of that province, and in my opinion the situation has not improved. I am going to try to impress upon this committee in a few words the seriousness of the situation. The Indian population of British Columbia amounts to 3 per cent of the total population, but in 1940, of all infant deaths under the age of one year, 30 per cent were of Indian children. This is something which should give those charged with the care of the Indians some reason to think. Sixty per cent of all Indian deaths were of persons under thirty years of age; one-quarter were of children under one year, and one-third of children under five years of age. The report states:
For certain diseases, especially tuberculosis, pneumonia and bronchitis, Indian mortality exerts a very unfavourable influence upon the vital statistics of the province. As the Indians are the wards of the federal government they do not constitute a direct public health responsibility of the provincial board of health. Indirectly, however, their existence as a potential menace to the health of the people cannot be ignored in the public health programme.
So bad is the situation among the Indians of British Columbia that the vital statistics are issued in two columns, one including Indians and the other excluding Indians. I would suggest to the minister that in some way, in cooperation with the provincial department of health, which cooperation I think would gladly be given, he should work out some programme by which better care might be taken of the health of the Indians. In the next item, if I may be allowed to refer to it, I notice that grants to hospitals have been reduced from the very small amount of $7,900 last year to $5,400 this year. Under the circumstances I do not believe that is good enough. We cannot allow diseases such as tuberculosis to go unchecked among the Indian population and at the same time hope to stamp it out in the white population. That is all I wish to say, but having drawn this matter to the attention of the minister previously I wanted to draw it to the attention of this committee, in the hope that this time something may be done about it.


Thomas Alexander Crerar: I do not like to delay the
committee, but there are one or two matters in connection, with which my hon. friend may not be aware of the facts. For the last four years we have been carrying on a steady programme of treatment of tuberculosis among the Indians, and that is particularly true of British Columbia. Only within the last eighteen months we have completed a fully equipped hospital at Sardis, not far from
Vancouver, and in that hospital to-day there are over 140 patients. Last year in British Columbia alone we spent over $56,000 in the treatment of tuberculosis, and from April 30 of last year to January 31 of this year we spent $218,000 throughout the dominion for the same purpose probably the full amount was spent by the end of March. We have under treatment some 671 patients. I may say to my hon. friend that this work was commenced only within the last four years; substantial progress is being made, and I can assure him that British Columbia is not being overlooked.


[Stage Direction]
Item agreed to.
Indian Affairs branch.
169. Grant to provide additional services to Indians of British Columbia, $100,000.
George Hugh Castleden: Would the minister
explain the reason for this extra $100,000 for British Columbia?


Thomas Alexander Crerar: This vote originated some
fifteen or sixteen years ago and has been continued every year since that time. It is a vote to develop agriculture and to aid the Indians in fishing, and occupations of that kind.


George Hugh Castleden: It is largely for medical services.


Thomas Alexander Crerar: Part of it may be devoted to medical services.


George Hugh Castleden: There is provision for a medical officer, a graduate nurse and special services to the amount of $37,000. Why is it a special grant in this instance?


Thomas Alexander Crerar: That originated in this way, that the Indians of British Columbia do not benefit from treaty moneys, while those in other provinces do. In lieu of that this special vote of $100,000 was given for the Indians of that province.


Major James William Coldwell: Is it correct to say that the Indians of the other provinces benefit from treaty money? Do the Indians of the White Bear reserve benefit in that way, and, if not, is something analogous to this done for those Indians? I do not believe the Indians in the White Bear reserve of Saskatchewan are treaty Indians. That is the reserve with which the hon. member for Weyburn is familiar.


Thomas Alexander Crerar: Some Indians came to Canada from the United States. Probably that is the reserve my hon. friend has in mind. They do not participate in the treaty money. A majority of Indians in the provinces other than British Columbia do participate in the treaty money.

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Major James William Coldwell: I was wondering if anything had been done for those Indians? I used to spend my summers on that reserve, and I know the conditions. As the hon. member for Weyburn has said, they are wretched.


[Stage Direction]
Item agreed to.
Immigration branch.
I'll. Field and inspectional service, Canada, $1,178,436.
John Ritchie MacNicol: Why are such amounts as those contained in items 171, 172 and 222 carried in the estimates, when immigration into Canada is almost at a standstill?


Thomas Alexander Crerar: While immigration to
Canada from other countries has largely ceased, there are still some people coming, although not very many. That does not decrease the amount of work which has to be done by immigration officials. For instance, all the people going back and forth across the international boundary line have to be passed by immigration officers. If my hon. friend goes to New York he has to pass United States immigration officers when entering the United States, and when he comes back he has to fill out a form for our immigration officers. Consequently we must maintain these inspection staffs all along the international boundary line.


[Stage Direction]
Item agreed to.
Immigration branch.
173. Relief of distressed Canadians outside Canada, $7,500.
Major James William Coldwell: The amount in this item seems to be small. Is it sufficient to take care of the needs? I think the hon. member for Rosedale and I might have some sympathy for those who might be classified as distressed Canadians abroad. We were pretty much in that class on one occasion, in Lisbon, when we had nothing but pounds sterling and could not get Portuguese money.


Thomas Alexander Crerar: This vote might be described as the ordinary vote to care for distressed Canadians abroad. It has been very substantially increased in the last few years, since the outbreak of the war; but the additional amounts required are secured from the war appropriation vote, because the conditions are due to the war.


[Stage Direction]
Item agreed to.
Special.
Lands, parks and forests branch.
176. National parks, $65,800.
John Ritchie MacNicol: Why is this vote not included in item 142?


Thomas Alexander Crerar: They were special projects originating under special votes of a few years [Mr. Crerar.,1
ago. I am informed that this amount is required to complete those projects, and some other similar projects. .


[Stage Direction]
Item agreed to.

[Stage Direction]
House of Commons.
116. General administration-estimates of the Clerk, $494,895.
Georges Parent: Mr. Chairman, I should like to place on Hansard a statement with regard to the administration of the House of Commons. It is very long, and I should not like to trouble the committee with reading it to-night. I should like to have it placed on Hansard for the benefit of hon. members. The statement is as follows:
It would be proper, I think, that at this time I should make a statement with regard to the administration of the House of Commons
Since I took office in 1940 wTe have made substantial reductions in the staff of the House of Commons during the existence of the present parliament. We are endeavouring to carry on with fewer employees without laying off men who have been here many years and are not entitled to pensions.
Mr. Burgess, committee clerk, whose salary was $2,640 enlisted in His Majesty's forces on November 6, 1940, and was not replaced.
Mrs. Rutherford, committee clerk, whose salary was $2,520 died on July 2, 1941, and the vacancy was not filled.
Mrs. McCann, whose salary was $2,372.50, resigned at the beginning of the present session and the position was abolished.
Mr. Lionel LeBel, who assisted Mr. Crossley Sherwood, clerk of orders and notices, at a salary of $1,825 left the service and was not replaced.
We have reduced the staff of the reading room from four to two employees. Mr. S. S. Spencer, curator, whose annual salary was $1,680 was superannuated on the 1st of November, 1940, and Mr. Boivin, one of the reading room clerks, was appointed in his place.
When Mr. L. P. Desrosiers, of the Journals' branch, left the service, Mr. Francis Schryburt, of the reading room, whose salary was $1,920 was promoted in his place. Nobody replaced Mr. Schryburt in the reading room where there are now only two men instead of four as formerly.
When Mr. Fortin, assistant chief of the joint distribution branch, whose salary was $2,100, died, Mr. Harry Terry, a clerk in that branch, with a salary of $1,680 was promoted in his place. No new man has yet been appointed to take Mr. Terry's place.

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Mr. O. Letourneau, chief of repairs, has recently left the service, owing to old age, and nobody is to be appointed to take his place. The salary is SI,560 per year.
Colonel M. F. Gregg, V.C., Sergeant>at-Arms, with a remuneration of $5,120 per year, was granted leave of absence when he joined His Majesty's forces on the 1st of January, 1940, and the Clerk of the House has taken over the management of his branch, consisting of constables, messengers, cleaners, page-boys and servants. No additional remuneration is paid the Clerk for that work.
Mr. T. M. Fraser, whose salary was $5,120, as Assistant Clerk, was superannuated in January, 1942, and nobody has yet been appointed to take his place. Mr. C. W. Boyce, Chief of Journals branch, was assigned to attend the sittings of the house while continuing to do his own work, without additional remuneration, but all the office work performed by the Assistant Clerk has been divided between the Clerk and the Accountant.
Clerk of the House
The Clerk of the House is the chief officer Who is responsible for the management of the house's affairs, as well as the controller of all its expenses. The estimates paid every year for the house's overhead, including members' indemnities cannot be paid by the accountant unless it has been approved by the Clerk of the House. This includes paylists and accounts as well as expenses. Members' statements of their attendance and the forms they have to sign have to be submitted to and checked by the Clerk. The Clerk has to inspect them as he is responsible under the Audit Act for all money paid out on the house's account. The printing bureau cannot deliver any stationery supplies or print any document unless the order is given over the Clerk's signature. The Clerk, particularly since January, 1940. when he assumed the Sergeant-at-Arms' duties, is head of a staff of 575 persons employed in the whole service of the house, from the last charwoman up to the Law Clerk, the Chief of Journals, or Editor of Debates. He has to see that the building is kept clean, the service well done and discipline kept in the staff.
Constables, messengers and page-boys have to wear uniforms. It is the Clerk's duty to supervise the purchase of material and repairs needed for these clothes. A close inspection is here necessary.
The Clerk in his capacity as deputy head, is bound to see that police protection is given the building and people who work in it. This work has been entrusted to the Clerk since
1940, and in addition to these duties he must exercise the most important duty of all, that of acting as adviser to the Leader of the House and the Speaker on questions of procedure. It must be realized that the Audit Act, the Civil Service Act, the Superannuation Act, the Printing Act. the House of Commons Act, the Senate and House of Commons Act, and above all. the British North America Act, deal with matters connected with the House of Commons, and the only officer the house has to rely upon for their interpretation is the Clerk of the House. During sessions particularly he is consulted by members of the house on these laws as well as on procedure. There are many other functions connected with the Clerkship of the House of Commons but the above are sufficient to show that the postion of the Clerk of the House has developed into one of the busiest and most exacting posts in our public service. I must be allowed to say this that the accumulation of these duties upon the Clerk has been a considerable strain upon his health and may have impaired it. I sincerely trust not and that for years yet the 'house will benefit from his unrivalled knowledge and experience. And I must also say that these extra duties as Acting Sergeant-at-Arms which he has undertaken have meant a saving of over $15,000 since he took that office because the Clerk receives no extra remuneration as Acting Sergeant-at-Arms.
Protective Service
We had 34 men for the first part of the session of 1940 and 25 for the recess. For the second part of the session in 1941 we had 33 men and 24 for the recess. We only have 28 men for the present session. This is not a large staff when we consider that constables are on duty 24 hours a day and have to guard three outside doors, the main entrance hall, the library, the Chamber and the upper corridors.
Stenographers Branch
A complete stenographic service to the members of the house during sessions of parliament is necessary. This service includes the taking of dictation, the transcription of notes, copying of documents, in both English and French, filing correspondence and all other related work. Another important duty of this branch is the copy of returns laid on the table during the session when requested by members. It also supplies a duplicating and stencil service for the house. Great numbers of envelopes for the use of members in distributing speeches and other literature
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are addressed in this branch. All menus for the parliamentary restaurant are stencilled and duplicated by this staff. The branch consists of one permanent chief, one permanent principal clerk, one grade 3 clerk, six full time clerks and stenographers. There is an average of 145 calls each day. Members filing is brought up to date each week-end, and accumulated envelopes are addressed. Stenographers, of necessity, must be qualified owing to the difficult and exacting nature of the work and the speed with which it is necessary to turn out a large volume of work each day. Some stenographers write as many as 70 letters per day. The office is open from 9 a.m. to 10 p.m., and many stenographers have to come back every night to finish their work.
When the present parliament came into existence in 1940, there was at the House of Commons a staff of 24 filing clerks consisting of girls who were neither stenographers nor typists but were employed at keeping members' files in their rooms. They were paid $4 a day. That service was immediately abolished and stenographers were instructed to look after the members' files. The result was a reduction of 24 persons in the staff and a saving of $96 per day without any impairment in the members' secretarial work. In 1940, the staff consisted of 167 employees, in 1941, 140; and in 1942, 132. A decrease since 1940 of 35 employees.
Post Office
There were 13 clerks during the session of 1940, 7 in 1941, and there are 7 now. From inquiries made, this office is, I fear, understaffed, and we cannot reduce it any more. We have also to keep three men for the manual labour connected with this office. Our mail service is considerable, but it cannot be judged by the amount collected for the sale of stamps because letters and all mailable matter addressed to or sent by members of the house during the session are free of Canada postage. Huge quantities of Hansard are sent out almost every day. The office is kept open from 7 a.m. to 11 p.m. and on Sundays and holidays, from 9 am. to 6 p.m. It is the busiest branch in our service. All members' mail is heavy. Our post office handles about 150 sacks a day.
Stationery
We have to keep a large stock of stationery for the members' correspondence, committee work and debates reporting. There is a considerable demand for all kinds of supplies such as nibs, pencils, erasers, clips, elastic bands, mucilage, et cetera, which are required by
fMr. Speaker.]
about four hundred persons every day during sessions. We have, however, managed to reduce our expenses on that account. The amount voted for stationery in 1941-42 was $34,000, but in spite of the extraordinary length of the session and the demands of several war organizations on our stock, we spent only $28,000 in 1942, thus allowing $6,000 to lapse and to be refunded to the consolidated revenue.
Messenger Service
Members of the House of Commons are the agents of their constituencies and they are written to on all kinds of subjects. They have to deal with ministers and government officials for their electors and as departmental officials are scattered in different parts of the city, a large messenger staff is required. This staff is distributed in offices as follows: Prime Minister's office: 1; Leader of the Opposition. 2; Chief Government Whip: 1; Clerk of the House: 1; Sergeant-at-Arms: 1; Press Gallery: 4; Accountant's office:	1; Parliamentary
Papers: 1; Votes and Proceedings: 1; Committees Branch: 1; Liberal Caucus Room: 1; Conservative Caucus Room: 1; Room Sixteen: 1; Clerk of Equipment: 1.
It must be noted that most of these men are clerk-messengers who answer telephone calls and assist private secretaries in filing correspondence and papers.
We have an assistant chief messenger, a time-keeper, two printing bureau truck drivers for day and night service and 22 messengers for the service of all members of the house. This is not excessive. I have had a statement prepared showing the number of messages carried daily since 19th January, 1942, to 27th July last. That statement shows that during that period there were 70,842 calls. During the long adjournment and recess last year we kept our messengers on duty because a number of offices in the building were used by commissions connected with war, such as the committee on War Expenditures, Labour Supply committee, the Air Minister of New Zealand, the Canada-United States Economic committee, the Australian Military mission and the Munitions and Supply committee. Moreover, there are always members of the house in the building during recess. We have had as many as forty at a time when the house is not in session, and we have given them a messenger service.
Some of our messengers are old and have been employed by the house for many years. Eight of them are over 65 years old. Three of them are permanent, the other five are temporary employees not entitled to pension. They have been here eleven, twelve, sixteen and

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twenty-one years. They would suffer if summarily dismissed. We are well aware of the importance of avoiding wasteful expenses and to make reductions wherever necessary, but I must do so by degrees in order not to cause hardship to employees who have served faithfully.
Char Service
This staff consists of 86 women employed during the session and 50 during the recess with several spare employees during the holiday period of twelve weeks. The number employed may vary but all are needed to take care of the building. The women commence work at 6.30 a.m. and have to be out of all offices by 9 a.m. The work assigned to each varies according to the amount to be done in each room or suite of rooms.
There are 47 men emploj'ed during the session and 32 for the recess, with 5 spare for the holiday relief. This includes the chief, Mr. Cardinal, and his assistant, Mr. Alexander. The men commence to work during the session at 6.30 am. and continue until 1 p.m. or later when caucus and committee meetings have been held, in which case they are on duty until all committee rooms have been cleaned up and prepared for further use. During the recess, the men commence to work at 7 a.m. and continue until 4 p.m.
While the session is in progress, all cleaning is done as a daily routine by both the men and the women staff. When the house adjourns or prorogues, each room, including the Prime Minister's and officials' suites of rooms, committee and caucus rooms, working staff rooms, cloakrooms and lavatories, and all corridors, from the 6th floor down to the basement, are given a thorough cleaning as follows: (1) ceiling and walls vacuumed; (2) all pictures vacuumed and glass washed; (3) rugs taken out of rooms and vacuumed both sides; (4) all furniture given a thorough cleaning and polishing; (5) Venetian blinds and curtains cleaned; (there are 216 Venetian blinds and 260 pairs of curtains in the various rooms) (6) old floor wax removed with benzene and floors newly waxed: (7) all electric fixtures washed; (8) after rugs and furniture replaced, all rooms are given a thorough disinfecting; (9) all corridor walls (stone) vacuumed; all corridor walls (marble) washed; (10) all panel woodwork in the ministers', reading, government caucus rooms, and all the woodwork and furniture in the Commons chamber, including the galleries, is cleaned and given an oil preservation treatment; (11) all members' rooms have painted walls. Any rooms that are soiled are washed during the recess when the general cleaning is done. An
average of from 10 to 40 rooms are washed, depending on how long the recess period lasts. This is a big job.
On the list of details of duties for the women during the recess, the following rooms and suites of rooms are given a general cleaning, the same as when the house is in session: The Prime Minister's, the Leader of the Opposition, all ministers' rooms, government and opposition whips, leaders of the smaller groups, local members' rooms, all official suites, all staff chiefs rooms, all rooms of staff kept on during recess, library, reading room and committee rooms used for the various meetings held since the war began. (There have been many of these).
Outside of their regular duties, the recess man staff do all the moving of furniture and extra cleaning entailed through the meetings and use of House of Commons rooms for the various boards, et cetera, such as those listed herewith: the Dominion-Provincial conference; Wartime Requirements board; Voluntary Registration bureau; Canada-United States Joint Board of Defence; British, Australian and New Zealand mission; Civil Service commission-various branches-labour unions; and many others. These meetings make considerable extra work for the recess staff.
Changes in Offices and Rooms
An inspection of the building clearly showed me that the layout of some of the rooms had to be changed for the convenience and comfort of the members and staff of the House of Commons.
The man employed in repairing upholstered furniture did his work in a dark room in the basement, with no other light than one electric bulb. It was impossible to clean that place where dust had accumulated for years. The air in it was unbearable. The man died a couple of years ago and perhaps the conditions in which he worked considerably impaired his health. His successor was placed in a well-lighted room near the freight entrance on the north side of the building.
The page-boys, fifteen in number, were also installed in a dark store-room where two stalls had been set up for their chief and assistant chief. They had no light nor ventilation. When these boys had to put on -their uniforms they went in a small dark room about 8 feet by 3 which was very unsanitary. A partition was pulled down so as to make a large room with two windows, running water and a screened space for dressing purposes.
Whilst these dark holes were used for persons in the service of the House of Commons, a comparatively large room with windows had been allotted as a cloak room for the
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charwomen who are employed from 6.30 a.m. to 9 a.m. The room was enlarged by pulling a partition down which turned it into a comfortable place for the constables who form our protective staff.
Whilst the men employed in the Sergeant-at-Arms service had to put up with unsanitary premises and, in some cases, chiefs were mixed with their men, several of our best offices in the front part of the ground floor were occupied by translators who did not belong to the House of Commons but were under the authority and. pay of the Secretary of State. We could not keep them on our premises when we lacked office space for our own men. After long discussions and difficulties, we finally succeeded in arranging that they should take a building in lower town. This removal gave us sufficient space for the offices of the chief constable, the clerk of equipment, the chief messenger, the chief of the cleaning service and the typist attached to the miscellaneous services of the house. We were able to supply suitable premises for the British United Press which is now comfortably housed near the door opposite the post office. We also furnished good premises to the engineers assigned to the parliament building by the Department of Public Works.
The cafeteria could not accommodate the increased number of customers who were patronizing it. We had another partition pulled down, increasing space, and we took over the west end of the fifth floor corridor on the north side, thus making the cafeteria double in size and better ventilated. This is one of the best improvements made in the building during the last two years.
No special premises had ever been set aside for the committee reporters who had managed to secure desk room in small offices where they found it almost impossible to perform their official duties. They needed space not only for themselves but also for the typists who copied their reports and for the employees who prepared mimeographed copies sent to members of the house. Their work is very strenuous and important. We succeeded in allotting to them two offices with a large room between them, and for the first time they were enabled to perform their duties under workable conditions.
The Speakers' portraits were scattered in the large dining room of the 6th floor, in room 268 and in some officers' offices. The greatest number were in the north corridor of the main floor but they had been placed without any attention to the dates of the Speakers' terms of office. Moreover, the very expensive frames of these portraits badly needed to be cleaned and repaired. That work was done

and this gallery of portraits was placed in accordance to seniority from the legislative assembly of 1792 to the last parliament which sat until 1940.
Other improvements of minor importance were also made but mention of the above is sufficient to show that the House of Commons is now working in better condition than ever before.
In the report submitted to me it has been stated that my own office expenses are the lowest during the past 40 years. I have endeavoured to practice retrenchments without causing hardship or impairing the service of the house. The staff has been reduced by sixty-one persons both permanent and temporary. The premises occupied by the Sergeant-at-Arms branch have been improved and order and discipline have been established in all the branches of the House of Commons service. Our expenses are matters of routine mapped out beforehand and paid almost automatically. When vacancies occur they are filled by promotions or changes within the staff. The accountant is always in close cooperation with the comptroller of the treasury and since 1940 I am informed that no payments or expenditures have been the subject of letters from the auditor general.
On the whole I would say that the affairs of the house are conducted with care and economy and further retrenchments can be made. In these further reductions I will have to ask the cooperation of the members of the house, a cooperation which I must here say I have received in a measure far exceeding my expectations.
I can only report on the affairs of the House of Commons. It would not, I think, be proper for me to make any suggestion to the Senate which is autonomous and has a staff of its own, independent of ours and under the authority of its own Speaker. It has been suggested that there be only one reading room, one post office, one barber shop, et cetera, for both houses of parliament and all I can say, and I think the house would wish me to. say it, is that I will gladly welcome consultation and agreement on desirable economies, with the Senate.



SOLDIER SETTLEMENT OF CANADA

[Stage Direction]
SSS. Administration of soldier settlement and British family settlement, $571,858.
Mr. QUELCH:: I should like to say a few words regarding soldier settlement in connection with the last war. I believe most hon. members feel the committee made a pretty good job of dealing with the bill that looks after the soldiers of this war. I am sorry I cannot feel that we have dealt as satisfactorily

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with the soldiers of the last war, under the recommendations of the committee on soldier reestablishment.
A member of the legion appeared before us and made certain recommendations regarding the rehabilitation of veterans of the last war. The Minister of Mines and Resources stated that in his opinion the recommendation was a moderate one. I believe the majority of the committee felt that the recommendations of the legion were moderate, and we spent a number of days in discussing ways and means of bringing about better conditions for those settlers. Unfortunately, when the recommendations regarding veterans of the last war were drawn up they did not go anything like as far as the recommendations made to the committee by the legion. The legion recommended that the interest charge on the indebtedness of the settler of the last war should be reduced to 34 per cent to bring him in line with the bill dealing with the settlers of this war. Instead of reducing the interest rate to 34 per cent on all debts of the settler of the last war, we are merely reducing the rate to 34 per cent on the debts of those settlers who have reenlisted in this war. One cannot help wondering why the rest of the settlers are not entitled to that same benefit. Certainly, if we are going to make a reduction of interest rates available to the settlers of this war, we should make that rate available to all the soldier settlers of the last war.
One recommendation of the special committee is in connection with what a soldier's equity in his land should be. In the new bill we recognize that every soldier settler, in order to have any real chance of success, must be given an equity in his land of around 334 per cent. As a matter of fact, when you take into consideration his equipment, he will -have a total equity of approximately 50 per cent. I remember when Mr. Walter Woods, associate deputy minister of the Department of Pensions and National Health, gave evidence before the special committee. He stressed the fact that to-day loan companies believe that a. man should have an equity of around 50 per cent if he is to be able to pay off his loan. That principle was embodied in the new bill to a large extent.
The settlers under this new bill will be younger men. Their stock and equipment will be in first-class condition. Yet we say that these men must have an equity of around 50 per cent. What chance will a settler of the last war have of paying for his land when in many cases he has no equity in the land? The average age of these men is around fifty-three years, and, generally speaking, their equipment is in poor shape. According to
a statement submitted to the special committee by the director of the soldier settlement board, 50 per cent of the old settlers of the last war are making practically no progress at all. Twenty-seven hundred have no equity in their land, and 1,078 have an equity of less than 16 per cent.
If we take the stand, which we have taken, that in order to pay off his indebtedness it is necessary for a man to have an equity of around 50 per cent, surely we should take the necessary steps to give the settlers of the last war an equity in their land which will make it possible for them to .meet their obligations. The recommendations regarding the settlers of the last war unfortunately do not meet that need. The recommendation may mean a great deal, but on the other hand it may mean nothing at all. It merely states that the debts of the soldier settler of the last war should be reduced to a point where he will have some equity in his land. Just what does that mean? If his debt is reduced to a point where he has an equity of $1, he has an equity and apparently that is all the recommendation calls for.
I should like the minister to tell us what in his opinion should be the basis of the equity that will be granted the soldier settler of the last war. He has stated that the recommendations of the legion are moderate. They -were to the effect that the benefits of the new bill should apply as far as possible to the veterans of the last war. As I say, this bill gives the settlers of this war an equity of around 334 per cent in his land, or around 50 per cent when one takes equipment into consideration. When the committee is appointed to deal with this question, what direction will be given to it? Will it be directed to reduce the debt to a point where there is an equity of 30 per cent or 40 per cent? I wish the minister would explain that -point because we have nothing on the record dealing with that point. I ask this because the minister was not present in the special committee when this matter was taken up.


Thomas Alexander Crerar: The hon. member for
Acadia (Mr. Quelch) has referred to the report of the special committee. This report will be before the government and will receive careful consideration. It recommends 'a reduction in the interest rate to those old soldier settlers who have enlisted in the present war. My hon. friend thinks that that should be extended to all old soldier settlers so that they will be on an equality with the beneficiaries under -the new legislation. I can assure my hon. friend that that will receive careful consideration. However.

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it must be borne in mind that the old soldier settlers have had a great deal of their indebtedness reduced or written off from time to time. In the majority of cases they have had the benefit of coming under the Farmers' Creditors Arrangement Act and have had their obligations adjusted under that scheme. I am quite willing to give my hon. friend the assurance that the government will consider the whole matter carefully. I shall see that it is brought to the attention of the government, and we will approach the matter as sympathetically as we can.


Victor Quelch: What will be the basis of the equity which will be applied to these soldier settlers?


Thomas Alexander Crerar: I would not care to make a promise with regard to the equity in the land. If I recall aright, the committee recommended that the government consider the practicability of that. My hon. friend knows as well as I do that there are practical difficulties in the way. It might result in injustices. A soldier settler who has met his obligations, who has secured title to his property or is in the way of shortly securing title because he can clear off his indebtedness, might feel he was being discriminated against if his neighbour, a soldier settler also, who had not been as attentive to his duties as he should have been and thereby had failed t-o make the headway he otherwise would have made, is legislated into an equity. These questions have to be considered. It is an easy matter in a spirit of generosity to say that these things should be done, but the practical aspects of the questions must be considered in all their bearings. All I can say to my hon. friend is that that will be done.


Percy Ellis Wright: 
George Hugh Castleden: Has the department taken into consideration the fact that these men who are on these farms now gave of
their best in 1914 and 1918, that the exposure, the wounds and the conditions of army life which they underwent in the last war have impaired their health, and whether what they have done for their country is deserving of any recognition at this time? The policy of this department and the director seems to be to send out their inspectors and take the last dollar from these men. That scheme has been a miserable failure.


Thomas Alexander Crerar: My hon. friend makes that statement, but what proof has he that the inspectors go out and take the last dollar from a man? It is not the case. My hon. friend is making a statement which is wholly inaccurate.


Gordon Graydon: "Inaccurate" is unparliamentary.


George Hugh Castleden: Well, I have seen
men who were burnt out, forced to sign a quit-claim deed and turned off their farms. I recall one case of a man at Springside. He stayed, on that piece of land for a number of years, his son helping him. The son enlisted in the navy. Later his ship was lost; the father no longer had any help on that farm. The inspector came round and said, "You had better sign a quit-claim deed." The man was put off and. got no equity; he is now living on a form of charity. The small number of men who have been successful in getting title to their lands is ample proof of the failure of the administration of this scheme. To-day at an advanced age these men find themselves unable to carry on any longer; their equity is gone; and apparently no consideration is given to the fact that they have paid and paid, year in and year out. I understand the department valuated a number of farms in 1941.


Thomas Alexander Crerar: In 1940 and 1941.


George Hugh Castleden: What is done in case the new valuation is less than the debt that is against the land?


Thomas Alexander Crerar: It goes before the board of review under the Farmers' Creditors Arrangement Act, and the debt is adjusted accordingly.


George Hugh Castleden: Would it not be considered right that in case the board values the land at a certain amount and the debt is more than the valuation of the land, the debt ought to be reduced to the value of the land as fixed by the board?


Thomas Alexander Crerar: That is precisely what the board of review does. If a man has a debt against the land of $5,000 and the board says the value is $3,000, it is put at $3,000.


George Hugh Castleden: The debt is put down?

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Thomas Alexander Crerar: Certainly. My hon. friend ought to inform himself before he starts making speeches.


George Hugh Castleden: I have informed myself, and I have written to the department about plenty of these cases. Moreover, I have talked with dozens of returned men, and what I have learned has led me to the conclusion that the attitude of the department is all wrong. These men are in dire circumstances. I take up the case of one man and I say, what about this man? He has done the best he can. I get a reply saying that this man's neighbour did perfectly well; that he paid off his indebtedness, and that if any further adjustment is made, why, the man who has nearly paid off his indebtedness will feel that he is being discriminated against. But when I investigate the other man's position I find that he had three or four sons to help him or had a large outside income, and that was the only reason why he could carry on.
Another abuse is this. The indebtedness of the soldier settler is so great that he feels he cannot possibly pay it off. The income from the farm has declined over recent years, and the representative of the soldier settlement board is told to come round and get the man to sign a quit-claim deed. The man says that if he does that, the land will be put up for sale. He is told, yes, that is what will happen. He asks if he will have an opportunity of buying it back, or if some member of his family will have an opportunity of buying it back at the price at which it will be sold to someone else, and he is informed that he will not be permitted to do this. That is an unfair practice.
There are not many of these old veterans left on the land, and I am going to make this plea to the minister. Surely, under the circumstances, these men are entitled, in the last years of their lives, to be freed from this continual hounding. They did their best for a number of years, but circumstances beyond their control made it impossible for them to pay off their indebtedness. In the twilight of their lives, after all that they have done, they should be given the title to their land. The people of Canada will not begrudge them that. The very recommendations brought down under the new scheme show that the old plan was entirely wrong. There was a fundamental weakness in the whole system. The original indebtedness was out of all proportion, and when the price of the commodities which the farmer could produce sank to a level at which he could not even meet interest payments, his burden became impossible.

There has been some adjustment, I agree, but it has not been adequate. It has still left the soldier settler with a burden which he cannot carry. The financial arrangements in this new scheme have been introduced because the old scheme was not equitable. It was unjust; and if there have been injustices in the past, why not wipe them out for the few men who are left? The older men have been up against a tough proposition. There is no appreciation of these facts as far as the administration is concerned. When the young men from these districts go to enlist to-day and they observe the way in which the soldier settlement board is treating the old veterans; when they read the record of what has happened to a number of them, many of them having proved their cases, where these men are up against' an impossible job, I can tell the minister that it has a very serious effect, so serious that we find editorials written in newspapers supporting the government protesting against the treatment that has been meted out to these men. They gave the best they had for this land. They were willing to give so much, and they are treated shamefully.


Percy Ellis Wright: The other minister was not present when the special committee were considering these recommendations which they have embodied in the report tabled on Friday, July 17, but the Minister of Mines and Resources was there, and he stated that it was his opinion that the government would, by order in council, bring these recommendations into effect this year and that the Soldier Settlement Act would be revised next year so as to include them in its provisions. The minister should give us an assurance that this will take place.


Thomas Alexander Crerar: My hon. friend is not
stating the facts correctly. What was stated was this, that it would require legislation to reduce the rate of interest, which is now statutory at 5 per cent under the old soldier settlement scheme, to 3| per cent. I said to the committee, as I recall, that I did not think it would be very likely that such legislation could be brought in this year, but if the government considered it favourably it would be decided to make that recommendation and validate it next year by statute. That was what was stated. I did not give a promise that the rate of interest would be reduced to 3J per cent. That is a matter which concerns the Department of Finance more than the Department of Mines and Resources. It is a matter that the government has to take into consideration. Really.

Private Bills Committee
I must say this, and I say it with the best feeling: I do not think speeches such as have been made by my hon. friend and his colleague who sits immediately behind him give any help to the soldier settlement problem. It is wrong to give the impression that the soldiers are being pressed, are being harried, and all that sort of thing.


Percy Ellis Wright: I did not say that.


Thomas Alexander Crerar: But the hon. gentleman's colleague behind him did. He said it was shameful treatment-


George Hugh Castleden: It is, too.


Thomas Alexander Crerar: -and used other expressions of that kind. That, certainly, is intemperate and unwise language. Why, there are 550 of these soldier settlers on the land who benefited to the extent of $155,000 last year under the War Veterans' Allowance Act. That is the shameful treatment which the government is handing out to these men. It is a mistake to say that they are driven off their land. There are hundreds of these settlers who have no prospect of ever paying for their land, who are not being disturbed because they have a home there. My hon. friend suggested that they should be legislated into an equity. The hon. member for Yorkton stated that they should be given title to their land.


George Hugh Castleden: No, I did not.


Thomas Alexander Crerar: Yes, my hon. friend made
that statement.


George Hugh Castleden: There are cases where it should be done.


Thomas Alexander Crerar: There are some of these
farmers, if you gave them their land, gave them full possession, in three or four or five years time their position would be just as bad as it is to-day. That is not an exaggerated statement. The inspectors doing this work are sympathetic men. They are practically all returned men themselves. The director is a returned man, and he knows the problems. The administration is just as sympathetic as is the hon. member for Yorkton. I wish to protest against the intemperate language which the hon. member has used to-night in this discussion.


George Hugh Castleden: Apparently I shall
have to bring more cases to the house. I shall be pleased to do so by the dozen.


[Stage Direction]
Item agreed to.
Thomas Alexander Crerar: Is there any objection to
calling one item in Labour?



DEPARTMENT OF LABOUR

[Stage Direction]
100. Departmental administration, $166,231.
Item stands.
Thomas Alexander Crerar: I am very grateful to the
committee for going on an hour longer, and for the assistance they have given in making the progress we have made.
Progress reported.
On motion of Mr. Crerar the house adjourned at 12.05 a.m., Saturday.
Saturday, August 1, 1942.