[Stage Direction]
First report of standing committee on banking and commerce.-Mr. Moore.


[Stage Direction]
Hon. ANGUS L. MACDONALD (Minister of National Defence for Naval Services): Mr. Speaker, I should like to lay on the table of the house information in reply to certain questions asked during the discussion of expenditures of my department arising out of the war appropriation bill. This information was tabled previously, but I table it now again, in more up to date form, and ask that it be printed in Hansard.
Mr. STIRLING:: Does the information now being tabled contain the rates of pay?


Mr. MACDONALD (Kingston City):: Yes, the information shows the revised rates of pay. With the consent of the house I should ask that it be printed in Hansard. The table follows:



RATES OF PAY AND ALLOWANCES-ROYAL CANADIAN NAVAL SERVICE

[Stage Direction]
Rank	Rate per Diem (Basic Pay)	Allowances per Diem	Single per Diem	Married-	per Diem	Lodging and Compensation	Maximum Dependents	Maximum Children	In Quarters	Out of Quarters	In Quarters	Out of Quarters	No Children	One Child	Two Children	No Children	One Child	Two ChildrenS cts.	S cts.	S cts.	$ cts.	$ cts.	$ cts.	$ cts.	$ cts.	S cts.	$ cts.	$ cts.	$ cts.Commodore 1st Class	17 00	3 10	2 00	0 40	17 00	20 10	19 00	19 40	19 80	22 10	22 50	20 09Captain	15 00	2 10	2 00	0 40	15 00	17 10	17 00	17 40	17 80	19 10	19 50	19 70Commander	10 00	1 85	2 00	0 40	10 00	11 85	12 00	12 40	12 80	13 85	14 25	14 80Lieutenant-Commander	7 50	1 70	1 80	0 40	7 50	9 20	9 30	9 70	10 10	11 00	11 40	11 10Lieutenant	6 00	1 70	1 60	0 40	6 00	7 70	7 60	8 00	8 40	9 30	9 70	10 82Sub-Lieutenant	5 00	1 70	1 45	0 40	5 00	6 70	6 45	6 85	7 25	8 15	8 55	9 65Prob. Sub-Lieutenant	4 25	1 70	1 45	0 40	4 25	5 95	5 70	6 10	6 50	7 40	7 80	8 95Commissioned Officers from Warrant Rank	5 75	1 70	1 45	0 40	5 75	7 45	7 20	7 60	8 00	8 90	9 30	9 20Mate	4 75	1 70	1 45	0 40	4 75	6 45	6 20	6 60	7 00	7 90	8 30	8 70Warrant Officers	4 75	1 70	1 30	0 40	4 75	6 45	6 05	6 45	6 85	7 75	8 15	8 55Midshipmen	2 00	1 70	1 45	0 40	2 00	3 70	3 45	3 85	4 25	5 15	5 95Cadets	0 25	1 70	0 25	1 95	Chief Petty Officer	2 80	1 25	i is	0 40	2 SO	4 05	3 95	4 35	4 75	5 20	5 60	6 00Petty Officer	2 40	1 25	1 15	0 40	2 40	3 65	3 55	3 95	4 35	4 80	5 20	5 60Leading Seaman	2 10	1 25	1 15	0 40	2 10	3 35	3 25	3 65	4 05	4 50	4 90	5 30Able Seaman	1 85	1 25	1 15	0 40	1 85	3 10	3 00	3 40	3 80	4 25	5 05Ordinary Seaman	1 25	1 25	1 15	0 40	1 25	2 50	2 40	2 80	3 20	3 65	4 05	4 45Boy	0 50	1 25	0 50	1 75	
Children's Allowance:-In addition to above, allowance of 30c. per diem for 3rd child and 20c. per diem for 4th child is payable to ratings only.
Officers' Allowances:-Allowances to Officers specialized in certain branches of the service and Command and Staff pay are authorized in addition to basic pay. Rates vary according to the rank of the Officer and degree of responsibility and qualifications.
Ratings' Allowances.-Non-substantive pay and miscellaneous allowances for special duty are authorized for certain ratings. Rates vary from 5c. per diem to 50c. per diem according to rating, qualification and experience.
Skilled tradesmen are entered in their own branch on rates of pay which exceed the Seaman's rate by from 10c. to SI.00 per diem.
[Stage Direction]
Progress of Sessional Business


[Stage Direction]
On the orders of the day:
Hon. R. B. HANSON (Leader of the Opposition):: I should like to ask the Prime
Minister (Mr. Mackenzie King) when he proposes to move the second reading of Bill No. 80, to amend the National Resources Mobilization Act.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: In reply to my hon. friend I would say that that depends upon the progress which the house makes with the legislation which is before it at the present time. I need not tell my hon. friend that the government is anxious to get on with the business of the session, and the bill to which he has referred is one of the most important of the session. It is our wish to proceed with it at an early day. But it will not be proceeded with until the present war appropriation bill has been completed. The house has already given some four or five weeks to that particular bill, and I should hope that it would be possible to conclude its consideration, along with one or two other small measures, this week. I should hope it would be possible to go on with the other bill some day next week.
I would direct the attention of hon. members to the fact that up to the present time there has been practically no supply considered by the house, and the budget has still to be brought down. There are one or two other important measures on the order paper, and of necessity there may be further legislation before the present session is over- not that I am aware of any at present, but usually something unforeseen crops up at the last moment. If we are to get through before autumn I think we should begin very soon to make more rapid headway than has been made up to the present time. I am not at all sure that it might not be advisable in connection with further proceedings of the house to divide the days between some of the different measures, rather than to sit continuously in discussion of one particular measure. Might I in that connection say further that in my opinion some of the matters being dealt with under the war appropriation bill would be more properly dealt with in supply of the departments concerned. I do not refer to the defence departments. I am told it is the desire to consider some matters with relation to the Department of Agriculture, and if that were to take the form
of a discussion in committee of supply we might have the whole discussion over again when we are in committee of supply. Perhaps time might be saved if the matters to which references are made in the discussion on the war appropriation bill were confined to that bill itself.


Richard Burpee Hanson: To a large extent I agree with what the Prime Minister has said; but may I point out to him that while we are in the seventy-second sitting day of the session, we took twenty-one sitting days in the debate on the address. In those twenty-one days we heard no less than ninety supporters of the government. Then we were asked to put through to a conclusion another measure brought forth by the government, namely the plebiscite bill. Over half of the time of the house has been occupied in the discussion of those two matters.
With respect to the war appropriation bill I would point out that this is the largest money bill which has come before parliament, and I do not think our time has been lost in discussing it. It is the one occasion on which private members have the opportunity, and I say the duty, to investigate what the armed forces and the defence departments are doing. I suggest that the government should have brought on the ordinary estimates before this. There has been opportunity. The whole matter is in the hands of the government. They have taken authority to give government orders precedence; the order of business of the day is as the government directs,. and the responsibility is on the leader of the house.


William Lyon Mackenzie King: Well, may I say to my hon. friend that I think he has to take a little of the responsibility.


Richard Burpee Hanson: I am willing to take mine.


William Lyon Mackenzie King: He mentioned
the time taken up on the plebiscite bill. There would not have been a day taken up on it if my hon. friend had not objected to it. It was fought so strenuously from the other side of the house that it was necessary to make clear the reasons why it should be supported, and my hon. friend came round in his point of view before the debate was over. I am not either complaining or explaining; I am simply stating what I think all hon. members recognize to be a fact, that we might get along a little more expeditiously than we have been doing.


Richard Burpee Hanson: I hope so.
The Ministry



THE MINISTRY


William Lyon Mackenzie King: Mr. Speaker, the Hon.
J. H. King, who is acting leader of the government in the Senate, was to-day sworn in as a minister without portfolio, it being thought that the acting leader of the government in the Senate should hold that position in the cabinet for the time during which he is acting as leader of the government in the Senate.



DEFENCE OF CANADA REGULATIONS


[Stage Direction]
On the orders of the day:
Grote Stirling: May I ask the Minister of Justice whether he has given consideration to the Chaloult speech and whether he has decided to take any action thereon?
Hon. L. S. ST. LAURENT (Minister of Justice): I have given consideration, and advisers of the department are giving consideration, to the Chaloult speech, and I hope to have information to impart to the house about their conclusions to-morrow.



AIR TRAINING CONFERENCE


[Stage Direction]
On the orders of the day:
Hon. H. A. BRUCE (Parkdale):: May I ask the Prime Minister if the Governor General, who is commander in chief of the forces in Canada, was asked to open the air conference last week?	,


William Lyon Mackenzie King: I am not aware that His Excellency the Governor General asked anything of the kind. If he had-


Herbert Alexander Bruce: I inquired if he had been asked.


William Lyon Mackenzie King: No, I am not aware that His Excellency was asked. Has my hon. friend any objection to raise?


Herbert Alexander Bruce: I am asking only because of the public interest which has been aroused in the question.


Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee of supply.
Motion agreed to and the house went into committee, Mr. Fournier (Hull) in the chair.



INTERIM SUPPLY BILL

Mr. ILSLEY moved:: Resolved,	that	a	sum	not	exceeding
$38,803,172.40, being one-sixth of the amount of each of the several items to be voted, as set forth in the estimates for the fiscal year ending 31st March, 1943, laid before the House of Commons at the present session of parliament, be granted to His Majesty, on account, for the fiscal year ending 31st March, 1943.
Resolved	that	a	sum	not	exceeding
$1,101,311.83, being one-sixth of the amount of each of the several following items to be voted, as set forth in the estimates for the fiscal year ending 31st March, 1943, laid before the House of Commons at the present session of parliament, in addition to the sum mentioned in resolution No. 1, be granted to His Majesty, on account, for the fiscal year ending 31st March, 1943, namely Nos. 31, 80, 116, 117, 128, 129 and 300.
He said: I am asking for two months' supply, that is one-sixth of the main estimates. It is necessary to have some interim supply voted because only one-sixth was voted before, and that runs out at the end of May. We are now nearly at the end of May, and some provision has to be made for payment of the public service and other obligations of the government in the next month or two. I am requesting therefore that two months' supply be voted, because it is very doubtful whether the estimates will be through before the end of July. Certainly they will not be through before the end of June.


Richard Burpee Hanson: Mr. Chairman, on account of considerations which were adverted to by the Prime Minister and myself a few moments ago, we find ourselves now in the seventy-second sitting day of the session without having voted any supply. The major part of the session up to the time of the introduction and discussion of the war appropriation resolutions was more or less of a political character. Parliament primarily in times of peace is called upon to vote supply, but for seventy-two days this parliament has been in session and no supply has been voted to his majesty. 1 suggest that all through these war sessions the government has not pursued the proper procedure, in putting off the voting of supply until the dying days of the session. In the interim they come to the House of Commons and ask for one-sixth now and one-sixth

Interim. Supply Bill
again. What does that mean? It means that until the end of July they need not ask the house to go into committee of supply. I do not think that that is a proper procedure for the government to pursue.
There are two fundamental objectives of parliament in the ordinary course of proceedings. One is to vote supply to his majesty and the other is to provide ways and means of securing money. Both those considerations have so far been ignored. I do not think the government is justified in asking for a second one-sixth of these appropriations, especially in view of the fact that while we vote the money on the peace-time estimates as well as on the war-time appropriation, parliament is given practically no accounting of how the money is being spent. If you do not believe that, examine the auditor general's report as it stands to-day. In other words, parliament is being asked to vote money en bloc twice in the earlier stages of this session and then to put through the final votes with a rush at the end of the session. That is not treating the members of the House of Commons properly. I protest against this kind of procedure, and I protest against a whole one-sixth being voted to-day.
I realize that the minister has intimated that we are near the end of the fourth month of the session, that the interim supply already granted will run out on the 31st day of May, and that if we do not pass some interim supply to-day, or between now and the 31st, some people, including members of parliament, may have to go without their salaries or indemnities. Well, it would not hurt hon. members if they had to go without the indemnity for a little while, if we could be brought to a realization of the true function and position of parliament. I protest against the granting of one-sixth; I am willing to grant one-twelfth, and that is as far as I am going. I am not going to start a filibuster against this measure, I shall not do anything of the sort. But I ask the minister to confine himself to one-twelfth, especially in view of the fact that he was very generously treated on a former occasion when he asked for one-sixth.
This is the seventy-second sitting day of the session. We spent twenty-one days on the debate on the address. The government could have brought in supply at any time. Then came the plebiscite bill. The Prime Minister says that that would have gone through immediately had I not taken the position I did. I wonder whether it is the thought of the Prime Minister that the opposition in this house should abdicate its functions. We have a responsibility to the
country just as much as the Prime Minister or the government. It is true that it is lesser in degree; nevertheless there is a distinct responsibility on the official opposition; and if we had let the plebiscite bill go through without discussion, unquestionably we would have been recreant to our duty.
After that came the billion dollar resolution and the bill based thereon. That was not held up. We supported that measure and helped to put it through. Then came the resolution on the war appropriation of two billion dollars. I do say at the risk of repeating myself that while that debate is long and is bound to be long, it affords the one occasion in this session when the people of Canada, on the anvil of discussion, can bring out the truth, so far as the government is willing to reveal it, in relation to the war effort of this country. Any time that is spent on the war appropriation bill is time well spent, and I believe I am in the judgment of the country when I make that statement. If the minister gets this one-sixth through tc-day he need not bring up the question of supply until the end of July when the heat of summer will be on us and everyone will be crazy to get home. It is not a right position for the government to take and I protest.


Mr. COLDWELL:: In the main, I support the contention of the leader of the opposition. I believe the time has come when the rules of the house ought to be revised. There was a time when, as the leader of the opposition has said, the main function of this house was the granting of supply and finding ways and means to give that supply to the government. But times have changed and to-day this house has the responsibility of supervising and inquiring into vast economic undertakings and of assuming responsibility in a larger way than ever before for social conditions and social legislation. The result is that parliament's function has to a very large extent been extended in the last twenty years or so, and consequently members come here not only to supervise the expenditure of money and to find ways and means of granting it to the crown, but also to advance social policies now of permanent interest to the community and to inquire into the vast economic undertakings which now belong properly to the government and will probably in future years be extended. I know that at Westminster the rules have been changed to some extent so that the government from time to time sets aside- certain periods when certain things are under discussion and are expected to be discussed within that limited time. They hawe a time table, as my hon. friend the member for Vancouver
Interim Supply Bill

East (Mr. Maclnnis) suggests to me. The same is true, I know, in New Zealand, in Australia and in other parliaments across the world. Our function as a parliament has greatly changed and extended and it seems to me that we are trying to operate under rules which no longer altogether meet the situation under which we are operating.
I agree with the leader of the opposition that it is wrong in principle for this house to grant supply for two months and then two months again, without going into the matter more carefully than we are able to do to-day. That does not imply any lack of confidence in the Minister of Finance (Mr. Ilsley) or the officials of his department, or the government generally, but I think it is unsafe and unsound that we grant vast sums of money to the government without adequate and proper inquiry and discussion. I also agree with the leader of the opposition that the war expenditures bill which is now before us, granting to the government the most stupendous sum that we have ever been called upon to vote, ought to be the subject of most careful inquiry in this house, even if it is a prolonged inquiry. I think, however, that if the opposition groups as well as the government would endeavour to departmentalize their own activities a little bit and assign to members of their groups criticism on behalf of the whole group we should probably facilitate the business of the house as opposition groups. We have tried to do that in our little group, and perhaps this has been noticed from time to time. I think that upon the opposition as well as upon the government some responsibility for facilitating the business of the house really rests. In the main, I repeat, I agree with the general criticism of the leader of the opposition.


Mr. POULIOT:: I cannot agree with the leader of the opposition but to-day I will express similar views. This is the old discussion. I am a supporter of the government and the Minister of Finance is a personal friend of mine, as he knows. If I rise to-day it is because of the promise that was made to me by the Prime Minister (Mr. Mackenzie King) last year, that the public accounts would be prepared more carefully this year than they were last year. Unfortunately, according to what the leader of the opposition said during the course of my remarks on March 17, no item below $35,000 now appears in the public accounts. This is a serious matter. Members should be given an opportunity to secure more detailed information from the auditor general. We have two sources of information with regard to public expenditure. In the first place we 
have the estimates, and secondly we have the public accounts. As to the estimates, I find that there is a great difference between ours and those in the United States. The other day I mentioned the budget which is yearly presented to congress by the President of the United States, and I said that it was a big book the size of the telephone directories of the city of New York, probably two of them, Bronx and Manhattan, bound together. Here I hold in my hand that very official document which was published in Washington, D.C., this year and which is entitled "The budget of the United States government for the fiscal year ending June 30, 1943". It is the budget of the United States at war. I observe with deep regret that British parliamentary traditions are better kept in the United States Congress than they are in the Canadian House of Commons. For instance here at page 764 start the estimates for the navy. They are rather detailed. They extend from page 764 to page 819. I have already said in this house that during the war there should be no secret about money expenditures. I protested with the hon. member for Danforth (Mr. Harris) when he complained that the war expenditures committee was sitting behind closed doors. Hitler can get no help from knowing what amount of money is spent in this country for war purposes. It will not improve his chances in any way; therefore I do not understand why such a committee is sitting behind closed doors. And I cannot understand why it is that in the United States they can have such detailed estimates for the navy, and we cannot have them here. However I was pleased to congratulate the Minister of National Defence for Naval Services on the way he handled his war estimates in committee of the whole.
But that is not all. There are also very detailed estimates for the war department in the very same United States budget for the next fiscal year. They extend from page 895 to page 964, with all details. The United States take war seriously, they do it very well, and of course the President of the United States is well enough qualified as a business man and as a shrewd diplomat not to put in his budget anything that would handicap the war effort of his country. Here we have it, and it is a big book.


Mr. ISNOR:: It is a big countiy.


Jean-François Pouliot: It is a big book for a big country and for a great war effort.
I heard the Prime Minister say-I do not know whether these are his exact words, but

Interim Supply Bill
they express the meaning of what he said- that some time has been wasted since the beginning of this session. It is my contention that the very reason why the discussion has continued so long with regard to the tremendous amounts spent for war is that we have no detailed estimates about war expenditures in this country. If we had them the discussion would have been much shorter; we would have proceeded in the same way as we did in years past, and after an item had been adopted no hon. member would have been allowed to discuss it again. If there are repetitions in the discussion of that war expenditure it is precisely because hon. members have no guidance in the matter; the discussion jumps from one subject to another in complete disorder and complete chaos.
I was greatly surprised when that course was followed. I regret to have to say that I foresaw that, and I warned the government about the danger of adopting this new practice. No member of the government can complain about any private member discussing fully before this committee any matter regarding expenditure. That right will not be denied. Since it is an unquestionable right, hon. members cannot be blamed for taking advantage of it and using it.
May I ask the government, in the first place, if the statement made by the leader of the opposition is correct that amounts below $35,000 do not now appear in the public accounts? If that is so, why has that course been followed? Secondly, why did the government not put in the estimates detailed information about the expenditures of the war departments? These questions seem reasonable. I should like also to know if it is because it would impede or decrease or handicap our war effort, and if so, how is it that the United States give precisely the information that we have been asking for? As everybody knows, they are doing very well in their war effort. I am ready to give the government a chance on this motion, but this is the last time.
There is another thing I want to tell the house. For many years past I have complained of the intelligentsia. I find that the men who are the arbiters or the high pundits of finance and who are graduates in economics, social science and so on are a curse to all the countries of the world. I say that as a war measure the teaching of economics and social science in universities should be stopped at once, and that all those who are doctors in economics or doctors in political and social science should be fired at once from government jobs. We see now the prodromes of a revolution that existed in Russia before the
communists took power in that country at the end of the last war. I love my country, and I want to see sound reasoning in matters of finance, as there is in law or any other science. Of course finance is a science, as law is a science, as geometry and mathematics are sciences; but political economy and the social sciences are not real sciences. Of course I may be told that political economy is part mathematics and part law, and that since mathematics and law are sciences, political economy or the social sciences are also sciences. This is most untrue, for the reason that what is called political economy, what is called social science and what is called political science are mostly just a conglomeration of divergent views which have been put together and which cause headaches to the students of such matters when they really have brains from which to suffer. What happens? The doctors of those half-baked sciences try experiments, not in a scientific way and on an infinitely small scale; but all their experiences are nation-wide, and when they are unsuccessful it is a nation-wide failure.


Mr. CRUICKSHANIC:: Does the hon. member for Temiseouata believe in Darwin's theory?


Jean-François Pouliot: I would not offend my hon. friend by telling him that he should not have risen to the occasion. Since the house is in a jovial mood, I remember what was said by a great educator of the city of Quebec, that one should always be able to smile even in his deepest affliction. It is very sad to discuss these matters, but even in war time-the more so during war time-we should come back to fundamentals. Everyone will agree to this. We must come back to fundamentals, and the fundamental of finance is common sense. More than that, it is the responsibility of the government to parliament, and of parliament to the nation. How can we satisfy the legitimate curiosity of our constituents about the expenditures that we vote if we are not in a position to give them all the information that may be asked by any one of them? Even if only one elector, one constituent in only one constituency in Canada, asks for full information about the expenditure of public money by this government, he should be entitled to get the information; and the money spent in gathering and printing it would not be spent in vain; for that citizen is only being true to the old British parliamentary tradition of governmental responsibility in regard to expenditures. I do not want to be cruel to anybody, but I warned the government before my hon. friend the Minister of Finance occupied his present high post. I warned them that a man who was

Interim Supply Bill

responsible for the bankruptcy or failure of a very large United States concern was not qualified to occupy a high post in the Department of Finance.


James Lorimer Ilsley: No one in the Department of Finance was responsible for the bankruptcy or failure of a large American concern.


Jean-François Pouliot: All right; then I ask the minister what his deputy did during the years which are left blank in the parliamentary guide?


James Lorimer Ilsley: What years were they?


Jean-François Pouliot: Several years. I do not want to be hard on anyone, but I want the minister to have advisers worthy of him. That is all I want; and when that is done I am ready to close my eyes. The years were from 1923 to 1930, when this gentleman was employed by Mr. Hoover in the United States, I do not know whether in connection with the tariff or other matters; it is not stated. But if my information is correct, he was first employed by and later became a director of the S. W. Straus corporation of New York, a very large concern, which among other subsidiaries controlled the Straus Investment corporation, with offices on Fifth avenue. He was treasurer and director of the investment corporation and a director of the parent company. I have asked for this information; the Minister of Finance must remember the time. He was then Minister of National Revenue; and when I brought the matter before either the committee or the house, one of his colleagues prevented me from mentioning these facts. Therefore I could not say anything; I have not said anything then. It is not a question of attacking someone who is not here. It is a question of being free in this country from that sort of intelligentsia which brought revolution in Russia some years ago. I do not want revolution in this country; I want order. And my suggestions regarding the estimates and regarding the public accounts were precisely intended to reestablish order in the finances of this country during the war. It is of the utmost importance that the discussion of public accounts should be orderly. It cannot be orderly unless we have complete figures in the estimates and in the public accounts, so that we may check all expenditures.
That being said, I shall not insist further. I think I have made myself clear enough on the matter. I have no grudge or grouch against anybody, and I have spoken in a very serene manner about matters of the greatest importance to the state as well as to the Canadian people. I shall support the

motion on the understanding that there will be no other motion of the kind and that the estimates and the public accounts are completed according to -the promise that was given to the committee by the Prime Minister last year. There can be no question as to cost, because the presses down at the printing bureau were busy for twenty-four hours a day for weeks, printing propaganda for the plebiscite, and it is my humble view that the printing of detailed information regarding public expenditure is much more important to the people of this country than any futile and frivolous propaganda of that kind.


Mr. CLAXTON:: Mr. Chairman, I have
only a word to add to the suggestions which have been made by the three previous speakers in connection with the organization of debate, and I speak with a great deal of humility as a younger member of this house. I believe most hon. members feel, with the three previous speakers, that some improvement could be made in that respect, and as a younger member I think that if we think an improvement could be made we should do something to bring it about. One or two connected matters I shall mention briefly.
A great deal is said about government by order in council. The house has been told that some 24,000 orders in council have been passed during the war. It is perfectly evident that if any considerable number of these orders in council had been brought before the house they would not have been passed and the work necessary to get on with the war would not have been done. It is obvious therefore that we must have orders in council to do things that must be done quickly. On the other hand this does not dispose of the objection that parliament's powers are gradually being removed from it in this way by legislation of a very substantial character. I suggest that if parliament is to remain anything it is time some new device was worked out by which orders in council having a generally legislative character could be periodically brought before parliament, or some committee of parliament, there to be reviewed.
We have an idea in this house-I had when I came-that our system of parliamentary procedure is modelled on the British system. I read the British Hansard as regularly as I can, and I find that it is practically impossible to reconcile the debates and the procedure in the British house with the debates and the procedure here. They are not similar in any respect. I do not suggest to Canadians that they should adopt every British thing as a model, but if you look at the procedure followed in Britain you will find that it has been brought up to date, much more up to date

Interim Supply Bill
to meet the needs of to-day and the needs of the war than ours is. I do not believe our procedure has been looked at dispassionately and constructively for the past fifteen years; consequently I suggest that for this reason, and a good many others which those who have had more experience in the practice of the house may bring forward, the time has come when a committee of this house should be set up to look into the rules of procedure, not so much from the technical point of view as to see how this parliament can better carry on the nation's business, particularly in connection with the war.


Mr. DIEFENBAKER:: I have listened with a great deal of interest to the hon. gentleman who has just spoken (Mr. Claxton), but I cannot follow his argument as to the necessity of orders in council in regard to non-war matters. I can understand the need of orders in council so far as war measures are concerned, but the expansion in that regard during the last two years has been justified because we are at war, and it has been used as an excuse by the government to remove from parliament the opportunity of looking into many matters which should have been dealt with by parliament and not through the medium of order in council.
When the Prime Minister is asked what statutes of this parliament have been abrogated, amended or suspended by order in council, he is unable to answer because there is no record of them. He says to this parliament that the government does not know what statutes passed by parliament have been amended by order in council.
I am glad to see the attitude that is being displayed in recent weeks by so many members in all parts of this house, an attitude for which we on this side have contended from the very beginning of this parliament; that we must once and for all demand our rights as members of this house. We have a duty to perform. Parliament is being emasculated under the guise of the exigencies of war.
The Minister of Finance makes application to the house for the extension of supply for another two months without giving the house what the leader of the Cooperative Commonwealth Federation party said was so necessary -an examination of the accounts, of the expenditures being made by the government. We as an opposition do not discharge our responsibility as members before the people of this country simply by saying to the government: We give you carte blanche; we will vote one-sixth of the estimates, and further, we will extend the time for examination of the expenditures until the month of July or the early part of August. When we 44561-1754
come to that period, Mr. Chairman, we shall have been sitting here almost five or six months. We shall be desirous of returning home, for a short time in any event, and in the latter days of the session tens of millions of dollars of expenditure which should be looked into will not be examined by parliament at all. Why cannot the estimates be brought down now?


James Lorimer Ilsley: They are down.


John George Diefenbaker: Oh, yes; the Minister of Finance says they are down, but what opportunity do we get to discuss them?


James Lorimer Ilsley: Give us a chance.


John George Diefenbaker: We do not get a chance. How do we deny the government the right to the chance that should be ours?


James Lorimer Ilsley: By discussing other matters.


John George Diefenbaker: 
James Lorimer Ilsley: If the hon. member would suggest some specific cuts in agricultural estimates I should be glad to see what can be done.


Richard Burpee Hanson: That is your duty.


James Lorimer Ilsley: I have discharged that duty.


John George Diefenbaker: We want the opportunity of assisting the Minister of Finance in the discharge of his duties. We want to look over these estimates one by one, make recommendations, and be able to say to the people of Canada that the only consideration in expenditures for civilian purposes will be need, not demand.
Then, turning to page 11 of the estimates-


James Lorimer Ilsley: And that has been for two or three years, since the outbreak of the war.


John George Diefenbaker: 
Richard Burpee Hanson: Mr. Chairman, I should like to congratulate my colleague the hon. member for Lake Centre (Mr. Diefenbaker) on the clarity and cogency of his remarks. An opportunity should have been taken long ago to call attention to the illusory nature of the claims of the government with respect to peace-time reductions.
When the estimates were brought down some weeks ago-and not since proceeded with-I made a more or less cursory examination to see if there was any justification for the claim which had been headlined to the country that there had been a reduction in peace-time expenditure. I think I can prove the thesis that that statement is not based on fact, according to the figures revealed by the estimates. It is a matter of surprise to me that with one or two possible exceptions the press did not get the true import of the figures, produced, I assume, by government propaganda, at the time the main estimates were tabled.
As was pointed out by the hon. member for Lake Centre, a summary of the main estimates for the fiscal year ending March 31, 1943, appearing at pages 2 and 3 of the estimates, indicates on its face a reduction of 856.215,457.05. As I have said, this reduction was blazoned in headlines all across the country, and it was suggested that the government was performing miracles in retrenchment. As a matter of fact a clear examination of the position reveals the exact opposite. But that was the impression which went out to

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the country, and hitherto it has not been contradicted or exposed as misleading or ill founded.
In actual fact the main estimates for the fiscal year 1942-43 show a considerable increase as compared with the main estimates for the fiscal year 1941-42. The means by which the apparent reduction has been achieved is to lump together, under the total for the fiscal year 1941-42, the main estimates, the supplementary estimates and the further supplementary estimates for that year. It will be recalled that we had three doses of them. The result is that the comparison is between the total estimates for the fiscal year 1941-42 and the main estimates for this fiscal year 1942-43.
Let me recall the position with regard to these supplementaries. The supplementary estimates and the further supplementary estimates for the fiscal year 1941-42 contained an item of S35,000,000, to which the hon. member for Lake Centre has referred, to provide for wheat acreage reduction payments; and an item of 845,000,000 to provide for compensation to the provinces which agreed to vacate the corporation and income tax fields for the duration of the war. These two together amount to $80,000,000. As the minister indicated yesterday, 822,000,000 of the latter amount has been paid out to the provinces, and I believe nearly all the 835,000,000 has been paid out to the western farmers in respect of wheat acreage reduction bonuses. But in this year's estimates for wheat acreage reduction payments the main estimates provide only $5,225,000, a difference of $29,775,000. I suggest that that is not a true picture, because the government has introduced special legislation to replace the wheat acreage reduction payments, and the final or net result will be in all probability in excess of the 835,000,000 provided for last year. In respect of the new wheat policy to take the place of the policy of last year, they have raised the price but they will not tell us what they are getting, they will not tell us what the loss is, they will not tell us what the gain, if any, is, with respect to their dealings in wheat-although we all know that there is no gain, but rather a huge loss every year. I am not particularly complaining about that at the moment. I am trying to expose the position with respect to the press notices sent out with regard to the estimates tabled here in January.
No item comparable to the $45,000,000 voted for the provinces appears in the main estimates for the fiscal year 1942-43, although it is indicated that provision will be made in the
supplementary estimates; and I refer you in that connection to page 11 of the estimates. Consequently in respect to this one item a reduction of $45,000,000 is apparently shown. But that is a most misleading situation, because it is to be paid, and paid doubly, as we know from the figures that were indicated yesterday-very much more than the $45,000,000 voted last year. I suggest to the minister that the correct comparison should be between the main estimates of the two years: the total main estimates for 1941-42, 8433,000,000 in round figures; the total main estimates for 1942-43, $454,000,000.
What does that mean? It means a substantial increase. To be exact, a comparison between the main estimates of the two fiscal years shows an increase in ordinary operations of government to the tune of 821,752,726.09- a huge increase, and one which I do not think is justified in war time. I put myself in the judgment of the country when I make that statement.
I do not believe hon. members have analysed this situation, and I am glad to have the opportunity now to give my views with regard to it and to expose a hollow piece of sham- if that is a parliamentary expression-on the part of the administration towards the people of Canada in respect to these civilian expenditures.
That may be one reason why they have not brought on a discussion of these estimates. The minister says, give us a chance. They have had four months' chance to bring on these estimates. One of the very first things this parliament did was to take away all the rights of private members. You cannot do anything in this parliament unless the government so direct. They call the tune and we are permitted no rights save and except the withholding of supply. Of all the rights that private members have had, all the rights that opposition members have had with relation to this government the only lever we now have on the government is to withhold supply. When we let that right go, we are finished. That is the only right under a set-up whereby we give government business precedence for the whole session. In ordinary peace time there is a supplementary right, the somewhat attenuated right to bring in private members' resolutions. But how many of them are accepted by governments? Not many. To-day there is not a single opportunity for any hon. member to air even a grievance except on a debate on a money bill. Then how far does he get with it?
I want to impress that position not only on the membership of this house but upon the
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people of Canada. It amounts to the abrogation of our functions. What good will it do to revise the rules if you do not revise the will to carry on public business? I was on the revision of the rules committee fifteen or sixteen years ago. The committee did good work. It might have gone much farther, but nobody wanted to be too revolutionary. The mere setting up of codes of operation is not going to cure the evil. The cure has to come from the administration, in listening to reason in connection with .these civilian estimates, and there is no evidence that the government is doing that.
The minister may take credit to himself for having pruned a lot of the estimates. I have no doubt he did so. I know something of how estimates are made up. They are prepared in the first instance by the departmental officials, and I have never known a departmental official in my life who did not want to increase his jurisdiction and his spending power. That is human nature. I am not blaming officials for that; it is the history of bureaucracy wherever you find it, even in a democracy. I have no doubt that the Minister of Finance prunes them and the treasury board prunes them again. That is always done. Nevertheless, unless there is the greatest firmness on the part of those who have the ultimate responsibility, the estimates will grow and grow and grow. In peace time it is almost inevitable, but it should not obtain for a minute in war time.
The primary responsibility is on the members of the administration who have to deal finally with the question of the quantum of the expenditures on the services. Do you mean to tell me that all the peace-time activities of the public works department are still required in Canada when we are practically at a standstill with regard to the operation of public works? Well, I shall have to be shown before I can believe that that is true.
I indicated a moment ago that the increase in ordinary operations of the government amounts to over $21,000,000, and I put the exact figures, as indicated by the two sets of estimates, upon the record. In addition, a further increase will be indicated and evident when the supplementary estimates are brought down-and make no mistake about it, there will be supplementary estimates; there always are-and probably further supplementary estimates will be brought down.
Whereas last year the amount of compensation to the provinces was $45,000,000, the Minister of Finance, in a press release as long ago as January, and again here yesterday on the floor of this chamber, indicated that we would have to pay about $S5,000,000 to the provinces, plus a guarantee with respect to

gasoline. Fortunately that guarantee did not represent much last year, but I venture to say that for the coming year it will represent a huge sum.


Mr. HOMUTH:: A tremendous sum.


Richard Burpee Hanson: It will be so tremendous that the people will be astonished. It may bring them to a sense of realization of how much money the country spends in gasoline in ordinary times, and perhaps we shall get the people of Canada back to the practice of one of the oldest virtues, and I should say the most unfashionable, the practice of thrift. If we can do that it will be a good thing, because we seem to have forgotten that there is such a virtue as thrift.
The total payments to the provinces for the fiscal year will be, we will say, $85,000,000 as opposed to $45,000,000 voted in the estimates last year. That means an increase in that item of $40,000,000, and that is civilian expenditure. It is important; it is necessary. I admit that, and because there is an increase, additional moneys must be raised.


Mr. CRERAR:: What item is that?


Richard Burpee Hanson: That is the vote to the provinces under the agreements; $45,000,000 last year as compared with $85,000,000 which will be voted in the supplementary estimates this year, plus the estimated deficit in respect of gasoline. That is civilian activity. True, it arises because of a war-time condition, but I hope the government will not pay that out of the war appropriation bill. We have not yet heard whether they will or not, and before this motion is adopted the minister should make that clear. I shall object if it is paid out of the war appropriation bill.
Then there is the legislation with respect to the wheat growers. That will involve a large expenditure either directly or indirectly on the part of the federal treasury as it did last year. Indeed, we may safely assume that in this respect there will be an increase. I do not know what the amounts will be. I do not suppose any reasonable forecast has been made.


Karl Kenneth Homuth: The government does not know.


Richard Burpee Hanson: Probably the government does not know. When it put up the price to 90 cents I doubt if it did know.


Mr. POTTIER:: The opposition wants more.


Richard Burpee Hanson: That is all right; the farmers are entitled to more. Does the hon. member for Shelburne-Yarmouth-Clare (Mr. Pottier) say that they are not?

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Vincent-Joseph Pottier: Why does the hon. member criticize it?


Richard Burpee Hanson: Because I am trying to expose the hollowness of the government's contention that there has been a reduction in the civilian activities of this ' administration, and I am right. I say therefore the comparisons that are made in the main estimates, the government blue book itself to which I have referred, are wholly misleading and present to the people of Canada an entirely false impression of the existing situation. I am surprised at the members of the press, who are usually very alert. I am surprised that the gentlemen of the press gallery have not analysed the situation before this and given the people the real facts. The only journal in Canada I can find which has become seized of the situation is the Globe and Mail, and I will take the liberty of putting on the record of this house an editorial of the Globe and Mail of February 23 last under the caption "Few signs of economy". I read:
The federal government tabled on Friday the estimates of the ordinary non-war civilian expenditures for the fiscal year 1942-43 and they will make rather depressing reading for the Canadian public. For the fiscal year 1941-42 the original civilian estimates were $433,131,000 but they were swollen by later supplementary estimates to a total of $509,566,000. Mr. Ilsley now places the civilian requirements for the coming fiscal year at $454,884,000 and there accordingly appears temporarily on the surface a reduction of some $55,000,000, but the decrease is patently illusory. For the 1941-42 estimates included an item of $45,000,000 designed to compensate the provinces for the revenues which they would lose by withdrawing from the field of income taxation upon individuals and corporations. But this sum was not paid over-
I understand that half of it has been paid, but I do not think it was made clear whether it was paid in this fiscal year or in the past fiscal year. The minister should tell us.
But this sum was not paid over, and so the total civilian expenditures in 1941-42 were cut to about $464,500,000. Now if agreements are consummated with all the provinces about the transfer of taxation rights, this compensatory item of $45,000,000, which was not included in the estimates tabled on Friday, will have to be added later; and even if there were no other supplementary estimates, which is unlikely'-
Quite unlikely, I suggest.
-our civilian expenditures for 1942-43 would thus be raised to roughly $500,000,000-[DOT]
Yes, and a good deal more than $500,000,000, depending entirely on what the deficit is in the guaranteed tax.
-which would mean that they will eventually be at least $35,000,000 greater than the total sum required for 1941-42.
I will not read the rest of it, which is along the same line. I ask the minister this question, and it is the appropriate occasion on which to ask it; Why is it that the government has not grappled with this problem of civilian expenditures and endeavoured to lead the country? I heard my hon. friend over the radio suggest that the people of Canada should tighten their belts. What evidence is there that the government is tightening its belt?


Karl Kenneth Homuth: They haven't got a belt.


Mr. MARTIN:: Braces are more secure.


Richard Burpee Hanson: I find them so myself. The people of Canada are asked, in this figure of speech, to tighten their belts; but I repeat, what evidence is there that the government of Canada is tightening its belt? Go through the purlieus of this house and look at the number of men on the House of Commons payroll. Has there been any cut in the personnel of this house? I ask the minister. There has not been any.
Mr. ILSLEY; Now you are getting somewhere.


Richard Burpee Hanson: I am dealing with a situation which comes right under my own nose. There are as many men on the payroll of this house as there ever were. Go to the senate and you will find there men who are actually doing nothing because the government will not give the senate anything to do. They serve a useful purpose and they have to be there. What are these men in the senate doing during the long recesses? They are not doing anything. The government should use the senate. Those fifteen vacancies should be filled with some of the best brains in the country, who could assist the government to carry on the war effort. There are men in the ranks of the Liberal party, and if there are not, there are men in the ranks of the Conservative party, who could help the war effort of the country, and could do wonderful work in the senate of Canada. But because of past considerations, past commitments which ought never to have been made, this cannot be accomplished. Let me impress upon gentlemen who claim to represent minorities the fact that the senate, which was set up by the wisdom of the founding fathers to be the bulwark of minorities in this country, is being allowed, by the action of the administration, to lapse into desuetude and decay.
One other matter. I was interested when the hon. member for Temiscouata (Mr. Pouliot) brought to his place in the house and exhibited to us the detailed budget of the United States in connection not only
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with peace-time activities but also with wartime expenditures on the navy and other armed services. What have we that is comparable to that? We get nothing but a few lump sums, without any statement that the amounts indicated be adhered to; they are simply a guide or chart. We have heard about charts before at the hands of my right hon. friend. A chart is something to be disregarded if it is the will of the administration so to do. This House of Commons ought to insist that when the next war appropriation bill comes down, be it $3,000,000,000 or what not, the government, with all the staff they have available, shall produce to the people of Canada and the membership of this house reasonable details of their expenditures, what their proposals are with regard to military expenditures. I serve notice on the administration now that if I am here I shall demand that that be done, and I ought to receive the support of every private member of this house, irrespective of where he sits. Do you know, any one of you, where your money is going? Do you know, any one of you, how much of your money is being wasted through irresponsible officials or appointees of a government who have no responsibility to parliament? You do not, do you? Not one of you. Do you know how much money an aeroplane costs? You have not an idea in the world how much money you are putting into aeroplanes. All these things are done with the taxpayers' money, voted by this parliament more or less willingly I think perhaps for the most part, and as far as I am concerned most willingly. All the money the government want with which to wage this war successfully will be given by the noble Canadian people, who have always been ahead of this government. They will give it to them with the best of grace. But how much are we told as to what is being done with our money and how much of it is wasted?
Let me give an illustration. Early in the war representations were made to this government that they should build an airport at Pennfield, engineers were sent down. I myself thought it might be a proper place to build an airport. When the engineers came back I understood their report was adverse. I took occasion to send for the director and for the engineer who made the inspection, and they gave rather convincing reasons that owing to atmospheric conditions it was not a proper thing to build an airport at Pennfield. I did not agree with them; I do not agree with them yet. But the project was first proceeded with and then abandoned, and the reason given was its proximity to the bay of Fundy. Last Sunday night on my way here, at the railway junction at MacAdam across the track

from me stood a special train, the cost of which would be thousands of dollars, to move to Rivers, Manitoba, the officers and staff that had been at Pennfield. They do not know why they are going, but I believe there has been some condemnation of the establishment of an airport at Pennfield because of certain climatic conditions. This should be explained to us by the Minister of National Defence for Air.
Now, what happened? Notwithstanding the adverse reports that I learned of through the medium I have mentioned, someone some time decided that an airport should be established at Pennfield. A contractor was brought here from New Brunswick, a good contractor with ample plant. He went home with me on the train one day and he had a smile like the smile on the face of a tiger-after he got a contract at his own price. Millions have been spent on that airport, and now it is to be abandoned.


An hon. MEMBER:: How many millions?


Richard Burpee Hanson: I do not know. I want to know. I am told it is now to be abandoned; that remains to be seen. At all events the school that was there has been moved out lock, stock and barrel. I saw them going myself. That is the type of thing that the people of Canada do not understand and that they want explained. And they want the truth. I venture to say that twenty-five cents out of every dollar-it certainly was true in the early stages of the war -paid for war expenditures was absolutely wasted. Not a dollar's worth of labour or return was given for a dollar of expenditure. Speed was the only thing. And why was speed necessary? Because this government in the first nine months of the war did absolutely nothing to meet the situation. They were going to have a moderate war. A moderate war I Ask any hon. member from the province of Quebec if they were not promised that Canada's contribution would be a moderate contribution.


Paul Joseph James Martin: Promised by whom?


Richard Burpee Hanson: By the Liberal party at the last election. I can turn up in my files dozens of clippings and reported speeches.


Karl Kenneth Homuth: What did the hon. member for Essex tell them in Windsor?


Richard Burpee Hanson: I will say to the minister that this debate will have served a useful purpose if it calls the attention of the country to the present situation, and if he will heed the voice of public opinion. It is not right that he should ask for two months'

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interim supply and then in the closing days of the session, in July next, when hon. members who have been here for nearly seven months are anxious to get away, seek to pass these estimates. That is not the way parliamentary business should be done.
I commend these considerations to the Minister of Finance. I hope he will take them in good part. I hope there will be some improvement, and I hope that press notices will not be given out, as they were in January last, that in my view are wholly false.


James Lorimer Ilsley: My colleague the Minister of Mines and Resources is I believe about to make a few remarks, but before he does so I want at once to take exception to the suggestion that there was any sham or any falsity about any press statement issued by myself as Minister of Finance. I remember the press release very well. Pains were taken to make it in no way misleading. There was nothing misleading about it, nor was there anything misleading about the summary of expenditures for the last fiscal year or this fiscal year. The hon. gentleman has not suggested any manner in which the presentation could have been improved. The facts were presented exactly as they were, and any interpretation that has been put upon those figures has been put upon them by the hon. gentleman himself. I shall have something more to say about that later.


Richard Burpee Hanson: Of course the minister has not said my interpretation was wrong.


Thomas Alexander Crerar: We have listened to a very interesting speech from the leader of the opposition. I only wish he had put as much profitable advice into it as he did sound and fury.


Karl Kenneth Homuth: You would not understand
that.


Thomas Alexander Crerar: The hon. member for Waterloo North-


Karl Kenneth Homuth: Waterloo South.


Thomas Alexander Crerar: Then I congratulate the electors of Waterloo North.


Karl Kenneth Homuth: They are not so proud either.


Thomas Alexander Crerar: My hon. friend has taken a great deal of exception to this interim supply vote. He says, "Why didn't you have your estimates before the house?" They have been before the house.


Richard Burpee Hanson: They
never have been before the house, except pro forma.


Thomas Alexander Crerar: Just a moment. The estimates were tabled immediately after the debate on the address was concluded. My hon. friend knows what the situation has been; it has not been possible to get these estimates by departments before the house except on a few occasions. I should like to give the committee a brief summary of the matters which have been discussed since this session opened at the end of January. I agree with the leader of the opposition that the debate on the address dragged on for a great length of time, and that a large number of the speakers who took part in that debate were from the government side. I would not wish to deny him any satisfaction he may get from that fact. But there were other matters. He has referred to the plebiscite debate, which came on after the debate on the address was disposed of. The plebiscite debate did not take nearly as long as the hon. leader of the opposition would suggest.


Karl Kenneth Homuth: But it was unnecessary.


Thomas Alexander Crerar: There were other measures. For instance, there was a very important measure having to do with the reestablishment in civilian life of those who enlisted in the army.


Richard Burpee Hanson: That was just a bagatelle and did not take any time.


Thomas Alexander Crerar: I sat here patiently and listened without interrupting my hon. friend I should be glad if he would accord me the same courtesy.


Richard Burpee Hanson: Quite
right; I apologize to the minister.


Thomas Alexander Crerar: That debate lasted several days, but it was a very important measure and surely there can be no criticism of the fact that the debate lasted so long. Then there was the wheat legislation, which also took considerable time in this house. I was much intrigued, if I may use that word, by the remarks of the hon. member for Lake Centre (Mr. Diefenbaker), who criticized the government severely, in his impassioned manner, because of its lack of economy. "Why are you not saving money," he said. "Look at your expenditures; look at the taxation the country is paying." But what was the attitude of the hon. member for Lake Centre when the wheat legislation was before the house? If he will look up Hansard and read his remarks at that time he will see that his whole criticism of the government was that we were not spending nearly enough money
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for the relief of the wheat farmers. And he had a very good seconder in his colleague, the hon. member for Qu'Appelle (Mr. Perley)


Karl Kenneth Homuth: They wanted to take it from the elevators and give it to the farmers.


Thomas Alexander Crerar: Perhaps it would be a good idea if the hon. member for Waterloo South would hide in an elevator for a while.


Karl Kenneth Homuth: Well, you have done
pretty well out of it.


Thomas Alexander Crerar: That was the position taken by the hon. member for Lake Centre. What did he advocate? Parity prices for wheat. And the hon. member for Qu'Appelle: parity prices for wheat.


Mr. PERLEY:: And no bonuses or waste.


Thomas Alexander Crerar: Well, it is generally understood that parity prices for wheat would have required probably another $100,000,000 or $120,000,000 on a normal crop.


Karl Kenneth Homuth: Is that a government
admission?


The ACTING CHAIRMAN (Mr. Fournier, Hull):: Order.


Thomas Alexander Crerar: I would ask the hon. member for Waterloo South for once please to restrain himself for a bit.


Karl Kenneth Homuth: I just want to know if that is a government admission, that to give parity prices to the wheat farmers would cost $100,000,000. I think we should have an answer.


Thomas Alexander Crerar: I am not taking back what I stated a moment ago, that this was the criticism of the hon. member for Qu'Appelle and the hon. member for Lake Centre. First we were not doing enough; we should be spending more money. We should have parity prices for the farmers. They did not offer any calculation as to what that would cost, but on the basis of the representations made it would cost well over $100,000,000. And when these two hon. members were making impassioned pleas for the expenditure of more public money in wheat payments to western Canada, the leader of the opposition was applauding them most heartily.


John George Diefenbaker: Would the hon. gentleman allow a question?


Thomas Alexander Crerar: I did not interrupt my hon. friend.


John George Diefenbaker: I should just like to ask the hon. gentleman if he thinks the farmers should not receive the same consideration as all other producers of war-time necessities.


Thomas Alexander Crerar: Now my hon. friend is shifting his ground a bit. I am not criticizing the payments which were made to the wheat fanners, but I am saying that these great apostles of economy advocated in this house a programme which would have meant the expenditure of additional scores of millions of dollars. In that, may I repeat, the hon. member for Lake Centre was ably seconded by the hon. member for Qu'Appelle, and both hon. members were applauded by the leader of the opposition, who chastises us this afternoon for our lack of economy. Where is the consistency in that?


Karl Kenneth Homuth: And some of the farmers from the west.


Thomas Alexander Crerar: I am getting a little tired of these interruptions. The hon. leader of the opposition and the hon. member for Lake Centre have criticized the volume of the estimates for this year. I find myself concerned about that also. I do not think there is any business coming before parliament more important than the matter of providing money for the public service, and finding the means of raising that money. It touches the whole question of taxation-how taxes shall be levied, how the money shall be secured, and how it shall be spent. I agree with the leader of the opposition and the hon. member for Lake Centre that there is no more important duty resting upon parliament than that responsibility. If we go back to earlier days we find that our parliaments had their origin in controversies over that very question, which is, and I think always will be, as long as we have a proper appreciation of our responsibilities as members of parliament, one of the most important matters with which we have to deal. But it is not very often, when you come to consider the expenditure of money, that you hear the voice of economy raised in this house, and I am sometimes alarmed at the extent to which our expenditures have grown. There are, however, many items which are in the nature of fixed expenditures. The leader of the opposition referred to the fact that in these estimates we were voting something over $450,000,000 for the current year. Of that total, in the Department of Finance alone over $226,000,000 is statutory. I do not think my hon. friends or any other hon. member of the house would suggest that we should repudiate or cut down the interest on our debt. I do not hear anyone suggest either here or anywhere else that we should cut down old age pensions.


Mr. COLD WELL:: Increase them.

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Thomas Alexander Crerar: On the contrary the argument is that they should be increased. Take another very important item, the amount expended by the Department of Pensions and National Health. The vote there is for almost S55,000,000. Is there any suggestion that practically all this money is not well spent? Most of it goes in pensions to men who returned from the last war and in looking after men who came back broken in body. Is there any suggestion that these pensions should be cut down? I do not hear it, and I do not think you will find it in the house or anywhere else. In these two items alone we have a total of $280,000,000 out of the expenditures of $454,000,000, leaving approximately $175,000,000 for all the other purposes of government, entirely apart from the war appropriation. It may be that in the expenditure of that $175,000,000 some economies could be introduced.
The leader of the opposition referred to the staff of the House of Commons and the staff of the Senate. Possibly you could reduce those staffs, but even if you cut those staffs in two, the saving effected in comparison with the whole expenditure would be negligible. When I say that I am not quarrelling at all with the principle which the leader of the opposition enunciated.
As to whether we should have one month's supply or two, my colleague the Minister of Finance will deal with that. I do not think the government can be fairly criticized because it has not had the estimates before the house up to the present time. It is true that we have had one very large estimate before the house in the appropriation bill which embraces a total expenditure of over $2,000,000,000. Certainly that has been fully discussed. We have spent from twenty-six to twenty-seven sitting days in discussing the war appropriation measure. And so, Mr. Chairman, I come to this conclusion, that while the speeches made by the leader of the opposition and the member for Lake Centre created an interesting diversion in the committee, I do not think they contributed very much to the business of the house.


Karl Kenneth Homuth: They certainly put the government on its toes.


Thomas Alexander Crerar: If my hon. friend thinks that, he is entitled to get all the satisfaction he can out of it. We have the budget coming along, we have the amendment to the National Resources Mobilization Act, and the strong probability is that the house will not be through by the end of June-


Mr. HARRIS (Danforth):: July.


Thomas Alexander Crerar: If the house granted only one month's supply, it would mean that the Minister of Finance would have to come back at the end of June for another month's supply, but if we are granted two months' supply now we think we are reasonably sure of getting through. So that while the Minister of Finance may accept supply for one month or two months, I do think the house would be well advised to grant two months' supply.


James Lorimer Ilsley: I am very glad that the leader of the opposition and the hon. member for Lake Centre made the speeches they did this afternoon. I want to congratulate them upon discharging their duty, although I cannot congratulate them upon the manner in which they did it or upon the time they selected for doing it. Sound and valid criticism of expenditure is a wholesome practice in this house, and I am sorry there is not more of it rather than less. From the Social Credit party we get nothing but advice to make greater and greater expenditures on the ground that money is easily obtained by government issue. From the Cooperative Commonwealth Federation party we get practically nothing in the way of a suggestion for economy of any kind.


Major James William Coldwell: I take exception to that. We have suggested great economies in the cutting out of profit in connection with the war effort, where the greatest economy of all could be made. We want more in the way of social legislation, I grant.


James Lorimer Ilsley: Larger expenditures by the government, but higher taxes.


Major James William Coldwell: No.


James Lorimer Ilsley: Higher taxes on the rich.


Major James William Coldwell: On the rich, yes.


James Lorimer Ilsley: That is a fair summary of the position of the Cooperative Commonwealth Federation party. I am glad that the Conservative party has at last started, even in this imperfect way, to discharge its historic responsibility, which is to criticize the expenditures of the government. It is true that this debate this afternoon is an old-fashioned one, if I may put it that way. It is the kind of debate to which I have listened many times in this house during the past fifteen or sixteen years.


Ernest Edward Perley: And in which the minister has himself taken part.


James Lorimer Ilsley: I have taken part in some of it myself. The practice usually pursued by the opposition is about as follows. In the first place there is a devastating onslaught on
Interim Supply Bill

the government, on general principles, for its total expenditures, just as was done this afternoon. When further dissent is invited to particulars, they show great adroitness in escaping any such temptation.


Richard Burpee Hanson: Speak for yourself.


James Lorimer Ilsley: This afternoon, for example, I was able to get only one concrete suggestion, and that was that we cut down in some way the number of messengers and others who are on the staff of the House of Commons. I said to myself when he had reached that point: now at last we are getting somewhere. I am grateful for the suggestion and I hope that members of the House of Commons will come forward with concrete suggestions of that kind.


Mr. GRAYDON:: Will the minister accept them when they come?


James Lorimer Ilsley: I will accept as many of them as are practicable, I can assure you, Mr. Chairman. I sincerely wish that members of the house on this side and in all the opposition parties would show a little more concern than they do about public expenditure.


Richard Burpee Hanson: Would the minister allow me one question?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: Does he think it is part of the function of an opposition in urging retrenchment to single out individual items when we have not the known facts in front of us. I do not think that is our function.


James Lorimer Ilsley: Certainly it is. It is the function of the opposition, and it is what a courageous opposition would do. The easiest thing in the world is to do what certain newspapers have done and what the Conservative opposition has done this afternoon-just to take a lump sum and say: There is really no reduction in that lump sum, and there should have been.
I will tell the committee of an incident that took place a year ago when the estimates were in preparation. One of the great newspapers of this country which is strongly and sincerely in favour of governmental economy was criticizing the government, and fairly, from its point of view, for not having further reduced the main expenditures. I think the main estimates as then introduced were $432,000,000, and it was said that we should be able to reduce that total to at least below $400,000,000. About that time a great interest in this country which was generally supposed to be fairly close to the newspaper in ques-

tion was making representations to the government and to treasury board, and curiously enough, just at the very time these editorials were coming out urging economy-it was before the estimates were tabled-the treasury board had before it no less than five submissions from the interest in question for specific increased expenditures.


Gordon Graydon: May we know what that interest was?


James Lorimer Ilsley: No. I must say that they made a very good case for several of these expenditures, and increases were allowed in two or three cases. But the incident showed me that the easiest thing in the world to do is to say to a government: cut down your total amount of expenditure, and if you are not doing it you are showing a callous disregard for the principles which should be followed in time of war. But the hardest thing in the world to do is to select the specific items for reduction.
I want to thank the hon. member for Lake Centre for one remark he made this afternoon. He said that the country was willing to stand any weight of taxation at all. I am going to remind him of that later, and I am going to remind the members of the opposition of that statement later, assuming that he is reflecting the sentiment of the leaders of the opposition. My experience in this house has been this-


Richard Burpee Hanson: Was there not an "if" attached to it?


James Lorimer Ilsley: There was no "if". I can almost pick out the members now who, when we get into our estimates, are going to rise and condemn the government for the smallness of certain items in the estimates. I could remind hon. gentlemen of what they have done in this regard during the past three years. I could start with the hon. member for Peel (Mr. Graydon) and tell him what he wanted an increase in, and I could go back to the hon. member for Vancouver South (Mr. Green) who is a particularly serious offender in that regard. He is always advocating higher expenditures. I could go on to an hon. member from Toronto, who is particularly hard on increases in taxation, and so on. I could go over hon. members of the opposition and-


Mr. JACKMAN:: Would the minister permit a suggestion? I do not take exception to what he has said; I do not know whether it is quite in accordance with the fact or not, but I would tell him this: If he wishes a concrete suggestion to decrease the civil expenditures of this government, and wants to know how I think it can be done, he Can do exactly the

Interim Supply Bill
same as all citizens in Canada are having to do to-day; that is, the heavy taxpaying class who have not the income they formerly had, by reason of the fact that they have had to contribute so much more in taxation. If they are going to pay their taxes, as they must, then they must go over every item, and reduce, whether they think it is possible or not. If the minister will say that the civil expenditures of this government will not be $500,000,000 this year because the money is not there, but that they will be $450,000,000 or $400,000,000, he will find a method of doing it, the same as every other citizen in this country is finding a way.


James Lorimer Ilsley: Just as I expected; I did not get a concrete suggestion.


Richard Burpee Hanson: Perhaps the minister will let me give him one, then. In Votes and Proceedings, No. 69, brought down on May 21, there are certain questions with regard to the position of Mr. Adjutor Savard, with the Royal Canadian Air Force overseas. The minister's answer is that he was director of overseas press relations, Department of National Defence, whatever that means, and he was paid $5,800 per annum plus $10 per diem living allowance. I would suggest that there is a case where the minister could do something.


James Lorimer Ilsley: The leader of the opposition thinks that is a good suggestion? That was paid out of the war appropriation.


Richard Burpee Hanson: It does not matter where it came from. It came from the people of Canada.


James Lorimer Ilsley: I know that.


Richard Burpee Hanson: And it was wholly unjustified.


James Lorimer Ilsley: It may be that there are salaries which are too high in the service.


Richard Burpee Hanson: The whole position was unjustified.


James Lorimer Ilsley: I will deal with the question
of salaries at the proper time; but I wish to say that the government has been fighting salaries, not only in the government but throughout the country, harder than anybody else has been. We have been criticized by business interests, by parliament, and by persons in the service and out of the service because of the rigidity and the severity-what is sometimes called the cruelty and the unreasonableness of trying to keep the salary ceiling on.


Mr. FRASER (Peterboorugh West):: That is in private business.


James Lorimer Ilsley: Just a moment; if I am going to make a speech, then I cannot let everybody rush in when they have a stray thought.


Gordon Knapman Fraser: Mine was not a stray thought. With respect to salaries, let us consider these dollar-a-year men. In a number of cases they are marked as not having any salary, but as receiving a living allowance of $20 or $25 a day. Would the minister tell me if those are taxable for income?


James Lorimer Ilsley: Absolutely.


Gordon Knapman Fraser: Are
they?


James Lorimer Ilsley: Yes; they certainly are; there is no doubt about it.


Gordon Knapman Fraser: In all circumstances?


James Lorimer Ilsley: Yes.


An hon. MEMBER:: Only a portion of
them.


James Lorimer Ilsley: Oh, do not get on to the question of taxation of living allowances. No rule of the treasury board has been more resented than that one. It has been regarded as absolutely unfair and unjust. But it has been stuck to, on the ground that living allowances are in the nature of salaries. That is, actual expenses accounted for are not taxable. But if a person is paid a flat sum of so much a day, it is the same as if he were paid so much a year or so much a month, whether he calls it a living allowance, or whatever he calls it.


Gordon Knapman Fraser: The government treats all living allowances on that basis?


James Lorimer Ilsley: I shall have to disregard
what the hon. member has said. I was going to complete my discussion with respect to what has been said by the opposition. I am not saying this with respect to any particular opposition. All oppositions are this way; I have seen it go on and heard it go on for many years. The programme, as I say, is to make a general attack on the expenditures of the government, in toto, and to run away completely from specific expenditures. On the contrary they attack the government, and then demand large expenditures.


Joseph Henry Harris: Mind your own business.


James Lorimer Ilsley: Oh, the hon. member is losing his temper.


Joseph Henry Harris: No. We will look after our business, and you mind your own.
Interim, Supply Bill

Mr, ILSLEY:	Mr. Chairman, the hon.
member is losing his temper. That is the first time in the house I have ever seen that come over the hon. member for Danforth.
The opposition this afternoon was discharging its duty, and I am discharging my duty now. I am putting this thing in its proper light. I am putting the whole position in its proper light. It must be remembered that this afternoon the government was accused of issuing false statements, and there was mention of issuing a statement which was wholly misleading. The government was accused of extravagance, and of asking people to do things which it was not prepared to do itself. This was done in a pretty highly efficient manner, I think, by the leader of the opposition and the hon. member for Lake Centre. I am putting the position exactly as I see it. The opposition makes its general attaok, and then it runs away from a specific item or a specific suggestion. It attacks us for not spending more on this service or on that service. There will be a lot of items like that in these estimates.
Let us consider the imposition of taxation, that the hon. member for Lake Centre was so very brave about this afternoon. We shall have opposition from every member in the opposition with regard to some item or another, if we undertake to increase taxation. We had it last year; we had it the year before, and we shall have it this year. Just wait and see.
This discussion all started on a matter of interim supply. This is wholly within the control of the opposition, not of the government. If the opposition says that we can have no interim supply I will announce, to-morrow morning, that there will be no interim supply. If the opposition says that we can have one month's interim supply, then we shall have to take one month's interim supply. That month will soon be over, and in the latter part of the month of June we shall have another one of these pleasurable occasions. The hon. member for Temiscouata said this afternoon that this is the last time for him, and that he is not going to agree to the passing of interim supply again-until he has gone into the way in which we are passing our accounts. Then we can expect a midsummer debate, I presume, which will last some days on the question of whether the government is to be given another sixth or twelfth at the end of June.
In my judgment parliament is more and more on trial, at the bar of public opinion. There is something wrong with this House of Commons. I am not reflecting on the 
house, and I do not know what is the cause. But there is something wrong with it. I have asked myself, "Is this the fault of the government, in any way?" Someone rises in his place this afternoon and says that the government has not brought along its main estimates, and asks why the government has ignored parliament. They ask, "Why did they hold their main estimates up?" We placed our main estimates on the table of the house on January 21. We worked day and night to get our main estimates ready in order to put them before parliament, so that parliament would have something before it-if it could get to those estimates. Since that time we have not taken any time off. We have gone on and on; we have sat on holidays-at least, we sat yesterday, at any rate. We have carried out our business-and we have always had an accumulation of business pressing for the attention of parliament. I do not know of any way in the world to get everything before parliament, unless hon. members curtail their discussions or unless we sit all night, or something of that kind.
A lot has been said this afternoon about changing the rules. I believe it was the hon. member for Rosetown-Biggar (Mr. Coldwell), who said that the rules were obsolete and that we should change them. However, he made no suggestion as to the manner in which they should be changed, and his suggestion that the rules be changed did not meet with the approval of the leader of the opposition. The hon. member for St. Lawrence-St. George (Mr. Claxton) said that we should bring our rules up to date. I do not know what he had in mind, but I want to say this-


Major James William Coldwell: May I say to the
Minister of Finance that I did not think this was the proper place to make suggestions. I have suggestions which I could make.


James Lorimer Ilsley: Whatever rules we adopt, we are not going to be able to consider more subjects in this house and get through faster unless there is less discussion on each subject in the house itself. Is it the government's fault that so much discussion goes on, that it takes so many days to get through a particular item? I tried just before the Easter recess to crowd the house a little. I will not do it again. If the government starts to crowd the house, the house crowds the government. That always happens. The moment we indicate to the house that we want to get ahead, we simply precipitate speeches about the right of the House of Commons to discuss matters and to discuss them thoroughly.

Interim Supply Bill
What has been the criticism this afternoon? Not that we have put too much before the House of Commons, but that we legislate by order in council, that we have used this power we have of doing almost everything by order in council to "emasculate the House of Commons", if I may employ the language of the hon. member for Lake Centre. If we were to bring along all the important measures which we transact by order in council there would not be, at the rate we are going, enough months in the year in which to get them through. We bring everything we possibly can to the house. We could have enacted our war risk insurance measure by order in council. We specifically had that power in the War Appropriation Act. It is contained not only in that act; in every war appropriation act since 1914 or 1915 there has been the specific power to bring into force a measure for war risk insurance. But out of respect for the House of Commons, and because the subject matter of war risk insurance is peculiarly a field which the house should occupy, I put the measure before them. Time after time we are confronted with these alternatives: Shall we bring this matter before the House of Commons, or shall we deal with it by order in council; and whenever we can, we bring it before the house. The result is that we have to wait from January 21 to some time in June to get our first estimates before the House of Commons. There is no way that we can avoid this unless we neglect something else. The House of Commons at the present time is discussing, as the leader of the opposition said, the biggest money bill which has ever Deen brought before it. We cannot bring peace-time estimates before the house at the same time as it is discussing the others. I have heard that in one legislature in the world two speeches go on at the same time for the purpose of effecting dispatch of business, but I do not suppose that this is the amendment of the rules which the hon. member for Rosetown-Biggar has in mind.
So here we are. In what way is the government wrong? What could the government have done?


Richard Burpee Hanson: The minister said that just before the Easter vacation he undertook to crowd the House of Commons. I should like to ask him if he did not get pretty good cooperation from hon. gentlemen on this side of the house.


James Lorimer Ilsley: I got very good cooperation before Easter, but I felt that I would have been further ahead if I had not tried to push quite as hard as I lid. We are strongly
indisposed to tell the house to stop its talk and get ahead, because we do not think we have quite the right to say that. I am simply remarking that I do not know what the government could have done to get these estimates before the house.


Richard Burpee Hanson: I will tell the minister one thing they could have done. They need not have had the plebiscite, or the long adjournment at Easter.


James Lorimer Ilsley: The hon. gentleman is
opening up a very important question of policy, as to which opinions differ, but it seems to me that when an issue of this sort is being discussed, that is scarcely the kind of argument which should be advanced.
One hon. member, I believe the hon. member for Rosetown-Biggar, said that possibly it was the fault of the opposition. I think that if there were one opposition instead of three oppositions, it could organize its work much better than can possibly be done at the present time.


An hon. MEMBER:: Do not suggest an
amalgamation 1


James Lorimer Ilsley: There will be no danger of that. I quite realize that it is just about impossible for three oppositions to coordinate-


Mr. ROWE:: Five.


James Lorimer Ilsley: -their laudable efforts. II
the Conservative opposition were to select their critics on certain features of the government policy and assign them to their tasks, as the Cooperative Commonwealth Federation does; if they were to do that, and I do not see any evidence that they do-


Richard Burpee Hanson: The hon.
gentleman does not look very far.


James Lorimer Ilsley: which they could have been placed before the house for discussion without crowding out other government business.


Richard Burpee Hanson: Does the minister suggest there was any way that we could have brought them before the house, when the government took away all private members' rights?


James Lorimer Ilsley: No; I am not suggesting
anything like that. The hon. member for Temiscouata-


Thomas Miller Bell: He is the "unorganized opposition" on the government side.


James Lorimer Ilsley: The hon. member for
Temiscouata asks two questions. The first is, is the government prepared to see that the auditor general changes his report so that all expenditures below $35,000 are reported on fully?


Mr. MacNICOL:: Just the same as they
were a few years ago.


James Lorimer Ilsley: I am sorry that I am not
aware of the terms of the rule which now prevails in regard to the production of these reports. The auditor general, it must be remembered, is an officer of parliament, and I assume that he presents his reports to parliament in a manner which he thinks is sufficient. I believe I have heard it said that if all expenditures were detailed in the way they were some years ago, an enormous number of volumes would be necessary for their presentation to parliament.


Major James William Coldwell: Does the minister not think that is a proper matter to be referred to the public accounts committee, so that the auditor general might explain the situation to the committee, and parliament might determine whether the reports are satisfactory or not?


Richard Burpee Hanson: Did not the Prime Minister make the promise to which the hon. member for Temiscouata referred? If he did, he must have some responsibility in the premises.


James Lorimer Ilsley: Well, I did not make the promise myself and was not present when it was made, if it was made, and I cannot answer that. As to whether the question of the form which the auditor general's report should take should be left to the public accounts committee, I do not know whether that is a function of that committee or not. I thought the main function of the public accounts committee was to review and probe expenditures which appear in the auditor general's report.


Major James William Coldwell: The auditor general cannot appear before this parliament, and therefore we have no opportunity to inquire as to the form and find out whether it is satisfactory or not. The public accounts committee might do it.


James Lorimer Ilsley: It might very well. I have not given any consideration to that.
The other question was, why do we not present detailed estimates of our war expenditures, as they do in the United States of America? The book which was produced today is a very thick book. What it contains, I do not know; whether peace expenditures or war expenditures or both, I do not know. I have not seen it. But when we were presenting our estimates of war expenditures to the House of Commons, we considered that we should be very careful of the possible consequences. These estimates, it must be remembered, give a picture of the military plans of the government. When I introduce the war appropriation bill I put on Hansard a brief summary of the war estimates of the government. If hon. members wish that the amounts and the brief summary should be broken down, consideration is given to the request; and if they can be further broken down without revealing information which should not be given-I mean, from the point of view of the public interest in the real sense -that further information is supplied.


Mr. GREEN:: In that connection, we have had a break-down of the amounts for the army, the navy and the air force, but no break-down of other items. Could such a break-down be placed on Hansardf There are several other departments which get a share of the money provided by the war appropriation bill, but we have had no details as to how that money is spent.


James Lorimer Ilsley: It is a good deal easier to ask for a break-down than it is to define a break-down. Break-downs are asked for, and sometimes the person asking thinks that compliance is entirely inadequate. If an indication were given as to the items that were required I do not see any objection.


Howard Charles Green: Take, for instance, the minister's own department, the Department of Finance. Could the expenditures of that department under the war appropriation bill not be broken down-so much for such and such an item, so much for something else, and so on. No one is asking for information which should not be disclosed.


James Lorimer Ilsley: If anyone wants that further break-down, I think a further break-down would be possible.

Ways and Means-Interim Supply


Howard Charles Green: Could that be done with each department? It would greatly simplify questioning in the house.


James Lorimer Ilsley: If the request were specific,
I do not see why more could not be done, but the request should be specific and it should be made, I was going to say, by the leader of the opposition; otherwise every hon. member would want something different.


Richard Burpee Hanson: I have *given some consideration to that point, and I am impressed with the statement the minister made, that estimates are a summary of the government's war plans. I therefore hesitated to ask for greater detail on the theory that perhaps it would not be in the public interest to do so. I am between two opinions. I do not know enough about the question to come to a conclusion, and I should not be blamed for not pressing the matter, because I have not convinced myself that it is the proper course. But there are certain estimates in connection with which more details ought to be given as a matter of course. I will ask the minister in future to give some consideration to that aspect of the situation and to bring down if possible, if it is not against the public interest, estimates in more detail so that members may have them in advance to study them. We do not get them in sufficient time to study them, nor do we get them with sufficient detail. I do not intend to delay the passage of the one-twelfth estimate. I will ask the minister to accept that. This discussion will do some good, both in the house and in the country, and I will ask him to accept the one-twelfth interim supply to-day.


James Lorimer Ilsley: I have no option but to accept it. I cannot do anything else; it is as the opposition says. I do not agree with the leader of the opposition at all. I think we would be further ahead in every way if we had two months supply instead of one, but I have no option but to accept the latter.
With regard to civil expenditure economies, as I said, one cannot take totals and compare them; -one must deal with specific individual items, and believe me, the last minister of finance, who was minister from the beginning of the war, now Minister of National Defence (Mr. Ralston), did an almost incredibly efficient job in reducing the estimates for civilian expenditures. I have tried to carry on along the same line and have asked the public to cut out unnecessary expenditures, and I realize that the government must be prepared to show that it is practising what it preaches. I would not say in thousands, but in hundreds of items, therefore-in connection with
every possible item-a considerable amount of time has been devoted to the preparation of the estimates, more time indeed than members of the house have any conception of. I will change the motion, dividing the figures in two, and will ask that they go through.
Motion as amended agreed to.
Resolutions as amended reported, read the second time and concurred in.



WAYS AND MEANS


[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee of ways and means.
Motion agreed to and the house went into committee, Mr. Fournier (Hull) in the chair.
James Lorimer Ilsley: Resolved, that towards making good the supply granted to His Majesty on account of certain expenses of the public service for the fiscal year ending 31st March, 1943, the sum of $19,952,242.11 be granted out of the consolidated revenue fund of Canada.


[Stage Direction]
Motion agreed to.
Resolution reported, read the second time and concurred in.
Mr. ILSLEY thereupon moved for leave to introduce Bill No. 81, for granting to his majesty certain sums of money for the public service of the financial year ending March 31, 1943.
Motion agreed to, bill read the first and second times and the house went into committee thereon, Mr. Fournier (Hull) in the chair.
Sections 1 and 2 agreed to.
On section 3-Additional interim vote of $550,655.91 granted for 1942-43 on certain items.
Richard Burpee Hanson: The minister asks for $19,401,586.20, and then in section 3 the half of $1,101,311.83, and the schedule refers to certain specific votes totalling $6,607,871. Why these particular items? Do they have to go through now, and are there funds to cover the others? I do not understand the modus operandi.


James Lorimer Ilsley: I am sorry, I do not know either. If it is important, it will have to stand.


Richard Burpee Hanson: The minister will give it at a later stage perhaps, just for information.
Canada Evidence Act


James Lorimer Ilsley: Yes; I will give it at a later stage.


Richard Burpee Hanson: Is this item for agriculture in addition to the amounts voted in the estimates last year?


James Lorimer Ilsley: The amount voted last year was $35,000,000. That was not all spent. I do not know how much was spent.


Richard Burpee Hanson: But this is a new vote in addition to what was spent last year?


James Lorimer Ilsley: That is right.


[Stage Direction]
Section agreed to.
Section 4 agreed to.
Bill reported, read the third time and passed.


[Stage Direction]
The house resumed from Friday, May 22, consideration in committee of Bill No. 66, to amend the Canada Evidence Act-Mr. St. Laurent-Mr. Fournier (Hull) in the chair.
On section 1-Definitions.
Hon. L. S. ST. LAURENT (Minister of
Justice): When section 1 was called the other day I stated that there were some amendments that were being suggested to extend the provisions to railway, telegraph and express companies and insurance and trust companies. I was under the impression that my colleague the Minister of Fisheries who was beside me at the time had moved the amendments. The amendments were discussed, but I find on reading Hansard that it does not appear that a formal motion was submitted. I will ask my colleague the Minister of Mines and Resources (Mr. Crerar) if he will be good enough to move the amendments.
The amendments were read on the former occasion and noted by hon. members who were present at the time. I have a copy for the leader of the opposition (Mr. Hanson). They are included in Hansard, although no formal motion was submitted.
Thomas Alexander Crerar: I move the following
amendments:
Clause 1, lines 9 to 12: strike out paragraph (a) and substitute therefor the following,
"(a) 'corporation' means the Bank of Canada, every bank to which the Bank Act applies or to which the Quebec Savings Banks Act applies, and each and every of the following carrying on business in Canada, namely, every railway, express, telegraph and telephone company (except a street railway and tramway company),

insurance company or society, trust company and loan company (except a company subject to the provisions of part II of the Small Loans Act, 1939);
(b) 'government' means the government of Canada or of any province of Canada and includes any department, commission, board or branch of any such government;"
2.	Clause 1, line 13: strike out "(b)" and substitute therefor "(c)";
3. Clause 1, line 17: strike out the word "bank" and substitute therefor the words, "government or corporation";
4. Clause 1, line 21: strike out the word "original";
M 5- Clause 1, lino 21: strike out the words "a bank" and substitute therefor the words, "any government or corporation";
6.	Clause 1, line 25: strike out all the words after "any" to the end of line 27 and substitute the words "government or corporation";
6a. Clause 1, page 2, line 2: strike out the word "original";
7.	Clause 1, page 2, lines 4 and 5: strike out the words "bank, department, commission, board or branch" and substitute therefor the words "government or corporation";
8.	Clause 1, page 2, lines 9 and 10: strike out the words "bank, department, commission, board or branch" and substitute therefor the words "government or corporation";
9.	Clause 1, page 2, line 14: strike out the words "bank, department, commission, board or branch" and substitute therefor the words, "government or corporation".


Richard Burpee Hanson: I regret that I was not here when this matter was under discussion last week. That is, of course, my fault.
The object of this bill is to alter the common law, or the practice, of eight of the Canadian provinces, and, I assume, the practice of the province of Quebec, with which, of course, I am not familiar, by amending the Canada Evidence Act with respect to these matters which are within the jurisdiction of parliament. Having regard to the fact that the same kind of legislation is to be presented to the legislatures of the provinces, there may be uniformity of practice in all jurisdictions.
The law of evidence is a very technical law. It is one of slow growth, and has grown up over many years. Those who are practising lawyers know that no matter how much theory you may have in your mind with respect to the law of evidence, if you are not an efficient trial lawyer you are not able to put into practice the theory which is comprised within the law of evidence.
One of the fundamental things is what is called the best evidence rule. Of course that is based on reason, that the best evidence in the trial of an issue should be the only evidence that a court shall receive. Because at times there is difficulty-I appreciate that

Canada Evidence Act
what I am saying is very elementary-because at times the best evidence is not immediately available, all sorts of efforts are resorted to in order to provide for the admissibility of secondary evidence. This bill is but an extension of that practice which has grown somewhat in recent years.
My understanding was that this bill as originally drawn was the result of an agreement between the representatives of the various provinces gathered at the annual meeting of the Canadian Bar association with the idea of having uniformity of legislation throughout the various provinces, including, I assume, the province of Quebec. With respect to any legal matter affecting that province I speak with the greatest deference because I really am not qualified to express any opinion.
In theory and practice uniformity of legislation in the various provinces is a proposal that I have always commended and supported. I agree that many substantial results have been obtained through the committee which has been set up by the Canadian Bar association. We have now standard acts covering the bulk sale of goods and various other matters to which I might refer in which the laws of the provinces approach uniformity. That was the basis of the inception of this legislation.
When the legislation was brought in, it was very much limited in its scope and rather innocuous. The amendments that are now proposed are extensive. I am fearful of change just for the sake of change itself. I realize that it will make things somewhat easier for certain corporations in this country to be relieved of the responsibility which the laws at present impose upon them with respect t) the preservation of their records. But we all have responsibility imposed upon us. I have in my own office a book of practice extending now forty years back and files extending back for forty years, and more than that. I am glad to think that my firm goes back a good many years prior to that. While 1 cannot say that we have all the old records of the predecessor firm, we have a good many of them and they have proved very valuable. While they would not perhaps be in the same category as the records of a bank or big corporation, they are of some importance and occasionally we have had to refer to them. That is one responsibility that attaches to your business. So I say that unless there is an imperative need for change in this particular case, wm should not agree to change just for the sake of change itself.
I can understand that from a working point of view the records in an institution like a bank
must accumulate and constitute a tremendous volume as the years go by, but that is a responsibility which they assume for being in business. The cost of accumulating and preserving these records in good condition is part of the cost of operating their business, just as any other business has its responsibilities. Whether it is advisable to relieve the banks of this responsibility it is for the minister who has given much more thought to it than I have and can perhaps express a better opinion than I can, to say. But there is a fundamental objection to making it easier to prove cases in a court of law by evidence that is not the best evidence. We know of many a battle over the admissibility of evidence in important legislation, where some litigant confronted with a certain situation has not been able to present the evidence which the law required and in all kinds of cases, I shall not say has resorted to questionable methods but has certainly used great resourcefulness in endeavouring to get around the carrying out of the best evidence principle.
This bill is an effort to make that sort of thing much easier. Where is it going to stop? This legislature, as far as the Canada Evidence Act is concerned, I suppose could make hearsay evidence legal evidence, although it would never be convincing evidence because it violates our powers of reasoning. Hearsay evidence can never be convincing evidence, and yet how many people accept hearsay evidence as true, real evidence.
I suggest that the minister is going a long way in making this change which has not been passed upon by the experts-I will so call them-who gather at the annual conference of the Canadian Bar association and sit on the committee on uniformity of laws. I understand that they have not recommended these additional amendments and were consulted only with respect to the original proposal.
Mr. ST. LAURENT:	The amendments
would not become effective until concurred in by the legislatures, so that there is no urgency about the matter.


Richard Burpee Hanson: If that be so, there is no great urgency to pass the amendments to-day or this session.
Mr. ST. LAURENT: No; there really is no urgency to pass the amendments because they will not become effective until they have been concurred in by the legislatures. If the hon. member feels that this house should not take the lead in any of these steps towards uniformity, no public interest would be prejudiced by our not adopting the amendments at this time.
Canada Evidence Act


Richard Burpee Hanson: I am
thinking particularly about criminal evidence. The provincial jurisdictions really have no right to legislate in respect to that, have they?
Mr. ST. LAURENT: No; but this kind of evidence will be used only if the originals have been destroyed. None of these companies will take the risk of destroying its originals until all the legislatures which have jurisdiction to deal with the custody of these originals have passed legislation to provide for photographic copies to be used as evidence.


Richard Burpee Hanson: That would be the proper way. I do not like to take the responsibility of asking that the amendments be not considered now. But my reaction from the very beginning with respect to this bill has been that it is a departure from well-established practice and that the change ought not to be made unless there are most cogent reasons why it should be made. The reasons advanced, as I understand them, are that it is a matter of convenience to the banks.


Mr. McNIVEN:: And expense.


Richard Burpee Hanson: And some expense, but I do not attach much importance to that. The most important part of it is the fact that it may be difficult to prove the proper custody of documents; but my recollection is that if they come from a proper source, proof can always be given by a proper officer.
One of the greatest objections to the principle of this bill is that the progress which modern scientific photography has made may enable it in cases of fraud or collusion to defeat the ends of justice. I am not suggesting for a moment that any reputable institution like a bank or telephone company or trust company would for a moment be a party to anything of that kind, but we do know the resourcefulness of the human brain and what human ingenuity can do. I have taken part in litigation where photographs were an important consideration in respect of the evidence. I am sure that nearly every member of the legal profession has been engaged in accident and collision cases arising out of the use of automobiles. It is marvellous what a photographer can do toward making a position appear just a little different from what it actually is, if he is adroit-and to-day many of them are adroit. I do not wish to take the responsibility of holding up the bill as originally drafted, but I suggest that the proposed amendment might stand.


Paul Joseph James Martin: I should not like to pit my legal knowledge against that of the leader of the opposition-


Richard Burpee Hanson: That
would not be difficult.


Paul Joseph James Martin: Oh, I think the leader of the opposition is much more eminent at the bar than he is prepared to admit. The fact is that I am inclined to give my support to this measure, and I should like to hear from the Minister of Justice. I missed his remarks of last week.
I rise first of all to ask the minister to tell us in what other common law jurisdictions, other than in some of the provinces, this practice prevails. For instance, what is the practice in the United Kingdom and in the United States? I believe there is a great disposition on the part of members of the legal profession, and particularly some very eminent jurists, to regard our laws of evidence, generally speaking, as deserving of great relaxation. There are many instances when the rules with respect to hearsay evidence could easily be broadened. I believe we have adhered to a strict regime unnecessarily, and one which in many instances works considerable injustice.
My purpose in rising is to ask the Minister of Justice, if he has not already done so, to tell us what the practice is in the United States, where litigation is much more intensive than it is with us. I believe the experience in that country would be of some value. My impression is that in England, if they have not gone quite this far they have gone pretty far in admitting copies of documents.


Richard Burpee Hanson: Anything can be done by consent.
Mr. ST. LAURENT: In a supreme court judgment in the United States, in December, 1939, the admissibility of what are known as recordaks was asserted and confirmed. These recordaks are photographing machines to retain on film the impression of cheques. They were admitted by the court in the case of the United States v. Martin T. Manton, the justice of the court in New York, who got into difficulties. In his trial a question arose with respect to the legality of evidence of the fact that cheques had passed through the banks and had been paid.
The purpose of this legislation, as originally drafted by the commissioners on uniformity of legislation, sitting in conjunction with the Canadian Bar association, was to allow microfilm to be made of old records. The reason was that on one film could be placed the material of 2,600 letter-sized sheets, and a film could be made, I am told, at a cost of $7. In other words, less than one-

Canada Evidence Act
thousandth of the space is required to conserve the record, and if at any time it is required, the microfilm can be thrown on the screen and enlarged. If it is required for the purpose of evidence in court, an enlarged print can be made. The bill provides for the making of an affidavit at the time the old record is photographed and destroyed. Therefore the print made from the microfilm, and the affidavit, can be admissible as evidence, not of the facts but of the documents destroyed.
The suggestion was made by these utility companies that although the five provinces which have already adopted this principle, in their provincial evidence acts, have not gone beyond the original recommendation, if they were included in the act passed by parliament they would be able to get concurring legislation from the legislature, and would, after having obtained concurring legislation, get the benefit of being able to conserve records on the microfilms, instead of having to provide the storage space now required to take care of them.
Therefore the amendment is not one of urgency, because no one will venture to use it until one or other of the legislatures has adopted it as a rule of evidence in the province concerned. But with respect to the bill as originally submitted may I point out that already five legislatures have passed concurring statutes.


Paul Joseph James Martin: But not covering the present amendment.
Mr. ST. LAURENT: No. Therefore, if in this committee it is considered that it is not desirable to go beyond what has already been adopted by the five legislatures, the amendment can be dropped and the bill passed in its original form. If, on the other hand, there is no objection found to taking this lead-and in the department it was not felt that the practice would be objectionable-


Paul Joseph James Martin: What does the minister think about it?
Mr. ST. LAURENT: I do not think there can be any serious objection to this practice, because of the kind of institutions the bill contemplates. Those institutions are going to be very careful, because if they take the risk of destroying records they are going to be careful to comply with all the conditions, so as to justify the destruction of the records.
It is suggested that at this time full storage space cannot be provided. The controllers in the Department of Munitions and Supply will not authorize the use of materials for such purposes, and the reducing by means of film
seems to be a desirable end to accomplish. I have heard the leader of the opposition say that he has files going back for forty years, and although my practice has not been quite that long I believe both he and I have found that there is a very large accumulation.


Richard Burpee Hanson: There is. yes.
Mr. ST. LAURENT: If we were to go on, not for the usual span of one man's life, but as a corporation, for a very long time, it would be convenient to be able to compress that material into one one-thousandth of the space. If we found it practicable to do so at a cost of only $7 a film, we would probably be effectuating a saving in that way.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.


Mr. NICHOLSON:: I should like to present a point of view that has not been discussed so far and ask the minister whether he has any information from the different companies concerned as to the amount of space that might be released and the number of tons of paper that might be salvaged if this measure goes through. My reason for raising the question is this. I have visited the bureau of statistics and the post office branch where this principle is at work, and I was impressed with the large volume of space which has been released since the practice has been introduced.
While I appreciate the points which have been raised by some of the learned members of the house I think that companies like express, insurance and telephone companies and banks which operate under charters granted after considerable investigation could scarcely afford to run the risk of falsifying their records with a view to their own advantage in evidence which they might later wish to present. If I remember correctly, the Post Office Department advised me that all the letters that could be contained in two filing cabinets of four drawers could be photographed on a film four inches by four inches by one inch, and in view of the storage space that would be made available as well as the number of tons of paper that might be salvaged I think the amendments proposed should be accepted. Certain risks will be involved, but we also run the risk of not winning this war, and much of this evidence would be of very little value to us if we did not win the war. In view of the growing shortage of paper in this country and the shortage of filing cabinets
Canada Evidence Act

which are more necessary for a great many other uses, I think the committee would be well advised to support the proposed amendments. Has the minister any information from these companies as to the number of filing cabinets and the number of tons of paper that might be made available under these amendments?
Mr. ST. LAURENT:	I have not precise
information beyond the statement that it is very considerable and that the use of these microfilms would reduce to about one-thousandth the space that is at present required to store the original records.


Alexander Malcolm Nicholson: That means that a
thousand filing cabinets now in use might be released for more essential purposes and the information contained in them recorded in one filing cabinet. Is that it?
Mr. ST. LAURENT: I would not say that it would be one filing cabinet, but a document photographed on microfilm would not occupy more than one-thousandth of the space the original record occupies.


Vincent-Joseph Pottier: The bill and the amendment deal with the Canada Evidence Act under the heading, "documentary evidence." Section 19 of the act refers to copies by king's printer; section 20, imperial proclamations; section 21, proclamations of the governor general; section 22, proclamations of the lieutenant-governor; section 23, evidence of judicial proceedings; section 24, official documents of Canada; section 25, books and documents of a public nature; section 26, entries in books kept in offices under the dominion government; section 27, notarial acts in Quebec; section 29, banker's books. That provision regarding banker's books is the only departure from any government, judicial or public document referred to in the Canada Evidence Act under the heading, "documentary evidence."
What we propose to do by this amendment, not the bill as first presented, is to add entries in books kept by railway companies, express, telegraph and telephone companies, insurance companies, trust companies and loan companies except a certain kind of loan company.
I suggest that we are going a bit afield under the amendment itself that has been proposed by the Minister of Justice, and that the thing to do at this time would be to pass the bill as originally submitted without the amendment. Let us try it as an experiment, if I may use that word, rather than bring into the Canada Evidence Act the possibility of all sorts of evidence that was never contemplated by the framers of the act. I suggest that we should stick to the bill suggested rather than press the amendment.


Mr. ROEBUCK:: Mr. Chairman, I did not have the advantage and the privilege of listening to the debate when this matter was before the house on a previous occasion, and so perhaps I am at a slight disadvantage, but I want to say a word of commendation of the proposed change. The leader of the opposition has said that we should not make changes, particularly in fundamental laws, just for the sake of change, and I agree with him in that statement. At the same time we should not resist change just for the sake of preserving old forms, once it is evident that the old forms are not entirely satisfactory.
I have myself seen progress in the matter of court procedure. In the short span of one life considerable changes have taken place. If we go back in history, we shall observe that our court procedure to-day is very much changed compared with what it was one hundred years ago. There was a time when we refused to hear the parties to a suit. The litigants themselves were debarred from giving evidence because the idea was held that the rascals would lie about the case, having a special interest in it. So cases had to be proven without the assistance of those most interested and most intimately in touch with the matters in hand. There was a time when men were put on trial and not allowed to testify in their own defence. They had to bring somebody else to give evidence for them. We have progressed greatly since that time, and largely by a process of making changes step by step for the mere purpose of convenience. Our present system of rejecting all hearsay evidence and insisting on the best evidence only is perhaps a salutary regulation, but it is the cause also of considerable inconvenience. Men in their private capacity and in their business often act upon secondary evidence and form their opinions, and sometimes very accurately, on hearsay evidence. Perhaps we could leave it to courts to give the right weight to evidence if it is secondary and a greater weight to evidence if it is first hand, and relax to a certain extent the rigid rules of evidence to which our forefathers adhered.
This bill is a matter of convenience. It is true that when you relax the severity of your regulations you may open the way for crooks to deceive you. But in life we do that. We do not run our lives on strict rules; we do the best we can and arrive at pretty sound conclusions.
It seems to me that this bill would be real progress because it will not only allow banks to destroy evidence by keeping photographic impressions of previously existing evidence, but also record evidence which

Canada Evidence Act
inevitably will be destroyed. For instance, when a cheque is returned to the drawer it is probably lost to the bank and lost to the parties to some later cause. It has gone into private hands. But if this bill were passed, as I understand it, a photographic copy of the cheque could be kept, if desired, and be a permanent record in the hands of the bank. This would be a convenience.
My hon. friend who preceded me used the word "experiment". He said he was diffident about making an experiment in a matter of courts. Well, all life is a matter of experiment, and all progress must involve some element of experiment. We cannot positively know how things will work out until they are tried, and the trying is an experiment. I do not think we should be afraid of making experiments because, if they do not work, we can go back to the old scheme. If this rule of evidence is found to be too loose, and is abused-I do not think it will be-it could later on be abolished, and we would have added at least that item of experience to our own knowledge.
So I am in favour of this bill as it stands.


Richard Burpee Hanson: Does the hon. member suggest that it should be limited to being made prima facie evidence and therefore rebuttable? Would that not be an additional safeguard?


Arthur Wentworth Roebuck: Was that question directed
to me?


Richard Burpee Hanson: Yes.


Arthur Wentworth Roebuck: Would it make any
change? If a document were proved by the production of a photographic copy, it could still be proved not to be a true record.


Paul Joseph James Martin: That could happen to any production.


Arthur Wentworth Roebuck: Of course, it could happen to an original document. Facts stated in a document are rebuttable; that is, evidence can be brought to court to show that the facts stated are not true; and also evidence can be brought to show that the document itself is not what it purports to be. I was thinking that perhaps some provision might be made to ensure honesty in the matter of photographs, because, as the leader of the opposition has pointed out, photography can be used to perform tricks; it is not always just what it seems. One might make a false photograph of a true document.


Paul Joseph James Martin: There is subsection 3.


Arthur Wentworth Roebuck: Does subsection 3 cover it? It may be covered here, but if it is not covered in the bill itself, the making of a false
photograph of a document and bringing it to court as evidence of the document itself would be forgery.


Richard Burpee Hanson: Absolutely.


Arthur Wentworth Roebuck: It would be attempting to make something appear that which it is not, and that is forgery. So my point is covered, I think, in the criminal code if not in the bill itself.


Howard Charles Green: The proposed amendment
extends these privileges to several different types of company. Could the minister tell us whether there would be very many companies or comparatively few? For example, the following words are used, "insurance company or society." Evidence was given this morning before the banking and commerce committee that there are several hundred small insurance societies in the province of Quebec, and the same may be true of some of the other provinces. I assume that, under the wording of this amendment, all these societies would be entitled to this privilege, and I think it would be interesting to the committee to know whether the amendment will mean that several hundred companies will have this privilege, or only a few. The same is true of loan companies; there must be very many of them in Canada, and the words in the amendment are simply "and loan company." That may cover a great many companies.
Mr. ST. LAURENT:	I imagine that the
amendment as drafted would extend to a great many companies. It would extend to all the companies registered under the various provincial insurance acts and to the loan companies similarly registered. I am not sure about all the provinces, but I know that in many of the provinces the loan companies are required to register and to have a licence similar to the licence required to do business as an insurance company. It would extend to those companies but would not be made use of by them until there had been concurring legislation by the province in which they operated.


Howard Charles Green: Well, under the criminal
code it can be used?
Mr. ST. LAURENT:	For purposes of
evidence in criminal trials it could be made use of immediately, but only in cases where the originals had been destroyed; and it would be surprising if those in charge of any company took it upon themselves to destroy the originals unless they had legislation, both under the Canada Evidence Act for the purpose of trials to which that act applies, and
Canada Evidence Act

under provincial statutes for the more numerous cases to which the provincial evidence acts apply.


Howard Charles Green: Why has the line been drawn where it has been drawn? For example, why should other types of companies not be included? With regard to utility companies, a telephone company has this privilege but a street railway company has not. Why this picking and choosing? It does not seem to be sound law.
Mr. ST. LAURENT:	The explanation,
whether it be a good one or not, is that after the bill w^s introduced, the two large railway companies, the Bell Telephone company, and several insurance companies, represented by the Canadian Life Underwriters' association, came to the department and asked if the same provision could not be extended to them. The officers of the department communicated with the Department of Transport to ascertain if there would be any objection to its being extended to railway companies and were assured that there did not seem to be any objection. We communicated with the superintendent of insurance, and he seemed to be of opinion that it would be a useful provision to allow the insurance companies under his jurisdiction and supervision to have this privilege of destroying voluminous records and replacing them with something more compact.


Howard Charles Green: Will companies which are not under his jurisdiction also have the privileges given by this bill?
Mr. ST. LAURENT: It was drawn in this way because it was not felt that there should be a statement here that it would apply only to the insurance companies registered with the superintendent of insurance. That was for a reason which perhaps is not a very serious one, but the hon. member knows what conflict there has been between provincial and federal authorities over insurance companies, and we did not want to give the impression that we were taking some roundabout way to try to bring a larger number of provincial companies to register with the federal authority. That may not be a very good reason, but it was desired to avoid the risk of a contention that we were taking a roundabout way to encourage provincial companies to come under federal inspection and jurisdiction.


Paul Joseph James Martin: Does this cover trust
companies?
Mr. ST. LAURENT: Yes. Trust companies, as the hon. member knows, are also required under, I believe, all the provincial legislation to be registered with the provincial authority.
,


Richard Burpee Hanson: That is, those incorporated under provincial law?
Mr. ST. LAURENT: Yes.


Mr. HAZEN:: I would call attention to the wording of a part of section 29A, subsection 2, which reads:
a print, whether enlarged or not, from any photographic film of . . .
Certain documents.
. . . shall be admissible in evidence. . . .
The words are "a print, whether enlarged or not." The Minister of Justice has told us that you can get on 200 feet of film, which would be twenty-four inches, 2,700 letter-size documents. If you can get 2,700 full letter-sjze documents on 2,400 inches of film, it means that the document will be smaller on the film than an inch in size, and consequently if a print that is not enlarged is taken from one of these films, you will get a print of a letter that is less than an inch in size. Nevertheless, according to the wording of this section, you can put that print in evidence. A print, "whether enlarged or not", "shall be admissible in evidence." What is the judge going to say if there is submitted to him, to be put in evidence, a print of a letter less than an inch in size? It would not clearly show the signatures, and therefore one would have to get a microscope to examine it. As the section stands, however, the judge would have to receive that in evidence. I suggest that the section be amended to provide that a print, enlarged to the approximate size of the original document, shall be admissible in evidence; otherwise you can put in evidence a print that is less than an inch in size, of a letter which I presume might be on a letter sheet about ten or twelve inches in length.
Mr. ST. LAURENT: I should imagine that the lawyers engaged in any trial would take proper means of making their evidence intelligible to the judge who was to determine the issue. I would take it that if a document were drawn in Chinese it would have to be admissible in evidence, but if I were on the case and wanted to use it I would take some means of making it intelligible to the judge who had to determine the case. I do not think the language suggested by the hon. member would be entirely appropriate in all cases. There may be photostats that would be of the appropriate size and would not be enlarged. In using the microfilms there would be occasion for producing an enlargement, and I think we can rely on the usual practice of lawyers conducting cases to see to it that what they submit is not only admissible but submitted in such a form or with such aids as to make it of value in determining the issue, just

Canada Evidence Act
27S5
as, if it were a document in a language unknown to the court, they would accompany it with a translation properly proved. I think the practice now existing, in my province at least, by consent is to leave with the court, instead of original documents, photostats that are usually of the exact size of the document photographed.


Richard Burpee Hanson: That is
done for convenience.
Mr. ST. LAURENT: It is done for convenience. As regards the objection of the leader of the opposition that perhaps these prints might serve as prima facie evidence, the bill does not purport to say what value they would have. They are merely to be admitted, not as evidence, but in evidence. They do not establish the fact but are admitted in evidence for whatever they are worth.


Richard Burpee Hanson: They go to admissibility but not to weight of evidence?
Mr. ST. LAURENT: That is correct.


Mr. JEAN:: Would the minister clarify the meaning of this provision? The amendment reads:
. . . shall he admissible in evidence in all cases in which and for all purposes for which the object photographed would have been received upon proof that-
-the object photographed was subsequently destroyed by or in the presence of one or more of the employees of the bank, and so on. Does this mean that an employee of the bank or of any company concerned would be authorized to destroy a document after it had been photographed, without the consent of the party who had signed the document?
Mr. ST. LAURENT: The bill does not purport to affect the rights of third parties at all, but affects merely the obligation of the custodian to have the original available to be put in evidence if required.


Joseph Jean: Should that not be made clear in the bill? As the section now stands, an officer of the company has the right to destroy a document without the consent of the party signing it.
Mr. ST. LAURENT: The bill does not
purport to authorize the destruction of any document. It purports to authorize the use of a photographic copy if the original has been destroyed. But it gives no right to make evidence of originals which have been destroyed.


Richard Burpee Hanson: Does the minister desire to proceed with the amendment?
Mr. ST. LAURENT: When the committee rose at six o'clock it seemed that hon. members then present thought it would not be desirable to proceed with the amendment, but in the discussion this evening there seems to be a desire that it be retained. The situation is this. The amendment will not immediately become operative, because none of these companies will take the risk of destroying their records until they have obtained concurring legislation from the provincial legislatures. Those companies that asked that they be included stated that they would attempt to get concurring legislation from the provincial legislatures, realizing that if they did not they would not be in a position where they could afford to take the risk of destroying the originals. Therefore there is no urgency about the amendment; it could be left and dealt with on another occasion if provincial legislatures do enact legislation in that form. If the amendment is not passed at this time and the provinces do adopt that legislation at some other date, a further amendment to the Canada Evidence Act would be submitted. If the amendment is passed at this time, it will be the first step and may become operative when concurred in by the other legislatures.


Douglas King Hazen: I suggest that the proposed amendment might very well be submitted to the uniformity of laws committee of the Canadian Bar association for their consideration and that we get their views on it before we pass it.


Alexander Malcolm Nicholson: For my part I am
prepared to make a decision on a question of this sort, and I think all hon. members should be prepared to make decisions without reference to any bar association or any other association. I imagine a company like the Canadian National Railways would have many carloads of paper that might very well be released. The same applies to the other railway, to all our chartered banks, and to insurance companies. These corporations are required to retain large volumes of paper for long periods of time, and the shortage of paper is now so serious that I think we should take the first step and pass this legislation. If there are objections that the bar association wishes to make, let it make them to the provincial legislatures before the enabling legislation is passed. Hon. members who have spoken so often about the urgency of the present situation should not block this amendment.


Douglas King Hazen: But this is not going to save any paper; the same amount of paper is going to be used, unless the paper is afterwards salvaged.
44S61-176

Canada Evidence Act


Alexander Malcolm Nicholson: But it will be salvaged.


Gordon Knapman Fraser: Has the minster any record of how long these microfilms will last? This is practically a new thing; with other films you have to keep them at a certain temperature and so on, or they will fade and crack and break.
Mr. ST. LAURENT: No; we have not in the department any information on that. I know from my own experience that films of my early childhood still serve to make prints that are quite clear. But even that is not so very long ago.


Mr. EDWARDS:: Does the same objection not apply to the original itself? Does that not fade?


Richard Burpee Hanson: Not if good paper and good ink are used.


Manley Justin Edwards: It seems to me we should encourage modern methods and practices-


Richard Burpee Hanson: Never
mind the rules of evidence, they do not matter!


Manley Justin Edwards: -and encourage business firms and institutions to do business in a modem way. The only objection I see is the one to which the leader of the opposition drew attention, that some trick photography might be done. I have found from experience in trials, where there are three dimensional objects or scenes or positions on a roadway, that a clever photographer can make the scene look different from what it actually is. I do not, however, think the same observation applies to a flat object such as a document. I am wholeheartedly in sympathy with the amendment and the bill itself.


Howard Charles Green: It scarcely seems to be showing the judgment that should be shown by this august body to have an amendment of this kind approved in order to make waste paper. Surely that is not a sound basis on which to make the laws of Canada. Yet that has been given as the main reason for this amendment. Here we are in this position: a bill is brought in, the terms of which have been approved by several of the provinces, by the committee on uniformity of legislation of the Canadian Bar association and by the Canadian Bar association, so that there could be no justifiable complaint about having the legislation pass in its original form. But now this ministry bring in an amendment which has not been considered by the committee on uniformity of legislation, presumably not considered by any of the provinces, which is obviously giving a privilege to some companies

and not to others, which is not drawing the line in any set place, but, for example, the Bell Telephone company asked to be included and so telephone companies are included in order to meet that wish. Surely we are not going to let legislation of that type slide through in this way. I urge upon the minister that he let this amendment stand for another year. He has admitted that no harm will be done if it does stand, and in the interim the committee of the Canadian Bar association can consider the amendment, and it can be whipped into shape so that it draws a proper line, instead of one company being in and another out. To put through legislation of this kind without further consideration will make this committee ridiculous.


Richard Burpee Hanson: I am
inclined to agree with that. The crux of the whole question is, is this change in the law of evidence a justifiable change? This question of salvage is wholly extraneous; it has nothing to do with the principle underlying this measure. I am willing to support the original bill, but I think the amendment should stand over.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Bill reported.


[Stage Direction]
Hon. T. A. CRERAR (Minister of Mines and Resources) moved the second reading of Bill No. 18, to amend the Alberta Natural Resources Acts.
He said: When the bill was introduced several weeks ago I gave a brief explanation of the purpose it seeks to carry out. It was in the latter part of March, as I recall.
Grote Stirling: March 25.


Thomas Alexander Crerar: The explanatory notes
accompanying the bill give a full explanation of the purpose of the measure. It will be recalled that prior to 1930 the federal government had the administration of the natural resources of the prairie provinces. The provinces were in a unique position in that respect since every other province from the time of its entry into confederation had retained full and complete control of all its public domain. When the resources were transferred in 1930 it was found that a substantial number of leases covering various parts of the public

Alberta Natural Resources
domain were outstanding. Those leases had been issued by the federal authority. What we are concerned with in this bill are those leases that cover gas and oil properties.


Richard Burpee Hanson: Issued
prior to the transfer?


Thomas Alexander Crerar: Yes. I said a moment ago that at the time of the transfer leases for various parts of the public domain in the prairie provinces had been issued by the federal authority. The measure with which we are now dealing relates to the oil and gas leases issued in the province of Alberta.


John Ritchie MacNicol: Was there a termination date in the leases?


Thomas Alexander Crerar: The leases were issued under regulations, the authority for which had been granted by the parliament of Canada. The regulations were passed by order in council and they governed the conditions of the leases. At this time there are approximately 810 leases that had been issued covering gas and oil rights, and of those, 169 are in the Turner valley where substantial quantities of crude oil were discovered. As hon. members know, to-day that field is an important source of supply for crude oil for the prairie provinces.
There was no question of the authority of the federal government to vary the terms of the leases. The terms that we are particularly concerned with in this measure are those relating to royalties. But I repeat, there was no question of the power and the right of the federal authority to vary the terms of the leases as far as royalties were concerned. When the resources were transferred and agreements were made between the prairie provinces and the federal authorities, I believe all the agreements contained a section which is known as section 2 in the particular agreement that we have under consideration to-night. That section will be found in the explanatory notes to the bill and it reads:
The province will carry out in accordance with the terms thereof every contract to purchase or lease any crown lands, mines or minerals and every other arrangement whereby any person has become entitled to any interest therein as against the crown, and further agrees not to effect or alter any term of any such contract to purchase, lease or other arrangement by legislation or otherwise, except either with the consent of all the parties thereto other than Canada or in so far as any legislation may apply generally to all similar agreements relating to lands, mines or minerals in the province or to interests therein, irrespective of who may be the parties thereto.


Richard Burpee Hanson: The government is now seeking to give authority to the province to do that very thing?
44561-X76i


Thomas Alexander Crerar: It was held by the owners of the leases that this section acted as a prohibition on the provincial authority in varying the terms of the leases that had been issued. I believe the legal advisers of the provincial government in Alberta held a contrary view.


Richard Burpee Hanson: Has it
ever been submitted to the courts?


Thomas Alexander Crerar: I shall come to that in a
moment. At any rate there appears to be a difference of opinion among the legal fraternity as to the precise meaning of this particular clause. Does this section 2 of the transfer agreement tie those leases for all time, in the matter of royalties for example, to the terms that were set out in the leases when they were issued? Or does it give to the province of Alberta what every other province in Canada enjoys, that is the power to vary the terms in so far as royalties are concerned?
In 1938 a very important question arose in Alberta in connection with the conservation of gas in the producing oil fields in the Turner valley. There was no doubt of the power of the Alberta legislature to pass regulations respecting the utilization of gas. That is, they could pass regulations requiring, for instance, that wells under gas pressure could permit only so much gas per certain unit of time to escape. But if they did that it was held, whether rightly or wrongly I am not prepared to say, that such regulations under section 2 would have to apply generally over the whole province. The Turner valley has been the main source of production of crude oil, but there are other fields in Alberta, which, while smaller as far as production is concerned, are still important. It was recognized, I think by everyone who knew anything about the subject, that while regulations might apply properly and wisely to the development in the Turner valley, they might not apply so wisely or so properly to the development, say in the Wainwright field. Consequently, rather than adopt the tedious procedure of testing the matter in the courts, the federal government and the government of Alberta entered into an agreement to amend the transfer agreement and give to the province of Alberta the powers it sought to enable it to carry out these conservation measures.


Richard Burpee Hanson: I think
the minister is making a substantial omission of fact, and I should like to ask him a question with his permission. Is it not a fact that after the natural resources were transferred to Alberta, they made a claim against the dominion, arising out of the loss of revenue
Alberta Natural Resources

which they contend they would have sustained by reason of the fixture of the royalties? And is it not a fact that an award was made giving them some $5,000,000? I think Mr. JusticeTweedie was one of the arbitrators, and they got paid for this very thing years ago, by the federal authorities. Now they want it twice.


Thomas Alexander Crerar: No.


Richard Burpee Hanson: I think I am right about that.


Thomas Alexander Crerar: No; the compensation
claimed by Alberta was for the part of the public domain that had been alienated.


Richard Burpee Hanson: Including the petroleum leases.


Thomas Alexander Crerar: The petroleum leases were only a very minor factor, because there was not any question that the Alberta government, as successor to the federal authority, had the power to collect the royalties specified in the leases.


Richard Burpee Hanson: Undoubtedly.


Thomas Alexander Crerar: But large quantities of timber had been alienated, and there were large acreages of public lands which had been alienated. Coal mines had been alienated, and worked out; and the Alberta government had never derived any benefit whatsoever from those alienations. This had taken place over a long period of years, and it was in compensation for these alienations that the claim was set up.
I recall the matter very well, because I was one of a commission of three royal commissioners who adjudicated between the province of Manitoba and the federal government as to the amount of compensation that should be paid Manitoba because of the alienations which had taken place in prior years.
The purpose of the bill is to give the Alberta legislature the power to vary these royalties. As a matter of fact, over a year ago the federal government was approached by the Alberta government, who asked that the agreement be amended at that time. Veiy strong exception was taken to the procedure by, I believe, practically all of those who held oil and gas leases. As a matter of fact, the gas leases are not so important. The real core of the matter is connected with the oil leases.
This happened toward the end of the session a year ago, and I made the suggestion personally to the minister of lands and mines of Alberta that the Alberta government should

endeavour to reach an understanding with the holders of those oil leases, particularly those in the Turner valley. I might interject here that they are the leases mainly concerned. Of the 810 leases I mentioned earlier-which had been issued, a large proportion are in areas where no oil has been produced. I understand many of the leases could be cancelled for failure to conform to the terms of the lease. However, that is not germane to the measure before us.
The Alberta government undertook to vary the terms of the leases, and a court action was instituted. As the leader of the opposition quite properly stated a little rvhile ago, the courts would be the place in which to settle these differences and difficulties, and in which to get a final judgment as to what section 2 in the transfer agreement really meant. But another matter intervened, one which again is directly traceable to the war. We have heard a great deal in recent days, and will probably hear more in days to come, about shortages of gasoline and oil in this country. It is believed, and with substantial reason, that there are other fields in Alberta in addition to the Turner valley, where oil will very likely be found. As a matter of fact, the federal Department of Mines and Resources is this year directing quite a number of its geological parties to the search for oil structures in Alberta. I believe one party is in Saskatchewan. The situation as it existed meant simply this, that the uncertainty was preventing the development of those fields. Those who had oil leases, and who desired to get capital to develop them, found the capital a bit timid because they did not know what royalties might be assessed against them in the future. They did not know whether the Alberta government had the power, or whether section 2 of the transfer agreement was good law.
As a result of this, through negotiations between a large majority of the active oil interests of Alberta and the government of that province an understanding was reached which, if approved, would give that security to capital which would lead to development, and to the possible relief, to a considerable measure, of the stringency in gasoline and oil we have at the present time. The terms of the agreement are set out.
In the first place, all the wells in Turner valley which were producing or were financed for production prior to 31st May, 1941, remain at a royalty of 10 per cent. That is, they were developed and financed on the expectation that the royalty would remain at 10 per cent. For developments subsequent to

Alberta Natural Resources
that date a scale of royalties has been agreed upon, with a minimum of 5 per cent and a maximum of 15 per cent, or an option to the person developing the well of 12i per cent, this to apply not only to federal government leases but equally to a quite substantial number of leases issued by the provincial government, subsequent to their taking over the administration of the resources. This arrangement is to continue for a period of ten years.
As I said a moment ago, it is felt by the oil producers themselves and by the government of Alberta that this will lead to a much greater development than would be possible if the whole question were still in the clouds of uncertainty I mentioned a moment ago.


Richard Burpee Hanson: Does the minister say, on his authority as a minister, that the leaseholders have agreed to this?


Thomas Alexander Crerar: No; all leaseholders have not agreed to it, but the majority of leaseholders with .active or potentially active properties have agreed. In addition to that, the oil controller was interested in this matter, and he urges-I do not think that is too strong a word-that the agreement should be amended to permit of conditions which will produce stability and get production.


Richard Burpee Hanson: I do not think that is a factor, at all.


Mr. BENCE:: Did he prepare a brief on it and, if so, could it be made available?


Thomas Alexander Crerar: No; he discussed the matter with Doctor Camsell, deputy minister of mines and resources. That, I believe, covers the main points in the measure. I have no hesitation in recommending this measure to the house. If it should fail to pass I think we would have a period of uncertainty, and consequently a lack of development. Representations have been made to me by those representing the majority oil interests, and they express themselves as wholly favourable to the passing of this legislation. I have no doubt that if it should pass, as I hope it will, it will be beneficial not only to the province of Alberta but to Canada as a whole.


Richard Burpee Hanson: At this stage, Mr. Speaker, I desire to make some observations on this bill. I think hon. members would be well advised to study all its implications. On a previous occasion I asked that all the correspondence be tabled. I do not recall that that has been done. I think it should have been done. Some evidence should be furnished to this house that the leaseholders or the great
majority of them, as has been alleged, have agreed to this legislation. I do not think that is the case.


Thomas Alexander Crerar: I can assure my hon. friend
that it is the case.


An hon. MEMBER:: How many of them?


Thomas Alexander Crerar: I have forgotten at the
moment.


Richard Burpee Hanson: I should like the minister to produce evidence that they have agreed. My information is that the leaseholders are afraid to move for fear of what may happen in the future. I think very few of them are willing to take a public stand for fear of jeopardizing the interests which they have in the province and future interests which they may have there.
This seems a rather strange piece of legislation, having regard to the fact that there was a contractual right vested under the laws of Canada prior to the passing of the legislation transferring the natural resources. If there is any doubt about the meaning and interpretation of section 2 in the agreement to which the minister referred, there is a proper tribunal to which to take the case, and that is the Supreme Court of Canada, on a stated case. If the subject matter has been under discussion for at least a year, as the minister has intimated, there has been ample time to have that done and to have' any anomaly and ambiguity in the section settled by the court.
I have not approached this matter of my own motion, but information has come to me from various quarters, from parties who are interested in preserving the contractual rights of certain of the leaseholders, many of whom spent large sums of money in developing these properties, much of which money was lost. Everybody knows that developing an oil field is a highly speculative enterprise, and a great deal of money that has gone into prospecting and development has been lost.
I would point out to the minister and to the house that some of the leaseholders look to the dominion government to preserve their rights in the situation which existed prior to the transfer of the natural resources.
In passing, let me say to the minister that the arbitration tribunal set up by agreement between the former government of Alberta and the government of Canada submitted the case of the natural resources, including petroleum and natural gas, alienated prior to the transfer, and as a result the province of Alberta received very generous compensation from this government. I think that ought to have settled the question once and for all with respect to the rights of the leaseholders,
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because the people of Canada, under the authority which this government possesses, and under the arrangement between the two governments, paid to the government of Alberta that which they claimed they had lost. That is a factor that must not be lost sight of.
Just in passing, I should like to point out this as a consideration, not a primary consideration by any means, but in recent years the dominion government or the courts, or both, disallowed, or declared ultra vires, many of the acts passed by the legislature of Alberta which had the effect of interfering with contractual rights of mortgagees and vendors under agreements of sale. That I think is a correct statement of the principle.
The federal government is now, I am sure at the instance of the provincial government, initiating legislation which clearly interferes with the contractual rights of individuals made with the dominion long anterior to the transfer of the natural resources. The federal government is moving, not of its own motion in this matter, but at the instance of the government of Alberta.
It is suggested-and I commend this to the minister-that it is improper for the dominion government to sanction and aid in what is considered a breach of trust and a breach of its own agreement under dominion laws, which would only be possible by a legislative enactment such as we now have before us. That is the only way in which this can be done, and such action cannot be justified. I lay that down as a principle. If that is true with respect to the violation of contractual rights under acts passed by the Alberta legislature in 1941, which have been disallowed, then I say that any reasons which would cause the dominion government to disallow such legislation interfering with contracts to which the federal government was not a party would apply with far greater force to the initiation of legislation affecting adversely contracts to which the federal government is a party. I lay that down as a principle of law for the guidance of the minister. He ought to think about that and give some attention to it.
I am advised-I do not know how correct my advice is-that not one single holder of a dominion licence favours this legislation.


Thomas Alexander Crerar: That is not correct.


Richard Burpee Hanson: Then I ask the minister to produce evidence of its incorrectness; I think we are entitled to that. I do say this, that not one of these companies can afford to come out into the open and fight this sort of thing because of the fear of the wrath to come later on.


Alfred Henry Bence: Particularly if they hold a provincial lease.


Richard Burpee Hanson: Absolutely, and most of them are under the jurisdiction of the provincial government. It is human nature, just the same as it is human nature to them to look to this parliament to see that they are given fair play. I think this parliament ought to see that they are given fair play.


Mr. REID:: We are giving them fair play for a lifetime if we give them royalties for all time.


Richard Burpee Hanson: There is no doubt that the leaseholders spent their money and took a chance. A great number of them sank their money in the venture; some of them won, and many lost. That is true of all such developments. I think the whole effect of this legislation, as far as I have been able to study the case, is that, in effect, it will be a breech of trust with the original leaseholders. That is my view.
I have before me a submission with respect to the history of this transaction. I am going to take a little time to read parts of it and to comment on it.
Prior to the transfer of the natural resources by the dominion to the province of Alberta pursuant to the natural resources agreement of 1929, a large number of agreements between the dominion and individuals and companies were entered into. These dealt, as the minister has very properly said, with dominion lands, but included, among other things, leases of petroleum and natural gas.
Large expenditures were made by companies and individuals, by holders of the leases, in exploring and drilling for oil in Alberta during the period from 1914 down to the date of the agreement.
Many of these leases were issued and were subject to and developed on the strength of regulations approved by order in council of this government under date of March 11, 1911, and these provided, among other things, the following:
No royalty shall be charged upon the sales of the petroleum acquired from the crown under the provisions of the regulations up to the first day of January, 1930, but provision shall be made in the leases issued for such rights that after the above date the petroleum products of the location shall be subject to whatever regulation in respect of the payment of royalty may then or thereafter be made.
That, of course, was an inducement for people who put out their money to make these
researches and to explore and drill for oil.

Alberta Natural Resources
If they struck oil, well and good; if they did not strike oil, they lost on the speculation.
The order in council goes on to say:
A royalty at such rate as may from time to time be specified by order in council may be levied and collected on the natural gas products of the leasehold.
In 1914, drilling in the Turner valley area was extensively engaged in, and I am informed that millions of dollars were spent by leaseholders in endeavouring to secure production under leases subject to these regulations.
Then followed the great war, and there was a period of stagnation in that area. But the majority of dominion leases comprising central and southern portions of Turner valley were held by lessees at great financial sacrifice, with the result that further developments took place during the several years when oil development was renewed, notably in 1926 and in subsequent years.
The regulations to which I have referred as having been passed under the order in council of 1911 were rescinded, and in 1919 further regulations were made by the federal authority, including, among others, the following:
The sales of the products of any location acquired under the provisions of these regulations shall be subject to the payment to the crown of such royalty thereon as may from time to time be fixed by the governor in council, the royalty to be collected in such manner as may be specified by the minister.
That certainly was narrowing down the time in which there could be no royalty, which under the present arrangement would not accrue until 1930.


Thomas Alexander Crerar: Royalties were provided for in 1919.


Richard Burpee Hanson: Yes. I am saying that. That is just what I read to the minister, if he followed me. In 1919 further regulations were provided which had an overriding effect on the authority of the order in council of 1911, and royalties were provided for in 1919.
Then there was a further order in council, to which I direct the attention of the minister; no doubt he is familiar with it. It was passed on October 29, 1920. Perhaps the minister was not Minister of the Interior at that time; I have forgotten at what date he ceased to be so, but it would be under his jurisdiction as such.


Thomas Alexander Crerar: I was not formerly Minister of the Interior.


Richard Burpee Hanson: I beg
pardon. He was Minister of Agriculture. I am quoting from that order in council:
The minister states that representations have been made to the Department of the Interior that failure to fix the royalty

Contemplated, I assume, under the regulations of 1919.
-which may be charged on the products of petroleum locations has the effect of retarding development, as persons contemplating investment in this industry hesitate to incur the large initial expenditure necessary to insure success without knowing what tax may be placed upon the oil which may be discovered. . . .
That was a very natural position for them to take. They would not put out the money until they knew what the tax was to be.
Therefore the minister recommended that- -for five years after the date upon which the Minister of the Interior may decide that oil in commercial quantities has been discovered on land acquired under the provisions of the regulations aforesaid the royalty to be collected by the crown shall not exceed 5 per cent of the output of the well or the sales of the products of the location as may be decided by the minister, nor shall it be less than two and one-half per cent of such sales during that period; that for a further period thereafter of five years the royalty to be collected shall not exceed 10 per cent of the sales of the products of the location, nor shall it be less than 5 per cent of the sales during that period; and that thereafter the royalty shall be 10 per cent of the sales of the products of locations acquired under the provisions of the said regulations.
After that order in council was passed, I am advised that around 1926 there were extensive developments in the Turner valley area.
Large sums have been spent by leaseholders in development, in many cases without any adequate returns or any returns at all, and without prospect of the return of the capital expended, on the strength of the regulations attaching to the leases and on the strength of subsequent regulations fixing for all time a maximum royalty of 10 per cent of production. To these regulations I have referred.


Thomas Alexander Crerar: Not necessarily for all
time.


Richard Burpee Hanson: Well-
. . . and that thereafter the royalty shall be 10 per cent of the sales of the products of locations acquired under the provisions of the said regulations.
Certainly it would be for the length of time of the lease under the regulations.


Thomas Alexander Crerar: No. The federal government had the power to vary that clause.
Alberta Natural Resources


Richard Burpee Hanson: Yes; I
think the minister is right; the federal government had power to vary it.


Alfred Henry Bence: Why did they put in a limitation then, in 1929?


Richard Burpee Hanson: Quite so.
The province of Alberta now proposes that the dominion government should by legislation sanction a deliberate breach of contracts carried out in their entirety by leaseholders; that is, leaseholders who have kept their leases up. I am not speaking on behalf of men who have forfeited their leases or left themselves liable to forfeiture; I refer to men who have in good faith carried out the terms of their leases.


Mr. JOHNSTON (Bow River):: Most of
the big oil companies.


Richard Burpee Hanson: I am not
speaking on behalf of any of the big oil companies. I would like the hon. member to understand that exactly. I am speaking on behalf of a taxpayer of the province of Alberta who objects to the principle of this bill and the measures under it. The province now proposes that the dominion should approve and sanction a breach of trust by the dominion to the detriment of those to whom the dominion owes a duty. I put this to the minister, that, as a trustee, the dominion owes a duty to the holders of dominion leases, the sole consideration for which is an agreement	by the province of	Alberta	toconfer a benefit on a group of individuals to whom the dominion government owes no duty and with whom the dominion government has not contracted, that	is, the	holders	of
provincial leases.
Just why the dominion government proceeds along the lines indicated I do not think the minister has made clear. Why should the dominion	government	be a party to	anagreement which violates the contractual rights of	holders of	dominion	leases?	I
suggest that that problem has not been clarified and is just as obscure as when the minister moved the second reading of this bill. I suggest to the minister as a sound principle of law, of policy and of legislation, that because the majority has authority it may not use its power to further its own ends by oppressing a small minority, which perhaps is afraid to move to protect itself and must look to this federal authority to protect it. In other words, if this legislation goes through, this government is lending itself to the principle of allowing the province of Alberta to increase the contractual obligations of

holders of dominion leases without consideration to them, and that is wrong, particularly in the face of their objection to such a bleach of contract, such a breach of trust, so that provincial leaseholders may obtain limitation of their contractual obligations without consideration from them.
I suggest that we ought to move very slowly in this matter. The minister himself moved very slowly last year. He was not convinced that this was the right thing to be done, and he has been convinced-if he has been convinced at all-on the theory that everybody is agreed to this and that if the province wants it we should give it to them. I demand to know the minister's authority for saying that all the leaseholders have agreed, because in effect he is lending himself to a violation of contract. He stands, the dominion stands, in the position of a quasi trustee for these leaseholders. There is no one else to protect them. I am on absolutely sound ground there. There is no one to protect them but this federal authority. And that authority in the dominion should not be lightly cast aside or overthrown, because grave injustice may accrue to these people. Nobody knows what they may be asked to pay. I have already referred to the position of the compensation paid by this government to the Alberta government for the alienation of these leases. That debt has been paid, and, I suggest, it was paid generously to all the three prairie provinces. I remember something about this in the nineteen-twenties. Arbitrations were held here. In the case of Manitoba, Mr. Justice Dysart-


Thomas Alexander Crerar: Mr. Justice Turgeon.


Richard Burpee Hanson: Mr. Justice Dysart sat on one.


Thomas Alexander Crerar: Saskatchewan and Alberta.


Richard Burpee Hanson: And Mr. Justice Tweedie sat on the Alberta case some years ago. All these considerations moved the arbitrators to pay the province of Alberta what they thought had been alienated from them by reason of the granting of these leases. That is an additional reason why the leaseholders should be protected by this government, and this agreement should not be given the sanction of law by this parliament.
I have not very much to add to that, although there is in the minds of some legal gentlemen of the province of Alberta a question as to the constitutional right to do this thing. I will not raise that because it is rather obscure; and from a cursory reading of the statutes, without attempting

Alberta Natural Resources
to give any concentrated study to the subject, my view would be that the constitutional question which might be raised has in a degree at least been cured'. Therefore I will not argue that this bill is unconstitutional. If anyone is aggrieved and believes that by this transaction, if it passes, which I hope it will not, there is a constitutional right which is being violated, I am quite content that they should go to the courts, and so far as I am concerned. I will abide by the result of any litigation there is.
I suggest two reasons why the minister should not pass this measure. In the first place it is a breach of trust to the federal government's own leaseholders who have spent their good money, and plenty of it- and many have lost their money. How many people bought oil stocks? Only one in a hundred is anything but a gamble. You take a chance, and so do the prospectors and the drillers, and especially in a field which is as precarious as are some parts of Alberta. Why should this government lend itself to the violation of a contractual right, and why especially should the government lend itself to the handing over to Alberta of a right which it does not possess to-day and for which it has received compensation at the hands of the federal treasury by judicial decision? There in a nutshell are the two counts of the indictment against the measure. I think the minister ought to withdraw the bill. This proposal of the government of Alberta does not differ very much in principle from the illegal position which the legislature of Alberta has taken with respect to certain other contractual obligations which this government itself has disallowed as being illegal. I ask the minister to reconsider the whole position and drop this bill.


Manley Justin Edwards: I come from that part of Alberta which is vitally interested in the oil resources of the one and only province of this dominion which has a potential supply of one of the most vitally necessary commodities for carrying on this war. When this agreement was proposed a year ago I offered objection to it, in that I, too, felt that the dominion government should not alter what was considered to be a binding, contractual obligation of this government with those people, firms and corporations, who had taken oil and petroleum leases from this government on terms and conditions which were, at least in their minds, and in that of the investing public, clear and unambiguous, namely, that the royalty was fixed and certain. The order in council was passed in 1920 to make the matter certain and to give a feeling
of security to those adventurers who might be interested in investing their money in exploring the oil potentialities of Alberta and the subsequent development of them. It was because of the very uncertainty which had existed up to that time that men were loath to spend the enormous sums necessary, particularly in southern Alberta, because of the peculiar and difficult rock formation and the depth to which it had been determined drilling had to be carried in order to ensure production. It was not an uncommon thing for an oil well to cost in those days anywhere from 8150,000 to 8300,000.


John Ritchie MacNicol: And some, $500,000.


Manley Justin Edwards: Yes; some as high as $500,000. No person was going to gamble any such sum unless he knew with some degree of certainty what portion or share of whatever he did find would have to go to the crown. That was the reason why the order in council was passed in 1920, as the recital to the order in council states. It was to give certainty where uncertainty had theretofore existed, and that certainty was given to encourage and ensure the development and the expenditure of the large sums necessary not only to locate but to develop the oil resources of the province. There is not a shadow of doubt that, from that time on, the holders of all leases issued by the federal authority and, up until as late as a year ago, the provincial authority, felt that that regulation or that order in council was binding in so far as any federal leases were concerned which had been issued prior to October, 1930, when the actual transfer of the resources took place and the oil and petroleum resources passed to the provincial government.
At the time the Alberta resources agreement was entered into the government of the dominion deemed it necessary and prudent, and I think wholly justified, to insert clause 2 in that agreement, which provided that the provincial government as such would carry out in accordance with the terms of the existing leases all their covenants and agreements, included in which I believe, and certainly every federal leaseholder believed, was the term or stipulation in regard to royalty, which would go to the provincial government instead oi to the federal government. The oil industry in Alberta has carried on in reliance upon that up to the present time, and even as late as last year denied the right and the jurisdiction of the provincial government to change the royalty stipulations in any of the outstanding federal leases. I thought at the time, and I so intimated, that before the federal government agreed to any alteration in the terms of the Alberta resources agreement, the

Alberta Natural Resources

least it should do was to consult with and get the consent of those leaseholders who had dealt with it in good faith and had invested their money in oil leases on the strength of those orders in council which were in effect at the time they got their leases.
So the bill was not introduced in this house a year ago. But it was ratified by the legislature of Alberta. And the Alberta governs ment, as any one from that province knows, notwithstanding the fact that the agreement had not been ratified by the federal government proceeded to enforce or try to enforce the increased royalties. Not one of the old federal leaseholders paid the 'increased royalty demanded by the provincial government. I understand on very good authority that the provincial government decided to make an issue of it, decided to start a lawsuit against one of the biggest oil operators to enforce payment of the increased royalty. But then they thought better of it, and following the usual custom and practice now of the government of Alberta they decided that instead of going to the courts and trying to enforce their legislation, they had better refer the legislation itself to the courts to find out whether it was valid. That is the procedure that was adopted. The Alberta attorney general is none other than the premier himself; he has no legally trained attorney general. Several years ago he fired the only one he had, and the result is that in the interval this parliament and the courts of this country have disallowed or set aside more Alberta legislation than legislation enacted by any other province since confederation. As late as March 28 of this year this government disallowed three acts passed by the Alberta legislature. They all related for the most part to contractual rights and obligations. They were the debt suspension act of 1941, the orderly payment of land debts act, and the limitation of actions act of 1935 amendment act of 1941. Any one in Alberta knows of the numerous acts of the Alberta legislature relating to debts which have been declared ultra vires by the courts.
Instead of pursuing a lawsuit as I indicated, the Alberta government referred their new royalty legislation to the supreme court of Alberta to ascertain in advance, if possible, whether it was good or bad. Then they thought better of that, and representatives of the government got together with certain of the larger leaseholders and operators and entered into a deal. Those with whom the deal was made are those parties or leaseholders referred to in the schedule to this agreement. In effect, the deal was this: "If you will support this bill and application to the federal government in so far as those federal leases which you have already drilled are concerned we 
will guarantee that you will not pay more than 10 per cent for all time to come. We will go a step further and say that with respect to any provincial leases that you hold, we will agree with you that for the next ten years the maximum royalty that you shall have to pay will be 12i per cent."


Thomas Alexander Crerar: Fifteen per cent.


Manley Justin Edwards: From 5 to 15 per cent. There was an alternative rule which was proposed that the lessees should pay the square root of their daily production. In other words, if your well produced one hundred barrels of oil a day, you would pay by way of royalty to the provincial government ten barrels a day, with the stipulation that the maximum should be 15 per cent. What happened? The firms and individuals which held federal and provincial leases endeavoured to decide which would be better for them. If they had more potential provincial leases than they had federal, the question obviously arose as to whether they should not agree to this and have the guarantee of the federal government that the maximum royalty that they should have to pay on the provincial leases they held would be 12i per cent for the next ten years. However, the firm or institution or individual that had no provincial leases, but that had a number of federal leases which had not been developed and upon which a great deal of money had been spent as well as for annual rentals, had nothing to trade. Perforce the consideration for this whole transaction comes out of the present holders of federal leases.
I think that is an unfair, inequitable and unsound proposition, because of the fact that the provincial government found it nesessary to come to this government at this time in order to get rid of the fair, just and equitable provisions of clause 2 of the Alberta resources bill. If there was nothing inequitable; if there was nothing unfair or unsound in so far as the petroleum leases were concerned, then there was no occasion for the Alberta government to come to this government at this time and ask to be relieved of the provisions of that clause in the agreement. I say that every one of those firms which signed that agreement did so not because they thought that it was fair, not because they thought it was equitable, not because they thought it would create stability; they signed it in order to get the protection of a covenant from the government of Canada with respect not only to the federal leases which they held but to the provincial leases as well.
I maintain that this government should have no part or parcel in the administration of any

Alberta Natural Resources
agreement with reference to the natural resources over which it never had, has not now and will not in the future have any control. If the federal government is going to exercise any control, I contend that its objectives should be to encourage and increase the discovery and production of our oil resources wherever they may be found. That is not done by increasing the royalty which a developer or producer must pay to the federal authority.


An hon. MEMBER:: Or by breaking faith.


Manley Justin Edwards: Thank you for the phrase -or by breaking faith with those who have heretofore dealt in good faith and who at the present time have their money invested in the development of the oil resources of this country. One of the things which has retarded the development of the oil resources of Alberta and forced large firms and institutions into the adjoining provinces of Saskatchewan and Manitoba and the northern part of British Columbia, or even out of the country altogether, is the lack of confidence in the stability of the government which presses this bill upon the people of Canada at this time.


Mr. FAIR:: It is the Liberal government at Ottawa that the hon. member is talking about; it is their bill.


Manley Justin Edwards: I am talking about the so-called social credit government or new democracy government, or whatever it is of Alberta. I submit that this legislation should not pass simply because some firms with large interests have sponsored it and have subscribed their names to it. Look through the portfolios of the companies which are involved and which own the wells and you will find, I doubt not, that most of their holdings are provincial and not federal leases. I doubt if you will find any who hold nothing but federal leases. There is no quid pro quo for them.


John Ritchie MacNicol: Does the hon. member think that if this bill passes it will discourage the opening up of new wells in Alberta instead of encouraging new oil production?


Manley Justin Edwards: If you can tell me what the reaction of the man or the firm with trust funds or money for investment will be to such a proceeding as this, then you will have the answer. Not being a moneyed man myself and having no investment in Alberta oil wells, I cannot say, but I do know that I have met representatives of large and substantial firms which are interested in the development of the oil resources of Alberta and which-


Charles Edward Johnston: That is where your law practice comes in.


Manley Justin Edwards: That is not true, because I did not act for a single oil company in Alberta.


Charles Edward Johnston: I did not
say that you did.


Donald Alexander McNiven: You suggested it.


Manley Justin Edwards: That has nothing to do with the matter. I think it will be found that my remarks in regard to the subject under discussion are-at least I hope they are

more accurate than the remarks of the hon. member for Bow River a few days ago with regard to the steel industry in his own constituency.


Charles Edward Johnston: I was waiting for you to bring that up; why don't you go ahead?


Manley Justin Edwards: Another reason I have for objecting to this legislation is that it is retroactive. If one refers to the agreement he will find that paragraph (e) of section 2 of the agreement states:
(e) The royalties provided for in subparagraphs (a), (b), (c) and (d) of this paragraph shall be due and payable as and from the 31st day of May, 1941.


Richard Burpee Hanson: That is when they were negotiating, a year ago.


Manley Justin Edwards: Yes; that is when they were negotiating, a year ago. So the provincial government is now attempting by this legislation to recover what has gone in the past. If this agreement was bad in May, 1941, I say it is equally bad and untenable in May, 1942. The minister states that there were outstanding, and I understand that there are at the present time, some six or seven hundred federal leases which are or can be affected by this legislation. I further understand, from reliable information, that not more than 125 or 150 of those leaseholders are parties to this bill. What about the other federal leaseholders who know nothing about this procedure?


Thomas Alexander Crerar: My hon. friend is not correct in that regard. As a matter of fact, as I recall, more than three-quarters of the leases are dormant, and never have been produced. No oil has been discovered in the territory of those leases. The vast majority of them, I understand, are in a position where they could be cancelled to-day.


Richard Burpee Hanson: But they are still outstanding.


Manley Justin Edwards: Why have they not been cancelled, if what the minister says is correct?

Alberta Natural Resources


Alfred Henry Bence: Mr. Speaker, I have just a few remarks to make in this connection, along more or less general lines. It does seem to me that before the house should be asked to pass a piece of legislation which so drastically interferes with the rights of minorities, we should have more information before us than has been given by the minister this evening.
He made the statement a few moments ago that a large number of these leases are dormant. He said that there were approximately 810 leases, and I am wondering whether he can tell us how many of those leaseholders are also leaseholders of provincial rights, acquired since 1930. I wonder whether he can tell us how many owners of the leases he has described as dormant, have paid their necessary dues or fees to the provincial government, and are in good standing. Furthermore, it seems to me he should inform us more specifically than he did as to the reasons why the oil controller has favoured the passing of this legislation.


Thomas Alexander Crerar: I can tell my hon. friend, if he will permit me. The oil controller favours the passing of this legislation because he thinks it will lead to the production of oil- and oil is a very scarce commodity to-day.


Alfred Henry Bence: I agree with the minister that that is so; but surely, rather than give us the blank statement that the oil controller says it will be conducive to the increasing of oil production in Canada, he should give us some reasons.


Thomas Alexander Crerar: That is pretty thin.


Alfred Henry Bence: As far as I can see, the only thing that is being done is that the dominion government is releasing the rights and protection it gives to these minority leaseholders, and turning them over to the province of Alberta. How in the world can action like that be conducive to producing oil in Alberta, in view of the record of the Alberta government in the past in connection with its contractual obligations?
On that point it seems to me that if the minister wished to have stability, and if this government wished to have stability, as far as the leaseholders are concerned, he should have entered into an agreement with the provincial government which would have provided specifically that those leaseholders who acquired their interest before 1930, and who come within the provision of the legislation referred to, and are described as not having financed or proceeded with their leaseholds, would have been protected, and that the royalties which would be charged to them would not exceed 10 per cent. If that were

done, it would give them stability. The province of Alberta would know where they were, and the Dominion of Canada would have complied with the trust reposed in it on behalf of these minority leaseholders.
I suggest to the minister and to the house that this is a breach of the fiduciary relationship between these minority leaseholders and the dominion government. As pointed out by the leader of the opposition (Mr. Hanson), on March 25 the minister advised the house that he would table the correspondence he had received in this connection. He has not yet done so. Surely there must have been some objection to the passing of this legislation. Surely those persons who were interested in this field, and who were not in the position of being squeezed, if I may use that expression, because of the fact that they own provincial leases, have made some representations to the administration as to the advisability of not proceeding with this legislation. [DOT]
Due to the fact that the minister agreed to table the correspondence, I suggest that he should do so, and that we should have an opportunity of examining it before proceeding further. There are various things which occur to me and which seem rather strange in connection with this matter. In the first place the minister suggested that one of the reasons was the fact that they did not wish to proceed through the courts, and to spend all that length of time which he felt would be entailed in court proceedings. Well, this matter arose a year ago and, as was pointed out by the hon. member for Calgary West (Mr. Edwards), the agreement is predated to May 31, 1941. If the federal administration had wanted to obtain the opinion of the court, they could easily have done so in that interval.
In any event, why should they assume the onus of discharging a responsibility which is purely that of the province of Alberta? Why should they assume the onus of the possibility of having actions for damages brought against them by these minority leaseholders? I wonder if the minister has considered that point. I wonder if he has asked for an opinion from the Minister of Justice (Mr. St. Laurent) and if he has ascertained whether these people would have an action against the dominion government for damages, if this legislation is proceeded with? The minister shakes his head. Has he obtained an opinion from the Minister of Justice on the point?
There is this further very important point. The leader of the opposition referred to the question of constitutionality. I believe there is a duty upon the administration to ascertain from its advisers whether this procedure is

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constitutionally possible and whether, in view of the fact that the original legislation was sanctioned by an act of this parliament and had to be taken from here to the imperial parliament in Great Britain, an amendment like this would also have to be taken to the imperial parliament. I am not suggesting that it should, nor am I expressing any opinion in the matter. But in view of the fact that that action was taken before, can the minister assure us that it is not necessary in the present instance?
The memorandum of agreement states:
The owners have agreed to withdraw their objections to section 2 being amended as above mentioned provided that the royalty on all wells in the Turner valley field that were producing or financed prior to May 31, 1941, would be fixed for all time at 10 per cent, and that the royalty on all other leases, both dominion and provincial, would be fixed until June 1, 1951, at a graduated rate with a minimum of 5 per cent and a maximum of 15 per cent, the owner having the right to elect to pay 12i per cent.
We are not given very much information there, but the statement is made that "the owners have agreed." Does the government intend us to infer that that refers to the owners in the Turner valley field alone, or that it refers to a majority of the leaseholders who own dominion leaseholds? To whom does it refer? In that connection the minister should inform us how many leaseholds that are not in the Turner valley are affected by this legislation. I know that the other fields are smaller. I have not the personal knowledge of the oil fields of Alberta which hon. members who come from that province have, but there is the Wainwright field and the Vermilion field. Are there any royalties in those fields which were held by dominion leaseholders before 1930, and are they referred to in the statement "the owners have agreed"?
It seems to me that the point raised by the hon. member for Calgary West is particularly cogent that a great many of these leaseholders own provincial and dominion leases together, and consequently a great deal of pressure could be exercised on these individuals because there is no limit to the royalties that may be fixed by the provincial government with respect to provincial leases. These men may have accepted the agreement, but they have accepted it unwillingly. How many have signed the agreement or indicated their willingness to accept it? The people I am mostly concerned about are those who have acquired a right, are getting no quid pro quo and are being absolutely discriminated against by this legislation.
I am not very familiar with the tar sands of northern Alberta, but can the minister assure the house that this legislation will not in any way prejudicially affect the situation there, and will he also state whether, if it does apply, there were dominion leases held there before 1930?
The minister should also explain-he may have done so, but it was not clear to me- what steps were taken to consult the dominion leaseholders. I understand that certain objections were made a year ago by the Alberta association-I am not sure what it is called, but I think it is the Alberta petroleum association-and I should be glad if the minister would give the house the benefit of the objections that were made by the association at that time, and whether the association objected on the ground that the legislation involved a breach of trust. Would the minister also state by what method the dominion government approached the dominion leaseholders with a view to getting their sanction? The minister should give us that information because I do not imagine that the dominion government would proceed unless they had first canvassed the situation carefully.
The minister, during the course of his remarks made a statement which I did not understand, and about which I attempted to question him at the time but was not allowed to do so. Would he explain what he meant by the statement that there was no question about the authority of the dominion government to change the royalties before, and why was it so specifically agreed upon, when the resources were turned over to the provincial government, that no alteration would be made in the agreement except under exceptional circumstances, as set out in the clause referred to by the leader of the opposition a few moments ago?
I shall reserve one or two further questions I have to ask until the bill is in committee.


Mr. E. G. HANSELL (Macleod):: Mr. Speaker, I was going to refrain from speaking on this bill. I had not intended to do so until the hon. member for Calgary West (Mr. Edwards) spoke on the bill and prompted the remarks I wish to make.
It seems to me that there is a type of mind that is vehemently opposed to the Alberta government. That type of mind has been prominently exemplified to-night in the speech delivered by the hon. member for Calgary West. It is strange that we cannot discuss a sane piece of legislation without questioning, shall I say, the character and the ability of a government duly elected by the people.
Alberta Natural Resources

The hon. member, as an argument against what he believes to be a government that passes legislation which should not be passed, referred to the fact that some of the provincial legislation of Alberta over the past years had been disallowed by Ottawa. Let me remind him that even though some of the statutes passed by the Alberta legislature have been disallowed by this government, nevertheless the people of Alberta returned the same Social Credit government to Edmonton. Evidently the hon. member for Calgary West does not regard the will of the people as of any account.
In speaking on a bill, it seems to me that we must have in view whether the bill is going to benefit Canada, whether it would be regarded as beneficial to the people. I am not so much concerned whether it is regarded as beneficial by this individual or that group or this interest; if it is regarded as beneficial to the people, that is my guide.
The hon. member for Calgary West claims to have a peculiar interest in the oil development of Alberta. I am sure he is not going to monopolize that interest. There are a few of the rest of us who are also concerned about the production of oil in that province. I remind the house that the hon. member opposes a bill introduced by his own government, and his speech is singularly coincident and in complete harmony with speeches which have come forth from-


Charles Edward Johnston: Other oil interests!


Ernest George Hansell: -the large opposition group in the house. This is one time when a Liberal has aligned himself with the Conservative party on a bill. Whether he can justify himself I will leave the people to judge.
If I analyse the will of the people with respect to the Alberta government-and I am now talking about those who live in the districts which produce oil-I would remind the hon. member for Calgary West that in the town of Turner Valley the people gave support to his colleague to the extent of sixty-eight votes-


Mr. BROOKS:: What has that to do with this?


Charles Edward Johnston: If the
hon. member listens he will find out.


Ernest George Hansell: -and they gave support to the social credit-new democracy candidate with 154 votes. It has just this to do with it: I would not have had to mention it if the hon. member for Calgary West had not cast a reflection upon the integrity of

the Alberta government and some of us who stand behind that government. I am simply saying that the people spoke in the last election in a voice which is contrary to the voice of the hon. member for Calgary West. In the district of Longview, which is in the heart of the southern Alberta oil fields, his colleague received 104 votes and our candidate received 173. In the district of Royalties, also in the heart of the southern Alberta oil fields, the people gave 71 votes to his colleague and 179 votes to the Social Credit-New Democracy group. The town of Hartell, similarly located, gave 39 votes to a Liberal candidate and 48 to our Social Credit-New Democracy candidate. In every one of those oil field centres the people showed their confidence in the Alberta government by returning Social Credit-New Democracy candidates to this house. I remind my hon. friend of these facts in the hope that he will not so vehemently oppose a government which has been put in office by the will of the people.
As far as the bill is concerned, evidently the minister's conviction is that the passing of it is in the best interests of all-of our war effort at this time when we need oil and gas, and of the country at large. We support the bill.


Thomas Alexander Crerar: Starting with the speech delivered by the hon. member for Saskatoon City (Mr. Bence), perhaps I can give him some of the information for which he, quite properly, asked.
He inquired if steps were taken by the federal government to assure itself that the leaseholders were not opposed to this legislation. All I can say in reply to that is that the interests and the gentleman who spoke for them and who made representations to me a year ago against the passing of the legislation at that time were the same gentleman and the same interests who came this year and said that they were in agreement with the Alberta government and desired that the legislation should be passed.
He also raised the question whether a measure of this kind should be passed without reference to the imperial parliament. I think the hon. member for Calgary West (Mr. Edwards) mentioned the same point. There is a provision in the agreement by which the resources were transferred to Alberta, that reads as follows:
The foregoing provisions of this agreement may be varied by agreement confirmed by concurrent statutes of the parliament of Canada and the legislature of the province.

Alberta Natural Resources
So there does not appear to be any question about the power to amend the agreement in the manner proposed here.
He also raised the question as to the authority to change the royalties, and the hon. member for Calgary West argued, if I understood him aright, that the royalties which existed at the time the resources were transferred to the province of Alberta were the royalties which would govern for all time to come. In that my hon. friend is quite mistaken. I believe the leader of the opposition (Mr. Hanson) also gave currency to that contention.


Richard Burpee Hanson: That is the interpretation I put upon one of the regulations.


Thomas Alexander Crerar: Well, leases which were issued under the authority of the federal government long before any understanding was reached for the transfer of the resources to the western provinces contained a provision to this effect. I shall not read the whole section, because it provides for the period of the lease and how it may be renewable, but it goes on to say:
. . . and also rendering and paying therefor unto His Majesty a royalty at such rate as may from time to time be prescribed by order of the governor general of Canada in council on the products taken out of the said lands, such rent and royalty to be free and clear of and from all rates and taxes and assessments and from all manner of deduction whatsoever except as hereinafter mentioned.
There was another section in the lease, section 16, which touched the conditions of the lease, and let me point out that these leases were all similar in character. This section 16 reads:
And provided further, and it is hereby declared, that this lease is subject in all respects to the regulations of the governor in council relating to petroleum and to any regulations that may be issued in amendment of and in substitution therefor.


Alfred Henry Bence: In what year were these passed?


Thomas Alexander Crerar: These were passed away back in 1911, if I remember rightly. At any rate they were the forms of lease under which these leases were given to the people who staked their claims or took whatever steps were necessary to get them. That makes it clear beyond any question of doubt that, if the resources had remained with the federal government, the federal government undoubtedly had power to change the royalties from time to time as it saw fit. It had power to change the terms and many of the conditions under which the leases were issued.


Alfred Henry Bence: What about the provisions of the amendment to the regulations passed in 1920, referred to by the leader of the opposition (Mr. Hanson), the preamble to which indicated that because of the uncertainty of the position with respect to royalties they would set these royalties for a certain time after the wells came into production?


Thomas Alexander Crerar: That confirms the point I am making. These leases were issued first in 1910, and in 1911 regulations were passed which were referred to by the leader of the opposition. These regulations did not provide royalties. The royalties were first provided for, I believe, in 1919 and 1920, and the terms under which they were provided were these: For the first five years a maximum of 5 per cent and a minimum of 2^ per cent; for the second five years a minimum of 5 per cent and a maximum of 10 per cent; and thereafter 10 per cent. These were the royalties fixed in the order in council of 1920; but they were not fixed for all time to come at that rate, because under the provisions of the lease I have just read, the federal government had power to vary these royalties. There can be no question of that. It is a very interesting legal point, and I realize that the whole debate is more a debate for lawyers than for laymen. It is, however, an interesting point as to whether or not in clause 2 of the transfer agreement the federal government passed over to the provincial government all the powers that it had exercised and could exercise in respect of these leases. That is the legal point which is in doubt. The leader of the opposition stated in his remarks that that was the question which should be resolved by the courts. As a matter of fact, when the legislation was not proceeded with in the federal parliament a year ago the government of Alberta, as stated by the hon. member for Calgary West, passed a regulation in regard to the leases issued prior to the transfer of the resources by the dominion government assessing such leases at the same rate of royalty as the provincial lease carried. I am not sure what it was, but I think it was 15 per cent. I speak subject to correction on that. That was resisted. Then steps were taken to test this very clause in the courts, and that court action was in progress when the arrangement was reached which this amendment seeks to ratify. Why was that arrangement arrived at?


Richard Burpee Hanson: They could not have been very sure of their legal position.
Alberta Natural Resources


Thomas Alexander Crerar: It may be that there was doubt in the minds of both parties to the transfer as to their legal position, but I do not pass any opinion on that.


Manley Justin Edwards: There was no action. Action was never started. The Alberta government, instead of starting action, made a reference to the supreme court.


Thomas Alexander Crerar: I accept my hon. friend's correction. At any rate it was a reference to test the quality of the law. The situation has changed greatly in the last year. I would draw the attention of hon. members to this fact, that a year ago we were not concerned with an oil shortage, nor were we concerned with the question of rationing. German submarines were not operating on this side of the Atlantic. Tankers carrying oil to Canadian ports had not been sunk, and hon. members are aware of the fact that within the last few months a number have been sunk.


Richard Burpee Hanson: There is no oil shortage in that area. That is a red herring the minister is now drawing across the trail.


Thomas Alexander Crerar: I should be grateful if my hon. friend would allow me to complete my argument instead of making interjections about red herrings and all that sort of thing.


Richard Burpee Hanson: There is no oil shortage in Alberta.


Thomas Alexander Crerar: If there is no oil shortage in Alberta, why is rationing in effect in that province?


Richard Burpee Hanson: The
Minister of Munitions and Supply (Mr. Howe) from his place in the house said that Alberta was self-sufficient. Can we depend on what he says? There is no oil shortage in Alberta and consequently no rationing would be needed there.


Thomas Alexander Crerar: Rationing is in effect.


Richard Burpee Hanson: I know it is in effect, but possibly for another reason.


Thomas Alexander Crerar: It is in effect for this reason, that the oil from Alberta can be distributed over a wider territory to serve the needs not only of industry but of agriculture as well. That has changed the whole situation. We do not know what is ahead of us in regard to oil production, and I am passing on to the house only the information that was given me and which I believe is correct. It was given by both sides to the controversy, or to the differences that have existed in the past, and that was as regards the stability which would be secured through the ratification of the amend-

ment to the agreement would be a factor in promoting development. This ratification, may I remind the house, was given in the Alberta legislature practically unanimously, and in that legislature they are not all supporters of the Social Credit government. In fact, there is considerable opposition, I believe, in the Alberta legislature. But according to the information given me it was approved in the Alberta legislature practically unanimously, and I submit that those who had opposed to the Social Credit government there, who come from various parts of the province, would be probably just as jealous, just as desirous and anxious to protect the rights of these leaseholders, as the leader of the opposition or any other member of this house. I think that is a fair statement.


Alfred Henry Bence: The point is that the province of Alberta would not give that stability unless they had this legislation.


Thomas Alexander Crerar: 
Richard Burpee Hanson: That has nothing to do with this.


Thomas Alexander Crerar: Except that it is an indication of how these things are valued.
This amendment will give stability for ten years. What is the alternative? Perhaps lengthy actions in the courts, the higher court in Alberta, the Supreme Court of Canada, ultimately the privy council, to decide the question; and that might take two years or more. During that time there is uncertainty, indecision and lack of development. The oil interests recognize that. I admit that there may be something to the argument of the

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hon. member for Saskatoon and that some holders of dominion leases who are also holders of provincial leases wanted to have some security in the fixation of the royalties on their provincial leases. Well, is that going to hurt development; is that going to hurt anyone? I cannot see it.


Alfred Henry Bence: But that might have been given without discriminating against these minority leaseholders.


Thomas Alexander Crerar: There cannot be discrimination against anyone. Wherein does the discrimination lie ?


Richard Burpee Hanson: In raising the royalties of the old leaseholders illegally.


Thomas Alexander Crerar: I submit there is no discrimination. I submit that that very fact will tend to stability and to development, which is something we all want and is greatly needed in this country.
The leader of the opposition argued at considerable length that we were violating a contractual right, or that we were consenting parties to the violation of an understanding that these leaseholders had when they took their leases. I dispute that. We are not violating that, because these leaseholders took their old federal leases on the distinct understanding, explicitly stated in the lease, that the terms of royalty could be varied by the federal government. There is no question of that. As I have said, it is a question whether or not the federal government in section 2 passed that authority over to the provincial government. That is a question which could be settled by the courts, and as a matter of fact that was the question which was sought to be settled by the courts in the reference made in the higher court in Alberta.


Richard Burpee Hanson: Why was it not left to the courts to determine, rather than coming here?


Thomas Alexander Crerar: One of the chief reasons, as I have stated twice already this evening, is to get a measure of stability which would lead to development, and get production which is badly needed.


Richard Burpee Hanson: This has been going on for two years, and during that time they could have gone to the courts.


Thomas Alexander Crerar: The question would probably have been fought through the courts. When you find a considerable majority of the active leaseholders in areas where oil is likely to be found, in support of this measure, it is something which should not be thrown lightly aside. I ask the hon. member for Saskatoon City to take my word for that, because I saw the list and I had the representations made to me by the gentlemen who acted on their behalf. When they had agreed to this; when they along with the Alberta government are asking for it; when they got together and settled it in that manner, I think we shall not make any mistake in ratifying that understanding.


Richard Burpee Hanson: They
agreed on the theory that if they did not consent, something worse would happen. That is a species of duress. Individuals are afraid of governments.


Thomas Alexander Crerar: If that were the case, why did they change their attitude from that of the year before? I want my hon. friend to accept my statement that the people who made representations against it a year ago were those who came and made representations in favour of it this year.


Richard Burpee Hanson: I have
given the answer; the answer is that if they did not agree to it, something worse would happen to them.


Thomas Alexander Crerar: I have never had that suggestion made. I do not think there is anything to it.


Richard Burpee Hanson: I know there is.


Alfred Henry Bence: Was the agreement not
arrived at as. a result of negotiations which resulted in these leases set out in the schedule to the bill being set at a limit of 10 per cent? Is that not part of the quid pro quo?


Thomas Alexander Crerar: No; the reason for that
was, as I stated in my opening remarks, that these leases have been developed and financed on that basis; that was a concession they were able to get


Alfred Henry Bence: It was a concession, though.


Thomas Alexander Crerar: Well, I would not say
concession; it was an understanding that was reached. But there is another point. I cannot help feeling that there is in the minds of at least some hon. members a doubt as to the manner in which the Alberta government might deal with these leaseholders. In other words, there is a feeling that the Alberta government perhaps cannot be trusted to do the right thing in the way other governments might be. I am not passing any judgment on the merits or demerits of that point of view. But there is not a province in Canada outside of the prairie provinces that did not have and has not to-day complete control of its resources. For example, if they find oil in New Brunswick the provincial government can assess royalty of 5 per cent or 50 per cent; there is no question about its power, or that of Ontario, British Columbia, Quebec
Alberta Natural Resources

or any other province except the three prairie provinces. The question has yet to be settled as to whether legally the restraints are placed on the provincial governments of the prairie provinces that some people think are implicit in section 2 of the transfer agreement.


Richard Burpee Hanson: What
about the point of compensation under the arbitration?


Thomas Alexander Crerar: Really I do not think the question of compensation applies to oil leases. I believe I am correct in saying that there was no oil discovered in Turner valley when the resources were transferred to Alberta. There was gas in large quantities.


Richard Burpee Hanson: When was the arbitration?


Thomas Alexander Crerar: The arbitration was in
1930.


Major James William Coldwell: Oil was discovered in
the Turner valley about 1911 or 1912-that is gasoline, not crude oil; I will correct myself to that extent. Crude oil was discovered much later.


John Ritchie MacNicol: Gasoline does not come
from the ground.


Thomas Alexander Crerar: It is only within the last twelve or fifteen years that crude oil has been developed in Alberta. I am pretty sure of that, because I have a recollection of investing some money a number of years ago in the expectation of helping to develop an oil well, and my expectations went for naught.
There was one other point raised by the hon. member for Saskatoon City. There was a question whether any dominion leases were outstanding on the tar sands in northern Alberta. I speak subject to correction, but my definite impression is that no dominion leases are outstanding on those tar sands. Any leases that have been issued were issued subsequent to the transfer of the resources to Alberta.
I do not know that I have much more to say. As I said earlier, I have no hesitation in recommending this legislation to the house.
I do not think any injury is going to be done to any interests. I think the people who are mainly affected desire it. I believe it is in the public interest to stabilize the situation in Alberta by this measure. This should be done in order to get the production of oil which is so badly needed in these days.


Mr. DEPUTY SPEAKER:: Shall the
motion carry?


Richard Burpee Hanson: On
division.

Motion agreed to on division, bill read the second time, and the house went into committee thereon, Mr. Vien in the chair.
On section 1-Short title.


Mr. ROSS (Calgary East):: Perhaps I should make some observations now that I hoped to make on the motion to go into committee. I suggest to the minister that instead of proceeding with this bill now, he have it referred to one of the standing committees. My reason for asking this is that I should like to hear witnesses and counsel for the different interested parties. I think interested parties should be given a chance to be heard. Pursuant to the agreement under which the natural resources were turned over to the province, a number of lessees feel that they have the right to have their royalties continued at 10 per cent. The province challenges this right. Whether the lessees are correct or whether the province is correct, I shall not discuss here; but assuming that the lessees are correct, there are a number of lessees-I thought there were seven hundred of them-whose contracts will be broken by the province of Alberta if we pass this legislation. Apparently the number of lessees is less than I thought. However few or however many there may be, it is a serious matter for an individual to break his contract. But it is much more serious for a province to break its contract, and it is an extremely serious matter for this parliament to give its consent to a province breaking its contracts.
It has been urged by the minister that it is necessary to pass this bill in order to assist our war effort. If it will assist our war effort, then we should go ahead and break these contracts, but we should compensate the people whose contracts are broken. For my part I should like to be shown how this will help our war effort. I gather from the discussion that it is thought this will stabilize the industry. I wonder if putting a ceiling on these leases would not stabilize the industry just as much as entering into an agreement of this kind to raise royalties would? Let us fix the royalties at what they were a year ago; let us fix them at the 10 per cent which is all these people have had from the time oil was first discovered in Turner valley. If a ceiling were put on, it should stabilize the industry for the duration of the war. That is the proper way to attempt to stabilize the industry. The oil controller can deal only with movable property, with the oil, with the product; he has no control over leases. But this government has control over leases. I wonder if the oil controller considered a fixed ceiling on leases when he expressed the opinion that it

Alberta Natural Resources
would stabilize the oil industry if this legislation were passed. I should like to see this bill go before a committee of this house where we can find out what his opinion really is in so far as this particular phase of the matter is concerned.
One of the companies opposed to this legislation has a great many oil leases that will be affected by the legislation. The name of this company is Okalta Oil company which was organized by W. S. Herron, who was a pioneer in that field. I doubt if there would be a Turner valley oil field to-day if it were not for W. S. Herron. He and Mrs. Herron sacrificed a great deal and suffered many hardships to acquire these leaseholds, develop this oil field and bring it to the point where it is to-day. If we pass this legislation, their holdings will be affected seriously. If it is in the interests of the war effort that we should pass the legislation, then we should compensate these people and others affected for their losses. This compensation should be paid either by the provincial government or by this government. The losses of these people will be in the tens of thousands of dollars; I suppose $100,000 would be a moderate figure at which to fix them, but the uncertainty is so great that one cannot fix them with any definiteness. I submit that the Okalta Oil company and others should have the privilege of appearing before a committee of this house to state their case.
There is another class of case to which I should like to refer. Sixty persons invested $11,200 in 21 per cent royalties in small holdings in the Turner valley field. They are advised by counsel, so I am instructed, that if this legislation passes, this 21 per cent will be wiped out. I shall give some more particulars with regard to it, so that hon. members may see how it will be wiped out. There was a dominion lease granted under which a 10 per cent royalty was reserved. A 2V per cent royalty was then sold to these sixty people for $11,200, paid in cash. The other 871 Per cent was turned over to a company. The property has been developed, and a good producing well now exists on it. The position now is that they are advised by counsel that if this legislation goes through, and that 21 per cent additional royalty is taken by Alberta, the 21 per cent royalty bought and paid for by these sixty people will be lost to them. Who is going to compensate them? It seems to me that they should be compensated. I say it will be lost to them, because their names do not appear in the schedule among those who are being protected.
For these reasons I urge the minister to move that the committee rise, and that the
matter be referred to one of the smaller standing committees of the house which can hear evidence. These sixty people should be represented and should have a chance to be heard before a committee of the house. I submit, too, that the Okalta Oil company should have a chance to be heard.


Thomas Vien: In the consideration of a section of the bill I do not think it is in order to move that the committee rise and that the bill be referred to another committee. The house has determined that this bill should be referred to committee of the whole. When the committee of the whole reports, the hon. member might move that the report be not now received, but that the bill be referred to another committee. This is not the stage, however, at which such a motion can be made. It is not permissible for committee of the whole to discharge an order in that way.


Alfred Henry Bence: I wish to make one further point. Certainly I would not want anything I said to have the effect of in any way slowing up the war effort or slowing up the production of oil in the oil fields of Alberta. The point which I endeavoured to make, and which I shall repeat is this, that I thought the same results could be obtained and protection could be given to these minority leaseholders. I felt that the province of Alberta was-and I use the expression advisedly-wielding the big stick, to a certain extent, with respect to provincial leaseholders who held dominion leases, in order to get this legislation through. I felt that if the Alberta government had been willing to give a little more, and protect the dominion leaseholder, with respect to the matters on which we have been speaking, the same results could have been obtained and equity would have been retained for the minority leaseholders.


Major James William Coldwell: I should like to say a few words on this bill because, as I understand it, both the province of Alberta through its government and the dominion government have reached an agreement which is as satisfactory, I suppose, as any agreement that could have been negotiated between them.
I would draw this to the attention of the committee that this again illustrates the whole situation regarding our natural resources. When the resources are returned to the jurisdiction of the provincial government, that government should have jurisdiction over those resources, and any strings attached to the return ought to be strings that can at least be cut by the province under conditions which the province and the others concerned may agree upon at a later date.
I do not believe in confiscation, but I do believe this, that the natural resources which
Alberta Natural Resources

are the common heritage of the Canadian people are fast being acquired and held in a manner which is against the best interests of this country. I dealt very briefly the other afternoon with oil leases which had been in the hands of a company for a number of years, and about which probably the minister will be able to report on another occasion. We have had so many instances in this dominion of our rich resources being exploited by small groups of people who have acquired them in one way or another and which have not benefited this country as they might have done. We have now a great new resource, a resource which was first of all indicated by the naphtha discovery in 1911 or 1912, and then by the crude oil very much later; I think the minister was right when he said about 1930.
It seems to me that instead of discussing the question of leases and royalties, we ought to be finding out upon what basis we can restore this great resource to the Canadian people, so that in this time of stress and strain and in the post-war period we can utilize this resource for the building up of a better Canada. I dislike very much sitting and hearing discussions in this house and seeing bills which, though they may not be designed to do so, nevertheless have the effect of still keeping away from the Canadian people the right to benefit wholly from the resources which nature has placed in this dominion and under its soil.
I realize, of course, that we live under a system which is based on property rights. I do not believe in taking property rights away without compensation, that compensation to end within a measurable period of time. I realize that we live under such a system and that it is very difficult to get away from it. But I want to lift my voice in this house to say briefly to-night that this alienation of our natural resources to private interests should cease and that we should find ways and means of restoring resources of this kind to the Canadian people in order that they may be used for the benefit of the Canadian people.
Section stands.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Wednesday, May 27, 1942