Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, I wish to make a statement to the house with respect to travel on the Alaska highway.
I am informed that requests for permission to 'travel along the military highway to Alaska are being received in considerable numbers by both the Canadian and United States authorities. Most of these requests come from persons who are actuated by an understandable curiosity or interest but who have no compelling reason for visiting the northwest at the present time.
There are at present no facilities along most of the highway for ordinary civilian traffic. For sleeping accommodation, for food, for gasoline and for repairs such travellers would have to rely on assistance from the military authorities. Every non-essential traveller who has to be assisted in such ways will detract by that- much from the primary work of the military authorities, the completion and operation of the highway for war purposes.
Under these circumstances we have agreed with the United States authorities that, until
further notice, no civilian traffic will be allowed on the Alaska highway except in the case of persons whose presence in the area will contribute to the prosecution of the war. It is contemplated that a joint control unit will be set up in Edmonton and will be given authority to issue permits to applicants who have legitimate reasons for wishing to travel on the highway. No civilian will be allowed on the highway without such a permit.
The arrangements which have been announced by which bona fide prospectors engaged in the search for oil or minerals of war value are allowed access to the area traversed by the highway will continue in force, and such prospectors will be granted permits to use the highway.


Mr. MacNICOL:: Does that apply to the Peace River-Providence highway?


William Lyon Mackenzie King: That I cannot say. What I have said applies to the Alaska highway.


John Ritchie MacNicol: I am informed that trucks are now being run from the Peace River on the round trip, so that the road must be in operation.



THE ROYAL CANADIAN AIR FORCE


Hon. C. G. POWER (Minister of National Defence for Air):: Mr. Speaker, I desire to table copies in English and French of a memorandum of agreement between His Majesty's Government in the United Kingdom and His Majesty's Government in Canada as to the financial arrangements applicable to personnel of the Royal Canadian Air Force serving with or in conjunction with the Royal Air Force, and to make a short summary and statement of the provisions of this agreement, which was signed in London this morning by the Hon. Vincent Massey on behalf of Canada and Sir Archibald Sinclair, the Secretary of State for Air, on behalf of the United Kingdom.
The provisions of this agreement provide for the termination of certain appendices of the memorandum of agreement dated June 5, 1942, between the governments of the United Kingdom, Canada, Australia and New Zealand, about the training of air crews in Canada and their subsequent service, and the present agreement shall be regarded as becoming effective from April 1, 1943. These matters were referred to in the speech from the throne and also in the announcement made by the Minister of Finance (Mr. Ilsley) on February 8.

Royal Canadian Air Force

The following is a summary of the agreement supplementing the Ottawa agreement of 1942:
1.	Under the new agreement, Canada assumes financial responsibility for the following:
(a)	Full cost of the 35 Canadian squadrons formed under the 1942 agreement. In addition Canada, will bear the cost, as formerly, of the 3 original Canadian squadrons, which were not related to the air training agreements.
(b)	Full cost of certain ancillary units overseas, formed for the control, administration and maintenance of the Canadian squadrons.
(c)	R.C.A.F. pay and dependents' allowances and cost of clothing for R.C.A.F. personnel attached to the R.A.F. and not serving in R.C.A.F. units.
(d)	Pension benefits to the extent of the difference between R.C.A.F. and R.A.F. rates in respect of the personnel referred to at (c).
(e)	The cost of transportation for all R.C.A.F. personnel to the United Kingdom and upon repatriation to Canada.
2.	The new commitments entered into by Canada, by reason of the supplementary agreement, which previously were the responsibility of the United Kingdom government, are:
(a)	In respect of the 35 squadrons and formations referred to at 1 (b) above
(i)	R.A.F. rates of pay.
(ii)	R.A.F. rates of pensions and noneffective benefits.
(iii)	All other operating costs.
(iv)	Capital costs.
(b)	In respect of R.C.A.F. personnel serving in R.A.F. units and formations
(i)	R.A.F. rates of pay.
(ii)	Clothing of personnel.
(c)	In respect of all R.C.A.F. personnel proceeding for duty with or in conjunction with the R.A.F.
(i) The costs of transportation to the United Kingdom and on repatriation.
Locations and Areas of Responsibility of R.C.A.F.
Base Accounts Offices and Liaison Accountant Officers Overseas 1. Base Accounts Offices
Office-Location	Area of Responsibility
(a) United Kingdom Base Accounts Unit- London, England	
(b) Middle East Base Accounts Office-Cairo, Egypt	
(c) Far East Base Accounts Office-Bombay, India	
J : i ' M
;;H.'
United Kingdom, Iceland, The Faroes, Gibralter, Australia and New Zealand.
Middle East, Malta, Aden, Iraq, The Levant, West Africa, North Africa, South Africa and Southern Rhodesia.
India, Ceylon, Burma and China.
2. Accountant Liaison Officers
British West Africa-Freetown, Sierra Leone. North West Africa-Algiers, Algeria.
The total cost to Canada for the current fiscal year is estimated at $341,000,000.


Mr. CRUICKSHANK:: Does this tend to bring those Canadians who are serving in the R.A.F. into the R.C.A.F.?


Charles Gavan Power: The Canadians who were enlisted in the R.CA.F. are provided for, but not Canadians who originally enlisted in the RA.F.



STANDING COMMITTEES


William Lyon Mackenzie King: That the name of Mr. Fournier (Hull) replace that of Mr. Mackenzie (Vancouver Centre) on the standing committee on privileges and elections.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Hon. L. S. ST. LAURENT (Minister of Justice) moved that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to introduce a measure to confirm the transfer of certain lands to Ontario and Quebec effected by order in council of the 26th day of January, 1943.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.
Mr. CHURCH:: When this resolution is taken up in committee will the minister make a statement of policy in connection with the diversion of the waters of the Ottawa river for hydro-electric purposes? Will all papers in connection with this agreement between Ontario and Quebec be tabled?
Mr. ST. LAURENT: Mr. Speaker, the government will supply all information it has in its possession as to the arrangement entered into between the governments of Ontario and Quebec for the development of the remaining water powers on the Ottawa river.


[Stage Direction]
Motion agreed to.


William Lyon Mackenzie King: That when the house adjourns on Wednesday, the 21st of April instant, it stand adjourned until Thursday, the 6th of May next.


Mr. GRAYDON:: Does that mean adjourning at six o'clock on Wednesday?


William Lyon Mackenzie King: It all depends.
I hope so.


[Stage Direction]
Motion agreed to.

Labour Conditions

[Stage Direction]
On the orders of the day:
Hon. J. L. RALSTON (for the Minister of Trade and Commerce):: Mr. Speaker, yesterday the hon. member for Rosetown-Biggar (Mr. Coldwell) asked a question about negotiations for the sale of Canadian feed wheat in the United States market. I desire to make a statement on behalf of my colleague the Minister of Trade and Commerce (Mr. MacKinnon), as follows:
Within the last several weeks discussions have taken place in Washington between the United States and Canada with reference to the question of the importation of wheat into the United States for feed purposes. Officials of the United States Department of Agriculture and the Commodity Credit Corporation directed an inquiry to this country as to the availability of feed supplies of both wheat and coarse grains. I am informed that these prospective imports are for the purpose of creating a reservoir of feed against eventualities. Discussions took place in Washington the early part of last week between United States authorities and Canadian officials. Canadian officials attending were T. C. Lockwood, Transport Controller, A. L. W. MacCallum, Chairman Canadian Shipping Board, George Mclvor, Chief Commissioner of the Canadian Wheat Board, and Doctor C. F. Wilson of the Department of Trade and Commerce. The question of transportation is vitally concerned, and the amount of grain that can be moved into the United States will be limited by available transportation facilities. This matter is now having the consideration of the transport controller and the railways, and developments are expected in the near future. In the meantime purchases have been made by the United States authorities in the regular way in the market for wheat for movement right after the opening of navigation. I am unable to give the house any definite information as to the quantity involved, which cannot be finally determined until the transportation problem is clarified. In addition to the wheat negotiations and sales, a continuous movement of coarse grains has taken place by all-rail shipment from western Canada, and commitments have been made for shipment of coarse grains on and after the opening of navigation.
72537-149J



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Hon. HUMPHREY MITCHELL (Minister of Labour):: Mr. Speaker, yesterday the leader of the opposition quoted a Washington dispatch to the Toronto Telegram of April 17 that 4,000 or 5,000 farm workers might be recruited by the United States government in Canada.
A few weeks ago representatives of the war man-power commission of the United States government were in Ottawa discussing with my officials and myself matters of mutual interest in connection with selective service. The situation in regard to farm labour was taken up, but it was made very clear to the United States delegation that there was no hope of any farm labour going from Canada to the United States. This statement was accepted as a fact.
This morning we were in communication with the commission at Washington and made, inquiries in regard to the press report. We were informed that the importation of men from Mexico and from the West Indies was in hand and that Washington fully realized that Canada could not be expected to supply any men.
In reviewing the situation in both countries with the United States officials when they were here the way was left open for a movement across the border of men from the south to assist in taking off such crops as Ontario tobacco and grain in the west. It is quite probable some movement of this kind will develop. We in turn agreed that we would consider allowing a few men to go from New Brunswick into the state of Maine for the potato harvest crop next fall. I am however very doubtful whether this will prove to be possible.


Gordon Graydon: May I ask what the minister means by "a few" men?


Humphrey Mitchell: I confess to wondering myself, Mr. Speaker.


Gordon Graydon: But the difference between us is that the minister should not be in a position of wonderment. I should like to know what he means by a few. Is there to be a large exodus from New Brunswick to the United States or a comparatively small number?


Humphrey Mitchell: I should say if any at all it will be a comparatively small number.


Gordon Graydon: That will be "a few"-the same as where we started.

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ALBERTA LEGISLATION


[Stage Direction]
On the orders of the day:
Mr. M. J. COLD WELL (Rosetown-Biggar):: I should like to ask a question of the Minister of Justice. I have been informed that on or about April 7 an act of the Alberta legislature known as the Land Sales Prohibition Act was disallowed. . If that is so, will the minister table in this house a report of that disallowance?
Hon. L. S. ST. LAURENT (Minister of Justice): I shall be glad to do so.



PARLIAMENTARY ASSISTANTS TO MINISTERS

[Stage Direction]
The house in committee of supply, Mr. Brad'ette in the chair.

[Stage Direction]
116. To provide hereby, notwithstanding anything contained in the Consolidated Revenue and Audit Act or the provisions of the Senate and House of Commons Act respecting the Independence of Parliament, for payment out of the consolidated revenue fund to each member of the House of Commons appointed by the governor in council to be a parliamentary assistant (which appointment shall not render such member ineligible or disqualify him as a member of the House of Commons) to assist a minister of the crown in such manner and to such extent as the minister may determine and to represent his department in the House of Commons in the absence of the minister therefrom, a salary of four thousand dollars per annum and pro rata for any period less than a year, $40,000.
William Lyon Mackenzie King: I should like to have this item amended in order to clarify its meaning in one or two particulars. I shall ask my colleague, the Minister of National Defence, if he will move the amendment. I should like to give the item in its amended form to the committee in advance:
That vote No. 116 of the main estimates for the year ending March 31, 1944, be amended to read as follows:
116. To provide for payment out of the consolidated revenue fund to each person appointed by the governor in council to be a parliamentary assistant to assist a minister of the crown, and to represent his department in the House of Commons, in such manner and to such extent as the minister may determine, a salary of $4,000 per annum and pro rata for any period less than a year: provided however that notwithstanding any act or other law to the contrary payments made hereunder shall not render any such person, if he be a member of the House of Commons, liable to any penalty or disqualification, or vacate the seat of any member of the House of Commons or render such member ineligible to sit or vote in the said house and no person receiving payment hereunder shall thereby be disqualified as a candidate at any dominion election, $40,000.


James Layton Ralston: I so move.


William Lyon Mackenzie King: The house is
being asked to appropriate the amount mentioned in order to implement the undertaking which appeared in the speech from the throne on January 28 and which reads as follows:
You will be asked to make provision for the appointment of parliamentary assistants to those of my ministers whose duties have become particularly onerous because of the demands of war.
In asking the house to make an appropriation for assistants to ministers the government is not putting forward a proposal that is by any means a new or novel one. For many years in the British House of Commons there have been parliamentary under-secretaries to ministers of the crown. We have felt that the designation "parliamentary assistant to the minister" would be more appropriate as applied to our parliament than would the term "undersecretary". The designation "under-secretary" is used in the British house largely because at Westminster most of the ministers of the crown are known as secretaries of state. There is a secretary of state for foreign affairs, a secretary of state for war, a secretary of state for air, a secretary of state for the colonies, a secretary of state for home affairs, a secretary of state for India and the like; the members who are appointed as their parliamentary assistants are known as under-secretaries.
In the United States similarly the executive heads of departments are known as secretaries, of state, of the treasury, of war and so on. But in Canada ministers of the crown are not so designated. We have one Secretary of State, who begins and ends there, and there is the Secretary of State for External Affairs, but they are the only two who are designated as secretaries of state. The other ministers are ministers almost exclusively so designated in relation to their several offices. It has seemed more appropriate that the assistant to a minister here, the one who will hold a corresponding position to parliamentary under-secretary in the United Kingdom, would be best designated as parliamentary assistant to the minister of the department specified.
I would remind the committee that appointment of assistants to ministers was made at the time of the last war under Sir Robert Borden's administration. At that time Sir Robert selected two members, one of whom was known as parliamentary secretary of militia and defence. Mr. McCurdy, who was at the time member for Shelburne-Queens, received that appointment. Later he was appointed parliamentary secretary of soldiers' civil reestablishment. Then there was the appointment of a parliamentary secretary of state for external affairs. That position was held for a time by Mr. Hugh Clark, Bruce

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North, and later by Mr. F. H. Keefer, Port-Arthur-Kenora. Provision for these appointments was made by order in council of July, 1916. They were subsequently confirmed by legislation which lapsed at the close of the war.
I have in my hand copy of the statutes of 1917 which contains the legislation relating to those appointments.
Shortly after the Liberal administration came into office in 19211 sought to have the ministers at that time adopt the practice of having under-secretaries. No provision was made by parliament for their payment, but I thought a beginning might be made by appointing members of the house who would be prepared to act for a time at least, in a voluntary way as do parliamentary private secretaries in Great Britain. I appointed at the time as undersecretary for external affairs Mr. Lucien T. Pacaud, the then member for Megantic. Mr. Pacaud was of real assistance to me in the course of the session. But my colleagues did not follow my example at the time, and I was not in a position to compel them to, especially as there being no salary attached to the position, members were not too keen about giving the extra time required without some emolument.


Gordon Graydon: May I ask if the gentleman to whom the Prime Minister has just referred was formally appointed as assistant, or was it done in an informal way?


William Lyon Mackenzie King: Just in an informal way, much as is done in the case of the parliamentary private secretaries to ministers in the House of Commons at Westminster. Mr. Pacaud was subsequently appointed to an important post in the high commissioner's office in London. His association with the Department of External Affairs helped to qualify him for the appointment which he subsequently received.
I am obliged 'to my hon. friend for his interruption, because it recalls to my mind that in the British House of Commons the practice prevails for all departments of the government, of having associated with the ministers of the crown in parliament not _ only under-secretaries to the secretaries of state but also parliamentary secretaries and parliamentary private secretaries in the House Commons or the Lords. The parliamentary private secretaries receive no salary, but the parliamentary under-secretaries and parliamentary secretaries do receive salaries. In some of the departments in the United Kingdom there is more than one parliamentary secretary or under-secretary. In the case of some ministries in Britain there are joint
parliamentary secretaries, in some cases parliamentary under-secretaries in the House of Lords as well as in the House of Commons. There are also financial secretaries. All this has been found necessary because of the extent of the work that has to be performed by the administration, and in order to provide parliament more promptly and with more in the way of the information which hon. members are anxious to obtain than would otherwise be possible.
I have mentioned the first attempt in this parliament to appoint under-secretaries. The next was in 1936. The speech from the throne of that year contained the following paragraph:
A bill to provide for the creation of parliamentary secretaryships will be submitted for your consideration.
I mention the 1936 intention to appoint parliamentary secretaryships because for many years I have personally felt strongly that it would be of great advantage to parliament and also the country to have younger members of parliament become familiar with the work of the different government departments, that this would also assist parliament itself in getting information in a more comprehensive way than might otherwise be possible, and would afford ministers assistance they certainly require. It is a little difficult for me to explain just why the appointment of undersecretaries was not proceeded with at the time, but I think I may be able to make the matter fairly clear. In the first place there is always some hesitancy in introducing anything in the nature of an innovation, particularly when dealing with institutions as old as our parliaments, but that was not the main difficulty as I see it. In the appointment of parliamentary under-secretaries it is necessary that responsibility for the appointment must be shared. The Prime Minister himself has to take the responsibility of making the appointment, but it is imperative that he should make it in consultation with the minister who is at the head of the department in connection with the affairs of which the under-secretary will be called upon to serve. I have found, in forming governments, that there is no task in the world more difficult, and in some ways more unpleasant than, having to select some persons as colleagues, and to pass over others, because of considerations of which we must take account in this country in most of the appointments we make, considerations of geography, considerations of race, religion, and the like. In the case of selecting under-secretaries, I found that when it came to having individual colleagues make selections these considerations seemed to occasion them a good deal of em-

Supply-Parliamentary Assistants
barrassment. There was also this third reason. I believe a selection could have been made more readily if there had been provision for a number of appointments being made at one and the same time. Hon. members will see for themselves how hesitant ministers are likely to be when called upon to make an individual selection here and there, and in so doing seemingly pass over a number of other members of parliament.
There is the further reason that, in earlier years, the need has not been as imperative as it has become since the outbreak of war. There has been a growing recognition in parliament and in the country of the great need for the appointment of assistants to ministers. We have had resolutions in this house, one moved by the hon. member for Wellington South (Mr. Gladstone), who has discussed at different times the importance of having appointments of this kind made. The hon. member for Parry Sound (Mr. Slaght) spoke at considerable length in 1936, and also more recently in February, 1942, in connection with the desirability of making appointments of this character. Never before have we had so large a measure of agreement on the necessity of these appointments as we have at the present time. I need not remind my hon. friend, the leader of the opposition, that at the convention in Winnipeg his party, if I am not mistaken, came out quite strongly for the appointment of assistants to ministers or undersecretaries in the House of Commons. At all events, its new leader has, and I know the leaders of the other parties in this house have also expressed the view that such appointments would be of assistance to all concerned. I take it therefore that at the present time the. House of Commons, while it may disagree on some details, is generally of the opinion that assistants to the ministers should be appointed at least for this time of war.
That causes me to say a word as to why I am asking the house to vote the necessary supply by an item in the estimates rather than to support a bill setting out more or less in detail the duties and functions of those who are to fill these positions. I believe the experience of the past, particularly that at the time Sir Robert Borden made an effort to establish under-secretaryships, has shown that it is preferable in time of war, and for the year immediately following war, to regard these as more or less temporary positions. Undoubtedly the house will in the interval become accustomed to the practice of having parliamentary assistants to ministers. We will see the advantages and disadvantages of the practice, and I should hope that, as soon

after the war is oyer as possible, a bill might be passed which would serve to perpetuate the system, and which would be so drafted as to make quite clear the functions and duties of those appointed to this office.
In regard to the salary, it is proposed that the salary of an assistant to a minister should be 14,000 a year. This means that the duties of those so appointed will not be confined merely to* the service they may render in the House of Commons. The word "assistant" is used with very evident design. Those of us who are in charge of departments of government which have to do more particularly with the war, realize that there is not a month or a week in the course of the year when some questions do not present themselves in connection with which it would be of great value to have someone who could assist the minister in looking into matters pertaining to them, and help to give the necessary explanations to the House of Commons when it is in session or to the country when the house is not in session. It is expected that the hon. members who will be appointed to these positions will be prepared to give their time not merely by way of assistance to the ministers when parliament is in session but as well during other months in the year. It may be that in some months their services will not be required to the same extent as in others, and some of them may not be in a position to give their services the year round. In that event the payment will be pro rata for the time during which their service is given. I have already indicated the functions of the assistants to the ministers, that the assistant to a minister would be expected to help the minister in any way the minister may think his services are likely to be most advantageous. And just here let me add something which I omitted to say a moment ago, namely, that a parliamentary assistant to a minister, in the very nature of things, will have to be someone who will be persona grata not only to the minister himself, but also to the deputy head of the department. A parliamentary assistant will have to be in close touch with the department with which his position is associated and indeed with the government itself. His relations will be of a character which will make it necessary for him to be persona grata to the deputy minister as well as to the minister.
The minister of course will be responsible for all the official acts and1 utterances of his assistant. That is one reason why, under our system of responsible government, an assistant to a minister would have to be chosen from among the supporters of the administration. The relationship of the

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assistant will be highly confidential, on occasions possibly involving his .presence in cabinet council. The position will afford opportunity for the parliamentary assistant to get into close touch with the affairs of the department and into the confidential relationships which one so closely associated with a minister must enjoy.
Obviously when responsibility is on the minister for whatever is said or done officially by his parliamentary assistant, the minister must have an opportunity of selecting someone from the following to whi.ch he himself belongs, and1 from which the government derives its power and authority.
Speaking of qualifications may I make it clear that while it is and will be necessary to have regard in a general way for the considerations I have mentioned, such, for example, as the fact that we have nine provinces in the dominion, and that it will be expected that these new posts will not all go to any one or two, but be distributed, the prime qualifications for appointment will be those of availability and suitability of the person selected for the particular position for which he may be chosen. It would be impossible to agree that these appointments should be made on the basis of geography, religion, race, or an.y consideration other than that first and foremost, they will be made on the basis of the ability and suitability of the individual selected to meet acceptably the requirements of the position.
May I add that the appointment of parliamentary assistants to ministers is not to be understood as in any way implying that it gives preferment in the matter of subsequent appointments to the cabinet. There will be a number of hon.. members in the house- I know several of them:


Gordon Graydon: They would have a head start, though.


William Lyon Mackenzie King: They might and they might not. It would be a help, undoubtedly-probably, over a period) of time, a very great help. But there are some hon. members who to-day are, and through the years will be too much engaged in professional or other duties, to feel free to act in positions of assistants to ministers. Also may I add that some hon. members may prefer to maintain more of what they would consider to be complete freedom of action in the house. The appointments should not in any way affect one's freedom to express one's own view; but there are some hon. members who would prefer, I know, not to fill the positions of assistant to ministers in
parliament, but who might be quite prepared to fill positions of ministers, if such appointments were to be offered to them.
There is this further fact, that a number of hon. members in the house who would be well qualified to fill the positions of assistants to ministers and, indeed, appointments to the cabinet, to-day are serving in His Majesty's forces in other parts of Canada, and abroad. If I am not mistaken some seventeen members of the house are in His Majesty's forces, fourteen of whom I am proud to say are hon. members from this side of the house. There may be more than that, I am not sure, but those are the figures I have. Certainly these hon. members, in virtue of the part they are taking in the war, will be among those that the government-and governments of the future -will wish to consider in all possible connections.


Mr. McNIYEN:: Nine of them are from the rump, sir.


William Lyon Mackenzie King: It is expected that the departments to which appointments will be made for the present will be limited to ten.
I, myself, in the position of president of the council would wish to have an assistant. Under war conditions a government must deal with many questions which do not fit into the traditional departmental pattern. They maybe of great concern to the government as a whole. Hon. members will realize that at a time of war there is as a consequence a tendency for functions of government to be centralized under the direction of the prime minister or president of the council. For example, there are the wartime information board, the joint board of defence, the joint economic committees, the economic advisory committee with its reconstruction and planning responsibilities, and other bodies which recently have been placed under the president of the council because they relate to or need the complete cooperation of different or all departments of government. The nature of the subjects, and policy implications make it inadvisable to assign these bodies to individual administrative departments. The president of the council is assumed-and I believe rightly-to be in a better position than any other individual member of the cabinet to assume responsibility for them. It is physically impossible for any one person to give them the supervision and direction they require.
Then, there will be appointments of parliamentary assistants for the Minister of Finance, and for the Ministers of the Defence Departments, the army, the air and the navy; for the Minister of Munitions and Supply, and for the Minister of Labour, agriculture, justice,

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and pensions and national health. Each of these departments has had additional, heavy responsibilities thrust upon it during the period of war. Some of these departments have been more closely associated with the organization of the war effort, while others, such as the Department of Pensions and National Health, are dealing with matters connected with postwar organization, rapidly pressing to the fore, and which will be of first importance in the post-war period.
I believe there is a very special need for the appointment of assistants to ministers who will be concerned with post-war matters. We are faced with problems of social security and reconstruction, problems which cannot be planned too carefully or organized too effectively. The more completely hon. members of the house can make themselves acquainted with all their aspects and the measures necessary to meet them, the better it will be for all when we come to deal with these problems in a practical way.
As hon. members know several of the ministers-and I might mention, for example, the Minister of Justice (Mr. St. Laurent)-are members of the war committee of the cabinet. Much of the time they would otherwise devote to the problems of their own departments must be devoted to the consideration of special questions confronting the war cabinet. Problems of a legal character continually arise. They are indeed among the most important problems which the government, is obliged to consider.
I need not elaborate upon the necessity of securing assistance for the ministers of the defence departments,, of the Department of Munitions and Supply, the Department of Labour and the Department of Agriculture. It must be obvious that in all those departments very heavy additional burdens have been thrown upon ministers.
I shall be happy to answer questions, if any should be asked, respecting the duties or responsibilities of the gentlemen who may be appointed to these offices. For the moment may I repeat that the appointments are being made, first, because of the necessity of giving much needed assistance to the ministers at this time of war; secondly, to do something by way of meeting the wishes of hon. members of the House of Commons to be as fully and as promptly informed as possible on matters with which they are immediately concerned and, thirdly, to afford to members of parliament an additional opportunity of becoming familiar with the whole organization of public administration and

questions which are most pressing in order that they may be able to give to their country in parliament that additional valuable service which comes from experience and which is needed in these times to a greater degree than ever before.


John Ritchie MacNicol: I have listened with much interest to the Prime Minister's remarks, but I am sorry I cannot agree with them. The Prime Minister said that ever since 1921, some twenty-two years ago, he has been considering the advisability of appointing what he now calls assistants to the ministers. I notice that he referred to them once as assistant ministers, which is an entirely different thing from assistants to the minister. On former occasions he referred to them as under-secretaries. I would have hoped that the Prime Minister would continue to play with the subject and not bring on this vote, particularly at this time. Twenty-two years is a long time to think it over. I must confess that I do not believe the Prime Minister is in favour of it. He says he is, and I will accept that, of course; I accept his statement.


William Lyon Mackenzie King: I was trying to get everybody else to agree.


John Ritchie MacNicol: In any event I prefer to think that he is not in favour of it. No. prime minister who has served this country has had perhaps the arduous duties which the Prime Minister has had to perform, and certainly no prime minister has been-I was going to say harassed, but perhaps I should not use that word.


William Lyon Mackenzie King: That is a pretty good word.


John Ritchie MacNicol: He has been besieged and importuned by an enormous majority of some sixty-seven, a wholly unnecessary majority, in size.


Some hon. MEMBERS:: Oh, oh.


John Ritchie MacNicol: I should have hoped that he would wait until after the election. He might be returned, but I am satisfied that much of the trouble caused by the huge majority he has now will be eliminated. He has many brilliant men behind him, and I quite realize the job he has in making a selection of those who are to fill these positions, or of those chosen for the cabinet. As he said, the choice for the cabinet is based on several grounds, such as political exigency, geographical position, race and religion. I can see men over there who are abler than some of those who are in the cabinet, but he had to pick his cabinet on those grounds, and that is part of his trouble. Had he been able-

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to do as the President of the United States is able to do, go out and pick the ablest men in the country, I am sure he would have picked some others. I am not speaking unkindly of any of them, because they are all very good men.
I am sorry he has yielded. In 1940, after he came into power again, he announced in the speech from the throne that he would have under-secretaries, or whatever the right name is, or that announcement may have been made before the election, perhaps in 1939. I am referring now to the time when the Department of National Defence was divided into three departments and two new ministers were named. The announcement made at that time was that instead of having undersecretaries, two new ministers would be appointed and the department would be divided. [DOT] I wish he had continued along those lines. Before I am through I will tell him what I heard in Toronto yesterday from people with whom I was discussing this proposal, which had been announced in the press.
The late Sir Robert Borden had the same difficulty when he was prime minister. He had a majority of forty-six. Such a large majority puts too much pressure on the Prime Minister. With a smaller majority the Prime Minister and his ministers would be able to dio better work. At the present time they must be constantly harassed by those asking for political appointments or political preferment. That is the trouble with too great a majority.
When the Right Hon. R. B. Bennett was in power there was a strong rumour that he was being urged by brilliant men behind him to appoint under-secretaries. I was one of those who opposed that very strongly. Afterwards I proceeded to England to make a study of the question of under-secretaries. I talked to a number of persons in the government, not ministers but men connected with the government, and I finally decided as to the necessity of under-secretaries.
The Prime Minister said that the duties of the under-secretaries would be more than running messages; they were to gather material and perhaps answer the occasional question. The other day I heard an hon. member sitting behind the Prime Minister say that they would be official coat-tail bearers. I would not characterize them as that, because the names I have seen would indicate that they are men of ability. The Right Hon. R. B. Bennett did not bring in a resolution, nor did he bring in a bill, because I am sure he found out that public opinion was against the idea.
Sir Robert Borden first brought in a resolution in 1917, and then he brought in a bill. I believe the bill called for the naming of an "overseas" secretary and under-secretaries. But that was an entirely different proposition from what we have before us now. That bill deliberately limited the appointments to the period of the war. It was provided that if the war should end while parliament was in session, the appointments would cease; if the war should end when parliament was in recess, the appointments were to continue until the following session.
Here we are entering upon an entirely new programme. Ten men are to be named, and there is nothing in the vote to indicate how long they are to retain their positions. It might be for a year, or it might be for more than a year. In my judgment that is not the proper way to initiate a new programme. It should be done by first bringing forward a resolution and then introducing a bill. The members would then have an opportunity to express their opinions, and the press of the country would also have an opportunity to express theirs. Public opinion could be formed and the Prime Minister could be acquainted with the feeling in the country.
I cannot approve this vote, because there is no limitation to the appointments. The vote is only for $40,000, but no one knows what it will cost this country if these gentlemen are appointed. They will have to have offices, and every one of them will likely want one, two, three, four or more stenographers. They will have to have new carpets and all sorts of things that go with high-falutin' offices. There will also be travelling expenses, and I venture to say that these ten appointments will cost the country not less than $100,000, and perhaps $200,000. This expenditure is being asked at a time when the country cannot afford to devote a single dollar to unnecessary expenditure.


An hon. MEMBER:: What about the
Winnipeg convention?


John Ritchie MacNicol: I will deal with that a little later. I might indeed deal with part of it now. I believe the Prime Minister said that there was a plank in the Progressive Conservative platform at Winnipeg for the appointment of under-secretaries. Not to my knowledge. I have read the platform very carefully; it may be there, but I have not found in any single line a statement that if this party were returned to power it would appoint under-secretaries.
Mr. COLDWELL; Mr. Bracken said so.

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John Ritchie MacNicol: I know what Mr. Bracken said. He is not in the House of Commons at present. He will be, and likely will be head of the government, but he is not here yet. In any event I am speaking for myself; I am voicing my own personal opinion. I am opposed to the principle, and I am asserting my privilege and my right to stand up in this house and express my opinion. Any other man, including my leader, can say what he likes. But I hope I shall never surrender my individuality or renounce my right to express my own views.
When Viscount Bennett was in this house, during the previous administration of the present Prime Minister, he made frequent reference to Lord Hewart as an outstanding writer on the subject of the rights and privileges of parliament. The Prime Minister has read, as we all have, in the press that public opinion in this country to-day is that this, parliament is going down hill.


George Alexander Cruickshank: No, no.


John Ritchie MacNicol: Yes, I am right. This parliament is losing its rights and privileges; in one way or the other we are not living up to what the public expects of us. Take for example something which occurred only last week, and which caused me to ask myself where we were going. Had it not been for His Honour, Mr. Speaker, parliament would have given first reading to a piece of paper with nothing on it. But Mr. Speaker had not the bill and he would not permit it. I do not know just how many speakers would have taken the forthright stand of refusing to regard as a bill a piece of paper on which was no writing whatever. I give Mr. Speaker credit for his independence in defending the rights and privileges of this house.
Where are we going? We have lately had more orders in council than have been passed in the history of this country. Yesterday- unfortunately I was not here; I had to go home and did not return until this morning- the Minister of Munitions and Supply (Mr. Howe), for whom I have a high regard, got away with what I would call, to use a vulgarism, murder, in this chamber, by obtaining approval for a bill giving him permission, upon his recommendation to council and with the consent of the governor general, to let contracts up to $50,000. No doubt a contract of that amount is small in the eyes of the minister. Now, through his bill, he is able to let them holus bolus. That is going a pretty long way. I can remember occasions when men stood here and fought like tigers against allowing our party, when it was in power, to spend even so small an amount as
[Mr. Coldwell.l
$5,000 without the item having appeared in the estimates. We have gone a long way from that position; I wonder how far we shall go.
I call this vote the cap-sheaf of getting away from parliamentary principles.
The other day I read the life of Robespierre, one of the leaders of the French revolution. He was called, I believe, "the incorruptible", because he led a very straight life. The author suggested that he derived his inspiration from another great Frenchman, Montesquieu, who, writing of government in relation to the cause of the French revolution, made this comment:
All that happens is a result of an infinite number of previous happenings in an ever more intricate chain.
That is what we here have been experiencing -an ever more intricate chain. I say that this is the cap-sheaf, to introduce in this house a vote of $40,000 to make appointments without any provision for or reference to termination. Never before have I read of any such departure from parliamentary practices.
I have to laugh when I read the debates of 1917 and reflect how completely the tables have been turned since then. In that year, during the government of Sir Robert Borden, the Liberal party fought bitterly against the appointment of an overseas minister and two under-secretaries. They were led by none other than one of the greatest men this country has produced; I refer to the late Sir Wilfrid Laurier. He headed the opposition to a bill, containing in effect proposals such as those now before us, which were introduced here in 1917, and he was supported by his ablest lieutenants, including the late Hon. Rodolphe Lemieux and the late Hon. E. M. Macdonald. Each of these distinguished men rose in his place to fight the proposal, as I am trying to do to-day, though I cannot do it as well as they did. I wish I had time to talk on this vote until the session was over, indeed until this parliament ends, because I am one hundred per cent opposed to it, and while I know I cannot defeat it, I' am going to do the best I can to arouse public opinion against it.
What did Sir Wilfrid Laurier say, on August 7, 1917, as reported in Hansard, page 4195?
I am sorry the ex-Minister of _ Militia has not heard what the Prime Minister stated, because he has already expressed himself on this question, and pronounced himself against it.
He went on further, on the same page:
It is impossible for me to conceive why there should be a second head of the Militia Depart- . ment. There must be confusion, there must be delay, and instead of expediting business, the result must be the very reverse.

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I have been saying the very same thing. We are to have an under-secretary for each of these departments; he will sit in this chamber, and when I ask a question he will not be able to answer; he will take it under advisement, and go back and worry his minister to get some answer that he can give me the next day. All that just delays matters. If I ask the Minister of Munitions and Supply a question to-day pertaining to his department he can answer at once. That is the kind of service to which hon. members are entitled. If I ask a question of any other minister, for instance the Minister of National Defence for Air (Mr. Power) he is always ready to get up and answer. I have been amazed at his ability to get up at once and answer questions on matters which one would not think he had at his fingers' ends. The same applies to the Minister of National Defence (Mr. Ralston). If I were a minister I would not be bothered with any under-secretary. If I could not manage my department I would resign my portfolio, return it to the Prime Minister, and let somebody who could handle the department take care if it. I am sure, as I look at the Minister of Munitions and Supply, that an under-secretary would be a perfect nuisance to him.


Mr. GLADSTONE:: Would the hon. gentleman have a vice-president if he were a president?


John Ritchie MacNicol: The hon. member will probably hear enough before I get through.
As I say, it is amazing how the tables are turned. Our party in 1917 were advocating under-secretaries, and the Prime Minister's party were opposing it; to-day he is advocating under-secretaries, and I am opposing it. It is strange what changes history records; what is poison to us to-day is not, perhaps, poison for us to-morrow. We have changed our positions.
Something has been said about Great Britain, but there is little comparison between the situation _h ere and in Great Britain. The parliament of Great Britain looks after the whole empire, which consists of from seventy-five to one hundred dependencies, many of them large, like India and Newfo-undL-land. I could name every one of them, I believe-in Africa, South America, Asia anid the islands of the sea. I believe our own ministers are big enough to take -care of that problem if they had to do it. Over there they have had under-secretaries, -but to-day the system of under-secretaries is a relic of the past. It was Lord Beaconsfield, I believe, who introduced the system of under-secretaries because one out of every two of his
ministers sat in the House of Lords, and so he conceived the idea of having someone sitting in the House of Commons to answer for the heads of the departments who were sitting in the Lords. But we have no senators in our government. If we did have them, there might be some excuse for having a commoner answer in the house for a senator who was sitting in the other house. That is how the system of under-secretaries came to be introduced. It was not because they were required on account of volume of work. They came in simply because there was no representative in the House of Commons for some of the departments which were headed by members of the Lords. I found in England certain opposition to the system of under-secretaries. More than one member told me that they were just a nuisance to the minister and were just running around with messages and doing things of one kind or another. There may be occasionally one outstanding under-secretary, as Anthony Eden was, but on the average, parliament would not hear from the under-secretaries one time from one year's end to another to every five times a minister is mentioned.
Again, Canada is in an entirely different position from Great Britain. Great Britain, with its forty-six million people,, has only one government, and that government looks after the affairs of the whole empire and in Britain right down to building roads in the counties, looking after the postal service, the telephone, telegraph and municipal service. They look after almost everything. There are no provinces in the old land. What a show it would make of government to have under-secretaries here! Already we have nine provinces, with ministers in each of them dealing with matters that are dealt with in the House of Commons here-practically all of them except that the provinces have no minister of defence. But they have ministers who look after fisheries, public works, finance and attorneys-general. That means that we have seventy-five ministers in Canada, including the nineteen we have here. In addition, we have a number of councils. We have a council in the Yukon and the legislative -council in Quebec province. In Canada we have only twelve million people or less, and we have ten governments, counting our own government here, and in addition the Yukon council. There is no comparison whatever between conditions here and in Great Britain so far as government is concerned. In my judgment under-secretaries in this country are just as much needed as a fifth wheel on a wagon. All my remarks are absolutely impersonal. I am discussing the principle. For
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the men, whose names have been mentioned in this connection I have nothing but the highest regard, but that does not affect my stand on this matter one iota. If I am against a principle I am going to speak against it.
Something has been said about the United States. The situation there is different. They have 96 senators and 435 representatives. They have ten ministers, but they do not sit in the house. I can conceive that they might have to have ministerial representatives in congress at Washington because the minister cannot sit in the house and answer for himself. But here our ministers sit in the house, and if I have a question to ask the Minister of Munitions and Supply I want to ask it of him direct. I know he will give me an answer because I know he is posted on his department. I cannot think of a minister like the Minister of Munitions and Supply, a former business man like myself, a contractor, a big man, even tolerating an under-secretary coming into his office. I could not. I would not have any place in my office for an under-secretary. I would want to know my department the same as the minister knows his, and just as the other ministers know theirs.
Something has been said about New Zealand. There the situation is a little different. They had one under-secretary. They have none now. But I believe they are going to appoint one. In New Zealand the war cabinet consists of three government members and two from the opposition party, and they get along very nicely. The situation is similar to that in Australia. Australia has no under-secretaries so far as I have been able to ascertain. They may have appointed them lately, but I do not know of it. But their ministers look after three or four departments. I can see ministers sitting opposite me who I am sure will admit that they could do a great deal more work. There are at least four or five of them whose departments cannot begin to take up all their time. Why not give some of them more work to do as is done in Australia? In Australia the ministers look after more departments that our ministers do here. The Prime Minister there also looks after defence; another minister looks after finance and post-war reconstruction; the attorney general also looks after external affairs; another minister looks after supply, development and shipping; the navy minister also looks after munitions; the minister for air looks after civil aviation; a senator looks after post office and information. Incidentally, Mr. Chairman, I should like to see our senators given more work to do. There are many able men in the senate, and I am ashamed when I think of how little they are given to do. There is a fund of knowledge

and experience in that other house, which comprises a large number of able and brilliant men who could render much more service to this country if they -were given the opportunity. If the Prime Minister would only introduce a bill, and change our constitution, if necessary, so that some of the brilliant talent in the senate could be utilized in greater service to this country, I am sure that the public would appreciate it.
Other departments in Australia which are combined under one minister are war, organization of industries and scientific and industrial research; social services, health and assistant to the munitions minister; trade and customs, which is looked after by a senator; commerce and agriculture; labour and national service; reparations and war services homes; home security and assistant to the treasurer; transport and assistant to the P.M.G.; interior department, looked after by a senator; external territories and assistant to commerce and the army, also looked after by a senator; aircraft production and assistant to, munitions, also looked after by a senator. Their advisory war council consists of six members of the government party, four members of the opposition and one from, the other parties in the house. We have in our senate a great deal of talent that could be used. We have also some ministers who have the ability to do a great deal more than their department calls for.
I am going to move now, seconded by the hon. member for Broadview (Mr. Church):
That item 116 be reduced to one dollar.
If it were in order I would move that the vote be struck out altogether, because I am afraid that moving to reduce it to one dollar commits me technically to the principle, and I am wholly opposed to the principle because I believe that these appointments are absolutely unnecessary.
I was going to quote what Hon. Rodolphe Lemieux said. Hon. members can find it in the debates of August, 1917. While I have Mr. Lemieux in mind I will read something he said that fits the situation very well. It is found at page 4420 of Hansard for 1917, and is as follows:
I submit, if the Minister of Militia had a proper military head working in conjunction with him, he would not need any military undersecretary, and if the military organization of the country had been arranged properly, or is arranged properly now-and it is not too late to rearrange it-there would be no need for a military secretary.
I have confidence in the three ministers of national defence. They have done a pretty good job for the last three and a half years,

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and the war is getting pretty well along. If they had been given under-secretaries when the war started, it might have saved them some work, but now they have the departments so well under their hands that I am sure undersecretaries would be in the way.
Furthermore I do not believe there is a better civil service in the world than Canada has. The Prime Minister has under him most capable secretaries in his department, such as Sir Joseph Pope was. I do not know the name of the chief assistant to the Prime Minister-


William Lyon Mackenzie King: Under-Stecretary of State for External Affairs, Mr. Robertson.


John Ritchie MacNicol: Well, he is a very able man, and I am sure that the men in the Prime Minister's department with him at' the head-because he has had so much experience himself, more than anyone else to-day in Canada-


William Lyon Mackenzie King: Some at times come very near the breaking point from lack of adequate assistance.


John Ritchie MacNicol: -does not require an under-secretary. In fact I cannot conceive of the Prime Minister, with all his knowledge about his department, even asking an undersecretary to run to this or that department on a message to get something. I cannot help but feel that if this vote is passed our civil service will be let down. Each department has very able men; I think there is no better civil service in the world than Canada has-I do not like to say it is the best.
Someone said something about big companies. What do they do? Well, I know a great deal about what big companies do. I have been associated with big companies myself. Before coming here to-day I took the trouble to see what some big companies do. United States Steel is a very big company. It has 150 subsidiary companies, and
225,000	employees. That is a lot to look after. It has a payroll of $438,000,000 a year. It has ten chief officers. It has sixteen directors and twelve in the finance department, a total of thirty-eight officers, some serving in two capacities. If they should decide to officer that great company as we are proposing now, with ten under-secretaries, they would want another hundred or hundred and fifty. The same applies to General Electric; they have 76,000 employees, $654,000,000 worth of orders per year; forty-nine chief officers. We have seventy-five ministers in this country, including the provinces, many of them doing the same work.
The Goodyear Tire company have 54,000 employees, 593 branches. That is a lot of
business to look after. They have fourteen officers, eighteen directors and four in the finance department, several serving in two departments. Business could not operate in any shape, manner or form if they carried on as we carry on Canada with seventy-five ministers and a couple of councils. No business could live under such conditions. You have to run business in a business-like way.
I was amused at reading some of the names of those who are to occupy these offices. They are all good men. I will not mention the name, but I noticed one very able man who is mentioned as assistant to the Minister of National Defence for Naval Affairs. When I spoke here a while ago about rehabilitating the Saskatchewan river I did not know that this capable man could have learned anything about shipping on the Saskatchewan river. Certainly he could not learn anything about shipping on Moose Jaw creek. But he has great ability and would give eminent service in a department; he knows more about shipping than I do. He would render excellent service wherever he is placed.
Last Saturday when I was home it was announced in the Toronto papers that we were to have ten under-secretaries. I met a workman on the street, and he said, "You will oppose that?" I said, "I have prepared myself to oppose it. Why are you so anxious to oppose it?" He said, "Out of my last week's pay envelope" - I assume he meant for two weeks-"I had $39 deducted for a lot of things -national defence tax, compulsory savings, red cross, stamps, plant health fund, et cetera." I have thousands of workers in my riding, perhaps forty thousand altogether. I just could not look my workmen in the face when I go back to Toronto and let them think that I supported an expenditure-not of $40,000 a year, but something like $100,000 to $200,000. I can support no vote for members of parliament acting as under-secretaries without making provision for terminating their office. If the Prime Minister wishes to introduce a bill as Sir Robert Borden did, that is another question, but I am wholly opposed to a vote which initiates a new principle in this country and revolutionizes our parliamentary practice without adequate discussion.


Thomas Miller Bell: I am a little surprised at the speech of the hon. member for Davenport (Mr. MacNieol). May I say first that in my opinion we are apt to view expenditures in a manner entirely out of proportion and to lose a proper sense of perspective in regard to them. During this session we have heard a great deal about large expenditures for rugs. I agree that they were high, and this sort of ex-

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penditure should be investigated and curtailed. We now have before us an item of $40,000 which to many people seems a good deal of money. But only a ripple was caused in the house over,, for example, the story we have been told of the expenditures in connection with the Aluminum Company and the Ship-shaw development. The fact that one way and another, by depreciation and so on, we are giving that company $158,000,000, seems to have caused a mere ripple on the surface, and a $100 rug or some relatively small expenditure seems to be taken as requiring to be looked into very carefully indeed.
However that is not what I rose to say. I think this is a step in the right direction. My predecessor, the late Mr. J. S. Woodsworth, on numerous occasions suggested that some relief should be given to the ministers in the handling of their departments on the floor of this house. I must say that I have often been surprised at the manner in which the Minister of Finance, for example-and I will say this because he is not in his seat at the moment- has sat here day after day, hour after hour, patiently answering questions that could have been answered quite readily by someone else while he might have, been given the opportunity of going on with the much more important work awaiting him in his department. Therefore I feel that to give the ministers this relief in war time is a sufficient recommendation for the motion now before the committee. But, as I said on another occasion, I also think it is well that when parliament is dissolved and members of the house are reelected, if the government should be called upon again to form an administration, there should be available a number of trained men to step into the shoes of those who have passed on, politically at least. It also may be a challenge to those of us in the opposition to see younger men being trained as juniors and understudies to the ministers, that we in our respective groups in this house may apportion our work so as to have men making particular studies of particular departments. If, then, at some time opposition parties should be called upon to form a government, they would have available men with a knowledge of the departments they might be called upon to administer.
I do not agree with the hon. member for Davenport that this system has been a failure in Great Britain, or that it is viewed unkindly by the people over there. I have been told on a good many occasions that the system of under-secretaries and parliamentary secretaries in Great Britain is one of the bases of their democratic life and of their continuance
in the paths of democratic endeavour. Therefore I intend to support this vote. I know the amount involved, $40,000 for ten men, may seem high to some people, but let us not forget that we are living within a system which offers certain rich rewards for services rendered in business, but that those who are connected with our governments and their services as a rule are not in receipt of high rewards for the work they do. Certainly this proposal is no exception, when we compare the proposed salaries to those normally paid in business to responsible officials.
A few moments ago I mentioned the Minister of Finance. I want to say also that I think we in this house appreciate the tremendous load the Prime Minister has been carrying; and while he has been called upon to look after external affairs, I have felt that at the present time sufficient attention could not be given by the Prime Minister to some of the matters that must come to his attention. I am hoping that when an assistant is appointed to his department we may see a great deal more attention devoted to external affairs in this house than we have seen during the past several sessions. I have in mind, for example, what has seemed to me the lack of any suggestion that Canada should cooperate in international affairs, in the manner in which her contributions to this war would warrant. At the moment a conference is taking place in Bermuda regarding the grave plight of refugees. I noticed in the press yesterday a report that the two great powers conferring there, Great Britain and the United States, had been looking around to see what assistance they could get in the solution of this problem, and the hope had been expressed that certain South American neutrals would make some offers. The same criticism applies to Casablanca and other conferences. Instead of our being kept informed as to what is going on, I think Canada should be a participant in these conferences, and should make her own contribution. If I may say so, it is a strange thing that just at this time the great Mohammedan power, Turkey, has shown more of a Christian spirit towards the refugee problem than we in this Christian country have shown in past months.
In my view at least the proposal now before us is a step in the right direction. I agree with the hon. member for Davenport to this extent, that perhaps we might have been better advised to accept a bill setting forth the activities of the new assistants, in order that we might discuss more intelligently what they are supposed to do. I realize, however, that the Prime Minister regards this as an important experiment,

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which, if he wishes, or if it does not work out as satisfactorily as the government hopes, may be terminated without difficulty because there will be no statute. I hope the experiment will succeed, and I trust we may find that under this plan some of our overworked ministers at least will be given a little more consideration than we have been able to show them in recent weeks.


Thomas Langton Church: I desire to second the
amendment moved by the hon. member for Davenport. Since I have been in the house I have consistently opposed this innovation, inasmuch as in Canada we have over-government and over-taxation. We never should have had any provinces at all. They were the creation of the fathers of confederation, for political and not economic purposes, with the result that under the British North America Act we have to-day a duplicate municipal system. Our system is different from that of the United States, where at one time they had a cabinet of six members, though I think now it has been increased to eight or nine. Members of the cabinet in that country do not sit as members of the legislative branch; that is the difference.
I do suggest, Mr. Chairman, that this proposal might have been left until the war is over. Some twelve or fourteen years ago I introduced a resolution in this house with regard to parliamentary, cabinet, constitutional and law reform, which included the revision of the rules of the house in order to give us the British system of asking questions on the orders of the day, which would eliminate very lengthy debates. Last year I placed on Hansard quotations from a textbook written in 1930 by the second clerk of the British House of Commons, now Sir G. F. M. Campion, showing that the procedure in the British house of questions and answers by members of the cabinet could be adopted here without any amendment to the rules.
I am opposed to this resolution, though I am quite sure the government have set their heart on it and that eventually they will carry it, due to their large majority. The Prime Minister does not seem to be mindful of Burke's observation that all innovation is not progress. This is a very great departure from tradition as set out by the fathers of confederation in the British North America Act. It is overlegislation. I am surprised at the attitude of the hon. member for Rosetown-Biggar and his party, because they have been opposing overgovernment and over-taxation. I say that this suggestion by the Prime Minister will result in over-legislation, which Herbert Spencer once described as the coming slavery.
There can be no doubt at all that the cabinet is over-worked and hard-worked. But if we adopt this principle of applying to 10,000,000 or 11,000,000 people what has been done with regard to under-secretaries by the mother of parliaments, in a country where they have 46,000,000 or 47,000,000 people, and if we compare our municipal officers, our provincial officers and dominion officers we will find that we are running into over-government and overtaxation. These three bodies are coining taxation of all kinds.
The people have been asking for retrench* ment in civilian estimates. If we look at the situation that has developed since I first opposed a resolution of this kind it will be seen that the situation has been changed. We have under each minister a large number of controls and subcontrols. Commissions of all kinds have been appointed, to the point where parliament, with all its rights, privileges and functions, has been greatly reduced in value. True, we are engaged in a war, and to a certain reasonable extent these bodies are required. But it has been overdone, and at great cost to the taxpayers.
A few days ago we heard reference to many features of that control system. For instance, let us turn to the appointment of inspectors- and I am surprised that the hon. member for Temiscouata (Mr. Pouliot) has not been included in the list of new secretaries. It was shown in the return brought down for him that 672 inspectors had been appointed by the wartime prices and trade board. That system of inspection is being or may be duplicated in our new system of secretaries. We are becoming a nation of ambassadors and heading for a nation of secretaries. Our ambasadors are found on all the seven seas. We have them in every important country in the world. We are duplicating in embassies what the British government for our empire has been doing along this line, with the result that in Australia, New Zealand and many other places mentioned in the blue-book published by the Department of the Secretary of State for External Affairs we find that we have a large standing army of ambassadors and envoys extraordinary-and some of them are extraordinary, I can assure the committee. Some of the speeches, like those by Ambassador Davis in Australia, are indeed extraordinary. And when an envoy extraordinary is appointed he takes along a string of secretaries, his first secretary, second secretary and third secretary-three strikes on the secretaries and they're out.-yes, sir!
Whether or not this is the Winnipeg platform makes no difference to me. I support principles. I do not believe in following the

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old policy in Ontario years ago, of the Conservative party, or that your leader is your policy-"follow your leader." Look at what has happened in Ontario in provincial policies as to that argument.
I have consistently opposed this innovation of appointing ambassadors not only in Washington but throughout the seven seas. That policy was fatal in peace-time, and it is still more disastrous in war. We are now sending an ambassador to Russia, and we are going to duplicate the system of controls and subcontrols, and now parliamentary secretaries and consuls general. Once these gentlemen, these ambassadors, are placed on. the payroll, they will not be taken off. The other day when I saw a parade of the Queen's Own going down Jarvis street and along Queen, I was reminded of these ambassadors, these high potentates going all round the world, followed by their first, second and third secretaries, and a regiment of army, navy and air force attendants with them.
When I first heard about this parliamentary secretary business I went to see a show called "The Private Secretary", the finest comic opera I had ever seen. In it was shown the secretary, "always perfectly correct and perfectly calm"-much the same as the secretaries the ambassadors have and our members will have; they are all good men. Sir John A. Macdonald once said to one of the members that he had the best secretary in the world, the Hon. William Lee. His picture was hanging years ago in Mr. Speaker's office,, in the office of the Clerk of the House, and in nearly all the offices-or used to be. I refer to Billy Lee, Sir John A. Macdonald's great secretary. That was the tribute paid to him by one of the writers.
Napoleon once said that France abounded in men of the highest capacity; the thing was to discover them and give them power. This man is a cart when he. ought to be a cabinet minister, and this man is a cabinet minister who ought to be driving a cart. There are many reasons why the government of to-day should wait until the war is over before offering this innovation. I sympathize with the ministers who supervise his majesty's forces. They cannot be expected to do all the work. But they have large staffs, and many people work for them throughout the country. Their attendance is required in the house, at times, but they need not be here every day. I believe some of them spend more time here than they need to. I sympathize with them, however, and I know the people of . Canada are proud of them and of the work they have done.
Yesterday the Prime Minister was in Toronto, where he lived so long., and where his family lived for so many years. He received a splendid reception in that city, a reception in keeping with one who is Prime Minister. His attitude was not that taken a few days ago by the Minister of Labour, when he made a reference and' a reflection which certainly was not flattering to Toronto or to hon. members from that city. Four or five members from Toronto are here today. I have not been able for reasons beyond my control, to be in attendance every day, but since I have had1 a seat in the house I believe my attendance has been fairly good. I sympathize with the government in the heavy load they have to carry, and the heavy work they are doing, and wish to give them support if they have a total war. But I see no reason for this suggested change.
It is true the Minister of Finance has been overworked, at great risk to his health. But he could get away from much of that work by setting up a ways and means committee for his budget, and adopting one of the principles of .municipal government. Such a committee could consider the budget resolutions, the income tax changes and matters of that kind, and1 save a great deal of trouble and get a better balanced budget.
We have become a nation of ambassadors, and now we are becoming a nation of secretaries-private secretaries and others. I have no objection to the fine type of gentlemen proposed for these various offices. It used to. be considered that a trip to the League of Nations was a consolation prize for those who were not in the cabinet. It was supposed that a trip to the league would1 cure them of their insomnia, and of any desire to be promoted to higher office. Now that the league does not operate as formerly, and these men are finished1 with it, we send them out as ambassadors. We sent one old league president as ambassador to Chile; another has been placed in the education branch of the Department of National Defence, and1 a full colonel of the league has been attached to the radio corporation. It will be seen that these consolation prizes are being taken up very rapidly.
I fail to see any reason for this vote. No doubt these secretaries when appointed will have large staffs. New rugs will have to be provided. They will have to have new desks for stenographers and new chesterfields. No doubt they will copy the great ambassador Donald Gordon, and will have controls, subcontrols, inspectors, inspectors-general, first

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secretaries, second secretaries and third secretaries. I fail to see the necessity for this innovation and boost of civil estimates, and I am surprised that we have not heard some opposition, instead of support, from the hon. member for Rosetown-Biggar. I know he would make a good secretary himself. It is too bad there are not enough positions to go around to take care of my hon. friends over here. Then further down there are my hon. friends of the Social Credit party. Then as we go farther down the gangway, as we come nearer to the door, we find all the wandering boys there who would make excellent secretaries. Where are they this afternoon? We talk about thin attendance in the house, but all you have to do is to go down to the railway ticket offices and you find the reason. All the berths, all the staterooms and all the drawing rooms have been booked for weeks ahead by the controllers and subcontrollers and their staffs. You cannot get into a hotel at times for the same reason on a visit to Ottawa. I do not know where they are going to house any further controls and subcontrols when they come here.
I may be wrong, but I am content to be consistent. I am one Conservative in the house who tries to be consistent. Without fear, without asking for any favours or for any promotion from any political party, I have always stood up for principles. The greatest need in the country to-day is a political party which will support principles in season and out of season. We have had enough of this in the past. Another great need in this country is a reduction in our overhead of government personnel. Each one of these controllers and subcontrollers has what is known as a staff of professors. Our professors are in their heyday while real men are at the front. These professors are operating, or helping to operate, not only the Department of Finance but almost every department of government. They dwell in the clouds. Science has won the respect and admiration of the civilized world in the past thirty years because of what it has done. Science argues from facts. The physicists, the chemists, the men of medicine, the biologists and other men of science have won the admiration of the world, but these political professors have never been trained in any business, and yet they are running these controls and subcontrols of government. They do not argue from facts; they dwell away up in the clouds and never come down to the ground at all. I should like to see the Prime Minister wait for this innovation until after the war. The members who have been named are excellent
members. They have worked hard and no doubt they deserve some recognition, but I think they should wait for a happier day.
I cannot see any useful purpose to be achieved by adopting this system. It will be a great change in our constitution. It will destroy the solidarity of the cabinet, the responsibility of the cabinet for collective action. You will have one officer in the House of Commons and probably another one in the Senate. Over-government and over-taxation will result, and I fail to see what good will be gained by such a costly innovation in war time.


Gordon Graydon: The whole matter of under-secretaries, or parliamentary assistants, or whatever they may be called, could be approached in a different manner from that employed this afternoon by the Prime Minister and others who have spoken. That the war has brought to the government a heavy load of responsibility is admitted by all who have spoken, and obviously it falls more heavily upon some departments than upon others. As has been pointed out by ministers who have spoken from time to time in the debates during this session, one of the results of the load of responsibility which ministers have been carrying is the necessity of bringing into the departments a great many men who perhaps cannot be regarded as civil servants in the usual sense of the term. These men are acting as controllers or administrators, or in other capacities, and in many instances they are functioning as legislators, sometimes in a small way and sometimes in a large way. In a measure they have superseded the functions of government of our land.
There is a feeling across Canada that there should be a democratization of the system of bureaucracy which has been growing since the beginning of the war. Regardless of the explanations which from time to time the government has made with regard to the responsibilities of ministers and the responsibilities of the government for the actions of those who are now occupying important positions, there is a call, an insistent and I think a reasonable one, that the parliament of Canada and the government should bring back that responsibility of government which has been lost through the adoption of the system I have just described. One of the reasons why the appeal for the adoption of the under-secretary or parliamentary assistant system met with some sympathy and favour in the country was the belief that it would bring back that measure of responsible government for which the country has been calling. That was the reason, and I think the only reason, why this

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opinion was expressed by many prominent people in various walks of life. I say to the government, and particularly to the Prime Minister, that if I read this particular item aright it will not provide that for which the people have asked and would normally expect to receive.
If we are to move away from bureaucracy, I do not think we will make the headway most of us would like to see made by superimposing upon that bureaucracy an under-secretary system. What I would like to see the Prime Minister undertake is to see that this undersecretary system will not just be something imposed upon the bureaucracy that we have, but that it shall take the place of at least a part of this bureaucracy. This is one of the thoughts which runs through my mind in connection with the whole matter of undersecretaries and parliamentary assistants.
Perhaps as time goes on the Prime Minister will explain the proposal more fully. The underlying motive of 'the under-secretarial system was to get back to responsible government, but it looks as though under this system we are simply adding another "semihonourable" to each department which has been mentioned. We do not know whether [DOT]they are to be called "honourable" or "semihonourable", or what the designation will be; we do not know whether they are to be designated "assistants" or "parliamentary assistants" to the ministers. In some of the departments there are not the same reasons for moving away from democracy as exist in other departments mentioned by the Prime Minister. Take the Department of Justice and the Department of National Revenue. Without casting any reflections upon the Minister of Justice or belittling the work he has to do, apart from the position in the war cabinet, if the emphasis is to be upon the departments which have the greatest amount of work and responsibility, the Prime Minister might have made a distinction between the ministry of justice and the ministry of national revenue; for the latter is now one of the major portfolios, and its work is continually being developed and enlarged.
It seems to me that the move which the Prime Minister contemplates is not one which was expected by the people. They will be asking, what part of the bureaucracy is this system to replace? I hope that the Prime Minister, when he replies, will have in mind a number of the points which I desire to draw to his attention.
I suggest that he should give us some information by way of comparison of the
fMr. Gray don.]
duties and responsibilities and positions of these parliamentary assistants with those of similar appointments in Great Britain.
Some mention was made of the Prime Minister's own department, that of external affairs. This brings up a point of which perhaps he should have due notice, so that the subject can be discussed at the proper time in parliament, namely, whether it is intended to set up a full-time full-fledged Department of External Affairs, and whether certain branches of the Department of Trade and Commerce will be part and parcel of the new structure. When the appointment of a parliamentary assistant in the Department of External Affairs was mentioned this afternoon, I thought it was some indication that a reorganization is to be expected in the reasonably near future.
The Prime Minister spoke of the matter of parliamentary assistants being on full time and on part time. This is a question which will engage the interest and concern of the country. People will want to know whether these positions are full-time jobs; whether-the men who take them are not, in the words of the hon. member for Broadview (Mr. Church), accepting a consolation prize but are assuming full war-time jobs in exchange for the salaries paid to them. It would seem to me that if there is need of a parliamentary assistant in any department there is need for it the year round. In any event the point is one which the Prime Minister should clarify.
Another matter on which information might properly be given is this. What will be the relationship-I am fearful sometimes that it may be a delicate one-between the newly appointed parliamentary assistants and the deputy ministers, the private secretaries, the executive assistants and all the range of officers wThich surrounds ministers?
With great deference to the Prime Minister, I thought he was taking a retrograde step, though he may not have meant it, when he indicated that one consideration in the choice of a man to fill the position of parliamentary assistant tvas whether he would get along well with the deputy minister. I believe that that is one of the considerations which he will wish,, upon reflection, to correct, having in mind the responsibility of government to parliament.
Again let me ask, will the duties of the parliamentary assistants be purely parliamentary? In other words will they spend their time between sessions getting ready to answer questions on the floor of the house? Will they have executive work to do? The Prime Minister spoke of some of them coming into the cabinet. Will they also have

Supply-Parliamentary Assistants
administrative work to do; and in that particular connection, just where do they fit in with these other officials I mentioned a moment ago? Then, will the parliamentary assistants have power to enunciate on the floor of the house government policy generally? Will there be a growing tendency for ministers to vanish from the house and find other work to do, or will the parliamentary assistants be here only when ministers are absent for some good and sufficient reason? On all these questions, I think, the public will require information.
I should also be glad to know whether the appointment of parliamentary assistants is of the nature of an experiment or is a settled and permanent policy. The Prime Minister may have mentioned that; I take it that when the war is over there will be some prospect of reviewing the necessity of maintaining this system.
I hope that at the end of the discussion the Prime Minister will be in a position to disclose the names of the men whom he has designed for the positions mentioned. He said that one was not always able to get the best men, because of certain considerations relative to cabinet appointments, but that in this particular case he had been able to put these impediments aside and choose the very best men he could find. I am anxious to compare my judgment, as I look across the house, with his, because I think the comparison, or perhaps the contrast, will be interesting.
I would rather that the Prime Minister had gone into the broader field of parliamentary reform instead of confining himself to the narrower field of parliamentary assistants only. The Prime Minister will recall that in my maiden speech as leader of the opposition at the opening of the session I made some remarks with respect to parliamentary reform and the rules and procedure and general deportment of the House of Commons. Since then, members from all sides of the house have concerned themselves with parliamentary reform in general. This proposal for parliamentary assistants can in any event be regarded as only one move or development which in the opinion of the government has been made necessary by changed conditions.
Whatever may be the reason, and the Prime Minister may have different reasons from mine, it seems to me that we have not in parliament to-day quite the reflection of public opinion that I should like to see. There are many, many factors which enter into that, and let none of us regard himself as free from sin in contributing to the present condition. So far as I am concerned, and I think it is true of
every member of the house, I want to do my part, but I believe that parliament must pull itself up and make some move so that it will reflect more effectively public opinion outside. I do not say that simply as leader of the opposition, because long before I occupied this post I intended to make reference to this question. Sometimes we become rebellious and feel that things are not moving as we should like them to move, and perhaps that is particularly true of the younger generation in public life. It does seem to me that this House of Commons is not organized in such a way that it can do its work most effectively in a war-time period. I confess that many times in the years that have passed I have felt something like futility,, but I hesitated to advance concrete suggestions for reform, because I was not quite sure whether my suggestions would make for betterment or not, I knew, however, that something was wrong.
There is a difference of opinion with respect to the whole question of our rules and procedure. I have great respect for the views held on this question by the hon. member for Richelieu-Vercheres. He is a veteran member of the house and has had long experience in observing how the rules and procedure worked, and when he says that it is not so much a question of the rules and procedure as of other matters which surround them and form part of the operations of the house, I would hesitate to take serious issue with him. But whether it is the rules or the procedure or our lack of organization generally throughout the house, the result is the same. Our rules and procedure were made when there were only two parties in the House of Commons, government and opposition, and the fact that we have now more than two parties may contribute to some extent to the necessity for a change in our rules and procedure. If that is so, let us not hesitate to change them.
In closing, and I am sorry to have taken up time but this does seem to me to be part and parcel of the development of our parliamentary procedure, I would suggest, in all earnestness that after the Easter recess the Prime Minister review and reconsider the position he took at the opening of this session. I know he held the view then that he was on solid ground and had the matter well reasoned out. But having had an opportunity of considering the matter further, and having had the experience we have had during this session-I do not say that that experience is indicative of anything more than our experience in other sessions-I would ask the Prime Minister to review the whole situation and if possible set up a select parliamentary committee to go into the whole question. It could not do any harm, Mr. 2358	COMMONS
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Chairman, and it might do a tremendous amount of good. After such a review by a parliamentary committee we would know whether it is ouf rules that are at fault:, or whether it is our procedure, or whether it is something wrong with ourselves; and perhaps many members, including myself, feel that there might be something in that latter suggestion.
A committee of that kind could give consideration to a number of questions and. inr quire into the suggestions which have been made from time to time by members inside the house and by people outside. One suggestion I have heard from many quarters is that a better division of private members' time would contribute to more effective work. There have been some who have suggested-I am not advancing this myself-that the House of Commons might make better progress and do better work and the members would have a better opportunity of making their proper contribution if the house met earlier in the afternoon and perhaps sat a little later to six or six-thirty, and then have the evening devoted entirely to committee work. The committees would then not be sitting while the house was in session, and the house would not be denuded of some of its best men. As I have said, that suggestion did not originate with me, but it is a suggestion that one hears from time to time, and it is one that might very well be considered by such a committee.
Curtailment of the length of speeches is another suggestion. We are all sinners in that respect. I remember when I made my maiden speech as leader of the opposition the Prime Minister in his opening remarks said that it was a very good speech, but before he got through he said in effect that it was not much good at all. Just to give some idea how we all err, let me say that the Prime Minister was kind enough to suggest that my speech was fairly long. Well, it was rather long, it lasted one and a half hours, and when the Prime Minister had finished he had spoken for two and a half hours, just to give a young fellow a lesson in his first days as leader of the opposition. I am not attempting to indicate any special need in that regard, because the Prime Minister must have on certain occasions plenty of time accorded to him in this house, for, after all, there are important things which he must discuss and which are not properly compacted into a small measure of time. But I would say that decrease in repetition in the longer debates is one of the things with regard to which, by organization of our parties, perhaps organization generally of the forces of parliament, a very material change for the

better could be effected1. These, and the more effective utilization of members on the committees, are matters to which the committee might give consideration.
More than that, the giving and dedication of a full question hour at the beginning of each sitting is a matter of importance and one which I think the committee would be fairly unanimous in recommending. With respect to the standing committees of the house, here is one of the. obsolete things with which I think a committee ought to deal. We have standing committees which seldom meet. The names of the committees themselves indicate that they were in some instances designed, for yesteryear and not for to-day. More than that, when committees are set up they should be the first thing dealt with at each session, instead of stringing along as committees do, regardless of the reasons, when of course the Prime Minister will argue very properly that it takes longer than it should to set up committees. But if they were set up at the beginning of the session, then their reports would be discussed and there would be no need to trail over to other sessions on account of the reports not having, been received.
Let me sum up by saying that I only bring to the attention of the committee at this time some of the things that I think a committee ought to thresh out and deal with. It may be that in many instances we shall find when the committee meets that this cannot be done, because until these matters have been gone into thoroughly none of us can properly give our views and expect that they shall be fully understood and accepted. But there is no reason why we should not at least make a drastic move to see what can be done. It is our duty to do our best to bring the House of Commons up to a better standard of efficiency. If, in bringing this up at the end of what I have said with respect to parliamentary assistants, I have provoked a discussion and brought before the committee once more the prime necessity of having a committee to deal with this all-important matter and to fit it in with the general position in connection with our parliamentary procedure, the time will not be lost.


Mr. POULIOT:: Supply-Parliamentary Assistants
of conduct to dictate to the Prime Minister; I am ready to accept his decision, but on the other hand I do not think there can be any reorganization of the cabinet as long as he keeps all the same men with him. That is not the idea. If there are changes to be made, that can be done in various ways; in the first place, by sharing the portfolios where more than one are held by a single minister; in the second place, by decentralizing certain large departments, such as the Department of Mines and Resources, and also by putting the knife into some departments. I will explain that. I have the greatest sympathy and admiration for the Minister of Finance, for several reasons. The first is that he has always been a friend of mine; that is a good reason for me. The second is that I cannot help admiring a man who makes the sacrifices the minister makes; who stays away from his family nearly all day and all evening; who lives a very simple life without even such distractions as going to the theatre. He lives like a recluse; he is always in his office working hard. When he goes out it is to make speeches in support of the victory loan, or something like that. He cannot enjoy the company of his family; he is kept working in the Department of Finance. That man needs help, but he can be given that help otherwise than by the appointment of a parliamentary under-secretary. It could be given by leaving him the Department of Finance and removing from his control the wartime prices and trade board, which could be headed by a new minister. That would be a great relief for the Minister of Finance, and would be an easy thing to do.
If these suggestions were followed there would be plenty of vacancies which would accord the Prime Minister opportunities to appoint a few more ministers, at least for the duration of the war. No one would complain about that expenditure, which really would not be so much after all. What would it amount to, for a country that is spending five and a half billions on the war and giving a billion to Great Britain? We are paying for it; why should we not have it? The cost would be the salaries of the ministers, plus allowances for automobiles, their private secretaries and a few stenographers. I do not wish to be considered forward, but that is the suggestion I offer the Prime Minister. The right hon. gentleman knows that I do not bother him with requests. I have great admiration for him, but I speak freely, and I find it my right and duty to express myself in this way.
Then there is another point. The leader of the opposition was perfectly right when he

spoke of the possible friction between the parliamentary secretary and the officials of the department. That would be inevitable. What will be the position of this colleague of ours when he rises to speak of the policy of his department? He will have to rely upon his minister for his knowledge of what has been done behind the closed doors of the council room, for I do not suppose these hon. gentlemen will have the right to attend all sittings of council; otherwise the council room will have to be enlarged. They will be in a false position. It is not a question of $4,000 per annum. If the Prime Minister needs more help, let him first separate the too large departments which are headed by one minister. Let him also get rid of the dead-wood. Let him divide the departments that are too big, and then he will be in a position to have colleagues who will not bring shame to his department. He may choose the same men, but they will be full ministers, with full authority to answer questions and to defend government policy in the house.
Among those mentioned for such posts is a very dear friend of mine, the senior hon. member for Queen's (Mr. Macmillan). I have for him the utmost respect. He is a modest man, one who did well in the army and is well read. His services as chairman of certain committees of the house have been of great value, and he is one of our most popular colleagues, and a good Scotsman.
The parliamentary guide states that his paternal ancestors came from Scotland1 in 1806, and his maternal ancestors from Inverness in 1803. He was educated at Prince of Wales college, Charlottetown, and at McGill and Harvard universities. He holds the degrees of Bachelor of Arts and Master of Arts from McGill, and Master of Arts and Doctor of Philosophy from Harvard. He was professor of English, chairman of the department of English, and dean of the faculty of arts and science of McGill university. He was a member of the royal commission on maritime claims, which sat in 1926, the royal commission on Atlantic fisheries, which sat in 1927 and 1928, and chairman of the royal commission on education in Prince Edward Island, which sat in 1929. He served in the war of 1914-18 as captain in the 7th Battery, Canadian Siege Artillery. He filled that capacity from April to October, 1916. He was major and officer commanding the 6th Battery, Canadian Siege Artillery from October, 1916, to May, 1919. He was twice mentioned in dispatches. In his student days he was a champion track athlete. He was sworn of the privy council on June 17, 1930. and was appointed minister of fisheries.

Supply-Parliamentary Assistants
Defeated at the general election in 1930. he resigned his portfolio on August 7 of that year. He was again elected to the House of Commons at the general election of 1940.
Is it reasonable to appoint as parliamentary secretary to any minister a gentleman of that calibre? This colleague of ours is exceptionally qualified to be deputy prime minister. I will tell the Prime Minister that the senior hon. member for Queen's is better qualified to be his deputy prime minister than is Mr. Clement Attlee in England qualified to be deputy to Mr. Winston Churchill. I speak freely, sir. I express personal views, but I want the country to survive after the war, and I am anxious that the parliamentary traditions of Great Britain may remain in our parliamentary institutions.
I took great interest in what was said by the leader of the opposition respecting changing of the rules. That is a most delicate problem in debate either in the house or in committee. The leader of the opposition, however, has complained about no rule regarding debate with the exception of the one respecting the length of speeches. I ask him now if there is any other rule about which he complained. I admire profoundly the wisdom of British practice which gives to each member the opportunity to express himself and to say what his constituents expect him to say. That is why our system provides for several readings of a bill, and the reason why an hon. member may always object to more than one reading on one day, although by common agreement first and second readings do take place on the same day.
The hon. member may be right in his reference to the formation of committees. I do not now whether I have been reappointed this year, but I do know that for years I was chairman of the debates committee. It never sat. One day I said to the whip, "Please do not have me appointed again to that high function, which does not interest me." But he played a trick, with the result that I was again made chairman of that honorary committee-which is of no use. Many committees are like that. But the saddest part of it is that there are committees which perform very hard work, which bring in no reports. I would ask you, Mr. Chairman, what useful work has been done by any committee since you have been a member of the house. I realize that you, with other hon. members, have worked hard on committees. But no result has been attained.
I remember distinctly the committee on elections, which sat for a long time, both day and night. Vehement discussions took place,
and what was the result? There was a suggestion that Bennett's law be repealed. We returned to the old legislation which had been in force before, and the change was made to the satisfaction of all concerned. No committee was required for that. We needed only a stroke of the pen to replace Mr. Bennett's bad legislation with good, Liberal legislation. My one regret is that despite their hard work the time of hon. members is wasted. What is needed is some practical direction, so that they may make the best possible use of their time while the session is in progress.
In earlier days members had no private rooms or offices. All members used to meet in room 16. I was always under the impression that the idea which prompted the union government to rebuild the houses of parliament as they are now was that of giving rooms to hon. members, so that they could be divided, two by two, and so as to prevent their having the contact they must have if they are to form common opinions on matters of public interest.
We must accept conditions as they are. But in my dealings with hon. members I have found that no man can be elected to this house, a most exclusive club, unless he has some prominent quality which may amount to a virtue, even though it may be partly hidden. There is no large group of fellow citizens who will unite to give their vote to a man unworthy of their confidence. I do not believe so. From my personal contact with the members of the house I have come to the conclusion that there are two sides to every picture. If I have had to complain at times about certain ministers, it is on account of their stubbornness and their refusal to listen to reasonable representations which are made in the public interest. I have already said in public that I think some of the ministers should go, and I still believe that. The Prime Minister may decide to do otherwise, but simply to put a plaster on top will not change anything. What we need is a change in bureaucracy, although, to attain this result, the government must use fairness in dealing with the officials of the various departments. Whether it will or will not, I do not know. It is up to the government to decide the policy to be enunciated, either over the radio or in the press. If the Prime Minister pursues his policy of appointing parliamentary secretaries, I will offer my sincere congratulations to their wives and my deepest sympathy to them.


Mr. JAQUES:: A previous speaker criticized the attitude of this group toward this matter when as a matter of fact none of us has expressed an opinion. I think I can sum
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up the attitude of our group in a very few words. If the ministers are overworked, and I think it is more than likely they are, we do not begrudge them all the help they require nor do we begrudge the expenditure that will be necessary to provide this help. But if the appointment of these assistants to the ministers means that the ministers are to shelve part of their responsibility, that instead of a minister being responsible directly to the members of this house he will have his understudy pass the buck, to use a common expression, then we would oppose the idea.


Mr. GILLIS:: I am not going to take up much time this afternoon because I am surprised at the time taken up already. With the opinions that have been expressed in the house and in the public press during the past six months I thought it was conceded that this measure was an absolute necessity. I am surprised that Mr. John Bracken has not convinced the members who spoke this afternoon that this measure is in the interests of the better functioning of parliament. Personally I think something should have been done two years ago.
The work of the ministers has increased 100 per cent because they have been handed additional duties in connection with the war. Anyone who has watched the ministers in the house will agree that they need assistance and need' it badly. I am for this measure 100 per cent. The fear expressed by the leader of the opposition that there is a trend toward a development of machinery outside parliament which lessens the responsibility of parliament should be taken care of by a move in the direction of giving the ministers assistance.
The time of a minister should be fully occupied in directing his department. No minister charged with the responsibility of carrying the load our ministers have to-day is in a position to do any detailed work. The general in command of a department should be able to delegate authority. He should see that his department functions as smoothly as possible and in the most efficient manner. The job of the parliamentary secretary will be to familiarize himself with discussions in the house which have to do with his department. I see the Minister of Finance, the Minister of Labour and the Minister of National Defence in their seats hour after hour waiting to make statements to this house. Their time would be much better occupied in carrying on the necessary directive work in their respective departments.

The leader of the opposition stated that the rules of the house should be changed in order that the services of the members of the house might be utilized1 to a greater extent. That appears to me to be the opinion of someone who has not spent very much time in this house. Speaking for the members of this group, I can say that we are fully occupied for at least fifteen hours a day. We serve on as many committees as it is possible to cover. My feeling is that by and large a great number of the members appointed to1 committees are not paying attention to their work. There is plenty of work for the private member to do if he is attending to the job. The work is efficiently organized, provided we do what we are supposed to do. You cannot spend your time in the house and' be in Toronto for four days a week.


John Ritchie MacNicol: Why does the hon. member mention Toronto? Why pick on Toronto?


Clarence Gillis: I mentioned Toronto for this reason-


John Ritchie MacNicol: I am in this house as
much as the hon. member.


Clarence Gillis: Oh, no, you are not.


John Ritchie MacNicol: Yes, I am.


Clarence Gillis: Toronto has the largest representation in this house of any city in Canada. It is close enough to Ottawa to enable members to go home on week-ends, and the majority of them do go home. The western members and the eastern members are here for the session when they come to Ottawa at the opening, and the result is that they are in the house all the time and are paying attention to their work.


John Ritchie MacNicol: [DOT] Montreal has a larger representation. The hon. member does not know the facts.


Clarence Gillis: I am not as familiar with
the Quebec members because they do not mingle with us as much as do the Toronto members. We generally recognize them as being "T to T" members; they are here from Tuesday to Thursday most weeks. *


Mr. JACKMAN:: The statement which the hon. member has just made is to my own knowledge not based on fact, and I ask that it be withdrawn. The hon. member has endeavoured to cast reflections on certain private members. I ask that he be directed to withdraw the statement.


Clarence Gillis: I am not withdrawing anything. I merely stated that that has been my experience since I came here. It is a state-

Supply-Parliamentary Assistants
meat of fact so far as I am concerned, and I am not withdrawing it. The hon. member for Rosedale may have a different opinion.


Harry Rutherford Jackman: Mr. Chairman, may I
have your ruling on my request?


The CHAIRMAN:: The hon. member for
Cape Breton South must accept the statement of the hon.'member for Rosedale.


John Ritchie MacNicol: Withdraw your statement.


Clarence Gillis: No; I am not withdrawing my statement.


Joseph-Arthur Bradette: Order. The statement
which has been made by the hon. member for Rosedale will have to be accepted, namely, that what the hon. member for Cape Breton South said about members from the city of Toronto is not according to the facts, and could not apply to himself, as far as the attendance in this House of Commons is concerned.


Clarence Gillis: I want him to present his facts. I gave my opinion, and I stated the reasons for it. If the hon. member for Rosedale has any facts which prove the contrary, he is privileged to put them on record. He has not done so; and the mere fact that he rises in his place and says that what I have said is not a statement of fact does not change my opinion or the correctness of the statement which I make.


Joseph-Arthur Bradette: The ruling is this, that what was said by the hon. member for Cape Breton South was a question of fact, and the fact not having been accepted by the hon. member for Rosedale, the -hon. member who made it must of necessity accept the statement of the hon. member for Rosedale.


Jean-François Pouliot: Speaking to the point of order, I remember distinctly that in former years I was forced to withdraw something which I had said without using any unparliamentary language. The only thing which an hon. member shall withdraw is unparliamentary language. Por instance, if he uses profane language in talking of a colleague, or uses ridicule to the point of making his colleague blush, or makes statements like that, the hon. member must withdraw. But if an hon. member does not use unparliamentary language, a statement of another hon. member in contradiction of his own is enough to close the matter.
72537-150	1


Joseph-Arthur Bradette: According to a statement of Bourinot in his " Parliamentary Procedure," pages 352,	365, citation 313 of
Beauchesne:
It has been formally ruled by Speakers in the Canadian Commons that a statement by an honourable member respecting himself and peculiarly within his own knowledge must be accepted, but it is not unparliamentary to temperately criticize statements made by a member as being contrary to the facts; but no imputation of intentional falsehood is permissible.


An hon. MEMBER:: "Respecting himself."


Joseph-Arthur Bradette: I have made my ruling. The hon. member for Rosedale has objected as contrary to fact the references of the hon. member for Cape Breton South to the representatives of Toronto in the House of Commons. I hope the hon. member for Cape Breton South will withdraw.


Clarence Gillis: I cannot see your point, Mr. Chairman. I recognize that you have the responsibility of guiding this committee in accordance with the rules laid down, and I have not any intention of arguing with you with respect to your ruling. But I cannot see wherein the hon. member for Rosedale has any justification, according to the citation you read, in demanding that I should withdraw anything I said. I expressed an opinion, and he merely expressed his opinion. He has not challenged or disproved the statement I made.


Harry Rutherford Jackman: Yes; I have.


Clarence Gillis: He merely rises in his place and says that what 1 say is not correct; he has not presented any evidence to the contrary, and I cannot see wherein the citation you read compels me to take back anything I have said. I made no accusations, no disparaging statements. I merely made a statement which I believe is the fact as I have seen it since I have been in the house. I am sure that the hon.. member for Rosedale cannot repeat even now what I said. I merely stated this, in reference to what the leader of the opposition had to say with regard to a better organization of the members of the house, or that their time might be more fully utilized, that, speaking for the members of this group, our time is fully occupied, and that if any hon. member carries out his duties in accordance with the programme laid down by the house he can work sixteen hours a day. I said it has been my experience, and that. I believe, of other hon. members who serve on committees, that a large percentage of the men appointed to those committees do not attend them. I also stated that the main complaints, perhaps, come from hon.



Supply-Parliamentary Assistants
members who are not attending the house and attending the committees, because they would not be looking for more work if they were. I believe that any hon. member will admit that this is a fact, that by and large the members do not spend the entire time the house sits, or the number of days the house sits, within the house. My only reference to Toronto was the matter of example: they can leave here on a Thursday or Friday evening and spend the week-ends at their homes. While they are there I have plenty of' work to occupy me. I am not blaming them for going home; if I were an overnight ride from home the chances are I would spend the week-end! there. But, as I stated further, hon. members from the west and from the two eastern provinces, New Brunswick and Nova Scotia, are not in that position. I merely used Toronto as an illustration; I might have used Montreal. If the hon. member for Rosedale wants to make a statement which places the matter in a different light so far as members from his city are concerned, that is his prerogative. But I cannot see any reason why I should retract anything I have said because the hon. member for Rosedale rises in his place and says it is not in accordance with the facts.


Harry Rutherford Jackman: Well, it is not.


Clarence Gillis: The opinion I expressed is based1 on what I see. The hon. member is privileged to do the same. With all due respect, I just cannot see why I should have to take back something which I know or I think is the fact, unless the hon. member for Rosedale is prepared to prove to me that I am wrong; then I would be quite prepared to retract anything I may have said which is not true.


Joseph-Arthur Bradette: Order. It is not a question of retraction; it is a matter of accepting the word of the hon. member for Rosedale. The hon. member for Cape Breton South made a statement to the effect that, generally speaking-he used general terms and did not single out any one of the hon. members from Toronto-they were at week-ends in the city of Toronto and not attending to their duties in the House of Commons. The hon. member for Rosedale objected and said that as far as he was concerned he was attending to his duties in the House of Commons at week-ends. Therefore the hon. member for Cape Breton South must of necessity accept the word of the hon. member for Rosedale.
Mr. O'NEILL: I should like to say a few words in connection with this matter of what the hon. member 'for Cape Breton South has said. It is my belief that the hon. member has voiced an opinion which is held by about ninety per cent of the members of this house. They have not said so, but they have thought so. I come from the west; I have sat here day after day, week after week, and month after month, and I cannot go home because the distance is too great. None of the committees sits on a Monday or a Friday. Why? The reason is obvious. The Toronto and Montreal members want to get home. We know that. A vote is never held in this house on a Monday or a Friday for the same reason.
I listened attentively to what the hon. member for Cape Breton South had to say, and I could not see that he said anything but what I considered to be the facts. From my experience in this house, for the whole length of time I have been here, I think he was 100 per cent correct in what he said.


Joseph-Arthur Bradette: It is not a question of retracting; it is a question of accepting the statement made by the hon. member for Rosedale. That is all I want from the hon. member for Cape Breton South, and it is a well-known parliamentary rule that when a member denies a statement made by another, that denial should be accepted.


Jean-François Pouliot: He can accept it by not saying a wmrd about it.
Amendment (Mr. MacNicol) negatived, on division.


Gordon Graydon: Before the item carries, Mr. Chairman, I think the Prime Minister has a word to say in reply to the suggestions I made.


William Lyon Mackenzie King: I do not like to detain the committee, but perhaps hon. members would agree that when we resume this evening's sitting we might resume at a quarter past eight instead of at eight o'clock, as it is now a quarter past six. .
I might answer what my hon. friend has requested in just a word. First of all, I should like to thank him and the leader of the Cooperative Commonwealth Federation and the hon. member for Wetaskiwin who is acting for the leader of the Social Credit group, for the support which they have given to this proposal. I take it that they have all supported the principle of the appointment of parliamentary secretaries. My hon. friend the leader of the opposition asks for a more direct or more specific statement as to the functions of the parliamentary assistants. I shall enumerate them in a ver3r hurried w7ay.

Sup-ply-Parliamentary Assistants
In the first place the functions of the parliamentary assistants to the ministers will be similar in all particulars to those of the parliamentary under-secretaries in Great Britain. The duties of the parliamentary under-secretaries in Great Britain may be easily ascertained. Broadly speaking, they are to assist the minister in any capacity in which the minister may think it advisable that assistance should be given.
I have had conversations about the position of under-secretaries in Britain with several ministers from Great Britain and in particular with the High Commissioner from the United Kingdom, Mr. Malcolm McDonald, now resident in this city, who was for some years a minister of the crown in the old country. Recently I had a conversation on this matter with Mr. Eden, Secretary of State for Foreign Affairs. All of these gentlemen have said to me that it would be next to impossible to carry on the business of the British parliament without under-secretaries. The ministers have not found it possible to be present continuously in the house. They have needed under-secretaries to follow the proceedings in the house and be an instrument for keeping the ministers in touch with the matters that came up there while the ministers were absent, also to see to it that information which hon. members of the house might wish to have would be made available to them as promptly and as fully as possible. That I think is an essential duty.
The Minister of Finance has been in attendance in this house almost continuously for the last three or four weeks. He has been giving not merely of his time and attention to this house, but he has been working in his department as well to an extent that I am not at all sure has not come dangerously near undermining his health. I say that anything of this kind would be one of the most serious things that could possibly happen in this country at this time. The minister might have been spared an endless amount of the exertions he has undergone had the gentleman who has been assisting him voluntarily ever since the beginning of the year had an opportunity to relieve the minister of some of his duties in the house by giving information on some phases of those questions with which he has become wholly familiar but with regard to which under the circumstances the minister has himself been obliged to give the information.
I agree with what the hon. member for Cape Breton South has just said. I am amazed that there should have been any opposition at all to the appointment of parliamentary assistants in view of what has been said throughout this country and in this House of Commons during
72537-150J
the last two years. Month by month and day by day the necessity has become more evident of giving to each of certain of the ministers as assistants someone who in this house when the minister is absent and also when he is present can assist him in the discussion of the questions that come before us.
My hon. friend has referred particularly to the growing bureaucracy of the different controllers, boards and commissions, and other like bodies that have grown up. They have grown up inevitably. They are inseparable from the war effort. The war effort cannot be carried on without the creation of a number of boards to carry out specific duties. One of the purposes of the appointment of assistants to the ministers is to see to it that this growing bureaucracy, as the leader of the opposition has called it, is controlled as he has said in a democratic way, to see to it that there shall be someone in this house who can speak with relation to these particular agencies in a manner which the minister himself finds it next to impossible to do. It is easy for members to say, separate the functions, for example, of the Minister of Finance. Take away from him responsibility for the wartime prices and trade board and let someone else look after it. But when one comes to see the position of the Minister of Finance in presenting his budget to the house and in considering questions of finance as he has to consider them, in relation to amongst other things the control of inflation, one realizes that it is inevitable that the Minister of Finance must be in very close relationship to that particular board and to the shaping of its policies. But if he has an assistant to whom he may give directions to follow the work of the board and keep him in touch with the parts of its work most important to him, he can without too great concern assume responsibility for an extra body of that character in so far as it has not been given independent authority by parliament itself.
The creation of a number of other ministries, as has been suggested, to take work off the shoulders of ministers will not meet the situation at all. In this war business, there are interrelations of offices and functions which are as closely knit together as the fibres of thread.
Reference has been made to myself and the office of the Secretary of State for External Affairs. No one in this world would be more pleased than I if to-morrow I could have a separate minister of external affairs who could assume responsibility for all the work of that department without my being obliged to keep myself familiar with it. That is impossible. With the war situation what it is, over four-fifths of the business of the Prime Minister

Supply-Parliamentary Assistants
to-day, is related immediately to external affairs. The communications that come in hour by hour on which decisions have promptly to be made or given is part of the business, not merely of the Secretary of State for External Affairs, but of the Prime Minister who has to keep fully in touch with these allimportant things. Assistants can help. Fortunately, I have in my colleagues here ministers who deputize in the House of Commons and relieve me of most of the duties which otherwise would require my presence continuously here. That is a very great assistance, and if the house, as it has generously done in the past, will permit more of that I shall I hope be able to give fuller information in regard to some of the matters about which hon. members desire detailed information. But it is no more possible to separate some of these positions that seem to be easy of separation than it is to construct an entirely new arrangement of government. In these matters that come up day by day and which relate to all the different countries that are involved in this war, some positions have become so interrelated and closely knit together as to be virtually inseparable. In Canada the position of Secretary of State for External Affairs and that of Prime Minister have become pretty much of that character. The ministers should have more time for consideration of matters of high policy and have that time free away from the House of Commons altogether. It should be possible for parliamentary assistants, where something might come up suddenly in the absence of ministers, to give the information that would be sought.


Gordon Graydon: In the case which often arises in the house something rather important comes up in connection with the international situation, will the Prime Minister's parliamentary assistant, who will be somewhere in the vicinity of the right hon. gentleman's seat, be at liberty or be in a position to answer on a matter of international concern that, is broached to him across the floor of the house?


William Lyon Mackenzie King: That will depend on the nature of the information sought. The Prime Minister will have a deputy leader in the house. The special role assigned to the Prime Minister makes it difficult to assign his functions. There is no assistant, other than the deputy leader and his own colleagues, to the Prime Minister; the Prime Minister will not have a parliamentary assistant, nor will there be an assistant Prime Minister. There will be an assistant to the president of the

council. The office of president of the council is linked up at present with the office of Prime Minister. If, for example, information were desired in regard to some of these boards that come under the president of the council, I would expect that the assistant to the president of the council would be able to give the house information on those matters if a question arose concerning them.


Gordon Graydon: But not in external affairs?


William Lyon Mackenzie King: On questions that relate to the office of prime minister, the deputy leader of the house would be the one who would have to take the responsibility.
Other duties of assistants to ministers would be to assist the minister in parliament, to answer questions-not all questions-and also to take part in departmental debates so that the house may be given fuller information in regard to some matters than it otherwise would. To assist in the explanation of the estimates. I -can conceive of occasions when an assistant to the minister might relieve the minister entirely of a large part of the explanation of the estimates. To appear before house committees on behalf of the minister, participate in interdepartmental committees on behalf of the minister, to keep the house itself informed more promptly on matters which may arise in the course of debates; to assist in the planning of some of the post-war work of the government which will have to be done under the direction of the minister, but which the assistant to the minister, giving his time to it specifically, could do to good effect. Also to receive deputations-* the ministers are beset with deputations-they cannot possibly see many of them. An assistant to the minister could see them and I should hope be able to be of real assistance in seeing that their representations, were carefully considered.


Gordon Graydon: In the case of the death of the minister, or removal or translation to another place, in view of the close relationship with the Prime Minister that must exist, what will happen?


William Lyon Mackenzie King: Where a new
minister is not appointed, an acting minister is always immediately appointed when a minister unfortunately passes away or resigns. The parliamentary assistant will remain the assistant to the acting minister. The responsibility will be on a member of the ministry all the time. The parliamentary assistant to the minister will not relieve the minister of his responsibility.

Federal District Commission


Gordon Graydon: Perhaps my point was
not clear. The minister who is occupying the post now is the man who for the whole session or so long as the parliamentary assistant may be there makes the choice. The man who follows apparently has no say whether or not the parliamentary assistant who is there is the man he wants.


William Lyon Mackenzie King: Parliamentary
assistants are not necessarily attached to one minister for all time. That I wish to make clear. The very essence of the system in Britain is to have the assistants move about very freely, so that they can become familiar with the government departments.


Gordon Graydon: A roving commission.


William Lyon Mackenzie King: Not a roving
commision, but becoming better informed in regard to public business so that they can be more useful.
Then there is the matter of a link with members of parliament. I am sure I express the view of many as to the inevitable difficulty of members having a chance to take up matters w'ith ministers direct. It is impossible for a minister to meet members in the corridors and hope to settle different questions at a chance moment. An assistant to the minister will be mixing with members generally and will be able to bring to the minister many matters that otherwise could not possibly be brought to his attention.


Gordon Graydon: The member will want
to see the minister.


William Lyon Mackenzie King: He will in some cases; in others he will want the minister to know that there is a certain situation that should be dealt with. He will know it is being looked after. Then there is deputizing for the minister on different occasions, fulfilling specific duties. The duties will vary between one department and another, one minister may wish his assistant to perform certain duties and another other duties. Then there is the signing on behalf of the minister of many documents that otherwise would require his signature. There is the supervision of officials in some branches where an assistant minister can be of great help. The assistant to the minister can be of great help in regard to outside engagements as well as engagements inside the house. Almost any service that will help relieve the minister of a burden and give the House of Commons and the public more information with regard to the public business
is the kind of position which the parliamentary assistant to the minister will be expected to fill.
I would ask the house-and I am sure I am only asking what will be gladly acceded to- that when the appointments are made hon. members will cooperate in seeking to make this reform an important one and one that will give added prestige to parliament in having its functions performed in the most satisfactory way.
Amendment (Mr. Ralston) agreed to.
Item as amended agreed to.
Progress reported.
At 6.30 p.m., the house took recess.
After Recess
The house resumed at 8.20 p.m.



FEDERAL DISTRICT COMMISSION


[Stage Direction]
Hon; J. L. ILSLEY (Minister of Finance) moved that the house go into committee to consider the following resolution:
Resolved, that it is expedient to introduce a measure to amend the Federal District .Commission Act, 1927, by the authorization of payment to the federal district commission out of the consolidated revenue fund of a sum of $200,000 a year for a period of ten years from the first day of April, 1943.
Motion agreed to an.d the house went into committee, Mr. Bradette in the chair.
Gordon Graydon: What is this all about?


William Lyon Mackenzie King: There is a short bill to be introduced, founded upon, this resolution,, and we should like to have it distributed.


Gordon Graydon: May I ask whatever
minister is in charge of this resolution if it follows along the line of the resolution, upon which the last bill was founded? Is the minister prepared to make a short statement?


Mr. ILSLEY:: I am not very well prepared to give the history of this legislation, but I understand' that the federal district commission is provided for in this way; there is nothing that could be different except the amount, and even the amount is not different.


Gordon Graydon: What the minister wishes to say is that it is the same as the last one?
Income War Tax


James Lorimer Ilsley: Yes.


Gordon Graydon: That is sufficient for me. Resolution reported, read the second time and concurred in. Mr. Usley thereupon moved for leave to introduce Bill No. 71, to amend the Federal District Commission Act, 1927.
Motion agreed to and bill read the first time.	.



INCOME WAR TAX ACT

[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved for leave to introduce Bill No. 72 to amend' the Income War Tax Act.
He said: It will be remembered that the bill did not receive its first reading, so that I am making this motion for leave to introduce the bill based upon the income war tax resolutions.
Motion agreed to and bill read the first time.
Mr. ILSLEY moved the second reading of the bill.
Gordon Graydon: I have no desire to speak at any length on the second reading of this bill. I take it that in committee there will be opportunity for all of us to go into the bill section by section. Consequently there is no particular reason why any time should be taken up at the second reading stage of the legislation.


Thomas Miller Bell: While I do not think we should spend much time in discussing this bill npw, because its subject matter has been thoroughly considered during the debate on the resolutions, I am glad to note that something is to be done for the merchant seamen and the men in the ferry command.
I wish to make a plea for reconsideration of regulations which may have been made under the act. At this time I intend to raise one point, and deal with it briefly. I have a communication from a lady in which she draws to my attention a circumstance in connection with our income tax regulations which seems to me to be unfair. I place the following facts before the Minister of National Revenue (Mr. Gibson). For obvious reasons I shall not give the name of the person involved. The woman states:
I claimed exemption on my income tax return for the support of an illegitimate daughter and was advised by the inspector of income tax . . .
At a point in Ontario.
. . . that such an exemption could not be allowed, due to the fact that the child was [Mr. Graydon.l
illegitimate and therefore no blood relative of mine. He suggested adoption, claiming that this would legalize the relationship, and then they would be able to grant me the allowance for a dependent.
She goes on to say:
I have been the sole support of this child since her birth. I have established her in a respectable home, properly feed and clothe her, and am having her taught music. . . .
I have thoroughly investigated the possibility of an adoption and have been advised by the children's aid society that they will not make representations for such adoption, as they claim she is my dependent as it now stands, and adoption would be absurd. They believe that the income tax department will eventually be forced to recognize the injustice of the ruling they have made. As it now stands I cannot adopt the child without the representation of the children's aid society, and am therefore left at the mercy of the income tax department.
I bring this to the attention of the minister so that the policy in regard to cases of this kind may be reconsidered. The fact that this is an illegitimate child means that the mother has had an exceedingly difficult time in maintaining it. She has brought it up respectably, has educated it and is giving it special training. This regulation seems to me to be simply a survival from the bad old days when punishment was meted out in such circumstances.
I present the facts at this time because I maj' be called out of the chamber later in the evening. I bring it to the attention of the minister because I feel that in such cases, where the mother continues to care for the child, instead of abandoning it to charity, as is done sometimes, proper recognition should be given. I suggest that this is a proper case for a change in departmental policy.


Hon. C. W. G. GIBSON (Minister of National Revenue):: The point raised is not a matter of income tax regulation. The question has arisen on several occasions as to whether the parent of an illegitimate child should be granted an allowance. It has been referred to the Department of Justice, and we have been informed that under the wording of the act "child" means a legitimate child, and that under the circumstances we were not authorized by the act to grant exemptions in respect of illegitimate children.


Mr. ANGUS MacINNIS (Vancouver East):: May I add a word to what has been said by the hon. member for Rosetown-Biggar (Mr. Coldwell). If, as the Minister of National Revenue (Mr. Gibson) has said, that is the ruling of the Department of Justice, we ought to get another name for justice, because certainly that is neither justice nor sense. A

Income War Tax
child is a child. As a matter of fact, in my opinion there are no illegitimate children. There may be illegitimate parents, but the children are not illegitimate. Therefore they should not be punished. This is a punishment on the child more than on the mother. If the mother has not sufficient income properly to rear the child, then the child as well as the mother will suffer. In this day and age it is disgraceful to have a ruling of this kind.


Clarence Gillis: Mr. Speaker, may I follow up what has been said by the hon. member for Rose-town-Biggar (Mr. Coldwell) and the hon. member for Vancouver East (Mr. Maclnnis). Within the past couple of weeks I brought a case to the attention of the minister. A long time ago I came to the conclusion that the minister should have some latitude in matters of this kind. The case I brought to his attention is an even more glaring example of injustice, and indicates even more clearly the necessity for some latitude in the interpretation of the law in respect of claims of this kind.
The person whose claim I placed before the department had taken control of two children belonging to his sister. Her husband had died, and she had not sufficient income to maintain her family. The brother has been maintaining those children for five or six years. Certainly he does not wish to adopt them, because at some time the mother expects to reestablish her home. Nevertheless he is granted no exemption for those children. He has to pay his income tax, because it is assessed against him. He of course receives consideration for his wife and the one child of his own. He has made numerous applications to have the matter straightened out, but is told repeatedly that the children cannot be exempted, unless they are adopted. This man is placed in an awkward position. He does not wish to insist upon his sister's permitting him to adopt her children, and still she is not able to maintain them.
In matters of this kind I believe some common sense should be applied. Possibly we cannot enact a law which will take care of all problems which may arise, but in my view the minister should have sufficient latitude in his interpretation of the law to take care of cases of this kind.
Mr. R. W. -GLADSTONE (Wellington South):	Mr. Speaker, a case similar to the
one reported by the hon. member for Rose-town-Biggar (Mr. Coldwell) has come to my attention. This is the case of a mother who
for some fifteen years has maintained an illegitimate daughter, and has been refused any deductions on her income tax returns. This mother has maintained a home, paid taxes, paid for gas, water, light and heat, and in every waj has been maintaining a proper home for the daughter. However, she is not allowed any deductions in respect of her income tax on that account. It seems to me that in equity she is entitled to some consideration.


Harry Rutherford Jackman: Mr. Speaker, before the matter is closed I should like to add my word to those of hon. members who have already spoken. Two or three sessions ago I spoke at some length with respect to this matter, when the question of exemptions for hosts of British guest children was before the house. While that matter has never been rectified in form, it has been more than rectified in spirit, in a way I shall not discuss at the moment.
However, at that time I put a question on the order paper asking how many foster children there were in the country, and was unable to get an answer because the census returns were not completed, and the Department of National Revenue had no information whatever as to how many dependent children there were in the country, who were not looked after by their parents. I do not know what loopholes the Department of National Revenue is up against in according decent treatment to people who look after these children, when the children are not their own. At that time I pointed out that if a mother should die leaving a child which was taken care of by a brother who for good reasons did not care to adopt the child, he would not receive exemption for the upkeep and care. Surely a man, or a woman for that matter, who undertakes an obligation such as that is entitled to an allowance for upkeep of the child, even more so than a parent.
I have never been able to find out from either the Minister of National Revenue (Mr. Gibson) or the Minister of Finance (Mr. Ilsley) just why no consideration is given to these most worthy cases. I ask the Minister of National Revenue to give an answer to this question, because I contend that the person who takes care of a child is entitled to the usual income tax exemption. If there is some reason for not adopting the principle that every child should be the subject of income tax exemption, I should like to know what it is. We find that departments sometimes have reasons, or say they have reasons for not adopting certain suggestions which

Income War Tax
are made, but we are seldom given those reasons. I have come to the conclusion that very often the reasons do not exist apart from some slight administrative difficulty. I call upon the Minister of National Revenue to adduce the reasons why he is not willing to make every child in this country the subject of income tax exemption.


Donald Alexander McNiven: Mr. Speaker, may I take this opportunity to bring another case to the attention of the minister. I understand that when a child is attending an educational institution such as a collegiate, a university or a business college, the parent is entitled to an exemption under the provisions of the act of 1942. I am informed also that when a child is taking a nursing course in a hospital, receiving no salary, her father being responsible for her clothing and whatever else she may require, the parent is allowed no exemption. I wonder why the department has decided that the parent of a child attending business college or collegiate or university is entitled to an exemption, while the father of a girl taking a course of training in a hospital is not entitled to an exemption. Nursing is a very honourable profession, and instruction is essential. These girls are performing a splendid and much needed service at the present time. I should like to hear from the minister in this regard.


Mr. G. RUSSELL BOUCHER (Carleton):: Mr. Speaker, I am in favour of the suggestion made by the hon. member for Rosetown-Biggar (Mr. Coldwell), but I should like to approach this problem from another angle. Generally speaking, we in Canada are in favour of keeping children in private homes rather than in public charitable institutions. An illegitimate child or any child kept in a private home is much better off than if he were in an institution. It would simply be common sense to hold out every inducement to foster parents to look after children in their homes by their firesides rather than to penalize the parents by not granting income tax exemptions. This refusal may force them to place the children in a hospital, a nursing home or an institution where they may become charges on the community. Apart altogether from the benefit to the child itself; apart altogether from the benefit to the foster parent, or guardian, there is the great benefit to the community through- having these children properly cared for.. We should do eveo'thing possible to encourage the care of children by guardians or foster parents. Our juvenile court records reflect in no uncertain terms the disadvantages of not having children
fMr. Jackman ]
cared for by foster parents or guardians. I wish to add my voice to urge that these foster parents and guardians be given every inducement to keep children in their care.


[Stage Direction]
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Bradette in the chair.
On section 1-Annuities.
Gordon Graydon: Would the minister give [DOT] us some explanation of this particular section, because it contains some contentious provisions?


James Lorimer Ilsley: The story is a long one but I shall try to make it as short as possible. Section 3 of the Income War Tax Act provides for the taxation of annuities or other annual payments, and it provides for it under two divisions of subsection 1. Section 3, subsection 1 (b), provides for the taxation of annuities or other annual payments received under the provisions of any contract except as in this act otherwise provided; and section 3, subsection 1 (g) provides for the taxation of annuities or other annual payments received under the provisions of any will or trust, irrespective of the date on which such will or trust became effective, and notwithstanding that the annuity or annual payment was in whole or in part paid out of capital funds of the estate or trust, and whether the same is received in periods longer or shorter than one year. From time to time representations have been made that we should alter our law in such a way that annuities or other annual payments would not be wholly included in income for taxation purposes. The argument which has been advanced is this, that when a person receives an annuity he is receiving yearly payments which are partly a return of capital, or part capital and part interest. We have followed the law of Great Britain in our treatment of annuities. The statute law of Great Britain makes all annuities and other annual payments taxable, whether they are contractual annuities or whether they are annuities payable under a will or trust. There are, however, decisions which define annual payments, and apparently the natural or dictionary meaning of "annual payments" is not the meaning given to that expression by the British decisions. Annual payments are treated by those decisions as equivalent to annuities, as another name for annuities, and annuities do not include what we call term annuities, annuities payable for a period of years certain, but annuities which last until the death of the

Income War Tax
annuitant or at least in some way depend for their termination date upon the death of the annuitant.
In this country there was a different wording of this section prior to 1938. As I have stated, we attempted to apply the law to annuities or other annual payments received under the provisions of any will or trust, although the wording of this section 3, subsection 1 (g) was not the same before 1938 as it is now. A case was taken to the courts which, I understand, was on the point, and the crown lost it. The section was then amended so as to take the present form of section 3, subsection 1 (g). However, the state of the law was not very well understood, and perhaps is not up to this date; representations have been made that there has been much hardship to those who receive annuities or other annual payments under wills, notably widows; and one of the trust companies circulated a booklet setting out certain cases of hardship. The hardship arises from the joint impact of succession duties and income taxation.


Harry Rutherford Jackman: If I may refer to the same booklet as I believe the minister has, in one case, that of a $50,000 bequest, $50,300 was eaten up in succession duties and income taxes; but in the other case which they mentioned, I believe the estate was eaten up, not chiefly because of succession duties, but rather because of the effect of income tax where the widow was allowed under the terms of the will to supplement her income up to a stated figure by drawing on the capital of the estate; the capital she drew was added to her own income, and the tax rate was such an effectively high rate that virtually none of the capital accrued to the benefit of the widow; all of it went in taxation. Whereas, as the minister has said, most of these difficulties have arisen through both succession duties and income tax, they can at the same time arise through the operation of income tax alone. Is that not so?


James Lorimer Ilsley: Well, I will proceed with . my statement.


Harry Rutherford Jackman: Well, is that so? Am I right, or am I not? It is not succession duties; it is income tax alone, the incidence of which can be so severe, if you are going to treat principal as income, that it is possible under certain draftsmanship contained in wills already existing, and perhaps under draftsmanship in wills to be drawn in the future unlesis solicitors are well aware of the terms of the law, that a great deal of principal will be treated as income and very little of the principal will find its way for the
purpose intended,, nameljq the upkeep of the family after the decease of the husband and father.


James Lorimer Ilsley: Yes; it would be possible, even if there were no succession duty at all, for a will to be drawn in such a way that there would be considerable hardship. To my mind that would be possible only if the testator underestimated very seriously the value of his estate, because if he left a true annuity to his wife, and there was sufficient either by way of capital or interest to yield an annuity fo the lifetime of the widow, it would not. I think, be a hardship for the widow to pay income tax on these annual payments during her life as if they were income. They are in fact income; that is, they have been defined as income under the British legislation, and they are defined as income in our legislation. The testator has in that case converted his capital into income; he has left his wife an income for life; and that income is taxable as income, both in Great Britain and here. The hardship arises where the testator has underestimated very considerably the size of his estate, and that may have arisen from the fact that he did not expect such heavy succession duties as have in fact been imposed.
But the hon. gentleman is right. The heavy succession duties are not absolutely necessary. They are not a condition precedent to the underestimate o| the quantum of the estate. He may have underestimated for other reasons. If I leave my wife $3,000 per annum for life, and there is not enough to last her for more than three years and she lives for thirty years and pays income tax on the $3,000 at full rates for those three years, I would call that a hardship. That is what I am talking about. But if there were enough to last her for thirty years, as I expected there would be, even though it used up the entire estate I would not consider that there was any hardship in the income tax being payable on that. Opinions may differ on this. I am approaching the question from this point of view, that annuities are income; they are not a return of capital. I am basing that on the British cases. Case after case affirms the principle that when I buy an annuity, even though it costs me $25,000, and even though I have nothing left when I die, the annuity which I have received during those years is income. The capital is gone. It has lost its identity as capital. It has lost its character and quality as capital. It has been transformed from capital to income.

Income War Tax


Gordon Graydon: Would there not be two income taxes on that?


James Lorimer Ilsley: Yes.


Gordon Graydon: Because he pays income tax on the money which he accumulates for the purpose of buying the annuity.


James Lorimer Ilsley: Right.


Gordon Graydon: Then, when he is paid the annuity he pays income tax again.


James Lorimer Ilsley: If he bought it out of capital, that would not be true. But the point is immaterial, it seems to me. One does not go back to the source of the money. If I had the cases here I could read them. The language of the Lords' decision is striking. There is no doubt at all what the law is in Britain, or in Australia and in the other British dominions. I am not prepared to depart from that principle in Canada, at least in time of war. It is fair to say that the United States have a different principle. The United States have worked out a plan of taxing a certain income element in the annuity. But the United States tax capital gains.


Harry Rutherford Jackman: And allow capital losses.


James Lorimer Ilsley: I did not hear my bon. friend. If he will rise in his place I will answer him.


Harry Rutherford Jackman: I cannot see why we cannot frame our own tax laws without regard to Britain or the United States. The minister has just said that Britain taxes all annuity payments as if they were entirely income. The United States differentiates, as every sound accountant would differentiate, as between principal and income in regard to annuity payments. A certain part of annuity payments is income and a certain part is principal. That is easily ascertainable by an accountant. The minister says that in the United States they tax capital gains and I interjected that they also allow for capital losses. But the United States is not necessarily right, nor is Great. Britain. We in Canada must be allowed to think for ourselves in relation to our own affairs without necessarily borrowing from Great Britain or the United States. But what happens as a rule is that the crown takes from a particular country what best suits its own tax purposes, and that is why Canadians are the most heavily taxed people in the world to-day.


James Lorimer Ilsley: They are not.


Harry Rutherford Jackman: I would think that corporations undoubtedly are more heavily taxed 
in Canada than in Great Britain, and our personal income tax rates are much higher than Britain's. If the minister wishes to deny that statement, all right, but I will stick to my guns in that regard. The total taxation in this country is extremely high; I do not know of any country where it is as high on a great many of our people.
With regard to these annuities it would seem as though the minister is going to be adamant in his refusal to separate that part of the annuity which is principal from that part which is income. Then it would be wholly unwise for any Canadian citizen ever to provide himself or his dependents with an annuity. It would be a most unsound type of investment particularly with the high income tax rates which we have in this country, and even if they are lowered in the future they will still be fairly high. If the minister persists in adopting that attitude, it means that he will exclude the purchase of annuities from every citizen in this country who is endeavouring to provide for his own old age and social security by that means of subsistence. As I understand it, at the present time if a husband leaves to his widow the income from a fund of $50,000, we will say, and if he gives the widow the right to draw on the principal of the fund in order to meet any emergency expenses, such as the education of the children, sickness, or operations, or anything else which the widow may choose; suppose she has the right to draw up to $5,000 in any year, as I understand it the whole $5,000 is taxable as income to the widow, even though the $50,000 is invested in government bonds at three per cent, which would yield only $1,500. Nevertheless, whether the widow takes the money or not, she is subject to a tax on $5,000, and if she happens to be young and have a family of tender years, the total capital will soon be dissipated. If, on the other hand, the husband has been provident enough to go to a good solicitor who understands taxation measures and spends probably all his time in endeavouring to keep up with the law, the will may be so drawn that the executors other than the widow would have the right to give her up to $5,000, in which case, although it is exactly the same money, that additional money making up the $5,000 per annum is not taxable. The minister will correct me if I am wrong. Therefore it is merely a question whether a person has been well advised legally in the drafting of a testamentary document. Surely the minister is not going to make it difficult and put an undue burden on people who have not consulted expert lawyers.

Income War Tax


James Lorimer Ilsley: It appeared to me that the
first thing to decide was whether we should adopt the principle urged by the hon. gentleman. If we adopt that principle for annuities under wills as a principle of our taxation system, it would appear to me that the argument would be very strong for adopting it for contractual annuities as well. Otherwise, situations would arise where there would be discrimination. For instance, one man provides in his will that his executors shall buy an annuity for his widow from an insurance company. That being a contractual annuity, would be taxable. If he directed his executors to pay his wife an annuity out of the estate, that annuity would be taxable only to the extent of income. It would be urged at once that we would have to treat both of those annuities in the same way. Consequently it would appear to me that there is a fundamental principle at stake here, namely whether to adopt the United States system or stick to the British system. The hon. gentleman is quite right in saying that, in deciding, we should not be guided by the fact that it is the United States or the British system, but by what is the correct principle. The lenient principle, the easiest for the taxpayer, is to adopt the hon. gentleman's suggestion and free a large part of these annuities from taxation. But personally I do not think the consequences the hon. gentleman predicts as likely to follow from continuing to do what we have done in the past and what a good many other countries which I have named do, will follow. I think persons will buy annuities and will recognize the fact that those annuities do constitute income, and will be prepared to pay tax on that income. It may be that some will say they will not buy annuities; they will invest the money, they will buy bonds or shares or something like that and just pay income tax on the interest. Then they run many risks, and they have a smaller return themselves during their lifetime. Speaking for myself, I have a government annuity- although that is nobody's concern-but I certainly expect to pay income tax on that government annuity; it appears to me its true nature is income.


Gordon Graydon: The minister has
educated himself to think so.


James Lorimer Ilsley: Perhaps so. I get so many
hundred dollars a year, beginning at a certain date, until the day I die. I regard that as income; it is irrelevant whether the purchase price of that annuity came out of some capital I had or some income; I have exchanged my capital; the purchase price is gone, and instead I have an income.
As far as my recommendations go I am going to stick to the taxation of these incomes. I do not see any basis for departing from it, particularly at a time like this. To depart from it would be to introduce a most drastic change into our income tax system. If you were to place it before the house without any influence from the government, I do not think hon. members would say to-day that it should be done-; that is, unless they just went on the principle that the fewer and lighter the taxes, the better.


George Russell Boucher: Is there not another aspect that we should look at, particularly in these days when we are figuring on unemployment insurance and all sorts of plans to give the individual a feeling of security? Should we not in framing our taxation structure frame it as a means of encouraging the purchase of government annuities, particularly by those in the lower brackets? Should not a government annuity if purchased by a life annuitant or left by a will have an exemption up to a certain figure? Annuities sold through the Department of Labour as fostered by the government have set limits whereby a person can buy only an annuity which pays a stipulated amount, and that limitation is very low as far as accumulation or retention of capital is concerned. In this age when public opinion is seeking more security I think the minister would be well advised to take into consideration this aspect, as a means of encouraging the independence and security that one seeks when one buys or leaves an annuity.


James Lorimer Ilsley: I hear the hon. gentleman, but I am not sympathetic with his point of view. I regard the annuities as income, and. as far as my recommendations go will continue so to regard them. What we have here confirms that principle. All contractual annuities are untouched, and annuities under wills and trusts which become effective after January 1, 1944, are to be subject in the future to the same rule that has applied to them in the past. I wish to make that clear and definite and public, because I do not want misunderstandings about this matter that have existed in the past to continue. There is a period during which there is a case for relief. It is a question as to how far that relief should be extended, what the time limit of it should be. But it seems to me that with regard to wills of testators who died before 1938 and who. therefore, could not change their wills to comply with our amendment of 1938, there is a case for relief. And as the hon. gentleman has said, there has been a difference in the treatment that persons receiving payments under wills have received. I do not mean that the treatment by taxation authorities
Income War Tax

has been different, but some persons have been better advised than others; solicitors who were skilful in the matter have been able to advise them how to draw their wills so that some have escaped because the annual payments have not been true annuities, and some not so well advised have not escaped because the payments are true annuities. This section states that vith regard to any wills and trusts which became effective prior to January 1, 1944, the Income beginning with the income of the taxation year 1943 will be exempt from income tax to the extent that they are paid out of capital, but only up to SI,500 a year. That will give some relief to a limited class; it will give them an opportunity to order their affairs in another way, if they wish to do so, before January 1, 1944. If they do so, we have no complaint, but we certainly do not want to whittle away and shatter this principle because, it is a principle of the greatest importance.


Harry Rutherford Jackman: I do not understand the distinction the minister made between a contractual annuity and an annuity, I presume, under a will or trust. He suggested that there was some difference in the method of taxation. Certainly, as far as anything I have put forward in the way of suggestions for equitable taxation is concerned, I have not had in mind any distinction between a contractual annuity and an annuity under a will or trust.


James Lorimer Ilsley: That is exactly what I said. I said that if we were to change this rule, as we have been strongly urged to do, so that annuities payable under wills are to be freed to the extent that they are paid out of capital, and do nothing more, we would have just started on a bigger problem. I do not think we can stop there. Consequently after giving the matter very careful consideration, I decided not to depart from that principle-that is, the principle of taxing them as income-but to affirm that principle and to give limited relief for a certain period, due to the inequities that have arisen as a result of testators having died before the decision to amend the law. Then, for the period after that, for testators not knowing exactly what to do, with some making their wills in one way and being caught and others making them in another way and not being caught, we are giving them a time limit, to January 1, 1944. The relief will be granted to this limited extent for the wills and trusts that become effective before January 1, 1944, and after that there will be no relief. That is what it means.


Harry Rutherford Jackman: As I understand this new clause, which we have seen for the first time
[Mr. Itsley.l
to-night, it seems to me that it would be very unwise financially for anyone to take out a contractual annuity, if the whole proceeds of that annuity are to be subject to taxation.


James Lorimer Ilsley: They alw'ays have been.


Harry Rutherford Jackman: Of course there have been a great number of annuities where there has been a certain amount of exemption.


James Lorimer Ilsley: I am wrong when I say they always have been. There was an exemption of government annuities for some years up to a certain amount, but the contractual annuities bought from insurance companies have always been taxable. There is no doubt about that.


Harry Rutherford Jackman: I still believe there is a great inequity, resulting from the attitude taken by the Minister of Finance in regard to these annuities, which works a hardship on a great many of our people, in fact on nearly every person who leaves anything in the form of an annuity or who purchases an annuity with a stated income. When a man purchases an annuity,' let us say for $20,000, it is known definitely, when the price of that annuity is figured out exactly, how much of it is income which accrues from year to year and how much of it is principal. When the beneficiary dies, of course the whole annuity is exhausted. I have not looked at any of the English cases, because it seemed to me the matter was fairly simple from both an actuarial and an equitable point of view, but I realize perhaps something of what the minister has in mind when he says that when an annuity is purchased it is the transference of a capital sum for an annual flow. So far as the individual is concerned, that may be quite, so. When a person takes out an annuity he does in effect make a bet. He makes a wager that he may live longer than the amount of income which he would receive from the capital sum plus an annual drain on the capital, and at the same time he is insured as to a certain amount of annual revenue for life. Therefore there may be a slight uncertainty in regard to each individual annuity. But if we take annuities as a class, so far as the government is concerned-and it is interested in all the annuities held by people in Canada-there is no uncertainty whatsoever. The government knows or can readily determine how much of each annuity is income and how much is capital; and if it wishes to legislate fairly and to make its taxes bear equitably upon the people, it will tax only that part of an annuity payment which is income and not that part which is capital.
If we take the average of annuities, which again is what the government is interested in and how it is actually affected, it cannot

Income War Tax
possibly be the loser. But because a man wishes to make sure that his widow will have an annuity of $1,200 or $2,000 for life, the government says that the whole capital will be taxed. To show how improvident such a proposal is, I can only say that these annuities are based on a rate of three per cent, or perhaps 34 per cent. We all know that to have a safe annuity the company which issues it has to invest the money in government bonds; it has to pay the commissions of its * salesmen, its head office expenses and so on, and if it uses a base higher than three per cent it is not perhaps the type of company in which I would care to have an annuity. Consequently one is reduced to the point that a husband may just as well buy government bonds and leave them to his widow, who will get three per cent on them. If that is not enough to maintain her at a decent standard of living, then she will sell a bond or two each year and in that way maintain her standard. The difficulty so far as the government is concerned, and why the government should treat this matter fairly, is that the husband does not know how long his widow may live after he dies. He may leave a certain sum of money, figuring that if the widow draws three per cent on the principal and encroaches on the capital at the rate of $1,000 a year, she will have enough to take care of herself for twenty or twenty-five years. But the widow may be long-lived; she may live for thirty-five or forty years, in which case, she may have nothing left at the end of twenty-five years. When that comes to an average, however, the insurance companies give you a rate based on the average, and the government could just as easily take that average rate, because all the people in Canada come under the government and must pay taxes to it.
I will not say I am not concerned with the English decisions mentioned by the minister. I suppose I should read some of them to find out just what the learned law lords have said about this matter. But England is a country which is still reminiscent of the feudal system; where an individual may own a whole town; where leases fall due at the end of ninety-nine years or nine hundred and ninety-nine years; where coal mines are owned by people whose ancestors came over with William the Conqueror, and I am not greatly concerned with the application of such principles of law to a young and growing country like Canada. Surely we should be able to discover for ourselves the basis of sound principles of income tax law. Any accountant can tell you how much of any annuity is principal and
how much is income, and surely if the government wants to tax people fairly it should tax that part of an annuity which is income and leave free of income tax that part which is capital.


Angus MacInnis: I do not know whether other hon. members are as confused as I am. after listening to the hon. member for Rose-dale and the Minister of Finance, but I am going to try to get a little enlightenment. At one time I thought I agreed with the Minister of Finance, but I believe now I agree with the hon. member for Rosedale. Do I understand that if a person invested $12,000 in an annuity and on reaching the age of sixty-five he withdraws that amount at the rate of $100 a month, that $100 a month is taxable as income?


James Lorimer Ilsley: Yes.


Angus MacInnis: And do I understand that if, instead of buying an annuity, a person deposited a certain sum of money in the bank each month so that at the age of sixty-five he had $12,000 in the bank, he could draw out that money at the rate of $100 a month and it would not be taxable as income?


James Lorimer Ilsley: Yes, but it might not last as long as he lived.


Angus MacInnis: What is the difference?


James Lorimer Ilsley: The money might run out.


Angus MacInnis: The other might run out too, as the hon. member for Rosedale has said.


James Lorimer Ilsley: No; it cannot possibly run out; that is the difference. The first case is the return of capital; the second is a purchase of an income for life. The life element is what makes the difference.


Angus MacInnis: There was a considerable capital investment, though.


James Lorimer Ilsley: That is true, but the individual exchanged his capital for income.


Harry Rutherford Jackman: Since the minister has
conceded a certain amount of the principle in this section, and if it is sound, why does he limit it to not exceeding $1,500 in any year?


James Lorimer Ilsley: Because it is a measure to
relieve the hardest cases; that is all.


Harry Rutherford Jackman: The minister does not
concede the principle?


James Lorimer Ilsley: No; I do not concede the
principle at all.


[Stage Direction]
Section agreed to.
Section 2 agreed to.
Income War Tax
[Stage Direction]
On section 3-Dividends received by one corporation from another.
Harry Rutherford Jackman: Is this the section which changes section 4 (n) in the old act? I note the marginal heading is, "dividends received by one corporation from another," and paragraph (n) reads:
Dividends paid to an incorporated company by a company incorporated in Canada, the profits of which have been taxed under this act, except as hereinafter provided by sections 19, 22A and 32A.
Does this mean that dividends from one Canadian company to another Canadian company are now to be taxable?


James Lorimer Ilsley: The only change is the
addition of 32A. The hon. member will recall that under the amended section 32A there is a case where dividends may be taxable in the hands of the company receiving them. That is, of course, after this treasury board procedure, finding, and so on. The hon. member protested against it the other night. I would point out again that the only addition is that of 32A. The other sections are already in the act.


Harry Rutherford Jackman: This is not the main
section respecting the amendment in the Income War Tax Act in connection with section 32 A.


James Lorimer Ilsley: No.


[Stage Direction]
Section agreed to.
On section 4-Service pay and allowances.
Mr. NEILL:: The last words in the section refer to the matter about which some of us were speaking the other night, namely the Royal Air Force transport command, formerly known as the ferry command. This does not give, of course, everything that was asked on behalf of these men. However, while I have not been able to get in touch with their views, because the bill is only just now before us, on looking at it from an unprejudiced point of view I think the suggested arrangement is a reasonable one. Therefore, on behalf of the men I take it upon myself to express their appreciation.
There is one point, however, I should like the minister to dwell upon. This matter was discussed before, I believe, and has to do with the cost of living at Nassau. I am told it is nearly double what it is in Canada. I admit we cannot very well adjust a condition like that through an income tax bill, but perhaps the minister would pass the word along, or indicate in what way some maintenance allowance might be given to the men sent to those places. I believe such allowances are given

to civil servants who are sent to the Yukon, where the cost of living is much higher than elsewhere in Canada.
On the general principle of taxation, however, I am glad to express appreciation for the consideration the minister has given the matters presented to him, but I would point out that this cost of living does fall heavily on the people who go to Nassau. It may be urged that they do not go there often, but a man may be there for a year. I am informed there is no price fixing or rental fixing. Perhaps the minister would undertake to pass the word along.


James Lorimer Ilsley: I shall make a note of what the hon. member has said, and bear it in mind, but I do not think it will do much good, because we are not the employers. The British government are the employers, and the pay is pretty substantial.


Thomas Langton Church: It seems to me that the exemptions provided for members of his majesty's forces returning from overseas do not go very far, compared with those offered in the British budget. The man returning from overseas may not be able to get a house. I say he should be allowed at least one year's exemption, because he is still on active service. He is wearing a uniform, and has been paid an allowance by the government, on both a per diem and a subsistence basis. I say he is still on active service for one year. I can see no reason why members of our armed forces, who have been tied up in England for about four years, upon their return to Canada should not be allowed one year's exemption from income tax.
The section makes reference to the exemption of war risk bonus of members of the merchant marine. I say the merchant marine has been the backbone of our fleet. For many years it has been the backbone of our navy, including the corvettes, and the boats of other types we have heard described.
The ferry command has been doing a fine piece of work, and I would urge the minister to reconsider the matter, and give increased allowances to these men.


Gordon Graydon: I do not wish to speak at length respecting the merchant navy or the Royal Air Force transport command. However, I was greatly impressed by certain evidence placed before the committee by hon. members to my left, as well as by a statement by the Minister of National Defence for Naval Services. Some of the information placed before the committee when the resolutions were under discussion indicated that what the minister said about the differentiation between

Income War Tax
civilians and those in the armed forces indicated that he was hanging his argument on a pretty slim thread, so far as members of the merchant navy were concerned. The Minister of National Defence for Naval Services said that they had guns on their boats, and that they did not shoot one way but shot the other. He indicated that their operations were entirely defensive. I thought that was carrying the argument a little too far. I could not very well see what difference it made to a man in the hold of a merchant vessel whether he shot a gun at someone who had already attacked him, or whether he fired the first shot. I cannot see myself how that makes any difference. However, the Minister of National Defence for Naval Services seemed to make a point of it, and the Minister of Finance said that he wanted to keep in force the distinction between members of the armed forces and civilians.
I am not an expert on naval matters, but looking at this from an unbiased point of view-I think most hon. members will do likewise-I should be inclined to think that under present conditions there would be more danger for the man in the merchant marine than there is for the man on a firsGclass cruiser or corvette or some other vessel of that kind which is well able to take care of itself. I cannot imagine any worse place for a man to be in than in a semi-protected vessel which, as the Minister of National Defence for Naval Services says, has a gun to be used for defence only. I can think of a man in the hold of such a ship and always having the fear in his mind that something will come through the side of the ship. I have great difficulty in seeing how the minister can draw such a fine line between the civilian on a ship which is in such danger that it must be armed, and the member of the armed forces.
I do not wish to make a lengthy argument out of this, but I do want the minister to know how I feel about it. It is unfortunate that no provision was made in the bill for those who serve on armed vessels, those who are actually engaged in the transporting of goods through the most dangerous parts of the Atlantic, those who must face the submarine menace. I cannot understand how those people should be regarded as ordinary civilians for the purpose of income tax or anything else. They are doing perhaps one of the most dangerous jobs in the whole war effort. I must say that we are thankful for small mercies.


James Lorimer Ilsley: This is not a small one.


Gordon Graydon: Of course the minister's
mind works in devious channels. His idea of a large concession is what many of us might regard as a small one.


James Lorimer Ilsley: The hon. gentleman must
realize that this concession means that the overwhelming majority will not be taxable at all.


Gordon Graydon: This is not the first time that I have risen in my place to say that I have a great deal of difficulty in swallowing the idea that we should be taxing people who fight in order to pay others who fight.
I am not going to deal with that phase specially to-night because it is something I have spoken about on previous occasions, but to exempt only the bona fide war risk bonus which is, I think, something like $25 a month-


James Lorimer Ilsley: $45 a month beyond coastal waters.


Gordon Graydon: Make it $45; make it
as large as you like; there is still another $106 a month that is taxable from the ordinary seaman in the merchant navy.


James Lorimer Ilsley: That is not correct; it is
included.


Gordon Graydon: Perhaps the minister
could tell me what is correct.


James Lorimer Ilsley: I think the $106 includes
the $45.
Mr. GRAYDON; I am quite sure it does not. During the debate on the resolution $25 was mentioned as the amount being exempted and $106 as the amount that was still being taxed. I do not wish to weary the minister at this stage. He has made up his mind, and when he says "no" you can take it as "no". I have learned that through the years. Some concession has been made in connection with the transport command of the Royal Air Force, and one-third of the remuneration of these men is to be exempted. If the minister cannot see his way clear to amend this section dealing with the merchant marine, I ask him to consider changing the definition of civilian and member of the armed forces before he brings in another Income War Tax Act amendment.


Clarence Gillis: The minister told the leader of the opposition that this concession will exempt the majority of the men in the merchant marine from the payment of income tax, but I do not think that is correct.


James Lorimer Ilsley: I would say ninety per cent. I can find out, but it is the overwhelming majority.
Income War Tax


Clarence Gillis: I have a fair idea of the rates. The lowest rate is that paid to the AB, who receives $106 a month exclusive of war bonus. According to the information which I received only a few days ago the bonus to the AB is $25 a month,. The bonus varies according to income and the income varies according to classification of occupation. An, AB is exempt from payment on his war risk bonus which amounts to $25 a month, but he still pays a tax on the $106 a month. The majority of these men are single, and they would: be paying tax.


James Lorimer Ilsley: Is the hon. member quoting those rates from memory, or does he have the figures before him?


Clarence Gillis: I had them here the other "day, and I took the lowest rate because that is the one in which I was interested.


James Lorimer Ilsley: The hon. gentleman says that in the case of the AB the bonus is payable over and above the $106; is that right?


Clarence Gillis: Yes.


James Lorimer Ilsley: The figures I have were obtained from a company which is re,pre-sented as being a typical company. They give the following rates for an AB:
Basic rate	 $ 56 20
War risk bonus	 44 50
Cost-of-living bonus	 18 42
Total	 $119 12
The amount that would be taxable would be $119.12 less $44.50.


Clarence Gillis: What company is that?


James Lorimer Ilsley: Park Steamship company.


Clarence Gillis: Does the minister mean to tell me that men are crossing the ocean for a basic rate of $56?


James Lorimer Ilsley: That is the basic rate for an AB, but the total is $119.12.


Clarence Gillis: Is the minister certain that that is not the inland rate?


James Lorimer Ilsley: This is the war risk bonus over the coastal rate. There is no war risk bonus for inland waters, but the coastal rate is about $25.


Clarence Gillis: I had the figures the other, day, but I only put the low rate on the record because if they get an exemption it would take care of those in the upper brackets as well. I secured my figures only last week from a man who has to do with the hiring and' firing of men, in the merchant marine.
I have never heard those rates before.


Thomas Miller Bell: I wonder whether the rate mentioned by the hon. member for Cape Breton South is not the Canadian rate, whereas the rate mentioned by the minister is the British rate?


Humphrey Mitchell: He is discussing the deep-sea rates.


Thomas Miller Bell: I think there must be some difference in the two. That is probably where the difference in the argument comes in. It seems to me like three pounds a week. It is about that sum, on the exchange.


James Lorimer Ilsley: The official who went into that is not here.


Thomas Miller Bell: I should like to add a word to that given by the hon. member for Comox-Alberni. As one of the members who was interested the other evening in trying to get some consideration for the young men in the ferry command, I am pleased that the minister took these representations into consideration and has gone as far as he has. I think some of us felt that nothing could be expected, that the minister's mind had been made up; and we all know, as the leader of the opposition said a few moments ago, that when the Minister of Finance makes up his mind-and we respect him for it-usually he sticks to what he says he is going to do. Consequently, even though this does not go as far as some hon. members hoped, I think it is a substantial concession, and I say this on behalf of my colleagues and myself. I am sure, too, that if he had an opportunity of asking the young men who made representations to the department their opinion of what has been done, they would express their thanks to the ' minister for having granted this concession.
So far as the merchant seamen are concerned, it might be well if the minister would look into the rates. I am quite satisfied that the rate he quoted is the British rate, much lower than the Canadian rate. There is no class of men engaged in active service in this war who are deserving of more consideration than the merchant seamen. We appreciate the risks which are taken by our men in the armed forces, especially, perhaps, in the air force; but the men who cross the seas in ships to-day-with what we know of the condition of the north Atlantic, particularly-are risking their lives all the time. I heard a statement of an authority a short time ago-I will not say who it was, but it was very high authority-that it is estimated that in recent months the loss in merchant seamen ran to something like a quarter of the crews torpedoed. If that is so, or if the casualty list approaches such a

Income War Tax
figure, it comes fairly close to the casualty lists we spoke of in connection with the ferry command; and to my mind any concessions we can make for the merchant seamen are fully justified.
I am glad that concessions to these two groups have been made. I express our appreciation, and I hope that further consideration will be given, and that these men, particularly those who go down to the sea in ships, will receive the concessions they deserve.


John Ritchie MacNicol: Is there anything in prospect for the widows and children of merchant seamen similar to the reparations which were paid to the families of merchant seamen sunk by enemy action, following the last war? I was on a reparations committee at that time, and many of the families received payments from that source. If there is nothing like that to-day, I too, wish to say a word for merchant seamen. Whether ocean-going ships are armed or unarmed makes no difference in this regard. The ship which is unarmed has that much less chance of getting through than the ship which is armed, and the sailors on board an unarmed ship as well as those on a merchant ship with one gun are always in jeopardy.


James Lorimer Ilsley: I cannot give the hon. gentleman any information about reparations. I do not know that I understand what the reparations would be.


John Ritchie MacNicol: German ships which were seized in port in the last war were afterwards sold, and the money received from the sales was distributed among the families of merchant seamen who lost their lives.


James Lorimer Ilsley: I do not know whether there will be anything like that or not.


Mr. ROSS (St. Paul's):: Having come in a little late, I asked for a copy of the bill, but there appear to be no more left. May I have a copy? It seems to me extraordinary, with so few hon. members in the house, that one is unable to get a copy of the bill.


Joseph-Arthur Bradette: Shall the section carry?


George Alexander Cruickshank: No. I, too, would like a copy of the bill, Mr. Chairman.


[Stage Direction]
Section agreed to.
Section 5 agreed to.
On section 6-Farm losses.
Mr. CASTLEDEN:: This clause varies somewhat from the resolution which was passed, does it not?


James Lorimer Ilsley: I do not think so.


George Hugh Castleden: I was under the impression, when we were on the resolution, that only losses for 1942 were deductible against future income of those engaged chiefly in farming.


James Lorimer Ilsley: The section at the end of the bill will make this subsection 1, paragraph (r) applicable to incomes for the year 1944. If the hon. gentleman will look at it he will see the effect of that:
(r) losses sustained in the process of earning income from the operation of any farm during the two years last preceding the taxation year-
That is 1944.
-by a person whose chief occupation is that of farming.
These losses can be brought forward against the profits of 1944. The hon. gentleman will ask, what about 1943? The existing'section, which is general in its application, allows losses to be brought forward one year; therefore the person can bring 1942 losses forward against the profits of 1943. That is provided for under the general section, but this specially applies to farms, and for the year 1944 and subsequent years.


George Hugh Castleden: Would 1943 be called the taxation year?


James Lorimer Ilsley: No, 1944 will be the taxation [DOT] year for the purposes of this section.


Thomas Miller Bell: Then, for 1943 the farmer may not charge back two years?


James Lorimer Ilsley: Not two, no.


Thomas Miller Bell: Well, that is the same as the resolution.


James Lorimer Ilsley: Yes.


Thomas Miller Bell: That is what we had all the argument about.


James Lorimer Ilsley: Yes.


Thomas Miller Bell: I am sorry it does not apply to 1943.


James Lorimer Ilsley: I have always been fairly insistent on the impossibility of ascertaining losses prior to 1942, when we started our legislation.


Thomas Miller Bell: We are not going to reopen the argument to-night.


James Lorimer Ilsley: No.


George Hugh Castleden: It seems to me there will be some difficulties in the mechanics of this section. Will the Minister of National Revenue explain how the farmer is to determine his actual losses? Is there a valuation of the farm at the beginning of the year and an inventory taken each year? How is the
23S0
Income War Tax

value of the farm to be determined? It seems to me it would be extremely variable and be affected by varying prices.


Colin William George Gibson: The losses referred to are
not capital losses, but operating losses in the actual operation of the farm.


George Hugh Castleden: That is what I mean. How are the operating losses to be determined? Does the farmer take his income and his expenses? Is he allowed to take into account, in computing his cost of operation, the number of hours of horse labour and team labour?


James Lorimer Ilsley: The cost of maintenance of the horses would not be a charge because he would not be in the business of hiring horses.


George Hugh Castleden: In farm management the farmer works out the number of hours of labour his horses have done. That is taken into account in figuring the cost of producing his commodities. There is an account for horse labour.


James Lorimer Ilsley: That might be a convenient method of arriving at the cost of production or something like that, but it would not be the way to arrive at the farmer's profit or ' loss. He could not put a value upon the use of his horses.


George Hugh Castleden: What about his labour costs? How does the Department of National Revenue figure the cost of operating?


James Lorimer Ilsley: The wages he pays his hired men would be an operating cost, but he cannot charge for his own labour.


Thomas Miller Bell: Can he charge for the labour of his family?


James Lorimer Ilsley: Not unless he pays them.


Thomas Miller Bell: If he pays them, can he charge that?


James Lorimer Ilsley: Not for his wife, but for the others he can.


George Hugh Castleden: If he pays anything to his son or daughter for work on the farm, he can charge that?


James Lorimer Ilsley: Yes.


George Hugh Castleden: But if he does not, he cannot?


James Lorimer Ilsley: No, and he would lose his son as a dependent, of course, if he paid him.


George Hugh Castleden: Is he allowed deductions for the purchase of seed and cattle?


James Lorimer Ilsley: Yes


George Hugh Castleden: What about the forms he has to fill out this year? Have they been printed?


Colin William George Gibson: No; we are waiting for the bill to pass. Then they will be prepared and issued.


George Hugh Castleden: Will they be different from those of last year?


Colin William George Gibson: The simplified form will in most instances be available with some extra inserts for the farmer.


George Hugh Castleden: There is nothing in the legislation we are passing that would require any alteration in the form? It is rather difficult for us to discuss the legislation unless we have the form.


Colin William George Gibson: The legislation does not specify what sorts of forms are to be issued. The income tax branch prepares the forms. They are not included in the act, with the exception of rates which are printed on them.


[Stage Direction]
Section agreed to.
On section 7-Proviso.
Harry Rutherford Jackman: This is an extremely difficult section, and I wish the minister would deal with it so that hon. members may understand what the subject matter is about.


James Lorimer Ilsley: This has been pretty well covered in the resolutions and in the budget speech, and I think the section is drafted in such a way as to carry out the intentions as expressed. I perhaps should point out that the first proviso is not limited to companies which are owned by a common interest. There was some expression in the resolution about a common interest, but the expression used here is a controlling interest, which is defined in a recent House of Lords' decision in such a way that it is possible to determine whether or not a person has a controlling interest in a company.


Harry Rutherford Jackman: May we have that definition in substance?


James Lorimer Ilsley: You mean, put it on Hansard?


Harry Rutherford Jackman: Yes, in substance, and have it now for the purpose of discussing this section.


James Lorimer Ilsley: I do not think it is necessary. We all have a pretty good idea of when one company has a controlling interest in another company or when one shareholder has a controlling interest in a company.


Harry Rutherford Jackman: That is not the type of answer the minister should give. You can have effective control with ten per cent if the

Income War Tax
rest of the stock is widely distributed, or otherwise fifty-one per cent gives you legal control. I think the minister should be definite. I do not wish to delay him; in fact,
I think we have cooperated to the utmost extent, but I should like to know what is meant by the word "controlling".


James Lorimer Ilsley: I will see if I cannot get that decision and read some excerpts from it.


Harry Rutherford Jackman: Is it effective or legal control?


James Lorimer Ilsley: It is effective control.


Harry Rutherford Jackman: Ten per cent would do the trick then. If the minister would be good enough to put the relevant parts on Hansard, if they are not too lengthy, it would be helpful.


James Lorimer Ilsley: All right. Apart from that point altogether, this proviso is designed to prevent more than 100 per cent of the cost of assets being written off by virtue of being passed from one interest to another under circumstances where one controls the other. That is the effect of the section. I do not think I need read it.


Harry Rutherford Jackman: Resolution 11 is covered by the first paragraph and resolution 12 by the second? Is that the way it works?


James Lorimer Ilsley: Yes; this is correct. There may be some slight modifications of the resolutions, but these sections are designed to put into legislative form those two resolutions. I think it is dangerous to provide that only 100 per cent can be written off. There will be circumstances in which more than 100 per cent will be written off; that is, in sales to perfectly independent purchasers. But that just cannot be avoided. This is designed to hold the write-off of depreciation down to 100 per cent where the seller controls the buyer or the buyer the seller.


Harry Rutherford Jackman: That relates to the first paragraph only?


James Lorimer Ilsley: Yes. Generally speaking, controlling interest would be majority interest, but I do not think it is limited to that. I will see what, the House of Lords' decision says.
The second proviso is about the depreciation on the sale of movable assets. That is designed to carry out resolution 12. Resolution 12 is descriptive and is shorter than the section. It reads:
That where immovable assets (not including equipment or machinery) in respect of which special or accelerated depreciation has been allowed, are subsequently sold at a price in excess of the residual undepreciated value, such
excess shall be applied to reduce proportionately in each year the special or accelerated depreciation previously allowed to the transferor; provided, however, that such taxpayer shall not be deprived of ordinary depreciation which but for the special depreciation would have been allow-ed as a deduction from income.
There is a further limitation in the section. The resolution is more harsh than the section in certain circumstances. The section is so drawn that if the vendor realizes more than 100 per cent of his cost, he is entitled to that capital gain.


Harry Rutherford Jackman: Do I understand the minister to say that if the property is sold for an amount over the present depreciated book value, the vendor is entitled to his capital gain?


James Lorimer Ilsley: No.


Harry Rutherford Jackman: Would it be too much trouble for the minister to give an actual example of this very complicated section?


James Lorimer Ilsley: I am hesitant to put an example on the record without giving it more thought than I can at the moment. Two or three days ago I had this clearly in my mind, and it was quite obvious that every clause of this was necessary:
Provided further that in the case of the sale of immovable assets (not including machinery or equipment) in respect of which special depreciation has been allowed, the minister may revise the assessments of the vendor for the years when the special depreciation was allowed, by disallowing as a reduction a pro rata portion of the special depreciation allowed to the taxpayer in each of the said years, to the extent of the excess of the selling price over the depreciation cost of the said assets. . . .
Let me interpose there. That is substantially what the section does, if we stopped there. But it would not be fair to leave it there. From that excess selling price over the depreciated cost we must make deductions; we must deduct the amount of depreciation normally allowed on the said assets. And, secondly, we must deduct the excess, if any, of the selling price over the undepreciated cost of the said assets. If he bought it for $100 and sold for $110, he should not be deprived of the $10.


Harry Rutherford Jackman: So that he is allowed that capital gain?


James Lorimer Ilsley: Yes; that is the capital gain over the cost, but that is different from allowing the capital gain over the undepreciated cost.


Harry Rutherford Jackman: That seems clear enough. How would the minister treat a case where the plant-because this has to do with plant, anything which is not movable-is sold and
Income War Tax

the new price has to do entirely with the fact that within a year or two after the cessation of war the earning power has been built up by some business manager going in there, perhaps putting in some extra working capital, so that the sale price with an established earning power bears little or no relation to the physical plant which was depreciated. You may have another plant across the way still lying idle on which the same depreciation operated during the war years. It comes back to the assertion I made at the time the resolution was under discussion, that industrialists are not interested in buying bricks and mortar, because we see idle factories that stay idle until you get a business to put into them. The only thing that creates value is earning power; bricks and mortar are essential; but because a man chooses a plant on this side of the road rather than on the other side, and, after making a good job for a period of years, getting things working and creating employment, then sells the plant at a profit, you are going to make him write back into the earnings of the company the extra depreciation allowed during the war years when the rate of taxation was eighty per cent under the Excess Profits Tax Act. It seems to me that the minister may find many cases which are extremely difficult to deal with.
Secondly, supposing after this war we run into a period of inflation, through no fault of our own, certainly not through the action of the Minister of Finance, and bricks and mortar become worth a great deal more than they were at the time they were being depreciated; surely the owner of those bricks and mortar is entitled to the present value, which is not related to the cost or cost less depreciation, whether it be excessive depreciation or normal depreciation. It seems to me that while the intent of the minister in putting this section in is good, nevertheless it might be well if the minister would put in a saving clause wdiich would allow him to take into consideration certain factors entirely outside the building itself, factors such as inflation or such as a man creating the value apart from the actual bricks and mortar.


James Lorimer Ilsley: In this case the vendor is
really selling assets' and something else as well, and it is all mixed up. We may have some more experience on this before another session, but that is the principle we want to apply, and if there are difficulties in the application of that principle which necessitate amendments we shall have to come back for
amendments. I must admit that from what the hon. gentleman says it looks pretty easy to evade. I do not know if that is what he has in mind.


Harry Rutherford Jackman: No; I want to treat them fairly in ease these other conditions are operative; that is all. As I expect things probably will be, despite the fact that we are going to have work for everyone, after the war we shall have much more industrial capacity than ever before, and we shall have a great deal of idle plant capacity. I assume it is plant capacity less machines to which the section refers. There will be a plethora of plant capacity, and if this section remains it will mean that a man who owns a war plant will be at a great disadvantage in selling it as against a man who owned some other plant which was just as good but which had not been subject to the excess depreciation. I am presenting these practical problems, as I did the other day, only in the hope that the minister may be able to give them some consideration. I would not ask the minister to amend this section now; but it seems to me this problem is very real, and I think the minister should take unto himself some power to relieve any undue hardship on the owner of that plant arising from circumstances entirely outside the fact that he was allowed excess depreciation during the years of the war. Otherwise he will not be able to sell his plant, while somebody else will be able to do so.


James Lorimer Ilsley: We might as well deal with
this other matter, the question of what we mean by "controlling interest." I wonder how it would be if I placed this case on Hansard, by consent; it is a pretty good case. It is a House of Lords' decision, and a very good one. Perhaps that would be the best way, and this would be the appropriate point. The previous cases are referred to here, and the decision covers less than two pages of the report. I think it would be helpful to place it on Hansard instead of reading it immediately.


George Russell Boucher: What is the name of the case?


James Lorimer Ilsley: It is British American
Tobacco Company Limited versus Inland Revenue Commissioners. It was heard on December 7, 8 and 9, 1942, and is reported in the "All-England Law Reports," annotated, 1943, volume 1, part 1, page 13. It will take a little printing, but perhaps it is worth it.


Harry Rutherford Jackman: If the minister thinks so.

Income War Tax


James Lorimer Ilsley: We mean "controlling interest" in the light of the decision in that case.


Gordon Graydon: I think the minister intended and perhaps neglected to ask for unanimous consent to have the case placed upon Hansard.


James Lorimer Ilsley: Yes; I should have unanimous consent; otherwise I would have to read it.


Joseph-Arthur Bradette: No one objected, and
I took unanimous consent for granted.


James Lorimer Ilsley: Then the case will appear
in Hansard at this point.
British American Tobacco Co., Ltd. v. Inland Revenue Commissioners
[House of Lords (Viscount Simon, L.C., Lord Atkin, Lord Thankerton, Lord Russell of Killowen, Lord Porter), December 7, 8, 9, 1942]
Revenue-National defence contribution-"Controlling interest" in company-Indirect control
-Finance Act, 1937 (c. 54), Sched. IV, paras.
4, 7 (b), 11.
The appellant company held shares in 11 companies operating outside the United Kingdom, which were not, therefore, liable to he assessed to national defence contribution. In the case of 4 of these companies, the appellant company itself controlled more than 50 per cent of the votes. In the case of the remaining 7 companies, more than 50 per cent of the votes were controlled by the appellant company in conjunction with a company or companies in which the appellant company controlled more than 50 per cent of the votes:-
Held: the appellant company had a controlling interest in all the companies within the meaning of the Finance Act, 1937, Sched. IV, para. 7 (b), and the dividends received by the appellant company from these companies should be included in its income liable to national defence contribution.
Decision of the Court of Appeal ([1941] 2 All E.R. 651) affirmed.
[Editorial Note.-It has been unsuccessfully contended that a control by a bare majority holding is insufficient. The argument was that, to have a controlling interest, a controlling company must have such a holding that it could ensure the passing of resolutions which must be passed by more than a bare majority of votes. This contention has been rejected by all the courts and in a few sentences Viscount Simon, L.C., has shown that a bare majority of votes is sufficient for effective control of a company.
As to Control of Company, see Halsbury, Hailsham Edn., Vol. 17, pp. 89-92, para. 187, p. 290, para. 576; and for Cases, see Digest, Vol. 28, pp. 25-30, Nos. 136-154.]
Case referred to:
(1) Noble v. Inland Revenue Comrs. (1926), 12 Tax Cas. 911.
Appeal by the taxpayer from an order of the Court of Appeal, dated June 30. 1941, and reported [1941] 2 All E.R. 651, dismissing an
appeal from a decision of Lawrence, J., dated Apr. 8, 1941, and reported [1941] 2 All E.R. 86, where the facts are fully set out.
J. Millard Tucker, K.C., and John S. Scrimgeour for the appellants.
The Attorney-General (Sir Donald Somervell, K.C.), J. H. Stamp and Reginald P. Hills for the respondents.
Viscount Simon, L.C.: My Lords, this appeal is brought, by special leave of this House, from the order of the Court of Appeal (Scott, Clauson and Goddard, L.JJ.), which dismissed an appeal by the appellants from a judgment of Lawrence, J., on a case stated by the commissioners for special purposes of the Income Tax Acts. The matter arises upon an assessment to national defence contribution made upon the appellant company under the Finance Act, 1937, Part III, and the question in dispute is whether the appellant company had "a controlling interest" in certain foreign companies referred to in the case within the meaning of that expression as contained in the Finance Act, 1937, Sched. IV.
7 (b), so as to require that dividends received by the appellant company from these foreign companies should be included in its income liable to national defence contribution.
Counsel for the appellant company put forward two contentions in support of the view that the appellant company had no such controlling interest. First, he argued that "interest" in this connection means interest of a proprietary nature and that tjie condition that there should be a controlling interest would only be satisfied if the appellant company itself owned a sufficient shareholding in the other company to control the latter. Secondly, he contended that, in any event, a controlling interest is not constituted by the control of the bare majority of shares (whether directly or through other companies), but that the control must be of such proportion of shares as -would secure the passing of a special resolution or other resolution for which a special majority ' is required by the terms of the constitution of the foreign company.
These two contentions have been rejected as unsound by each tribunal which in turn has dealt with the appellant company's claim, and at each stage the decision arrived at has been in favour of the crown. Notwithstanding the full and careful argument addressed to the House. I take the view that the decision arrived at below was correct, and I understand that your Lordships are in agreement with me that the appeal should be dismissed.
The case turns on the meaning of the -words "controlling interest" in the context in which they are used. The appellant argues that, in order that one company should have a controlling interest in another, it must be the beneficial owner of a requisite number of shares in that other company, either registered in its own name or in the name of its nominees; and that if company No 1 owrns all the shares in company No. 2, which in turn owns all the shares in company No. 3, company No. 1 has no interest, controlling or otherwise, in company No. 3.
It is true that in such circumstances company No. 1 owns none of the assets of company No. 2, and a fortiori owns none of the assets of company No. 3, and in that sense neither owns, nor has an interest in, company No. 3. But that is to treat the phrase "controlling interest" as capable of connoting only a proprietary right, that is, an interest in the nature of ownership.
Income War Tax


[Stage Direction]
Section agreed to.
On section 8-Government annuities.
Harry Rutherford Jackman: What is this?
[Mr. Hsley.1


James Lorimer Ilsley: This allows payments on government annuities as offsets against com-* pulsory savings.


George Russell Boucher: Can the minister tell us something about payments on existing government annuities incurred some few years ago, under contracts that were convertible in the sense that the holder of the annuity could increase his annual payments. Having made annual payments at a low rate, could the annuity holder increase his annual payments and thus have that much more credited against his compulsory savings?


James Lorimer Ilsley: I shall have to look into that. I know what the hon. gentleman means, and I am concerned about the section myself. It may be that it is all right., but I am concerned with what we have done here, because my recollection is that some years ago purchasers of annuities in some instances paid fifty cents or a dollar and had the option of taking out an annuity for any amount, almost up to the limit, at any time they wanted to do so, on the same terms. I think the hon. gentleman's question means this: Can one of these persons who paid a dollar down and really got an option on an annuity, which he did not exercise until after June 23, 1942, now exercise that option and get the benefit of payments on that annuity as an offset. That is the question, is it not?


George Russell Boucher: More than that. For instance, a person had an annuity, had made payments under it at a certain rate, and by ' the original contract had the right and privilege to increase that payment, and reduce the maturity date of his annuity from the age of sixty-five or seventy years to that of fifty-five years, or also by making payments and advancing the payment date of the annuity.


James Lorimer Ilsley: I should like to have this section stand.


Mr. ROSS (Calgary East):: Does the
amendment apply to existing annuity contracts as well as to future ones?


James Lorimer Ilsley: It does not apply to future ones	at	all.	It	applies only to	contractsprior	to	June	23,	1942. The point	troublingme at the moment is whether one can say that	an	annuity	contract existed	prior toJune	23,	1942.	in	any real sense, if	a person
paid merely a nominal sum down. Should he now be permitted to come in, buy an annuity and get the benefit of this, when a person who did not get any option cannot get the benefit of it? My concern is to see

Income War Tax
that there is no discrimination here. The point is worthy of consideration, and I am asking that the section stand.
Section stands.
Sections 9 and 10 agreed to.
On section 11-Expenditures on dry oil
wells.


George Henry Ross: I understand there are a number of wells that were spudded-in before January 1 last. They have not been fully financed, and the owners are not able to carry on now. They were not able to complete financial arrangements by reason of the heavy taxation imposed last year. I had hoped this section would affect such wells. May I ask if the crown corporation being formed, which will have the right to acquire land and drill wells, from the commencement, will have the right to go in and take over these wells which have been commenced, but closed down on account of the owners being unable to complete financial operations. Will the crown company have the right to go in and take over these wells, complete them, take the cost of completion out of production, and then turn the wells back to the owners, the same as they would if there were no oil well at all?


James Lorimer Ilsley: I cannot answer that. The hon. member will recall that it was the Minister of Munitions and Supply who informed the house with respect to the proposed operations of the crown company. I do not know what its powers wdll be, or how it is to operate.


George Henry Ross: There are other matters in connection with this section about which I am not clear. Toward the end of the new subsection G we find this:
Provided, however, that in the case of a corporation substantially all of whose income is subject to depletion under the provisions of this act. . . .
As I understand it, the depletion can be written off only at the rate of one-third. The depletion can be claimed only at the rate of one-third of the net realizations.


James Lorimer Ilsley: Correct.


George Henry Ross: That being so, 1 cannot conceive of a case of a corporation "substantially all of whose income is subject to depletion".


James Lorimer Ilsley: 
George Henry Ross: One other point is troubling me. We have had so little time to consider these sections that one finds some difficulty in getting the import of them. Let us suppose that two or more oil companies clubbed together, drilled and got production in one of two wells drilled. The other one turned out to be a "duster". My understanding is that they could off-set the cost of drilling the dry well against the assessment of the other well. Suppose two companies clubbed together, and drilled a "duster"; could they offset the cost of producing the dry well against their separate, individual incomes?


James Lorimer Ilsley: These are two companies?


George Henry Ross: They are two companies, and each company has an income from some other oil operation.


James Lorimer Ilsley: I understand.


George Henry Ross: And they offset the cost of drawing the dry hole against the other operations.


James Lorimer Ilsley: Is the hon. member referring to a partnership company?


George Henry Ross: Yes.


James Lorimer Ilsley: It could be set off against the income of the two participating companies in proportion to their contributions to the venture.


George Henry Ross: That is the answer I wanted. Instead of two oil companies, we have two individuals, two natural persons, each of whose business is that of drilling for oil. Supposing the two persons clubbed together to drill a well, could they set off the cost of drilling against their other assessment?


James Lorimer Ilsley: Is there any case like that?


George Henry Ross: I could quite conceive of two or three clubbing together, with companies, advancing money, and doing it in that way. Or, a dozen individuals might club together to form a syndicate.


James Lorimer Ilsley: There is little I can do with a question like that. I do not know what to say to that question. The hon. member asks if
Income War Tax

individuals who are in the oil drilling business may set off unproductive expenditures against their individual incomes for taxation purposes.


George Henry Ross: Yes.


James Lorimer Ilsley: I do not think they can under this.


Mr. EDWARDS:: I have in mind a man who would be willing to undertake to drill a well at his own expense. What would be his position so far as income tax is concerned if he should bring in a dry hole?


James Lorimer Ilsley: What is his present business?


Manley Justin Edwards: He is interested in oil promoting, oil developing.


James Lorimer Ilsley: This applies only to corporations whose principal business is the production and/or refining and/or marketing of petroleum and/or petroleum products; it does not apply to individuals.


Manley Justin Edwards: That is the new subsection 6?


James Lorimer Ilsley: Yes. The case the hon. gentleman has in mind is apparently that of an individual whose principal business is not the production of oil. He is interested in it and would like to try it.


Manley Justin Edwards: On the contrary, this man made his wealth out of drilling for oil, and he has probably drilled more footage than many of those who would be covered by this section. This section would cover one oil operator I know who has a pothole refinery. He will get all the benefits of this concession.


James Lorimer Ilsley: It was not designed to apply to individuals. It was thought that corporations do a substantial part of this work. I do not know of any individuals who drill for oil; I thought it was all done by corporations, either royalty or other companies.


Manley Justin Edwards: I took great pains to try to follow the minister the other evening when he was discussing this matter. I still cannot understand the logic of confining the benefits of this section to corporations interested in producing, refining and distributing oil. I know of one firm which has not produced one barrel of oil. It has three or four service stations, and yet it can come under the benefits of this section. In order to be consistent, the section should be confined to producing companies and producing individuals, or it should be thrown wide open to any individual, person or corporation who will spend money on drilling an oil well.	*


James Lorimer Ilsley: No doubt some cases will be found where perhaps a refinery is not interested in the production of oil, and then other cases will be found where individuals are interested in the production of oil. In the one case the concession is granted; in the other it is refused.


Manley Justin Edwards: I know of one distributing company here in Ontario which is not interested in the production of oil in any way, shape or form.


James Lorimer Ilsley: Our experience over the last two or three years, or the last year at least, has been that some companies interested in refining are also interested in the production of oil. They are in the oil business, and they are willing to go ahead and search and drill for oil. They are the only ones that have come forward. There might have been one case of an individual, but for the most, part we had to do with producers and refiners.


Manley Justin Edwards: Am I not correct when I say that purchases of small companies have been made in order to get under this section? I have in mind a small marketing organization which was a thorn in the flesh of the legitimate industry in Alberta because it was bringing in so-called bootleg crude oil and gasoline. That company and others will be able to take advantage of some fictitious set-up and get the benefits of this section. From the outset I have advocated, and I still advocate that since we. want oil, this section should be thrown wide open to anyone who will spend his money in drilling for oil. If such a man drills a dry well, he should be allowed this concession. Why should it be limited as it is?


Douglas Gooderham Ross: I have a word or two to say following up what the hon. member for Calgary East has said. There seem to be many difficulties in connection with oil. I did not know anything about royalty companies until my hon. friend came to my office the other night and explained them to me. I used to think that you would be safer if you had a limited company than you would with a royalty company, but he disillusioned my mind about that. I happen to know something about one of the greatest businesses in Canada, the insurance business. Mr. Finlayson is the most likable king who ever controlled any business. We have no difficulty in this business; everything is cut and dried. Why could the same thing not be done in connection with the oil business? Why could some man not be appointed to hold a position comparable with that held by Mr. Finlayson? Then you would not have the difficulties you seem to be

Income War Tax
having at the present time. We do not have any difficulty about income tax or anything like that in the insurance business. We should have somebody who knows the oil business from top to bottom, as Mr. Finlayson knows the insurance business. Then there would be no difficulty at all, because he could take all his problems to the council, and the council would take his word. I quite understand the situation. The insurance business is old; the oil business is young; and in connection with it and wdth a number of other classes of business which need guidance and help, why could an appointment not be made similar to that of the inspector of insurance, who looks after the interests of the people so far as that business is concerned? Could the Minister of Mines and Resources not do something? Has he not brains enough to arrange for a service of this kind?


John Ritchie MacNicol: He is going to wait, for the under-secretary.
Mr. ROSS (St. Paul's); I see. Perhaps an under-secretary would be able to do it for. him, but so far as I understand he is not getting one. I am laying down the general principle. I know what has been dune. The Department of National Revenue is being run just as smoothly as nobody's business; many people protest strenuously against some of the decisions, but we all know the commissioner and we like him; we like the minister too. So far as the insurance business is concerned we esteem Mr. Finlayson, and we believe that if other businesses were provided with the same sort of control, much of this trouble would be avoided. The hon. member for Calgary East has much to complain about. He has talked to me a good deal about these matters; he taught me what royalties are; I find that a royalty is far safer than the limited liability company.


George Henry Ross: When the oil resolutions were before the house the minister stated that a royalty holder may elect, before receiving his first payment on a royalty, to get full return on his investment before the tax is exigible, but he would have to forgo his right to any depletion allowance. Is that covered by the legislation?


James Lorimer Ilsley: It is the trustee who makes the election.


George Henry Ross: Is there anything covering that in the bill?


James Lorimer Ilsley: That is done by regulation. It pertains to depletion allowance. The election which has to be made is whether they will take 33 per cent indefinitely or 100 per cent and nothing more.


George Henry Ross: The royalty holder can make the election?


James Lorimer Ilsley: I do not know. There must be one rule for all the holders in the same unit. I think it is the trustee who does it, even though the unit holder gets the benefit or suffers the consequences. I do not know how it can be done in any other way. It would be like a corporation making a decision on behalf of its shareholders.


George Henry Ross: That would be worked out by the department in any event?


James Lorimer Ilsley: That would be worked out by the Department of National Revenue.


[Stage Direction]
Section agreed to.
Section 12 agreed to.
On section 13-1942 individual reduced tax liability.
Mr. KNOWLES:: I suggest in connection with this section, which deals principally with income taxation, that the minister might clear up a good deal of misunderstanding, and perhaps a good deal of protest throughout the country, if he were to give a statement making more clear the position on this matter than was made, so far at least as its effect, in his speech on March 2.
What I have in mind is this, if I may take a moment to give a bit of background. A year ago, when the income taxation proposals were made, the minister's remarks made it clear to the country that the taxation being applied at that time was in the nature of an increase. The country accepted it, realizing that it was necessary for the sake of the war effort. But it came as a rather pleasant surprise to taxpayers generally to discover that when those increased rates were applied, due to the longer period-in effect, twenty months-which was being allowed to pay the taxes of one year, the monthly' or weekly deductions were not greater after, the new tax of last year than they were before, not substantially greater as far as the average working man was concerned. However, this year, when the budget speech was made on March 2, whether the minister intended it or not, a great deal of publicity was given to the fact that there were no increases in 'the rates, and the general impression gathered throughout the country was that this was a budget which was perhaps rather light in its burden; there was an element of forgiveness in it, and people expected it to be a fairly easy pill to swallow. But the discovery dawned that, despite the fact that there was no increase in rates, due to other factors, such as the bringing forward of the taxation period, the deductions which are to be made
Income War Tax

from workers' pay envelopes and pay cheques per month or per week are actually greater than was the case before.
I know that when the minister was speaking on March 2 he remarked, as reported at page 855 of Hansard, that some would thank it strange that, with no increase in the rates, there would nevertheless be a tremendous increase in the aggregate amount collected through income taxes. But that was put in more or less as an aside; at least it was treated in that way in the country generally. The impression gained, if I may repeat myself, was that this was a budget which did not involve increases in taxation; it had in it with respect to the pay-as-you-earn plan an element of forgiveness, and it would be fairly easy to take. I feel it was because that impression was given that so much misunderstanding has arisen and so many protests have been coming in to the government, man}' of them relating, as the minister knows quite well, to the pay-as-we-earn plan. I feel that that misunderstanding and those protests might to a large extent have been avoided, and I believe that a good deal of that misunderstanding could be cleared up now if the minister were to make it clear that the, purpose of this budget so far as the income taxation part of it is concerned was not to give something easy to the Canadian people, was not primarily to provide forgiveness in connection with the pay^as-you-earn plan, but that its fundamental purpose was to increase the aggregate amount of income tax collected1 from persons.


James Lorimer Ilsley: I do not admit that for
one minute. That is not the fundamental aim of this provision. That is the incidental effect.


Stanley Howard Knowles: In the appendix to the budget speech which is found in Hansard of March 2, the minister gave figures showing that the effect which he now refers to as incidental was to provide a tremendous increase in collections. He gave the estimated receipts from personal and national defence taxes for the year 1942-43 as $540,500,000. Then he pointed out that the anticipated revenue from income taxation in the year 1943-44 would be a total of $930,000,000. He made it clear that the increase would be due to the application of the tax over a different time period and that there would have been a certain increase in the aggregate collected even if no changes have been made, but that there was, through the tax changes, an additional increase of $105,000,000. My point is that since the effect of this tax legislation is to increase the collections
from $540,500,000 to $930,000,000, it would look to me as though that was the purpose of this legislation. If it was not intended to make an increase in the aggregate amount collected, one would have expected that changes would have been made to keep that amount down. I am not complaining of this increase, but I say that I feel that if the Canadian people had been told or were told now that because of the war it is necessary to make these increased collections, that that is the primary purpose, and that the forgiving of certain portions of the 1942 tax and the change-over to the pay-as-we-earn plan is not a concession in terms of dollars and cents so far as this year is concerned- it is a concession so far as the future is concerned-there would have been a great deal less of misunderstanding.
I remind the minister that a year ago when he announced that the tax rates were going up the people accepted that, being willing to give all possible support to the war effort. This year I am quite satisfied that [DOT] the same spirit is still there, but somehow it has got off on the wrong track because the press has been able to use the minister's speech and his announcements to create the impression that something easy was being given, that there was an element of forgiveness in it. Because the Canadian people found that they were wrong about that, there is now complaining about the forgiveness of only fifty per cent and other incidental features. I do not think that represents the fundamental attitude of the Canadian people toward the demands of the war effort.
I stated earlier when I spoke on this matter that the acceptance of this increase in taxation deductions, for that is what it means, to the majority of the people, would be much more ready if there were such gestures as an increase in the old age pension, but I am not going to press that just now; I wall do so at the proper time. I merely want to press my point that the minister might clear up a good deal of misundersttanding if he wTould make the kind of emphasis which it seems to me ought to be made about this budget because of its actual effects when put into practice.


James Lorimer Ilsley: I do not know what further statement from me is necessary. I am sure it would be very difficult for me to make a statement that would place just exactly the right amount of emphasis on the forgiveness feature, and the exact amount of emphasis on the increased immediate burden feature. I thought I made that clear in my budget speech, and everything is in that. I pointed

Supply Bill
out that this removes an overhanging load of debt from practically all the taxpayers of the nation. I also pointed out that it did, however, mean an increase in the deductions immediately. I gave figures indicating that the total amount of our revenues raised this year would be several hundred million dollars more than the total amount of our revenues raised in the last fiscal year.


Stanley Howard Knowles: Those are the figures from which I just quoted.


James Lorimer Ilsley: Yes; I do not just remember those figures. The figures I have in mind are the figures of our total revenues, not the income tax revenue alone. Some way or another during the last fiscal year we collected something like $2,250 million, and this year we expect to collect $2,750 million. There is a difference of $443 million, some of which will be refundable. I do not think I can make the position any clearer than it is now. I think this is the sound thing to do on both accounts. Both things are sound, I think. The fact that we are moving up the total amount we are collecting from the people to keep step with the greatly increased war expenditures is certainly a sound application of the principle of pay-as-you-go. That is, the nation should pay-as-you-go so far as possible. The other fact that we are putting the earners on a pay-as-you-earn basis is also a sound principle because it removes from them that overhang of undischarged liabilities, that eight months' liability which otherwise would always be over them. That is about the whole story.


Stanley Howard Knowles: Does the minister not feel that the amount of complaining he is receiving about the budget is inconsistent with the willingness of the Canadian people to support him in this phase of the war effort?
' Mr. ILSLEY: I am not receiving very much complaint about the budget. I thought that the people accepted it as well as they accept any budget, and that has been so pretty well through the years.


Gordon Graydon: Mr. Chairman, we have transgressed the eleven o'clock rule for a considerable time now. I did not want to raise the point when the hon. member for Winnipeg .North Centre was speaking, or while the minister was making his reply, but I feel that we have worked pretty hard during the last few days, and in view of that I do not think that we should be asked to sit longer to-night.
Progress reported.



SUPPLY-CONCURRENCE

James Layton Ralston: The Prime Minister
would like, if the house is willing, to advance the matter of parliamentary assistants another stage by having the resolution concurred in and moving the first reading of the bill.
Resolution 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. Bradette 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 March 31, 1944, the sum of $33,333.33 be granted out of the consolidated revenue fund of Canada.


Douglas Gooderham Ross: I think the Prime
Minister is quite correct in asking for help for his ministers in time of war. But I think that instead of a blanket authority being asked for, each individual minister ought to explain to the house the reasons why he should have a parliamentary assistant.


Clarence Gillis: On a point of order, when I
attempted a few minutes ago to have two minutes with the Minister of Finance, the leader of the opposition stopped me and objected to the house continuing any longer. Is it the intention to go on with this debate? If so, I think an injustice was done to me.


Gordon Graydon: I would be the last to
do my hon. friend an injustice, and I think he would be the last to accuse me of attempting to prevent him from going further in the debate. I did by acquiescence permit his colleague the hon. member for Winnipeg North Centre to finish his point.


Clarence Gillis: But now one of the hon.
member's own followers is continuing the debate. Personally I am prepared to sit here until we finish, but if it was not right for me to take a few minutes with the Minister of Finance I do not think it is in order to continue this debate.


William Lyon Mackenzie King: I do not think my hon. friend realizes the proceedings. We are not discussing the bill in which the Minister of Finance was interested. This item
Supply Bill

was passed in the committee of supply, and there is to be a bill founded on the resolution that passed the committee of supply to-day. It is simply a formal matter. All that I would ask to-night is that we might get the bill through for the second reading to-morrow. If we could pass it through its different stages to-night, I do not think that would be asking too much. It is simply a routine that I thought was completed this afternoon, but we broke up on a discussion of a point of order, and I did not have a chance to proceed with the formalities necessary to complete the transaction.


Douglas Gooderham Ross: I just want to make this point. I think the Prime Minister needs an assistant secretary. I think he needs a man in his own office who can come here and take his place in the house and be responsible to the minister. So far as the S40,000 is concerned, that is small. I have often said to the Minister of Munitions and Supply that he is too burdened with his work; there should have been two or three ministers instead of one. But he has always said to me in private conversation that there ought to be just one head, and he can be it. That is what he thinks about the matter. I know that the Minister of Finance is overburdened with work, and that he deserves someone who can help him.
This is war. I think we should save a great deal of time in this House of Commons in debate if we had the opportunity of a question hour which would save so much time taken up with long speeches afterwards. As any man in public life knows, as a matter of fact the Prime Minister knows it better than I do, the finest literature that he can read in public life is his own name in print. It is better than Shakespeare to him, and every man in public life knows the same thing.


William Lyon Mackenzie King: Surely that is a new theory.


Douglas Gooderham Ross: