[Stage Direction]
Second report of the standing committee on banking and commerce.-Mr. Cleaver.
Mr. HUGHES CLEAVER (Halton) moved that the first report of the standing committee on banking and commerce presented to the house on November 28, be now concurred in.
Motion agreed to.

[Stage Direction]
Mr. L. 0. BREITHAUPT (Waterloo North) presented the first report of the standing committee on railways, canals and telegraph lines, and moved that the report be concurred in.
Motion agreed to.


Hon. ERNEST BERTRAND (Postmaster General):: I am pleased to inform the house that we have been able to make arrangements for the acceptance of gift parcels for dispatch to Poland. The usual eleven pound weight limit will apply for these parcels, and they may be sent under the same conditions as at present covering parcel post services from Canada to other countries on the continent to which such services have been resumed.



BRETTON WOODS AGREEMENTS


[Stage Direction]
Hon. IAN A. MACKENZIE (Minister of Veterans Affairs-for the Minister of Finance) moved that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to present a measure to grant authority to accept on behalf of Canada and to carry _ out the obligations of Canada under the articles of agreement for an international monetary fund and an international bank for reconstruction and development prepared by the united nations monetary and financial conference held at Bretton Woods in July, 1944; to authorize the payment of the subscriptions required from Canada out of unappropriated moneys in the consolidated revenue fund to an amount not exceeding seven hundred million dollars; and to authorize the borrowing under the provisions of the Consolidated Revenue and Audit Act, 1931, of sums not exceeding seven hundred million dollars.

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.
Motion agreed to.


[Stage Direction]
Hon. IAN A. MACKENZIE (Minister of Veterans Affairs-for the Minister of Finance) moved that the bouse go into committee at the next sitting to consider the following resolution;
That it is expedient to present a measure to provide by amendment to The Export Credits Insurance Act that the aggregate amount of loans made and outstanding at any time and the value of securities purchased or acquired and held at any one time under section twenty-two of the said Act shall be increased from one hundred million dollars ($100,000,000) to seven hundred and fifty million dollars ($750,000,000).
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.
Motion agreed to.


[Stage Direction]
Hon. IAN A. MACKENZIE (Minister of Veterans Affairs-for the Minister of Finance) moved that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to present a measure to authorize the Minister of Finance, with the approval of the governor in council to enter into an agreement with the province of Alberta to pay the province increased amounts by way of compensation and subsidy over the amounts agreed to be so paid under an agreement entered into with the province, dated March 30, 1942.
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.
Motion agreed to.


[Stage Direction]
On the orders of the day:
Mr. JOHN BRACKEN (Leader of the Opposition):: I have a question that I had
wished to direct to the Minister of Finance. In

Crown Corporations
his absence probably the Minster of Veterans Affairs would take note of it, and it might be answered later in the day. A few days ago, I think on Tuesday last, it was revealed that one crown corporation was entirely free of control by the civil service commission or the treasury board in the employment and appointment of its officials. May I ask the minister if this situation applies as well to other crown corporations or agencies, and if so, what ones?
Hon. IAN A. MACKENZIE (Minister of Veterans Affairs):	I shall be glad to direct
the question to the attention of my colleague, and it will be answered at eight o'clock this evening.


Hon. J. L. ILSLEY (Minister of Finance):: I understand that a question was asked, either to-day or yesterday, and: an intimation was given that I might answer it later to-day. By consent of the house I shall give the answer now. The leader of the opposition (Mr. Bracken) said:
A few days ago, I think on Tuesday last, it was revealed that one crown corporation was entirely free of control by the civil service commission or the treasury board in the employment and appointment of its officials. May I ask the minister if this situation applies as well to other orown corporations or agencies, and if so, what ones?
The rule is fairly general, if not entirely so, that appointments of employees of what are called crown corporations are not made by the civil service commission nor is their remuneration fixed by the treasury board. An example would be the Canadian National Railways and another would be the Bank of Canada. However, I have here a list, which I believe is complete, of the crown corporations and agencies to which this rule applies. They are:
Allied War Supplies Corporation.
Bank of Canada.
Canadian Arsenals Limited.
Canadian Broadcasting -Corporation.
Canadian National Railways. .	.
Canadian National (West Indies) Steamships.
Canadian Wheat Board.
Canadian Wool Board Limited.	.
Canadian Prices Stabilization Corporation Limited.
Custodian of Enemy Property.
Eldorado Mining and Refining.
Export Credits Insurance Corporation.
Federal Aircraft Limited.
Federal District Commission.
Fisheries Research Board of Canada.
National Battlefields Commission.
National Harbours Board.
National Railways Munitions Limited.
Park Steamship Company Limited.
Polymer Corporation Limited.
Research Enterprises Limited.
Small Arms Limited.
Turbo Research Limited.	. .
Veterans Housing Project (Ottawa) Limited.
Veterans Housing Project (Toronto) Limited.
Wartime Food Corporation Limited.
Wartime Housing Limited.
Wartime Shipbuilding Limited.
War Supplies Limited.



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
Mr. ANGUS MacINNlS (Vancouver East):
I should like to direct a question to the Minister of Labour. Are the positions of two of the commissioners on the unemployment insurance commission vacant? How long have they been vacant, and how does the commission carry on or function with only one commissioner?
Hon. HUMPHREY MITCHELL (Minister of Labour):: I think I can answer that question, but my hon. friend did not give me notice of it. As he has indicated, there are at the moment two vacancies on the unemployment insurance commission. The matter of filling those vacancies is under advisement. Let me go a step further. As hon. members of this house know, we had the tremendous job of mobilizing man-power during the war years. To carry that out, the direction was given to the Minister of Labour, and I can assure this house that that big organization will function just as efficiently as it did during the war years. Make no mistake about that, commissioners or no commissioners.


Mr. COLDWELL:: May I ask the minister a supplementary question?


Some hon. MEMBERS:: Order.


Major James William Coldwell: Has the treasury board at any time refused to pay the salary of Mr. Tallon, the employees' representative on -the board?


Humphrey Mitchell: My hon. friend will have to ask the treasury board that question; I cannot answer for it.


Major James William Coldwell: How is the commission functioning? Is the minister doing the work of the commission now, if the commission is not in existence?


Humphrey Mitchell: That, Mr. Speaker, is not altogether correct; I am cooperating with the commission.


Mr. GILLIS:: There is no commission..


Humphrey Mitchell: Yes, there is.


Major James William Coldwell: Does the minister not know whether the treasury board has refused to pay Mr. Tallon? Su-rely he can answer that question.

Unemployment Insurance


Some hon. MEMBERS:: Order.


Mr. SPEAKER:: Order.


Humphrey Mitchell: I should like to say this to my hon. friend: I have a big enough job of my own without running the treasury board.


Major James William Coldwell: This is a question on the orders of the day, and it should be answered. May I just ask this supplementary question? Will the Minister of Veterans Affairs take note of the question I asked with reference to the treasury board, and have the question answered later to-day?


Mr. MACKENZIE:: I shall be glad' to take notice of my hon. friend's question, and an answer will probably be given to-morrow.



SS. &quot;QUEEN ELIZABETH&quot; INQUIRY AS TO THE FUTURE DOCKINGS-INTERVIEW GIVEN BY MAJOR-GENERAL YOUNG

[Stage Direction]
On the orders of the day:
Mr. GORDON B. ISNOR (Halifax): Having already brought the matter to the attention of more than one of the members of the government, including the Acting Minister of National Defence, I wish to direct an inquiry to the government in respect to the reported interview given by Major-General Hugh Young concerning future dockings of the troopship Queen Elizabeth at New York instead of at Halifax.
Some hon. MEMBERS:: Order.


Mr. ISNOR:: As the Acting Minister of National Defence is familiar with the statement of Major-General Young as published in the Ottawa Citizen, and with reference to the ridiculous contention that Halifax is not a safe place at which to dock the Queen Elizabeth in winter time-


Some hon. MEMBERS:: Order.
. Mr. SPEAKER: I am sorry to interrupt the hon. gentleman. His observations are completely out of order.


Gordon Benjamin Isnor: Mr. Speaker, I am just
going to-


Some hon. MEMBERS:: Order.


James Horace King: Order. I am sorry to interrupt. An hon. member's question should be urgent, brief and to the point; and he should not quote from a newspaper. I would ask the hon. gentleman to resume his seat and put his question on the order paper.


Gordon Benjamin Isnor: May I ask the question in this way. Will the Acting Minister of
fMr. Coldwell.]
National Defence be good enough to make a statement in reference to the matter to which I referred?


Hon. COLIN GIBSON (Minister of National Defence for Air):: The hon. member gave me notice of this question. I understand that the Minister of National Defence, who has been away, is returning to Ottawa to-day, and I shall ask hitn to make a statement.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. T. L. CHURCH (Broadview):: I
should like to know from the Minister of Labour if he will take any action in view of the scarcity of bread caused by the strike at Brown's Bakery, which is on Eastern Avenue, Toronto, in my constituency. Perhaps he will see if he can bring the parties together.


Humphrey Mitchell: I shall be glad to take note
of my hon. friend's question and request.


Thomas Langton Church: The minister might also
take some appropriate action. If he does, I will call him Humphrey the Peacemaker.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
Mr. R. W. MAYHEW (Parliamentary Secretary to the Minister of Finance) moved the second reading of bill No. 178, to authorize the provision of moneys to meet certain capital expenditures made and capital indebtedness incurred by the Canadian National Railways System during the calendar year 1945, and to authorize the guarantee by His Majesty of certain securities to be issued by the Canadian National Railways Company.
John Bracken: Surely we shall have a statement from the minister.


Mr. MAYHEW:: I made a brief statement on this matter when it was in the resolution stage. I do not knowr whether hon. members wish me. to repeat it or net. Any information they want can be given on second reading or when we are in committee of the whole.
Motion agreed to and bill read the second time.


James Horace King: Mr. Mayhew moves that I do now leave the chair for the house to resolve itself into committee of the whoie on the said bill.

C.N.R.-Guarantee of Securities


Mr. IRVINE:: What are we adopting?
We do not know' what it is about.


James Horace King: Is it the pleasure of the house to adopt the motion?


Some hon. MEMBERS:: No.


William Irvine: On division.


[Stage Direction]
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Macdonald (Brantford City) in the chair.
On section 1-Sfyort title.
Mr. FRASER:: Will the minister tell us
what the net revenue was last year?


Robert Wellington Mayhew: The cash surplus was


Gordon Knapman Fraser: That is the net?


Robert Wellington Mayhew: That is the net cash surplus of the Canadian National Railwa3rs.


Mr. COCKERAM:: That is for the year ended March 31 ?


Robert Wellington Mayhew: That is for the calendar year 1944.	.


Thomas Langton Church: Part of the bill relates to betterments of the system. What percentage of those betterments are related to the lines within Canada and how much of this expenditure, amounting to $15,000,000, is to be made in the United States on American affiliations? Although repairs are very badly needed in Canada, it would seem that a great deal of work is to be done on subsidiaries in the United States, where, of course, they have betterments which we in this country have not got at all.


Mr. CHEVRIER:: The expenditures on
betterments for lines in the United States out of the $15,000,000 referred to by my hon. friend are as follows: Grand Trunk Western Railroad Company, $1,529,246; Central Vermont Railway, Incorporated, $203,045. The rest of the money is for betterments in Canada. [DOT]


[Stage Direction]
Section agreed to.
On section 2-Power to issue securities for capital expenditures.	.
Alan Cockeram: I understood that during the war years both the C.N.R, and the C.P.R. have been allowed to place certain sums of money aside for betterments and for reestablishment of their systems. How much money is standing in the Canadian National treasury for that purpose? We are being asked here, as I understand, for an additional $15,000,000.
47696-168J


Robert Wellington Mayhew: The development maintenance fund in the Canadian National Railways is $34,000,000.


Alan Cockeram: And an additional $15,000,000 is required on top of that?


Robert Wellington Mayhew: No; one is capital and the other is maintenance. I think there is a little confusion in the minds of some people. The net cash surpluses of the railway automatically go into the sinking fund of the railway, so that we actually are only giving them back a portion of what they have already paid to the government. What they have done is done out of depreciation. This amount does not increase the capital indebtedness of the Canadian National Railways. As a matter of fact there will still be a reduction of $1,977,000; their net debt will be less by that amount.


Alan Cockeram: Have the surpluses
which have been built up over the period of the war years been used for retiring funded indebtedness or the indebtedness standing on the books of the company? .


Robert Wellington Mayhew: That has been used to pay off loans which they received from the government.


Thomas Langton Church: I should like to ask the minister a question under this section. I am not in favour of the present system of financing this particular road and its subsidiaries and other affiliations, aided by many bills passed during this war, and even during this session. In view of the vast earnings which this system is making on land, on the sea and in the air, would it not be possible to pay out of income some of these expenditures which are charged up to capital? In the ordinary public ownership ventures, such as the cheap power furnished in Ontario, many of the improvements are charged to income, and come directly from it. If this railway is to operate at cost, and if it is to run on a commercial basis, well and good. But I can tell the house that these two principles are not being carried out at the present time. Why are many of these expenditures for improvements not paid for out of income? Why is it all charged up to capital with heavy refunding charges? I find it difficult to read the auditor's report, and I cannot get this information from the various pamphlets and booklets that are given an ordinary member of parliament. I cannot find any connection between the owership of this railway, which is a public venture, and the principles I have mentioned. If it is going to be a public ownership venture, then let it be a real public
C.N.R.-Guarantee of Securities

ownership venture, with the operational costs of the road placed on a commercial basis and the road run from the commercial aspect.
When we look at the cheap light and power in Ontario, a venture which has been a great success, we see the way they meet many betterments and some capital expenditures out of income. What is done in connection with this railway makes but a sorry comparison, loaded up as it is with all sorts of ventures which should never have been entered into. I refer to subsidiaries in the United States, and other capital outlays that never should have been made. Then there is the steamship line running to Port Dalhousie, and many other subsidiary ventures. They are all mixed up together. This system of expenditures and finance bears heavily upon the taxpayers, but they will have to pay for it. We are all wrong in such financing, and it seems to me the system of financing should be overhauled from top to bottom, and in the years to come we should have some way of meeting many of these expenditures out of income instead of charging them up to capital and having them refunded from' year to year. I would ask for an explanation from the parliamentary assistant.


Robert Wellington Mayhew: I think I have already made an explanation. Probably the non. member did not hear it, or I may not have understood his question. At any rate the amount provided by parliament to meet capital expenditures shall not be diverted to cover deficits in operation, unless with express authority from parliament. We are coming to parliament now for that authority.


Thomas Langton Church: You did not give any
answer whatever.


Mr. McLURE:: I see the Minister of Transport in his seat, and I should like to direct some observations to him. When this matter was first introduced the hon. members for Cape Breton South and Cumberland spoke in connection with it. On that occasion I forgot to mention this matter, and now that so much money is being voted I should like to find out whether part of it will be used to pay for the new steamer to be used in the ferry service between Borden and Tormentine. At the present time the service between those points could scarcely be called a service at all so far as the farmers are concerned. If the money is voted will it facilitate this matter, or have the effect of the steamer being made available any sooner?


Lionel Chevrier: None of this money has anything to do with the new steamer now being constructed for the Prince Edward

Island car ferry. That will be voted under another estimate for the Department of Transport which I hope will be reached some time to-day or perhaps to-morrow. I shall be glad to discuss it then.


Winfield Chester Scott McLure: I would ask the minister to prepare a statement to be presented when we reach that matter and to indicate definitely when we may expect to have, the steamer.


Mr. BLACK (Cumberland):: Could we have a detailed statement from the parliamentary assistant of the items which make up this appropriation of $15,008,000 for additions and betterments? There has been considerable complaint from the maritime provinces, especially in respect of local railway service, about the antiquated rolling stock operated on those lines and also to some extent on the main line of the Canadian National Railways. There is a very general feeling that the maritime provinces are getting the dregs of obsolete rolling stock from other parts of Canada.
Will the Minister of Transport indicate to the committee in what form the appropriation will be made for the building of the causeway or bridge over the strait of Canso? The people in eastern Canada take it for granted that this public work will be undertaken in the coming season. It was approved by the former premier of Nova Scotia, the Honourable A. S. MacMillan. He quoted the Minister of Munitions and Supply (Mr. Howe) as having approved it. The present premier of Nova Scotia has given his approval, and has given the people of that province to understand he will proceed with the work. Similar approval was given by all the candidates in the eastern part of Nova Scotia who took part in the two recent elections. I .should like to learn from the parliamentary assistant whether a special vote will be offered in his estimates, and if not, whether one will be placed in the estimates of the Minister of Transport, the Minister of Reconstruction, or the Minister of Public Works. I repeat that we take it for granted that such appropriation will be made so as to meet the requirements of the people in that part of Canada, and also to fulfil the undertaking given to the people of Nova Scotia.


Lionel Chevrier: This question was discussed the other evening by the hon. member, when we were at the resolution stage. I said at that time, and I repeat now, that when the estimates for the Department of Transport are up for discussion either the Minister of Reconstruction or myself will be in a position to make a statement concerning the project I

CJV.R.-Guarantee oj Securities
at Canso. It is my understanding that the funds for the construction of that project, if approved, will be voted by the Department of Reconstruction and that the work will be done by the Department of Transport. I do not wish to say anything further about the project at this time, because it is not a matter which would properly come under any discussions flowing from .this bill. When my estimates are before the committee a statement will be made.


Mr. HAZEN:: The parliamentary assistant said a few minutes ago that the cash surplus for last year was $23,600,000. I call the matter to his attention, because I think he has made a mistake. The figure is $23,027,000, and should be corrected.


Lionel Chevrier: Does the hon. member say it .should be $27,000,000?


Douglas King Hazen: No, $23,027,000.


Lionel Chevrier: That is what was read out.


Douglas King Hazen: I understood the parliamentary assistant to say $23,600,000.


Robert Wellington Mayhew: The figure is $23,026,924.35.


Douglas King Hazen: That is not what Mr. Vaughan's annual report says. It gives the figure as $23,027,000. Is that correct.


Robert Wellington Mayhew: Well, the difference is only a few dollars.	*


Percy Chapman Black: Would the
parliamentary assistant give the details of the appropriation of $15,800,000 asked for additions and betterments?


Robert Wellington Mayhew: It would take a rather voluminous report to answer that question in detail, but if the hon. member will turn to page 175 of the report of the committee on railways and shipping he will get a fairly good idea. I can give him the amounts by regions, which are: .
Atlantic region	 $ 1,331,350
Central region	 6,009,624
Western region	 2,963,779
Grand Trunk Pacific	 1,529,246
Montreal terminal construction	100,000
Prince Edward car ferry
terminal	 10,000
Subsidiary companies	 281,097
Additions, betterments and. equipment	 2,600,854


Percy Chapman Black: What is the $10,000 being voted for in connection with the Prince Edward Island ferry terminal? As I
understand it, this is a capital expenditure, and I should like to know why we are being asked to approve a capital expenditure for a sum as small as $10,000. Could we have also the particulars of the larger items which go to make up the one million odd in connection with the Atlantic region?


Lionel Chevrier: This is working capital provided for the railway to the end of the calendar year. There will be an item in the transport estimates covering the operations of the car ferry and its deficit.


Percy Chapman Black: I cannot understand why we should be asked to provide moneys at this time as working capital for the operation of the Prince Edward Island ferry.


Lionel Chevrier: I cannot give the hon. gentleman any further details now, but if he wants them I shall be glad to give them to him when my estimates are before the coipmittee.


Mr. ROSS (St. Paul's):: Would any of this have to do with grade separations in the city of Toronto? There is sprue work in connection with level crossings that is very badly needed, and I understand some of it has been approved.


Lionel Chevrier: None of this would have to do with grade separation.


Douglas Gooderham Ross: Is it proposed to go on with that work? I understand some of it has been approved.


Lionel Chevrier: I shall be glad to reply to my hon. friend on my estimates.


Mr. KIDD:: Is there any amount provided for a new station at Kingston?


Lionel Chevrier: No.


Thomas Ashmore Kidd: When the local suburban train was taken off, as well as the early morning train to Toronto, there was a definite understanding that a new station would be built at Kingston. That promise has not yet been fulfilled. I want to urge as strongly as I can that something be done, now that the war is over and you are looking for means of providing employment. I have just been talking to Kingston by telephone and there is a snowstorm on now. / At the noon hour there will be four trains pulling in, two from Montreal, two from Toronto and Chicago to Montreal. Any passengers from the rear coaches will be dumped off in the rain and snow. I repeat that there is an obligation on the minister's department to build this new station as soon as possible.


Lionel Chevrier: None of these expenditures is for a new station anywhere. They cover capital expenditures already made and

C.N.R.-Guarantee oj Securities
those that will be made until the end of this calendar year. I know the condition at Kingston fairly well, because I have been there many times. I know it is as the hon. member has described it, and I shall be glad to bring the representations he has made to the attention of the board of directors of the Canadian National Railways.


Mr. HARKNESS:: At the end of 1944 there was a net surplus over reserves and capital expenditures of $23,000,000. The fact that we are being asked to provide the sum set forth here would seem to indicate that it is expected there will be a deficit. If not, why is it necessary to vote this money rather than have it taken out of the earnings of the railway?	'	[DOT]


Robert Wellington Mayhew: I think I have answered that question twice already. The Canadian National does not operate as a business concern operates. A business concern would take this money out of .its earnings, but when Canadian National Railways has a profit it immediately goes back into consolidated revenue. Then when they want to get money to go ahead with betterments they must come . before this house.


Gordon Knapman Fraser: Does the Canadian National pay any income tax to the government?


Ernest Bertrand: It pays more than income tax; it pays everything it receives.
Mr. MAYHEW; It pays back everything it makes.


John Bracken: Section 5 of the bill which deals with power to aid other companies reads:
The National company may aid and assist, in any manner, any other or others of the said companies and railways-
According to section 2 these powers would apply to any company or railway comprised in the Canadian National Railways. Could the minister give us a list of the companies and railways included in the Canadian National Railways system?


Robert Wellington Mayhew: I would refer the leader of the opposition to the annual report of the Canadian National Railways, which shows ninety odd subsidiaries. These could be placed on Hansard, but they can be found in the report which I presume is on the hon. member's desk.


John Bracken: I would not ask that it be put on Hansard.


[Stage Direction]
Section agreed to.
Sections 3 to 8 inclusive agreed to.
Bill reported, read the third time and passed.
[Stage Direction]
The house in committee of supply, Mr. Macdonald (Brantford City) in the chair.

[Stage Direction]
247. Departmental administration, $196,195.
Gordon Knapman Fraser: Throughout the country the government has certain properties on which it intends or at one time did intend to erect a public building. Lately I have heard that War Assets Corporation is selling some of these lands. Is that true?


Hon. ALPHONSE FOURNIER (Minister of Public Works):: No. At certain times when we have lands that we do not foresee any use for we have them declared surplus and transferred to War Assets, but speaking from memory I cannot recall one specific case. Before War Assets Corporation was set up, when we had surplus lands, we dealt directly with people and asked for tenders for these lands, but there have been very few cases in the last few years. I cannot at the moment recall a specific instance.


Gordon Knapman Fraser: I do not think War Assets Corporation should have the selling of any of the lands of the government, because if they sell them as they have sold other things, God help the people of Canada.


Alphonse Fournier: My hon, friend will admit that that is a matter of opinion.


Gordon Knapman Fraser: It is not only my opinion but that of a great number of people across the country. I know that people have written in to me asking about certain lands.


Alphonse Fournier: If my hon. friend will give me a case I will get all the information I can about it.


Gordon Knapman Fraser: I will do that, because I do hope that War Assets is not selling these government lands. I do hope that any such lands that are sold will be sold by tender and not by War Assets.


Mr. NICHOLSON:: Would the minister make a statement regarding his plans for the future? Has he a five-year or a four-year plan? What amount cff construction can be expected under the department in the immediate post-war years?

Supply-Public Works


Alphonse Fournier: The present
estimates were drawn up in December, 1944, and January, 1945. It will be recalled that at the last session of the last parliament we had the same estimates brought back before us. At that time we were right in the war, although of course preparing for the post-war period. These estimates do not. deal with any post-war projects. They are the regular estimates of the department for the maintenance and repair of the public works we have, and even then not to the full extent required. Hon. members will recall that during the war years the estimates of the department were kept down to the lowest level. In the next fiscal year we shall have to attend to the repairing of nearly every building we have in Canada, because they have been neglected to a certain extent, and my recommendation to the government is for increased amounts in the next estimates so that government property all over the country can be maintained in a good state of repair. Many requests have come from every part of Canada for new buildings, wharves, breakwaters, and all kinds of public works coming under this department. We have our architects and engineers making surveys all over the country, and we have been receiving requests from all over the country. I could not mention any specific cases now; I can only say that they are under consideration and that at the next session I hope to have an increased amount of money to spend on public works throughout the country.


Alexander Malcolm Nicholson: Is -the staff of the
department back to pre-war levels, or is it being increased? I imagine that on paper at least a good deal of work is being done in preparation for the next few years, and it seems to me that a fairly large staff would be necessary even now to do this preliminary work.	.


Alphonse Fournier: The number on the staff is perhaps a little lower than it was before the war, or at about the same level, but we are trying to get the services of a good many engineers and architects on a temporary basis. We are having a little trouble in getting qualified technical men because they are not so much interested now in becoming civil servants because of the openings in private enterprise. But we are taking on engineers and architects every month, or trying to get them, to help the regular staff prepare the plans for next year.


Mr. BURTON:: I can understand the position of the minister in connection with these estimates. The greater part of the money to ' be voted has already been spent and all that
remains is to finish up the year's business. I would ask him to enlarge a little upon the statement he has just made. Throughout the country from coast to coast the government's public buildings have been perhaps not neglected but allowed to take second place in the plans of the ministry. It would help us to get the full picture if the minister would go on to tell us, though not in detail, of the plans he has for next year and subsequent years. These estimates really deal with something that is past; we are interested also in the future.


Alphonse Fournier: I believe requests are coming in from nearly every riding in the country for further repairs to buildings or for the erection of new public buildings. I cannot give details with regard to this town or that city in which it is requested that a building be put up. Most of our buildings are for post office and customs and for other departments. We have to get requests from those department, because they are the ones who must justify the putting up of buildings. The intention is to come back to pre-war conditions in public works and make the necessary expenditures so that our public works shall be in as good condition to serve the public as they were before the war.


Mr. FERGUSON:: Will the minister give the number of employees who have been taken on in his department since June 11, 1945, and the names of those employees?


Alphonse Fournier: That is a large order. We have in the department a little over 5,000 employees who are permanent, temporary or seasonal. In the fall we take on a good many firemen for the different buildings, and these would1 have come on since June 11. I am trying to -see what the bon. member is looking for. There has not been any large increase in public buildings since the elections; I did not have the money to pay for them. I am limited by my estimates. Personally I should like to see more employees in the department, but I have not the funds. If the 'hon. member will read these estimates through he will see that they compare with the war years. There is only a difference of some $276 thousand as compared with 1944-45. There may be some extra employees, but I cannot give them from memory.


Julian Harcourt Ferguson: I would ask the minister to prepare a statement showing the number of employees taken on since June 11 in his department, and giving the names of those employees. That is not a large order. In the minister's own words, he has not expanded) a
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great deal. The order is therefore not a large one for any well-run department and I would like to get that information.


Alphonse Fournier: We will get these names and the dates of appointments. Most of these appointments are made to replace employees retiring or dying-


Julian Harcourt Ferguson: That is all I want, sir.


Alphonse Fournier: -and the civil service makes the appointments, except for temporary works or in the case of prevailing-rate employees. I will have the information prepared.


Julian Harcourt Ferguson: Thank you.


Mr. FAIR:: Does the department intend to provide better buildings for civil service staff after the war is over? I have in mind some of the old wrecks of buildings that are being used by different departments. Is it the intention to use some of the temporary buildings, which seem to be much better than some of those at present occupied? Or is it the intention to sell the old buildings? One of the buildings I have in mind particularly, is the old horse-stable on Green island which houses the bureau of statistics. These people are dealing mainly with figures all the time, and it is important that they should have proper accommodation. Judging from the outside of the building, I do not think there is any ventilation system. It should have been done away with years ago. The same may be said of many other buildings that are being used by government departments. A few days ago I heard that provision is being made to clear down that old horse-stable and put up another building to house the staff there.


Alphonse Fournier: On Green island we have part of the film board staff and the statistical branch of trade and commerce. We are actually preparing plans for the erection of a new film board building. As to the site, we are waiting for a report from Mr. Greber, who is planning the national capital, and the moment we have a site that will fit into the plan for a special kind of film board building we shall be ready to put up that building and clear out the buildings on Green island.


Mr. MARSHALL:: I would ask the minister the same type of question I asked the Minister of Agriculture yesterday. I do not think it is fair to compare the estimate of the previous year with the estimate this year. I would ask him to give, on each vote as the votes appear on page 33, the actual amount that was spent during the particular year. Referring to item 247, which we are now
TMr. Ferguson.]
considering, the minister asked for $191,595 in 1944-45; I should like to know how much he actually spent in that fiscal year. Will the minister from time to time, as he comes to the various items and without having to be asked for the information, give the amount actually spent in connection with each vote? Take number 247.


Alphonse Fournier: On vote 247 the estimate in 1944-45 was $191,595; the actual expenditures were $185,989.50. The actual estimate for 1945-46 is $196,195, an increase of $4,600 over the preceding year. This increase comprises: statutory increases $1,065; cost of living bonus, $1,300; travelling expenses, $1,500; miscellaneous adjustments, $735; making the difference of $4,600.


James Alexander Marshall: The picture as it presents itself now is entirely different from that shown in the estimates. Of the $191,000, $185,000 is the amount actually spent. We are now asking for $196,000 and instead of an increase of $4,000 roughly the increase is $11,000. I should like to get the same picture in connection with each of these estimate from beginning to end.


Alphonse Fournier: I will have that done.


James Alexander Marshall: Am I not correct in that?


Alphonse Fournier: The hon. member is right. The estimate sometimes is not all expended during the year. It will be found that we have revotes of amounts voted in the preceding year. There is a difference of about eight or nine thousand dollars between the amount voted in 1944-45 and the amount expended. That can be easily accounted for by saying that somebody in the personnel retired and was not immediately replaced.' The salary during that lapsed period would not be paid. Or certain works may have been undertaken and were not completed; therefore the amount was not paid. I believe there is a justification for every case of the kind we have in the estimates.


James Alexander Marshall: I am not quarrelling with that at all. I realize that there is justification for anything that is not spent or an amount that may be overspent. But it is totally unfair to compare an estimate of one year with an estimate of the next year, because of the fact that an estimate may be inflated to a very large degree. In this case it is inflated to the extent of $11,000.


Mr. HERRIDGE:: I wish to direct the attention of the minister to the situation as it exists on some of the lakes in Kootenay West.

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The minister will realize that for some years there has been a restricted programme of expenditures in that district. I am not criticizing that so far as the past is concerned, but I do wish to bring to his attention the fact that on the lakes many people are in isolated places without roads and are dependent upon water transportation. I urge upon the minister that in the future he give these people every consideration by providing wharf facilities where it is pos'sible or convenient so to do.
Then there is the question of dredging. In recent years the dredging programme has been restricted until now navigation is difficult between the upper and lower Arrow lakes. Steamers going through there at low water almost touch bottom; in fact they have to be very careful when coming into the low water area. Navigation into the northern end of the lake, where the Columbia enters the Arrow lake, is extremely difficult. I would ask that the minister have the whole matter investigated and these conditions corrected.
May I now say a word with reference to the question of the removal of snags. Years ago the department periodically reihoved snags from the low water areas and close to the docking points so that navigation was reasonably safe at night. I would ask the minister to have the question of the removal of snags on the upper and lower Arrow lakes investigated. There is one other matter, the question of erosion, which has been a constant problem to the Department of Public Works. I refer particularly to the channel between the two lakes. Because the work has not been done in recent years, erosion has taken place in certain areas, I would ask the minister to give that consideration.


Alphonse Fournier: I understand the position ur there in Kootenay. We have the snagboat, and we have this dredge, the Samson. The hon. member will find these items mentioned in the estimates. We do a great deal along that line. The intention of the department is to undertake this work in the next year and complete the work which has not been completed in the past.
The hon. member made one request for British Columbia which I received from all parts of the country. I cannot give any other answer than to say that during the war years, and because of the war effort, we did not .receive, and we did not ask parliament for, larger votes.


Mr. CASE:: I should like to pursue a little
further the general administration as it affects the staff, and inquire is to the general policy.
I understood the minister to say when he replied to the hon. member for Simcoe North, that those who were taken on in his department were largely replacements. Is the policy of the department one of promotions? Does the department advertise open competitions? Perhaps I may give a specific instance. I understand that one of the senior officials of his department has about reached the retirement age. How would his position be filled? Would ,it be by competition or promotion?


Alphonse Fournier: When there is a vacancy in my department, as in other departments, we send in a request to the civil service commission. They advertise. If it is a senior position, it goes by promotion. It is advertised in the department; a board examines the qualifications, service, seniority, and so forth, and we take on the man who is appointed by the civil service commission.


Clarence Gillis: I think the minister knows- if he does not, his departmental officials do- that for some years I have discussed with his department the matter of repairs to the wharf at Glace Bay, Nova Scotia, and a breakwater at Port Morien. The reason I have pursued these two problems year after year is that in the Mqrien case it directly affects the livelihood of a village of about twelve or fifteen hundred people. It is the only industry on that coast. I was assured by both Public Works and Reconstruction that the breakwater at Morien was a post-war project and would be proceeded with in the post-war period. I notice that the estimates make no mention of it, and certainly there is no item in Reconstruction that anticipates anything being done as far as the breakwater there is concerned.
Glace Bay harbour is a very important one, because the sword-fishing industry is largely concentrated there. For the last six or eight months I have wired and written both Fisheries and Public Works with regard to the condition of that harbour. Vote 283, which deals with that matter, makes no mention of that harbour or of any appropriation in regard to it. Neither is there any mention of it in the war estimates or civil estimates of Reconstruction. I think that the least the people affected in both these communities could expect is a definite answer that something is going to be done. We should like to know if anything is anticipated. These people have a right to know so that they can make their arrangements accordingly. I was convinced last year that the matter was left in abeyance pending the termination of the war, but that in the immediate post-war period the Glace Bay harbour and MorieD breakwater would
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be major projects for that area, and that things were going to be done. I cannot find any item anywhere which indicates that the government intends to do anything with respect to these two points. The story is well known to Public Works; I am not going to elaborate it, but I should like to know from the minister whether he has anything in mind.


Alphonse Fournier: When I first
spoke to the committee I explained that those estimates were prepared in December 1944 and January 1945. We were then right in the midst of the war. The war concluded in May and August, but we still have those same estimates before the house, and as an hon. member remarked, we have spent most of this money, because five-twelfths were voted at one time and one-sixth or two-twelfths at another time. These are estimates which are prepared as I am preparing actual estimates which will be presented at the ensuing session. We prepare them in November, December and January. Now, I would not want to undertake at this time, a discussion of those two projects, Glace Bay harbour and the Port Morien breakwater, but we are having reports prepared by our engineers. I do not think that the hon. member would ask me on these estimates for a definite statement as to the intentions of the department in respect of the new estimates which will come up in February or March of next year, but he may be sure that we are studying and considering those post-war projects. They are post-war projects; do not ask me on these present estimates, which were prepared before the end of the war, for any post-war works. I do not think I could give an answer which would satisfy the hon. member.


Clarence Gillis: I appreciate the minister's
difficulty. If he carries on the same system year after year he is going to be in the same position in 1949. It is not the fault of the people affected that the estimates are handled in that way. You are running on to the end of 1945 with these estimates, and as far as these communities are concerned they can anticipate nothing by the end of 1945. Remember, you have two industries tied up there, with the means of livelihood for the communities. While you prepared those estimates last August, do not forget that the members of this house were sitting at home for three or four months when they could have been here doing business and dealing with these estimates. It is not our fault that we were away. The condition at these two points is serious. I could mention a dozen more cases, but I do not think there is the same urgency in respect of them as there is in [Mr. Gillis.l
these two particular matters, where action is badly needed and should be taken now. The Minister of Reconstruction, who is handling post-war projects, has prepared his reconstruction estimates, and there is not an item in them dealing with these matters. Evidently they are forgotten, so far as those who can sit down and write the necessary appropriations into the estimates are concerned.
We leave here in December. My message to these two sections of the country where there is an urgent problem is, "Nothing is to be done for 1945." We shall come back here next summer, and, you say, the money available under these estimates is all spent. You will start preparing the next estimates in December or January, and by the time they pass through the house all the money will1- again-be spent and there still will not be any appropriation.


Alphonse Fournier: That is not the way at all.


Clarence Gillis: That is exactly the way you put it just now. As I said before, I am not concerned about money for projects such as new buildings; I realize that one can get around to those thipgs any time. But where the means of livelihood is directly affected the situation is different. Your department should not have to begin now to study the Glace Bay harbour or the Port Morien breakwater, because you have been dealing with it for the last ten years, throwing a few planks around.


Alphonse Fournier: Then you have not been convincing in the past.	.


Clarence Gillis: I was not here except during the war, and you always have the alibi, "There is a war on."


Ian Alistair Mackenzie: Mr. Chairman, I must protest against a procedure which is growing up, and regarding which my own colleagues are as reprehensible as anybody else, of hon. members speaking across the floor to each other. Every question should be addressed to the committee through the Chair. [DOT]


Clarence Gillis: That is quite true, but I cannot very well blame the present chairman of this committee for the inactivity of the Department of Transport; and while I realize it may not be exactly in order, it is natural,
I think, to talk to the person concerned.


Lionel Chevrier: Does the hon. gentleman mean the Department of Transport?


The CHAIRMAN:: The Minister of Veterans Affairs is correct. The procedure, as we all know, is to address all questions to the chairman, and all remarks which are delivered

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by any member of the committee should be addressed to the chairman. I agree with what the Minister of Veterans Affairs has said, that sometimes his own colleagues are just as guilty in this respect as are other members of the committee.


Clarence Gillis: Thank you, Mr. Chairman.
I realize that, so I am going to talk direct to you now, and through you to the minister. Mr. Chairman, what I was endeavouring to do was to point out to the minister that despite the fact that for the past six years certain definite commitments have been made verbally to people in the community I represent in this House of Commons, with regard to certain improvements to harbour and breakwater facilities which direcfly affect the means of livelihood of a large number of people, I am rather disappointed, in looking over the public works department estimates, that, regardless of all these promises that in the post-war period these necessary improvements would be undertaken, there is no item in the estimates providing the money to bring about the necessary improvements. Secondly, in checking over the reconstruction estimates for the immediate post-war period, as these were supposed to be post-war projects, I still find not an item there to provide the necessary funds. I should like to find out through you, Mr. Chairman, if the people of the communities affected can expect any relief in the immediate future in the very urgent matter of improving their means of livelihood, as regards repairs to the harbour in Glace Bay, Nova Scotia, and the breakwater at Port Morien. I should like to be able to go home and tell the people of these two communities that the alibi offered by the government through the war years, namely that they were fighting a war, concentrating upon that, and spending all their money on it, was legitimate, but now that the war is over the promises made are going to be kept; that while the minister, maybe through an oversight on the part of his officials, had failed to include in the estimates any reference to these projects, he at least would take the matter up with the Department of Reconstruction, because' Public Works is the department which will do that work, although Reconstruction may have to provide the funds. I should like at least an assurance from someone that as soon as they can get around to it the promises made during the war period with respect to these two particular projects will be carried out.


Alphonse Fournier: Mr. Chairman, I would not impute any motives to an hon. member speaking in the committee. The hon.
member who has just taken his seat is speaking of post-war public works, and I have explained that these estimates do not contain any post-war items. We just admit that. These estimates were prepared for March 31, 1945, to March 31, 1946. We were here presenting these estimates last spring while the war was on, and five-twelfths of the amount was voted at that time. Now we are just completing the fiscal year.* This does not comprise the post-war projects or works which we have, or which the hon. member has, in mind.


Clarence Gillis: But fisheries won't wait for estimates.


Alphonse Fournier: The policy we followed of not proceeding in war time with extended public works projects was admitted by everybody, even by the hon. member. My estimates would not have passed this house if there had been an increase in them during the war. Everybody understood that we were in the war and were putting everything into it and that the ordinary public services had to wait until after the war.
As to the suggestion that a promise was made, if the hon. member will look up the estimates for the fiscal years 1943-44 and 1944-45 he will find there was no promise by the Minister of Public Works. The estimates went through in about twenty minutes each time; I did not even have to discuss them; they were unanimously agreed to, I believe, because the policy was the right one. My difficulty to-day is that I am getting into that period which is post-war, yet I am dealing wdth the ordinary civil estimates. If the hon. member has been patient so long on behalf of Glace Bay and Port Morien, he may be patient a little longer. He has been waiting, he says, ten years for those works, and I have been here only three, so I can take only three-tenths of the blame.


Clarence Gillis: The problem is becoming
worse every year. .


Alphonse Fournier: I could ask perhaps fifty members in the house to stand up, and they would make the same speech the hon. member has made.


Mr. McIVOR:: I am going to make one now.


Alphonse Fournier: I may have to make a speech that way, and I do not contradict what the hon. member has said. I may not agree with everything he has said, but I really do not think this is the right time to discuss post-war projects. I would
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not be prepared to discuss them in detail, because I have not the details here. I am ready to discuss every item of ordinary estimates, and I think it is only fair to my officials to confine the discussion to those items. To assume that my officials were negligent would not, I suggest, be a fair assumption.	.


Clarence Gillis: I did not say that! I said there was an oversight.


Alphonse Fournier: Well, there was no oversight on the part of the officials of the Department of Public Works. They knew their position and they followed the policy handed down to them not only by the government but by, parliament of that time.


William Ross Macdonald: The minister has stated that these estimates do not include postwar estimates, and has made the suggestion that post-war projects should be considered when the items for another department are before the committee.


Clarence Gillis: The Department of Reconstruction is in here too, but there is practically no vote.


William Ross Macdonald: The Department of
Reconstruction will come up later, but it is not now before the committee. I would remind hon. members that we now have before us the estimates for the Department of Public Works, and -that those estimates do not include any post-war projects. Therefore I suggest that what is not intended by the estimates should not be discussed. However,
I am in the hands of the committee.


Mr. DIEFENBAKER:: Surely we have the right to know now what the plans are with respect to public works being used as an adjunct to the general improvement of conditions, and the assurance that there will be jobs during the transition period' through which we are now passing. Whefi this matter was discussed last year the minister pointed out, and quite properly, that we were in the midst of war. When reference was made to the white paper issued by the government, dealing with the question of employment after the war, the answer given at that time, and accepted by the opposition, was that then was not the time or the occasion to discuss post-war employment as applied to public works. I do not raise any objection to your ruling, sir, but I think it is only fair and proper to point out that now that the war is over-officially or otherwise-we should have from the government, through the Minister of Public Works, a statement outlining 
generally the plans of his department. When the Minister of Reconstruction is before us, and a matter of public works is raised, we receive the answer that the matter is one for the Minister of Public Works. When we now approach the Minister of Public Works to ascertain what he is going to do with reference to this matter, the implication we must draw from his remarks is that it should come under some other department.


Alphonse Fournier: No; I wish to correct the hon. member-not under another department. It will be under this department, when the next estimates are prepared. These are not new estimates; they were prepared during the war and are a continuation of the estimates, seven-twelfths of which were voted in April last, for the fiscal year from April, 1945, to the end of March, 1946.
The hon. member is asking for a simple statement as to post-war projects. I cannot say: Yes, we are going to build a post office in such and such a place or a breakwater in some other place. I would have to cover the whole Dominion of Canada. What I may say in my statement is that it is the intention of the government to keep in good repair- better than during the war years-all the public works in Canada, and to undertake post-war works which will be prepared in my department, but submitted' to the Department of Reconstruction, according to the conditions in the part of the country in which those projects will be executed. The remainder will be prepared in the Department of Public Works with the staff at our disposal. The Department of Reconstruction will draw up surveys of their own and will try to give us direction as to what works should be proceeded with at a specified time. I believe that is about all I can say.


John George Diefenbaker: I cannot accept the minister's explanation at all. Men are coming back from overseas; others are being discharged from industry. They are taking new jobs. One of the means whereby jobs will be assured, according to the plans of the government as outlined in white papers, and according to other documents issued with such abandon by some departments, will be in the initiation of public works and they must be commenced not after March, 1946, but now. Certainly plans must have been made by this time. Surely the Department of Public Works is in a position to place before the committee something of its plans.
I direct my attention to my own province of Saskatchewan, which is going to have a good deal of unemployment-let there be no mistake about that. Those who left Saskat-

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chewan during the war are beginning to come back. They will not all be absorbed on the farms. Already there is unemployment in some of the cities. One of the means of meeting the problem is a public works programme, not without regard to cost or to utility, a programme to operate in cooperation with private and government enterprise, so as to assure jobs rather^than a return to the dole. When I look at the estimates I find that the total amount to be expended in Saskatchewan is the sum of $40,000. If I am not right in that, I am sure the minister will correct me.


Alphonse Fournier: That is the
amount under the architects branch.


John George Diefenbaker: What else is there? I find items for dredging in Manitoba, Saskatchewan and Alberta. There is not much dredging in Saskatchewan-certainly not of the kind covered by the Department of Public Works. Then there is an expenditure for telegraph and telephone, but that is merely the upkeep of existing utilities, it is not in the nature of a public work designed'to assure employment.


Alexander Malcolm Nicholson: What about harbours and rivers, as shown at page 38 of the estimates?


John George Diefenbaker: That is the item upon which I intend to make some observations. If the Department of Public Works intends to operate in conjunction with the Department of Reconstruction and the Department of Labour in an effort to secure jobs for the unemployed, to develop public works that will be self-paying and of benefit to the areas in which they are established, this is one expenditure that very well might be made in the province of Saskatchewan.
Almost in the exact centre of Saskatchewan is Long lake or Last Mountain lake, the greatest natural reservoir that we have in the province. It is a fine fishing lake; last year there was exported from the catch from this lake between five and six hundred thousand pounds of fish; it is also a summer resort lake. But it is receding year by year. Whereas in 1904 it was one of the navigable lakes in the province, to-day it has diminished to such an extent that if something is not done, in twenty or twenty-five years this great reservoir will be dried up.	,
Between 1898 and 1904 the wheat being transported from central Saskatchewan into southern Saskatchewan and then on to the markets of Winnipeg passed over this lake on barges. The prairie farm rehabilitation vscheme is engaged in the digging of dugouts
and the maintenance of necessary reservoirs for water, but upon the Department of Public Works primarily rests the responsibility for the preservation of Saskatchewan's greatest natural reservoir. Looking over a return that was brought down I find that the Qu'Appelle river, which adjoins this lake and must necessarily be the means whereby it is preserved, passed into the hands of the dominion in 1898 because its waters had not been disposed of prior thereto. In 1938 the Department of Public Works purchased the dam facilities that were constructed at Craven on the northern rim of the Qu'Appelle river.
Unless something is done to raise the level of this lake-the best fishing lake in central Saskatchewan, a lake which comprises the greatest bird sanctuary in the province,-its very existence will be in danger. This lake is the most valuable water reservoir along the Qu'Appelle valley and something should be done to provide for tapping the reserve waters of the south Saskatchewan river in June and July of each year and diverting those waters down the Qu'Appelle into Long lake, thus raising the level of the lake.
There may be fifty members, as the minister has said, who are looking for post offices or other buildings, but I doubt if there is any place in the dominion where expenditure of money would give greater dividends in enjoyment, the preservation of an agricultural area and the conservation of bird life than, the utilization of the waters of the Saskatchewan by diversion through the Qu'Appelle valley. By doing this, not only will the lake be preserved but irrigation areas will be opened up along the river valley and jobs will be provided.
This is one of the few areas in Saskatchewan where irrigation has been used. A number of soldiers of the first war have already established themselves in small farm projects made possible by such irrigation work as has been done. I understand that the total project would cost some $2,000,000. I realize that that is a large amount, but its expenditure would provide jobs for the unemployed of our province; it would provide work over a considerable period of time-it will take some two years to complete the job-for farmers during their spare time. It would assure the preservation of this lake which is so necessary to the future of our province and the continuance of agriculture in the adjacent areas.
I ask the minister if this is not just the type of work that the post-war plans of the government actually comprehend. Is it not just the kind of public project that is being done in the United States? I look at the
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Washington Congressional reports containing the plans of the United States government for the building of public works that will be self-liquidating and pay dividends in happiness and enjoyment, and at the same time provide employment, and then I compare those plans with the plans of this government in November, 1945. If members are to carry out their responsibilities, now is the time to place before the minister projects within the competence of his department which will provide jobs for our unemployed. If we deal with all the subjects we have been dealing with in this parliament and do not assure jobs, we are building for the most terrible crash that hag ever taken place in this country. We are building for the separation of province and province, for disunion and for the setting of class against class.
I do not want to see the government building public works that cannot be justified, merely going through the form of entering upon some construction or initiating some work for no other reason than to provide jobs. The Department of Public Works should assure jobs by public works properly planned to the end that as far as possible they will be self-liquidating. Those jobs should use raw materials and labour to as large an extent as possible during the transition period through which we are passing and which may continue for some two years. The government should step in wherever necessary and construct public works which will assure employment.
I think it is the duty of the minister, and I say this with the greatest deference, to place before this house and the country at this time the plans of his. department. Surveys have been made. Everybody is making surveys. But parliament cannot find out what is in those surveys. I say to the minister through you, Mr. Chairman: Take parliament into your confidence and place before us generally your plans-not just generalities, not something ephemeral, not something that we cannot put our teeth into. Let us know your plans for each province or generally for each area, and let us in a spirit of cooperation try to work together with you to the end that we place before you proposals that we believe to be necessary in the national or provincial interest. On our part we shall do our best to assist the department in facing this problem, which I say without reserve has not been faced yet. We have white papers and papers of every other colour, but when we ask the government what it is going to do, each minister says: Go to the other minister, because that particular matter comes under rMr. Diefenbaker.]
him. The Minister of Public Works, I understand, is on the committee that deals with these matters. Let him tell us now what is being done and what the plans are, so that when we go back to our constituencies we can say: Well, there is a minister who was able to place his plans concretely before parliament. The minister laughs. But if he has not those plans, we are in for a very serious condition of affairs. If he has them, surely we have the right to know now what they are.


William Ross Macdonald: I hope that members of the committee did not misunderstand the remarks I made prior to the speech of the hon. member for Lake Centre. What the committee discusses on the item "departmental administration" is for the committee itself to decide. It has; however, been agreed that under the first item a general discussion is in order, and my suggestion was that each member would not propose some specific pub-' lie work required in his constituency because the minister in his remarks stated that there was no provision in these estimates for specific public works in the different constituencies. It was not my suggestion that there should not be a general discussion on the question of public works and what public works were best for the community, but I do think that hon. members should not at this time discuss specific public works in their own community, for the reason that the minister has not included them in these estimates and such appropriations could not be passed now. As I say, I am in the hands of the committee; I am not attempting to dictate to the committee what shall or shall not be discussed. But the minister did state that estimates for specific projects were not included and that they should not be discussed at this time.


Alphonse Fournier: Mr. Chairman, I feel inclined to agree with very many of the things which the hon. member for Lake Centre has said, and his dissertation on public works in Saskatchewan was most interesting. I believe there is something in what he said about that project for Long lake and the Qu'Appelle river. I have to repeat that there is nothing in these estimates for these works, but they are kept in mind. I am not telling the hon. member that some other minister is responsible. I have never said that since I have been sitting in this house. I take responsibility for everything that goes on in my department. But if hon. members followed my speech I am shre they will not find reason in it to justify the gloomy picture that the hon. member drew of conditions in the near future.

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Everything in this country does not depend on public works. If you look at the amount of my estimates you will find that they amount to $16 million. The hon. member is now proposing that we go into a two million dollar project, so I think it will be realized that the welfare of our country is not solely dependent on public works. They are a part of our national economy, and can be of help. But if anyone has in mind that the ills of our country can be cured by putting up public buildings or even self-liquidating projects such as the hon. member has mentioned, I must say that my experience has been' that it is not done that way. I have seen moneys voted by parliament in the last fifteen years for public works to cure unemployment; far be it from me to say that those projects were wrong at that time, but the results were not very good. This whole question has to be studied, keeping in mind labour conditions, the work of the Department of Reconstruction and private enterprise. We must try to do our share, oi course, and personally I am convinced that we shall have to study projects in every province.
The hon. member started out in light vein , and said that Saskatchewan was getting $40,000 for public works. I point out that maintenance and repairs of public works there come under the architects' branch; that is, the estimates for harbours, breakwaters, and so forth, and I am quite willing to consider any requests for such work. But surely there are very few harbours and rivers and ports in Saskatchewan. There are not many places there where we can build breakwaters, although there may be a few; but in that respect you cannot compare Saskatchewan with Nova Scotia.


John George Diefenbaker: I was not suggesting that. I said that they were navigable rivers under your authority.


Alphonse Fournier: I am not ready to go over the Navigable Waters Protection Act with the hon. member without having it here and making a study of it, but if roy recollection of the act is correct the only jurisdiction this department has over navigable rivers is to remove any impediment to navigation. That is the main jurisdiction we have. I understand that many of these matters are contained in the brief which the dominion government submitted to the provinces, and I hope that some understanding will be arrived1 at with the provinces.
Once more may I say that these estimates are war-time estimates, prepared when we were right in the war and presented to the
house in April last and voted to a large extent, and what I am trying to do to-day is to get authority to take care of the remaining four or five months of this fiscal year. I do not say that this is all the public works that we will have; there may be supplementary estimates. I am pleased that this discussion on public works has taken place, because we have. been the unknown department for so long and now we are getting prominence in the House of Commons.
Mr. BRACKEN; Don't let that lake out there go dry.


Mr. CASSELMAN:: Is the minister aware of the fact that in my district there are eight towns and villages, every one of which fequires a public building?


Alphonse Fournier: I have requests for public works in every constituency in Canada. I do not know whether they are all justified. I agree with the hon. member for Lake Centre that we- should not erect buildings just for the sake of building them. They must have some utility, and the cost must also be considered.
At one o'clock the committee took recess.
After Recess
The committee resumed at three o'clock.


John George Diefenbaker: I do not want to
press unnecessarily the request I made before recess, but I still feel 'that the minister owes the'committee an explanation in regard to the general plan to meet unemployment. He said this morning that he was not one of those who would have criticized a plan <for public works, at the time, but an experience of fifteen years in the house has taught him that public works are no cure for unemployment. At least that is the interpretation I placed on his words. I do not disagree with him in that regard, but public works are a necessary adjunct to any scheme to tide over the employment situation during difficult days.
I did not have the white paper on employment and income before me this morning. I find that it contains the plans of the government in this regard, set forth as generally though not particularized. On page 15 of the report presented in April, 1945, after setting out the various plans that the government has in mind for the encouragement of private investment after the war and the extension of consumer demand and the development of an expanding economy, it says:
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Accordingly as an appropriate policy for this period the dominion proposes to press ahead with the planning of its own deferred works and invites provinces and municipalities to do the same. In addition, the dominion government will give consideration to methods of stimulating provincial and municipal governments to carry out necessary surveys and draw the plans for useful public projects in. defined categories to be executed when they are needed, to stabilize employment, probably some time after the Japanese war is ended. Further, the dominion government proposes to press ahead as rapidly as possible with surveys, aerial and other mapping and explorations on the results of which a new and forward-looking agreed programme for the development and conservation of natural resources must be built.
I call attention to those words "forwardlooking agreed programme." They indicate that even in April last the government had a "forward-looking programme" agreed upon. The document goes on:
Then the dominion will undertake its own deferred projects in those localities in which the decline of war contracts or other circumstances have made available labour, which can be employed on such projects and for which the locality gives promise of _ permanent employment. The government will invite provincial and municipal governments to cooperate in following similar programmes.
When I brought the Last Mountain lake project to the attention of the minister I did so because it is recognized that if the undertaking in Saskatchewan is developed it will mean that a very considerable area will be available for irrigation. It will mean that this lake will be preserved for its fishing economy and as a bird sanctuary and also as a necessary reservoir for moisture. It is a project that will be worth while. I did not put it before the minister as the only project, there might be in Saskatchewan, but as one which should be in accord with what the government intends to do with a view to assuring employment. The minister is fully conversant with the general plan for assuring jobs; that plan was known to the government in April last, and the reason I am making these remarks is that we have heard so much about two jobs growing where one grew before. That is the statement of one of the ministers, translated into simple every-day language. I should like to hear of one of these post-war projects that will assure the growing of one job where none grew before, because Saskatchewan people are coming back from the coast and from overseas and already there is a lag in employment in that province.
From time to time the member for Davenport has brought other projects to the attention of the government, and this type of project combines in itself the very elements mentioned in the white paper as the proper
TMr. Diefenbaker.]
ones to be considered when the government is deciding upon a project for the prevention of surplus unemployment.
The minister does not need to go into details. I do not ask what amount of construction he will do in each province, because he cannot answer that. But what are the projects which the government will enter into so that it may, by these projects, cooperate with enterprise and assure the relief of any prospective unemployment? He says that my view of things in the next months or years is not the proper one, that I picture a doleful situation in employment. Well, all I know is that in the evidence given before the United States congress, one of the outstanding economic leaders there said that unless something is done in the setting' up immediately of public works in that country, there will be, I believe he said, four million unemployed within the next year. In this country we generally follow similar economic trends. If we are faced with a like problem, if it is found that private industry cannot secure jobs or assure jobs, then what are the government's plans for public works?
So long as all controls remain on private industry, so long as a price ceiling is maintained-and I am not arguing against it-in the face of higher cost of production which the .manufacturer or the industrialist must meet, private industry cannot develop or expand, because of the fear that there will be no compensation for the extra effort. Further, in the transitional period-and I am supported by the evidence given before the various committees of the United States congress-public works have a definite place. In the United States, if I understand the position correctly, several billion dollars of public works are about to be undertaken in order to assure that during this period of transition from war activities to peace industry the slack in employment will be taken up by public investment.	[DOT]


Mr. PROBE:: May r. ask the hon. member for Lake Centre this question: Is he now arguing on behalf of public enterprise, or public enterprise during the transition period, or more assistance to private enterprise? I cannot quite follow him.


William Ross Macdonald: Order. The hon. member for Lake Centre might like to answer the question, but I must remind the hon. member for Regina City that we are now discussing public works. I think the question would be out of order at this time.

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Mr.   GLDLIS@: I should like to say a few words at this point. Does the minister want to answer?


Alphonse Fournier: It will take me only a few minutes. I am pleased that on so many points I agree with the hon. member for Lake Centre. He seems to approve the white paper and the principles laid down in it.


John George Diefenbaker: Yes; it was copied from the British and United States investigations.


Alphonse Fournier: That puts us on the same floor, and we can discuss this matter of planning. Public works has jurisdiction in two or three spheres. The general plan is that we are to expand our works in every one of these fields-buildings, breakwaters and so on. We are going to try to come to some agreement with the provinces in the development of natural resources. I have not before me the proposals to the provinces, but we shall be interested in every work which can help private enterprise to continue on its same level, or on a reasonable level. Where I agree for the most part with the hon. member for Lake Centre is that he admits public works are not a cure for unemployment, they may be a help. In an economy where the national revenue is some nine billion dollars and we have a public works programme of fifty millions or a hundred millions, it would be only a drop in the bucket to boost the standard of living or give purchasing power to the population, Hon. members do not want me to go into details.
This morning the hon. member for Cape Breton South spoke of Glace Bay. I am coming back to that. During the lunch hour I found that in the 1946-47 estimates there is an item prepared for that, but that is a postwar project which has been considered. It is ready. But do not ask me to bring in those estimates which were prepared last January, and which are continuing estimates of wartime administration, post-war projects. I do not think that would be fair, and what I am now saying applies equally to all of Canada. We could discuss that for a day or two, but generally I would not be able to give much more information than I am giving right now, I shall certainly, however, answer any question hon. members wish to ask when any estimate is before the committee.


Clarence Gillis: I know that the committee
wants to get along and finish up the estimates, but I am not going to apologize for one minute at this time for joining with the hon. member
for Lake Centre in the arguments he has made. I think perhaps the hon. member for Lake Centre has occupied the time of committee to-day to a greater advantage than he has at any other time since I came into the house. I have in mind, Mr. Chairman, the fact that I sat on the reconstruction committee for some two and a half years. The object of that committee was to find post-war employment. We called in representatives of industry and finance from one end of Canada to the other, and the provincial governments were called in to place before the committee the public works projects they had in mind in their respective provinces, so that the government might start immediately to plan for the post-war period. It was emphasized in that committee time and time again that in the transition from war to peace the greatest medium for taking the first shock of returning service personnel and war workers being laid off would be the public works projects that might immediately be put into operation in each province in order to create employment during the period of the re-tooling of industrial machines for other means of production.
During the two years that I sat on that committee I did not think I was wasting my time. I heard the provincial premiers laying out immediate post-war plans and indicating what they were prepared to do. As there was at that time an interdepartmental committee handling the problem for the federal government, I thought that each department of government that had to do with public works projects would have its plans ready. The fact of the matter is that the minister comes before the committee-I am not blaming him; I am criticizing government policy, or lack of government policy-and tells us that they have no programme ready.
We went to considerable expense in bringing people from one end of the country to the other to have those plans prepared. The excuse cannot be given that the government did not know and that they are still probing the problem. The problem was set out pretty well to that reconstruction committee. Evidently it never got beyond the committee stage.
The minister says there is no possible chance of solving the whole problem with public works projects. I will admit that; but I also want to bring to the minister's attention the fact that there is no other programme in the maritime provinces. There is no war industry there, and very few were created during the war-only about one per cent. Those that were created there folded up in the past several months. Industries that were in Nova Scotia
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for years were syphoned off immediately upon the cessation of hostilities, and a serious unemployment situation has developed in that province. That applies to the maritime provinces generally. It is worse than it was in 1939. If the only department of government that has some money to spend to create employment in the province says that nothing is to be done until the 1946-47 estimates are brought down, that is a simple and plain statement that so far as Nova Scotia, New Brunswick and Prince Edward Island are concerned there are no plans whatsoever for employment, and we are going back exactly to where we were in 1939.
I have talked to the Minister of Reconstruction about reconverting war industries there. He has no plans. I say to the Minister of Public Works that in the field of. public works there are many projects that could be got ready immediately. I mentioned two this morning. I picked them out because of their urgency, and also because I was led to believe that in the 1945-46 estimates there would be an appropriation for the purpose of doing something about the two specific matters I mentioned this morning. But from the broad general picture, as I see it now, the only hope we have in the maritime provinces is to get some public worjes projects started until such time as private enterprise, which has the machine of production in its hand at the present time, is prepared to make up its mind whether it is worth while investing money in the creation of industry in those provinces. We have no other hope., and we have not that hope now until 1946-47. In the meantime the two projects which I spoke about this morning are left untouched. Seven hundred boats go in and out of Glace Bay harbour during the fishing season. You could not get into it last year, and if it is left until next year the chances are you will not be able to do anything about it. The same situation applies to the [DOT] breakwater at Port Morien. The upkeep of the community depends upon it. I could give the minister a long list but I did not want to do that this morning. The hon. member for Lake Centre has insisted this afternoon that something should be done. If the minister is not prepared to tell us what the department has in mind in each province, can we not have it by way of supplementary estimates? I appreciate the fact that the present estimates were drafted months ago and that the money has been spent. That is quite all right. I am prepared to let these estimates go through without any further discussion if the minister will say: I am going to consult the Minister of Reconstruction and also that interdepartmental committee which is supfMr. Gillis.]
posed to be handling the recommendations of the reconstruction committee; I am going to find out what they are prepared to do in the way of getting urgent public works projects started across Canada as laid down by the various provincial ministers to that reconstruction committee, and, having selected half a dozen projects in each province, which means the creation of employment, I am ready to come in later this session with supplementary estimates and make a start on this rehabilitation of the country of which we have talked for five years. If the minister will do that, I do not wish to discuss this any further. I know he cannot do anything on the set-up he has before him now, but I insist that it is the obligation not only of the minister but of the whole government to tell us definitely, as a matter of public policy, what they are prepared to do in the immediate future with respect to getting these urgent public works projects started, in order to create employment in the transition period.


Mr. HANSELL:: I have been listening for the last hour or two to this debate in respect to post-war public works, and, so far as I can see, we are mixed up a little bit on this matter; I am, anyway. I think we are asking the wrong minister these questions. About a year ago a reconstruction committee was set up. It went into a fairly extensive investigation as to post-war reconstruction and, partly as a result of its activities, a department of reconstruction was set up or is now in process of being set up. I never visualized the present Department of Public Works as being the department responsible for post-war reconstruction, although I agree that the minister should have something in- mind as to what his department is going to do next year or the year after.
The hon. member who has just taken his seat says that the minister should tell the committee now, for it is his responsibility to do this and do that and do the other in order to find employment. Now, when did it ever become the business or responsibility of the Department of Public Works to find employment for people? That is a question which I think we should continually put before hon. members of this house and the people of Canada. We do not build post offices because we want to give men work; we build post offices because we have no post offices. We do not build wharves for the purpose of creating employment; we build wharves because we need wharves. I say that the purpose of the government is not to find employment, but so to legislate that the people of this country shall have economic security at

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the very highest level that our productive capacity is able to provide. That is the purpose of government.
I can quite understand the minister saying it is no use to ask him what he is going to do next year or the following year, because I know how the department is handled; at least he can correct me if I am mistaken. Departmental officials gather around some table and get their heads together and say: What are we going to do next year? Well, the member for so and so wants a post office; he is a Liberal, we will put up a post office for him. And the member for so and so wants a post office; well, what party does he belong to? So eventually he winds up the work for the year, and that is his programme: so many post offices, so many wharves, so many other public works. Then he goes to the treasury board-and that is the nigger in the woodpile. He goes to them cap in hand, makes a humble obeisance to them, and says: Gentlemen, I want so much money this year to run my department. The members of the board take out their pencils and do a little figuring. Regarding themselves as the custodians of the people's money they scale the figures down, and the poor minister is left to get along with whatever the treasury board care to say he is to have. I should like to ask the minister a question along this line, and he can answer it later. I am afraid he will have to be very careful how he answers it, because it has to do with the relationship between his department, and the treasury board, and of course he will have to be very polite to the treasury board or they will scale him down a little more next year. I should like to ask him if my diagnosis of his procedure is correct.


Alphonse Fournier: The hon. member is all wrong.


Ernest George Hansell: I should like to ask him if a happy relationship exists between himself and the treasury board. I should like him to answer that, because when we are discussing grants of money for public works under this department we are just talking peanuts. I want to know whether the treasury board is not penny wise and pound foolish. Look at the measures on the order paper. Here is one, standing in the name of the Minister of Finance, which calls for an appropriation of $700,000,000. That is a lot of money. Another order requires an appropriation in the neighbourhood of $750,000,000. That, also, is a lot of money. It is to provide other countries with funds wherewith to buy what we have to sell. I can never figure that one out, but I may not discuss that subject on this measure.
It seems to me that when you ask for a few billions you are apt to get it, 'but if you ask for enough to put up a post office here or something else there, the board can figure in those terms, because they are at just about the level where they are able to do a little figuring.
Of course we in this corner of the house look at things rather differently. I am. glad we do, because, you know, money is worth nothing at all unless it is spent. Our Social Credit philosophy is one of spending, and that one has when he spends. I am willing to vote any appropriation for which the minister may ask. The only thing I ask when voting money is that he shall spend it without wasting it. That is all I am concerned about. And when treasury board or some other responsible persons find they are spending so much that they have to tax so much more, then I just hope that they will tax so much, and the people will holler and shout so loudly Canada will wake up to the fact that the present policy of government financing is strangling them. Those of us in this group can shout our heads off about government finance, but the government will move only when the people begin to learn that they are being strangled by this system of taxation and debt.
I should like to ask another question of somewhat lesser importance. What is the process followed in respect to the management of public buildings? It does not matter which one the minister may have in mind. Let us say a public building is on some corner or some back street. Is there a superintendent who looks after the building? If the minister replies that there is, then I am perfectly certain that the superintendents of some of our public buildings do not look after them very well. I have passed government buildings and have said to myself; Well, if that is a picture of government ownership. I want none of it. If private industry kept its buildings as some of our public buildings are kept, it would not be in business very long. It is about time the Minister of Veterans Affairs saw to it that the windows in the Daly building were cleaned. One of these days he will not be able to see out.


Ian Alistair Mackenzie: And the hon. member will not be able to see in.


Ernest George Hansell: Maybe they do not want anyone to look in.


Gordon Knapman Fraser: There is no light in that
department at all.


Ernest George Hansell: Sometimes I have wondered if buildings like that have janitors.
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I have a further point. When the minister brings in estimates in which he includes amounts for repairs to certain buildings, what happens when buildings have to have repairs after the estimate has been passed? In private business, if a stairway breaks down the management will realize that in order to do business a new staircase must be put in and they will go ahead and do1 it. What is the process when that happens in a public building? Do they have to wait for a year until treasury board discovers that they need some new stairs?


Gordon Knapman Fraser: They just step things up a little.


Ernest George Hansell: Do the superintendents
of these buildings have a sort of contingent fund to do this, that and- the other thing? Looking at some of the signs in these public buildings one is inclined to say: What boy in grade II printed that? I suppose the minister has no money to send out to have a little sign painted, so he has to ask some school boy to write signs in pen and ink. Words may be spelled wrong, the S's turned tlje wrong way, and all that kind of thing. Perhaps the minister would answer one or two of these questions.	-
The building in which we are housed is a very fine one, and spotlessly clean-except, of course, when I go into some of the member's rooms; that is a little different. But the hallways are spotlessly clean, and we like to bring visitors here so that they may see the building. I am quite certain, however that if someone from another country visited some of the offices in the east block-the Department of External Affairs, for instance-he would think the whole government was on the bread-line.


Gordon Knapman Fraser: He would think they were in the morgue.


Ernest George Hansell: I think a good fire over in the east block would be a good thing for this country. It would clean the inside out and put a new inside in. That is the way I look at some of these things. I guess I have said enough.


Alphonse Fournier: Mr. Chairman, the discussion on my estimates started out on a high plane. Questions were asked about the general plan for public works all through the country; it was suggested we should try to find ways to relieve unemployment wherever it showed up, and I followed that discussion with keen interest. The only thought that came to my mind when hon. members were speaking about planning was this: Do they 
realize that planning for public works means that we have to make out a list' of specific projects extending from one ocean to the other? Now, I could probably give the committee some information as to projects for Nova Scotia, New Brunswick and going on out to Vancouver-


Mr. REID:: And New Westminster.


Alphonse Fournier: Yes, and New Westminster. I could probably give information about projects for buildings, works and harbours, along the St. Lawrence and on the two coasts. That would be a general plan. But I can assure hon. members that every day we are studying and preparing those plans. The only question is as to the time at which a .discussion of such plans should properly take place. I shall not repeat what I said before, that these estimates were voted in part in the month of April, and I am now asking that a vote be passed to conclude the requirements for the fiscal year.
The hon. member for Cape Breton South has asked if we are to have supplementary estimates. Certainly we shall have a certain amount. But the timing of works is of great importance. If the department were asked to carry out some project in January or February along the coast of Nova Scotia, I do not think we could do it. We have to time our works properly. We start as early as possible in the spring and continue as late as possible in the fall. But the hon. member wants us to begin right away.


Clarence Gillis: We have been waiting for ten years.


Alphonse Fournier: Oh, no.


Clarence Gillis: It is time to get started.


Alphonse Fournier: Do not speak about the past ten years. In my department are officials' who have had experience in these matters, and who know the right time to go ahead with them. There are certain times in the year when some works cannot be carried out, and I hope the hon,. member will not insist that we begin next week on certain works in some parts of Canada. We have plans. The ordinary estimates will come up, and we shall have supplementary estimates at the end of this session. Then there will be estimates probably in February, during the next session. We shall have works in the different provinces. I cannot give stated amounts, because those amounts might be over or below what I have in mind.
This discussion was followed by the speech of the hon. member for Macleod, who has a sense of humour well known in the house. He

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has told us of the way in which he believes the Department of Public Works votes money, and he says that if Mr. So-and-so is a Liberal member, he has a great chance to have public works in his riding. But if the hon. member will look up the estimates he will find that there is more money spent in constituencies represented by members of the opposition than in those represented by members on the government side of the house.


Daniel (Dan) McIvor: I agree with that.


Alphonse Fournier: My officials are not Liberals or members of the opposition; they are civil servants. I do not think the^ have any political affiliations. They are loyal to their minister, and they try to do their best for the people with the amount of money they have at their disposal.


Ernest George Hansell: I withdraw.


Alphonse Fournier: I thank you on behalf of my officials.


William Irvine: You are describing Alberta's method.


Alphonse Fournier: I will describe the set-up. Canada is divided into twelve districts. In each district there is a resident architect and a resident engineer. These men have their own staffs. They have full knowledge of the different public works in their district, their state of repair, the cost of maintenance, and so on. They make reports to headquarters in Ottawa. They advance every reason they can to get appropriations to repair, build or maintain public works. That is the ordinary procedure. As a general rule, members go to the resident engineer or the resident architect to present their plans. They then come to us and we decide. We generally follow the advice given by the architect or . engineer. If you know of one engineer or one architect from Halifax to Vancouver who is derelict in his duty, I should like to have his name. They are doing a wonderful job. They are considering every request that is made. They are technical men who act as my advisers.
We do not spend much money. I am thinking of what was spent during the war.
I can remember standing up in the house and asking for $100,000,000 for public works in Canada, but who was ready to support the Minister of Public Works on that occasion? Not one single member. We pared down our expenses to the bone, if you will pardon the expression, because requests for the war effort were so urgent and compulsory that we tried to forget our own lives here in Canada in order to try to save what we were fighting
for. That was the position of my department, and we continued in that way until the end of the war.
Under this new policy I am going to do my utmost to see that needed public works are constructed, not fancy public works that are not needed. I think that is the duty of the officials and of the minister. We are the custodians of the money. You may laugh at the treasury board, but I want to tell you that I have sat on that board. You ask if that board studies the expenditure of the people's money. Yes, they do, from one dollar up. Previously I did not know the procedure that was followed, but now I know it is the best guarantee you can have that the people's money will be properly spent. They do not spend money unless there is justification for the expenditure.
That does not always fit in with what we have in mind as to public works. We think that public works should be built when they help a community to expand its activities, when they help a private enterprise to expand its activities. I have in mind right now the construction of a wharf that was started at Westview on the British Columbia coast. Why did we do that during war time? We did it because an industry at Powell River was willing to spend between $13,000,000 and $14,000,000. We thought we should be ready to spend from $200,000 to $300,000 to help put up the wharf, to do some dredging, and so on.


Mr. SINCLAIR:: When are you going to complete the, harbour there?


Alphonse Fournier: That may be coming, but I am not making any promises. I just want to tell hon. members what we have in mind, and we are going to follow that up to the limit. I should like to continue this discussion for days. I hope that after hearing this, hon. members will not be so ready to ridicule men who have been working for the government for years and doing the best they can under the circumstances.
Mr. GILLIS.: The Minister of Reconstruction made it clear that his department would only be a coordinating department and would carry on no public works. Does the minister anticipate putting through post-war projects that would come under his department without reference to Reconstruction?


Alphonse Fournier: I could not do it.


Clarence Gillis: Then no one is going to do it.


Alphonse Fournier: That is not the way it is done. The Department of Reconstruction was set up to coordinate govern-
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mental activities in the post-war period. If I understand the act,. their staff is not to undertake the execution of public works; they are working on the reconversion of war industries into peace-time industries. Public works generally and the ordinary programme of maintenance have nothing to do with the Department of Reconstruction. Any projects started with a view to creating employment or any assistance given to the construction of provincial works would come under the Department of Reconstruction so far as the timing is concerned. Plans and specifications for post-war projects are prepared and then sent to the Department of Reconstruction for advice as to timing. It might be wise to start a project in Toronto, either this winter or in the spring, because of the unemployment situation, whereas in other places there might be a shortage of manpower and it might be better to wait. They will be our advisers. If my understanding is correct, the plans for public works will be carried on by the Department of Public Works.


Julian Harcourt Ferguson: We representatives of the people have come here in the belief that we would get information from our associates in Ottawa, particularly [DOT] from the ministers. Parliament has been in session since September 6, 1945, and the people of Canada want to know what is going to happen, not only in the years to come but in the days and weeks to come. They want some notice from the cabinet ministers as to what they may expect in the immediate future. Conditions in Canada to-day are not such that time can be wasted, particularly when ' you consider the money that is t<j) be spent by the minister's department on post-war projects.
Apparently the minister has not seen fit to give the people of Canada any idea of what they may expect from his department. In 1944 the minister acknowledged receipt of a letter urging improvements in Collingwood harbour. These improvements were necessary in order to reduce by $1.40 per ton the cost of coal to the consumer in the Collingwood vicinity. The minister's department is not working very closely with the Minister of Reconstruction, because the Minister of Reconstruction informed this house the other day that he believed there was sufficient work to keep the shipyards at Collingwood and other yards throughout Canada busy for about eighteen months. The Collingwood shipyards were asking that improvements 'be made to the harbour because it is not in fit condition to permit an extensive shipbuilding programme. The minister's two engineers last year drew this extensive plan for the harbour of Collingwood, and I have copies of a

great deal of correspondence-this is only one-tenth of it-between the minister and his engineers. I was warned by the defeated Liberal candidate in my riding not to mention this matter in the house; but on the 6th day of June, 1945-and it will be remembered that the federal election was on June 11-after that gentleman had been in power for eleven years, without ever mentioning to me up to that time improvements in our harbour, he did say, and it was well published in the newspapers, that approximately $4 million was to be spent on Collingwood har-hour-a small item of $4 million! The hon. member for Lake Centre asked for only $2 million, but the defeated Liberal candidate promised on June 6, 1945 that the dominion government would probably spend $4 million on that one trivial item in the town of Collingwood.
After the election I was told not to mention this matter or nothing would be spent. The matter would still have to be left in the hands of the defeated Liberal candidate, as this government was still in power. My answer to that was this. I am the representative of the people of Simcoe county, and if they need public works and I can prove it, I defy any government to withhold those public works from those people. I do not need anybody to intercede, and if anyone does, we will let the people of Canada decide whether everybody is to be treated alike by the government. I have confidence enough in the people of this country to believe that when public works are necessary for the general benefit of the people of Canada, wherever they may be required, the people will see to it that those works are carried out by this government. Until I find out differently, that is my opinion, and if I do find out differently, the people of Canada will know about it.
I cannot understand why the minister up to this late date has given no intimation regarding the expenditures that are to be made on public works when this particular work has been urged upon him repeatedly by our town and our board of trade, especially in view of the fact that the Liberal candidate in my constituency declared before the election that $4 million would be spent on this work. The people of Canada want to know, and they have a right to know, what is to be done. In my opinion it was not good judgment for the minister to get up here and say we cannot discuss anything but past expenditures.


Alphonse Fournier: I never said
such a thing.


Julian Harcourt Ferguson: Pardon me if I am
wrong, but I understood (he minister to

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intimate that we should stick to the appropriations he is asking the committee to pass. The people of Canada want to know what the minister's plans are for the future, and they are entitled to know. But the minister asks us to approve past expenditure without giving us any intimation as to what is to be done in the future. I think he owes it to the people of Canada to give them some idea as to what the department is going to do for the general benefit of Canada.


Douglas King Hazen: The Minister of Public Works referred this afternoon to New Brunswick. I should like to take this opportunity to bring to his attention certain works that are necessary for the improvement of the facilities at the port of Saint John, New Brunswick. The port of Saint John is one of two ports facing on the Atlantic that remain open throughout the year. It plays an important part in the export business of Canada. The minister a few1 minutes ago said that he proposed to spend-money on public works where it is necessary to help communities, but I would point out to him that these expenditures are asked for not merely to help the community but to be of benefit to the dominion as a whole.
The port of Saint John has modern up-to-date facilities for handling freight. It has some of the best longshoremen in the world. But it requires further facilities. This matter has already been brought to the attention of the minister by the mayor and council of the city of Saint John and also by the Saint John board of trade. I do not propose to take up the time of the committee or the minister's time this afternoon by reading from that report, but there are two or three recommendations in it to which I would refer briefly.
One is in connection with passenger facilities at that port. We have, as I say, modem freight facilities, but we have no modern passenger facilities. Those facilities were destroyed by fire some years ago and have not been rebuilt. Customs and immigration sheds should be provided. The board of trade of the city of Saint John understood that plans for these sheds and buildings had been made some time ago, but they recently discovered that no plans had yet been made. I suggest to the minister that steps be taken to have the plans prepared immediately and the work undertaken as soon as possible.
I wish to refer also to a wharf on the east side of the harbour, known as the McLeod Pettingill wharf. Plans were made *prior to the war to rebuild this wharf but owing to the war coming on this construction was held up. I hope if it comes within his
jurisdiction that the minister will give attention to the rebuilding of that wharf now that the war is over.
Then there is a wharf at the head of the harbour known as the Long wharf. Recommendations have been made that it be reconstructed and I would ask that steps be taken to have that done at the earliest possible date. There are other facilities to which I could refer but these are the three most important; the others are contained in the statements that have been forwarded to the government by the board of trade and by the mayor and city council of the city of Saint John.
There is one other matter. It has not to do with the port of Saint John; it has to do with some of the fishing villages along the shore of the bay of Fundy in the county of Saint John. No repairs have been made since prior to the war to the wharves and breakwaters in some of these villages. The result has been that they have fallen into disrepair and in consequence the commercial fishermen who live in these villages and use these wharves and breakwaters are placed at a very serious disadvantage. I ask the minister to look into these needed repairs, particularly to the wharf or breakwater at a village called Chance Harbour. This matter, I believe, has already been brought to the attention of the minister. Recently I received a letter from one of the fishermen in that community advising me that, the breakwater being so far gone, they had found it necessary this autumn or early winter to make a temporary breakwater to protect their fishing boats. The wharf at Lomeville is also badly in need of rebuilding.
Since these matters were brought to the minister's attention I would point out that there has been a very bad storm in the bay of Fundy so that these wharves and breakwaters, which were in a bad state of repair, have now been damaged to a greater extent with the result that work is urgently needed on them at the earliest possible moment.
In addition to the wharves and breakwaters I have mentioned, work is needed in Dipper Harbour in St. John county. There is urgent need for dredging in that locality. There is a considerable lobster fishing business in that harbour.- The lobsters are brought in by boat and truck to Dipper Harbour and when they get there they are put in what the fishermen call cars, which are large crates that float in the w'a'ter inside the breakwater. What has happened is this. The harbour has started to fill up, and at low tide, instead of these large crates that contain the lobsters
267$
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floating, they rest on the bottom of the harbour, the top of the crate being exposed, with the result that some of the lobsters are killed. That of course is a great loss to the men engaged in this form of fishing. I hope the minister will give attention at the earliest possible moment to remedying that condition.


Mr. SHAW:: I have looked through the estimates in an attempt to find some vote under which one may discuss rentals for government offices, but I have not been able to find one.


Alphonse Fournier: The hon. member might look at 245 and 249.


Frederick Davis Shaw: My discussion may go to the point where I may challenge certain policies with respect to rentals and advocate government ownership of those buildings, and I want to be sure that I shall not be deprived of an opportunity.


Gordon Benjamin Isnor: I support the representations made by the member for St. John-Albert with regard to the eastern ports. He has made an exceptionally good case for the port of Saint John. I have already placed on record my views with regard to Halifax, and I will not take up further time in that connection. I concur in what the hon. gentleman has said about the fishermen. I do not look upon this as an expenditure, but rather as an investment on the part of the country. When I suggest that the Public Works department should favourably consider the requests made for needed breakwaters and wharyes in the fishing districts of the maritimes, I am urging what is'really an investment, because, unless the fishermen have these breakwaters, they are unable to do their work properly and to bring home the catch that adds to the wealth of the country.
The member for Calgary West the other evening drew, so to speak, a triangle of labour, capital and the public. In this matter I would point out that we have again a triangular situation involving production, export trade, public works and finance. These elements enter into the. picture. Unless you have production you cannot have new markets and it is necessary, if we are to have production, to give the fishermen needed protection in the form of breakwaters so that they can go out and fish and bring back their product, adequately protected against the hazards which they have to face. May I say to the Minister of Public Works that when requests come from the maritime provinces they are for needed works. We do not make requests otherwise, and I would ask him to give them his favourable con-
sideration. They should not be looked upon as unnecessary expenditures but rather as investments for the good of the country as a whole, and especially, of course, for our part of the dominion.


Winfield Chester Scott McLure: As this seems' to be rather a maritime field day, and as other provinces down east have spoken, I do not care to see Prince Edward Island left out in the cold. In going through the estimates before the house I was looking for a revote of a considerable amount for Charlottetown harbour improvements. This is not something new that is being brought to the attention of the minister, because Charlottetown harbour improvements have been promised for many years. A start was made on them in 1913 and nothing else was done until 1941 when a vote went through this house for 1250,000 to begin improvements there.	[DOT]
At one time we had a royal commission- it was appointed in 1926 under the chairmanship of Sir Andrew Rae Duncan-to look into harbour improvements and other matters connected with the maritime provinces. I will mention only the part of the inquiry that related to Charlottetown. The Duncan commission was appointed by a Liberal governs ment. It brought in a recommendation, No. 18, urging the absolute necessity, from the point of view of Prince Edward Island transportation, for certain harbour improvements. This had been neglected, but in 1941, as I have said, a vote went through this house of $250,000 which was supposedly to be used as a start on harbour improvements in the port of Charlottetown. Material was brought to Charlottetown-lumber, steel and machinery -and harbour improvements began. All of a sudden the construction company received the command to halt, and did it so quickly that some of the piles that were half driven were left there, I suppose, to show where work might start again at some future day. Then, as if by magic, all the materials disappeared. After tracing it we found that it had landed in one of the upper provinces of Canada to be used in war construction. We had no objection to their getting a wharf up there, but we do take objection to our part not being carried out.
What I want to say to the minister is that if this revote to take care of harbour improvements in Charlottetown is in the supplementary estimates-and I hope it is, because it has been definitely promised to us that it would be in the estimates of this year, if not in the estimates now tabled, then in the supplementary estimates-I shall feel much happier.

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I wish to say a little more with reference to improvements to the Charlottetown harbour. Another thing we have been promised for the last forty years is a ferry service. Engineers have gone over it time and again. In 1913 a start was made to build a marine railway slip- it is sometimes called a dry dock, but we have called it a marine railway slip. In 1913 the Borden government purchased a site for it and did some work on it, but when the war [DOT] broke out in 1914 the whole thing was dropped. In later years we have been agitating for it, and it was promised by both parties in the last election that this would be a real project in the harbour improvement of our port on the island. What would that mean to us? To begin with it is part of the agreement under which we entered confederation. We were promised that we should have proper communication with the mainland. One thing essential to our transportation is to have a place in our province where we can repair our own ships instead of having to send them up to the St. Lawrence. One of our finest ships was lost on the way up there for improvements. If she could have been repaired and overhauled on the island we would not have lost the SB. Charlottetown.
When properly built this marine railway slip will employ at least three hundred men annually just to repair our own ships. These figures are taken from the blue-book which gives the expenditures that have been made annually on the repair of our ships over a period of years. Besides, there are all the local boats which could be repaired as well as the boats that we might get from outside points if we had a proper harbour. I bring this to the attention of the Minister of Public Works so that even if he has not his postwar programme all ready he must see that this one is in it. When we come to some other items in the estimates we shall couple with it one of the things that has been definitely promised by both political parties. Of course they always make promises before an election, but we are going to 'hold them to it this time. Besides this marine slip me are going to ask for the building of a new bridge across the North river which will be known as the Brighton bridge. This bridge will give us a definite road and highway over the shortest route from Charlottetown to Borden. This is a matter that I shall take up with the Minister of Reconstruction or the Minister of Transport.
With reference to the harbour improvements, I believe I am right when I say that a vote in the neighbourhood of a quarter of a million dollars was put through the house in 1940 for this purpose. I know that materials were, bought and construction companies 47696-169
employed to do the work. We were promised that it .was only a beginning, and that the harbour would be definitely improved' to carry out the recommendations of the Andrew Rae Duncan commission of 1926. Can the minister tell me whether it is in the estimates?


Alphonse Fournier: I am sorry, but I shall have to disappoint my hon. friend to a certain extent. That item will not be in the supplementary estimates of this year; but I am told that it is in the ordinary estimates for next year. I did not quite follow the hon. member with regard1 to Charlottetown harbour. I believe that money was voted in 1940.


Winfield Chester Scott McLure: Yes.


Alphonse Fournier: A contract was awarded, and then public works had their holiday during the war time. The contract was cancelled and the materials which were purchased were sent to Saint John and Sydney, I believe, to help works which we had there and which had become necessary on account of the war. But we have never lost sight of the improvement of Charlottetown harbour. I am glad to see that both parties on the island agree on this.


Winfield Chester Scott McLure: The work was really started.


Alphonse Fournier: It will be continued next year.


Winfield Chester Scott McLure: The minister can give us an assurance now that it will start next spring?


Alphonse Fournier: I am speaking for the department. I .have an estimate ready to be brought down for the improvements in Charlottetown harbour next season.


Winfield Chester Scott McLure: With regard to the vote for the improvements in this harbour, why should we lose out on it? Why do we have to wait? The money was voted. Why should the minister not be able to say to us that this work will go ahead next spring?


Alphonse Fournier: Time has lapsed. We could not use that money after the end of the fiscal year. We have to have a new vote for the next season.


Mr. ARCHIBALD:: I should like to say a few words about the condition which we face in Skeena. It is somewhat similar to that of hon. members from the east coast. The fishermen there lack facilities. I know the Department of Public Works have plans, and I think that they work in cooperation with the Department of Fisheries. Would the Department of Public Works tell us just what steps they intend to take to do some of this work up at

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Squadaree, Langara, Massett and so forth, so that the fishermen may know ,wbat to expect in the forthcoming season?


Alphonse Fournier: Actually we have an item for New Massett. It reads as follows: "Wharf reconstruction, revote, $47,700.", It will be found at page 38 of the estimates.


Harry Grenfell Archibald: That is for tying up
boats in the coastal trade; it has nothing to do with the fishing industry. ,


Alphonse Fournier: I am told it
works both ways. When we come to that item I shall have a note, if the hon. member wishes any information.


Mr. JACKMAN:: The minister ably described how jealously the Department of Public Works guards public money, and how the whole of Canada is divided into twelve sections with an architect and engineer's office in each. Can he explain to the committee exactly how his department will coordinate with the Department of Reconstruction and Supply? In the bill setting up the department, the old Munitions and Supply Act was changed in order that the Minister of Reconstruction might be empowered to enter into construction contracts, and it then went on to define the various projects. When the bill was before the house the Minister of Reconstruction said he was not in the construction business, but neither,is the Minister of Public Works. I presume that both departments will let contracts. It would seem to me, from the description the minister gave a few minutes ago, that his department is in so good a position, with its engineers and architects experienced in the erection of public buildings- or "projects", as the Minister of Reconstruction calls them-that many of these projects which will be undertaken in the future could perhaps better be carried out in the Department of Public Works than through setting up a new department of reconstruction which, in turn, will require to have its architects and engineers in various parts of Canada if it is to do an efficient job, thus duplicating services which we already have, at considerable cost to the taxpayer.


Alphonse Fournier: I do not think that the Department of Reconstruction will have a staff which could be compared to the staff of the Department of Public Works. They may have a certain number of architects or engineers as their advisers. Bu.t Public Works has the set-up to study public works projects, prepare plans and specifications, ask for tenders, and, if the work is to be done at a comparatively small cost, call for local tenders.

I do not believe the Department of Reconstruction will have the same set-up as that of public works. Our projects of building and .other public works will be continued through our own organization.


Harry Rutherford Jackman: I am not quarrelling with the work of the Department of Public Works, but here under reconstruction and supply we have set up a department which is empowered to enter into contracts for buildings, aerodromes, airports, dockyards, roads, defence fortifications, et cetera, and enterprises for industry or reconstruction.


Alphonse Fournier: May I interrupt the hon. gentleman? Nearly every project or work he has mentioned would not come under public works. There may be some that would, but the works he mentions do not. The building of aerodromes never came under my department. We have no jurisdiction in that field.


Harry Rutherford Jackman: No, but this is a new department which is being set up, although in a small sense it is a carry-over of the old munitions and supply department. If our construction is to take place under this new department, contracts will be called for, and obviously the department must have its engineers and architects to see whether those contracts are properly designed to meet the' needs and to be economical in their operation. Inasmuch as the minister's department has been engaged in public works over the years, why cannot his department more efficiently and more economically carry on these proposed new construction enterprises, particularly as the Minister of Reconstruction and Supply said that he hoped his department would liquidate itself within four or five years and he would find himself without a job? If temporary works of the kind are to be undertaken in order to create employment, why cannot that temporary job be put under Public Works rather than in a new department, at great cost to the public?


Alphonse Fournier: As I understand it, they have started to use our organization. That is so to the extent that we know about these works. Any extra work I would not know about, but I know they will use our architects and engineers in their projects; they have been doing so in the preliminary steps.


Harry Rutherford Jackman: If I may caution the minister, Mr. Chairman, I think he will find that, perhaps because of the-personality who will be in charge of reconstruction and supply, gradually the power and the responsibility

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will gravitate to the new man and be taken away from the old. I do not know any reason why, if the Department of Public Works is efficiently administered by a capable minister to-day, that department should not do the building. I may cite, as an illustration of what I have in mind, the Department of Transport, which also was under one of the ministers and had under its jurisdiction the Trans-Canada Air Lines. But T.C.A, was retained by the present Minister of Munitions and Supply when he gave up the Department of Transport and was continued by him under munitions and supply, for reasons which he gave at the time-that there was a big job in the construction of aerodromes, et cetera; and while he is no longer constructing aerodromes he still maintains that organization. I suggest to the Minister of Public Works that he had better be on his guard or he will find the Minister of Reconstruction and Supply trenching on his preserves and taking his engineers and architects, or he will find that the Department of Public Works becoming a mere shell and the Department of Reconstruction and Supply doing the main work. The situation should perhaps be the reverse. The minister has already a good operating department capable of doing this work,- which, again, as the Minister of Reconstruction has said, will be temporary work under his department. That would obviate the necessity of a duplication of architects, engineers and the rest, and the work could be more efficiently and economically carried on.


John George Diefenbaker: I do not want to be persistent in this, but I think we have the right to ask the minister to give us some statement in regard to the plans of his department for the providing of employment by public works as ancillary to private enterprise, particularly during the period of transition. My information is that a committee of the cabinet has had before it in the last few months a general plan, that a survey has been made of the dominion, city by city, setting out what the prospective unemployment will be during the transition period. It would be improper for me to say that I have seen such a plan, but I know that one exists and that there has been worked out by the experts a division as between private enterprise and public projects in the solution of the prospective unemployment problem.
So far as we are concerned we know there are plans-plans, plans and plans-but when you ask the ministers where the jobs are going to be, there is not a job in sight. There are promises of jobs, but never a concrete example of the type of work which is to be 47696-169$
undertaken. I ask the minister whether he has not been consulted by, say, the Minister of Reconstruction nr by the Minister of Labour, and given some indication as to how many jobs his department through the construction of public works will be asked to provide. How many is private enterprise going to provide? What is the surplus which may not reasonably be expected to be provided with jobs? What kinds of the public works does the government intend to undertake- not two years from now but immediately; for, in the words of the white paper, these public works have been planned and are described as part of a forward-looking and agreed programme; They have been decided upon, but try as we will, it seems impossible to extract this information. I do not know why. There should not be anything secret about it. There is no need of hiding it away; it does not have to be put under lock and key. If there are plans, let us know what they are; what distribution of moneys is to be made; what provinces in general are to receive it; whether it is to be used in the development of water powers, irrigation projects or the erection of public buildings. These are things which the minister must have information about. The file, as I remember it, is a very large one. It represents the activities of a large number of experts over a long period of time. It is in the possession of the government, and the minister must have a copy. We do not ask him to go into any unnecessary detail; but can he not answer this one question: What is expected to be the degree of unemployment within one year? That has been anticipated. Statistics have been prepared estimating it. I believe with reasonable certitude that the number can be given in advance.


Alphonse Fournier: Would the hon. member give me his estimate? That would be helpful to the country.
Mr. DIEFENBAIvER:	Well, now, after
all, mine is guess work. This is the product of the work of the experts in the ivory tower. They have been working at this and have made either plans and estimates. Surely it is not for me to do so. How can I contemplate whether there will be unemployment, and how much?
But the government has the record. It knows how many men will be reabsorbed in manufacturing, and what manufucturing concerns and industries are going to expand. It knows the anticipated number who will be unemployed. even though physically employable. Those are the people for whom public works projects are designed so as to assist in tiding over the transitional period.
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I have studied this report on employment and income. I have studied reports from the United States, the national planning board scheme and the British scheme. They all, with one accord, set forth their plans in generalities. The United States planning board has gone somewhat farther than that and has actually indicated the numbers that will be absorbed generally through improvement in export trade, by increase in private investment, by expansion in consumption demand, and by public investment in other various ways, whereby improvement may be secured and maintained.
I am not asking this in any critical sense or to embarrass the minister. But he is the minister in charge of the department which will be charged with a tremendous responsibility. The report indicates that public works will not solve unemployment. But public works properly applied and divided throughout the country as a whole can operate as a cushion during the period of transition, and can take up the lag when men are being transferred from war-time to peace-time industry, and when there is a lagging behind in peace-time industry.
I do not think I am unfair when I press this matter. We have not been able to secure this information. I am not asking anything unreasonable when I direct the minister's attention to the certainty that what he anticipates will actually occur. But we are asking him to place the committee in a position where it may know that the government has more than plans. If all the government has is some plans in white papers, and in the minds of some experts, and if there is nothing in the mind of the practical minister to translate such plans into action, then I say they are worthless. They are just plans, and not jobs.
What the people of Canada want is not plans, but the assurance of jobs based upon those plans. I am not going to press the matter further. If the minister says he does not know, then the answer is perfectly clear. He is the Minister of the Department of Public Works. If he does not know, then all I can say is that we must accept his answer, and it simply means that the public works plans are contained in white papers, but that as yet they.have not yet been translated into actualities or into plans which will culminate in the development of public expenditures.


Mr. MacINNIS:: I was considerably impressed by the statement of the hon. member for Lake Centre in the forenoon session. I believe he had some good proposals. I doubt very much, however, if most of the discussion we have had on this point is really in order.

I believe we shall have to accept the statement of the Minister of Public Works to the effect that these estimates were prepared prior to the beginning of the year and during a time w'hen the country was at war. He has said that they were prepared to meet a condition which prevailed when we were at war. I am not, however, absolving him altogether from the obligation to bring in supplementary estimates to deal with certain projects which were delayed during those years and which, now that the war is over, might be discussed appropriately. But I feel convinced that we are not dealing with the larger programme in the proper place.
We have set up a Department of Reconstruction. The white paper was issued by that department, and we should hold the Minister of Reconstruction responsible for the programme to be carried on in the period of transition. When that department is before us, and before parliament prorogues we should insist upon having some concrete proposals to meet a situation of unemployment we are now convinced1, and I think even the Minister of Reconstruction is convinced, we shall have in this country before spring. But I do not believe that this matter can be discussed properly at a time when we have before us the routine estimates for the Department of Public Works.


Alphonse Fournier: I cannot let the hon. member for Lake Centre build up a case based upon guesswork-those were the words he used-for the future. He has envisaged our country as one in which there will be a great deal of unemployment from one end to the other. When Tasked him to give his own estimate of unemployment for the next six months or a year he replied that that would be only guesswork. But on that guesswork he builds up a case in which he seeks to prove that the Department of Public Works should have one of those programmes or plans in which we would explain how we would take care of unemployment in the country.
If one follows my way of reasoning, then all the arguments he has made up to now have not been based upon facts. He turns to the minister and asks, "Does the minister know anything about this? If he does not know let him say so, and I shall sit down." Then, later on he will tell the minister, "You do not know what is going on, or what will take place." In French we have the expression: "La maniere la plus habile de prendre son homme;" or, translated: "That is the way you can hang anybody." One will make up a case, and will then say, "It is up to you, if you do not know."

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But I will tell the hon. member one thing I do know, as Minister of Public Works. .1 know what my powers are, and I know what the jurisdiction of the Department of Public Works is. If the hon. member will turn to section 9 of the Public Works Act he will see that this department has power over certain dams, hydraulic works, the construction and repair of harbours-not including harbours coming under the national harbours board'- piers and works for improving the navigation of any water, and the vessels, dredges, scows, tools, implements and machinery for the. improvement of navigation.
If we take that as the power, then our plans are prepared for the next year to increase our activities to quite an extent. We will increase those activities where they will prove useful for the community in the improvement of business in each section and in order to relieve unemployment if it exists. That is the plan we have in public works, which is only a small part of the reconstruction plan or programme to try to maintain employment in the country and create as high a standard of living as possible.
If you read section 9 you will see exactly what powers and jurisdiction we have in public works. We are going to exercise all those powers and develop the works that are under our control. I have estimates amounting to about $16,000,000 in a budget of four billions and a half, and I-do not think hon. members should expect me to be able to give them all the information they want. I am ready to tell my story, and the other parts can be told by the other ministers. As a member of the government I can tell the hon. member for Lake Centre that we in our department are prepared to go ahead according to our jurisdiction and power; but we do not intend to spend money uselessly.


Mr. LOCKHART:: I gather that no expenditures are to be made for new works, but that expenditures will be made simply for the maintenance of works and so on. Would the minister explain the machinery? Suppose a small post office or a building for public services is desired in a community. Would that request go through the Post Office Department and then come to public works with their recommendation?


Alphonse Fournier: I may receive
a request from the Postmaster General that because of the revenue of an office the/con-struction of a post office would be justified. Then I would have the resident architect make a report on the situation. If it were
favourable, we would proceed with our plans and specifications. The same would apply to customs and excise.


Norman James Macdonald Lockhart: The original request would go to the appropriate department?


Alphonse Fournier: Absolutely.
Public works does not go out and just put up buildings; we do not go around' trying to impose buildings on communities. The buildt-ing must be needed and justified by the revenue of the office. In many places the income from the office does not justify a capital expenditure.


Gordon Benjamin Isnor: There are two questions I should like to ask. First, does the minister's department initiate expenditures on public projects such as breakwaters? .


Alphonse Fournier: Yes.


Gordon Benjamin Isnor: That being so, I wish to make a few remarks but I shall be as brief as possible. I was told I was out of order this morning when I introduced a matter in reference to the port of Halifax having to do with the transfer of the Queen Elizabeth from the port of Halifax to the port of New York. I feel I am justified in bringing up this matter under this item.


Alphonse Fournier: The question was asked on the orders of the day and I understand that the Minister of National Defence is to make a statement, perhaps to-day.


Gordon Benjamin Isnor: I do not wish to hold up these estimates but I want to place the case of Halifax before the government in such a way that it will recognize our claim. It is not Halifax alone that is affected; this concerns our whole nation. We certainly do not want the Queen Elizabeth or any other ships carrying troops from England to a United States port when we have fine ports on the Atlantic coast, such as Halifax, Saint John and others. I think it is due to our men who went overseas to fight for the good name of Canada and in the interests of freedom throughout the world to have them brought back to Canadian ports when they are being returned. With all due respect to what the minister has to say, I think he should look into this matter from the point of view of his department.
I think the late Sir Samuel Cunard, the founder of the Cunard line, would turn in his grave if he read the statement which appeared in last evening's papers to the effect that Halifax was not a safe port for the Queen Elizabeth or any other ship. I have photographs here showing hundreds of ships that assembled in the port of Halifax during the war. I have here one showing the Queen
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Elizabeth sailing into thie harbour of Halifax under her own steam in what; would appear to be the safest possible manner. I have one showing the Queen Elizabeth at the pier in Halifax and it would appear to any one that she was as safe there as a bug in a rug.
There is misunderstanding somewhere. This is of importance not only to Halifax but to the whole dominion, and an investigation should be carried on as soon as possible. This is an opportune time to bring up this matter. If a breakwater is required, or if the present outer breakwater needs to be extended1 or increased in height, then it is up to the Department of Public Works to investigate and make the extensions, if needed. I asked the minister if these things were initiated by his department and he said they were. That is why I am now bringing this matter to his attention.
I do not wish to prolong this discussion because I believe I have accomplished my purpose in bringing this matter to the attention of the Minister of Public Works. I am glad to see the Minister of Transport in his seat because the national harbours board is under his jurisdiction. I hope that action will be taken so that in the future we shall have no such statements as appeared in the papers last evening.


[Stage Direction]
Item agreed to.
Chief architect's branch-
2,(8. Branch administration, $223,725.
William Ross Macdonald: I would remind hon. members that we are now on specific items and that the discussion must be relevant to the item before the committee.


[Stage Direction]
Item agreed to.
Chief architect's branch-
249. Ottawa-maintenance and operation of dominion public buildings and grounds, including rents, repairs, furniture, heating, et cetera, $2,900,117.
Frederick Davis Shaw: 
Mr. STEWART (Winnipeg North):: I
should like to speak on a subject that is of importance and interest to every member of the house. We in this group have repeatedly brought to the attention of the government the survey that was made by the welfare council of Toronto, which found that the minimum wage on which one could keep an average family of five living decently and adequately was SI,757.60. Let us consider the salaries that are paid to men who are working in the government buildings at Ottawa. There is one foreman at $1,320; twelve foremen, part time, at $600; cleaners and helpers, nineteen at $1,140 and three at $1,020; twenty-eight part-time cleaners at $500. Many of them are married men with families, and most of them are ex-service men because I see a great number of them wearing buttons. How can they live and bring up a family on $1,200 a year? We complain about industry not paying decent wages, but the fact is that industry is taking a lead from the parliament of Canada. We in this house owe a debt of gratitude to the cleaners, foremen and janitors for their kindness and courtesy to us members, for they make life very much easier for all of us. I know cleaners who go to work in the early morning hours and work not just eight but sometimes ten hours, and occasionally twelve hours a day, with no extra pay. The only bonus they get is the cost of living bonus, which in all probability will be cancelled when P.C. 1003 goes. The only hope for these men is, I think, organization. I should like to see them in a trade union, and that is one of the questions I wish to ask the minister. Would these cleaners, foremen and janitors be allowed to enter a union?
And is the minister prepared to see that they are given decent rates of pay over and above what they are now getting?


Alphonse Fournier: No one more than I should like to see these cleaners, helpers and elevator men receive higher compensation, but my personal opinion is that I have nothing to do with fixing the salaries of these classes of workers, who come under the civil service commission. They are all classified, and any member who has attended the meetings of civil service committees knows how complicated are these classifications and salary rates. I would be most favourable to increasing everybody's purchasing power and raising his or her standard of living. I am really in sympathy with these workers, but I do not think I am the one who can raise the salaries of these civil servants. That is one more thing that does not come under my purview, although I sympathize with every one of these workers. I happen to live in a town of labouring people, many of whom are my friends. I have listened attentively and sympathetically to what the hon. member has said, but I do not think he is making his request in the right place, although I would favour any such move.
His second question was as to these workers joining a union?


Alistair McLeod Stewart: These workers have the right to join unions?


Alphonse Fournier: I have no objection unless the government changes its policy, and I have always understood that it favoured unions among the labouring classes. If the hon. member lives in Ottawa for any length of time he will see that they have unions, not exactly in the sense of labour unions, but there are four or five different civil service associations. I cannot give the names.


Mr. COLD WELL:: They are more or less social organizations.


Alphonse Fournier: Yes, but they interview government authorities and the civil service commission with regard to better conditions, wages and so on. I am not an expert in these matters, but in the public works department where there are labouring men there is an association of prevailing rates people who come regularly to see me and chat over their wants, and in the department there is a constant study of conditions of work, increases in wages and so on. I often recommend increases to the labour department where there is a body that sanctions rates of wages, and when a report comes back with their approval I put it
Supply-Public Works

before the treasury board. In the last year there have been, I will not say increases, but readjustments in pay, because we are still living under a condition of stabilized prices and wages which perhaps would hinder large increases in any class.


Major James William Coldwell: The minister has put his finger on the spot when he refers to the treasury board. Probably the treasury board has more to do with this than the minister or the commission.


Alphonse Fournier: Before the hon. member came in I spoke of the treasury board.


Major James William Coldwell: The question I am
about to ask may have been put before; I do not know. One cannot be here all the time these long days. I understand, however, that the department has a list of desirable public works graded under letters A, B. C. D. and so on-projects that may be undertaken in the post-war period for the relief of unemployment.


Alphonse Fournier: That matter
has been brought up before.


Major James William Coldwell: I prefaced my remarks by saying that perhaps it had been discussed before. If so, I will not go into it again. As I say, one cannot be here all the time to listen to what goes on.


Alistair McLeod Stewart: Is it possible for the minister to make representations to see that these workers get better wages and that their hours are reasonable in this building? Ten hours a day is too much.


Alphonse Fournier: The employees in the buildings, except the elevator operators who are under the supervision of public works, do not come under the department.


Alistair McLeod Stewart: They are the ones I am talking about, and also the cleaners.


Alphonse Fournier: The cleaners in this building do not come under my department. They are under the Speaker.


Major James William Coldwell: Then we shall have to raise this question in connection with the House of - Commons staff. It should be brought up.


Gordon Knapman Fraser: This morning when I shut my window in the Chateau Laurier I was surprised to see, although I should not have been surprised, seeing that I brought the matter up last year, that the window-sill,

instead of being white as it was last night, was absolutely black. The soot comes from the Daly building across the street. I understand that there is an oil furnace there. There must be one because I see a 1,000-gallon oil truck practically every other morning unloading at that building. I do not believe the oil-burner in that building functions as it should because no oil-burner that I have ever seen-and I have seen a great number of them-throws out clouds of smoke worse than any train in the country. How the Chateau Laurier management has stood this so long I do not know.


Ian Alistair Mackenzie: Stood what?


Gordon Knapman Fraser: The soot and dirt from the Daly building oil-burner. If that oil-burner were checked by outside engineers from the manufacturers they would tell you that it could not throw out all that dirt as it is doing at the present time.


Alphonse Fournier: We have an engineer and fireman in the building. It is an old building and the installation is quite aged. I admit we are having trouble with it, but during the war years I have not seen my way clear to having a new installation, and I do not know whether in the future plans for the capital that building will be taken into consideration. It is more of an eyesore than anything else.


Gordon Knapman Fraser: Could there not be installed a soot arrester on the stack? They have them on other buildings.
Another thing I noticed this morning-and I thought it was a waste of time and money -was the snow truck going down the street, probably miles away, to dump snow.


Alphonse Fournier: That is under the federal district commission.


Gordon Knapman Fraser: As the hon. member for Macleod mentioned, the elevator in the west block quits at five or five-thirty o'clock in the afternoon. The other evening I was there about a quarter to six and I saw a cripple going down three flights of stairs. There should be another man there to relieve the elevator operator so that the hours can be extended, because while people are working in the building the elevators should be running. If a fire ever occurred there, there would have to be an elevator running.


Ian Alistair Mackenzie: For the past year I have been pressing to have a new veterans building in the city of Ottawa. It is about our first necessity. I agree with much of what the hon. member has said, and I think it is one of the first obligations on the admini-

Supply-Public Works
stration to make plans for the construction of a real veterans administration building in Ottawa similar to the one in Washington.


Gordon Knapman Fraser: For the last five years we have been hearing every year of someone breaking or spraining an ankle going down the walk on the east side toward the hotel.


Alphonse Fournier: All these lands are under the federal district.


Gordon Knapman Fraser: All right; we will bring the matter up at the proper time.	.


Thomas Miller Bell: With regard to housing, cannot something be done so that before we come back next summer and have to sit in this chamber in the heat, the place will be aired? In the second place, can we not have lights that are decent and that will not ruin our eyes?


An hon. MEMBER:: And loudspeakers.


Major James William Coldwell: Yes, and loudspeakers too, so that we can hear what everyone says.


Alphonse Fournier: Every request will be taken into consideration.


Mr. BLAIR:: I intended to bring up the question of lighting. Has the minister made any arrangements for improved lighting in the chamber? In the rows at the back here, if you hold up a pencil you will get six or eight shadows from it, and many members have had to go and see about their eyes and get glasses. For a new member to bring this matter up, when the lights have been used for such a long time, may sound peculiar, but this system is antiquated and something should be done about it.


James Alexander Marshall: Has the government
given any consideration to the question of converting a large number of the temporary buildings into permanent buildings so that they will accommodate a great number of departments which are using rented buildings? I think the Department of Public Works have rented somewhere in the neighbourhood of 105 to 110 different buildings throughout the city on which they paid in the year 1943-44 in excess of three quarters of a million dollars rent. I asked the Minister of National Defence for Naval Services what was contemplated with respect to the building on Elgin street. If I recall correctly, he said that it was being turned over to War Assets Corporation. I think that building could be made more permanent and could be used for a large number of different departments. Has the government any policy with respect to this matter?


Alphonse Fournier: Up to September there was such a lack of space in the city of Ottawa that instead of giving, say 125 square feet per employee it was brought down to seventy-five feet. We thought at one time after August 15, or September 1 that we would see the defence departments decrease the numbers of their employees. That has taken place to a certain extent, but they were replaced by new departments such as the Department of Veterans Affairs and the Department of National Health and Welfare, which are expanding departments, and we find to-day that we have not too much space for our offices.
As to the future policy of. the government with respect to the temporary buildings, I understand that they were 'built and would be useful for a certain number of years. They will be replaced, as time goes on in this scheme of a national capital, with other permanent public buildings. Did I understand that they were declared as surplus to the department?


James Alexander Marshall: It was my understanding that the navy had practically abandoned the building and would turn it over.


Alphonse Fournier: I am sure that the Department of Veterans Affairs and the Department of National Health and Welfare will be glad the moment they abandon it. They are crowded in. Some of the employees were in halls for a while; they could hardly do their work. I am now trying to get them a little more space. As regards hygienic' conditions, when you have people working in that limited space of seventy-five feet, there is far less comfort than if they had 125 feet. I do not see that we can dispense with those temporary buildings in the near future.


[Stage Direction]
Item agreed to.
Chief architect's branch-
250. Maintenance and operation of dominion public buildings and grounds, other than at Ottawa, including rents, repairs, furniture, heating, et cetera, $4,054,216.	,
Douglas Gooderham Ross: Why this large increase of $271,000? One would naturally think there would be a very large reduction because the war is over. It seems to me that some economy ought to be shown. Why has this increase taken place?
Mr'. FOURNIER (Hull): The increase of $271,458 is made up as follows: (1) an increase of $195,605 in salaries caused by an increase of 170 in the number of the staff; (2) an increase of $45,800 in the allotment for materials and supply caused by an increase in the price of coal; (3) an increase of $39,725

Supply-Public Works

in the cost of living 'bonus owing to the increase in the number of the staff. These three increases total $281,136, which with other adjustments reduces the amount to $271,458.


Douglas Gooderham Ross: What I had in mind was the question of the amount of space which is being used by the various departments. As I say, the war is over and one would think the departments wpuld be cutting down.


Alphonse Fournier: My hon. friend
knows that this is for the maintenance ' of buildings outside Ottawa. Unemployment insurance, selective service, veterans affairs and the wartime prices and trade board-I am trying to name a few of the departments-have expanded their activities outside Ottawa. They have offices in nearly every town in the country. We have to provide them with rental and the staff to maintain those places. In the last year the increase in new employees amounted to 170.


Douglas Gooderham Ross: What did the minister say the increase was due to?


Alphonse Fournier: This increase is brought about by the increase in the number of employees we need for the maintenance of our outside offices.


Douglas Gooderham Ross: I can understand that, but the minister said that the increase was-


Alphonse Fournier: Some of these
people work in Toronto.


Douglas Gooderham Ross: The minister said it was caused by the increase in the national selective service. I would not think national selective service would be as large now as it was during the war. It seems to me some reduction should be taking place there.


Alphonse Fournier: I shall withdraw selective service and put in veterans affairs instead.


Douglas Gooderham Ross: The wartime prices and trade board and many of those other departments should be cutting down their staffs.


Ian Alistair Mackenzie: No.


Douglas Gooderham Ross: Yes, I think so.
Of course veterans affairs has increased.


Ian Alistair Mackenzie: May I tell my hon.
friend that the greatest problem we have encountered in veterans affairs across Canada is lack of space. Instead of cutting down we shall increase substantially in the next eighteen months. We have been having stenog-

raphers and secretaries working in corridors for the last six months. That condition should not prevail among individuals who are looking after the men coming back from the war.


Douglas Gooderham Ross: I am not criticizing veterans affairs, but it seems to me that there are other departments which should be cutting down at the present time, and the veterans affairs department should be moving into the space left vacant by some of those departments. The Department of Munitions and Supply are closing down, and the wartime prices and trade board will be cutting down in a short while.


Harry Grenfell Archibald: I was glad to hear the Minister of Veterans Affairs talking about the maintenance of the health of the workers involved in the various departments. I can recognize that during the war years those departments, because of the war, did not want to spend any more money than they could avoid, but when it comes down to the health of the people involved and it gets serious then something should be done. There is a telegraph office in Hazelton. I am not speaking of Hazelton because Hazelton wants a new building, but the employees in that building are suffering. They have colds continually; snow blows under the doors and through the cracks around the windows; flies enter in the summer. The employees freeze when they are a few feet away from the stove and when they are right near the stove they roast; they have to keep it red hot. Nothing has been done. They have one little piece of bakelite for the top of a desk and that is all they have had in the last two or three years. They are very proud of it; they pat it every time they pass it. I should like to know if the minister plans, and when he plans, to put a new building there for those employees who have worked very hard for the war effort?


Alphonse Fournier: This must be a rented building we have in Hazelton. I could not give an answer offhand as to whether or not we contemplate putting up a new building there. I do not know whether we own that -building.


Harry Grenfell Archibald: It may be a rented building; I am not certain.
Mr. FOURNIER (Hull); I shall look into the matter and try to give my hon. friend a satisfactory answer.
Mr. TOWNLEY-SMITH: I should like to ask the minister a question concerning a post office building which was started in St. Wal-burg, Saskatchewan, just before the war. The basement part of the building was finished,

Supply-Public Works
and the job was apparently left at that stage. How much was spent on it? What is the intention with regard to this unfinished building? When may we expect to get it completed?


Alphonse Fournier: I understand that this was one of the contracts which were let at the outset of the war and then cancelled. We have contracts like that throughout the country. At the outset of the war people turned their minds to the war and said, "We are not going on putting up these buildings." I am informed that this building will be provided for in the estimates of next year. I would not commit myself, since I have not reviewed this particular case, but I have asked my officials and they say that it is under consideration for the estimates of February or March.


Mr. MOORE:: I wish to have some information about the post office at Flin Flon, Manitoba. Flin Flon is a new city in northern Canada. A post office was built there in, I believe, 1930, when the population was about 1,500; to-day it is in the neighbourhood of 10,000, but they have the same post office building, in which approximately five times as much work must be done as was done when it was built. I should like to know whether the people of Flin Flon can expect that in the near future the department will go ahead with the construction of a new post office there.


Alphonse Fournier: I will look at the file and see what can be done.


[Stage Direction]
Item agreed to.
Chief architect's branch-
255. Ontario-Dominion public buildings- improvements and repairs, $170,000.
London public building-repointing masonry, painting and repairs (revote $15,000), $25,000.
Ottawa-hydrogenation laboratory for the Department of Mines and Resources (revote), $250,000.
Ottawa-Central Experimental Farm-Water tank and pump house, etc. (revote, $22,000), $35,000; total, $480,000.
Ian Alistair Mackenzie: There is a request by the hon. member for Davenport to have this stand over, if my colleague would be kind enough to agree.


John Bracken: I think he wants to help the minister rather than hinder him.
Item stands.
Chief architect's branch-
257. Dominion public buildings, Saskatchewan -improvements and repairs, $40,000.


Mr. CASTLEDEN:: Where is it the intention to spend the $40,000 which is in this item?
47696-170J


Alphonse Fournier: This is an annual amount. It is required for improvements and repairs in connection with dominion public buildings in Saskatchewan. The appropriation asked for this service in 1945-46 is the same as was provided for in 1944-45. It is not known in advance what repairs will be required. These buildings have to be maintained in as good condition as possible. This is a general vote, and when we have requests from our architect for repairing some buildings the repairs are made under this vote.


George Hugh Castleden: What was spent last year under this item?


Alphonse Fournier: 

Mr. CASTLEDEN; At what places was it spent?
Mr. FOURNIER (Hull); I shall have a statement sent to my hon. friend.


George Hugh Castleden: Thank you very much.


[Stage Direction]
Item agreed to.
Chief architect's branch
[Stage Direction]
258. Dominion public buildings, Alberta-improvements and repairs, $30,000; Edmonton- postal terminal (revote), $150,000; total, $180,000.
James Alexander Marshall: I asked the minister
some hours ago if he would give us the amount that was actually spent. I do not wish to hold up these estimates, but I would ask him either to send me a statement showing the amount actually spent last year in connection with each one of these votes, or have it placed on Hansard later on.


Alphonse Fournier: I will get the information and ask the officers of the department to send the hon. member a copy. If I understand correctly, he wants a comparison between the estimate we vote and the actual amount expended during the fiscal year?


James Alexander Marshall: During the last fiscal year.


Alphonse Fournier: The hon. member understands that these are estimates; they are not actual expenditures.


James Alexander Marshall: I understand that.


Alphonse Fournier: We know the expenditures at the end of the fiscal year. I shall have a list sent to my bon. friend.


James Alexander Marshall: All the information I require is the amount which was actually spent during the last fiscal year in connection with each one of these items.


Alphonse Fournier: I shall have that sent to the hon. member.
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John Bracken: Are we to understand
that the minister will give us a total setting out actual expenditures for the last fiscal year which will replace the estimates, as he calls them, in here?


Alphonse Fournier: In these estimates we have the estimates which were voted in the last fiscal year and the estimates to be voted for the present fiscal year. I understand that some hon. members want a list of expenditures actually made in the last fiscal year. We shall have a list prepared, and when I come back with my estimates in respect of item 255 I shall have it put on Hansard.


James Alexander Marshall: May I ask the minister, for the sake of eliciting information, how much was actually spent in connection with vote 258 for Alberta during last year? Of the $180,000 shown in the estimates how much was spent?


Alphonse Fournier: The actual amount was $19,476.56.


James Alexander Marshall: Any member of the
committee can see that the amount asked for, $180,000, in no way compares with the amount which was actually spent.


Alphonse Fournier: I am sorry, we are not on the same item. The estimate was $30,000 under, dominion public buildings.


Alexander Malcolm Nicholson: There are two amounts in item 258.


Alphonse Fournier: The hon. member refers to the Edmonton postal terminal?


James Alexander Marshall: Yes.


Alphonse Fournier: That will be put up, I understand, by Canadian National Railways, and it is going forward. The only expenditure this year on that work was $9,137.50, but we had to enter into an agreement with Canadian National Railways, who are building this, and from now until the end of March, we believe, the expenditure will go mp to $140,000 or $150,000. We have a contract with the C.N.R., and from now to the end of the year we shall probably spend the total amount of the vote.


James Alexander Marshall: Out of $30,000 the department has spent $19,000; and out of the $150,000, a matter of only five or six or nine thousand dollars has been spent?


Alphonse Fournier: We have spent $9,137.50 on the preparation of plans.


James Alexander Marshall: So that actually out of the $180,000 voted last year the department spent a matter of only $25,000?


Alphonse Fournier: Right.


John Bracken: Will the minister explain the procedure in connection with these items where it is marked "revote"?


Alphonse Fournier: We voted in the past fiscal year an amount of, say $50,000; $25,000 was expended in that fiscal year, but the contract is still going on, and we shall need the next $25,000, so that we ask for a revote of that money for the next fiscal year.


John Bracken: Does that apply to wha* are called capital expenditures?


Alphonse Fournier: These are for current expenditures. At the end of the fiscal year the vote dies out and we have to revote it at the next session to carry on the work.
Mr'. BRACKEN: This practice applies to what one would ordinarily call capital expenditures: is that right?	,


Alphonse Fournier: That is right.


Mr. JOHNSTON:: The minister mentioned a moment ago that $25,000 of that estimate was spent in the province of Alberta. Where was it spent?


Alphonse Fournier: Does the hon. member want me to send him a list?


Charles Edward Johnston: How was the $9,000
spent?


Alphonse Fournier: The $9,137.50 was paid to the Canadian National Railways for the preparation of plans and specifications. We are undertaking the construction of a postal terminal at Edmonton. The building will be put up by the Canadian National Railways, because I understand that the two buildings are right together. We have an agreement with them whereby they will do the work and we shall have the building. Up to this time we have paid about $9,000.


Charles Edward Johnston: There will be no further work done until-


Alphonse Fournier: That is only
the start of. it.


Charles Edward Johnston: Where was the other
$16,000 spent?


Alphonse Fournier: I shall prepare a list showing the expenditures above $25.


[Stage Direction]
Item agreed to.
Chief architect's branch-[DOT]
26S. Generally-Flags for dominion buidings,
Gordon Knapman Fraser: Will the flags be union
jacks?

Supply-Public Works


Alphonse Fournier: Some are union jacks and others are red ensigns. I am not partial in the matter of the flag.


Gordon Knapman Fraser: So long as we know it is one or the other, we are satisfied.


[Stage Direction]
Item agreed to.
Chief engineer's branch-
269. Dredging-Maritime provinces, $492,765.
Winfield Chester Scott McLure: Is there anything in this
item for the ferry from Wood Island to Cariboo? Considerable dredging is needed there. During the past season they had to delay their trips, and to cut out the evening trips entirely because of a lack of dredging. The captain of the ship did not wish to take the ferry through the narrow passage when it was not properly dredged. Will dredging be done in the spring?


Alphonse Fournier: There is provision for work there to the extent of 26,000 square yards.


[Stage Direction]
Item agreed to.
Chief engineer's branch-
271. Dredging-Manitoba, Saskatchewan and Alberta, $169,160.
Mr. BRYCE:: I should like to speak to the minister about dredging in lake Winnipeg and to make suggestions to him as they have been made to me by my constituents. There has been very little dredging in lake Winnipeg during the war years, with the result that it is now in bad condition. I would draw attention particularly to George's island. Perhaps the minister has never been on lake Winnipeg, but I am sure the officers in his department have. They know how quickly a storm will come up in that area, and how one may have to run for shelter. For instance, it is impossible to get in to George's island in the event of a storm. In the interests of safety it will be necessary next summer to have some dredging done.
The sa!me condition applies to Sandy island, where the anchorage is shallow. There is also Little George's island. I was on the lake some time ago, during the summer, and we had to run for shelter when a storm came up. We found at that time that the anchorage was very shallow.
Would the minister be good enough to give me a copy of the cost of living bonus and other paylist items, so far as Manitoba is concerned? I am not in a hurry for it. The minister can send it to me at his convenience.


Alphonse Fournier: I shall ask my
officials to do that.


Joseph William Burton: How much of this is being spent in Saskatchewan, and at what points?


Alphonse Fournier: I have not that break-down with me, but I shall ask my officials to get it by provinces. It is entered for the three provinces, and I do not think it . has been broken down. The item is to look after the dredging for the three provinces, and to pay the staffs of the dredges. In salaries and wages we pay $19,410, a cost of living bonus and other paylist items of $5,000, a maintenance and operation charge of $37,750, and we have built a new plant for $105,000.


James Alexander Marshall: Where is that? [DOT]


Alphonse Fournier: The new plant is to replace the Red River dredge on lake Winnipeg. This will be of interest to the hon. member for Selkirk.


Joseph William Burton: The minister can give me the information later.


Alphonse Fournier: I shall ask my officials to send it to the hon. member.


Charles Edward Johnston: Could we have it for the three provinces?


Alphonse Fournier: Yes.


Douglas King Hazen: How many dredges does the department own? Do any other government departments own and control dredges?


Alphonse Fournier: I would not know what the other departments have. I believe we own all the dredges which are operating for the government. We have some on the Atlantic coast, some in the interior and others on the west coast, and all are numbered1. .
The information I have shows that we have the dredge Red River, and dtedges numbered 202 and 205; also the dredge Winnipegom, and the tugs B'aldur, Armenon, Peguis and Parkdale. Then we have coal barges M4, M5, M6 and M7; and hopper mud scows numbered 214, 215, 216, 217, 218 and 219. Those are the craft we own.


[Stage Direction]
Item agreed to.
Chief engineer's branch-
Maintenance and operation of graving docks, locks and dams, etc.
277. Locks and dams, $97,550.
William Scottie Bryce: I should like to say something about the St. Andrews lock. I see in the details that it will C09t less money this year than it did1 last. I know they have been working short-handed on that lock, and1 in my view that should not be required1 any longer. This is one government service in which the men are working twelve hours a day, and I do
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not think any man should be asked to work as long as that when he is in the government service. If anyone is to set an example, surely it should be a government department, especially if we are going to tell other people to reduce hours of work. We could set a good example here by establishing an eight-hour day on the lock.
Will the minister look into this matter and see if arrangements cannot be made, whereby the number who were employed before the war can be employed again? Is there a possibility of establishing an eight-hour day with services like that? I should like the same break-down in connection with this item.


Alphonse Fournier: The break-down
is:
Permanent staff	 $ 7,069
.Maintenanuce and repairs and operation	 27,445
Materials and supplies	 2,825


William Scottie Bryce: The item covering cost of living bonus and other paylist items is down about SI,000 as compared with last year. Is that owing to a smaller number of people being employed?


Alphonse Fournier: The cost of living bonus is not determined by my department. I cannot give all the details because I did not know this matter was coming up. Civil servants are entitled to a bonus varying from eleven per cent to eighteen per cent, representing the difference in the cost of living from 1939 to 1941 or 1942.


William Scottie Bryce: There is that difference in the one item as compared with last year. If you are working short-handed, I would ask that the staff be brought up to strength.


[Stage Direction]
Item agreed to.
Chief engineer's branch-
Maintenance and operation of roads and bridges-
281. New Westminster bridge, $36,025.
Angus MacInnis: I notice that this item is down somewhat from last year.


Alphonse Fournier: This amount is required for the maintenance and operation of the old railway bridge over the Fraser river which was taken over from the province of British Columbia under the terms of order in council dated October 4, 1939, effective December 1, 1939. The tolls collected for the passage of trains more than offset all annual costs. Under the terms of the agreement the surplus in ten years is to revert to the province of British Columbia. The hon. member will recall that when the new bridge was

taken over the province said they would tear this one down, but later on they transferred the old bridge to the federal government. I am trying to recall certain of the terms of the agreement. I think that after ten years the government would decide either to put in a lift span or to have it tom down. We have four more years to go under the agreement. As I say, the revenue from tolls exceeds the cost of maintenance.


Angus MacInnis: You cannot very well tear it down, can you, unless you build another bridge, because the Canadian National and the Canadian Northern both go over that bridge?


Alphonse Fournier: We were not considering taking it down; probably something else will be done at the end of ten years.


[Stage Direction]
Item agreed to.
Chief engineer's branch-
Maintenance and operation of roads and bridges-
282. Generally, $70,890.
Harry Grenfell Archibald: I would imagine that the federal government will have considerable road building equipment around Whitehorse which has been used on the Alaska highway. Just south of Whitehorse is the Atlin district which is accessible only by means of aeroplane. This isolation could be overcome if a forty-mile section of road were built. There is no other machinery in there except that under the control of the dominion government. I just wanted to bring this matter to the minister's attention.


Alphonse Fournier: We have no machinery in there.


Harry Grenfell Archibald: Who built the Alaska highway?


Alphonse Fournier: The United
States government.


[Stage Direction]
Item agreed to.
Chief engineer's branch-
Construction, repairs and improvements- harbours and rivers, Prince Edward Island.
28'/. Harbours and rivers generally-For maintenance of services, no new works to be undertaken, $64,000.
Summerside-repairs to railway wharf (revote $3,000), $20,000-$84,600.
Winfield Chester Scott McLure: I notice that there is a decrease in this item.


Alphonse Fournier: The item of S20,600 in connection with Summerside is to cover repairs to the railway wharf rendered

Supply-Public Works
necessary by the decay of the timbers. Attention is directed to the necessity of this work by the chief engineer.


Lionel Chevrier: Are we continuing that this year?


Alphonse Fournier: Tenders were called for. All we are asking for is a revote of $3,000.


[Stage Direction]
Item agreed to.
Chief engineer's branch-
Construction, repairs and improvements-harbours and rivers, Ontario.
287.	Cobourg - breakwater reconstruction, $65,000.
Rondeau-replacement of harbour protection (revote), $15,000.
Harbours and rivers generally-Fair maintenance of services, no new works to be undertaken, $210,000-$290,000.
Mr. ROBINSON (Bruce):: We all realize that the minister has a big job on his hands in connection with harbours and rivers. During the
war his staff has been more or less disrupted, but I wish to say that I appreciate the courtesy that has been shown to me any time I have had any business with the Department of Public Works. Bruce county has a long shoreline and we are more or less interested in public works. I am rising to refer to a sad accident that occurred at Southampton when a little boy, three years of age, was killed by a falling boulder. I have in my hand a letter dated November 20, from which I should like to quote as follows:
I know this old -dock at Southampton. It is the centre dock and between a fish dock and a new concrete dock. This Old dock is the property of the government and is in a very serious state of disrepair. 'I walked along it a. few weeks ago and am surprised that more accidents do not happen. It is dangerous to human life and no one ought to be allowed on it. The government should prevent people from using it or should pull it down. As it is, children and others walk on it and play on it and use it daily and it is a shame.
I would ask the minister to have this matter inquired into and see if this wharf cannot be made safer.


[Stage Direction]
Item agreed to.
Chief engineer's branch-
Construction, repairs and improvements-harbours and rivers, Manitoba.
288.	Hnausa-wharf reconstruction, $25,000.
Harbours and rivers generally-For maintenance of services, no new works to be undertaken, $40,000-$65,000.
William Scottie Bryce: Will the minister be able to do anything about the breakwater at Gimli? He was good enough to do some temporary repairs last year.


Alphonse Fournier: We did do some work.


William Scottie Bryce: Will the minister give me an assurance that this breakwater will be looked into because it is in bad shape?


Alphonse Fournier: Two years ago the hon. member asked for some temporary repairs and I believe that some work was done.


William Scottie Bryce: You spent $300, but that just backed the water up a little more.


Alphonse Fournier: I will do my best.


John Bracken: I need a little more enlightenment. At the bottom of item 287 appears this statement, "appropriations not required for 1945-46." In the column; for that year there is no figure, but for 1944-45, there is 82,500. I should like an explanation from the minister of what all this means.


Alphonse Fournier: Appropriations not required for 1945-46 are appropriations which were included in the estimates of the previous year, 1944-45, for which no provision is made in these estimates because the works were completed, and consequently no appropriations are required in 1945-46. This feature is inserted by the Department of Finance in order to show a comparison of the totals of the appropriations for each province for the years 1945-46 and 1944-45.


John Bracken: Does the minister understand what all that means?


Alphonse Fournier: I understand that the amount was not all expended and recognition is taken of that fact by inserting this note in the estimates, to show that there was an overestimate. Suppose we have estimated $100,000 for a particular work and the work is done for $75,000. That would leave a surplus of $25,000 and the Department of Finance puts this in to show the exact amount that was spent.


John Bracken: You have underexpended in most of these items and you do not show this statement in other places.


[Stage Direction]
Item agreed to.
Chief engineer's branch-
Construction, repairs and improvements-harbours and rivers, Saskatchewan, Alberta and Northwest Territories.
289.	Fort Norman

wharf, $7,600.
Waterways, wharf, $10,000.
Yellowknife-improvements to navigation (revote $5,450), $7,200.
Harbours and rivers generally-For maintenance services, no new works to be undertaken, $25,000-$49,800.
Supply-Public Works
Joseph William Burton: I notice that the minister has removed the appendix to the east of us, but then he went to work and substituted another one to the northwest of us. I am afraid that Saskatchewan is getting a very small part of these appropriations. I would remind the minister that in the northern part of Saskatchewan we have waters that are worthy of development. The hon. member for Lake Centre was speaking earlier to-day of a lake in southern Saskatchewan, but we have in northern Saskatchewan waters, which, if developed, would prove an asset to the whole country. I would urge the minister and his officials to give consideration to their development when preparing the estimates for another year.


[Stage Direction]
Item agreed to.
Chief engineer's branch-
Construction, repairs and improvements-harbours and rivers, British 'Columbia and Yukon.
290.	New Massett-wharf reconstruction (revote $47,700), $62,000.
Port Alberni assembly wharf-construction of shed (revote), $20,000.
Stewart-wharf repairs (revote), $32,000.
Westview-harbour	improvements (revote
[Stage Direction]
Harbours and rivers generally-For maintenance of services, no new works to be undertaken, $216,000-$561,000.
Mr. GREEN:: This item has to do with British Columbia and the Yukon, and I understand that an arrangement was made that any item contained in the war appropriation could be discussed when the civil estimates were under consideration. I would ask the minister to tell the committee the present position with regard to the plans for removing Ripple rock in Seymour narrows on the west coast. There is a war vote of $287,697.


Alphonse Fournier: Certain expenditures were incurred in 1943 prior to the instalment of operations by a different method of removing the rock. It is a long story and my hon. friend knows all about it. At the beginning of the war the war committee of the cabinet was asked by the United States admiralty to try to remove that rock so that ships could pass through the narrows without any danger. That was in 1941. We had a vote in the war appropriation and we undertook that work. We tried one method of blasting out the rock and then dredging so that we would have a depth of twenty-nine to thirty-one feet. After a year and a half of trying we had to build a scow and some special equipment to do the work. We tried to anchor the scow down and started the work, but with very little success; in fact, we did not succeed at all, and at one moment we decided to discontinue the operations. Later on we were told that by trying the cable

method of stabilizing that scow we could do some drilling and blast out the rock. We tried that method. We did not have the money in the war appropriation but it was allotted by the treasury board to the department and I am now asking that it be confirmed. We kept on drilling until the end of October of this year. We drilled a little over 100 holes at a depth of from five to six feet and we blasted seventy per cent of those holes at that level. We are now up against the difficulty of trying to find a way to dredge this blasted stuff away.


John Bracken: Is that parliamentary
language?


Alphonse Fournier: When we get
this done we are still convinced that we shall be able to drill down at another six feet lower and then blast at that level and dredge the stuff away. Three weeks ago my deputy spent some time out on the coast to acquaint himself personally with the circumstances. He is preparing a report which I have not yet to hand, on whether we should continue with this work. Everybody -agrees that it would be a fine thing to see that rock out of the way, but it is one tetrible job to get it done. This is one experiment we are making; I do not know whether we shall succeed. But the hon. member can rely on my good will. I have done the best I could.


Howard Charles Green: I hope that there is no intention of giving up the attempt to remove the rock. It is a menace to navigation.


Alphonse Fournier: There have been many attempts at giving up, but I have not given up yet.


[Stage Direction]
Item agreed to. *
Chief engineer's branch-
Telegraph add telephone services, operation and maintenance. '
293. Land and cable telegraph lines-lower St. Lawrence and maritime provinces, including working expenses of vessels for cable work, $161,000.
Mr. ZAPLITNY:: I see that this vote for
telegraph and telephone services, operation and maintenance, applies to Alberta, Saskatchewan, British Columbia, and the next item applies to the maritime provinces. Why are Manitoba and Ontario not included?


Alphonse Fournier: In outlying districts on the coast we have our own lines and our own staff. They are in remote districts where no company will undertake to supply a service. We have no such lines in Ontario or Quebec.
<
At six o'clock the house took recess.


[Stage Direction]
Item agreed to.
Progress reported. /
[Stage Direction]
Income War Tax
After Recess
The house resumed at eight o'clock.

[Stage Direction]
The house in committee of ways and means, Mr. Macdonald (Brantford City) in the chair.

William Ross Macdonald: Last night the committee passed resolutions 2 and 3. Resolution 1 stood.. Is it the desire of the committee to proceed with 1 or 4?


James Lorimer Ilsley: No. 4, please.
That all payments of superannuation or pension to former employees or their dependents in 1946 or subsequent taxation years be taxable income, provided that, where a former employee has not in the past been entitled to a deduction from income in respect of his contribution to ' an .approved fund or plan, only a proportionate part shall be taxable.


Harry Rutherford Jackman: Will the minister explain what is meant by the word "proportionate"?


James Lorimer Ilsley: I will read the explanation of resolutions 3 and 4; resolution 3 is passed but,the statement I have covers both. Resolutions 3 and 4 should be considered together since they both are closely related to the revision in tax treatment proposed for certain pension plans, and each is incomplete without the other. At the present time there are in the income tax law two alternative provisions governing taxation of approved pension funds and plans. Under one alternative, contributions made into the plan by employees are allowed up to a limit as deduction from income in the year of contribution and the pension received by the employee after his retirement is. taxed as income. Under the other alternative no deduction from income is allowed the employee in the year of his contribution, but the whole of his pension received after his retirement is free from income tax. The first alternative is of more general application than the second and applies automatically in the case of any pension plan that has been approved by the Minister of National Revenue. The second alternative applies in the case of a pension fund or plan administered by a separate trust or .corporation established for that purpose which has elected, under the right given by section 5 (1) (h) of the Income War Tax Act, to have the income from its investments exempt from income tax. It is _ the fact of election under 5 (1) (h) that carries with it the right to a tax-free pension on retirement. Such an election was only of significance in the case of a plan where there was a separate fund holding investments which
earned an annual income. The majority of pension plans now in force in Canada are written on a group basis with the government annuities branch or with insurance companies, in which case there is no distinguishable separate fund on which income is earned.
The effect of resolutions 3 and 4 will be to place all pension plans henceforth on a uniform basis. Resolution 3 will do away with the necessity for any plan to elect to have the income from those investments free of tax, since the income of all funds will henceforth be exempt.
Resolution 4 will place all pensioners on an equal basis also by providing that contributions to the funds will be allowed as a deduction from income in the year of contribution, and the pension will be taxable as income of the pensioner in the year of receipt. It will provide, however, that to the extent that a pensioner had accumulated) a right to a tax-free pension because of an election by the fund under section 5 (1) (h)a that right will be protected to the pensioner and his dependents in future years.
I cannot answer my hon. friend's question at the present time. The formula for apportionment, for fixing the proportionate part will be contained in the bill, and the officials have to discuss it with me before final approval is given to it. There has been a great deal of discussion as to the principle upon which that apportionment should take place and11 have to consider two different principles and select the one which I think is most appropriate.


Gordon Knapman Fraser: Would that be the life expectancy?


James Lorimer Ilsley: No; that has nothing to do with life expectancy.


Gordon Knapman Fraser: It would to a certain extent.


James Lorimer Ilsley: 
Gordon Knapman Fraser: For the rest of their lives.


James Lorimer Ilsley: Yes. The pension will be a retirement annuity, of course, but employees of certain - companies are paying income tax on their entire pay without any deduction of what they put into the pension, in the expectation, which they are justified in having under the law, as I said yesterday, that when they receive their pension it will be entirely free of income tax. Now, then, this changes the law so that the pensions of all will be taxable; but with regard to those who have been paying taxes on their entire income it is obvious that the entire amount of their pen-
Income War Tax

sion cannot be taxed because otherwise they would be subject to double taxation; therefore a proportionate amount can be taxed. But the principles upon which that proportion will be fixed are not stated in the resolution; they will be stated in the bill, and I cannot state them at the present time 'because two or three different plans of apportionment are being considered and I have not yet given my approval to one or the other of them.


Gordon Knapman Fraser: The minister does not know when the bill will be ready?
Mr. ILSiLEY: I think we shall be ready with the bill when we get through the resolutions. It depends on how soon we shall get through those resolutions. I have not had time this week-


Gordon Knapman Fraser: The minister will explain that when we come to the bill.


James Lorimer Ilsley: I shall explain that when we get to the bill, and' if I may be permitted to refer to another resolution I should like to explain the formula for determination of the capital element in an annuity when I get to the bill. It is drafted1; I was looking at it last night, but it is as long, involved and complicated as anything one ever saw, and it may be changed.


Gordon Knapman Fraser: Would the ordinary layman understand it?


James Lorimer Ilsley: I doubt it; at any rate the members of the committee will not be able to understand it unless they have it before them-	,


Gordon Knapman Fraser: That is what I meant.


James Lorimer Ilsley: -in a bill. That is the reason why the best way to treat this legislation is to-


Gordon Knapman Fraser: Let it go through and get the bill.
'Mr. ILSLEY: Yes, let the resolutions go through; have as much discussion as the committee wants to give them and then distribute the bill and not go on with the bill immediately, but have two or three days to look at it, because it will have some fairly complicated sections in it.


Harry Rutherford Jackman: I assume that the minister might read resolution 5 in connection with resolutions 3 and 4 which were read. They are really all part of the whole, are they not?


James Lorimer Ilsley: They are part of the same general class of cases.
[Mr. Ilsley.l


Harry Rutherford Jackman: I wonder if I have it right when I read it in this way, that on these approved pensions or annuity plans the interest or income on the fund will not be taxable.


James Lorimer Ilsley: That is right.


Harry Rutherford Jackman: Second, that payments out of the fund will be taxable except in cases where certain funds have already accrued and payments in have not been allowed as tax deductions?	.


James Lorimer Ilsley: That is right.


Harry Rutherford Jackman: Third, in resolution 5 which we are about to come to, the amounts which the employee and the employer may put in each year amount to $900 each as against $300 in the existing section.


James Lorimer Ilsley: That is right.


Harry Rutherford Jackman: Last year, as I recall it, we made it possible for corporations to contribute up to $300 a year for back years, did we not? Will that be $900 for back years too as a maximum for each year?


James Lorimer Ilsley: That is correct, yes.


Harry Rutherford Jackman: May I go on with resolution 5 as they are all embodied together? It seems to me that in this provision which, on the whole, I would consider generous and more than helpful toward providing for one's old age through contributions both by the individual and by the employer, there is a discrimination against employees in very small companies or against individuals who do not belong to a company which sefes fit to set up an employee fund of this kind. They have no means of providing under the same generous terms as have individuals of a large company or an approved plan, and there have been a good many complaints-I am sure some of them have reached the ears of the minister-that the individual who works for a company which has not a plan, and who would like to provide for his old age,, cannot take $900 from his income and have it tax free and put it into a fund from which he will eventually derive an annuity which will be taxable. Therefore, if I am right in my assumption, and these people are right in their complaint about discrimination against them because the opportunity is not open to them, I would suggest that the government might consider under the annuity department some method whereby the individual who is not an employee of a large company could contribute under the same right and privileges as the individual is given when he comes under an approved plan. I make that sug-

Income War Tax
gestion because undoubtedly at the present time there would seem to be a rather harsh discrimination.


James Lorimer Ilsley: I do not know of any way whereby that could be met.


Harry Rutherford Jackman: In place of the company or the great number of companies having a plan whereby the individual contributes under it, could not the government, under the annuities department, set up a plan whereby individuals could pay into it and receive the same treatment that those employees of individual companies receive? As it is, when a man has $900 taken from his wages and paid into a plan on which he pays no tax it is a great advantage to him over a man who cannot contribute to such a plan. It is obvious under these plans which are approved, does the minister not think? The employer can also contribute $900. Then, under the generous provisions of last year's budget they can contribute $900 each year for a number of previous years.


James Lorimer Ilsley: If the employee of that small company were to purchase an annuity, under this legislation that annuity would _ be largely free from tax; that is, the capital element is free.


Mr. BENTLEY:: Would the minister mind talking to us also? The hon. member for Rosedale is not the only one interested.


James Lorimer Ilsley: I thought he was the one principally interested, but if there is general interest in this matter I will certainly try to speak louder. The employee of the small company which does not set up a pension plan may buy a government annuity, and he will be taxed on a very small part of that annuity. I do not know whether that entirely eliminates the discrimination, but he has paid a tax before he began to get his money back. It is true he has not been able to deduct the purchase price of his annuity from his income, as the employee of a company with a pension plan can do, but the employee of a company which has a pension plan pays a tax on every bit of his pension when he begins to receive it.	In the case of the purchaser of an
annuity-and that is the only provision I know of for the employee of a small company which has not a pension plan-under these provisions he is largely free from tax on his annuity, what may be called his pension.


Thomas John Bentley: And these three resolutions will equalize those two kinds of people who purchase annuities?


James Lorimer Ilsley: As far as that is possible. If the hon. gentleman has not read the report of the Ives commission I would recommend that he do so, because it is an able and interesting document which makes a valiant attempt to eliminate discrimination as between those receiving annuities, pension payments and so on. They are not taxed in the same way. The pension is all taxed; everyone's pension is completely taxed. In the case of a contractual annuity, it is largely untaxed. In the case of a person who buys an annuity, that purchase price comes out of taxed income; he pays taxes on it, so to speak, before he buys the annuity. In the case of the employee of the company, he deducts his contribution from his income for tax purposes. One gets the benefit at one end; the other gets it at the other end; but as far as it can be done, in the opinion of this commission the situation is rendered devoid of inequity.


Robert Fair: I should like a little information about something I have not heard mentioned so far in this discussion. Take the case of a farmer who has worked until he is sixty years of age. Then he sells his farm, live stock and equipment, pays off the debts he has accumulated during his years of endeavour, and invests the balance in an annuity. Where does he get off? What tax will he have to pay if he receives an annuity of, say $100 a month?


Harry Rutherford Jackman: Not very much.


James Lorimer Ilsley: As the hon. member for Rosedale suggests, the answer is, not very much. He will pay income tax on the interest element, not on the capital element. As I was saying a while ago^ if you ask me to state the formula for determining the capital element I can do so only in a very simple case. Take a man, say at the age of sixty-five who bought an annuity for a lump sum. In that case I could pretty well tell what the capital element is; it is the purchase price of the annuity. If he has a life expectation of ten years my understanding of the formula-and I have to go over this before I bring in the bill so that I can speak with greater certainty-is that the purchase price will be spread over the ten years, and it will be considered that one-tenth of that purchase price each year will be capital, that the balance will be interest, and he will be taxed on that interest.


Robert Fair: Then tell me if I have it straight. Iff a farmer pay9 $15,000 in a lump sum-this is just by way of illustration-in
Income War Tax

full payment of 'an annuity amounting to, say $100 a month, what will be the tax each year?


James Lorimer Ilsley: In the first place you will have to determine his expectation of life.


Robert Fair: Well, suppose he is sixty-five
years of age and expects to live another ten years.


James Lorimer Ilsley: Then he has paid entirely
too much for his annuity, has he not?


Robert Fair: I knew the minister was
pretty greedy in collecting money, and I wanted to set it high enough that there would not be any argument.


James Lorimer Ilsley: If you had such an impossible situation as that the man would not be getting any interest 'at all. He has paid $15,000 for the annuity and in theory he is going to live for ten years. That means that in order to get back his capital, without any interest at all, he should get back $1,500 a year, but under this hypothesis he is getting only $1,200, so that I would say he was an improvident farmer.


Robert Fair: Then, say a farmer aged fifty-five pays $17,000 for his annuity and expects to live twenty years. Perhaps that would be a better basis. What would be his annual tax payments?


James Lorimer Ilsley: What I say is subject to
correction, because this formula is not finally settled, but it will appear in the bill. My expectation-not of life but of how that would be dealt with-is that he would get back $850 a year in capital. He paid $17,000 for the annuity, and he has an expectation of life of twenty years. That is $850 a year for twenty years, making a total of $17,000. So to the extent- that his annuity in any year exceeded $850, that excess would be taxed, because that would be interest, not capital.


Robert Fair: Then, if he did not have any
other income than his annuity, he would not pay any income tax?


James Lorimer Ilsley: I do not -know what the
interest element worked out to. It was less than the exemption for a single man, was it? If so, he would not pay any tax.


Thomas John Bentley: If the interest element
did not work out to more than the exemption for a single man he would not pay any tax?


James Lorimer Ilsley: Not if that was his only
income?


Mr. McMASTER:: The minister is taking the average over the year, and making the interest the same.


James Lorimer Ilsley: That is the intention. That applies each year as long as he lives, no matter whether his real life corresponds with his life expectancy or not. But I must say I put the most simple case, one of great simplicity to the committee. That is not the kind of annuity which is sold in most cases. There are all kinds, they are bought in all kinds of ways.


William Alexander McMaster: What about a guaranteed life arrangement?


James Lorimer Ilsley: Oh, please dlo not ask me about that. All I can do, as I say, is to put the bill before the house and let the hon. members study it.


Wilfrid Garfield Case: Is not the real force of the argument in favour of having annuities tax free, simply because, as the minister said, in the ordinary course of events a man pays income tax on the funds he eventually pays in.


James Lorimer Ilsley: Correct.


Wilfrid Garfield Case: Therefore we can properly contend that there is a duplication of taxation. For that reason I say that the government should give consideration to making annuities tax free within certain limits-$750 a year, $1,000 a year, or $1,200 a year. What I was thinking about is the prospective purchaser of an annuity knowing definitely at the time he makes the purchase what it will yield, and that it would not be subject to a change in law. It should be a contractual obligation on the part of the government.


James Lorimer Ilsley: I do not think any government can possibly do that. An attempt to bind future parliaments in respect of taxation is something that cannot or should not be done. We changed the taxation in 1940, but we were entering the greatest war in history, and one did not know when a national emergency might arise which would necessitate severe taxation.


Wilfrid Garfield Case: I think, in fairness, that principle would have to be accepted. You could not bind a future government.


James Lorimer Ilsley: Correct.


Harry Rutherford Jackman: I made a suggestion to the minister in regard to the government's setting up some scheme whereby people could buy an annuity, pay into it, and receive $900 deduction from their tax, as they do when they are employees of large corporations. The minister gave a reason why the present amendment worked in favour of the man who bought an outside annuity, inasmuch as when he receives payment only the income part will be taxable, and not the capital part also.

Income War Tax
But I point out that I think the reason he advances as to why there is a tendency to equalization in those two disparities is a specious one, because the wage-earner, though being allowed to deduct his $900 a year now, has a real saving because he has income tax to pay. But when he receives the annuity he will likely be receiving so little money-and the suggestion is that the employee will be receiving about half of his annual wage-when he retires and receives the annuity income he will not be in any income tax bracket at all, even though the provision is that he will be taxed on the full amount.
I think the minister will agree that in the great majority of cases the ordinary individual will not be in any tax bracket at all. For this reason I think the answer the minister gave when he tried to dispel the disparity in respect of the man who contributes under the plan is a specious one. I believe the government would be following its present acceptance of the principle of letting a person provide for old age if it were now to bring down a further addition to the legislation respecting the change made last year in allowing contributions under the plan to be larger and also retroactive. This would be good, socially, and would be acceptable to all parties in the house.


James Lorimer Ilsley: It is just a question how far the government ought to go. It is a good idea to encourage people to do something for themselves. I think pension funds and plans are' extended-and properly so-to industry. Let us give them our blessing and help them to expand.


Harry Rutherford Jackman: It is just a suggestion.


James Lorimer Ilsley: I have not given it any study. It is a suggestion which can be given consideration.


William Ross Macdonald: Shall resolutions 1, 4, 5 and 6 carry?


Harry Rutherford Jackman: Was it not resolutions 2, 3, 4 and 5?


William Ross Macdonald: I understood the minister to say that he would have to bring down the bill before he could discuss resolution 1 effectively.


James Lorimer Ilsley: There were two points in connection with resolution 7. The first was as to how to define capital, and I said that that had better stand. I have gone some distance already, and that is about as far as it would be profitable to go. A second question was asked last night by the hon. member for Rosedale. The answer is a technical one. Does the hon. member want it on the record?


Harry Rutherford Jackman: Yes.


James Lorimer Ilsley: The first question asked was this:
If a person purchased an annuity before the 25th June, 1940, whereby he would receive an annuity commencing at age sixty-five, having regard to the amount paid prior to the. said date, can he, after the 25th June, 1940, pay a larger sum than originally contracted for and thereby receive a larger annuity at the commencement date and have the larger annuity exempt from tax?
The answer is: Under the amendment of 1940 the increased annuity, or enlargement of the annuity originally contracted for, would become subject to tax.	(
The second question is: If the holder of the annuity purchased it prior to the 25th June, 1940, and then subsequently to that date advanced the date of -maturity and paid the required amount, as demanded by the annuities branch, would the annuity received at the advanced date be subject to tax in whole or in part?
The answer to the second question is: The ruling of the Department of National Revenue is to preserve to the annuitant all rights that he had in respect of his pre-25th June, 1940 contract so far as it could be matured earlier without the payment of any additional sum, so that if the date of maturity were advanced and because an additional sum was paid the same amount of annual annuity would be paid as and from the earlier date, then the difference between the preserved pre-25th June, 1940 rights and the amount that he would receive as an annual annuity, arising out of the additional payment, would be subject to tax.
To state it in figures for clarity-if the pre-25th June, 1940 contract entitled him to $1,200 per annum commencing when he was sixty-five years of age, and payment were accelerated by five years, -and he was to receive thereby, without payment of further moneys, $900 per annum from age sixty, that annuity would be free of tax; but if, after June 25, 1940, he paid an additional sum of money which entitled him to $1,200 per annum from age sixty, then the difference between $900 and $1,200 would be annual taxable income to him for the rest of his life.


Harry Rutherford Jackman: The minister has answered my observations. But this in my opinion is a distinct breach of contract. Section 5 (k) was the section in question, and I doubt very
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much whether under the present legislation the exchequer court would uphold the ruling of the commissioner of taxation.
If the minister wishes to know it, I shall not let this matter go by easily, because I think that in 1940 the minister permitted a breach of good faith on the part of the dominion government when annuitants were not allowed to enlarge a contract under the right which had been most specifically promised to them by agents of the government. It was so stated in the literature of the Department of Labour issued in connection with the sale of these government annuities. The minister quarreled with my statement last night that there had been a breach of contract on the part of the dominion government; but in 1940, when the debate on the budget was up, I mentioned this cancellation of the option right. An option right is just as valuable as any other intangible right. I said at that time, as reported at page 1480 of Hansard of that year:
I am not holding a brief for any person who pays in a nominal sum 'in order to obtain a larger annuity later on-
It may have been an improvident contract on the part ' of the government, but if a person makes an improvident contract he has to live up to it under the law unless he happens to be a sovereign body, such as the government. I continued:
-but the fact is that government agents did tell these people that if they took out small contracts they had the right to increase them up to a maximum of $1,200.
There was never any question about that. I have checked and rechecked. Other hon. members will bear me out when I say that the right was given to the holders of these contracts, even though it might be for a nominal amount. At that time the minister said:
I admit that has been taken away.
He was admitting taking something away from a person.


James Lorimer Ilsley: I do not admit it now, whether I admitted it then or not. I apparently misunderstood the hon. gentleman at that time because the right to increase was never taken away.


Harry Rutherford Jackman: The right to increase under the same favourable terms as those given. What was the use of increasing the contract if you had not the same terms? Of course you could increase it to $1,200 if you wanted' to, but not under the original terms that you were promised. You were told that

you could1 enlarge the contract under the same terms, and that right was taken away. Section 5 (k), which deals definitely with that, says:
Provided that such exemption shall not extend to that portion of the income which exceeds the amount of the annuity actually specified in the contract before the twenty-fifth day of June, 1940, where such excess amount arises by reason of any option or contractual right to enlarge the annuity income by the payment of additional sums or premiums, unless such additional sums or premiums have actually been paid before the said date.


James Lorimer Ilsley: Parliament did not say in that section that they were taking away any option or contractual right, nor did they take away any option or contractual right. Moreover, they left untaxed all annuities that were bought or contracted to be 'bought before June 25, 1940.


Harry Rutherford Jackman: You have given me another ruling which takes away a further right. Take a contract for $1,200 which was entered into before 1940. So much was paid in and the payments were kept up. It was to be a tax-free contract for $1,200, and now you say to the committee to-night-there is the amount designated as an enlargement to bring the entire contract to maturity-that it will be taxable. If the minister has ever taken the trouble to look at the application form for a government annuity he will find that they were sold somewhat on this basis; I am referring to the period prior to 1940. The agent would visit you and state, "You can take out a contract for any amount not exceeding $1,200; if you take it out for a smaller amount you may enlarge that contract at any time." It was definitely stated in the /annuity contract that the income derived from the contract is exempt from dominion government income tax. That is what was stated in the contract signed by the Minister of Labour.
The agent would approach you and would tell you, "If you will tput down some money on one of these contracts you will be able to pay it off at any time you please under any plan you like." There were certain restrictions as to the guaranteed type of annuity. But in 1940 the tax-free option was taken away. I do not raise that point particularly, because I realize that if a man took a contract after that date and paid out so much money, while it was a breach of a contract, we could not do very much about it.
But when you come and say to the person who has an annuity for the full $1,200 and wishes to make it immediate under the terms of the contract which has a Dominion of Canada seal on it, that that will foe an entirely different contract, you are committing a breach. In the old days it made very little difference

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to the minister whether it was tax-free or taxable, because even a single person had1 an exemption of $1,200. If he had a tax-free annuity, that would' probably absorb the complete amount. But when taxes rose, then the Minister of Finance looked into these matters, and he thrust aside all rights of individuals who held these contracts and said that they would not be able to get what they were told in writing they would get. Now they must abide by his decision even though it greatly changes the nature of the original contract.


James Lorimer Ilsley: My case is just this: Every annuity that any one bought or agreed to buy before June 25, 1940, is free of income tax. That is my simple case. But annuities upon which a person got an option but which he did not care to take up, were taxed as from June 25, 1940. The taxing of them was no breach of contract or breach of faith on the part of this government. On the contrary, had we left the law so that option holders could exercise their options and have their annuities free of income tax while new purchasers would have to pay income tax on their annuities, we would have been committing unjustifiable discrimination.


Harry Rutherford Jackman: There is no use in labouring the matter at too great length. I do not know whether the minister thoroughly understands me or not. If he were a holder of one of these contracts, as many citizens are, I think he would put an entirely different interpretation on it. I have given him the case of people who have taken out these contracts for $1,200 before 1940.


James Lorimer Ilsley: At what age?


Harry Rutherford Jackman: Any age you like; sixty
years if you wish.


James Lorimer Ilsley: Sixty-five years was the
case I took.


Harry Rutherford Jackman: This was simply a savings deposit with the government with the right to take out a Dominion of Canada annuity. The very application stated that tffe applicant would be granted an annuity of a certain amount or such other annuity as his payments might purchase. There was nothing very definite in the contract. It made little difference whether you took out a $100 or a $1,200 contract. That is what the agent would tell you because you had the right to enlarge it if you wished. As I said before, even a person who took out the $1,200 maximum annuity in 1940 is now, by a ruling which I think is not valid in law, told that his contract is changed. It is not an enlargement of the
contract; he stipulated for the full amount of $1,200 and now he wants to pay that up. Some people will have paid a fair amount by means of annual instalments and now they might wish to pay up the balance on their contracts. But the government now comes in with a new ruling as to income tax. I can only say that if the government continues to advertise itself in this way as a breaker of contracts,
I am very sorry for the future of the finances of this country.


Mr. SMITH (Calgary West):: May I ask
one question which applies only to the last answer given by the minister? Perhaps I did not understand him correctly, but I thought he made some moral distinction between the breach of a contract in the nature of an option and the breach of a contract which had finished its stipulations and covered the whole terri- . tory. Did I understand the minister correctly?


James Lorimer Ilsley: That is correct.


Arthur Leroy Smith: You see no
moral difference?


James Lorimer Ilsley: I certainly see a moral
difference.


Arthur Leroy Smith: Let us assume that I have agreed to buy a piece of property from you for $10,000 and I have paid you $100 because that would be all I would have at the moment. I then obtain an option for one year. You can see no difference in some third party, in this case the government, coming in and making a stipulation with respect to that, even though I had paid you the whole $10,000 in cash? That is the legal view which I think is simple. So where is the distinction between the government breaching a contract by way of taxation and breaching a contract which had not been completed? I cannot find the difference.


James Lorimer Ilsley: You cannot deal with these matters in the abstract. You are running from annuities to real estate and you are not specifying the kind of change that the government makes in the situation, so that I cannot argue from one to the other. But take the case of annuities that I put. I have said it a dozen times. It seems to me that there is a great difference between the government going in and taxing an annuity which a man has agreed to buy, has either paid for or agreed to take and pay for, and an annuity which he has never agreed to take at all. The government has agreed to enlarge his annuity later if he wishes to pay the money for it. But the government has never agreed not to tax the additional annuity that he takes later. The government has not agreed
Income War Tax

to refrain from taxing that. The man is out nothing. He has not paid any money; he is not denied the opportunity of investing his money elsewhere, and surely it is limiting the powers of parliament unduly to say that if you change your system from non-taxation of annuities to taxation of annuities you can only tax annuities which are purchased after the date of the change and not annuities which were bought on option and taken out before the date was changed. I think there is a great difference.


Arthur Leroy Smith: May I
endeavour to make myself plainer. We will leave out real estate. Say that I have a contract of insurance, which comes perhaps a little closer to annuities than anything else. Suppose I have taken out a contract of insur

 ance with a company or with the government, for they are all in the same positron, and under that contract of insurance I also have, the option, as many insurance contracts have, permitting me in a given length of time to uccept certain advantages which are open to me by the contract of insurance. If the insurance company came along to me and said, "We are not going to honour that option except on new terms that we impose", what is the difference between that and the government adding conditions to the exercise of my option? With respect, I do not see the difference. I would be very glad to be shown it, but at present I cannot see it. Perhaps-it is my fault; I do not know.


James Lorimer Ilsley: I do not think there is any implied term at all binding the government or parliament that taxation would not be imposed after a certain date.


Arthur Leroy Smith: Is the minister suggesting that there is a difference between a contract with the government and a contract with an insurance company?


James Lorimer Ilsley: No.


Arthur Leroy Smith: If there is, it is time that we quit selling annuities.


James Lorimer Ilsley: No. I consider that the government carried out its contract completely.


Arthur Leroy Smith: With respect,
I know the minister thinks so; but I was trying to find the parallel, if there may be one, and I think there is. The minister has not explained my difficulty. That may be my fault.


James Lorimer Ilsley: I do not know whether it is worth while to carry this on, but will my hon. friend point out to me in what respect the government broke its contract? The goviMr. Ilsley.]
ernment agreed by these contracts that the person who bought the annuity would have the option of enlarging his annuity.


Harry Rutherford Jackman: Under what terms?


James Lorimer Ilsley: Under what terms? The terms had nothing to do with taxation. Read the contract through. I will take all this back if any of my hon. friends can bring me in, not something they heard that somebody said, but a contract and show where we have broken a single clause of that contract. That is the difference between the case put by me and the other two cases put by the hon. member lor Calgary West. He was putting a case where the insurance company were breaking their contract. They agreed to give the purchaser certain privileges which later, they denied him. They broke their contract. But show me where the government has broken its contract.


Arthur Leroy Smith: Am I wrong in saying that an option between two parties involves one of the parties doing certain things on certain terms? I always understood that.


James Lorimer Ilsley: Certainly. That is your insurance company case.


Arthur Leroy Smith: If my simple understanding of this is wrong I should like to know. The government signed a document and gave me the right to do certain things within a certain time.


James Lorimer Ilsley: That is right.


Arthur Leroy Smith: That is a contract.


James Lorimer Ilsley: That is correct.


Arthur Leroy Smith: I think we shall go that far together.


James Lorimer Ilsley: That is right.


Arthur Leroy Smith: Then when I find that you as the grantor of the option have, by way of taxation, disturbed those terms-


James Lorimer Ilsley: What terms?


Arthur Leroy Smith: The terms upon which I might increase my position, the option part of it, if you wish. Am I quite wrong in assuming that to be the fact?


James Lorimer Ilsley: The act does not prevent anybody from enlarging his annuity. That was the only contractual term that is applicable.

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Major James William Coldwell: I think we should get this untangled because it is very important. Is it not a fact that when I ptit $100 into a government annuity at a certain date it is estimated that that $100 by maturity will have earned a certain annuity,* and every multiple of $100 that I put in is a separate deposit which earns a separate part of an annuity which may total $1,200, let us say, at the end of a given time? In other words, I am not making a deposit which is in the nature of an option to do something at some future date. But I can put in another $100, or $50, or $500, or $1,000 when I have it, and from the date on which I deposit these further sums that money will give me at the age of sixty, we will say, an annuity of $500, $600, $1,000, $1,200, as the case may be. In other words, is this not in reality a separate deposit, with the deposits being made not regularly, perhaps rather irregularly, so that at a certain time a certain annual sum- will be available to me as earnings from that deposit? Are these not separate transactions? That is the point that was running through my mind when the argument was taking place, namely', that I am not buying an option but making a deposit which will guarantee me a certain return called an annuity, and my aggregate deposits may earn me, let us say, $1,200 when I have reached the age of sixty or sixty-five, as the case may be.


James Lorimer Ilsley: That is the ordinary case of purchasing an annuity. The purchase price is not paid all at once. In most cases it is paid by instalments. But that is not the case I am talking about. I am talking about the purchaser who perhaps paid the government one dollar in 1930.


Major James William Coldwell: Yes, but the minister has not got my point. If I put in one dollar in 1930 that dollar in 1960 will have earned me very little.


James Lorimer Ilsley: That is right.


Major James William Coldwell: Perhaps I do not put anything more in until 1940 and then I put in $10,000. That $10,000 will earn me something up to the time of maturity. But as I see it, the dollar I put in did not entitle rae to a return of any particular sum other than on the dollar I put in 1930.


James Lorimer Ilsley: That is right.


Major James William Coldwell: If in the meantime I make a deposit under different conditions, then I have to abide by the conditions imposed at the time I make the deposit. That is the point. Is that not the argument?


James Lorimer Ilsley: Yes.


Major James William Coldwell: I can understand that, but I cannot understand the argument put forward by the hon. member for Rosedale, that you are buying an option, because it is a different thing from real estate, which was used as an analogy. I buy an option on real estate for one year and if I do not take it up at the end of the year I lose the deposit; but in this case I preserve my deposit and get an annuity on the deposit, and no more, until I make another deposit on which I earn something.


Mr. KNIGHT:: Do I understand that one has the privilege of increasing the annuity according to contract, but increases it subject to the taxation conditions imposed at the time the increase is made?


James Lorimer Ilsley: Yes.


Robert Ross (Roy) Knight: That is perfectly reasonable and it seems to me to make good sense, but I cannot understand the argument advanced from the Conservative benches. It does not make sense.


Harry Rutherford Jackman: If I can still throw some light on this matter I will try to do so, because what the minister has said does not budge me one iota from my position which I believe to be fundamentally right. If anyone in business attempted to do what the minister suggests can be done I would not negotiate with him at all because it would not be worth while. We cannot live in such a world. Let me read to the committee from one of these application forms for the purchase of a deferred annuity. This is _ one I found on my desk this morning. I do not think there is any marked change from those used some years ago. I quote:
I desire to purchase under plan . . .
One or 2.
. . . and agree to pay the authorized monthly, quarterly, half-yearly, yearly or single premium
Of so many dollars.
. . . reserving, however, the right to complete the purchase under the contract by the payment of sums of varying amounts . . .
Put in what you like, when you like.
... or by such other method as may be authorized and approved by the government-
I presume that if the government wish to have regularity in the payments they can specify it.
-and with the understanding that such an annuity will in any event be granted to the annuitant as the total purchase money with interest thereon at 4 per cent per annum, compounded yearly, will purchase at the rates in effect at the date of this application, the annuity not to exceed $1,200.
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May I suggest to the minister that if he insists on the provision which he now proposes, he amend section 5 (k) and declare that not only can those annuities prior to 1940 not be enlarged but that they can not be matured tax free earlier than stated in the contract, because I have no confidence, speaking from the little legal background that I have, in the ruling of the deputy minister.


James Lorimer Ilsley: Maturing it earlier than originally intended is enlarging the annuity.


Harry Rutherford Jackman: Enlarging it means making the amount larger, though it is a legal question. I suggest, however, that the minister had better make it plain so as to save the taxpayers legal expenses.


James Lorimer Ilsley: If I get an annuity of SI,200 beginning at fifty-five years of age, it is an enlargement of an annuity of $1,200 beginning at sixty-five years.
' Resolutions 1 and 4 agreed to.
5.	That the limitations on deductions for contributions in 1946 or subsequent taxation years by an employer or an employee to a superannuation or pension fund or plan be increased to $900, and that the percentage limitation in respect of the employer's contribution be removed.
Resolution agreed1 to.
6.	That the exemptions and deductions for 1946 and subsequent taxation years in respect of a superannuation or pension fund or plan be conditional upon the continuing approval of the fund or plan by the Minister of National Revenue.


Arthur Leroy Smith: I was wondering whether this was the resolution under which one might speak of business superannuation and pension funds. It provides exemptions and deductions for 1946 and subsequent taxation years conditional upon the continuing approval of the fund or plan by the Minister of National Revenue. I should think this would be the relevant resolution. .


James Lorimer Ilsley: Yes.


Arthur Leroy Smith: Occasionally we make bad friends in this world and sometimes they come back to thank us, but I wish to speak about bank pension funds. I want to know first whether or not the minister has some approval or disapproval of pension funds set up in banks. I gather he would have under this particular resolution.


James Lorimer Ilsley: They must be approved like other pension funds.


Arthur Leroy Smith: I should think so. Therefore what I have to say about bank pension funds is appropriate here. When
[Mr. Jackman.1
we get our new allowance through I shall not need to borrow from banks, but at the moment I do owe some of them. There was a report in the newspapers, either yesterday or to-day, with reference to salaries paid in banks. In my view-and I am supposed to be one of the fifty big shots who nominated our leader-salaries paid by Canadian banks are completely disgraceful. I go farther than that and point out that the answer to that is said to be that persons employed in banks have security in old age. That is the answer w'hich is given.
In the first place, in no banks that I know of is there any pension fund applicable to women, although we know that Canadian banks have been largely operated by women since the last war. I can speak with authority with regard to only one bank, the name of which I will not mention, and my experience goes back seven or eight years. The pension fund in that bank is something which I do not think the minister, busy as he is, if he had an opportunity of looking into it, would approve. They say that these small salaries are small because the banks look after-their employees in later life. Living in the place where the hon. member for Regina City (Mr. Probe) comes from, and which the -member for Rosetown-Biggar knows, a bank clerk in the nineteen hundreds was the only fellow with a pair of white pants and a tennis racquet, and that was the only reason we knew he was a bank clerk. He was getting $9 a week. What happened is this. They have maintained that position.
I quite confess that being a bank clerk does not mean nearly as much socially as it did when Regina was a town of 2,537 people and there was no decrease by deaths; in other words, the births just kept the .thing even for a long time. But the last bank pension scheme I had occasion to look at some years ago had this provision: The employee paid in a certain amount of mofiey; the bank added a certain amount of money which is usual in pension schemes; but if that employee were discharged he received from the bank one-half of the amount of money he himself had paid in, without interest. I know it startles people, but it is there. I know that the thing is usual. I speak of one bank which I know. They have another provisioh which is that persons receiving pensions from banks do so in- the sole, entire and uncontrolled discretion of a certain board. In other words, granted that I am a manager and I have reached the age of sixty-five, I retire. They can take that pension- away from me.
I have signed a contract that that may hap-

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pen; everybody does when he works for this bank, and it is one of the biggest in Canada.
I hope I am not out of order-


Angus MacInnis: Based oh regimentation, I suppose.


Arthur Leroy Smith: I do not know what my hon. friend means by that. I shall tell him what I think of regimentation if he wants to take time out. t


Angus MacInnis: I thought that was it.


Arthur Leroy Smith: Let me go back to what I was speaking about a moment ago. I see here that the' minister is given discretion; I am glad he has it. I am not opposing the idea for a moment. Take the Canadian Pacific Railway company; it is entirely different. The man who pays into that fund is entitled to have the money of right; not only what he has paid in but a proportion of what the company has paid in.
I am simply speaking of Canadian banks, and it does seem to me that the department, the minister, or the Minister of National Revenue, or someone, should look into those contracts, because the things I speak of were true up to six years ago. I am sure of that and I have never heard of its being changed from that date. I inquired of other banks; they did not show me their little book, but I was given to understand that they are pretty much on the same basis.	_	'


Alexander Malcolm Nicholson: In support of what the hon. member for Calgary West has said, may I say that within the last week a similar case was brought to my attention where a bank accountant with over eighteen years' service in the bank left because the economic return did not enable him to support his family. His complaint is the same as, that mentioned by the hon. member. He has contributed all those years, and although he left with a very good record he is denied the right to get back the amount of money he has paid in. In this particular bank that, regulation still prevails.


[Stage Direction]
Resolution agreed to.
7.	That a payment on or after October 13, 1945, to an employee in respect of loss of office be deemed to be income of such employee over a period of five years.
Harry Rutherford Jackman: May I ask the minister just how he hits on the period of five years in connection with these payments which a person receives as compensation for loss of a job? May I read from the Ives report:
There does not appear to be any particular reasoning behind the choice of five years over which the payment may be spread; rather it appears to be an arbitrary decision which recognizes the inequity which would result if the total payment was considered as income in one year.
May I suggest to the minister that when he is answering, consideration might be given to enlarging this period perhaps to seven or to ten years or on a life expectancy basis.


James Lorimer Ilsley: It seems to me we discussed this matter of life expectancy one other year, and there are certain objections to it which do not occur to me now. The period of five years was selected as a reasonable length of time, and the Ives commission did- not take any exception to it at all; I think they endorsed.it. The hon. gentleman is suggesting that it should be longer than five years; that is all.


Harry Rutherford Jackman: May I illustrate a hypothetical case? Suppose a man loses his position through the merging of a company, or for other reasons, and the firm is quite willing that he should receive a lump sum as compensation for the Loss of his job. That man is more likely than not to be pretty well up in years. It may be thait he will find difficulty in obtaining suitable employment, particularly if he is an executive officer. It may foe very difficult to get a job of a similar nature with another company, and this lump sum is supposed to Look after him as best it can for a considerable period, perhaps for the rest of his life. That is why I suggest that a longer period than five years is more equitable. The shorter the period, the higher the burden of taxation, because the more income will come in for taxation purposes in each year. If it were spread over ten years the revenue department will get less but the man will receive greater equity. I think the ideal way is to give the man a life expectancy. It may be ten years; it may be twenty-five years, in which case the purpose for which the lump sum was given to him by his former employer is carried out, since it is given to him 'because he has lost his job and may not easily find another means of livelihood1.


William Alexander McMaster: Suppose the man died in the first year; what would happen?


James Lorimer Ilsley: He would collect only on the one year; that is all.


Alan Cockeram: What has been the practice in cases like that? Are there departmental rulings?


James Lorimer Ilsley: Formerly the practice was to tax it all in one year, because it was regarded as income and is income except for this provision.
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Alan Cockeram: There have been specific cases which the department has handled. Have people come to the minister, and has he or his officials made the necessary arrangements? What has been the practice in the past?


James Lorimer Ilsley: It is the Department of National Revenue; I do not know, I am sure.
Mr. COCKERAM" Some people who have been let out of war industries are in that position.


James Lorimer Ilsley: I do not know; I do not remember any cases. At any rate it was regarded as a hardship to tax it all in one year. Therefore, in one of the budgets when the taxes got high we changed it so that he would only have to pay income tax of one-fifth the first year and one-fifth the second year, and so on for a period of five years. I think it has met with reasonable acceptance.


William Alexander McMaster: Was there not a case before the exchequer court a few years ago in which the sum of $100,000 was paid to one of the heads of a department? I forget the result, 'but my recollection is that it was decided it was not taxable. I do not know whether I agreed with that decision or not.


James Lorimer Ilsley: I do not know what the case is.


William Alexander McMaster: I could look it up and let the minister know.


James Lorimer Ilsley: There was the Judge Fullerton case, in which it was held to be capital and not income, and not taxable at all.


Alistair McLeod Stewart: Has this not happened before, that payment for the loss of a job has been regarded by the Department of National Revenue as capital, but the company which paid it was not allowed to charge off that amount against profits? Either the company had to pay tax or the recipient had to pay; in the case I know of the company has paid the income tax on the total amount, and the person who received it did not pay any taxation, because it was regarded as a capital sum,.


James Lorimer Ilsley: The effect of this resolution is to place lump-sum payments made for loss of office on the same basis for purposes of taxation as lump-sum payments in general made to an employee at the time of his retirement from employment. The courts have interpreted the present law as excluding from the ambit of taxation so-called payment for loss of office, while other lump-sum payments on retirement from office are subject to tax. The royal commission asserted in its report that the distinction made was some-
	.
what artificial, and that if the present interpretation were allowed to stand, by the simple expedient of entering into an agreement wifh an employee worded in a certain way, all lump-sum payments on retirement could be given the guise of payments for loss of office and thus escape taxation.
The resolution proposes, therefore, that such payments for loss of office be made-subject to taxation by a definitive amendment to the law, and that where paid in a lump sum they be taxed in the same manner as other similar lump-sum payments are now taxed; that is, over a period of five years Apparently what I said a few minutes ago in reply to some question was incorrect; that is, that these would be income, but I was thinking about lump-sum payments made in consideration of past services. They would be income, I believe, and I think we spread those over five years under an income tax amendment made a few years ago. This is a proposal to do the same with these payments, for the reasons stated.


Harry Rutherford Jackman: I can only say to the minister that I think there is a good deal of equity in my suggestion. If the man is big enough and important enough the company will see that funds are placed with a trust company so that his income will be paid to him for ten or twenty years or more. If he is a small man, a salesman or something like that who will receive only a few thousand dollars, he will be taxed at a very high rate, because that amount would be spread over five years while he may have to live on it for twenty years. I think the minister should either increase the number of years over which the income is spread or adopt the principle of life, expectancy, so that substantial justice would be done.


James Lorimer Ilsley: As a rule these are not large sums. The small man the hon. gentleman is talking about gets a small sum; when it is divided by five it does not amount to a great'deal, so that it does not worry him at all in the matter of taxation.


Harry Rutherford Jackman: But the rates are pretty high on small incomes.
Resolution 'agreed to.
8.	That, in lieu of the taxes otherwise payable by shareholders of a private closely-held company in respect of earned surplus accumulated by the company from the beginning of its 1917 fiscal period to the end of its 1939 fiscal period, the company be allowed to elect to pay a tax equal to the -aggregate of the taxes calculated in respect of the allocable portion of each shareholder determined in accordance with the following table: -

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On the first $25,000, or any portion thereof,
15 per cent,
$3,750 on an allocable portion of $25,000 and 18 per cent on the amount by which the portion exceeds $25,000 and does not exceed $50,000, $8,250 on an allocable portion of $50,000 and 21 per cent on the amount by which the portion exceeds $50,000 and does not exceed $100,000, $18,750 on an allocable portion of $100,000 and 24 per cent on the amount by which the portion exceeds $100,000 and does not exceed $200,000, $42,750 on an allocable portion of $200,000 and 27 per cent on the amount by which the portion exceeds $200,000 and does not exceed $300,000, $69,750 on an allocable portion of $300,000 and 30 per cent on the amount by which the portion exceeds $300,000 and does not exceed $400,000,
$99,750 on an allocable portion of $400,000 and 33 per cent on the amount by which the portion exceeds $400,000.


Harry Rutherford Jackman: Would the minister
explain this resolution?


James Lorimer Ilsley: It will be recalled that the second part of the reference to the royal commission on the taxation of annuities and family corporations was to consider the problem encountered by closely-held companies on the death of a principal shareholder, the main part of whose estate was composed of his holdings in the company. In order to provide funds for the payment of succession duties on the estate of such a shareholder it is normally necessary to declare a dividend from the earned surplus of the company; and under existing arrangements this dividend is subject to taxation in full at the present high rates of personal income tax, which reach a level of sixty, seventy, eighty or a higher percentage in many cases, and encroach so heavily on the dividend that little is left for payment of the succession duties, for which purpose the dividend has been declared. -The recommendation of the royal commission to meet this problem was that in respect of earned surplus accumulated between 1917 and 1939 a schedule of rates'should be applied approximating the rates that would have been imposed had the surplus been withdrawn in those years. This schedule of rates is embodied in resolution 8. It is proposed to give any closely-held company coming within the definition which will be set forth in the amendment to the law the right to pay a tax on an amount of its present earned surplus equal to its 1939 earned surplus in accordance with the rates set forth in this schedule and in this manner discharge on behalf of its shareholders the income tax liability on such earned surplus. Resolution 9 sets forth the time limit within which such companies must elect to pay the prescribed tax, and the manner in which such tax may be paid.


Harry Rutherford Jackman: The minister has said that the type of company which will be allowed to take advantage of this new provision will be defined. I consider it important that the public know exactly what that type will be. I will not ask the minister for the precise legal wording, but a number- of people have inquired already whether or not their companies would be eligible under this provision, and the minister should at least give the committee some idea as to whether it is to be a strictly private company within the terms of the dominion Companies Act or whether it is to apply to companies where we know hardship exists, where a man had a charter taken out under the Companies Act and built up a company in a small community, into which company he ploughed back his earnings. I believe there are to be some limitations on the number of shareholders, and so on, but the minister should give the committee some idea of what is in his mind so that members of the committee may perhaps put forth what ideas they have in their minds.


James Lorimer Ilsley: My intention is to propose a definition of a private company which will be something like this:
"Private company" means a company the number of whose shareholders has not at any time since the 29th day of April, 1941, been more than fifty, not including persons who are in the employment of the company, or who having been formerly in the employment of the company were while in that employment and have continued after the termination of that employment to be shareholders of the company, two or more persons holding one or more shares jointly being considered as a single shareholder for the purposes of this paragraph.
That is a fairly comprehensive definition; it is not limited to private companies as defined by the Companies Act, because it would not do to confine it to that.


Harry Rutherford Jackman: It would be a fairly broad definition.


James Lorimer Ilsley: Yes, it is.


William Alexander McMaster: I notice that companies themselves are allowed to take advantage of it, if they get any benefit from it. There is nothing that allows the income tax branch to force the making of these payments.


James Lorimer Ilsley: No.


William Alexander McMaster: Is there any reason why the exact amount of income tax could not be computed from the annual statements of these companies?


James Lorimer Ilsley: It would be impossible. The annual statements of the companies would not be of any help. The figure we try to
Income War Tax

arrive at is the amount of tax which would have been payable by the individual shareholders, had the earnings of the company been distributed from year to year, instead of accumulative. That would depend upon so many factors. It would depend upon their total incomes, and upon the rates for the various years; and it would be impossible to do it, especially when some of these surpluses have been accumulated for forty or fifty years. To go away back would be an impossible task.


William Alexander McMaster: I do not think it would apply to any surplus which accumulated before 1917, when the Income War Tax Act was brought in.
Mr. ILSLEY; No, but I referred to surpluses which have accumulated for forty or fifty years.


William Alexander McMaster: It would not be taxable. Mr. ILSLEY:-The question is to determine what part of it has accumulated since 1917, and what part before 1917. If there has been a depletion and restoration, what rules would *ne apply?


Harry Rutherford Jackman: What is to be the treatment of the surplus which accumulated before 1917? Why do you have a deadline there? I realize that was the date of the introduction of the income tax legislation, but why does the minister place a deadline at 1917? How will you distribute your pre-1917 surplus?


James Lorimer Ilsley: We propose to leave the treatment of the pre-1917 surplus exactly where it is at the present time.


Harry Rutherford Jackman: How is that?


James Lorimer Ilsley: I do not know whether I can go through it all or not, but it goes something like this: If it is paid out in dividends, the dividends are wholly taxable. If the company is wound up and there is distribution of earned surplus, the part accumulated prior to 1917 is free of income tax. That is only the beginning of the story; there are some other qualifications as well.


Harry Rutherford Jackman: There was no deadline date given in some previous year to get that surplus out? A company prior to 1917 has a surplus, and it may pay it out in the form of dividends, and have those dividends tax free?


James Lorimer Ilsley: Pre-1917?


Harry Rutherford Jackman: Yes.


James Lorimer Ilsley: If it pays that out in the form of dividends, the dividends are taxable.


Harry Rutherford Jackman: That is what this legislation is aimed at-to get rid of taxation.
TMr. Ilsley.]


James Lorimer Ilsley: Not all taxation.


Harry Rutherford Jackman: No, not all taxation; but if companies are to be given the right to distribute post-1917 income under certain terms which give substantial justice, they can distribute this surplus in the form of dividends- or how is it to be distributed?


James Lorimer Ilsley: On winding up, it is free- the pre-1917 surplus on winding up each year of taxation. They always have been free. If they are paid out in dividends they are tax-'able, and always have been. We were dealing with the problem covering the period between 1917 and 1939.


Harry Rutherford Jackman: Apparently there is one provision already on winding up that allows that money to be distributed tax free, because there was no income tax in those days. What are you going to do with distribution which is made of the post-1917 surplus under this legislation? What are you going to call it? Will it be called a dividend?


James Lorimer Ilsley: It will be a dividend.


Harry Rutherford Jackman: If there is any equity in allowing a post-1917 surplus to be distributed as dividends, and have it taxable under this special resolution, why do you not at least include the pre-1917 surplus? It has more equity attached to it, because there was no income tax whatsoever at that time.


James Lorimer Ilsley: I shall have to get an -answer to that question. We did consider it but I have forgotten the circumstances. The whole thing from 1917 to 1939 has to come out. Part of it cannot come out, but it seems to me what we considered was whether there should be an option to take it all out, and we decided just to cover the period of the income tax.


Harry Rutherford Jackman: Under this legislation
must it be all earned surplus?


James Lorimer Ilsley: I was wrong in that answer;
I am sorry.


William Alexander McMaster: I should like to know whether profits which have been accumulated during the past years under the act as it stood last year and the year before, were declared nom-tax-able as profits.


James Lorimer Ilsley: I did not catch the question.


William Alexander McMaster: The point I make is that it is not necessary to declare a dividend and pay money over to be taxable. I am asking this: Were they not actually taxable last year? Should not the amount of profits made last year have been taxable, and income tax paid on it?

Income War Tax


James Lorimer Ilsley: The corporation income tax was paid on it.


William Alexander McMaster: But no other.


James Lorimer Ilsley: The individual income tax was not paid on it, because the individual never got it.


Alan Cockeram: Has the minister estimated the amount of taxation he will get under this resolution?


James Lorimer Ilsley: No estimate has been made, and I do not think one is possible.


Harry Rutherford Jackman: I suggest that this resolution' should stand until the minister finds a reason for not including the pre-1917 income.


James Lorimer Ilsley: Very well, let it stand. Or, would it be agreeable to pass the resolution, if I undertake to give consideration to the point before the bill is introduced? Would that be satisfactory?


Harry Rutherford Jackman: I presume that is all right. I had an example here that I thought I would put to the minister. It was given to me as an actual case. Earned profits between 1917 and 1939 amounted to $38,000. The company took off a capital loss of $8,000, which it was allowed to do, and showed an earned surplus of $30,000. Then it realized a capital profit of $5,000 in a subsequent period, and it had an earned surplus on January, 1917, of $5,000. Apparently I shall have to leave that in abeyance. Does the section apply to the $38,000 Tess the $8,000 for capital losses, which would make it $30,000, or does it apply to the $40,000, which is made up of the $5,000 earned surplus in 1917 and the amount of the earned surplus accrued during 1917 to 1939, plus the capital profit realized of $5,000? Perhaps the minister would let me have the answer when he gives the other information.


[Stage Direction]
Resolution agreed to.
9.	That the provision contemplated by resolution 8 be applicable only if the company elect on or before December 31, 1947, and that the tax be payable in four annual instalments, the first one being due on December 31, 1947, with interest at 4 per centum per annum on each in-salment from December 31, 1946, until due and thereafter until paid at 7 per centum per annum.
Resolution agreed to.
10.	That for 1944 and subsequent taxation years the provision for deductions of unusual medical expenses be extended in the event of the death of the taxpayer either in the taxation year or subsequently to include expenses incurred and paid either by him or by his estate in a 12-month period commencing in the taxation year.
Harry Rutherford Jackman: I think the minister
should be congratulated on having included this resolution because it has been needed for a long time.


Douglas Scott Harkness: I should like to draw the attention of the minister to those people who suffer from diabetes. I have received representations from many of them. Probably everyone knows that the majority of such people are dependent for their lives upon the continual use of insulin. I should think that if there is any such thing as an unusual medical expense it would be the expense incurred by these people; yet I understand that the departmental officials will not so consider it for income tax purposes. I should like to ask the minister if that is still the situation and, if so, if he will give consideration to including this under the heading of unusual medical expenses. The amount of money these people must spend annually for insulin runs up to a considerable sum in most cases.


James Lorimer Ilsley: You cannot break the rule for one particular drug, or perhaps I should say one particular pharmaceutical product. A long list of drugs wo.uld have to be compiled as being eligible as medical expenses when bought from druggists rather than through a doctor. We have never felt that we could do that. This matter has been up in other sessions. Last year it was argued that we ought to do something and we reduced the five per cent to four per pent? That did not help the druggists very much, but it helped the person who was incurring the expense. That was brought in as a sort of alternative to a compilation of a long list of pharmaceutical preparations and drugs.


Douglas Scott Harkness: I do not think the minister can argue that insulin should be considered as being in the same class as other drugs. It is certainly a very special case. The lives of a large number of people depend upon taking this drug regularly, if you want to call it a dTug. The minister's argument is simply one 'of difficulty of administration. Because it is going to be a bit difficult to differentiate between this preparation and drugs generally, because it may make a little more work for some people in the department, he. says it cannot be done. I do not think that is a good enough excuse. There are probably more people dependent upon the use of insulin than upon any other preparation of that kind. Relief from taxation for the cost of purchasing insulin is long overdue and administrative difficulties should not be allowed to stand in the way.
Income War Tax


Harry Rutherford Jackman: I think the hon. member for Calgary East has made out a good case. This is simply another example of difficulty of administration being allowed to interfere with the redress of an injustice. No doubt many of these people spend a considerable amount of their income upon insulin in order to keep alive. There may be some other drugs or remedies which are just as essential as insulin, but here is a case where relief should be given. Simply because it may create a little more difficulty in administration should not be taken as a reason for permitting injustice or hardship to be imposed upon a certain class of people. Let us make this an exception if necessary. Practically every year since I first came here I have heard the minister complain that he could not do this or that because of administrative difficulties, and yet eventually he was forced to see the injustice of the case and he did the right thing, but only after pressure on the part of the opposition. Hon. members who are members of the medical profession will probably know how much it costs a person who is suffering from diabetes to purchase insulin. The terms of this resolution state that people who have to spend extra amounts on medical supplies are to get relief. Let us apply this to insulin and exclude the others for the time being. Perhaps in another year some other case will be shown to have as much merit as this one. In the meantime let us do what justice we can.


Mr. McCANN:: The contention of hon. members that the cost of insulin should be allowed as a deduction is not opposed on the ground of administrative difficulties. There would be no more administrative difficulty in the case of one drug than in the case of another, but why one particular drug rather than another should be picked out I cannot understand. I could give many examples of drugs which people must purchase in order to remain alive. For instance, people suffering from pernicious anaemia must take liver extract continuously. Then there are certain classes of people to which this would be almost an encouragement to continue the use of drugs. I refer to drug addicts, and there are very many of them. I cannot see that the hon. gentlemen who appear to know so much about the medical profession have made out a case for insulin over and above any other drug used in the treatment of disease.


Douglas Scott Harkness: I rather object to the minister's remark that I pretend to know anything about the medical profession. I do not so pretend. But I do know that large numbers of people require insulin. I under-	*	*
stand also that there is no other drug upon which so many people are dependent for their lives. I certainly think this is something that should be put in a class by itself, and not as it is represented here, just one drug among many.


Mr. GLADSTONE:: Would the Minister of National Revenue indicate whether a patient would secure the insulin from a medical practitioner or from a laboratory the same as liver extract is obtained? It is not obtained from the drug store.


James Joseph McCann: I think the hon. gentleman is mistaken. It is procurable and purchasable at any drug store after the physician has indicated that it is to be used by the patient. One prescription in that regard is being filled continuously when the needs of the patient are known, so that it is not just purchased over the counter as one would purchase aspirin, quinine or drugs of that type. The patient who uses insulin gets a prescription for it from a qualified physician and that prescription is honoured by being refilled until it is countermanded by the physician who has indicated that its use is no longer necessary. In some of the provinces insulin has been distributed entirely free of charge, but that I understand has been discontinued. Certain people who are indigent and cannot pay for it are able to get it on the recommendation of the clerk of the municipality and a physician. In such cases it is distributed free by the province.


An hon. MEMBER:: In some provinces only?	.


James Joseph McCann: Yes.


Mr. McKAY:: Would the minister clarify the term "unusual medical expenses"? Does it include hospitalization? "Medical expenses", if strictly applied might be limited to medical doctors' fees and would not necessarily include hospital or clinical treatment or even dental treatment.


James Lorimer Ilsley: The definition of "unusual medical expenses" is found in section 5(1) (n) of the Income War Tax Act. It is a long definition. Would the hon. gentleman like me to read it?


Eric Bowness McKay: I am not so much concerned about that as I am about getting an outline so that we shall know just what it includes.


James Lorimer Ilsley: It is:
(n) that portion of medical expenses in excess of four per centum of the income of the taxpayer incurred and paid within the taxation period or incurred and paid within a twelvemonth period ending in the taxation period and not included in the calculation of a deduction for medical expenses under this act for a pre-

Income War Tax
vious taxation period, if payment is made to a medical practitioner, dentist or nurse qualified to practise under the laws of the place where the expenses are incurred or a public or licensed private hospital in respect of a birth in the family of, illness of or operation upon the taxpayer or his spouse or any dependent in respect of whom. he may make a deduction from his normal tax under rule five of section one of paragraph A of the first schedule to this act.
That is just the beginning of it.


Eric Bowness McKay: I cannot see any reason why insulin does not come under that. If insulin is given by medical order, it would definitely come under that definition.


James Lorimer Ilsley: If it is included in a doctor's bill and the doctor gets paid for it, it does come within it; but that is not always the case.


Harry Rutherford Jackman: The Minister of National Revenue directed some remarks to me which were taken by my hon. friend as directed to him. The minister said that presumably I know something about medicine. I know nothing of it. But now that we have a member of the medical profession as head of the Department of National Revenue I hope that we shall get justice in this matter. The minister let the cat out of the bag when he said that some provinces distribute insulin free to these suffering people because of the expense incurred in purchasing it. Surely the purchase of insulin, if it amounts to something considerable each year-and the minister will know much better about that than I do-so that it becomes a financial burden on these people, properly comes under this section; and all the other drugs he mentioned, about which I know nothing and he knows a great deal, would perhaps be able to be put under the section another year. Let us do what justice we can to-night, hot next year. Let us get something done here in this legislation by including the payment for insulin as one of the legitimate medical expenses allowed under the act.
Resolution, agreed to.
11.	That the requirement to deduct 7 per cent tax at source oh payment of interest, dividends or royalties be discontinued after December 31, 1945.


Gordon Knapman Fraser: Is it contemplated that this seven per cent tax, the normal tax, will be eliminated altogether by this legislation?


James Lorimer Ilsley: No. This resolution does not change the weight of taxation or the liability to taxation at all. It is merely an administrative change.


[Stage Direction]
Resolution agreed to.
12.	That for 1946 and subsequent taxation years the exemption of the service pay and allowances of members of the 'Canadian naval, military and air forces while on active service in Canada or anywhere in the western hemisphere whose duties are of such a character as are required normally to be performed afloat or in aircraft be rescinded.
Alan Cockeram: Would the ipinister explain this?


James Lorimer Ilsley: This resolution withdraws in respect of 1946 and later years the complete exemption from income tax granted service personnel in the western hemisphere whose duties are normally performed in aircraft or afloat. Complete exemption was granted such personnel because of the risk to life involved in large scale training programmes, particularly to aircraft instructors, and also because of the risk to life from enemy action, particularly in the coastal regions.
The end of hostilities has brought the cessation of both enemy action and of the training programmes, and it is not justifiable that personnel whose duties continue, to be performed in aircraft or afloat should be more favourably treated than other service personnel in the western hemisphere. Such personnel will, of course, be eligible for the tax concessions now granted all service personnel in the western hemisphere.


Alan Cockeram: What are those
concessions?


James Lorimer Ilsley: It is a complicated matter, but the way it is usually described is a SI,600 exemption for single persons and S2,100 for married. That is a very loose and general way of stating it, and the concessions do not apply as you get into the ranks of the higher paid officers receiving above a certain level of pay. They are taxed just as civilians are in Canada. But the lower paid ranks, lieutenants, captains, and so on, up to a certain rank, are taxed more lightly than civilians.


Mrs. STRUM:: Would the minister explain the inclusion of the words, "in the western hemisphere"?


James Lorimer Ilsley: Outside the western hemisphere service personnel were free of taxation and still are.


[Stage Direction]
Resolution agreed to.
13.	That for 1946 and subsequent taxation years the exemption of one-third of the remuneration paid to the_ civilian officers or employees of the Royal Air Force transport command whose duties are of such a character as are required normally to be performed in aircraft be rescinded.
James Lorimer Ilsley: The present law grants
exemption from tax in respect of one-third of the remuneration of civilian officers and

Income War Tax

employees of the air force transport command in recognition of the great risk from enemy action encountered by such men in performing their duties over the Atlantic during the period of hostilities. With the end of the war the risk from enemy action has ceased, and it is proposed therefore that the exemption granted in recognition of this risk shall be withdrawn as from the end of the present year.


Alan Cockeram: How long did they
have that exemption-right through the war?


James Lorimer Ilsley: It w'as introduced in 1943.


Howard Charles Green: Does the minister not think it would be fair to maintain it as long as the transport command is in operation?


James Lorimer Ilsley: Not without discrimination
against Trans-Canada employees flying over the ocean, and others. I do not think you can treat people differently under identical conditions.	[DOT]


Howard Charles Green: Are the transport command
men flying under the same conditions as the Trans-Canada Air Lines men? Do the Trans-Canada men fly on regular schedules and routes, whereas the others do not?


James Lorimer Ilsley: I did not think there was
any difference in risk now between the two._


Mr. QUELCH:: These men do not benefit
under the rehabilitation programmes provided for the armed services and I think this advantage should be continued. As regards the Trans-Canada men. do they not come under some form of pension? Is therh not some pension for Trans-Canada pilots?	-


James Lorimer Ilsley: I do not know of any pension to' employees of Trans-Canada. They may have a pension fund or scheme. Is the hon. gentleman talking about a disability pension?


Victor Quelch: Yes, disability pension or
loss of life.


James Lorimer Ilsley: I do not know about that.


Victor Quelch: These particular men do
not participate in the benefits provided for members of the armed forces and if they are killed, unless they have taken out special civilian life insurance, their dependents are not cared for. I think we should continue to give them this concession.


James Lorimer Ilsley: If the other group have
higher pension rights you will find that this group has higher pay. As a matter of fact, their pay is very high.


Alan Cockeram: The men who have
been in the transport command have, in my 
opinion, been discriminated against. It is true they got high pay for doing an extremely hazardous job, but they have none of the benefits that people in less hazardous occupations have enjoyed. There was discrimination in income tax from the start of the war. 'If there is one group of people to whom consideration should be given it is this group of men. Some were killed on service and their wives to-day are penniless. That is a situation which does not reflect credit either on Canada or on the minister.


[Stage Direction]
Resolution agreed to.
14.	That the exemption of limited dividend housing corporations be broadened to include institutional housing corporations and institutional holding companies as defined by the National Housing Act, 1944.
Alan Cockeram: Will the minister
explain?


James Lorimer Ilsley: This resolution extends the
exemption granted last year in respect to the income of limited dividend housing corporations to institutional housing corporations and institutional holding companies as defined by the National Housing Act, 1944. By order in council passed some time last summer the list of limited dividend housing corporations was extended, or at least provision was made for setting up institutional housing corporations and institutional holding companies under the National Housing Act, and there is the same reason for freeing them from income tax or excess profits tax as there is in the case of limited dividend housing corporations.


[Stage Direction]
Resolution agreed to.
15.	That a special tax he imposed equal to 100 per cent of the'profits made by persons who between January 31, 1945, and August 7, 1945, purchased bonds or debentures of or guaranteed by the province of Alberta which were outstanding on January 31, 1945, and were included in the debt reorganization proposal of the provincial government, dated July 16, 1945, such profits to be the difference between the purchase price and the selling price of the bonds or debentures, if sold by such purchasers, or the difference bettveen the purchase price and the total value of rights accruing to the purchasers on implementation of the provincial government conversion plan, as the case may be.
James Lorimer Ilsley: In connection with plans
worked out last spring for repayment of Alberta bonds, the government undertook to recommend a tax of 100 per cent of profits made through the purchase of such bonds in order to forestall speculative gains on the part of those wrho might trade in them. The tax will apply to any profits made on Alberta bonds purchased between January 31, 1945, and August 7, 1945, by which latter date the

Income War Tax
full terms of offer of the Alberta government had been made known, and time had been given for full publicity.


Harry Rutherford Jackman: On what day did the
minister make the announcement that profits between January 31, 1945, and August 7, 1945, would be taxable at the rate of 100 per cent? Was it not retroactive from the time he made the statement?


James Lorimer Ilsley: Yes. It was made after January 31; I do not know the exact date.


Harry Rutherford Jackman: I have no particular
disagreement with this resolution, except that I could not allow it to pass without commenting upon the importation into our whole tax system of a principle to which we have not given cognizance before either here or in Great Britain, namely, the taxation of capital profits. There were, however, in this case certain extenuating circumstances. The minister did not .make his statement until after the deadline date of January 31, and that is an infringement, if you like, of the rights of certain people. There was no secret about the matter. Everyone knew the refunding was under negotiation, but the minister in a wave of righteousness, if I may so describe it, made this exceptional ruling. It would be interesting to see how it will be possible to enforce this particular provision, which is a most unusual one. I do not disagree with it, but in the circumstances it was hardly necessary. As I say, it does import into the taxation sysfem something to which I dp not think the minister wishes to give general recognition.


[Stage Direction]
Resolution agreed to.
16.	That the right of a corporation whose principal business is the production, refining, or marketing of petroleum- or petroleum products to deduct 40 per centum of the exploration costs and drilling'costs of oil wells which prove to be unproductive be extended to wells spudded in before the thirty-first day of December, 1946.
Eric Bowness McKay: How is the productivity of wells determined? I have seen accounts of wells that had been capped, and no one knew whether they had been producing oil or not. They were in the exploratory stage at one time and were then capped. Is that a means of getting by the payment of income tax, or is there a method of checking to see whether they are productive?


Arthur Leroy Smith: Would the minister take resolutions 16 to 20 inclusive, which cover the oil well situation, and let u*s know what differences there are in the present legislation and what is contemplated under this resolution? With respect, Mr. Chairman, I think, if that were done, we would really 47696-1711
know what we are talking about, and it would cover the question which the hon. member over here had in his mind.


James Lorimer Ilsley: There is no change as far as the oil industry is concerned. I think all these resolutions deal with oil and natural gas; it is just an extension of the present legislation.


Arthur Leroy Smith: We are dealing with resolution 20.


James Lorimer Ilsley: That is right; it is just an extension of the present legislation for a further period.


Arthur Leroy Smith: This resolution is of interest to those of us who live in Alberta, and it has prospective interest, I am sure, to my hon. friends from Saskatchewan. I am asking tfye minister to give further consideration to one aspect of the picture. May I also say that I came down to see him in a private capacity some years ago. By that I mean that I was acting for a number of people and my trip was 100 per cent unsuccessful. I appreciated his position and he explained it to me quite clearly. However, in our business we occasionally get paid whether we succeed or not. I enjoyed the trip to Ottawa because I had lunch with him at his desk. I know he drinks milk at noon. That is all I came, to know. The point I am trying to make is this: Lest members in this honourable body think this is a small show -I have mot. my file with me-I wish to give one figure. Turner Valley is on the decline. That was our oil field. To-day it is producing
800.000	barrels a month, and that is not milk; that is a good deal of oil and it is on the downgrade. They have received some assistance in what are known as deep-test wells
The present programme, which includes that in the province from which my hon. friena comes, is greatly extended and is covering the prairie region. It is true that wells drilled there cost much less than wells drilled in Turner valley where the wells go down to
10.000	and 12,000 feet. If you drill an oil well there for $200,000 or $250,000 you- are doing very well. Out on 'the prairie they can drill them for $30,000. I think that is to a depth of 3,000 feet, and probably that will include some production machinery. In other words, the cost increases as the depth increases. To those deep-test wells the minister has given consideration and I am not asking that it be altered in any way.
We have heard discussions in this house to the effect that coal is a national industry. I am sure that hon. members from Quebec, Ontario and Manitoba consider precious metals a national industry. The point I make
Income War Tax

. is this, that the search for oil is just as much, and in fact more, of a national industry to us than any of those others. Why? With 800,000 barrels a month at the present time vve have never produced enough oil in Canada even to supply the Winnipeg market. We have at all times had to import oil to take care of the demand there. The reason is, of course, that the horse-anddouggy days in farming are gone-not gone, but nearly gone, I hope. I am glad the hon. member for Lethbridge is not in his seat at the moment, or he would accuse me again of doing harm to some other western industry. What I have in mind is this: The world operates on oil; there is .no doubt about that. I am asking that the minister have some regard to these explorations which are going on, other than deep-test wells, in the prairie areas. Turner valley is in the foothills, the sub-mountainous area, if one might use that expression. *
What has happened is this. In western Canada to-day we have a search and an exploration going on which is new in the whole history of this country. Every United States company of any account or size is in there. They have seismograph and geophysical parties there. I am not sure' that I know what these words mean; they are big words and I like to use them. They are spending a tremendous amount of money on these parties. The reason they are doing so-and I got this from the president of one of the largest companies whom I saw only a few months ago- is that in the United States they have a ninety per cent exemption of income tax on explorations. Therefore, do not let us think in western Canada that they are attracted out there because they like us, or anything of that kind. They have a wonderful exemption over there.
Let no one think I am making a percentage comparison between Canada and the United States, because so many other elements enter into that calculation. While we have forty per cent exemption here and they have ninety per cent there, the figures do not mean just that. Somebody said that figures never lie, but there is always the converse of that proposition which I am sure it would be unparliamentary to mention. I am not suggesting that this is the comparison, but I am frankly admitting and saying that the tremendous exploration programme we have at the present time comes from that.
I am asking the minister that with respect bo this prairie development, which is an entirely different show, we have some write-off. The minister says that there is no change; I am 
accepting his word for that. Aside from the ordinary drawback of forty per cent and twenty-six and two-thirds per cent and whatever it is on the shallow wells, there is no special exemption for prairie wells as there is for deep-test wells. I merely ask that they be given further consideration, because we cannot get our coal down to the east on account of the freight rate of $8; but we can build pipelines and carry oil. That barrier will never exist between eastern and western Canada if we can develop oil in real quantity. You can build pipelines a lot cheaper than you can build railways, and once you have them built they do not cost as much to operate as railways do. I am merely asking the minister-and I see his most excellent adviser in front of him, who, I think, is Doctor Eaton, who has always been sympathetic to this thing-to have just a bit of regard, a good deal of regard, for that prairie element which permits the newcomer and smaller companies to try hard to get some oil. Remember that oil was never discovered in North America by the big companies. History shows that it was discovered by the little wild-catter, and that is the chap I am thinking of at the present time.


Ernest Bertrand: The big companies buy the small companies once they have discovered oil.


Arthur Leroy Smith: The hon. member is quite right. I have had a little experience in that regard. I made $2.50 myself by selling out to the Imperial Oil. They do absorb them, but remember from little things great things have grown. We have two or three companies out there now, the Anglo-Canadian, the Home, and so on, some of them just localized in Alberta, which have really amounted to something.
The hon. gentleman to my left, the hon. member for North York, is sitting here all atremble waiting to talk about mining. We are asking from the minister and those able people who advise him, nothing more than to be put on a level with mining. Down here some years ago-and I was here-exemptions were granted to new enterprises until so many years after they had mills in operation. Their business is the same as ours. If you put a hole in a beer barrel and let the beer run out, it will be all gone. Oil and gold are in exactly the same position; they are not renewable products. It is not like electricity, for instance, which comes from water power, or anything like that. Say I drill a well which costs me $200,000. I strike oil and I take out my $200,000, which I put into another hole. I have not made any money; I

Income War Tax
am just where I started, except that I have paid income tax on the product of the first well. In other words, my over-all position has not given me a profit.
I do not want the minister to think I am going so far as to suggest that we should be allowed to do that sort of thing indefinitely, because then no one would pay taxes. We would be merely building up reserves. Suddenly we would become a big outfit and perhaps would be rich before you found us out, though I know you are pretty good on a hot scent. My thought is that you might help us in regard to those people who are wild-catting, because it is nothing else in the prairie area. I know you have read in the newspapers that So-and-so has brought in a good well. Probably it kept going for four or five days and then salt water came in. There are so many difficulties and intrusions, with this, that and the other thing happening, that this is an extremely hazardous business. So, to conclude, before you bring down this legislation, would you please give some consideration to the problem we have on the prairies in connection with the oil business?


Eric Bowness McKay: I think the minister passed over my question rather lightly. I asked whether or not there was any way for the Department of Finance, through its supervisors, to determine the productivity of these wells. I had intended to follow that up; and while the hon. member for Calgary West has ably presented the case for the development of oil, I wish to deal with the matter from another angle. I consider that the search for oil is important because oil is a natural resource and should be developed; and I feel disposed to say that the United States system of a ninety per cent deduction for exploratory costs is the right one.


Some hon. MEMBERS:: Hear, hear.


Eric Bowness McKay: Do not misunderstand me. On the other hand the Department of Finance could well get that money back by establishing a substantial royalty on the production of the oil that is found. My leading question this evening was, how does the Department of Finance determine whether or not these wells do produce? How do we know that these wells all through western Canada are or are not in production? I have seen a great many wells that have been drilled and capped. No one seems to know whether or not they ever struck oil. No doubt somebody knows, but certainly the general public does not know. Why are these oil companies holding back? It is obvious to me there is a reason. Is it because the deduction allowed
is not sufficient? Is it because of the threat of a royalty? There must be some reason. I suggest that we give a cutback of ninety per cent, let these oil companies go to work and explore, and then put a royalty on the production; and we will get the oil.


Arthur Leroy Smith: The dominion has no royalty; that is a matter for the provinces.


James Lorimer Ilsley: I do not know that I understand the United States system, but I think they simply allow these exploration costs as deductible expense for tax purposes. If they have a ninety per cent excess profits tax and are in that category, then the amount they save in tax is ninety per cent of their exploration expense. It sounds better than it really is, because when taxes come down in the United States, as they will on January 1, 1946-


Harry Rutherford Jackman: Yes, they are down substantially.


James Lorimer Ilsley: They are down substantially, I believe to forty per cent. So that from January 1 they will get a forty per cent advantage instead of a ninety per cent advantage; they will get forty 'per cent of their exploration expenses off their tax bill instead of ninety per cent, which is the same as our provision under resolution 16.


Eric Bowness McKay: I did not understand that was considered an excess profits tax. I thought that was a deduction from exploratory cost.


James Lorimer Ilsley: It was the exploratory cost. The amount of the exploratory cost was deducted from their profits for tax purposes. If they were paying ninety per cent of those profits in taxes, then they -were able to deduct from their tax bill which they paid to the United States government ninety per cent of the exploration expense, but only by reason of the fact that they had a ninety per cent tax. When they have a forty per cent tax that ninety becomes forty.


Eric Bowness McKay: Would the minister continue and tell me how they check on the productivity of these wells?


Arthur Leroy Smith: Perhaps I might ask the minister a question which will help my hon. friend.


James Lorimer Ilsley: I shall have to come back to that question later.


Arthur Leroy Smith: May I say the statement of the minister with respect to taxation in the United States and Canada is
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entirely accurate. That is why I said that when we spoke of forty per cent and they spoke of ninety per cent, they were not comparable figures. With respect to the other question the hon. gentleman asked, for a long time I have heard exactly what he has been saying, and I am one of those who thought [DOT] that was the situation. We heard of a big corporation who had gone into a place, drilled their wild-cat wells, made a discovery and then capped it because they did not want the oil to come on the market. Then, having capped their well and said it was a failure, they bought up all the ground around and had an oil field. I heard that story so often I almost believed it, but I made a number of investigations-[DOT]


Eric Bowness McKay: You do not believe it now?


Arthur Leroy Smith: As far as I can find out there is not a word of truth in it anywhere.


Eric Bowness McKay: Of course I will take your word for it.


Arthur Leroy Smith: You need not do that, because the answer is comparatively simple. When you have oil in a country such as ours, where you have a price that is profitable and where you cannot even begin to supply the present market, it is beyond reason that anyone should cap an oil well. I think my hon. friend is more interested in the gas sections, because in Saskatchewan they have not even obtained gas yet, except a little around Unity and a few places like that. Let me put it in this way: they do not supply anyone with it yet, because they have a bottle-neck they have not been able to overcome.
There is no doubt that the ninety per cent figure is quite right. I have gone into this matter with tax experts, some of them with companies right in the city of Calgary; and as far as the ninety per cent is concerned, if you figure what it is taken from and take our forty per cent and twenty per cent we are in a better position than they are. I am sorry to support the government, but that is the simple fact.


James Lorimer Ilsley: In regard to the matter of unproductivity or non-productivity, the test is . abandonment. The section of the act is section 8 (6), and the unproductive wells, forty per cent of which may be deducted from the tax, are wells which are abandoned within six months after completion of drilling. I do not think there would be any fraudulent advantage there.


An hon. MEMBER:: Does the minister suggest that capping a well is abandoning it?


James Lorimer Ilsley: No.


Arthur Leroy Smith: Would the minister answer the question as to whether he would give consideration to this little prairie place of ours? Then, perhaps I might be of some assistance 'in connection with the abandonment of wells. I do not know what happens in the benighted province of Saskatchewan, where they do not know much about this business, but let me say that in Alberta we have an oil and gas commission, which is a provincial government show. However, the well must produce this log-and for those people who do not know what a log is, I will say it is the history as one goes down to the bottom of the well. It is not the same thing as hangs out from the tail end of a ship. No well can be abandoned without examination by experts who are engineers on that board. Further, no one can drill a well without having put up sufficient money in cash to pay for the abandonment, in the event of the Compaq' itself not abandoning the well, or not doing the work of abandonment. That means going out and shutting off the water, and so on. With great respect, let me say that the minister would have no difficulty in finding out whether a well has been properly abandoned, if he will remember that once wells are abandoned they are through, because the pipe is pulled in and there is nothing more except what used to be a hole in the ground.


James Lorimer Ilsley: On the question raised by the hon. member for Calgary West with regard to the extension of this very generous tax privilege to companies which drill deep test wells-I mean the extension to a different type of well-I suppose I should not say that I will not give consideration to it. However, representations have been made, and I am somewhat reluctant to extend a privilege of that kind. In effect, the dominion government is paying half the cost of drilling those wells, and if they turn out to be good wells, the company, and not the government, owns them.


Arthur Leroy Smith: But (he dominion government gets the money back, do not worry about that.


James Lorimer Ilsley: It can be defended in times when the need for oil is great, but it cannot be defended forever, and I do not know whether an extension of the privilege could be defended at all. The reason for such a distinction between deep-test wells and other

Income War Tax
wells is, as I understand it, that the risk is very much greater-perhaps I should not say the risk; the expense is very much greater. You have to get an inYestor to put in a lot more money. Therefore there is some reason for saying, "We want oil. This is going to be a very expensive proposition. You will have to put up half the money-and that money will be a lot. Therefore we will put up the other half." But with a verj' much less expensive operation I do not think there is the same justification for the dominion government's putting up half the money. That is what it amounts to, stripped of its camouflage-and perhaps I should not use that word; I shall say, stripped of its other aspects.


Arthur Leroy Smith: The minister has enunciated a principle. A deep-test well is nothing more than a wild-cat. That is what it is. It is an effort to develop a new body of oil. Your first deep-test is going into the producing horizon, and going down to- well, I cannot remember those fancy names, but I believe it is called the Devonian, or something like that.
In other words, the principle is this-and it is a sound one-that the government has been prepared to assist those persons who are trying to develop new areas or new fields, whether they lie side by side or one above the other. That is what the expression "deep-test" means. That being the principle, I am utterly unable to understand the minister's position. Let us say that a deep-test will cost $300,000-and that is not unusual. I know the Imperial Oil company spent over a million dollars in one hole and they got nothing. So that when you get into this business you can very easily get rid of money, almost with the same facility that members of the House of Commons get rid of it when they are spending somebody else's money. The principle is the same.
It seems to me that the contribution should be made on the same basis, the whole purpose being to find new fields. Why make a distinction then, between an expensive process here, and an inexpensive one over there? I ask the minister to give that a little bit of consideration, because, remember, if we get a new' oil field, the money the government has exempted from taxation-and you never had it, you know-will be returned to you at least a thousand times; and if they could have counted up farther than that when the Bible was written I would have used that expression, too.


James Lorimer Ilsley: I do not know whether I am expected to reply. I may say that I am not enthusiastic about this legislation-and
perhaps I am being too frank. I would be more enthusiastic if it had been more successful. I am willing to admit that private investors have put up a lot of money. I admit, too, that th^y have lost a lot of money. We, too, have put up and have lost a lot. As the hon. member says, we do not have it; but we certainly would have had it, had it not been for this provision.


Arthur Leroy Smith: You would have killed it, if you had not done that.


James Lorimer Ilsley: No, because the taxpayers to whom we gave these tax credits would otherwise have paid us a tax. They were all perfectly good.


Arthur Leroy Smith: Not all of them; most of them would have been broke.


George Hugh Castleden: How many wells in which the government undertook to pay half the cost turned out to be successful?


James Lorimer Ilsley: I do not think one has been successful. There have been twelve or fourteen altogether.


George Hugh Castleden: Can the minister tell us what it has cost the government?


James Lorimer Ilsley: Yes, I can find that out.
I knew it about a month ago.


Alan Cockeram: And the total number of feet drilled in those holes?


James Lorimer Ilsley: I do not know that.


Alan Cockeram: It would just be a
matter of multiplication.


James Lorimer Ilsley: I shall get that.


Arthur Leroy Smith: I could do it now.


Douglas Scott Harkness: As the representative of the constituency in which Turner valTey is situated, I should like to express the appreciation of the oil mem to the minister for extending this fifty per cent drawback in the case of deep-test wells. I know that a considerable number of the companies which have been engaged in drilling operations in the Turner valley are now hoping to undertake exploratory oil operations in the plains area. One of the things which will restrict their operations or in some cases probably prevent them is the fact that they will not get the fifty per cent drawback in regard to wells they may drill in the plains area. As has been pointed out by the hon. member for Calgary West, Turner valley has now passed its peak and will be a declining source of oil from now on. As far as oil production in Canada is concerned, it is
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absolutely essential that new fields be discovered. Therefore the necessity for exploratory work is greater now than it has been in the past. I should merely like to support what the hon. member for Calgary West has said, and I think the' government would be making an extraordinarily good investment by extending this concession to wells drilled anywhere, whether they are deep or shallow wells. There is no doubt that if an oil field even approaching Turner valley in importance is discovered, the government will receive back a great deal more than they would have failed to collect because of this concession.


[Stage Direction]
Resolution agreed to. [DOT]
17.	That the right of a corporation, association, syndicate or exploration * partnership, formed for the purpose of exploring and drilling for oil, to deduct 26f per centum of exploration and drilling expenses be extended to expenses incurred in 1946.
Resolution agreed to.
18.	That the right of a corporation, association, syndicate or exploration partnership, formed for the purpose of exploring and drilling for natural gas, to deduct 30 per centum of exploration and drilling expenses be extended to expenses incurred in 1946.
Mr. SENN:: I should like to say a word about the production of natural gas in certain areas of Ontario. It happens that there is a natural gas field in the district from which I come. The production of natural gas is an important industry in that particular part of the province. Natural gas has primarily two uses. First, it is used to heat and light houses and, second, it is used by certain industries where heat is needed or for processing of one kind or another. A great many people have gas stoves and other types of equipment in their homes, and these cannot be converted to the use of any other type of fuel. Millions of dollars have been expended in equipping those homes, and it is essential that these people continue to get natural gas in the days to come. The development of the field and the maintenance of the supply is contingent upon drilling operations. These are shallow wells; they are not like the wells we have been talking about in Turner valley. The people who are interested in the production of gas cannot understand why a forty per cent deduction is made in the case of oil wells and only twenty-five per cent deduction in the case of gas wells. The need for drilling has become greater as time has gone on, but it has actually dropped off to a certain extent. These companies do not want to spend all their revenue in the drilling of wells and they are anxious indeed that some further provision should be made. Why is it not possible at this time to allow a deduction 
of forty per cent for the drilling of natural gas wells as well as for oil wells? This is a most important industry in the section from which I come. Cities like Hamilton, Brantford, St. Catharines, Welland and so on use gas in large amounts for heating purposes in homes and for processing of different kinds of new material. Why is it not possible at this time to increase the deduction to forty per cent just the same as for oil wells?
Mr. IiLSLEY: Because the depletion rate is twenty-five per cent in the case of natural gas; twenty-five per cent, of forty is ten, and ten taken from forty leaves thirty. That is probably Greek the way I have stated it, but that is what is done. If the hon. gentleman wants me to do it, I shall get a statement to show just why that is done. It is in the form of a tax credit, but the tax credit is arranged on the basis of the expenditure being a deduction .from income for income tax purposes. If you said that the expenditure was deductible from income for income tax and excess profits tax purposes, that would be one way of stating it, but you can state it in another way, in the form of tax credits. These tax credits are worked out in such a way as to be the equivalent of the rule or formula j I have just enunciated.


Mark Cecil Senn: I wish the minister would look over the matter once more and see if some adjustment cannot be made.


James Lorimer Ilsley: No adjustment should be made because the two classes of company are being treated exactly the same. The expenditure is allowed as a deduction from income for taxation purposes on the assumption that none of the companies is in the excess profits tax class. If you have a company which is subject to the forty per cent corporation tax and you were, to allow the expenditures as a deduction from income for income tax and excess profits tax purposes you would get exactly the result that you would get by applying this formula. The reason they vaiy is that there are varying depletion rates.


Mr. ADAMSON:: 
James Lorimer Ilsley: 
Agar Rodney Adamson: I suggest that the minister look at the United1 States law, where 100 per cent is allowed for exploration purposes.


James Lorimer Ilsley: Yes, where there is a 100 per cent tax. They are allowed that as a deduction from their profits for tax purposes.


Agar Rodney Adamson: I realize the difference between ours and the United States system, but I think we should allow every dollar that is expended for exploration purposes irrespective of the percentage that it may be of profits or anything else, in the hope that some day we may discover an oilfield of major proportions in Canada, of sufficient proportions to compare with either the Oklahoma or the Texas field. But unless we are prepared to allow every dollar "spent in drilling as a deduction from taxation we are not going to encourage the development of the oil industry in Canada. I suggest to the Minister of Finance in all seriousness that its development is going to take a lot more money than is perhaps in the minds of many of us at the present time. It is not a cheap thing to do. It takes millions of dollars to bring in an oilfield. One well does not make an oilfield, any more than one swallow makes a summer. Unless we are prepared to spend and to encourage people to spend major sums of money we are not going to develop; we are not even going to find out whether we have a major oil Dome which some of the oil companies think we have in western Canada. I suggest that we let this resolution stand, Mr. Chairman, until to-morrow morning.


William Ross Macdonald: Resolution 17 was
carried some time ago, and the hon. member for York West was referring to resolution 17 by unanimous consent.


Mark Cecil Senn: I should like to know what
the minister has to say about natural gas.


Agar Rodney Adamson: I suggest, Mr. Chairman, that resolutions 17, 18 and 19 stand.


James Lorimer Ilsley: That is all right.


William Ross Macdonald: The record shows that
resolution 17 is carried, but I take it that the committee is agreeable to its being reconsidered.


James Lorimer Ilsley: Just for the sake of the
record, Mr. Chairman, let us agree that resolution 17 may be discussed on resolution 19, or something like that. That carries the same percentage.


William Ross Macdonald: Then resolution 17 may be discussed on resolution 19, and resolution 18 is not carried.
Resolutions 18 and 19 stand.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Ford Motor Plant Strike
[Stage Direction]
Friday, November 30, 1945.