Mr. MACKENZIE KING (leader of the Opposition) :

I do not know whether my right hon. friend (Mr. Meighen) had in mind starting a second attack on the Government from his own side of the House, but if he desires to continue the discussion further, I would draw his attention to the fact that it is now Tuesday morning, and as we have been in session a long time, he should now allow the House to adjourn.

Rt. Hon. ARTHUR MEIGHEN (Prime Minister) :

I must say frankly that I was not inviting any attack from any side of the House or thinking that a government so undeserving of such would ever receive it.

Oh, oh.

Mr. MEIGHEN:

Now that it has come I would prefer to have it over, if that is at all possible, although I do feel that we have sat a long time. While I am on my feet I will set an example in brevity, without discourtesy, I hope, and endeavour to see if it will be possible for The Government to survive the last attack.

The oil regulations are under fire tonight from the hon. member for East Edmonton (Mr. Mackie) on the ground that they are too exacting as against the oil prospector or developer, and that as a consequence there will be reluctance on the part of those who otherwise might perhaps journey into the far northern Territories and stake claims there. If I caught the substance of his charge, it is this: that too high rentals are taken, that insufficient inducements are given, and that consequently there can only be development by men of large means. Now, I am quite free to admit that under the regulations that we passed only a few weeks ago there can be actual development in that district only by the investment of large sums of money. And no regulations that would protect the public interest at all could be operative that would permit development except by the expenditure of large sums of money, for the simple reason that otherwise development cannot be undertaken. The regulations were designed to apply to an oil field, not wholly in prospect but actually, to some extent at least, proven. The regulations that were in force before were in considerable measure attractive to the prospector because they were applicable to a field only in prospect and in no degree at all proven. They were changed because by the discovery of oil at Fort Norman, some fourteen hundred miles north of Edmonton, the Territories oil field became an established field-of what extent we do not know-and thereafter it was felt the regulations should be such as would do ample justice to the general interest of the whole country in that field.

Now, what are those regulations? They provide that any person of eighteen years of age or upwards can stake a claim not exceeding in all 2,560 acres or four sections of land, and he may stake it in four different areas, each being rectangular and of any size he chooses. Upon staking the claim and complying with the regulations-which [DOT] must be done within a certain time after the staking, I think thirty or sixty days-he pays 50 cents an acre the first year, and thereafter $1 an acre for the land that he retains. The regulations also provide that he must within two years have a drilling outfit on the ground capable of drilling for oil within the area staked, and if he has that drilling outfit on the ground, showing that he is a real oil borer, and not merely a company promoter, then the rental for the second year is not charged; and if in the

third year he proceeds to drill, then for that year as well the rental of $1 per acre is not charged, but he must pay in any event on the oil that he produces a royalty for the first five years of not less than 2i or more than 5 per cent; and for the next five years a minimum of 5 per cent and a maximum of

10 per cent. Those royalties virtually amount to the entire rental that he pays to the crown. He is permitted to retain a quarter of the land he stakes, and the other three-quarters revert to the Crown; but he can choose the land he retains anywhere within the area that he stakes so long as he makes it a square piece of land.

Now, it is argued by the hon. member that land may afterwards be taken up by somebody in the city of Ottawa, and that the man who went up there and took the risk and discovered the oil will derive no advantage from the other three-quarters, although he paid rent on that land at 50 cents an acre. It is true he paid that rent, but it is not true that anybody in Ottawa could get that land; it reverts to the Crown solely. It is quite possible that later on it might be found equitable in the regulations providing for the disposition of the other three sections, or three-quarters of the .land staked, that the man 'who staked the first 640 acres should have a prior claim upon it.

These regulations have been framed mainly after the regulations applicable to the Alaska oil field, although there is not a proven field as in the Territories. But it may be afterwards held equitable to do as is done in Alaska: to give a prior claim to the entrant for the 640 acres, and to provide, say, that tenders shall be called on a royalty basis for the oil in the other three sections of land, and that after the highest bona fide tender is received the entrant for the 640 acres shall have the right to that

011 at the price tendered by the highest bona fide bidder. That is not the law today, it is true; but it is the law to-day that nobody else can get that oil. That portion of the land originally staked is simply held until it is found what is going to be equitable having regard to actual development. And it is quite within the power of the department to issue further regulations providing that a fair and just preference shall be given to the man who has taken the risk and made the discovery.

Mr. MACKIE (East Edmonton):

Thatis all I am asking.

Mr. MEIGHEN:

As to what shall be the general policy with regard to this oil, speak-

ing on the subject a few weeks ago I referred to the regulations that had been in force for many years excepting oil from royalty. It will be observed that as regards this field that exemption does not apply. Not only is that so, but regulations are now in force specifically requiring royalties-a minimum of 21 per cent and a maximum of 5 per cent for the first five years, and thereafter a minimum of 5 per cent and a maximum of 10 per cent. In the United States, I believe, provision is made whereby a preference is given as to the rest of the land to the entrant for whatever share he is entitled to there on a royalty basis of 121 per cent. Something like that might possibly be later on found suitable in Canada. But it does seem to me that the regulations as they stand now, having in view the fact that no provision is yet made for the disposition of the other three sections, are not prohibitive by any means and should not deter anyone who really wants to develop oil in that territory, because anyone who really wants to do so must certainly have money at his back; otherwise he has no real intention of developing oil. The cost of getting in is great; the cost of boring is high; the cost of maintenance is very high; and after the oil is bored it must be got out, and that cost is very great indeed. It is estimated that a pipe line from that district would cost twenty or thirty millions of dollars. Now, there is one object to be served above all others, and it is this: to take care that the regulations are such, so far as we can frame them, as to discourage the practice of promoting companies and' selling stock where there is no real exploitation under way; the regulations are designed to forbid, as far as they can, that being done. It does seem to me that the first requisite is that the innocent public shall be protected against those who look upon that district as merely a chance to fly kites and to do an oil business upon paper. The field should be reserved for those whose intention is to get oil and to serve the needs of the public by getting oil. There is no preference given to anybody in this regard; any who have the money and who intend to get oil will go up under these regulations; there is no reason in the world why they should not. It may be found by experience that preference should be shown in advance to those who take the one section. That is the only thing that seems to me to be 'worth consideration now, and that is under consideration.

Mr. LEMIEUX:

Will my right hon friend pardon me if I interrupt him? At the beginning of the war, in the session of 1914 or 1915, we enacted a law giving the preference to the Home Government in respect to oil produced in Canada. Has that statute been made use of?

Mr. MEIGHEN:

No. That is not quite the fact, though I know what the hon. member refers to. A regulation was passed at the suggestion of the Home Government reserving from entry oil in the forest reserves and parks owned by the Crown, and that regulation was fully complied with until a. few months ago-if my memory is correct, about nine months ago-when certain lands in the Rocky Mountain Reserve-I am not sure whether it applied to others or not- were opened under the oil regulations. The idea was in that reservation that oil was going to be a war necessity of the future and that unless the necessary steps were taken the oil of Canada might get into the hands of citizens of other countries and the purposes of our own country be forestalled. I think that was the idea underlying the reservation. Against that, though, it can be said-and said very emphatically after the experience of the war-that even though leases for oil lands be held by outsiders, even though others come in with their capital and get these leases and own them to the exclusion, say, of Canadian or British capitalists, the Government of Canada in time of war has absolute control of the whole situation; can prevent the export of oil or the export of anything else-indeed, in time of peace can do the same.

Mr. LEMIEUX:

Is there not a clause in the leases to that effect?

Mr. MEIGHEN:

Yes. But aside from

that, the power of expropriation exists, and the course of the war showed that there really was not the peril in that regard that was anticipated. Consequently I as Minister of the Interior did not see that we were serving the interests of Canada by continually tying up these territories. I thought it was better that we should find out just what they contained and reserve to the whole country a just and fair interest therein. Special regulations, therefore, were made applicable to the oil in the Rocky Mountain Reserve, holding a very considerable proportion for the state in case oil should be discovered, much along the line of the regulations that are not under discussion. These regulations, let me explain to the House, are different for the Northwest "Territories from those that

57i

apply to the provinces. The reason is this: in the provinces there is no proven field as yet on any considerable scale; it is largely a matter of prospect and hope. In Alberta three refineries, I think, or three oil wells, are now being developed, but the amount of production is not relatively very high. In this Fort Norman well the flow is large. The best reports would indicate that the flow is very considerable indeed- that there is a very large field of oil; how much it will prove to be, only time will tell. The flow is on such a scale that undoubtedly it is a field of very considerable dimensions. The regulations, therefore, applicable to the Territories, fix definitely the royalty that can be charged, and they are such as not so much to encourage people to come in to look for oil, but to encourage people to go in who are going to bring oil out. That, ir, one word, distinguishes the regulations that should apply and do apply in the case of a proven field from those that are more applicable to a field that is still in prospect.

Now, I have no word at all to say in derogation of the rights of the hon. member (Mr. Mackie) to put this resolution on the Order Paper and to address the House upon it. I know that he as a member for his district is vitally interested in the prospect of oil development in the Territories as well as in his own province. But I submit to him that inasmuch as the regulations stand to-day in such shape that the department is quite in a position to give, if experience shows it to be necessary, a fair preference, as respects the other three sections, to the entrant for the one section; and inasmuch as up to now others cannot enter for these other three sections-the state only is interested in them; they are reserved to the state and to the state alone- it is scarcely right to ask the House to find that there is not sufficient inducement offered to the prospector, or that the oil regulations are such as to throw undue restraint around the development of the industry in the Northwest Territories.

Mr. MACKENZIE KING:

Mr. Speaker, I submit to my right hon. friend that it is unreasonable to ask the House to proceed any further with the discussion this evening.

Mr. MEIGHEN:

I think we should close, too. I am sure the debate is over; I think that with all I have said, perhaps the hon. member will withdraw his motion.

Mr. MACKIE:

Mr. Speaker-

-

Mr. SPEAKER:

I would direct the attention of hon. members to the fact that if the hon. member addresses the House at this stage, the debate will be closed.

Mr. MACKENZIE KING:

Is it not possible that other members may wish to speak to this resolution? This is an important subject; it amounts to a charge against the Government, and I do not know whether my hon. friend is prepared to withdraw that charge at the present stage. It is unreasonable to expect hon. members, after midnight, to take up an entirely new subject, and I do not think my right hon. friend (Mr. Meighen) was fair to the House when he caused us to proceed with this new subject at a late hour.

Mr. MEIGHEN:

It is an old subject.

Mr. MACKIE:

Other gentlemen informed me they wished to speak on this matter; but I had one purpose to serve, and that was to bring to the attention of the Government what I think I have presented clearly, and if I had an opportunity to reply, I think I could make it yet more clear that the regulations are not as they ought to stand. I do not, however, wish to press this resolution to a vote, and unless hon. gentlemen really want to speak on it, I will withdraw the resolution after making one or two comments on the remarks made by the Prime Minister.

Mr. SPEAKER:

Is it the pleasure of the House that the hon. gentleman shall have leave to withdraw his resolution?

Mr. MEIGHEN:

I have no objection to the resolutidn being withdrawn, but the hon. gentleman said that he would like to make one or two comments by way of reply-

Mr. SPEAKER:

It is rather an unusual situation. The hon. gentleman rises to close the debate. He must either close the debate or withdraw the resolution.