Mr. D. M. KENNEDY (West Edmonton):

I wonder whether the Minister of Railways can tell us to-day anything more about the Peace

river transportation question. I understand he has had an interview with the heads of the railways, and he could possibly tell us whether any recommendation has been made or whether it is impossible to come to an agreement.

Hon. GEORGE P. GRAHAM (Minister of Railways): If my hon. friend asks me

whether I have learned anything, I can only say that I am learning every day something about Peace river. Yesterday I learned a good deal, and among other things both railway heads told me that the solution of the Peace river problem was one of the most difficult that either of them had ever come across in all his experience. Further than that I think I have nothing to say at present.

Hon. R. J. MANION (Fort William and Rainy River):

I want to call the attention of the Prime Minister (Mr. Mackenzie King) to a passage in a letter which I have received referring to his department. It is from one of the officials of the Great Lakes and St. Lawrence Tidewater Association and I shall ask for information on the basis of this paragraph:

Some weeks ago our state department despatched to your government what seemed to close the correspondence concerning the reference of the St. Lawrence project to the Intemationail Board of Engineers. In that note, the Secretary of State deferred to Canada's wishes in the matter of the time it should be made public. It was thought, however, that it would be immediately given to the press.

Has the Prime Minister any information to give to the House in regard to the progress being made?

Right Hon. W. L. MACKENZIE KING (Prime Minister):

The department is in correspondence with Washington at the moment as to the simultaneous publication of the information in 'both countries. I expect this will be in another day or two.

Mr. E. J. GARLAND (Bow River):

May

I ask if the government's consideration of the question of revaluation of soldiers' land, stock and equipment has yet borne fruit?

Right Hon. W. L. MACKENZIE KING (Prime Minister):

I think the matter is

under consideration by the Minister of Immigration and Colonization, which department is concerned with matters pertaining to

The Budget-Mr. Spencer

soldiers' land settlement. I understand the Minister has something that he intends to present to the House shortly. I think perhaps he had better speak for himself when he is in his seat.

Mr. H. E. SPENCER (Battle River):

Mr. Speaker, in rising to take part in this debate I wish, along with other members who have spoken before me, to express my regret at the Minister of Finance (Mr. Fielding) not being able to take his seat owing to ill-health. I intend to criticize the budget that is before us, but in doing so I do not wish to align myself with any hon. member who has implied anything against the personal integrity of the Acting Minister of Finance (Mr. Robb) whom I hold in the greatest personal esteem. I do, however, criticize the drawing up of his budget statement, in that I do not think it is a correct one, I do not think it is a fair statement to place 'before the people. I refer particularly to what I might call the financial gymnastics which the Acting Minister of Finance has gone through with respect to the interest owing on the loans to Roumania and Greece. This interest has not been paid, but at the same time it is treated as an asset and, what is more, added to the so-called surplus, making that surplus $5,823,162. I prefer the more logical arguments of the exMinister of Finance (Sir Henry Drayton), which go to prove that instead of having a surplus we have a deficit of no less than $16,204,000.

There is another important side to this question, and that is, it is very misleading to the public, because if the people think there is a surplus they will naturally expect a reduction in taxation. In view of the fact that we have no surplus but a deficit, this reduction is something that cannot very well be brought about. Furthermore, however small a deficit it may be, it is a very difficult task indeed to reduce taxation under our present system. It is difficult because some of our greatest liabilities are brought about by so-called "uncontrollable expenditures." But what are these uncontrollable expenditures? Mainly they are interest on our national debt, and we are to-day paying in interest on that debt as much as it cost to run this country some eleven years ago. It is only fair that the public should know the exact state of our finances, and whoever is in charge of the finance department of the country should not hesitate to put the figures before the public and let them judge for themselves the impossibility of reducing taxation to any large extent.

Now, what is the extent of our national debt? I am going to give some figures with regard to our federal, provincial and municipal debts, taken from the Canada Gazette of December 31, 1924, and from the Canada Year Book for 1923. These are the figures:

Gross debt, Dominion $2,940,099,008 35

Securities guaranteed by Dominion:

As to capital $423,161,713.83

As to interest only.. . 167,349,218.72

590,510,932 55

Funded and floating debt of provinces, including guaranteed securities, but

excluding sinking funds 697,785,627 00

Funded and floating debt of municipalities of 1,000 to 10,000 706,644,567 00

Total $4,935,040,134 90

Taking our population at nine million, this means that we have a per capita debt of $548. or an average debt of $2,740 for a family of five, the interest on which has to be paid annually by way of taxation.

I have in my hand a copy of the speech made by the hon. member for Laprairie and Napierville (Mr. Lanctot) in this debate, in which he says:

There is still $931,000,000 due to these gentlemen, on bonds which will mature in 1931, 1935 and in 1937. They still have about ten yea-rs of tax exemption, they who forced the government to pass conscription; but these people must prove their gratitude towards us. Why does the House, to-day, not ask, unanimously, the Minister of Finance, to borrow the necessary money to pay these people? I do not wish them to lose a cent on the capital they have lent us, but what I do want, is to pay them off. These gentlemen are responsible, to-day, for a loss of $18,400,000 in the income tax, that we could collect, and nearly $9,000,000 of interest that we should have less to pay.

I wish to compliment the hon. member for bringing these facts before the House. But I would go further than he does, I would recommend that we refund the total of our war debt of over two billion dollars. By refunding it with cheaper capital subject to taxation, we could in all probability save the country upwards of $100,000,000.

Mr. MEIGHEN:

How does the hon. member arrive at the figure as to what the taxable income would be from those bonds?

The Budget-Mr. Spencer

Mr. SPENCER:

At the present time I

understand, we have outstanding more than 8931,000,000 of non-taxable bonds. I take it the hon. member for Laprairie and Napierville estimated on that a tax of only 2 per cent, but I think he would have been quite safe had he allowed more than that. .

Mr. MEIGHEN:

How would you arrive at that?

Mr. SPENCER:

These are not my figures; they are the hon. member's.

Mr. MEIGHEN:

No matter whose they

are, it is the purest kind of guess. In fact, it is a guess in the dark, and the worst kind of one at that.