May 11, 1926

CON

James Dew Chaplin

Conservative (1867-1942)

Mr. CHAPLIN (Lincoln):

I do not mind being asked a question, but I object to the hon. gentleman making a speech.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Charles A. Stewart (Minister of Immigration and Colonization; Minister of Mines; Minister of the Interior; Superintendent-General of Indian Affairs)

Liberal

Mr. STEWART (Edmonton):

With 'all

due respect to the hon. gentleman, he asked the question and I answered it.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Hewitt Bostock (Speaker of the Senate)

Liberal

Mr. SPEAKER:

The hon. member asked a question, but I think he is now asking for protection for himself.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

James Dew Chaplin

Conservative (1867-1942)

Mr. CHAPLIN (Lincoln):

I do not mind being asked the question, but I do not want the hon. gentleman to answer it too.

I am sorry the Minister of Finance is not in the chamber because I want to refer to one more item on the schedule. Hon. members will remember that some years ago I stated in this House that I approached the late Minister of Finance, the Right Hon. Mr. Fielding, with the request that' he place a duty on the dyeing of silk. There was no duty in 1921 upon the article that it was proposed to put on the market and the manufacturer who was desirous of coming here to do the dyeing asked for 10 per cent protection. The minister said: Of course we are not a protectionist government and I will not make

any promises, but if it looks reasonable to us I will consider the matter. In the 1922 budget the minister was good enough to place a duty of 10 per cent upon the silk dyeing industry and in my locality about $100,000 were spent by a small firm in establishing a silk dyeing industry. It so happened that the minister, along with the then Minister of Marine and Fisheries, who afterwards became Minister of Justice (Mr. Lapointe), went over to France and made a treaty with that country. By means of that treaty about one-half of the duty was cut off.

I want to refer to another act of perfidy, or, Mr. Speaker, if you consider that too strong a word, let me say another breach of faith on the part of this government. A couple of years ago, I believe in 1924, an English concern came to Canada and approached this government with a view to having a duty imposed on artificial silk, which product they were prepared to make. This company, I may say, is the largest English concern in the silk industry and one of the foremost companies of the kind in the world. They came here and interviewed the minister, submitting certain proposals as to what they would do. They offered to erect a plant at a cost of between $2,000,000 and $3,000,000 and to utilize our wood product in the making of artificial silk. We do not know what took place but at any rate the government met them, and following that interview a duty was imposed on this article At the same time a drawback was provided for the purpose of allowing people interested in the importation of this commodity to bring in their supplies in the meantime until the factory should be started. Mr. Fielding in 1923 at page 2648 of Hansard volume 3 is reported as follows:

A ncsw industry is promised us for tihe manufacture o-f artificial silk. It is represented to us that this industry will employ a large amount of labour and we have every reason to believe that if we can make encouraging terms a great industry will be established. We propose to make a classification in which it will be treated largely as silk, and we have every reason to hope this will lead to a very' important industry being established.

The Englishmen, it appears, were not quite satisfied with the lengths to which the minister had gone, and after some further negotiations the resolutions were changed in committee to meet their views, with the result that they got the terms they desired. The drawbacks were also arranged. The company afterwards wrote to the minister and told him that they were going to be somewhat late in getting their mill going. They wanted to make sure first that their product was a success, and so

3310 COMMONS

The Budget-Mr. Chaplin (Lincoln)

they asked the minister to continue the drawback arrangement until such time as their plant might be put into operation. The minister did so. There was passed an order in council, which I have under my hand, extending the time to December 31, 1925. A few weeks ago the government were informed that these people were now ready to produce in Canada. They had experimented long enough with the Canadian raw material to ascertain that the article they could produce here was first class. As a matter of fact it was better than they had anticipated, for they found that our wood excelled their expectations. Now, very much to their surprise, the minister brings down a budget containing an entirely new arrangement in favour of another firm who are about to begin operations in the province of Quebec. The effect of this departure of the government's is that the duty which this English firm has had on its product for three months and fifteen days is now practically removed. Three-quarters of the duty has been taken away, and these people would be stranded if it were not for their strong financial position. That is what I term an act of perfidy. It is a breach of faith on the part of this government which will do us no good in any market of the world when what has taken place becomes known. I have no brief for these people, nor have I any information other than I have been able to pick up. I may observe, however, that they came to my city because it was the centre of a small growing industry, engaged in the manufacture of silk. This is the treatment that they have received at the hands of this government. They have invested in the town of Cornwall over $2,000,000 and they employ about 500 people to-day. It is going to be two years before the firm in Quebec are ready to produce and in the meantime the product of the other people is allowed to come in practically free. In other words, 75 per cent of their finished article will come into the country under a drawback. That is the kind of treatment which this government metes out to people who come here to do business.

I think I have taken up enough of the time of the House, Mr. Speaker, and I beg to thank hon. members for the careful attention with which they have followed my observations.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Archibald John Macdonald

Liberal

Mr. A. J. MACDONALD (Glengarry):

My purpose in participating in the present debate, Mr. Speaker, is to direct your attention to the fact that notwithstanding the wonderful progress of the province of tMr. J. D. Chaplin.]

Ontario along industrial lines its outstanding and predominant industry is still agriculture. Fortunately all parties concede that agriculture is our basic industry and that when this industry prospers all others prosper. In view of this fundamental fact it is reasonable to expect that the elected representatives from the province would be very much concerned with the present position of this industry, and that its requirements would evoke the sympathetic interest of hon. gentlemen opposite. I submit that it is fair to say that during the progress of this debate whatever sympathies hon. gentlemen opposite have shown have been on the whole with the protected interests.

Having been closely associated with the farming industry of my native county of Glengarry for the last thirty-five years, and having an intimate knowledge of the constant struggle on the part of the vast majority of them to make ends meet, even in that fertile county, I have endeavoured to evolve a reasonable explanation for this condition of mind on the part of hon. gentlemen opposite. Perhaps a casual analysis of the report of the Chief Electoral Officer in respect of the last general election will provide it. Looking at this report one finds that, sixty-eight Conservatives were elected out of a total of eighty-two candidates. They were elected by 57 per cent of the votes polled, and 38 per cent of the total possible vote, and of these sixty-eight members, four are classified as farmers, one as a retired farmer, three as farmers and breeders of pure bred stock and one as contractor and farmer.

With all due deference to the superior training and the intellectual attainments of the many gentlemen of the learned profession in that group I submit, Mr. Speaker, that this very training precludes them from a sympathetic understanding of the problems confronting the farmers of this country and that those among them who should be sympathetic have permitted their sympathies to be dulled by their environment. How many of the elected representatives from Ontario have a clear understanding of the income and expenditure of the average farmer? Yes, how many gentlemen connected with tin press of this Canada of ours have an adequate conception of the income and expenditure of our average Canadian farmer? In the final analysis the press may be held accountable for the wealth of misunderstanding prevailing in the industrial and urban centres of our fair country in this respect. In this connection I wish to direct your attention to an article in Toronto Saturday Night which was

The Budget-Mr. Macdonald (Glengarry)

reprinted by the Ottawa Journal of the fifth instant and which reads:

Taxes, Tariffs, Industry

When the Canadian Council of Agriculture met the cabinet the other day the members expressed themselves strongly against the reduction in the income tax. These philanthropists believe in taxation. Of course they do-for everybody but themselves. Their worry is not that they pay income taxes, but the reduction in the income tax may by hook or crook make it necessary to levy other taxes and these may get to them in time.

As for the application of the income tax, be it high or low, they have no reason to worry. Last year according to recent figures there were exactly 3,061 farmers in Canada paying income taxes, and the sum total they paid was $162,000. This chicken feed was contributed by 530 Ontario agriculturists, to the amount of $19,351. In Quebec 42 paid $3,775, which was just about half the sum that British Columbia farmers paid. In the Canadian west farmers appear to have a reasonable view in respect to their responsibilities. In Saskatchewan 1,492 farmers paid $70,956.

In Alberta 663 farmers paid $49,894, though Manitoba fell down with only 171 farmers paying $6,303, but this was nearly twice what Quebec paid.

As fifty per cent of the people in Canada either live on farms or draw incomes from them the question of income taxes so far as they are concerned is rather a joke, particularly in view of the fact that upward of half of the country's wealth is derived from the farm.

Of course if the 168,000 employees who in 1925 produced $13,973,000 as their contribution toward the income tax collected, could live off their salaries in the same manner as the farmer lives off his acres, with no one to check them up, our interest in the income tax would not be of a character to keep us awake nights.

And this brings up another question. If the government proceeds to rip the vitals out of industry who is to pay the taxes? Where is the government to find that six or seven hundred million dollars necessary to meet the yearly liabilities? Land taxes look to b'e in sight.

In 1924 Ontario and Quebec paid $44,000,000 out of the total of $56,000,000 paid in income and war taxes, while out of $4,700,000 paid as business profits tax Ontario and Quebec contributed $3,500 000. If industry is to be sacrificed to make a holiday for the Progressive party and such part of the Liberal party as believe in such things, the time will come when a complete revision of taxation methods will be necessary to meet new conditions.

The tenor of this article suggests that inasmuch as upwards of fifty per cent of the country's wealth is derived from the farm, and fifty per cent of the people in Canada either live on the farm or draw income therefrom, the farmers are dodging the payment of income tax because there is no one to check them up. May I suggest that rather than this smug assumption on the part of the would-be saviours of this country that the men and women engaged in our basic industry are dishonest, the fact that only 3,061 farmers paid the small sum of $162,000 in income tax out of a total of $56,000,000 in the year 1924 should be a compelling reason why every man interested in the economic situation and future welfare of our country should pause and ask himself where we are drifting.

For the information of the House and those people in this country not familiar with this problem I invite you to consider seriously with me, as the importance of the subject fully warrants, the financial statement of one of our young farmers engaged in dairying and mixed farming, covering his business operations for the years 1922, 1923, 1924 and 1925. It is my firm conviction that even a superficial examination of these statements will lead to a better appreciation and understanding of many of the problems confronting us at present, and understanding it may force us, even against views honestly held, to consider our whole fiscal policy before it is too late.

This young man owns a 109-acre farm with 50 acres under cultivation, 20 acres of pasture and 30 acres of bush. The value of the farm and stock is $9,000, against which he has a mortgage for $5,000, which is not an unusual condition among the farmers of Ontario. The following are the! financial statements foi 1922, 1923 and 1924:

Revenue-

42,160 pounds of milk from 8 cows at

$1.24 per cwt

Cows and cattle sold and used

Hcgs sold and used [DOT]

Insurance on horse killed by lightning

Eggs and poultry sold and used

Hay sold

Wood sold and used

Maple syrup sold and used

Potatoes and roots used

Expenses-

General repairs $129 00Taxes

94 35Fire insurance

6 50Feed bought for hogs

161 45Hired help

60 00Threshing and Dressing

55 00Blacksmith bills etc

30 00

Horse bought to replace that killed 110 00

Balance $1,073 88

Annual payment on mortgage of $5,000, amortized over 20 years at 6 per cent. 435 90

Balance available for clothing, groceries, medical aid and all other necessities... 1923

Revenue-

44,830 pounds of milk at $1.54.

Cattle sold

Hogs sold and used

Eggs and poultry sold and used.

Hay sold

Maple syrup sold

Wood sold and used

Potatoes and roots used

3312 COMMONS

The Budget-Mr. Macdonald (Glengarry)

Expenses-

Repairs $100 00Taxes

87 72Insurance

0 50Feed bought for hogs and depreciation in value

353 09Hired help

08 75Threshing and pressing

39 25Blacksmith bills etc

35 00

690 31

Annual payment on $5,000 mortgage.. .. 435 90

Expenses-

Repairs

Feed for hogs and hens.. ..

Hired help

Threshing

Blacksmith bills etc

718 66

. $1,136 99

Annual instalment 435 90

mean, I propose to consider in detail the omissions as affecting particularly the mining industry.

Now, with particular application to the mining industry in our own country, wherein does the budget fail? First and foremost, no consideration is given to labour, the most essential element in the success of mining or any other industry. I refer especially to the homes and living conditions of the miners and those who live in mining towns.

A discovery being made, development and construction proceeds apace, a town or city springs into existence, and the inhabitants are forced to install water works and sewage systems, build roads, schools, churches, and public buildings. In one stroke they must accomplish what entails years of slow and patient growth in a fanning or any other industrial community. This being done, and the mine put on a producing basis, the federal and provincial authorities step in and reap the benefit without a word of thanks or a gesture of gratitude.

Take for example, the case of a city in the province of Ontario, a city owing its birth and existence to the discovery and operation of a mine, the city of Timmins with a population of some seventeen thousand people. Under the Mining Tax Act of Ontario, that city is not allowed to levy any tax on the profits of the mine within its precincts, nor upon the mill or other mine buildings. The Ontario Mining Tax is not really a profits tax but is an arbitrary method of giving the provincial government a revenue from profitable operations in lieu of a royalty, while assuring would be investors that stability indispensable to a successful commercial enterprise. The act is based on the report of the Royal Ontario Nickel Commission of 1917, which report takes into consideration the taxing systems of every mining country in the world. Let me quote clause 5 which contains the gist of the act:

5. (1) Every mine in Ontario, the annual profits of which exceed $10,000, shall be liable for and the owner, manager, holder, tenant, lessee, occupier, and operator of the same shall pay an annual tax as follows:

(a) Three per centum on the excess of annual profits of such mine above $10,000 and up to $1,000,000.

0>) Five per centum on the excess above *1,000,000 and up to $5,000,000; six per centum on the excess above $5,000,000 and up to $10,000,000; seven per centum on the excess above $10,000,000 and up to $15,000,000, and on the annual profits above $15,000,000 a percentage or percentages increasing in like progression.

Of this amount, the provincial government allows fifty per cent up to a maximum of

835.000 to go to the local municipality. Over and above this, the federal government lifts

about twice the total and contributes nothing to the municipality.

Allow me to refer to the profit and loss statement for the Hollinger Mine for the year 1925: '

Taxes, province of Ontario $152,296 62

Municipal taxes (except residences owned

in city) 35,000 00

Dominion of Canada 1925 taxes 388,000 00

Dominion of Canada 1924 taxes (adjustment) ' 57,597 34

Not only does the federal government corral more than double the amount levied by the province but the levy is made without allowing the mine to deduct from profits the amount paid either the province or the municipality.

A further incongruity lies in the fact that with regard to the federal income taxes, no allowance is permitted for money spent by mining companies on outside ventures. As everyone knows the development of new mines is extremely hazardous in a financial sense, the proportion of payable mines to the total number of properties on which work is done, being very small. If mining organizations are going to survive they must get new mines, but as the law stands for every dollar spent by a mining company in outside prospecting, exploration, development, and equipment, a tax is paid, and even under the new tax regulations the cost to the companies is $1.04i. It seems only reasonable to ask that in view of the large, very large element of risk in the development of new properties, mining companies should be allowed to spend annually a certain percentage of their capital in outside ventures and that this money if so spent, should be exempt.

With regard to the reduction in the rate from ten and one half per cent to nine per cent, I consider it is merely a matter of shifting the burden with a net loss to the actual shareholder. As pointed out by the hon. member for Quebec West (Mr. Parent):

If you happen to be part owner of a mine, the company first pays the income tax, and as shareholder or part owner you must also pay, so that whereas you are given consideration for depreciation only once you must pay the tax twice.

On hearing that statement I was inclined to agree with the hon. member, but on further investigation I find it is not true. There is a fifty per cent allowance on net profits for depletion of the mine, also an allowance of fifty per cent on mine dividends in the case of gold and silver and twenty-five per cent in the case of copper. No allowance is made in the case of nickel. This is an incongruity which should be rectified.

The Budget-Mr. O'Neill

Reverting to the case of the municipality, I consider it is only fair, equitable, and just that the Dominion, spending a very small item on geology or any activity contributing to the success of provincial mining ventures- I mean comparatively speaking-should

acknowledge indebtedness to the working man and help reduce his tax burden. He pays income and property tax to the municipality as well as income to the Dominion as well. To my mind, it is nothing short of robbery on the part of the federal authorities. The case is totally different from every other community. The city in question, and every mining city as a matter of fact, is situated away off on the frontier; the inhabitants are all workmen raising families, and the school question is more acute than that of housing. Why, in Timmins last year more than the provincial allowance of $35,000 was given out in charity to the workless! Yet the federal money grabber can walk off with approximately one-half million dollars without the slightest qualms of conscience. The same applies in the good old township of Tisdale, in Teck, and down through the silver region.

Recognizing the fact, Sir, that Canada's mineral industry has reached such tremendous proportions, I believe, and I am sure all hon. gentlemen in this House will agree with me, that the time is ripe for the immediate calling of a conference of representatives from the Dominion, the provinces, and the various mining associations for the purpose of framing uniform and non-duplicating tax laws and uniform mining laws in general throughout the Dominion of Canada. I have heard mining men of experience and prominence say that the federal mining laws are beyond all doubt the worst in the world, both as to acquiring and as to holding mining property. There are some irritating differences between the laws of Ontario and those in vogue in Quebec, and these could easily be ironed out before the industry becomes further established. I might add that I have heard mining men from Africa, Australia, and the United States state that Ontario mining laws worked out to greater advantage than any with which they had experience.

It might not be inadvisable here to refer to the present status of Canada's mining industry. The situation is well outlined in a report by S. J. Cooke, chief of the Mining, Metallurgical & Chemical branch of the Dominion Bureau of Statistics at Ottawa in the course of an address at the opening session of the annual meeting of the Canadian Institute of Mining and Metallurgy in Montreal, March

3rd, 1926. Reviewing the developments of the year, Mr. Cook pointed out that the production of minerals reached a value of $224,846,237, an advance of $15,262,831 over the total for 1924, and well towards the record valuation of $227,859,665 attained in 1920, when new production records were established. Among the metals the remarkable advances in the production of gold, lead and zinc were the most outstanding. Improvements in outputs marked the totals for nickel, copper, cobalt and silver. Sales of asbestos increased during the year by more than $2,000,000 to a total value of $8,995,854. Improvement in the production of other non-metallic minerals was noted in the figures for fluorspar, graphite, gypsum, natural gas, petroleum, quartz natural sodium sulphate and carbonate, salt, talc, and soapstone. Production figures for coal, feldspar, pyrites and mica were below those reported in 1924. Except in coal, losses were negligible. Coal showed a loss in tonnage amounting to 508,796 tons and as coal at the mines sold at slightly lower prices during the year the value of the output showed an even greater loss proportionally than the tonnage.

Metal mining in Ontario showed wonderful prosperity in 1925. Gold, silver, nickel, and copper were produced in abundance and in addition to these leading minerals there was a production of almost every other economic mineral with the exception of coal. British Columbia's output of lead, zinc, copper, gold and silver added greatly to Canada's mineral wealth. Quebec's asbestos fields continued to supply by far the greater part of the world's tonnage of this useful commodity; lead, zinc, gold and silver were also reported. Developments in the Rouyn field in Quebec were watched with interest by the mining world during the year. Much progress was made. Alberta, Nova Scotia and British Columbia produced large tonnages of coal in addition to other minerals. Manitoba's mines yielded gold and silver, but more important perhaps than the actual yield of metals was the fact that Manitoba's mineral area was made the subject of a more intense study during 1925, than in other years so that the prospects of production from this source were very considerably improved. New Brunswick's coal and building materials added to the total for Canada. Interest in the oil-well developments in Alberta was very keen throughout the year; it is probable that very encouraging developments will occur in the mineral industry in this province in the early future.

Upwards of 64,000 persons find employment in Canada's mining industry. Ontario, British Columbia and Nova Scotia mines alone fur-

The Budget-Mr. O'Neill

nish employment to more than 45,000 persons. Nearly 20,000 are employed in Canada's metal mining and non-ferrous metallurgical works. About 34,000 people are employed in nonmetal mining and approximately 11,000 in the production of structural materials and clay products. To these salaries and wages totalling approximately $83,000,000 are paid annually. The importance of the purchasing power represented by the employees of Canada's mining industry is sometimes not fully appreciated. Fuel and electricity constitute an expense item reaching a total of almost $20,000,000 a year; much of the progress that has been possible in the mining industry in recent years has been due to the extensive development of hydro-electric power facilities.

Investment in Canadian mines amounts to approximately $632,444,000; of which $281,-

828,000 is invested in metal mining and metallurgical works treating Canadian ores; $259,-

361,000 represents the investment in non-metal mines and $91,255,000 the cost of properties and plants producing structural materials and clay products. .

Mining, now third in rank among Canada's primary industries contributes extensively to the wealth and prosperity of the Dominion. Large tonnages of freight move from and to the mines; many subsidiary industries depend upon the mining industry for their prosperity. Canada's progress in the production of mineral wealth has been notable particularly in recent years; the developments in established fields have won the confidence of the investing public; the discovery of new mineral areas has provided attractive opportunities for those of a more speculative nature; the growth and evident stability of the mineral industry stamp it as one of the great and increasing factors in Canada's industrial and commercial life.

At this point, Sir, I would refer to certain special items in the matter of the mining industry regarding the tariff and sales tax. Here is where 1 may find myself a bit isolated, although I am sure it is the policy of the protectionist party not to advance the interests of one class at the expense of another, and should be, of course, the policy of the government.

With regard to tariff and sales tax, the intention and the desire of the government apparently is to remove or lessen the duties on essential machinery for production in natural resources. The government has been very considerate to us, but there are a number of items where there is discrimination, due in part to the fact that the tariff takes no con-fMr. O'Neill.)

sideration of advances in mining and metallurgical practice, and also due in part to a lack of knowledge with regard to the machinery used by the industry. Following I might mention several items in which this appears to be the case.

There is a considerable consumption of dehydrated borax by the mines, particularly in refining of gold bullion. Ordinary borax comes in duty free, although it is used in the manufacture of a large number of articles which themselves are protected by a duty. The only difference between borax and dehydrated borax is that in the latter some of the water is driven off, but although it is still borax, when imported in that form it pays a duty of 17| per cent.

Mine hoists are not specifically mentioned in the tariff and because of this fact they come in under article 453 and pay a duty of 27J>

per cent plus 5 per cent sales tax. Compressors and wire ropes also pay a high rate of duty and sales tax. If either hoists or compressors are used in the lumbering industry or ropes used in connection with block and tackle, they come in under reduced rate of duty and are exempt from sales tax. This appears to be discrimination against the mining industry in favor of lumbering and as they are both basic industries, there seems little excuse for it.

Rock drills come in under reduced rate of duty and together with drill steel are exempt from sales tax. Drill sharpeners however and steel tempering furnaces pay a high rate ol duty and also pay the sales tax. As the twc latter are used in the manufacture of the drilling bits, it would only seem reasonable that they should be at least exempt from sales tax.

Tariff item 460 provides that, "sundry articles of metal as follows, when for use exclusively in mining or metallurgical operations" shall come in duty free. It appears that the limiting of this to articles of metal is unfair, in some cases. I might point out that steel cyanide tanks come in duty and sales tax free, while wooden tanks, for the same purpose, pay a duty of 25 per cent plus 5 per cent sales tax. You know filters all have filter cloths; American filters have redwood sectors and filter cloths. A complete filter, including the canvas and Redwood sectors, come in duty free, but spare Redwood sectors pay 25 per cent duty plus 5 per cent sales tax and extra cloths or bags pay 35 per cent duty plus 5 per cent sales tax.

I might also mention that crushers, ball mills, tube mills, and so on, come in under reduced rate of duty and are exempt from sales

The Budget-Mr. O'Neill

tax. Cyanide machinery comes in duty free and is exempt from sales tax. Between these two, however, are the classifiers, and the Department of Customs and Excise considers that classifiers do not property belong either to the cyanide machinery or to the crushing machinery, although they are of course essential to both. Because of this classifiers have to pay 274 per cent plus 5 per cent sales tax.

I might also mention that mine cars, and so on, are exempt from sales tax, but the rails on which they run are not. The 6mall mine locomotives, for underground use, which are practically the same as cars, pay a duty of 35 per cent plus 5 per cent sales tax, although they are not manufactured in this country. They perform the same function for the mines as tractors do for the farmers and tractors or locomotives in lumbering operations. Farmers can bring in tractors duty free; lumbermen can bring in tractors and locomotives at 20 per cent, exempt from sales tax. Any person can buy a tractor under a duty of 27i per cent plus sales tax, but the mine locomotive pays a duty of 35 per cent plus 5 per cent sales tax.

It seems to me that the timber used in mining operations should also be exempt from sales tax, because it is really a by-product of farming; also in view of the fact that a certain amount of clearing is done around the mine and the timber is sold. As hon. members know, it does not enter into the final product and timber once put underground has no salvage value. As used in the stopes it is essential to the operation of rock drill and steel, both of which are exempt from sales tax, and as used in the shaft it is essential to the operation of mine cages, cars and skips, which are also exempt from sales tax.

I am also inclined to think it is rather unfair to differentiate to the extent that is done between machinery for the cyanide process and machinery for concentrators, where the same machinery is used in both cases. When used in the cyanide plant it enters duty free and is free from sales tax, while the same machinery used in concentrating ores is not exempt and pays a high rate of duty. Flotation oils, et cetera, are exempt from sales tax when used in the production of a product which itself is not exempt, but when used in connection with gold or silver ores they have to pay a sales tax. These are only some of the items to which I should like to refer.

There is also the question of salt used in the refining of nickel. This is not the ordinary type of salt as manufactured in Canada, but 14011-211

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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REVISED


is a rock salt which has to be imported from the United States. Rock salt used by the fishermen comes in duty free, but the nickel companies have to pay a duty of five cents per 100 pounds. The government has more or less laid down the principle of a rebate of duties on articles consumed by companies manufacturing for export. It seems to me that this should apply in the case of rock salt, because 97 to 98 per cent of the material produced in our nickel refineries is for export, and of course, as hon. members are undoubtedly aware, nickel sent into the United States has to pay a duty of three cents a pound. The salt as used in the nickel refinery is used for giving a chloridizing roast. It does not enter into the final product, being consumed in the process of manufacture. The free importation of this can affect no Canadian producer; but if the government cannot see their way dear to place this salt on the free list, I think it is only reasonable to ask for a rebate of the duty on account of the salt being consumed' in the process of manufacturing a product for export. These subjects might come under the consideration of the newly-formed tariff commission; they would form excellent material on which the commission mi^ht cut their eye-teeth. That covers some specific items to which I wish to refer, consideration of which would prove an encouragement to the mining industry, but I do not suggest for a moment that I have covered the whole field. I should like to come now to a short consideration of the iron and steel industry. Failure to adjust the specific duties on the basic forms of iron and steel so as to bring their ad valorem effect up to the general level of duties on other materials marks one of the most outstanding disappointments in the budget. As regards the province of Ontario, this great basic industry is dependent on imported ores in spite of the fact that several companies have demonstrated what can be done by the beneficiation of 'low grade Canadian ores. The O'Connor holdings at Temagami. the Ko-Ko range further to the west, and the Onaman iron range, are all attractive possibilities. At Moose mountain, some thirty-five miles west of Sudbury, more than 100,000,000 tons of magnetite have been proved up by the owners. In the Atikokan district some 25,000,000 tons of magnetite have been blocked out. The deposits of nonBessemer ore in the Michipicoten district are extensive, and millions of tons of red hematite have been taken from the Helen mine. From


EDITION


The Budget-Mr. O'Neill



tile Magpie mine siderite is obtained and roasted before shipment to the blast furnaces at Sault Ste. Marie. In central Canada our source of supply is the high grade deposit of the Mesaba range ill the state of Minnesota. This is being rapidly depleted and the chief reason why it is being shipped out in a wholesale manner is because of the local taxing system. This is a case where the municipality have abused their taxing power and it pays investing capital to exhaust the supply rather than to pay tax on the ore even in place. It is for the purpose of avoiding a similar occurrence that Ontario restricts the municipal taxing powers, and in order to profit by the experience generally I say that we should have a conference between the provincial and federal authorities to arrange uniform mining taxation throughout the Dominion of Canada. I should like to quote this statement from the editorial page of the Iron Age of April 9, 1926: The time is not far distant when the furnace men will not be able to obtain their ores at the low prices which prevail at present. The cream of the lake deposit is being shipped at a rapid rate, and it will not be long before the leaner ores will have to be treated to meet the demand. The supply of rich ores will not last many more years. Commenting on the situation an editorial in the Canadian Mining Journal under date of April 9, 1926, goes on to say: To Canadians the iron ore situation is a matter of more importance than is generally recognized. We axe producing no iron ore and have no mines ready to produce. We have an extensive iron and steel industry employing a large nuimlber of men and contributing largely to the welfare of the Dominion; but we are still depending on supplies of iron ore from other countries. The definite (warnings that have been recently coming from the lake Superior iron producing states should not be ignored in Canada. For the present year there is not likely to be any difficulty in securing supplies from the United States at low prices; but the time is coming when we may 'have to pay dearly for our inactivity in developing iron ore resources of our own. The iron ore supply for our large iron and steelindustry in Nova Scotia is fortunately assured. Theoperators there own very large iron ore deposits in Newfoundland and are at least drawing their supplies from within the empire if not from Canada itself. The Newfoundland iron mines together with the Nova Scotia coal mines give (the industry there a firm footing which has permitted it to grow even though competition with imported iron and steel 'has madethe business less profitable than it should be. The needed impetus to the Nova Scotia enterprise could be given by increased protection. Soane action on this matter is necessary for the welfare of the iron and steel making industries in all parts of Canada; but we are here considering a problem which is more particularly of interest in the central and western provinces. In central Canada there is no satisfactory supply of either coal or iron ore. That is more or less an assumption. Here the outstanding advantage is proximity to the consumer of iron and steel and this, coupled with the business ability of the men in control of the operations, has made it possible for the iron industry to become firmly established at some centres without a domestic supply of iron ore or coal. The latter defect has been remedied as far as possible by making the coke from imported coal instead of importing the coke. For the present there is no other source of fuel. We have however other possible sources of iron ore and we should not be satisfied with the progress we are making towards utilizing them. Hon. members will remember that the Iron Ore committee appointed by the Ontario government investigated the situation and recently presented their report recommending that the government offer a bounty of one cent per unit of iron on each long ton of merchantable iron ore marketed from Ontario mines, the "unit" being one per cent of iron in each ton of iron ore. Thus if the iron ore asayed 40 per cent iron the bounty would be forty cents per ton. This bounty is granted for a period of ten years from the date a,t which it became effective. In order to make this proposition a success the Dominion government was expected to assist the industry correspondingly, but so far federal aid has been confined to pious wishes. Surely this great industry, whose status is looked upon as the barometer of the times in every thriving country, is as worthy of a subsidy as the deserted farms of this country are. The cost to Canada would not surpass the amount involved in the subvention referred to in the bill to aid colonization recently submitted to this House. It would mean infinitely more to the nation and to our railway systems. A subject of cognate interest is that of coal. In respect to the coal situation, the budget of 1926 marks a further disappointment to the interests of Canada by reason of the government's failure to correct the mistake made last year when the duty on bituminous coal was lowered three cents instead of being raised, and their failure to make anthracite screenings dutiable at the same rate as soft coal with which it competes. I desire now to refer to the discoveries of coal in northern Ontario. In view of the recent development in that part of the country along the Mattagami river north of the Transcontinental railway, I would call the attention of t'he government and of every hon. member to the possibility of solving our fuel problem in central Canada through these discoveries in northern Ontario. The possibilities of the field deserve a thorough investigation, and I would urge upon- the government the advisability of immediately co-operating with the The Budget-Mr. O'Neill 3319 ' provincial department in this respect. In the past some writers and geologists have scouted the idea of its being possible to find coal in this particular area, but the nature of the latest discoveries and the opinions of several prominent mining men make it evident that the country has a splendid future in this matter. On this point let me quote the Canadian Mining Journal of May 7, 1926. At page 483 the following appears: Not only do the clays and associated beds of lignite occur on the banks of the Mattagami but they are also to be found on the banks of the Missinaibi, forty miles west, so that a very wide area comes within the range of investigation. This is the important feature: The clays in this section of northern Ontario were described by Joseph Keele, formerly of the Dominion Department of Mines, as belonging to the lower cretaceous series. The coal of Alberta and Saskatchewan occurs in this series. Formerly it was supposed that the lignites which are found in the same localities as the Mattagami clays were of inter-glacial origin. Now it is commonly believed they are of pre-glacial origin. Unquestionably these coal-bearing cretaceous formations may be found to be of great national economic value when intensive exploration is carried on, but the task is too great for individual effort and every encouragement should be given immediately by both federal and provincial authorities. It has always been recognized by those interested in the coal industry in the north country that the construction of the Georgian Bay canal was indispensable to its success. One question which is now before the people of that part of the country is the construction of the Georgian bay-0 ttawa river canal and the improvement of the French river to facilitate the transportation of coal and supplies by water to North Bay. This would mean a great deal to northern mining and industrial interests and this section of the system is a pressing necessity of the hour. May I at this point quote the late lamented Sir Wilfrid Laurier as he is reported in Hansard, February 23, 1914 at page 1036: I am so confident of the future of the country that I have no hesitation in saying that none of the resources which nature has given us in the way of transportation can be neglected, that every possible advantage of that kind should be improved. Nature has provided us with two outlets from the west, one by the St. Lawrence and the other by the Ottawa river. Both of them are needed to carry on the enormous development which must take place in the west. My excuse for venturing to mention this subject on the present occasion is the fact that it has always been closely allied with the development of our great deposits of iron ore in the north country. I know that as the matter stands we are dealing with something that seems to trench upon the sphere of the 14011-2li£ provincial authorities, and doubtless at no distant date the whole problem must engage the earnest attention of this House. I believe the carrying out of this gigantic enterprise by private capital under federal charter depends upon determining whether or not the surplus waters in navigable streams belong to the province in which the streams flow, and I trust that the government will tell us without delay what policy they intend to pursue in relation to this important principle. Passing from a consideration of iron ore I desire to say a word or two on the copper situation. In view of the wonderful develnn-ment that is taking place in northern Quebec I should like to put on Hansard certain extracts from the London Times Trade and Engineering Supplement which will be of particular significance. I am rather inclined to believe that it is the intention of the Copper Export Association of the United States to do to the rest of the world what they imagine Great Britain did in connection with rubber. Let me quote from the paper I have just mentioned, of April 24, 1926, the following: The perfecting of methods of ore treatment with a view to conserving the all too limited world supplies of metals and minerals is not merely an empire problem but one which concerns mankind as a whole. Our civilization is so dependent on the use of certain metals that too much thought cannot be devoted to the prevention of waste, both in extraction and utilization. The struggle for materials of this kind will be a fruitful source of international disputes within a century or two. That covers pretty well my views in regard to the free trade proposals of hon. gentlemen touching machinery and one thing and another. I quote further: With the principal execeptions of copper and lead, the British Empire is particularly well provided with, deposits of the industrially important metals, both precious and base. The deficiency in copper may be merely temporary; since recent discoveries in northern Rhodesia promise a large output from that region within the next decade. The discoveries in northern Quebec in copper are unequalled by any that have heretofore been made in the civilized world. In this connection I should like to quote from the Wall Street Journal of May 6, 1926, an article under the heading: Copper Trade Outlook Increasingly Bright New Export Association Representing 90 per cent of World Production, Formed to Do Away With Unjust Competition. (Special From Boston News Bureau) * This association, so far as we can ascertain, is composed not only of the copper producers of the United States but of producers in South The Budget-Mr. O'Neill



America, Europe, South Africa and various other countries excepting Japan which at present is standing aloof. The article says: To prophesy better things for copper companies in general during the past two years has required an extraordinary degree of optimism. Copper shares have steadily fallen in public favour and only a few companies have made any dividend money. The rank and file have either lost money or did not make enough to compensate for the exhaustion of the ore assets. But really the outlook is far from hopeless. A new Copper Export Association, stronger and bigger than its predecessors, has been formed, and 90 per cent of the world's production is represented therein. This is the first time the so-called big producers have been able to sit around a table and agree to stop cutting each other's throats. In only one year since 1920 have our refineries produced more copper than was shipped to foreign shores and to American manufacturers. That was in 1923, when refined output amounted 2,327,770,000 pounds against shipments of 2,314,786,000 pounds. In 1925, American refineries produced 2,704,618,000 pounds of copper a record for any war or peace period. And shipments exceeded this outpouring by about 127,000,000 pounds, bringing stocks down to 146,161,000 pounds of refined metal, the smallest since the war, and comparing with 641,474,000 pounds at the end of 1920. In 1920, in face of a huge surplus, the average price of electrolytic copper was 17.50 cents a pound. Last year it was 14£ cents, with surplus down almost to vanishing point. With the permission of the House I should like to put on Hansard the following table showing this statistical improvement with price trend in pounds: - Refined product Shipments End period Average price1st quarter 1926 692,620,000 2.704.618.000 2.600.664.000 2.327.770.000 1.577.658.000 1.074.394.000 1.670.759.000 688,372,000 2.831.448.000 2.639.568.000 2.314.786.000 1.814.810.000 1.179.932.000 1.731.406.000 150.412.000 146.161.000 272.868.000 311.770.000 298.786.000 535.936.000 641.474.000 14-00 cts.1925 14-12 "1924 13 02 "3923 14-42 "*1922 13-56 "1921 12-65 "1920 17-50 " This is more or less repetition, but I trust there will be no objection. The conclusion is that the consumption is still running ahead of the tremendous production, but because of cut-throat competition among copper producers their thousands of shareholders have been left profitless. On top of this I should like to quote from the editorial page of the New York Times of May 8, 1928, as follows: Almost simultaneously the British Colonial Office announced a policy intended to raise the pnice of rubber, and the Copper Export Association was formed to raise the price of copper. While the objectives are similar the methods are different. Addressing the "National Foreign Trade Council, Dr. Klein of the Department of Commerce said that "international commercial relations are endangered by price-fixing and other political intrusions in raw material exports, the costs of which are to be borne primarily by foreign consumers." Our copper export association is not at all political. It is a combination which our laws allow in foreign trade but forbid at home. Authorized under the Webb-Pomerene law, it aims to represent 90 per cent of the world production. To the extent that it takes the surplus off the domestic markets it is better able to raise home prices. Others may complain as well as Americans, but it is a common grievance. The copper combine does not ask foreign consumers to bear any part of our tax levies, and professes merely a desire to stabilize the price and keep it from falling below cost of production. Our constitution forbids an export tax. The British rubber export restriction raises prices of exports. This is a restriction of trade of which there is no example in our large exports of raw materials. Some of our laws lay us open to reproach for political intrusion in international commerce, but in the matter of raw materials we are more sinned against than sinning. fMr. O'Neill.] This Copper Export Trading Company will be very comprehensive, including not only all the important producers and smelters of North and South America but those of Europe Africa and Australia as well. This brings us back to a consideration of our copper wealth. We do not seem to realize what has taken place in the northern part of Quebec. When you consider the holdings of South America, Spain, various parts of the United States and Australia, and realize that when they produce to their utmost, no matter how low copper goes, due to the wealth of our mines in northern Quebec we can continue to produce after they have been shut down. I would like to quote just one official statement regarding the Home mine in the Noranda district: A horizontal drill hole, No. 329, driven from the third level north of No. 1 shaft has euit eighteen feet of ore averaging $8 in gold and 27 per cent copper. The average gross value of this ore at 13-cent copper is $78.20 per ton. If we are about to face a copper monopoly through the formation of an American export association I would suggest, Mr. Speaker, that it is advisable for our Department of Trade and Commerce to realize the holdings we have in the northern part of Quebec, and get in touch with the men who have that monopoly. We should be protected within the empire and the department should see that a condition similar to that experienced The Budget-Mr. O'Neill in connection with rubber in the United States may not obtain in Canada with regard to copper. I notice no mention in the budget of good roads. The section of the country from which I come would welcome very heartily any subvention or help in the form of good roads. I submit that the time has arrived when the great division between east and west should be bridged by an international highway, which should be constructed with federal assistance. There are other considerations to which I should like to refer, and one in particular on which I touch with a certain amount of reluctance. But I take my cue from the principle enunciated in this House by the Prime Minister in the course of a recent address, when he stated that the formation of public opinion is often more important than definite legislation. In this connection I wish to make a few observations on one of the greatest problems of the day, the question of prohibition. 1 quote again from the New York Times of May 8, 1926. This article is written in the lighter vein, and while I am not inclined to touch on that angle, at the same time I appreciate the argument. The article is as follows: Rustic John Barleycorn According to the Year Book of the Department of Agriculture, bad times on the farm are to be ascribed partly to prohibition. Representative Black of New York, speaking by that book, proceeded on his own authority to place the annual loss in a single crop, the barley that no longer goes into beer, at $100,000,000. The loss in the matter of hops is "incalculable." Confronted by three farm relief bills which a floundering committee on agriculture has dumped together on a still more distracted House-bills which nobody wants, but which all Representatives confronted by farming constituencies feel obliged to take seriously- Representative Black says blandly, "Let good old beer do it"! The farmer would have prohibition. Sustained through the winter by frosty 'hard cider from the cellarage, soothed by elderberry wine and cherry bounce- Not to mention our 27 per cent Niagara wine- -he exercises his moral nature with indignation against the city man's crock of suds. And now, tardily, the effect of his crusading spirit is brought home to him. The barley crop alone once yielded him ten times as much in farm relief as the Aswell bill offers. And so, as Mr. Black urges, in the eyes of constructive statesmanship farm relief goes hand in hand with relief of urban gullets. Here, surely, is new light on John Barleycorn. Through the ages he has been pictured as a rakish city chap, the affable familiar spirit that wets the workman's whistle and whets the politician's eloquence; that gives the last indispensable flavour to the clubman's midnight rarebit, and even flourishes in the midst of fine ladies where picnic luncheons are served. Now at last John Barleycorn emerges in his true character. He is a bearded grain. Last as first he belongs among the worthies of the farm. Spendthrift and rake? He is sown in sobriety and reaped in thrift. If for a time he is an erring and a prodigal son, he says with another repentant and home-coming rustic: "Like him that wanders I return again; Just to the time, not with the time exchanged, So that myself bring water to my stain." Banish John Barleycorn? Banish Whiskered Jack and banish all the world! Such ,.is the article. I wish to refer now, Sir, to prohibition particularly as it is in vogue in Ontario and in the great republic to our south. It may be looked upon as a malignant cancer destroying the very vitals of our civilization. Prohibition has defeated the very object it was designed to effect; it was supposed to elevate the moral tone of the nation, but in reality the opposite result has been accomplished. Beyond all doubt there is more liquor, of an injurious and damaging brand, consumed clandestinely to-day than was ever thought of in the days before the introduction of the present system, and unfortunately the evil effect is in evidence among a class in the community who formerly regarded an imbiber as a social pariah. In the psychological working out of prohibition it is considered a clever achievement to spier a drink under present conditions. Between the millstones of natural or inherited tendency on the one hand and the added thrilling: inducements incident to prohibition, the-younger generation is exposed to a moral' degeneration, and is forming habits which will play havoc with society at a time when they must shoulder the responsibilities and duties of to-morrow. Why delude ourselves on this great moral issue? Illustration is unnecessary, but to confirm our own personal observations let me refer to a conversation I overheard the other day between two travelling men, men of experience. When reference was made to the revolting effects of prohibition, one man remarked, "I have just placed an order for 275,000 pocket flasks at - " naming the town, "and in the immediate vicinity." On inquiry he was prepared to admit that the sale of these flasks was mostly to the younger set, which is an astounding fact. But the statement of the other man was even more so. He said, "I am a boiler inspector, and in making my rounds, I inspect the boilers in high schools and collegiates. On all sides the story is the same. The janitors complain of the youth of to-day in most shocking terms. They say their first duty in the morning is to go about the buildings to collect the six and eight ounce empties and the unmentionables strewn about on all sides." The Budget-Mr. O'Neill



Surely, Sir, the problem should be grappled with openly and courageously, and it is to be sincerely hoped that the country's morals will receive the same careful consideration as the material issues. Furthermore, the present system is debasing our medical profession and engendering a general disregard for law and authority. All head and no heart makes for sterile politics; compromise is essential. As has been well said: With something in them of the beast, and something [DOT]of the god, mortal men can know little of unmixed emotions. I trust that at our next provincial election our authorities will be brave enough to grapple with the situation regardless of considerations for their political future one way mr the other. There is one other suggestion I should like to make to the Minister of Finance. I have not an exhaustive knowledge and cannot say whether the scheme would be workable, but the suggestion has reached me from the north country that the metal cobalt might be used as a five-cent coinage by way of advertising a very picturesque and useful by-product for the purpose of familiarizing the public with this metal. As to the reduction of postage, the postage was raised 50 per cent, and is now lowered only 33] per cent. I might ask, what has become; of the other 16J per cent? In this connection I should like to refer to the underpaid staff of the Post Office department, particularly the baggagemen carrying the mail. I think too much credit should not be taken by the government for taxation reductions when these men are receiving such comparatively low pay. It was not my intention to deal in prophetic censure of the present administration, Sir, but I must state on behalf of the great race that comes from the land where politics is the breath of life that it is a matter of supreme regret that perhaps for the first time in the history of this great Dominion no son of Erin adorns the treasury benches of Canada directly at the present time. This is felt keenly by every Irishman, especially in the province of Ontario, and the absence is interpreted as indicating that the Liberal party has lost the breed of noble blood. We all pay due respect to certain "dephlogisti-gated" Irishmen in the cabinet at the present, but at the same time we should like to see a Teal son of Erin adorning the treasury benches of this House. That there is not one is but another link in the catena of evidence which makes it possible to prophesy a grand victory for the old Tory party. [Mr. O'Neill. For the reasons I have given, Sir, I do not see how I can support the budget. I would recall again a quotation of the Great Chief "Le Grand Mort," who in his speech on the Address in 1911, stated: We [DOT] are living under constitutional government, an elementary principle of which is that the men who form the administration must have a common policy. Drawing the logical conclusion from that statement, I submit that I cannot support this hybrid offspring of an unnatural alliance. Before I sit down, Mr. Deputy Speaker, as this is the first occasion on which I have had the opportunity of offering a few remarks since your selection for the position which you adorn with so much dignity, may I offer you my congratulations on your elevation to your high office?


LIB

Liguori Lacombe

Liberal

Mr. LIGUORI LACOMBE (Laval-Two Mountains) (Translation):

I feel, Mr. Speaker that it is my first duty to offer my congratulations to the hon. member for Timiskaming-North (Mr. O'Neill) for the enjoyable piece of oratory we have just listened to. His address shall indeed prove a source of inspiration to future generations, as it is replete with such literary gems as they might wish to scatter through their speeches, and it will also convey to them valuable lessons in mathematics, specially in connection with the ground rules.

Mr. Speaker, before dealing with the ,ub-ject matter of this debate, I must first, not only in my own behalf, but also in the name of the French-speaking members of this House, express my sincere admiration for the commendable stand taken by the hon. member for Toronto-Northeast (Mr. Baker) who, when addressing the House on the budget, on the 6th May last, spoke in French. It was all the more gratifying to us to hear that French voice from Toronto as we know that it is inspired by a feeling of sincerity and sympathy, and that it conveys to us the lofty ideals of union, peace and harmony that obtain between the two great races living side by side in this Dominion of ours. I take great pleasure in congratulating him specially for having, as so many others have done previously, urged the use of the two official languages in this country. In view of the fact that no better opportunity could arise under the circumstances, I wish to make a plea, in behalf of my own race, for the vested rights of the French language, not only in parliament, but in the -country as a whole, and I would suggest that, when the government do restore the two cent rate of postage, provision be made also for the issue of a bilingual stamp.

The Budget-Mr. Lacombe

The budget, as brought down by the hon. Minister of Finance (Mr. Robb) whether it deals with the improvement of the economic conditions in the country, the readjustment of our financial standing, or any other matter of great national import, affords quite a diversified field of endeavour to any member wishing to take part in this debate. The population of Canada, I am sure, hailed with a feeling of hope and confidence those reductions which this government has been pleased to bring about in the income tax, the postage rate, and generally in the public expenditures of this country. The striking decrease in our national debt, the general reductions in the taxes which will be a relief to the overburdened taxpayers, the material progress shown in the management of our railways are, in my humble opinion, indicative of the ability and wisdom of those who are entrusted with the administration of public affairs, and also bear witness to their sense of duty and loyalty.

Hardly four years ago when the right hon. leader of the opposition (Mr. Meighen) and his !hon. colleagues were forced by the popular will to relinquish power, the Liberal government had to carry on through the most trying conditions it had ever .experienced. Unemiplojunent waa rampant all over the country. Those who now discuss most bitterly tihis important problem of our national life -were at that time occupying the treasury benches, while the right hon. leader of the opposition was Prime Minister. It was incumbent on those hon. gentlemen enlightened by a sincere and true patriotism, to make up for such inroads on the public funds for which a prodigal and antinational administration were responsible.

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An hon. MEMBER:

Hear, hearl

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LIB

Liguori Lacombe

Liberal

Mr. LACOMBE (Translation):

On the 15th of April last the hon. member for South Wellington (Mr. Guthrie), in the first of a series of speeches in criticism of the budget, attributed the ever-increasing prosperity of Canada to the magnificent effort of her people and to the liberality of Providence. With all due deference to the hon. member, I beg to state that under the administration of the right hon. leader of the opposition, and of his predecessor, we have been time and again blessed with the gifts of a bountiful Providence and with abundant crops, but the governments then in power did not know how to make the best, in the interest of the Canadian people, of the great opportunities offered by an incomparable nature and the liberality of a generous Providence. Throughout the country, in our immense western

plains as in our rich and fertile eastern regions, when the products of the soil were reaching a promising maturity, when the first and best interests of Canada and her fondest hopes commanded our leaders to act with extreme prudence and to the best advantage of our country, yet too young to be sacrificed on the altar of an exaggerated and blind loyalty, by striking agriculture at its very heart they wrenched from the Canadian farmer his vitality, his strength and the vigorous arms necessary to gather the crop. What has been the result of that guilty enthusiasm? An overwhelming debt, taxation, the instigation of strikes and often misery and agony. So, on December 6, 1921, from one end of the country to the other, there was but one voice to condemn the costly policies of our predecessors. Then the Liberal government entered upon its work of economic restoration, of readjustment of our finances with the generous and sane support of the mandatories of the people. This is why, in a magnificent effort of energy and loyalty our leaders go on legislating for the common weal, with a sentiment of doing their duty and of acting in the public interest.

Allow me, now, Mr. Speaker, to express my views in regard to our tariff policy. I see that the government has cut down the duty on automobiles entering the country, leaving however to our national industry a protection of 20 to 27J per cent. Especially in the course of the last decade the automobile industry has given our 'commerce a tremendous impetus and it is to be counted among the great factors of progress. Even agriculture finds it most advantageous. A touring car had been considered for a long time as a luxury reserved exclusively to people of means. With a true humanitarian outlook our leaders realized that those who toil, work and suffer during long hours of a protracted labour have a right to a share of the rest, of the well-earned relaxation, and of the happiness enjoyed by the rich and the powerful. I believe that will, more than anything p'se be to their credit.

In a. country like ours, with sudh diversified interests, with aspirations often incompatible, the tariff must not sacrifice the interests of one class towards benefiting another, nor injure the rights of anyone. That is why the Liberal government is an enemy to all monopolies and condemns those who impose upon the people. Besides, what did we see under the system of high protection favoured by our predecessors? Our imports were very much in excess of our exports and the balance of trade was turning more and more against us from day to day. My hon. friend the

The Budget-Mr. Lacombe

former minister of Finance (Sir Henry Drayton), who is now laughing, is well aware of the fact. Speaking on behalf of the government the minister of Finance recently announced to the delight of all the Canadian people that our domestic and foreign trade was making Considerable strides, giving Canada a favourable balance of trade of over four hundred million dollars. Are. we not entitled to take some pride in our country when it so readily comes out victorious of the nearly insurmountable difficulties which beset it through the inefficiency of a prodigal and incompetent administration? That is why, Mr. Speaker, I am 'loath to accept the views of certain large interests and contributors to the electoral funds of hon. gentlemen opposite, who apparently are very much put out by the cutting down of the tariff duties on automobiles. On the contrary, the price of the cars being much lower and within the reach of 'almost everybody, there will be, as a consequence, an increased demand. Therefore, instead of hampering that industry the government are expanding lit and giving it a new impulse. I shall go further and, according to the principle that I laid down a moment ago, that the automobile had become a prime necessity, I do not hesitate to say that it would be unfair, in order to give one industry an exaggerated protection, to deprive the farming and other Canadian industries of the valuable opportunity to progress and to reach their goal But should the buying of a car affect the welfare of the poorer class by making them the victim of an exaggerated luxury, I should at once disapprove of the expenditure that the fondness for the automobile involves.

Did hon. members opposite, absorbed as they are in the earnestness of their policy of protection, ever think for one moment of the interests and the unquestionable rights of 'he consumer? Do they forget that an increase of the tariff means more taxation for the people? Do they forget that the Canadian producer is continually requesting the government to find new markets for his products and that the one truly national tariff policy is that which is beneficial to all and hurts nobody. That is what this government had in mind when it established new business connections with European countries. After all, is it not the way of founding the public administration on the principles of sound political economy? Therefore I am glad to pay this compliment to the present members of our government that owing to their sane and enlightened administration Canada is recovering from the crisis that followed the war better than any other country in the world.

The present, budget evidences a state of welfare akin to prosperity and none are more jealous of it than our opponents. Let me tell them very sincerely that pertinacity, economy,

wisdom and efficiency, in conjunction with the so valuable and so varied natural resources of this country, can solve all difficulties, even to paying off the enormous indebtedness that, they forced upon us.

I also notice with pleasure quite a substantial reduction in the postal rates. That re duction relieves all classes of the community: manufacturers, business men, farmers, professional and labour men and will give a new impulse to every line of commercial activity.

The repeal of the receipt tax will be received by the people with a good deal of satisfaction, for apart from the inconvenience inseparable from all taxation, that was the cause of numerous misunderstandings and much trouble.

Realizing that the small wage earners and those who have not the advantage of being wealthy are entitled to as much aid and fair play as possible, this government thought, proper to make some alterations in the income tax act. It is a striking contrast as between the present administration who are not sparing of care for-those who need it the most, and the former Tory government whose protection seemed to be applied only to people favored with a fat purse. In support of this statement I need but point out the income tax exemptions granted by the conservative government to Victory bond subscribers.

Mr. Speaker, before concluding these few remarks, let me take up in this House a statement made recently by the hon. member for South Winnipeg (Mr. Rogers) at Montreal, being the repetition of the ever recurring wail of an opposition (hankering for power. " Where is the government," said he-before the so-called Liberal-Conservative association of that city. I do not know, Mr. Speaker, that the government is anywhere but in the majority of the representatives of the people and only partisans lured by the desire of power can deny it. Does the hon. member forget, that the people of this country have eloquently ratified the decision taken by our leaders to summon parliament and to rule with the majority of its members? Does he forget that the government have won victory after victory in all the by-elections since held and have splendidly increased the majorities received by their supporters in the general election of October 29 last? When hon. members wrongly assert that there is no legislation before the House, I wonder whether they are

The Budget-Mr. Morand

not suffering from the same delusion that blinded them at the opening of the session. But in spite of the erroneous statements spread about by their opponents, the Liberal administration are pursuing their work of economic reconstruction, always progressing in the path of prosperity and carrying out very well the task with which they were entrusted by the people of this country.

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LIB

Liguori Lacombe

Liberal

Mr. LACOMBE (Translation):

Will my

hon. friend allow me to ask him on what grounds he makes this statement that the province of Quebec is Conservative?

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May 11, 1926