Mr. DUNNING:

My hon. friend will permit me? He will at least do me the justice, I am sure, of admitting that I stated in the budget address that I proposed making free some fifty items in connection with which the trade with Great Britain had been and probably would be ineffective, because I regarded it as an absolute absurdity to have a tariff against Great Britain on hay and straw, or, for instance, on natural gas piped into the country. The purpose was just to eliminate that absurdity.

Why mention them?

Mr. DUNNING:

Because I was eliminating them.

Mr. IRVINE:

I hope, Mr. Speaker, you

are paying attention to the time, because time is a very important element in a private member's speech. May I say to the hon. minister that it is not my intention to leave the impression that these are all the commodities that are given the benefit of the British preference. I am not trying to make an absurdity out of the entire budget. I am merely pointing out that a great number of these articles have no meaning, but may be counted in the pending campaign as having real significance when you merely total them up. On the other hand, I quite agree that the minister has not confined his revision to matters of this kind. There are other things that will count I hope, and I am very glad to congratulate the minister on having made the alterations.

Now, I have something to say about the other feature of the budget, that is, the increases; these have not yet been touched on at all. Let us take, for instance, tea. True, something has been said about tea already. I imagine the housewives of Canada think they are going to have a cheaper cup of tea than ever before, and yet when they put a certain kind of sugar in it they will have a much dearer cup of tea than they have had for many years. The tariff on sugar, I understand, has been raised 325 per cent.

Mr. DUNNING:

My hon. friend is quite wrong; sugar has not been touched at all.

Mr. IRVINE:

I have here, I think, the

actual quotation. Somebody says it is a different kind of sugar. I am not questioning

what kind of sugar it is; I said it was sugar; and that is all I have to say about it.

Mr. DUNNING:

Does my hon. friend

know what invert sugar is?

Mr. IRVINE:

Yes, I like it in my tea.

Mr. DUNNING:

Invert sugar!

Oh, oh.

Mr. IRVINE:

The tariff on invert sugar is raised 325 per cent. At any rate when you put the tea with the sugar it is a bad proposition.

Mr. DUNNING:

It surely is.

Mr. IRVINE:

I would call attention also

to the fact that the 50 per cent empire-wages-and-materials regulation has not been touched at all. I may also point out to the minister that boots and shoes and textiles remain as they were. We might do with some trade from Great Britain in these matters; such trade might cheapen the purchase of boots and shoes by the Canadian people. Also it is altogether likely that if the British preferential tariff applied clothing might be supplied a little cheaper. I do not think however that such a policy would be popular in Montreal; in fact I have an idea that it would not be. I do not suggest for one moment that that is the reason why the hon. minister did not include it; perhaps he did not notice it when he was hastily preparing the budget. I am sure, however, that it would make a great deal of difference to the consumers' league and it no doubt would be beneficial to the hon. member for Weyburn (Mr. Young). At any rate the tariff reductions on goods from our natural market have been apparently abandoned; there are increases in this regard.

I wish to refer particularly to iron and steel, and I take those commodities because I believe they afford a good example. The hon. minister mentioned that they were two of the most important items. I am not opposing the statement made by the minister and I am not opposing the companies whose names I shall mention in regard to it, but I merely mention these industries in order to get information from the minister as to why he made the tariff increases which he did make in respect to them. To my mind the reason for the raising of this tariff would be of extreme interest and would be quite illuminating. I wish to quote certain facts in connection with some companies which will be affected; and I shall first refer to steel stocks. During the last few years steel Stocks have done very well. Taking $100 as the average price in 1926 ithe value to-day is represented by the figure $231; that is, they are worth

The Budget-Mr. Irvine

two and one-third times as much as they were worth in 1926. Let us look at the real profits of some of these companies; take as one example the British Empire Steel Corporation. They show a profit in 1929 of $6,046,647, which has risen from $4,187,403 in 1928. These are gross figures from which interest on bonds, and so on, had to be deducted. The company laid aside for sinking fund, depreciation and depletion the neat sum of $2,093,344 as compared with $1,478,017. After paying bond interest and bond discount they arrived at a net profit of $2,226,636 in 1929 as against $855,938 in 1928, an increase in net profit alter these generous allowances, of $1,370,698. This represents a substantial gain.

Someone has said that the man with the millions wonders from where the next million will come. Meanwhile let us see how some of the other companies wore doing; lot us take as another example The Steel Company of Canada Limited. You will be shocked to learn that it was struggling along with an income slightly in excess of $5,335,000. The following extract from the Financial Times will be illuminating:

Manufacturing profits for the year amounted to $4,936,067 as compared with $4,051,705 m 1928 and $3,166,280 in 1927. To this was added investment income of $399,189 making a total income of $5,335,256. After deduction of sinking fund at $325,828; depreciation at $1,158,897; bond interest at $312,264; preferred dividends at $454,741; common dividends at $805,000 and pension reserve for employees at $300,000, there remained a surplus for the year of $1,978,520. Previous balance was brought forward at $12,042,376, making a profit and loss balance in the current report of $14,020,902.

There is the situation in respect to some of the companies which are affected by the extraordinary increase in the tariff on steel products.

There is no protection for steel workers.

Mr. IRVINE:

I hear of none. When I reviewed the budget, to my mind there appeared to be one class of people who did not seem to profit; I refer to the labouring class. I cannot find that the minister had them in mind at all.

WTiat about tea?

Mr. IRVINE:

Mir. DEPUTY SPEAKER:

The hon. member has exhausted the time at his disposal.

Mr. IRVINE:

I do not think, Mr. Speaker, that you made allowance for time taken off, but I shall submit to the order of the house.

Mr. R. S. WHITE (Mount Royal):

Mr. Speaker, at the opening of the session I gave notice of a resolution in regard to the discrimination in taxation as between privately owned and publicly owned utility companies, having particular reference to light, heat, and power companies. Opportunity, however, did not present itself for the discussion of that resolution, so I avail myself of this opportunity to address the house on the subject for a few moments.

As hon. gentlemen are aware, publicly owned utility companies are exempt from income tax. In the case of provincial enterprises that exemption is provided for by the British North America Act, which states:

No lands or property belonging to Canada or any province shall be liable to taxation.

Of course, so far as that exemption is concerned, nothing can be done by this parliament, but this exemption was extended to municipally owned utilities as well. On the other hand all privately owned utilities are subject to income tax, thus creating a discrimination which not only in my judgment, but also in the judgment of every fair-minded man, is unfair and indefensible.

Certain remedies have been suggested; one is to abolish the exemption which has been extended to municipally owned companies, but I fear that if such a course should be pursued the municipalities would hand over to the province the properties owned by them to be administered by the province, and so taxation would be escaped. Another suggestion is that the income tax should be levied upon the gross and not upon the net earnings, but in that case also I fear that municipal enterprises of this character would 'be handed over to the province, and so an attempt of this kind to equalize taxation would become ineffective.

In a word, in my judgment the only way to bring about equity in taxation-and surely that is something desired by every member of this house-is to abolish the income tax entirely with regard to public utilities. I do not intend to weary the house wiith extracts

from the reports of privately owned companies bearing upon this question, except for just a brief moment. Taking it on t'he basis of the gross sale of electricity for municipal stations the result would be 3 per cent of $32,000,000, with regard to Ontario, or 3 per cent of over $44,000,000 with regard to the whole of Canada, so that there would be an increase of $1,320,000 annually in respect of income tax in the event of that tax being imposed upon publicly owned utilities. The gross revenue from the sale of electricity in Canada amounts to over $104,000,000 annually. Of this amount over $44,000,000 is derived in the province of Ontario and over $33,000,000 in Quebec. Of the Ontario receipts over $32,000,000 is furnished from publicly owned *municipal stations, which pay no income tax at all, -while in Quebec only a little over $1,000,000 is received in respect of municipal stations. The consequence is that the people of Ontario pay no tax on over $32,000,000 worth of electricity purchased, while the people of Quebec pay no tax on only about $1,000,000 worth cf electricity purchased. This obvious discrimination is one I ask the Minister of Finance and the government to remove in justice to the people of the various provinces.

If it is not removed, what fair deduction can be made? We can only take it that the government desires to aoerce t'he people of the province of Quebec who, in the exercise of their own free will and judgment, prefer privately owned corporations to publicly owned corporations; to compel the peicple of that province to turn over privately owned utility properties to the municipality or to the province. If that end were effected the whole income tax revenue now derived by the government so far as these corporations are concerned would disappear. It has been wittily said of the late naval conferences held in London that the delegates were actuated by "faith, hope and parity; these three, but the greatest of these is parity." Sir, what I ask this government, the members of this house to consider, with a view to bringing it about, is parity or equality of taxation upon public utitlities both publicly and privately owned.

Now I crave the indulgence of hon. members, Mr. Speaker, and ask the permission of the house, as I turn to the budget speech, t-o allow me to depart from the rule of the house which declares that a member shall not read his speech. I dlo that chiefly because I rarely take up the time of this house, so perhaps for that reason I may be granted this indulgence.

The Budget-Mr. White (Mount Royal)

I desire to extend my personal congratulations to the Minister of Finance (Mr. Dunning) on the manner in which he discharged the onerous task laid upon him last Thursday. Much had been expected from him and I am sure that in this respect he did not disappoint his friends. In arrangement of matter, in avoidance of undue detail, in clarity of expression and in force of delivery, his speech was most admirable, confirming the confidence of his political supporters in his great ability and large capacity for work. Having said this much in deserved praise, I hope I shall be pardoned if I add, employing the words of a critic, that there was much in the speech that was new and much that was good; but what was new was not good and what was good was not new.

I most heartily applaud that portion of the hon. minister's speech which announced the adoption in part by the government of the protective features of Conservative policy-protection to agricultural interests, protection to iron and steel industries, and reduction of sales tax. These things have been for a long time pressed incessantly upon the government and never more strongly than during the present session of parliament. Now the coon lias come down. These admirable features of the finance minister's speech are good but not new. What is new but not good is the handing over to other countries the making of the Canadian tariff of duties on certain classes of goods when imported into this country. Call the scheme countervailing, retaliation or what you please; by any name it smells as rank. If the flexible duties provision is retained in the tariff about to come into operation in the United States, it will continue to invest in the president the power to alter tariff rates by proclamation. Under the government proposals the plain inescapable position would be this: that neither customs officer nor importer would know with absolute assurance from day to day what rate of duty should be collected on these specified articles when imported into Canada. That assertion may seem to some be a grotesque exaggeration, but it is a fact. In my judgment the proper course would be to enact in the tariff such rates of duty as are required for the welfare of the agricultural classes of Canada in order to preserve to them their home market. The purpose of the countervailing duties can be neither concealed nor camouflaged. They are aimed at the United States and, as such, I certainly have no objection to them. What I do contend is that the variableness to which they are exposed should be removed and fixed definite rates adequately protective of Canadian farmers substituted.

There was an omission in the budget speech of the hon. the finance minister, which cannot have escaped observation. I refer to his failure to make any forecast of the financial results of the current fiscal year. Such forecast is almost invariably made by ministers of finance, chancellors of the exchequer, provincial treasurers, when making their annual financial statements. I do not wonder, however, at the silence of the finance minister on this point. He is heading for a deficit. The days of great surpluses of which worldwide prosperity permitted this government to boast and which were hailed by its supporters as evidence of heaven-born financial genius, are gone; I will not say never to return, because other men will soon occupy and other measures come from the treasury benches; but I am as certain as I am of my own existence that when the current fiscal year closes not a surplus of $44,500,000, but a deficit, will be shown in the public accounts. How can it be otherwise? From customs and excise taxes alone the revenue decreased by $14,100,000 in the last half of the fiscal year as compered with the coresponding period of the preceding year. The finance minister estimates a loss of $22,000,000 in sales tax from the reduction in rate just made; the income taxes based on 1929 incomes, a leaner year than 1928, may reasonably be expected to decline $10,000,000, and then there are tariff reductions w'hich will involve a loss of revenue of an unknown but certainly not an insignificant amount. If the finance minister pulls through the current fiscal year with a net loss of revenue on consolidated account of less than $45,000,000, he will be lucky.

And then the expenditures; they have a persistent habit of going up. In the last fiscal year they were $22,500,000 more than 192829. The main estimates for the current year reveal no evidence of economy but quite the contrary-and the supplementary estimates have yet to come. Estimates are always large when an election is in the offing. Soldiers' pensions, which this house is gratefully and willingly extending, will make a further drain on the public revenues. So, Mr. Speaker, from the government standpoint the finance minister was well advised in withholding from the house and the country the information that the day of deficits has come.

I have referred to the sales tax. Greatly do I regret that this war impost has not been abolished this year as it should have been. There was force in the argument that to remove the tax in whole when it stood at 5 per cent would involve rather serious loss of merchants carrying stocks of tax paid goods, but that argument does not apply when the

1848 COMMONS

The Budget-Mr. White (Mount Royal)

tax has been cut down to 1 per cent. Hon. members looking into shop windows may have seen articles marked down from $1 to 99 cents, a reduction made without serious loss to the merchant. It costs as much to collect 1 per cent as to collect 10 per cent and in retaining the low rate-one-half per cent in the case of boots and shoes-the government also retains the cost of collection, to say nothing of the nuisance to merchants. It would have been infinitely better and more economical in the net, had the finance minister followed the course pressed upon him by the Conservative party, to abolish this war tax altogether.

Then, sir, we have the piece de resistance, the head and front of the new departure in fiscal policy, namely, enlargement of the preferential tariff. History again repeats itself. I have to take memories of members, older men particularly, back four decades to the years 1889, 1890 and 1891, when the Liberal party fought the fight and staked its political fortunes upon a policy of unrestricted reciprocity with the United States. I know whereof I speak, for I was engaged in those struggles, and as I looked up in the library recently the utterances of Liberal leaders at that time, wandering, it may be among the tombs, it was melancholy to find that in a division list on unrestricted reciprocity in 1891, only one member of the 202 who voted, namely, myself, remains in this house. Interesting, indicative and informative as extracts from Liberal speeches and Liberal resolutions at that time are, I do not intend, Mr. Speaker, to weary the house with much quotation. The policy of the Liberal party upon which it fought the election of 1891, was commercial union, or as it was termed, unrestricted reciprocity with the United States. The tariff wall was to be swept away between the two countries and a common tariff erected against all other countries, including Great Britain. Two brief quotations will suffice to show the attitude of the Liberal party at that time, quotations taken from speeches by their financial adviser and one-time finance minister, Sir Richard Cartwright. Speaking in the House of Commons in the session of 1890, he said:

If unrestricted reciprocity does discriminate against Great Britain, we have a right to. Our own interest is paramount. We owe Great Britain nothing hut charity for her atrocious blundering against our interests. There never was a time when Canada could not have bettered her condition by joining the United States.

We must remember these are the words of an official leader of the Liberal party, declaimed in the House of Commons and loudly cheered by his supporters in that chamber.

[Mr. R. S. White.}

Again on February 4, 1891, speaking at Oshawa, Ontario, Sir Richard said:

If free trade with the American nation will be good for us, let us vote for it, though it should involve discrimination against Great Britain twice over.

Mr. Speaker, I could continue to make quotations ad nauseam from Liberal leaders breathing the same disloyalty to Great Britain, the same eagerness to annex Canada commercially to the United States. Then what happened? The electors of Canada rejected the Liberal policy in 1891. Edward Blake gave it the finishing blow and then, in desperate plight, in hope of deodorizing the policy which literally stank in the nostrils of the Canadian people, the Liberal parliamentary party in 1892, less than twelve months later, turned a complete somersault, a volte face unprecedented in political history, and put forth the doctrine of preferential duties on British goods.

The Conservative party was not alarmed at this futile attempt of the Liberal party to wash away its sins. As Sir Robert Borden declared in the House of Commons on January 26, 1911:

The Conservative party stands to-day as _ it stood in the past for the policy of reciprocity within the British Empire.

Time passed. In 1896 the Conservative party went down to defeat and the Liberals came into office. Fifteen years later they were again looking to Washington where Hon. Mr. Fielding and Hon. Mr. Paterson, acting on behalf of the Laurier government, entered into a reciprocity pact with the United States government that literally in respect of its durability was not worth the paper it was written on, a pact obnoxious to the people of Canada as had been the unrestricted reciprocity policy of twenty-one years before. Observe what the whirligig of time 'brings about with a political party of unstable principles:

(1) Opposition to fiscal protection.

(2) Commercial union with the highest protectionist country in the world.

(3) Preferential duties upon British goods.

(4) Again, reciprocity with the United States, and now,

(5) Extension of preferential rates upon British goods.

Surveying these gyrations in policy, this jumping from one extreme to the other, this blowing hot and blowing cold upon preferences in promotion of British trade, one is reminded of the lines of James Russell Lowell:

A marciful Providence fashioned 'em holler,

In order that they might their principles swaller.

Before I dismiss this branch of the subject, let me point out that, greatly as we on this

The Budget-Mr. While (Mount Royal)

side of the house desire to promote trade within the British commonwealth of nations, efforts thus far made have not brought successful results. The preferential tariff, as we have had it under Conservative and Liberal governments for more than three decades, has not enabled Great Britain to displace United States commodities with her own in the Canadian market. In 1896, the year before the preferential tariff came into operation, Canada imparted from countries within the British Empire, including, of course, the United Kingdom 33.4 per cent of her total imports and imported from the United States 50.8 per cent of her total imports; whereas in 1929, the percentage of Canadian imports from the British Empire had fallen to 20.3 per cent of the total, while imports into Canada from the United States had risen to 68.6 per cent. The table shows a steady trend, decade after decade, uninfluenced by tariff changes, preferential or otherwise, and it is a regrettable fact that in 1928-29, a year of abounding prosperity in Canada, our imports from the United Kingdom were only 15.3 per cent of the whole, as compared with an import of 68.6 per cent from the United States.

These figures, melancholy to those in whose breasts beat British hearts, prompt the thought: Why not try a policy of preference to Candian products? He who lives and labours in Canada is quite as important a member and as ardent a supporter of the British commonwealth as he who dwells in Great Britain or any other part of the Empire. Why not give him a chance? Why not frame the fiscal policy so that he may find work in farm, factory, forest, fisheries and mines? Should charity not begin at home? Yet, I have examined the revised tariff submitted by the hon Minister of Finance, have scanned its provisions with some care, and have yet to detect in it that open, frank, avowed creed that the Britisher domiciled in Canada has claims superior to a Britisher elsewhere; that, in a word, the policy of this country should be to encourage, assist and protect Canadians first and foremost, and after that, our fellow-subjects in other parts of the Empire. True it is that in a minor degree, some Canadian industries are sought to be helped in the tariff proposals, but in my judgment the gesture in this direction is inadequate. Yet, I do commend, as an adoption of the Conservative fiscal policy the words with which the Minister of Finance introduced the changes in the iron and steel schedule, when he said:

In raising the schedule, the government has kept in mind, first, the national necessity of maintaining an efficient and self-reliant iron and steel industry supplying Canadian consumer demand at reasonable prices.

Not much "death-knell of protection'' in that, Mr. Speaker; not much "free trade as they have it in England." I rejoice that the young low-tariff Lochinvar who came out of the west to lead to the support of the government the free traders of these provinces has at last partially seen the light, has at last changed his fiscal convictions-or should I say has temporarily submerged them, and has gloatingly, with the zeal of a convert, proclaimed "the national necessity of maintaining an efficient and self-reliant iron and steel industry."

Preferences, Mr. Speaker! In the course of his speech, the Minister of Finance declared:

This budget is frankly framed to enable us to buy more freely from those countries which buy from us most freely those commodities which are of vital importance to us and in the confident belief that by this means we shall help to develop and stabilize export markets for our surplus products.

Does it ever occur to hon. gentlemen opposite that the country from which Canadians should buy most freely and to which Canadians should sell most freely is Canada? In doing this, we reap a double profit on the trade-the profit of him who produces, and of him who consumes. What above all is needed is preference for Canadians in the Canadian market, for all sorts and conditions of Canadians, whether they work with their hands or their heads, for the tiller of the soil, the toiler of the sea, the mechanic in the mill, the labourer at the loom and the maker of merchandise.

The removal of the duty on tea is not now made for the first time. As long since as 1882, nearly half a century ago, the Conservative government of that day struck off the duty which had been placed on this article by a Liberal government and gave the people what was called a free breakfast table. Tea remained free until 1918, when a duty was imposed as a war revenue measure, and for eight years, from 1922 to 1930, the present government retained the tax despite large surpluses of revenue. I am heartily glad that there has now been done what long ago should have been done when war taxes were being remitted or reduced.

Before I close, I have a tip for the finance minister which he may find useful. The Canadian merchant marine is still very much of a white elephant. Its operating loss last year was $879,000, and its profit and loss deficit has now reached the formidable sum of $52,-

722,000. My tip to the finance minister is to adopt the sage course of the Minister of Trade and Commerce (Mr. Malcolm) and so increase the subsidies out of the national treasury to vessels of the merchant marine

1850 COMMONS

The Budget-Mr. White (Mount Royal)

that the balance sheet of the 'latter will be enabled to show an operating profit, and, if the subsidies are made large enough, even a profit sufficient to pay interest on the debt due the Dominion government. Or course, the treasury position is not bettered, nor the burden on the people lightened, but the deception may deceive some.

Mr. Speaker, an election impends; an issue had to be found. The expected moral one failed, and so another is sought in a budget whose principal features have been appropriated from Conservative policy. It is all very amusing and very characteristic of politicians whose principles can be changed when they do not suit. I recall, as apt to the situation of the government, the story of the hunter who related to a friend how he had taken his gun and his dog and started out for game. Soon the dog unearthed a rabbit. Off they ran, over the plain, down the glen, and uip the hill and over the plain again, with the dog steadily gaining, and just as it was about to pounce upon its prey the rabbit climbed a tree. "But," said the friend to whom the hunter was telling this story, "a rabbit cannot climb a tree." "I know that," he replied, "but this one had to."

On motion of Mr. Thorson the debate was adj ourned.

On motion of Mr. Dunning the house adjourned at 10.50 p.m.

Wednesday, May 7, 1930.