William Lyon Mackenzie King (Leader of the Official Opposition)
Mr. MACKENZIE KING:
Subtopic: PROVISION TO MEET EXPENDITURES AND INDEBTEDNESS INCURRED IN 1931
Hon. R.. J. MANION (Minister of Railways and Canals) moved for leave to introduce Bill No. 21, respecting the Canadian National Railways, and to authorize additional provision of moneys to meet expenditures made and indebtedness incurred during the calendar year 1931.
Mr. MACKENZIE KING:
Mr. Speaker, this bill is really one which in the past has been put through the house as a supplementary estimate, where necessary, for the Canadian National Railways. The object of the bill is to authorize the Canadian National Railways to raise an additional SI 1,372,000 for the purpose of paying various accounts for the last year which the estimates of last year did not meet. This bill is introduced for the purpose of allowing the railways the S11,000,000, which they require.
Probably I had better go a little farther in my explanation because, although I was informed by my officers that there were plenty of copies of the bill, I am now informed by the Clerk of the house that they are not available. With the consent of the house I should like to proceed a little farther. The fact is that in last year's estimates the Canadian National Railways were allowed the sum of 868,000,000, and they find they now require this additional 811,000,000 odd to meet the requirements of the past year. May I read one or two clauses from the bill, which I think, explain the situation:
The net additional income deficits including bond interest but not including interest on the Dominion government advances, is $20,000,000, against which-
That is 820,000,000 extra. There was an allowance last year in the Canadian National Railways estimates for a deficit, so far as interest to the public investor was concerned, of about 831,000,000. They find however that it is in the neighbourhood of 851.000,000. It is obvious therefore that about 820,000,000 is required to cover that amount. Against that however there is S13,000,000 odd under the authority of the proviso contained in last year's bill. That proviso permitted money which was not used for other purposes, and which was contained in the estimates of last year, to be utilized if the deficit turned out to be more than the estimated deficit. That provision allowed a 813,000,000 credit against the 820,000,000 extra deficit. Then there are some smaller amounts for equipment principal payments, sinking funds, and the like, amounting to 8192,077.30. For the purchase of new equipment the amount is set at 811,014,284.11.
May I explain that the purchase of equipment by the Canadian National Railways is usually done on what is known as the Phila-
Canadian National Railways-Finances
delphia plan. A payment of 25 per cent is made, and the remaining three-quarters is financed by lien notes usually issued-in fact, I think always issued-by the banks in the United States. The Canadian National Railways carried those lien notes without the guarantee of the government. However, because of financial conditions in the world, generally, and in the United States particularly the amount of 811,000,000 cannot be borrowed in the United States to-day, and therefore it comes back as an ordinary estimate to be paid by the Dominion government. That adds another $11,000,000 odd. Against that however there is $7,331,000, which w'as borrowed last year, and which was not spent for purposes authorized. There is in this bill a clause permitting the utilization of that balance. I do not wish further to enter into the matter because figures are confusing. The result is however that a net balance of $11,000,000 is required to-day by the Canadian National Railways as a supplementary estimate.
Mr. STEWART (Edmonton):
understand the minister to say that the money was used to pay interest to the public?
Yes, to pay interest to the lending public, and for other purposes.
It is for the calendar
Sir EUGENE FISET:
Is this over and
above the $10,000,000 authorized by order in council?
Over and above what?
Sir EUGENE FISET:
Over and above the $10,000,000 authorized last year by order in council?
I do not understand my
Sir EUGENE FISET:
A meeting was held, and at that meeting we were asked to endorse the action taken by the department to finance the Canadian National Railways. Does that include such an amount?
I am afraid I do not know to what my hon. friend is referring.
Is the bill to provide for the payment out of the consolidated fund, or to provide for funding this amount, and borrowing?
Funding and borrowing,
Mr. CA\ LEY: Is there any provision made for payment of the back interest in default on the Toronto suburban electric lines?
Mr. HANSON (York-Sunbury):
Does the statement of the minister mean that the Canadian National Railways failed, to the extent of $79,000,000, to pay their way last year?
No, it means that the
interest to the public last year is short by $52,000,000, in round figures. The interest was $57,000,000, and they have about, in round figures, $5,000,000 towards that amount. That does not include interest to the government. The interest to the public is about $57,000,000, and there is a surplus on operating of about $5,000,000 which leaves about $52,000,000 which the government of Canada has to meet. In addition to that there are statutory obligations which brings the total higher than that.
Mr. GARLAIsD (Bow River): When the minister refers to "interest to the public," does he really mean that, or does he mean interest to the bondholders?