Mr. RHODES:

Conferences were held by

the officers of my department with every province and we had the cooperation of British Columbia up to a point. Either the province of British Columbia is prepared to make its contribution or it is not, and no further conference is required. I say to the hon. member for Vancouver Centre and the house that this bill has not been introduced in a spirit of pique or because of a desire on the part of the government to raise a sectional issue; it was brought forward with very great regret with a view to preserving the value of the act to the other eight provinces where it is acceptable and desirable.

Mr. MACKENZIE (Vancouver):

Just one word more in response to the remarks of the Minister of Finance (Mr. Rhodes). The question is not whether the province is prepared to make a contribution; it is whether provincial authority, that of British Columbia or any other province, is to have its jurisdiction with regard to land taxes, water rates and in some cases school taxes affected by the mandatory order of a board of review. That is the clear issue, and not as the minister stated it.

Mr. RHODES:

If we withdraw the operation of the act in British Columbia they cannot raise any constitutional question. We are not trying to impose upon them what the premier of that province has said we are trying to impose.

Mr. MACKENZIE (Vancouver):

The government is taking a most extraordinary course. The obvious course would be to try to keep the benefits of this legislation in British Columbia. The minister is not only withdrawing this legislation from British Columbia but he is imperilling its operation in the other provinces. The minister has said that a decision of the Supreme Court of British Columbia that this act is ultra vires will have no effect upon the other provinces,

Farmers' Creditors Act

but I submit that it will have a tremendous effect. * Although an edict of the Supreme Court of British Columbia does not govern in the other provinces, once a province has made such a declaration the other eight provincial governments will be invited to test the validity of this federal statute. Once the Supreme Court of British Columbia has given a decision, any private creditor who is dissatisfied will be encouraged to launch a proceeding in any other province.

Mr. GRAY:

This legislation affects the whole nine provinces of the dominion. When the Minister of Finance (Mr. Rhodes) was introducing this bill a few days ago he stated that while the law officers of the crown did not have any doubt as to the validity of this act, they did not feel like testing the act before the courts. This act is either good or bad. It has been placed upon the statute book by this government, and instead of running away from the issue the dominion parliament should place its powers behind the act and be represented not. only at the hearing to be held to-morrow but before every court in which the validity of the act may be tested. The Prime Minister (Mr. Bennett) stated this afternoon that we are not going to defend our own legislation; we are going to permit an interim injunction to be made permanent. I could not follow the reasons which he gave for this action, and I doubt if any other hon. member could. If this interim injunction is allowed to be made permanent without opposition it is bound to bring about the result suggested by the hon. member for Vancouver Centre (Mr. Mackenzie). I ask the Minister of Finance to reflect further upon this matter. I think he should aslc that the hearing to-morrow be adjourned in order that the dominion government may be represented, and I am sure if he does, the request will be granted. This legislation has been passed for the equal benefit of all the nine provinces.

Mr. RSID:

I am very sorry that the

government have seen fit to introduce this legislation. The Farmers' Creditors Arrangement Act was supported by every hon. member of the house and the government is now denying to the farmers of British Columbia the rights given under the act to the farmers of the other provinces. Apparently the government has decided not to enter into any conference or to modify the act in any way; they have decided to withdraw it entirely. If that absurdity were carried to its logical conclusion, the province of British Columbia should now perhaps endeavour to obtain an injunction against the dominion govern-

ment to prevent the province from being denied the benefits of this act. Further, the province of British Columbia will be called upon to pay a part of the cost of administration of this act in other provinces as well as a proportion of the losses which are bound to occur, and yet the benefits of the act to the farmers are being withdrawn. I ask the minister if it would not have been possible to make some change or amendment in the act in connection with agreements for the purchase of land or taxation or in connection with contracts entered into between individuals and the provincial government or dyking commissioners. The minister this afternoon, if I rightly understood him, said that the province of British Columbia was not prepared to assume its proper share of the cost but was willing to stand aside anld see bondholders and others taking a loss which would accrue when the farmers received an adjustment under the act. I would point out that there are other phases which in my opinion are responsible for a heavier load, and that has been touched upon by the minister. Let me cite an instance in my own municipality. We have a dyking area with a bonded indebtedness of $100,000. A tax levy is made every year in that area to take care of the interest and sinking fund, and that tax is spread over those in the area. Certain farmers in that district appealed to the receiver general and I understand that two cases were to go to the board of review. Would it have been fair to allow the rest of the farmers to assume a load of debt which would have been thrown upon them, through certain farmers being given an adjustment? There are some farmers who owe from $300 to $500 in taxes, and the dyking commission did not compel them to pay the taxes, but in one or two instances they appealed to the reoeiver and as well to the board of review. If an adjustment had been made with respect to these taxes owed by the farmers, the rest of the debt would have had to 'be borne by the other farmers within that area. We endeavoured, when the act was under discussion, to direct the attention of the minister to that aspect of the matter but little attention was paid to it. So far as British Columbia is concerned, it was not a matter of cutting off taxes; the point is that certain people had entered into an agreement with respect to dyking and water taxes, something on which bonded indebtedness is raised. It was not a case of redress being given by the provincial government, but the fact is that a heavier load would have been placed on the farmers of that dyking area. The government has

Farmers' Creditors Act

been high-handed in going ahead with this bill. Would it not have been possible to make some adjustment in the act to take care of the matter under dispute without withdrawing the whole act?

Mr. RHODES:

We must bear in mind

that of the total number of settlements effected in Canada up to the end of May, 5,852, there were 4,602 effected by compromise and agreement, and only 1,250 as the result of decisions of the boards of review. I do not think that any better evidence could be given of the fact that the spirit of the act has been carried out than to cite these figures. The whole underlying motive of the Farmers' Creditors Arrangement Act was compromise, conciliation and amicable adjustment, and it has worked out in that manner. My hon. friend from New Westminster (Mr. Reid) wants to know whether there could not have been some other amendment to the act. I do not think so, but I will say this. If the government of British Columbia had made representations to us calling on us to make some special concession which ought to have been made in view of certain conditions in that province, they would have been considered. But what are the circumstances? We had some communication with British Columbia as with the other provinces, and up to the point where this injunction was brought, coming as it did like a bolt from the blue, we had no idea that the intention of British Columbia was to challenge the act in this arbitrary manner. It has been suggested that our action is high-handed. Well then, the government of British Columbia must assume the entire responsibility. All we do is to say, "If you are going to challenge the act we will not force it on you; we withdraw it from the province and allow it to operate in the other eight provinces."

Mr. GRAY:

Why not defend the act?

Mr. RHODES:

That is a question of

opinion. My hon. friend, inadvertently I am sure, made two mistakes. He said that the officers of the Department of Justice had said they had no doubt that the act was constitutional.

Mr. GRAY:

I was quoting what the hon.

member had said.

Mr. RHODES:

Just a moment until I

finish my sentence please. He said that the Department of Justice had said they had no doubt as to its constitutionality. As a matter of fact, what the department did was to

give an opinion. They said that in their opinion the act was within the competence of parliament, in other words, that it was intra vires.

Mr. GRAY:

That is all I said.

Mr. RHODES:

Now the second statement, as regards doubt, arose in connection with the statement I made on the introduction of the bill, namely, that while there was this opinion of the Department of Justice, what the courts might say might be entirely different, and that it would be unwise to imperil the act by action on the part of the province of British Columbia when it was accepted in the other eight provinces.

Mr. MACKENZIE (Vancouver):

The

minister said he never heard a suggestion with regard to adjustment. Was not the government in receipt of a telegram from a gentleman acting in a legal capacity for the province of British Columbia to the effect that he and the attorney general of British Columbia had forwarded to the government a suggested adjustment? May I read the following telegram to the Minister of Finance. The federal government's legal adviser in Victoria and the attorney general-

-had made a tentative arrangement concerning the operation of the act in this province prior to announcement in house by Hon. Mr. Bennett subject to confirmation by this and federal governments. Arrangement suggested was that first board of review would not interfere with provincial right to levy and collect taxation. Second, we would have official of this government delegated to act as liaison officer with board in respect to adjustment of crown contracts, board agreeing to accept reasonable suggestion of our official as to necessity for compromise or not.

I suggest that that tentative agreement between the attorney general of British Columbia and the gentleman who was acting in a legal capacity either for the board in British Columbia or for this government was telegraphed to this government before the bill was introduced, and when the Minister of Finance gets up and says that there was no attempt at amicable adjustment, I submit that the facts as I have stated them are contrary to his assertion. I do think that if that offer was madte by the attorney general, collaborating with the minister's own representatives in British Columbia, the government should have given it the fullest consideration before introducing in this house a bill such as the one we have before us.

Mr. RHODES:

The committee will bear

with me when I say that for a period of days I was confined to my house-

Farmers' Creditors Act

Mr. MACKENZIE (Vancouver):

I am

not blaming you.

Mr. RHODES:

-and for that reason I was not familiar with the day to day letters and telegrams which passed. But as at present advised, I know that the chief official receiver, Mr. Davidson, had frequent conferences with the attorney general of British Columbia and also with the Minister of Lands and Municipal Affairs, Mr. Wells Gray, so that there was no question of lack of complete cooperation so far as the officials of the department, in relation to the Farmers' Creditors Arrangement Act, were concerned. There may be some correspondence of which I have no knowledge, but so far as I am personally concerned I may say that the action of British Columbia came like a bolt from the blue. There was no intimation of which I am aware at the moment on the part of the province that it intended to resist the act up to that point.

Mr. MaoINNIS: I am not going to try

to apportion the blame between British Columbia and the government here; possibly there is some blame on both sides. But whoever is to blame, there is no doubt that if this legislation passes, certain farmers in British Columbia for whose benefit the Farmers' Creditors Arrangement Act was passed will suffer. They will feel the effect of this action. I am going to suggest to the Minister of Finance that in order to give the government of British Columbia some time to consider the matter, an amendment might be made to this measure that it would not come into effect until a certain date. That need not be far distant, and this would give the provincial government an opportunity to approach the federal government and would show that the federal government was quite ready to be approached. Would the Minister of Finance take that suggestion into consideration?

Mr. RHODES:

I hope the hon. member

for Vancouver South will realize that we cannot accept any sugegstion as to blame in this matter. We have taken precisely the same course in trying to cooperate with British Columbia as we have with regard to the other eight provinces, and no question has been raised by them. I may point out to him that although the act was proclaimed in British Columbia on November 1 last and was in operation there, it was only in May of this year that this action on the part of British Columbia was taken. I have said before that we brought in this bill with

reluctance and regret. If the British Columbia government want to take action, why, we shall not proceed with this bill but if they persist in the course they are pursuing, we have no alternative, and inasmuch as the chances are that this bill would not pass the Senate for a day or so, I may say to my hon. friend that if there is any indication of a change of attitude on the part of British Columbia showing that they are prepared to cooperate with us, I should be very happy, when the bill reaches the Senate, to have them insert in it an amendment to have the act come into force only on proclamation. I think that will meet with my hon. friend's views.

Mr. JACOBS:

I am glad to have this statement from the Minister of Finance that there is still a possibility at the eleventh hour of having this legislation postponed. I was a member of the house who had something to do with the introduction of the Bankruptcy Act in 1919-and my hon. friend will remember that it was introduced by a private member, myself, in that year; it was afterwards adopted by the government and put through I think in 1920, when the present Minister of Justice (Mr. Guthrie) was Solicitor General and had the bill in charge-I do not like to see the legislation begun at that time truncated as it would appear to be by the proposed measure. We have in Canada nine provinces with the act applying generally to them all. I do not understand why through a piece of pique, this action should be taken. Of course my hon. friend shakes his head but the fact remains that while British Columbia may have gone about this matter in an undiplomatic way it is proposed to remove from that province the benefit of this legislation. There is no doubt there is benefit attached to it, otherwise it would never have gone through and the Minister of Finance would not have received all those encomiums which he said he had received.