June 23, 1942

The total of these increases due to the war should be reduced by $5,475,000 representing the aggregate of special grants to the provinces which were dropped in 1941 and replaced by the arrangements under the new Dominion-Provincial Taxation Agreements. This leaves a balance of $42,063,000. If we add to this the increased cost of unemployment insurance, namely $9,563,000, we get a total of $51,626,000. Some of the increases in the so-called ordinary expenditures of other departments might be regarded as due directly or indirectly to the war, such, for instance, as the $2,795,000 increase by the Post Office Department and the $467,000 for administration of the Royal Canadian Mounted Police. Regular subsidies to provinces increased by $640,000. Other minor in- creases were: Government Annuities $550,000; Public Works S429.000; Trade and Commerce $1,560,000; and sundry increases $1,780,000. The largest decrease in Ordinary Expenditures was occasioned by the suspension of the special grants to Provinces which amounted to So,475,000. Other decreases are as follows: Agriculture $156,000; Old Age Pensions $300,000; House of Commons $1,060,000; Senate $444,000; Chief Electoral Officer $2,188,000; Indian Affairs $204,000; Treatment and aftercare of returned soldiers $669,000; Pensions,. War and Military, $933,000; Transport $233,000; Sundry $320,000. These decreases aggregate $11,982,000.


16. Total expenditures charged to capital are estimated at $3,357,000 compared with $3,358,000 in the previous year. The main items in this category are expenditures arising out of dredging the St. Lawrence Ship Channel amounting to $1,952,000, and other construction and improvements, including lighting and radio facilities in connection with civil airways and airports, amounting to $1,250,000.


17. Direct war expenditures accounted for roughly three-quarters of the Dominion's total expenditures during the fiscal year ended March 31, 1942. This is, of course, apart from the assistance given to the Government of the United Kingdom by the accumulation of sterling balances or the repatriation of Canadian securities held in the United Kingdom. It is now estimated that Canada's total direct outlays on war account will amount to $1,394,- 033,000 for the past fiscal year. Included in this total is the sum of $42,480,000 charged to Active Assets, of which $18,149,000 represented additions to Loans and Investments and $24,331,000 represented advances to crown corporations organized by the Minister of Munitions and Supply for the purchase of scarce commodities. This total direct war outlay represents an increase of $615,609,000 over the corresponding figure for the preceding fiscal year. The rapid increase in Canada's war expenditures (including amounts charged to Active Assets) is shown by the following table: Fiscal Year 1939-40 $ 127,384,000 Fiscal Year 1940-41 778^424'000 Fiscal Year 1941-42 1.394,033,000

During the corresponding three years of the first World War, expenditures charged direct to war account aggregated approximately $533,000,000. It will be seen, therefore, that expenditures by the Dominion on account of The Budget-Appendix the present war have to date been over four times the expenditures made in the same period of the last war. They exceed by over S603,000,000 Canada's total expenditures for war and demobilization during the whole of the last war. Indeed Canada's direct war outlays during the past fiscal year were less than §300,000,000 short of the total cost to Canada of the last war. 18. If we deduct the amount charged to Active Assets, we get a total of §1,351,553,000 as the estimated total to be charged to expenditures on war account during the past fiscal year. This represents an increase over the previous year of $599,508,000. The amounts expended by the major Departments or Services and the increases over the preceding year may be summarized as follows: - Direct War 1940-41 Expenditures 1941-42 IncreaseDepartment of National Defence-Army Department of National Defence-Naval Service Department of National Defence-Air Service Department of Munitions and Supply Department of National War Services Miscellaneous Departments: s 353.235.000 88.163.000 176.279.000 79.954.000 2.370.000 4.490.000 1.692.000 1.897.000 3.370.000 1.214.000 9.381.000 $ 509.879.000 132.443.000 386.418.000 248.639.000 3.112.000 25.724.000 16.727.000 6.559.000 5.619.000 3.666.000 12.767.000 % 126.644.000 44.280.000 210.139.000 168.685.000 742,000 21.234.000 15.035.000 4.662.000 2.249.000 2.452.000 3.386.000 Pensions and National Health 752,045,000 1,351,553,000 599,508,000 19. Expenditures made by the Department of National Defence, Army, are estimated at 8509,879,000, which compares with $383,235,000 during the preceding year. This total is broken down as follows: Administration $ 809,000 Army Services 501,542,000 Royal Military College 517,000 Radio Services, N.W.T. and Yukon. 167,000 Joint Inspection Board of the United Kingdom and Canada... . 4,876,000 Internment Operations 1,315,000 Censorship 230,000 Dependents' Allowance Board .... 407,000 Dependents' Supplementary Grant Fund 16,000

20. Expenditures made by the Department of National Defence, Naval Services, aggregated $132,443,000, which compares with $88,- 163,000 expended during the preceding fiscal year. The rapid expansion of the Canadian Navy tnay be indicated by a comparison with Canada's Naval expenditures during the last war; during the corresponding fiscal year of that war, namely, 1916-17, the total expenditures on Canada's Naval Services amounted to $3,806,000. 21. Total expenditures of the Department of National Defence, Air Services, for the fiscal year ended March 31, 1942, are estimated at $386,418,000, classified as follows: Home War Establishment $ 108,708,000 Overseas Establishment 10,370,000 British Commonwealth Air Training Plan 267,189,000 Departmental Administration. Air. 113,000 Construction of Temporary Building, Ottawm 38,000

For the fiscal year 1940-41 Canada's total expenditure on Air Services amounted to $176,279,000. 22. Under the Department of Munitions and Supply expenditures chargeable to the War Appropriation for 1941-42 aggregated $248,639,000, of which administration accounted for $4,939,000 and expansion of industry for $243,- 700,000. Corresponding expenditure during the previous fiscal year was $79,954,000. 23. Expenditures of the Department of National War Services chargeable to the War Appropriation amounted to $3,112,000 during the fiscal year ending March 31, 1942. This compares with an expenditure of $2,370,000 during the preceding fiscal year. The total of $3,112,000 may be itemized as follows: The Budget-Appendix

Departmental Administration $ 84,000 National Registration 274,000 Mobilization 634,000 Division of Human and Material Resources, General 21,000 Salvage 157,000 Public Information 709,000 War Charities 27,000 Radio Broadcasting Censorship 22,000 Women's Voluntary Services 1,000 National Film Board 8,000 Payments re Auxiliary War Services. 1,175,000

24. Included in, the estimated total war expenditures for 1941-42, estimated at $1,351,553,000 are various expenditures by the nonwar departments for services or activities arising directly or indirectly out of the war and charged to the War Appropriation. The total of these expenditures, not including loans and investments referred to above, amounted to $71,062,000 as compared with $22,044,000 during the preceding fiscal year. The following table gives a detailed itemization of these expenditures classified by Departments and Services: Agriculture- Agricultural Supplies Board Administration.... Flour and Feed Administration Advertising, 1940-41 Commitments Publishing Wartime Pamphlets Compensation of Inspectors of 1941 Flax Etrich Flax Tow Scutching Machine Vanhawert Turbine Flax Scutcher Installation of Experimental Refrigeration.... Experimental Shipment of Eggs to Great Britain Bacon Hog Advertising Programme Egg Production Programme ' Subsidy on Export Eggs ' ' Bacon Board Administration Bacon Export Subsidy " Dairy Products Board Administration Cheese Exports to the United Kingdom Nova Scotia Apples, 1941 Crop Less refund on account 1940 Crop 1.359.000 1.200.000 British Columbia Apples, 1940 Crop British Columbia Apples, 1941 Crop Freight Assistance on Western Grains, 1940-41 Accounts".'.... hreight Assistance on Western Grains, 1941-42 Accounts ! Special Products Board Administration Payment to increase Income of Farmers in Spring Wheat Area of Western Canada 7 Inspection and Grading of Fibre Flax Equipment for Dehydration of Apples [ Dehydration of Vegetables Sundry Auditor General's Office- Audit of War Expenditure Civil Service Commission- Additional War Expenses External Affairs- Departmental Administration Office of the Prime Minister '' Representation Abroad Evacuation of Offices Abroad Consular Services, St. Pierre, Miquelon and Greenland! I ermanent Joint Board on Defence " Payments to Canadian Government Employees evacuated from enemy occupied Territories Expenses of Canadian section of Joint Economic Committee.. Sundry * Finance- Payment of premium on purchase of Dominion of Canada Registered Stock Office of the Comptroller of the Treasury-Dependents, Aliowances and Outside Offices, etc Royal Canadian Mint Wartime Prices and Trade Board- Licence Division Administration " " Furniture and Equipment Subsidies, etc., due to application of order placing ceiling on prices " 22.000 13.000 25.000 6,000 5.000' 67.000 8,000 19.000 2,000 29.000 8,000 305,000 53.000 2,281,000 11.000 1,784,000 159.000 182.000 311.000 170.000 3,802,000 13,000 10,298.000 6,000 7.000 132.000 6.000

150,000 238,000 244,000 16,000 76.000 23.000 4.000 2.000 8,000 16.000 5.000

388,000 8,100,000 3.864.000 80,000 139,000 1.208.000 94,000 3,242,000 18,727,000 The Budget-Appendix Fisheries- . Canned Lobster Control $ 103,000 Wartime Fisheries Advisory Committee 1,000 Committee re Japanese Fishing Boats 5,000

Justice- Prize Court 6,000 Defence of Canada Regulations 35,000 War Measures Act 4,000 Arvida Commission of Enquiry 9,000 Royal Commission re Hong Kong Expedition 7,000 Labour- Vocational Training for Discharged Members of Canada's Armed Forces 3,000 Wartime Bureau of Technical Personnel 41,000 Cost of Living Commission 2,000 Wartime Wages Policy Civil Employment Reinstatement Regulations 12,000 Labour Supply Investigation Project 8,000 National War Labour Board 91,000 Interdepartmental Committee on Labour Coordination 9,000 National Labour Supply Council 12,000 Assistance to Necessitous Dependents 1940-41 10,000 Assistance to Necessitous Dependents 1941-42 59,000 Training men for R.C.A.F. Ground Crews 1,489,000 Purchase of Machine Tools 52,000 Enlistments in His Majesty's Forces re Youth Training 25,000 Skilled and Semi-Skilled Occupations for War Work 1940-41.... 139,000 Skilled and Semi-Skilled Occupations for War Work 1941-42 4,430,000 Occupation History of Canada's Armed Forces [DOT].*.[DOT][DOT][DOT] 10,000 Advertising Intent and Purpose of Government Wages Stabilization Policy 31,000 Ontario Farm Labour Service 54,000 Specialized Training for Aircraft Manufacturers' Employees 14,000 British Columbia Security Commission 25,000 Manpower Inventory 43,000 Mines and Resources- Metallic Minerals Division-Services to War Departments 58,000 Grant to Yukon Council 20,000 Prince Rupert-Cedarvale Highway 10,000 Explosives Division-Administration of Regulations 12,000 British Columbia-Road-Pinehi Lake 1,000 National Parks Bureau-Alternative Service Work Camps 237,000 Dominion Forest Service-Alternative Service Work Camps 11,000 Forest Products Laboratories 16,000 Dominion Forest Service-Internment Operations 24,000 Engineering and Construction Service-Alternative Service Work Camps 98,000 General Expenses-British Isles and Canada 17,000 Detention of Alien Seamen 17,000 Canadian Interests in Enemy or Enemy Controlled Territory.... 81,000 Canadian Interests Abroad, Apart from Enemy Controlled Territory 5,000 Grants to National Advisory Council-Children from Overseas.. 79,000 British Evacuee Children..., 1,000 Return of French Fishermen, SS. Angelus 6,000 Employment of Japanese Nationals 71,000 National Harbours Board- Halifax-Extension to Pier 9 627,000 -Lighterage Berth at Fish Pier 66,000 -Moorings for Ships under Repair 204,000 -Equipment and Operation of Fire Tug Rouille 48,000 Saint John-Construction of Wooden Pile Dock 589,000 Montreal-Purchase of Locomotive Cranes 113,000 National Research Council- Special War Activities 246,000 New Annex Laboratories 303,000 Explosive Testing Laboratory 55,000 Radio Direction Finding Programme 528,000 National Revenue- Censorship of Publications 109,000 61,000 6,559,000 764,000 1,647,000 1,132,000 4,000 The Budget-Appendix

Pensions and National Health- Treatment-Members and Ex Members Defence Forces $ 2,700,000 R.C.M.P 96,000 Pensions-Defence Forces, etc 888,000 Air Raid Precautions 620,000 Investigations-Dependents' Allowance Board 26,000 Inspection of Industrial Plants 15,000 Public Health Engineering 15,000 Quarantine Service 52,000 Hire of Boat-Halifax 14,000 Additional Accommodation-Departmental Hospitals 100,000 Fixtures and Furnishings 42,000 Committee on Demobilization 9,000 Processing of Blood 101,000 Additions-Camp Hill Hospital - 52,000 Lancaster Hospital 133,000 Maintenance-Non-resident Seamen 10,000 Committee on Reconstruction 9,000 Extension-Nurses Home, Westminster Hospital 35,000 Staff Accommodation and Recreation Building, St. Anne 36,000 Additional Accomodation-Savard Park Hospital 43,000 Calgary 31,000 Detention Allowance-Canadian Seamen 53,000 Addition-University of Alberta (Departmental Hospital) 24,000 Improvements-Deer Lodge 15,000 Alteration to Steam Mains-St. Anne 17,000 Infectious Unit-Shaughnessy 23,000 Post Discharge Re-establishment 105,000 Reserve Stores 340,000 Sundry 15,000

Post Office-* Postal Censorship 328,000 Army Postal Services 1(66,000 Privy Council

Office of the Registrar of Orders in Council.. Public Archives- Compensation to staff evacuated from abroad 5,619,000 494,000 4.000 3.000 Public Works- _ Additional Accommodation, C.O.T.C. Units Ottawa-Daly Bldg., Annex Rock Island, Que.-Armoury London, Ont.-Westminster Hospital Ottawa, Ont.-Base Army Post Office Jackson Building-Taxes Extension of Jackson Building Record Storage Building Temporary Building No. 3 'temporary Building No. 4 Temporary Building No. 5 Temporary Building No. 6 Temporary Building for Department of Pensions and National Health Toronto, Ont.-City Delivery Building Temporary Building for Post Office Department. Vancouver, B.C. Hospital Furniture, etc. for wartime employees Repairs, alterations, etc. to buildings Rental of new premises Dartmouth, N.S.-Wharf improvements. etc Missaguash River. N.S.-Interprovincial Bridge Shelburne, N.S.-Wharf repairs Saint John (Courtenay Bay), N.B.-Dredging Lome, Que. Dry Dock-Operation Repairs to Pier Midland. Ont.-Dredging Esquimalt, B.C.-Dry Dock-Operation Dry Dock-Dredging Protection and Camouflaging Provision for 24-hour telegraph service on Pacific Coast.... Port Hardy, B.C.-Wharf extension and shed Sidney, B.C.-Wharf improvements and repairs Communication facilities between Port Alberni, B.C., and Ucluelet, B.C., Air Base Contingencies 61,000 31.000 11.000 35.000 64.000 31.000 166.000 20.000 13.000 307.000 471.000 244.000 4.000 10.000 62.000 147.000 784.000 946.000 462.000 202.000 22.000 48.000 130.000 2.000 15.000 10.000 13.000 3.000 5.000 10.000 8.000 6,000 23,000 132.000 4,498,000 [Mr. llsley.I The Budget-Appendix Royal Canadian Mounted Police- Land Services $ 3.009,000 Secretary of State- Internment Operations $ 77.000 Press Censorship 81,000 Refugee Camps 21.000 Sundry 7,000

186,000 Trade and Commerce- Canadian Shipping Board 32.000 Export Permit Branch 46,000 Shipping Priorities Committee 2,000

80,000 Transport- Meteorological Services 209.000 Radio Interception and Monitoring 391.000 Civil Aviation 135,000 Marine Service Steamers 94,000 Nautical Services 25.000 Aids to Navigation 50,000 Compensation to Masters and Crews re loss of personal effects.... 25.000 Administration of Pilotage 12.000 Office of Director of Merchant Seamen 341,000 Installation of Degaussing Equipment 171,000 Additional Harbour and Transportation Facilities-Halifax 1,932.000 Salvaging of Captured Vessels 13,000 Office of the Transport Controller 83,000 Balance re payment to Yukon Southern Air Transport and Trans- Canada Air Lines 10,000 Purchase and Repairs re Motor Tug Frangois 29,000 Stores, etc. C.G.S. Montcalm 100,000 Dredging in St. Charles River, Que 32,000 Sundry 14,000


25. Reference has already been made to the fact that included in the total estimated outlays for war purposes during the fiscal year 1941-42 was the sum of $42,480,000 representing outlays made under authority of the War Appropriation Act 1941 and carried forward as Active Assets. This amount is made up as follows:

June 23, 1942