Mr. GRAYDON:

As a matter of fact I

do not. i

Mr. LaFLECHE: Then I regret that the

hon. member does not. Recalling that public officials cannot carry on with the nation's business in an atmosphere such as has been created, and that I cannot make it possible to carry on the office of economy control without clearing the atmosphere, let me say that I entirely fail to see any charges or accusations of crazy waste, extravagance, subterfuge or trickery. On the contrary my impression is that turmoil has been created, perhaps thoughtlessly andi more likely amusingly-

Mr. GRAYDON:

Is the minister quoting

from something now?

Mr. LaFLECHE: No.

Mr. GRAYDON:

I understood those words were used before.

Mr. LaFLECHE: I am quite certain the

Prime Minister would tolerate no extravagance, subterfuge, trickery or evasion, and I know equally well that in view of the absolute necessity of helping to win the war by making a success of his fourth victory loan the Minister of Finance (Mr. Ilsley) would not be a party for one second to such things as have been mentioned. I have done my best to find out what there was at the bottom of all this. I have certainly not wanted in any way to injure the reputation of one of Canada's gallant officers of the last war, and a gentleman who is known for his honesty and sincerity. On the other hand I do not want to be a party in any way to permitting anything to be done which would hinder the possibility of practising economies, wherever they can be made.

Mr. DIEFENBAKER:

I wonder if the minister would allow a couple of questions? Was there any reference whatsoever to waste in the air force in the first article which appeared in the Ottawa Jouma.il My recollection is that the one matter denied by Colonel Thompson, namely waste in the air force, was not referred to either directly or indirectly in the article which started this discussion.

Mr. ILSLEY:

The minister did not say it was.

Mr. LaFLECHE: Because of my hoarse voice it is possible that the hon. member did not understand me when I read. Colonel Thompson makes it very clear that he refers to the papers of this morning.

Mr. DIEFENBAKER:

That was not mentioned at the opening interview which allegedly was given by Colonel Thompson.

Order.

Mr. DIEFENBAKER:

If I may be permitted to ask a couple of questions, I am sure the minister will not object. Is there any denial from Colonel Thompson of the other allegations of waste allegedly made in the first interview reported in the Journal? And, my second question: Did the minister receive a memorandum in writing from Colonel Thompson or through the Minister of Public Works (Mr. Fournier) in reference to the question of economy, prior to the alleged interview in the Journal?

Mr. LaFLECHE: My hon. friend's first question resembles very much that which he put to me more than two weeks ago, as I recall it. I have asked my secretary several times to make absolutely certain whether or not I have received any such documents as mentioned by the hon. gentleman and the answer was no. That must be my answer.

Mr. DIEFENBAKER:

What about the other matter?

Mr. ROSS (Souris):

Did the Department of Public Works in any way come under the jurisdiction of the government economy director, Colonel John Thompson? If not, why was that department not brought under his jurisdiction?

Mr. LaFLECHE: By the provisions of the order in council all the departments were brought under his jurisdiction.

Mr. ROSS (Souris):

Following up the question which my colleague put, will copies of the files or letters which were turned in to the minister by Colonel Thompson on his resignation be available to members of the committee on public accounts when it convenes?

Mr. LaFLECHE: That is a question that will be answered in due time. I am very sorry that certain gentlemen seem to take the information I have given in bad grace, or hesitatingly, shall I say.

The Budget-Mr. Castleden

Mr. G. H. CASTLEDEN (Yorkton):

Mr. Speaker, when the budget debate was adjourned last night we were discussing the term "free enterprise". The sooner that free enterprise becomes the line of real demarcation between the members of this house, the better. Then we shall have this house divided into two proper groups, those who are in favour of free enterprise as it is practised to-day, the coupon clippers, on the one side, and1 those working for humanity on the other.

Last night I was proceeding to give an example of the type of thing which we in this group oppose. I refer to an agreement, dated August 19, 1941, which was tabled in this house between His Majesty the King in right of Canada and the International Nickel Company of Canada. Reading from this agreement I find:

Whereas part III of the War Exchange Conservation Act, 1940, provides that, the governor in council, in order to increase or conserve Canada's supply of foreign exchange, may enter into agreements with persons to grant assistance by way of special tax credits. . . .

And further:

WThereas the company is the principal world producer of nickel and is actively engaged in serving the war and defence requirements of the British empire and the United States. . . .

I -believe it was also actively engaged in serving someone else before the war. Then, after several more "whereases" I find this:

Whereas the company represents that from the standpoint of commercial considerations such an increase in capacity is in its opinion unwarranted, principally for the following reasons, viz., (i) to provide for a substantially greater output of nickel in 1943 would interfere with and adversely affect the company's long-range mining programme designed to preserve the life of the mines and stabilize costs for a long period of time; and (ii) the increase in capacity, with the attendant special capital expenditures, would be provided at a time when the outlook is most uncertain. . . .

In view of the various considerations thus set forth:

. . . the government under the provisions of part III of the War Exchange Conservation Act, 1940, hereby grants assistance to the company as follows:

In computing the amount of the profits of the company for the purposes of the Income War Tax Act and the Excess Profits Tax Act, 1940, to determine the liability of the company to pay tax under the said statutes in each of the five calendar years, 1941, 1942, 1943, 1944 and 1945, a deduction by way of special depreciation allowance against the cost of depreciable assets included in the said project shall be permitted. . . .

Then on page 5 of the agreement these amounts are set out.

Up to December 31, 1945, not to exceed in the aggregate $25,000,000.

That is $5,000,000 a year. Then on the last page of the agreement I find the various expansion projects set out which are to be undertaken by the company at a total cost of $34,000,000, as follows:

Mining

Mine surface plants, shafts, permanent underground development, open pit development and permanent mine equipment.

Concentrating

Permanent plant building, extensions and crushing, grinding and flotation equipment.

Smelting

Reverberatory building extension, together with one additional nickel reverberatory complete with a superimposed bank of 6 roaster furnaces and one additional nickel converter. Miscellaneous

Plant extensions and equipment for miscellaneous auxiliary services, such as transportation, power, et cetera.

Nickel Refinery

Plant extensions and equipment for additional electrolytic nickel capacity together with additional facilities for leaching, reducing and calcining department.

The total estimated capital expenditure is $34,000,000, against which the government is compensating the company by a reduction of their taxes to the tune of $25,000,000,

Mr. ILSLEY:

That is not correct. It is not a reduction from their taxes. It is a write-off of their investment.

Mr. CASTLEDEN:

I read the exact

wording.

Mr. ILSLEY:

Read it again.

Mr. CASTLEDEN:

It reads:

In computing the amount of the profits of the company for the purposes of the Income War Tax Act and the Excess Profits Tax Act, 1940, to determine the liability of the company to pay tax under the said statutes in each of the five calendar years, 1941, 1942, 1943, 1944 and 1945, a deduction by way of special depreciation allowance against the cost of depreciable assets included in the said project shall be permitted. ...

Mr. ILSLEY:

Not from their taxes, though,