July 12, 1946

CCF

George Hugh Castleden

Co-operative Commonwealth Federation (C.C.F.)

Mr. CASTLEDEN:

How about your

promise?

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

Ian Alistair Mackenzie (Minister of Veterans Affairs; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. MACKENZIE:

You can't have it both ways, either.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. ARGUE:

If the Minister of Veterans Affairs will say that there are good jobs, then I assure him that the boys will not any longer want these niggardly out-of-work benefits.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

Ian Alistair Mackenzie (Minister of Veterans Affairs; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. MACKENZIE:

I can tell my hon. friend that I have done more for the veterans than he has ever done.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
?

An hon. MEMBER:

Give it to him; you have got him going.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. ARGUE:

Another thing we should attempt to do is to find out if there is to be greater prosperity in Canada in the future, and if so, we should attempt to see what the income tax exemptions for 1947 will do for the people who will receive the benefit of them. In 1946 a single man earning SI,250 paid S140 tax. In 1947 a single man earning $1,250 will pay $118 tax. He will be given tax relief in 1947 to the extent of $22 in excess of what he received in 1946. A married man in 1946 earning $2,000 a year pays S194 tax, while in 1947 he will pay $118, or will have a reduction of $76 in taxation.

[Mr. Castleden.1

Many statements have been made that we are witnessing to-day an increase in the cost of living. We know that there is a certain amount of inflation in Canada and that the prices of many articles are increasing by leaps and bounds. The cost of living index published by the bureau of statistics in April, 1945, was 119 and in April, 1946, 121, an increase of two points. The homemakers' association, as recorded in the Toronto Star of April 9, found that in six years the cost of feeding a family had increased by fifty per cent.

I am not attempting to argue that there will be all-out inflation in Canada. What I am attempting to do is to have hon. members agree that there is a certain amount of inflation, and that there will be inflation next year. Some of us might be reasonably well satisfied if the cost of living next year did not increase by more than ten per cent. I do not know if that would be considered a reasonable figure, but some of us might think it was not too bad. Others might think that if it increased only five per cent a good job was being done. I believe most will agree that if it increased four per cent, that is the least that could be expected. If the cost of living increases four per cent in 1947 over what it is now, then four per cent of a married man's income of $2,000 will amount to $80, and that $80 in fact will buy him nothing, because of the decreasing value of money. So that if the cost of living increases on the average four per cent in 1947 tlhe small tax relief of $76 that is being given for 1947 will be in effect- entirely wiped - out.

If the cost of living increases two per cent a single man earning $1,250 will have to use $25 of his income to make up for the increase in prices. His tax relief for 1947 will be $22. So that, if -the cost of living increases in 1947 by two per cent, the very small tax relief given to a single man, earning $1,250 will in effect, by another means, be taken away from him.

If we look to see how the exemptions will benefit the taxpayer within the next twelve months we find that if there is a two per cent rise in the cost of living it will cost a single man earning $1,250 some $25 to make up for the additional increase in the cost of living. But his tax relief within the next twelve months will be only $11. So that in effective purchasing power within the next twelve months, if the cost of living goes up by two per cent, lie will be $14 worse off than he was before.

The Minister of Finance is, with one hand, granting some small amount of tax relief to income earners, but because the government is not successful in maintaining rigid price control he is in effect taking -away that small

The Budget-Mr. Argue

amount of tax relief with the other hand because the value of the money which the income earner receives will be less through the increase in the cost of living.

Let us now look at the policies which the government is inaugurating or is likely to inaugurate to increase prosperity in Canada and see if the low paid sixty per cent of the labour force do get increases in income so that their incomes will be up at least to the extent of reaching the low income tax brackets. To provide more prosperity for Canada the government made certain proposals to the dominion-provincial conference. As I understand those proposals there were mainly two fields in which the government proposed new measures. One was a taxation agreement with the provinces so that there would not be double taxation in-the income and corporation tax fields and in succession duties. Second, the government proposed a social security programme, including public investments, a health programme, adequate old age pensions and unemployment insurance.

We all know the history of the dominion-provincial conference. It failed. Then the government announced proposals for taxation agreements minus the social security programme. The Minister of Finance in his budget address stated:

Financial pressure on the less-favoured provinces will give rise to increasingly arbitrary and discriminatory taxation, will lead to interference with interprovincial trade and to the extension of government ownership and operation of business merely in order to obtain additional provincial revenues which of course would mean loss of revenues to the dominion.

I would like hon. members to note that according to that statement of the minister, without an agreement with the provinces, there is likely to be an extension of provincial government ownership. The minister went on to say:

The dominion cannot stand aside and allow such a situation to develop. It would seriously impair the capacity of private enterprise to provide high and expanding employment.

There was some danger, if an agreement had not been offered, of some provinces going into business for themselves. The premier of Manitoba made a statement to that effect at the conference. If the provinces were forced to go into business undertakings for themselves it would of course deal a severe blow to big business and corporations in Canada, and the Minister of Finance says the dominion cannot stand aside. But there was no offer made to the provinces to sign separate agreements for social security measures. The dominion government, while not ready to stand aside and see big business double-taxed, is willing

to stand aside and see the Canadian people go without an adequate social security programme. Surely that is placing the emphasis entirely in the wrong place.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Did I say anything in that speech to the effect that we did not want government ownership to take place in the provinces because it would hurt private business?

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. ARGUE:

No; but apparently that is wha-t the minister had in mind.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

That is most unfair. What I had in mind I said, which was that it was undesirable to have the provinces taking over business purely for revenue purposes. That is what that says.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. ARGUE:

That is right.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

And that is undesirable.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. ARGUE:

Because it would force

governments in some of the provinces to go into the public ownership of business, as the Saskatchewan government has done.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Does the hon. member think it is desirable for a province to go into public ownership of private industry, merely because it can get a tax advantage or increased revenue at the expense of the dominion?

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. ARGUE:

A province goes into business for many reasons. If it gets revenue for the province rather than allowing the corporations to skim off the cream of the revenue, certainly that is for the benefit of the people of the province.

The minister went on to say that the proposal that he was making to the provinces was based on fiscal need. He stated that a number of times, I believe. It is based on fiscal need to this extent, that a poor province will be enabled to get some additional moneys that are raised by taxation by the federal government and turned over to the province in the form of a subsidy. I wonder, in looking over the various amounts that will be paid to the different provinces, If indeed they are based on fiscal need. The people of British Columbia under this proposal are to get approximately $20 per capita. The people of the other provinces will get something over $15 per capita, considering the gross national product and the formula that is used. I am not suggesting for one minute that the people of British Columbia should get any less than $20 per capita, but I am suggesting that if the people of British Columbia are to be paid $20 per capita, then the people of the other provinces of this nation should be treated equally well.

The Budget-Mr. Argue

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Would you place everybody on an equal per capita basis?

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. ARGUE:

No, I would not, but that would be better in my opinion than the method now proposed, because I do not think British Columbia is likely to have the same expenditures in providing social services that some of the other provinces will have.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

Ian Alistair Mackenzie (Minister of Veterans Affairs; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. MACKENZIE:

They have the highest standard in Canada.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. ARGUE:

I am talking of the cost of providing the social services, not what social services they have. For example, in British Columbia approximately 394,500 people live in towns of over 5,000, and this out of a total population, according to the 1941 census, of some 817,800. In other words, in British Columbia about forty-eight per cent of the people live in towns of over 5,000. I am sure that even the Minister of Veterans Affairs (Mr. Mackenzie) will admit that it costs more money to provide social services in the rural areas where people are widely dispersed than it does to provide the same services in towns of over 5,000.

In Saskatchewan there are 147,000 people living in towns of over 5,000 out of a total population of some 895,000, or about seventeen per cent. The number of people in Ontario who live in centres of over 5,000 is more than half the total population. Surely it cannot be said that proposals are based on fiscal needs when in certain provinces the cost of providing social services is more per capita because the population is widely disbursed.

I do not think it can be said that the proposals are based on fiscal needs because, if widespread drought occurs in the west, the provincial governments of Alberta and Saskatchewan, and to a lesser extent Manitoba, will be almost bankrupt. If we experience a period of low prices for our primary products the people on the prairies will not have sufficient income to provide a taxation base by which the provinces will be able to furnish the social services they may wish to provide. I do not think any effective argument can be made that these proposals are in any way 'based on fiscal needs. Before there can be continuous social services we must protect the primary producer against drought and low prices, and protection also must be provided to see that unemployment does not recur.

In conclusion, I contend that the Minister of Finance has based his statement that there is prosperity to-day in Canada on three weak and breaking props. There is no prosperity in Canada when the vast majority of Canadians are not receiving incomes sufficient to maintain an adequate standard of living.

More than that, the very small income taxation reductions that have been provided in the budget and the utter failure to go ahead with an agreement to provide social security measures place the people of Canada in a position where they cannot look forward to years of prosperity, but rather only to depression, poverty and misery in the very near future.

Mr. DONALD M. FLEMING (Eglinton): Mr. Speaker, this effort on my part will in no sense be a sermon but it will open with a text. I am grateful to my hon. friend, the Minister of National Defence (Mr. Abbott), for supplying that text. It will be found in part of the quotation with which he closed his remarks this afternoon: "We have a Minister of Finance (Mr. Usley) who is not afraid to tax." Apparently this is the cry of the Liberal party: We are the party of taxation; we are the party which is not afraid to tax. Their fitness for office apparently is to be based upon their ability to heap on the taxation.

During the five days of this debate a good many adjectives have been devoted to this budget. Probably it has earned a good many of them because it is certainly a recordbreaking budget. It has engendered more bitterness than any budget in the living memory of the people of this .country who were led to certain expectations in consequence of lavish government promises. They have carried a heavy load of taxation during the war; they struggled along manfully hoping to see light at the end of the road, in the form of some relief from the crushing burden of taxation. What have they been given in this budget-this budget for the first full year of peace?

In the first place, they have been told that there will be no easing of the load this year. In the second place, they have been given no hope of any worth-while or substantial easing of the load after this year. In the third place, they have been given no evidence of retrenchment on the part of the government. Is it small wonder that the taxpayers of this country feel frustrated, defeated and bitter? And bitter they do feel. They put the responsibility squarely where it belongs, on the doorstep of the government.

May I say a word concerning these so-called deferred reductions. To what shall we liken these slight reductions, these phantom, fugitive reductions? Would this be a fair picture? We have a very tired, jaded steed which has covered six long, hard laps. We have a rider plunging the spurs in further and further and calling for another long, hard lap, with greater expenditure of effort on the part of the steed

The Budget-Mr. Fleming

than has been made in the previous laps. What is the steed offered? The rider dangles a carrot, and a very small one, in front of the steed just out of his reach. The tired steed must gallop another long, hard lap, in the hope of catching up with the small carrot at the end of the lap.

In truth, this is a two-in-one budget. Where did this extraordinary and novel idea originate? It certainly was not conceived by anyone devoid of political considerations. It certainly was not conceived by anyone who was prepared to come forward and say frankly that there would be no reduction in taxation this year for the people of Canada. Apparently it was conceived by those who were not prepared to make a reduction in taxation this year, but who were afraid to tell the people of Canada that they were unwilling to make a reduction. So there has been resort to this curious expedient of announcing in the budget for the fiscal year 1946-47 that certain meagre reductions in taxation will come into effect within the course, not of this year, but of next year. It is a curious and interesting device.

I suggest that the people of Canada are going to have certain convictions and certain knowledge in their minds on this subject. They know perfectly well that this budget covers only the fiscal year which began on April 1, 1946, and which will end on March 31, 1947. It does not go one day beyond that. They know also that the Minister of Finance cannot bind or undertake now for the fiscal year 1947-48. They know, too, that these elusive and fugitive reductions announced in the budget will apply for only three months of next year, January, February and March. They know that something has been done by the Minister of Finance in this budget which has never been done in the previous fiscal history of this country, the announcement of reductions which will not come into effect until the following year.

This leads me to ask: will there be a budget next year? It is hard to see what occasion there will be next year for a budget since the Minister of Finance has rolled two years' budgets into one. Apparently this is the begin-ling of biennial budgets. Apparently, also, in view of the fact that we have had six heavy budgets in six years and that this is the seventh, the Minister of Finance has adopted the timely suggestion of the leader of the Social Credit party (Mr. Low) that, this being the seventh year, he, the minister, might observe a Sabbatical year and go on .an extended absence. The leader of the Social Credit party suggests that it would be helpful to the minister to move closer to the people and understand what they are asking. It may

be that the Minister of Finance, in looking forward to a Sabbatical year, has decided to roll two years' budgets into one.

But what will he do next year when this fiscal year has rolled on to its close on March 31, 1947? I suggest that the Minister of Finance, whoever he may be at that time, will have these three alternatives before him. In the first place, he can make an announcement of these reductions, or rather a reannouncement of the slight reductions which the present minister has announced this year. The minister at that time can reannounce them and take double credit. In the second place, he might withdraw them. There is nothing in them binding beyond March 31 of next year. In the third place, he might ignore them and announce similar reductions, not to come into force until the following year. He can do that inasmuch as precedent has been established for announcing reductions that shall be postponed a year.

With the present mind prevailing, it is hard to see the end of what I call a fantastic farce in budgeting. It is mere window-dressing, trying to dress up the fact that there is no tax reduction this year, and that all the hopes which this government, by its rash and lavish promises, conjured up in the minds of the taxpayers, who were looking forward to reductions in store for them when the war was over, will be dashed to the ground. The government is not making these reductions, so that these phantom, deferred reductions are so much window-dressing.

The year 1947 will be closer to the next election than 1946 and, if the same mind prevails in 1948, then as that year will be still closer to the election, we may expect the budget reductions of that year to be also postponed. The Minister of Finance has admitted the house to a fleeting glimpse of these slight reductions and has then hustled them away into the refrigerator, keeping them in cold storage until the next calendar year. I can liken that action to that of a mother who, when the children open their toys on Christmas day, thinking that Johnny has received too many presents for his good, decides to put them away until a later stage in the year, or until next Christmas.

The Minister of Finance, I say, has offered this fleeting glimpse of phantom reductions. But surely, Mr. Speaker, in this year of grace and this year of taxation it should not be necessary in the Canadian House of Commons to put in a word for the hard-pressed taxpayer. Apparently, however, it is necessary because very little has been said, by those who sit to your right, by way of a plea for an under-

The Budget-Mr. Fleming

standing of the plight of the Canadian taxpayer. The Canadian taxpayer has carried and is still carrying a crushing burden. He is round-shouldered carrying it-yes, and he is the man who has been cajoled into thinking he might now expect a lightening of that heavy load.

The Canadian taxpayer in many cases is living on a fixed income under a wage ceiling or a salary ceiling. He has had no increase in income, no opportunity to put anything by during the war years. Indeed, great numbers of our taxpayers have been living in the red because taxation and the cost of living have taken more than they, have been able to earn under ceilings. The cost of living has been going up, and I am not in the slightest degree impressed by the government's babbling about the way they have held down that cost, because the official cost-of-living index is so much nonsense. It is eyewash. There is not a housewife in this country who is prepared to accept the statement that the cost of living since the war began has increased only twenty per cent. She knows better because that cost of living index does not take into account deterioration in the quality of the goods she has to buy and the fact that she has to pay a higher price for goods of the same quality which, previously, she was able to buy at a lower price.

That same round-shouldered taxpayer has been burning himself out during the war. There are tens of thousands of men throughout the length and breadth of the country whose lives, and certainly the period of whose earning power, have been greatly curtailed by the exertions they made during the war. Everyone, or nearly everyone, has been doing his best, and many a man working under these ceilings has shortened the period of his earning life.

The Minister of Finance keeps coming back to the statement-in fact, it has become almost a' fetish with him-that there is more money in the banks than before the war. I do not know who the people are who have all the money in the banks, but I should like the minister to know that it must be in the hands of people I do not know, because the people I come in contact with are people who have been on low frozen incomes during the war, on whom the burden of taxation has been grievous. They have not any larger bank accounts, and, in fact, great numbers of them have hardly any bank account at all. But, as I say, it has become a sort of fetish with the Minister of Finance. He has persuaded himself that a duty rests upon him to relieve the people of these great surpluses which they

are supposed to have in the banks. That has been carried too far. Whoever planted that idea in the mind of the Minister of Finance has done him no great service, and it is a pity that by reason of the heavy burden he has been carrying he should be misled in that way. I should be the last person-and I say this in all frankness-to minimize in any sense the size of the load he has been carrying, but it is a pity that he has not been freer or has not taken the opportunity to go around and get into closer contact with the people who are paying the taxes that he imposes. It would have a beneficial effect on his approach to these problems.

Unfortunately, the Minister of Finance has become a prisoner of the bureaucrats. It is a pity that a little refreshing contact with the people who have to pay the taxes is not possible for him. Such a contact would have a salutary effect in restoring a perspective which I fear the right hon. gentleman has lost.

The Minister of Finance has trumpeted the fact that next year about a quarter of those who now pay income tax will not be doing so. Well, there will still be about 1,750,000 people left paying income taxes and sharing that burden with their families. Is that the whole story? It is far from the whole story. I wish some of those eloquent spokesmen for the government, including the Minister of National Defence, who made his maiden speech to-day as Acting Minister of Finance, would give the house some inkling as to how the burden of hidden taxation has been reduced by one copper in this budget. There is no hope of a reduction as long as the government continues in its present frame of mind.

What is the situation? There are taxes that are borne in this country by everyone, the whole twelve million of us. Is there any relief for them? Not a word in that regard. The budget still soaks everyone of them, and this government keeps on professing to be the government of the people. The Minister of National Defence this afternoon spoke about the government being the government of the people.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

Douglas Charles Abbott (Minister of National Defence; Minister of National Defence for Naval Services)

Liberal

Mr. ABBOTT:

I never used that phrase.

I would think of something newer than that.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
PC

Donald Methuen Fleming

Progressive Conservative

Mr. FLEMING:

They are posing as the friend of the ordinary man, but this budget has exposed them. They are exposed out of their own mouths. This, I suppose, is a sample of the Liberal idea of a budget that meets the needs of the masses. But what about the masses? What about the tax on sugar-a cent a pound on a price of eight cents a pound still going on? It is still in full force

The Budget-Mr. Fleming

and effect, a load borne by every one of the twelve million people of Canada. On such harmless things as soft drinks we still have a tax of twenty-five per cent, plus a cent for the bottle, which means that the youngsters pay seven cents instead of five cents for ordinary soft drinks. It means, too, that the movie, the poor man's recreation, is still subject to a twenty per cent tax; it means that candy, even when consumed by children, is still subject to a thirty per cent tax. Everybody in the country bears it. How about a little relief for these people? How about the twelve million people who are still waiting in vain for some semblance of reduction in taxes?

I am not a smoker; therefore I can make my next observation, I trust, with complete dispassionate objectivity. Consider cigarette papers. I suppose they are used chiefly by people who cannot afford to buy packages of cigarettes. A man or a woman pays thirteen cents for a package of 100 cigarette papers of which eight cents represents tax, eight out of thirteen cents. Then there is a tax on cigarettes in packages. The tax is two cents on every five cigarettes, and that affects every smoker throughout the length and breadth of the land. I suggest that if the Minister of Finance is looking about for opportunities to grant some tax relief he had better think about the rank and file of people from coast to coast.

I turn now to a subject which affects every man, woman and child in Canada, namely, reconversion from wartime to peacetime economy. At the outset I should like to emphasize the crucial importance of the time factor. Even the Minister of Finance recognized that in what he had to say on June 27. If we are to give any assistance to this reconversion process it must be given right now, not next spring, not in next year's budget, but right now, and there is no time to lose. This is what the Minister of Finance said in his budget speech of June 27, as reported at page 2905 of Hansard:

. . . the action we take now in regard to taxes should provide whatever stimulus is possible to increased production. If we can encourage hard work and efficient production at this critical time, we shall be assisting greatly the effectiveness of our other actions to overcome the inflationary influences left behind by the war.

An ounce of effort now to assist in the reconversion process will be worth a pound a year from now. The solution depends on the action that we take right now, and it depends far more on this budget than many hon. members have given any indication that they yet realize. Let me quote what the right hon. gentleman had to say at page 2904 of Hansard:

Production then should be our primary objective both for its own sake in a world that needs goods so badly, and as a safeguard against the present danger of inflation. We should aim now at high volume production for civilian purposes. . .

A little further on he said:

No longer must civilian production be restricted in order to conserve resources for war. It can now receive first priority. _

How are we to assist this reconversion process? I should like to recall the description of government wartime fiscal policy as outlined by the Minister of Finance in his speech on October 12, 1945, as reported at page 1002 of Hansard of last year. This is what he said:

During the war, there has been built up a system of taxation which is discouraging to investment, to enterprise and to consumer expenditures. In many of its aspects it was designed to be discouraging and restrictive to all activities not necessary to the prosecution of the war. Some taxes were intended to restrict trade. Others have had the effect of increasing costs. I recognize that in the course of six years, war-time taxation has begun to blunt incentives and if continued indefinitely will paralyse the development of industry and trade.

This is a consideration of the greatest national importance.

I should like to underline every word that the right hon. gentleman uttered on that occasion and recall to you, Mr. Speaker, that every moment the government fiscal policy as outlined by the Minister of Finance on October 12 last persists, these consequences, which he fully and frankly outlined on that occasion, will persist, too: the restriction on output, the discouragement of enterprise. To the extent that this budget carries on the same fiscal policy as was in effect then, it just accomplishes these things; the restriction of output, the dampening of incentive and the retardation of this whole process of reconversion from wartime to peace-time economy. There is no escape, and this budget unhappily carries forward just about-well, I shall be conservative with a small "c" if I say ninety-seven per cent of everything that was involved in government fiscal policy during the war as described by the Minister of Finance in the passage which I read from his speech of October 12 last.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink

July 12, 1946