Mr. G. B. ISNOR (Halifax) presented the fifth and final report of the special committee on war expenditures and economies, as follows: The special committee on war expenditures and economies begs leave to present the following as its fifth and final report. Under date of March 22.1946, your committee was appointed "to examine the expenditures defrayed out of moneys provided by parliament for national defence and demobilization, and for other services directly connected with the war. including the disposal of surplus war assets, and to report what, if any. economies consistent with the execution of the policy decided by the government, may be effected therein." The committee met four days after its appointment and since that date it has held forty-one sittings and heard twenty witnesses. A steering committee was set up and recommended procedure which was approved by the main committee. In giving consideration to matters coming within the scope of its reference, your committee decided to pursue the inquiries initiated during the last session, and accordingly turned its attention towards the operations of War Assets Corporation, its organization, functions and policies in the marketing of surplus assets, its priority system, etc. It also inquired into the methods of declaring surpluses, and the receiving, checking, and storing of such surpluses before final disposal. Arising out of these inquiries, it rvas found expedient to secure evidence from the three armed services, viz.: navy, army and air force with a view to ascertaining what quantities of material and equipment had been transferred to War Assets Corporation for disposal and whether, in the interest of economy, stocks held by these services are limited to their requirements under post-war establishments. A visit was made to the head office of War Assets Corporation, at Montreal, so that firsthand information could be sought and a study made of the general organization and set-up of the corporation. Before the committee had proceeded at any length into the study of quick disposals it was felt that a change in respect of priorities should be given consideration, so that the disposal of surplus material could be effected with greater expedition by revising the method of granting priorities insofar as the time element was concerned. It wras, therefore, recommended and approved by the house "that in respect of priorities granted to federal, provincial and municipal governments, the thirty day period now- in effect, be reduced to ten days." From the evidence submitted it w'as ascertained that greater care should be exercised by the armed services and War Assets Corporation wdien surpluses w'ere being turned over, and. accordingly your committee recommended, and the house approved, "that when surpluses are to be declared by the armed services, or from any other source, advance notice be given to War Assets Corporation so that a representative of the corporation be on hand to cheek and receive surpluses." A statement tabled by War Assets Corporation showed gross sales of declared surpluses, from 1944 to July 31, 1948 as follows: To March 31. 1945 $ 9.507.127 00 1945- April 1.386.291 16May 4.566.293 80June 2.132.337 S3July .... 7.231.162 22August 6,308.356 54September 3.047.375 08October 6,345.218 20November 10.007.956 83December .... 10.153.689 231946- January .... 14,477,019 19February 16.331 943 54March 42,830.725 34April 66May 22.608 326 47J une 04July 43Total $228,523,150 26 War Expenditures-Final Report The witness representing the Royal Canadian Naval Services presented statements as to their wartime and peacetime requirements, the disposal of surplus assets and the policy to retain sufficient consumable stores for three to five years, based on the anticipated rate of consumption of the peacetime navy, and for the retention of special equipment. It was shown that the total surplus declarations made by the navy from V-J day to the 31st March, 1946, was as follows:- Stores (cost value) $ 14,353,284 75 Ships (cost value) 223,391,221 93 Properties (cost value) . .. 12,503,132 92 Total $250,247,639 60 The naval service witness also supplied a list of yachts chartered commercially, or on a nominal basis, or donated, and a statement showing the disposition made of such yachts, and including moneys required to recondition them for return to their owners. A summary showed:- 25 vessels on commercial charters; 27 vessels chartered at $1 a year; 5 vessels sold and 6 vessels on loan without cost from other departments. The army witness outlined: - 1. (a) The background of army equipment. (b) The organization of provision within the army to assist in categorizing information deemed necessary by the committee. 2. The equipment policy to provide for the post-w'ar army, based on the following: (a) An active force; (b) A reserve force; (c) Supplementary reserve; (d) Cadet training. 3. Implementation of the equipment policy. In connection with economy, the governing factors were outlined in respect to: (a) Disposal of surpluses at rates consistent with diminishing requirements. (b) Retention of stores and equipment required for the post-war army. (c) Acquisition of modern stores required to ensure a high degree of efficiency in the post-war army. It was shown that the army vehicle surpluses amounted to 24,055, of which 15,955 had been disposed of up to April 1, 1946, and the balance of 8,100 to be disposed of by the end of 1946. Categorizing of army stores and equipment were shown under the following classifications: 1. General stores (a) Clothing. (b) Camp and barracks equipment. 2. Technical stores (a) Ammunition (b) Small arms (c) Radio and telecommunication equipment. (d) Engineer equipment. 3. Vehicles. (a) Load carrying and passenger vehicles. (b) Armoured fighting vehicles. 4. Mechanical equipment, including mobile and self propelled engineer equipment such as graders and other road machinery, equipment required for clearing snow, etc. As at April 1, 1946, the approximate cost of these holdings amounted to $509,286,897, and the approximate cost of materials disposed of to $86,042,008. The witnesses were questioned in respect of all these holdings, the need of some and the final disposal of any surpluses. Your committee desires to draw to the attention of the house, and particularly to the attention of the Minister of Defence, that in prewar days there were 93 personnel carrier vehicles and that the post-war requirements show 4,133 vehicles of this type, which number appears excessive. Witnesses from the Royal Canadian Air Force also appeared before the committee and gave a general outline of the policies and practices affecting equipment during the latter years of the war, since the cessation of hostilities, as well as those in effect at the present time. The statement dealt with all forms and types of equipment, provisioning and contract cutbacks, stock retentions, disposal policy and other matters of policy. In connection with declared surpluses, it was shown that the air force had declared, as at May 1, 1946, equipment of an approximate total cost of $624,677,000. Considerable discussion centred around the destruction of material at Penhold, Calgary and other depots. A statement was submitted which did not meet with general approval. The committee, as a whole, was critical of the manner in which the R.C.A.F. admittedly acting under general authority from War Assets Corporation, had brought about the destruction of equipment at these R.C.A.F. depots. This equipment, which was termed unserviceable (i.e., beyond economical repair) and had been listed as of no marketable value, was marked for physical destruction. It is to be regretted, and is indeed unfortunate, that no collective statistical data was kept of the equipment which was reduced, to produce as it was not apparent at the time that there was any advantage to be gained from the additional administrative work involved. It was pointed out by the R.C.A.F. that all serviceable bits and pieces and parts were extracted. The destruction, nevertheless, took place; and although the policy, in this respect has been changed, your committee take the definite stand that no such procedure or action should have been followed or allowed. According to R.C.A.F. witness no further destruction has taken place since August, 1945. Witnesses were also heard from the special service branches of the navy and air force and from the joint services advisory committee on welfare, voluntary and auxiliary services, Department of National War Services, respecting donations of materials, equipment and furnishings for the comfort and enjoyment of men and women of the services and the final disposal of same, by sale or otherwise. Your committee recommends that such donated equipment, materials and furnishings above referred to and still in stores, be disposed of and that the revenue derived from this source be used for the benefit of the personnel of the armed services. Because of articles appearing in newspapers and magazines respecting the destruction of war materials, it was deemed advisable to call before the committee the writer of certain of these articles which charged the air force with the alleged mutilation and scrapping of batteries delivered from No. 1 Equipment Depot, Toronto. A report dealing with this subject had previously been received from the Department of

War Expenditures-Final Report National Defence for Air under date of 29th May, 1946, as appears in the minutes of proceedings and evidence of June 6, 1946. The writer of those articles made what appeared to your committee serious charges against the air force and War Assets Corporation. One of his statements was that, while he had not counted the number of batteries on a junk pile he figured the volume of one battery, and then using a correcting factor, arrived at a number of 2,000. The R.C.A.F. witness stated that only 371 batteries had been released from No. 1 Equipment Depot from 25th June, 1945, to October 3, 1945. Another allegation by the same witness was to the effect that he had purchased for $5 a damaged 5J22 battery, which cost the taxpayers §80. This statement w'as contradicted and invoices produced to show that this type of battery (5J22) cost the taxpayer only $14.68. Certain other figures of costs as submitted by this writer witness were challenged, and figures of actual cost were given to show the incorrectness of statements contained in printed articles, although the great majority of figures of cost have not yet been examined. Your committee's inquiry in this connection had not reached a stage where further comment on the evidence can be made, but your committee feels that what appear to be sensational articles, should not go unchallenged. Another subject which your committee had under consideration and to which it devoted much time and study, is the question of making war surpluses available for instructional and school purposes. Witnesses were heard in support of a more generous treatment to educational institutions. The policy and procedure whereby War Assets Corporation disposes of surplus material and equipment to educational institutions were submitted to the committee. These dealt very fully with all phases of this important question, and members of the committee gave careful attention to means whereby useful equipment could be made available to educational institutions with the least possible delay. While, in the opinion of your committee the present policy of indefinite loan is sound from the viewpoint of War Assets Corporation, your committee recommends: 1. That the present policy of indefinite loan to educational institutions be broadened to include equipment not readily saleable. 2. That official educational representatives be permitted to visit and inspect such material and equipment as may be considered of educational value. 3. That there be granted to educational institutions a discount equal to that received by any dealer for similar lines. In the interest of economy, it is further recommended that additional outlets be found, or other suitable steps taken, with a view to speeding up War Assets Corporation's sales, and thus save storage and maintenance charges and. at the same time, place much needed material on the market. The following measures are also recommended to speed disposal, viz.: (a) Decentralized "sales-at-the-site"; (b) Selecting "short-supply" civilian items for immediate sale; (c) Disposing of real property as quickly as possible, consistent with the protection of public interest; (d) Making all building material immediately available for construction purposes; [Mr. Isnor.l (e) The non-employment by War Assets Corporation of persons otherwise interested in outside business; (f) Greater publicity by War Assets Corporation in respect of the sale and disposal of all war surpluses. With a view to effecting economy in the armed services, it is further recommended that all branches review, before the end of 1946, or, as early thereafter as possible, the need of retention of consumable stores, particularly with respect to the building up of reserves of clothing and equipment, bearing in mind the present shortage of many lines required for civilian consumption. _ It is also recommended that a review should be made of post-war requirements. _ Your committee recommends that a similar committee be appointed immediately after the opening of the next session. In this connection, it is respectfully suggested that study be given to the advisability of merging the work of this committee with that of the standing committee on public accounts by broadening its reference to include all war expenditures, and that the committee be known as the special committee on national expenditures. Your committee wishes to express its appreciation of the cooperation and assistance received throughout its deliberations, from officials of War Assets Corporation, representatives of the armed services and other departmental officials. A copy of the minutes of .proceedings and evidence taken by your committee, consisting of 1130 pages, is annexed hereto. All of which is respectfully submitted. Gordon B. Isnor, Chairman.