May 22, 1947

LIB

Thomas Vincent Grant

Liberal

Mr. GRANT:

What are you doing now but playing politics?

Topic:   THE BUDGET
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SC

John Horne Blackmore

Social Credit

Mr. BLACKMORE:

He is doing what he came here to do-looking after the common man.

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LIB

Thomas Vincent Grant

Liberal

Mr. GRANT:

The other fellow was doing the same.

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SC

William Duncan McKay Wylie

Social Credit

Mr. WYLIE:

This is what one of the aspirants for the leadership of the Liberal party of Ontario said, according to a report in the Ottawa Citizen of May 16:

During the policy report debate, the convention turned down a suggestion that the party go on record as favouring a $40 a month minimum old-age pension. Mr. Lamport, chairman of the public welfare committee, said this was not the time to "give away the dynamite of the Liberal campaign for the next election."

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PC

Gordon Graydon

Progressive Conservative

Mr. GRAYDON:

What dynamite?

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SC

William Duncan McKay Wylie

Social Credit

Mr. WYLIE:

A minimum of $40 a month for old age pensioners. I was very much surprised to read that in the press, and I certainly hope that the party will never be in power to carry that out,

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PC

Gordon Graydon

Progressive Conservative

Mr. GRAYDON:

You are as safe as a church on that.

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SC

William Duncan McKay Wylie

Social Credit

Mr. WYLIE:

What I mainly rose to discuss was irrigation, but after listening to the Minister of Agriculture (Mr. Gardiner) this afternoon I do not know that there is very much that I can say. We do have a problem in the west in the drought area for which irrigation is the only solution. I often think that one-half of Canada does not know how the other half lives. In discussing problems pertaining to western Canada I do not think

The Budget-Mr. Wylie

I should be classed as a nationalist at all. I have a devotion to those drought areas. I am reminded of a trip I was privileged to take about two weeks ago, sponsored by the hon. member for Hamilton East (Mr. Ross). On that trip I saw areas I had never seen before and got to know many members with whom I had never before been intimate. It made ms realize that when you get to know one another and understand their problems, things are much easier.

In the west, according to the last report of the Department of Agriculture, there are in Saskatchewan 1.541 townships which averaged from eight bushels per acre down to zero; 750 townships averaged five bushels or less to the acre. Those 1,541 townships affected 42.592 individuals, and they received a total amount of a little more than $12,000,000. In Alberta there were 890 townships, 442 of which averaged five bushels or less to the acre, and 448 eight bushels or less. Those 890 townships affected 18.244 individuals, who received a little over $4,000,000.

When you tell people in the east that we have yields in the west averaging sometimes four bushels or less to the acre, they seem unable to realize it. They think it just cannot be so. That is why I say that people in eastern Canada should see the conditions in that large area in western Canada, especially around the first of July. Just imagine a man with 480 acres of land, 400 acres under cultivation. The general practice would be to put 200 acres each year under crop and 200 under summer-fallow. That means that he would thresh 800 bushels of wheat, and at $1.35 a bushel that would bring slightly over $1,000. In other words, his income for that year is slightly over $1,000, and out of that he has to meet all his expenses. The Prairie Farm Assistance Act has done wonderful work. He will receive $500 from the government through the P.F.A.A., and if it were not for that he would be on relief. But he has 80 acres more, and some people may say, he still has 80 acres of pasture. Well, in the drought area 80 acres will carry only two head of cattle; that is the recognized number of stock that will be carried in such an area, 40 acres per head. The provincial government leases the land on that basis, and as a matter of fact in some areas only three head of cattle per quarter section, or 160 acres, can be taken care of. It is hard to realize that. Well, there is only one solution to that, and it is irrigation.

I realize that the dominion government has started on the St. Mary-Milk river dam, which will hold 270.000 acre feet of water and will supply water to another 345,000 acres of land, and partly to another 120,000 acres.

That is only one dam, but we have many others. We have the Red Deer diversion scheme, which the hon. member for Acadia often speaks of. When you think of what can be done in the way of irrigation in that area you will see the significance from the standpoint of population. We sometimes wonder why we are having a redistributian in the matter of population. The population in those areas can be increased by thousands if we make use of natural resources. The dominion government and the provincial government, of course, have come to an agreement over the conservation of the watershed on the eastern slope of the Rocky Mountains, and I am sure we are all glad to see that. It is badly needed. That is our only protection to supply water in the future for our drought area.

I notice some of the eastern papers are taking up the question of irrigation, and I refer particularly to the Globe and Mail, which at times rather surprises me. They must have a western writer on that paper, and I have one editorial here in particular which is very good. They explain what the Lethbridge area produces. It produces $100 million worth of goods, $70 million in agricultural produce, and that is produced in an area which, before irrigation was used, was producing very little. It tells of Saskatchewan's problems and the way the population has decreased in that province. It tells what can be done by more irrigation in that area and it has this to say:

Twenty years ago the population of the Lethbridge northern irrigation district, for example, was 1,500. Today it is HO,000. The dry land farms in the west support an average of 3-5 persons per square mile; irrigated farms 30 per square mile. Average returns per acre throughout Alberta is $12. In the irrigated sugar beet fields near Lethbridge it was $411 in 1946.

That just shows what irrigation can do when it is in an area such as we have in southern Alberta. But the writer entirely spoils the editorial in his last paragraph. I am going to read that paragraph because so many people in Ontario do not quite understand what irrigation means to the west. The writer says:

Also, if Alberta is fully appreciative of the values of water control, nothing like the same degree of understanding has been evinced by Ottawa or, for that matter, by the federal members of parliament representing those western areas most susceptible to drought. Up till now the lone parliamentary voice, which for long cried in the wilderness, has not been that of a western member nor even of a farm member, but that of a Toronto manufacturer. It would be appropriate about this time, we think, if there was something heard from representatives of those areas vitally concerned with this question.

The Budget-Mr. Wylie

That last paragraph spoils the whole editorial. I agree that the member for Davenport (Mr. MacNicol) has done a lot in advocating irrigation and letting people know the results, and I can assure you, Mr. Speaker, that any time the hon. member wants to come to Medicine Hat he will get a hearty welcome. But there have been others in this house who have discussed irrigation, before the hon. member sat here. I refer particularly to Doctor Gershaw, who is now a senator. Since 1935 we have had the member for Acadia here, the member for Battle River, and the member for Lethbridge. Will anyone try to tell me that they have not discussed irrigation in this house? Surely not. The former member for Medicine Hat, between 1935 and 1940, made many speeches on irrigation. I suggest to the editor of the Globe and Mail that he read Hansard a little more and inform himself before he spoils a good editorial by adding a little politics at the end of it. The hon. member for Davenport has done much to sponsor irrigation in the west, and I hope he will be back to see us.

In Alberta we have many other areas that can be put under irrigation. As a matter of fact, we have 976,000 acres that have already been surveyed, which can be put under the ditch. That means that we shall have an additional 10,000 farms. What does that mean in its economic effect, not only on Alberta but on Canada as a whole? It means that we shall have 976,000 additional acres under irrigation, and 9,590 irrigation farms would be created. Assuming that each irrigation farm would support five members of a family, the rural population would be increased by 47,950 persons and the urban population would be increased by at least 39,000 persons. Assuming that each irrigation farmer spent approximately $2,000 on the purchase of farm implements, it can readily be seen that the agricultural machine manufacturing industry would benefit to the extent of $20 million in orders for assorted implements. In addition to the purchase of farm implements, the need for sundry processed goods, fabrics, utensils, clothing, et cetera, would be approximately twenty per cent of the total annual farm production, to the benefit of transportation and eastern manufacturing concerns. These are just a few figures.

I could discuss the irrigation problem for hours and still not exhaust the subject, but I cannot deal with it fully in forty minutes. In fact, I sometimes think that forty minutes is too long for any member to speak in the house, especially if we are to get through the business outlined yesterday by the Prime

Minister. But no matter how much we talk about irrigation, there is only one way to do it and that is through action by the government. We found all the money we wanted during the past war, and I see no reason why we cannot find just a little bit more to satisfy our own people and keep them contented. We have wonderful opportunities in that southern area for the rehabilitation of many of our veterans and the farmers who are already there. Let us give them just a little better deal. Let us get busy on irrigation. Let us have a little more action and less talk.

Mr. DONALD M. FLEMING (Eglinton): Mr. Speaker, the budget remarks of the Minister of Finance (Mr. Abbott) had about them elements of both inflation and deflation. In the picture he drew in advance of his actual announcement of his budget proposals there were strong elements of inflation. But when he proceeded finally to announce the fiscal changes he was actually proposing, I think all members must have realized-or must realize now if they did not do so before- that a process of deflation was at work having regard to the glowing promises which preceded the actual proposals.

Any decrease in income tax is necessarily welcome to a tax-burdened people. The decrease which the Minister of Finance announced is welcome, but it is not adequate. To most of the people who are affected, it is trifling in amount. I submit that it cannot be regarded, in most cases, as more than a token reduction. It will be accepted gladly, but only as the slender first instalment of reductions which must be made. The reductions, of course, are not fairly measured in terms of percentages but are fairly measured in terms of what the reduction means in dollars and cents to the man of small means, the man in the low-income bracket or lower middle bracket. To the average taxpayer, the married man with two children, with an income of $1,800 a year, it means that this year the reduction will be only $4; to the man with an income of $2,000, the reduction is only $16; to the man with $2,250 of income, the reduction is only $25; to the man with an income of $2,500, the reduction is only $32; to the man with an income of $2,750, the reduction is only $39; and to the man with an income of $3,000, the reduction is only $49. These reductions are entirely inadequate.

I have just one comment on the surplus. I am not prepared to offer any words of commendation to the Minister of Finance on the size of an alleged budget surplus when it reflects such inexcusably inaccurate budget-

The Budget-Mr. Fleming

ing as we have seen this past year. Actually the government has taken from the people of this country, on various accounts, $352,000,000 more than they actually needed to balance their accounts, and this at a time when the taxpayers have been suffering greatly under an excessively heavy burden of taxation. Fourteen per cent more was taken from the people in taxes than was actually needed to finance the government expenditures of last year.

If this is put before us as a surplus of $352,000,000 on current account, then I say, Mr. Speaker, that it is not an honest surplus. It has been brought about by the sale of government assets to the total of $372,000,000 so that actually on strict current account there is a deficit of $20,000,000. That is no more truly a budget surplus than it would be in the case of a man, we will say, with an income of $2,400 a year whose expenditure is running to $2,600 a year, who has made up his mind that he is not going to have a deficit, and who goes out and sells his motor car and refrigerator for $500, ends up with $2,900, and says that he has come out with a $300 surplus.

This budget is also woefully lacking in any attempt at an approach to the problem of spending. The government had an opportunity this year, relieved as it was to the extent of $900 million of expenditures on account of demobilization and reconversion, to grapple with the problem of bringing expenditure within the capacity of the people of this country to bear. On the contrary they have taken advantage of that relief from the burden of expenditure on demobilization and reconversion account to begin the upward spiral of expenditure in the majority of the departments of government. In seventeen out of twenty-eight departments expenditure for the current fiscal year is to be greater than last year. It is not enough for the Minister of Finance to say that the responsibility rests on parliament, unless the government is prepared to give parliament a really effective opportunity to review the estimates in detail. That cannot be done when the house is sitting in committee of the whole. There are too many here and it takes too much time. These estimates are chronically left until too late in the session for any comprehensive or thorough review. If parliament is to have any effective participation in the review of exnenditure, a different means must be found from that in vogue at the present time.

Furthermore, the habit of heavy taxation is a difficult one for this government to shake. The habit has become so deep-seated. Actually this year the Minister of Finance says that he is budgeting for a surplus of $190 million; and even in the unlikely event, under present

circumstances, of all the remaining provinces coming in and accepting the terms proposed by the dominion government in respect of an agreement, there will still be a surplus of $80 million, which represents an excess of taxation over the amount actually required to meet this year's expenditure.

The means resorted to by the Minister of Finance or by the government for accomplishing the reduction in the income tax is not a satisfactory or adequate method. Actually, as against reductions in taxation which for this fiscal year ending March 31, 1948, will amount to $160 million, the government has relieved itself of no less than $208 million in subsidies as compared with the past fiscal year. Let us leave out of consideration entirely those forces which are at work at the present time to increase the cost of living, and just put this problem on the basis of the amount which the dominion government contributed last year in the form of subsidies to help reduce the cost of living. The dominion government has now relieved itself of that grand total of $208 million as compared with last year. As against that they offer reductions in taxation for this fiscal year of only $160,000,000. That is a poor sample of a reduction in taxation which will offer any net benefit to the people. Actually the government has been offering $160,000,000 with one hand and with the other taking away $208,000,000 in terms of the cost of living of the people. What do these trifling token reductions in income tax mean to the married man, with two children, whose income is $2,000? As I mentioned a moment ago, his reduction in income tax this year is just $16. How far will that go to meet the increased cost of many articles which are staple household necessities and to the cost of w'hich the government formerly contributed by way of subsidies? As a matter of fact in the case of most families that reduction of $16 will not cover the increased cost of one of these staple necessities of life, let alone all of them.

Now, Mr. Speaker, I turn briefly to the related subjects of trade, exchange and the plight of the gold mining industry. Our fiscal relationships with the United States have reached very serious proportions; and because of the difficulties the countries in the sterling area are having in converting currency, the situation affects us in our external commercial relations in almost every quarter. In the year 1946 we had a trading deficit with the United States of $603,000,000, by a very wide margin the highest in our history. Compare that with the figures for some earlier years. In 1938, the last full year of peace, our trading deficit with the United States was

The Budget-Mr. Fleming

$149,000,000. In 1941, when we were making substantial purchases of war materials in the United States, our deficit was $318,000,000. In 1946 it jumped to $603,000,000, and it has not stopped there. As a matter of fact the tempo has quickened, and in the first quarter of this year our trading deficit with the United States amounted to no less than $204,000,000. The situation is approaching alarming proportions.

Consider this in relation to the gold mining industry, which in those dark days of the thirties did so much to carry this country through the depression. We were very glad then to have an industry for whose product there was always a market, especially a market in the United States to help reduce our trading deficit with that country. In 1941 gold production in this country netted us $205,000,000. In 1946 it dropped to half that figure, $103,000,000. Today it is nothing short of tragic to see what is happening to this great Canadian industry. Apart from some of the big producing mines, which in times like these can fall back upon their higher grade ore bodies and stop mining on their lower grade stopes, the gold mining industry has reached a critical position. Exploration work is at a standstill. The marginal mines are a.t a standstill. The w'hole industry, apart from a few very large mines, today is faced with nothing short of ruin, and this government has not offered anything in this budget to save that industry from destruction. The need has been there for any government with its eyes open to see; but it stands back with arms folded and watches this industry proceed to ruin.

The difference between the Canadian dollar and the United States dollar on the unofficial market in the United States; or, if you like, the difference between the Canadian dollar ruling at a discount up to June last and the United States dollar as it ruled at that time in terms of premium, represented in great mining areas in Canada, not confined to one province alone, the difference between valuable ore bodies and heaps of rock. That is just what the reduction in the price of gold has meant, and this situation cannot be redeemed apart from an increase in the price that gold produced in this country is able to fetch in the United States. If some encouragement were given the gold mining industry it could contribute mightily to redressing our unfavourable trading account with the United States, and I urge the Minister of Finance to lose no time in addressing himself to this problem and at least offering the gold producers of this country a price equivalent to the price of the American dollar with relation to the Canadian dollar ruling in the unofficial market in the United States.

It is a matter of general regret, I am certain, that in the present budget the Minister of Finance has not done anything to remedy the injury he wrought last year to married women in respect of their income tax. Here we have the labour department boasting in a recent publication about the number of married women who are employed. They make this statement:

In 1946 twenty-one per cent of all persons gainfully employed were women, as compared with seventeen per cent in 1939 and thirteen per cent in 1941. Of all women employed in 1946 in industries other than agriculture, twenty-three per cent were married.

We need married women in those lines of industry in which they are employed today. The time has not come when we want to see married women retire from those lines of employment in which today they are filling a role which cannot be filled otherwise. I am thinking of nursing, of the needle trades, of domestic service, and a good many other avenues of female employment.

I turn now to the subject of indirect taxes. I suppose indirect taxes are always popular with governments because they are hidden and, not being known or appreciated by the people, they are thought by governments to be painless. It is like the dentist who gives a patient gas but takes out the tooth just the same. This government is certainly fond of levying indirect taxes. Of a total of $2,458 million in taxes raised by the government from the Canadian people last year, $1,436 million was raised by direct taxes and no less than $1,022 million by indirect taxes. Yes, indirect taxes are at the highest point ever reached in the history of this country. I wish to comment on several matters, and to say something in the first place about the way the sales tax is applied. What I have to say about the sales tax applies with equal force to all these indirect taxes, because they are consumer taxes. They bear no reference to the capacity of the taxpayer to pay, and therefore bear relatively much more heavily on the man with a small income, particularly if he has a large family or other dependents.

The pyramiding of the sales tax is a serious problem. Let me give you an actual case as an example. A wholesaler pays $10 a dozen for hosiery; the eight per cent sales tax amounts to 80 cents. His mark-up is 20 per cent, making the selling price by the wholesaler to the retailer $12.96. The retailer adds 50 per cent, again on the total, making a price of $19.44. In other words the consumer is not paying a sales tax of 8 per cent; by

FMr. Flpming.l

The Budget-Mr. Fleming

that pyramiding method he is paying a tax of 14-4 per cent. This is one example of many that could be cited.

I wish to refer also to the so-called luxury taxes. Actually, in terms of normal peacetime, this is a misnomer, and I think the Minister of Finance ought to be the first to admit it. It is not a luxurj tax. There may have been some justification for calling it a luxury tax in time of war, when it was deliberate government policy to siphon off manpower from certain avenues of production and concentrate it on the production of war materials, but that does not bear any relationship to the situation in peacetime. Let me refer to the way this so-called luxury tax is working out at the present time. It is full of anomalies, and it is time the government removed those anomalies.

Today a refrigerator is taxable, but an icebox is not. A vacuum cleaner is taxable, but a carpet sweeper is not. An electric range is taxable, but a coal range is not. Fountain pens, clocks, watches, plated and pewterware, trunks, bill pouches, shopping bags and things of that kind are taxable as luxuries, but oil paintings, oriental rugs and other items incidental to a luxurious or semi-luxurious living standard are not taxable.

Let us consider the way in which this tax applies, particularly to necessities required by young people who are setting themselves up in housekeeping. Jewellers, too, have a legitimate complaint on this score, as well as consumers.

Why should alarm clocks, knives, forks, spoons and glassware be classified as luxuries, and subjected to luxury tax? If one puts a $1,000 table on a $3,000 oriental rug in his home, those articles are treated as necessities and are not taxed as luxuries. But if he puts on that table a fork costing $1.50, the fork is treated as a luxury and is taxable accordingly. There is no sense in taxation of that kind. It simply does offence to reason. I believe the minister has admitted as much, because, writing to the Hon. Angus Macdonald, premier_of Nova Scotia, on April 21, 1947, he said this:

These taxes, along with a considerable number of other special taxes, such as those on gasoline, soft drinks, candy bars, luggage, clocks, jewellery, furs and the like, were imposed by the dominion during the war emergency. I imagine that most governments are more anxious to take taxes off than to put them on.

So far as the taxes to which I have referred are concerned, I say the people of this country would like to see a little action on the part of the government toward taking them off.

Is it realized that if one enters a florist shop today and buys cut flowers he will not pay luxury tax? But if he buys flowers in a vase he pays a tax not only on the vase but on the flowers as well! This is another anomaly. If one buys flowers in a vase, he pays a tax on the whole purchase-a luxury tax on the complete purchase. It is unjust.

Not only are these taxes working an injustice on the consumer, but I can tell the house they are working a serious injustice on a young Canadian industry. I refer to the ceramics industry. Before this tax, this industry was making some headway and employing a considerable number of people, but under present tax conditions it is faced with extinction. I beg of the minister to appreciate the seriousness of the problem this young industry faces, and to bring relief to it and thus bring relief to the consumers who are buying these commodities. If I had time I could give examples showing reductions of employment in the numbers of persons engaged in the ceramics industry. These reductions have been made recently, when the industry has been feeling the full weight of the tax. In some instances the reductions run up to 60 or 75 per cent of the. numbers employed.

The amendment offered on May 6 by the hon. member for Muskoka-Ontario (Mr. Macd'onnell) deplores the failure of the Minister of Finance in his budget to provide for the reconvening of the dominion-provincial conference in order to complete a satisfactory agreement with the provinces and a dominion-provincial programme of social security, health and public investment.

Let us not for the moment be too confused over figures, but rather realize fully the realities of the situation. Somehow a way must be found to reach agreement with reference to taxation fields, social security and public investment as between the dominion and the provinces. It is a fact that there cannot be that over-all agreement which is so essential unless there be a dominion-provincial conference. But the dominion government, which alone can call such a conference, refuses to do so, and demands that Ontario and Quebec yield and, in advance of any conference, accept terms offered previously by the dominion government. All the provinces are asking that the conference be reconvened, but the dominion government refuses to convene it.

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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

No, they are not.

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PC

Donald Methuen Fleming

Progressive Conservative

Mr. FLEMING:

I say the time has come when this nation demands that the conference

The Budget-Mr. Fleming

be reconvened. The party of which I have the honour of being a member believes that a way to agreement can be found. But we say this, that it will not be found by methods pursued in this chamber by some hon. members opposite during the course of this debate, by calling the premiers of Ontario and Quebec hard names. That will not bring about a solution of this problem.

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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

And calling the action of the dominion government political blackmail will not help, either.

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PC

Donald Methuen Fleming

Progressive Conservative

Mr. FLEMING:

I would remind the Minister of Finance and any other hon. members opposite who may be interested that these premiers are not speaking for themselves alone. They speak for the legislatures of their respective provinces. On April 1 of this year the Ontario legislature by a vote of 57 to 21 endorsed the position taken by the premier of that province in the course of these negotiations, and in connection with the offer made by the dominion.

In Quebec the legislature has recently enacted Bill 30, with the effect of authorizing the provincial government to negotiate a general basis of agreement between the dominion and all the provinces, but not on the terms that the dominion is insisting should be accepted. Before hon. members opposite go too far in calling the premiers of these two provinces hard names, I would remind them of what Mr. Godbout, the leader of the Liberal party in Quebec, had to say not sc long ago. Speaking in the throne speech debate in the Quebec legislature on February IS of this year, Mr. Godbout said this, as reported in the Montreal Daily Star of February 19:

Naturally, Mr. Godbout proceeded, the preservation of provincial autonomy is the first prerequisite. The province cannot, under any pretext, sacrifice any of its sacred rights and privileges.

And further down:

But as regards the Ottawa proposals, Mr. Godbout said-

And, by the way, these were the latest proposals made by the dominion government- -he could not say that he approves them, or whether he objects to them.

And again:

Mr. Godbout claimed that, in the light of what he learned of the Ottawa proposals, he felt they could not be accepted in their entirety. For example, he was against the Ottawa government entering the succession duties field, 'because in his opinion that should be left exclusively to the provinces. Furthermore, he believed that a number of taxes of another nature, now collected by Ottawa, should ibe retained by the provinces.

The premiers of these two provinces not oniy are willing to meet the dominion and the other provinces in a general conference, but have implored the dominion to call a conference. And this has been going on ever since the conference was adjourned in May, 1946.

On January 23 of this year the Premier of Ontario wrote the Prime Minister a letter, at the conclusion of which he said:

I assure you that the government of Ontario jO* be ready to attend such a conference in Ottawa at any time and there examine and consider all proposals on their merits. We are most anxious to arrive at a settlement which

. b? Pst and fair to the people of every part of Canada.

And the Toronto Globe and Mail of May 7 leports a statement by Mr. Duplessis to the same effect, as follows:

Mr. Duplessis expressed his willingness to attend another plenary conference, but declared nis unalterable opposition to any secret meetings.

He continued:

Conferences, to the spirit of

secret or separate, are contrary the federative pact.

Mr- Drew is reported in the Globe and Mail of May 7 as follows:

We want an agreement with the dominion, but we also want an examination of the constitution so that our taxation system may be simplified, improved and made more efficient for the great years ahead.

The fact that the Premier of Nova Scotia entered into an agreement recently with the dominion government, apparently with a. considerable measure of reluctance as to the terms eventually settled upon, has not changed the position with regard to the provinces of Quebec and Ontario. We have statements to that effect. I have only time to refer to the one attributed to Colonel Drew1 which appeareo in the Globe and Mail of May 14, in wffiich he said, "Our stand is still"-that is after the agreement with Nova Scotia-"that a further inter-provincial conference is needed to discuss the situation."

I implore the dominion government to reconvene the dominion-provincial conference. The crux of this matter revolves around six minor fields of taxation. Having regard to the size of those fields and the revenues accruing to the dominion, is the dominion government justified in refusing to reconvene the conference unless the provinces forgo these fields except the gasoline tax? Here is a

[Mr. Fleming.}

The Budget-Mr. Fleming

list of the yields from these six taxes in the fiscal year ended- March 31, 1947, and I will give the figures in millions only:

Gasoline tax $36,000,000

Amusement tax 14,500,000

Pari-mutuel tax 2,500,000

Electricity tax 5,000,000

Security transfer tax 1,000,000

Succession duties 23,500,000

The dominion has withdrawn from the gasoline tax field, so actually all that remains at stake are five fields of taxation with a total revenue of $47 million. When the Minister of Finance is budgeting for a surplus of $190 million this year, is he justified in standing firm for the retention of these fields of taxation? Having regard to the fact that the war ended two years ago, and that the war emergency which occasioned the entry of the dominion into these fields has passed, I submit that it is the primary duty of the Minister of Finance to withdraw from these fields of taxation. When he has budgeted for a surplus for this coming fiscal year I submit that he should eliminate these taxes and leave them to the provinces.

I have only time to make one or two hasty references to the agreements already signed. First, so far as this Progressive Conservative party is concerned and as its distinguished leader has said on more than one occasion, there will be no interference on the part of this party with agreements already signed. The leader of this party has said that if the Progressive Conservative party were in office today the provinces which have signed would get at least as good terms as those they already possess, or better.

Second, the terms offered by the dominion go far beyond the terms of the original offer upon which agreement was found to be impossible at the dominion-provincial conference in April and May, 1946. The actual advance in the total cost to the dominion is $100,000,000 per annum over the original offer considered at that time. A total of $225,000,000 is the estimated cost to the dominion this year if these proposals had been accepted by all the provinces.

In the next place, so far as the third and most recent bait offered to the provinces is concerned, it increased the cost by $26,000,000 and the minister made clear in this house on March 28 that the government will insist that this sum be taken into account when the dominion and the provinces sit down, if they ever do sit down, to discuss the problems of social security and public investment.

It is not enough to have individual agreements with some of the provinces. There must be a general agreement; there must be some attempt made to preserve the workability of our constitution by allowing uniform constitutional relationships to subsist between the dominion and the various provinces. Therefore the pursuit of secret agreements is essentially wrong in principle. There must be open negotiations

Topic:   THE BUDGET
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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

There are no secret agreements and there never have been.

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PC

Donald Methuen Fleming

Progressive Conservative

Mr. FLEMING:

-to which all the provinces must have full access.

I ask hon. members on the other side of the house who represent Quebec constituencies if they are prepared to go to their constituencies and say that they advocate the acceptance by their province of the lowest per capita rate of all the provinces. This is inherent in the latest dominion-provincial proposals by the federal government, because it would pay only $16.63 per annum for every person in Quebec, as against higher figures for the other provinces, $17.29 for Ontario and running up to $23.33 in the case of the most favoured province.

The nation wants an agreement. It wants the dominion and the provinces to sit down together. The nation demands that the dominion government call the provinces together. It was the desire of my leader to bring about an adjustment of the fiscal relationship between the dominion and the provinces on an equitable basis that led him to form his coalition government in Manitoba some years ago. The desire to see that accomplished was one of the things which led him to enter the federal political field. If the present dominion government will not move to reconvene the dominion-provincial conference in order to bring about an agreement between the dominion and the provinces, then it may be well assured that a government headed by the present leader of the opposition (Mr. Bracken) will do so at the very first opportunity.

Mr. Speaker, this brings me to the concluding passage of my remarks, which I should like to deliver in French, trusting that you will overlook my shortcomings. [DOT]

(Translation):

The Progressive Conservative party believes that a way can be found to bring about agreement between the dominion and the provinces on the important questions of fields of taxation, social security and public investment.

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PC

Gordon Graydon

Progressive Conservative

Mr. GRAYDON:

Hear, hear!

The Budget-Mr. Fleming

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LIB

James Horace King (Speaker of the Senate)

Liberal

Mr. SPEAKER:

Order! Before interrupting the hon. member who is speaking, I suggest that the hon. member for Peel (Mr. Graydon) should ask his permission to do so.

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PC

Gordon Graydon

Progressive Conservative

Mr. GRAYDON:

Thank you, Mr. Speaker.

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PC

Donald Methuen Fleming

Progressive Conservative

Mr. FLEMING:

This party affirms that compulsion on the part of the dominion government and unfair use of its vast powers to exert pressure on the provinces, are not the way to bring about agreement. It condemns such tactics as offending the spirit of the constitution.

This country was brought into being by agreement, embodied in the British North America Act-agreement between men of different provinces and of two great races and cultures. Destroy respect for that agreement, destroy the respect due to the constitutional rights of the provinces, and you destroy the basis of confederation itself. Our national well-being will never be advanced by doing violence to the constitutional basis of our nationhood.

I said that the Progressive Conservative part}'' believes that a way can be found to bring about general agreement between the dominion and the provinces. It can be done if the dominion government will stop treating the provinces as subordinates, and if it will cease its persistent efforts to centralize power in Ottawa at the expense of the provinces. Let it restore to the provinces those fields of taxation which the provinces have said they wish to retain in order to continue to be sovereign under the constitution, and the way will immediately be opened to reaching a unanimous agreement.

Agreement between the dominion and some of the provinces is not sufficient. If confederation is to remain a fact the constitutional relationships between the dominion and all the nine provinces must be uniform, always reserving the rights guaranteed under the constitution to the province of Quebec and its people.

Hon. Liberal members who during this debate have been deriding and attacking the premier of Quebec and the premier of Ontario are contributing nothing to a true solution of thq problem. If they really desire an honourable agreement between the dominion and all the provinces, let them refrain from their silly tactics of calling Mr. Duplessis and Mr. Drew names. Let them remember that these two honourable gentlemen have been honoured by the people of their respective provinces with their confidence, and that their policies on dominion-provincial relations have recently been strongly endorsed by the legislatures of their respective

provinces. These two men have a duty, not only to the people of their own provinces, but to Canada to protect the constitution, just as the dominion government has a duty to protect the constitution. Mr. Duplessis and Mr. Drew are the kind of men who will perform this duty, no matter how bitter and unfair be the personal attacks made on them by Liberal members in this house. Hon members would do well to remember that Mr. Godbout, the Liberal leader in the province of Quebec, when speaking in the Quebec legislature on February 19, requested that the dominion vacate the field of taxation which Mr. Duplessis, Mr. Drew and Mr. Angus Macdonald have said the provinces must possess exclusively.

Mr. Duplessis stated in Quebec city as recently as May 6, that he was willing to attend another plenary conference. The legislature of Quebec, by its Bill No. 30, has authorized Mr. Duplessis' government to enter into agreements with the dominion government. Mr. Drew has for months been urging the dominion government to reconvene the conference. The premiers of the other provinces have all been asking for the same thing. Under these circumstances, there can be no excuse for the refusal of the dominion government to reconvene the dominion-provincial conference.

I call upon the government to put aside petty partisan politics and to reconvene the dominion-provincial conference, and thus to open the way to negotiations and unanimous tax agreements, the kind of agreement by which the constitutional fabric of this nation may be strengthened, and prosperity and security won for all our people, not by bureaucratic centralization of power at Ottawa, but by achieving the maximum of provincial autonomy with a minimum of centralization.

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LIB

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. ABBOTT:

Hear, hear!

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LIB

Joseph-Arsène Bonnier

Liberal

Mr. J. ARSENE BONNIER (Saint-Henri):

Mr. Speaker, I must congratulate

the hon. member who has just resumed his seat on his splendid handling of the French language. If 90 per cent of the members in this house did as much, it would promote agreement among the provinces and between the two great races which people them.

Mr. Speaker, I will devote part of my remarks to my constituency, which is, by the way, one of the largest in the province of Quebec, since it has a population of 80,000 numbering an electorate of 50,000. Needless to say, should the government act, in the

The Budget-Mr. Bonnier

interest of my fellow citizens, on any of their long standing requests, any such steps would surely be highly appreciated.

I also wish to point out that I represent the largest industrial county in the province for there are more industries within my constituency than in any other of the city of Montreal. Altogether, there are 160, some small, some large, but all fairly important. In that district, one finds, for instance the Canada Car & Foundry plant, which employs only men and numbers about 6,000 workers; during the war, one of its sections built airplanes and thus did great service to the country. There is also the Canadian Tube plant, just about on the same footing, since it employed some 6,000 men. Last year, it built a million dollar addition to its present establishment. I can tell hon. members opposite who are always talking about nails that we produce them in my constituency. If they care to pay us a visit, they may be able to buy a number of interesting things.

Dominion Textile have three branches and some 10,000 employees; many women and aged people, unable to find work elsewhere, are hired by this company. Imperial Tobacco, the important cigarette factory known to all, has a large staff consisting mainly of women. R.C.A. Victor also numbers many employees while Crane Limited, another important enterprise, retains a large staff as do General Steel Wares and the luggage concern of Eveleigh. Tooke Bros., big scale manufacturers of shirts, dressing gowns, ties, and so on, have a very flourishing industry in my constituency. Simmons Limited, manufacturer of iron beds and various iron supplies, ^number a great many employees. The important Robert Mitchell foundry also has a large staff while the Steel Company of Canada, manufacturers of nails and pipes, retains the services of a great many employees.

Mr. Speaker, it would take too long to list the 160 industries of my constituency. I have mentioned only a few. Would the house allow me, in order to save time, to put this table on record?

(Text):

Topic:   THE BUDGET
Subtopic:   DEBATE ON ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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May 22, 1947