Mr. FULTON:

The penalties under this section have been increased five times. A new requirement is apparently being laid down with which it may take brewers some time to familiarize themselves. Why is it necessary to increase the penalty five times at the same time as this new requirement is introduced?

Mr. McCANN:

The reason is that the onus is now on the brewer. There is an additional penalty in that his licence is subject to cancellation.

Mr. FULTON:

The onus is now placed on him. He has a new requirement to meet, and yet if he makes a slip, whether he does it inadvertently or deliberately-we will say that it is inadvertent in respect of the new requirement-he is subject to a penalty five times as great as it was before. Why is it necessary to increase the penalty? Has there been evasion, or has the department just got nasty-minded and decided we should have a heavier penalty?

Mr. McCANN:

I am told the reason is that the malt is now' in the hands of the brewer, and for that reason there is a greater responsibility. Because of that the penalty is higher.

Mr. HACKETT:

Is the explanation that the malt was previously in the custody of the department under an excise officer, and it has now been transferred to the brewer, in consequence of which he is liable to greater penalties because if he does not carry out the regulations it constitutes a breach of trust? Is that the answer?

Mr. McCANN:

Formerly the brewer

secured his malt from the malt house. The duty was paid at the malt house, so that now there is a greater responsibility upon him.

Mr. HACKETT:

The malt house being under departmental regulations and officers of the government.

Mr. McCANN:

Yes, that is correct-under excise officers. When it is transferred, a greater responsibility rests upon him, and of course if there is an infraction the penalty is greater.

Mr. MERRITT:

The minister used a

strange remark in answer to the question of the hon. member for Kamloops. He said, ''1 am told" the penalty has been increased.

Mr. McCANN:

I was told by the officers.

Mr. MERRITT:

Am I to understand then that the minister did not exercise his own mind in the decision whether this penalty should be increased or not?

Mr. McCANN:

I exercised my own mind, certainly, but one cannot carry in his head all the reasons for the actions which have been taken, and I do not think there is any harm in having one's memory refreshed by the officers. That is why they are here.

Mr. MERRITT:

As I understand it, the malt used to be in the malt house under part IV which is being repealed. The minister says the penalty should be increased because now there is additional responsibility upon the brewer. What was the penalty upon the malt house under part IV? Was it $5,000 or $1,000?

Mr. McCANN:

The penalties are set out in sections 208, 209, 210, and as far down as 214 of the Excise Act. For example, section 234 of the Excise Act provides:

Every person who, without having a licence under this act, then in force, makes any malt or steeps any grain or leguminous seeds for the purpose of malting, is guilty of an indictable offence, and shall, for the first offence, incur a penalty of one hundred dollars, and for each subsequent offence a penalty of two hundred dollars.

Then section 235 makes this provision:

Every person who becomes liable to a penalty provided for in the last preceding section, shall, in addition thereto, forfeit and pay for the use of His Majesty double the amount of excise duty and licence duty which should have been paid by him under this act.

There are other sections dealing with illegal possession of apparatus, fraudulently putting grain into a cistern, removing malt before account is taken, selling malt unlawfully manufactured-all with the penalties set out.

Mr. MERRITT:

It seems strange to me that although the duties of the maltster are now put upon the brewer, all the penalties to which the maltster was subject were in the sum of $100 or $200, and never more than $200. They were all set out seriatim so that for one offence there was never a fine of more than $200. Now we have this one increased from $1,000 to $5,000, and yet the responsibility being assumed was assessed at only $100 before.

Mr. McCANN:

Something has to be known of the background of this change. Perhaps

Excise Act

I should have made a statement at the outset to clarify the whole situation. This whole bill is designed as an economy measure. For many years malt has been subject to duty at the point of production-that is, at the malt house. It is proposed now to assess the duty as the malt is received at the brewery. It has been estimated that our present control costs in the neighbourhood of $153,000 a year. It involves not only the cost of maintaining continuous supervision over eight malt houses at present under licence, but the larger item of supervising the operations of forty bonded manufacturers who supply malt syrup to 294 industrial users. By these amendments, that is being done away with and we are putting the tax on the malt when it gets to the breweries. The answer to the hon. member's remarks is that there must be additional penalties for infraction because of the fact that, whereas before it was all supervised, now only that part that goes to the breweries will be supervised. One can easily see that quantities could be bought by brewers through other channels of trade and that they would not be subject to the tax.

Mr. FULTON:

This presumably will save a considerable number of personnel as well.

Mr. McCANN:

Yes.

Mr. LENNARD:

Will there not be excise officers in the breweries?

Mr. McCANN:

Yes.