Mr. Sinclair:

Go on. There were a lot of interruptions.

Mr. Smith (Calgary West):

Go on. This is good.

Mr. Gillis:

Thank you. I had a lot more to say but I shall cut it out.

Mr. Sinclair:

You have had a lot of interruptions.

Mr. Cockeram:

Get down to the budget pretty soon.

Mr. Gillis:

I am sorry to be taking up so much time and not talking about gold, which is a very useful product. It is dug out of the ground in Canada and buried in the United States, but somebody makes a lot of money out of it.

Mr. Ross (St. Paul's):

Get down to the budget.

Mr. Gillis:

You would not know even if I were there. The thing that I cannot understand is why we should have a lack of markets in a basic industry in a province, at a time when we import so much coal from the United States. We imported coal to the value of $143 million last year at a time when we were producing a small amount of coal in Nova Scotia, with the mines working on half time. That is reminiscent of the thirties. Many people in that province cannot understand why this should be so. The only alibi offered by the Minister of Trade and Commerce (Mr. Howe) was, "Well, this has been a mild winter, and the railways are not burning as much coal". That is not an answer at all. It shows faulty planning. There is no plan to market the product of one of the basic industries, an industry which is basic to one province in this country.

I had intended to say more, but with the permission of the house I should like to make one observation with regard to steel. In my view the Minister of Trade and Commerce before dissolution of this parliament should

clarify the position of steel in Canada. The speech from the throne indicates that the government was anxious to expand that industry. To that extent they were prepared to match dollar for dollar with the industry in any expansion program which might be undertaken.

The minister stated in reply to a question from myself a month or so ago that the only section of the industry which had made application for that grant was Stelco, and that neither Dosco nor Algoma-the other two basic industries in the country-had indicated whether they would make use of it or not.

In the last issue of the Financial Post there was a statement to the effect that steel was becoming more plentiful, and that to that extent the federal government was likely to withdraw the dollar for dollar proposal it had made for the purpose of expanding the steel industry. There is a large steel plant in my constituency, one which produces a large share of Canada's basic steel, and I should like to know from the minister before I leave Ottawa whether Dosco made any application to expand its plant on the basis set out in the speech from the throne and, if not, why not? I should like to know if there is any truth in the statement which appears in the Financial Post that the government may withdraw this program of financial support for the purpose of expanding the industry. I am concerned about it, because I fully believe that the only solution to the problem of Nova Scotia is the expansion of the steel industry at Sydney. It uses a large percentage of the coal produced in that province. Unless that steel industry is expanded, I do not see a bright future for the province.

Secondly, the iron ore deposits in Labrador and Ungava are most important to this country. I note that a large number of American investors are coming into that industry in eastern Canada. I believe that five of the directors of Dosco are Americans; they are buying heavily into that stock.

With the ore situation such as it is on the North American continent, I believe that in the not far distant future there will be shifts of major steel plants to the east coast. I suggest we should try to hold our own industries in this country, and utilize the iron ore deposits in Ungava and Labrador for the purpose of building this country into a great industrial nation, rather than allowing its resources to slip to the other side of the border.

I should be pleased if the Minister of Trade and Commerce would look at my remarks in Hansard, and before the session

closes make some kind of statement as to the future of steel, particularly in the matter of expansion. May I thank the house for listening patiently at this time.

Mr. W. F. Kuhl (Jasper-Edson):

Mr. Speaker, I am tempted to get into the controversy which has been taking place regarding the merits of public enterprise as compared with private enterprise. However, if I became too much involved in that, perhaps I would forget to return to the observations I had intended to make. Nevertheless there are one or two remarks I feel compelled to make considering the controversy which has just taken place.

I believe that those on both sides of the argument-the C.C.F., who champion public enterprise, and the Liberals and Conservatives, who support the present orthodox policy-are both groping in the dark. I say that for this reason: The success of either public or private enterprise in the final analysis depends upon markets. It depends upon the ability of people to purchase the products produced. That is the feature which I believe hon. members of the C.C.F. in particular overlook when they constantly advocate public enterprise.

Neither enterprise can succeed completely unless there is sufficient purchasing power in circulation in the community to absorb the total production. Again and again we in this corner have asserted that in normal times industry never distributes sufficient purchasing power to buy back the total production of the country. We suffer from a chronic shortage of purchasing power. What both orthodox economists-those of the Liberals and Progressive Conservatives on the one hand, and the C.C.F. on the other-overlook, is the relationship of purchasing power to production. They overlook the part played by those who control the monetary policies of the country. That is one of the most important features to observe at all times- that is, to see that there is a proper relationship between money in the hands of the people and goods which they have to buy. Therefore, I suggest, the people of Canada will never have economic justice, whether things are produced publicly or privately, until purchasing power equates producing power.

Before I refer to that part of the budget to which I wish to make special reference, I should like to place on record a letter which I received recently from Mr. R. B. Morrison, secretary of the trans-Canada highway association, Yellowhead route. Doubtless all hon. members received this correspondence; but inasmuch as this route would pass

The Budget-Mr. Kuhl through the constituency of Jasper-Edson, which I have the honour to represent, I feel the facts contained in the letter should be placed on record.

Doubtless the major responsibility for determining the route lies with the provincial governments, and the pressure should be applied to those governments. Nevertheless the association which sponsors the Yellow-head route feels that the dominion government should consider the submissions they have made respecting the preference for this route, inasmuch as money is being provided by the dominion government. [DOT]

I suggest that much credit must be given this association for the work they have done in ascertaining the facts concerning the desirability of the various routes and for the pressure they have applied to see that the route which is chosen is the one which in their opinion serves the interests of the greatest number of people.

Personally I see no reason why all the routes that are proposed cannot be built. I believe the people along any particular route are entitled to have the highway just as much as the people along any other route. As I say,

I see no reason why all routes should not be built, especially if there is to be a so-called unemployment problem. I want to place this letter on the record because it sets out the reasons why the Yellowhead route is the choicest of those that have been suggested. The letter reads:

As secretary of the Edmonton committee of the trans-Canada highway system association (Yellowhead route) I have been instructed to write you concerning the forthcoming debate on the trans-Canada highway bill, your part in this and facts you may need.

We ask that you insist on complete and impartial investigation of the entire question by a fact-finding body independent of parliament before any decision is made concerning routes. Naturally we also will appreciate direct support of the Yellowhead route; but our major problem now is to get impartial information before the house. For such argument as you may find necessary for either stand, I trust you will not object to our reviewing the true facts.

The Yellowhead route covers suggested highways from Winnipeg to Vancouver and Prince Rupert via Saskatoon, Edmonton and Jasper. As compared to the Kicking Horse Pass route our claims for the Yellowhead route are easily proved.

It is cheaper road to construct and to maintain.

More than half of the population, area, oil and parks of the four western provinces are tributary to the Yellowhead route.

It serves the new development in the Canadian northwest including Peace river agriculture, Mc-Murray tar sands. Elk Point salt, Yellowknife gold, Great Bear uranium and the Alaska tourist.

It covers the important military requirements- three Pacific ports, essential northern airfields and supplies and the projected radar screen.

We believe that the people of the whole of Canada have a right to expect that the trans-Canada high-

The Budget-Mr. Kuhl way will be so located as readily to serve the largest number of Canadians, and thus make its utmost contribution to the unity of the nation; so as to facilitate the business of the country; so as to make accessible to Canadians and visitors alike the greatest possible number of national and provincial parks; and, since the defence of Canada must loom large in any decision, so as to be of the utmost strategic value.

Let us examine the facts.

First a word about cost since it is inconceivable that a decision on routes could be made totally ignoring the lower cost factors both for construction and maintenance which the Yellowhead route offers over the Kicking Horse route. East of the junction of the two roads at Kamloops, the Yellowhead route follows wide peaceful valleys where narrow shelves, sheer cliffs and overhands, steep grades, abrupt turns, and impassable snows are practically unknown. The highest elevation is 3,717 feet (three hundred feet above that of the city of Calgary), whereas approximately one hundred and seventy-five rugged miles of Kicking Horse route lie between 3,717 and 5,337 feet elevation. The average of winter reports on snowfall between Jasper and Kamloops is four feet eleven inches-that between lake Louise and Kamloops is eleven feet four inches. We urge you to study the established facts of elevation and snowfall shown on the graphs I am enclosing.

It is obvious that routing the trans-Canada highway through the central portion of the Canadian west will knit the country together in a way that the Kicking Horse route to the south can never do. What is not so well known is the fact that even in Saskatchewan and Alberta the Yellowhead highway serves sixty per cent of the population as compared to the forty per cent for the other route. The present trend of population northward suggests that the future ratio could easily be much greater.

Nor is the Yellowhead route less useful to business and commerce. It traverses the finest agricultural district of western Canada-the Evergreen belt. The fertility of the Peace River district is legendary. Reasonable estimates of liquid bitumen at McMurray indicate enough road topping material for generations yet to come. The ore belts of northern Manitoba and the Northwest Territories have been barely scratched, yet show lead, zinc, copper, silver and gold to match the best in Ontario and Quebec along with materials for all the atom bombs yet produced. And, of course, the Edmonton oil fields bid fair to alter the entire economy of the west. Production now is running more than double that of Turner valley. The president of Imperial Oil recently forecast an additional 400 wells for 1949. This indicates more than double present production and, when transportation facilities are available, that Alberta will be an oil exporting province producing $100,000,000 in oil each year. Nor is the end yet.

The Yellowhead route is a natural for our vacation industry permitting, as it does, our citizens and visitors to explore and enjoy the scenic beauty of Canada. It follows the Evergreen route, and serves the Alaska highway, the Great Slave lake highway and four national and five provincial parks, constituting by far the largest park area west of the great lakes.

From a military standpoint, the Yellowhead route is the only route that will provide:

(1) Access to three all weather Pacific ports- Vancouver and Prince Rupert in Canada and Skag-way via the Alaska highway, with Bella Coola for future development.

(2) A sound strategic highway readily improved to military standards.

(3) Cover for radar and air operations from Hudson bay and the port of Churchill to the Arctic and Alaska.

Finally I wish to emphasize that not only do we expect you to voice the needs and opinions of your constituents but we also feel sure that you will recognize it as your duty as part of the government of Canada to provide the people and commerce of your country with a trans-Canada highway that gives the maximum service per dollar expenditure.

It is your responsibility.

Respectfully yours,

R. B. Morrison,

Secretary, Edmonton committee, Trans-Canada Highway System Association, (Yellowhead route)

That letter sets out the arguments that this association have advanced in favour of the Yellowhead route. I think they are very substantial and merit serious consideration.

What I had intended to deal with specifically was the reference made by the Minister of Finance (Mr. Abbott) during his budget address to dominion-provincial relations. Notwithstanding the importance of many other subjects that are covered by the budget and other legislation, I consider that the dominion-provincial issue is the most important internal issue in the Dominion of Canada. I feel that the solution to genuine economic democracy in Canada, as well as political democracy, depends upon a satisfactory solution of the dominion-provincial controversy. I, of course, felt that there would be a more appropriate occasion on which to discuss this subject, but inasmuch as parliament will be dissolved in the near future I wish to take advantage of this occasion to once more place on the record my views and wishes in this matter.

The Minister of Finance certainly left the inference, in the remarks which he made concerning the taxation agreements with the various provinces, that it was an ideal arrangement, and that it was redounding to the very decided advantage of the provinces. I think there is also an implied suggestion that it might be a good thing to have a permanent arrangement of this nature. The future alone will reveal what those who will form the government at Ottawa have in mind with respect to taxation fields. Certainly on this occasion I wish to voice my protest at the manner in which these matters are being dealt with. My greatest concern in the whole controversy over dominion-provincial relations is as to the rights of the individual citizen of the country. I believe I was not sent here primarily to defend the rights of institutions. I believe my primary purpose in being sent here is to defend the rights of the individual citizens of the country. It is from that point of view that I have the greatest concern about the dominion-provincial disagreement.

The actual records, as far as the province of Alberta is concerned, certainly do not seem to indicate that the premier of that province is in favour of a permanent arrangement such as now obtains between the dominion and the provinces. I should like to quote a few sentences from the submission which was made by Premier E. C. Manning to the last dominion-provincial conference. I think this particular submission was one of the most valuable, one of the most enlightening, and one of the best submissions made as to a solution to this particular problem. On page 8 of the submission we find these words: Moreover income tax and corporation tax have in the past been two important fields of provincial revenue, but both have been invaded by the dominion to an extent which, if continued after the expiration of the dominion-provincial tax agreements, will for all practical purposes nullify the provinces' constitutional right to derive revenue by means of direct taxation in these fields. To suggest that the provinces can meet their post-war obligations by means of large-scale public borrowing obviously is no solution to the problem, but merely pushes it into the future with increasing certainty that the results will be even more disastrous a few years hence. Obviously the present situation is absurd, and places both provincial and municipal governments in an intolerable position. The whole situation resolves itself down to one indisputable fact that the major problem confronting all governments today is primarily financial, and, in so far as provincial and municipal governments are concerned, it is absolutely impossible for them to discharge their post-war responsibilities within the confines of the constitution and the laws of Canada unless the necessary additional revenue is made available to them. Until this absurd situation is corrected no amount of reshuffling of our responsibilities or of our inadequate revenues will solve our problem and ensure the people of Canada a post-war economy in which their standard of living and the measure of their social services will be limited only by the aggregate of their material resources and their combined ability to produce the goods and services they require.

As to jurisdiction and responsibility Mr. Manning on this occasion said these few words:

Like so many seemingly complex problems, the present difficulties in dominion-provincial relations arising out of this situation are relatively simple in origin and stem from a violation of fundamental principles. It is axiomatic that all authority must carry with it corresponding responsibility, and vice versa. Furthermore, responsibility without the means for carrying it out cannot be maintained.

With respect to solutions that are commonly advanced, Premier Manning made this statement:

There are those who maintain that the solution to this problem is for the provinces to surrender to the dominion their constitutional authority over the matters involved, and thereby transfer to the dominion government the financial obligations which attach to the proper discharge of those responsibilities.

This proposal has two obvious weaknesses. First, it does nothing to remove the root causes of the difficulty, but rather seeks to evade the real issue

The Budget-Mr. Kuhl by shifting responsibility for providing social and other public services to the dominion government. Secondly, it violates the basic and fundamental principle of effective democratic government, by centralizing, under the dominion, administrative authority over matters which properly should be under the effective control of the people of the respective provinces.

I would suggest at that point that that statement is quite in contrast to that which was made by the Minister of Finance.

It does not alter the situation to contend that the loss of provincial autonomy would be offset by the fact that the dominion treasury would assume the financial obligations which attach to the administration of such social services. In the last analysis it is the people of Canada who are footing the bill, whether the dominion or the provincial governments extract the revenue from them. For the dominion to assume jurisdiction over all social services would simply mean that the people of Canada, who are the citizens of the respective provinces, would still be paying the bill but would no longer have the effective voice in deciding the nature of the social services to be provided that they have when such services are under the jurisdiction of their provincial and municipal governments.

There are others who contend that the solution to our problem lies in the redistribution of the various fields of taxation as between the dominion and the provinces. Certain adjustments in the fields of public revenue and in the powers of taxation certainly are desirable and necessary, but let us never forget that the mere realignment and redistribution of the powers of government to extract public revenue from the pockets of Canadian business and the Canadian people does not, and cannot, increase by one red cent the amount in those pockets that is available for extraction. In other words, no amount of mere juggling the respective fields of taxation as between dominion, provincial and municipal governments can possibly enhance the ability of the Canadian people either to tax or borrow themselves into an era of permanent postwar prosperity.

Then Premier Manning concluded his submission with a suggestion as to what should be done. I wish to put that suggestion on record and go a little further than he did. At page 11 he said:

In the light of these circumstances the effective solution to our problem obviously requires a policy that goes far beyond the mere adjustment of our respective responsibilities or the reallocation of our present inadequate sources of public revenue. It lies within the sovereign power of the dominion government, through the Bank of Canada, to monetize fully the real wealth of the nation as represented by our abundant national production, and to utilize the financial credit representing the monetization of that real wealth to supplement the ordinary public revenues of the dominion and of the provincial treasuries.

Such a monetary policy, operated within adequate scientific safeguards against both inflation and deflation, would enable the dominion government to ensure to the provinces adequate revenues to discharge fully their constitutional responsibilities without jeopardizing its own financial position, and would, at the same time, remove the necessity for excessive taxation and the accumulation of further public debt. It would put the dominion and the provincial governments in a financial position to implement adequate programs of post-war rehabili-

The Budget-Mr. Kuhl tation and reconstruction, which would raise progressively the standard of living of the Canadian people to the high level which the abundance of our resources and our steadily expanding productive capacity would make physically possible.

I think that was a most worth-while contribution to a solution of the dominion-provincial controversy. I would go one step further, however, and add to that suggestion. I do not feel that this controversy can be settled through dominion-provincial conferences. I agree with the suggestion made in 1935 in the special committee on the British North America Act by the late Norman Rogers, Minister of Labour, and the late Ernest Lapointe, Minister of Justice. At that time a question was asked as to what would be the starting point in a solution. At page 116 of the proceedings of that committee this exchange appears:

Mr. Cowan:

You get back to this: your start is

another interprovincial conference.

Mr. Rogers:

I am afraid it is.

Mr. Lapointe:

There is no doubt about it.

I agree with the suggestion made on that occasion. I can see no solution from further dominion-provincial conferences; and I would go further and make this assertion, as I have on many occasions since becoming a member of this assembly. The provinces of Canada are the only governments which have authority to initiate any conference. I am not going to repeat all the arguments I have presented on numerous occasions, but I reiterate that it is my considered opinion-which I have supported with ample evidence and statements by those regarded as authorities-that at the moment the actual constitutional position is that all authority to govern lies in the hands of the nine provincial governments, and that this has been the situation since December 11, 1931. I know I have been regarded as a sort of crackpot on this subject. Hon. members of this house have referred to my ideas as queer, and similar remarks have been made elsewhere. Nevertheless not a member of this house and no one outside it has attempted to refute either the facts I advanced or the conclusions I drew from those facts; and until someone either in this house or outside it successfully refutes the contentions I have made, I shall continue to believe that I am right.

I wish to introduce the opinion of someone else on this subject. I do not suppose this man would be recognized by anyone as a constitutional authority; nevertheless he is a Canadian who has done a considerable amount of thinking on this subject. At one time I believe he was a press reporter for one of the large daily newspapers in Edmonton; and as far back as 1937 he wrote a letter to my colleague the hon. member for Lethbridge (Mr. Blackmore). I am referring

to Mr. J. H. Hodson, whose address at that time was Wetaskiwin, Alberta. I believe he sums up the situation in Canada very well, and I subscribe to his statement one hundred per cent. If I may be permitted I should like to read this letter into the record. It is dated March 1, 1937:

Dear Mr. Blackmore:

I am writing you again on the constitutional question-it is one that intrigues me very much and one which I think is most important to the provinces in the way it is dealt with.

For three years the dominion authorities seemed quite satisfied to continue to function under the B.N.A. Act, although it seems to have been the duty of the central government, after the passage of the Statute of Westminster, to notify the provinces of their changed status and the necessity of a federation agreement by which to reclothe with authority a new central government under a proper federation by which to bring into being a commonwealth similar to those which have been created in both South Africa and Australia.

I have been seeking for the cause of the dis-complacency on the constitutional question. I have noted that it was not until Mr. Aberhart loomed large on the political horizon that the Right Hon. R. B. Bennett then Prime Minister endeavoured to bring about a conference of provincial premiers. This for a variety of reasons failed. The next move was to set up a select committee in the House of Commons to investigate and recommend the best way amendments to the B.N.A. Act should be brought about.

This, it appears to me, is an approach to the question with the deliberate intent to establish the B.N.A. Act as the constitution under a new federation without which, except by negative assent, under the act the present federal government is not legally established nor has its powers been properly conferred upon it. The powers under the B.N.A. Act is merely an arrangement made between colonies and authorized by the British House of Commons whose authority in the internal affairs of Canada have been relinquished.

If this were not the case Mr. Mackenzie King would not have been justified in saying in the house on February 9 last, "We take a certain pride in having a status of our own as an autonomous nation with all the powers and rights of a full nation."

This status, of course, was conferred upon the people of Canada and not on the dominion government. It is a peculiar fact and a reflection on the dominion government that the people of Canada have not yet been given an opportunity to accept the sovereign powers which the British House of Commons relinquished in their favour. It seems to me that the sovereign rights at the present moment are resident in the people, and through them in the provincial governments as the most direct agents of the people. There has so far been no invitation to form a federation of provinces since the power to create an independent government was conferred on the people of Canada.

In this session of parliament Mr. Bennett betrayed a good deal of impatient anxiety with regard to the amending of the B.N.A. Act, in spite of the fact that the law officers of the crown in giving evidence before the select committee of his own establishing were definite in their statements as to the necessity of a new constitution, one of them going so far as to intimate that at the present time we have none.

In the same debate, on January 26, it is to be noticed that while Mr. King quoted the views of Prince Edward Island, Manitoba, Saskatchewan,

and British Columbia, he made the following reference to Alberta without quoting that province: "Alberta said that they considered such vital questions should be approached through an exchange of views, by an interprovincial conference." This attitude, I am convinced, is the proper one. I go further, however, and claim that in formulating a new constitution the dominion government has no status at all. It is for the provinces to say what powers shall be conferred on a new federal authority, which by the act of the provinces should have been created as soon as possible after the relinquishment of sovereignty by the British House of Commons to the people of Canada.

It seems to me that the Hon. Mr. Lapointe contradicts his own argument on page 477 of Hansard, February 1, 1937. In one place he says that the dominion is the child and not the father of the provinces. On the same page he says: "but the provinces have exactly the same powers, the same rights, and the same jurisdiction which they had prior to the passing of the Statute of Westminster". If this is the case then the provinces of Canada are still a colony with colonial rights, if those rights are "exactly the same" after as before the passing of the Statute of Westminster. It seems to me the political leaders of the east would like to become the parent of the provinces under a new constitution and to maintain for the provinces the status of colonies subservient to the federal government. This would suit the financial interests and effectively prevent any province from making economic experiments such as Alberta has embarked upon. The danger to the provinces, as I see it, is that the provinces be induced t.o hold a conference and to review the B.N.A. Act and with or without amendment to that act get from the provinces expressions of acquiescence to the terms of the act and thus establish it as the constitution of Canada under the newly acquired sovereign rights conferred upon the people of Canada, on December 11, 1931.

There are some so-called statesmen who believe that the rabble, especially the rabble resident on the prairies, are too unstable to be given too much power, and that a colonial status under an Ottawa government is all that should be given to them.

Yours truly,

J. H. Hodson.

Mr. Speaker, I think this letter summarizes very well the present position in Canada. I agree wholeheartedly with the views expressed by Mr. Hodson. Had I the time I could substantiate the points I have made without very much evidence, as I have done in the past. It is on the record for all to see. Anyone who desires to consult it can do so. As I have said before, until anyone in this house or outside it takes it upon himself to indicate wherein the facts I have adduced are not facts and shows wherein the conclusions at which I have arrived are improper conclusions, I shall continue to believe that the arguments I have advanced are sound.

I suggest, therefore, to all the people of Canada that the only solution to this con-

The Budget-Mr. Kuhl troversy is to start from bedrock, that is by recognizing that since December 11, 1931, the authority to govern in this country has been vested in the provincial governments and that the responsibility to form a federation and authorize a central federal government belongs to the provinces. When a solution is attempted from that angle, then I really believe the problem will be solved properly and we will reach a basis upon which we can have a truly political democracy in this country and will be enabled to obtain an economic democracy.

On motion of Mr. Coyle the debate was adjourned. .

Mr. E. O. Bertrand (Prescott):

Mr. Speaker, I would ask the leave of the house to revert to motions. I should like to present the second and third reports of the standing committee on standing orders, and move that the reports be concurred in.

Mr. Knowles:

There is quite a bit to this report. I think it would be better if notice were given and a motion made tomorrow.

Mr. Bertrand (Prescott):

The reason for asking concurrence tonight is that if notice is given on the order paper it will have to wait forty-eight hours before it is considered, unless we again ask for leave of the house to adopt the report tomorrow. Of course, it is not meant to rush this matter, but it is important that the necessary legislation be passed before parliament is dissolved.

Mr. Low:

Ask for leave tomorrow.

Mr. Knowles:

Asking for leave tomorrow after we have had a chance to look at the report is a little different from asking for leave tonight.

Mr. Bertrand (Prescott):

That will be quite satisfactory.