April 26, 1950

LIB

Paul Theodore Hellyer

Liberal

Mr. P. T. Hellyer (Davenport):

Mr. Speaker, I rise at this time on behalf of the people of Davenport, whom I have the honour to represent. The constituency of Davenport is situated in what was formerly known as the town of York. It is now known from coast to coast, yes even across the seas, as Liberal Toronto. The people of Davenport are ordinary people, and most of them, like myself, are forced to work for a living for reasons that are entirely beyond their control. We in Davenport do not claim high mountains, broad rivers, great mines, or any of the other natural legacies so proudly enumerated by the people of other areas in this great dominion. We do, however, have great respect for

my illustrious predecessor, Dr. J. R. MacNicol, who is a great Canadian, a fine gentleman, and one who does not wish to damn anything -with the probable exception of the south Saskatchewan river.

The people of Davenport are sensible people, and most of them do not make unreasonable demands on government. They only seek a reasonably buoyant economy, one which will provide employment and opportunity for individual initiative, along with a certain amount of collective security to take care of those hazards which are handled so well by means of the insurance principle. It is because of those modest requirements, and the way that they have been and are still being taken care of by the present administration, that I should like to take this opportunity of congratulating the Minister of Finance on the consistent economic policy he has followed in the presentation of his several budgets. It must have required a great deal of intestinal fortitude to present the first two budgets containing the extremely high taxes and restraints that were necessary to control the inflationary tendencies of that time. They were definitely unpopular, and justifiably so in the minds of some people who are prone to criticize.

Then, last year a much more pleasant task devolved upon the minister in that, still in line with his policy, it was necessary to relax some of the restrictions and reduce taxes.

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

Gordon Knapman Fraser

Progressive Conservative

Mr. Fraser:

The 27th of June.

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

Paul Theodore Hellyer

Liberal

Mr. Hellyer:

My hon. friend questions the motive behind last year's budget, but we will not get into a discussion of that. It is possible to kill two birds with one stone, but what I am going to say about this particular budget, regardless of what anyone may think of it, is that it is consistent with the principles set out by the Minister of Finance. This afternoon we have heard people bemoaning the fact that there is some unemployment, and that some people are apprehensive of the future. Before I proceed let me say that last year's budget has been responsible for more production, and more employment, than anyone on the other side of the house is probably willing to give it credit for. If those reductions had not taken place we might have encountered a slight recession, as is the case in the United States.

This year we have a budget which is described by hon. members opposite as a stand-pat budget, and I think rightly so. Conditions in the country today warrant that type of a budget. It is consistent with the policy of preventing the cost of living from rising any further, and at the same time maintaining employment and industry in

The Budget-Mr. Hellyer its present buoyant state. I am sorry the hon. member for Moose Jaw (Mr. Thatcher) is not in his seat, because the other night he made a statement that this was the end of cyclical budgeting. I do not know whether or not the name means anything in particular, but so far as this budget policy is concerned, I do not think it is the end. So far as the Minister of Finance is concerned, it is probably only the beginning of a new phase in the consistent policy so ably initiated by him a few years ago.

The opposition has presented an amendment showing, want of confidence in the minister. They have mentioned three things they think ought to have been done which have not been done, or vice versa, as the case may be; they change their minds so often it does not matter which way you look at it. They bemoan the fact that the things that have been done cause higher taxation. I was looking through a booklet of the campaign speeches and pledges made by the leader of the opposition prior to this date of June 27 which is thrown at us from the opposite side of the house, in which he promises all sorts of things such as canals, highways, bridges, and old age pensions. I should like to quote one phrase from that booklet; "-far beyond any pledge of social security put forward by any other government in the history of this country."

What sort of broad statement that is, 1 do not know.

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

An hon. Member:

You would not.

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

James Sinclair (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. Sinclair:

And the trans-Canada highway to go by your place.

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

Paul Theodore Hellyer

Liberal

Mr. Hellyer:

It covers enough to make sure that higher taxation would have been inevitable.

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

Gordon Knapman Fraser

Progressive Conservative

Mr. Fraser:

Oh, no.

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

Paul Theodore Hellyer

Liberal

Mr. Hellyer:

And probably to make sure that there would be further extravagance and further expenditures; because some of the things I have looked over I am sure could not be justified on a self-liquidating basis, and certainly they would have been in a questionable category as far as extravagance is concerned.

National development is also in line with the minister's procedure of sound budgeting. At the present time projects are being carried forward as fast as they can be absorbed. If you read the forecast tabled in this house you will find that this year the capital expenditure will probably be the highest in the history of the Canadian economy. Most of it is relegated to two or three particular types of construction and development. Most of the things which hon. members opposite

1924 HOUSE OF

The Budget-Mr. Hellyer have suggested we should have done are things which would compete with the things being done, to the extent that the inflationary spiral would start again, with higher and higher prices; and you would be right back throwing at us the fact that things were getting out of hand and our money was being further depreciated, and so on.

The conclusion to these few remarks is,

I think, Mr. Speaker, that they do not know just what to ask for and do not know just what to complain about but because of their honourable status as His Majesty's loyal opposition they have to take some position. One day it is one position and another day it is the other position. But they are consistent in one fact: it is always some position.

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

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

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

Mr. Knowles:

What position are you in?

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

Paul Theodore Hellyer

Liberal

Mr. Hellyer:

I had intended, Mr. Speaker, to make this a sort of full-blown economic debate-

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

Gordon Knapman Fraser

Progressive Conservative

Mr. Fraser:

It is full-blown, all right.

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

Paul Theodore Hellyer

Liberal

Mr. Hellyer:

-and elaborate on the minister's policy of consistent budgeting, but there are certain reasons why I should not. First of all, some of the people who need it most are not at present sitting in the house; and the second reason, and probably the most cogent, is the fact that I am not going to have enough time to do so.

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

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

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

Mr. Knowles:

Look at the Liberal benches; they are half empty.

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

Paul Theodore Hellyer

Liberal

Mr. Hellyer:

The financial critic of the Progressive Conservative party, the hon. member for Greenwood (Mr. Macdonnell), made a statement which I found most interesting. He mentioned the freedom that has brought us as far as we have come. I believe that is worthy of consideration. At the same time the leader of the opposition (Mr. Drew) recently made the statement, during a comment on a speech made by some other hon. member opposite, that he thought the situation could be handled by the same processes we have always used; by carrying on with exactly the same methods and techniques that we had used during the past generations and decades. Unfortunately, I do not believe that is true, and I know that the . Minister of Finance (Mr. Abbott) does not think it is true or he would not have initiated this consistent policy which has been called cyclical budgeting; you can call it what you like.

The first great reason why it is not so and why the leader of the opposition is not on solid ground is that some of what he calls the natural laws no longer apply in our economy. What have been referred to as

booms are usually artificial booms; and busts are, by the same definition, in many respects artificial too. I have not the time to go into the background of this; but, as you all know, in ancient days most of the economies were of the nature of one or two products; and if you had a natural failure, by immediate consequence you then had a depressed state. There has been a gradual tendency away from this and we have developed exceedingly complex societies, complex economic relationships, and a degree of specialization of labour which was never previously dreamed of. If you average all the cycles, all the moods of men, all the lack of rain in one area of the country offset by rain in the other, you find that the potential production of a diversified economy like our own does not change a great deal from one year to the next, except by natural increase.

The leader of the opposition would lead us to believe that if we just sort of let things go their own natural course-I think he might favour returning to the gold standard or something-it would all right itself and pretty soon we would have a new equilibrium which would have all of the necessary requirements to produce full employment and an extremely buoyant economy. Unfortunately this is not true either, and it is due to a natural process which has developed during the last two hundred years. We started with small industries. For natural reasons those have integrated and have become larger and larger for the sake of efficiency. Every year we have more industries, more products and more classes of produce in a category which could be said to be of a semi-rigid or rigid price nature. They are prices set by arbitrary decision and which do not obey the laws of supply and demand-one of the leader of the opposition's natural laws. A few years ago we had more commodities which fell in the natural price law category but the numbers are diminishing, and we now find ourselves in a complex economy in which we have a predominantly private enterprise, semi-rigid price structure. We still have some commodities in the free enterprise free competitive price category which obey the law of supply and demand.

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

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

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

Mr. Knowles:

We have the highest cost of living in our history.

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

James Sinclair (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. Sinclair:

We have the highest national income in our history.

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LIB

Elie Beauregard (Speaker of the Senate)

Liberal

Mr. Speaker:

Order.

Topic:   THE BUDGET
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SC

John Horne Blackmore

Social Credit

Mr. Blackmore:

Yes, give the man a chance.

Topic:   THE BUDGET
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LIB

Paul Theodore Hellyer

Liberal

Mr. Hellyer:

It is because of this that the natural laws, which previously would have come into operation to get us out of our

troubles and restore equilibrium when disequilibrium sets in, are no longer of necessity operative. It is because of this that I believe that the Minister of Finance has accepted the inevitability of having to compensate for this price rigidity through a sound policy of cyclical budgeting.

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Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PC

Lewis Elston Cardiff

Progressive Conservative

Mr. Cardiff:

You had better call it six o'clock.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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April 26, 1950