April 25, 1951


The house resumed, from Tuesday, April 24, consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell (Greenwood).


PC

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. George A. Drew (Leader of the Opposition):

Mr. Speaker, I think it is fair

to say that those who criticize this budget do so in no spirit of hostility to the government because it is called upon to levy greatly increased taxes.

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

George Alexander Cruickshank

Liberal

Mr. Cruickshank:

Is that the big lie?

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

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

Every hon. member knows that Canadians, along with the people of every other free nation, must spend large sums to strengthen their defences now and in the years ahead. We know that greatly increased expenditures must be made for that purpose. What we have criticized, and what we have really hoped the government might still reconsider, is the fact that this budget will do nothing to hold down the cost of living,

but that on the contrary it will increase the cost of living by the very way in which the taxes are levied.

In the course of this debate the attitude of the government has been very largely that all is well, that there is no need to do anything about the cost of living or the inflation we see taking place day by day. The interesting fact is that no one has come forward from or on behalf of the government to answer in any way the analysis of the budget made by the hon. member for Greenwood (Mr. Macdonnell), and others who followed him in the debate.

It should be remembered that just before the budget was introduced a motion was brought before the house calling for consideration of the increased cost of living. At that time it was said on behalf of the government that it was unfortunate that the motion had been made at that particular time, because the budget which was to be introduced on the following day would indicate the measures the government intended to take to control the cost of living and to deal with inflation. Therefore we looked for something in the budget which would vigorously and directly tackle this major domestic problem. Instead of that, the budget indicates no positive action by*the government to deal with the rapidly rising cost of living and with the inflation which goes hand in hand with it.

In many of the discussions which are taking place outside the house it is noticeable that there is not the same concern about inflation in some quarters as there is in others. There is no doubt about what people on pensions, people on small incomes and the average worker think about the cost of living at this time. There is no doubt about the seriousness of the problem confronting every housewife in Canada today. Nevertheless there are arguments put forward which indicate that there are others who do not take the same attitude.

It is necessary for us to remember that there are people who do not mind inflation. It is necessary for us to remember that there are people who appear to benefit temporarily by inflation. Perhaps there are some hon. members who are aware, and who may have acted upon their awareness, that during a period of continuing inflation there are apparent gains to be made in the stock market, and there are similar gains to be made which are not so openly disclosed day by day-simply through the artificial process of increasing prices.

For the time being those who realize these apparent benefits do not object seriously to 80709-152J

The Budget-Mr. Drew inflation-that is, so far as it affects activities of that kind. What is necessary for all of us to remember, however, is that ultimately no one benefits by inflation, because either we go on endlessly to the point where money is degraded to the extent that it has very little real value, or the inflation is halted; and that at the point at which it is halted those who apparently benefited must, like everybody else, pay the penalty of the inflation in what they hold, whether it be in the form of property, investments or otherwise.

For that reason there is no person who in the end really benefits by inflation. But as representatives of the people the important thing for us to remember is that no matter how many persons may seem to benefit temporarily, the overwhelming majority of the people in Canada and in other countries are not in a position to take advantage of any of the devices by which some of the impact of inflation can be avoided. They are the ones who suffer; they are the ones who are the least able to suffer.

It is because of that fact that there is no other subject, even including national defence itself, which calls more urgently for consideration than the inflation which is now taking place, with its inevitable result, a constant increase in the cost of living. There is however this fact that we must also remember when we consider national defence. It was pointed out by the Minister of National Defence (Mr. Claxton). Speaking in the United States not long ago, he referred to the difficulty there would be in meeting some of our defence requirements because of the increased costs that are developing day by day. As inflation increases, our ability to produce the machines, weapons and equipment for defence is lessened in exact proportion to the amount of inflation that has taken place.

Therefore we are dealing not only with the plight of the majority of Canadians who are attempting to meet obligations in their own homes and in their lives from day to day, but with the vitally important question of defence, upon which the future security and perhaps the very survival of this country as a nation is going to depend.

It is with that approach to the seriousness 'of the question that I put forward the arguments I shall present, in the hope that even at this stage the government will be prepared to reconsider some of the inflationary taxes it has announced it intends to impose. Already there has been reference to the famous statement of Lenin, that to create revolution you need only to wreck the currency of a country.

The Budget-Mr. Drew

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

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

"Debauch" is the word he used if you wish to be accurate.

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

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

The truth of that is obvious, because in countries where currency loses its value-and may I say it has lost its value, and completely lost its value, in countries where there were ministers of finance just as confident as the Minister of Finance in this country, and just as over-confident in their assertions of their own ability to meet the problem-in those countries, with a long history of government behind them, they have seen the value of their currency disappear entirely. In many of those countries there has been revolution and a spread of communism, for no reason other than the fact that the fertile soil was prepared to receive the argument that the system which had permitted conditions of that kind was not a system worth preserving.

When I argue, and I am sure when others do, that every possible step should be taken to protect the living standards of our people, we are arguing both for steps which will assist our people to meet these tests that are going to continue for many years, and also for the one thing which will preserve confidence in this system which we are trying to preserve by the vast expenditures we are pouring forth on defence.

That being so, we must approach this whole problem with the recognition that everything that is done to save and protect our currency, everything that is done to hold down the cost of living, is not done simply for the comfort and benefit and happiness of our people, vitally important though that may be, but also because it is part and parcel of the vast struggle which is taking place today throughout the whole world against the threat of communism.

When we were told that the budget was going to deal with these things, it was not only the members of this house who thought that they would be hearing some important announcement. As usual, reports had gone out over the wires-from supposedly reliable sources, as they are described without any name being attached-indicating the important steps that were to be taken by the government to deal with this problem. But instead of dealing with the problem, the government has actually aggravated it by following a course which in itself is inflationary, even if the inflationary trend had not already been apparent.

The budget is inflationary, and the Minister of Finance has made it clear that there were other methods that could be employed. He has made it perfectly clear to the members

of this house, and through this house to the people of Canada, that this is only a stopgap, and that if this whole condition continues, other devices will be employed. I suggest that the situation has already been reached where those other devices should have been employed and when other taxing methods should have been applied.

There are many ways in which this budget is inflationary. One of the important ways in which it is inflationary is that there is a clear indication that this budget is intended to produce a larger surplus than the surplus indicated in the formal announcement of the Minister of Finance. When some question was raised in regard to this by the hon. member for Greenwood, the Minister of Finance said-I am not quoting the exact words, but I feel sure he will agree this is their effect-"Of course you are forgetting the debt retirement."

One of the principles of the preparation of a budget is that the members of the house should know exactly the purpose for which they vote money. If the intention is to have a certain debt retirement, then that should be indicated in the budget. Certainly members of this house will support the idea of debt retirement, and certainly members of this house will support every sound measure when it is put forward and properly explained.

The Minister of Finance does not answer in any way the unchallenged statement that there has been a huge miscalculation, reaching many hundreds of millions of dollars, by simply saying to the house, "We had a surplus, but we applied it on the debt." If there is to be debt retirement, then it is for the members of the house to say there is going to be debt retirement, and how much it should be. Anything else simply means that the budget statement deceives the representatives of the people. No matter how worthy the declared object may be, that in no way lessens the incorrectness of a course of that kind in preparing a budget for this house.

It is obvious also that the Minister of Finance is budgeting in the belief that this inflation is going to continue. In his budget statement he bases his tax estimates on a gross national product for the coming fiscal year of $20 billion. There could not be such a gross national product in this coming year unless there is further inflation.

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

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

Oh, rubbish!

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

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

The Minister of Finance knows perfectly well that while there is going to be a very large increase in the gross national product from increased production, there is no

contemplated expenditure on increased production in this country that will take up the increase that would bring us up to $20 billion. The Minister of Finance has admitted perfectly frankly that a large part of these surpluses was made up of apparent increases in tax collections because of the effect of inflation, and it is obvious that the minister is contemplating that possibility in the months ahead.

Let us come to the question of price control. Some members of the government outside this house have rather appeared to seek commendation by statements that they do not intend at this time to introduce price controls. It is not necessary, therefore, to examine this situation from the point of view of what the government itself has stated. The fact is that the principle of price control has been established in this house by this government and not by anyone else.

It was the government itself that stated that it was preparing to impose price control. The government did so when the emergency bill was introduced last September. The stated purpose of the wide powers in that bill was to be able to deal with the effect of the special expenditures that were to be made on defence. Then we come to the bill that was introduced and which became law during the present session, the Emergency Powers Act. The minister who takes the credit for drafting that bill, who informed us that he was responsible for the drafting, the Minister of Trade and Commerce (Mr. Howe), stated that the extremely wide powers in the bill were for the purpose of price control.

This, then, is no longer an issue so far as the government is concerned. The government has established the principle. The government surely cannot tell us that the intention behind the Emergency Powers Act is not to introduce price control when it got that bill passed by this house with the statement that it was. That certainly would be improper and beyond the point that one could easily contemplate, even with this government.

It should be remembered exactly what the Minister of Trade and Commerce did say in regard to this measure before it came to the house. He is reported on page 185 of Hansard of February 8, 1951, as saying:

At its last session, parliament enacted a measure authorizing the government to control prices of materials where shortage is caused by defence purchases.

Do not let any member of this government suggest that someone else has introduced the subject of price control here. That is what the minister said in a speech before the bill

The Budget-Mr. Drew was introduced to the house. Then the minister went on to say:

Up to the present time, defence purchases have not been of sufficient volume to be in themselves responsible for shortages, although prices of steel and other war materials have been kept under close observation. Obviously a more comprehensive price control bill is needed for any effective control of the Canadian economy, and it is such a bill that you will be asked to consider.

These are the words of the Minister of Trade and Commerce, the man responsible, according to his own statement, for the drafting of the bill. His explanation is that the wide powers were necessary so that there could be price control where government buying forced up prices artificially. The principle being established, the question therefore, is only, when? After all, the government with its majority is in a position to carry out a principle it has established. It is in a position to carry out the purpose for which this bill was introduced, according to its own statement, and members of this house have the right to say: If that was the purpose of the bill, then carry out the purpose. Whether or not the bill was properly drafted, it was drafted for this purpose, and there is an obligation to the people of Canada to carry out the stated purpose of the bill passed by their representatives in this house.

When we say that flexible price controls should be placed on those things which are artificially in short supply because of government purchases, we are simply saying to the government: Do what you said you were going to do first of all last September and then in February of this year. If you are not going to do it, tell the people you are not going to do it, and repeal the bill you passed for that purpose. If you do not do that, if the government is unwilling to carry out its stated purpose, then of course the whole situation is different. If the government does not intend to use the Emergency Powers Act as it said it was going to, then the act in its present form should be repealed immediately, because the support of the members who voted for it would then have been obtained under false pretences.

Inflation can be tackled in other ways than by price control, and that has been said by every speaker on this side of the house. Certainly the first way to tackle inflation is by production which will meet both civilian and defence requirements. When we speak of flexible controls, we mean those controls, which, with all the experience gained during the last war and in the years afterwards, this government is able to apply temporarily, in the simplest possible way to meet the artificial situation created by heavy buying.

I of certain types of commodities or products.

The Budget-Mr. Drew Just as soon as production has been stepped up to meet both defence and civilian requirements, those controls should be removed so that we can get back to the normal interplay of prices in that area. After all, that would appear to be what was contemplated by the Minister of Trade and Commerce when he introduced the bill in the very words he used when he explained what was going to be done.

What I suggest is that the government must not give undertakings of this kind and then not carry them out, because it is not just a question of whether or not it has lived up to its undertaking. When the government says that certain things of this kind are going to be done, immediately there is inflation by invitation, and there has been inflation by invitation. The Minister of Trade and Commerce put it succinctly when he said that those who would be affected had made arrangements accordingly, and he added: In other words, they are all set. He was telling the house and the people of Canada that there had been inflation by invitation to a point where those who would be affected were all set to meet the situation to their own advantage. Perhaps he was wrong, but if he was wrong he is the one who is responsible for the statement and not any other member of the house. He, after all, is the minister who is supposed to have the most information with respect to this particular subject.

I said there were other ways of meeting inflation. They have been mentioned in this house before. There are other ways than production. Immigration is one of them. There will be an opportunity to discuss immigration in detail on other occasions. The subject has been referred to in the house, however, and certain comments have been made about our immigration methods. I simply want to say at this time that the government is not seriously tackling the question of immigration. The government has not set up the kind of machinery to handle immigration that indicates any real belief in immigration to this country at this particular time. It is simply going through the motions to the extent that will make it possible to say that it is doing something to meet the situation.

If the members of the government think that they are really tackling immigration at the present time, then they should examine some of the other methods now being followed in London and elsewhere by other countries and by other legislative jurisdictions to encourage immigration. Others are doing it in such a way as to make it possible for the immigrant to believe that we really

want him in this country. Arrangements are set up by others so that an immigrant can come into one building and get everything in that building from his medical examination right through to his passport and the exchange of his money into Canadian dollars. This government has not yet really given evidence of a desire to do the thing that would in itself be the most anti-inflationary thing that could be done, namely, to build up our productive capacity by inviting to this country the skilled brains and skilled hands of people of good character who will take part in employing the vast resources of Canada for the common defence of civilization.

Then we come to the question of cutting non-defence expenditure. The government has not said very much this time with regard to that. In fact not a member of the government has really met that subject since the debate started. The only statements that have even attempted to deal with this question have been statements that cannot be taken as authoritative so far as the government is concerned.

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

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

I took about twenty minutes to talk about it.

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

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

I said, since the beginning of this debate.

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

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

Since the beginning of the debate.

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

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

Certainly when the debate

started was after the budget was presented.

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

Some hon. Members:

Oh, oh.

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

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

You pays your money and you takes your choice.

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

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

There is no use trying to split hairs about this.

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

Some hon. Members:

No.

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

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

The Minister of Finance knows perfectly well that there was no debate in this house on the budget until, the budget was before the house. Supposedly he and his officials were the only ones who knew what was in it until it was read in the house on that night.

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

Edmund Davie Fulton

Progressive Conservative

Mr. Fulton:

He did not say anything ir. the twenty minutes, anyway.

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

Douglas Charles Abbott (Minister of Finance and Receiver General)

Liberal

Mr. Abbott:

The first speaker does not count. I think that is right.

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

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

No, the first speaker in this case counted a lot, because the first speaker was the man who started this whole thing off on the wrong course, and we are still hoping to correct it. These demands for the cutting of non-defence expenditure are constantly made, Mr. Speaker.

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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April 25, 1951