Mr. Fulton:

Could we have an advance copy of the Auditor General's report?

Mr. Sinclair:

The Auditor General's report is available but it will be another two weeks before the public accounts part will be ready for general circulation.

Financial Administration

Mr. Drew:

Was not the public accounts part tabled?

Mr. Sinclair:

What was tabled in accordance with the act was the first proof with the corrections in the manuscript. The act stipulates that a copy shall be tabled, and that was done. Because of the accumulation of printing which happens when we have a fall session, and because of the limitations of the king's printer's staff, from time to time it is found impossible to turn out reports as early as might be hoped for.

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

Mr. Speaker, I find it difficult to deal with this matter by way of questions, but the fact is that what was tabled was a printed book with a blue cover glued in place, with the pages duly numbered and generally in the form in which we usually receive it.

Mr. Sinclair:

If the leader of the opposition (Mr. Drew) had taken a more careful look he would have seen that throughout the book there were a great number of corrections in ink and sections and pages were numbered by hand. Another copy like that has gone off to the king's printer as the corrected proof. As far as the act is concerned, I, on behalf of the Minister of Finance, tabled a copy of the public accounts and of the Auditor General's report on October 31 as required.

Hon. Alphonse Fournier (for the Minister of Finance) moved

the third reading of Bill No. 19, to amend the Bills of Exchange Act.

Motion agreed to and bill read the third time and passed.

Mr. J. H. Blackmore (Lethbridge):

Mr. Speaker, on Tuesday, November 20, I made some remarks concerning this resolution dealing with Canadian financial acts and agencies. Those remarks may be found recorded on pages 1218 to 1222 of Hansard of that date. They had reference to the following words in the resolution:

-to provide for the organization and functions of . . . the Department of Finance.

I pointed out that the department of finance of a modern state has three inescapable functions. The first function is the raising or providing of money and the regulating of the spending of it. The second function is providing for the adequate financing of the production of all desirable goods and services in the state. The third function is that of providing for the adequate financing of all desirable consumption in the state.

I pointed out that in providing money to meet the expenses of the state, Canada relied too much upon taxation and borrowing with a resultant excessive burden of taxation and debt which impaired the incentive to produce. I suggested that the Department of Finance by creating debt-free dollars to match any surplus goods and services in the state, and spending such dollars into circulation, would gain access to a source of revenue independent of taxation and borrowing. I pointed out that the means at present in use in Canada for financing production were insufficient for the satisfactory discharge of that function.

Coming to the function of financing consumption, I showed that the need for financing consumption was rapidly growing greater because of the development of our age of abundance through the use of machines, technological skills such as plastics, and solar energy as derived from gasoline, for example. It is commonly said and recognized that mankind has now solved the problem of production but has not solved the problem of distribution or consumption.

I pointed out that our financial measures in Canada fall far short of providing appropriately for the financing of consumption. I argued that the only means whereby a government could finance consumption on the scale necessary in our age of plenty was debt-free money. By quoting from the report of

the royal commission on banking and currency for Canada, published in 1933, I proved that in, the years 1907 to 1934, at which date the Bank of Canada Act was passed, the Department of Finance employed the device of debt-free money.

I then turned to the international scene and in effect said that our present dangerous world situation is largely the result of a failure to distribute goods adequately among nations. I maintain that, Mr. Speaker, and stand ready to maintain it before all comers. It therefore becomes quite evident that the matter of financing consumption, not only within each nation but among nations, is an exceedingly serious matter. When the nations with little goods produce more goods, then they find that they are unable generally to sell those goods to the nations that are better off because, generally speaking, those wealthier nations are nearly self-sufficient and do not desire many goods from abroad. This has brought about conditions such as we recognize today in the shortage of United States dollars. I said that I desired to point out that the problem has to be taken care of by debt-free money, or at least government-created interest-free money.

Since before world war I, I believe nearly everybody has felt there ought to be an international bank. What they have had in mind is that there should be some international authority that could create money. They have felt that if we had an international finance department that could create money through its finance minister to represent the unconsumed goods that are being produced in the world, then it would be possible to distribute the goods by granting money to the "have not" nations so they could buy goods from the "have" nations.

It is unorthodox and it is new, but it offers a possible suggestion. I submit, Mr. Speaker, there is no possible solution that has yet been offered by man other than through government-created interest-free money.

The idea of having a world minister of finance, with authority to issue debt-free world money, sounds attractive. This was the idea in the minds of men that the schemers took advantage of when they set out to popularize the international monetary fund and the international bank. The international monetary fund and the international bank were not founded upon principles which I believe the people, fundamentally and instinctively, thought they were founded upon. The result has been that those two institutions are mischievous white elephants on our hands.

Financial Administration

The proposal to have an international finance minister would not work today, because there are insuperable difficulties in the way of using that particular kind of agency. Such an agency could not work successfully until all nations would accept the validity of debt-free money, and could understand clearly the kind of circumstances that would warrant its use, and the factors that would limit its use. Moreover it would be far too easy for such an agency to come under the control of some international organization disposed to abuse the power and the functions. Furthermore there would be too little effective means by which the various nations represented by such an agency could maintain adequate control of it. Then again there would be too great a likelihood of having such an agency gain power to infringe the sovereignty of the participating nations. For all these reasons, we cannot rely upon any international department of finance to effect international distribution.

What then are we to do? There are two devices, to either or both of which we could have recourse. The first of these devices is this: Canada, as an example, could, through her own Minister of Finance, create and issue Canadian bills as she did in the case of the $50 million to provide Britain with wheat in world war I, as is set forth in the report of the royal commission on banking and currency, paragraph 47, page 22. With such debt-free dollars, Canada could purchase in Canada, from her own producers, the goods which Canada considered she was able to spare for marketing abroad. These goods Canada could then sell to any nation she chose, such as India, and accept in return that nation's I.O.U. to be redeemed in goods at some future acceptable time. In this manner Canada could build up credits abroad in every direction. This is very much the same principle as Britain used throughout the generations to build up credits abroad, some of which she invested abroad. She thereby put herself in the strong financial position in which she was before world war I.

Each nation could manage in a way similar to that which I have suggested for Canada. To facilitate such an arrangement, the participating nations could agree upon a sort of goods-exchange-clearing-agency to give each of them expert assistance, information and advice. Each nation could then expand its production to the optimum degree, certain of markets for all its production at stable prices. Each nation could then be assured that it could obtain from the world's production whatsoever of its needs were available.

94699-so

Financial Administration The whole process would be voluntary, and free from all forms of external constraint or compulsion.

The second of the devices to which the nations could resort is the pound sterling of Britain. Britain has been perfecting the pound sterling for at least one hundred and fifty years. She has all the know-how required, all the information of every kind necessary, all the skill and experience that are needed. Britain has a record of success in financial matters that is the envy of the world, and the admiration of all mankind-even those who seek her destruction. Britain has all the connections, all the establishments and facilities. Britain has proved herself to be possessed of the magnanimity and altruism to inspire the confidence requisite. Because of her geographical and historical position, and because of her economic and strategic situation, Britain would have every incentive to do the job well. Why not make Britain the goods-and-services-clearing-house for all European members of NATO, as well as for all the British empire and commonwealth of nations? If the United States desired to join the team, she would be free to do so. Each participating nation would assist Britain through a mutual aid credit advance system whereby the participating nations would guarantee Britain access to all materials essential to her economic life.

The sterling mechanism is simple, flexible, and, in Britain's hands, limitless in capacity for expansion and adaptability. Has not Britain been for generations the centre of world shipping, world banking and world insurance? As a further aid to Britain in the discharge of that responsibility that Britain would have to assume if she became such a goods-and-services-clearing-house as I have suggested, why not have the United Nations Organization commission Britain to appoint an agency to draw up a list of all goods available for export from time to time in each participating nation? It might be suggested to her that such goods be classified into three categories, namely, foodstuffs, raw materials and manufactured products.

May I urge upon the minister that he pass on to his department the suggestions appearing in my remarks. If he does so and his department accepts them and embodies them in the Canadian financial system of the future the way will be paved for Canada to plant her best foot forward on the path of progress, ready to pass from a period of confusion, frustration and well-nigh dismay into an era of peace, order, prosperity and serenity.

Motion agreed to and the house went into committee, Mr. McCulloch in the chair.

f Mr. Blackmore.]

Mr. Drew:

Just before the resolution carries, Mr. Chairman, I wish to point out that sessional paper No. 28, which was tabled and to which reference has already been made in the discussion this afternoon, is in bound form and contains all the essential material that has been presented by the Auditor General. In going carefully through this document I find that there are only a limited number of minor amendments introduced, in ink; and there would not be the slightest difficulty in preparing enough copies for distribution to the members of this bouse within a matter of a single day. I simply cannot believe that enough copies of this document are not available for the members of the house, in view of the fact that there has been a run-off. Since this is a printed document it seems most unlikely that there would be only a limited printing of it. On the other hand, if for any reason this document has been printed and bound formally with the usual blue cover-which would seem to me a rather expensive and unnecessary process- I would suggest that the appropriate steps be taken to have the amendments made in the existing plates.

Knowing of the efficiency of the department of the king's printer in handling printed material, which we see every day in the presentation of Hansard, I am not in any doubt whatever that within a few days we could have at least the printed sheets, even if they are not bound. I strongly urge that the appropriate steps be taken to have the copies of this report before the members so that while they are discussing the appropriate amendments which have been suggested by the Auditor General, amongst other things, they will actually have before them the recommendations of the Auditor General in this last copy of the public accounts for the year ended March 31, 1951.

After all, there are in this sessional paper a number of recommendations which should be before the members at the time they are discussing appropriate amendments. Everyone will recognize the fact that it is not a practical possibility for all the members who will be considering this subject constantly to review the one single document. As the parliamentary assistant to the Minister of Finance has said, a book corresponding to this-which is the sessional paper-has been sent forward to the king's printer with the amendments. I do not know how long it has been in the hands of the king's printer with those amendments, but it has been in his hands certainly before today. I am perfectly sure that, if appropriate instructions are given, these copies can be in the hands of members of that committee, at any rate, before they are called upon to dispose of this act.

I suggest that there are added reasons why steps should be taken to have this copy of the public accounts before the members of this house. In the motion now before us and now in committee there is reference to the position of the Auditor General. For that reason 1 suggest that it is appropriate that I should mention the strong reasons why every member of this house should have a copy of this report in this session. During the session we have been discussing the cost of living, inflation and related subjects. Here in this last report of the Auditor General, as of March 31 this year, is most conclusive proof of the reckless extravagance of this government which should be in the hands of every member while this special session is still in progress. Attention has been called to such unexplainable waste as the renting of property in the city of Ottawa for $70,000, for space not occupied by anyone during that time. That is only one of many examples. The report speaks of the case where contracts were let on tender, and then, by agreement with the successful tenderer, new arrangements were made without any tender for more than twice the original amount; and so it goes through this report. At a time when we are discussing the cost of government, which is a factor contributing to inflation, and while we are discussing the possibility of saving money in every way we can, these are reasons why every member should have in his hand a copy of this report. That can be done if any serious effort is made to complete it for the members who will be sitting on this committee and for the rest of the members of the house.

Mr. James Sinclair (Parliamentary Assistant to the Minister of Finance):

I think I should say a few words in this respect. The Department of Finance tabled the report in accordance with the act and turned the manuscript copy over to the king's printer. I think perhaps the inquiry of the leader of the opposition as to printing could best be directed to the Secretary of State. At the same time I would point out that the king's printer has an especially heavy burden this session because of the printing of daily proceedings. I know that the committee on combines legislation, of which I am a member, has asked for and has received permission to get their proceedings printed overnight, as is our own Hansard, so that we have them the following day. In any event, I am quite sure that the Secretary of State will ask the king's printer to expedite the printing of this document.

As to how important this document is in connection with the study of the financial administration act, I would point out that the Auditor General came before the public

Financial Administration accounts committee two years ago when we made this thorough and valuable study of both the form of the public accounts and the form of the estimates. As hon. members know, the form of the estimates has since been changed because of the recommendations of that committee. In the recommendations of the public accounts committee made in the report that year were incorporated most of the suggestions of the Auditor General. The hon. member for Eglinton is listening to me; and he will recall the excellent study we made at that time. As hon. members will find, those valuable recommendations of the Auditor General have been incorporated, for the most part, into the new act. That is the reason why the Minister of Finance is anxious to have this bill referred back to the public accounts committee which made that study two years ago, and whose members already have a fairly good, practical working knowledge of the provisions of the present Consolidated Revenue and Audit Act and also of the weaknesses of that act.

The Auditor General's report is, I believe, available in separate pamphlet form. That, of course, is the part which is attached at the end of the public accounts; at least I saw a separate form which had been made available, I think, to the press gallery the day I tabled it here. But on the main public accounts, that is the statistical summary of the public accounts of Canada for the fiscal year ended last March-that is the major part of the volume that the leader of the opposition has-that is in the hands of the king's printer. I am sure that the Secretary of State has listened to the observations of the leader of the opposition and will do his best to see that a copy is made available as soon as possible.

I myself have been through the entire work of this financial administration bill and it is my opinion that the statistical information in the public accounts or the review of irregularities which the Auditor General has reported in accordance with the instructions of his position are not of great significance in the study of the new act. I think our work on that was done two years ago, and most members of the committee on public accounts at that time have a good knowledge of what the Auditor General recommended. When this bill goes to committee we of course intend to have before the committee all the public servants who are connected with this bill. The hon. member for Kamloops quite rightly described this bill as the key bill of government. It is that, because there is no more important function in responsible government than to have public control over the receipt, disbursement and audit of public

Financial Administration funds. We intend to call before that committee the Auditor General, the comptroller general, the various deputy ministers and, I suppose, the heads of some of those crown corporations who are for the first time going to be brought under direct parliamentary control. I can tell the leader of the opposition that it is a matter of real regret to our department that these public accounts of the year are not in the hands of all hon. members.

But there again, getting back to our committee of two years ago, the Auditor General himself was the one who pointed out how difficult it is, when there is a fall session, to live within the terms of the present act, which says it shall be filed by October 31, or fifteen days after the session following that. Well, when we have a spring session, starting late in January or in February, it means that the king's printer has two, or perhaps three, months more than he has at the present time for that preparation. I would point out the strain which it has placed on the staff of both the comptroller general and the Auditor General. Our fiscal year ends on March 31. The accounts are not closed until the end of the following month; therefore the staff of the comptroller general can only start their work as far as an overall review is concerned, such as is contained in the public accounts, on May 1. The Auditor General's work, of course, comes after that. The staffs of both the comptroller general and the Auditor General are under great pressure to produce this report on the date set out in the present act. That is why in this new legislation we have the change recommended by the Auditor General to say that it shall be December 31, and not October 31, that such a report shall be tabled.

I can assure the hon. member that it will certainly be in the hands of hon. members by December 31. I know the Secretary of State is listening to this debate and I am sure he will take steps to advise the king's printer it is desirable that this report be in the hands of hon. members as soon as possible.

Mr. Drew:

I realize the immense amount of work that is involved in the preparation of this report, and I recognize also the very great importance of complete accuracy in the subsequent amendments made. I was interested in the statement of the parliamentary assistant that there is in pamphlet form the information contained in the separate report at the end by the Auditor General. If these are available I would strongly urge the Secretary of State to have them distributed

immediately, because I understand hon. members have not received the separate pamphlet. I fully recognize that there will not be an opportunity for the committee which will be considering this bill to consider the items of the accounts in detail, but what 1 have in mind are the separate recommendations by the Auditor General which the parliamentary assistant has said are in pamphlet form. They would be very helpful as showing any amendments which may be made in this extremely important measure to strengthen and carry out the recommendations that have been made, and which in this case will perhaps be the most recent recommendations that have been made. It would be helpful if they were available to this house at the time this particular bill is under consideration. I leave it on that basis, but I do feel that no matter how long it may take to complete the printing and binding of this full record of the public accounts and the recommendations of the Auditor General, the recommendations of the Auditor General in pamphlet form, which it has been said are now available, should be distributed to hon. members just as soon as possible.

Mr. Sinclair:

I did not say that they were available. It is my recollection that on the evening I tabled this report the gentlemen of the press did not all use this one copy to make their statements.

Mr. Drew:

That is not only my impression, but my knowledge.

Mr. Sinclair:

That is my impression, and certainly we should be able to turn out fairly quickly just a separate copy of the Auditor General's report. It is really not the responsibility of the Department of Finance. The Auditor General, after all, is a servant of parliament, not of the Department of Finance. I hope it will be possible to have that circulated amongst the members of the committee as quickly as possible.

Mr. Hansell:

I notice in the resolution that the bill will provide for the appointment, salary and functions of the Auditor General. Is it contemplated that his functions will change from what they are now?