April 23, 1952

LIB

John Sylvester Aloysius Sinnott

Liberal

Mr. Sinnotl:

No, they have not.

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

Hugues Lapointe (Minister of Veterans Affairs)

Liberal

Mr. Lapointe:

Moderation.

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

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

What shall we say of the speech in which the budget was offered to the house? Well, as has been pointed out in this debate and in newspaper articles, it was accompanied on the part of the Minister of Finance (Mr. Abbott) with a good deal of sleight-of-hand, of juggling, and I think we may compliment the parliamentary assistant to the Minister of Finance, if it be a compliment, that he has added to the minister's sleight-of-hand some sleight-of-tongue today. I am prepared, too, to leave that public verdict on the basis of a summary of press opinion which appeared in Le Soleil, in the issue of April 12. This is the way in which the budget commentaries appearing in the press were summed up in this newspaper:

La presse frangaise du Quebec a accueilli avec une impression teintee de desappointement le budget de M. Abbott. Aucun journal ne lui manifeste de l'enthousiasme. La note generate est celle d'une deception.

If I may attempt a translation of that article, Mr. Speaker, I would say that it runs like this:

The French press of Quebec has greeted the budget of Mr. Abbott with an impression tinged with disappointment. No newspaper manifests enthusiasm for it; the general note is that of a deception.

I am prepared, sir, to put the verdict of the Canadian people on precisely that basis. One goes back in memory to that day in somewhat similar circumstances in April, 1949, in this house when the Minister of Finance said: "Let us not fool ourselves, even if we are trying to fool the people". Sir, on this occasion the people have not been fooled, and hon. gentlemen opposite, as I have said before,

The Budget-Mr. Fleming ought to have that fact clearly impressed upon their minds by now.

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

John Sylvester Aloysius Sinnott

Liberal

Mr. Sinnotl:

Nobody is trying to fool them at all.

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

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

And with all the air of mock modesty with which the minister approached his task one failed to find anything very modest in the essence of his statement. What of the 1951 budget, sir? It was the worst in Canadian history up to that time, without exception. And the Minister of Finance showed himself extraordinarily and unusually sensitive to criticism in respect of the inaccuracies and the blunders of last year's budget. He says that the policies of the government had been proven to be wise and right. Well, it took him a long time that night, Mr. Speaker, in the course of his speech, to try to justify the wisdom and the correctness of those policies. Certainly it was not apparent to anyone else, and he had to labour hard and long to prove that there was any wisdom or anything correct in these policies. I think the Canadian people know by this time that the way in which they should measure the accuracy of last year's budget is not by the figures that have been given by the minister as to the surplus, but they should measure last year's errors by the extent to which overtaxation, as compared with estimated expenditure, resulted in a budget surplus which has been whittled away now by additional expenditures and by nonbudgetary allocations which have had the effect of creating a certain diminution in what is otherwise shockingly and unjustifiably bad budgeting.

Sir, we have seen the effects of last year's budget manifested in downright hardship on the part of the Canadian people, restriction in development, unemployment, smuggling. And the credit restrictions, the minister tells us, are to continue. Credit restrictions have hampered and restricted enterprise in many directions, have been discriminatory in their effects as between different kinds oj businesses, and have also been discriminatory in favour of the larger interests at the expense of new businesses and smallei enterprises.

But what has become of the budget surplus? It was $721 million on December 31 after the fiscal year had run but nine month: of its course. The great Ottawa mystery oi this spring of 1952 is, where is the vanishec surplus? The minister has announced a budget surplus of $356 million. Well, what ha: become of this surplus? That bears somi examination, Mr. Speaker.

In launching upon that inquiry it is no amiss, I think, to recall the variety of th<

1532 HOUSE OF

The Budget-Mr. Fleming approaches that the government has manifested with respect to the virtues of budgetary surpluses. Last spring, a year ago now, when the minister was budgeting for a surplus of $30 million he and those associated with him had not a good word to say for surpluses. They did not budget for a surplus of more than $30 million. Where then were the virtues of debt reduction? We did not hear anything about that, because only $30 million was to be provided for by way of surplus. Then, as the year progressed, of course the tune changed, and we heard from the minister declamations about the virtues of big budget surpluses and debt reduction. Yes, we heard the minister say on the radio last February: It has been an excellent thing-

He was referring to the budget surplus which then stood at $721 million. I continue: It has been an excellent thing not just for the government, but for each and every one of you.

He was referring to the hard-pressed taxpayers of this country. Well, so much for the contrast between the minister of April, 1951, and the minister of February, 1952. But then the Prime Minister (Mr. St. Laurent) joined the chorus when he spoke in this house in the throne speech debate on March 6. He not only lauded the surplus, but in taking up the remark of the leader of the opposition (Mr. Drew) that the effect of the surplus showed that every family in Canada had in those nine months been overtaxed to the extent of 8250 each, the Prime Minister rose and proclaimed the benefits of that overtaxation of every family to that extent. At page 172 of Hansard we find the Prime Minister using ;hese words:

And if the amount of commodities had remained what it was, and there had been $250 more purchasing power for every family of five-well, in my simple logic I would come to the conclusion that ;hat would have added to the inflationary pressure nstead of the fact of its having been withdrawn as jurchasing power adding to the inflationary >ressure.

But now, sir, we have moved forward igain another six weeks. We are now in \pril, 1952, and the tune has changed again. Ye no longer hear of the virtues of planning !or debt reduction or planning for surpluses. Che minister is now content to plan for $9 nillion, which he says is tantamount to a jalanced budget. Well, it is very difficult, I tm sure, for the house. I fancy hon. members lave long since given up any attempt to keep >ace with these frequent changes on the part >f the minister, these kaleidoscopic changes hat occur almost from month to month. The ninister now says, according to his radio peech on April 15:

The government does not think It is necessary o plan for a surplus under present conditions.

The Budget-Mr. Fleming to a man who simply removes taxes that he imposed last year, despite the warnings we gave him that they would feed the fires of inflation-as feed the fires of inflation they certainly did.

Now, what about the income tax? Again here, instead of going away with the cheerful impression the minister invited in his budget speech that night, what we see when we remove the masquerade from the budget is that what the minister has done is to increase the income tax. As I have said, the total burden of taxation is greatly increased. The burden of the income tax is also severely increased. And I am content to accept the dictum as set out in Le Soleil of April 12, in this particular aspect, when it said:

(Translation):

The general note is that of a deception.

(Text):

Speaking of the note that runs through the press Le Soleil indicates that the reaction to this budget is that of a deception. (Translation):

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

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

Your speech is another

deception.

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

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

No indeed, I am not mistaken; but it gives me great pleasure to read to the house, and more particularly to the minister himself, the excerpt which I have just read from Le Soleil, a worthy newspaper from the province of Quebec.

(Text):

The iniquity of this budget is shown in no particular more than in the fact that whereas it pretended to decrease the income tax, it in fact increased it. And those increases are found to be heaviest upon those with lower incomes. I am not going to go over the whole story because yesterday afternoon the hon. member for Rosetown-Biggar (Mr. Coldwell) and the hon. member for Peace River (Mr. Low) put figures and detailed calculations on the record. The argument is unanswerable that this budget has committed a cardinal sin. Having disguised itself as a budget that reduces the income tax, having been exposed as a budget that increases the income tax, it has committed the sin of imposing those increases most heavily upon those with lower incomes.

Let us look at the corporation tax. Was that worth all the time spent on it today by the parliamentary assistant? There is a reduction, but what does the reduction amount to? Instead of paying 52-6 per cent the corporations are going to pay 52 per cent next year. They are to be expected to throw up their hats in the air and cheer the budget. Our eyes are not closed to the fact that when the government heaps up taxes upon corporations,

in the main those taxes ultimately rest upon the shoulders of the consumers. What were the effects of the increases last year in the corporation taxes? They were passed on where possible and the effect was inflationary as it added to the cost of living. It did not matter that the minister was warned about this, because the minister does not listen to anybody. He is not even here now because of an engagement to address the American Chamber of Commerce, if you please. Apparently that is more important to the minister than to be present in the House of Commons when his budget is being debated. There is nothing unusual in that because the minister would not listen to us even if he were here.

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:

As the minister is not here perhaps I should rise to say that this engagement is at least three months old and the minister told both the leader of the opposition (Mr. Drew) and the financial critic. I am sorry he did not also inform the junior financial critic.

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

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

I suppose the parliamentary assistant thinks that it is an end of the matter when he says that the Minister of Finance (Mr. Abbott) after the thing was done came over and acquainted the leader of the opposition and the financial critic of the official opposition with the fact that it had been done. Let me make it perfectly clear to him that that is not good enough. Surely the Minister of Finance has a first obligation when the budget introduced by himself is under debate in the house to be here throughout that debate. I have said that it would not make any difference if he were here because he would not listen to anybody, anyway.

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:

On a question of privilege, I suggest that the leader of the opposition has an obligation to be in the house to listen to the junior financial critic.

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

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

I am sure the parliamentary assistant derives satisfaction from taking up my time.

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

John Sylvester Aloysius Sinnott

Liberal

Mr. Sinnoit:

Where is he today?

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

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

He will be here, do not have any fear. I think the hon. member will have his hands full looking after himself and explaining to his constituents how he comes to support a budget of this kind which adds to their already excessive burdens. There are only two ministers in the house during this present discussion.

What is the result of these present taxes on corporation profits? There is this fact which the minister would do well to ponder. He treated the house last year to a pious expression of regret that taxes on corporations were so high. The country needs something more than a pious expression,

especially when we see the results that flowed from last year's budget. We see the Bell Telephone Company obtaining authority to increase their rates by over $14 million, of which nearly $8 million went for direct taxes. It was so also with the increases in railway freight rates. The minister boosts the taxes, but who pays them? The consumer.

The taxation which the government is heaping up in this present budget means that every man, woman and child in Canada will on average pay in excess of $300. As the financial critic of the official opposition pointed out yesterday, it means that the average Canadian family of five will be paying about $1,715 in federal taxes alone. Is it not about time that the people of this country had an opportunity to say that they do not want to be smothered by the impositions being heaped upon them by the government at Ottawa?

In order to show what this taxation means in terms of burden on the Canadian people I turn to newspapers published in the province of Quebec which have passed accurate and pungent comments upon the scale of taxation applied during the fiscal year just ended. I look forward to hearing their comments on the much heavier taxation that is proposed for this new fiscal year. Here is the comment made by Le Devoir:

Les impots reglent l'activite economique d'un pays. Quand les impots deviennent excessifs, ils tuent l'esprit d'initiative et le commerce aussi surement que les detruit le socialisme.

If I might attempt a ready translation of that it would be that taxes regulate a country's economic activity. When taxation becomes excessive it kills industry and trade as surely as does socialism.

In a recent editorial L'Action Catholique had this to say:

Le gouvernement federal saigne le contribuable canadien a blanc.

I translate that to mean that the federal government is bleeding the Canadian taxpayer white. That was for the fiscal year just closed. How much whiter can this government bleed the Canadian taxpayer in the fiscal year 1952-53? The Minister of Finance is at least going to try.

Let us remember also what this is doing to the whole fabric of confederation. The distinguished premier of Ontario pointed out in a speech on April 21, as reported in the Toronto Daily Star, if you please, of April 22 as follows:

A dozen years ago the federal government took 49 cents of every tax dollar; the provincial and municipal governments took the remaining 51 cents. Now the federal government is taking about 73 cents of every tax dollar and the province and the municipalities divide the balance of 27 cents.

The Budget-Mr. Fleming

The way this government is going on to bleed the Canadian taxpayer white is having the effect of upsetting the whole scheme of confederation. While they go ahead and levy these impositions they try to make a great thing of the fact that having overtaxed the people they are ready to hand back certain amounts. The Minister of National Revenue (Mr. McCann), who is not here today either, made a press announcement on February 19 that out of approximately 3,500,000 taxpayers more than 2,000,000 individual taxpayers will be entitled to refunds on their 1951 income tax of a total amount in the neighbourhood of $60 million.

What does that mean? Does it mean that the federal government is doing right by the Canadian taxpayer in making refunds? Rather it means that even in the face of its outrageously heavy rates of taxation last year levied through the income tax the federal government overtaxed two million taxpayers, or more than half of those subject to income tax. Now they make great fellows of themselves and make a great display of handing back the excess. The best reaction to that kind of tactic that I have seen appeared in the St. Catharines Standard of February 22, 1952. The article reads as follows:

The Minister of National Revenue, Dr. McCann, made a nauseating little speech the other day about all the lucky taxpayers who were going to get some money back from the government. Two-thirds of the nation's taxpayers, he indicated, would get some sort of rebate on the taxes sucked out of them during the past year . . . This noble gesture on the part of Dr. McCann is something like a bank robber returning to the scene a year later and handing a surprised manager a few of the greenbacks he stole. The manager doesn't get down on his knees and lick the bandit's boots in thanks, and neither do we. If they don't mind a suggestion up at Ottawa, we'd as soon keep possession of our own dough, instead of having them look after it for a year and then return it when it isn't worth as much as it was when we earned it.

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

Gordon Graydon

Progressive Conservative

Mr. Graydon:

Without interest.

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

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

It continues:

If there were no hidden taxes, and we were all made aware at many points of just what we are paying in taxes, there would be a greater demand for careful spending and an end to extravagance in government.

So much for the Minister of National Revenue. The expenditure that I have indicated as contemplated by the budget will be boosted to record heights. Never in the country's peacetime history has there been anything approaching it, and if I recall correctly even in wartime there were only three years when expenditure, even when we were in the throes of a life and death struggle, exceeded the expenditure budgeted for by the minister for this present year. Profligacy is written all over the acts of this government. This is a spendthrift government. Yet it even has the temerity to preach thrift, and

The Budget-Mr. Fleming item 587 in the recent supplementary estimates is a vote of $10,000 to assist a particular organization to carry on a thrift campaign. I wish the minister were here because I should like to say to him: Physician, heal thyself.

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

John Sylvester Aloysius Sinnott

Liberal

Mr. Sinnoit:

The parliamentary assistant is just as good.

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

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

Thrift is a great thing for other people to practise, in the view of this government. It is high time the government practised a little of its own abysmal preaching. The mentality shown by the budget is just that shown by the Minister of Defence Production (Mr. Howe) in 1945 when he said, "What's a million dollars?" It was not worth saving. Hon. members will recall that in the fall of 1948 during the negotiations with Newfoundland somebody mentioned a figure of $180 million and the Prime Minister (Mr. St. Laurent) said, "What is $180 million? That is just peanuts." When methods can be so loose that a budgeted surplus of $30 million can expand to $900 million you have some measure of the utter unreliability of this government.

When we, of the official opposition, in decrying the extravagance of the government and the shocking wastefulness with other people's money, money of the Canadian taxpayers, call for up-to-date methods that would afford parliament an opportunity of applying the searchlight of publicity to these expenditures, what are we met with? We are baffled at every turn by the government's refusal to permit the introduction of methods that would enable us to really get at these expenditures and expose the extravagance in them. When the leader of the opposition (Mr. Drew) a fortnight ago asked the Prime Minister if he would agree to the estimates of the Department of National Defence amounting to over $2 billion being referred to the special committee on defence expenditures for review, he was met, as he has been met repeatedly, with the same old answer-no. Why does the government not want parliament to have an efficient and up-to-date method of reviewing these expenditures? I leave that question to the house.

Look at social security. It has been made quite plain that the government has bungled the financing of that the same as they have bungled the financing of everything else. The old age security plan was to be on a pay-as-you-go basis. The plan has already become a deficit plan. There is a deficit of $58 million this year. The basis of the scheme has so far not been honoured by the government.

I have time to mention only one other matter. I should like to have spent some

time on what the government has done in ignoring, yes, defying the clear expression of opinion of the house given on March 26 that the four per cent limitation on medical expenses as deductions from income tax should be removed. What the house said on that occasion in the clearest-and unanimous -expression of opinion was that the four per cent limitation should go and that all medical expenses should be recognized as deductions from taxable income. But the minister has ignored, yes, he has defied, the clear expression of opinion of the house, and in the face of the kind of sophistry that we heard on this subject today from the parliamentary assistant to the minister we can only be left with the conclusion that either the house has been defied or the house was hoodwinked on March 26. There has been no attempt on the part of the government to address itself even to the merits of the subject. On that occasion the parliamentary assistant sought to belabour the hon. member who introduced the resolution and said: Oh, this will increase the ceilings. Then, if you please, the Minister of Finance (Mr. Abbott) not only ignores the request for the removal of the four per cent limitation but he boosts the ceilings, the very thing his parliamentary assistant had decried in the house on March 26.

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:

That is not true either.

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

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

These two hon. gentlemen, the minister and his assistant, ought to get their heads together. They are not working together. It is high time they got their trains running on the same track.

We have had enough of this defiance of parliament. We have had enough of this attempt to override and ignore parliament. I hope that by this time the house is sick and tired of the insults the government is deliberately heaping upon it.

I think I have justified what I called the budget in the first place, a budget that should have been introduced in season, at Hallowe'en, because it is a budget with a false face.

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:

Full of sound and fury and signifying nothing. [DOT]

Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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April 23, 1952