May 1, 1952

LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Right Hon. C. D. Howe (Minister of Trade and Commerce):

I cannot make any statement. The discussions are being held in camera. No official statement is being issued by the negotiating group, and probably no statement will be made until the conference ends.

Topic:   INTERNATIONAL WHEAT AGREEMENT-PROGRESS OF LONDON DISCUSSIONS
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HANDLING OF 1951 PRAIRIE CROP


On the orders of the day:


LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Right Hon. C. D. Howe (Minister of Trade and Commerce):

Topic:   HANDLING OF 1951 PRAIRIE CROP
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THE BUDGET

ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE


The house resumed, from Wednesday, April 30, consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that



The Budget-Mr. Courtemanche 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), and the amendment to the amendment of Mr. Coldwell. (Translation):


PC

Henri Courtemanche

Progressive Conservative

Mr. Henri Courtemanche (Labelle):

Mr. Speaker, on Tuesday, April the 8th of this year, thousands of Canadians were hoping that the Minister of Finance (Mr. Abbott) would at last bring them good news, would at last inform them of substantial tax reductions. We all know, however, what has happened. In this budget brought down by the Minister of Finance, one would search in vain for anything that would encourage the unemployed in Canada, give hope to the victims of the housing shortage, give the heads of families cause to expect any substantial decrease in the cost of living. Our great treasurer has, in brief, decided to maintain taxation at a very high level, the effect of which is to promote unemployment, aggravate the housing shortage and contribute substantially to the increase in the cost of living.

The Minister of Finance should therefore not be surprised if no one has offered him congratulations nor thanks except, of course, those who are duty bound to kowtow to him and especially to approve by their vote the budget he has brought down, however dissatisfied their electors may be with these apparent and hidden taxes the government of this country is constantly levying.

In keeping with the mandate given me by the taxpayers of Labelle county, I shall certainly not approve the budget which the Minister of Finance has brought down. However, I shall take the liberty of paying him a compliment. I can tell him that on the evening of Tuesday, April 8, he made a speech which was marvellously and tragically consistent with the best and the worst traditions of the Liberal party. Having heard that speech and read the newspaper comments on the next day, I was reminded of the speeches of the present Prime Minister's predecessor, which all at once confounded, mystified, intrigued and embarrassed the whole of this country's press.

Moreover, nobody has forgotten that memorable banquet, at the end of which all those present were wondering whether the then head of the Liberal party had resigned or not.

Today, I admit that the Liberals are past masters in the art of saying "yes", while suggesting that they mean "no". A despicable art, if there is one, but an art which

remains, I believe, the main cause of the often lengthy period of office enjoyed by Liberal governments.

The Minister of Finance, following in that respect the example set by some members of the Liberal party who now belong to history, has announced that taxes would be reduced while demonstrating at the same time that they were going to increase. He succeeded so well in this task that, the next day, the learned members of the press, all over Canada, were at a loss to express an opinion, and to give an interpretation of this verbal avalanche which served to camouflage a real and truly existing increase of the income tax. It did not take long, though, to see through this most involved situation and L'Action Catholique of Quebec, in its Wednesday, April 9, 1952 issue, headlined in the following manner its report on the changes in income tax:

Income tax is lowered but everybody pays more than in 1951.

This Quebec city newspaper had succeeded in condensing hours and hours of speeches into a mere dozen words. I told myself that the Minister of Finance would have done well to follow a course in journalism or to become a newspaperman in order to learn how to think in a more compact manner, how to clarify his thoughts, how to give them preciseness so that after hours and hours of words, sentences and figures nobody would have to say: "What is really happening to us?"

It is obvious that the minister is likely to lose his post the day he will be able to act in such a way because the Liberal party, as has been made clear by experience, does not like its members to make themselves too well understood. That is a luxury that the Liberals can afford only when they have reached the Senate. Indeed, some hon. senators, members of the Liberal party, do not hesitate when opportunity affords to state fully what is on their minds, what they used to think but could not reveal heretofore.

Shortly after his speech in the house, the hon. the Minister of Finance addressed the nation over the radio in an effort to explain the confusion. If my interpretation is correct -but I would not be too sure about it-he stated that in announcing a tax reduction, he had meant that taxation was going to be reduced on the basis of what we were supposed to pay for this year, but that it would obviously be higher than in 1951.

That statement was a little clearer but we may ask the minister what prevented him from being equally explicit before the house.

I know that the hon. minister has in

his department a lot of experts who exercise

their wits in order to complicate everything. But the public is fed up with such complications. Our people want things to be clear and clearness can always be easily attained when there is nothing one wants to hide, when there is nothing one wants to cover up, when one does not want to make the taxpayers believe that the moon is made of green cheese.

Therefore the budget speech conforms to the best traditions of Liberal policy as far as ambiguity and apparent contradictions are concerned.

However those gentlemen to the right will answer that the income tax has been decreased although there will be no decrease in fact because of the addition of a social security surtax but they will say we have lowered many taxes, for instance, on washing machines, stoves, appliances, soft drinks, furs, cars, travelling bags, etc. Obviously there has been some relief, but now, if ever, is the time to say too little and too late.

Let us take for example the tax on cigarettes. The minister has lowered that excise tax by three big cents.

But up to now there has been no indication of an increase in the sales of Canadian cigarettes. There is no indication, on the other hand, that smuggling of American cigarettes has slowed down. This means that because of excessive taxation our people are getting used gradually to breaking the law the same as in the United States the corruption there in certain taxation departments of Washington is blamed on excessive taxes.

Because of the fact that taxes on cigarettes are still too high, unemployment will continue in the tobacco industry, producers will remain in a difficult financial situation, and the revenue from taxes on cigarettes will decline.

Why does the Minister of Finance persist in imposing excessive taxes on any commodity at all? Has he not been forced to recognize the fact that he made a serious mistake when he last increased the excise tax on cigarettes and that his estimates of revenue from this source were as wrong as his other estimates?

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

Jean Lesage (Parliamentary Assistant to the Secretary of State for External Affairs)

Liberal

Mr. Lesage:

May I ask the hon. member a question?

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

Henri Courtemanche

Progressive Conservative

Mr. Courtemanche:

I have no objection.

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

Jean Lesage (Parliamentary Assistant to the Secretary of State for External Affairs)

Liberal

Mr. Lesage:

Mr. Speaker, I read on page 13 of yesterday's-that is Wednesday, April 30- edition of Le Droit, the following news item:

The hon. member for the histone county of Labelle, Mr. Henri Courtemanche, created some sensation yesterday at the House of Commons by condemning the budget presented on April 8, by the Hon. Douglas C. Abbott.

The Budget-Mr. Courtemanche

And if I go on reading that article, I find, word for word, the remarks which the hon. member has just made. Did the hon. member make the very same speech in this house yesterday?

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

Henri Courtemanche

Progressive Conservative

Mr. Courtemanche:

I am grateful to the hon. member for Montmagny-L'Islet (Mr. Lesage) for having pointed this out to me. I had not read the paper. I shall explain to him that I had been asked for my text. I am not responsible for its having been published before I actually made my speech.

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

Pierre Gauthier

Liberal

Mr. Gauthier (Portneuf):

Who wrote it first?

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

Henri Courtemanche

Progressive Conservative

Mr. Courtemanche:

I do not need the hon. member's help to write my speeches.

Taxes are indispensable to public administration and, when they are levied fairly and logically, they can become a great factor of progress. On the other hand, when they are not levied discerningly they can be a source of destruction, of surprisingly rapid destruction. What is true of the cigarette tobacco industry is also true of other industries, as well as of individuals and the community.

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

J. G. Léopold Langlois (Parliamentary Assistant to the Postmaster General)

Liberal

Mr. Langlois (Gaspe):

That's right!

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

Pierre Gauthier

Liberal

Mr. Gauthier (Portneuf):

It is in the paper.

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

Henri Courtemanche

Progressive Conservative

Mr. Courtemanche:

Le Droit knew that I was going to make a speech. It said so in advance to warn my opponents.

The surplus of revenues over expenditures announced by the Minister of Finance could have been used to bring about a reduction in income tax so as to help the taxpayer. I mean a true and real decrease, not a lower tax on what we could have paid but a large reduction on what we have been compelled to pay up to now.

Income tax discourages and depresses. Every Friday or Saturday, when his pay envelope is handed to him, the first thing the worker does is to look for all the deductions. And he discovers that the sum which actually remains in his envelope is very much smaller than the salary that his employer actually hands out to him. If he happens to obtain an increase he feels frustrated again, for he soon realizes that he benefits very little, very little indeed, by that increase, since the income tax has claimed its share, that is, generally speaking, the lion's share. I feel that the Minister of Labour (Mr. Gregg) will be bound to admit that these deductions from the source do not help to improve the relationship between capital and labour. What workers really want-and one cannot blame them for it-is

1762 HOUSE OF

The Budget-Mr. Courtemanche a net salary which would be big enough to enable them to look after the needs of their families. Often, one is flabbergasted by the nominal salary. But once the compulsory deductions have been subtracted it is quite another story. Our southern neighbours have long spoken of the "take-home pay" when discussing the labour problem.

How can we expect householders to save for the future when they cannot even balance their budget because the Minister of Finance is not the least interested in balancing his?

Of course, government members try to find excuses to justify overtaxation. There is national defence! There is social security!

Let us deal first with national defence. I am all for it and I recognize everything possible should be done when the country is in danger. However, the term national defence is apt to become the perfect pass-key with which the people on the right will elude their responsibilities and duties. Are we to forget that countries have been ruined through ensuring their national defence? Today, one wonders what would have happened, had it not been for assistance from America. And later, when we also shall be bankrupt, who will help us?

If truly national defence were involved, no one would object. We should call it "international defence", defence of South Korea, defence of Germany. It would be surprising to know what percentage of the appropriations for so-called national defence will be spent in Canada for Canada. Is it not true that some people have expressed dissatisfaction because there were insufficient funds for civil defence? Yet, if there be an important feature of national defence it surely is the budget that could be voted for civil defence.

I know that the Minister of National Defence (Mr. Claxton) does not like anyone to criticize the way in which that national defence is organized. I believe, however, that enough things have happened these last few years to allow us to state that, if care is not taken, national defence will really become national wasting of money.

The Minister of National Defence does not like criticisms. But he should hardly expect any congratulations from us for the manner in which those military camps which are not in use at present are being watched and protected.

Social security is also beginning to be a pass-key. Should anyone venture to criticize certain items of the budget he is accused of

being opposed to social security. No, I am not opposed to social security. On the contrary, I would like to see it granted in the greatest spirit of charity, generosity and kindness. Should social security, however, be used as a pretext to ruin the taxpayer? Have the experts of the Department of Finance considered what kind of social security we will have, in spite of all possible allowances and pensions, the day this country goes bankrupt?

National defence, social security, these are, in our mind, two arguments but too frequently used by members on the government side to hide their poor administration, their excesses of all kinds, their errors. The real champions of national defence and of social security are not those who think that both these fields call for unrestricted expense but those who demand a closer control for one and the other with regard to the employment of sums levied from taxpayers, i.e. those who oppose attempts to justify all these abuses by putting forward both these arguments as a shield, or as an armour.

If individuals have scarcely benefited from any friendliness on the part of the Minister of Finance, corporations have not been much more fortunate. I believe that the fate of heads of families, in town or country, ought to worry us more than that of large or small corporations. I am sorry to say that it but too often slips the mind that excessive taxation with regard to these companies only falls back on the small man, who in most cases suffers from it to a greater extent. Let me explain. An overtaxed corporation cannot be developed nor expand as it would want to do.

It is thus prevented from establishing a great number of new jobs which our 370,000 or so unemployed would certainly not fail to welcome. Besides, and that is the most important point, a corporation or company is made up of hundreds and thousands of small shareholders, such shareholders being, very often, widows, orphans, workers saving for the future, far-sighted farmers and numerous small wage earners.

Any attack launched against the big companies is also directed against those very people. Banks and insurance companies are called upon, in many cases, to provide the funds needed by a good many concerns. Whenever corporations are overtaxed, banks and insurance companies are hard hit as also are, indirectly, those with small savings or insurance policies.

Whenever a tax is imposed, whatever that tax may toe, it is like a stone cast into the water. Upon hitting the water, the stone starts a constantly widening circle. The consequential effects of a tax are a bit similar to those ever widening circles. They never reach but a small group; yet as a consequence the whole nation is made to suffer. No matter how we tax, tax again and overtax the big interest, the small wage earner will always be the one to suffer most, and a day will come when only those of extremely moderate means will be left to bear the whole burden of taxation.

I would like to say a few words about the taxes levied on crown companies in the new budget. In my opinion, crown companies should not be exempt from any municipal or provincial taxes. But I am wondering what difference it can make to the federal treasury whether these companies pay federal taxes or not. Is it not true that whatever deficit they have will be made up by Ottawa and is it not true that if they register a profit, it will go into Ottawa's coffers?-at least we hope so. This will undoubtedly require more red tape, more bureaucrats and more civil servants; it will increase the cost of administration. In a word, it will increase the taxpayers' burden and nothing more.

In fact, would it not be a means of sheltering those companies from criticism on the part of members of parliament, of sheltering them from the indiscreet and inquisitive investigation of the people's representatives, at least of those in the opposition? Could these taxes paid into the federal coffers not be used as an excuse to strengthen the immutability of the bureaucrats who administer those government enterprises? I must say that it looks pretty fishy to me.

The Minister of Finance abolished the 15 per cent tax on washing machines, stoves and refrigerators. In so doing he merely put an end to an injustice but he cannot make up for all the wrong done through a tax that was both so unfair and so ridiculous. Who could ever conceive that a washing machine, a stove or a refrigerator could be considered as luxuries and taxed accordingly? We do not know a single housewife who considers her stove as a luxury any more than she believes she is using an article of luxury on Monday mornings when she starts to do her weekly washing. As far as the refrigerator is concerned, under modern living conditions, due to our small accommodation and to the

The Budget-Mr. Courtemanche necessity of making use of all that is bought, because everything is so dear, it has become indispensable in most cases. We heartily approve the abolishing of the 15 per cent tax on those articles but abolishing that tax does in no way make up for the wrong that has been done these last few years.

(Text):

In conclusion may I say that the people of Canada are too heavily taxed. Our taxation has reached a point where it is nothing less than a tragedy, because it has brought about a crisis in unemployment and a shortage of living accommodation. About a year ago, on April 14, 1951, the day after the budget speech of that year, which was not any better or more promising than this budget, a Liberal newspaper of Montreal, Le Canada, tried to cheer up its readers by stating that there were other people much more heavily taxed than we were, the people of Great Britain. That was a poor consolation, if you ask me, but it perhaps was a very good illustration.

If today the people of England are more heavily taxed than we are, if they are facing a national economic crisis, it must be attributed to the heavy taxation which has been imposed for the purpose of national defence and social security. There was a time when the people of Great Britain had to undergo all kinds of sacrifices in order to ensure the national defence of their country, but afterwards the expenditures on social security were certainly exaggerated.

Soane time ago the main object in Great Britain, as it is in Canada today, was national defence and social security. Now they find their national defence is in danger and social security cannot be ensured any more. To avoid bankruptcy they have had to go backward. It may be found in the near future that we in Canada will have to do the same because our system of taxation may become an instrument of ruin instead of progress.

Two thousand years ago Isocrates, the Athenian, said that those who were making money should be considered as criminals and punished more severely than criminals themselves. If that man came back to earth today and saw the new budget of the Minister of Finance, he would have to say, as I say myself, that today it is not only those who make money who are punished as criminals; it is also those who earn a simple and modest living.

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

George Taylor Fulford

Liberal

Mr. G. T. Fulford (Leeds):

Mr. Speaker,

during the first two months of this year I

The Budget-Mr. Fulford came to the conclusion that Canada was Utopia, and it was not until my return from South America to Canada and to this chamber that I realized, from the speeches of hon. members across the way, that perhaps all was not well here. My wife and I travelled to South America by sea. It took us nineteen days to go from New York to Buenos Aires. During those nineteen days I had many conversations with citizens of the United States prominent in business,' governmental and military circles in their country. Without exception these men spoke of the envy they felt of this country. One of the chief points they emphasized was the fact that Canada had a large surplus, and that since the war we had written off over $2 billion of our national debt. These are matters which seem to be the source of great complaint in Canada, according to hon. gentlemen opposite and a certain section of the press of the country. But I can imagine the howl that would go up in that same section of the press if Canada should have deficit budgeting year after year and pile up our national debt to unheard of heights.

High taxes are not pleasant for anyone.

I am sure everyone in this chamber will agree that I should have no love for high taxes. Like many others, I think of yesterday, April 30, as probably the blackest day of the year. But the fact remains that the rest of the world knows of our financial set-up, of our great industrial development and of the progress this country is making. It is not easy for the government to maintain high taxes. It would be much easier to lower them and get in right with everyone and it is not easy to introduce credit restrictions. But one has to leave our own shores to appreciate just what the policies of this government have done for this country and how much better off we are than any other nation on earth.

Speakers on the opposition side have made much of the fact that the purchasing power of the Canadian dollar today is roughly 50 per cent of what it was before the second world war. I wonder how these critics would feel if they lived in a country whose currency had depreciated by one-sixth or one-tenth or even one-fiftieth, and where the cost of living had risen sixfold while wages had only doubled. These are manifestations one sees outside Canada, which drive home how beneficial have been the policies adopted by the Minister of Finance (Mr. Abbott) in particular and the government as a whole.

I wonder how they would feel if our credit had shrunk to such a low level that we were unable to make purchases from foreign countries. Yet that is exactly the predicament

in which many other countries find themselves today; and that is not restricted to South America by any means.

I happened to be in Brazil the day the Canadian dollar reached parity in relation to the United States dollar, and I was astounded to see that the newspapers in Rio de Janeiro headlined that fact. To Brazilians it was a great achievement, an almost unbelievable fait accompli. In Brazil much is known about Canada because of the development of hydroelectric power in that country by the Brazilian Traction Company, and the extraordinary personality of our former ambassador there, Mr. Jean Desy. Wherever you go, when it is discovered that you are a Canadian you are immediately told, "What a wonderful job your ambassador, Jean Desy, did for you in our country." I might add that the visit of Lord Alexander did much to cement the friendship between the Republic of Brazil and the Dominion of Canada. The film board has also done a great deal, not only in Brazil but throughout South America, to help our neighbours of the Americas become Canada conscious. Wherever I visited our trade commissions and embassies I was told there was a constant demand for more and more pictures produced by the Canadian film board.

I was very interested in a line-up I saw in front of one of our embassies in South America. It was made up of newly arrived Italian immigrants who were trying to obtain entry visas to Canada. In some way a false rumour had started that the Canadian embassy was granting Italian immigrants visas to go to Canada. In spite of repeated denials by our charge d'affaires a new line-up formed each morning in front of the embassy doors, waiting to see the proper officer, hoping to obtain visas. To me that showed in no uncertain manner how anxious the people of other countries are to come to our shores, which hold out so much promise to them.

In Chile I discovered a large potential market for Canadian products. Unfortunately we do not buy enough from Chile to give that country the credits to enable it to make purchases here. In many respects our economies are parallel, and there is very little that we can exchange. I would suggest, however, that if Canada needs more nitrates during this period of national defence construction, or more copper, those products be obtained from the Republic of Chile. I believe that Canada could buy certain fresh fruits and wine from Chile. Our seasons are exactly opposite. When it is midwinter in Canada, it is midsummer in Chile. The fruits of that country are of a superior quality, and by

importing those fruits it would be possible to furnish Chile with some Canadian foreign exchange.

Last week while in Montreal I was surprised and gratified, on going into a fruit store, to be able to buy Chilean grapes. I only hope that this is the beginning of a large trade in that particular line. I am quite certain that were we to purchase more from Chile, she would come to Canada and buy large quantities of wheat, dairy products and manufactured goods.

In passing, I should like to note that I flew from Santiago, Chile to Buenos Aires on an airplane operated by British Overseas Air Corporation. I am particularly happy to say that this plane, although termed an Argonaut by the British, is in fact a Canadian-made North Star. At 19,000 feet we flew safely and comfortably, and I might add proudly, through the various passes in the Andes mountains, with the mighty peaks towering above us in some instances 3,000 to 4,000 feet. In speaking to a member of the crew of that airplane I was told that B.O.A.C. consider their Argonauts or North Stars one of the safest and most rugged of any aircraft flown by that company. I may tell the hon. member for Winnipeg North Centre that while in South America I travelled on no less than four air lines, and on each one of those air lines both wines and cocktails were served. You know, the drinking habits in South America are considerably different from those in Canada. In order to meet competition the air lines are forced to serve wine and cocktails, just as they are to serve meals. No one is required to take the wine or cocktails and I know that my hon. friend would be like me and refuse them. The fact remains that throughout all these southern latitudes it is the accepted thing that air lines serve wine and cocktails.

The one great tragedy I noted when visiting the great South American ports like Rio de Janeiro, Santos-the greatest coffee exporting ports in the world-Montevideo and Buenos Aires, was the almost total lack of ships flying the British flag. In fact, in the four ports I only spotted one British flag, and that was on a royal mail steamer in regular service between South America and England. I mention this, and I repeat that I consider it a great tragedy, because it shows how much British trade has been diverted from world markets to the dominions and colonies within the sterling zone.

While in Port of Spain, Trinidad, I made it a point to enter quite a few of the smaller shops, chiefly grocery stores. I found that virtually all the goods displayed were of British origin or perhaps I should say British commonwealth origin. Unfortunately, the

The Budget-Mr. Fulford display of Canadian goods was conspicuous by its absence. For instance, one could find quantities of cheese and butter from New Zealand and Australia. In exchange Trinidad sends tinned citrus fruit to New Zealand.

I discovered also that virtually all of the dried and smoked fish on display came from the Scandinavian countries. Formerly, this type of goods was supplied by the great maritime provinces of Canada. It does not seem right or economically sound that all this trade has to be diverted away from Canada. Certainly, it is an economy that is built on false premises. We could use all the tinned citrus fruit that Trinidad could produce. We could use much of their fresh fruit and yet, under the present system, this fruit is being sent halfway around the world.

I was asked, while in Port of Spain, why it was that Canada was no longer buying all its cane sugar requirements from the British West Indies. My answer was that we were buying some of our sugar from Cuba for the simple reason that Cuba would trade with us. In order to sell, one must buy and the man to whom I was speaking agreed. The next question he asked me was, "Would you consider bringing the British West Indies into confederation as the eleventh province"? I said that frankly I had not given the matter any consideration and I did not think anyone else up here had considered it sincerely. He said, "Take this message home with you: a lot of consideration has been given to that in the British West Indies." Actually in developing new or old markets for our dairy products, agricultural products and our fisheries, it would go a long way in solving a very knotty problem. I have particular reference to the cheese problem that is so evident in the provinces of Ontario and Quebec. It is not my intention, Mr. Speaker, at this time to go into all the ramifications of the cheese problem, because I have had many talks with both the Minister of Agriculture (Mr. Gardiner) and his parliamentary assistant. They well know my stand on this important matter.

Just a week ago today I had the opportunity of accompanying delegations of cheese producers and milk producers from the counties of Leeds, Prescott and Glengarry to an interview granted us by our Minister of Agriculture. It was one of the longest and one of the most understanding interviews, I believe, that I have ever had with a cabinet minister. I believe that the minister explained his position clearly. However, I should like to say that if the cheese producers are unable to make satisfactory arrangements through their own association in conjunction with the marketing board of Ontario, the marketing board of Ontario and the federal Department

The Budget-Mr. Fulford of Agriculture should get together in a spirit of co-operation to devise a method of keeping the cheese market at a reasonable level.

Cheese is a vital agricultural industry throughout the provinces of Ontario and Quebec, and especially in eastern Ontario. It would indeed be a tragedy for our dairy agriculture as a whole if the price of cheese should break or if the bottom should drop out of the market. I should therefore like to suggest that when a floor price is set for cheese, it should be high enough to reimburse the producers for the capital they have invested and for the wages that are paid. There is, of course, such a thing-and we saw it work last year-as overpricing an article, when it becomes profitable for other countries to export their products to this country in competition. But there must be some point in between where the milk producers and the cheese producers of this country will be adequately reimbursed for their labour and for their capital invested and at the same time there will be produced a market where competition from outside sources will not be too heavy.

I am firmly convinced that there is a market for our cheese right in our own country, and that every effort should be made by all concerned-by the Ontario marketing board, by the Ontario cheese producers' association and by the federal Department of Agriculture-to get our cheese right across Canada, and to get the people of Canada cheese-conscious so that our people eat at least as much cheese as the people of Britain ate before the war. If we did that, we would absorb all the cheese that is made in this country and there would still be room for imports. In the meantime let us do all that we can to fill our needs from our own market, along with an attempt to get rid of any surplus stocks that are on hand in the markets of the world.

To return to the budget for a moment, I cannot agree with my hon. friends opposite when they say that the general public is displeased or even agitated. In fact, most people were prepared for the type of budget that the Minister of Finance (Mr. Abbott) presented. We know that taxes are high; but to avoid a third world war we must do our share as a member of the United Nations and of NATO. At this point I should like to compliment the hon. member for Greenwood (Mr. Macdonnell)-and I wish he were in his seat-for his patience and perseverance in finding in a United States publication adverse criticism of the Canadian financial structure.

I have always had a high regard for the Atlantic Monthly; but after all, it is not the type of magazine that has a wide circulation.

However, we see in the great national weeklies such as Time, Newsweek, U.S. News and World Report, in magazines such as the Reader's Digest, and in the great dailies such as the New York Times and the New York Herald Tribune references to Canada's fiscal policy, all of which are in the most glowing terms; and in the great financial papers such as the Wall Street Journal we see great recommendations for investment in Canadian stocks. I would ask this question, Mr. Speaker. Could it be that the Atlantic Monthly is like the person referred to in the old song: "They were all out of step but Jim."

The budget is really straightforward enough when one considers what the taxpayers would have paid under the terms of the old budget. By the wildest stretch of the imagination no one could accuse the Minister of Finance of trying to deceive the public. The Minister of Finance gave what would have been collected in taxes, and what we would have had to pay had the terms of the 1951 budget continued throughout 1952, and he compared the difference in taxes we would be paying under the new tax scheme.

For a moment, Mr. Speaker, I should like to deal briefly with a subject that has been discussed both in the Ontario press and in the Ontario legislature. It is a subject about which, strangely enough, little has been said until recently, although it was six years ago when the then minister of finance allowed the provinces not coming under the dominion-provincial tax agreement to collect 5 per cent of the dominion income tax levy, which amount was deductible from the gross income tax payable by the individual taxpayer to the federal treasury. It would appear that the provincial government found income tax so distasteful that it was unwilling to set up the necessary machinery to collect this income tax. As we know, Ontario along with Quebec did not choose to enter the dominion-provincial tax agreement. There may have been good grounds for not accepting the formula proposed at the last dominion-provincial conference. Certainly Ontario has not fared badly during the last five years. This has resulted, no doubt, from the gross national product being much higher than could have been contemplated. The 1947 agreement provided for payments based on the gross national product and population data for three years preceding the year of payment. Ontario's collection from corporation income taxes and succession duties reflected this rise more quickly than the payments provided for under the three-year formula tax agreements.

17G7

In his most recent budget speech on February 21, 1952, the treasurer and premier of the province of Ontario produced a table to show the total collection from corporations, succession duties, statutory subsidies and excess mining and logging royalties. Over the five-year period the taxes I have just mentioned amounted to $456,300,000, which is about $7 million more than the total rental payments of $449,500,000 which the province would have received under the tax agreements. The total of $456,300,000 shown in the table also includes $10 million for uncollected corporation taxes, succession duties and mining and logging taxes. The province will have to wait a number of years to collect all these arrears. On the other hand, the total of $449,500,000 which Ontario would have received during the five years of the tax agreement would have been fully paid up as of June 30, 1952.

The Department of Finance has informed me that under the new tax agreements, to start in 1952, payments will be adjusted on the basis of the G.N.P. for one year immediately preceding the year of payment instead of three years. This results in the rentals payment reflecting more quickly any change in the economic position. It is interesting to note that the estimated payment to Ontario in 1952-53 under this proposed new agreement is considerably in excess of the amount Ontario estimates it will receive from using the tax fields in question. I would like to place this short table on the record:

Estimated payment to Ontario under new agreements in 1952-53-$137'5 million.

Amounts Ontario expects to collect in 1952-53: (as shown in forecast of revenues for 1952-53 in Ontario budget speech February 21, 1952).

million

Succession duty $16

Corporations tax

89 millionStatutory subsidy

3-6 $108-6Excess under a tax agreement 28-9

It is estimated that the payment to Ontario under the new 1952-53 agreements will be $137,500,000. These are the amounts reported by the premier and treasurer on February 21, 1952, which Ontario will collect should it again decide not to come into a dominion-provincial tax agreement. This amount shows succession duty, $16 million; corporation taxes, $89 million; statutory subsidy, $3,600,000; or a total of $108,600,000. Subtracting $108,600,000 from $137,500,000 you get $28,900,000 to the good should Ontario enter the new dominion-provincial tax agreement.

I would not presume to advise the premier and treasurer of Ontario whether the province should or should not come under the new agreement. But if it should decide not

The Budget-Mr. Johnston to, I would respectfully suggest that if the province is unwilling to collect the 5 per cent allowable income tax, the provincial government permit the municipalities within the province to do so. This would not set a precedent, because municipal income taxes were permitted in the province of Ontario prior to 1936. Probably this would require authorization from the federal Minister of Finance (Mr. Abbott), but I can see no reason why this should not be allowed under the offer already made to the two provinces of Canada not signing formal tax agreements. It would not cost the income tax payers of Ontario any more than they are already paying, and it would help the hard-pressed municipalities where real estate taxes have more than doubled since the war. I might say that the tax rate in the two larger municipalities in my county, the towns of Brock-ville and Gananoque, are, by a strange coincidence, both set at 86 mills, making it unbearable for the property owners.

By allowing the municipalities to collect income tax it would assure them of a steady income, and it would more than supplement the uncertain subsidies now granted the municipalities in the province.

In conclusion, I should like to say that to appreciate this country one must investigate conditions in other parts of the world. It is true that we are not satisfied with all that is going on here. If we were satisfied, we would cease to make the progress that is so vital to our future. We have advanced more than any country in the world since the war, and, I might add, we are the envy of all, but the fact remains we must seek to move forever forward and forever upward.

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

Charles Edward Johnston

Social Credit

Mr. C. E. Johnston (Bow River):

Mr. Speaker, I want to speak for a while today about two things. I want to refer somewhat briefly to the budget, and then I wish to spend some time on national housing. Before I do either of these things I should like to make a few comments about the remarks made by the hon. member who has just taken his seat.

At the opening, and again at the closing, of his remarks, he laid particular emphasis on the fact that Canada had had such a wonderful period of prosperity. Of course, that is true; it is very true indeed. But he took great satisfaction in saying that the federal government was largely responsible for that. Of course, that is not true. The first remark was true; the second one was not.

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

May 1, 1952