Mr. Lesags:

That is the first sensible thing you have said.

Mr. Dufresne:

That is the first time my good friend is of my opinion. The hon. Minister of Northern Affairs and National Resources -and this is going to please him-in a well prepared speech, but one which echoed the feelings of his centralizing masters, has held that the proposal put forward by the hon. Leader of the Opposition, with a view to the convening of a federal-provincial conference before the end of May, was no immediate solution to this problem.

And yet, instead of playing the mathematician, in order to convince his colleagues of the cabinet that he was fit to manage the portfolio of finance, he could have suggested that which, in his opinion, could have solved the problem immediately and definitely. He did not do so, because he was afraid, no doubt, to spoil his chances with the government of which he is a member and which has no intention to try to solve the constitutional imbroglio.

In my humble opinion, there is but one immediate solution to the problem which requires Quebec taxpayers to pay a double tax:

1. A return by the federal authorities to logic and common sense which they have lost through too long a reign at the helm of the state.

2. The immediate and full respect for the Canadian constitution which guarantees unequivocally the rights of the provinces, thereby preventing a centralization nefarious to a sound democracy.

3. The will, on the part of the federal government, to stop considering Quebec as an illegitimate child within confederation.

Can we still continue to treat with contempt the numerous requests made by every important public body, such as municipal councils, chambers of commerce, as well as countless associations or organizations without any political character, that are asking for fair play for the people of Quebec and are also urging the government to come back to the great principles upon which the Canadian constitution is based. Could anybody remain

indifferent when faced with the legitimate grievances of a whole people? It is up to the right hon. Prime Minister to answer that!

It is unfortunate that we did not hear more speeches on this issue by Liberal members from Quebec.

Mr. Lesage:

They will come.

Mr. Dufresne:

Before the Easter recess, they all boasted that they would defend the arrogant and uncompromising attitude of their government. But yesterday, when the session was resumed scarcely a score of French-speaking members were waiting anxiously for the question to be put, so that they might be spared the irksome task of making a speech. I am scarcely surprised by their changed attitude, for I know them well. They were back from their respective constituencies where they had been in a position to realize that the views of their electors did not agree at all with the policy of the government. One must then infer, Mr. Speaker, that the fear of the electorate is the beginning of their wisdom.

The province of Quebec is firmly opposed to centralization on very particular grounds; in the face of the present centralizing thrust, it may well fear the advent of a legislative union.

French-speaking Canadians have traditions to which they are deeply attached. They have customs and traditions of their own which it may be possible for them to safeguard through the guarantee offered to them by the Canadian constitution. They have a past of which they are proud, ancestors whose footsteps they want to follow. They have a deep love for the language of their forefathers and for the religion they have been taught on their mother's knees. They have an educational system adapted to their mentality and a culture which they have not refused to place at their country's disposal. Can such a valiant people as ours be asked or required to give up all this, to play into the hands of those whose only concern is to divide in order to rule? No, Mr. Speaker, and I appeal here to all well-meaning Canadians worthy of that name who constitute the great majority in this country.

Whatever one's language or religion, nobody can help being deeply impregnated with the traditions established by his ancestors. Every citizen wishes to keep his traditions, his language, his faith, his customs, and use them in the service of Canada.

When every Canadian understands that a glorious past cannot be sullied with impunity, the general harmony among all of us will be more complete, that will be all the better for

this wonderful and promising country of ours, which we want to make even greater and more prosperous for future generations.

Let us be guided once more by common sense, let us act always and everywhere as real Canadians. We must respect what is dear to us if we want our country to become greater and to prosper.

In that way, Mr. Speaker, we shall live happy, in the closest harmony, each in his own sphere fulfilling the noble mission we have received from Providence.

When, with the satisfaction derived from the fulfilment of our duties, we shall be called into a better world, leaving to our children a country in which it will be pleasant to live in peace, harmony, justice and freedom, our descendants, with real joy in their hearts and the deepest pride in being Canadians, will be able to sing the first two lines of our national anthem:

0 Canada, terre de nos a'ieux

Ton front est ceint de fleurons glorieux!

(Text):

Mr. H. A. Bryson (Humboldl-Melforl):

Mr. Speaker, yesterday afternoon two hon. members on this side of the house dealt in some detail with the very serious agricultural situation that has developed in Canada. In particular the hon. member for Jasper-Edson (Mr. Yuill) dealt with it at length and placed a great many very interesting figures on Hansard to substantiate the statements he made in that regard. While I am not going to take the time this afternoon to speak about this question in detail, I should like to take some time to deal with the over-all picture as it applies to agriculture and in particular to the condition of the grain farmer in western Canada.

1 am very glad that I was able to visit my constituency during the Easter recess because it gave me an opportunity to speak not only to farmers but also to machine agents, garage men and a great many of the other small business people whom we find in every little town scattered throughout the prairie provinces. I was told in every case that their business had fallen off from 25 to 60 per cent in the last six months, owing of course, to the fact that farmers, because they are not able to market their produce, are not able to buy the things that they need. It only seemed to confirm what I had believed and what a great many more people believe, that a most serious situation has developed in our agricultural industry.

Obviously we are following the very same pattern that was developed prior to 1939 and

The Budget-Mr. Bryson the second world war. At that time we had the same conditions of surpluses, falling prices and lost markets together with an increase in the cost of production. Following the second world war our agricultural economy was cushioned against a very obvious recession in this country by the introduction of the Marshall aid program. Following that the recession was of course cushioned by the Korean conflUct.

As I said a moment ago, we have learned nothing from the events of the last fifteen years and we are right back where we were prior to the outbreak of the second world-war. We have reverted to the status quo>

of the 1930's. Somebody once said that as literal translation of the Latin, "status quo",, is "the mess that we are in". I submit that as far as our agricultural economy is concerned we are back in the same old mess in which we were in the 1930's. I should like to mention briefly the impossible position in which our farmers find themselves in trying to work out plans for their production. I think it is something that is unique and it is something that a great many people do not seem to appreciate. This, we are told, is the age of the specialist. This is the age of the efficiency expert and, while a great many people do not like the sound of the word, this also is the age of planning.

No business can long survive in this country unless it gives a great deal of thought, to planning for the future. The distance that these plans are projected into the future is limited only by the size and the scope of the particular industry coupled with society's need for the product that the industry produces. While that is true of all successful enterprises in this country, both in peacetime and in war, it does not follow that it applies throughout the agricultural industry, because farmers do not plan their production in the light of future prospects or future promises but rather on the basis of past experience. I might add that one of the yardsticks that farmers have come to use in their planning is that whenever the Minister of Agriculture (Mr. Gardiner) suggests a certain approach to a problem, if they do the opposite they find it is a good guide to what they should do in that particular year in which he makes the forecast.

The blame for this state of affairs cannot be placed on the shoulders of our farmers. They have no control over the cost of production, nor have they any control over the prices they will receive either on the domestic market or in the markets of the world. We have a pitifully small population in Canada.

The Budget-Mr. Bryson We can never hope to consume all we produce. Why should we when two-thirds of the world's population is hungry and clamouring for food? Like a great many people, I believe that our whole approach to this problem of distribution is wrong. I believe the government is trying to reconcile its thinking in 1954 with its thinking back in 1934. I do not believe it is possible to do that. It is time we reversed the actions of the proverbial ostrich by pulling our head out of the sand and facing up to reality.

We must revolutionize our thinking concerning this problem of distribution just as drastically as we have revolutionized our production methods in this country. If our agricultural industry is to survive and take its place in our country's economy, we should and must plan for the future. Those plans must be based not only on our domestic needs but upon the needs of mankind everywhere, rather than plan as we now do on hope, mere chance and intuition, with our success dependent in large measure on our happy ability as individual farmers to outguess our neighbour concerning what to produce and in what quantities. The most urgent and important question of the day, so far as agriculture is concerned, would seem to be how long can we, as an agricultural nation, continue, without giving this problem of distribution the serious consideration it deserves.

Throughout the war the farmers were asked to produce in abundance. We did a wonderful job. We were told we had done something that had never been done before. We were told we were the salt of the earth and we had unlimited markets. But now we have an entirely different condition. One of the very significant things, and one that any amateur observer might question, is that in spite of the fact we are still spending in the neighbourhood of $2 billion for defence in the name of peace and world security, we are unable to find markets for the very large food reserves we have in this country. The reason, of course, is that we are spending this tremendous amount of money not for food but upon arms, aeroplanes and guns. We are shipping these things to people who are badly in need of food. In effect, we are saying to these people, accept these things and defend your poverty. When this does not have the desired effect, we throw up our hands in holy horror and in our stupidity say that these people are accepting communism, they are turning to communism.

We should not cut our production. I certainly hope our government will not be influenced by recent press statements attributed to the United States secretary of agriculture, Mr. Ezra Benson, in which he

suggested the United States would like to see Canada cut her agricultural production. I think we can all go along with a statement recently made by our own Secretary of State for External Affairs (Mr. Pearson) when he was speaking at a luncheon held in London, Ontario, on January 27 of this year by the federation of agriculture. He said:

None of us wants to see food production curtailed or surplus food destroyed when there are so many hungry people to be fed. Indeed, as long as these people remain hungry there cannot be such a thing as a surplus, except in the economic sense. All our humanitarian and social instincts rebel at a policy of contrived scarcity and food destruction.

I certainly hope that will continue to be the policy of this government.

I come now to one item about which I am greatly concerned, and one which I investigated thoroughly when I was home over the Easter recess. It is something that we in this party have advocated for a long time. We believe that the government should take ownership of properly stored grain on the farm. We do not ask the government to pay the full initial price for this grain, but they should pay a minimum price for grain properly stored on the farm. We say that because the Canadian people are now being told that the grain that is piled on the farms in western Canada is a wonderful thing. They are told it is just the same as money in the bank. If times get tough or we get into another crisis, we will have this supply to draw upon, and we believe that is true.

However, we do not believe the producer should carry the whole burden of this so-called mountainous prosperity, as someone referred to it. Today the people of Canada are asked to bear the whole burden of defence. We are stockpiling armaments in the name of security and world peace, and the people are quite prepared to pay the shot. We say that food is just as essential to world peace and security as armaments. We believe it is only fair that all the people should help to carry that burden and not leave it to the producer alone.

There is another matter I should like to mention at this time, and I am expressing a personal opinion for what it is worth. From discussions I have had I know that a great many people in western Canada are in favour of the scheme I have outlined, but the farm organizations in western Canada are shying away a little bit from this idea of the government taking ownership of properly stored grain on the farm. I am suspicious of this, that the wheat board is saying to the farm organizations of western Canada, "If you are going to advocate this new idea and if you are going to try to push us into the position of buying this

grain, then we will abandon the wheat board." And that would be a real disaster. But I am suspicious that this is the gun that is being held at the heads of western farm organizations.

I think the government should exercise some control over the cost of production, but I am not going to discuss that matter in detail today. There will be other opportunities for me to do so. However, I shall deal with one item in particular, that of fertilizers. I should like to comment momentarily upon two points discussed in debate on December 2 by the hon. member for Kootenay East (Mr. Byrne) who, I am sorry, is not in his seat.

On that date, replying to a criticism I had made in connection with what I called a monopoly in the sale of fertilizers in this country, the hon, member for Kootenay East said I had left the impression that farmers were being gouged. He intimated he was sorry I had made that statement, because he was afraid it would have an adverse effect on fertilizer sales. I am convinced the hon. member for Kootenay East did not make those statements without giving some thought to them, because I know he is concerned about the situation of the workers in the plant at Kimberley. I know the figures he quoted in the house had been submitted to him by the fertilizer companies concerned-because I have investigated the matter. I do not think the farmers in that part of the country from which I come had to wait until I came to Ottawa for me to tell them that they were being gouged, so far as their purchases of fertilizers were concerned. They knew about that a long time ago.

As a matter of fact, when I was home at Christmastime the farmers in my area were circulating a petition in which they asked their neighbours to pledge that they would not buy any fertilizers this spring. This was done with a view of bringing the high cost of fertilizers to the attention of the proper authorities. Fertilizer distributors in the district of Humboldt-Melfort told me only a day or two ago that they know now that their sales of fertilizer are going to be drastically reduced.

I was not in the house when the hon. member spoke and discussed the fertilizer situation, but I could tell from reading his speech that he has real sympathies for the fertilizer companies, and was not pleased with the nasty things I had said about them. I am not going to deal at length with this subject of fertilizers, but I shall try to correct two statements of the hon. member on that occasion.

First of all he said that in the years 1935 to 1939 it took 90 bushels of wheat to buy

The Budget-Mr. Bryson one ton of fertilizer. He then proceeded to point out that in 1952 it takes only 65 bushels to buy one ton. I would say to him in reply that in the years from 1935 to 1939 we were buying fertilizer for about $60 a ton and wheat was selling at less than a dollar a bushel. To be exact, the price of wheat was -956 cents per bushel.

But what was the picture last year? Farmers who were able to market top grades of wheat found that they had to sell over a hundred bushels to obtain enough money to buy one ton of fertilizer. And, incidentally, these figures are from the dominion bureau of statistics and cannot be denied.

The other point made by the hon. member for Kootenay East was that because the fertilizer industry had sold 100,000 tons of fertilizer in western Canada this had meant an increase of 35 million bushels of wheat. I have made inquiries at the central experimental farm here in Ottawa. They have secured all available information from many experimental stations and from the hundreds of illustration stations scattered across the country, and it is their considered opinion that 15 million bushels would be an outside figure-and not the 35 million mentioned by the hon. member.

This just goes to prove once again that the fertilizer people will go to any length in an effort to becloud or muddle the thinking of people who are buying their product. I do hope that before this session is over this whole industry will be investigated under the authority of the Combines Investigation Act.

I was very happy indeed to hear the hon. member for Brantford (Mr. Brown) make a case for economic aid. I am not going to discuss the subject at length; but it was refreshing to hear the fine address he made this afternoon. In addition to the proposal I have made in connection with outright purchases of grain by the government, I would like to see this country accept sterling. This group has maintained over the months that sterling should be accepted. There are many places throughout the commonwealth where it could be spent; or, as we have suggested over and over again, we could invest it in Great Britain to help them rebuild their industries, so that they might produce more goods to offer in trade for our agricultural products. This would help relieve the great surpluses we find in agriculture today.

I should like to see wholehearted support for a world food bank as outlined by the food and agriculture organization of the United Nations. I believe these two things, coupled with what I have suggested previously, would go a long way toward relieving the stress and help cut down the surpluses we have in our

The Budget-Mr. McLeod agriculture. It would also go a long way toward establishing security and peace throught the would.

Mr. G. W. McLeod (Okanagan-Revelsloke):

Mr. Speaker, in the few remarks I shall make in this debate it is my wish to bring to the attention of the government the need for greater financial assistance to the government of British Columbia in developing and conserving her natural resources. The hon. member for Kamloops (Mr. Fulton) made mention of this a few nights ago, and I should like to commend him for it, because I heartily agree with most of what he said. Of course I could not agree with everything, and particularly the fact that he cannot agree with the political convictions of the premier of British Columbia. However, I would remind the hon. member that it is not so many years ago that he and the premier of British Columbia were very close political buddies. Of course, that was before the time when our premier saw the light and renounced Conservative policy.

There is one problem that is a threat to Canadian unity, and that is the Ottawa tax view. It is interesting to follow the arguments of government members from Quebec who support the Minister of Finance (Mr. Abbott) in the stand he has taken. Apparently the present government at Quebec is not very popular with government supporters in Ottawa. They are not afraid to make their views known, whether right or wrong.

However, I should like to congratulate the hon. member for Outremont-St. Jean (Mr. Bourque) upon the very strong plea for national unity he made when speaking in the house last night. I am sure that is one goal we must never lose sight of, and we as Canadians must at all times be prepared to sink our differences of race, religion and politics in a common desire to work in harmony for the welfare of Canada.

Now, what about this Quebec taxation problem? To my mind it is serious; but, Mr. Speaker, I believe it is strictly a family affair and a problem for the Quebec and Canadian governments to settle. It is a family squabble between these two members of the Canadian family and as such the rest of us would be well advised to keep out.

However, while speaking of this taxation question, there is one matter I must bring up. It concerns the defence department and the Department of Finance. I am thinking of members of the Canadian forces posted to stations in Quebec. These men and women, Mr. Speaker, are not in Quebec by choice- they are there in their line of duty. Yet, because they are in Quebec, they are going to be penalized to the extent of the income

tax levied in that province. They will receive less take-home pay than those stationed elsewhere in Canada. This is an injustice. I trust that the ministers of national defence and finance will get their heads together and bring in a solution. If something is not done, I am sure that harmful and unnecessary dissatisfaction will result. I know of what I am speaking, for it was my privilege to spend a few days with my son and his family on one of our defence stations recently and this matter was brought to my attention.

Of the provinces working with the federal government under the tax rental agreements I am sure the so-called "have-not" provinces-the prairies and maritimes-are not dissatisfied. This leaves Ontario and British Columbia. So far as Ontario is concerned, I am sure there are many members of this house who will be able to speak for her. I am going to confine my remarks to my own province of British Columbia.

Our province, Mr. Speaker, comparatively speaking, is the fastest growing and the wealthiest in Canada; yet, strange to say, these two facts are causing us a lot of trouble. In the first place, our increasing population demands expensive services from the province; and in the second place, the federal government is receiving the major share of the increased revenues derived from our great wealth.

Since 1939 our population has increased by 55-3 per cent. The next highest provincial increase was Quebec with 32 [DOT] 2 per cent, while the increase for Canada was 27 [DOT] 8 per cent. This rapid increase creates a great problem for us. The people must be provided with roads, schools, hospitals and social services. In 1940, Mr. Speaker, it required $29-4 million to provide these services. In 1953 it required $145-4 million. This is a large amount of money for a fast growing province to raise, and many projects that are necessary for our people and that would assist not only British Columbia but Canada as a whole cannot be undertaken for lack of funds. Yet it is interesting to note-and I hope the house will remember these figures-that in 1952-53 the federal government collected the huge sum of $259,708,170 from corporation and personal income taxes and succession duties in our province. Many millions more were collected from sales, excise and other taxes. Mr. Speaker, this is only $21 million less than the total collected from the three prairie provinces-Manitoba, Saskatchewan and Alberta-and almost two and one-half times the amount collected from all the maritime provinces. I trust that the hon. members from these provinces will recall these figures when they are discussing the estimates, and compare their allotment with what British Columbia is receiving.

I want to refer briefly to P.F.R.A., railways, highways and conservation of natural resources. Agriculture in British Columbia is expanding along with our total economy. In 1940 our production from this source was valued at $52 million. In 1951 it was $160 million. The end is not in sight yet. There is room for tremendous development, but expensive irrigation and reclamation projects are required. Irrigation is needed in all except the coastal and northern parts of the province. There are large tracts of land that may be reclaimed in areas subject to flooding, as well as in semi-arid areas.

Here I would like to acknowledge expenditure by the federal government of $2,429,939 for work done under supervision of P.F.R.A. engineers in recent years. These projects included, mainly, reclamation and irrigation of blocks of land for war veteran settlement and have proven very satisfactory for the settlers and are of great benefit to the communities and to the province generally.

I would like to see the federal government extend the full benefit of P.F.R.A. to our province. Many of our areas are short of water for home use and the assistance of P.F.R.A. would be very welcome in constructing dams, dugouts, and other facilities for the provision of water for domestic and farm purposes. Then, too, we have individuals who are spending large sums of money for sprinkler systems where the water is pumped from adjacent lakes and rivers. In the vicinity of Vernon we have possibly the largest privately-owned sprinkler system in British Columbia, if not in Canada. It is used mainly for watering pasture land on one of the largest mixed farming ranches in the interior. It has cost the owner thousands of dollars without any outside assistance. Under P.F.R.A. he would have been entitled to engineering assistance and to grants in aid of purchasing the necessary equipment. It is to promote and encourage further installations such as this that we are so concerned that P.F.R.A. should be extended to British Columbia.

I am going to quote you some of the expenditures made by the federal government in aid of such projects as I have been mentioning. Under the Maritime Marshland Rehabilitation Act, 1945, the sum of $8 million will be spent in reclaiming lands around the bay of Fundy. Up to the end of 1952, Manitoba had received $4,277,688, Saskatchewan $35,276,000, and Alberta $28,049,108, under P.F.R.A. British Columbia has received absolutely nothing. So, Mr. Speaker, when I ask that these benefits be made available to

The Budget-Mr. McLeod our province and that we share in the millions being spent to promote agriculture, I believe you will agree the request is not unreasonable.

We have a railway problem, too. The P.G.E. has no coast outlet, but I am glad to report that the provincial government has instituted steps to complete the line from Squamish to Vancouver. However, there is great need to have the line extended from Prince George to Dawson Creek. This is a distance of 271 miles and is beyond the ability of the province to finance. For years we have heard of the need for a Peace river outlet. Mr. Speaker, this is it. From Dawson Creek to Vancouver via P.G.E. would be 516 miles shorter than between the same two points via Edmonton. This road, if completed, would also give a short rail route from the Peace river bloc to the port of Prince Rupert via Canadian National railway from Prince George.

I am not going to take up the time of the house to enumerate the great developments which would follow in the wake of a rail outlet. At the first opportunity hon. members might obtain a map of the Peace river area and while looking at it think of the press reports they have read concerning gas and oil development, mineral finds, and the thousands of acres of virgin timber in this last great bloc of unsettled farm lands. This great area, truly an inland empire, endowed with natural wealth almost beyond imagination, is waiting for a rail outlet to the seaboard. Such an outlet has been promised for years. The federal government has built railroads and through the C.N.R. are operating roads in almost every province of Canada most of which can never hope to serve Canada, as a whole, to such great advantage as a road from Dawson Creek to the Pacific coast. I might mention a few of these such as the Hudson Bay railroad, the Northern Alberta and Newfoundland railroads. We are not asking for favoured treatment. We are merely asking that the federal government assist us in providing this worth-while railroad which would be a great stride forward in the development of our northland and a necessary artery of defence in time of war.

Coming to highways, we all realize that this primarily is a provincial matter. However, we have conditions which make road building the costliest in Canada. Our settlements are scattered and connecting highways, through sparsely settled districts and for long distances, are necessary. We have a very heavy outlay for bridges.

I was rather amused to learn that the federal government disclaims any responsibility for financial assistance for the construction of

4166 HOUSE OF

The Budget-Mr. McLeod the Marpole bridge at Vancouver. Yet I find that this same government is committed to spending $30 million on a causeway from Cape Breton to Nova Scotia. We need roads to tap our mineral and forest wealth. We need roads into our far north, and we need a trans-provincial highway from Alberta through Yellowhead pass to the coast, as well as the trans-Canada highway through Revel-stoke. All these roads will mean wealth for Canada and greater tax return for the federal government. We think the federal government should share the cost.

As regards conservation, I was greatly interested in the reports of the conference on natural resources held in this city last Wednesday and Thursday. On April 22 the Minister of Northern Affairs and National Resources (Mr. Lesage) stated that resources had put Canada in her position as a top-ranking trading nation and that these resources are vital for defence. He is also quoted as saying:

We must consider as urgent any measures which will improve the status of conservation of our natural resources. With the exception of minerals they are renewable and it must be our aim to keep them renewed. The approach must not be lethargic, but dynamic.

He went on to say:

. . . conservation requires a combined effort at two levels-federal and provincial.

Truer words were never spoken. On April 23 the Minister of Trade and Commerce (Mr. Howe) addressed the same convention. He quite plainly showed that he is alive to the necessity of conservation, and he stressed that the federal government is fully alive to the situation and that such a program had become "not only a matter of protecting future generations but of ensuring progress in the present time." He mentioned several acts sponsored by the federal government in carrying out its role as regards conservation, both independently and in co-operation with the provinces. He stated:

Conservation cannot be taken for granted. It must be pursued constantly and with vigour.

After reading the reports on this conference and noting the keen interest shown by these ministers representing the government of Canada no plea of mine need be added. All I ask, Mr. Speaker, is that this government re-examine the brief presented by the government of British Columbia, especially with regard to forest conservation, and take immediate steps to implement a federal-provincial plan which will be in the best interest of all concerned.

And now, Mr. Speaker, I would like to quote the words of a great Canadian, the

late Right Hon. W. L. Mackenzie King. Speaking before the dominion-provincial conference in 1945 he said:

What then are the alms or the objectives for which we are seeking the best possible dominion-provincial relations? To express them, very briefly, we are asking the provinces to go into partnership with the dominion in a broad program for the development of our national heritage, and the welfare of the Canadian people.

I would like to assure this government, Mr. Speaker, that the people and the government of British Columbia are prepared to do their part in developing the great resources within their borders in partnership with the federal government of Canada.

Mr. S. R. Balcom (Halifax):

The Budget-Mr. Balcom proportion of its revenues to positive development. In the long run that policy will provide more jobs and more security than will overzealous paternalism in respect to individual problems.

The minister has done well to resist the pressures for tariff or customs increases. Canada, as the third largest trading nation, has a very large stake in increased world trade and in the progressive removal of restrictions thereon. For example, with respect to wheat, picture the difficulties there would be were tariffs or embargoes added to the marketing difficultifes resulting from keener competition from other producer countries.

Because of our dependence on United Kingdom markets we in the maritimes are perhaps more familiar than are others with the results of tariff restrictions. Our lumber industry has already suffered because of the lack of effective demand. Our fresh fish industry, which finds its main market outlet in the United States, has so far weathered the gales of competition. But the pressure across the border for higher tariffs hangs like the sword of Damocles. I cite these instances to support my view that in Canada's own interest we must not seek tariff protection to save us from fair competition.

Of particular interest to Nova Scotia and Halifax was the optimistic note in the budget speech with regard to the progress towards freer trade in the United Kingdom, Europe and the commonwealth. There are signs, too, that our great neighbour to the south is lending an ear to the pleas for removal of trade barriers. Foreign trade is vital to our economy and it is the lifeblood of our ports. It is as important, Mr. Speaker, to the dock-worker in Halifax that trade be kept moving as it is for the wheat farmer to sell his wheat abroad.

It is important then for the government to bend every effort-as they are doing, I must say-to expand trade. One factor of great consequence is speed and efficiency in transport. That is one justification for national participation on a very large scale in the St. Lawrence seaway and power project. The development of ports important to international trade meets the same test, namely the involvement of national interest as opposed to purely local or provincial interest. That is why we have pressed for an over-all plan of development of the port of Halifax. We are not satisfied simply with the provision of berths and other facilities as business demands. The long-range plan and its implementation should precede and stimulate business, not just follow after.

This past winter there has been great pressure on available facilities at the port of

Halifax. It is granted that some of it was due to the dock strike in New York, a situation which may arise at any time. But there has been an increase in traffic of such proportions as to justify a new look at the problem and (he addition of many more facilities in the port of Halifax.

It goes without saying that adequate railway facilities are a "must" for balanced port development. I have on other occasions drawn attention to the need for enlargement of the Nova Scotian, the Canadian National hotel in Halifax. We have also pressed for replacement of the outmoded building which houses the baggage, express, mail and other departments of the Canadian National Railways. This building has now been declared a fire hazard, which is serious enough in any circumstances, but when you consider the special role that Halifax plays in our scheme of national defence the urgency for a fireproof modern structure is the more apparent.

In this connection I would also urge early consideration by the Canadian National of the construction of a suitable railway station at Armdale. To those who know the location of the railway tracks encircling the city en route to the waterfront, the logic of such a move will be quite apparent. The population of that area in Halifax city and county has grown very quickly in the past decade. The city itself has increased by 100 per cent while the suburban area has more than doubled its population to easily some 20,000 people.

The location of a suitably equipped station here would in any circumstances be a justifiable service to the residents of the area and would relieve congestion in downtown Halifax. In time of emergency it would be invaluable in facilitating the evacuation of people from the western and northern parts of the city.

I do not wish to be an alarmist, Mr. Speaker, but I do feel that the awful possibilities of the dreadful weapons of war now developed call for a new approach to many problems. The position of Halifax as a target area, with all the attendant dangers, calls for immediate action on the first-class bottleneck at the Fairview underpass. The Canadian National Railways, as the main agency responsible for the situation there, should initiate action on this problem. The city of Halifax and the province have a responsibility too, but I believe that its importance in civil defence warrants that the initiative be taken by the dominion government through Canadian National Railways.

I now have a more pleasant suggestion to make regarding the railways. Canada's

stature in the eyes of other nations has grown considerably in the past. We are made aware of this in the contributions of our Canadian representatives at international meetings, in the attitude of the diplomats and representatives of other countries towards our people and in the general appraisal of Canada's economic strength.

In the United States in particular there has been of late a veritable flood of articles and stories on Canada and its resources and development. In most cases these have emphasized our mines and natural resources; in short, Canada is presented as a land of opportunity. That this view has acceptance in many circles is borne out by the volume of United States money flowing into Canadian development. The almost phenomenal success attending some of this, particularly in oil, has strengthened the current of optimism. But I suggest that there are some dangers inherent in this situation. It is to be hoped that we may some day get out of this era of a semi-war economy. When that day comes it is natural that there will be bad years as well as good. Then we shall need in our neighbours, as well as ourselves, a faith in our country based on a well-informed public opinion.

I am afraid, sir, that some of the information about Canada which is being disseminated, particularly in the United States, is not tempered by a realistic appraisal of our problems, of the difficulties of a country which is in fact a thin line strung across a continent, of a relatively small population which must pay high for an extensive transportation system in order to survive as a nation, and of an economy where a relatively few staples bulk large in our total production.

The effect of the glowing prospectus of Canada as it appears to potential investors in the United States, and not tempered by a realistic appraisal of some of our problems, may make them wonder about Canada's contribution to NATO. In fact, questions have been raised and statements have been made which indicate that we are not regarded so well in all quarters for our contribution to mutual defence. In the light of all this, Mr. Speaker, and in view of its importance to our future development, increasing efforts should be made to present Canada as a whole to our neighbours. This is no counsel of gloom; it is prompted by a desire that our position be on a foundation firm enough to weather any minor storms which sooner or later we must encounter.

One small way in which this might be accomplished is to provide United States congressmen and senators with passes on Canadian railways. It is not suggested that

The Budget-Mr. Girard the railways should bear the expense of this educational project but rather that they should be reimbursed for any small cost involved, and it would not be too large. We might then encourage better understanding on the part of those responsible for defence expenditure and procurement, for tariff and other trade regulations.

This better understanding would surely spread further among the people. It is very important to us that the average American does not feel short-changed on his foreign commitments. An appreciation of what Canada is doing and the removal of the impression that we are not doing our share is more important than the attraction of more investment capital at the expense of realism.

The Acting Speaker (Mr. Applewhaite):

Is

anybody acting for the sponsor of these divorce bills?

Mr. Knowles:

No.

The Acting Speaker (Mr. Applewhaite):

If

not, the bills will stand. The business for the hour for private and public bills having been exhausted, the house will revert to the consideration of the business interrupted at five o'clock.

Mr. Fernand Girard (Lapointe):

Mr. Speaker, a while ago, the hon. member for Macleod (Mr. Hansell) speaking of the Quebec income tax said that it was a family problem between Quebec and the federal government and that it did not concern the other provinces. However, he recognized that this was greatly unfair to the servicemen stationed in the various camps of the Department of National Defence in the province of Quebec.

Mr. Speaker, that attitude well shows how the government deals with this matter. It is considered unfair that a serviceman from another province should be compelled to pay

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The Budget-Mr. Girard that tax. Yet they do not seem to realize that it is just as unfair to compel 300,000 taxpayers in the province of Quebec to pay a double tax, although they do not benefit, like the citizens of the other provinces, from the subsidies paid under the fiscal agreements, because the province of Quebec refused to sign them. It was expected that in the budget debate Liberals would try to refute all the arguments advanced in favour of the deduction of the tax and of the prior right of the province regarding that tax. They all took up the gratuitous assertions made by the Minister of Finance (Mr. Abbott) himself. Mr. Abbott's speech was met by thunderous applause from the Liberal members from Quebec, even when he stated that the prior right of the provinces in the field of direct taxation had no legal or concrete basis.

Before stating-yet without attempting to prove it-that the province had no prior right, neither de jure nor de facto, maybe the minister neglected to read the whole of the British North America Act and more particularly sections 91 and 92 which deal with this question. It is true that section 91, subsection 3, states that the federal government shall have the right to raise money by any mode or system of taxation. However, the beginning of that section, and all the government members failed so far to deal with this point, provides that:

It shall be lawful for the Queen, by and with the advice and consent of the Senate and House of Commons, to make laws for the peace, order and good government of Canada, in relation to all matters not coming within the classes of subjects by this Act assigned exclusively to the legislatures of the provinces.

And then, in section 92, it is expressly stated that:

In each province the legislature may exclusively make laws in relation to matters coming with the classes of subjects next hereinafter enumerated:

Nobody has attempted to equate "exclusive" with "parallel", as the government supporters who have spoken on this matter have tried to do.

The hon. minister not being in a position to rewrite the British North America Act seizes upon a motive which ill conceals the evident contradictions of his statement. He holds that to admit this principle would put the treasury in an intolerable position. In other words, he says: I cannot hand over his own garden hose to my neighbour; I need it to water my own garden. So he immediately claims that, as a charitable necessity, the poorer provinces must be helped, forgetting too that the 15 per cent we are claiming is less than what would be offered in a fiscal agreement, and that the other provinces

are left with the lion's share, the amounts received by them under these agreements being in no way affected.

The hon. minister made another declaration, with a more serious implication, when he said that the province of Quebec did not exercise its right to direct taxation before 1940. Does that mean that only those prerogatives granted under the British North America Act which are regularly resorted to are applicable and that the provisions of the federative act which have not yet been applied lapse and become inoperative? And yet the arguments used by the Minister of Finance lead to such a conclusion.

The hon. minister claims moreover that should he grant the 15 per cent deductibility of the Quebec tax, it would be tantamount to recognizing in principle the province's right to grab 30, 60, and even 100 per cent of his direct taxes. In the first place the request concerning deductibility covers but 15 per cent and nobody as yet has asked for 30, 60 or 100 per cent. In the opinion of the hon. minister, to grant the deductibility of 15 per cent would provide recognition of the prior right the provinces have in the direct taxation field.

How is it that 5 per cent, which is provided by a federal statute, does not constitute such recognition? Can the hon. minister tell us at what percentage provincial priority begins; is it 6 or 6if per cent, or what is it? It is of course obvious that the government is trying to hedge and veil its centralizing policy. As a matter of fact, the delirious enthusiasm of the socialists, which was only equalled by that of the Liberals at the time of Mr. Abbott's statement, is perfect proof that the centralizing attitude of the government in fiscal matters is at the same time a victory for the socialists, who want an almighty central government.

For the Liberal members from Quebec, this policy had a disadvantage, for it was disagreeable to almost the entire voting public of that province, who had and still have a word to say about their own autonomy. The hon. minister had thought of everything. He had a ready solution, which gave to his colleagues from Quebec the opportunity for numerous speeches on non-pertinent matters. He, indeed, invited the prime minister of Quebec to a conference with the federal government. But his invitation was accompanied by a straight rejection of all deductions.

That was a door, but one that was padlocked by the refusal of any concession. Such a contradictory offer has nothing in common

with preceding statements according to which "no pressure, direct or otherwise, would be applied to obtain the signature of a province". The same minister declared last year that one of the advantages of the fiscal agreements was that their success did not depend on the unanimous approval of the provinces. Twelve months later, he says that if one province refuses to participate, the treasury will be placed in an intolerable position. Completely unmindful of any contradiction, he is ready to see the taxpayers of Quebec carry the burden of an additional $25 million in taxes, as a punishment for their refusal to sign. He even says that the federal treasury could not tolerate our exercising our freedom of choice.

Everybody is talking of a federal-provincial conference. I am not against any sincere wish to understand each other, and every possible means to achieve such an end must be taken. Has any thought been given to the real alternative which faces a province which has refused to be a party to a fiscal agreement? There is only one: exercise her own right to tax. The province had to choose between $115 million under a fiscal set-up or $15 million, which is roughly the equivalent of 5 per cent. Such is the freedom of choice which is offered!

Much more, the charitable duty of helping the poorer provinces has been invoked, even though to do so a province would have to accept double taxation, although in fact, the said province never requested 100 per cent of its direct taxes, but only 15 per cent, which is less than was offered under the fiscal agreements.

Not one hon. member has taken upon himself to refute the arguments advanced in this house by several hon. members about the prior rights of the province to direct taxation. All have adopted the rather easy way of resorting to gratuitous assertions and advocating a federal-provincial conference, while stating that they would adopt an uncompromising attitude.

The Minister of Northern Affairs and National Resources (Mr. Lesage) summed up all those arguments, which he repeated after the Minister of Finance, by using a charming comparison, quoting as an example a child who refuses to obey his father's order to stop pulling the cat's tail. The child replies that it is the cat that is pulling. Using the same comparison, I must say that it applies even better to the other side of the argument. The child is well entitled to pull the tail of a cat that drinks his plate of milk. I easily see the federal government in the role of the father

The Budget-Mr. Girard who scolds his child because he is pulling the cat's tail, without stopping to ask himself to whom the plate of milk belongs.

The passing-of-the-buck policy will not succeed in diverting attention from the real problem which consists in determining to whom the plate of milk belongs or whether the province has a prior right in the field of direct taxation. It is therefore useless to find in that attitude and in the dollar and cents consideration of a centralizing government reasons for decentralization and then pretend to have fulfilled the intentions of the fathers of confederation, who cannot have set up a central state at the expense of the autonomy of the provinces which united to make up that state.

When one reads the numerous speeches made before confederation, one is astonished to see that the fathers of confederation were unanimous in their desire to protect the autonomy of the provinces. Since our contemporaries do not seem to agree on the constitution or on its interpretation, I took the liberty of making a pilgrimage, as I say, among the fathers of confederation, a few years before the pact was signed, to see what they really had in mind. When they drafted the British North America Act, they evidently intended to grant to each legislative body the necessary prerogatives to ensure the preservation of the two races and of the two cultures that were facing each other under the union government, following the uprisings of 1837.

One has but to read the speeches of those who drafted our constitution to become firmly convinced that the British North America Act is the outcome of the unanimous and clearly-stated desire to safeguard the autonomy of the two races which faced each other in Upper and Lower Canada, and to guarantee the rights and the prerogatives of the other provinces which might join confederation. May I be permitted for this purpose to quote some of the statements of the fathers of this confederation which it is our duty to preserve and respect. We will find in these statements the proof that confederation was a treaty between two races, a pact ratified in London, whereby each province agreed to join the other, not so as to disappear but in order to form a central government having jurisdiction over questions of general interest.

It never came to the mind of the fathers of confederation to form a centralizing government which would deprive the provinces of all their sources of revenue, limiting their role to that of a passive distributor of the

The Budget-Mr. Girard liberalities of a central government. If such had been their intentions, the provinces would never have put up with it.

Immediately following confederation, in a speech delivered on May 17, 1867, Sir George Etienne Cartier said, as reported on pages 523 and1 524 of the record of his speeches:

Confederation was a compromise and still retains that character to-day. There are many who went as far as to say that we did not quite know what to expect from Great Britain, that though a good constitution had been drafted at the Quebec conferences, the imperial authorities would change and alter It at will. You know what happened. We went to Britain and we were treated fairly, generously. All our representations were taken into account. These Canadians, said the British ministers, have come to see us with a ready made constitution, agreed upon after friendly agreement among themselves, the result of a mature discussion of their interests and needs. They are the best judges of what is good for them, let us not undo what they have done and let us approve their confederation.

And even before confederation, most of the great parliamentarians of the day were moved by the same spirit.

On February 6, 1865, the hon. the attorney general, Mr. Macdonald, in a speech which I quote from the debates preceding the adoption of the British North America Act, said:

The whole plan of confederation as worked out by the conference and submitted by the Canadian government for the perusal of the people and of the legislature is in the nature of a compromise. I do not hesitate to repeat it, there has been of necessity many mutual concessions.

Such a project may be considered as a treaty passed between the different provinces, and if any serious change is made thereto, every one of the colonies will feel itself absolved from the implied obligation to deal with it as a treaty and will be in a position to amend it ad libitum so as to suit its own views and interests; all our works will remain fruitless and we will have to start all over again and to work out a new treaty.

As evidenced by page 81 of the same volume, Sir Etienne Tache stated, on February 8, 1865:

I must declare that the scheme must be assented to or rejected as a whole because it is the result of deliberations not only of the Canadian government but of the other provinces as well.

And the Hon. Mr. Brown spoke along the same lines when he said:

Whether we ask for a parliamentary reform for Canada only or a union with the maritime provinces, the views of French-Canadians have to be ascertained as well as our own. This plan may be adopted, but no plan not assented to by both sections could be approved.

And the Hon. Sir Etienne Tache said on February 16, 1868-I am quoting from page 243:

Thus, honourable gentlemen, the proposal now before you is not so much the work of the Canadian government, but the collective effort of delegates from all provinces in the form of a treaty.

On the motion for second reading of the bill, in the House of Lords, as stated on page 27 of a book by the Rev. Father Ares S.J., entitled "Confederation: Law or Compact", even Lord Carnarvon said the following:

The Quebec resolutions are, with a few small amendments, the basis of a legislation that I now have the honour to introduce in parliament. These resolutions have been agreed to by all the British provinces of North America and the legislation based on these resolutions must be accepted as a treaty of union.

To those facts which establish that the treaty has really been a pact between the provinces can be added the opinions expressed on direct taxation even before confederation by the fathers of confederation. 1 shall quote the statement made on February 7, 1865, by the Hon. Mr. Galt, which can be found on page 68 of the report of the debates preceding the passing of the British North America Act:

The transfer to the general government of all of the main sources of revenue and-with a single exception, that being the field of direct taxation- of all the means which can be used to have the industry of the nation help meet the needs of government means-the fact will be evident to anyone-that part of the resources placed in such a way at the disposal of the general government will have to be used one way or the other to fill the gap which inevitably will be created between local revenue and local expenditures.

Mr. Speaker, that statement was made in 1865, even before the pact of confederation was signed. I have been unable to find any other statement which at that time could have been interpreted otherwise. It seemed evident that in the spirit of the fathers of confederation the right of direct taxation should be reserved solely for the provinces.

Mr. Paquette, who then represented Lower Canada, made a speech on March 8, 1865, reported at page 795 of the debates on the confederation of the British North American provinces. He was speaking precisely of direct taxes. After compiling various figures, he predicted a deficit of $485,078 for Lower Canada. He stated:

Mr. Speaker, how can we overcome that deficit unless we resort to direct taxation?

And he added:

The Minister of Finance states himself that the federal legislature will have the power of resorting to all taxation systems it may deem advisable to meet the expenses of its administration, while local legislatures will have to resort to direct taxation for the same purpose, if their revenues are not sufficient.

Mr. Speaker, surely one cannot find more frank statements. Well, those statements were made even before confederation, even before the present discussion was started, even before the government decided to nego-

tiate fiscal agreements, and we find that, in the minds of the fathers of confederation, the provinces had a prior right to direct taxation.

And yet, the Minister of Finance dares contend that the question of priority has no basis, neither de facto nor de jure. Section 91, in the light of section 92, either states a general rule, or constitutes a contradiction, which is inadmissible on the part of the fathers of confederation, particularly in view of the fact that the numerous debates on confederation dealt with the necessity of safeguarding the prerogatives of the provinces. Reading the speeches contained in that volume, one finds that, for all purposes, no speaker suggested that any of the provinces could keep its prior rights, its prerogatives. We cannot admit that they made a mistake, or intended that section 92 should be inconsistent with section 91.

We must therefore admit that section 92 sets forth exceptions to the general application of section 91; that it is a clarification of it. And section 92 does state that direct taxation is exclusively a provincial matter. The word exclusively is important. No mention has been made of it in the speeches of the government supporters since none of them could interpret it in a sense favourable to centralization.

After confederation political figures of every party continued to make statements to the same effect. Here is what I find in the debates of the House of Commons for February 18, 1925. The Right Hon. Ernest Lapointe is quoted as follows:

I may say that every time an important amendment was made it was first submitted to the provinces. I do not think there are many cases in which an amendment has been asked to the British North America Act without communicating with the provinces. If it was done it was only in cases where there could be no possible objection on the part of the provinces.

And the same gentleman also stated:

It is somewhat strange that one of the parties to the convention should study the methods of amending the pact without inviting the other parties interested to participate in the discussions.

Again the Right Hon. Mr. Lapointe stated, on February 18, 1925, once more according to Hansard, at page 300. The minister of justice mentions those words, after quoting the opinion of Mr. Churchill stating that the construction of "pact" given to the confederation by public men in Canada was also the one of the public men of the empire. Then he adds: "That was the interpretation

accepted by every interested person in

The Budget-Mr. Girard Canada, it is the opinion of the public men in the provinces."

Perhaps it will be alleged that precedents altered the constitution without consulting the provinces. I shall answer through Lord Sankey who stated in 1932, as found in Appeal Cases, 1932, pages 54 and 70:

Inasmuch as the act embodies a compromise under which the original provinces agreed to federate . . . the process of interpretation as the years go on ought not to be allowed to dim or to whittle down the provisions of the original contract upon which the federation was founded, nor is it legitimate that any judicial construction of the provisions of sections 91 and D2 should impose a new and different contract upon the federating bodies.

As may be seen, Mr. Speaker, there has been a continuity of views amongst all members of parliament of both parties which have held power since confederation; but all this has become part of the fiscal structure of confederation. Yet some have tried to consider the confederation act as a law, subject to modifications, which could be changed without consulting the provinces.

Well, I know, of course, that the partisans of centralization do not all support the principle of the central government's supreme authority, which enables it to amend the confederation act without the agreement of the provinces; but they approve of a federal law reducing to 5 per cent the rate of our direct income taxation in the provinces. They are blaming a province which did not ask Ottawa's permission to exercise its own right. They dare not deny a province the right to levy taxes, but they dictate a limit to this right. They admit provincial taxation, but as a supplementary one, that should raise no issues with the federal treasury.

Yet it was a distinguished Liberal, the Right Hon. Ernest Lapointe, who declared on February 1, 1937, as may be seen in the official report of the house-and I quote:

The dominion is the child of the provinces; it is not their father. The fact of saying that we have jurisdiction does not give it. The assumption of powers which we do not have does not give those powers to us.

Let those who have nothing but words of praise for the enticing offer of subsidies pretend now that provinces do not lose their autonomy! The other provinces are now asking the government to raise the subsidies they receive.

The hon. Minister of Finance, if he were premier of a province, would not accept such a situation. I base this opinion on nothing but his own statement to the house last year when he dealt with the question of fiscal

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The Budget-Mr. Girard agreements, as can be ascertained on page 2131 of Hansard for February 19, 1953. I quote:

This might never be possible. As a matter of fact, I am by no means sure if I were a provincial minister of finance that I would agree to such an arrangement. X am afraid I would find something repugnant in the idea that an outside body-a board, council or commission-would be investigating provincial affairs and determining the size of the fiscal needs for a particular period which amount in turn would be the measure of the federal grant.

Who can say that within 25 years we shall not have a socialistic government, a government that will decide the fate of provincial autonomy which is supposed to be guaranteed by a pact that can be broken by the more powerful? No Liberal member seems to have seen that; they have acted against the spirit and the letter of confederation and contrary to all the statements and policies of their own party. Instead they saw in Mr. Duplessis, who resorted to the Quebec provincial tax, an opponent whom they wished to corner, even at the cost of penalizing a province at the rate of $25 million per year, thus placing its citizens in an unfair situation and in a position of economic inferiority as far as the other provinces are concerned.

If the Liberal party is so sure that its policy is the right one, why does it fear so much a vote on the matter? Why does it try to transform it into a mere question of dollars and cents, thus shifting the true meaning of the issue? Why have they chosen to act in a way that is evidently contrary to the interest of their electors, preferring to submit to party discipline? Why did the socialists applaud with so much energy? Why did the Quebec press condemn them unanimously?

They have also tried to cast a smokescreen on the matter by speaking of national unity, Quebec isolationism, ultra-nationalist separatism and so forth and so forth.

I am asking you, Mr. Speaker, who is working against national unity? Is it those who urge compliance with the Canadian constitution or those who try to amend it to suit their centralizing policy? The province of Quebec has always found a safeguard to its autonomy within the very framework of confederation and she will never give in to the tantalizing appeal of fiscal agreements. It safeguards national unity within the framework of the act of confederation, which is the constitution of our country.

We shall not cease to labour the point, Mr. Speaker, until we obtain fair treatment for the province of Quebec, even though the only ones to rise to its defence may be the independent members, as well as those too few Conservative members and the hon. member for Quebec-Montmorency (Mr. LaCroix).

In concluding, Mr. Speaker, I would like to digress a moment to ask the Minister of Labour (Mr. Gregg) whether the government will soon grant supplementary unemployment insurance benefits.

There are in my constituency nearly 1,000 families who have not received any income since April 15. It is perhaps true that the present situation is merely temporary, but I nonetheless support the request of the labouring people and would ask the minister to keep on paying these benefits for a few weeks at least to families without any means of support.

(Text):

Mr. W. G. Blair (Lanark):

Mr. Speaker, the recent budget brought down by the Minister of Finance (Mr. Abbott) some three weeks ago has given considerable time for analysis. One disappointing feature was the fact that there was no tendency revealed to offer assistance to depressed areas.

In former debates in this house I have placed before the house the position of industries in the Ottawa valley and the effect of unemployment, particularly in my own constituency. The Ottawa valley has been known for years as the centre of the textile industry and in that area there is probably the largest concentration of this industry in all Canada. Many mills are closed down through lack of orders, and in the area of Carleton Place and Almonte there are 700 persons unemployed. The greater proportion of these are textile workers. In the month of March last there was paid out in unemployment insurance a total of $40,000. Owing to the fact that steady jobs were not obtainable unemployment insurance has been of marked assistance during a most difficult period.

As opposed to the textile industry it has been argued that the industry has overexpanded; it is not efficient; and has not kept up to date in manufacturing methods. But one very important fact has been entirely ignored, and that is the defence aspect. On former occasions I have placed the position of the Canadian textile industry before this house, but in all fairness to the industry I feel an answer should be given to the arguments which have been presented against it.

Let us first take the question of overexpansion. The industry now supplies less per Canadian than it did before the war, but the per capita share of the domestic market, which has supplied the imports, has almost doubled. There were five per cent more looms and seven per cent more spindles in factories in Canada in 1951 than in 1939. However, it

is to be noted that our population during that period has increased by 24 per cent. It is not true that textile mills have otherwise expanded. It is quite easy to understand the difference between labour costs in Britain and Canada, but it does not fully explain the increase in the United States imports. It is difficult to understand why such an argument can be used in reference to an industry which never at any time had more than approximately 70 per cent of the domestic market.

I would point out that in the period from 1935 to 1939 just prior to the last war Canadian mills supplied 73 per cent of all fabrics which were used on the domestic market. This has now dwindled down to 51 per cent. The domestic market for textile goods is greater than it was in 1939, yet the Canadian industry has a smaller percentage of domestic sales than it ever secured prior to 1939. If the industry over the last three years had been able to retain the former percentage of its domestic sales it would still be in a sound position and could recover its costs and make a profit.

In regard to the charges of inefficiency, I would again point out that this industry since the end of world war II has spent something like $450 million in modern equipment with the object of bringing production in the industry to a high point of efficiency.

It is also charged that the industry has not kept up to date in the use of various fibres. Fabric producers inform me that they are prepared to make goods of any form of fibre, and will produce fabrics of rayon, nylon, or wool, either alone or in mixtures of two or more fabrics, if there is a demand by the Canadian public for such goods.

In spite of the fact that all efforts have been made to produce an effective industry, it is becoming increasingly apparent that our industrialists find it impossible to compete with goods made in overseas countries because our wages are two or three times higher than their wages. In so far as competition from the United States is concerned, distress prices can be established giving a fictitious price, but which have the object and purpose of undermining our Canadian customs structure. It is nonsense to believe that under present conditions Canadian industry can meet price competitions from abroad. No amount of efficiency in industry can cure such a situation. It is only natural that in countries of comparatively low wages goods can be processed and placed on our market to sell more cheaply than our own domestic production.

In so far as wages are concerned, to meet foreign competition would mean a serious reduction in our own wages. Reductions in

The Budget-Mr. Blair wages would mean that the Canadian public would not be able to purchase in the amounts to which they have been accustomed. It is due to our buying power that our standard of living has progressed to the point where it now stands. Unemployed workers are unemployed customers, and unemployed customers will mean that more goods will be left unbought, resulting in piled up surpluses or, on the other hand, more unemployment.

On March 4 I asked the Minister of Labour (Mr. Gregg) to state the policy, if any, the department has considered for the re-employment of textile workers in areas of closed factories throughout Canada. In reply the minister said, and I quote:

When any worker applies to his nearest employment service office for employment, a full record is taken of his work experience, and this information is available in matching men with jobs not only in the immediate locality, but in Canada as a whole. This means that when employment opportunities develop in other industries and those applying for work have suitable qualification, the applicants are referred to them. This applies to alternative employment opportunities which develop in their own immediate areas, or to those which become available in other areas, if suitable workers are not available locally.

In view of the minister's answer regarding unemployment, it is interesting to study the results of a survey conducted in a depressed textile area in New England. This research was conducted by the bureau of business and economic research of Northeastern University of Boston. The object of the survey made a year ago was to find out the position of displaced textile workers. Workers over 45 years of age were having a particularly hard time in finding new jobs. Eighty per cent were drawing unemployment insurance. The majority of the re-employed were earning less than before, and many had been downgraded from skilled to unskilled qualification with a loss of seniority, and very little chance for advancement. Diversification had helped, but new industries are filling jobs with newcomers in the labour market instead of displaced textile workers. Of the first some 156 workers checked, only 5 per cent found jobs in new industries.

In one area in New Hampshire, a town with one mill and 1,500 population, the closing of the mill made idle 200 workers. Some workers were re-employed in a leather products firm which moved into the mill building. Two years after the shut-down a third of the 200 laid off from the woollen mill were still out of work. For the other two-thirds who got jobs, the average period of employment was about five months. Thirty per cent got textile jobs elsewhere, some as far as 64 miles from home; 50 per cent took jobs in a leather products company with downgrading and less pay, and 20 per cent got a variety of other jobs.

The Budget-Mr. Blair The problem of unemployment in the textile industry is serious, and the continuing maintenance of the textile industry under adverse conditions is extremely difficult.

If Canadian textile manufacturers are to maintain their position in the domestic market, there should be full realization of their attempt to do so in competition with other countries with lower wage standards and cheaper production costs. The present adverse conditions in which this industry finds itself cannot be entirely overcome by improving the efficiency of production. As I pointed out, they have spent $450 million to improve efficiency and to lower costs. It is becoming apparent that if these mills could retain their pre-war share of the domestic market, it would lessen their difficulties because production and volume are necessary to make business a profitable operation.

I again bring the position of this important industry to the attention of the government. I am fully aware of the desirability of exploring all possibilities and channels of international trade. When I spoke on this question earlier in the session, as reported at page 402 of Hansard, I stated:

I do not believe it is advantageous to the economy of this nation nor do I advocate a high protective tariff policy for this or any other industry, because such a device can only provide stability for an uneconomic unit at unwarranted high cost to the Canadian consumer of the products which the industry produces.

At that time I suggested that a study be made of the duty on all fabrics coming into Canada. The textile industry is not the only industry which today finds itself in difficulties with regard to foreign imports. A careful analysis should be made of Canadian industry, and this analysis should take into account the consumption level of the domestic market, price structures, production capacity and, most important of all, the element of defence.

There are many manufacturers in Canada who do not worry about foreign competition, but they are worried about foreign industries using the Canadian market as a sales outlet for distress goods. There is little protection against foreign goods offered in Canada below the competitive price here or in the country of their origin. Countries exporting to Canada do this to avoid disturbing their own home market. Textiles, stoves and refrigerators have been principally affected.

As far as tariffs are concerned, they should not be so low as to cause failures of efficiently operated Canadian businesses, nor so high that inefficient producers could still remain in business. If such an approach could be made to the problem of Canadian manufacturers, then it could be reasoned what industries should be protected, the amount of their

rMr. Blair.]

protection, and the position of other industries which are not entitled to any protection at all.

I suggest, Mr. Speaker, that a board consisting of trade officials, and research and efficiency experts would be an advantage. Such a board could make inquiry into the causes of failure, or of inability to meet competition of certain industries, and make recommendations to increase efficiency or suggest certain changes in trade agreements which would enable such industries to manufacture in a competitive market.

I now approach the problem of another type of industry which has been manufacturing in Canada for many years. This industry was developed in early years by Canadian manufacturers and, according to the requirements of that time, was confined principally to the making of stoves. Since that time the industry has kept up to date in all modern developments in heating and has expanded in various factories throughout Canada. Employment dropped by 26 per cent and business prices are down 17 per cent since last year. Canadian manufacturers in this line

and I include refrigerators-are supplying less than half the domestic market in Canada. The position of our Canadian dollar has had its effect because it now commands up to 3 per cent premium. When United States money had a 10 per cent premium it acted as a protection for the Canadian manufacturer.

In the year 1952 the United States exported 2-7 per cent of the total production of gas ranges in that country. Production is much greater in the United States than it is in Canada, for in the same year manufacturers there produced 38 units for every one sold by Canadian manufacturers in Canada. Another 2 per cent of the United States production would destroy any further business of the Canadian manufacturer in this line. At present, merchandise of this type is coming into Canada at prices which are very low even in the United States. Apparently it is the practice for United States manufacturers to sell several carloads to a distributor in that country at a low price. This low price is the one which is used for duty purposes in Canada for single carloads or when selling to large retailers or distributors in Canada.

Canadian manufacturers are looking for a fair market value to be used for duty purposes. If that could be obtained, Canadian manufacturers could carry on and would not find the competition too severe from merchandise which is coming in at prices which are very low even in the United States. The valuation for duty is the crux of the matter. In order to meet competition, Canadian manufacturers would favour a method

in which the value for duty would be the fair market value of similar goods sold for home consumption under fully competitive conditions averaged over a six-months' period in the country of origin.

Gas ranges averages show that imports received over 80 per cent of the market, and the same percentage would hold good for oil space heaters. The Canadian manufacturer is at another disadvantage in that manufacturers in the United States can spread their die and tool costs over large quantities of a model on account of the large market. In Canada where the market is about a tenth as large as that in the United States, the die and tool costs are high. This situation is shown in the fact that in 1952 2,085,385 gas ranges were sold on the United States market while 55,407 were sold on the Canadian market. Therefore it can be appreciated that unit costs of Canadian manufacturers would be much higher. It only requires a small percentage of United States production of gas ranges sold at low prices in the Canadian market to flood our market and embarrass our Canadian manufacturers.

It is to be noted that due to the building of natural gas pipe lines across Canada natural gas will be available to Canadians at low prices. Unless some relief is given to Canadian manufacturers in this line, very little of the market for gas ranges will be available. Some change will have to be made in customs regulations to place them in a competitive position. At present the United States stove manufacturer is able to sell at prices in Canada that have made heavy inroads in the Canadian market. As in the case of textiles, we should again consider the element of defence. Plants of the type I have mentioned engaged in the manufacture of stoves, etc., are well equipped for the fabrication of steel. If it were necessary these same plants could convert rapidly to the production of defence material.

There would seem to be no plan to deal with unemployment. The Minister of Trade and Commerce (Mr. Howe) told a delegation that if they lived in a depressed area they should move to another area where they could get work. The Minister of Labour stated in answer to a question I asked regarding unemployed textile workers that the federal government was willing to co-operate with provincial governments regarding the location of new industries. The present unemployment stems from federal government policies. In the Ottawa valley, where there has been a concentration of textile factories, there should be an all-out effort to place new industries. Conditions are ideal for

The Budget-Mr. Blair manufacturing in this area, and this should be considered in conjunction with a policy of decentralization.

So far as meeting competition is concerned, taxes add to the cost of production and our industry is again placed at an unfair disadvantage. Not only the industry suffers but unemployment is created. High corporation taxes will obstruct industrial growth and industry will not find it profitable to take risks. Excessive taxes do not permit sufficient earnings for industries to expand. The buying power of the nation shrinks resulting in unemployment and the further curtailing of industrial expansion. Increased consumer buying power would stimulate industrial expansion and create more jobs which would be available to those who are unemployed at the present time. Steps taken towards lowering the taxation against production costs in industry would help our industries meet competition not only in the domestic field but also in the export market.

It is to be regretted that there is no mention of economy in the budget. Every year the government finds that the Canadian taxpayer must produce more money. In 1952-53they required $4-6 billion. In 1953-54

they required $4-9 billion and again there was an upward move to $5 billion in 1954-55. I point this out in view of the fact that defence expenditures will be down $126 million. Last summer we were given to understand that taxes would be reduced in accordance with defence expenditures, but instead of being reduced $126 million they are actually down about a third of that, or $40 million. Taxes can defeat their own ends, and if they are levied at too high a rate they can decrease production and expansion in industry and in the end produce less revenue than somewhat lower taxes. Certainly the corporation tax at 49 per cent leaves little room either for industrial expansion or to meet foreign competition.

I am concerned about the surplus of farm products in the United States. The grand total is over $2-7 billion in value. Included in the list are dairy surpluses, $382 million; vegetable oils, $235 million; wool, $62 million; and grains, $1-91 billion. Under their present program part of the surplus could be used as a strategic reserve. The dairy surplus is held in the form of butter, cheese and dried milk, but even if they retain part of the surplus as a strategic reserve the rest will be sacrificed, and there are indications that it will be disposed of at a loss.

It has already been proposed to get rid of some of this surplus by greater sales to foreign countries at market prices which are

4178 HOUSE OF

The Budget-Mr. Knight below United States prices. In so far as the Canadian dairy farmer is concerned, there is no likelihood nor possibility of the export of their products to the United States. This again brings up the question of the British market. The Canadian dairy farmer is already under severe competition from edible oils. The only market of which the dairy farmer is assured is the domestic market, and even this is under competition. Lack of suitable markets will mean uncertainty in the industry which will be reflected in lack of buying power for the products of Canadian industry.

At six o'clock the house took recess.

Mr. R. R. Knight (Saskatoon):

It is always an interesting event in this House of Commons, Mr. Speaker, when the Minister of Finance (Mr. Abbott) brings down his budget. I have often said, and I have often written, that I feel it is the night of nights in the House of Commons when the people of Ottawa show some interest in the proceedings of this house. I suppose these people are, to some extent at least, representative of the people of Canada. On budget night, therefore, they usually crowd the galleries and even stand up, something that I never quite understood because I know they could get the main points of the budget just as easily and as quickly if they stayed at home. However, for some reason they come.

I believe it was noticeable this year that there were very few people here on budget night. I take it they expected practically nothing, and if I may say so, that was just about what they got. It was a very tame budget. There was nothing inspirational about it, and I imagine that is one of the reasons we have not had many inspired speeches. The minister will forgive me-

Mr. Abbott:

Are we going to get one now?