Mr. Sinclair:

They can prepare works, but it needs money to start these things and provide jobs. If you had told them last September and had given the money last September they could have had these projects under way now.

Let us talk about this short term situation. We all know that the Prime Minister is a very careful student. He is not a man who makes off the cuff statements like the Minister of Finance. He does not do his own calculations, I hope. The Prime Minister would not go before the 10 premiers without having very careful assessments of the economic and employment situations before assuring the premiers that this was just a short term recession and would be over in the spring. Therefore I should like to ask the Prime Minister whether, before making this reassuring statement to the premiers, he had studied the quarterly confidential reports which are made by the Department of Trade and Commerce to the Minister of Trade and Commerce.

Mr. Speaker:

Order. It seems to me that the hon. member in going into the unemployment situation is straying from the principle involved in the bill.

Mr. Sinclair:

Mr. Speaker, the reason I tied it in so directly is in the light of the statement the Prime Minister made to the premiers and the fact that the Minister of

Finance in opening this discussion said that one of the reasons for these extra payments at this time was to assist in relieving the current unemployment situation.

Mr. Speaker:

I follow the hon. member that far, but if he goes on to deal with the unemployment problem then I think he is going beyond the scope of the bill.

Mr. Sinclair:

I certainly bow to your direction in that respect. I assure you I was not going to go into actual details with respect to employment. In view of the fact that we are asked to support the bill, one of the reasons for which is to provide money to relieve unemployment, what I was asking for was a reconciliation between the statement made by the Prime Minister to the premiers at the dominion-provincial conference which occasioned this bill and the statement made to the House of Commons by the Minister of Finance at the opening of the debate, at the resolution stage. If I wander into the actual field of unemployment and what should be done I hope, sir, you will check me.

I think the members of the house in discussing the bill on this basis would also like to have the benefit of the confidential reports, which the Prime Minister must have had before he addressed the premiers at the dominion-provincial conference, reports from both the Department of Finance and the Department of Trade and Commerce. Normally, of course, these reports made by a departmental head, a civil servant, to a minister have been regarded as confidential and secret, but the Prime Minister has broken new trails this session by tabling one of them.

In tabling that confidential document he justified himself this morning by saying he had done so because the opposition had asked for it. I am a member of the opposition, and I should like to ask for these confidential reports for the three quarters before the Prime Minister made his speech, made by the deputy minister of trade and commerce and the deputy minister of finance. They are not hidden but they are confidential; and since they are confidential they are not lying around on a desk for a charwoman to pick up. But I can tell you where you can find them. You will find them where they should be, in the files of the deputy minister of finance and the deputy minister of trade and commerce.

I come back to the point I was raising about the need for the bill. If, as the Prime Minister assured the premiers, all is well and this is just a short term unemployment situation we are experiencing this winter, why does the Minister of Finance put forward in justification of the measure the fact

Dominion-Provincial Relations that the extra money which is going to be paid will help the provinces this winter with their very serious unemployment problem? I raise this point and make this request. It would be very helpful in our discussion of the bill if we could have these confidential reports from the two deputy ministers on which the Prime Minister must have based his reassuring remarks to the premiers. If the Prime Minister wants to rip off the two covers of these reports, and table them without classification I think we will not object, because that principle has been established by him.

I should like to close by stating by way of summary that this bill changes not one iota the principle of the dominion-provincial fiscal arrangements which were passed by this house this spring, as sponsored by the former minister of finance, Mr. Walter Harris. There has been one minor amendment to increase one tax division from 10 per cent to 13 per cent. So far as British Columbia is concerned I think the people will want a much better explanation than they have received so far as to why they were led up the garden path to believe they were getting $5.5 million instead of getting just $2.8 million. They will want an explanation, too, as to why the per capita extra payments made to our province are just half those made to the provinces of Ontario and Quebec, which are the only two provinces that could be fairly compared with British Columbia.

I think, however, the great interest of the nation will be in the payments made to Ontario. This province got the most, and it continues to get the most.

Hear, hear.

Mr. Sinclair:

A Tory member says, "Hear, hear". This indicates the way they value the equalization payments and the special grants to the Atlantic provinces which are, of course, in direct contradiction to this position that Ontario wants everything for itself.

What I want to talk about is the fact that last spring when Premier Frost was here he said he had to have at least $100 million to discharge his constitutional responsibilities in his province. Then last June on the platform he again announced to an audience in Toronto-I shall quote from the red book. No; hon. members opposite now know the Prime Minister's promises as well as we do, so quotation is unnecessary. Premier Frost pointed and said, "This man Diefen-baker will get us an extra $100 million'*. Well, Premier Frost did not get $100 million, but he got $22 million. He is happy with it, so it was only a bargaining position he was establishing last spring when he asked the

Dominion-Provincial Relations Liberal government for $100 million. He would have been happy if he had received $22 million. This was Premier Frost's reaction to this proposal.

Even more interesting, of course, is the way this shows again how the Tories have failed to keep their election promises. Instead of the $100 million for their favourite province they were able to settle for $22 million, or one fifth that amount. Then there is the promise we had in advance of the baby budget, from the Prime Minister and the Minister of Finance, that they would give this nation $500 million in tax cuts this year. In the end they provided only $26 million this year, or one twentieth of what they had promised. So in the end we have a watered down settlement of Tory promises from last June; the promise of $100 million for Ontario and the settlement for $22 million; the promise of tax cuts of $500 million and the settlement for $26 million.

Mr. Stanley Knowles (Winnipeg North Centre):

Mr. Speaker, as we indicated at the resolution stage it is our intention to vote for this measure. In doing so we will be taking a position, unlike that of the Conservative members of this house, consistent with the position we took in 1956. We voted for this measure then and they voted against it. As a matter of fact they did so on at least two occasions. We note now that they are proposing slight amendments to the measure without changing its basic principle. We are voting for this measure not only because that is a stand consistent with the stand we took in 1956, but because we believe that the provinces need and are entitled to such additional revenues as are provided in this legislation.

We are voting for it as well because at a time when special recognition has been given to the particular needs of the Atlantic provinces we feel, as we have already made clear, that the basis for special aid to any of the provinces of this country should be laid down in terms of a formula that would be applicable to any province. We hope even yet that will be done, so far as the Federal-Provincial Tax-Sharing Arrangements Act is concerned.

We are for this measure, not only for the reasons I have given but because we believe that Canadian unity should be something more than words, something more than a pious slogan. We believe that a real and determined effort should be made to raise the living standards, to raise the standards of services for our Canadian people to the highest possible levels in all parts of this country.

One of the economic facts with which Canada has had to contend for a number of

years is the fact that because the head offices of some of the powerful corporations of this country are located in the central provinces, the incidence of taxation does not automatically result in the benefit of that taxation accruing to the people as a whole. It is because of that economic fact that it has been necessary to go in for tax rental agreements, tax-sharing agreements, and the various changes that have been made in these proposals.

We feel that still further efforts along this line should be made. We feel that much more consideration should be given to the fiscal needs of the various areas of the country, and we suggest to both of the old parties that we have not yet reached the end of the road in trying to achieve a satisfactory solution of the problem of federal-provincial fiscal arrangements.

Before I go on to the few words I want to say in pursuance of that position, may I say that though we are voting for this measure for the reasons I have indicated, we still regret the manner in which it has been brought forward. As my hon. friends of the Conservative party said so well when they were in opposition, this is a field, the field of federal-provincial arrangements, where the utmost in co-operation, consultation and mutual understanding is required. Yet in this instance, despite the promises of the Prime Minister, despite the promise in November that there would be a resumption of that conference in January, the government has gone ahead and taken this unilateral action. The only way some of the premiers learned about it in the first instance was by reading about it in the newspapers. In due course all of them, it appears, received their telegrams. There has been no attempt at consultation, no attempt to work out even this interim arrangement on the basis of consultation and mutual understanding.

We are not going to take further time to berate the Minister of Finance for the arithmetical errors he has made and the errors in understanding the legislation for which he is responsible. But we do suggest that when a minister of the crown has made a serious error or series of errors he should draw those errors to the attention of the house without waiting until someone else has checked him up and then making his explanations.

I suggest that in our view this whole question of federal-provincial fiscal relations calls for a great deal more than has yet come within the compass of this legislation or even the negotiations that have been held in connection with this subject. The Prime Minister himself, at the conference in

November and in the statements he has made in the house, has recognized that federal-provincial fiscal arrangements involve more than just a sharing of taxes. He has admitted that the question of unemployment has to come into the picture. Indeed, one of the promises he made to the federal-provincial fiscal conference was that the federal government would do something further with regard to unemployment assistance, namely remove the threshold in the Unemployment Assistance Act.

It is not now in order for us to rehash the debate that took place on that legislation, but perhaps I might point out that we have still not seen an implementation of the principle laid down many years ago that the federal government should be responsible 100 per cent for employable unemployed. It is still accepting that responsibility only to the extent of 50 per cent, and I call the Prime Minister as my witness that unemployment is a matter germane to the question of federal-provincial fiscal arrangements.

If the federal government and the provinces are going to address themselves to the economic problems of this country, one of those problems is that of employment or unemployment, and we urge upon both levels of government a much more serious approach to this problem than has yet been indicated. We suggest to the Minister of Finance and to the government that there is really a tremendous opportunity in this whole field of employment to come to grips with the fiscal problem.

It has been estimated that for each person in the labour force the contribution to the gross national product is of the order of $5,225 per year. I therefore submit that one of the ways in which to increase tax revenue for the federal and provincial governments is to tackle the problem of unemployment. If the quarter million, half million or three quarters of a million of our people who are now unemployed could be put into employment and one could multiply that number by the increase in the gross national product of something over $5,000 per employed person, one would realize that there is a solution to our governmental revenue problems which would be much more effective than the mere sharing of an inadequate tax-inadequate because our gross national product is not as high as it could be under present conditions.

The Prime Minister also admitted at the federal-provincial conference that germane to the whole question of federal-provincial arrangements is the question of what federal-provincial governments do about health. This 96698-251

Dominion-Provincial Relations was admitted when the Prime Minister asserted that there was general agreement at the conference to do something about the financing of the hospital insurance plan provided for in the statute passed in 1957. There seems to be disagreement between the Prime Minister and the premier of Manitoba as to what aspect of hospital insurance financing was agreed upon. The Prime Minister says it was as to the effective date of the act, while the premier of Manitoba says it was with reference to the inclusion of mental and tubercular cases within the provisions of the legislation.

Mr. Martin (Essex East):

There is no doubt about that; that is indicated by a reading of the communique.

Mr. Knowles (Winnipeg North Centre):

The

interpretation placed upon the agreed communique by the premier of Manitoba would indicate that that is correct.

Mr. Martin (Essex East):

Hear, hear.

Mr. Knowles (Winnipeg North Centre):

The

point I am making now is that it has been admitted by the Prime Minister himself that in the context of the federal-provincial fiscal arrangements, when you are talking about what the federal and provincial governments can do for the economy and well-being of the country one of the matters to be discussed is the health of our people. I call upon the federal government, if it is sincere in its assertion that these matters of federal-provincial fiscal arrangements are extremely important, to pursue that important matter not only by having discussions as to the sharing of the tax dollar, but by having further discussions as to the ways and means to greatly improve the contribution made from the treasuries of this country to protect the health of our people. In other words, let us not have any further delay in getting the Hospital Insurance and Diagnostic Services Act into operation; let us not have any further delay in including all types of illnesses within the provisions of that act, and let us move along further to a national health insurance program.

I insist, Mr. Speaker, that in doing something in this field the government would be pursuing more effectively than has yet been the case the assertion that federal-provincial fiscal arrangements are of great importance to this country. They are of great importance, but they are of importance not just in a vacuum, and not just in terms of dollars and cents; they are of importance in relation to some of the specific issues which are of concern to our people.

I suggest to the government across the way that there are other fields where there

3964 HOUSE OF

Dominion-Provincial Relations should be federal-provincial co-operation. We have raised in this house on a number of occasions-and again I must refer to this only in passing, because there has already been a debate on this matter during this session-the whole question of education, which is more and more being recognized as an important matter to which Canada must pay increased attention. If we are going to do that, Mr. Speaker, it calls for more than fine words and fine speeches; it calls for a serious endeavour to grapple with the financial problems related to education.

I submit that this matter calls for federal grants in aid of education without interference with the jurisdiction of the provinces in this important field. May I point out that this is one aspect of federal-provincial fiscal arrangements which means something specific and which has not been touched upon in the bill, good as it is, which deals only with the sharing of the tax pie we now have and which changes that sharing to only a very slight extent.

The government across the way has had a good deal to say about its national development program. We have urged the fullest possible development of the resources of this country, and that position is taken by all political parties and by all those who are interested in public affairs. In the same vein that we suggest that it would improve our governmental revenue picture to have the unemployed put to work, so we say this position would be greatly improved if real steps were taken to develop the economy of this country in all its various regions.

All levels of government are having difficulty in getting by on the available revenues. You do not really solve these problems by changing the angle of division within the pie. You do not solve them nearly as well in that way as by dealing with them as they ought to be dealt with, namely by increasing the size of the pie, increasing the wealth that is produced in this country. We suggest that as part of the active pursuit of effective federal-provincial fiscal arrangements there should be greater concentration as to ways and means of co-operating in generally developing the resources and the economy of this country.

I could go on to talk about the need for a second trans-Canada highway and assistance to other highways and roads, or about the need for assistance in the building of bridges and other public works. I could refer to the speech which my hon. friend from Kootenay West has made so well in this house on the need for a national conservation program. I could refer to the speech which my good friend from Burnaby-Coquitlam

made the other day about the problems of the municipalities. These questions are all wrapped up in this basic problem of financing the needs of this country, and that is what is before us in this bill which is before parliament today.

Our complaint is that the government seems to see it only in terms of a slight alteration in the division of the revenues which are now available. Basically what we are concerned with is the economy of the nation as a whole. What we are concerned about is organizing that economy in terms of national unity, so that all our people across Canada will have a chance of securing the highest possible standards of living and the highest possible per capita income.

The Minister of Finance made a mistake the other day when he referred to per capita income. I hope he will not take that out of Hansard. I hope that having made that mistake he will realize that it is one of the tasks of government to raise the per capita income of our people, and particularly to raise it in areas where it is lower than in others. That is what we are concerned about, not just the division of the pie among the various spending agencies but the raising of our production levels, our standard of living and our standard of services.

That, I say, should be the aim of this legislation. The legislation before us has been brought about in a way we do not find satisfactory. It has been brought about on a unilateral basis. This business of doing it by telegram, and blaming an employee of the Canadian National Telegraphs because two of the premiers did not get their telegrams when in reality it was the fault of the government for relying on this method of so-called consultation, is not good enough as far as we are concerned.

The extra money to be received by the provinces will be welcomed by them, and we are voting for this measure; but we hope we will yet have in this country a government which sets its sights much higher in terms of what can be done to raise our standard of living and our standard of services than either the government which is now in power or the government which held office for too many years.

Hon. members of the Liberal party have enjoyed in the last day or two pointing out that the Conservatives are buying off Premier Frost at 20 cents on the dollar. I do not blame them for making a debating point of that, but I think I could make one too. When I hear this 20 cents on the dollar mentioned and the suggestion that the government is giving only one-fifth of what it promised to the premier of Ontario, I am

Dominion-Provincial Relations

reminded of another occasion when it was 20 cents on the dollar. In 1945 the Liberal government, as set out in the green book proposals-and those books are available, too, with the covers on them-

Mr. Pickersgill:

They were always public.

Mr. Knowles (Winnipeg North Centre):

-

offered a health program to which the federal government was prepared to contribute $150 million a year. That was in 1945. It was three years before Mr. King even began to implement that promise, and what did he come down with? Thirty million dollars a year, or one-fifth of what was promised; twenty cents on the dollar. As a matter of fact right until the present time, when we are hoping to get the Hospital Insurance and Diagnostic Services Act into operation and when there have been some increases in the hospital construction grant, the amount being paid by the federal government in relation to the promise made in 1945 is still of the order of 20 cents on the dollar. Apparently hon. members across the way learned this technique of getting by with their promises at the rate of one-fifth from their predecessors in office.

We think that the people of Canada still feel this is not good enough. Promises which are made should be kept. We think the people of Canada still want full implementation of an adequate health program and an approach to federal-provincial fiscal arrangements which envisages not just a different sharing of the taxes received but a raising of the per capita income of our people, the raising of the standard of services provided for our people, and the raising of the standard of living generally for all our people in a united Canada.

Mr. Speaker, it is not our intention in this group to unduly delay the passage of this measure. I believe it is recognized that we in this group believe in stating our position clearly and positively, but that we do not talk for the sake of talking.

My leader briefly but very adequately outlined our position with respect to this particular bill when he welcomed the proposal but voiced some misgivings with respect to the method employed in its introduction, and also the possible danger that this gesture on the part of the dominion government might be used as an excuse for not calling any further dominion-provincial conferences.

It was a source of disappointment, regardless of what reasons may have been given for the change, to find that the apportionment for British Columbia has been reduced from $5,500,000 to $2,800,000. Regardless of what 96698-2oli

reasons may have been given, it was a letdown to be told first of all that it was $5,500,000 and then to find that it had been reduced by so large an extent. The provinces are facing increasing difficulties in providing facilities and services needed by their people.

The previous speaker has outlined some of the responsibilities which devolve upon the provincial administration with regard to education, health, and other services, and we are all aware of the tremendous increase which has taken place in the cost of providing those services for the people. The various provincial and municipal authorities across the country are finding it almost impossible to keep up with the demand occasioned by increasing population, especially when the cost of providing such services has increased to so great an extent.

However, there is another factor which we must recognize, and it is this. During the past two years or so we have been suffering from the effects of a fiscal policy which was introduced by the late administration and which is commonly referred to as the tight money policy. The dangers of the policy had been outlined and stressed on many occasions, but seemingly unmindful and heedless of these warnings the late administration continued that policy, with the result that governments at the municipal and provincial levels encountered almost insuperable obstacles in the discharge of their responsibilities.

The present Progressive Conservative government takes credit to a certain extent for an easing of those restrictions, but I would suggest that even up to the present time the easing of restrictions has not resulted in any considerable assistance in these particular fields, and until there does come a time when we get back to normal and municipal and provincial governments can secure adequate finances at reasonable rates and in the amounts that are required, we are still going to be up against a most difficult problem. I would point out with regard to the $2.8 million for the province of British Columbia that it is extremely meagre compensation for the loss occasioned by the tight money policy that has been in force for some time.

The matter of dominion-provincial fiscal arrangements is becoming one of urgent importance. As I have said, through the unjust and unsatisfactory division of the tax dollar the provinces and municipalities are unable to fulfil their constitutional responsibilities. It was pointed out yesterday that approximately 74 cents out of every tax dollar accrues to the federal coffers, and I would suggest in view of the responsibilities that

Dominion-Provincial Relations are faced by the provincial and municipal governments that this is a highly unrealistic division.

Speaking at the time when the dominion-provincial tax-sharing agreements were being discussed, about two years ago, I suggested to the then minister of finance, Mr. Harris, that if he would face the issue squarely and bring in fiscal arrangements that were more in keeping with reality the federal government would not be confronted with so many demands upon the federal treasury, and I believe that is still the case.

I would now like to refer to a bulletin called Economic Intelligence, issue of December, 1957, published by the economic research department of the chamber of commerce of the United States, which carries an article referring to the governors' conference in Williamsburg in 1957, at which President Eisenhower called for a general re-examination of the changing governmental structure. He expressed concern over the shift of power from local and state governments to the federal government, and suggested that a task force be established to do the following things:

(1) Consider existing federal programs which should and could he returned to state control.

(2) Recommend appropriate specific tax sources which could be currently returned to the states.

(3) Identify future problems that may call for government attention and to recommend the appropriate governmental level at which such responsibilities should be assumed.

I wish to read a brief quotation from the speech Mr. Eisenhower made in connection with these suggestions, as recorded in the Economic Intelligence bulletin:

Every state failure to meet a pressing need has created the opportunity, developed the excuse, and fed the temptation for the national government to poach on the states' preserve. Year by year, responding to transient popular demands, the congress has increased federal functions.

I suggest that it might be to our advantage if such a task force, in the form of a committee or commission, were set up in Canada to consider some of these very same problems, which I believe are very real in Canada at the present time. It seems to me that with respect to the consideration of the problem of provincial jurisdiction and the encroaching of federal authority upon that jurisdiction we ought to be sure that if there is any change in responsibility it is done in a constitutional manner, and not brought in through the back door. We find that with increasing grants from the federal government to the provincial governments there is in many respects a corresponding increase in control and direction.

As I have already stated, we welcome the increased amounts but again voice the conviction that there must be a full and careful

reappraisal of this whole question of dominion-provincial fiscal arrangements. The holding of a conference is imperative. I do not think we can consider as adequate the excuses given by the government. When you analyse the whole situation it boils down to the fact that the government did not want to call a conference, and is trying to blame the opposition for its own lack of interest and failure in calling a conference at this time. The government talks about the opposition speaking too long carrying on the debate, and refers to the long hours the house is sitting, but the crux of the matter is that the calling of a conference is a responsibility of the government which it must assume in order to fulfil its promises and carry out its obligations. A conference should be called, and should continue to meet until this entire matter is resolved.

Mr. Speaker:

Before calling it one o'clock may I remind the house that at one o'clock the ceremony of the presentation of a portrait of Thomas D'Arcy McGee will take place in the Hall of Honour at the library end. The members of the Thomas D'Arcy McGee association will gather there to make the presentation, and I would hope that a number of hon. members of the house would be able to attend.

At one o'clock the house took recess.

Mr. T. A. M. Kirk (Shelburne-Yarmouth -Clare):

Mr. Speaker, to the best of my knowledge no Nova Scotian has as yet taken part in this debate. As a Nova Scotian I should like to make a few comments on Bill No. 247, and to make special reference to that portion of the bill which applies to the special fiscal or adjustment grants.

In doing so, however, I should first of all like to pay a tribute to Mr. Henry D. Hicks, the present leader of the Liberal opposition in the province of Nova Scotia and the former premier of that province who, when attending the preliminary conference in April of 1955, first made the suggestion that special fiscal or adjustment grants should be made. In making that proposal he brought it forth as one that would apply not only to the Atlantic provinces. He brought it forth as a type of policy which could be applied to any province should conditions arise similar to those which were in effect in the maritime or Atlantic provinces when he first brought forward the proposal.

There is no question but that the people in the Atlantic provinces will consider this $25

million, this portion which is to be the special assistance grant or special fiscal grant, of great assistance. They will consider this a move in the right direction. I think they realize, as must the house, that a move of this nature, an amount such as $25 million, is needed in the Atlantic provinces today because of the deteriorating economic conditions even more than it was when Mr. Hicks first made the suggestion less than three years ago. I feel that the real objective of the government should not be deficiency payments, if I may call them that, to the governments of the Atlantic provinces but efforts to bring about higher incomes for the people of the Atlantic provinces. Such higher incomes could be brought about, of course, by policies leading to industrial development. In other words, what we need to assist us in the Atlantic provinces are some imaginative proposals and policies.

I am thinking of one of the steps that was taken along that line only last year or to be more exact, less than a year ago. It was one of the most imaginative steps that has ever been proposed for the maritime provinces. I refer to the action by the then minister of northern affairs and national resources, the hon. member for Montmagny-L'Islet (Mr. Lesage) and the then finance minister, Mr. Harris, when they brought forth the thermal power policy for the Atlantic provinces.

I think of another step which was taken by previous Liberal governments within the last few years which resulted-

Mr. Fleming:

On a point of order, Mr. Speaker, may I say this. We are not discussing thermal policy, surely. This is a debate on the motion for second reading of this particular bill. It does not mention thermal power.

The Acting Speaker (Mr. Rea):

I think I shall be obliged to remind the hon. member that he is a little off here. I have been listening to him very carefully.