Mr. Olson:

Having listened to the arguments advanced by the hon. member for Grey-Bruce this afternoon in support of his amendment, I do not think many hon. members are going to place very much credence in the argument he now advances.

Would the hon. member permit a question?

Mr. Olson:

I will permit a question as soon as I progress far enough into my remarks to make it perfectly clear what I am referring to. In order to explain my position I will have to quote parts of the amendment placed before us this afternoon. In part it states:

-since the income of wage and salary earners has remained approximately the same and farm income has fallen as a proportion of the total national income over a period of years, this house regrets the failure of the government to introduce policies designed to produce an equitable distribution of rising productivity-

Several weeks ago the house saw fit to recognize the problem relating to the rising cost of living in Canada by referring the whole matter to a joint committee of this house and the other place. It seems that the members of the New Democratic Party are about seven weeks late in recognizing what other members of the house recognized at that time.

There is an element of truth in the literal definition of the words used in the amendment. If that were not so the committee of which I am proud to be a member would not have spent a great deal of time, sometimes as

23033-642J

Increased Cost of Living many as four, five or six meetings a week, studying this problem. I have before me some of the evidence presented to that committee. Apparently the members of the New Democratic Party have not yet found time to give consideration to the very important evidence which was presented.

Many hon. members of this house including members of the N.D.P., the Conservative party and the government party, as well as members of the party to which I belong, have been seized with this matter and are proceeding with all convenient speed to get to the bottom of it and to recommend a solution to this house.

Table 5 in some evidence presented to the committee by the Department of Finance gives a clear statistical breakdown of our gross national product by income shares in current dollars. Item 6 of that table is headed "Accrued Net Income Of Farm Operators From Farm Production". I refer to this table because farm income has fallen in proportion to total national income. We knew back in September that this was true and this fact was presented very forcibly to the committee by the Department of Finance.

[DOT] (8:40 p.m.)

Let me refer to this item and the income percentages during the period from 1949 to 1965. It is apparent that farm income has gone up by only 1.7 per cent, whereas the gross national product by income shares for another item, wages, salaries and supplementary labour income, has gone up by 7.7 per cent. In making this comparison I am not suggesting that labour is getting too much, because there are some other items that are even higher. I am trying to show that there is no disagreement that farm income over this period of years has not kept pace with the increase in other sectors of the economy, the cost of production and so on.

We find that corporation profits before taxes during that 16-year period have gone up 6.6 per cent. Item No. 5 of this table, headed, "Rent, Interest And Miscellaneous Investment Income", has gone up 10.7 per cent. This is by far the largest increase of any item except the one that falls under the category of "Military Pay And Allowances". As you go through the other pages of the evidence you find the recurring position of investment income leading the list in the amount of increase that has been enjoyed percentagewise over this 16-year period.

I think the committee is doing an excellent job. After it has reported to the house it will

10146 COMMONS

Increased Cost of Living be up to the government to take some positive action to see whether this investment income, which includes rent, interest and miscellaneous income, cannot somehow be used to create an increase in relation to labour income and particularly in relation to net farm income.

Table No. 6 deals with the composition of the gross national product. The table is headed "Per Cent Composition Of Gross National Product" and shows that in 1949 the accrued net income of the farm operator from farm production was 7.6 per cent of the gross national product. By 1966 this figure had fallen to 3.8 per cent. The source of the table is statistics compiled by the Department of Finance and presented to the committee on September 28, I believe, although I am subject to correction as to the exact date.

There is no argument that net farm income so far as farm operators are concerned has gone down not only in absolute terms but in relation to most of the other factors included in the gross national product. Labour is not the culprit because we find under item 1 that in 1949 the percentage composition of the gross national product for wages, salaries and supplementary labour income was 49 per cent. By 1966 this had risen to only 50.6 per cent, which I suggest is a very small increase and is almost minimal. Therefore, Mr. Speaker, it is easy to find statistics to substantiate the literal definition of the amendment which has been placed before us.

I believe there is one other point that is rather important when endeavouring to make this kind of comparison. I refer to the indices that relate to the costs per unit of output. When we look at table 7 of the same document we find that the accrued net income of farm operators from farm production has not increased at all from 1949 to 1965; in fact, it has gone down 2.8 per cent. The fact is that the cost per unit of output so far as farm workers are concerned has gone down substantially since 1949.

There are a great many more statistics involved in this matter. I only want to point out to hon. gentlemen in the New Democratic Party that most members of the house recognize that this has been a problem for a long time. Steps have been taken by way of motion in this house to delve into the details, find the cause of the problem and make the kind of recommendation that may perhaps lead to a correction of some of the inequities as far as government action can do so. There is one

November 21, 1966

part of the amendment with which I do not agree. In part it reads as follows;

-this house regrets the failure of the government to introduce policies designed to produce an equitable distribution-

I do not mean to be unkind to the New Democratic Party, but I believe that in this country there is still a place-in fact in my opinion this is of paramount importance so far as our whole economy is concerned-for a direct relationship between effort and reward. If this amendment is designed to encourage the government to set up the kind of policies that will achieve by government order some kind of equitable distribution of our productivity, I am not in favour of it. We can look around the world today and see countries where it has been shown that ignoring the direct relationship between effort and reward in their economies has not been successful.

I have visited some of these countries which they have been unable to meet the basic requirements of life, namely, adequate food, clothing and shelter. They are introducing a new system and are abandoning the system that has been in effect for the last 30 or 40 years. They are introducing a system of incentives and bonuses because they realize they will never reach the standard of living that we have in this country, or indeed on the North American continent, until they introduce the concept of receiving reward directly in relation to effort. Some of the collective farms that I visited for the first time in 1965 are keeping an accurate account of the production of dairymaids, grain farmers, hog producers, etc. The information I received from them was that after they have compiled all these records they strike an average and anyone who produces above the average receives a bonus. This is the kind of incentive they need at this time to meet the production required in order to feed their people.

To my knowledge, in any country which has done away with the incentives involved in the whole concept about which I am talking, the production of output in relation to hours of input, production has gone down. I am proud of the output of the Canadian people, particularly those in the farming industry, in relation to the number of hours of input per man. I am familiar with the operation of some farms where output per man in this country is three to five times as high, in terms of volume, as it is in some countries where they have done away with rewarding people in direct relation to their effort. I do not like that part of the amendment; you can be sure of that.

November 21, 1988 COMMONS

I will not go on much longer except to say that this matter is now under study by resolution of this house. I hope that before long the committee will make an interim report to the house dealing, in the first instance, with the price of food. Perhaps the committee will be able to establish whether there is anyone along the line from the producer to the consumer who is taking an unconscionable profit, and if they do find this I hope they will make recommendations which the government will accept. We must not interfere with the direct relationship between effort and reward, but we must also recognize the monopoly of an enterprise which may have developed in Canada in the field of food distribution. The hon. member for Nanaimo-Cowichan-The Islands (Mr. Cameron) knows very well that all parties in this house agree that there is a need for political action to be taken against economic monopolies. This in no way violates the principle I have enunciated respecting the relationship between effort and reward.

[DOT] (8:50 p.m.)

May I say in closing that it seems to me we are wasting our time talking about a matter which has already been referred to a committee for examination. There are many important pieces of legislation on the order paper and in my opinion the government is remiss in giving priority to particular legislation. To spend two days in discussing a matter on which there is no disagreement regarding the literal definition of the words and on which no conclusion can be reached as a result of the debate seems to be a waste of time. I hope the New Democratic Party will spend a little time reading the evidence which has been placed before the committee dealing with this matter and will take cognizance of the fact that this house has already dealt with this matter in the best way it could, namely, by referring it to a joint committee of the two houses.

Perhaps the hon. member for Nanaimo-Cowichan-The Islands can answer a question, because I noticed he attempted to get the floor just before me. How is it that the matter of the Prudential Finance Company was not so important at five o'clock although at 2.30 p.m. it was important enough to warrant setting aside all the other business of the country? I cannot understand this kind of reasoning unless the hon. member's party wanted to make political hay out of some of the platitudes contained in this amendment. Perhaps he knew perfectly well that the motion under standing order 26 was going to be set aside. This is what is called "shotgun politics"; with

Increased Cost of Living one shot at several targets you get a few of them at the same time.

I am very pleased to say that the house, and that includes all parties, has already dealt with this matter and I think it is time that the New Democratic party read some of the evidence.

Mr. Schreyer:

May I be permitted to direct a question to the hon. member for Medicine Hat? He chides us for making reference to the high cost of living because, as he states, this matter is now being considered by a committee of this house. I would ask him whether he considers the problem of those people who are on fixed incomes and those who live on Canadian farms in relation to the rising cost of living to be a matter of platitudes?

Mr. Olson:

The word "platitude" in the context in which I used it, and I think the definition of that word will bear me out, is something that is repeated over and over again. Everyone is concerned about the problem, and genuinely so, but I am saying that something positive has already been done by the house to try to get to the bottom of the problem and to make recommendations toward solving it. To make a motion of this kind, after what has already been done, fits the literal definition of the word "platitude".

Mr. Warren Allmand (Noire-Dame-de-Grace):

Mr. Speaker, I want to make a few comments on the remarks made by the hon. member for Burnaby-Coquitlam (Mr. Douglas) this afternoon when he introduced his amendment. He criticized the government severely, as the amendment states, for failing "to introduce polic:es designed to produce an equitable distribution of rising productivity and national income." Furthermore, he criticized the government for failing to maintain stable prices and he said that prices in Canada are beyond all control.

I w sh to take issue with these statements of the leader of the New Democratic Party, and in doing so I will refer to a table which was filed with the joint committee studying consumer prices, the committee to which the hon. member for Medicine Hat referred. This table can be found at page 556 of the reports of that committee. According to the table, in the period from 1958 to May, 1966 Canada had the second best record for price stability. In this period the consumer price index in Canada went up only 15 per cent while the United States had the best record with 12 per cent. However, if we look at other countries listed in the table we see, for example, that in

10148 COMMONS

Increased Cost of Living Germany the consumer price index went up 22 per cent, in Switzerland, 24 per cent, in the United Kingdom, 26 per cent, in Sweden, 33 per cent, in France, 36 per cent and so on.

Mr. Nasserden:

Will the hon. member permit a question?

Mr. Ailmand:

Not now; I will answer questions at the end. Although we are always dissatisfied with increases in prices we must admit that there has been good management in Canada if we could maintain, on a comparative basis, the second lowest increase in prices in the western world. In commenting on this table before the committee, Professor Neufeld of the University of Toronto made the following comments which appear at page 112 of the proceedings of the committee:

I think two rather interesting points emerge from the comparisons outlined in that table. First, the increase in the cost of living in Canada from 1958 to May, 1966, which amounted to about 15 per cent, was smaller than in any other country shown except for the United States, in which the cost of living rose by 12 per cent. If you go down the list you can see that there is a wide range in the distribution of the percentage increases in prices. All the European industrial countries, which for some purposes might be appropriate comparisons, have experienced price increases well in excess of the price increases in Canada.

As found on page 118 he said: "By international standards Canadian prices have been remarkably stable, but they have risen more than United States prices."

At page 129 he said:

The policy of the Bank of Canada over the last five years, in my view, has an excellent record. Fiscal policy has revealed, for the first time perhaps, a degree of imagination, in the budget, that had been absent for so many years.

He was referring there to the budget which was presented to the house last spring by the Minister of Finance (Mr. Sharp).

The last witness who appeared before the consumer prices committee was Professor Kragh, a Swedish economist who heads a council in Sweden somewhat similar to the Economic Counc l of Canada. In his testimony to the committee Professor Kragh said that Canada had a remarkable record in price stability over the last few years. He said that in his country prices had risen by quite a high degree despite many efforts by the government to keep them in line.

a (9:00 p.m.)

I noticed this afternoon that the hon. member for Danforth (Mr. Scott) criticized my

[Mr. Ailmand.1

DEBATES November 21, 1966

colleague the hon. member for Vancouver-Burrard (Mr. Basford) for referring to statistics from the committee report, saying that they were quoted out of context. Earlier the leader of the New Democratic Party also quoted statistics from the committee reports, and in my opinion he quoted them out of context. He made certain references to the decrease in farm incomes and he made comparisons between incomes received by way of salaries and wages and income from profits and rents. I will comment on these in a moment. The hon. member for Burnaby-Coquitlam tried to show that there was a great inequity in this regard.

I should also like to refer to a statement made by Mr. Rasminsky, governor of the Bank of Canada, when he appeared as a witness before the committee. At page 335 of the report of the proceedings he is recorded as follows:

I would like to begin by reviewing, briefly, some of the highlights of the present economic expansion. This expansion has now lasted for 5i years, and it is by far the longest expansion in our peacetime history. It has brought us some very substantial benefits. When the final results for 1966 are in. I expect that our gross national product will be over 50 per cent higher than it was in 1961 in dollar terms. I take 1961 because that is the year in which the expansion began. I say it will be 50 per cent higher in dollar terms and about 35 per cent higher in real or in physical terms.

That is what was said by Mr. Rasminsky, governor of the Bank of Canada.

In introducing his amendment the leader of the N.D.P. made reference to a table which was presented to the committee by Mr. Bryce of the Department of Finance. This table appears at page 94 of the committee report and is entitled "Gross National Product By Income Shares". It refers to the percentage of income which was credited to wages, salaries and labour. The table shows that during the period from 1949 to 1965 wages, salaries and labour income increased by 7.7 per cent.

The hon. member then compared this with the increase in corporate profits before taxes, which increased in the same period by 6.6 per cent. He then referred to the increase in revenue from rent, interest and miscellaneous investment income, which had increased by 10.7 per cent, the largest increase of the three. Then he added together these latter two items and impl'ed that the total increase of approximately 17 per cent should be compared with the 7.7 per cent credited to wages, salaries and labour income. He then suggested that the group which was receiving income from rent, interest and investment income was clipping

November 21, 1966 COMMONS DEBATES

coupons and more or less belonged to the capitalist class.

May I refer to some of the cross-examination which deals with this table because a lot of matters were clarified. As reported at page 47 of the evidence, the hon. member for Nanaimo-Cowichan-The Islands (Mr. Cameron) asked Mr. Bryce this question:

Mr. Cameron:

I notice, Mr. Bryce, the item you decided did not call for comment seems to be one that does call for comment. I refer to No. 5. I notice in the period between 1949 to 1965 wages and salaries have increased about 31 times; corporation profits have increased somewhat less, only about three times, but rent, interest and miscellaneous investment income have increased over five times. Would that not suggest that this is one of the points we should look at for inflationary practices?

Mr. Bryce:

Let me try to find some of them.

In other words, he is breaking down the items included in the table. He continues:

May I pick out some of the major items? First we have the net rents received by individuals-

These are rents received by individuals, not by corporations, because the income received by corporations is included under the corporate profits section of the table. The second item is investment income of life insurance companies, including pension funds. Then there is bond interest, interest on bank deposits, trust and savings deposits, credit union deposits, mortgage holdings by individuals- not by corporations-government annuities, dividends from abroad, profits on mutual nonlife insurance companies, royalties, etc.

As you can see, Mr. Speaker, many of these items are not the type of income-producing item which it can be said accrues to the large corporation or big businessman. Much of it is income which is received through pension plans, credit union interest and so forth and has been received by the little man. So in this respect I think it was misleading for the leader of the N.D.P. to try to imply that there was an increase of 17 per cent among the members of the upper economic echelon of our society, whereas labour and wages income increased by only 7.7 per cent.

With regard to farm incomes the table which appears at page 95 of the report shows an increase of 1.7 per cent during the period from 1949 to 1965, which is a very low percentage. According to the following table, table 6, farm income is only 3.8 per cent of the gross national product, which again is a rather low percentage. The hon. member for Bur-naby-Coquitlam seemed to be implying that there was some inequity here, but an examination of the evidence given under crossexamination of the witness demonstrates that

Increased Cost of Living the situation is not what the hon. member would have us believe. On the subject of farm income the hon. member for Medicine Hat asked Mr. Bryce from the Department of Finance some questions. The hon. member for Medicine Hat asked about some years when there had been a significant decline. He said:

[DOT] (9:10 p.m.)

Does that account for why we come up with an average of 1.7 per cent?

Mr. Bryce said:

The reason for the 1.7 per cent growth is that agriculture is a diminishing part of the economy as a whole. A great deal of manpower has left agriculture and has gone into other fields. The increase in productivity in agriculture has been quite high. This income of 1965 is distributed amongst a far smaller number of farmers than the income of 1949 was.

Mr. Olson:

But that would not affect the 1.7 factor as an average over the whole period, would it?

Mr. Bryce:

The reason the figure is so low is because agriculture has not been growing in aggregate in the way in which, let us say, manufacturing or mining has been growing through the period. The number of farmers has been diminishing, and not growing.

The report goes on to point out that though the total amount of farm incomes has been going down, in fact farm productivity and the income of individual farmers have risen, though not at the rate of those working in other sectors of the economy.

The hon. member, in introducing his amendment this afternoon and trying to find the causes for the high cost of living, completely excused wage increases, blaming the increase in profits for the increase in the cost of living. In all the evidence put before us by the companies in the food business we have seen that labour rates in food industries have increased more quickly than profits. Referring to a few tables, we see on page 549 that the salaries and wages for one of the supermarket chains increased 11,2 per cent from 1960 to 1966 and fringe benefits increased by 9.2 per cent, making a total increase of approximately 20.4 per cent, whereas their profits in the same period increased by 8.7 per cent. I am not excusing the food companies, but I think we have to be fair. We must agree that the matter is not as simple as pretended by the leader of the N.D.P. Different sectors of the economy have been responsible for the increased cost of living at different times. We must recognize this to be fair.

In the amendment the hon. member criticizes the government for not having done anything to produce a more equitable distribution of productivity and national income. As

10150 COMMONS

Increased Cost of Living has been pointed out by the hon. member for Medicine Hat, the amendment makes little sense if we look at the record. Since this session, which opened in January, the government has introduced much legislation to help the lower income groups in our economy such as the Canada Assistance Plan which gives assistance to the sick, the blind, the crippled and the aged, the new amendments to the National Housing Act which will help people with lower incomes to purchase houses, the medicare program, and the Company of Young Canadians to help those in dire circumstances in Canada. The government has also set up the committee studying the cost of living. It is my opinion that the very working of the committee has had a corrective effect on the price structure up to now.

I think the fact that such a committee is sitting, calling witnesses and making companies reveal their records is having a corrective effect because it makes the people who set prices in the industry think twice before taking an undue profit at the expense of Canadian consumers. Statistics released at the end of October show that consumer food prices have decreased. I will not pretend that the immediate cause of the decrease has been the work of the committee, but I am fairly certain that the committee work has been one of the causes bringing about decreased food prices.

Contrary to what the amendment implies, if we compare the record of the government of this country with the records of other governments in other countries we shall see that we have been extremely effective in providing price stability and maintaining income. Despite this record the government is still not satisfied but wants to do even more.

Mr. Nasserden:

May I ask the hon. member a question? In 1962 the President of the United States admitted that the record of price stability in the United States was second to that of Canada. If the table that has been referred to is correct, why is Canada's record now second to that of the United States?

Mr. Allmand:

Mr. Speaker, the tables I quoted from are taken from Dominion Bureau of Statistics figures and other official figures. It may be that the United States has a better record than we have, but compared with the other 25 countries on the table we stand second.

Mr. J. H. Horner (Acadia):

Mr. Speaker, I rise without hesitation to take part in this

[Mr. Allmand.)

DEBATES November 21, 1966

debate and speak in support of the amendment which says in part that:

[DOT]-this House regrets the failure of the government to introduce policies designed to produce an equitable distribution of rising productivity and national income among all groups in Canada, particularly in view of the rising cost of living.

The rising cost of living has alarmed many members of the house and many people across the country. The hon. member who just spoke compared the record of this country with .that of other countries. He quoted the governor of the Bank of Canada to show that the present boom began in 1961 but he did not have to go to the governor of the Bank of Canada to say that. He could have gone to the Minister of Finance, to the former minister of finance, to the Minister of Transport or to any one of a number of ministers in the present cabinet who would have admitted readily that the boom Canada is now enjoying began in 1961. I want to make that absolutely clear.

Let us look at what happened in 1962. We all remember what John F. Kennedy said in 1962. He admired Canada because Canada led the world in maintaining a rapid growth in gross national product. We led the world in maintaining price stability in regard to the cost of living. Where is Canada today in that regard? The hon. member said we were second in line among 25 countries. In 1962 we were on top. We were the world leaders in maintaining stability in the cost of living. Now one need only look at any paper published anywhere in Canada within the last year to see where this country stands.

Mr. Allmand:

May I ask a question?

Mr. Horner (Acadia):

We are at the very top in promoting an increase in the cost of living. That is where we stand.

Mr. Allmand:

May I ask a question? May I ask the hon. member where we stood on unemployment in 1961?

Mr. Horner (Acadia):

I will get to unemployment in good time. Let us look at inflation. The hon. member admits that the cost of living in Canada has reached an all-time high. It has accelerated at a rate comparable with that of any country in the world. It is all very well for Canadians to realize that the cost of living has gone up but we as legislators should ask ourselves why this has happened. Why did we lead the world in 1962 in maintaining stability in the cost of living and yet lead the world in 1965 and 1966 in bringing about a situation where the cost of living is rising at a

November 21, 196G

rate comparable with that of any country in the world? This is a question which we as legislators should ask ourselves.

[DOT] (9:20 p.m.)

It is all very well for the hon. member to refer us to the committee on consumer credit of which I am a member, although I have found it difficult to find the time to attend because of my work on other committees. It is all very well to refer members to the findings of that committee. I could deal with them at length and I could state what I think they should bring in as a recommendation. But let us look at the root of the problem.

This government took office in 1963 as a minority government. It wanted to be returned with a majority. How best could it acquire that degree of acceptance across the country? It thought it could best acquire it by printing money. My Social Credit friends to my left will say "surely not; they don't believe in that." But that is exactly what they did. If you doubt my word, look at the last monthly statement of the Bank of Canada. One has only to compare the last monthly statement with the last monthly statement when the Conservative government was in power.

This government came in as a minority government and wanted to go to the people as quickly as possible and get a majority. How best should they do it? They created an artificial position so that Canadians all across Canada would accept them. I should like to quote a brief paragraph from a statement by Mr. Louis Rasminsky, the governor of the Bank of Canada, when he spoke in Rome. This is what he said in respect of inflation:

Inflation in its early stages is popular, it creates a feeling of ebullience and well-being which does not tempt the community to ask too many questions about the future.

That is what the governor of the Bank of Canada said in his speech in Rome as reported in the Ottawa Journal of November 10, 1966. He said that inflation creates a popular feeling and tempts the community to ask not too many questions about the future. This is the very condition this government tried to create, because they were elected with a minority in 1963 and wanted to go back to the people as soon as they could and get a majority. They wanted to create a popular feeling.

I am pleased to see the minister in the house because I wish to quote from a letter dated August 5, 1966, which was written to people who are close to me.

This present government has been In business fostering this economy in a financial sense since 23033-S43

Increased Cost of Living 1963. We made a deliberate decision to increase the money supply and we have increased it by over 50 per cent since that time.

The minister who wrote that letter is sitting on the front benches now. In August, 1966, he said that they had made a deliberate decision to increase the money supply. Bear those remarks in mind and compare them with what the governor of the Bank of Canada said in Rome. Bear that in mind in conjunction with the fact that the Liberals were elected in 1963 as a minority government. What did they do? We in Alberta have contended with the funny money policy for years. The premier of Alberta said that he would go federal any day if he could get away from the tag "funny money". Yet we in this house sit opposite members who have applied social credit to the country. They have printed money far in excess of the gross national product and the growth in population in Canada.

Mr. Olson:

Would the hon. member permit a question?