May 22, 1923 (14th Parliament, 2nd Session)


Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Right Hon. ARTHUR MEIGHEN (Leader of the Opposition):

The Minister of Finance (Mr. Fielding) has been treated in this debate to general expressions of good will. To these his wealth of years and his long public service undoubtedly entitle him, and in them I am only too happy to join. My comment this afternoon on his course in recent times will, I hope, not lack in courtesy, but I am equally anxious that it do not lack in frankness. I was disappointed in his budget. I say so entirely irrespective of the policies he abandoned and of the policies he adopted. I do not think the budget presentation was a real budget presentation at all. I think the country is entitled to more in a statement on the occasion of a budget speech, than the Finance Minister saw fit to give us as the text of our discussion. What the budget speech contains is a skilful but elusive commentary on the history of tariff discussions, on the unpopularity of taxes, on the undesirability of debt and on various ideas, some accepted and some rejected, which passed through the minister's mind in preparation of his case. A budget presentation should be a great deal more than that, and in the history of this country it usually has contained a great deal more. A budget presentation, I think, should include a close examination of the whole financial position of our country with some retrospection into past years and as well some prospect into the future. By examination I do not merely mean a chronicle of the ascending steps of our debt. I mean an analysis of our financial position. I mean an investigation of the value of our assets, of their
revenue bearing properties and of the nature and maturity of our liabilities. It should contain as well a synopsis of our trade, of those vital factors of our commercial life that keep us living and moving, an examination into the sources, the basis and the currents of our trade, and into the policies that best can be applied for its pursuit. It should contain as well an analysis of our means of revenue and of the merits of each, and some comparison between our position in all these respects and the position of other countries comparable to our own. These things are given in the budget addresses of the statesmen of other lands. I commend the Finance Minister to read the speech on a similar occasion of the Chancellor of the Exchequer of England presented this year, or, better still, the speech presented last year, and, because a better example cannot be found, I commend all hon. members to read the budget presentation of the present Prime Minister of Australia when as treasurer of the Commonwealth a year ago he gave to its parliament an exhibition and an expose of the whole financial and industrial situation of his country. I venture to make this remark: that after reading both, -the Australian budget and our own-though unacquainted with Australia and its history to any degree and though having followed the finances, the trade, and all the affairs of this Dominion, and having witnessed its development for fifteen years, after reading both, I knew more of the position of Australia than I did of the position of Canada. This is the purpose of a budget address, and a mere homily on various popular subjects is not justice to the occasion and not justice to the House. We owe to our people a thorough examination of all these elements, and we did not get the text for this examination from the budget presentation of the Finance Minister.
He gave us the figures of our ascending debt since 1914, told us how much it had increased year by year, and seemed to take some credit, or at least some comfort in the fact that we were not increasing our debt so rapidly now in the days of peace as we did in the days of war. His idea was to show that under other regimes we went rapidly into debt, but that now, though we are going further into debt, we are not going at quite so accelerated a pace. This is very true. He was not altogether fair even in that statement. Starting with 1914, when we did add $21,000,000 to our debt, the whole addition and far more due to comm.i-ments for the Transcontinental and Grand Trunk Pacific, and the loans we had to make to have them completed, though we did that year add 821,000,000 to our debt for those

The Budget-Mr. Meighen
purposes, we remember as well that the year before, notwithstanding corresponding obligations, we reduced the debt by $25,600,000. We effected a greater reduction in one year than all the aggregate reductions the present Minister of Finance (Mr. Fielding) had been able to make in the fifteen years antecedent during which he reigned as Minister of Finance. Yes, our debt additions are, I suppose, diminishing. The debt addition in the fiscal year ending in 1920 was some $674,000. 000. That was the year when we paid for demobilization and took care of the cash responsibilities which we thought this country owed to the men who returned from the war. The elements that make up that sum are largely composed of cash gratuities to those men, and of outlay for other policies then laid down, which policies hon. gentlemen opposite have dutifully followed by way of helping to establish the returned soldiers. Though we went into debt huge millions for that purpose, we were met by castigation on the part of hon. gentlemen opposite, including the Minister of Finance, and by the declaration that, if returned to power, they would adopt a better method and distribute further cash grants to those men. This declaration they promptly repudiated on attaining power.
The next year, when we had passed from those days of great and uncommon responsibilities, the addition to the debt was some $92,000,000, and in 1922 for which the present government is partly responsible, $81,000,000. This year the addition to debt is $57,000,000, not a very great reduction from the year before. The minister gives it to us as $49,000,000; but he gets that figure by crediting $8,000,000, which was just as much our property five years ago as it is our property to-day, $8,000,000 of exchange which was owed to us by the British government then, but which now is credited merely for the reason that now it is ascertained. These are huge additions to our debt.
In case I might overlook this, let me say that the Minister of the Interior (Mr. Stewart), in attributing our obligations for revenue to the late administration and to the great war debt which was piled up during its tenure of office, reflected upon us because, he stated, we had not gathered from the pockets of our people during the war and applied on our war obligations, as large a proportion as we should have. He contrasted us unfavourably with Great Britain. This has been a practice of hon. gentlemen opposite and of some hon. gentlemen who are not wholly opposite. I have never heard figures given by any of our critics; but if members
of the House will look at the figures given in the budget presentation of 1919 when the war was over, there will be found a statement of the revenues collected during the war, of the war debt, of the whole war outlay, of the capital debt as well, If hon. gentlemen will look at a corresponding statement by the British Chancellor of the Exchequer, they will find the British Chancellor of the Exchequer claiming that they succeeded, during the currency of the year, in paying 28 per cent of the war debt, of the war obligations, and having to borrow only the balance, 72 per cent. I went into his figures to ascertain how they were arrived at, and the only method by which they could have been arrived at was this, by taking the total outlay for the war, including interest thereon and resultant pensions, then ascertaining how far their excess of revenue during the war exceeded their other expenses, and applying that excess upon war obligations. If we take the very same method in Canada, we find our war obligations as presented in that budget running to $1,327,000. Add to this, interest thereon and our pensions; then set off against it the excess revenue over the other obligations, revenue over expenditure, which excess was $425,000,000, and it will be found our application against the whole war responsibility was not 28 per cent, but 29 per cent. Nor do I not know that we could have been expected to have reached the percentage of Great Britain. Great Britain was an older and a wealthier country. She had greater resources upon which to draw. Of course her responsibilities were greater; but we were much more comparable with Australia. I have gone into the figures for Australia, and I find that Australia was able to apply, not 29 per cent on her war obligations, but less than 15 per cent throughout the entire war period. Such is the record of Canada.
We gathered those funds from war profits, from a higher scale of income tax; we gathered those funds as well from a well directed additional tariff taxation to the extent in one year alone of $44,000,000, during which period not only industry, but agriculture and every occupation of our people flourished as never before. We gathered them by a higher income taxation than Britain imposed, because Britain's minimum was actually higher than ours, and her maximum was not more. We carried our profits taxation in its full extent throughout the year 1919, after Great Britain had reduced hers by almost one-half. Our profits taxation throughout, higher on certain industries than on others, because certain industries profited more than others, was higher than that of our great com-

The Budget-Mr. Meighen
petitor the United States, indeed it was the highest tax of its kind in the world. Beyond that our income taxation, though fixed on a scale lower than that of Great Britain until something over $150,000 per annum of income was reached, was on a scale higher even than Great Britain's and higher than Australia's for incomes beyond that amount. It was higher than the level of the United States on all classes of incomes, large and small. We must measure our power to tax in a very great degree, by corresponding taxation across the line. The government then in office went to the full extent it could go in levying from the people during the war period a large share of their earnings to pay the cost of the war. Very well. We got to the end; and though no one claims perfection or anything approaching perfection, nor claims there was not waste, for no war can be fought without waste, I venture to assert this as one conclusion, that we got more war results for the money we spent on the war than did any other country, save possibly Australia or Great Britain. Undoubtedly we got the equal of any country for the money we were able to expend. Let us not, then, bewail the debt of Canada. We are in a better position to discharge it than is any other nation which went through the entire course of the war. It has been shown in previous budget addresses that our debt, though heavy, is less than a third of the per capita tax of New Zealand and little more than half the per capita debt of Australia; and; of course, our debt is very much less per capita than is the debt of Great Britain.
Years ago, even as early as 1919, but more strenuously in 1920, we were prayed by hon. gentlemen opposite, nay, we were demanded bv them, to balance the budgets of that time. We were told that the war was past and the period for balancing budgets had come, and hon. gentlemen in 1920 pointed to Great Britain, which that year had virtually balanced hers. In 1921 more vociferously than ever they compared us unfavourably with Great Britain because we had an addition to our debt of some $80,000,000, while Great Britain s had actually been reduced. Those charges were true. But Great Britain had added to her war debt all the cost of her war material and so she was able to reduce her war debt thus enhanced, by the sale of war material to the extent, not of millions or hundreds of millions, but actually of billions of dollars. We on the other hand, though we were possessed of a share of war material, had relatively almost a trifling share. We had equipped our men on a per capita basis from
the British government; therefore a large share of war material was not ours. Our debt was never enhanced by that increment, and consequently we could not sell war material to reduce. But with the passage of those years, conditions became comparable. Great Britain's war material has been sold, and for the past two years she has been virtually in the same position as we; but she continues to diminish her debt while we, with a new government in office, continue to increase ours. And this new government consists of the men who inveighed against us in earlier times because, under totally incomparable circumstances, we were not able to reduce. Now I think the time has come when a better showing should be made, and I certainly think the time has come when we ought not to be under the necessity, I had almost said the humiliation, of proclaiming to the world that we are budgeting for a deficit of some $70,000,000 for the year just ahead.
There are ways of balancing budgets. The Minister of Finance (Mr. Fielding), in his address, thought of only one; the only possibility that seemed to be before his eye was the raising of taxes, as he described it, from new fields. Well, there are other ways of increasing taxes besides entering new fields, namely, the multiplying of taxes in the old fields. But the minister, although he has done that, did not emphasize the fact; the fact he emphasized was that he did not like to venture into new fields in order to balance his budget. It is not very long since he saw another and far better way than either of those plans to balance a budget, and that way was by reducing the expenditure of this country as we receded from the years of the war. Hon. gentlemen will remember that in the Estimates of 1922 it was proclaimed to the people of Canada that a saving of, I think, $137,000,000 was being effected by this economical government for the year just now passed in the way of appropriations for our railways. One would have expected it is true, that concurrently with the completion of two events or tasks, namely, the receding of the war- and necessarily the reduction of after-war services-and secondly, the rehabilitation of our railway systems that we had to take over;-one would naturally have expected I say, that concurrently with these two circumstances, it would be quite easy to reduce our expenditure. So no one was surprised when the government was able to present appropriations to this House less, as to our railways, by $137,000,000. It simply meant that the Grand Trunk, having been

The Budget-Mr. Meighen
put into shape for service, the Canadian National having been built also into shape for service, those obligations being discharged did not have to be discharged again. But notwithstanding this fact, and notwithstanding the other faftts to which I have alluded, what do we actually find the result of last year? What do we actually find in the way of diminution of expenditure as between 1922, nine months of which were ours, and 1923, no months of which were ours? The reduction is not $137,000,000; it is not $37,000,000; the reduction is nine million and a few thousand dollars. The actual expenditure last year as given by the minister m his budget statement, though he did not tabulate and add the figures-why, I leave hon. gentlemen to conjecture-the actual total expenditure, taking into account that charged to the consolidated revenue, the capital charge, the special war and railways expenditures amounted in 1921-22 to $463,305,000. The actual expenditure for this year, an expenditure composed of the same elements, is $454,280,000, or a diminution of $9,000,000. Why has 137 contracted to nine? How is the nine arrived at? Our Soldiers' Civil Re-establishment department is nearly $4,000,000 less. I am not criticizing the reduction; the Minister of Soldiers' Civil Re-establishment has frankly and publicly stated that, having examined into the services we had established, he had made up his mind that he could not improve upon them and so simply carried them on. This reduction is due to the fact that the necessity for the money has contracted; we are getting further from the war. There is a reduction also of $3,000,000 or more in our pensions. I have the exact figures before me from the Department of Finance; the reduction in pensions is $3,300,000. There is a reduction as well in our Soldiers' Settlement appropriations. In those soldier services the government was able, quite properly, I presume, to save this country some $7,500,000. This makes up virtually all of the total sum of reductions from 1921 to 1922; there is only a million and a half to account for besides. But they had nothing at all this year in the way of loans to the provinces for housing; they had nothing at all for unemployment-they let the unemployed take care of themselves. This may be an evidence of selfishness, but it could scarcely be said to be an evidence of economy. Then they did not have the same appropriations for railways. But in all the services where it took real strength of character and will to make contractions, instead of contractions they have
made additions, and at the rate they are going they will very soon overtake all they are able to reduce because of diminishing soldier services. At the present rate of additions to civil government, at the rate of additions to many other of the services mentioned in the tabulated statements obtainable from the Department of Finance they will very soon overtake and pass the appropriations of the nearwar years.
Such is the financial record of the government. And yet although standing under a deficit for this past year of $57,000,000 the Minister of Finance gives us figures of contemplated expenditures for the current year aggregating $434,000,000, and budgets only for $372,000,000: What is going to be the effect of all this on the name of Canada throughout the world? What is going to be the effect on the operations of business and the securing of money everywhere for the purposes of our industrial expansion? What is to be the effect now on this Dominion which ended the war in strength and virility, which was admitted by this government to have been in the best position of any land when peace was declared, if we have to acknowledge financial defeat, haul down our flag and say "For the life of us though we don't expand we cannot pay our debts"?
The minister proposes some increases and some reductions of taxation. Everybody rejoices in reductions. But what does reduction of taxation mean when it is accomplished by an increase of our national debt? It is all right to talk about taking $2,500,000 off sugar -and, mark you, it is not off the sugar refiner; the protection stands as it was. I am not complaining of that-

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