The financial critic of the Progressive Conservative party, the hon. member for Greenwood (Mr. Macdonnell), made a statement which I found most interesting. He mentioned the freedom that has brought us as far as we have come. I believe that is worthy of consideration. At the same time the leader of the opposition (Mr. Drew) recently made the statement, during a comment on a speech made by some other hon. member opposite, that he thought the situation could be handled by the same processes we have always used; by carrying on with exactly the same methods and techniques that we had used during the past generations and decades. Unfortunately, I do not believe that is true, and I know that the . Minister of Finance (Mr. Abbott) does not think it is true or he would not have initiated this consistent policy which has been called cyclical budgeting; you can call it what you like.
The first great reason why it is not so and why the leader of the opposition is not on solid ground is that some of what he calls the natural laws no longer apply in our economy. What have been referred to as
booms are usually artificial booms; and busts are, by the same definition, in many respects artificial too. I have not the time to go into the background of this; but, as you all know, in ancient days most of the economies were of the nature of one or two products; and if you had a natural failure, by immediate consequence you then had a depressed state. There has been a gradual tendency away from this and we have developed exceedingly complex societies, complex economic relationships, and a degree of specialization of labour which was never previously dreamed of. If you average all the cycles, all the moods of men, all the lack of rain in one area of the country offset by rain in the other, you find that the potential production of a diversified economy like our own does not change a great deal from one year to the next, except by natural increase.
The leader of the opposition would lead us to believe that if we just sort of let things go their own natural course-I think he might favour returning to the gold standard or something-it would all right itself and pretty soon we would have a new equilibrium which would have all of the necessary requirements to produce full employment and an extremely buoyant economy. Unfortunately this is not true either, and it is due to a natural process which has developed during the last two hundred years. We started with small industries. For natural reasons those have integrated and have become larger and larger for the sake of efficiency. Every year we have more industries, more products and more classes of produce in a category which could be said to be of a semi-rigid or rigid price nature. They are prices set by arbitrary decision and which do not obey the laws of supply and demand-one of the leader of the opposition's natural laws. A few years ago we had more commodities which fell in the natural price law category but the numbers are diminishing, and we now find ourselves in a complex economy in which we have a predominantly private enterprise, semi-rigid price structure. We still have some commodities in the free enterprise free competitive price category which obey the law of supply and demand.
Topic: THE BUDGET
Subtopic: ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE