Mr. W. F. Kuhl (Jasper-Edson):

Mr. Speaker, I am tempted to get into the controversy which has been taking place regarding the merits of public enterprise as compared with private enterprise. However, if I became too much involved in that, perhaps I would forget to return to the observations I had intended to make. Nevertheless there are one or two remarks I feel compelled to make considering the controversy which has just taken place.

I believe that those on both sides of the argument-the C.C.F., who champion public enterprise, and the Liberals and Conservatives, who support the present orthodox policy-are both groping in the dark. I say that for this reason: The success of either public or private enterprise in the final analysis depends upon markets. It depends upon the ability of people to purchase the products produced. That is the feature which I believe hon. members of the C.C.F. in particular overlook when they constantly advocate public enterprise.

Neither enterprise can succeed completely unless there is sufficient purchasing power in circulation in the community to absorb the total production. Again and again we in this corner have asserted that in normal times industry never distributes sufficient purchasing power to buy back the total production of the country. We suffer from a chronic shortage of purchasing power. What both orthodox economists-those of the Liberals and Progressive Conservatives on the one hand, and the C.C.F. on the other-overlook, is the relationship of purchasing power to production. They overlook the part played by those who control the monetary policies of the country. That is one of the most important features to observe at all times- that is, to see that there is a proper relationship between money in the hands of the people and goods which they have to buy. Therefore, I suggest, the people of Canada will never have economic justice, whether things are produced publicly or privately, until purchasing power equates producing power.

Before I refer to that part of the budget to which I wish to make special reference, I should like to place on record a letter which I received recently from Mr. R. B. Morrison, secretary of the trans-Canada highway association, Yellowhead route. Doubtless all hon. members received this correspondence; but inasmuch as this route would pass

The Budget-Mr. Kuhl through the constituency of Jasper-Edson, which I have the honour to represent, I feel the facts contained in the letter should be placed on record.

Doubtless the major responsibility for determining the route lies with the provincial governments, and the pressure should be applied to those governments. Nevertheless the association which sponsors the Yellow-head route feels that the dominion government should consider the submissions they have made respecting the preference for this route, inasmuch as money is being provided by the dominion government. [DOT]

I suggest that much credit must be given this association for the work they have done in ascertaining the facts concerning the desirability of the various routes and for the pressure they have applied to see that the route which is chosen is the one which in their opinion serves the interests of the greatest number of people.

Personally I see no reason why all the routes that are proposed cannot be built. I believe the people along any particular route are entitled to have the highway just as much as the people along any other route. As I say,

I see no reason why all routes should not be built, especially if there is to be a so-called unemployment problem. I want to place this letter on the record because it sets out the reasons why the Yellowhead route is the choicest of those that have been suggested. The letter reads:

As secretary of the Edmonton committee of the trans-Canada highway system association (Yellowhead route) I have been instructed to write you concerning the forthcoming debate on the trans-Canada highway bill, your part in this and facts you may need.

We ask that you insist on complete and impartial investigation of the entire question by a fact-finding body independent of parliament before any decision is made concerning routes. Naturally we also will appreciate direct support of the Yellowhead route; but our major problem now is to get impartial information before the house. For such argument as you may find necessary for either stand, I trust you will not object to our reviewing the true facts.

The Yellowhead route covers suggested highways from Winnipeg to Vancouver and Prince Rupert via Saskatoon, Edmonton and Jasper. As compared to the Kicking Horse Pass route our claims for the Yellowhead route are easily proved.

It is cheaper road to construct and to maintain.

More than half of the population, area, oil and parks of the four western provinces are tributary to the Yellowhead route.

It serves the new development in the Canadian northwest including Peace river agriculture, Mc-Murray tar sands. Elk Point salt, Yellowknife gold, Great Bear uranium and the Alaska tourist.

It covers the important military requirements- three Pacific ports, essential northern airfields and supplies and the projected radar screen.

We believe that the people of the whole of Canada have a right to expect that the trans-Canada high-

The Budget-Mr. Kuhl way will be so located as readily to serve the largest number of Canadians, and thus make its utmost contribution to the unity of the nation; so as to facilitate the business of the country; so as to make accessible to Canadians and visitors alike the greatest possible number of national and provincial parks; and, since the defence of Canada must loom large in any decision, so as to be of the utmost strategic value.

Let us examine the facts.

First a word about cost since it is inconceivable that a decision on routes could be made totally ignoring the lower cost factors both for construction and maintenance which the Yellowhead route offers over the Kicking Horse route. East of the junction of the two roads at Kamloops, the Yellowhead route follows wide peaceful valleys where narrow shelves, sheer cliffs and overhands, steep grades, abrupt turns, and impassable snows are practically unknown. The highest elevation is 3,717 feet (three hundred feet above that of the city of Calgary), whereas approximately one hundred and seventy-five rugged miles of Kicking Horse route lie between 3,717 and 5,337 feet elevation. The average of winter reports on snowfall between Jasper and Kamloops is four feet eleven inches-that between lake Louise and Kamloops is eleven feet four inches. We urge you to study the established facts of elevation and snowfall shown on the graphs I am enclosing.

It is obvious that routing the trans-Canada highway through the central portion of the Canadian west will knit the country together in a way that the Kicking Horse route to the south can never do. What is not so well known is the fact that even in Saskatchewan and Alberta the Yellowhead highway serves sixty per cent of the population as compared to the forty per cent for the other route. The present trend of population northward suggests that the future ratio could easily be much greater.

Nor is the Yellowhead route less useful to business and commerce. It traverses the finest agricultural district of western Canada-the Evergreen belt. The fertility of the Peace River district is legendary. Reasonable estimates of liquid bitumen at McMurray indicate enough road topping material for generations yet to come. The ore belts of northern Manitoba and the Northwest Territories have been barely scratched, yet show lead, zinc, copper, silver and gold to match the best in Ontario and Quebec along with materials for all the atom bombs yet produced. And, of course, the Edmonton oil fields bid fair to alter the entire economy of the west. Production now is running more than double that of Turner valley. The president of Imperial Oil recently forecast an additional 400 wells for 1949. This indicates more than double present production and, when transportation facilities are available, that Alberta will be an oil exporting province producing $100,000,000 in oil each year. Nor is the end yet.

The Yellowhead route is a natural for our vacation industry permitting, as it does, our citizens and visitors to explore and enjoy the scenic beauty of Canada. It follows the Evergreen route, and serves the Alaska highway, the Great Slave lake highway and four national and five provincial parks, constituting by far the largest park area west of the great lakes.

From a military standpoint, the Yellowhead route is the only route that will provide:

(1) Access to three all weather Pacific ports- Vancouver and Prince Rupert in Canada and Skag-way via the Alaska highway, with Bella Coola for future development.

(2) A sound strategic highway readily improved to military standards.

(3) Cover for radar and air operations from Hudson bay and the port of Churchill to the Arctic and Alaska.

Finally I wish to emphasize that not only do we expect you to voice the needs and opinions of your constituents but we also feel sure that you will recognize it as your duty as part of the government of Canada to provide the people and commerce of your country with a trans-Canada highway that gives the maximum service per dollar expenditure.

It is your responsibility.

Respectfully yours,

R. B. Morrison,

Secretary, Edmonton committee, Trans-Canada Highway System Association, (Yellowhead route)

That letter sets out the arguments that this association have advanced in favour of the Yellowhead route. I think they are very substantial and merit serious consideration.

What I had intended to deal with specifically was the reference made by the Minister of Finance (Mr. Abbott) during his budget address to dominion-provincial relations. Notwithstanding the importance of many other subjects that are covered by the budget and other legislation, I consider that the dominion-provincial issue is the most important internal issue in the Dominion of Canada. I feel that the solution to genuine economic democracy in Canada, as well as political democracy, depends upon a satisfactory solution of the dominion-provincial controversy. I, of course, felt that there would be a more appropriate occasion on which to discuss this subject, but inasmuch as parliament will be dissolved in the near future I wish to take advantage of this occasion to once more place on the record my views and wishes in this matter.

The Minister of Finance certainly left the inference, in the remarks which he made concerning the taxation agreements with the various provinces, that it was an ideal arrangement, and that it was redounding to the very decided advantage of the provinces. I think there is also an implied suggestion that it might be a good thing to have a permanent arrangement of this nature. The future alone will reveal what those who will form the government at Ottawa have in mind with respect to taxation fields. Certainly on this occasion I wish to voice my protest at the manner in which these matters are being dealt with. My greatest concern in the whole controversy over dominion-provincial relations is as to the rights of the individual citizen of the country. I believe I was not sent here primarily to defend the rights of institutions. I believe my primary purpose in being sent here is to defend the rights of the individual citizens of the country. It is from that point of view that I have the greatest concern about the dominion-provincial disagreement.

The actual records, as far as the province of Alberta is concerned, certainly do not seem to indicate that the premier of that province is in favour of a permanent arrangement such as now obtains between the dominion and the provinces. I should like to quote a few sentences from the submission which was made by Premier E. C. Manning to the last dominion-provincial conference. I think this particular submission was one of the most valuable, one of the most enlightening, and one of the best submissions made as to a solution to this particular problem. On page 8 of the submission we find these words: Moreover income tax and corporation tax have in the past been two important fields of provincial revenue, but both have been invaded by the dominion to an extent which, if continued after the expiration of the dominion-provincial tax agreements, will for all practical purposes nullify the provinces' constitutional right to derive revenue by means of direct taxation in these fields. To suggest that the provinces can meet their post-war obligations by means of large-scale public borrowing obviously is no solution to the problem, but merely pushes it into the future with increasing certainty that the results will be even more disastrous a few years hence. Obviously the present situation is absurd, and places both provincial and municipal governments in an intolerable position. The whole situation resolves itself down to one indisputable fact that the major problem confronting all governments today is primarily financial, and, in so far as provincial and municipal governments are concerned, it is absolutely impossible for them to discharge their post-war responsibilities within the confines of the constitution and the laws of Canada unless the necessary additional revenue is made available to them. Until this absurd situation is corrected no amount of reshuffling of our responsibilities or of our inadequate revenues will solve our problem and ensure the people of Canada a post-war economy in which their standard of living and the measure of their social services will be limited only by the aggregate of their material resources and their combined ability to produce the goods and services they require.

As to jurisdiction and responsibility Mr. Manning on this occasion said these few words:

Like so many seemingly complex problems, the present difficulties in dominion-provincial relations arising out of this situation are relatively simple in origin and stem from a violation of fundamental principles. It is axiomatic that all authority must carry with it corresponding responsibility, and vice versa. Furthermore, responsibility without the means for carrying it out cannot be maintained.

With respect to solutions that are commonly advanced, Premier Manning made this statement:

There are those who maintain that the solution to this problem is for the provinces to surrender to the dominion their constitutional authority over the matters involved, and thereby transfer to the dominion government the financial obligations which attach to the proper discharge of those responsibilities.

This proposal has two obvious weaknesses. First, it does nothing to remove the root causes of the difficulty, but rather seeks to evade the real issue

The Budget-Mr. Kuhl by shifting responsibility for providing social and other public services to the dominion government. Secondly, it violates the basic and fundamental principle of effective democratic government, by centralizing, under the dominion, administrative authority over matters which properly should be under the effective control of the people of the respective provinces.

I would suggest at that point that that statement is quite in contrast to that which was made by the Minister of Finance.

It does not alter the situation to contend that the loss of provincial autonomy would be offset by the fact that the dominion treasury would assume the financial obligations which attach to the administration of such social services. In the last analysis it is the people of Canada who are footing the bill, whether the dominion or the provincial governments extract the revenue from them. For the dominion to assume jurisdiction over all social services would simply mean that the people of Canada, who are the citizens of the respective provinces, would still be paying the bill but would no longer have the effective voice in deciding the nature of the social services to be provided that they have when such services are under the jurisdiction of their provincial and municipal governments.

There are others who contend that the solution to our problem lies in the redistribution of the various fields of taxation as between the dominion and the provinces. Certain adjustments in the fields of public revenue and in the powers of taxation certainly are desirable and necessary, but let us never forget that the mere realignment and redistribution of the powers of government to extract public revenue from the pockets of Canadian business and the Canadian people does not, and cannot, increase by one red cent the amount in those pockets that is available for extraction. In other words, no amount of mere juggling the respective fields of taxation as between dominion, provincial and municipal governments can possibly enhance the ability of the Canadian people either to tax or borrow themselves into an era of permanent postwar prosperity.

Then Premier Manning concluded his submission with a suggestion as to what should be done. I wish to put that suggestion on record and go a little further than he did. At page 11 he said:

In the light of these circumstances the effective solution to our problem obviously requires a policy that goes far beyond the mere adjustment of our respective responsibilities or the reallocation of our present inadequate sources of public revenue. It lies within the sovereign power of the dominion government, through the Bank of Canada, to monetize fully the real wealth of the nation as represented by our abundant national production, and to utilize the financial credit representing the monetization of that real wealth to supplement the ordinary public revenues of the dominion and of the provincial treasuries.

Such a monetary policy, operated within adequate scientific safeguards against both inflation and deflation, would enable the dominion government to ensure to the provinces adequate revenues to discharge fully their constitutional responsibilities without jeopardizing its own financial position, and would, at the same time, remove the necessity for excessive taxation and the accumulation of further public debt. It would put the dominion and the provincial governments in a financial position to implement adequate programs of post-war rehabili-

The Budget-Mr. Kuhl tation and reconstruction, which would raise progressively the standard of living of the Canadian people to the high level which the abundance of our resources and our steadily expanding productive capacity would make physically possible.

I think that was a most worth-while contribution to a solution of the dominion-provincial controversy. I would go one step further, however, and add to that suggestion. I do not feel that this controversy can be settled through dominion-provincial conferences. I agree with the suggestion made in 1935 in the special committee on the British North America Act by the late Norman Rogers, Minister of Labour, and the late Ernest Lapointe, Minister of Justice. At that time a question was asked as to what would be the starting point in a solution. At page 116 of the proceedings of that committee this exchange appears:

Mr. KUHL:

I could understand that attitude on the part of members of the C.'C.F. party, because a't all times they are attempting to show up business in the most unfavourable light possible. That, was possibly one of the strongest remarks made by the C.C.F. members on the committee, and it was quite unwarranted considering the evidence 'that was given later. Here are the words of the hon. member for Moose Jaw in addressing one of the witnesses, as reported on page 3713 of the proceedings:

Would it not look to this committee that this is one of the most shocking examples of a company not showing their strength in order to keep these prices down? There is no sense of public responsibility there because if every company in Canada took the view that you have been taking we would have uncontrolled inflation in this country andi an inevitable depression. I do not know what your justification is for that time taking such a terrific and abnormal profit.

That is typical of the questions asked and the inferences drawm by the C.C.F. members of the committee. I can, well expect that, because it is their ambition and objective to substitute nationalized industry for private industry and they will do anything they can to discredit private industry.

I should like to make one more reference to the criticisms of the hon. member for Moose Jaw. I have often said that if the truth were known members of the C.C.F., socialists and others who subscribe to a like philosophy are not as much opposed to profit as they are envious because they are not making the profits themselves. Actually I think they believe in the profit motive for themselves, and I have a little quotation which will substantiate that. This is our good friend, the hon. member for Moose Jaw, speaking to Mr. Wolfe, general manager of the Ontario Produce Company. Mr. Wolfe said:

Let me put it this way. If we were able to get the Toronto trade together to maintain a lower level on the price of our produce could we not likewise get them together to hold prices up at some time when supply and demand could bring lower prices?

Mr. Thatcher: I am not suggesting you

should have got together, but I think possibly you could have set an example. It looks like the example you set was a bad one. You took all you could get. Maybe I would do the same thing if I were in your spot.

When C.C.F. members are off-guard they really reveal what they feel inside. As I say,

I can understand that type of criticism emanating from C.C.F. members, because they claim they' are opposed to the private enterprise system. It seems to make no difference what is discussed in this house or in the committees, the discussion always resolves itself eventually into a debate on the principles espoused by the various political parties. The questions asked in the committee were coloured by the particular philosophy subscribed to by the hon. member asking them. That is quite natural.

As I said in the beginning, innuendoes that the private enterprise system is responsible for the high cost of living should not emanate from members on the government side. They represent themselves as being the champions of private enterprise and they should so conduct themselves. There was altogether too much time taken up in the committee in an effort to blame private business for the high cost of living.

The hon. member for Cariboo (Mr. Irvine), who just preceded me, made some statement, about profits being high. I think I followed fairly closely all the evidence that was given and outside of the potato case and one or two others there were few instances where there were what one could call high profits. In most instances the profits were quite modest and in some cases there were none at all. There were times when the profits were less than they were under controls.

I should like to refer to a statement with regard to mark-up and controls by Mr. Steinberg of the Steinberg groceterias. He was being questioned by the hon. member for Moose Jaw as follows:

Q. You are telling us the retailer has not benefited particularly or has not made any greater profits with controls off than he did when they were on?

A. No, I would think the retailer has made less.

Q. Has made less?

A. Yes.

Q. Then he has not benefited by the fact controls were removed?

By Mr. Kuhl:

Q. Therefore the consumer has benefited as a consequence of the controls coming off?

A. I would say yes.

Mr. KUHL:

I am not saying there should not be some censure in the matter. I have not the actual figures here, but the report of the committee says it was 43 per cent on sales. In any event, it affected only four carloads of potatoes and, as I say, the circumstances were precipitated by the government itself. They put the ban on overnight, and they made it possible for this man to make that money. Then they proceed to blame him for making it.

If that were typical of the whole of the vegetable industry I might understand a censure of that kind being made in this instance. But -when it is a mere drop in the bucket-

Mr. W. F. KUHL (Jasper-Edson):

Mr. Speaker, without wishing to give offence to any of the hon. gentlemen who have preceded me, I wish to say that at no time have I been adept in the art of making a hogshead of lather out of an ounce of soap; so I shall make my remarks as brief and to the point as I can, in view of the general desire to terminate this session as quickly as possible.

It was my pleasure and privilege to be a member of the prices committee, though not from its inception. I commenced my service with it at the end of April, in the position previously occupied by my colleague the hon. member for Bow River (Mr. Johnston).

First I should like to endorse the compliments which have been paid by previous speakers to the chairman of the committee, the counsel and the members as a whole, but in endorsing their remarks, I must say there was a notable omission from the compliments that were extended. I believe the witnesses who appeared before the committee, representing various businesses, also deserve a compliment for the contribution they made to the work of that committee, and I wish them

Report oj Prices Committee

to know that, as a member, I certainly appreciate the information I obtained. I believe they should be complimented, not only for the information they gave and the patience with which they submitted to cross-examination, but also for the manner in which they overlooked what in some instances 1 consider were positive insults. Perhaps that language is somewhat strong, but sometimes I felt that if I had been in the place of the witness I would have been tempted to make much stronger replies to the questions asked.

I voted for the setting up of this committee in the first place; not because I felt that anything startling or unusual would be revealed, but because I felt that, information might be brought forward which would dispel some of the false impressions abroad in the country, and also that, as a result of the work of the committee, we might be better able to determine what should be done in the circumstances. I believe a good deal of information was placed on the record which, if the public could become aware of it, would dispel certain false impressions which are abroad.

As has been indicated already by the hon. member for Eglinton (Mr. Fleming). I opposed the adoption of the report by the committee. Manj' of the reasons for which I felt I was justified in opposing it were advanced by the hon. member for Eglinton. In the main I believe the criticisms he offered were quite justified and I endorse most of them.

But I had an additional reason for opposing adoption of the report. I think my chief reason was the attitude adopted by the government members, which I resented very much. When I spoke on the motion to set up this committee I said I thought one reason the government was glad to take that action was that for the time being it would silence the wrath of the people with respect to the high cost of living. It would enable the government to offer the excuse that a parliamentary committee was investigating the matter, and as long as that committee sat they could transfer the responsibility from themselves to the committee. The committee has now finished its work; certain recommendations have been made, but I agree with those who have suggested that it still remains to be seen how effective those recommendations will be if carried out. Personally I consider them woefully inadequate to meet the situation.

The attitude on the part of the government members of the committee which I resented so much was expressed in the manner in which many of the witnesses who appeared before the committee were dealt with. I resented

the suggestion that, instead of being regarded as public benefactors, most of the witnesses who appeared there seemed to find the atmosphere like that of a sort of inquisition. They were looked upon as public enemies, who had to account for some wrongdoing. That was the impression I received from the manner in which many of the questions were asked; and I am going to read a few excerpts from the records of the committee to substantiate what I have said. I would not say that applied in every instance; nevertheless in many cases it was true.

Naturally I tried to discover a motive, and the only motive I could arrive at was that up to that time-and it is still the case-the government were not prepared to meet their responsibility in the way I at least think they should. The government have not met their responsibility because they have not done those things I believe they should do for the people of Canada, and therefore the government must look for a scapegoat. I considered the attitude they took toward many of these businessmen was because they were looking for a scapegoat for their own sins. They were attempting to make private business the scapegoat for their sins. In my view it was most unfair for the committee, and furthermore I believe it is a dangerous attitude to take.

From all sides of the house we have heard expressions of fear of the communist menace with its danger to the private enterprise system and freedom in general. The government, the Liberal party and the Progressive Conservative party nominally at least represent themselves as being the champions of the private enterprise system. Yet if one goes over the evidence somewhat carefully he will find that a concerted effort was made in the committee to discredit private business-or at least it had that effect. I am satisfied, from the newspaper reports which went out in consequence of some of the questions asked in committee, that many of the public are under the impression that a large number of businessmen are just a lot of bloated profiteers and chiselers. I believe there is too much of that impression abroad. There has been too much of it abroad for too long a time, without those wiho claim to be the champions of private enterprise lending any more emphasis to it.

Just to indicate a little more specifically what I mean, I should like to refer to one instance of this. While I think of it, perhaps I should say at this juncture that I can understand hon. members of the C.C.F. party doing that, because they have come out flat-footed and have said they are opposed to the private

Report oj Prices Committee

enterprise system and opposed to profit. Therefore it is in their political interest to discredit private business as much as they can so as to give them an excuse for nationalizing industry.

However I cannot understand that attitude on the part of those who pretend to be the champions of private enterprise. Therefore I resented the attitude taken by some of the Liberal members on the committee when dealing with some of these matters. The case to which I shall refer is one where possibly we cannot altogether excuse the people involved. But again, as has already been pointed out, I think the .circumstances are attributable to government policy. It was the government which was really responsible. They made possible the circumstances under which these things could happen. Then government members have the gall to turn around and blame someone for taking advantage of those circumstances.

Here is one instance of it-and in this particular instance I think the general public would get the impression that most of the fruit and vegetable business was carried on in this manner, and that profits of this kind, were made regularly in that business. This is the case of Mr. Ruben Marlow, general manager of Marlow and Company Limited of Toronto. It is the case of the famous four carloads of potatoes. I should like to indicate here the way in which this man was spoken to and in which he was treated, which I thought was unfair and uncalled for, in view of the conditions for which the government itself was responsible.

The hon. member for Victoria (Mr. May-hew) was in the chair at the time, and it is his remarks I am going to quote. This/is what he said to Mr. Marlow:

I want to say this; it is my opinion, and it is a little more than an opinion that, in this particular transaction, both the government and its departments were trying to see that there was a supply of new potatoes on the market. The foreign exchange control board released American funds for this purpose. It would appear to me you took advantage of the situation and you prevented potatoes from getting to the public at a reasonable price. In other words, you did not live up to the spirit of the regulations which existed at that time. You took an exceedingly high mark-up. I certainly will draw this to the attention of those writing the report because I think you are doing a disservice, not only to yourself and to the people of Canada, but to the other people in your own business.

Then, when I myself pressed the witness to make a comment upon that statement, the acting chairman said this further:

I fully understand the explanation you make. As far as I am concerned there is no explanar\Ir. Kuhl.]

tion at all, there is no justification for it. There is no justification in your having taken the mark-up on the potatoes which you did at that time. That is my opinion. Those who are writing the report -will have to deal with it in their own way. I feel it is my duty to make that quite plain. As I see it, I consider it one of the most outstanding cases of its kind that has yet been brought to the attention of this committee.

So far as I recall, it was shown that this particular wholesaler had made 43 per cent on the sales of two carloads of potatoes. That is undoubtedly a very high profit. He justified it himself. He considered that it was fair, in the light of prices of vegetables at that time. I considered these statements of the vicechairman a most unwarranted censure of a businessman. In any event, I think the committee could have made statements of that kind among themselves, without saying it to the man personally.

Mr. KUHL:

What is your answer?