Mr. F. W. GERSHAW (Medicine Hat):
In making a short contribution to this budget debate, Mr. Speaker, I desire first to congratulate the Minister of Finance (Mr. Ilsley) upon the preparation and delivery of the budget. He has had many baffling problems with which to deal, but he has won a high place in the confidence of the Canadian people. A few moments ago someone said something about an election in the near future. When that day comes I believe this government should be returned, to promote the welfare and happiness of the people of Canada. They have headed into the storm; they have done what had to be done, and they are well equipped to represent Canada at the conference table and to deal with the problems of rehabilitation. The great issue before the Canadian people at the .present time is the war, which is never very far from our thoughts. As long as history is read, as long as memory lasts, the glorious deeds of skill and courage performed by the members of our fighting forces will remain with us, ever to their credit.
It has been said that one of the chief causes of the great depression which followed the last war was agricultural distress. I do hope that following this war the industry of agriculture will receive first consideration at the hands of the government, because if we have a prosperous agriculture we shall have prosperity throughout the whole economy of the country. I should like to bring to the attention of the
minister two problems that are of great importance to the district from which I come. Ever since the early eighties people farming in that district have found themselves at times in a condition of poverty, owing to crop failures. At such times they have had to obtain relief and seed grain and fodder from this government. The amount of such assistance was placed as a lien against the title of their land, and very little of that money has been repaid except when there was a transfer of title. Commissions have been set up in each province to deal with these old seed grain liens, but those commissions have not been very generous, and those unfortunate enough to have had to accept relief find themselves overwhelmed with the interest charges which have accumulated during the last forty years or so.
I should like to give some reasons why these old seed grain liens should be cancelled, in addition to the fact that such action would bring about a feeling of good will and of justice among these people. In the first place, as I have said, interest charges have mounted very rapidly. I have in mind the case of two people, Mr. and Mrs. Wing of Ranchville, who had to accept some relief thirty years ago. The day came when they wanted to retire. To their great surprise they found that the little equity they hoped would be theirs was completely wiped out by these liens, of which they had known nothing. They had thought these liens were long ago cancelled. I have another case of a man who received $293 in 1915 in relief fodder and seed grains. During the years he has paid $249, but he still owes $334.90, which is away beyond his ability to pay. [DOT]
The officers of the provincial government are in close contact with actual conditions and that government has seen fit to cancel its share of what was advanced for relief. The dominion allowed the people to settle in those districts and certainly should bear some responsibility. The principle has now been established that there should be a minimum standard, and it seems pretty hard to have children and grandchildren, some of them returned soldiers, having to pay for relief that was used to save their parents or grandparents from actual starvation at that time. If those bad crops had come along in more recent years the condition would have been corrected by means of bonuses or payments under the Prairie Farm Assistance Act. Surely that is sufficient reason why leniency should be shown. Someone has said that those who have paid would feel that they had been dealt with unfairly if some
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remission were given to those who still owed on their debts, but I do not believe there will be one person who will object on that account.
A permanent policy should be adopted to deal with the recurring droughts in those districts. Those who live there are convinced that they cannot depend upon moisture from the sky. During the last thirty years there have been, because of lack of rainfall, only about five paying crops. We do hope and put forward the plea that adequate provision be made, so that a permanent policy can be worked out in order that these relief debts and bonuses will be quite unnecessary. The people of that district are convinced that a great step would be taken in that direction if every acre foot of water now flowing to the sea could be used for production. It is quite impossible to find private capital to build these irrigation schemes. Experience has shown that governments must advance a certain amount of money to cover the capital cost. But there would be increased production; there would be increased traffic for the transportation systems; there would be increased trade; there would be more taxes collectable, and it wohld not be necessary to provide relief and assistance.
If you go into those districts you find that the homes are often badly in need of repair. The people are isolated; they are long distances from their neighbours. They have no grass and trees and they cannot make real homes. If water were provided; if use were made of the water that is there, there would be flowers and gardens and dairy products. A community life could be built up and there would be food provided for the proper nutrition of the people. The people of this country are not getting a balanced diet. If they were we would be consuming eighty per cent more milk, forty-one per cent more butter, fifty-five per cent more eggs, twenty-nine per cent more meats and about 120 per cent more fruits and vegetables. These are the very products that could be produced as the result of irrigation.
Many of those districts are suffering from drought at the present time. If you went through them you would see that the grass was thin and brown, that the crops were poor and that the cattle were in need of water and pasture. Then if you drove into an irrigated district you would find an entirely different atmosphere. You would find the grass tall; you would find large stacks of feed; you would find the cottages and homes painted and more homelike; you would find a much better feeling, more hope and courage.
The provincial government has been approached regarding this programme and it
is ready to do what it can within its means. Petitions have been circulated and signed by thousands of people in those districts. Every member of the cabinet in this government has been approached and has been made familiar with the situation. It is true that something has been done under the Prairie Farm Rehabilitation Act in the way of building small dugouts and stock water reservoirs and other irrigation schemes, but these all depend upon the spring run-off. When there is no snow there is no run-off and the reservoirs are soon dry.
Surveys have been made, and I want to thank the Minister of Agriculture (Mr. Gardiner) for sending in surveyors at the beginning of this year to complete the survey of one large district, the Redcliff-Ronelane district. These problems have been before the reconstruction committee of this house on at least two occasions. In June, 1943, the reconstruction committee recommended that immediate steps be taken to bring about cooperation between the dominion and provincial governments to the end that these districts may be completed.
Mr. Meek, chief engineer of the Department of Mines and Resources, has been over the Milk river project on different occasions and he is thoroughly familiar with the whole proposition. He is convinced of its feasibility and practicability. Mr. Hayes, an engineer of great experience, pointed out to the committee that there were difficulties in irrigating, but he also pointed out that in the light of experience gained and knowledge now acquired great prosperity could be brought about if these districts were completed.
In the St. Mary's-Milk river district 345,000 additional acres could be brought under the ditch at a cost of about $44 an acre. This matter is urgent because, if this project were completed, the waters of those international streams could be used and if it is not completed they may be lost forever. There are 120,000 acres under irrigation but with deficient water supply with consequent lighter and poorer crops. Additional water is needed.
The Redcliff-Ronelane scheme was built up largely by private capital, and 180,000 acres could be brought under water for the cost of around $20 an acre. The people there are in deadly earnest. At a large meeting held in April of 1944, a resolution was passed recommending that the construction of these districts be proceeded with as soon as men and materials can be released from war work. The time has come when another step should be taken, a step that will really move some earth and get water into the ditches. If that is done an enduring work will have been
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constructed, a work that will be a monument to those who have completed it, a work that will last long after we are gone and be a great blessing to the people of future generations.
A little area near the ranching station at Manyberries, an area that would feed only one cow without irrigation, produced last year 2,400 bushels of feed grain and about 250 tons of hay. In the near future, and even at the present time, soldiers will be and are returning from the war and men must be moved from those dried districts. Land suitable for farming is becoming, scarce* Here we have a great area close to schools, hospitals, telephones, churches and railways that could be brought into production at a very reasonable cost. Dehydration is a common process nowadays and milk and eggs and a large number of vegetables can be dehydrated and preserved in that way. Quick-freezing plants would soon come into operation. By these means these protective foods can be made available all the year round for the people who need them. Then there would be seed plants, canning factories and beet sugar factories to complete the picture. The by-products of the beet sugar factories would be a great help to the live stock industry. Altogether it would revive and give permanency to the towns and cities there. It would create happy homes.
Education at the present time is valued very highly. Parents will sacrifice almost anything to get it for their children, and children often dream of it, 'but in the farming districts where the hazards are so great these dreams seldom come true. I am making an appeal to the members of this house to support irrigation projects because, by so doing, they will help to bring joy and happiness to many people. It would be a step away from that despair which comes when human hopes are crushed for lack of the economic means of fulfilment.
Mr. HARRY R. JACKMAN (Rosedale): Mr. Speaker, in speaking on the amendment to the budget I should like to direct the attention of the house to the following points: First, to the need for increased exemptions in the lower income brackets. If I understand them correctly, some of the calculations of the hon. Minister of Justice (Mr. St. Laurent) in re-' gard to the normal tax were not entirely correct. For instance, I do not believe that the increase in the brackets from $660 to $800 would relieve anyone of normal tax except those in the brack'd between $660 and $800 for single persons and, for married men, those in the brackets between $1,200 and $1,600. Only to that class would relief be afforded.
The second point to which I wish to address myself is that employers should be permitted after three years, and that time has already elapsed, to increase the pay of deserving salaried workers by a ten per cent upward adjustment.
Third, the conception of a modern budget. It is no longer what you earn that counts, but what the government lets you keep or hands you out.
Fourth, the need for a committee of ways and means, with power to call for witnesses and to consider alternative plans of taxation to the proposals which have been brought down by the Minister of Finance (Mr. Ilsley), which are seldom allowed to sufEer any major change at the hands of members of the house.
Fifth, why compulsory savings did not work.
Sixth, the need for an announcement of the government's general policy on post-war taxation. Business men cannot go ahead without a chart, and an announcement of the general post-war taxation policy would be a great step in giving the people of this country some basis on which to construct their own reconstruction policies which will afford employment to our people.
The amendment to the budget moved by the Progressive Conservative party would provide much needed relief to taxpayers, particularly those in the lower income groups, and at the same time provide a measure of relief that would not be inconsistent with the general financial policy of this country. In particular I refer to paragraph (b) of the amendment which reads as follows:
(b) that no effective action has been taken to grant a measure of relief to the men and women in the lower income brackets by raising the exemption in income tax for single persons to not less than $800 per annum and for married persons to not less than $1,600 per annum.
With the exemption on a single person's income limited to $660 per annum or $12.70 a week, and on a married man's income limited to $1,200 per annum or $23.07 a week, there is not enough left on which to live, much less enough left on which to begin to pay income tax. The cost of living makes the raising of the income tax exemptions necessary. Very small items bulk large in the worker's income. For example, two years ago the government permitted restaurants and hotels to increase the price of tea and coffee by five cents a cup. That meant, if the taxpayer were living away from home, an increase of fifteen cents a day, or not less than $54.75 for the year. Assuming that five cents was already charged for a cup of tea or coffee, which would surely be the minimum, we must
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add another S54.75, or a total of $109.50 a year, which the taxpayer would have to pay who uses three cups of tea or coffee a day. In view of the hardships which taxpayers living away from home were already up against, it would seem that the government might well have been advised to divert some of the taxation on alcoholic beverages and use it to subsidize the use of tea and coffee in public restaurants and hotels.
To give another example, take government employees in grade 1. Their salaries are inadequate; yet they are subject to the tax. If one visits local restaurants in Ottawa or makes inquiry it is found that just prior to the next pay cheque coming due many of these government employees cannot afford proper meals. They will have for lunch probably a sandwich and a coca-cola. The result is that they are undernourished. Yet this class of employees is subject to income tax, even though it is a small one, and it is our belief that they should be given a little higher exemption before they are brought into the income tax brackets. What is the use of the government taking away by taxation the income of these employees in the lower tax brackets and at the same time giving the cost of living bonus to some, and in varying amounts? As matters now stand, men and women in the lower income groups, both married and single, cannot live in decency, much less with comfort, on what is left of their wages and salaries after taxation. I urge the government to increase the income tax exemption on single men to $800 and on married men to $1,600. The cost of doing this would not be great; in fact, rather small after the cost of collection is deducted. It is true that it may be said to be inflationary, but only in a small degree, and not nearly to the same degree as is the need for some relief to those of our citizens in the lower income brackets. It comes with ill grace from this government to raise the cry of inflavor -hen it sponsors family allowances costing over $200,000,000.
Salaried workers, including those above the cost of living bonus class, should after three years of frozen salaries be permitted, where they have become entitled to it, a ten per cent salary increase. Salaried workers as in the civil service ordinarily get small increases from time to time, because in their early years they receive extremely small returns for their labour. As they continue in their employment they become of more value to their employers and because of this, and in many cases because of then- growing family responsibilities, it is customary and part of the implied contract that they should receive periodical increases. After three years with greatly increased taxation the plight of many of these workers is serious and economically much harder than that of other classes. I therefore urge upon the government that the salaried worker be allowed one upward adjustment of -ten per cent in his basic salary. I do not believe that there is a member of the house who will not agree that this permission to employers to give a ten per cent increase is not only fair but overdue.
To return to the estimates that were given to the house by the Minister of Finance, we have an estimated expenditure of $5,152,000,000 or $458 per person. Wei have an estimated revenue from taxation and incidental sources of $2,617,000,000, or $233 per person, leaving a deficit of $2,535,000,000, or $225 per head. We are paying for just over half the costs of the war through taxation; the remainder is provided by our people purchasing claims on the future through their subscriptions to victory loans and war savings certificates. But they are not sacrificing a present spending or purchasing power with anything but the firm expectation that, when the maturity of these war savings certificates or victory bonds comes around, they will be able to purchase just as much as they are giving up at the present time. They do not expect that a suit of clothes will then cost $100 or that a $1,000 motor car will then cost $2,000. They expect the same kind of dollar as they are giving up and lending to the government at the present time. If we were to pay as we go entirely we should have to double taxation in this country, and that would be arithmetically impossible in the higher brackets, and humanly impossible in the lower brackets, because something must be left on which to live. It may indeed be interesting for hon. members to speculate on what would happen to production if we paid for production as we went along, instead of borrowing against the future. What would be the effect on production if, for example, we paid out, not $5,152 millions bu only what we took in in revenues and taxation, namely $2,617 millions? What would be the effect in lessening incentive to our workers? And then we must ask ourselves, how long can we continue to spend twice as much as we collect?
In addition to the enormous expenditures which the house has already before it, we find that the Minister of Finance tells us that approximately $848 millions additional has to be raised in Canada in order to pay our workers and other producers for what the governments intend buying this year. The question of course arises as to what is going to happen to it. The minister said that there will prob-
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ably be large shipments for which we shall have to take payment only in the future. In other words, someone will be indebted to us and we shall have to take payments only in the future, or present payment in a currency other than Canadian-something we cannot spend at the present time, but which may be of value in the future. May I ask him, what is the nature of the transaction which involves such a large amount of money, $848 millions, over one and one-half times our ordinary peace-time budget? We are merely given a hint as to what it may be. Is it to be mutual aid to our allies who are going to use on the fighting front the goods represented by this money? I believe the minister must give us as full an outline as it is possible for him to give before this budget passes. Certainly, if we learn nothing about it, and parliament has adjourned, we have been warned already that the money will probably be spent; we do not know how it is going to be raised; if necessary, I presume, it will have to be manufactured by the printing press or the government will have to go to the Bank of Canada-it is almost the same thing-and the people's representatives will never have been consulted.
Once again, Mr. Speaker, I suggest that a committee of ways and means with the powers which I have already outlined is urgently required to pass upon these matters, unless the executive is to take complete power away from the legislative branch. About the only power left to us, namely the legislature, is that of scrutinizing expenditures and supplying money to the crown. Surely some right has to be left to the legislative branch of parliament.
The budget has really assumed tremendous proportions. Against our normal budget of about $500 million, our present budget is over ten times that amount and our cash requirements are about twelve times as great. Unlike the ordinary taxpayer or individual in this country, parliament does not figure out where the money is coming from before it spends or appropriates it. It is very much like putting the cart before the horse; and I believe that if we had a committee of ways and means we would be able to cut our coat more closely according to our cloth and have some realization of where the money is coming from before we decided how it is going to be spent. Certainly the present method cannot go on for ever without having very serious consequences to our whole economy. The only exception I would make to that stricture on the government is in connection with the war. Certainly we must not count the cost there before we spend it; we must spend every cent and every dollar we can which will shorten
the war or save the life of a single man. That is not only our duty but our self-interest and our solemn obligation.
May I point out to this house, however, that finance is not an abstract affair apart from the people with whom it has to do. It does not operate in a vacuum. I believe that the temper of the people will allow the present method of financing to continue until victory is assured. But finance deals with people; its possibilities and limitations are rooted deep in human nature, and hence I use the qualifying phrase, "temper of the people".
In the post-war period we must make financially possible that which is physically possible, and may we hope that the temper of the people will allow that to be done. The question will undoubtedly arise at that time, will three million Canadians continue to buy government bonds and war savings certificates? I was reminded in this connection of a statement of Field Marshal Ironside, who, when he was congratulating our armies on the capture of Cherbourg added:
Every war ceases by the fact that men will not fight any more. Whatever the order given by a general or a government, when men cease to fight then the war is over. That I hope is just coming.
Or as General Montgomery says:
You can do anything with an army if the morale is 'high.
And I suggest you can do anything with production or with finance if the people are willing or have confidence. Despite the tenets of certain political doctrines there is a limit to what the people will stand, and they will stand different things at different times. Education and new ideas are a great help, and we all live and learn. But I maintain that a system which has built up the modern industrial world, based on individual initiative, is the system which is best calculated to provide the highest standard of living for all.
I should now like to say a few sentences about the conception of a modern budget, because I believe that not only will some hon. members be interested, but the people should understand what we are doing when we discuss budget matters in this house.
In a little booklet entitled, "Full Employment and the Budget", by Hugh Molson, M.P., is the following:
In the days of Gladstonian finance, it was considered that the state should concern itself as little as passible with the economic and social life of the country. Its activities were so narrow that in 1887 Lord Randolph Churchill resigned the office of Chancellor of the Exchequer rather than introduce a budget of 88 million pounds. It was thought best to leave money "to fructify in the pockets of the taxpayer."
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And, quoting further from the same pamphlet:
As Mr. Quintin Hogg, M.P., said in the House of Commons on 14th April, 1943: "we are gradually passing through a transitional stage betwen two different conceptions of what our budget is. It still is in form a statement of the accounts of the treasury-the ordinary expenditure and revenue of the year-but it is gradually developing into an annual review of our whole economic life and resources. I believe the process should continue, because I think it will lead in the end to a much wiser view of our economic policy."
The modern budget, unlike its predecessors, results in the redistribution of the national income, although that is a new conception in this country. Here it was not found necessary until some years ago, because in Canada individual initiative counts and here the children of the same family have the same opportunity, and these same children can occupy the highest or the lowest places in our economic society depending on their own abilities and application. But now the national income, which is the adding together of all our wages and salaries, those of every one of us, into what I may term, and it is so-called by many in fact, the national pie- this national pie is divided by bureaucrats under the aegis, if you will, of the Minister of Finance and under the authority of the government. You and I are merely a collection agency until the budget is brought down. It is no longer what you earn that counts, but what the government lets you keep or hands out to you. It is no longer what you receive from your employer, in competition with your fellow men, which determines how much you shall have, but simply how much the government decides that you may be allowed to keep at the end of the year. The old virtues of self-preservation, hard-work and self-denial will, I believe, reassert themselves because they are part of the fundamental law of nature. We may hope that glittering prizes for sharp swords will not be held out after the war, but at the same time we may hope that there will be payment to everyone according to his ability and his contribution to society. Fortunately, the principle which leads to the greatest production still obtains, namely, free enterprise and individual initiative; and, as Mr. John Bracken has said, it is that principle which leads to the distribution of plenty and not to the distribution of scarcity.
But it is this importance of the modern budget which I wish to emphasize to members of the house, because it surely gives rise to the need for a committee to examine these matters, since probably nothing is of greater importance to the people of Canada than the
manner in which the budget redistributes their earnings throughout the year. It has a direct effect on every taxpaying individual and nowadays, therefore, on practically every individual. There is an imperative need that a committee should be set up which knows the needs of the people and what the people will stand for, rather than to have the whole matter settled by a mere handful of people in Ottawa. Such a committee would avoid gross errors. For example, I do not think the situation in regard to compulsory savings would have been so unhappy and so disastrous had there been a committee composed of members of this house. This redivision of the national income, that is, everyone's wages and salaries, is of much greater importance than many other measures in this house on which we spend endless time and which do not begin to compare in importance with the budget.
The second basic consideration which the minister outlined in his budget address was that we must have the highest possible production, and that the urgency is very great and is immediate. This is surely not a new principle either in war budgets or even in peace-time budgets. It should be the allcompelling one, although I am afraid that sometimes other principles are allowed to take precedence over it. May we hope that, in the post-war period, whatever government is then in power will allow the principle of production to take priority over any principle of tax collection, because the budget is surely made for business and not business for the budget.
In the 1942 budget the minister upped the personal income tax and introduced compulsory savings. The latter was by far the major matter of the two. At that time he mentioned the three determining principles in framing his budget as equity, incentive, and the need for savings. The minister said this:
There is danger that high progressive rates of income tax may interfere with the incentive for harder and better work for efficient production. We can and must rely upon other than economic motives to a large extent these days, nevertheless, we cannot afford to dispense entirely with the incentive of improved earnings as a stimulus in the continued week-in week-out production work of the nation at a time when production is of vital importance.
I suggested at that time that he was guided if not dominated by bureaucrats, and as a result the compulsory savings measure has utterly failed, and failed perhaps to a large extent because this country has not had during the war the spiritual leadership which we might have expected and which some other countries have happily had. Now we find compulsory savings partly done away with. The error, in
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the minister's judgment, or in the judgment of his advisers, which he accepted, is obvious and admitted.
Topic: THE BUDGET
Subtopic: DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE