Manitoba Hansard — Sitting 18 (26th Legislature, 5th Session)

26-5-18

Manitoba — Debates (Hansard)

Le gislativ e Ass e mbly Of Manftoba DEBATES an d PROCEED IN GS Speaker The Honourable A. W. Harrison Vol. vn No . 18 8:00 p.m ., Monday, March 5, 1962. 5th Session, 26th Legislature Printed by R. S. Evans. Queen�s Printer for the Province of Manitoba, Winnipeg

THE LEGISLATIVE ASSEMBLY OF MANITOBA 8:00 o' clock, Monday, March 5th, 1962. MR. CHAffiMAN: Resolution 8. MR. MOLGAT: Mr. Chairman, before the dinner adjournment we were discuss ing the matter of savings bonds which the government has issued, and I wonder if the First Minister has any further information. MR. ROBLIN: Mr. Chairman, I took the suggestion of my honourable friend to consult . with members of the department. They tell me the information is available but it is not readily available--there's no chance of getting it as quickly as my honourable friend wishes.

But I have a suggestion to offer which perhaps might meet his position; and that is that it would be, I think, quite useful if he were to ask for an Order for a Return on this. Then he could specify exactly what it is he wants, we'd do our best to get the information far him , and he would have it, I trust, reasonably soon. MR. MOLGAT: Well, Mr. Chairman, I quite appreciate.the fact that after I got out of the Chamber I realized it was 5:30 and I don't think you like to ask the staff to work overtime, so I have no objection to not having the information this evening.

Ho wever, I think this is an im portant item as I pointed out this afternoon. We are dealing with large sums and I think the people of Manitoba are entitled to know exactly how their business is being handled. And on this subject, as I indicated, the net interest cost runs something in the order of $5, 000 a day which is a large sum of money. I think it's important that we have the information.

I would suggest that if the Minister is not in a position to give us the information this evening that we could pro ceed to discuss any further items under the particular resolution and then we can leave it open and we can get the information, say, tomorrow or the next time we're on Treasury or back onto the estimates once again.

The information that we would want is specifically when the $40 mil lion came in what happened to it, where was it invested and what portion of it in particular was invested in treasury bills and at what rate, what was the net cost • In other words, the relation ship between what we were paying out in interest on the $40 million and what we were getting back ori. the short-term investment that we made, so that the House can determine whether or not this was in effect as good a deal as my honourable friend likes to tell us. --(i nterjec tion)- Well I think it's a reasonable request, Mr.

Chairman, that this should be given under this item. After all, we're discussi ng Treasury. The information I'm asking for is not that com plicated. My honourable friend surely must know what they do wi th the money they get, and it's as simple as that. MR. ROBLIN: ...... you want to know . If you write it down I'll-- MR. MOLGAT: I'm just telling you what I want to know. I want to know what you did with the $40 million that you got and I want to know if the deal's as good as you pretend it is.

You've been going up and down the province and again in this House and every time you talk about it you say what a wonderful deal it is. Well I'm not saying it's not a good deal. I just want to know that it's a good deal. I want the people of Manitoba to know where they stand on this thing. That's all I'm asking. Very straight-forward--all you have to do is give the information. MR. ROBLIN: ... •.. Order for Return and you'll get it. MR. MOLGAT: In other words you are refusing the information on this item. MR.

ROBLIN: I think we could get what my honourable friend wants _in a com pletely accurate form if he writes down what information he wants to get; we'll see that he gets it. MR. MOLGAT: Well--but Mr. Chairman the purpose of es timates is to be able to ask questions. If we've got to do everything by Order of Return then we may as well forget all about having estimates and we'll sit here--we'll prepare Orders for Return between sessions--we'll rise here--we'll put them all on the Order Paper and then wait until we get an answer. Now that surely isn't the way we should conduct our business.

We're dealing here with the Treasury De partment. We•re dealing in particular with the item of Adm inistration. Now surely the questi ons I asked are perfectly legitimate questions under this item. If my honourable friend can't supply them this instant--which I'm prepared to admit he may not be able to do--then surely my request isn't unreasonable that he should supply them at a later date under estimates still. MR. ROBLIN: If my honourable friend will give me a written statem ent of what he wants March 5th, 1962 Page 383

(Mr. Roblin, cont1 d. ) ...... to know, I'll find out for him, but I want it in wri ting to be abso- lutely sure what it is that he wants. MR. M. N. HRYHORCZUK, Q. C. (Ethelbert Plains): Mr. Chairman, I don't know why the Honourable the First Minister is so reluctant to answer ing a perfectly legitimate question. Before we adjourned for the dinner hour, the first Minister told us we could get the information we wanted at the Public Accou nts Committee.

He knew at that time that when we go into Public Accou nts all we 'll cons ider is last year's estimates, last year's expenses ending March 31 st, 196 1, and any questions we'd want to ask in that comm ittee on the points raised by the Leader of the Oppos ition wouldn't be answered. Now that's plain enough. I believe that he's evading these particular questions. All we want to know is what did he do wi th that $40 . 8 million of a bond issue last year, whether that money was used wi sely or otherw ise.

Is he using the treas ury bills that he's raising now to redeem some of those bonds that were floated last year? Are those bonds being redeemed? At what rate are they redeemed? How much of that $40. 8 million is still in the Treasury of the province or available to the Treasury ? Have the bondholders re deemed these bonds, and if so, how many? He tells us just lately that he's floating another bond issue, on top of the treasury bills that he intends to raise some mo ney with.

I think this House is entit led to know what he 's doing wi th that money, and when the Leader of the Oppos ition asks simp le questi ons that could be answered with a little bit of work and he admits that it isn't too much, then why not give us the answers? MR. ROBLIN: My honourable friend's list of questions, I think, is a pretty good indica tion of how difficult it is to get the answers for these things in a short time. It can't very well be done.

As to this bus iness of Public Accounts Committee, the Public Acc ounts Committee can examine any matter that is referred to it and while I am not insisti ng on that by any means, if this matter was raised in the Public Accounts Committee on the undertaking of the government that it would be open for questioni ng, then it cert ainly would be . We've done that before. My honourable friend knows it.

He knows perfectly well that we're not trying to use the Public Ac counts Commit tee to get the Honourable Leader of the Oppos ition in there and then tell him that because it isn't on the agenda we don't intend to provide the facts. I think that's a very, very uncalled for statement, because if an undertaking is given that it will be provided, it will be provided, but it cert ainly can't be provided tonight to the honourable gentleman. His questi ons or the others, because it is going to take some time to get this information together.

We do not refuse to give the information but we're going to know exactly what my honourable friends want to know and it's going to take some time to get it together . MR. HRYHORCZUK: But Mr. Chairman, would the Honourable the First Minister agree to hold this item until we get the answers to that question? MR. ROBLIN: I think, Mr.

Chairman, that we don't need to hold the item , but I have no objection to the matter being discussed in committee, provided that the comm ittee is going to be satisfied wi th the kind of answers that I can give, because the details that my honourable friend's asked for are certainly not at anybody's fingertips. Just recall what my honourable friend, the Member for Eth elbert has been saying for the past few minutes; you will recognize how difficult it is to get those answers. I am not interested in wi t hholding the information.

I am interested in making sure that the information I do give is com pletely accurate .

Now if my honourable friends will give ·US the matter in writing or--t hey've been. doing a lot of talking here tonight--allow us to read it in Hansard, so we know exactly what it is that you're asking for, we'l l do our best to provide it, but I suggest that there will be plenty of opp ortunities to raise the matter again if members want to, and I give an undertaking that we'll not attempt to close them off on the grounds of procedure or anything of that sort, because pe_rhaps when the Capital Estim ates are down or anyth ing of that sort, it's quite a reasonable time to reopen the matter, in view of the fact that it is Capital sums.

So we'v e got no objecti on to providing the informa tion and we've got no objection to discussi ng it in the Committee, providing he'll accept the kind of answers that I'm able to give in the Committee, but if you want to get more answers than that, it's st ill open for you to discuss at the Public Accou nts Acc ounts Committee and I make that offer- -that if you're not satisfied wi th the answers that I can give here, you can discuss it in the Public Ac counts Committee. But what is the point of trying to hide anything? There 's nothi ng we want to hide.

We just want to make sure that we give you the correct--as . nearly the correct facts as we can. Now on that basis we can provide the information as soon as it is available. Page 384 March 5th, 1962

MR. HRYHORCZUK: I am not suggesting, Mr. Chairma n that the First Minister is try ing to hide anything. That isn't the point at all. What we're doing is just asking for some simp le information that must be available to him as the Provincial Treasurer. That's all it is in a nut shell. MR. ROBLIN: But it isn't available as readi ly as that.

Now I want to go back to my hon ourable friend, because he just left the implic ation in my mind that what we are trying to do was some tricky device to close off discussion now, get it in the Public Acc ounts Comm ittee, then refuse to talk about it, on the grounds that it wasn't on the agenda of that commi ttee. Now that's the impression he left with me. Now I want to assure him that that isn't the case, that we've got.no objection to disclos ing all the information we can on this and we will do so, given reas onable notice. MR. HRYHORCZUK: •..... Mr.

Chairma n., that if the First Minister insists on taking this attitude he's the one that's going to leave the wr ong impression, not me. MR. PAULLEY: Mr. Chairman, while we're discuss ing the question of information forth comi ng to the comm ittee--discuss ing the question of the savings bonds , I don't know if the Hon ourable th'e Provincial Treasurer recalls that when we were discussi ng his estimates a year ago in respect of this department and in particu larly the savings bonds I requested information from him as to a brea kdown of the categories for which these bonds were purchased.

If mem ory serves me correct ly this information has not been fort hcom ing. If I recall correct ly the Hon ourable the Provincial Treasurer-- MR. ROBLIN: ...... question a little more clos ely and we'll try to get the answer. MR. PAULLEY: I beg your pardon. MR. ROBLIN: I'm not sure what you want to know. MR. PAULLEY: Well what I wanted a year ago and I was assured of rece iving the infor mation Mr. Chairman, was the facts of the breakdown of the subscribers to the savings bond issue of $40, 000.

Now if I recall correct ly--! don't know of course what this particular issue --(interjection)- -Pardon--$40 million.

I don't know if the forthc oming issue will be on the same basis as the last one, but if I re call correct ly the maximum that could be held by any corpora tion or individual was $25, 000 in the aggrega te, and a year ago we asked for the infor mation as to a brea kdown in categories in amounts--how many subscr ibers took the advantage of the full amount of $25, 000; how many took $20 ,0 00; and breakdown into reas onable categories . !w ouldn't be unreasonable and ask for full informa tion as to all amounts, but in genera l in the res pective categories. I might say, Mr.

Chairman, that I'm vitally concerned with this, or interested in this, because while in the aggregate there was $40. 8 million of an investment, I'm interest ed to find out because of the fact that the First Minister and all of us have mentioned in respect of the savings bonds of Manitoba, that this is an indication of general supp ort of the peo ple of Manitoba.

I wanted to know then, and I want to know now, how much of this support came from what we consider the ordi nary individual on the street; how much of it came from those who had, say, $25, 000 to invest in provincial bonds, and I would suggest that individuals like myself wouldn't have $2 5, 000 to invest in provincial bonds and I'd li ke the Provinc ial Treasurer who I think assured us of receivi ng this information a year ago , whether now he's in a posit ion in his department to give us this information. MR.

ROBLIN: I think I get my honourable friend's point and I can say that this info rma tion has only just rec ently become available from the department. I think I saw a statement on this approxim ately a month ago, so it's brand new information and I'll try and get it.

As I re call the statement the average investment was something in the neighbourhood of $2, 000 and there were some fourteen or so thousand investors--! hope that wor ks out ri ght--if anyone's got a quick pencil they can tell me whether it does or not, and the personal investments in it were in the neighbourhood of 32 to 34 million and about 6 or 8 million, so mething in that neigh bourhod, came from corporati ons and from estates.

A good deal of the money came from the metro politan area but all parts of the province were rep resented, and I'll dig up what informa tion we have on that and give it to my honourable friend, and if it's not satisfactory he can ask further questions. MR. GUTTORMSON: Mr. Chairman, during the last year this government has embarked on a pol icy whereby they hold cabinet meetings outside the city of Winnipeg, or outside this Cham ber. The First Minister has indicated that the meetings out in the country were justified March 5th, 1962 Page 385

(Mr. Gutt ormson, cont1d. ) ..... . because they wanted to take the cabinet to the people-- MR. CHAIRMAN: I don't think that is just on the matter that we have before us at the present mo ment. MR. GUTTORMSON: Why doesn't it, Mr. Chairman? We're dealing with an expenditure of money. MR. CHAIRMAN: No , I think that's not in order just here. MR. GUTTORMSON: I beg to disagree with you, Mr. Chairman. This is an item deal ing with a government expenditure of money and the subject I have to deal with is to do with the budget. I don't see why it isn't proper, Mr. Chairman. MR.

CHAIRMAN: I thought you were rais ing the questions as to the propriety of just leav ing this building, as you did the other day--holding meetings elsewhere. MR. GUTTORMSON: I'm sorry, I didp't hear you. MR. CHAIRMAN: I think we've got this matter before us now . We're discuss ing the bond; we're discuss ing the question of the finances. I think we should just keep to that for the time being. MR. GUTTORMSON: I'm sorry, Mr. Chairman, I can't agree with you. The matter I have to raise I think is import ant and should be raised. MR.

CHAIRMAN: I think we should stick to this ; we'll have lots of op portunity to discuss other matters like that later on. MR. MOLGAT: Mr. ·C hairman, with all due res pects to your ruling, it seems to me that poss ibly my honourable friend could bring this up now because we are discussi ng Treasury and I understand Treasury takes in all of the budget matters , and the news cli pping that I have says "Retreat held to consider budget. The Manitoba cabinet has a new retreat in which to hash out provincial finances".

Now I think that's what my honourable friend wants to talk about, and this appears to me to be direct ly related to the Treasury Department. MR. CHAIRMAN: No, in my opi nion, I leave it to the comm ittee, but I thought it was just a question of the advisability of having a retreat, as the rep ort says. MR. MOLGAT: It was a spec ial kind of a retreat, Mr. Chairman. It was a retreat on Budgets. MR. CHAIRMAN: ... ... to discuss any mortal thing under the sun, not necessarily fin- ances . MR. HRYHORCZUK: Mr.

Chairman, I don't think the honourable member is interested in the retreat; he's interested in the money that was sp ent to use this retreat. MR. CHAIRMAN: That's my ruling in the matter. MR. GUTTORMSON: I don't know why you're trying to cur tail debate on this matter . think it's very-- MR. CHAIRMAN: Well because--I did that because I see no direct connection between the holding of this retreat, as re ported in the press, and the question of the treasury. MR. GUTTORMSON: Well if it is used to deal with any matter that has to do with money, sur ely this is the time we should speak on the matter.

Do you wish me to read the cli pping that shows you why I feel I'm justified in sp eaking on this ? MR. ROBLIN: The Chairman's ruling really isn't debatable. If my honourable friend wishes to find out the sense of the comm ittee, let him make a motion to that effect. MR. GUTTORMSON: Mr. Chairman, I challenge your ruling. I think it's incorrect and I challenge it. MR. L. DE SJARDINS (St. Bo niface): Mr. Chairman, may I ask a question? Why are the affairs of the budget better discussed outside this building? It seems that I've asked the ques tion under Executive Co uncil and that question wasn't answered.

Now this might be the place. Is there any spec ial reason why this money matter can't be discussed her e? Do the walls have ears or what is the matter ? Is this in. order, Mr. Chairma n ? There must be some reason. I think that we're entitled to know. The Honourable the First Minister told me last Fr iday that he was very touched by my concern and I wish that he'd show that he is touched with the concern of other peo ple also and maybe he can give us an answer. MR. PAULLEY: Mr. Chairman, if this item that's raised by the Honourable Member for St.

George , if it's not pro per to discuss it under this particular item, where might it be prop er to discu ss ? I think if we had an indication that it is poss ible to discuss this on another item, Page 386 March 5th, 1962

(Mr. Desjardins , cont1d.) ..... if not this one, that might be satisfactory. --(interjections )- MR. PAULLEY: Pardon, under what item? MR. MOLGAT: Mr. Chairman, it was discussed, but it wa sn't answered. My honour able friends across the way didn't supply an answer . Now surely the request of my colleague from St. George isn't unreasonable. He's asking the question under Treasury. The movement out of the building here, the junket, was presumably for purposes of discussing estimates, from the reports we'v e had. Surely this is the proper place to ask the question. MR. HILLHOUSE : Mr.

Chairman, we no longer have a Department of Immi gration in this province so I think this is the proper place to discuss it. MR. SCHREYER: Mr. Chairman, I respectfully suggest that the matter which the hon ourable member raises could be discussed properly in the Department of Industry and Com merce under tourism, since motels are involved. MR. CHAIRMAN: That's the ruling that I--(i nterjection)- -Pardon?- -that it's out of or- der to be discussed at this present time. This matter's already been discussed. MR. ORLIKOW: Your ruling apparently has been challenged,-- MR.' CHAIRMAN: ...... it's for the comm ittee.

MR. ORLIKOW: Your ruling apparently has been challenged and possibly I'm a stupid member of this comm ittee but before I vote on your ruling I wo uld like to know at what point this matter can be discussed. If there's another point at which it can be discussed then I cer tainly would not want to vote against your ruling. If there isn't, then I'm afraid I would have to vote for the motion, and I think the members of the House have the right to know when this tremendous sum of $36 .2 0, when it can be discussed, or where? MR. ROBLIN: Mr. Chairman, I don't know whether I can help you on this point or not.

The government has got no objection whatsoever to the matter being discussed, as long as any one likes to .discuss it. Unfortunately you have made a ruling on this and I don't think the com mi ttee really wants to challenge the ruling.

We may be able to find some other items on which we might be able to discuss it and on that basis, I can't think of one at the moment, but I would suggest that we do not press the matter at the moment and we can have a look at the estimates and see where we could discuss it, because I've certainly got no objection to the honourable gentlemen oppos ite expressing any opinions they like on the subject.

So if that wo uld be agree able we could just forget about it for the time being and between now and next time this com mi ttee meets we could see where this matter could properly be discussed and make that known to members of the comm ittee. MR. HRYHOR CZUK: Mr. Chairman, that may be a very good suggestion but supposing we don't find an item under which it can be discussed. I wo uld suggest that we hold this item until we find one that we can discuss this point on. MR.

ROBLIN: We can't do that in view of the Chairman's ruling and besides we have the Speaker's ruling, which we don't know what that's going to be, on the very same point tomorrow . So why not just let this matter rest for the time be ing and see what happens? MR. DESJARDINS: Mr. Chairman, it wo uld seem that the Premier is so concerned of finding a place to discuss it. You have ruled that the Honourable Member from St. George was out of order but you haven't ruled on my question yet: why was this questlon of budget better dis cussed outside this House?

Maybe we can find this place wi thout challenging any ruling, find this place to answer it. I think that this is related; I'm just asking this: why are the affairs of the budget better discussed outside this House? T think this wo uld give the Honourable the First Minister the chance that he wants to find some way to discuss it. MR. CHAIRMAN: Well I think perhaps that we should just leave the matter for the time being and as the First Minis ter says find some place-- MR. DESJARDINS: Well, wo uld you give a decis ion also on my question? MR. CHAIRMAN: Pardon? MR.

DESJARDINS: Am I to feel that I'm out of order also on my question? MR. ROBLIN : Mr. Speaker, I think the honourable gentleman can discuss his point and I wo uld suggest that probably when we get to Public Works there's an item there on public build ings and includes this Legislative Assembly and my honourable friend can speak on it then and we can discuss the matter. MR. ORLIKOW: Mr. Chairman, I think we could discuss it under No. 9, Attorney-General. March 5th, 1962. Page 387

MR. ROBLIN: What's that say-? MR. ORLIKOW; Admin istration of est ates of the mentally incompetent. MR. ROBLIN: Mr. Chairman, I prefer the suggestion of the Honourable Member for Brokenhead. MR. DESJARDINS:. Mr. Chairman, .....• will of course, deal wi th buildings that are not alive; that might be the place because this building has been emptied when it's time to dis cuss this . MR. CHAIRMAN: I think that's a good way out, to settle it, to let it co me, as the Fi rst Minister said, under Pu bllc Buildings and-- MR. DESJARDINS: Maybe we can buy the Charterhouse between now and then. MR. SCHREYER: Mr.

Chairman, ...... come back to the discuss ion we had on treas- ury bills . I just have two brief questions to ask the First Minister. As I understand it 90 -day treasury bills, the use thereof has been entered into by this administ ration in order to take ad vantage of the short term money market, and it seems rather strange to me that this should be attempted at this time in view of the fact that the federal government is moving into the short term money market in the hope that they will leave long term money market more open to provincial and municipal borrowing.

And if this is in fact the case -- and the federal govern ment people say it is--it seems rather strange that the Province of Manitoba should be moving into the same field as the federal government, with such hope. I don't think we can hope for as subst antial a saving as the "First Minister indicated. My question really has to do wi th amounts .

It could be that I wasn't lis tening carefully enough but the Provincial Treasurer gave me to un derstand that at the end of one fiscal year we would have accumulated or aggregated a total of about $13 million in debt by way of treasury bills , and if it is a fact that we are going to borrow by treasury bills at the rate of about one million dollars per month- -( interjec tion)--Oh. Well that answers the quest ion right there. I can leave the rest unasked. The other question, Mr. Chairman, has to do wi th the mechanis m as to how this money is streamed into us here in the province.

Now as I understand it the Consol idated Revenue Fund has several se parate accounts , the two main accounts of which are current and. capital, and I'm wondering if the First Minister could tell us if most of the monies that will be borrow ed by treasury bi lls are going to be streamed into the current account or is it going to be used indisc riminately for current and capital? Although I can't imagine short term money being used in capit al to any extent. MR. ROBLIN: Mr.

Chairman, answering my honourable friend, I may say there's plen ty of room in the short term money market for a great many people bes ides the federal govern ment. You will find that many, many com mercial organizations are in the short term money market, just the same way as .we are, and there's cons iderable sup ply of funds. If that were not so the rates would not be so low; and we would be ·out of that .. market if it did not appear to be financially advantageous to us. So that's the reason why we're in it.

It's going to save us a couple of hundred thousand dollars in interest charges, which, as I think , is saving well worth making. Now in connection wi th the other point: what do we do with the money ? None of it goes into current. This is entirel y used for capital purposes. Now I don't want my honourable friend to think that we put this in and out of capit al on a 90 -day basis because, of course, if the money is lent to the Manitoba Hydro, for example, to. pay for som e of the bills at Grand Rap ids--t hat's where a lot of lt undoubtedly will go- -they 're on a very, very long term basis, indeed.

That is why we have what's called the float; that is why we reissue these bills every week so that we have a continuous float of $13 mlllion. The effect of that is that we can use that money really over a very long period of time--it doesn't come in on 90 days . It's maybe years before the float changes. That's the way the system is devised. MR. J. M. FROESE (Rhineland): Mr. Chairman, I have been wanting to get up on my feet for some time and wasn't able to.

Since the last item in the estimates dealing wi th debt and taxation requires no resolution I think it would be proper to put any questions at this time regarding that aspect. Fi rst of all I think we all agree that today taxation has taken on in a big way. I notice that in the March issue of the Canadian on page 13 , headed, "Barometer" it has this to say: "Governments at all levels in Canada now pay 26% of the national income. This ls roughly what the United States Government takes wi th the big difference that in the United States Page 388 March 5th, 1962

(Mr. Froese, cont•d. ) ...•. real income are 40% higher", so we find that taxation in Canada is much worse than it is in the States. I would like to read a few paragrap hs on the matter of taxation. This is from the book called, "Aladdin 's Lamp" . It was written by Gorham Munson, an econom ic journal ist, and on page 298 he has this to say, and I'm quoting: "Only one govern ment in the world, the Provincial Government of Alberta, has ever officially provi ded the true backgrou nd against which the subject of public finance should be reviewed.

That was done in the document and patent, The Case for Alberta, released in 1938". The logic of these para graphs quoted below applies in every detail to the taxation problem faced by the United States Treas ury as we emerge. from the war period, and it applies equally in Canada. "The whole subject of public finance is bound up with that of the monetary sys tem. The princ ipal problems confronting all go vernments are the proble ms of an ever-m ounting debt struct ure and of the necess ity to secure an increas ing revenue to meet the continually grow ing needs for soc ial services .

These are due to the vicious results of economi c degeneration which in turn are due to a discr edited and defective monetary system. As a teacher of a system op erated at present the world over that as a nation, a province or a state becomes wealthier in real sense, that is in its abil ity to produc e, so its people become more and more financially impot ent. Public debts pyr am id and taxation increas es. The increased abil ity to produce is not reflected in the purchasing power of the people. In fact, purchasing power relatively de creases, leading to economic im potence.

Unemployment, increas ing indigents, and health de generation due to worry and poverty are the outstanding features of every econom ically wealthy country. They are the fruits of the present social order and are due to fundamentally defective financial system. Faced with such a si tuation governme nts are driven to provide increas ing soc ial services which resu lts in increased taxation.

As it is a feature of the present system that governments shall attain their revenues from taxation, and as taxation renders the individ ual citizen less secure to the extent that it reduces his purchasing power, it merel y aggravates the si tuation. Theref ore, rathe r than attempt to op erate within the limi ts of tax reve nue , gov ernments are driven to borrowing. This, however , mer ely eases their pride temporari ly, for the increased debt leads to increased taxation to meet interest and sinking fund payments .

This in turn leads to the need for further borrow ing and so the si tuation becomes more and more in tolerable for the people and increas ingly difficult for the government" . I think this is more true today than it was at the time it was writ ten and I would li ke to quote part of one further paragraph which deals with taxation itself, and I am quoting: "F ew people seem to realize that taxation is only rec ently res pectable. As the economist, C. E. Ayres has rem inded us, in early folklore the tax collector was usually depicted as a close rel ative of the devil.

Let us not smi le too readily at this superstition of prim itive peopl es. For most of recor ded histor y the job of col lecting taxes was too unsavoury a business for public officials. With the publicans of Rome in mind we may say that very often it was farmed out to pers ons who com bined the traits of a secret police with those of racketee rs . What has brought about the change whereb y co llectors of internal revenue if never popular are at leas t respected? ·T he change is connected with the growt h of indirect taxation which has kept pace with the grow th of commerce.

In fact, as Ayres carefully explains , our mer chants have be come unofficial and unpaid tax gatherers. Through the modern practice of bookkeeping, gov ernments are able to keep tab on the mer chants, and through the price system concealed taxes can be easily passed on·to merc hants• customers, and this way taxation, which was form erly regarded as disre putable oppression, has become the most res pected form of op pression, whitewashed by its victims even while they bleed" . And those few paragrap hs bring out some po ints which I would li ke to question the Fi rst Minister on.

One of them is in regard to the collection of gasol ine tax. Are our present col lectors reimbursed for the work? Secondly, in case they run up accounts receiv able and they have to dish out the taxes, is there any way in which they can be recom pensated for it? Then I would also briefly like to comme nt on one other aspect of the Throne Speech and that has to do with the brief to the Royal Commi ss ion on Banking and Finance.

In the Throne Speech there was a short paragrap h stating that "my ministers also plan to make re presentation to the Royal Commi ss ion on Banking and Finance when that body opens its hearings in Manitoba". I would li ke to know from the Minister just what aspects wlll be covered by that brief and whether he can give us any further information as to what the brief is to contain? I note that from this March 5t h, 1962 Page 389

(Mr.

Froese, cont 'd. ) .. ... same issue of Canadian, the March issue, there is a paragraph on that same page that I quoted before, page 13 , and it has this to say, and I am quoting: "Graham Towers suggests that the Royal Commission on Banking and Finance should direct its attention to the economic effects of taxation since fiscal policy has a major bearing on the operations of the banking system . 'If it is found that over-taxation is contribu ting to unemployment by rais ing cos ts and reducing incentive s, new government spending should be lim ited until the total tax revenue represents a lower percent age of the gross national product, 1 he said".

And fur ther to that I would like to have some information from the First Minister regarding unused authoriz ation for capi tal expenditu res. Could he tell us how much is still there to be expended ? How much in total there is authorized which has been unused so far? MR. ROBLIN: Mr. Chairman, I would like to try and deal wi th some of the questions raised by the last spe aker . I think, first of all, I'd inquire of him whether he has read Prem ier Bennett of British Columbia's budget spe ech this year ?

Because if he has he will find out that Premier Bennet t in Briti sh Columbia, who I believe is head of the Social Credit Govern ment, makes quite a point of the way in which he has used the public credit to support worthy public undertakings in the Province of British Columbia, and welL he might make the claim be cause the Province of British Columbia at the present time--i f one takes his com plete debt pic ture , namely a guaranteed debt as well as any other debt they may have- -has the heaviest per capita debt structure in the country, and far be it for me to say that it's too heavy, but never theless it is a fact that the Province of British Columbia has made very extensive use of the public credit to support the public undertakings in that province, and Premier Bennett in his budget speech--a nd I am just sorry I haven't a copy in my desk because I made a note of this portion of it--ma de it very clear that he was quite satisfied wi th the way they had made use of the public credit in that respect, so that it depends which Social Credit Government you're talking about.

Now the one in Alberta is--as far as I know and I think I'm rig ht here--is a pretty good government. I would say nothing uncomp limentary about them, but I would simp ly point out to my honourable friend that if he was reading the paper tonight, he would have notic ed that the revenue that is being planned for by Mr. Htnman, the Provincial Treasurer in Al berta, from oil alone exceeds the current revenue estima tes for the Province of Manitoba-- it's over $120 million.

So one can see that in that province they really perhaps are fortunate in be ing able to call upon these enormous revenues from oil to help support their public reven ues, and I submit, wi th respect, that that is the reason why the Province of Alberta does not have any direct debt of its own, although it too guarantees certain debts. It guarantees, for in stance, the debt of the Alberta Municipal Finance Corporation just as we guarantee the debt of some of our municip al undertakings here in this provinc e.

So that I don't think the question is by any means as open and shut as my honourable friend likes to make out, or at least the impress ion that he left with me that he wi shed to try and demonstrate that the re was a com olete difference of pol icy with respect of Social Credit Government and this government in res pect of the use of the public credit for public purpose s.

I think the Province of British Colum bia does much the same as we do in that respect, and the Province of Alberta is in the fortun ate pos ition of not having to do this to any great extent, though they do it to some extent, be cause they have these very large revenues from oil on which they can rely, and I say good luck to them. I only wi sh we·h ad the m here. Now with respect to the level of taxation.at 26% and the Royal Commissi on on Banking and Finance.

I would like to say that one of the things that we will certainly be presenting to that Royal Commiss ion--a nd our brief is not yet at the stage where I can give any detail as to the exact content--but the general line of discussion will emphasize, among other things , the effect of banking policy or perhaps even economic policy generally on provincial and munic i pal governments as such, and also on the question of regional development. We feel quite strongly that the question of regional development with respect to banking policy and monetary policy is one that this commissio n should study.

Now I am going to say one thing though, I am not certain whether we will take a pos ition officially in respect to the level of taxation at 26%. I think if one com pares it to the taxes in other countri es, one will find that it is not out of line these days. In fact if my memory is correct, and I hope it is, in the Federal Republic of Germany, for example, and it's often held up to us as one of the outs tanding free enterprise governments in the world, one will find that the level of taxation there is higher than the level Page 390 March 5th, 1962

(Mr. Roblin, cont• d.) .••..• here in Canada, so that it's really unfair to try and make comp ari sons of that sort. I wouldn't llke to draw any conclusion from the fact that one government in one country has a higher or a lower level of taxes than we do, because a great deal depends on just what the policies are that are be ing pursued, and until those are analyzed pretty carefully, I don't think that it's helpful to make the com parisons without further study.

Now on the question of unused authorization, those unused authorizations are still in force because the Legisla ture makes the appropriation in that way. It's not like current account appropriations which fall in at the end of every year. The capit al appropr iations are still out standing. I haven' t got "that figure wi th me, but I undertake to provide it for my honourable friend. MR. GUTTORMSON: A few moments ago you ruled against me speaking on a subject. Have I got your assurance that I can speak on this item on another item during the estima tes? MR.

ROBLIN: I am sure we can give the honourable gentle man that assurance. MR GUTTORMSON: Can you tell me where ? MR. ROBLIN: Well I for one, if we like to make an agreement about it, let us agree that on this building item that we'v e already mentioned that we 'll have a wide open discuss ion on these two propos itions my honourable friend is interested in. MR. GUTTORMSON: Is that in the Public Works ? MR. ROBLIN: Yes. MR. GUTTORMSON: All right then, I won't challenge your motion. MR. SHOEMAKER : Mr.

Chairman, I have three questions I think and I believe that I am in order in asking them now, because I would like to refer at the moment to the Manitoba Budget & Economic Review of 1956 that I have before me. Manitoba Budget & Econo mic Review 19 60, on the bottom of Page 26 the honourable the First Minister says, referring to the debt and I quote : "As to the cost of debt support, we realize how small this is in the li ght of our cur rent ability to bear these charges.

Net interest and amortization of disc ount costs for the next fiscal year will only take about 2% of our revenue com pared with about 24% of 20 years ago. This we can certainly afford to carry". Now my question number one is : It is a fact, isn't it, that the percentage now has risen to 8% ? That is , it was 2 at that time ; it is now 8%.

That's question No. 1, and then on Page 33 of the same report there's a subject matter here that I haven't had an answer to yet, and I quote again: "The problem of attracting savings into investments in provincial and munic ipal securities has been given a good deal of attention in the past few months . Various possibilities present themse lves , but in most cases these in volve inter-governm ental co-o peration which has not been forthcoming".

Then the Honourable the First Minister cites an example: "For example, Manitoba has for some time been looking at a method com monly used in the United States- -that of providing exemption from incom e tax for state and munic ipal securiti es". My question is, has anything further developed in that regard? My third question is this , and I think it is a fact that the Honourable the First Minister told us one day last week that the cost of acquisit ion of the 91 day treasury bills was $275 per milli on--! think that was the figure quoted. Now that is for 90 or a 91 days.

Now it does seem pretty ins ignificant, but I am wondering what was the acquisition costs for the 10 year Manitoba bonds that were issued last year. My point is this , is the acquisition cost per day about the same for the 90 day treasury bills ? That is, a 10 year bond would be 40 times the length of a 90 day treasury bill, so that you could in effect say that the cost, the acquis ition cos t of a 10 year bond would be 40 times $275, to give you a comp arison of the acq uis ition cost per day. MR. ROBLIN: Mr.

Speaker, in endeavouring to answer the last speaker, may I say that I don't agree with his figure on the perc entage that the support of the public debt bears to our revenue . I would put it at about half the figure that he gives , and my explanation would be as follows. The item in connection with net interest, and I suppose one had bet ter add as well the amortization of debt discount, can be regarded as interest costs- -and those are the costs of carrying the debt.

The si nking funds and the debt redemption item merely repres ents the re payment of the debt which is, in effect, a cancellation or at least a cross -entry from the si tua ti.on that would exist had we not borrowed the money, so that I don't regard the cost of the sink ing funds and debt redemption as part of the cos t of carrying the debt as we have to pay that money back anyway--i f it came out of current it would be the same. The extra costs that are involved are the costs of interest and they come to something over $4 million, so I would suggest March 5th, 1962 Page 391

(Mr. Roblin, cont' d. ) ..... that about 4% would be the cost of carrying the debt in the Province of Manitoba, which I don't think is out of the way and I think which leaves us cons iderable leeway for future activities. Now dealing wi th the tax-exe mpt bonds, I have to say that we have got precisely nowhere wit h the suggestion on tax-exempt bonds. We have raised the matter repeatedly at Dominion Provinc ial Conferences and I am afraid we've never got any indication that the Federal Govern ment would be happy wi th these.

However, I think I may tell my honourable friend that this is one of the matters which we intend to raise again when discuss ing munic ipal finance with the Roy al Commissi on & Banking Finance that will be here in a reasonable period of time. Now on the acquisition costs, I can give some rough figures on those which I believe give an indication of the si tuation. The cost of securi ng the savings bonds is--t he commi ss ion paid was 1%, so 1% over 10 years is one-tent h of 1% per year.

Now it's probably going to turn out to be something more than that because there is the question of redemptions which will increase the cost of acquisition. I can't tell him now what that will turn out to be, but it's roughly about one-te nth of 1% at the present time. Now what relation is the acquisition cost of $250 to $1 mil lion--let me see , how many 90 day periods are there in a year ? Four--if there are four 90 day per iods in a year, it means that on an annual basis the cost would be $1 00, 000-- that's on an . annual basis .

So $100 , 000 would be again, if my arithmetic is any good, one-t enth of 1% would it not?--on the million? So that it works out about the same in both cases . MR. CHAIRMAN: Reso lution 8--passed? MR. MOLGAT: Mr. Chairman, I have some more questions I would like to ask on 8. wonder if the Minister could outline to us how the income tax money which is now bei ng collect ed for the Province of Manitoba comes back to Manitoba. As I understand it, the cor porations which, if I recall correct ly, we are charging 1% in come tax, the final deadline for their report is June .

So far as the individuals are concerned, the final deadline for their report is the 30 th of Ap ril, and over and above that there are the monthly deductions from anyone on payroll. I wonder lf the Minister could indicate to us how these monies flow back to the Provin ce of Mani toba from Ottawa; when do we rece ive them; and what accounting is done and so on? MR. ROBLIN: Mr. Chairman, I can say that there is absolutely no difference in the pro cedure now than the procedure before. That is, that Ottawa sets up in the beg inning of the per iod the sum that they estima te we will receive.

They then give us installme nts on that as the year goes by and at the end of the year they see how close their estima tes were to the facts , and we either owe them money· or they owe us money. i think the esse ntial point ls that there is no change whatsoever in that procedure as far as we're concerned. It's the same as it was under the Tax-Rental Agreement, and the tax collecti on from my point of view in receivi ng the money, I can't tell the difference. MR. MOLGA T: The payments of course are larger on the present basis. MR. ROBLIN: The payments are larger. MR.

MOLGAT: How frequent are these installments made back to the Province ? MR. ROBLIN: Now, Mr. Chairman, I am afraid that I can't be sure that I am right on this because it is a matter of procedure wi thin the adm inistration. I think, lf my memory is right, that we get monthly payments on this account. Perhaps the honourable member for Lake side who has been a treasurer could confirm to me that that's correct, but my belief is , and I think I am correct, that it is on a monthly bas is. MR. HAWRYLUK: Mr.

Chairman, this afternoon I asked the First Minister regarding the interest on the $40 million and I got the answer as $3 mill ion--aro und 3-1 /2. I was just wonder- ing whether that's cont ained in the public debt here, ...... the question I asked of the $40 mil- lion that was-- MR. ROBLIN: Well we're paying 5% on $40 million, so that if the whole $40 million is out, whatever 5% comes to that's what it is . But members realize that not all of that, in fact a very small portion of that, perhaps none of it in some ci rcums tances, becomes a charge on the Consol idated Fund.

These interest monies are paid over to us by the Hydro or the Tele phone or whoever actually got the money in the final analysis, so that our net bill is the figure that's shown here in the estimates at something over $3 .6 million. MR. CHAIRMAN: Resolution 8--passed? MR. MOL GAT: Mr. Chairman, I have some further questions as well. I wonder lf the Page 39 2 March 5th, 1962

(Mr. Molgat, cont'd. ) . . . . Minister could undertake to find out for us how frequently the pay ments are made from Ottawa. MR. ROBLIN: Monthly. MR. MOLGA T: It is definitely monthly . MR. ROBLIN: Yes . MR. MOLGA T: Fine. And this is an average over the year, I presume. MR. ROBLIN: Yes . They set at the begi nning of the year, as the Honourable Member for Lakes ide can tell my honourable friend, they estimate--as a matter of fact it appears in the Estim ates in Ottawa-- they es timate how much this province is going to get, and on the basis of that they t:nake their payments.

Now at the end of the year they calculate how far out they are on their estima tes and, as I say, we may owe them or they may owe us, but they do their best to hit the estimate on the head to the best of the information that's available to them. Of course one has to reco gnize that this estim ating is a highly sp eculative busin ess, because what you are really esti mating is the performance of the economy for the next 12 months and that's an ex ceedingly difficult thing to do on the nose . It would be unusual, I think, if they were comp letely accurate , 'in fact there would be something wrong.

It would just be chance if they were com ple tely accurate. I think probably one could say that the estima tes that Ottawa prepare are usually on the conse rvative side, although I can rememb er one occasion, and the Honourable Member for Lake side will remember it very well as it happened when he was in of fice, that their estima te was optimistic and we didn't get all the money that they said we were going to get. But I believe that's the only occas ion on which they erred on that side.

Usua lly we get a lit tle bi t more, but you can't tell until the year is well over and they've had a chance to add up all the factors involved. MR. GUTTORMSON: Mr. Chairman, I see where the item under salary for the Minister is list ed as $10, 000 , and in the Executive Council it shows the Premier and President of the Counc il, $12, 000 . Now I know he's not taking two salaries but why is the differential ? This is the Minister 's Portfolio, as I understand it. Should it not be $12, 000 in this place? MR.

ROBLIN: For some reason which is perhaps not satisfactorily explained, the First Minister in Manitoba gets $2, 000 a month more than other members of the Executive Council. There 's a strong opi nion held by some in this House that he isn't worth it, and I hes itate to add my views to that particular thought. However that may be, I almost thought for a moment that my honourable friend was going to propose that I should be paid the two salaries, one for be ing the First Minister and one for be ing the Treasurer. Coming from him that would be quite a handsome suggestion, but he didn't get that far.

Of course I suppose it's pretty clear that I'm not going to get two salaries . The salary shown under the Executive Council is the one that I shall receive as long as I'm in the offi ce, and the other item is perhaps pro forma in case a new treasurer should be required in the course of the year . I may say that there are no plans at the moment, but one never can tell . MR. SCHREYER: Mr.

Chairman, in view of the fact that the allocation of $10, 000 is not in fact used, is it taken as given that at the end of the fiscal year it simp ly reverts back to the Consoli dated Revenue Fund, or is it diverted to another item in the same department? MR. ROBLIN: No, Mr. Chairman, it's not diverted to another item in the same depart ment. It falls back into the Consoli dated Revenue.

If members will unders tand that what we are discuss ing here are estimates only, and sometimes we get pretty badly fooled and our esti mates aren't very good or new circum stances arise- -for example, the drought of last summer and the forest fires were cert ainly not estima ted for and they were fairly expensive ope rations --but the money does go back into the Consoli dated Fund. There is a procedure for transfers between votes, on votes that are clos ely related, and sometimes that does take place if one vote is under-expa nded and one is over-ex panded--that sometimes takes pla ce.

But as a rule, if we are over-expanded we ei ther raise a spec ial warrant if the House is not in sess ion, or if the House is in sess ion we present it as suppleme ntary estima tes . MR. SCHREYER: Mr. Chairman, I know that it is a pretty hard and fast rule in provin cial and federal financing that no monies be diverted to one departm ent from another, and I un derstand it's just as hard and fast a rule , or practice, that no money be diverted from one vote to another .

I'm a lit tle surprised to hear the First Minister say that there is sometimes follow ed the practice of us ing monies from one vote for use in another item. March 5t h, 1962 Page 393

MR. ROBLIN: My friend mi sunderstood me. If I said that I shouldn't have. The appro priations are called sub-appropriation transfers and can only take place within a vote. You can not transfer mo ney from one vote to another. That's quite imp roper and it's not done. MR. GUTTORMSON: Mr. Chairman, do I understand the First Minister correct ly then that the $1 0, 000 that's alloc ated to the Minister's salary can be used for other salaries in that department? MR ROBLIN: It's possible, but I can tell my honourable friend it won't happen. MR. CHAIRMAN: Resolution 8- -passed? MR. MOLGAT: Mr. Chairman, still on 8.

This same item of the Minister has been in I think every year since my honourable frie nd took over as the Treasu rer, and every year we've , asked him the same questions. Is it his intention to appoint another Provinci al Treasurer ? Every year the same answer is given, that he hasn't quite made up his mind yet. I think either we should settle this one way or another , either appoi nt a Provincial Treasurer or remo ve the item. MR. ROBLIN: Mr. Speaker, the only firm stat ement I can make on this subject is that I will not invite my honourable friend to assume the task. MR.

MOLGAT: I can assure him that in his present administration, Sir, I would not be interested in the job. However, it will be not too long before we'll be in a position to undertake those im port ant duties and take care of them at that time. On the subject of Other Salari es, Mr. Chairman, there seems to be quite a--(interjection) --no, we're still under Item 8. There's a substantial increase there. What are the additions in particular in that line? MR. ROBLIN: Mr. Chairman, I'd li ke to deal with the question of staff here for the whole of the department if I may. It might be a convenient place to do it.

And that is, that in this de partment, plus the Com ptroller-General's Office, plus the Pre mier's Office, there is a total staff of--just a second now, if I can find it--155. This comp ares with 154 last year . However, there has been some shuffling around between these various com ponents of my res pons ibility, and in this particular item of Adm inistration Salar ies, there is an increase of thr ee. over last year--a Budget Analyst, a Clerk and an Executive Assis tant. MR. PAULLEY: Mr.

Chairman, while we'r e discussi ng salaries, if the First Minister may recall, the other day I asked him for the salary staff count of last year so that we could have this. He indicated that he was going to give it to us in form. Now I wonder or not whether he's not processed that. MR. ROBLIN: ..•... dealing with all departm ents. The Provincial Secre tary has those and he will pass those around to members . I also undertook to get a list of salaries for the Honourable Member for Carillon. I don't want him to think I've forgotten that, because I haven't.

I can give you the Deputy Minister in this department ri ght away so you'll have that. Last year his salary was $1 5, 000 ; this year , it's $1 5, 500. Now in addition to that the Deputy Treasurer sits on the Manitoba Hydro Board and receives $3 , 000 a year for that service as well, so that makes up his total emol uments from government service. MR. HRYHORCZUK: The estimates here cover all the establishments under the depart ment. Are these establishments filled at the moment, and if they're not, what positions are vacant? · MR.

ROBLIN: In thls particular item we're referring to, I believe there are no pos itions vacant in this heading of Administrati on - Other Salar ies. We can deal with the other sections as we come to them. MR. PREFONTAINE: Mr . Chairman, the data with respect to the staff in this depart ment give us some numbers. With respect to Adm inistration there are 32 being paid $196 ,0 00. That would average at about$6, 000. Further down we have in Taxation Branch an average sal ary of $3 , 400 which seems very very small in com parison to the average salary under Admin istration.

I would unders tand that the salary of the De puty Minister would come in, but I'm surprised to see such a differ ence. And if we go into other branch es , we find the average sal aries being $3 ,7 00 for a Central Electronic Data Proc essi ng Bureau and $4, 800 on Insurance. There seems to be quite a discre pancy with respect to the salaries under Administ ration and in other bra nches of the department. MR. ROBLIN: Mr. Chairman, I think that the question of salaries is one that ls ruled on Page 394 March 5th, 1962

(Mr. Roblin, cont' d. ) ...... by the Civil Service Commiss ion. They set the salaries. That is, they set the relative salary scales and have done from time immemor ial as far as I know, and they are resp onsible for the Salaries set for the different categories of public service. From time to time the employees ask for an increase in salary and that, of course, is based on what the Ci vil Service 's scale is . Now in respect of this particular section, it is perfectly true that there are a number of our more senior ci vil servants in this sections, and it is their salar ies which sends the average up.

For example, Pll name no names but i'll name the position. The Ass istant Dep uty Minister is in the $11, 640 bracket. There is a Direct or of Budget, the same salary. There is 'the Chief of the Economics Rese arch Divis ion that has a salary of $1 0, 920 . . The Chief of Organization and Methods has the same salary, and some of the Analysts are in the $8 , 000 class. So it is that that acc ounts for the fact that the average here is higher than some other sec tions because there happens to be conce ntration of some of the senior offic ers in this particular heading .

Although one recognizes that their work isn't limi ted to Vote No. 8, they have responsibilities in connection wi th all the Votes under Treasury and wi th the general financial operations. MR.' REID: Mr. Chairman . . . • . . spent in his department. How and where did he get this extra money ? MR. ROBLIN: I've just been informed by the Provincial Secre tary that I may have given a wrong impression when I said the Civil Service sets the salary. What I should have said was that they calculate what the salaries ought to be, and recommend, and then it's up to the Execu tive Branch to actually accept them.

But the practice is that we accept the recom mendations of the Civil Service Commission pretty well as they bring them in. I didn't get the question from the Member for Kildonan. MR. REID: You mentioned before that under-expenses of es timates in any department, the money goes back to Consoli dation Fund. Now suppose they overspent . Where and how do they get this extra money? I think he mentioned before if the House is out of session he can't get it. I was just wondering if he wants extra money, and he said it don't go from one department to another, well how does he get it? MR.

ROBLIN: Well we have a device called the Spec ial Warrant which is an old and long es tablished instrument by which the Executive Council can authorize the expenditures of monies over and above what may be estima ted, where they deem that the si tuation is suffici ently emer gent or press ing to do so. Of course the Spec ial Warrants are listed in the Public Accounts, but if anyone wants to find out what they are, all they have to do is ask and we' ll furnish that in formation. MR. SHOEMAKER: Mr.

Chairman, I would like to ask one further question, and I want to once again refer to the sam e report that I read from before. I quote from Page 29, and it says : "The case for restraint in capit al expenditure has been strongly made by the Minister of Finance and by the Governor of the Bank of Canada, and we would agree as to the validity of much that they have said.

" Then the Honourable the Premier goes on to say: "Perhaps it would be more practicable for us to reduce our borrowings for capit al if Canada would see fit to pro vide the province with a more realistic share of these import ant revenue fields which it now con trols ." My question ls: Has there been any change at all in that regard? MR. ROBLIN: I'm quite sure my honourable friend was here last August, or September or October or whenever it was when we thoroughly discusse d the tax-rental agreements, so he will know from that debate what the changes are in the tax-rental arrangements .

I think the shorthand way in which I could refer to it now is to make the statement that I made the other night, namely, that com pared to the '57 arrangements , the present arrangements in this year will give us some $4. 4 million. MR. S. PETERS (Elmwo od): Mr. Chairman, under Other Salaries , seei ng as we'r e deal ing wi th it, I notice there's an increase of $21, 045 in Other Salaries . Could the First Minister tell us , not exactly what each person is getting, but is this an annual increment for certain · people or are the top people getting more than the lower peo ple ?

What is the range of the in creases for these 32 people ? MR. ROBLIN: I think the Leader of the Oppositi on has got something to wants to say. MR. MOLGA T: It's on an entirely different subject. You may as well answer this one. MR. ROBLIN: If it's on this vote, I would be pleased to hear lt now. March 5th, 1962 Page 395

MR. MOLGAT: Well that's all right. It's on subs equent matters so you can go ahead and answer this one. MR. ROBLIN: I'll wait--!'11 wait for you. MR. MOLGAT: Well if my honourable friend doesn't want to get up, I'll proceed and give him the question I have at the moment, Mr. Chairman. On page 32 of the book of Esti mates is the item called Public Debt. Now there's no resolution number on it and I think this is the pro per place to discuss it. I wonder if the First Minister would explain to us in particular one figure--Appropriation No. 3, Am ortizati on of Debt Discount--if he could describe that figure to us.

MR. ROBLIN.: Yes I will, Sir. I feel rather confident that my honourable friend the Lead er of the Opposition knows as much about the Am ortization Debt Discount as I do. However, if he thinks I can add anything to his store of knowledge I'll be happy to oblige. The Am ortization of Debt Disco unt-- MR. MOLGAT: ...... Mr. Chairman, for when I'm over on the other side, because he suggested a few moments ago that I was unfit to take the reins . MR. ROBLIN: I appreciate that he's going to need an awful lot of help to get over to the other side, so I won't grudge him this question.

But dealing first with the Honourable Member .for Kildonan, or was it Elmwood? Let me say that the increased salaries are made up really of three com ponents. First of all, last year there was a general sa lary increas e. That is not shown in the item here for 1961-62. It is shown at the end of the book last year where there was some six or seven hundred thousand dollars for salary increase, but it was not distributed back to the department, so there is quite a sum in there that reflects a general pay raise that was given last year .

In addition, there are these increments which my honourable friend refers to and they are based on the salary that a person happens to be getting, so they may be different for every person. I really haven't got the information as to how much each one gets, but the in creases in the salary are made up of these items and that's how it is acco unted for. Going back to the question of Amortization of Debt Discount, I think that the situation can be explained in this way, that when a bond is sold, it may be sold at par; it may be sold at over par; and it may be sold at under par.

If it is sold at under par, the amount of that discou nt is the amount that is being amortized here in this item. The procedure is that each year one amor tizes the 20 year bond; one amortizes whatever is necessary to retire the whole of that debt dis count over the life of the bond, so that is , I trust, a fairly accurate description of what debt dis count is. MR. HRYHOR CZUK: Mr. Chairman, seeing that we're on public debt now and it seems to be a part of the particular estima tes that we're cons idering, in this item of 2(b) , Debt Re de mption-- it's under Public Debt that I'm talking now, Mr. Chairman.

Could the First Minis ter give us some explanation just what that money is used for ? MR. ROBLIN: It happens to be an amount of debt that is repayable in the coming year, so we provide for it. MR. HRYHOR CZUK: I checked through the last few years on our estimates just this morn ing and I noted that, until this government took over, this particular item was just over $2 mil lion for several years prior to that. Now I see that it's reduced to $1 million. Will that mean that we're redeeming our debt at half the pace that we were previous to 1958 ? MR.

ROBLIN : Sir, by statute we are instructed as to how we are to set up the items for sink ing funds and matters of that sort, and we are strictly adhering to that statute which was passed before we came to office. There has been no change in our policy in that res pect. MR. HRYHOR CZUK: Well that was just the point that made me make that query, Mr. Chairman. If this is a statutory provision, how come then that, with the additional debt that we have today, that payments on account of that debt are half of what they were prior to this government coming into power? MR. ROBLIN: I think, Mr.

Chairman, my honourable friend better look at 2(a), because lt is in 2(

a) that one sees reflected the sinking fund payments that are being made on account of that particular debt. There has been no change made in the procedure and a lot depends on when the debt was incurred and when it matu res . If it is not maturing for a long time, then ov er the 20 year period of the life of it, or whatever period the sinking fund is set up for, one al locates each year sufficient to have the sinking fund at the right level called upon by the Statute Page 396 March 5th, 1962

(Mr. Roblln, cont•d .) ..... at the time when it . . . . . , so that it may be say a 20 year wait un til th e sinking fund for that particular maturity happens to reach the level that is called for by the Statute. MR. HRYHORCZUK: ... . .. Mr. Chairman, if there is a minimum set and that you could exceed the minimum if you so cared to. MR. ROBLIN: I think that's perfectly true, that one can retire the debt- -one can change that if they w,ant to, but what we have done is we have stuck to the requirements of the Statute , which I think are am ple under the circumst ances . MR. CAMPBELL: · Mr.

Chairman, like the Honourable Member for Rhine land I am inter ested in the subject of debt, and I would like to ask the Provincial Treasurer if he could give us the latest figure as to the gross debt of the province and the net debt of the province. What time would--to the end of what month would the-- MR. ROBLIN: I think to the end of the 196 1 calendar year would take care of most every thing and be reas onably accurate. MR. CAMP BE LL: I quoted it the other day at well over a half a billion dolla rs . I notic ed that the' press has quoted it at more accurate statement than that.

I don't know where they got their information. Has some informati on been issued to the press in this regard ? MR. ROBLIN: Mr. Chairman, it may well be that the department has given some infor ma tion to the press . I do know that the department has been instructed to prepare this state ment for the purposes of the budget speech, because it is our custom always to give a com plete story on the public debt at that time--giving the latest figures . I do know that instructions have been given to the department to prepare that informa tion because the House ought to have it. MR.

CAMPBELL: Now on the matter of public debt, I would appreciate having it so that we would know about what we are talking about--as accurate figures. The debt--gross debt to the end of the calendar year and the net debt with the self-sus taining enterprises subtracted, be cause that's a subject that my honourable friend and I don1t see eye to eye on. As a matter of fac t, when he spoke to the Honourable Member for Rhineland a little while ago about British Col umbia, I was thinking he could have stayed a bit closer home than that. MR. ROBLIN: They got me beat out there. MR. CAMPBELL: Yes.

Yes, but relatively speaking, I would say my honourable friend is not letting them get out of sight at all . Then in connection with the debt, and I also am deal- ing with Page 32 of the estima tes , the item l(

a) is the interest on the public debt of the province and payments which may be required, necessa ry expenses and expenses incidental thereto, and it quotes the statute in that regard. Now that total is $18, 248 , 000- odd. I think I would be right in saying that that is the interest on the gross debt without any debt repayment or sinking fund contributions taken in. Is that correct ?- -(interject ion)--When we're talking about gross debt, we now have an interest payment of $18-1 /4 million approximately.

Now I looked up--my hon ourable friend knows that I have a particular affinity for the last year of the former administra tion because I suppose as long as I am around here that I will continue to make some compari sons, because my honourable friend makes them too--and looking at the Public Accounts for the year ending the 31 st of March, 1958, I find that what I esteem to be the exactly sim ilar item, that is the interest on the total debt, the gross debt, without any provision in it for sinking fund payments or debt retirement, as I see it--and we should check this figure--! make it to be $6 ,39 4, 000- odd.

Now I don't expect my honourable friend to have those public accounts probably with him--he'll know why I selected that time--and if my rough figuring is right, that would mean that the gross interest payment has gone from $6 , 394, 000- odd to $18, 248 , 000- odd, o r $11, 850, 000- odd. Now I recognize that that's the gross interest payment and I recognize that the amounts contributed by the var ious self-sust aining utilities , etcetera, can properly be de ducted from that, but--and we did that too, of course, in our time--but the fact is that it1s the taxpayers of the Province of Manitoba that pay it all .

They pay this one directly; they pay the Hydro through the Power Commissi on bills; they pay the telephone through the telephone rental. They pay them all, so even though my honourable friend by taking off the payments of those people, we st ill are faced with the fact that the int erest rise , the total interest rise is some- thing approaching $12 million. Now that brings me back to a favour ite theme of mine, where I like to quote the Honourable the First Minister when he said that "no matter what you call it, it's st ill debt" and it certa inly is growing fast.

The int.erest payment is growing fast; the amortization March 5th, 1962 Page 397

(Mr. Cam pbell, cont1d. ) ..... of debt disc ount is now a sizeable figure, well over three quarters of a million dollars by itself; and all in all, this is a page that I think requires a lot of coo s ideration. My honourable friend--t he very first set of estimates that he drew did som ething that I have always referred to as "trick y bookkeeping". I think it was unjustified at the time; I still think it was a wrong procedure, because he managed to make, by a change in the bookkeeping system, to make the net debt payment appear to be almost non-existent.

During a partic ularly inter esting time in this provin ce, right when there was an election on, my honourable friend in dic ated to the public there had actually been a reduction in the debt position in this prov ince, a reduction from the precedi ng government. I would like him to figure out for me now what the per centage increase is in the net debt; what the perce ntage increase is in the net interest payment. I've tried to give the perce ntage increase in the gro ss interest payment.

I'd like him to figure out, even if he takes these present figures of a net annual interest payment of $3 ,6 65, 000- odd, how many times that is greater than the net interest that he showed on the other occas ion. That memor y, of cour se, the honourable gentleman will think rankles with me. It does to a certain extent and, consequently, I would like to have some body put down on record, as I am trying to do with regard to the debt here, just exactly what the si tuation is. How much has the debt in- . cr eased--gross debt? How much has the net debt increased? How much has the gross interest payment increased?

How much has the net payment increased? How many times is the present net inter est payment what it was in the first estimates that my honourable friend put out? MR. ROBIJN: Well, Mr. Chairman, I don't suppose that my honourable friend really ex pects me to supply him wit h a full answer at this time. I feel th at he is quite capable of putting the facts on the record himself or no doubt will find an op portun ity to do so. But I would li ke to make one or two comme nts on his statement. First of all, I think he does me an injustice. He said that during that election campaign I said that we had reduced the debt.

I never made any such statement. What I was trying to show was that the debt we had was within our abil ity to take care of, and it still is as far as that goes , because when my honourable frie nd refers to the gross debt, and his figures are accur ate, they're ri ght here, he must ask himsel f a further question of how that debt got there and for what. pur pose. Well it got there because of the vote of this House. The government can't go out blind and willy-nilly putting on debt or borrow ing mo ney.

It can only be done so if we can make a sufficiently convincing case to carry the judg ment of the House, and let me say this, that in all the votes that have been put before this Cham ber on capital supply, I can recall only one which did rrot receive the unanimous support of the House. Last year there was a vote in connection with the floodway in which the Honourable Member for Carlllon and others decided that they weren't going to vote for it and they didn't, but that is the one and only occas ion on which there has not been comp lete support in the House for the borrow ing program of the present government.

Now we don't rely on that fact because we realize it's our re sponsibility to account to the people of Manitoba for the money that's borrow ed; the policies that lead to that borrowing; and for the debt structure that we have . We 're not going to try and dodge that re sponsibil ity because we think we can make a sound case for it, but to say as my honourable frie nd, at least it seems to imply to me that this was over his dead bod y or the dead body of other members of his party, simply is not the fact.

I don't think that on ma ture consideration that he would change one of his votes, because what was the money being voted for? Well , mo st of it as these figures clearly demonstrate , have been for the self-supporting enterpri ses in which we are engaged, like the telephones and the hydro and other things of that sort . Now my honourable friend is perfectly right when he says it doesn't make any difference , that that debt has got to be paid back one of these days . Tha t's true , he's never said a truer word.

I agree with that, but it so happens that these are in a sense commercial opera tions that carry themselves, and while they do inflate our figures and they could scare us to death if we don't take a realistic view of what the money was borrowed for, I don't think that if orie does look at it from the point of view that I am stressing that it becomes an intolerable situation by any manner of means .

So I would say to him that no government has the rig ht to ignore the facts in connection with the debt that may be authorized by this Legislature , and we don't intend to try and do that, but we do think that a rational case can be made for the debt policy that has been follow- ed and that, on the whole, it is in the public interest for us to do what we have done. So while I have no objection to my honourable friend placing any

interpretation of the fact that he approves Page 398 March 5th, 1962

(Mr . Roblin, cont'd) .•••• of on the record , I t hink that we're also able to give a pretty reason able account of what we'v e been doing. MR. CAMPBELL: Mr . Cha irman , I did not intend to say, and I think I did not say that the Honourable gentleman said in that particular election campaign that they had reduced the debt . What I meant to say was that by the bookkeeping device that he employed, that he made it appear that the net debt payment was much lower than our corre sponding payment the year before.

That was advertised very definitely during that time, not that the debt bad been reduced but the very fact that this net debt payment was lower than it bad been the year before . What was the logical conclusion to be drawn from that? Now, that's the thing that I am wanting to remind my honourable friend of, and then when I've been talking about the growth in the debt, of course I am aware that we have supported the capital votes and, generally speaking, the current ones too. Quite frankly to use a politician's phrase , I view with greater alarm the growth in the curr ent debt than in the capital debt. MR.

ROBLIN: The current expenditure . ·MR . CAMPBELL: The current expenditure than the capital debt, because generally speaking I think the utilities for which the major amounts have been borrowed are capable of supporting them, but I am reminding my honourable friend of the fact that he lectured us from this side of the House that we were borrowing too much at the time when it was just a pretty small amount compared to today.

My honourable friend likes to blame things of omission and commission on us , because he likes to say that one of the reasons that they have to spend so much money is that things were not done in-our time.

I want to remind him that he was warning us about debt when the debt was $158 million or thereabouts and when the current capital supply appropriations indicated that it would be $175 million the next year , and when my honourable friend wants to pose as a clairvoyant politician who foresaw all these things coming, I simply have to keep reminding him of what he said when he was on this side of the House , and I think that's fair. If he's going to remind us of what we did when we were on that side of the House, then I must remind him of what he did on this side of the House .

The quotation that he gives me credit for now as saying that regard less of what kind of debt it is it has to be paid, I don't deserve any credit for it -- that's not original with me , I am quoting my honourable friend. He was the one that waved these things at us over at that side , and proclaimed that obiter dicta we were being instructed in this matter, and so I simply remind him of his own words in this regard, and th ey're true -- they're true , Mr. Chairman.

The fact is that we're getting both the capital debit and the current expenditure , the interest on the debt, we 're getting them all up to such high figures that this particular province, if it had a let down in the economy, and I am not predicting one even under the administration of my honourable friend, but if it had, if we bad another drought year , it would slow up the economy considerably� These debts , these -interest payn1;ents can become very, very onerous on the Province of Mani toba. What the Honourable Member for Ethelbert-Pla ins said is perfectly true .

We were pay ing off more of the debt than the statute requ ired. I realize that my honourable friends are liv ing up to the law, but we were going much beyond the law because we thought that it was right in good times -- a lot of those years were good times to reduce the debt -- because if you don't reduce it somewhat in the good times , when are you ever going to pay it off? Well I am not going to get into a lecture of that. My honourable friend has promised, I think, to put on the record here or give it to us so that we can put it on the recor d, because once again quite frankly, Mr.

Chairman, I want to put it on the record in the honourable gentleman's words so that I can quote it back to him again, but I think on that occasion I'll be sitting over there quoting 4t back to him here . MR. ROBLIN: Mr. Chairman, I have to admit that some of the advice that I gave to the honourable gentleman in days gone by wasn't very good advice , and I also have to admit that on tl:.e occasion to which he takes reference , he didn't pay any attention to it anyway, so I think that I must concede that he got the advice all right .

I must concede that it wasn't very good advice and I also must concede that he paid no attention to it whatsoever. So I think that that's the situation on that particular point. The logical conclusion to the way in which the debt struc ture was set out, if we must re-thrash this old straw of cour se , is the conclusion that the prov ince was able to stand further additions to its debt structure without any difficulty. That I think happens to be the fact. The way in which we set that out, if we must again refer to these old March 5th, 1962 Page 399

(Mr . Roblin, cont'd) •••• matters was the way that was used by the Dominion Bureau of Statis tics. We didn't invent it. It didn't come to us like a bolt from the blue or an inspiration. We just adopted the method that the Dominion Burea u of Statistics used then and use now for the statement of the pu blic debt. Now I also want to refer to another statement that my friend made, and that is his concern about the rise in current account, and it is true. I frankly must say it, because the facts don't brook contradiction.

It is true that th ere has been a very considerable rise in current account over the last years , but what I am waiting for is for my honourable friend or some of his asso ciates to propose some substantial reductions in current account. Let them tell us where they think these accounts should be cut if they think we're spending too much. That's one of the purposes of this committee and it is within the rules that members can propose re ductions in expenditures. If my honourable friend has any suggestions in that connection, it will certainly be interesting to the committee. MR.

CAMPB ELL: There is one other figure that I wanted to put on the record at this time , Mr . Chairman, and that was simply that as I read the $18 l/4 million in round figures of gross interest related to the total budget, I would say that it's approximately 15% of the total, not 8%. MR. ROBLIN: If you would make that figure stick, you would then have to add to the ·t otal budget the income and expenditures of the utilities that this debt suppo rts , which are not in here. MR . CAMPBE LL: Not if my honourable friend is going to again take them off. MR. SCHREYER: Mr.

Chairman, in any discussion about debt, both net and gross debt in the province , I think that we can very easily get ourselves into a pos ition where we are criticizing unfairly the provincial admini13tration. I don't think any one of us here are particu larly concerned about the increase in gross debt because of the fact that money is being put in to productive use in the development of natural resources.

Even though we're not concerned a bout that, there does seem to be some concern about the increase in debt in current accounts and I, for one, under certain conditions , certain periods in a cycle of an economy, am not too concerned about that either; and I hope that me�bers will take me as being honest in that regard.

In times when you have the economy of the nation going into somewhat of a decline, you have to make up for this by increased government expenditure in public works ; and also , the govern,ment cannot afford to ignore the development of human resources , and that would mean going into somewhat more debt as far as current account is concerned.

Now even though the debt here in Manitoba has increased substantially , it has in most cases been for rather meritorious purpo ses, and to the extent that it has been rising al most too much, we must keep in mind that a lot of the probl em, the debt here in Manitoba, has to do with the mismanagement that has taken place at the federal level , because it is the fiscal policies of the federal government that really dictates the kind of economic climate that we must as a province function in.

If you consider the record of the government at Ottawa in matters of pu blic debt, there you will see a lot to be alarmed about -- not here . Not here so much. We see the debt increasing from 14 billion -odd in 1956 to somewhere in the neighbourhood of 16 1/4 billion today. That in itself doesn't tell you much of a story, Mr. Chairman, but the alarming part of it is the overall cost of servicing the debt. The interest rates have been driven up by an idiotic monetary policy that has been followed for the past three or four years.

In the last five years alone the overall rate of interest on the public debt, according to Canadian Tax Founda tion, has increased from 2. 85% to 3. 91, an increase of one and one fifth percent in four years - a larger increase in four years than has taken place in the entire post -war period. Now I suppo se some members will say that this increase in overall rate of interest is the result of increased government borrowing -- the massive government borrowing at the federal level.

This isn't nec es sarily so , because if members will take the pains to investigate they will find that one of the reasons for the alarming increase in the interest rate, and therefore in the cost to the taxpayers of Manitoba as well as of Canada, vye will find that for some strange reason the money supply in this country has been, by the powers that be , has been allowed to decrease -- and not just one or two per centage points .

In 1950 the money supp ly, which includes currency and deposits, both demand and time deposits, has decreased from 48% of the gross national product to, today, where it is only 36 percent. Try and explain that. At a time when in order to keep the economy of our country Page 400 March 5th, 1962

(Mr . Schre yer, cont'd) ••••• functioning in as healthy a manner as possi ble , instead of increas ing the money supply in proportion to the increase in the G.N .P ., we have allowed it to decrease and decrease substantially. It is therefore not surprising that the interest rate has been allowed to increase to such an extent. This is where all the criticism regarding public debt should be directed. I don't think anyone here can say that this government has carelessl y increased the debt burden on the people of this province .

To a large extent a part of this has gone into resource development -- gross debt; a large part of it has gone into human resource develop ment, though not nearly" enough. That shouldn't be something we should be too concerned about, because u,nlike the time when the Member for Lakeside was in office, this is the time when the economy is not functioning by its own volition in as free-wheeling a way as it did six or seven years ago. Some government intervention and stimuli is needed, and this is the kind of policy that must be followed.

What then remains for us in the oppos ition to direct our arrows at is the way in which the monetary policy as followed at Ottawa has allowed the interest charges rates to rise; the way in which the money supply has been allowed to decrease so substantially. On that score' we should ask this government to protest to the federal authorities. Before I sit down, Mr. Chairman, I would like to •••••. MR . CAMPBEL L: Mr. Chairman, before the honourable member goes on to another point, might I ask him a question? I understood him to say that the federal government had allowed the money supply to decrease? MR.

SCHREYER: As the per centage of the G.N .P. Yes, that's right. Except for the last eight month period, when as the honourable member will know the Bank of Canada was authorized to issue more currency. But I have the statistics right here. Money supply per capita as a percent of the gross national product, 19 49 , 48 percent of the G.N. P. ; 1960 , 36 per cent of the G. N. P. This restrictive action by omission has had, I submit, a fairly large effect on the interest rate rising. It has been one of the major causes , obviously. But before I sit down, Mr.

Chairman, I would like to ask the First Minister, again dealing with Page 32, Public Debt , I would like to ask him 'if the items cited as 1 (b) (4) , Other Loans and Investments, wheth er that would include the returns to the province on its sinking fund investments , that is the in terest rate earnings on its sinking fund investments . MR . ROBLIN: No, that does not include that. Those Other Loans and Investments are other things, such as the Water Supply Board and other self-liquidating projects . MR . SC HREYER: Mr .

Chairman, I would assume that the province maintains its sinking fund by investing in certain securities, etc. , and therefore must be earning a return on this investment. Where would that show up ? MR. ROBLIN: Those returns are all shown in the Public Accounts under the sinking fund analysis . You'll see there the number of investments that are in the sinking fund.

The way it works is that, if you want for example , to accumulate a thousand dollars at the end of 20 years , you make an investment, let us say, of $4, 000 at the beginning of that period and the interest that accumulates gives you your sinking fund total at the end of the time. The totals in the sink ing fund and the bonds in the sinking fund, and other S3curities, are all listed in the Public Accounts. MR. FROESE : Mr. Chairman, I'd like some clarification on Page 32, Item 3, the Amortization of Debt Discount.

We have the figure given of $1 ,0 01, 208 less recoveries, which amount to $210, 758 leaving a net figure of $790 ,4 50.0 0. That was for last year. For this year that figure is $764 ,7 81 .0 0. How is this figure arrived at? Is it on a diminishing basis , or will that be the same figure from now on? MR . ROBLIN: No , it changes every year , Mr . Speaker, and it depends on the actual amount of amortized discount that we have to take into account. MR . CHAIRMAN: Resolution 8 -P assed? MR. MOLGAT: Mr .

Chairman, while we are on the subj ect of public debt, I wonder if the Minister can give us a breakdown of that Item 1 (b) (4) , Other Loans and Investments. What does it cover? MR . ROBLIN: I can give the member that breakdown. MR . MOLGAT : Mr . Chairman, on the same topic, I can understand that the Power Commission figures are out now, that being absorbed by the Hydro. I'm surprised, however, to see March 5th, 1962 Page 401

(Mr . Molgat, cont'd) • , , , that the co� bined total of Power Commission and Hydro is less in '62-'63 than it was in '61-162 , Now it seems to me that really our investments in those two fields has been going up very substantially with Grand Rapids at present in process. I don 't quite understand how our inte rest charges can be going down. MR. ROBLIN: Th ey're about the same, I think my honourable friend will find . MR . MOLGAT: A couple of hundred thousand down, are they not? 6.1 million this coming year, and if you total the other it comes to 6.3 million doesn't it?

Now the change isn't great, but I'm surprised that it's a decrease when really what we 're doing at the moment is in vesting very heavily in our power resourc es . MR . ROBLIN : I haven't got an answer to that. MR . CHAIRMAN: Res olution 8 -P assed? MR. MOL GAT: Could we obtain an answer to that then , Mr. Chair man, and also the breakdown on (4) ? MR. ROBLIN: Yes, we'll have that very soon . MR . MOLGAT : On other subjects , Mr. Chairman, in the past year or two there have been at least two conferenc es, I understand, of Canadian Premi ers .

This was a new develop ment and my understanding is that some of the discussions there were on tax matters . I wonder . if the Premier has anything to report on these two meetings ? MR. ROBLIN: Mr. Chairman, I think that if the honourable member had wished to raise this he should have done so on the Premier 's salary. However, had he done so , I would have given him the answer that I'll give him now, namely, that I can't make any comment upon ··. �""-� �e cause the proceedings are confidential. MR . MOLGAT : Mr .

Chairman, I really think this is proper unde r Treasury because my understanding was that the First Minister was there at least partly on Treasury matters, because some of the clippings that I saw indicated that the Deputy Provincial Treasurer was there with him , and this seems to me to be directly connected with Treas ury . At that time one of the clippings that I saw was that the collections of sales taxes was discu ssed. I wonder if this in- -·- .. gicated that my honourable friend was thinking of entering the sales tax deal. ·. . MR.

ROBLIN: I'm sure my honourable friend will have to wait for the Budget Speech to hear what my views on that are, but I must -- I want to deal seriously with his point , and that is that the Deputy Treasur er, I think , did attend me on one conference but I think he did so in a more general character. I really do think the proper place to bring it up was the place I'v e indi cated, but I must confess that I am not atile to give any information to my honour able friend because it's generally agreed that what goes on there i� confidential discussion .

It's not a formal meeting of any kind; there are no communique s issued except rather a bland one that discussions proceeded a.n,icably or something of that sort, but we don't go into detail as to what was discussed in those conferences . Personally, I have no real reason , no real desire to make a secret of it , but it just is the agreement there and I think I'd better stick to it. MR . MOLGAT : Well if that's the agreement with other province s, Mr. Chairman, I won't pursue the question further. I am very much interested in the subject however.

It seems to me that one of the things that we have to do in Canada is a substantial re-organization of our tax structure . I think it's based on circumstances that existed many years ago; that we have had a complete change in our economic structure in this country and that if we' re going to have the type of development that we want to see across Canada; if we are going to see develop ment in Manitoba in particular, that we cannot continue the same tax policies necess arily that have been carried on in the past.

The work, for example, of the Canadian Tax Foundation is som ething that I hope this government is following very closely. The reports from their meet ing this fall certainly gave cause for concern in the field of income tax, for example now. Until this year this government was not involved in income tax, now they are. Have they been follow ing the work of the ta." foundation in this regard? I am referring specifically to the fall meeting where people like Dr. A. K. Eaton who was a former Assis tant Deputy Minister of Finan ce ; Mr.

Heward Stikeman who is also a former Assis tant Deputy Minister of Finan ce; the Vice-Presi dent of Imperial Oil and so on, who were then indicating that our present income tax structure is in their opinion , very reactionary. In fact the statement was that the Canadian Income Ta.x law as now framed is slowing down Canada 's growth. The speaker said that it dries up supplies of investment money; it discourages Canadians from investing in Canadian projects; it prevents Page 402 March 5th, 1962

(Mr. Molgat, cont'd) •••• the creation of new jobs. They state that the high rates was driving people to seek ways of legal tax avoidance which may get into unethical or even illegal grounds and is otherwise a hodge podge which frequently in trying to get at the guilty hurts the innocent . Of course one of the specific recommendations of Dr. Eaton was that there should be no gradu ated tax. Now I know that in the normal terms which we consider income tax this is probably not immediately acceptable to us .

However there is a gentleman who certainly has had the opp ortunity to have the background of the situati on, and should know what he is talking about, mak ing this specific recommendation. Now all of tl:iis is of vital importance to us . As our country is getting more advanced economically; as our problems themselves are growing; these meetings that my honourable friend has been going to are most important.

They should be followed through and more work should be put into them, but we 're hopeful that some specific propositions will come out of them - of first of all a simplification of the Canadi an tax structure so that we don't run into a sit uation where there are great varying methods of taxation and rates of taxation, if possible, between all the various provinces; and then , of course , a re-organization of the tax structure so as to pro vide an adequate breakdown, distribution between the various levels of government.

Now unless this is gone into very soon, I fear that our whole economy will suffer as a result of it and that was the reason for my asking the questions of the Treasurer about these conferences. Are they really achieving this? Or are they not? Now I can appreciate he can't give me details, but I would be inte rested in knowing if some work is being done in this regard; secondly, whether this government is following the discussions and the work of the Canadian Tax Foundation. Third ly, are they making recommendation to Ottawa in this field? MR. ROBLIN: Mr.

Chairman , my honourable friend has opened a very wide spread subject and perhaps I might begin what I have to say by observing that the income tax law has been with us a long, long ti me; and may I also say that the present structure of the Income Tax Act, I think may be thoroughly ascribed to various Liberal Governments that have been in ottawa during the past years. I dare say some Conservative Governments that have been in there have had something to do with it too.

As a matter of fact it started out in 1917 with the Union Govern ment as a war income tax measure , but like some other taxes it's still with us . So I think that all of us can share some responsibility and can share some concern for the Canadian tax struc ture . I, myself agree with a good deal of what Dr . Eaton has said and what Mr. Stikeman has said, both of whom I have the pleasure of knowing quite well , particularly Mr. Stikeman, and they make a good deal of sense .

I think one of the things t hat we have to consider, and I can't really prescr ibe speci fic for this, but I think we have to consider the rate of progression in the income tax scale which is very steep.

Now that rate of progression might have been quite acceptable in the days when $10, 000 was a lot of money for anyone to make -- and very few people made any more, but in these days when incomes are on the average, twi ce what they were , when these scales were de veloped, ·i t seems to me that the rate of progression may very well be steeper than a fair assess ment of the situation would justify and that's a subject which should be examined.

Now when one talks about income tax and corporation tax and says that it's all wrong, I think we may agree that it could be , perhaps the income tax could be looked at from a point of view of progression, but when one gives the impression as some do -- and I'm not sure whether the Honourable the Lead er of the Opposition is included in this -- that the se taxes in themselves, the total amount of money they rai se , for example , is too high, then one is duty bound to offer a substitute , and I am waiting to hear -- I don't say thi s by way of a challenge to my honourable friend, because there's plenty in the same· situation -- I am waiting to hear someone who says income tax is too high and corporation tax is too high, to say where they are going to get the money from.

Some people say the re should be a capital gains tax. That would be the position taken by the CCF. May be -- but I think the effect of a capital gains tax on incentive and development would be just as serious and perh aps more so, than the present situation we have from income tax, so I wonder if we're leaping from the frying pan into the fire . Now, Mr.

Chairman, I make the se observations in the full knowledge that I don't think any member of this House has got any really all inclusive answers to this question -- I don't think I have -- but I do agree with my honourable friend, the Leader of the Qpposition , that it 's a subject well worth looking into. I think I am correct in saying that although the Royal Commission March 5th, 1962 Page 403

(Mr. Roblin, cont'd. ) ....• on Banking and Finance does not really take this into their ambit, we're going to try and bootleg it in, if we can; because we would like to leave the idea with the Royal Commiss ion, that this question of the tax structure of the nation is something that could well call for further study. Now the suggestion has been made in some quarters that another Royal Commission would be required to do the job.

I know that some of us have a reluctance for too many royal commiss ions, but I think this is one that we might be able to stand, because the subject is so involved, so complicated that very few people who are not really expert in it understand the consequences of some of the things they propose, so that it is a matter that re quired the most expert study. So I think that I would agree with my honourable friend in his ex press ion of uneasiness or dissatisfaction with the present tax structure in the country and the suggestton that it should be well looked into to see what we can do better.

I think I would agree with those sentiments and I think I'm right in saying that in the Royal Commission brief that we are preparing, this matter is being considered. The brief hasn't reached the stage where I can be positive about what's in it or what isn't, but this is one of the subjects for study, let us say, that our people are engaged in in preparing for it and we have to see what they come up with before we can state positively that it's in the brief; but it is a matter which, if not consi dered by this royal commission, certainly ought to be taken into account by somebody else. MR. G. MOLGA T: Mr.

Chairman, I thank the Minister for his statement. My comments were not being strictly critical of the present rates or the method; I'm just concerned about whether we are heading in the right direction. I'm particularly concerned when I see various provinces imposing new types of taxation or increasing the ones that they have and this growing complexity in our whole tax structure when I think that the reverse should. be the process, if it's at all feasible.

I think that in the long run this is extremely important to Canadian development and anything that can be done to simplify this -- to get various levels of government co-operating on this and various provinces working together, I think will be to the benefit of our whole economy. Mr. Chairman, my honourable friend isn't prepared to tell me yet whether he is imposing any sales tax or not, so this particular item then is of some importance to us poss ibly.

This is a newspaper report, Winnipeg Tribune on the 9th of February indicating that the federal govern ment intends to bring in legislation to require Federal Crown Corporattons to pay certain pro vincial taxes and fees. This is to be introduced at this current session. I don't know if it's been introduced yet or not. It said that it would become effective April 1st, the next federal fiscal year, and they indicated there that most crown corporations are exempt from provincial sales taxes . On the other hand, provincial crown corporations and agencies have to pay federal sales taxes .

So officials said the legislation is designed to overcome this anomoly; in other words, that the federal crown corporations will start paying provincial sales taxes where they exist. Well, what happens in the case of a province like the Province of Manitoba, where at the moment at least, until my honourable friend divulges what he intends to do, at the moment at least, there is no sales tax. Will we be getting some compensatory payment from the federal government? MR. ROBLIN: Mr.

Chairman, I think I can say that the situation that has been outlined is the situation that exists as far as we're concerned and that there is going to be, in matters of substance, no change in the propositton. We have always maintained here that if we're ex pected to pay any federal tax as far as crown corporations are concerned, that the federal government should pay our gasoline taxes and other taxes of that sort. In my opinion, Mr. Chairman, the gasoline tax is a sales tax.

I think that if anyone cared to pursue the matter from a legal point of view before the Supreme Court we might very well get that decision, but by mutual agreement people seem to be content to regard it as an indirect tax when perhaps its claim to that status is a little questionable. But I would point out that what my honourable friend is talking about is the crown corporations. The provincial government as such does not pay federal sales taxes or other, nor will the federal government as such. It's a matter of crown corporations only.

So we trade off our crown corporations here with the Atomic Development people that are in the Whiteshell and other people of that sort. MR. MOLGAT: Presumably under this arrangement other provinces will be getting cer tain sums from Ottawa now. Was the provincial government of Manitoba consulted before Ottawa prepared this change ? MR. ROBLIN: Well, Mr. Chairman, if my honourable friend is saying that we should Page 404 March 5th, 1962

(Mr. Roblin, cont'd.) .•... impose a sales tax in order to be able to collect it from the federal government I am afraid that I won't be able to go along with him. Whatever taxes we impose will be payable by Federal Crown Corporations; that's the long and short of it and it depends on our tax structure as to what taxes they pay. MR. MOLGAT: I'm not suggesting for a moment that you should impose a sales tax, but the situation is this: Your Crown Corporations -- our crown corporations in Manitoba pays a Federal Sales Tax presumably. Is that correct? -- (Interjec tion) -- All right.

Now seeing that we have no sales tax in the province we will be collecting nothing from the Federal Crown Corporations, so we' ll be paying out more on the one side and not collecting from them on the other. Now if Ottawa is making such a change I think they should consult with us, because by relationship to other provinces, we will be in an inferior position. MR. ROBLIN: Mr . Chairman, if my honourable friend had been follow ing the course of events he would know that this matter has been brought up twice now at the Dominion-Provincial Conferences.

This government took the point of view that we would rather have the Crown Cor porations tax free on both sides. That's the position that we put forward and that is the position that we would like to see adopted, but as far as the merits of the case from the point of view of other provinces and of the federal government were against us, so the majority opinion was that both crown corporations should pay taxes, rather than that they should not. That was not our position. We would prefer to have no taxes levied on crown corporations, but that's not the majority opinion in the country. MR.

MOLGA T: ....•. the net costs to Manitoba then, when this starts off. MR. ROBLIN: I don't think so. It's the situation that we have now. It's a net cost in the other provinces. MR. MOLGA T: Well, I don't see how. If our crown corporations will be paying higher federal taxes and theirs will be paying no higher federal taxes than Manitoba, then surely we are net loser. MR. ROBLIN: Crown corporations will be paying the same federal tax they have always been paying. MR. MOLGA T: But the federal, see ing as we have, no sales tax, they will be paying nothing to us. MR. ROBLIN: They won't pay us a cent. MR.

MOLGA T: So by comparison to Saskatchewan or Ontario we won't be as well off. MR. ROBLIN: Well, I am afraid that I am disinclined to put in a sales tax for that reason. Why not just take the facts as they are? MR. MOLGAT: I am not suggesting you should, but Ottawa should give consideration to a compensation of some kind in that case. MR. CHAIRMAN: Resolution 8 -- passed? MR. MO LGAT: Mr. Chairman, I think there is still some inform:t ion to come from the Minister on Resolution 8, some information on the discuss ion we had earlier this evening.

I suggest that that be left open, then we can proceed when we get the information to clear it. MR. ROBLIN: What information am I supposed to speak on ? MR. MOLGA T: Well, you wanted me to put an Order for Return first of all, then we agreed that I would do it by ..... MR. ROBLIN: No, I just said that if it's a question to do with the capital debt structure, that can be debated when we get to .... MR. MOLGAT: No, it's a question to do with the savings bond. MR. ROBLIN: That's the same thing, it's capital debt. MR. MOLGA T: Well, if you want capital debt.

We had agreed earlier that I would sub mit a written question to you, not an Order for Return but a written question, so that we could continue and discuss it if there's anything rising out of it. See ing it's on this item I would sug gest that the item be left open. MR. ROBLIN: I have no objection to that Sir, providing we can have an understanding that that won't be used to revive the whole debate again.

Provided we can have an understanding that if it's left open we'll restrict ourselves to discuss ing the matters that are contained in the information, if that's understood, then there's no objection from this side of the House. MR. MOLGAT: My interest is strictly the savings bonds. I have no intention of going into the other items. March 5th, 1962 Page 405

MR . CHAffiMAN : Res olution 9. Item 2 -- Taxation Branch. MR . PAULLEY: Mr . Chairman, in connection with this item , I would like to direct one or two questions to the Provincial Treasurer. I presume that this is the department that is responsible for the collection of Gasoline Users Tax and Motor Vehicle Users Taxes, and also this would be the item under which we should have a discussion on the Provincial Income Tax that we 're in at the present time. Now recently .... MR . ROBLIN : That does not come under this section. --(Interjection)-- Well we don't collect it though. Ottawa collects it. MR .

PAUL LEY : It's all related -- at least I think it is. Recently there has been a considerable amount of publicity, Mr. Chairman, as to evasion of the payment of proper gaso line taxes, where some persons apparently are obtaining gasoline ostensibly for purposes of boating -- I believe at the two cent per gallon rate -- and using it for other purposes . Also , there has been some suggestions through the media of the press that, in the agricultural industry ,eva sions are occur ring.

Now my questions to the Minister: Could he give us an outline as to any investigation that has been made in the taxation branch as to how much, if any, of this is going on, and what steps the department takes in order to offset or prevent any abuses. It does seem to me that due to the fact of the differences in taxation, and there may be justifications for the . exemptions -- I am thinking particularly in the agricultural field -- legitimate reasons as to why there should be exemptions.

I would like to hear an outline from the Provincial Treasurer as to what steps the department takes in order to try and curtail any abuse caused as the result of the different rates of taxation, and any information that he can give to us in this respect. Now I mentioned the fact of Provincial Income Tax.

It was my understanding, and in this I may be wrong, but it was my understanding that when the Prime Minister of Canada was discussing the question of a provincial income tax, or the change of the system into a collection agreement rather than the old rental agreement, that one of the basic reasons that he proposed this was that the provincial authorities who were levying these income taxes wciuld be charged with the re sponsibility of showing that they were making this imposition on the people within the boundaries of the respective provinces.

I would sugge st that the reasons were obvious as to why he made this suggestion, in order to indicate that the amounts levied on the income tax basis at the federal level were actually lesser than the appearing picture was at that particular time. Now then at the pres ent time , to my knowledge nobody in Manitoba who is being deducted for in come tax purposes from their pay cheques, be it weekly, bi-weekly, or monthly, know exactly how much money in income tax is accruing to the Provincial Treasurer.

I know as far as the men in the railway were concerned, as soon as they received their first cheque for this year 1962 , it was noted that their payments or deductions rather for income tax increased over what they were the year before , but there 's no indication as to how much of this is coming into the Provincial Treasury of Manitoba.

When we were discussing the legislation at our special ses sion the First Minister indicated to us that the amounts of money that he was going to collect , or the province was going to collect in respect of income tax was going to be used for the purposes of revenue for the hospital scheme . I know we had quite a bit of discussion before we finally, without it being in the legislation, before we got a commitment from the Minister, which is re corded in Hansard, that this was the purpose of the provincial income tax, but I suggest today, Mr . Chairman, that nobody knows .

It's true there is the item in the estimates, we only find that when we look into the Department of Health, of some ten million-odd dollars -- or rather let me put it -- rather there's an increase of $3 miUion that used to come out of general revenue to $10 million now, roughly speaking, indicating the probability, just using these figures , that through the media of income tax the income tax payer in Manitoba will be making a contribution of some seven million-odd dollars.

I think this is the figure. which the Provincial Treasurer used roughly in our deliberations at the special session, how much additional revenue he expected to be raised with the result of the income tax. I think it's a most unfortunate situation as far as the taxpayer of Manitoba is concered, in that he doesn't know how much of his tax dollar is going to the Prov ince of Manitoba as a result of the new arrangements and as a result of this because of the fact that the money is presumably ear marked for that of hospitalization, he's at a loss to know how much actually he is paying in respect of hospitalization.

We know that we have the monthly pre miums of $2 .0 0 or $4. 00, but we don't know as a result of the income tax how much additional that this is costing. As I said at the outset, Mr. Chairman, it was my understanding that one Page 406 March 5th, 1962

(Mr . Paulley , cont'd) •.•.. of the reasons given by the Rig ht Honourable John Diefenbaker in setting up this new agreement, that here would be evidence of the amount of monies that are being collected by the provinces as against it all being lumped as it formerly was as income tax accruing to the federal authoritie s.

I think this is most important, and while I appreci ate the fact that the revenue will not be forthcoming until the 1st of April, on an actual basis the fact that deductions are commenced at the 1st of January of this year , I am sure the answer to this que stion would be intere sting to the people who are paying now to the Provincial Treasury. MR . CHAIRMAN: Are there any other points on taxes? MR . SHOEMAKER: Mr.

Chairman, I have been informed that several farmer s, on making application for their tax rebate , have received a letter stating that they have used too much gasoline in comparison to the number of acres they farm . I am interested in knowing, when is too much too much? That is , what are they allowed per acre ; and what is the basis upon the number of gallons of gasoline that can be used on a given number of acres? MR . DE SJARDINS: Mr .

Chairman , is it the intention of the Minister to grant the re que st of the Metro Government and dispense with their paying of the gasoline tax on their bus used in their public transportation system ? MR . ROBLIN: Mr. Chairman, if there are no furthe r questions on taxation I'll deal with them in reverse order. For the Honourable Member for St . Boniface , there is no plan to rebate the Metro Cor poration for gasoline tax.

Secondly, with respect to the Honourable Member for Gladstone-Neepa wa, let me say there has been no change of any substance in the way in which we calculate the rebate to which farmers are entitled since we came into office. It's the same system as operated before . The system is roughly this , that we ask the farmer to report to us the type of machinery that he operate s, his acreage and various matters of that sort. From this the department make a calculation of what would be a normal expenditure for gasol ine consumption to do the kind of work that would be done in the farming operation referr ed to .

That gives us a norm. If he's below that norm, then that' s a pretty fair indication that he's in order. If he's above that norm , tnen it calls for an explanation. Now this bears on the point that the Honourable Leader of the CCF Party said because he wants to know about this que stion of tax evasion, and I think it is an excellent point that we should discuss here .

I have in front of me , and I dares ay other members of the House got it too because 1t was addressed to ail members of the Legisla ture , a two-page mis sive prepared by the Managing Director of the Automotive Trades Assoc iation, in which he makes a number of rather serious charges about gasoline evasion, and seems to indicate to me that

Document details

Collection	Manitoba — Debates (Hansard)
Citation	26-5-18
Type	hansard
Volume / chapter	26th 5th hansardpdf 18.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	7ba574002b4d7909adc368e6f6d9a31e00114ac0

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