THRONE SPEECH PROMISES: Where’s all the extra money coming from?

BLAIR FRASER February 14 1959

THRONE SPEECH PROMISES: Where’s all the extra money coming from?

BLAIR FRASER February 14 1959

THRONE SPEECH PROMISES: Where’s all the extra money coming from?




IT BEGINS TO TOOK as if “hidden reports" in one form or another are a chronic occupational hazard of big government, no matter what party is in office.

When Prime Minister Diefenbaker made the phrase famous in the election campaign, it wasn't quite clear what he meant by the word “hidden.” Some people thought he was rebuking the 1 iberals for failure to publish the 1957 edition of an annual confidential forecast prepared by government economists. In June and again in August that misapprehension was cleared up.

Challenged in the House of Commons. the prime minister refused to publish the same economic forecast for 1958 “on the ground that it is a confidential document.” When the Toronto Star later published what it said were excerpts from this 1958 report, no cabinet minister could be induced to say whether or not the quotations were genuine, though when the document was finally tabled on January 16 it showed that the Star report was quite correct.

Evidently the I iberals’ sin was not that they failed to publish the 1957 forecast, but that they seemed to ignore it—even made statements and appraisals that contradicted it. If it were so it was a grievous fault, and grievously the I iberals answered it. (When the speech from the throne mentioned legislation for humane slaughter, opposition leader I H. Pearson quipped, “I hope they'll make it retroactive to March 31.")

But the present session of parliament

was less than an hour old when the Conservatives demonstrated how easily this sort of thing can happen, how easily a hydra-headed government can speak with more than one voice.

Said the governor-general, reading the speech from the throne: "My government welcomes the evidence of recovery from the recession and will continue to foster and assist this improvement.”

Said an official economic forecast, published on the same day by the agriculture department: “In Canada the decline in business investment and the offsetting increase in government spending are likely to continue in 1959.”

Obviously this report, a public document, was not “hidden" in the sense of being deliberately concealed. Just as obviously, it might as well have been —it hadn't caught the attention of whoever wrote that section of the speech from the throne. Still unanswered, at this early stage in the session: “Which of these two voices does the government really believe?”

Of about thirty pieces of legislation that have been mentioned so far. less than a dozen involve much spending of money and only two or three call for massive amounts. However, they will add up to a considerable sum.

Possibly the biggest item, among the legislation actually forecast, is the "action to alleviate discriminatory effects of the recent horizontal increase in freight rates." Put briefly, this means a subsidy from the taxpayer to the railways. to pay them for reducing the

freight rates they would otherwise impose on the Maritimes and the west.

In central Canada, road and water competition keeps railway freight charges down below the maximum authorized by the Board of Transport Commissioners. It's most unlikely that the railways will be able, without losing more business than they can afford. to add to their central rates the full seventeen-percent boost that they recently won. Eight percent would be a likelier rise, which the trucking companies will probably follow.

East and west have no such protection—the railways have a monopoly of the long hauls, and can charge whatever the transport board permits them. To prevent them from doing this, and to keep freight-rate increases equal in all parts of Canada, the government will have to pay the difference. It is not yet known just how the subsidy will be paid, or how much it will be. but a popular guess is thirty million dollars.

A somewhat related topic is the federal-provincial tax-sharing deal. Ottawa has committed itself to nothing but a renewal of the increase made last year in the provincial share of income tax. and (to quote Charles Lynch of Southam Newspapers) a promise "that the federal-provincial continuing committee will indeed continue to continue.”

But the Conservative government of Ontario may be having an election in 1959 and must have one in I960. Premier Leslie Frost turned against the Liberals in 1957. after years of benevolent neutrality, mainly because they re-

fused him the extra hundred million dollars of tax money that he thinks is Ontario’s due. How long the Diefenbaker government can put off the promised federal-provincial conference, and the promised new deal for the provinces, without rousing the ire of the formidable Premier Frost is an interesting question. How much a new deal would cost the Ottawa treasury, for all ten provinces, is equally interesting and equally a matter of speculation.

Meanwhile, the government has undertaken to continue the various development projects already in hand, “and to initiate others." Alvin Hamilton's department of northern affairs, which spent twenty-four million more in the current fiscal year than in the previous one, will need quite a few' more millions still to carry out its projects in the Arctic. How' much more money will go out for crop insurance, housing loans, export-credit insurance and the like is not yet clear.

If unemployment were the only problem in sight, or if for the whole of 1959 it w'ere the principal and overriding problem, these new expenditures wouldn't attract much comment. But if, as the speech from the throne implied. the recession is over, and if Finance Minister Donald Fleming is as worried about inflation as some recent speeches indicate, then his worries are unlikely to have shrunk much lately. Another massive deficit is obviously in prospect, but the only reference to inflation in the government's official program has been one calm sentence:

"As recovery proceeds, there will be increasing need for care to preserve the stability and purchasing power of our currency."

This would be difficult enough if all the government's outlays were civilian, and related to economic considerations alone. Unhappily they are nothing of the kind. The biggest expenses of all don't depend on economic factors, but on military.

Not much has yet been said about defense costs, beyond a mention of the talks with Washington on productionsharing for joint defense. But the concentration of attention on defense of North America has tended to obscure another urgent problem elsewhere.

"They'll have to do something soon about re-equipping the RCAF air division in Europe," said a man who knows the defense-production picture. “There is almost a Hong Kong situation developing overseas.”

What he meant was plain enough. Canadians in Hong Kong in 1941 were caught without enough weapons or mechanical transport, because Ottawa didn't manage to send these things in time. Canadians in Europe in 1959 are equipped with Sabres and CF-10()s. both subsonic fighters and both obsolete. The Russians are equipped with supersonic fighters and perhaps, by now, with supersonic bombers, not to mention intermediate-range missiles. If the Canadians had to take their outdated machines into battle they would be sitting ducks. They need new aircraft. far sooner than the Canadian aircraft industry can tool up to produce any.

These are some of the difficulties that will emerge as the session proceeds. They are also some of the reasons why the budget is awaited with such interest, and why the rest of the legislation — brought in before the budget — seems a bit of a bore, if