§ 33. Mr. BURNETT (for Sir P. HURD)asked the Secretary of State for Dominion Affairs the result of his inquiries of the Canadian Government regarding the position of British holders of the Ontario and Vancouver municipal bonds, in view of the recent official statements by the Ontario Minister of Municipal Affairs and the mayor of Vancouver?
The SECRETARY of STATE for DOMINION AFFAIRS (Mr. J. H. Thomas)As the information which has reached me from the Canadian Government goes into the position in considerable detail, I will, with the permission of the House, circulate a statement in the OFFICIAL REPORT.
§ Following is the statement:
§ I am informed that under the Canadian Federal system the Dominion has no control over, or responsibility for, municipal financial obligations. Municipalities are created by provincial legislation and are under provincial control. A number of the Provinces have set up municipal boards or commissions which exercise varying degrees of administrative control, particularly where municipalities find difficulty in meeting their obligations. Such difficulties have occurred in recent years as regards some 10 per cent. of the total amount of municipal bonded indebtedness outstanding. It is estimated that about 69 per cent. of all Canadian municipal obligations is payable in Canada, about 7 per cent. in the United Kingdom, and some 24 per cent. in the United States and other countries.
§ I am also informed that the Premier of Ontario has indicated that the statement of the Minister of Municipal Affairs 31 in the Provincial Government of Ontario was to the effect that Ontario municipalities in default will pay 3 per cent. interest in 1935 and will be refinanced before the 1st January, 1936, the refinancing to consist of debtor and creditor arriving at a composition by mutual consent based upon ability to pay. The Premier of the Province points out that, before that statement was made, only 4 per cent. of those Ontario municipalities which were in default were paying any part of the interest on their debentures, only 3 per cent. full interest, and that over 90 per cent. had paid no interest in the last two years, whereas now all defaulting municipalities will pay 3 per cent. for 1935 pending refinancing. In this connection I would also refer to the reply given by my hon. Friend the Secretary to the Treasury to the hon. Member for West Bromwich (Mr. A. Ramsay) on the 14th February.
§ The Premier of Ontario has also called attention to a published statement which he made recently and which concluded as follows: "The high credit standing of the Province of Ontario in this country and abroad has been built up over the years by the prompt and regular payment of public obligations of the province and its constituent municipalities in accordance with the letter of the contract in each case, and I would regret the day that it cannot continue to do so. This does not imply, however, that certain municipalities do not require adjustment. They do. It is in the interest of bondholders that they do adjust. The Ontario Municipal Board will put an end to the idea of some that certain municipalities which have not defaulted will be permitted to do so to ease their situation and taxation they are facing.
§ As regards the question of Vancouver municipal bonds, I would invite reference to my replies to the hon. Member for North. Newcastle-on-Tyne (Sir N. Grattan-Doyle) on the 6th February. I am now informed that the meetings of the Mayor of Vancouver with representatives of the bondholders on the 11th and 12th of February resulted in agreement that a Toronto financial expert should be engaged by the city council to examine the city's finances and resources. I gather that it is contemplated that this expert will report to the city council who will inform the bondholders.