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Lethbridge Herald, The (Newspaper) - October 15, 1971, Lethbridge, Alberta SNOW FLURRIES FORECAST HIGH SATURDAY 35-40. The LetWmdge Herald VOL. LXIV No. 258 LETHBRIDGE, ALBERTA, FRIDAY, OCTOBER 15, 1971 PRICE NOT OVER 10 CENTS TWO PAGES Pay and price controls may be necessary By CARL MOLLINS OTTAWA (CP) Tax cuts and expanded spend- ing announced Thursday night might generate infla- tionary Pressures-as well as the jobs hoped prompt another try at controlling the advance of prices and incomes. The near-budget by Finance Minister E. J. Benson is designed to pump more money into the economy to stimulate demand for goods, productive activity and jobs. But the pronounced shift of gears might also put upward pressure on prices. That would be the opposite of the trap the gov- ernment found itself in 1969 and 1970. Then, it was clamping down on spending to beat inflation but found that jobs were also diminishing. The federal prices and incomes commission was set up to attempt to win voluntary compliance to re- strain pay rates and prices. But the plan fell through last year. Life extended The commission's life has been extended, however, to next June and the government has worked out new restraint plans. Mr. Benson said Thursday night that if his new financial measures prove inflationary, the government is ready to take appropriate counter-action. He reiterated that the government will use some form of pay and price restraints if necessary. Labor Minister Bryce MackaseH said budgetary measures are inadequate in maintaining economic sta- bility. Selective pay and price controls might be ne- cessary, he added, but he hoped not. Within less than two years, federal money man- agers have switched away from collecting more than they spend to a budget in which they will outspend income by biggest budget deficit in a quarter-century. Nineteen months ago, Mr. Benson was budgeting for a surplus in the financial year that coded last March 31, although less than half the million sur- plus in the previous financial year. But by the summer of 1970, the government be- gan to shift away from surplus to fight price deficit financing, design- ed as a cure for unemployment. By last December, in a freer-spending budget, Mr. Benson had turned his original estimate of a surplus for 1970-71 into a deficit of more than million. Last June 18, budgeting for the current financial year, Mr. Benson was estimating a deficit of mil- lion on spending of billion and revenue of billion this fiscal year. With his announcement Thursday night of increased spending and temporary tax reductions, the deficit esti- mate increases to billion on spending of bil- lion and revenue of billion. The theory behind deficit budgeting is this: With taxes held down and government spending up, there will be more private and public money circulating to buy goods and services. That tends to stimulate productive meet the demand. Surplus financing tends to have the opposite effect, depressing demand, production and employment. But It also helps to hold down price inflation because there is less demand for goods and services with less money around. Forced, to borrow Deficit budgeting also forces the government to bor- row money on bond markels to cover its deficit That increases the demand for cash, pushing up interest reflected in higher prices for goods end services. Mr. Benson said Thursday night that total borrow ing requirements in the year ending next March 31 will be billion, up from the billion estimated last That, in turn, was double the amount the government borrowed the year before. He said he does not believe the latest increase in borrowing requirements will force up interest rates. If interest rates rose, that would conflict with gov- ernment aims. Federal authorities have been anxious to keep in- terest rates down, discouraging inflows of foreign funds Becking high returns on loans. Such inflows tend to put upward pressure on the value of the Canadian dollar in international exchange markets. That makes Canadian exports more expensive to foreign buyers, further depressing pro- ductive activity in Canada. Kos) gin lo see hockey, slay in posh hotels OTTAWA (CP) Soviet Premier Alexei Kosygin will watch a professional hockey game and stay at some of Canada's swankiest hotels during an eight- day tour which begins Sunday. Mr. Kosygin arrives here late Sunday afternoon for a Canadian tour that will also take him to Mon- treal, Vancouver, Edmonton and Toronto. Next Friday night, in Vancouver, he is to attend a National Hockey League game between the Can- ucks and Montreal Canadians. His presence at the game will symbolize a new affinity between Russiaas ami Canadians deriving from ice hockey's growth as a major sport in the Soviet Union during the last 20 years or so. In the Soviet Union, the game as played in Can- ada is frequently criticized because of its alleged domination iiy professionals and the rough style of play. The iKiurgc-ois-style hotels Mr. Kosygin will stay at are (lie Chateau Lauricr in Ottawa, Montreal's Queen F.lizabclh, the Hotel Vancouver nnd Toronto's Inn (in the Piirk. The accommodation at the Queen Elizabeth will lie a four-room, suite. Trudeau: no election until job finished OTTAWA (CP Prime Min- ister Trudeau said today his government wants to introduce further policies before calling a general election and suggested one may not be held until 1973. He said at a news conference the government was elected in 1968 for five years and that it wanls to run-as much of a full term as possible "to get on with the job." The opposition probably feared an election now but the government did not intend to call one now. The administration had "fur- ther policies and laws" it wished to push forward. The prime minister called the news conference to discuss the "budgetary measures" taken by the government Thursday night. He described the planned defi- cit of ?1 billion in the current fiscal year as "about right." A GHOSTLY CAMPAIGNER The traffic department made no bones about importance of its driver education campaign by using this bicycle-riding ghostly figure on the streets of Sao Poulo, Brazil. Proposed Alaska test draws blast OTTAWA (CP) Environ- ment Minister Jack Davis told tire Commons today there is about one chance in four that the proposed nuclear test, on Alaska's Amchitka Island will spill radioactive dust into the atmosphere. As well, "there is a certainty of contamination of ground wa- ters in the which will eventually seep into the sea, ho said. Mr. Davis was speaking in a special debate on a motion by External Affairs Minister Mitchell Sharp which con- demned nuclear testing by all countries, and especially the projected blast scheduled for this month Mr. Sharp said that if the U.S. and Soviet Union do not restrain their nuclear testing and the arms race, they cannot expect other countries to accept re- straints on their own possession of such weapons. Spokesmen for all parties in the House had expressed ap- proval of the motion in advance. SHAKE FOUNDATION Mr. Sharp said the balance nuclear deterrence remains the foundation of world peace, but detonation of more and more efficient bombs is not the way to provide a more secure foun- dation. "The world is made apprehen- sive by continued nuclear tests. It is becoming weary of the end- less delays that are postponing a nuclear ban." Mr. Davis stressed the envi- ronmental danger. But he estimated as "remote" the danger of an earthquake in Canada started by the five-mega- ton underground blast, or of a tidal wave set off by earth movements in the Amchitka area. lie said that the last nuclear test in the continental United in Nevada last leaked ra- dioactive dust despite predic- tions by U.S. officials that such venting could not or would not happen. The radioactive cloud drifted north to Canada, finally settling in the Thunder Bay area. The proposed Amchitka bomb would be 250 times more power- ful than the Nevada blast, Mr. Davis said. NO DECISION YET Mr. Sharp said President Nixon had not yet made the final decision to approve the Amchitka blast, which would test the warhead for the Spar- tan anti-missile defence system now being developed by the U.S. "There is, room for hope that the U.S. will cancel the showing respect for world opin ion, the minister said. If more spending was needed, the government would bring in more budgetary measures. And if inflation became se- vere, the government would "have to act on that side." Mr. Trudeau said all the eco- nomic indicators are good ex- cept employment. The government had intro- duced tax cuts and more spend- ing to provide jobs and to try to prevent the "uneasiness" about what direction U.S. policy would take. Mr. Trudeau maintained that the government had not waited until this month to act. It had, for instance, injected mil- lion into the economy in March. 1970. Mr. Trudeau said he hoped there would have been some in- dication from the U.S. that its trade restrictions would be more temporary than they ap- pear. Had this been the case, Thursday's "budget" would have been easier. INDICATORS ENCOURAGING He said that with the excep- tion of unemployment, all eco- nomic indicators in Canada are encouraging, and the actual rate of unemployment would have been only 4.4 per cent if it weren't for the unexpected in- crease in the participation in the labor force. Asked whether the govern- ment now is giving greater con- sideration to mandatory price and wage controls, Mr. Trudeau said the situation is unchanged. This remains a contingency plan, but he still thinks Canadi- ans prefer voluntary restraints to the "rigid apparatus" of con- trols. He said Canada still had a wide variety of choices to follow in its trade relations with the U.S., but he still felt it would be 100 times better if any type of hostility could be avoided. Re- calling that in 1911 an election campaign was won on the slo- gan of "no track or trade with the Mr. Trudeau said "it's not a course I would like to follow." When American intentions be- come more clear, Canada could decide ont for example, specific ways of 'expanding trade with the U.S. or, if necessary, reo- rienting trading patterns to other countries. TAKES FIRM STAND If counter measures were re- quired he would take them. Asked whether he still thought the Americans knew or cared little about Canada. Mr. Tru- deau said he doubted whether they have changed overnight and have begun massively car- ing about Canada. shot in arm What it means Liske replaced for contest PHILADELPHIA (API Rick Arrington will start at quarterback Sunday when Phil- adelphia Eagles clash with the Raiders in Oakland, head coach Ed Khavat said today. Khayat said Arrington will replace Pete Liske, formerly of the Calgary Stampeders of the Canadian Football League for the game. A spokesman for the team said there is nothing physically wrong with Liske. Hold mail rates WASHINGTON (API In a move to co-operate with Presi- dent Nixon's new economic pol- icy, the postal service has de- cided against seeking increases in the current temporary rates, the Washington Star reported Thursday. The new three-per-cent reduction in fed- eral income taxes announced Thursday will mean a saving of for each that a tax- payer has been paying lo the federal government this year, a finance department source said today. But precisely how the reduc- tion affects taxpayers with var- ious amounts of incomes and deductions for supporting a wife and children has not yet been worked out by the finance de- partment. The tax reduction is retroac- tive to July 1 and will continue, Mr. Benson said, until the end of next year. Since it applies only to half of the current calendar year, the tax reduction amounts to 1.5 per cent of federal taxes payable for 1971. The reduction applies only to federal income taxes. Tax tables put out previously by the finance department include both federal and provincial taxes, the latter at the rate of 28 per cent of basic federal tax. Most provinces, however, levy a provincial tax in excess of 28 par cent, as high as 39 per cent in Manitoba and 38 per cent in New Brunswick- OTTAWA (CP) A shot in the arm for the laggard economy, including Income tax cuts, was delivered by the federal government Thursday night. The program of temporary individual and corporate tax reductions, plus financial aid to provinces and municipalities for job-making projects, was outlined by Finance Minister E. J. Benson during a special Commons debate called to consider the slack state of economic activity. MR. BENSON cuts taxes Seen and heard Detectives gunned down in Belfast BELFAST (AP) Machine- gunners killed two detectives today in what security forces said was a carefully-planned ambush. The two officers were silling in plain clothes in a parked car in the Roman Catholic Ardoyne area when two cars carrying the gunmen sped past and rid- dled them with bullets. About town TTNEMPLOYED university grad Brian Wilson tell- ing friends how over-edu- cated employers thought he was Garth Wilson ar- raning a stage prop for the operetta "Puddin the First" Toil Tliacll rem- iniscing about the days ne used to repair outboard mo- tors. Fire halls unmanned MONTREAL (CP) District chiefs and supervisory person- nel provided skelton staffs in 14 of 40 Montreal fire stations today, but; the other 26 stations were empty as striking firemen defied a court injunc- tion ordering them back to work. FORECASTS DOWN The measures came after a sharp increase in the unemploy- ment trend and amid fears that U.S. trade restrictions will cause more damage. "The economy will be boom- ing by the end of Mr. Benson told reporters later. But, he added: "This' is not an elec- tion budget." The spending program pro- vides a three-per-cent reduction on individual federal income tax and a drop of seven per cent in corporate tax, both retroactive to July 1 and due to run to the end of next year. The tax cuts would be in addi- tion to those announced in June of the three-per-cent surtax for individuals and cor- porations imposed in 1968. INCLUDE LOANS Thursday's proposals include million in loans to provinces and municipalities for projects to help employment, mil- lion in grants to municipalities and community organizations for the same purpose, mil- lion to improve manpower train- ing and an million federal works program. There will be a speed-up of million in loans from Cen- tral Mortgage and Housing Corp. and million in loans for construction of multi-pur- pose exhibition buildings. The total cost of the package will be million, including the loss in tax revenue- To opposition hoots of derision be concluded his speech with: "The economy is strong and growing. The measures I have proposed today are designed to keep it that way." He urged higher consumer spending as an antidote in the U.S. surtax on imported goods, a barrier to Canadian exports- "Spending by individuals makes up two-thirds of national income and is the base on which the whole economy he said. WILL CONSULT PROVINCES Mr. Benson said the federal government "will be consulting the provinces forthwith on the early implementation of the pro- gram." A federal-provincial confer- ence was scheduled for Dec. 6-8 but the federal government, under pressure, has been trying to arrange an earner date amid conflicting provincial require- ments. The programs to spur employ- ment contain incentives for win- ter starts on construction pro- jects. Local and provincial gov- ernments will get back for every of on-site labor costs incurred up to May The aid to municipalities has overtones of the 1958 winter- w o r k s projects Conservative government of John Diefenba- ker where 50 per cent of payroll costs were borne by the federal government. But the highest amount spent in any one year before that program was abol- ished in 1968 by the present gov- ernment was million, in 1964-65. Last December, the govern- ment made million in low- intercst loans available to prov- inces for special job-producing projects. Leaders hoL cold Banquet of the century Well, if it isn't 'J'rnilenn! I misjn.il tlunkintjiboutsoul' PERSEPOLIS, Iran (Reuter) A giant military pageant marked today's celebrations of the anniversary of the P er sia n Thursday night in this tented city by one of the most glitter- ing banquets of the century. Fifty guests of the Shah of Iran and Empress of the largest gatherings of monarchs, presidents, and top government officials ever as- down lo the feast in a blue and yellow tent within the shadows of the ruined impe- rial capital. They dined on 90 plumed pea- cocks, quail eggs stuffed with caviar, mousse of crayfish tails, stuffed roast lamb with truffles, truffle salad, creamed figs with raspberries in port wine, and pink champagne. Six different wines were served. The gut'-sls inchulal Guv.-Gun. Roland Michoncr of Canada and his wife, Soviet President Niko- lai Podgorny. American Vice- President Spiro Agnew, Em- peror Haile Selassie of Ethiopia, Prince Philip and his daughter Princess Anne, and King Hus- sein of Jordan- Agnew downed 1911 Moet champagne at a head table that included eight kings, 13 presi- dents and assorted prime minis- ters, governors-general and sul- tans. Welcoming his guests to the banquet, the shah urged them to harmonize their efforts for a world "free from fear, anxiety and the constant tlireat of anni- hilation." More than 500 guests from 68 nations attended. LUXURY CAMPING STYLE This is the general view of "Tent City" in Persepolis, Iran, where all visiting dignitaries are slaving for thn anniversary celebration of the founding of the Persian empire by Cyrus the Great. The Imperial tent is at centre of encampment, By THE CANADIAN PRESS Politicians and business lead- ers responded with enthusiasm Thursday to the federal govern- ment's measures to expand the Canadian tem- pered their plaudits with doubts about the liming and possible inflationary effects of the plan. Spokesmen generally ap- plauded Finance Minister Edgar Benson's proposals for tax cuts and creation of jobs. However, some criticized the government for acting too late, encouraging inflation and for re- sponding with temporary mea- sures. W. V. Scully, chairman of the Steel Co. of Canada, said: "How are they going to pay for it? I suppose it will mean printing money." However, he said, "something had to be done to tide us over the winter." "Things are bad enough now in summer conditions." Jack Mackenzie, vice-presi- dent of Canada Permanent Trust Co., said he believe.1! "a deficit has to be wildly inflationary. Forrest Rogers, economic ad- viser to the Rank of Nova Sco- tia, said in Vancouver: "The program will spur the economy to a degree, the extent will depend on the suc- cess tie U.S. has in cooine with its wage-price problems and correcting its trading posi- tions." Conservative Leader Robert Stanfield said Finanace Minis- ter E. J. Benson should resign. And the government should start looking around for new economic advisers, he said. NDP Leader David Lewis said if government was lucky, the measures it intro- duced would create between and 50.000 jobs. Not very impressive when the unemploy- ed could total he de- clared. Social Credit Leader Heal Caouette called the measures "just another band-aid." "It isn't going to solve the problem of unemployment in said Mr. Cauoclte. ALBEHTA REACTION In Alberla, Treasurer Gordon Minicly said he was pleased with the personal tax reduc- tions, but had reservations about the concessions proposed for corporations. He said Ihe latter would help stimulate the general economy, but suggested they would be of moro benefit to hiohly-indus- trialized provinces such as On- tario than to Alberla. Ilo also wanted to know how the million r.pccinl-lcans program for provinces and mu- would be allocated, ;