Report of the Ottawa Delegation
Proposed Arrangements for the Entry of Newfoundland into Confederation
Committee of the Whole
Mr. Smallwood Mr. Chairman, yesterday we
had got as far as clause 7 dealing with what would
happen to the public debt. I do not know if the
House wants to continue debating that clause or
if it is ready to move on to clause 8.
Mr. Cashin I understood from Mr. Smallwood
yesterday that we were going to defer this financial section and go on with the others;
that we
could leave the financial end until we wound up.
The financial thing is the main thing. There have
been a lot of questions asked to which we have
not yet received replies, and I imagine it is going
to take time. I would suggest to Mr. Smallwood
that we defer from there up to the end of section
14. All that is financial. We could go on from
there to representation.
Mr. Smallwood I sympathise with the point
made by Major Cashin that the debate on these
clauses under the general heading of Financial
Arrangements — clauses 7 to 14 inclusive —
might be deferred until replies have been
received to the various questions tabled, but I
wonder if it would not be as well to go as rapidly
as possible through these clauses so that they
would be a matter of record. As far as any clause
dealt with up until now, the house can revert to
them and so with these particular clauses.
Mr. Chairman I am inclined to agree the debate
should be deferred; perhaps it might not properly
be disposed of by virtue of the fact that there may
be some questions arising out of the clauses.
Mr. Cashin This is the most important matter in
these terms — the financial section. I suggest a
small committee of the House be appointed to
go into it thoroughly to see where the whole thing
fits. The public wants to know all about it; how
868 NATIONAL CONVENTION November 1947
it affects the country.... The whole thing has to be
thrashed out. The financial clauses are the most
important matter and I am confident we should
not rush them. I have been trying to get further
information on them and until such time as I get
the information, I will not talk on them.
Mr. Chairman If the reading is deferred, that
might result in members being deprived of the
opportunity of asking questions.
Mr. Cashin If we read them now, and no member asks questions, we are not passing them, so
to speak?
Mr. Cashin I do not mind them being read now,
but the whole thing has to be summed up by
members in the House before we are finished, to
see what side of the ledger we are going to come
out on if we go into confederation. Anyone who
thinks we can do this in a few days is all out.
Mr. Chairman Which is why the only argument
against reading them is that it may be unnecessary; while on the other hand the reading
or even
a brief explanation might suggest to members
questions which might perhaps otherwise escape
them, and then when the time came to debate the
whole thing, perhaps they would not be in as good
a position as they would be if their attention had
been drawn to them by brief explanation. Apart
from that fact, I am in agreement with your
suggestion, Major Cashin, that the debate as such
should be deferred until the required information
is forthcoming.... I am prepared to rule that in the
event of your deciding to defer the debate, not
only on these section, but on other sections, it will
be your right to revert back to other sections.
Mr. Cashin I want you to understand I am not
trying to hold it up; but the matter is so important,
that I think all these questions, particularly with
regard to banks, the national debt of Canada, the
CNR and the Trans-Canada Airways, should be
forthcoming now.... This is supposed to be a
partnership which we are to go into on equal basis
in proportion to our assets. In order to do that, we
have to know the assets of the other side of the
picture, which are not here in these terms. The
assets of Newfoundland only are here....
Mr. Smallwood I appreciate the point Major
Cashin is making. I agree with him completely
that there is information on this section which
members will need to have in their possession
when they debate these particular terms, and
possibly debate the whole picture. But I think he
will agree, it might save time if we read these
sections, as it might suggest questions to be
asked.
Mr. Cashin You can take notice of questions as
we go along.
Mr. Smallwood I am a bit worried about the
questions. The government is in Ottawa and if as
they occur to us, we give notice of question, and
the question has to go through the formality of
passing the Information Committee, then be forwarded to the local government and then
probably to the Canadian High Commissioner, and by
him to Ottawa, by the time we get back final
replies ... with that in mind, it might expedite
matters if members who have questions would
please get them in as early as possible so they can
be forwarded as quickly as possible and have the
replies back in lots of time to help in the debate.
Mr. Fudge Before Mr. Smallwood proceeds,
there are a few questions I would like to ask him
and to which the people of the country would like
to know the answers. I have to take you back to
unemployment insurance. I wonder if Mr.
Smallwood could tell me what obligations, if any,
the unemployed are placed under in the getting
of this insurance? I have heard that the unemployed man must appear in person to get
the
insurance. However, if he appears in person and
there is a job available in any particular part of
the nine provinces, he is obliged to accept that
position, regardless of what the rate of wages may
be. Should he refuse to accept that, he automatically relieves himself of any unemployment
benefit....
Mr. Smallwood The position is that before a
man can get the insurance, which is his by right,
having paid into the fund, he must first be unemployed. He must be in a condition
to work,
physically, and, thirdly, he must accept a job
offered by the Insurance Commission which is
suitable work. A painter offered work as a clerk
or offered a job as a watchman, is not suitable
work. Secondly, he must be willing to move. A
logger must be willing to go to the lumberwoods
where the work is. If he is living in Green Bay,
he cannot say the job offered in Bay of Islands or
Badger is too far away. He cannot take that stand,
if the job is reasonably suitable to him, in a place
reasonably near, not too far away. The idea that
an unemployed man in Newfoundland, if offered
November 1947 NATIONAL CONVENTION 869
a job in British Columbia, must go or forfeit his
insurance benefit, is a wrong idea. That is not the
case.
Mr. Fudge I take it for granted that if a man is
sick and unable to appear in person at the unemployment office, he is out of luck
as far as
getting his unemployment insurance is concerned?
Mr. Smallwood The Unemployment Insurance
Commission has a good many offices — a couple
of hundred or more opening up in various parts
of Canada — but not every worker becoming
unemployed is near one of those offices. In Newfoundland, suppose they opened two,
one in St.
John's and one in Corner Brook. A man in Fortune Bay or Green Bay cannot be expected
to
come personally to St. John's or Corner Brook;
but he must report that he is employable, able and
willing to work. Forms are provided for that
purpose. An unemployed man cannot be expected to travel from St. Anthony to St. John's
or
from St. John's to St. Anthony, that would be too
utterly foolish....
Mr. Fudge I would suggest, if at all possible, to
have produced one or two forms which an unemployed person has to fill in — let us
see what
obligations there are. Let us see if there is not
something in what I have referred to. Furthermore, if the logger in Corner Brook is
unemployed and he is seeking his insurance, and he
has to go to Prince Edward Island or North Sydney to work on a farm, I am of the opinion,
should
he refuse, he would not get unemployment
benefits. When we get the form, we will see
exactly what the obligations are.
Mr. Smallwood I will do better than that. I will
put a question to the Government of Canada who
will put it to the Unemployment Insurance Commission on these points.
Mr. Fudge I am aware that there are quite a
number of unemployed throughout Canada at this
very moment — I have figures here, which I am
satisfied are correct, that there are 114,828 unemployed. Some of those, I am informed,
are not
getting unemployment insurance. I do not know
why. It may be because of the fact that they
refused to take employment elsewhere. I am also
in possession of information which says that
2,906 Polish veterans were brought into
Canada...their contract is for two years, they are
hired at the rate of $45 a month. I do not think
that would suit a logger from Corner Brook or
Point Leamington or anywhere else — to have to
take employment on the farms for $45 a month
and found. One more item, I wonder if Mr.
Smallwood made any inquiries as to what taxes
or licence fee the fishermen would have to pay
by way of trap berths?
Mr. Smallwood In the matter of charging fees
or licenses for setting various traps and other
kinds of fishing gear, ... it is the provinces who
set the amount; it is then gazetted by the Fisheries
Department of Canada. If Mr. Fudge wants it, I
have it for the Province of Quebec, Prince Edward Island, Nova Scotia and New Brunswick,
the actual fees charged. If Newfoundland were a
province, if any fees were charged for placing
fishing gear in the water, that would be a matter
entirely for the province.... The whole matter of
regulating berths is entirely provincial; and is
done on the word of the local provincial
authorities, and is then gazetted by the Department of Fisheries....
Mr. Higgins Could we not raise these questions
at the particular time?
Mr. Fudge This is a very important matter. I
would like to tell the fisherman, if we had confederation, if it is good or bad. I
may be fishing
next month myself.
Mr. Chairman I think you are properly entitled
to put your questions.... It is proposed that the
debate on 7 to 14 be deferred. That should not be
regarded as closure as far as members are concerned, to re-opening questions on preceding
sections. As I have already ruled, you are entitled to
raise the questions.
Mr. Fudge There are a number of men within
the hearing of my voice who may have to pay 50
cents per capita whilst fishing. I take it that
whatever the province collects by way of taxes is
for the purpose of raising sufficient money to run
the province.
Mr. Cashin The Newfoundland Hotel has cost
the country somewhere around $450,000. In addition, it has lost money since. Same
thing applies
to Canada. In Ottawa, they have the Chateau
Laurier, that hotel has cost enough to buy out
Newfoundland in losses over the last number of
years. But they have to have it. With regard to
public wharves, in Canada today they have a
Harbour Commission. Take Halifax or the City
of Montreal, all those places are operated under
870 NATIONAL CONVENTION November 1947
what is called a Harbour Commission.
Mr. Cashin They own the docks and they
charge fees for the docking, so much a ton for
docking, so much for space, so much for freight,
etc. The first thing we would find is that Harvey
and Company's premises, Furness Withy, all
Water Street premises would be taken over by the
Harbour Board. Mind you, there is something to
it. I have been trying to think this thing out for
some time — whether a harbour board would be
better to handle the freight in this city. Because
today there are only two or three places where
you can land stuff. They have a combine. I submit
that it is an idea that might be constructively
thought out. I believe that if we became united
with Canada efforts would be made to establish
a harbour board where shipping comes in — St.
John's, Corner Brook, etc., and it would be a
corporation run on its own.
The next thing on the list is military property.
Does that include the bases in Argentia? I do not
think it does. It does cover St. John's West, and
Bay Bulls. Public dredges — we have only one
which is 35 years old. Customs House, post offices, all these public buildings, in
my opinion, if
we had to start all new, including the railway and
the whole works, you could not replace them
under $110 million or $120 million.
Mr. Cashin It is being taken over for $62.5
million.
Mr. Chairman I do not think the question of the
value to be placed on them is important if you are
satisfied with the Economic Report, where they
evaluated the assets of the country; you could fix
your values on that. If you are not satisfied with
that report, you have to find some other means to
arrive at it.
Mr. Smallwood I appreciate what Major Cashin
has said. I would like to say something about the
National Harbours Board. I feel as he does, that
something ought to be done about the harbour of
St. John's to put it in a position of efficient service
to the trade and public of the country. It is only a
hope that the National Harbours Board of Canada
would take over St. John's harbour and make it
one of the modern, efficient harbours on the
North Atlantic seaboard of America. I hope they
would make Corner Brook a national harbour.
We raised the matter. We tabled a question on
that in Ottawa. The National Harbours Board
administers, I think, 16 harbours in Canada....
The Canadian Government has spent ... many
millions of dollars on the vast terminals,
elaborate piers etc. in the port of Halifax. I hope
the National Harbours Board would take over the
port of St. John's. That is not something to fear;
it is something to welcome. Let us say these
services in clause 8 would be taken over by the
Government of Canada. An earlier clause says
they would take over and operate all these services and pay the costs of operating
them. If they
take them over and pay the cost of running them,
naturally they have to own them. That is the usual
practice. If the provincial government operates
certain services on its own, then that government
owns those things; if the federal government
operates such services, they own them. If they
take over the Railway, the ownership is in their
own hands, in the name of the federal government. Same thing with Gander. But if they
are
worth $2 million or $120 million, does that mean
that Canada is getting that value? If they take the
Railway over and it is worth $73 million, is it $73
million better off?.... Is Newfoundland $1-2 million better off because as a province
it has not to
pay the operating loss on the Railway in the
future as we have done since 1920 or 1923? I am
sure Major Cashin will appreciate these points.
All right, they are worth $120 million, from the
standpoint of running them at a loss. One of the
worries we have had is the loss on Gander airport;
as a province, that loss will not have to come out
of the provincial treasury.
Mr. Higgins I asked a question; I do not know
if I am going to get an answer.
Mr. Smallwood When Mr. Higgins tells me
what kind of value he wants — if he wants
purchase cost, resale cost or value or replacement
value, I will give him the answer.
Mr. Higgins Do you agree, in the event of confederation, if we did not have the services as
outlined in clause 8, they would have to be
provided by the federal government?
Mr. Higgins What is the value of the railway if
we did not have it, and the federal government
had to build one?
Mr. Smallwood They would have to provide a
railway. They did that in British Columbia. They
November 1947 NATIONAL CONVENTION 871
agreed to build it to cost.
Mr. Cashin Let us forget that building it to cost.
It was the greatest scandal in Canadian public
life.
Mr. Cashin It cost $50 million in grants — the
Grand Trunk Pacific.
Mr. Smallwood If Canada was to become the
great nation she is, they had to build it.
Mr. Higgins If Canada did not have it and had
to put it here?
Mr. Smallwood What would it cost? I do not
know — $30 or $40 million, I do not know. I am
not a cost accountant nor an engineer; nor do I
know what it would cost to put a railway here
today.
Mr. Higgins Then why did you say the figures
we gave Ottawa are not correct?
Mr. Smallwood Because the figure of $73 million is allegedly the value; not the value.
Mr. Chairman That is not quite correct. I will
have the transcript brought in here.
Mr. Smallwood I do not know what the Newfoundland Railway is worth from the standpoint
of even the government value. I do not know what
it would cost to build a railway, or what you
would get if you were selling it. I only know, as
Major Cashin knows, roughly what it cost the
treasury of Newfoundland up to date for us to
have the railway we now have. We paid dearly
for it.
Mr. Higgins You agree we got the figures from
the Railway management?
Mr. Higgins Is it correct that you cannot dispute
them as being accurate?
Mr. Smallwood I am not going to be cross-examined as in the Supreme Court by a King's
Counsel; nor am I going allow myself to be
trapped by leading questions of that kind. I do not
believe the Newfoundland Railway is worth $73
million. If it cost $80 million, that does not say it
is worth that.
Mr. Chairman The Railway have evaluated
their assets at something like $72 million or $75
million. In reply to Mr. Higgins, you personally
think it is an inflated figure?
Mr. Smallwood Yes, and we are wasting an
awful lot of time. Could I be blamed, this time,
for holding this thing up?
Mr. Higgins What is the value of the Gander
airport, in your opinion?
Mr. Smallwood If you had to start from scratch,
it would cost $30-35 million. If you were to sell
it to some commercial enterprise, I am afraid you
would get precious little. Whoever buys it, is
buying a thing which has to be operated at a loss.
Mr. Smallwood I am not going to answer any
more questions. I am not in a witness box. I am
not being cross-examined by a distinguished
King's Counsel.
Mr. Chairman It is just as well to avoid confusion and useless argument. You cannot naturally
be expected to answer whether or not anyone
is prepared to purchase Gander; when you get
into that, you are into the realm of speculation and
conjecture. As far as I am concerned, it boils itself
down to this — Mr. Smallwood is not in a position to answer your question.
Mr. Higgins Mr. Smallwood, as chairman of the
Transportation Committee, I understand the
figures on the cost of Gander were in the vicinity
of $40 million.
Mr. Higgins If I do not address myself to Mr.
Smallwood, I do not know to whom I am going
to address myself on these matters.
Mr. Chairman Assume it cost $40 million, then
unless the values have altered materially one way
or the other, for all practical purposes, we must
assume, were we to replace Gander airport
tomorrow, it would cost approximately $40 million. If we are going to depend upon
the realisable
value, we must also depend upon whether or not
anyone is prepared to buy; and if so upon what
terms and conditions. Since we have no
knowledge of that, I do not think it is possible to
determine the realisable value.
Mr. Higgins What would you believe to be the
value of the Newfoundland Hotel?
Mr. Higgins And the public harbours, wharves
and so on? You do not know that either, I suppose. I give in. I cannot get the information,
I am
872 NATIONAL CONVENTION November 1947
satisfied.
Mr. Ashbourne I think the Newfoundland
government bought over the Newfoundland Railway some years ago for a couple of million
dollars. Did they not take over the airport for $1
million? Is not that the present day value?
Mr. Butt They did not take over the airport for
$1 million.
Mr. Chairman We are getting into very
dangerous ground. There are, when dealing with
property, three angles from which to approach it.
If you are going to determine values in the light
of what it cost to erect a building, that is one thing.
Then again, looking at it from the angle of replacement cost, that will depend upon
the price
at the moment. If prices are higher, it will be
more.
Mr. Chairman That is right up my alley. If I
build a house for $50,000 and I can only realise
$5,000, then the value of the house is $5,000. Or
conversely, if it is costing me $5,000 and I can
get $50,000 for it, that is the realisable value. The
actual realised value depends upon what I can get
and is not necessarily related to the actual cost of
construction.
Mr. Vardy As I view this, it is not so much what
it cost; neither should it concern us today in this
Convention, what we could get on a forced sale.
We should ask ourselves what is it worth today
to the people of Newfoundland, as a going concern. That is the value — not what it
cost; not
what we would get if we sell out. We are not
going to sell out. We are discussing a partnership....
Mr. Chairman Speaking for myself, I have always felt that the manner in which the public
approached the thing is all wrong. For example,
the operating deficits on the Railway have been
met by the government exchequer. Assuming, for
argument's sake, that the operating deficit for the
year would be $1 million, everybody blandly
assumes that it cost the country $1 million. We
must bear in mind the fact that the Railway is the
largest employer of labour. And remember, on
every article of foodstuffs and clothing, every
Railway employee is indirectly, if not directly,
paying revenue to the government. He pays his
income tax. So that when we come to consider
what the government raises in return it might
well be that the contribution they make to the tax
structure might outweigh considerably the
operating deficit.
Mr. Higgins What value did the Government of
Canada put on these assets?
Mr. Smallwood I have no idea. Clause 9.
Accumulated Financial Surplus.
Newfoundland will retain its financial
surplus accumulated to the time of union,
subject to the following conditions:
(1) One-third of the surplus at the time of
union shall be set aside during the first eight
years of union, either in trust or on deposit
with the Government of Canada at Newfoundland's option, withdrawable by the
Newfoundland government as required only
for expenditures on current account in order
to facilitate the maintenance and improvement of Newfoundland public services, any
unspent portion thereof at the end of the
eight-year period to become available for the
unrestricted use of Newfoundland.
(2) The remainder of the surplus shall be
available to the Newfoundland government
for developmental purposes within Newfoundland.
(3) No part of the surplus shall be used to
subsidise production or sale of Newfoundland products in unfair competition
with similar products of other provinces, it
being understood that this proviso does not
preclude assistance to industry by such
means as developmental loans on reasonable
conditions or by ordinary provincial administrative services.
Newfoundland will have the right within
one year of union to deposit with the Government of Canada all or any part of the
surplus
held in dollars and to receive with respect
thereto interest at the rate of two and five-
eighths percent annually during the maximum period of ten years after union on the
minimum balance outstanding at any time in
the year preceding payment of interest.
That seems to be fairly clear. We have a
surplus of so much at the date on which we
become a province, if we become a province, and
all the surplus would belong to Newfoundland;
but it would have to be divided into two parts.
The first part would be one-third of that amount.
That one-third would be earmarked to be used by
the provincial government for ordinary purposes.
November 1947 NATIONAL CONVENTION 873
The other two-thirds would be for the use of the
province for developmental purposes.... There
are two other points about that — one is that the
one-third, for eight years after we became a
province, would have to be put in trust or it could
be put on deposit with the Government of Canada
drawing interest. And there is this point — the
whole amount of the dollar surplus, and the sterling surplus if we can get it turned
into dollars,
can be placed on deposit with the Government of
Canada for as long as we wish to leave it there,
up to ten years. That must begin within one year
after becoming a province; while there the
provincial government would draw interest at the
rate of 2 5/8% per year. One other point only needs
to be drawn to your attention. No part of the
surplus can be used to subsidise production or
sale of Newfoundland products in unfair competition with similar products of other
provinces.
That does not prevent the Government of Newfoundland from helping industry by such
means
as development loans on reasonable conditions
or by the ordinary provincial administrative services; it must not be a direct subsidy
on similar
products sold in competition with other provinces.
Mr. Butt Naturally, the question of the surplus
did come up when the delegation was discussing
these questions with Canada. I wonder if the
delegation could tell us why any restrictions at all
should have been put on the use of our surplus by
the province, if we did become a province?
Mr. Smallwood The practice in the case of
every province that joined the Canadian union
was for the federal government to take over a
certain share of the province's public debt and its
the accumulated cash surplus and assets. In our
case they have not done that; they have left the
surplus untouched. They could, on all the precedents established by all other provinces,
take over
the cash surplus in an amount corresponding in
principal to the amount of the debt taken over.
They have not done that. They said they did not
want to do so. In fact, they know that if we were
to lose our surplus the people of Newfoundland
would not consider confederation. So the surplus
is left intact to us; but one-third of it is earmarked
— not for them, but for us, for the ordinary
purposes of provincial government for the first
eight years. There is to be a whole review and
reassessment of the position within the eight
years. In the eight years, one-third of the surplus
is ours, but we must use it only in a certain way,
for ordinary purposes, road building, if you like,
or building hospitals; any purpose which we wish
to spend it on. The other two-thirds is for
developmental purposes. Subsection (2): Canada
will pay to the Province of Newfoundland the
following statutory subsidies:
(2) $1,100,000 annually, in lieu of the
various fixed annual awards, allowances and
subsidies provided by statute from time to
time for the Maritime Provinces or any of
them, and in recognition of the special
problems created for the island province of
Newfoundland by geography and a sparse
and scattered population.
That means only that the Government of
Canada would pay to Newfoundland $180,000 a
year and also 80 cents a head of all our population, and that would increase as our
population
and scale of grants increased. And, secondly,
would pay to our government $ 1.1 million a year;
and that is to take the place of certain statutory
awards made to the Maritime Provinces. These
statutory awards, as you undoubtedly know, are
the Duncan-White award made to the three
Maritime Provinces in 1927. Nova Scotia, I think,
got $1 .3 million; New Brunswick, $900,000; and
Prince Edward Island $300,000, I think, a year —
according to the population of the province.
These particular subsidies are perpetual:
$180,000 a year and 80 cents a head of the
population — $1,300,000 — these would have to
be paid to the Government of Newfoundland
every year, for all time; at least that much. I do
not know if there are any questions to be forwarded to Canada on that.
Mr. Fudge I would like to ask Mr. Smallwood
for what reason, if any, did you take the 1942 year
population?.... We are told the population today
is 320,000.
Mr. Smallwood They have a decennial census;
the last census in Canada was 1942. All their
financial statistics are based on their 1942 census;
all their subsidy payments are computed on the
basis of the 1942 population.
Mr. Fogwill I have not got that clear: $180,000
a year and 80 cents a head — and the total amount
would be the perpetual amount?
Mr. Smallwood That is right. Wait now! The
$180,000 is a fixed amount but the 80 cents a
874
NATIONAL CONVENTION November 1947
head, that will depend on the population, but it
cannot fall below the amount of the first year of
union. The $1 million should not go up or down.
It is a fixed permanent amount in lieu of special
subsidies.
Mr. Chairman It says, "in lieu of the various
fixed annual awards."
Mr. Butt It also says "provided by statute
from
time to time."
Mr. Smallwood The Duncan award — Sir A.R.
Duncan, Chairman of the Duncan Commission in
1926; and Mr. Justice White, Chairman of the
Sirois-Rowell Commission in the following year;
Duncan-White awards. Incidentally it was under
that same award that the Maritime Freight Rates
Act was enacted and the Maritimes received
lower freight rates, at least 20% reduction; that is
also the Duncan-White award. It is also made
available to Newfoundland in a clause further
over.
[ The committee recessed until 8 pm]
Mr. Smallwood I wonder if it would be in order
to go on to clause 12?
12. Tax Agreement. Newfoundland will be
entitled to enter a tax agreement for rental to
Canada of the income tax, corporation tax
and succession duty (inheritance tax) fields
on either of the following bases, the option to
be exercised within six months after union:
1. On the same basis as the existing
agreements with other provinces which
apply to fiscal years up to and including
1952;
2. An agreement providing for the same
annual basis of payment by Canada as in
existing agreements with other provinces
(i.e. existing at the date of the exercise of the
option), applying to fiscal years up to and
including 1957, regardless of the terms
which may be negotiated (after the date of
exercise of the option by Newfoundland) by
other provinces in any renewals of the existing agreements.
If Newfoundland enters into a tax agreement, the subsidies under clause 11 above
($180,000 and 80 cents a head of population
and the fixed annual subsidy of $1,100,000)
will, as in the case of similar subsidies to
other provinces, be included in the computation of tax agreement payments. (The
methods of computing the payments to New
foundland under such tax agreement are set
forth in Annex III).
Annex III is a most complicated and difficult
thing to read, let alone understand. I am quite
certain that not one in 100,000 hearing the intricate mass of figures showing how
the tax agreement payments are computed will understand it.
Perhaps the Convention would be satisfied if I did
not read it. If that were agreeable, I would explain
the general principles of the tax agreement. The
position is this: the Government of Canada is
permitted under the British North America Act
to raise its revenue by almost any kind of taxation; but the provinces are limited
to direct taxation to raise revenue. Most of the provinces up to
1941 had their own provincial income tax. In fact,
some town councils in some provinces had their
own municipal income taxes. Up to the outbreak
of the war, you would find, in some cases, three
income taxes — one collected by your own town
council, one collected by the government of your
province, and the income tax collected by the
Government of Canada... When the war broke
out, the cost of the Canadian effort had to be
borne by the federal government, not by the
governments of the towns or provinces. They
knew that it was going to be a very expensive
proposition to fight that war. I think Canada
raised nearly half the money by taxes. The taxes
were very high. They raised a little over half by
borrowing from the peoples. As the Government
of Canada was going to pay the cost of the war,
it went to the various provinces and said to them,
"You are not going to have to pay the cost; we
are going to pay the cost and we will make an
agreement with you for the period of the war."
They called in the premiers of the nine provinces
and they said, "We will pay you a fixed amount
every year as long as the war lasts, the average
amounts you collected for three years before the
war broke out. We will pay it as long as the war
lasts and a year after. In return, you must stop
collecting corporation taxes, death duties and
income taxes during the war and while the agreement is in force." The provinces agreed.
Beginning 1941 the only income tax collected in
Canada was collected by the federal government,
none by the provinces... The war came to an end,
and the people of Canada were rather fond of the
idea of paying one income tax. True, the
Canadian government had the monopoly; they
November 1947 NATIONAL CONVENTION 875
drove the income tax and the corporation taxes
up very high; they got the money out of the
people. But they have reduced them three times
since the war. Just after the war ended they called
the nine provinces together and said, "This wartime agreement will soon be coming
to an end;
you will have the right to put on provincial income tax again." The provinces did
not want to
go back to the old system. The federal government said, "We propose that this arrangement,
made during the war, we will make that for time
of peace. We will be the only government who
will collect income tax and death duties. In
return, if you will lease to us the right to collect
these taxes, we will pay you a fixed amount."
They worked out the basis, haggling over it;
various premiers were trying to get the best deal
possible for their industrial provinces. Seven of
the nine provinces made that agreement with the
Government of Canada.
They offer us in these terms the same agreement, only a little bit different. The
agreement
with the seven provinces expires in 1952. They
say to us, "You can have it ... on the same terms
to 1952; and if you like, you can have it to 1957.
You have to decide within six months. After you
become a province, your government would have
to make up its mind whether it will sign the tax
agreementuntil 1952 or until 1957. You will have
to make your choice. But if you decide to make
it up to 1957, and the agreement with the other
provinces expires in 1952 and if they negotiate a
new agreement, a better one, more preferable to
them, you will not be entitled to any improvements they may get starting 1952, you
would not
get that until your agreement expired in 1957."
So Newfoundland, if it became a province, would
have to make up its mind within six months,
whether to sign the tax agreement until 1952 and
take a chance on getting a better deal in 1952,
together with the other provinces. The danger of
signing up to 1957 would be that if 1952 rolled
around and the other nine provinces had
negotiated a better deal, a better tax agreement,
then the province might have to wait until 1957
before it could get these additional advantages
and benefits the others had got starting 1952.
Personally, it is only a matter of opinion, I do not
think there is any danger that if the other provinces in 1952 did get a better tax
agreement, the
better agreement would be kept back from New
foundland. If were to decide within six months,
if we did become a province, I would take my
chance on signing up to 1952, feeling there will
be a better tax agreement negotiated by the other
provinces in 1952. There may be some questions
on this section and there may be some to be
directed to the Government of Canada.
Mr. Higgins I wonder would Mr. Smallwood
give us his opinion — in the event of federal
union taking place between this country and
Canada, if he approves of our signing a tax agreement with Canada?
Mr. Smallwood I would be in favour, if we
became a province, of signing a tax agreement for
this reason — that it is unthinkable that there
should be two income taxes in Newfoundland, or
that there should be two corporation taxes, or two
death duties taxes or inheritance taxes. There is
room for only one. If we refused to make that tax
agreement, Canada would collect her income tax
in Canada just the same, and Newfoundland
would be forced to have its own provincial income, corporation and inheritance taxes;
which
would be two such taxes on the people of Newfoundland and that would be something
too
heavy for the people to bear. It may be asked why
Ontario and Quebec did not make the agreement... The reason is that those provinces
had a
tremendous backlog of money accumulated, so
for a year they would quite easily finance themselves without this income tax; they
could spend
their backlog. For reasons of their own they have
not signed it and they can go on for a year. They
do not need to put on provincial income tax. But
the moment they come to impose that on top of
the other taxes, the governments of Colonel Drew
and Duplessis would be wiped out. No one wants
to pay two income taxes. If Newfoundland became a province, i would say let us have
that
agreement with the Government of Canada.
Mr. Smallwood I do not think that is; but that
would be sufficient for me if I had to decide the
matter.
Mr. Higgins I want to put this position to him. I
can give authority:
I believe that everyone who has given any
attention to public finance will agree that it is
a thoroughly vicious system to have one body
raise taxes and another body expend the
money thus secured. In other words, give to
876
NATIONAL CONVENTION
November 1947
the provinces these grants from the federal
treasury, and you will not get, with respect to
expenditure, that careful supervision which
would be exercised if the provinces themselves were obliged to raise the money in
the
first instance. It is a bad system, a thoroughly
vicious system, and that is the reason why the
present administration has been seeking to
put an end to a system that grew up at a time
when the country was in the throes of war or
had to meet a post-war situation — a system
which, had it been pemiitted to develop,
would have become thoroughly destructive
of anything in the shape of economy, with
respect to the expenditure of the people's
money.
That citation was from the speech of the Prime
Minister, Mackenzie King, on February 21,
1929. And on April 3, 1930, he said:
When on a previous occasion we were
discussing this matter of grants from one
treasury to another, I said I thought it was an
unsound principle; in fact, I think I used the
expression that it was a vicious principle to
have one body raise the taxes and another
body spend the people's money thus raised.
Is there any hon. member who will disagree
with me in that statement?
There is none. That is the extent of the
statement I made. I was referring to a principle of financing, speaking simply in
relation to what is sound and what is unsound in
financing. Anyone interested in financing,
whether of a municipality, a province, a
dominion, an empire, or a league of nations,
will, I think, admit it is unwise, an unsound,
a wrong principle for one body to have to do
with raising the taxes and another to be concerned with the spending of the money
so
raised, that other body not having to account
to the representatives of those who have paid
the taxes.
The only other authority I have is from a very
celebrated Canadian: "It is a completely false
principle that one government should impose
taxes and another government spend the revenue
therefrom. This will always lead to extravagance." That is a quotation from Sir Wilfred
Laurier.
Mr. Smallwood I was present in the House of
Commons when that statement was made. I am
not going to attempt to defend the Prime Minister
— if he needed any defence against the crime of
changing his mind. He did change his mind between 1929-30 and 1947. I repeat, the
people of
Newfoundland cannot afford to pay income tax
to two governments. It can afford to pay it to only
one. I would he in favour, as were the other seven
provinces, of signing the tax agreement with the
Government of Canada. The people of Canada
are firmly in favour of having one government
collect income taxes, corporation taxes and death
duties. That is why the Government of Nova
Scotia signed the agreement. They signed because the people of Nova Scotia wanted
them to
sign....
Mr. Higgins Do you know if the Prime Minister
changed his mind and if so, why?
Mr. Smallwood l have not had the honour of
being put in his confidence — he has not confided
in me as to why he changed his mind.
Mr. Butt I read something on the dominion-
provincial meeting. I got two clear impressions.
One has not been mentioned here at all, the
question of principle. That is, many people in
Canada, including well-known people in public
life there, felt that by these tax agreements, and
by allowing the central government to control the
finances to a greater extent, you would be
destroying the whole basis of federal government
and create a unitarian state. That is what they
disagreed with. I believe Mr. King felt the same
way some years ago. Another thing I noticed was
this; whenever Mr. King was present at that meeting he was careful to say very little.
These were
two different impressions. The question of principle we ought to consider, for the
simple reason
that if you put any more control into the hands of
the federal government, then you are going to get
more dictation from the central government, and
your province is governed by remote control
rather than if you kept more control in your
province itself. I believe very firmly, if you are
going to develop a country, no matter how small,
it has to be done by the people themselves, as
close as you can get to the people — build it up
from the small unions like local councils. When
you get finances centralised in one government a
long distance away, it makes it more expensive
on the taxpayer. That came to my mind when Mr.
Smallwood referred to the possibility of losing
some of our services. I do not think it is likely that
November 1947
NATIONAL CONVENTION
877
our services such as wharves and bridges will be
cut down. Those things should be done close to
home. On the question of the principle, both
Quebec and Ontario, representative of two-thirds
of the people, felt it was a question of destroying
the federal union and creating a unitary state; not
now, but a little later on when the taxes are
extended.
Mr. Smallwood Mr. Butt has touched loosely
on a philosophical question which is receiving a
great deal of debate in Canada and the United
States; that is, on the alleged trend towards
centralisation. He is overlooking something. The
royal commission which lasted three years, and
which scoured Canada from one end to the other
holding hundreds of hearings, went into the
whole question of dominion-provincial relations.
One of the members was Mr. MacKay, editor of
a book which each member has, a book to which
contributions were written by a number of
people. That Rowell-Sirois Commission investigated the whole story. Wilfred Eggleston
was
one of the members of that commission It was a
most complete, most exhaustive examination of
the country. Three thundering volumes, which
perhaps Mr. Butt consulted. That commission
recommended very strongly the very idea which
was put into effect in part in the wartime tax
agreement, and which has been put into effect in
part by this tax agreement.
I might remind you, sir, that this dominion-
provincial conference which was held beginning
in August 1945, again in January 1946 and again
in June 1946, three great sessions, was called so
that the federal government could submit to the
nine provinces not merely a tax agreement but a
whole sweeping series of reforms aimed at helping the population of Canada generally,
regardless of what province they might happen to live
in. One was that old age pensions should be made
universal at the age of 65, regardless of their
means. A national health programme, calling for
expenditure of $300 million to be distributed
among the provinces, and especially for the
provinces needing it — it was for hospitals,
clinics, all kinds of activities for public health. A
whole series of proposals — the Government of
Canada to have a fund of half a billion dollars,
and a billion to be made available to the different
provinces if things began to slip — that would be
given, not when things were good, but to hold it
in reserve when things got bad. That dominion-
provincial conference was not a success. They
put it on the shelf. They have never abandoned it.
They put into effect one feature, the tax agreement. 1 have read all the sessions
— a great
volume from which Mr. Higgins quoted yesterday. Mr. Duplessis and Colonel Drew in
that
conference harped upon the increasing tendency
towards centralisation in Canada. In studying
Canadian history, we should not only look at the
things said by Messrs. Duplessis and Drew, both
of whom are at bitter personal enmity with the
Government of Canada, which they have the
right to be, and as Mr. Butt noted, they said there
was an increasing tendency towards centralisation. The Government of Canada does not
lay
down a pattern for others to follow.
Mr. Higgins Point of order. I wonder if we are
not wasting a lot of time.
Mr. Chairman As far as I am concerned he is
addressing himself to a question. We are sitting
in committee.
Mr. Smallwood I want to get through this document. We agreed there was to be no discussion,
but if a point should require further information,
either I or someone should give notice of question. That is what I want to do. I cannot
sit silent
and dumb if members get up, as they have the
right to do. If they make these points, surely they
call for a reply. Either everybody has the right or
nobody has the right.
Mr. Cashin Here is a tax agreement; when it is
translated into figures, it means $6,820,000. This
is what it means in dollars and cents. The irreducible minimum payment would be the
sum
of $15 per capita on the population for 1942
(311,301) plus statutory subsidies. That comes to
the provincial government?
Mr. Cashin That is what they pay in subsidy; in
return we give them customs duties, income tax
and inheritance tax.
Mr. Smallwood We have other considerations
for losing our customs duties. $6.8 million plus
transitional grants — $25 million or $26 million.
Mr. Smallwood It is never a fixed amount. All
they can put here is the irreducible minimum,
$6.2 million. That is irreducible. It cannot fall
below that. It can rise up. It is the average over
the three preceding years.
878 NATIONAL CONVENTION November 1947
Mr. Cashin If half our population moves to
western Canada, and we have 150,000 people
left, what happens?
Mr. Smallwood You lose a lot of subsidy.
Major Cashin has lost all his faith. You make
Newfoundland a nice place to live, and we will
bring them back. It never gets out of their blood.
I talked with a Newfoundlander in Montreal, he
has been up there 61 years — Lewis Taylor— he
made a lot of money, and he is now coming back
to Newfoundland. We will bring them back in
their thousands and drive up the subsidy.
[Short recess]
Mr. Smallwood Clause 13. Perhaps I might be
permitted to go on to that.
13. Transitional Grants. In order to
facilitate the adjustment of Newfoundland to
the status of a province and the development
by Newfoundland of revenue-producing services, Canada will pay to Newfoundland
each year during the first twelve years of
union a diminishing transitional grant payable as follows:
1. The sum of $3,500,000 annually during
each of the first three years after union;
*
I have nothing particular to say about that, except
that it is to be considered in the light of clause 14;
and as the two are very much together, perhaps it
might be as well if I read clause 14 now.
14. Reassessment of Newfoundland''s
Financial Position
In view of the difficulty of predicting with
sufficient accuracy the financial consequences to Newfoundland of adjustment to
provincial status the Government of Canada
will appoint a Royal Commission within
eight years of union to review the financial
position of Newfoundland and to recommend the form and scale of additional financial
assistance, if any, which may be required
by the Government of Newfoundland to
enable it to continue public services at then
prevailing levels without resorting to taxation more burdensome, having regard to
capacity to pay, than that of the Maritime
Provinces.
The first is clear enough. Special grant of $3.5
million a year for the first three years; after that
dropping by 10% each year. I would ask you to
note why that grant is offered. It is in order to
facilitate the adjustment of Newfoundland to the
status of a province and to facilitate the development by Newfoundland of revenue
producing
services... But it is the next clause that is really
important, because as they say there, it is a difficult thing to foretell with enough
accuracy just
what the financial consequences would be to
Newfoundland in adjusting herself to the status
of a province of Canada. So these subsidies offered, including the $3.5 million. may
or may not
be enough. Therefore the Government of Canada
... says within eight years of our becoming a
province they would appoint a royal commission
to review our financial position as it appeared at
that time. In doing that, the royal commission
would be bound to take two things into account
in deciding whether we need a bigger subsidy or
not. It would have to take into account whether
the province at that time was taking in enough to
pay its way — taking it in two cases, first, subsidies from the Government of Canada
and taxes
on the people of Newfoundland. Was it breaking
even? Was it paying its way? Was it balancing its
budget? Was the Government of Newfoundland
getting enough subsidy to enable it to keep up its
services to the public? And secondly, they have
to have a yardstick to measure that by, and the
yardstick is the rate of provincial taxation in the
Maritime Provinces, those provinces being most
nearly similar to the conditions in New—
foundland. These would be the yardstick. However, it is agreed here that the Government
of
November 1947
NATIONAL CONVENTION
879
Canada in deciding whether to give more subsidy
or not, and if so how much, would have to take
into account what we were doing for ourselves;
were we collecting a fair amount of taxes?.... The
yardstick is how would taxation in Newfoundland six or seven years from now compare
with taxation in the Maritime Provinces. That is
not all. They do not say you have to have the same
burden of taxation in Newfoundland as in the
Maritime Provinces. What they say is, having
regard to your ability to pay....
I do not know if there is anything else I need
add. I do not know if there are any questions on
this to be directed to the Government of Canada;
if any member wants any more information, he
can give notice of question.
Mr. Smallwood Yes, it is provided for in clause
14.... If there are no questions, I will pass on to
clause 15.
15. Representation.
Representation of the Province of Newfoundland in the Senate and House of Commons
of Canada will be in accordance with
the British North America Acts, 1867 to
1946, as amended from time to time. Under
the existing provisions, while the number of
senators to which each province is entitled is
fixed, the number of members of the House
of Commons is determined from time to time
on the basis of population, but in any case is
not to be less than the number of senators to
which the province is entitled. Under these
provisions, the Province of Newfoundland
will be represented by six members in the
Senate and, on the basis of its present population, by seven members in the House
of Commons.
It is fairly clear, Newfoundland would be entitled
to full representation in the Senate by six senators
who are appointed by the Govemor-General of
Canada for life.
Mr. Cashin A lot of them were appointed last
fall.
Mr. Smallwood I have not got that far yet. They
are appointed by the Govemor-General; but perhaps Icould appoint some senators — if
everyone
is very nice, I may say I want some special friends
appointed to the Senate. You are appointed for
life. You do not have to go out and get elected.
They get $6,000 a year, paid by the Government
of Canada. You would have to draw lots. In the
House of Commons there would be seven members. These are not appointed. They are elected
by the people and for that purpose Newfoundland
would be divided into seven districts; they will
be big districts, of course... Members of the
House of Commons are paid by the Government
of Canada. They also get $6,000 a year. If the
government of the day in Canada happened to be
Conservative, and if at least one man elected from
Newfoundland was a Conservative, he would be
a member of the cabinet. If the Government of
Canada happened to be Liberal, and there was
one elected Liberal from Newfoundland, he
would be a member of the cabinet. It is an understood thing, it is not in the bond.
As Newfoundland is such an important fishing country,
the most important fishing country in the
Canadian union, Newfoundland would automatically fall in for the job of Minister of
Fisheries.
I do not expect to be Minister of Fisheries.
Mr. Smallwood Mr. Crosbie would make one.
We cannot decide that here. If Mr. Crosbie
wanted the job, he will be Canada's Minister of
Fisheries a year or so from now. Incidentally, you
can never have fewer MPs than senators. Prince
Edward Island is only entitled to two members of
Parliament, but she has four. She has four
senators. No matter how small the population,
you have to have as many MPs as senators...
16. Transportation.
(1) Canada will maintain in accordance
with the traffic offering a steamship service
between North Sydney and Port-aux-
Basques, which, on completion of a motor
highway between Comer Brook and Port-
aux-Basques, will include suitable provision
for the carriage of motor vehicles.
(2) Railway services and railway rates
over the Newfoundland Railway will be subject to regulation by the Board of Transport
Commissioners of Canada as are railway services and rates elsewhere in Canada.
(3) For the purpose of rate regulation:
(a) Through traffic moving between
North Sydney and Port- aux-Basques will be
treated as all-rail traffic.
(b) The Island of Newfoundland will
be deemed to be within the Maritime region
880 NATIONAL CONVENTION November 1947
of Canada and any legislation of the Parliament of Canada (such as the Maritime
Freight Rates Act, 1927, and amendments)
providing for special rates on freight traffic
moving within, into or out of, the Maritime
region will, so far as appropriate, be made
applicable to Newfoundland.
There is not much to explain on that. The first
one is that Canada would operate a steamship
service between North Sydney and Port-aux-
Basques, with suitable provision for the carriage
of motor vehicles; but that would not be done
until the road between Corner Brook and Port-
aux-Basques is completed. What is in mind —
what you want is a ferry on which a car which
started, say, in Texas or in any part of Canada,
could drive along the road, drive to North Sydney, drive on to the motor ferry, land
in Port-aux-
Basques.... The other point is clear, the railway
rates would be regulated by the Board of
Transport Commissioners. It is made clear in 3(a)
that traffic moving back and forth across the Gulf
... will be treated as a railway. The Maritime
Freight Rates Act passed in 1927 and in force
ever since was to this effect, that freight hauled
anywhere within the region is hauled at the
regular rate, but the government pays 20% of the
freight rate; the man who ships it or receives it
pays 80%. By making Newfoundland part of the
Maritime region, any freight put aboard
anywhere in Newfoundland, shipped to
anywhere in Canada would be shipped at a
reduction of 20% in the freight rates. In the same
way, any freight that originated anywhere in the
Maritime region on the mainland of Canada...
coming to Newfoundland by rail would be hauled
at a reduction of 20% in the freight rate. There is
another act, an act under which feeds, animal and
poultry feeds shipped to the extremities of
Canada... are free of charge, no freight charges
on any amount, from Fort William or Port Arthur
all the way down to Halifax or St. John. If Newfoundland became a province, feeds
for animal
and poultry would be hauled here without
costing one cent for freight, which is a very
important item in any Consideration of livestock
or poultry raising. I do not know if there is
anything else I can add.
Mr. Cashin In connection with travelling on the
Canadian railway at the present time, is it not a
fact, in addition to the passenger rates, there is
15% on top of that in taxes?
Mr. Smallwood Whether there is a special tax
on travel? Whether it is still on?
Mr. Smallwood It is a wartime tax, put on
during the war to help finance the war effort.
Most of them have been cutout. If it is still on, it
is due to be abolished.
Mr. Cashin He does not know whether it is
going to be cut out. We have no guarantee. It is
on every transportation facility in Canada. There
are lots of people in Canada who sent money
down here to buy tickets in order to avoid paying
15%.
Mr. Cashin We have no guarantee, Does it
exist? And as the government has not indicated
it here at all, will it be cut out? As far as we know,
it is not going to be cut out. We have no clear-cut
promise. If the railway collected $2-3 million in
passenger fares, that would be $300,000 or
$400,000 we would have to pay in taxes for
travelling...
Mr. Smallwood He is right when he says there
is no guarantee that Canada is going to cut out the
wartime tax on travel. The guarantee, if it is a
guarantee, is in the budget speeches of the
Finance Minister who has announced in the
budget speeches that it is their intention to abolish
all the wartime taxes. We know for a fact that they
have abolished a majority of them....
Mr. Chairman There is nothing here to show
that there is a wartime tax and that it would be
abolished.
Mr. Cashin With regard to abolition, it is a
matter for the Transportation Board to recommend to the government.
Mr. Cashin The railway collects the 15% tax
and hands it over to the federal government.
There is nothing here to show it is to be abolished
and until such time as it is abolished, we cannot
say it is. As things are today, it means an extra
million dollars to people who travel around Newfoundland and who travel abroad.
Mr. Smallwood Major Cashin suggests that $7
million will be spent in travelling, and with 15%
on that, if that is kept up, $1 million will be taken
out of the peoples' pockets on wartime travel. I
doubt very much if the people in Newfoundland
will spend $6 million or $7 million on passenger
November 1947 NATIONAL CONVENTION 881
fares on the railway. But Major Cashin is right, it
is not in the Terms; and it is not in the Terms that
there is such a tax.
Mr. Cashin They make them so complicated;
they do not mention coastal travel at all.
Mr. Bailey I wonder if the committee on railway
negotiations took in mind the special rates to our
fishermen going to Labrador. I wonder if they
would continue after the CNR took over the
running of the railway and steamship line?
Mr. Smallwood That is a good point — special
rates for fishermen going to and coming from the
Labrador. I will get a question in on that.
Mr. Newell Further to this discussion of the
amount we pay extra by 15% on travel, we are
working on the assumption that the basic rate in
Canada is the same for Newfoundland
Mr. Cashin It is higher. I am certain it is higher,
particularly in the western part of Canada. If we
are in the Dominion, it affects us from here to
Vancouver. I think today they are looking for
30% increase in passenger and freight rates.
During the war period these railways made considerable money because of war traffic.
Now they
are getting back to peacetime; the position is they
cannot make the grade. The Canadian National
Railways took over the Grand Trunk Railway
after it became bankrupt. The Canadian National
is the largest publicly-owned railway; the
Canadian Pacific is the largest privately-owned,
running on its own. Just prior to the war the
Canadian Pacific were in such difficulties that
they had to go to the government which had to
guarantee them a loan. They started paying back
interest on common stock. Today it is practically
as bad as ours. With regard to our rolling stock,
we have information that the Railway spent $1
million in converting our locomotives from coal
to oil. If Canada takes over, they will be taking
over locomotives in first class condition.
Mr. Chairman This proportional increase of
30% is cited to be justified upon the urgency of
replacing rolling stock worn out in war years.
Mr. Smallwood We talked about that application for a 30% increase. That began in January
this year. A whole army of something of the order
of 25 or 30 lawyers are engaged in that hearing
at $100 a day.
Mr. Chairman As one King's Counsel to
another, I am worried we were not down there.
Mr. Smallwood From January all through the
winter, spring and summer they were there; they
were there when we arrived in Ottawa, they were
still at it. The railway was trying to get the Board
of Transport Commissioners to allow them to
increase their rates. There is nothing doing yet.
Mr. Cashin The general opinion is they will get
15%.
Mr. Higgins On this question, this applies only
to rail travel?
Mr. Higgins It does not apply to steamship and
most of our traffic out of the Dominion is by boat
— boat from Halifax — and it would not apply
to CNR boats.
Mr. Smallwood It begins at Levis, just below
the City of Quebec — all east of that is the
Maritime region; it takes in roughly half of
Quebec and all of Nova Scotia.
Mr. Cashin That act was passed to keep the
Dominion Coal Company afloat, without which
they would not have been able to get the coal to
the market.
Mr. Higgins In theory it looks to be a fine act;
but in practice, as most of our haulage is by boat,
it is not of any real value to us.
Mr. Smallwood I put this to you: many people
in this country are convinced, and many people
in this chamber are convinced that Newfoundland should and will perhaps become an
important livestock country. Newfoundland, sir,
will never be, and can never be an important
livestock country until feeds are made as cheap
in Newfoundland as they are in the mainland of
Canada. Mr. Crosbie has started this gigantic
herring meal plant in Bay of Islands. I believe
other firms are making herring meal or other fish
meal. There is not a market for it in Newfoundland, so I understand. But what is to
prevent
Mr. Crosbie and some other progressive firms
from starting a feed mill, if you can bring in feeds
free all the way from the prairie provinces to
Corner Brook without costing anything for
freight — why not a feed mill in Newfoundland
...? You have at one blow destroyed the obstacle,
or half the obstacle, to a livestock industry. The
Maritime Freight Rates Act could be the means
of our becoming an important livestock country.
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NATIONAL CONVENTION
November 1947
What is to prevent all kinds of other products
coming into Newfoundland from the Maritime
region of Canada? Look at the figures in the
Black Book, there are figures showing the actual
tonnages of Newfoundland products shipped to
Canada west of the Maritime region; huge quantities. What is to prevent some of them
going to
rail all the way, with a 20% reduction. Finally,
this point was put to us by Mr. St. Laurent at a
plenary session when we asked him did it apply
to steamships, as a lot of our stock comes and
goes out by water, and this 20% reduction on
stock coming in and going out by rail would not
help us much. He said, "Surely the railway
operating between the mainland of Canada and
Newfoundland would have to be cut in its rates
by the competition it might have from steamers.
Would your steamers not have to cut their rates
by reason of competition from the railway?"
You would have two means — rail and water, one
is competing with the other; then the trade of the
country would thrive.
Mr. Cashin On this point about the feeds
originating in the west — I do not think they haul
grain into Fort William or Port Arthur for nothing. The grain that comes from there,
comes by
water. Rail haul is much more expensive than
waterhaul. That was why they gave that 20%
reduction; they cannot compete with waterhaul.
That is one point. Waterhaul is much cheaper
than rail — 50% cheaper.
Mr. Smallwood Freights are free, all the way
east or west, as far as they can reach... completely
free. No freight, whether by rail or by boat. No
freight charged...
Mr. Cashin Does he mean to tell us that feeds
coming from Fort William on the Canadian
steamship line, they carry it for nothing?
Mr. Chairman I thought there was a nigger in
the woodpile. It is a form of government subsidy.
Mr. Smallwood It is a form of government subsidy to encourage stock raising; there is no nigger
in it.
Mr. Cashin You should make it clear; if you had
said it was subsidised, that would be different.
You were telling us it was coming down free. It
comes at a cost to the taxpayer.
Mr. Smallwood A consumer is one thing and a
taxpayer is something else. If you put a thing
aboard a train, and if you prepay the freight, you
pay 20% less than the regular rate...
Mr. Crosbie I appreciate all Mr. Smallwood has
said. I have not a copy of the act whereby the
feeds are brought down free. He says there is a
separate act. That act is not mentioned. We are
told this is official. That act is not here.
Mr. Chairman Except that it says "the Island of
Newfoundland will be deemed to be within the
Maritime region of Canada." And any legislation
of the Parliament of Canada, such as the
Maritime Freight Rates Act, will apply.
Mr. Ashbourne In reply to Mr. Crosbie, I would
ask him to look up the Black Books, appendix 10,
there is a brief statement there about that.
Mr. Crosbie It is the act I am looking for. I am
asking for the one Mr. Smallwood is talking about.
[The committee rose and reported progress, and
other orders of the day were deferred]
Mr. Smallwood I give notice that I will on
tomorrow ask His Excellency the Governor to
ask the Government of Canada for a statement of
the changes that will occur in the tariff and excise
figures as a result of the Geneva agreements, and
to apply these changes particularly to the items
listed on pp. 126 and 138 of the Report of the
Ottawa Delegation. Also to ascertain the practice
in connection with insuring persons, as to
whether they would be obliged to go to other
provinces to accept employment; and to ascertain
from the Government of Canada whether the
existing special low rates charged to fishermen
travelling between Newfoundland and Labrador
would be continued in the event of union.
Mr. Job I hereby give notice that I will on
tomorrow ask His Excellency the Governor in
Commission whether, in view of persistent
rumours to the effect that the Government of
Great Britain do not intend to place on the
forthcoming referendum paper the continuation
of Commission of Government, even if a
majority or minority of the delegates to the National Convention recommend that it
should be
included, His Excellency the Governor in Commission will ascertain and definitely
inform the
Convention at the earliest possible date as to the
truth or otherwise of the persistent rumours
referred to.
[The Convention adjourned]
