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Newfoundland National Convention, 27 November 1947, Debates on Confederation with Canada

November 1947 NATIONAL CONVENTION 867

November 27, 1947

Mr. Fogwill I give notice that I will on tomorrow ask His Excellency the Governor in Commission for the following information:
1. To table a statement showing the approximate total amount collected in passenger fares for the year 1946 by all forms of passenger transport....
2. To table a statement showing the approximate total amount collected in passenger fares in Newfoundland for the year 1946 from persons taking passage either by air, steamship, or by rail and steamship to points outside the island.
3. To table information containing the act or the regulations of the Government of Canada which provides for a 15% transport tax, so that an appreciation of the position as outlined in questions 1 and 2 can be readily assessed.
Mr. Smallwood I give notice to ask His Excellency the Governor in Commission to ask the Government of Canada to state whether in the event of union and the consequent operation of the Newfoundland railway and steamship system by Canada, it would be the policy of Canada to continue in their employement all the employees of the system at the time of union, with the rights and privileges with respect to continuity of employment that are accorded to employees of the Canadian National Railway.

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 β€” clauses 7 to 14 inclusive β€” 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 β€” 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. Chairman No.
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 β€” a couple of hundred or more opening up in various parts of Canada β€” 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 β€” 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 β€” 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 β€” 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. Smallwood Harbour Board.
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 β€” 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 β€” 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 β€” 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. Higgins It is more than that.
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 β€” 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. Smallwood Yes. Wait now! Not all. Railways, yes.
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. Smallwood It cost hundreds of millions of dollars.
Mr. Cashin It cost $50 million in grants β€” the Grand Trunk Pacific.
Mr. Smallwood If Canada was to become the great nation she is, they had to build it.
Mr. Higgins What is the value of our railway now?
Mr. Smallwood What is it worth to Canada?
Mr. Higgins If Canada did not have it and had to put it here?
Mr. Smallwood What would it cost? I do not know β€” $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. Smallwood Yes.
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. Higgins What do you believe it is worth?
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 The answer is, you are unable to answer it?
Mr. Smallwood Yes.
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 β€” 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. Smallwood I have no comment.
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. Chairman I have not the remotest idea.
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. Higgins This is selling as a going concern.
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 β€” 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 β€” 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 β€” 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 β€” 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 β€” according to the population of the province. These particular subsidies are perpetual: $180,000 a year and 80 cents a head of the population β€” $1,300,000 β€” 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 β€” 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 β€” 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 β€” 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 β€” 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 β€” 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. Higgins Is that the only reason?
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 β€” 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 β€” 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 β€” 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 β€” 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 β€” it was for hospitals, clinics, all kinds of activities for public health. A whole series of proposals β€” 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 β€” 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 β€” 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. Smallwood Yes.
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 β€” $25 million or $26 million.
Mr. Cashin Our subsidy is $6.8 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 β€” Lewis Taylorβ€” 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 β€” 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 Newβ€” 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. Higgins This royal commission would be automatic?
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 β€” 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. Fudge What about Mr. Crosbie?
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 Β NATIONAL CONVENTION Β  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 β€” 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. Cashin It is 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. Smallwood All during the war.
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. Smallwood Nor the wartime tax.
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 β€” 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. Higgins I think that is not altogether correct.
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. Smallwood Railway and steamship.
Mr. Higgins It does not apply to steamship and most of our traffic out of the Dominion is by boat β€” boat from Halifax β€” and it would not apply to CNR boats.
Mr. Smallwood I believe that is the case.
Mr. Higgins Would you explain a little further.
Mr. Smallwood It begins at Levis, just below the City of Quebec β€” 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 β€” 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. 882 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 β€” 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 β€” 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 β€” 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. Smallwood Not the steamship companies.
Mr. Cashin Who pays them?
Mr. Smallwood The Government of Canada.
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. Smallwood We will get it.
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]

Source:

Newfoundland. The Newfoundland National Convention, 1946-1948 Vol 1: Debates. Edited by J.K. Hiller and M.F. Harrington Montreal: Memorial University of Newfoundland by McGill-Queen's University Press, 1995).

Credits:

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Selection of input documents and completion of metadata: Gordon Lyall.

Footnotes:

  • *
    In the fourth year .............. $3,150,000;
    In the fifth year .............. 2,800,000;
    In the sixth year .............. 2,450,000;
    In the seventh year........... 2, l00,000;
    In the eighth year ............ 1,750,000;
    In the ninth year............ 1,400,000;
    In the tenth year............ 1,050,000;
    In the eleventh year ............. 700,000;
    In the twelfth year........... 350,000.

Participating Individuals: