Mr. Smallwood Mr. Chairman, I have nothing
in particular to say at the moment. The figures I
tabled yesterday are before the House.
[1] I assume
members will want to discuss them.
Mr. Hickman Mr. Chairman, as you know, we
only went through this proposed budget of
revenue and expenditure, as it would be under a
province, yesterday afternoon, and it has not
given us much time to study it. But in going
through it there were a few notes I made, and I
have only got a few comments on it for the time
being. I can appreciate Mr. Smallwood's difficulty in bringing it in, and he did very
well with what
he had to work on. I am glad that the Finance
Committee did not have to bring in one like it,
because, while that was torn to shreds, I think we
would go for years before we would be allowed
to forget one like this.
On the expenditure side there is $15.1 million,
I think, for the first four year period. In that
section there was an item of $3.1 million for
Education. That is the same amount as contained
in the Commission of Government estimates for
1947-48. I don't think that is sufficient. I have not
got the figures yet to give you what will exactly
be required, but I think you will find that that will
be increased considerably in the estimates for
1948-49. I understand the Department of Educa
974 NATIONAL CONVENTION December 1947
tion will ask for, whether they get it or not,
another $1 million, and they will require as a
minimum say $500,000.
On the Public Health side we find that figure
has been brought down to $5.2 million-odd, from
$6,274,000. Some of that cut was explained and
been taken care of. The department, however,
will not be able to get along under present conditions on, not just the cut to $5.25
million, but it
would not be able to get along with the budget
made by the Commission of Government
amounting to $6.25 million. We have got these
extra hospitals, the General Hospital which is not
yet completed, the sanatorium at Corner Brook,
which will be a 250-bed hospital, and the
Western Memorial Hospital. The late Sir John
Puddester told us in committee here about 12
months ago that even with what they were spending then and would spend this year,
they would
require considerably more money to maintain the
service, and that the maintenance cost would be
considerably more. I think, if my memory serves
me correctly, that it would run at least another $1
million more. I may be wrong, perhaps Major
Cashin will remember.
Mr. Hickman So that would bring it up to about
$7 million odd. And I understand now that they
anticipate another million extra, which will be a
difference of about $2 million as I see it; but put
that conservatively, and call it $1 million or $1.5
million. Now there is no provision, except at the
end of $500,000, for expenditure in the province
for new services.
Mr. Hickman $750,000, yes. Well, these hospitals all have to be finished, equipped and staffed.
There is no provision made for the extra staffing;
the only provision there is $750,000 each year for
total new reconstruction. Now members will
remember, in the early days of the Convention,
we were given a reconstruction program by the
Commission of Government, and in there they
planned to spend $59 million or $60 million in
ten years. That would be about $6 million per
year that they had planned, providing the funds
were there, to spend on reconstruction. Supposing we cut that in half, making it $3
million for
reconstruction; yet in this budget there is only
$750,000 provided for all new services or reconstruction.
Mr. Hickman Yes. Wait a minute I am coming
to that. Now if you take these items, I note there
is Education which roughly is $500,000 over and
above what is in the budget, there is Public
Health, which we figured at $2-2.5 million over
and above the provincial budget. We will cut that
down to $1.5 million, which will bring it down to
$6.7 million, which is slightly more than required
on today's basis. The reconstruction which the
Commission of Government had provided for at
$6 million for the next ten years, we will call only
$2.5 million, on that total it brings us to a $4.5
million expenditure, and I have tried to be conservative in this, $4.5 million over
and above the
expenditure which Mr. Smallwood provided for
in yesterday's budget. If you add that to the $15
million expenditure which he anticipated you get
approximately $19.5 million. That would be our
expenditure if we have to spend on the same basis
as we have the last few years, if we maintain the
same services. There is no large provision there
for relief, but I will come to that later on.
Now turning to the revenue side of the budget,
included is the total repayment of the amount that
the Newfoundland government will have paid to
the Canadian government for Gander, which I
think he said was around $600,000. Anyway the
total amount we paid to them we will get back,
plus the money paid for the ships being built right
now in England for the government here. That
shows a revenue of $255,000 a year. Mr. Smallwood said he was prepared to argue in
this Convention or with anyone outside it that that should
go into this current revenue. As far as I am
concerned Mr. Smallwood can argue forever on
that point, but I will never be convinced that
repayment of the money paid for Gander and the
money for the boats, taken from the money we
accumulated, belongs to current revenue. I know
that last year the government did that, but they
were wrong too, like Mr. Smallwood. You can
argue till the cows come home, but it is not the
right principle. I have yet to see a balance sheet
that did not separate capital from ordinary expenditures. That $255,000 per year which
is revenue
shown in this provincial balance sheet should
come out of it. It is not earnings of the province,
it is not current revenue, it is repayment of money
that we expended.... It is not current earnings, and
similarly there is $125,000 in there per year as
December 1947 NATIONAL CONVENTION 975
repayment of loans from the Housing Corporation. That is in exactly the same category,
it is a
repayment of a loan, and is not earnings. That
makes a total for those two items alone of
$375,000.
Now the total revenue under the provincial
set-up for the first four years is shown as $13.9
million, and if you deduct that $375,000 you will
find that you have a net revenue of $13.6 million.
There was a deficit on the first four years anticipated by Mr. Smallwood at somewhere
around $1.2 million, and if you add this $375,000
you will find that on his figures there would be a
deficit of $1.5 million, but that deficit is based on
an expenditure of only $15 million for the
province. I contend, sir, on the figures I gave in
the beginning, and they must necessarily be only
estimates at the present time, the expenditure will
be $19.5 million, call it $19 million, and the
revenue should be $13.5 million; that leaves you
a deficit on the provincial accounts of $5.8 million, or call it $5 million; not a
deficit of $1.2
million, but over $5 million.
I realise that in mentioning reconstruction,
Mr. Smallwood did say, when the question was
raised on roads, that $3 million would be
withdrawn annually from the surplus of $28 million which would be deposited with the
Canadian
government, as provided in the Grey Book, at an
annual interest of 2 5/8%.... If we withdraw that
amount for eight years we would withdraw $24
million. Now the surplus is only $28 million. On
page 3 of the Grey Book we have to freeze
one-third of that, which we can't touch. That's
part of the terms. If we freeze one-third, that's
over $9 million, that brings it down to $18 million
surplus. So you can only draw your $3 million a
year for six years, not eight, and the last two years
you can't have anything to draw, if I understood
his explanation yesterday.... I contend that we
should not touch that surplus; it should be there
for some day when we may need it. There has
been no large amount provided for emergencies,
or able-bodied relief. I hope we won't see the
dole, but there is nothing for that. Because if
times are going to be poor, and there's going to
be bread lines or soup kitchens, no matter if we
are on our own or with Canada or the United
States, our surplus should not be touched. We
should not start off presuming that we are going
to use $3 million of it each year. If we do that,
and there is no provision in this budget for
reconstruction other than using the surplus each
year, I am afraid that we have built our last
hospital and our last mile of roads.
As I said at the beginning, these remarks are
only general because I have not had time to go
into it; but this struck me at a glance, if this budget
was to be the one we would use under confederation, I can very well see why one of
the clauses
was put in, that in eight years they would set up
a royal commission to review the financial position of Newfoundland, and to recommend
the
form and scale of additional financial assistance,
because we will need one. We will be insolvent,
or so close to it that, perhaps, our only "out"
would be to transfer the Labrador, for a price, to
Quebec or the Canadian government. If that is the
best budget that can be brought in, and the best
hope for our people, I can't hold out very much
hope for it. I would say that it was rather a defence
of the terms offered. I can't see any equitable
basis in that budget. I can see a deficit that we will
have to withdraw $3 million a year from our
surplus to meet, not for reconstruction but to pay
off a deficit.
There was another question, the gasoline
taxes, licenses for motor cars and drivers as a
source of revenue, which Mr. Smallwood anticipated would be considerably increased,
particularly in the last four years of the first eight. I
don't know how we are going to increase it with
our present mileage of roads. The estimate in the
budget brought in by Mr. Smallwood shows
$1.25 million for roads, expenditure for the year.
The current estimate of the Commission of
Government shows just over $3 million. Now
that's been cut practically $2 million. I realise
that we can use some of the withdrawals from the
surplus to build roads, but I contend that our
surplus should not be touched for that purpose. I
fail to see where we can, out of revenue, do any
construction on roads, or any other such service.
Those taxes we are going to collect from motor
cars and gasoline, clear of the fishermen's tax —
I can't agree that we are going to get as much as
Mr. Smallwood anticipates. The license for a car
is only $12, and the driver's only $3, and we have
got to have quite an influx of tourists, and a
personal income of the people that is going to be
exceptionally high, to be able to increase the
income from gasoline and licenses, unless we
976 NATIONAL CONVENTION December 1947
raise the rates, which of course is just increasing
the taxation on the people.
As I explained, I did not have time to make a
clear study on this, I would like to reserve the
right to have a little more to say later on.
Mr. Smallwood I appreciate very much the fair-
minded spirit in which Mr. Hickman has made
his preliminary analysis of the figures I brought
in here yesterday. He has not shown any animus
or bad feeling, he has spoken very fairly, and I
appreciate that, but, as he has said himself, he has
not had time to think about these figures and I am
afraid that the remarks he has just delivered are
very good proof of that, because otherwise four-
fifths of the things he would never have said.
I made notes as he went along. Road maintenance. In this estimate we have $1.25 million
a
year for roads. That's only to maintain roads, not
to build roads, and if you turn to the estimates of
the Commission of Government you will see that
that is their estimate for maintaining roads — not
building them.
Mr. Hickman speaks about our surplus. In this
estimate of mine I have pictured our $28 million
surplus, which may be $30 million. It is proposed
that the offer the Government of Canada has
made be accepted, that that surplus be put on
deposit, at 2 5/8% interest. Now should that be
withdrawn once we would put it on deposit drawing interest every year, or left in
there? Well,
there are two schools of thought on that. One is,
as Mr. Hickman just said, it should be left in there
for the rainy day. What rainy day, sir? He says
when there may be bread lines and unemployment and destitution in the country. That's
one
school of thought — leave it for the rainy day.
The other school of thought is this, and it is the
one I have followed: not to leave it there forever,
but to draw it out each year and spend it in such
a way as not to have the rainy day. All right, when
the laughing is thoroughly over, I will explain
what I mean.
Throughout the world, in larger countries than
this, countries where the science of government
has been carried to a much finer degree of excellence than in Newfoundland, even under
Commission of Government, the idea has become
well developed of what they call "timing grants"
— to spend public money that has been accumulated as surplus (and if you have not
got a surplus,
to borrow it) on public projects for the purpose of
taking up the slack in private industry. A depression means that private employers
can no longer
employ men because they cannot make a profit,
and many become unemployed. Fishermen don't
fish because no one will supply them, and no one
will supply them because there is no money to be
made out of fish, so you get a depression; and
when private capitalists are no longer able to
employ the people or keep them fishing, then the
government, with public money, takes up the
slack. That's a well-developed policy and principle. We are told that many governments
have
reconstruction projects on the shelf, ready to be
put into operation at a minute's notice, just ready
to call for contracts, and one way to prevent a
depression is by public spending at the time when
private spending has come to an end. Instead,
therefore, of leaving your $28 million or $30
million surplus there on deposit until you have
got unemployment right on your hands, draw it
out so much per year and spend it for the purpose
of taking up the slack that has been created by the
failure of private enterprise. That is the school of
thought to which I adhere. Whether you draw out
three or two or one million dollars a year, is a
matter for a future government to decide. I would
point out however, that if you don't draw it out
at the rate of $3 million a year, your interest
earning for the government will be that much
greater each year, and your income from interest
would be higher than is shown here, because
what is shown in my table is the interest on the
balance of the surplus that would remain each
year after you had withdrawn $3 million....
Another point I want to deal with that Mr.
Hickman has made, and I dealt with it yesterday.
I would expect any businessman anywhere in this
Convention or in this country or out of it, to speak
exactly as Mr. Hickman has spoken, because very
few businessmen in the world appreciate the fundamental difference in public finance
and private
finance. Very few appreciate the difference between a corporation balance sheet and
the
balance sheet of a government — all the difference in the world, and until we get
that point
clear in our minds, we are wasting our time
talking about public finance. Sir, a government's
accounting is about the simplest thing in principle
and outline in the world — it is simply a cash
account. No government has a balance sheet, a
profit and loss account, it is simply a cash ac
December 1947 NATIONAL CONVENTION 977
count. The law provides that every single cent
that comes to a government in a year must go into
the Consolidated Revenue Fund, every single
cent no matter what it is. It may be conscience
money, it may be $1.30 that someone cheated the
government out of and he sends it in anonymously, and that $1.30 by law has to go
into the
Consolidated Revenue Fund. If the government
borrows money, what it borrows has to go into
the CRF. If it gets interest on money that it loaned
to somebody, and that somebody now pays back
interest each year, that has to go into the CRF.
Every cent that the government receives in any
shape or form must by law go into the CRF. Now
when you put it there, you can call it this, that or
the other. Within the CRF you can set up various
subsidiary funds, but the CRF is the
government's money. That is what it takes in. Not
one cent can be paid out of the CRF except on the
authority of Parliament. Not one cent can be paid
out of it except what Parliment orders. In a
country like Britain you have two men who are
appointed by Parliament itself, the Comptroller
of the Treasury and the Auditor General. The
Comptroller is there to see that every cent goes
into the CRF, and that not one cent is paid out
without the consent of Parliment. The Auditor
General audits the accounts and sees that they are
audited in the various funds. Here in Newfoundland the two jobs are done by the one
man.
So what kind of thinking is it, what kind of
argument is it, to quarrel about whether or not the
interest payments that the government receives
from the Housing Corporation, or anyone else
that the government has loaned money to
should not be counted as revenue? Every cent the
government receives is revenue. It may not be
revenue received by taxation, but every cent the
government receives is revenue. So please, no
matter what private organisation of business or
finance may do, no matter what is their system of
accounting, no matter what their system may be
of balance sheets, it has nothing to do with public
accounting.
Now if Mr. Hickman, or any other gentleman
in this Convention, is disposed to doubt what I
am saying there is a simple way to solve it. Go
down to the public library and take up any of the
50 books that are there on public finance; not
private, or corporation, or banking finance, but
public finance. If you don't want to spend that
much time, as I have done, reading dozens of
books on public finance ... go down to the Auditor
General, or the Fiance Commissioner, or anyone
who has any knowledge, practical or theoretical,
and you will find out if what I say is true or
fooling. So I say this: the Housing Corporation,
or other housing outfits who have had money
loaned to them in the past and who now pay back
interest and principal for many years to come,
that money is income and revenue for the
Government of Newfoundland, no doubt about it.
Do you suppose that with the best Auditor
General that we have ever had in our lives, do you
suppose that with a Commissioner for Finance
who is a practical financial man, that when they
show revenue from the Housing Corporation as
revenue, that they don't know what they are
doing? Of course they know what they are doing.
They are following orthodox and established
public finance practices.
Now similarly, the other point that Mr. Hickman made was this: the Newfoundland government
agreed a year or so ago to buy back from
the Government of Canada whatever they own
out there in Gander — equipment of all kinds.
They got for $1 million what it cost the Canadian
government $25 million to put there. They agreed
to pay that in three annual installments of
$333,000. The Government of Canada says they
will pay that back if we become a province, so in
two years that means $666,000 which will come
in to the Government of Newfoundland in cash.
On top of that the Newfoundland government
placed an order in Scotland to build three boats,
one of them is the Cabot Strait on duty now, and
the other two are still being built and will be done
very soon. The Canadian government says that if
we become a province they will pay back the cash
we paid out for these two boats. It is a couple of
million dollars, or more.... That is revenue of the
government. Now let us say that we are the
cabinet. We say, "All right gentlemen, we just
received a cheque from the Government of
Canada for $2 million, what will we do with it?"
Mr. Hollett and Mr. Hickman give their ideas. To
begin with we have no choice, it has to go into
the CRF, but now what will we do with it? Will
we spend it all the first year, or in two years, or
eight years? According to my plan we divide it
by eight, and spend $255,000 a year. Now what
is wrong with that? We are the cabinet, and we
978 NATIONAL CONVENTION December 1947
decide that we will spend it in one year, or 50
years, or not spend it at all. Whatever the government decides, that is it; except
that of course, after
the cabinet decides, it has to be brought into the
House of Assembly.... Now don't let's hear any
more about that. It's bad enough to have to bring
in a budget, without having to educate men on
public finance. I take my hat off to Mr. Hickman,
but although he has had a lot of experience in
private finance, he has had very little in public
finance.
The next point, he says I have not got enough
in this estimate by $500,000 for Health and Welfare, and for the government's reconstruction
policy, $2.5 million. Well, that's a good one —
the present government's reconstruction program of $2.5 million. Since when has Mr.
Hickman become a convert to the present
government's reconstruction policy? The day
that this Convention opened, every member here
was presented with what was called "A Proposed
Reconstruction Programme", every year for ten
years. We remember Mr. Wild, Commissioner
for Finance and Customs. Major Cashin brought
in a resolution, and we adopted it, and Mr. Wild
came up to a private session of the Convention
and he was asked a question about this
reconstruction programme — $59 million or $60
million dollars for ten years. "Where do you
propose to get the money for that?" Every member remembers what he said: "Oh that's
just a
programme that we think should be carried out,
provided the money were there to carry it out
with". I doubt if there is one member in this
Convention who would take that reconstruction
programme and agree with it. Out of $60 million
how much did they propose to spend on the
fishery? $1 million wasn't it? On roads I think it
was $12 million. There is not a man who agrees
with the government's reconstruction
programme, and Mr. Hickman does not agree any
more than I do. But now he comes to the debate,
and it is a different story: $2.5 million you have
to spend on the government's reconstruction
programme. It is very convenient to use it although he did not agree with it. I apologise
for
being so long, but I will come back to it later.
[Short recess]
Mr. Smallwood Mr. Chairman, I will just take
a couple of minutes to finish what I was saying
before the recess. On this estimate of mine, the
total expenditure of the provincial government
for the first four years of union would be $15.1
million a year, and for the next four years it would
be $15.5 million or $15.6 million a year, and
Mr. Hickman claims that it is $2-3 million short;
but my answer is this: it is not short, that these
dollars that he claims should be added on will be
spent all right, and probably should be spent, as
this country has not got enough public services.
We know that, and spending $15 million a year
for the first four years, and $15.5 million for the
next four years would not create any new services
at all. I would ask you to take notice that
provision is made, in these four years, for the cost
of up-keeping new services that we have not got
now, but those amounts do not cover the cost of
putting the new services there. But Mr. Hickman
claims that the cost of creating these new services
should be shown in the new cost of government
on the ordinary account side. I hold the exact
opposite. We need more schools in Newfoundland; a lot of schools that we have now
need
to be repaired and improved. We need new roads
and a lot of new services; new hospitals, and a
number of new things, which if we are to get them
at all will have to be got by the provincial government. Some will be gotten by the
federal government: bait depots, etc., would come under them,
but under the provincial government a number of
new services have to be got. I admit that, and I
hold that the ordinary expenditure of the government year by year should cover the
cost of keeping up any public services we have, but the cost
of new public services — roads, hospitals,
schools — should not, and does not need to be
included in ordinary expenditure. They should be
on extraordinary, special, capital, reconstruction,
or whatever you like to call it; and for that we
have money to do the job. We have $28 million;
when this fiscal year is over we may have $30
million, which we can put on deposit and draw
interest on it, and draw out of that sum some
amount each year to build new schools, new
roads, new hospitals, and new public services.
That is what that money would be for, and the
amount that you would draw out every year to
spend on capital account should be decided by
the general conditions of the country. In other
words, you should time your spending. Now it's
been held, and I think rightly, that one mistake
that our present government is making is to be
December 1947 NATIONAL CONVENTION 979
spending that public money on capital account,
building schools, hospitals, bait depots and roads
now, when the need, from the standpoint of
giving employment, is not so great as it may be
in the future, and our government is following the
exactly opposite course from that adopted by
most governments around the world. Most
governments do this: when times are good they
tax high and collect all they can; and when times
are bad the money that they collected they spend
when it is needed most, to take up the slack by
private employment.
My contention is that $15 million a year for
the first four years, and $15.5 million a year for
the second four years is ample to cover the ordinary expenditures of the government
of the
province, and that anything extraordinary should
be spent out of capital account. We have a capital
fund for that very purpose.
Finally, I want to say this: I don't want to do
Mr. Hickman an injustice, but I must say that he
gives me this impression that the surplus should
be laid aside and forgotten until we get the bread
line. He said, "When you get bread lines on the
mainland of Canada and the United States, you
will have them in Newfoundland". Now that
means destitution and unemployment, and he
says we should save the $28 million or $30 million until that day. The impression
I got is, "Don't
touch your surplus until your people are destitute
or nearly so, and then spend it for dole." If I got
that impression wrongly he will correct me, and
I will be glad, because I find it hard to believe.
He is a practical and determined Newfoundlander, who is old enough to remember
what we went through from 1930 to 1940, and
how we spent millions of dollars on dole, and he
could not welcome that again, just spending it on
dole. I think he would agree with me the better
way is to spend the money before the dole days
come on public works such as road building, the
construction of buildings, etc., so as to create
employment. Let's all hope and pray to God that
there will be no need to ladle out dole again in
this country. The very sound of the name turns
your blood cold, when you remember the dole
days from 1930 to 1940. Let's hope that we will
spend that capital, timing it right, so that there
will not be any need to pay dole.
Mr. Hickman Mr. Smallwood at the beginning
brought in a little dig which I don't think is right.
He said it was plain that I did not study this. I did
not need to study it. I could gather it quite easily
yesterday afternoon, and the few notes I made
then are quite clear. Now, on this question of
surplus I would like to correct Mr. Smallwood,
and I know he did not intentionally misunderstand what I said. I did not intend to
say that the
surplus should be saved until dole days, or until
the people are on relief. I think it should be saved
until the revenue drops, not until dole, and then
it could be used for special expenditure. If for
eight years we use $3 million a year we have $12
million gone, but we have got to keep $9 million,
as one-third of it is frozen under the terms of
confederation....
Mr. Chairman The section reads: "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."
Mr. Hickman That's my point. My original
point was that it could not be used for reconstruction, not that part.
Mr. Hickman Well, there won't be enough to
take it out for eight years, and $9 million is in
England, and I don't know how we can get that
for a while. I don't want to get into an argument,
but I will say this: that the Government of Newfoundland prior to Commission government
did
not throw everything into the one hat. They did
keep ordinary expenditure separate from capital
expenditure, and whether the governments today
do it or not, I still contend that it is the wrong thing
to do. There would be a lot of governments who
would be better off if they ran their governments
like a private business. There would be fewer
debts. Again, on this question on which
Mr. Smallwood spoke, the repayment of the
money from the Gander and the boats purchased
in England. After we have spent that for this eight
980 NATIONAL CONVENTION December 1947
year period, it is completely dissipated. It is gone.
It is my opinion— Mr. Smallwood has his— that
this should not go into current revenue, but into
accumulated surplus, not surplus that we may get
as a province, but surplus that we will be left with
if we become a province.
In reference to roads, I know that the $1 million allowed in Mr. Smallwood's budget
was for
maintenance. I have looked at all these figures.
That was my contention, that there was only $1
million for roads, and that has to be for maintenance. It is going to cost us $1 million
under the
provincial set-up for roads, but what I was saying
was that there was nothing for new roads that will
bring in taxes on cars and gasoline and drivers'
licenses.
Now, sir, on that reconstruction, Mr. Smallwood gives me credit for now believing
in Commission of Government policy. If Mr. Smallwood
has followed me closely, I brought out the fact
that that deficit of approximately $5.8 million
would be brought about by reconstruction at the
rate of $2.5 million, and the educational cut, and
the public health cut, if we maintain the present
standards that we are doing today in reconstruction; and I presume it would be the
purpose of
any government in the next few years to carry on
as we have been doing to finish the buildings we
have started, and complete these services. That
was my point, if we continue. But if you want to
wipe out the $2.5 million, and take the estimate I
originally made of $2 million for public health,
and $1 million for education, it still brings it up
to $18 million, and that's without any reconstruction deficit. You have the same thing,
and that
will bring it up to a $4 million deficit. You have
got to add that to the $1 million already provided
for in Mr. Smallwood's estimate. That brings it
to $5 million that you have got to get from the
people in some form in addition to the taxation
they have to pay to the federal government. I
think that clears up what Mr. Smallwood and I
have to say.
Mr. Butt Before we go any further there is one
item I would like to see cleared up, that figure
under Public Works for road maintenance. Now
under heading 1 of sub-heading E, page 61...
[1]
Mr. Chairman Pardon me, Mr. Butt, there is
altogether too much noise, 1 can't hear members
when they are addressing the Chair. Will you
kindly refrain from noise in the galleries?
Mr. Butt All the headings with the exception of
E-4, in my opinion are all maintenance, in spite
of the fact that improvements and reconstruction
of roads and bridges were under that heading. I
will explain the difference. The maintenance of
roads, that is the first item of $1 million, will be
the pay for any maintenance men who are filling,
cutting, spreading gravel, etc; under E-3, the
improvement and reconstruction of roads and
bridges, there is a slight separation. It could very
easily go into maintenance of roads and bridges,
because that would include such things as the
replacement of ordinary bridges by, say, concrete
bridges, and the replacement of ordinary wooden
bridges by new wooden bridges. It would also
take in side cuts where you have sharp curves.
You would take these off and you would also fill
in, for instance, where you have very soft ground,
so that if we are going to improve our roads at all
— and there is an important point to remember,
by improving and not putting it under ordinary
maintenance, you are thereby saving a lot of
money in the future by upkeep of roads. On this
sub-heading alone, apart from the $1 million and
a very small section which would be used in the
construction of new roads, roughly $2 million is
today being spent on what I consider poor maintenance, and I think $1,270,000 is quite
wrong. I
would go a little further, and if my memory serves
me wrong I would like to be corrected, but I
believe that when we were discussing the
Transportation Report, it was said by one
gentleman that Sir Wilfred Woods gave it as his
opinion that $2 million would be needed to maintain the roads that we have at present.
Mr. Smallwood No, when the present existing
road program is completed.
Mr. Butt Certainly it is. I hope I have drawn a
clear picture as to what these two votes are for.
Ordinary maintenance, such as driving the grader
over and throwing down a bit of gravel, as against
cutting off curves, side cuts, filling in soft spots,
and concrete bridges, etc, which are all part and
parcel of maintenance of roads, and are not for
new construction at all. So I think it is out at least
December 1947 NATIONAL CONVENTION 981
$500,000.
Mr. Smallwood There is a slight difference of
opinion between Mr. Butt on the one hand and
the Commission of Government on the other. If
Mr. Butt will turn to paragraph 94 of the estimate,
the Newfoundland government's own estimate,
not mine, the third item from the bottom, which
is the three year reconstruction program of the
present government; the third item from the bottom — $1.75 million. Now Mr. Butt regards
all
that as ordinary expenditure on maintenance of
roads, whereas the government regards it and
treats it as reconstruction expenditure, part of a
three year reconstruction program, and the
amount I have down of $1.27 million per year is
the govemment's ordinary maintenance of roads
as they now exist. But roads that will be built from
the time that we would become a province, would
be extra or special, or reconstruction, or capital,
and the maintenance of them would have to be
ordinary expenditure.
Mr. Butt There is one way the Convention
could settle a matter of that kind — call in the
men who are doing this job in the government.
The actual fact is that that money is all required
for maintenance unless you are going to leave
your roads exactly as they are today.... I don't
speak definitely on matters of this kind unless I
know whereof I speak. I say this is out by half a
million dollars.
Mr. Hollett I find myself in a very peculiar position, in that Mr. Bradley moved, "that the Convention
resolve itself into a committee of the
whole to further consider and discuss the
proposals received on November 6 from the
Right Honourable the Prime Minister of
Canada"; that is what this committee of the whole
is supposed to be doing now. What are we doing?
We are discussing a proposed budget brought in
by Mr. Smallwood. The whole discussion is out
of order, but we are at it, and we may as well
continue it.
Mr. Chairman If you don't mind, Mr. Hollett,
I would like to make my position clear. Mr.
Smallwood has, if not at the request of the Convention, at least by and with their
consent, introduced this for the purpose of breaking down some
figures that were received from the Prime Minister of Canada. I have not ruled that
he has the
right to do it, but he has done it at the request of
some members of the Convention, and I have
allowed it to go.
Mr. Hollett That may be so, but I maintain that
he has not broken down these figures, but has
brought in new figures. I propose to go through
this, including also the Black Book and the Grey
Book as time goes on, and for that purpose I want
to start at the beginning of the proposed budget
brought in by Mr. Smallwood and make an inquiry.
On page 15 you will notice "Trustee stock not
converted...on these two loans", one up to 1950,
and that amounts to $80,569 and the other in 1952
amounts to $42,806, What I can't find out in the
estimate is if any provision is made to pay the
interest on these two loans. I know that $3 million
has been set aside in Great Britain to wipe out
these two loans at maturity, one in 1950 and the
other in 1952, but I do say that our government
in Newfoundland, be it as it is now, or be it under
confederation, has to supply enough money to
pay that.... Your provincial government will have
to pay the interest on that $80,000 and $40,000
and some odd from 1950 to 1952. What I would
like to ask is, why Mr. Smallwood has not made
any provision for that in his proposed expenditure?
Mr. Smallwood In reply to Mr. Hollett, if he is
prepared to wait until I have talked to the Finance
Department I will give him a very complete
answer.
Mr. Cashin There is no answer beyond the fact
that the government is transferring the interest on
this money semi-annually, June 30 and December 31, and in this provincial budget these
two
loans have to be taken care of as to interest. Now
there is $3,232,000 at 2.5% set aside in the Bank
of England to meet this loan of $3.5 million. We
figure that as the loans mature the interest which
will be accumulated on these two amounts will
be sufficient to pay them off, but at the present
time the interest is being transferred to London to
pay these, consequently I realise, and
Mr. Smallwood realises, that it is immaterial. It
does not matter whether he goes down to the
Finance Department or not, it is left out. Until
1950, or from then until 1952 it is $40-50,000 or
more.
There is another thing while I am on my feet.
I find in the Black Book, volume II, page 56, the
total expenditure in this budget for the Finance
Department, if I can make it out, because I never
982 NATIONAL CONVENTION December 1947
saw a budget like this in my life. We have here
an amount to disappear of $2,228,500, and that
includes three Commissioners. They are going to
disappear. The Secretary of the Commission will
disappear; grade I clerk, $2,000, in the Finance
Department will disappear; the assistant
secretary will disappear. Two grade III clerks are
disappearing, the private secretary to the Commissioners is disappearing, $2,000,
the
telephonist is disappearing, the statistical officer
is disappearing, the clerk grade III is disappearing.... Then there is a slice off
the Auditor
General's department. Now the point I am
making is this: all these people that are going to
disappear from the Finance Department will be
absorbed by the Finance Department of Canada...
Mr. Cashin These people were to be paid off
from the Finance Department of Newfoundland
and put into another department. These people
will be laid off, and their salaries are considerable, apart from the Commissioners
there's 11
people laid off from the Finance Department who
will have to find employment in some other
department of the Canadian government. Twelve
or 14 are laid off, and we don't know where they
will be fitted in. They might transfer them to
Victoria, anywhere from Vancouver to Halifax.
Mr. Smallwood Because in the Civil Service
Act the Government of Canada must employ
civil servants in the province where they are
ordinarily resident, so that the civil servants they
would employ in Newfoundland must be people
ordinarily resident in Newfoundland, those in
British Columbia must be ordinarily resident in
British Columbia. That's the law.
Mr. Cashin Well now, "Employees of the
Government of Newfoundland in services taken
over by Canada as provided for in clause 5 above
will be offered employment in the corresponding
Canadian service under the terms and conditions
governing employment in that service, but
without reduction in salary or loss of pension
(superannuation) rights acquired under Newfoundland law." As I read that they will
be offered jobs in the Canadian civil service, and there
is nothing to say as to what part of Canada they
will have to go to. The Finance Department down
here will be closed up, and the headquarters of
the Finance Department will be in Ottawa. They
will not have a branch down here. They will have
an assessor's department down here to collect
income tax, but they will not have all these financial people down here, because the
headquarters
will be in Ottawa.
Mr. Cashin Yes, there will be a Customs
Department here, and how many will be laid off,
particularly if we read these figures given by the
Canadian government themselves, which says
they are only going to collect $2 million in customs duties here, and let's see, how
many people
have we in the Customs?
Mr. Cashin Yes, 256 people to collect around
$2 million. They are going to collect $2 million,
well $3 million altogether including excise on
tobacco and liquor, and they will still employ 256
people to do it, when we only employ 256 to
collect $30 million! There will be people let off
from the civil service and we have had proof
during the discussions of this from Ottawa. The
Railway will receive the same treatment. It's
hidden in the Black Books, but it is in secret
documents which we are supposed to have, and
we find that there will be lay-offs in the Railway
unless we are not able to read English.
Mr. Smallwood As I put a question to the
Government of Canada on that, why make a
statement until the answer comes back?
Mr. Cashin The Black Book has nothing to do
with it. In these discussions we have discovered
there were other documents given to you by the
Ottawa government, and in one of these documents it was pointed out and intimated
by one of
the Canadian officials of the CNR that they
thought that the Railway was overstaffed. That's
what it meant in rough English. Consequently
they have it in the back of their heads that when
they take it over, they will lay off people over
there, but for official purposes they did not mention it here. There are a lot of
other secret documents that will have to come out before this is
December 1947 NATIONAL CONVENTION 983
over.
Mr. Smallwood There are not any.
Mr. Cashin There are. You told us about some
in the Steering Committee the other day.
Mr. Smallwood The first I heard of it — only
the one showing the public debt of Canada.
Mr. Cashin Yes, but it has to be blasted out of
you. There's other documents they have going
back two or three years, and we should have
them.
Mr. Smallwood I don't know, and if any other
member knows of any secret document I ask him
to name it. There are seven of us, and I don't
know of any document going back three years.
Mr. Higgins I believe what Mr. Cashin is referring to is the one you referred to in the Steering
Committee the other day.
Mr. Cashin You mentioned some document we
have not seen, and I think we should have it.
Mr. Cashin We did not send you people up to
Ottawa as a beggarly delegation — we sent you
to Ottawa representing what I consider a fairly
prosperous country, and what you did, you went
up with your hat in your hands and said, "What
are the best terms you can give us?" That's what
happened. I bring that out right now, but as I go
along I just want to make this clear: I find now
that there's ten or 15 people who will be laid off,
but there is nothing definite laid down as to where
they will be employed. Those people who are
included in the Black Book will find that when
the provincial government (if we ever get one,
and I doubt it) takes over the affairs of the
province, that their jobs are gone, and they will
have to go with their hats in their hands looking
for similar employment.
Mr. Chairman Before you take your seat, I
would like to draw your attention to the fact that
the document which occasioned so much mystery
was, at my request, turned over to the secretarial
staff, and is being mimeographed at the moment,
and I understand it will be available to members
tomorrow or the next day at the latest.
Mr. Smallwood I want to make a very brief
reply to Major Cashin. He says that in the Finance
Department 12 or 14 men and women who work
there now would ... be out of their jobs. That is
true, but I would draw Major Cashin's attention
to the fact that here in Newfoundland the Government of Canada would open up a number
of
federal departments over and above the departments we have here now, that they would
take
over and run.... I estimate that the Government of
Canada, after taking over certain public departments that we have now (and in taking
them over
they take over with them the employees that are
in them) would have to take on at least 1,000 civil
servants in the new offices and departments that
they would have to open up, and any civil servants ... who would lose their jobs would
have the
first offer of employment in these other Canadian
government departments that would be opened
up. It is true that in departments that would become provincial departments there
will be fewer
employees, so many will have to go; but they and
many more will be taken on in entirely new
federal government departments that will be
opened in Newfoundland.
One other point only: Major Cashin tells us
that the number of employees in the Customs
Department is 256. I do not dispute that 250-odd
are employed in the Department of Customs to
collect $20 million a year off the people of Newfoundland. I hate the sound of it,
but they will
need employees to collect that money. Let me tell
Major Cashin that if the Government of Canada,
when it takes over the Customs Department, if in
taking over the Government of Canada collects
only $2-4 million a year, they will need just as
many employees as there are now to collect $20
million.... You will have exactly the same number of customs ports of entry, so therefore
you
will have the same number of collectors and tide
waiters, the same number of customs watchers
and searchers, and clerical staff. We are an island,
and confederation will not change that. If I am
wrong, and they can get along with 200, well then
the 56 will have the first chance of being
employed in the other departments of the federal
government.
[Short recess]
Mr. Smallwood a question when the floor was
more or less taken away from underneath my feet.
Of course we have to put up with these things.
One is dubious about saying anything here today,
984 NATIONAL CONVENTION December 1947
but if you say anything at all you are tried, as it
were.
This budget which he has brought in starts by
leaving out an expenditure of $123,000 which
would have to be found by the provincial government, some of it up till 1952. I asked
him why he
left that out, and his reply was that if I would give
him time to see the finance minister he would be
able to reply. Now is the finance minister of this
country at the present time responsible for this
budget? Is not this Mr. Smallwood's own
budget?
Mr. Hollett In that case I cannot understand
why Mr. Smallwood cannot answer me now. I
can understand a man forgetting it, as I understand that $123,000 has to be spent
as soon as you
get it.
With regard to the probable expenditures
under consolidated funds service A, if you would
put $499,625 you would be practically correct.
We come on to the Department of Finance, and
that has been spoken to by Major Cashin and
Mr. Hickman. One of the things that did strike me
was that in the Black Books there was $1,000
allowed for civil service pensions.
Mr. Smallwood in the goodness of his heart has
added $101,000 to that, because he suddenly
discovered that the provincial government will
be responsible for the present civil service pensions.
Mr. Smallwood If you would allow me, responsible for pensions of those who have been working for
the Government of Newfoundland up to
the time of union, and for those who become
federal employees, for that portion of their pension earned up to the time of union.
Mr. Chairman If you don't mind Mr. Smallwood...? I would like to say, Mr. Hollett, that
your criticism was just and proper, that the floor
was taken away from you, and it arises from the
fact that I permitted two men to occupy the floor
at the same time.
Mr. Hollett Thank you, Mr. Chairman. I note
that we have 256 employees in the Customs at the
present time. Apparently most of them will be
done out of employment. Posts and Telegraphs,
1,031 civil servants, most of whom will be
retained. A good many of these will probably find
themselves without work. Assessor of Taxes, 31
civil servants. Coming down to the Depart
ment of Home Affairs, I notice under "Travelling
and Miscellaneous" Mr. Smallwood has the figure $2,300. I understand it is $9,800.
Probably
Mr. Smallwood would make a note and tell me
why he has lopped off $7,800. There is another
note in the estimates which provides $10,000 for
war graves in Europe. It is just possible that if we
go into confederation, that the war graves will be
taken care of by the federal government, but I
have yet to see any mention of that in the Black
Books. I would like to be sure on that point too.
Education, too, has been spoken of this evening. The estimate calls for $3,622,300
for the
present year. $514,000 of that amount was allocated by the government for building
of new
schools throughout the island, and for repairing
schools. Mr. Smallwood has cut off $514,600....
Again I maintain that we have no right whatsoever, simply because the remainder of
Canada
does it, to cut off an allocation which has been
made for the education of our children. The
education of our children has been backward.
You and I grew up in those backward days, with
the rain beating in through the roof and the snow
through the windows — not at the same time, I
suppose! Do you remember those days?....
Mr. Smallwood will say no more repairs to
schools, no more erection of school buildings, if
we are going into confederation. I would suggest
that instead of the $3,107,700 which
Mr. Smallwood has cut out for Education, it
should be $4 million, because we all know that
the Education Department today is budgeting for
a $4 million expenditure next year. Why should
we deprive this country of that budget, simply to
become a part and parcel of the Dominion of
Canada?
We come on to the Department of Justice.
There's this little matter of the magistrates, 21 at
the present time and they are receiving $70,181.
Mr. Smallwood has cut that down to $38,374,
simply because he says the other seven will become county magistrates. Whether they
are county magistrates or district magistrates I think
makes very little difference. It has not yet been
proved that these district magistrates will receive
their stipend from the federal government. I am
doubtful whether you can get along in this
country without 21 magistrates. You can call
them what you like, whether they are assistant
magistrates, or district magistrates, I feel sure that
December 1947 NATIONAL CONVENTION 985
a magistrate is somewhat lower in the judicial
circle then a county magistrate in the Dominion
of Canada, so I see no reason why that should be
cut down. Shorthand typists, is cut down to three
which means that three will be done out of work.
Now I come to the Constabulary, $526,830.
Mr. Smallwood very magnificiently has left that
as it is. I have been dealing with constables and
police officers for 25 years, and I know the conditions under which they live, and
I know the
salaries they are receiving even today, and when
I tell you that a constable of 15 or 20 years
experience receives $1,550, and a second grade
clerk in the department here in St. John's with
one year's experience gets $1,500, I ask you, are
these constables being treated right?
Mr. Smallwood thinks they are. We won't increase that vote, we will leave it as it
is.
Penitentiary. Mr. Smallwood says the federal
government will pay half that amount. The allocation is now $25,000, and it is cut
down to
$12,500. I take it that's the amount that is required to service and take care of
the penitentiary
as it exists today. We all know that that penitentiary is inadequate. I don't think
any of you
gentlemen would get a bed there tonight if you
wanted to. How can you cut down your expenditures? Most of these men are sent there
by the
magistrates, and I take it under confederation our
people are not going to become saints, and some
will have to take temporary residence down
there, and the amount of $25,000 is only just
enough to get along. As a matter of fact, I don't
think it is ample. The travelling of magistrates is
cut from $20,000 to $15,000. Why? Magistrates,
or county magistrates, are they not going to
travel? It there not just as much travelling in this
country for the magistrates under confederation
as at the present time? How can he cut $5,000 off?
These are only small amounts, gentlemen, but all
added together will show you just how much we
need to run this country, even as it was. General
justice, $25,100 in the estimates, Mr. Smallwood
has cut off another $5,000 there. Maintenance
and operation of vessels. Last year that took
$11,200. I don't know what vessels that refers to,
unless it is the vessel which takes the Supreme
Court around the island. I don't believe they can
do it less than that, or we will have no Supreme
Court travelling around the island from time to
time. If we are going to have that we will need
$11,200, and not the $5,600 which
Mr. Smallwood has put down for the maintenance and operation of that vessel.
Penitentiary supplies. The vote is $45,000,
and Mr. Smallwood has cut it to $10,000. I don't
know how. The penitentiary will have prisoners,
and has to be serviced and have supplies. How
can we do it on $10,000 being a province of
Canada? You will see that if you add these
amounts, and the amount already placed there by
Mr. Smallwood, that the estimated expenditure
as made by our own government under the heading of Justice, which was $1,177,700,
is little
enough, so I would suggest that instead of
$1,053,000, you really must leave that figure of
$1,177,700. That is as far as I care to go this
afternoon, because there are other men who
would like to speak.
Mr. Smallwood I would like to reply to
Mr. Hollett. He says there are 256 men or women
working in the Customs, and he says that most of
them will be done out of work.
Mr. Smallwood Will you turn to page 5 of the
Grey Book, clause 17, and the heading says
"Government Employees." I will read it to you.
It does not say that they will take over part or
some of them, but it says: "Employees of the
Government of Newfoundland in services taken
over by Canada as provided for in clause 5 above
will be offered employment in the corresponding
Canadian service under the terms and conditions
governing employment in that service, but
without reduction in salary or loss of pension
rights..."
Mr. Smallwood Look at clause 5 and you will
get a list of them. Clause 5, sub-clause 1, Newfoundland Railway, Newfoundland Hotel,
Customs and Excise, etc, and in any department they
take over they will take the employees with them,
and obviously some of the employees of the
Customs department will not lose their jobs.
That's quite clear isn't it?
Mr. Hollett I rise to a point of order. Mr.
Smallwood is deliberately misquoting me. On
that point I fail to see that they are going to need
986 NATIONAL CONVENTION December 1947
256 customs officers to do the work after confederation.
Mr. Chairman Yes, your statement was that
there were 256 employees presently employed
down there, and you went on to state your reasons
as to why some of these employees should lose
their jobs.
Mr. Smallwood My reply was just as clearly
that none of them would lose their jobs. I hope
that no one else will say that in the Customs or
any department ... any of these employees would
lose their jobs; so let us hear no more of that.
War graves. It is perfectly true that in the Grey
Book or the Black Book there is no specific
statement to the effect that the Government of
Canada would maintain war graves in Europe.
Does anyone doubt that the Government of
Canada does look after war graves? It is not
looked after by the province, but by the federal
government. It comes under Veterans' Affairs,
which is a federal job.
Mr. Hollett says I have dropped $500,000, but
I would ask Mr. Hollett to turn to page 94 of the
estimates of the Government of Newfoundland,
the third item down, D 8 and F 4, and he will find
that a total amount of $514,600 is a reconstruction expenditure by the government,
part of their
three year reconstruction program; not permanent but a program to spend $500,000 on
the
building of new schools and reconditioning old
ones, and the building of regional libraries. So as
it is only a reconstruction program I have omitted
it as an ordinary expenditure, the idea being that
it should be under capital expenditure —
reconstruction expenditure...
Mr. Hollett Excuse me, have you got a capital
account in that budget?
Mr. Smallwood No, it is an ordinary account
budget, the ordinary expenditure for eight years,
year by year. Anything else would have to be
special. Now Mr. Hollett says that we have so
many magistrates, and that I have cut seven of
them down. That is true, because seven of them
would not cease to be magistrates, but they would
cease to be provincial and become federal. They
would become county court judges, whose
salaries are paid by the federal government. So,
as the federal government would pay the salaries
of seven magistrates, that would be seven
magistrates that the provincial government
would not have to pay for. The same thing exactly
applies to the travelling. I have reduced the
amount for travelling by the seven magistrates
because the federal magistrates are not only paid
their salaries, but their travelling expenses as
well. Then Mr. Hollett notices that I have cut
down the travelling expenses of the Supreme
Court. I have, for a very good reason — that the
salaries of the judges of the Supreme Court are
paid by the Government of Canada, and so are
their travelling expenses. It is a federal charge, a
federal expense.
Mr. Smallwood Speaking from memory,
without looking it up for details, it is an amount
of $5,600 lopped off of how much?
Mr. Smallwood Possibly I should have lopped
a lot more off, and in leaving what I have left as
a provincial government expenditure probably I
have been too generous. Possibly it won't cost
quite as much as I have said. If so it will be
another little saving.
I think that's all Mr. Hollett said, except the
question he raised before, of those two debts that
Newfoundland owes that are coming due in 1950
and 1952, against which the government has
placed money over in England. Why I have not
put the interest in, I have told Mr. Hollett I will
give him the answer tomorrow. Perhaps I have
made a mistake, but at all events give me an
opportunity to look into the matter, and if I have
made a mistake there's nothing to add. I have
gone a long way in giving you some estimates of
what the Government of Newfoundland would
spend for the first eight years, and what would be
their revenue for these eight years, and done it in
considerable detail. It is entirely possible, not
being minister of finance, and not having even a
secretary that I have made a mistake. I have got
hundreds of letters in my house that I have not
had a chance to answer. Give me a chance, and
tomorrow morning I will look into it, and tomorrow afternoon I will confess it very
frankly. They
say that open confession is good for the soul, and
my soul needs some confessing after 14 months
in this Convention.
Mr. Higgins With respect to these budgets, as
Mr. Smallwood recollects, the Ottawa delegation
made a budget before going to Ottawa. They
followed the same lines as the budget being
brought in now, with the exception that there is a
December 1947 NATIONAL CONVENTION 987
difference in the figures. I can understand why
the difference in expenditure may arise, but
frankly the difference in the expenditure from the
one we made up rather puzzles me. The first gave
an accounting for expenditure of $13,920,000.
When we got to Ottawa, after some consideration
we increased that budget by $500,000. If I
remember rightly the budget for expenditure
that we finally presented was $14,420,000. That
is as you have it in your Black Book. Now on the
revenue side we had a revenue of $3 million. That
is apart altogether from this $1 million tax that
we added on afterwards, a special tax...
Mr. Chairman Mr. Higgins, if you don't mind,
I must remind you that it is nearly six o'clock, and
if I don't get a motion to rise before that time I
will be leaving the Chair at six o'clock as I am
required to do.
[The committee rose and reported progress, and
the Convention adjourned]
