NEWFOUNDLAND
APPROVAL OF TERMS OF UNION WITH CANADA
The house resumed from Tuesday, February 8, consideration in committee of Bill No.
11, to approve the terms of union of Newfoundland with Canada—Mr. St. Laurent—
Mr. Golding in the chair.
On section 22—Fisheries.
Right Hon. L. S. St. Laurent (Prime Minister): Mr. Chairman, before proceeding further with this section may I
make a brief
statement. The information I gave the committee last night about the recommendation
I had received as to the distribution of posts
of senators for the island of Newfoundland
has created some uneasiness there. I said it
had been represented to us that there were
three main groups of the population, divided
according to religious denominations among
Anglican, Roman Catholic and adherents of
the United church. That has been taken to
mean that it would exclude the possibility of
anyone not belonging to those three denominations being considered for a Senate
appointment. That is not at all what I meant,
nor was it the real meaning of the recommendation made to us.
The recommendation made was that there
were these three groups, namely the Anglicans, the Roman Catholics, the members of
the
United church and adherents of other denominations not forming part of the United
church.
The high commissioner reported that my
statement might create a false impression and
I feel it is desirable to have any false
impression corrected. So I wish to say that
those recommendations did comprise in the
group described as the United church group
the adherents of the United church, and members of other denominations being neither
Anglican nor Roman Catholic, and that would
include Presbyterians, adherents of the Salvation Army and other denominations.
Mr. St. Laurent: I understand there are a
few Baptists there, but that they have not yet
established any denominational schools. The
information given to me was that there were
Anglicans, Roman Catholics, and others, most
of whom belonged to the United church. But
it was not intended that anyone would be
excluded from consideration because of his
religious views.
Mr. Gillis: I did not think we would ever
reach the point when the House of Commons
would discuss appointments to the other place,
or anywhere else, on sectarian grounds. However, that is not the point I had in mind
when
rising.
We are dealing with section 22 of Bill No.
11, dealing with fisheries. I consider the subject matter now under discussion one
of great
importance to the whole fishing industry of
Canada, because the provisions of this bill
could affect that industry in the wrong way.
It seems to me that at this time it would be
necessary for the Minister of Fisheries to give
us a comprehensive statement about the
whole industry. For example, according to a
press dispatch it was stated that a fisheries
treaty was to be signed within a few days.
That procedure took place in the United
States. I understand eleven countries were
represented, that Canada and Newfoundland
are part of the set-up, and that this particular
treaty deals with research. We are acting
together in that field.
In Quebec and the maritime provinces fishing can be considered as one of the basic
industries. I notice that section 22(2) states:
Subject to this term, all fisheries laws and all
orders, rules, and regulations made thereunder shall
continue in force in the province of Newfoundland
as if the union had not been made, for a period of
five years from the date of union and thereafter
until the parliament of Canada otherwise provides,
and shall continue to be administered by the Newfoundland fisheries board; and the
costs involved
in the maintenance of the board and the administration of the fisheries laws shall
be borne by the
government of Canada.
While I am not sure of the accuracy of my
information, I am informed that the fisheries
board which regulates marketing in Newfoundland is representative of the fish dealers
only, and that the industry is not represented
thereon. I am further advised that the commission of government as such has no representatives
on the board. If that kind of
marketing arrangement is to continue for
five years in Newfoundland, I think it is
wrong. If my information is incorrect, I
would ask the minister to give the correct
information. If what I say is the fact, then
surely this section should be rewritten.
My greatest concern, and the point about
which I wish to be most specific, is the bounty
now paid maritime fishermen. This is a fixed
amount. If Newfoundland is now to be in—
cluded in the bounty arrangement—and it
would seem that it is—the result would be a
reduction in the amount of money paid to
FEBRUARY 9, 1949 Newfoundland 395
Quebec and maritime fishermen. Surely it is
time the Fisheries Act was amended to preclude any such results. For the benefit of
members of the house, and fishermen generally, I believe an explanation as to the
way
the bounty was established might be in order.
I am aware that most fishermen know very
little about it and I confess that I did not
myself until a few days ago. I am indebted
to the Department of Fisheries for the information that I have received and I think
it
should be a matter of record.
This bounty to the fishermen is known as
the Halifax award. It was established by
the treaty of Washington which was entered
into in 1871 between the United Kingdom
and the United States. Under that treaty
United States fishermen were permitted to
take fish off the coast of the maritime provinces, Quebec and Newfoundland for a certain
term of years. For that privilege the
United States paid $5,500,000 to the British
government. The British government then
paid $1 million of the award to Newfoundland and $4,500,000 to Canada.
The Canadian payment was placed in the
consolidated revenue fund and after $500,000
had been deducted as expenses the net
amount of $4 million was recognized as the
payment received by Canada for the grant of
these fisheries concessions. In 1882 parliament made provision for an annual grant
of
$150,000 for the purposes noted in the act,
and that sum was later raised to $160,000.
It is from this grant that the annual fishing
bounties have since been paid.
That summary is taken from the report of
the royal commission on fisheries which sat
in 1927, which report goes on to say:
From the House of Commons debates of 1882 when
the resolution upon which was founded the legislation of 1882 was passed, it is plain
that this annual
grant was regarded as the interest upon the amount
of the Halifax Award.
As I said in the beginning, the amount of
money available for the purposes of paying
this annual bounty is now $160,000. Fishing
is the largest single industry in Newfoundland, and if under this agreement all the
Newfoundland fishermen are to be eligible
for payments under that grant, and if no
additional money is to be disbursed, it will
mean that the grants to Quebec and the
maritime fishermen will be cut down.
I suggest that our Fisheries Act should be
amended in order that the amount of the
grant may be increased so that grants now
paid would not be cut down because of the
Newfoundland fishermen coming under the
provisions. I should like to ask the minister
if the governor in council have not the
necessary power under the regulations to
increase this amount. The regulations are to
be found in P.C. 5366 of 1947, section 14 of
which reads:
The amount of the bounty to be paid to fishermen
and owners of boats and vessels will be fixed from
time to time by the governor in council.
I am making these remarks in order to get
a definite and specific answer from the minister. The fishing industry is very important
to the whole of Canada and at the present
time it is facing many difficulties. If we are
to bring in another large group of fishermen
then I think it is time the Canadian government began to pay more attention to this
industry than has been paid in the past.
I want to give some credit to the Minister
of Fisheries. He comes from the west coast
and when he took office he had not had very
much experience. Immediately after being
appointed he took his duties quite seriously
and made a trip across Canada and today I
think he knows a great deal about the industry. I hope the cabinet will have just
as
serious views in connection with this basic
industry as has the minister.
As in practically every industry, a fight
is going on now in the fishing industry. It
has reached the stage where mechanization
is the order of the day. A struggle is going
on between the shore fishermen and the
trawlers which will have to be settled. I
think it is the obligation of the government.
to view that particular angle very closely.
The fishermen claim that the trawlers are
depleting and destroying the industry. That
is the assertion that has been made to me
and if it is true it is the responsibility of
the government to see that the industry is
not destroyed.
The best methods will have to be found
to perpetuate this industry because it is an
important food industry and deserving of
much more consideration than it has had in
the past. With the bringing in of another
large group of fishermen, with the fight that
is going on between owners and fish dealers
and those engaged in the industry, I think
the time is ripe for a thorough examination
of the whole question. I should like the minister to answer the questions I have posed.
Mr. Mayhew: Mr. Chairman, I shall not at
this time attempt to answer the hon. member
for Cape Breton South, but I shall start out
by answering the question that was put to me
last night by the hon. member for Winnipeg
North Centre. I am pleased indeed to have
an opportunity to speak briefly about the
Newfoundland fisheries.
As all hon. members well know, the fishing
industry is the oldest industry on the island.
But it is more than that; it is by far the most
396
Newfoundland HOUSE OF COMMONS
important industry. lt is the most important,
not necessarily because of the annual dollar
value of its products but because of the
number of people engaged in it directly and
indirectly and because of the unique way in
which it has affected the whole economy of
Newfoundland and even the character of the
Newfoundland people.
The hon. member for Winnipeg North
Centre was quite right when he suggested
that we in Canada might profit from the
knowledge and experience of the Newfoundland fishing industry. To my mind, we stand
to gain a great deal by coming into association with Newfoundland fishermen, shore
workers and management in that industry.
I should like to pay a tribute to these
magnificent people of Newfoundland. The
Newfoundland fishermen come from a hardy
race of men and by their courage and
resourcefulness they have built up a long and
honourable tradition of life on the sea. From
generation to generation they have faced without question the challenge and the hazards
of the sea; they have gone out in very small
boats and battled the elements; they plied
their perilous trade long before the advent
of steam and other modern improvements and
safeguards. In spite of the many obstacles
they have had to overcome—and have overcome—they have forced their way into the
markets of the world. They have succeeded,
not only because of their initiative and courage but also because of their skill in
the
methods of processing and because of their
attention to the quality of their products.
A comparison of the history of Ontario and
Quebec and the history of Newfoundland
would perhaps emphasize the contribution
that fisheries has made to the heritage of the
island. Here in the interior of Canada our
forefathers cut down the forests, plowed and
cultivated the land and reaped the harvests.
Farming became the very backbone of our
economy and was the determining factor in
our social evolution.
Exactly the same thing occurred in Newfoundland, except that the sea took the place
of the land. The harvests of the sea formed
the substance of life for Newfoundlanders,
and the life of the sea has left its impact on
the character and the economy of the people.
The fishing industry is the one industry
that has held Newfoundland together over the
years. The sturdy fishermen have provided
the island with the first line of defence from
the very beginning. They are the real Newfoundlanders, and will make real Canadians.
We should be proud to welcome these fellow
Canadians.
I should like to quote, if I may, from a
recent book entitled "Newfoundland", edited
by Dr. R. A. MacKay. Dr. MacKay is well
known in this city. The passage I wish to
read is as follows:
At least as early as the sixteenth century annual
fishing voyages began from western Europe, the
banks becoming as well known to the fishermen of
the west of England, of Spain and Portugal,
of Brittany and Normandy, as the Caribbean was to
the fighting men of Spain. Proximity to the fisheries
ultimately induced permanent settlement in Newfoundland, and determined its distribution
about the
coasts. The annual fishing voyages ceased with the
Napoleonic wars, and the English fishing industry
became resident on the island. The local economy
which developed was pre-eminently a fishing economy. A merchant class concerned with
the export
of the fish and the import and distribution of supplies was established on the island,
particularly
about St. John's, which early became the commercial
capital. The whole business life of the island developed around the fishery. Retail
merchants branched
out to become wholesalers as well as retailers, importers and exporters. insurance
brokers and ship
owners. bankers, and in more recent times manufacturers. Although conditions have
changed greatly
within the past half century, the stamp of the fishing industry still marks the economic
and social
life of the island.
For four centuries, up to 1900, the fishery
was the only industry in Newfoundland of
any real significance. In the period 1901 to
1905 the value of fishery exports amounted to
just over $8 million out of total exports of
$9-6 million. Later the pulp and paper
industry, and mining, exceeded fishing in the
value of exports; but as I intimated before,
from the standpoint of the number of people
engaged in the three industries, the number
in fisheries has remained in first place.
The fishery of Newfoundland has always
centred primarily around the dried-codfish
trade. Generally speaking, "fish" to Newfoundlanders means "cod". Recently there
has been a development in the fresh and
frozen trade. This branch of the industry,
however, has tended to supplement rather
than to supplant the salted fish production. In
addition, Newfoundland has important lobster, herring, seal, and whale fisheries.
There is a wide range in the types of dried
salted fish produced, and in the requirements
of the various foreign markets. Newfoundland ships fish to many markets in Europe
and in the western hemisphere. The Mediterranean markets of Portugal, Spain, Italy
and Greece have long been the principal
markets for Newfoundland codfish. Substantial quantities are also sold in such markets
as Brazil, the British West Indies, and other
Caribbean countries.
Dried codfish is essentially a cheap source
of the protein used in semi-tropical countries,
and its keeping qualities give it a decided preference over other protein foods. The
fact
that markets for dried codfish are, for the
most part, in countries in which a large part
of the population exists on a very low
FEBRUARY 9, 1949 Newfoundland 397
standard of living, renders the industry
somewhat susceptible to world economic
conditions.
The development of the fishing industry in
Newfoundland has not been one of continuous progress. Over the four centuries of its
history there have been many ups and downs,
and a number of remedies have been applied
to bring about recovery. When the world
economic depression struck in the early thirties, the economy of Newfoundland was
unable to cope with the pressure exerted on
it by falling markets for its principal export
economy. In the period of 1926 to 1930 the
codfishery yielded close to $13 million annually
in value of exports, but from 1931 to 1935 the
average was cut approximately in half to
$6.4 million.
In the face of these conditions, in 1936 the
commission of government established the
Newfoundland fisheries board, and endowed it
with wide powers over the production and
marketing of salted codfish. This was a
drastic change in tactics made necessary by
drastic economic conditions. The board was
given authority not usually vested in such an
organization in a democratic country; but as
I have said, the desperate plight of the fishing
industry made such a step imperative.
As world conditions improved, the fishing
industry, and indeed the whole economy of
the island, began a slow recovery. The value
of exports of fishery products, which stood at
$6.9 million in 1937, rose to $8.1 million in
1940, and then rose sharply throughout the
war to a peak of $33.8 million in 1946. In
1947 the Newfoundland association of fish
exporters, NAFEL, was formed by the board.
All exports from the island are now controlled
by this association.
This has been but a brief survey, Mr.
Speaker, of the Newfoundland fisheries. I am
sure you would not expect more from me
at the present time, although it would be
very profitable to anyone to read the many
books and articles that can be found in the
library.
Before answering the hon. member for
Cape Breton South (Mr. Gillis), I should like
for a minute to give a brief outline of the
method by which the fisheries committee
proceeded with its part of the program of
bringing about union. It was felt that any
time you tackled the fishing industry you
were tackling a very live nerve centre in the
whole economy of both countries. Therefore
it had to be dealt with in a spirit of good will
on both sides. When the committee was set
up, I asked them to come to my ofiice. Mr.
Walsh was the chairman of that committee.
He and his associates visited the office, and
with the departmental officials we sat down
to consider the problems before us. Before
proceeding I suggested to him that we would
not consider them in the manner of horse
traders. I said that I realized they were
here to do a job—to negotiate—a job which
they would want to live with, not only in
the immediate future, but for years to come.
I asked them to look upon us in the same
way. I assure you that this was the spirit
in which we approached the whole problem.
At the beginning I suggested to them that
we all knew, facing each other as we did,
that there was one problem about which
there would be some difficulty, and that was
the fisheries board and NAFEL. At that time
I intimated to them I had had some experience in the splitting of wood, and had found
it was very desirable to put a wedge in at
the knot to open it up, and that the rest of
the block would then fall apart in an easy
and fairly reasonable way. That is exactly
what we did. We started immediately to
discuss the things that we knew were going
to be hurdles, and somewhat difficult to get
over.
After spending two or three hours in
exchanging views on this matter, we proceeded by way of memorandum. We were
given a list of questions which the delegates
wanted us to answer. We answered these
questions and then discussed our answers in
another meeting. After various meetings, by
a process of elimination, we finally reached
a list of understandings which will be found
in this pamphlet. I believe all hon. members
have a copy of the pamphlet, and they will
find the questions on page 8. These were the
questions this committee was finally able to
submit to a committee of the cabinet and of
which we were finally able to get approval.
These questions then found their way into
the pamphlet which we have before us. I
want to show that never at any time were
there any harsh words. At all times the matter was viewed in a reasonable and businesslike
way and we are very pleased with the
results.
Some of the questions which were asked
this afternoon have to do primarily with our
own position, and the fight between trawlers
and shore fishermen. I think those questions
can quite easily be left to be dealt with when
our estimates are under discussion.
A question was raised about the fisheries
board. The fisheries board was set up in
1936 by the commission. It is composed of a
chairman and two members. This board has
fairly wide powers, I will grant you. In
1947 a company was set up known as NAFEL,
which is an exporting company.
Mr. Mayhew: NAFEL, a Newfoundland
association of fish exporters. We are not
398 Newfoundland
HOUSE OF COMMONS
getting all the privileges that were originally
given the company. We agreed to let them
retain the export market for salt fish only,
which will amount to about $14 or $15 million 3 year, depending of course on market
conditions. NAFEL has nothing to do with
the rest of the fishing industry.
From the various departments we are taking over the freezing facilities, the inspection
service and the research department, incorporating these into the federal system of
fish
management.
I believe I have answered all the questions
except the one concerning the bounty. Please
do not ask me to give the dates in connection
with this question, because I do not remember them. In substance, however, the Newfoundland
people received a million dollars as
their share of the bounty; that was considered
as their reward. The matter of sharing the
$160,000 a year with the fishermen of Newfoundland was not discussed during the conference.
It will be divided therefore, as it
always has been divided, between the maritime fishermen.
Mr. Gillis: Am I to understand, then, that
this $160,000 which I understand is interest on
the original $4 million grant Canada received,
will continue to be distributed between the
Quebec and maritime fishermen? The Newfoundland fishermen will not share in that
sum until such time as there are other
arrangements.
Mr. Mayhew: That is my understanding,
and it was not discussed at any other meeting.
Mr. Baker: As I am interested in seeing
this union between Newfoundland and
Canada go through, and I do not want to do
anything that may impede it, I shall be very
brief. Taking the long view, this union will
be of strategic, economic and social advantage to both Newfoundland and Canada.
Dealing specifically with fisheries, I know
the union will prove to be mutually beneficial.
True, the salt fish industry in Newfoundland
is going to be, so to speak, on its own, to a
certain extent for five years, but that is
quite understandable. It takes a certain
amount of time to adjust these things.
There has been an historical association
between the fishermen of Newfoundland and
the fishermen of our great province of Nova
Scotia. Many of the Newfoundland fishermen
have fished out of Nova Scotia's ports, and
particularly out of the home port of the
Minister of Reconstruction and Supply,
Lunenburg. These men are well known to
us all. There is one point I should like to
mention and that is that, as a result of
Canada and Newfoundland coming together,
the hand of the Minister of Fisheries will be
strengthened. We all realize the fine job he
is doing. I think this union will help him
because it is going to make the fishing industry a very large industry. Few people
realize
it is an industry that brings in a large volume
of United States dollars. It is an industry
that is growing.
The Louisburg project is one example of
the co-operation between the federal government and Nova Scotia on behalf of the
industry. With Newfoundland becoming a
tenth province of Canada, we may some day
be able to establish a continental shelf, which
I think is of the utmost importance.
Now I bring up my perennial story. The
stronger the claims of the fishermen become,
and the claims of seafaring people in general,
the greater the opportunity of having some
sort of coastguard system, perhaps not
exactly the same as the one the United States
set up. I believe this union will help
strengthen our request for such a system.
There may be some difficulties during the
period of transition but I am sure, taking the
long-range view, this union will prove to be
beneficial to Canada, Newfoundland and the
maritime provinces in particular.
Mr. Archibald: I should like to ask the
minister about this Newfoundland association which has control over the export of
fish. If an individual desired to set up a
business for the export of fish, would he have
to pay a fee of $10,000 in order to belong
to that association?
Mr. Mayhew: My understanding is, and I
think I am right, that the regular fee for
joining NAFEL is $10,000. Four or five men
may get together and take out one membership. A person who has fish to export may
ask a member of the association, and there
are in all some 43 members in NAFEL, to sell
his fish for him. It will be sold for a
commission of from 3 to 5 per cent. Â
Mr. Knowles: I want to thank the minister
for the trouble he has taken in replying at
length to the question I asked last night.
This is a subject in which the people concerned are keenly interested. Some hon.
members may wonder why I should be
interested in the subject, since I come from
the centre of the continent. I suppose it is
partly due to the fact that, as a child, I was
brought up on stories of my Nova Scotian
ancestors who had gone fishing on the grand
banks. I dared to hope when I asked the
question last night that the permission to
Newfoundland to retain their present set-up,
at least in part, for five years, was a concession to the fishermen themselves, the
men
who actually do the work. But after listening to the minister's description of the
set-up
today, particularly in view of his answer to
FEBRUARY 9, 1949 Newfoundland 399
the question just put to him by the hon.
member for Skeena, it looks to me as though
it is the old story: it is a concession not to
the men who do the work but to a privileged
few. In the beginning the set-up sounded
good, in that the marketing and export of
fish were under the direction and control of
a state fisheries board. Had it stopped there,
one might have said "hear, hear." But, lo
and behold! that board seems to have turned
over all its rights and privileges to a fishing
association, which is a fairly select group, if
it is true that there is a fee of $10,000. If that
is the situation, I hope that the department
will get out of it any advantages there are.
But I also hope that, in the interests of the
men who do the work, modifications of this
set-up will be made as quickly as possible.
Mr. Archibald: Can that fishing association
do what the fisheries council of Canada did
with the west coast co-operatives, namely,
turn down on political grounds an application
for membership?
Mr. Mayhew: I do not think I should be
expected to answer that question. There
seems to be in the minds of a few of the
members an impression about which I think
I should say something, and it will take me
only a minute or two. They seem to think
that the coming in of Newfoundland and the
bringing in of another $30 million or $35
million of business will in some way affect
the industry in the maritime provinces. As
a matter of fact, there will be no more fish
for sale by reason of Newfoundland coming
in than there would be if she stayed out.
Both countries will be doing business in the
same markets. I believe one will strengthen
the other in looking for markets, and that
both will be able to go after business together
in a better way than would be possible
separately.
Mr. Gibson (Comox-Alberni): In the event
of a maritime fisherman finding it to his
advantage to take his fish to Newfoundland,
would he be entitled to sell his fish through
NAFEL? Or conversely, would a Newfoundland fisherman be able to bring his fish to
the maritimes and sell it through NAFEL?
I refer to codfish.
Mr. MacInnis: I quite agree with the point
the minister has made, that bringing
Newfoundland into confederation does not
increase in any way the world fish supply
or the North American fish supply. The fish
supply is much the same as it was before;
that is, the production of Newfoundland as
a dominion and the production of the maritime-province section of this dominion will
be much the same after confederation as
before. But it may affect the maritime fishermen if the assistance given to the fisheries
board, or to the organization that has been
set up by the fisheries board—which, as has
been mentioned, is a purely big-business commercial organization—will give the board
a
greater advantage in the markets of the
world than the Canadian fishermen have
under production conditions in Canada, where
better labour conditions prevail—conditions
which are none too good but perhaps better
than they are in Newfoundland. That is the
point I wish to make. I think we should be
satisfied here, because of the understanding
that the dominion government is to pay the
costs of the fisheries board for the next five
years.
Mr. Mayhew: We are paying only the
deficit. I do not think there is any difference
in the opportunity that Newfoundland has.
I do not think the people are in any better
position than we are in the maritime provinces at the present time. They operate some
boats of their own between Newfoundland
and the West Indies and have enjoyed that
market right along. I expect they will continue to do so. Those boats will be taken
over by the Department of Transport. There
is in Newfoundland a bait-freezing service
which I think is a better one than we have
in Canada. We shall have to do something to
improve ours so that it will be equal to Newfoundland's.
Mr. MacInnis: The minister said that,
according to the terms of the agreement,
Canada was undertaking to pay only the
deficit in the administration of the Newfoundland fisheries board. Is that the statement
the minister made? Before he answers,
I may say that is not the way I read it in
subsection 2 of term 22, which reads as
follows:
Subject to this term, all fisheries laws and all
orders, rules and regulations made thereunder, shall
continue in force in the province of Newfoundland
as if the union had not been made, for a period
of five years from the date of union and thereafter
until the parliament of Canada otherwise provides,
and shall continue to be administered by the Newfoundland fisheries board; and the
costs involved
in the maintenance of the board and the administration of the fisheries laws shall
be borne by the
government of Canada.
This subsection does not say anything about
assuming responsibility for the deficit only:
Mr. Mayhew: There is in the hon. member's
mind a little bit of confusion between the
board and NAFEL. The board will be considered part of our official organization, will
be treated the same as are our officials, and
will be paid by the government.
400 Newfoundland HOUSE OF COMMONS
Mr. MacInnis: Part of the Department of
Fisheries of Canada?
Mr. Isnor: I think there is one point we
should bear in mind with regard 'to this five-
year period. As I understand, the Newfoundland fisheries board will operate as a federal
agency under the control of the governor in
council. If I am correct in that, it does away
with some of the worries that the hon. member opposite has in regard to its operation.
But I take a wider View of awards than did
the hon. member for Cape Breton South,
because that Halifax award applies largely
to the inshore fishermen. He also raised the
question as to the operation of the fishing
industry. I think Canada and Newfoundland,
or the maritime provinces including Quebec,
will be in an exceptionally fortunate position
having regard to the future fishing industry
of the world. We certainly will be able to
take care of a population of 160 million, or
all the consumers on the north American
continent. In this fisheries development, we
should take a long-range view not only of the
benefits to Newfoundland, the new province,
but of the effect it will have on our Canadian
fishing industry. I for one welcome the
thought that we are going to be able to join
our forces and export in still larger quantities than ever before. I do not expect
any
trouble between the maritime provinces and
Newfoundland in regard to regulations,
because they have already shown a willingness to co-operate in developing new and
more extensive markets.
May I say a word about the trawler? A
number of years ago I was drawn into the
trawler question. In fact I was almost crucified by certain groups and papers in the
maritimes, but I am just as firmly convinced today
as I was when I took my stand, in 1938, if I
remember rightly, that the fishing trawler is
necessary if we are to develop a large export
market. You cannot sell in small quantities
in a profitable way. It is all right for the
inshore fishermen. I am familiar with the
inshore fishermen. In the summer months I
live right next door to them. I am friendly
with them and am anxious to see them prosper, but they can only prosper by developing
and holding a market in central Canada and
in foreign countries. Therefore the trawler
is necessary. A continuity of supply must be
maintained if we are to continue in any
developed market. Because of that, I am
sure that those who say the trawler must be
done away with are unfamiliar with this
important question.
I quite agree with the hon. member for
Cape Breton South that there are differences
of opinion in the matter. There are those
who say that if you allow the unrestricted use
of the trawler it will destroy our fishing
grounds. I wish to point out that today the
fishing banks of Canada and Newfoundland
are quite close. We have an advantage over
the United States fishermen. As I said a
moment ago, we must continue to operate
the fishing trawler if we are to bring in large
quantities of fish, process them and ship
them to export markets, and in that way
bring additional money to this country, which
we as a progressive people are seeking. We
are seeking increased export markets.
The hon. member for Cape Breton South
is anxious to rise in his place and take exception to my remarks. I would ask him
to
wait a minute. It was not my intention to
take part in this debate, but I know that
from the maritime point of view the fishing
industry is an important one. At the present
time we have a minister who is interested
not in the one section of the country which
he represents in this house, namely the
extreme west coast, but in all sections of the
country. He has shown his interest by coming
to the extreme east, and he has made himself
familiar with our needs. Because of these
visits to the different parts of the country
we shall have a better transportation system
to help the extreme east and west to market
their fish in a better condition in central
Canada. We are anxious to ship larger quantities to central Canada than we are doing
at the present time. We realize that industrial
central Canada, with its large population,
roughly speaking 64 per cent of the population of the country, is a real market for
our
fish and the few products that we have to sell.
We must ship our fish in a better condition
than we have in years gone by.
I am pleased that the minister has shown
his interest in our problems. He has promised
us that we shall have a more rapid transportation system to make available to the
people of central Canada the fine type of
fish that we catch along the Atlantic coast,
particularly in Nova Scotia.
Mr. Archibald: Are there any qualifications or terms demanded by the Newfoundland association of
fish exporters other than
the $10, 000 fee?
Mr. Archibald: Do the members of the
board have to belong to the association? Are
they all members of the association?
Mr. Mayhew: Is the hon. member talking
of NAFEL or the fisheries board?
Mr. Archibald: Are the members of the
fisheries board also members of the fish
exporters association?
FEBRUARY 9, 1949 Newfoundland 401
Mr. Hazen: Will the laws, and regulations
made thereunder by the dominion government, which affect trawlers and drifters, apply
to the trawlers and drifters owned by the
citizens of Newfoundland when Newfoundland becomes a tenth province, or will these
laws not be applicable until five years have
passed?
Mr. Mayhew: If the hon. member will refer
to page 8 of the statement of questions he
will find the answer to his question. At the
present time the Newfoundland trawlers are
not allowed to fish within a twelve-mile
radius of the shores along the maritime provinces, but they may fish within three
miles
of Newfoundland. The Newfoundland fishermen will be allowed to fish in the same way
as Canadian trawlers. We shall have to
change the regulations to bring that into
effect. If the hon. member will read the top
of the page dealing with trawling he will get
the answer.
Mr. Hazen: I notice that in subsection 2 of
section 22 the words used are: "For a period
of five years from the date of union". That
is a definite period. I presume it was put in
at the request of the Newfoundland delegation. Was any consideration given to the
fact
that Newfoundland might apply prior to the
end of five years, or within five years, for a
change? In other words, were the words
"from the date of union" the governing
factor? Could these words not have been
inserted, "unless the province of Newfoundland requests that they or any of them be
terminated at an earlier date? Why is it so
definite, a period of five years?
Mr. Mayhew: My understanding is that this
can be changed at the request of the Newfoundland government. That is what they
wanted.
Mr. Knowles: I should like to ask a question on subsection 4. Half way through the
subsection we find the following words, "...
may be revoked or altered by the body or
person that made them." Am I to take it that
that body or person may refer to NAFEL?
Has NAFEL the authority to change the regulations that they have made? Our concern
is
that the fisheries board set up by the state
apparently has not much power left; most
of the power is in the hands of this $10,000
per person private club.
Mr. Mayhew: NAFEL itself has no authority to make regulations. The regulations will
be made by the board. The board was set
up by the commission form of government
and is now under the direction of the federal
government.
Mr. Knowles: Do I understand that the
board, which will now become a creature of
the federal government—
Mr. Knowles: All right, an agency—directs
and controls the affairs of NAFEL?
Mr. Mayhew: That is right. We have what
we call an eastern division and a western
division, and now this will be the Newfoundland division. This board will be the agent
for the Newfoundland division of the Department of Fisheries.
Mr. Knowles: We wish to be sure that the
board controls NAFEL, and not NAFEL the
board.
Mr. Nicholson: The minister has indicated
that this is a most important industry in
Newfoundland. Did any discussions take
place with the Newfoundland delegation
regarding the future of the industry? I understand a large volume of fish was sold
in the
British market, and that at the present time
Great Britain is finding difficulty in getting
the dollars to pay for Canadian products.
With Newfoundland becoming part of Canada,
there will be tariff barriers which will prevent the importation into Newfoundland
of
goods which previously came from Great
Britain. Thereby a problem will be created
which may make it difficult for Great Britain
to accept and pay for the quantity of fish which
formerly came from Newfoundland. Will the
minister say whether there was any discussion of that problem, and whether any assurance
is being gîven to the Newfoundland
fishing industry that they might expect to
sell as much fish under the new arrangement
as they did under the earlier one?
Mr. Abbott: I did not hear everything the
hon. member said, but I understood his
remarks related to what arrangements could
be made with respect to the sale of fish by
Newfoundland in European countries either
for sterling or for other European currencies.
Last year an arrangement was made by the
British government whereby it took over
from Newfoundland the currency proceeds
of sales of fish in those areas—escudos in
Portugal, or lira in Italy—and gave to Newfoundland blocked sterling for those other
currencies. The Newfoundland government
gave to the fishermen equivalent amounts in.
dollars to pay for the fish.
The blocked sterling thus acquired was
held in a special account available, and available only, for the reduction and the
servicing
of the sterling debt of Newfoundland held in
the United Kingdom. The Newfoundland
government approached the United Kingdom
402 Newfoundland
HOUSE OF COMMONS
at the time discussions of union with Canada
were under way, and asked them if they
would renew that arrangement for the coming season. The United Kingdom government
has agreed to do 50. In other words, the
United Kingdom has agreed to take from
Newfoundland the proceeds from sales of
fish in those European markets, and give
them blocked sterling for it, which will be
placed in this account. Then, of course, the
government of Newfoundland would have to
provide dollars for the fishermen.
On the part of Canada, we as a country—
Newfoundland being a part of this country,
or soon to become a part—would be able to
make the necessary dollars available to Newfoundland for those proceeds, because under
the terms of union Canada has undertaken to
assume the payment of. sterling debt. We
would therefore be in a position to use the
proceeds of such sales for the servicing and
reduction of that sterling debt.
Mr. Matthews (Kootenay East): I should
like to ask a question regarding the latter
part of subsection (5), where it says:
And employees of the Newfoundland fisheries
board shall become employees in that department in
positions comparable to those of the employees in
that department in other parts of Canada.
Does that mean that when these regulations come into effect there will be a general
stepping up of salaries of those employees
beyond what they are now receiving?
Mr. Mayhew: We will try so far as possible to have an equalization of salaries. In
some cases it would be a stepping up, while
in others it might be a stepping down.
Mr. Archibald: With respect to liquidation
of the Newfoundland debt by accepting
blocked sterling for fish exports, is there any
chance of getting rid of some apples and
canned salmon so as to help liquidate the
debt of Newfoundland in that way?
Mr. Abbott: Perhaps we could answer that
when we are considering Newfoundland's
debt. It is expressed in terms of dollars. The
Newfoundland sterling debt is expressed in
terms of dollars at $62 million. It has varying maturities. Canada will have to service
the debt until it is repaid, and in due course
will have to provide for payment. In order
to provide for payment Canada will have to
acquire the necessary sterling; and it will
acquire that sterling by giving to the United
Kingdom treasury the equivalent amount in
dollars. Presumably the dollars will be used
as part of the general dollar reserve of the
Bank of England or the United Kingdom
treasury, and used for whatever purposes
their laws provide. But I do not think
Canada would be in a position to impose con
ditions upon the Bank of England or the
treasury of the United Kingdom as to how
such proceeds would be used.
Mr. Dickey: Mr. Chairman, before the
section is carried I should like to support
what was said by the minister and also by
my colleague, the senior member for Halifax,
with respect to the industry generally.
The Nova Scotia and Newfoundland fishing
industries are quite similar. I believe the
union of these industries under one jurisdiction will be a source of strength and
will
result in far-reaching benefits for the industry
as a whole both in Nova Scotia and in other
parts of the maritime provinces, as well as
in Newfoundland. As the Newfoundland
industry stands, having been developed under
a separate jurisdiction, it is unavoidable that
at the present time there are certain arrangements and regulations concerning the
industry
which are different from those under the
Canadian jurisdiction as applied to the
industry in Nova Scotia and the other maritime provinces.
I believe it indicates a desire of all parties
to see that the two industries are united
under one jurisdiction, with the least amount
of damage to either, when it is pointed out
that arrangements have been made to continue in force for a period of time certain
of
these special regulations under which the
Newfoundland industry. has developed, in
order to provide an orderly and proper unification of the regulations which in future
will apply to the industry as a whole.
The fact that theseregulations have been
continued in force does not in any way show
that these particular regulations and arrangements are approved, that they will be
continued in force permanently, or that any of
them will be made to apply to the industry
in those parts of the maritime provinces
which already form a part of Canada. That
the whole question received the greatest possible consideration is shown by the great
detail set out in section 22, now under consideration, and more particularly by the
very
detailed discussion of the various questions
involved, and information which has been
given in the committee. The industry as a
whole will benefit through the efforts of the
Department of Fisheries to improve methods
of packing and transporting fish products to
market. As a result of benefiting to that
extent the industry will be able to bring
about considerable expansion.
The hon. member for Cape Breton South
rather left the impression that trawlers were
destroying the shore fishing industry. My
colleague pointed out that there were two
schools of thought on that matter. I think
it is generally agreed that if there is to be
FEBRUARY 9, 1949 Newfoundland 403
any considerable expansion of the fishing
industry in the maritime provinces and on
the Atlantic coast a continuing and regular
supply of suitable fish will have to be provided. The only basis upon which that expansion
can be built is the proper use of trawlers.
Far from destroying the shore fishing industry, the proper use of trawlers will contribute
to its prosperity.
Mr. Hazen: I have had the opportunity of
looking at this pamphlet containing the statements of questions raised by the Newfoundland
delegation. On page eight it is stated
that Newfoundland trawlers will be permitted to fish to the three-mile limit off the
coast of Newfoundland. Will that be for the
next five years or for a longer period?
Mr. Mayhew: When union is consummated
Newfoundland will be a part of Canada, and
normally the laws of Canada would apply.
Throughout the rest of Canada trawlers must
operate beyond the twelve-mile limit, but we
are saying that as far as Newfoundland is
concerned its fishermen may continue to fish
up to the three-mile limit. Legislation will
be brought in to make that legal.
Section agreed to.
On section 23—Debt.
Mr. Macdonnell (Muskoka-Ontario): I think
it would be desirable that a statement should
be made to the committee with regard to this
section. It reads:
Canada will assume and provide for the servicing
and retirement of the stock issued or to be issued—
I refer particularly to those latter words.
Mr. St. Laurent: I think it is desirable that
there should be some explanation of this
clause for the information of hon. members
and the public generally. The expression
"issued or to be issued" refers to the replacing of certain securities by other securities.
There is a provision for the replacing of
securities issued under the loan act of 1933
without changing the amount at all.
On the basis of conversion at the rate of
$4.04 to the pound, the amount outstanding
under the loan act of 1933 is $71,911,467.24.
There is a sinking fund amounting to $9,326,650.26, which leaves a net outstanding
debt of
$62,584,816.98.
Mr. St. Laurent: It is dollars converted at
the rate of $4.04 to the pound. According to
the latest information available, the amount
of the internal debt was $10,465,593, with a
sinking fund of $879,368, leaving a net internal debt of about $9,500,000 as of December
31, 1947.
Mr. Brooks: Would the total debt be
$72 million? I do not just understand the
difference between internal debt and national
debt.
Mr. St. Laurent: Securities were issued in
sterling in the United Kingdom, the net
amount of which at the present time is $62
million. Then securities were issued in Newfoundland in dollars, the net amount at
the
end of December, 1947, being approximately
$9.5 million. An attempt was made to determine what portion of the total debt incurred
in respect of the services would have been
in respect of federal services had union taken
place before the expenditure was made, and
what proportion referred to services which
would have been provincial services had
union been in effect. According to the report
of 1933 it was estimated that approximately
$67.5 million of the debt at that time was
the result of capital expenditures and current
deficits in connection with the railway enterprise and war expenditures.
We reduced that $67.5 million in the proportion in which the total debt existing at
that time had been reduced over the years
and it was found that that brought the amount
down to $54.8 million. The Newfoundland
delegates represented, and after consideration
it was found that their representations should
be accepted, that there had been issued for
war purposes during the last war a total of
$6.5 million in war loans and savings certificates. That added to the $54.8 million
made a total of $61.3 million.
That figure was found to correspond quite
closely to the debt owing in the United Kingdom in sterling. It was agreed that in
bringing about the union Canada would take over,
as a debt incurred for what would have been
federal purposes, an amount equivalent to
the United Kingdom debt, and that the
government of the province of Newfoundland
would retain the debt of approximately
$9,500,000 as a debt incurred for purposes
which would have been provincial. There
was this slight discrepancy. In making the
mathematical computation we arrived at $61.3
million whereas the amount of the sterling
debt was $62.5 million. It was pointed out
to us, however, that in connection with the
railways and the war, not only had there been
capital expenditure of a federal nature, but
that a portion of it had been incurred presumably for the erection of public buildings,
and that the public buildings were going to
be distributed according to the space in them
occupied for what would be either federal
or provincial services. It was found therefore
that the fairest approximate calculation that
could be made would show that the amount
of the sterling debt was just about as close
404 Newfoundland HOUSE OF COMMONS
as we could get to the amount of indebtedness
incurred for purposes which would have
been federal purposes.
It was for that reason that the sterling debt
was assumed, and that the provincial government was to be left with its dollar debt
owing to residents of Canada or of Newfoundland.
Mr. Jackman: May I ask whether the sterling debt of Newfoundland is held by British
nationals? If so can we offset some of the
sterling balances, which we own in London,
against the payment of this debt?
Mr. St. Laurent: The debt will have to be
paid in sterling, and we will be entitled to
pay it in any sterling that we have. Of course,
we have not endeavoured to trace the securities, but presumably they are securities
that
were issued in England and issued in sterling.
We assumed that they were probably held
in the United Kingdom, but whether or not
they are held there they are payable there,
and they are payable in sterling, and we can
use whatever sterling we have to redeem
them.
Mr. Macdonnell (Muskoka-Oniario): I take
it the Prime Minister means not only that
they are payable in sterling but that they are
payable only in sterling.
Mr. Macdonnell (Muskoka-Oniario): The
Prime Minister referred to the wording where
it says, "Stock issued or to be issued". As I
understood him, that means that new stock
can be issued, but only to replace existing
stock. That gives rise to this question. Does
that mean merely to replace stock that is lost,
or does it mean that if under the sinking fund
you pay off a certain amount you can then
issue up to the old amount?
Mr. St. Laurent: No; it means it is only to
replace securities originally issued. My understanding is that under the Loan Act,
1933,
there were securities issued to replace former
securities, and that there are some of those
that have not yet been converted.
Mr. Macdonnell (Muskoka-Ontario): So the
net result is that it will be the original
amount not subject to increase, and subject
to decrease to the extent of the sinking fund?
Mr. Fleming: My question has to do generally with the financial terms, and it applies to
article 23 and several of the other articles
which are to be found under the general
heading, "financial terms". I should like to
ask the Prime Minister to supply a little more
information as to the net result as far as the
annual charges that will be borne by Canada
are concerned. The information which has
been furnished to the house is not quite up to
date. The document which has been circulated
entitled "Report and documents relating to
the negotiations for the union of Newfoundland with Canada" deals at page 70 with
the
question of probable revenues and probable
expenditures accruing to Canada from Newfoundland. That information is based on 1947
figures, and also relates to the terms offered
to Newfoundland in 1947. The figures at
page 70 are a part of annex No. 4, which is
annexed to the so-called "proposed arrangements for the entry of Newfoundland into
confederation," which accompanied the letter
of October 29, 1947, of the former Prime
Minister of Canada to the governor of Newfoundland, to be found at page 57 of this
same document.
As I gather it, the position under the terms
offered in 1947 was roughly to this effect.
Canada might anticipate drawing from Newfoundland into the federal treasury approximately
$20 million per annum on the assumption of a continuation of the 1947 level of economic
activities in Newfoundland. It was calculated also that probable expenditures on Newfoundland
out of the federal treasury, embracing tax agreement payments, old age pensions,
family allowances and other departmental
expenditures, would total approximately $27
million. On page 71 it is pointed out that
there are four items not included in the
estimate of $27 million odd. They are: first,
the transitional grants; secondly, the cost of
servicing that part of the Newfoundland debt
assumed by Canada; thirdly, any costs in
respect of the Newfoundland railway or its
auxiliary steamship services taken over
by Canada; and, fourthly, any capital
expenditure.
I pause at that point to make this comment.
In trying to arrive at the net result, it would
appear that on the basis of the 1947 offer the
net result to the treasury would be a deficit
of roughly $7 million as between federal
revenue and probable expenditures, plus
three and a half million dollars of transitional
grants in each of the first three years of
union, plus the other three of the four items
referred to on page 71. But those are not
the terms that are before the house today.
The terms were revised in 1948, and the
result has been to increase very substantially
the amounts of the transitional grants that
are offered by Canada to Newfoundland. It
is proposed to increase the grants substantially during the first eight of the twelve
years during which transitional grants are
payable. By doing some arithmetic one finds
that the total of transitional grants contemplated in the 1947 offer was $26,250,000,
whereas the-transitional grants that are contemplated by article 28 of the terms of
union
total $42,750,000. I assume that the amount
FEBRUARY 9, 1949 Newfoundland 405
of the transitional grants was increased in the
interval between 1947 and 1948 for the purpose of making the terms of union more
acceptable to the people of Newfoundland,
and perhaps to meet some of the opposition
that had been encountered there towards
confederation.
I should like to ask the Prime Minister if
he is in a position to give to the house now
up-to-date figures as to the probable net
result to the federal treasury of union based
on the figures on pages 70 and 71 as varied,
first by the increase in the transitional
grants, and. secondly, by any possible changes
arising from the use of 1947 figures as basic.
It may be the government is in a position to
give us more recent figures than those used
here.
Mr. St. Laurent: I should not like to
attempt to go into the details of those calculations. Those estimates that were made
are contained in this annex 4. They were
rough estimates and it was found that, in
many respects, more precise information
could be supplied than had been available in
1947. It was found that, in order to leave the
provincial government in a position to carry
out its responsibilities and give to the people
of Newfoundland services that would be progressing up to the scale of services provided
in other provinces, without imposing taxes
which it would not be practical to try to
make effective at once, additions in the
transitional grants were required. It is
because of that feature that those increases
in the transitional grants were provided.
I think the Minister of Finance and his
officers did make calculations before recommending to the committee the reasonableness
of the proposals, and I think he would be in
a much better position than I to give my hon.
friend such information as his officials were
able to obtain.
Mr. Abbott: As the Prime Minister has
suggested, perhaps I might follow that up,
Mr. Chairman. When the first delegation was
here discussing terms of union, certain figures
were made available as to the probable
revenues in Newfoundland. It was on the
basis of those figures or estimates that the
original financial proposals were made.
Following the holding of the plebiscite and
the arrival of the new delegation a good deal
of additional work had been done with
respect to the probable revenues and expenditures in Newfoundland. The Newfoundland
delegation had retained the services of a very
capable accounting firm. A careful analysis
had been made of the probable revenues in
Newfoundland and an attempt was made to
forecast a probable provincial budget. As
the committee will appreciate, it was rather
difficult to do that because of the difficulty
of assessing the extent to which the federal
services would accomplish what, in the past,
had been done by the province, and just how
much would be carried on by the province.
That was, of course, on the expenditure side.
On the revenue side of a proposed provincial budget, it was necessary to take account
of the fact that union would effect a rather
revolutionary change in the tax sources of
Newfoundland. Up to the time of union, the
major sources of revenue were sources which
either were exclusively within the purview
of the federal government or would be shared
by the federal and provincial governments.
The major source of revenue in Newfoundland has always been the customs duty. This
revenue would no longer be available to the
new provincial government. Income taxes,
corporation taxes, succession duties and the
like are fields that are shared by the two
governments. The difficulty in assessing what
the revenues would really be was considerable.
It was, of course, realized by the Newfoundland delegation and by the Canadian
delegation that it would be possible and
necessary to develop new sources of revenue,
in the light of those which are utilized in
other Canadian provinces, but that inevitably
it would take some time to develop those
sources of revenue. For that reason, it was
decided it would be necessary to increase
the transitional grants which, as the committee will have appreciated upon looking
at
the terms of union, commence at the figure
of $6.5 million for the first two years and
diminish to nothing at the end of the twelfth
year.
It was upon that basis that these additional
transitional grants were arrived at, and that
was the consideration which prompted the
Canadian government to recommend these
increased grants. The Canadian government
felt they were fair and were necessary in
order to enable the new provincial government to have a reasonably adequate budget
to provide a scale of provincial services
necessary in the new province.
Mr. Fleming: I appreciate the real difficulty
in arriving at very precise estimates of the
probable revenues and probable expenditures
in a situation like this, which has some novel
features about it. If the minister would be
kind enough to clarify this matter, I should
like to ask him whether my understanding of
the situation is correct in so far as the net
cost to the Canadian treasury is concerned.
The anticipated total annual revenue from
all sources after union, which will include the
personal income taxes, corporate taxes, succession duties, customs duties, import
taxes,
as well as all the other forms of taxes which
406 Newfoundland
HOUSE OF COMMONS
were enumerated on page 70, will be in the
neighbourhood of $20 million.
Mr. Fleming: Yes, I understand this was
the estimate of the Canadian government.
Against that, there are anticipated expenditures of approximately $27 million per
annum.
The tax agreement payment, which I presume
is the subsidy payment which is provided for
in article 26, is estimated at $6,820,000; old
age pensions, between $2 million and
$2,600,000; family allowances, $8,350,000;
other departmental expenses, $9,400,000. This
makes up the total I mentioned. There would
appear up to that point to be an annual
deficit of $7 million in round figures.
The increase in the transitional grants from
$3,500,000 to $6,500,000 would bring the deficit
up to $13,500,000, approximately, per annum,
but that does not include three other figures:
first, the costs of servicing that part of the
Newfoundland debt assumed by Canada; secondly, any costs in respect of the Newfoundland
railway or its auxiliary
services taken over by Canada; thirdly, any
capital expenditures. Could the Minister of
Finance give any estimate at all of those three
latter factors, as to what they might be
expected to amount to, and could he say a
word as to the anticipated additional cost of
defence, so that we will have as complete a
picture as it is possible to draw at this stage
of the net result for the treasury of Canada?
Mr. St. Laurent: Before the Minister of
Finance gives his estimate, possibly I should
give the estimate that was brought back to
us in 1948 by the Newfoundland delegation.
They disputed our estimate of the revenues
as being too modest. Our estimate of what
Canada would derive in 1949 was $20,185,000.
Their estimate of what would be derived on
the level of economy of 1949 was $26,922,000.
They made that as their estimate of what
Canada would derive from those various
sources—personal income tax, corporation tax
and so forth. They also disputed the
$27,150,000 because that included the old age
pensions payment at $2,600,000, and they said
it would not exceed $2,400,000. So they came
back this time telling us that our estimate of
the revenue Canada would get, on the level
of the economy of 1949, was too low, that it
should amount to $26,922,000; and that our
estimate of the expenditure on these items
was a little bit too high and would be
$26,970,000, practically balancing each other.
Of course those figures are merely estimates.
Before the Minister of Finance gave his own
figures, I thought I should give to hon. members the representation that had been
made
by the delegation from Newfoundland.
Mr. Abbott: I forget for the moment what
other things my hon. friend had in mind particularly.
Mr. Fleming: I went on to deal with the
factors enumerated at the top of page 71 of
the booklet. I asked if the minister could give
any estimate at all as to factors 2, 3 and 4,
which are as follows:
(2) Costs of servicing that part of the Newfoundland debt assumed by Canada;
(3) Any costs in respect of the Newfoundland railway or its auxiliary steamship services,
taken over
by Canada:
(4) Any capital expenditures.
I also asked whether the estimate of their
expenditure, this figure aggregating $27 million in round figures, took any account
of the
increased burden of national defence. There
is an item here entitled "other departmental
expenditures", but it is an amount of only
$9,400,000. Does that take any account of the
increased burden of national defence which
will now fall on the federal treasury with
respect to the defence of Newfoundland?
Mr. Abbott: No. I have not any revised
figure as to probable federal revenue from
Newfoundland, and I would prefer not to
hazard any further statement on that matter
at this time. We are, however, in process of
preparing estimates to be included in what
would be the main estimate in order to provide services in Newfoundland. While those
are not completed yet, they are fairly well
advanced. Those expenditures, including
expenditures for veterans' benefits and one
thing and another, which are not included
here, will be substantially higher than the
figure of $27 million shown on page 70.
Including all those special items, I think it
will probably be something of the order of
$50 million, including additional estimates
for defence and the like.
Mr. Fleming: I should like to be clear with
regard to that figure of $50 million. Is that in
addition to the $27 million?
Mr. Abbott: No. What I am saying is this.
Of course, before union is completed I shall
be bringing down the main estimates for the
fiscal year from April 1, 1949, to March 31,
1950. Therefore I have decided that, in the
main estimates, we should not include Newfoundland items, but that they should be
brought in as special supplementary estimates. I think it is an advantage to deal
with
the matter in that way, in that it will show
to members of the house in detail the additional expenditure which it is contemplated
will be necessary for Newfoundland. Those
estimates will be brought in. My present
intention would be to table those estimates
on or about March 31, on the assumption that
FEBRUARY 9, 1949 Newfoundland 407
the legal formalities will have been complied
with in order to make union effective about
that date. Present indications are that the
over-all amount of those estimates, including
the other items to which I have referred—
those relating to veterans and the like—will
be something of the order of $50 million.
Mr. Fleming: For clarity's sake, may I ask
this further question. That $50 million will
include the $27 million, plus the transitional
grant, plus the other three factors at the top
of page 71?
Mr. Nicholson: Can the minister make any
breakdown of this additional $23 million? I
am referring especially to item 3:
Any costs in respect of the Newfoundland railway
or its auxiliary steamship services. taken over by
Canada.
In the report of meetings between delegates
from the national convention of Newfoundland and representatives of the government
of Canada, part II, at pages 67 and those
following, the section dealing with transportation makes some mention about present
freight rates, express rates and passenger
rates in Newfoundland. I understand that
the freight rates there are about twice as
high as the prevailing rates in the maritimes.
I was surprised to find that it is so much more
costly to travel by train in Newfoundland
than it is to travel by air. The cost of travelling from St. John's to Gander is a
good deal
higher by train. I am told that the rates are
about twice as high as the prevailing rates
in Canada.
As to the condition of the property, at
page 69 I read:
Such evidence as is available would indicate that
the Newfoundland railway system is badly run down
and would require the expenditure of substantial
amounts for rehabilitation. Estimates of the probable cost of such rehabilitation
can only be guesses
on the basis of data at present available. It would
appear that the rails would need to be renewed on
the whole of the railway within a period of ten
years. and that at the same time ballast should be
renewed, embankments and cuts widened. drainage
restored or improved and that & majority of the
bridges would need renewing. The cost of such
rehabilitation over a ten-year period would be of
the order of $10 million.
The rolling stock of the system would also need
rehabilitation. Much of the car equipment is of
wooden construction and a number of the locomotives are not worth repairing. It may
be hazarded
that the cost of rehabilitating rolling stock over a
ten-year period would be of the order of $7 million.
I read that the rates of pay, as far as can
be judged from the sample given, are on the
whole somewhat lower than those in Canada.
Under the heading "Results of operation", it
is reported that there was a deficit of about
$525,000 in 1944-45 and $698,000 in 1945-46,
after adjustment of a non-recurring item.
The point upon which I should like some
information is this. Does it now become the
problem of the Canadian National Railways
to take over the Newfoundland railway? Is
there an undertaking to bring the rates of pay
up to Canadian levels and to bring passenger
and freight rates down to Canadian levels?
If so, what is the probable deficit which might
be expected? What about the capital debt of
the Newfoundland railway? Does it become a
charge on the consolidated revenue of Canada, or is it added to the already heavy
burden of the Canadian National Railways,
which is about twice as high as the debt of
its competitor, the Canadian Pacific Railway?
Can the Minister of Finance answer some of
those questions?
Mr. Abbott: The Newfoundland railway
will be operated by the Canadian National
Railways; that is to say, management will be
provided by the Canadian National Railways,
but they will operate it as agents of the Canadian government in the same way as the
Canadian National Railways operate the
Intercolonial railway. If there is a deficit, and
I think it is fairly certain that there will be
one, any deficit incurred will have to be voted
by this house in the same way as deficits of
the Canadian National Railways and just as
we have in the estimates each year an item
for statutory obligations in connection with
the Intercolonial railway. At the moment I
have not available any estimates of the possible or probable deficit of the Newfoundland
railway. There is no doubt that it will require
substantial capital expenditures, which will
be classified as capital, and which presumably would increase the earning power of
the
railway by improving efficiency. But from an
operating point of View the deficits, if any,
will be a charge upon the taxpayers of Canada in the same way as are the deficits
of the
Canadian National Railways and of the Inter«
colonial railway. I have forgotten my hon.
friend's other question.
Mr. Nicholson: Are the rates of pay prevailing in Canada to be made available to
Newfoundland? Â
Mr. Abbott: I am afraid that that is a question which is not within my province. The
Minister of Transport is not here at the
moment. That question comes within his
jurisdiction.
Mr. MacNicol: The rates would have to be
applied to Newfoundland.
Mr. Bentley: In taking over various public
utilities such as railways and hotels in Newfoundland, under the terms just announced
408 Newfoundland HOUSE OF COMMONS
by the minister, will a careful audit be carried out, and will they be taken over
at the
actual replacement value or at their value
regardless of how much actual over-capitalization there may be?
Mr. Abbott: No valuation is placed on them.
We take them over as an asset of the government of Newfoundland. As the Prime Minister
indicated a moment ago, we have assumed
the payment of the sterling debt, a large portion of which was incurred in the building
of the railway, among other things. We will
own the railway as an asset of the Dominion
of Canada. As I indicated, the offsetting
liability is a portion of the debt. I might add,
the arrangement provides that the railway
will be left with adequate working capital,
stores and so on, and that is part of the
adjustments which are made on union.
Mr. Jackman: After what my leader has
said in welcoming Newfoundland into confederation, I am sure that we shall be glad
to
accept the young lady without any dowry
whatsoever. But this committee is entitled
to know just what revenues we are likely to
receive from taxation in Newfoundland and
also what the expenditures will be. The
information which the Minister of Finance
has given has been anything but illuminating.
I do hope that he has not entered into a financial transaction on the scanty basis
of information which he has so far given to the committee.
The document which was given to hon.
members was printed in 1949. It refers to a
conference series published in 1948. One
might expect that the information would be
at least reasonably up to date, but either the
minister or the Prime Minister has said, when
dealing with the federal revenues which we
can expect from Newfoundland, that the
original figure of $20,185,000 had been upped
by the Newfoundland delegation when they
went back home and made a further investigation, and that they retained a very capable
firm of accountants—I am sure they were
very capable—who upped these revenues to
an estimated $26,922,000. Do we accept that
revision of the estimate of revenue which we
shall get from Newfoundland?
Mr. St. Laurent: We neither accept it nor
dispute it. We shall get such amounts as will
be provided by the present rates of taxation
applied to operations which actually take
place. These are estimates. We accept them
as estimates, but we do not guarantee that
these estimates will prove to be accurate.
Mr. Jackman: I am not asking for a guarantee. Of course they must be estimates in
the very nature of things, but one certainly
does a little checking and double checking.
The delegation met here with our own representatives for weeks, if not for months.
Surely there must be a very good idea in the
minds of members of the government as to
what a reasonable estimate is. I am asking
a specific question. Is the reasonable estimate
in the eyes of our own advisers and our own
responsible ministers $20 million or is it
nearly $27 million, which was the final estimate of the Newfoundland delegation? That
is a simple question. Surely the government
holds at least a belief that it must be nearly
one or the other. I know that when we
apply our taxation laws to Newfoundland we
get a certain figure. We do not know exactly
what it is, but we must have made some
estimate which we hoped would bear some
accuracy, because it is simply amazing, when
the budgets are brought down year after year
and estimates are made running up to
hundreds of millions of dollars, how accurate
they sometimes are, although I admit that in
the last few years the surpluses have been a
little higher than the government could ever
possibly have expected.
As members of this committee, we should
inquire into what these probable expenditures
are going to be. The minister, in his usual
slapdash fashion, has said that the figure of
$27 million applies to transitional grants
which are now $6,500,000—
Mr. Abbott: Total payments. The main
additional item, if my hon. friend will permit
me, will be approximately $14,500,000 under
the transitional grants, the tax agreement, and
other payments to the province. Add
$14,500,000 to $27 million and you get up to
$41 million odd. Then there are veterans
benefits of $4 million or $5 million, and one
thing and another.
Mr. Jackman: It is this "one thing and
another" to which I object. This committee is
entitled to know what we are doing. As I
said before, we are willing to go into this
irrespective of any dollars and cents. The
question of union with Newfoundland rises
above that; nevertheless we owe a duty to
our own people in Canada and we need the
information. I would ask the minister not
to give me a few figures on this and that and
say, et cetera, et cetera, then arrive at $50
million. What I want to know is this. What
is added to the probable expenditures of $27
million, which I think the minister said had
to be revised upwards? I should like to know
what the additional figures are. I want them
itemized to make up the total of approximately $50 million which the minister gave
us. We have the transitional grants. which
are $6,500,000. Then we have the cost of
servicing the Newfoundland debt, which I
presume will be somewhere in the neighbour
FEBRUARY 9, 1949 Newfoundland 409
hood of $2,400,000. The minister can correct
me if I am wrong. Surely he knows what the
experience is in operating the Newfoundland
railway even with the high freight rates and
passenger rates which we heard about, and
possibly a lower wage scale than we have in
Canada. What has been the experience there
in the last few years?—because in the nature
of things it is not likely that there will be
too radical a change in a short time. What
is the deficit on the Newfoundland railway
likely to be, if there is a deficit? It may be a
profit, for all I know, but I want a figure on
that. I want to know exactly what other
items, including the cost of veterans allowances, will go to make up the figure of
$50
million more or less which will be the cost
to Canada of the first year of operation. I
have not said a word about the revenues,
which are estimated on the basis of 1947, I
think, because that was applying the tax laws
as they existed in Canada at that time, and
we, representing the people of Canada, surely
expect that the tax rates will be much less,
therefore the tax revenues will be much less.
However, I will not ask the minister to make
any estimate in that regard just now. If he
would throw some light on how the $50 million probable expenditures are made up I
should be very grateful.
Mr. Abbott: That question is fair enough.
I am afraid I cannot give the information at
once. The reason I gave the round figure of
$50 million was that I asked the officers of
the various departments to segregate the
expenditures in the different departments
relating to Newfoundland. The other day
I asked what the total of these estimates
would be and I was informed that it was
something of the order of $50 million or $55
million. I have not the details here. I will
get them. This discussion will probably go
on for some time. The full detail of course
will be, set out in the special supplementary
estimate to which I referred a moment ago,
but I cannot give my hon. friend a breakdown of that here now.
The major item is the extension to Newfoundland of rehabilitation grants and- other
veterans benefits, which run to quite substantial sums of money. That is a major item
in the increase. It may well be that the gross
figure which I have given also includes an
estimate for deficit on the railways but I
shall have to ask my hon. friend to allow
that to stand and I shall try to give it to
him either tomorrow afternoon or certainly
before the discussion finishes.
Mr. Fleming: Going back to my now
familiar problem about the net result, the
minister has now said that the total probable
expenditures for a full year would be $50
million to $55 million. The Prime Minister
has indicated that the estimates of federal
revenue in a year are, on the one hand, the
Canadian estimate of $20 million, in round
figures and, on the other hand, the Newfoundland estimate of, shall we say, $27 million,
in round figures. This means that, with
those figures, the net cost to the federal
treasury through union would be a minimum
of $23 million per annum, and might run up
to as high as $35 million, based on the
assumption of the continuance of the present
scale of economic activity, and also on the
continuance of the present scale of federal
taxation. If, as we sincerely hope, there is
a substantial reduction in rates of taxation
this year, the anticipated revenue from Newfoundland would be reduced accordingly,
and
the net charge on the federal treasury would
be increased accordingly.
Would the minister comment upon that?
According to my arithmetic the figures of cost
would be somewhere between $23 million
and $35 million per annum.
Mr. Abbott: That is probably right. But,
as the hon. member appreciates, those are
estimates. If, in fact, the federal revenues
from Newfoundland are of the order of $20
million, and if in fact the federal expenditures in Newfoundland, of one sort or another,
are of the order of $50 million, obviously
there would be some $30 million paid out
more than is taken in, in direct revenue.
My hon. friend is right when he says that.
But I am sure he appreciates that in the
early stages of union it is perhaps not a fair
test of the ultimate revenue-producing capacity of Newfoundland, nor is the amount
received in revenue at the outset a fair test
of the value of Newfoundland, or the contribution it may make to the Canadian federation.
I do not think we can do that—and I
am sure my hon. friend was not suggesting
that we could. I am simply pointing out
that we cannot judge this entirely in terms
of either estimates or dollars and cents.
Mr. Fleming: I agree entirely with what
the minister says. I would not wish anyone
to think that I am basing my judgment as to
the advantages of union either to Newfoundland or to Canada on these figures which
have
been brought out this afternoon upon inquiry.
However, this is a matter of some importance,
and inquiries have been made with a view
to eliciting essential information. On the
other side, if we were thinking in terms of
a ledger balance in respect of the union, of
course we would have to take account of the
economic advantages accruing to both sides
as a result of the increased facilities for trade,
and other similar advantages. It is a separate
and distinct problem.
410 Newfoundland HOUSE OF COMMONS
Mr. Probe: Referring to this deficit, which
is estimated variously as running from $23
million to $35 million annually, as of this
year, would the minister indicate what the
position will be in five, ten or fifteen years.
Some of these are non-recurring debts and
expenditures as of this or next year. This
figure, whatever it may be, of the present
deficit, will be sharply or gradually reduced
to what figure in what time?
Mr. Abbott: As I have often had occasion
to say in the house, I claim no gift as a
prophet; and anyone who could attempt to
forecast what the revenues and expenditures
of a province or of the dominion would be
years ahead is a worker of miracles. It is
absolutely impossible to make anything but
a wild guess. But if one assumes that Newfoundland develops and occupies a full place
in the Canadian economy, I think it is fair
to assume that its revenues will expand; and
my experience as Minister of Finance has
been that expenditures will also expand.
Mr. Probe: Is it the minister's view that this
temporary or this present apparent deficit
will narrow considerably as soon as conditions stabilize?
Mr. Abbott: I should think that is bound
to happen. Such matters as veterans affairs
payments and transitional grants are both
diminishing items. But I wish to take this
occasion to say that I am never one who looks
on the balance sheet of a Canadian province,
the revenue from that province, or the federal
disbursements in the province as a fair test
of the contribution the province makes. We
have "have" provinces in this country, and
certain provinces which do not collect as
much revenue. I am not one who accepts
that as a criterion of the place that province
occupies in confederation.
Mr. Probe: In section 23 it is stated that
Canada will assume certain debts of the
province of Newfoundland, and that the
province itself will retain its surplus, as
indicated in section 24. May I ask first of
all in regard to section 23 whether there are
in Newfoundland at the present time any
arrears of debt for which Newfoundland is
responsible, or for which she would be
responsible if she were not entering confederation?
Mr. Abbott: No. The debt of Newfoundland has been fully serviced and all maturities have been
met. The debt which Canada
is assuming, as the Prime Minister explained,
is its external debt, the debt which is payable
in sterling. I am informed that all of that
debt is now callable, if that is desired, at
any time on three months' notice.
Mr. Probe: With respect to the guarantees
for corporations or institutions within Newfoundland, are they also up to date or
are
there arrears of debts for which Newfoundland has some responsibility?
Mr. Abbott: So far as I am aware—and I
am sure I am correctly informed—all obligations of Newfoundland have been fully met.
Mr. MacNicol: Mr. Chairman, I agree with
some of the remarks made by the minister.
I do not think we should split hairs, or be too
much alarmed by a consideration of what
Canada is going to get at the present time or
in a certain number of years as a financial
return from Newfoundland. The island has
not had the opportunity it should have had.
I have made an exhaustive survey of the
facts, and I am convinced that it can do much
better than it has done. I believe we have
nothing to fear in that regard.
The railway has been mentioned. The first
thing I would suggest to the minister and the
government would be a plan for reservicing
the railway for standard-gauge cars. It is a
narrow-gauge line, and much more time is
required to go from Port aux Basques to St.
John's than should be required. The faster
the trains could cover that distance, the more
money would be made by the railway.
Therefore that is one of the first suggestions
I would make, namely that it be made a
standard-gauge line. Then I would suggest
further equipment for the port of Port aux
Basques so that larger ships, capable of
carrying cars, could be unloaded quickly and
reloaded rapidly at Port aux Basques. I can
see myself at some time in the future boarding a train at Toronto, one properly equipped
and having proper sleeping accommodation,
and remaining on that train until I reached
St. J ohn's, Newfoundland. I do not see how
the railway can be made to pay unless it is
equipped so that people can travel on it in
modern equipment.
It will take a few years to have that done;
but the sooner it is done the sooner that railway will be able to produce a revenue.
At
the present time the passenger traffic on it is
not as heavy as it should be. I have found
the general service satisfactory, although the
sleeping accommodation was a little cramped
for me. However, a modern car would
eliminate that difficulty. I found the meals
quite satisfactory.
We will have an opportunity, not only to
build up Canada but to build up this new
province. I would not hedge at all in giving
it opportunities to develop. It has vast resources of pulpwood. If the hon. member
for Dufferin-Simcoe were here he could tell
FEBRUARY 9, 1949 Newfoundland 411
the committee much more effectively than
I can just what results might be expected
from that pulpwood. A condition exists there
that does not exist in Canada or anywhere
else that I know of, although it may in Norway, whereby the forests regrow in thirty
years. I never saw such forest growth in
my life as I saw in Newfoundland. This is
brought about by the moisture content of the
air and the ameliorating temperatures, the
country being of course surrounded by water.
I hope the minister does not become distracted by thinking there is any possibility
that we are not going to be able to carry
out our obligations. Give the island a chance
and it will pay its way. It has not had a
chance up to the present. The same applies
to the fisheries. The whole service should
be made more rapid than it is today so that
people may travel back and forth more
quickly. They should be able to ship more
rapidly the goods they sell and in that way
develop their business. The more business
they do, the more they will be able to buy
from us.
I made a comparison of the costs to the
consumer in Newfoundland. I found that
people along the coast were generally opposed to confederation. One argument I used
was that it would cost them much less to live
if they were part of Canada because their
present rates of duty are so high. I found
that the cost of ordinary groceries, food and
other articles was from fifty per cent to one
hundred per cent more than in Canada. If
these people are given an opportunity to buy
at rates comparable to what we pay, they will
buy much more. That will be better for the
older provinces of Canada and it will help
to reduce the deficits on the railroad by
providing more freight.
I am for one not going to endorse the
expectation that Newfoundland is going to
embarrass Canada financially. I look at the
bright side of things. I think union will be
most helpful to Canada. We can work
together. They should be given a chance to
come up to our standards in every way.
Mr. Green: Has the government any plans
in mind for the promoting of industry in
Newfoundland? Section 24(2)(c) reads:
(c) no part of the surplus shall be used to subsidize the production or sale of. products
of the
province of Newfoundland in unfair competition
with similar products of other provinces of Canada.
but nothing in this paragraph shall preclude the
province of Newfoundland from assisting industry
by developmental loans on reasonable conditions or
by ordinary provincial administrative services.
Apparently that contemplates that the provincial government of Newfoundland will
assist in the development of industry, but I
think it is of the utmost importance that the
federal government should also promote the
establishment of industries in Newfoundland.
We have much the same kind of problem on
the west coast. There is a greater need for
assistance of this kind in the remote provinces
than there is in the central provinces. Can
the minister tell us whether the government
has in mind assisting in the development of
industries in Newfoundland.
Mr. Abbott: My hon. friend will appreciate
that primarily this comes under the jurisdiction of the Minister of Trade and Commerce.
The minister was down in Newfoundland last week, and prior to that officers of
his department, acting on the assumption
that union was probable, were down in Newfoundland going over the industrial situation
and making a survey of what could be done
and in what way the federal government
could assist, not only during the transitional
period but in the development of such industries as might be suitable to Newfoundland.
The paragraph to which my hon. friend has
referred was put in because, as may be seen
from the section itself, Newfoundland is being
permitted to retain its surplus, which amounts
to some $26 million. That is a rather unusual
provision when the dominion is taking over
most of the debt, but it was felt that it was
quite proper that that should be done and the
surplus made available to the new provincial
government for whatever purposes it saw fit
to use it in the interests of the province.
However, it was felt that it would not be
appropriate that it should be used to subsidize
the sale of Newfoundland products so that
they might enter into unfair competition with
those of the other provinces. That was a condition in the original proposals for union
and
it was continued in this arrangement.
Mr. Green: The minister has said that this
matter of industry would come under the
Department of Trade and Commerce, but I
would point out to him that the industrial
development bank comes under the Department of Finance. It seems to me that that
bank could be of great help in Newfoundland
and I should like to know whether any steps
have been taken by the industrial bank authorities to see in what way they can help
out
in Newfoundland.
Mr. Abbott: I am glad my hon. friend
raised that point. It may be premature, but
it is the intention of the industrial development bank to have offices in Newfoundland,
as they have in other provinces. Naturally
the management of that bank will be not only
willing but anxious to do what is done in
412 Newfoundland HOUSE OF COMMONS
other provinces of Canada in assisting in the
development of industries.
Mr. Green: I hope they will adopt a different attitude from that adopted elsewhere.
During recent months we have been receiving complaints in the west that the industrial
development bank is getting very sticky about
assisting industry. If they adopt a policy of
that kind in Newfoundland there will not be
a very bright outlook for the people there.
Mr. Abbott: I do not know on what my hon.
friend is basing his statement that they are
becoming sticky. The management of the
bank has the responsibility of making loans
which have good prospects of being repaid.
I think the hon. member will find when we
come to consider the industrial development
bank that they have been making loans in
his own province and that the bank has
adopted a very fair policy there, as it has in
most other provinces.
Mr. Green: If the minister will check up
the statements made by some of the officials
of that bank and of the Bank of Canada I
think he will find they were to the effect
that a policy has been deliberately adopted
of not being so free with loans. It is not a
matter of whether the loans will be repaid;
it is simply a matter of holding down expansion. There has been considerable criticism
over a policy of that type being adopted on
the west coast and I suggest to the minister
that he check the situation because I think
it is as I have stated.
Mr. Abbott: I am sure my hon. friend does
not want me to debate the operations of the
industrial development bank. I have been
following them pretty closely and there will
be an opportunity later in the session to
consider its operations.
Mr. Claxton: I should like to supplement
the answer of my colleague to the question
put by the hon. member for Vancouver
South about the promotion of industry. I
can say that, in anticipation of the possibility or probability that union would take
place on March 31, officers of the Department of Trade and Commerce were sent to
St. John's. There is also a committee of
senior officials in Ottawa specially appointed
to deal with problems of the continuation
and development of industry in Newfoundland. Further, a special inquiry was made
by a team of ofl'icials into the prospects and
outlook of' the seventy-five relatively small
industries that exist in Newfoundland to see
by what means they could be assisted and
encouraged. If the Minister of Trade and
Commerce were here he would, I think, be
able to give one or two rather striking illus
trations of the way in which we expect that
union will assist the development of industry
in Newfoundland.
Mr. Green: Does the Minister of National
Defence know of any definite plan for assisting industry there?
Mr. Claxton: Yes. Some steps have already
been taken to meet certain special needs of
Newfoundland industry—for example, in the
supply of raw materials.
The Deputy Chairman: We are dealing
with section 24. When the hon. member for
Vancouver South rose I was just about to .
ask the committee if they would carry section 23. I wonder if they would do that now?
Mr. Macdonnell (Muskoka-Ontario): As I
understand it, we still have to get certain
information which has been asked for under
section 23, and which the Minister of Finance
is to give us tomorrow.
Mr. Abbott: Whether it comes under section
23 or section 24 is immaterial. Section 23
happens to relate to the assumption of the
debt. I undertook to obtain for the hon.
member for Rosedale, and I should be able to
have it at the opening of the house tomorrow
afternoon, a statement by main heads of the
major items of expenditure. I could not give
it to him broken down by individual departments, but I presume the committee want
to
know the main headings showing how the
figure of $50 million which I have given is
made up. I hope to be able to have that
tomorrow afternoon. There are, of course, a
great many non-recurring items in that
figure. There are amounts which have to
be paid in adjustment of accountable
advances, taking over consumable stores, and
that sort of thing, which are referred to in
the document. I will have that statement
available for the committee tomorrow afternoon. Â
Mr. Macdonnell (Muskoka-Ontario): I would
suggest that section 23 be left over. It seems
to me it is always better to have a section
still under review, and not be discussing it
afterwards when it is supposed to have been
passed. Then we seem to be at a disadvantage in asking questions.
The Deputy Chairman: I should like to
say to the hon. member that the only point
I had in mind was to keep things in order.
I wanted to keep the record straight. But if
the committee decides to let section 23 stand,
that is all right.
Mr. Abbott: For instance, I could give the
information under section 26, which provides
for the financial payments to Newfoundland.
I think it is immaterial under which section
I give it.
FEBRUARY 9, 1949 Privilege-Mr. Cockeram 413
Mr. Jackman: The minister has been good
enough to say he will give a breakdown of
probable expenditures. Will he also give
us a breakdown of the estimated federal
revenue? We have been given two figures,
$20 million and $27 million. I am sure that
each of the items which go to make that up-
and there are about nine or ten listed in the
pamphlet—was the subject of considerable
discussion between our delegation and the
Newfoundland delegation. I believe we are
entitled to know on what the estimate is
based.
Mr. Abbott: I could give that at once. I
have that here if my hon. friend wishes it,
but I have to put the expenditure item over
until tomorrow.
Mr. Jackman: If the minister would table
it, I think it might be quite adequate.
Mr. Abbott: Perhaps I might do that at the
same time tomorrow afternoon.
Mr. Jackman: May I ask the minister
whether or not there are any outstanding
tax agreements between Newfoundland and
any taxpayers in the former dominion. If
there are any such agreements, is it to be
the policy of Canada to honour them?
Mr. Abbott: On the question of the agreements to which my hon. friend refers, the
colony or dominion of Newfoundland has
entered into agreements, for income-tax
concessions and customs concessions, with
certain corporations in Newfoundland. In the
terms of union there is a provision, section 27,
subsection 4, which reads:
The government of the province of Newfoundland
shall not, by any agreement entered into pursuant to
this term, be required to impose on any person or
corporation taxation repugnant to the provisions of
any contract entered into with such person or corporation before the date of the agreement
and subsisting at the date of the agreement.
The "term" referred to in that clause is the
term enabling them to have a tax agreement
with the dominion. The tax concession agreements to which my hon. friend has referred
are agreements which of course were entered
into with the government of Newfoundland
and not with the government of Canada. The
policy to be followed with respect to those
agreements will be a matter for this parliament to decide.
Mr. Jackman: The minister does not care to
express an opinion on the policy which he
thinks would be a fair one in the circumstances? After all, there are certain agreements
in Newfoundland with high contracting
parties, certain sovereign powers. I presume
those agreements might be respected in the
same way as taxation agreements. In other
words, would the minister care to say
whether the policy in the case of a high con
tracting party such as the United States will
be different from the policy for an ordinary
taxpayer?
Mr. Abbott: Of course, the agreements to
which my hon. friend refers are contracts,
and there is in the terms of union nothing
that deprives the contracting parties, the
beneficiaries of these tax concessions, of any
legal right which they have. Newfoundland
will of course become a province of Canada,
and residents of Newfoundland will become
subject to Canadian laws.
Mr. Fleming: There is one point I should
like to raise. Someone suggested that the
information should be tabled. I suggest that
it ought to be put right into
Hansard.
Mr. Abbott: It is not lengthy, and I think
my hon. friend's suggestion is a fair one. I
will put on
Hansard early tomorrow afternoon
the heads of estimated expenditures and the
heads of estimated revenues.
Sections 23 and 24 stand.
Progress reported.
